U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the year ended December 31, 2000.

( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(No Fee Required)

For the transition period from to

Commission file number 1-12522

Alpha Hospitality Corporation
(Name of registrant as specified in its charter)

Delaware 13-3714474
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

12 East 49th Street, New York, N.Y. 10017
(Address of principal executive offices) (Zip Code)

Issuer's telephone number (212) 750-3500

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

Name of each exchange
Title of each class on which registered

Common Stock, $.01 par value per share Boston Stock Exchange
Redeemable Common Stock Purchase Warrants
each redeemable common stock purchase
warrant entitling the holder to purchase
one share of common stock

Securities registered under Section 12(g) of the Exchange Act:
None
(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

Yes X No

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

The issuer's revenues for the year ended December 31, 2000 were
$872,000.

The aggregate market value on March 23, 2001 of the voting stock held
by non-affiliates computed based on the average bid and asked prices of such
stock on that date was approximately $14,000,000.

As of March 23, 2001, 20,748,312 shares of Common Stock, $.01 par
value, were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

Transitional Small Business Disclosure Format:

Yes No X

The Exhibit Index is located on Page 35.

ITEM 1. BUSINESS

General

Alpha Hospitality Corporation (the "Company") was incorporated in
Delaware on March 19, 1993, and its subsidiaries Alpha Gulf Coast, Inc. ("Alpha
Gulf") was incorporated in Delaware on May 4, 1993, Jubilation Lakeshore, Inc.
("Jubilation Lakeshore") was incorporated in Mississippi on December 8, 1992,
Alpha Missouri, Inc. ("Alpha Missouri") was incorporated in Delaware on March
17, 1996, Alpha Monticello, Inc. ("AMI") was incorporated in Delaware on May
30, 1997, Alpha Rising Sun, Inc. ("Alpha Rising Sun") was incorporated in
Delaware on August 6, 1993, Alpha St. Regis, Inc. ("Alpha St. Regis") was
incorporated in Delaware on June 24, 1994, Alpha Greenville Hotel, Inc.
("Greenville Hotel") was incorporated in Delaware on February 27, 1997, Alpha
Entertainment, Inc. ("Alpha Entertainment") was incorporated in Delaware on
March 12, 1997, Alpha Florida Entertainment, Inc. ("Alpha Florida") was
incorporated in Florida on May 26, 1998, Alpha Peach Tree Corporation ("Alpha
Peach Tree") was incorporated in Delaware on March 16, 1999, Casino Ventures,
L.L.C. ("Casino Ventures") was formed as a limited liability company in
Mississippi on June 6, 1999, Alpha Florida Entertainment, L.L.C. ("Alpha Florida
LLC") was formed as a limited liability company in Florida on October 19, 2000
and Alpha Casino Management Inc. ("ACM") was incorporated in Delaware on
June 26, 2000. As used herein, the term "Company" includes Alpha Hospitality
Corporation and such of its subsidiaries as the context requires. The Company's
principal executive offices are located at 12 East 49th Street, New York, New
York 10017, and its telephone number is 212-750-3500.

In November 2000, the Company launched its gaming day cruise vessel
operations out of Miami-Dade County's Haulover Beach Park and Marina adjacent
to Bal Harbour, Florida. The Company is pursuing additional gaming related and
other opportunities.

Historically, the Company had been engaged in (i) the ownership and
operation, through Alpha Gulf, of a gaming vessel in Greenville, Mississippi,
and the construction of an adjacent hotel through its Greenville Hotel
subsidiary and (ii) the pursuit of gaming related and other opportunities
through the Company's other subsidiaries.

Effective March 2, 1998, the Company sold to Greenville Casino Partners,
L.P. (the operator of another casino barge in Greenville, Mississippi), its
Bayou Caddy's Jubilee Casino ("Jubilee") and related assets, which then
constituted substantially all the Company's operating assets, in
consideration for (i) approximately $11,800,000 in cash, (ii) a 25% limited
partnership interest in Greenville Casino Partners, L.P., (iii) the
assumption of approximately $2,000,000 of liabilities of Alpha Gulf and (iv)
the assumption of an additional approximately
$23,900,000 of indebtedness (inclusive of loan costs and loan discounts
aggregating approximately $6,000,000, which was not received by the Company)
owed by Alpha Gulf and Greenville Hotel to an institutional lender, which
indebtedness had been incurred in anticipation of the proposed sale.
See Item 7, herein, for a more detailed discussion of the sale transaction.

Casino Operations and Gaming Activities

2000 Operations

Florida. On May 7, 1999, Alpha Florida was notified by Miami-Dade
County (the "County") that it had received the final approval on a lease to
dock and operate a day cruise vessel out of the County's Haulover Beach
Park and Marina adjacent to Bal Harbour, Florida. The exclusive lease is
for five years. The County
may renew this exclusive agreement for two periods of five years each. For this
exclusivity the Company has agreed to pay the County a minimum guaranteed
monthly base rent, a per-passenger fee and a percentage of retail
merchandise sold in the facility. The lease commenced on November 26, 2000,
the date of the vessel's inaugural cruise.

$41,000 during the first year and $46,667 during years two
and three, with an additional surcharge for each month of the three-year period
amounting to one dollar per each passenger during each previous month. At the
completion of the three-year period, the Company has the option to purchase the
vessel at a cost of $4,500,000, towards which all previous construction payments
would be applied. In November 2000, the interior design and construction was
completed on the vessel, the Ella Star Casino ("Ella Star"), with the inaugural
cruise taking place on November 26, 2000. The Ella Star has an inherent
competitive advantage as it has the fastest route to the three mile limit,
putting its
passengers in gaming action in just 20 minutes. The vessel's first two decks
provide for 7,000 square feet of Las Vegas style gaming with 165 slot machines
and 20 table games. The third deck features the Star Cafe with seating for 150
people. Included in property and equipment at December 31, 2000 are $2,345,000
(including $1,250,000 paid pursuant to the Charter Agreement) of
payments related to the construction of the vessel and related improvements.

On September 7, 2000, the Company entered into a three-year agreement
for the rental of certain furniture and equipment to be used in the gaming
day cruise vessel. Rental payments, which commenced in November 2000 and
December 2000, are approximately $36,000 per month.

In October 2000, Alpha Florida merged into Alpha Florida LLC. Also,
in October 2000, the Company received $900,000 from an unrelated third party and
an additional $71,000 of pre-opening expenses paid directly by that third
party, in exchange for a 25% interest in Alpha Florida LLC, while retaining
the remaining 75% interest. In addition, the Company will receive a monthly
management fee amounting to 5% of gross revenue.

Development Activities

New York. The Company, through its wholly-owned subsidiary, AMI is
party to a General Memorandum of Understanding (the "Memorandum") with
Catskill Development, LLC ("CDL" and, collectively with AMI, the "Parties")
dated December 1, 1995, which among other things, provided for the
establishment of Mohawk Management, LLC ("MML"), a New York limited
liability company, for the purpose of entering into an agreement to manage a
proposed casino on land to be owned by the St Regis Mohawk Indian Tribe (the
"Mohawk Tribe"). The Memorandum also sets forth the general terms for the
funding and management obligations of CDL (25% owned by Bryanston Group,
Inc. ("Bryanston")) and AMI with regard to MML. In January 1996, MML was
formed with each of CDL and AMI owning a 50% membership interest in MML.
On July 31, 1996, MML entered into a Gaming Facility Management Agreement
with the Mohawk Tribe (the "Management Contract") for the management of a
casino to be built on the current site of the Monticello Raceway in
Monticello, New York (the "Monticello Casino"). Among other things,
the Management Contract provided MML with the exclusive right to manage the
Monticello Casino for seven (7) years from its opening and to
receive certain fees for the provision of management and related services.

In July 2000, the Parties completed a final settlement agreement whereby
Alpha's wholly-owned subsidiary will be entitled to receive 40% of any basic
management fee income and 75% of any service fee income accruing for the
operation of any Native American casino facility development at Monticello
Raceway. The net result of the settlement entitles Alpha's subsidiary to
receive approximately 47% of all management fee and service income derived
from the
underlying management contract. The original agreement contemplated an
arrangement specific to the Mohawk Tribe, while the settlement agreement covers
all prospective federally recognized Native American Nations. Accordingly,
Alpha Casino Management Inc. ("ACM") and Monticello Casino Management, L.L.C.
("MCM") were formed to facilitate such potential non-Mohawk Tribe arrangements.

As part of and in conjunction with such settlement, AMI acquired 5
percentage points of Bryanston's ownership interest in its real property
holdings at the Monticello Raceway for $456,000 plus consideration if the
asset is liquidated. That holding includes the Raceway's building and
equipment and approximately 200 acres of land. Bryanston has agreed to defer
payment of this
liability until the earlier of the liquidation of the asset or January 2002.
The $456,000 is included in other assets and liabilities on the consolidated
balance sheet
as of December 31, 2000. AMI was also granted the right to receive 25% of all
net development fees earned by CDL in the development of these holdings.
Additionally, Bryanston has agreed to transfer its 25% ownership in the
Raceway's parimutuel operations to AMI. Under the previous agreement, AMI
did not participate in any of these sources of revenue nor the previously
discussed development fee arrangement. For the year ended December 31, 2000,
the Company's share of the Raceway's parimutuel operations amounted to $72,000.
Included in deposits and other assets as of December 31, 2000 and December 31,
1999, the Company capitalized $2,047,00 and $1,366,000, respectively towards the
design, architecture and other costs of the development plans for the proposed
Monticello Casino.

On April 6, 2000, in a letter to New York Governor George Pataki, the
U.S. Department of the Interior and its Bureau of Indian Affairs (the
"Department")
forwarded its initial Two-Part Determination, which included the Department's
findings that: 1) the Monticello Casino was in the best interests of the Mohawk
Tribe; and 2) that there was local support for the project. The Department has
requested the Governor's concurrence in their findings. Such concurrence is an
integral step in establishing the trust lands on which the proposed casino
would be developed. On April 19, 2000, MML received a letter from the
National Indian
Gaming Commission asking for additional information as it was completing its
review of the underlying management and development agreements. As explained
below, on June 5, 2000, MML notified the Department of the purported
abandonment of the project by the Mohawk Tribe.

On April 22, 2000, the Company was made aware of a purported letter
agreement between the Mohawk Tribe and Park Place Entertainment ("PPE"),
which agreement (with two irrelevant exceptions) would purportedly give PPE the
exclusive rights to develop and manage any casino development the Mohawk Tribe
may have in the State of New York. The validity of the aforementioned purported
agreement is not clear at this time. On November 13, 2000, MML and CDL
(collectively the "Plaintiffs") joined in a suit filed against PPE, alleging
entitlement
to substantial damages as a consequence of, among other things, PPE's purported
interference in the Plaintiffs proposed casino in Monticello.

Subject to the obtaining of requisite approvals and satisfactory resolution
of the previously mentioned lawsuit, it is anticipated that MML or MCM will
undertake the development and management of the proposed casino in Monticello,
New York, and AMI will be responsible for the day-to-day operations of that
casino. It is intended that that casino will be owned by the respective Native
American Nation and will be located on land to be placed in trust for the
benefit of that Native American Nation.

CDL purchased the 225 acre Monticello Raceway in June 1996. The
Company has been advised by CDL that CDL plans to continue its racing program
at the Monticello Raceway and to explore other developments at the site in
addition to the proposed casino referred to above.

There can be no assurance that the project will receive all requisite
approvals. However, if such approvals are obtained, it is the Company's current
intention to proceed with the development of this gaming activity.

During 2000, 1999 and 1998, respectively, AMI incurred $962,000,
$209,000 and $279,000, respectively, of costs, of which $681,000, $0, and
$75,000, respectively, has been capitalized, and the remaining $281,000 $209,000
and $204,000, respectively, of which has been expensed as casino development
costs, which are substantially comprised of a corporate overhead allocation.

In March 1998, CDL completed the State Environmental Quality Review
Act process with the Village of Monticello's Planning Board as lead agency.

Mississippi. On July 8, 1999, the Company, through its subsidiary,
Jubilation Lakeshore, contributed its

inactive gaming vessel, Bayou Caddy's
Jubilation Casino ("Jubilation") to Casino Ventures in exchange for $150,000 in
cash, a promissory note of $1,350,000 plus a membership interest in Casino
Ventures. Upon repayment of the promissory note and other funding to the
venture, the Company's membership interest in Casino Ventures will decrease from
its current percentage of 93% to 15%. Matthew Walker ("Mr. Walker"), a
director of the Company, is a member in Casino Ventures and serves as its
General Manager (see Item 13 - "Certain Relationships and
Related Transactions").

The Jubilation vessel has been relocated to Mhoon Landing in Tunica,
Mississippi ("Tunica"), where it is anticipated it will be refurbished
and operated
as a gaming vessel. To fund such costs in 2000, Casino Ventures was loaned
$804,000 from Mr. Walker, $172,000 from the Company and $29,000 from the
holder of a $650,000 mortgage on the inactive gaming vessel. An additional
$350,000 was received by Casino Ventures in 2000 for future equity contingent
upon final approval of the casino by the Mississippi Gaming Commission. During
2000 and 1999, the Company capitalized $1,859,000 and $364,000, respectively,
of costs related to the relocation and refurbishing of the vessel
and improvements
to its redeployment site in Tunica. An additional $268,000 and
$100,000 of start-up costs were incurred in 2000 and 1999, respectively.

The Company expects Casino Ventures to commence operations in
Tunica in late 2001. The Company is not required to make any further capital
contributions to Casino Ventures. On January 18, 2001, Casino Ventures received
site approval for the casino in Mhoon Landing from the Mississippi Gaming
Commission. If the project is completed as approved, the casino will
be supported
by enhanced existing land-based infrastucture, including restaurant and lodging
facilities, as well as the requisite back of house service areas.

Discontinued Activities

The Bayou Caddy's Jubilee Casino. The Jubilee, originally located in
Lakeshore, Mississippi, was owned and operated by the Company's wholly-owned
subsidiary Alpha Gulf. Following the Company's acquisition (through Jubilation
Lakeshore) of the Cotton Club casino in October 1995 (see "The Company --
Discontinued Activities -- The Jubilation Casino"), the Company relocated the
Jubilee to Greenville, Mississippi. The Jubilee reopened in Greenville on
November 17, 1995. The movement of the Jubilee to Greenville increased the
capacity at Greenville and brought an upscale facility to the Greenville market.
Management believed that the relocation of the Jubilee to Greenville was an
appropriate action designed to increase the return on the Company's
gaming assets in Mississippi.

In April 1997, Alpha Gulf received approval from the Mississippi Gaming
Commission to make the infrastructure investment required to build and operate
a hotel on property adjacent to the Jubilee location. Greenville Hotel
entered into
a long-term lease with the Board of Mississippi Levee Commissioners to lease
property, including historical landmark buildings, for the development
of a forty-one key single room and suite hotel. Management believed that
this hotel would
add a new dimension to the Company's casino patron experience and would be an
added amenity to the Company's player development program. The total cost of
this project, including capitalized interest, indirect labor and
sundry costs, was
approximately $4 million. Greenville Hotel received interim financing from
Bryanston to fund construction. In February 1998, the Company completed
construction of its Greenville Hotel, and on March 2, 1998, through Alpha Gulf
and Greenville Hotel, the Company sold the Jubilee, the Greenville Hotel
and other related assets to Greenville Casino Partners, L.P. ("GCP") (see
"Business General").

The Jubilation Casino. In August 1998, the Company relocated its idle
Jubilation vessel to a terminal in Mobile, Alabama. In July 1999, the Company
contributed the vessel to Casino Ventures (see "Casino Operations and Gaming
Activities - Development Activities - Mississippi").

Marketing

Florida. With the concentration of people in the immediate area of the
Ella Star, the Company's sales, marketing and promotional activities target a
market area of up to a 15 mile radius of the Ella Star's location. The target

market is reached through a combination of billboard, bus, cable and print
advertising,direct mail and group sales efforts.

The Company is developing an in-house mailing list, which currently is
in excess of 100,000 potential casino customers. A portion of this list
is comprised
of Ella Star's "All Star Players' Club" members. The All-Star Players'
Club is an
ongoing promotion encouraging customers to sign up for a players' card, which
will let the players accumulate points based on table or slot play.
Players are issued
different cards depending on level of play. Points may be redeemed for cash.
Complementaries for this group of players may also include free admissions and
meals. Other special events, giveaways and entertainment are offered
to Ella Star's customers as part of the ongoing promotions at the casino.

Mississippi. The Company concentrated its sales, marketing and
promotional activities for the Jubilee in its principal target market
within a 50-mile
radius of the Jubilee's location. The target market was reached through a
combination of billboards, radio, television and newspaper advertising
and direct mail. The Company developed an in-house mailing list of in
excess of 130,000 casino customers. These customers were made up
of table game players and "Slot
Club" members. Table game customers were identified through the casino's
marketing representatives, and their play was monitored to evaluate whether the
customer warranted complimentary services provided by the casino. The award of
complimentary services was consistent with standard industry practices and was
based upon a customer's duration of play and average amount wagered. The "Slot
Club" was an operation that allowed the casino's computerized tracking system to
identify customers, amount of play and other pertinent characteristics.
The "Slot Club" was an ongoing promotion where members were issued cards and
accumulated points based on the amount of their play. Such points were
redeemable for food, beverages and merchandise. Tournaments for blackjack, craps
and poker were held, along with other special events and promotions.

Competition

Florida. There are three day cruise vessels currently in the Ella Star's
target market area - Sun Cruz Casino, Star Dancer Casino and Casino Princesa.
At this point, though the competition between the day cruise vessels
is vigorous, the Company feels no threat to its immediate market from
any of these competitors.

Mississippi. At the time of the Company's sale of the Jubilee, there were
19 casinos located on the Mississippi River. In the Greenville market, the
Company's Jubilee competed with the Las Vegas Casino, which in October 1998
was closed for possible removal to a new Greenville location, and the Lighthouse
Point Casino, which opened in November 1996.

After the opening of the Lighthouse Point Casino, the Jubilee's share of
the market, based on the number of player positions in the market, improved. The
Company believed that the Jubilee was well-positioned to compete successfully
with the two other casinos in the Greenville market, one of which (the Las Vegas
Casino) was owned and operated by GCP, the purchaser of Jubilee. As a result of
the sale of the Jubilee, the Company owns a 25% equity interest in GCP.

Approximately 60 miles south of Greenville is Vicksburg, which has four
casinos: the Isle of Capri, Harrah's Vicksburg, Ameristar and Rainbow Casino.
Approximately 110 miles south of Greenville is Natchez with the Lady Luck
Natchez Casino. Approximately 60 miles north of Greenville is Coahoma County
with the Lady Luck Coahoma Casino. Tunica County is approximately 150 miles
north of Greenville and has nine casinos -- Harrah's, Sam's Town, Fitzgerald's,
Sheraton, Hollywood Casino, Gold Strike (Circus Circus), Horseshoe Casino,
Grand Casino and Bally's. Since casinos outside a 50-mile radius of Greenville
were not considered by the Company to be within its primary competitive market,
the Company did not deem the casinos in Vicksburg, Natchez or Tunica County to
be among its principal competitors.

Government Regulation

The Company's ownership and operation of its gaming properties are and
have been subject to regulation by federal, state and local governmental and
regulatory authorities, including regulation relating to environmental
protection. The Company has not been the subject of any complaints or
other formal or informal proceedings alleging any violations of
government regulation.

Seasonal Fluctuations

Florida. It is expected that the results of the Ella Star's results
will reflect
seasonal fluctuations. More particularly, the results of the Ella Star will be
impacted by weather. The winter weather that the Ella Star has experienced in
South Florida thus far has been the worst for the region in approximately
25 years. The nature of such weather increases the risk of loss of
casino revenue and would have had a materially adverse effect on the
Company's financial condition and results of operations.

Mississippi. The results of the casinos' operations were seasonal, with
the greatest activity occurring during the fair weather months of May through
September. Consequently, the Company's operating results during the calendar
quarters ending in December and March were generally not as successful as those
quarters ending in June and September, and losses resulted from time to time.
The seasonal nature of such casino's operations increased the risk that natural
disasters or the loss of the casino for any other reason during the May through
September period would have had a materially adverse effect on the Company's
financial condition and results of operations.

Licensing

General. The gaming industry is highly regulated by each of the states in
which gaming is legal. The regulations vary on a state-by-state basis but
generally require that the operator, each owner of a substantial interest
(usually 5% or more) in the operator, members of the board of directors,
each officer and all key
personnel be found suitable, and be approved, by the applicable governing body.
The failure of any present, or future, person required to be approved to be, and
remain, qualified to hold a license could result in the loss of the license.

Florida. At this writing, there are no state regulations for the day cruise
industry in the State of Florida. However, as stated below, the Company holds a
Finding of Suitability from the Mississippi Gaming Commission and is subject to
its requirements on foreign gaming. The Company is subject to regulation by
federal and, per its contractual agreement, Miami-Dade County authorities.

Mississippi. The ownership and operation of casino facilities in
Mississippi were and are subject to extensive state and local regulation,
primarily the licensing and regulatory control of the Mississippi Gaming
Commission and the
Mississippi State Tax Commission (collectively, the "Mississippi Authorities").
This includes the regulation of the Company in regard to its 25% investment in
GCP.

Gaming licenses and findings of suitability are not transferable, are
initially issued for a two-year period and are subject to periodic renewal. Such
renewal was obtained in November 1999 for a two year period. No person may
receive any percentage of profits from a gaming subsidiary of a holding company
without first obtaining licenses, findings of suitability and approvals from the
Mississippi Gaming Commission.

The laws, regulations and supervisory procedures of Mississippi and the
Mississippi Gaming Commission seek to: (i) prevent unsavory or unsuitable
persons from having any direct or indirect involvement with gaming at any time
or in any capacity; (ii) establish and maintain responsible accounting
practices and procedures; (iii) maintain effective control over
the financial practices of licensees,
including establishing minimum procedures for internal fiscal affairs and
safeguarding of assets and revenues, providing reliable record keeping
and making periodic reports to the Mississippi Authorities;
(iv) prevent cheating and fraudulent practices; (v) provide a source of
state and local revenues

through taxation and licensing fees; and (vi) ensure that gaming licensees,
to the extent practicable, employ Mississippi residents. The regulations
are subject to amendment and to
extensive interpretation by the Mississippi Gaming Commission. Changes in
Mississippi law or regulations may limit or otherwise materially affect
the types of gaming that may be conducted and could have an adverse
effect on the Company and the Company's Mississippi gaming operations.

Mississippi law provides for legalized dockside gaming at the discretion
of the 14 counties that either border the Mississippi Gulf Coast or the
Mississippi River but only if the voters in a county have not voted
to prohibit gaming in that
county. The law permits unlimited stakes gaming on permanently moored vessels
on a 24-hour basis and does not restrict the percentage of space that
may be utilized for gaming. There are no limitations on the number
of gaming licenses that may be issued in Mississippi.

The Company, a registered, publicly traded holding company under
Mississippi law, is required periodically to submit detailed
financial and operating reports to the Mississippi Authorities and to
furnish any other information that the
Mississippi Authorities may require. The Company and any subsidiary of the
Company that operates a casino in Mississippi (a "Mississippi
Gaming Subsidiary") are subject to the licensing and regulatory
control of the Mississippi Gaming Commission. If the Company is
unable to continue to satisfy the registration
requirements of Mississippi law, the Company and its Mississippi Gaming
Subsidiaries cannot own or operate gaming facilities in Mississippi. Each
Mississippi Gaming Subsidiary must obtain gaming licenses from the Mississippi
Gaming Commission to operate casinos in Mississippi and receive a finding of
suitability to have a certain ownership interest in a casino, as
described by the Mississippi Gaming Commission. Gaming licenses and
findings of suitability are
issued by the Mississippi Gaming Commission subject to certain conditions,
including continued compliance with all applicable state laws and
regulations and physical inspection of casinos prior to opening.

Licensing of Officers, Directors and Employees

Officers, directors and certain key employees of the Company and Alpha
Gulf (as the owner of the 25% interest in GCP) and Casino Ventures
(in connection with its proposed operation of the Jubilation) must be
found suitable or be licensed
by the Mississippi Gaming Commission, and employees associated with gaming
must obtain work permits that are subject to immediate suspension under certain
circumstances. In addition, any person having a material relationship or
involvement with the Company may be required to be found suitable or be
licensed, in which case such person must pay the costs and fees associated
with the related investigation. The Mississippi Gaming Commission may deny an
application for a license for any cause that it deems reasonable. Changes
in licensed positions must be reported to the Mississippi Gaming Commission.
In addition to its authority to deny an application for a license,
the Mississippi Gaming Commission has jurisdiction to disapprove a change
in corporate officers and has
the power to require any gaming subsidiary and the Company to suspend or dismiss
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.

Investigation of Holders of Securities and Others

Mississippi law requires any person who acquires beneficial ownership of
more than 5% of the Company's common stock to report the acquisition to the
Mississippi Gaming Commission, and such person may be required to be found
suitable. Also, any person who becomes a beneficial owner of more than 10% of
the Company's common stock, as reported in filings under the Securities Exchange
Act of 1934, as amended, must apply for a finding of suitability by
the Mississippi Gaming Commission and must pay the costs and fees that
such Commission incurs
in conducting the investigation. The Mississippi Gaming Commission has generally
exercised its discretion to require a finding of suitability of any
beneficial owner of more than 5% of a company's stock. If a stockholder
who must be found suitable
is a corporation, partnership or trust, it must submit detailed business
and financial information, including a list of beneficial owners.
Representatives of the
Mississippi Gaming Commission have indicated that institutional investors may
only be required to file summary information in lieu of a suitability finding.

Any person who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the Mississippi Gaming
Commission may be found unsuitable. Any person found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the securities of the
Company beyond such time as the Mississippi Gaming Commission prescribes may
be guilty of a misdemeanor. The Company is subject to disciplinary action if,
after receiving notice that a person is unsuitable to be a stockholder
or to have any other
relationship with the Company or its Mississippi Gaming Subsidiaries, the
Company: (i) pays the unsuitable person any dividend or other distribution upon
the voting securities of the Company; (ii) recognizes the exercise, directly or
indirectly, of any voting rights conferred by securities held by the unsuitable
person; (iii) pays the unsuitable person any remuneration in any form
for services rendered or otherwise, except in certain limited and
specific circumstances; or (iv) fails to pursue all lawful efforts to
require the unsuitable person to divest himself of the securities, including,
if necessary, the immediate purchase of the securities for cash at a
fair market value.

The Company may be required to disclose to the Mississippi Gaming
Commission upon request the identities of the holders of any debt securities. In
addition, the Mississippi Gaming Commission under Mississippi law may, in its
discretion: (i) require disclosure of holders of debt securities of corporations
registered with the Mississippi Gaming Commission; (ii) investigate such
holders; and (iii) require such holders to be found suitable to
own such debt securities. Although the Mississippi Gaming Commission
generally does not require the
individual holders of obligations such as notes to be investigated and found
suitable, the Mississippi Gaming Commission retains the discretion to do so
for any reason, including, but not limited to, a default or where the
holder of the debt
instrument exercises a material influence over the gaming operations
of the entity in question. Any holder of debt securities required to
apply for a finding of
suitability must pay all investigative fees and costs of such Commission in
connection with such an investigation.

Required Records

The Company must maintain a current stock ledger in Mississippi that the
Mississippi Gaming Commission may examine at any time. If any securities of the
Company are held in trust by an agent or by a nominee, the record holder may be
required to disclose the identity of the beneficial owner to the
Mississippi Gaming
Commission. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. The Company must also render maximum assistance in
determining the identity of the beneficial owner.

Mississippi law requires that the certificates representing securities of a
publicly traded corporation (as defined under Mississippi law) bear a
legend to the general effect that such securities are subject to
Mississippi law and the regulations
of the Mississippi Gaming Commission. The Mississippi Gaming Commission has
the power to impose additional restrictions on the holders of the Company's
securities at any time.

Approval of Corporate Matters and Foreign Gaming Operations

Substantially all loans, leases, sales of securities and similar financing
transactions by a Mississippi Gaming Subsidiary must be reported to and/or
approved by the Mississippi Gaming Commission. Changes in control of the
Company through merger, consolidation, acquisition of assets, management or
consulting agreements or any form of takeover cannot occur without the prior
approval of the Mississippi Gaming Commission.

The Mississippi legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and other takeover
defense tactics that affect corporate gaming licensees in Mississippi and
corporations whose stock is publicly traded that are affiliated with
those licensees may be injurious to stable and productive corporate gaming.
The Mississippi Gaming Commission has established a regulatory scheme
to ameliorate the
potentially adverse effects of these business practices upon
Mississippi's gaming industry and to further Mississippi's policy to:
(i) assure the financial stability of
corporate gaming operators and their affiliates;
(ii) preserve the beneficial aspects of conducting business in
the corporate form; and (iii) promote a neutral environment for the
orderly governance of corporate affairs. Approvals are, in some
circumstances, required from the Mississippi Gaming Commission before the
Company may make exceptional repurchases of voting securities above the current
market price of its common stock

(commonly called "greenmail") or before a
corporate acquisition opposed by management may be consummated. Mississippi's
gaming regulations also require prior approval by the Mississippi Gaming
Commission if the Company adopts a plan of recapitalization proposed by its
Board of Directors opposing a tender offer made directly to the stockholders
for the purpose of acquiring control of the Company.

Neither the Company nor any subsidiary may engage in gaming activities
in Mississippi while also conducting gaming operations outside of Mississippi
without approval of the Mississippi Gaming Commission. The Mississippi Gaming
Commission may require determinations that, among other things, there are means
for the Mississippi Authorities to have access to information concerning the
out-of- state gaming operations of the Company and its affiliates.
Foreign gaming approval was received by the Company for the Ella Star operation.

Sanctions

If the Mississippi Gaming Commission were to decide that a Mississippi
Gaming Subsidiary had violated a gaming law or regulation, the Mississippi
Gaming Commission could limit, condition, suspend or revoke the license of such
Subsidiary. In addition, the Mississippi Gaming Subsidiary, the Company and the
persons involved could be subject to substantial fines for each separate
violation. On the basis of any such violation, the Mississippi
Gaming Commission could
appoint a supervisor to operate the casino facilities, and under certain
circumstances, earnings generated during the supervisor's appointment
(except the reasonable rental value of the casino facilities) could be
forfeited to the State of
Mississippi. Limitations, conditioning or suspension of any gaming
license or the
appointment of a supervisor could (and revocation of any gaming license would)
materially and adversely affect the Company's and the Mississippi Gaming
Subsidiary's gaming operations.

To comply with the Mississippi Gaming Commission's requirements
regarding the Company's 25% partnership interest in GCP, the Company retained
its finding of suitability in November 1999 for a two-year period. The Company
anticipates renewal of this finding of suitability in November 2001.

Fees and Taxes

License fees and taxes, computed in various ways depending on the type
of gaming involved, are payable to the State of Mississippi and to the
counties and cities in which a Mississippi Gaming Subsidiary's
operations have been conducted.
Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually and are based
upon (i) a percentage of the
gross gaming revenues received by the casino operation, (ii) the number of slot
machines operated by the casino or (iii) the number of tables games
operated by the casino. The license fee payable to the State of
Mississippi based upon "gaming receipts" (generally defined as gross
receipts less payouts to customers as
winnings) equals 4% of gaming receipts of $50,000 or less per month, 6% of
gaming receipts over $50,000 and less than $134,000 per month, and 8% of gaming
receipts over $134,000 per month. The foregoing license fees are allowed as a
credit against the Company's Mississippi income tax liability for the year paid.

New York

The Federal Indian Gaming Law (as it relates to the Company's proposed
operation in New York State) provides for a comprehensive, detailed scheme for
the control of gaming operations in the state and the issuance of licenses for
gaming, both to gaming facilities and to persons involved in certain
gaming related activities. Each of the supervising governmental
agencies is authorized to
promulgate rules and regulations applicable to the administration of
gaming related laws. With respect to the Company's agreement with the
Mohawk Tribe relating to the proposed Monticello Casino, the
State of New York has provided for regulation
of Indian gaming casinos through the New York State Racing and Wagering Board.
Additionally, in connection with its potential operations in New York State, the
required documentation has been filed with the National Indian Gaming
Commission.

Florida
Currently, the casino day cruise industry operating for the
State of Florida is unregulated as its activities are beyond
Florida's three-mile limit of jurisdiction.

Employees

As of December 31, 2000, the Company employed 118 full-time
employees, including the Company's Chairman and Chief Executive Officer and
those executives not presently compensated directly by the Company (see "Item 11
- - Executive Compensation Policy").

ITEM 2. PROPERTIES

The Company maintains its executive office at leased premises located at 12 East
49th Street, New York, New York 10017. This lease expires October 1, 2004.

Other Properties
Approximate
Location Principal Use Area Owned/Leased Expires
990 NW 166th St Business office 2,148 sq ft Leased 7/31/2001
Miami, FL

Miami-Dade County Dock and operation see 1) below Leased 11/26/05
Miami Beach, FL of gaming day Option for
cruise vessel two 5 yr terms

Miami-Dade County Charter agreement Leased/ 11/26/03
Miami Beach, FL vessel Option to Buy

Hancock County Warehousing 3 acres Leased 4/30/03
Waveland, MS and with option
parking to purchase

Washington County Accounting offices 10,000 Leased Month to
Greenville, MS and warehouse square feet Month

1) Lease requires sufficient dockage space to provide a berth for the vessel and
space large enough to allow room for the permanent office and ticketing center.

ITEM 3. LEGAL PROCEEDINGS

Company's insurance company and plaintiffs Amos, Batiste and Ducre
with settlements being reached in all three cases for an aggregate amount of
$110,000, of which $85,000 is covered by the Company's insurance. The remaining
$25,000, representing the cost to the Company, is included in accounts
payable and accrued expenses as of December 31, 2000.
Although the Company's insurance
company has initiated settlement discussions with plaintiffs Johnston
and Rainey, neither case has been settled nor can there be any assurance
that settlements can be reached. Accordingly, no provision for
liability to the Company that may result
upon adjudication has been made in the accompanying consolidated financial
statements. The Company believes that the remaining risk referred to in this
paragraph is adequately covered by insurance.

In 1998, the Company became engaged in an arbitration proceeding in
connection with its development and management agreements with respect to the
proposed casino in Monticello, New York (see "Item 1 - Business- Casino
Operations and Gaming Activities - Development Activities"). In July 2000,
a final settlement of the issue was agreed upon whereby the Company will
be entitled to
receive 40% of any basic management fee income and 75% of any service fee
income accruing for the operation of any Native American casino facility
development at Monticello Raceway. The net result of the settlement
entitles the
Company to receive approximately 47% of all management fee and service income
derived from the underlying management contract. The original agreement
contemplated an arrangement specific to the Mohawk Tribe while the settlement
agreement covers all prospective federally recognized Native American Nations.

As part of and in conjunction with such settlement, the Company acquired
5 percentage points of Bryanston's ownership interest in its real
property holdings
at the Monticello Raceway for $456,000 plus consideration if the asset
is liquidated.
That holding includes the Raceway's building and equipment and approximately
200 acres of land. Bryanston has agreed to defer payment of this
liability until the earlier of the liquidation of the asset or January 2002.

On November 13, 2000, MML and CDL (collectively the "Plaintiffs")
joined in a suit filed against PPE, alleging entitlement to substantial
damages as a consequence of, among other things, PPE's purported
interference in the Plaintiffs proposed casino in Monticello.

The Company was involved in a dispute with GCP regarding an agreement
dated December 17, 1997, pursuant to which the Company sold the Jubilee and
related hotel property to GCP. The Company claimed GCP was liable for certain
liabilities and certain accounts payable. GCP counterclaimed that the Company
breached some of its warranties, failed to continue operating the casino in the
normal course of business through the date of sale and also failed to
pay certain accounts payable. An arbitration hearing was held in March
1999, at which time each side presented its final arguments. In September
2000, an arbitrator awarded the Company a net amount of $136,000 in
satisfaction of all claims and counterclaims in the dispute.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None

ITEM 5. MARKET INFORMATION

Market Prices

The Company's Common Stock is traded on the Automated Quotation
System of the National Association of Securities Dealers, Inc. ("NASDAQ") under
the symbols "ALHY", on the Boston Stock Exchange under the symbols "ALH".
The Company's its Redeemable Common Stock Purchase Warrants (the "Warrants")
are traded on the Boston stock Exchange under the symbol "ALHW" and on the
OTC BB under the symbol "ALHYW".

The following table sets forth the high and low sale prices for
Common Stock and Warrants as reported by NASDAQ.

Common Stock Warrants
High Low High Low

2000 Quarters:
Fourth . . . . . . 3.125 .875 .75 .13
Third. . . . . . . 3.50 1.00 .6875 .30
Second . . . . . . .7.50 1.375 4.9375 .50
First. . . . . . . 9.75 3.375 5.4375 1.00

1999 Quarters:
Fourth . . . . . . $6.69 $2.50 $3.38 $1.25
Third. . . . . . . 4.44 3.00 2.38 .88
Second . . . . . . 5.00 1.50 .375 .0625
First. . . . . . . 2.81 1.19 .0625 .0625

As of March 23, 2001, 20,748,312 shares of Common Stock and
960,695 shares of Preferred Stock were issued and outstanding. The
outstanding shares of Common Stock were held of record by
approximately 800 persons, including ownership by nominees who may
hold for multiple beneficial owners.

Dividends

The Company has not, since its inception, declared or paid any
dividends on its shares of Common Stock. Under Section 170(a) of the
General Corporation Law of Delaware (the "GCL"), the Corporation is,
and has been, proscribed from declaring or paying any dividends upon
any shares of its capital stock except to the extent of (1) its surplus (as
defined under the GCL) or (2) in the case of no such surplus, its net
profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year. As the Company has no surplus (as defined under
the GCL) or net profits, the Company is foreclosed from declaring or
paying any dividends even if it were otherwise inclined to do so. There
can be no assurance that the Company will have any surplus (as defined
in the GCL) or that the Company will achieve any net profits, nor can
there any assurance that even if the Company were to have such a surplus
or achieve net profits, the Company would not determine to retain all
available funds to expand the Company's business or for other corporate
purposes. Management has no current intent to declare or pay any
dividends on the shares of Common Stock.

Additionally, the Company is, and since its inception in 1993
has been, subject to loan covenants that have generally prohibited the
declaration or payment of any cash dividends. Although proceeds from
the pre-closing financing in connection with the sale of the assets of
Alpha Gulf and Greenville Hotel were used to discharge loans pursuant
to the terms of which the Company was prohibited from declaring or
paying any cash dividends on its shares of capital stock, such prohibition
was replaced with restrictive covenants with respect to such pre-closing
financing that effectively reinstated such prohibition. Upon consummation
of the sale of the Jubilee and the Greenville Hotel, such pre-closing
financing was assumed by Greenville Casino Partners, L.P., effectively
relieving the Company from such prohibition. However, there can be no
assurance that the Company will declare or pay any dividends in the
shares of its capital stock or will not obtain financing under terms that
could prohibit the declaration of payment of any dividends on its capital
stock.

The Company's Series B Preferred Stock has voting rights of
eight votes per preferred share, is convertible to eight shares of Common
Stock for each share of preferred stock and carries a dividend of $2.90 per
share, payable quarterly, which increases to $3.77 per share if the cash
dividend is not paid within 30 days of the end of each quarter. In the
event the dividend is not paid at the end of the Company's fiscal year
(December 31), the dividend will be payable

in shares of Common Stock
instead of cash. On December 17, 1997, the Company declared a
dividend of $1,391,000 with respect to the outstanding shares of the
Series B Preferred Stock for 1996, which was paid by the issuance of
777,000 shares of the Company's Common Stock in April 1998. On May
12, 1998, the Company declared a dividend of $2,861,000 with respect to
the outstanding shares of the Series B Preferred Stock for 1997, which
was paid by the issuance of approximately 1,605,000 shares of Common
Stock in January 1999. On May 12, 2000, the Company declared
dividends on the Series B Preferred Stock for the 1999 and 1998 fiscal
years amounting to 450,479 and 1,942,607, respectively, shares of the
Company's common stock. These shares were issued in July 2000. As
of December 31, 2000, dividends in arrears on the outstanding Series B
Preferred Stock amounted to approximately 3,167,000 shares for 2000.

On June 30, 1998, the Company issued 135,000 shares of Series
C Preferred Stock in settlement of $9,729,000 of net obligations. The
Series C Preferred Stock has voting rights of twenty-four votes per
preferred share, is convertible into twenty-four shares of Common Stock
and carries a dividend of $5.65 per share. In addition, the terms of the
Series C Preferred Stock includes a provision granting the Company the
right to call such stock based upon the occurrence of certain capital events
which realize a profit in excess of $5,000,000. As of December 31, 2000,
dividends accruing on the outstanding Series C Preferred Stock amounted
to approximately $382,000, $763,000 and $763,000 for 1998, 1999 and
2000, respectively.

On February 8, 2000, the Company issued 4,000 shares of its 7%
convertible Series D Preferred Stock (the "Series D Preferred Stock") for
an aggregate price of $3,900,000, net of approximately $100,000 of
closing costs. The Series D Preferred Stock is convertible into shares of
the Company's Common Stock at a conversion price of the lesser of $6
per share or a price based upon the prevailing market price of the
Company's Common Stock at the time of conversion, and accrues
dividends at a rate of 7% per annum. In the event the Series D Preferred
Stock is not converted into shares of the Company's Common Stock by
February 8, 2005, there will be a mandatory redemption at that time,
payable in shares of the Company's Common Stock at the same
aforementioned conversion price. The dividends are payable in arrears on
the earlier of the date of conversion of a share of Series D Preferred Stock
or the date of redemption. At the Company's option, the dividends are
payable in the form of cash or shares of the Company's Common Stock.
The maximum aggregate total of shares of the Company's Common Stock
issuable relative to the conversions and payments of dividends on the
Series D Preferred Stock is 3,300,000 shares. In the event such limitation
prevents the conversion of any Series D Preferred Stock, the dividend rate
will increase to 15% per annum to be payable in cash in arrears, semi-
annually on June 30 and December 31. The Series D Preferred Stock
contains no voting rights prior to its conversion to Common Stock.
During 2000, 1,900 shares of the Series D Preferred Stock were converted
into approximately 1,387,000 shares of the Company's Common Stock.

Although the Company is not subject to loan covenants
restricting its right to declare or pay cash dividends on shares of preferred
stock, there can be no assurance that the Company will be able to do so
or, even if able to do so, will elect to do so. Management anticipates that,
even if the Company has sufficient surplus and/or net profits to declare
and pay a cash dividend on shares of preferred stock, its decision whether
to do so will depend upon its determination as to whether it is in the best
interests of the Company to pay such dividend in cash or in shares of
Common Stock.

ITEM 6. SELECTED FINANCIAL DATA
(Dollars in thousands, except per share amounts)

Years ended December 31, 2000, 1999, 1998, 1997 and 1996

2000 1999 1998 1997 1996

Revenues $ 872 $ 185 $ 5,424 $ 31,633 $ 44,520
Loss from
continuing
operations $ (647) $(5,763) $(13,399) $ (1,774) $(26,309)
Loss per common
share from
continuing
operations,
basic and
diluted $ (.35) $ (.34) $ (1.09) $ (.23) $ (1.98)

December 31,
2000 1999 1998 1997 1996

Total assets $ 13,533 $ 8,128 $ 10,196 $ 29,993 $ 43,954
Long-term debt $ 2,473 $ 1,407 $ 2,108 $ 8,088 $ 22,394
Stockholders' equity $ 3,576 $ 2,761 $ 5,163 $ 8,833 $ 1,506

See Management's Discussion and Analysis of Financial Condition and Results
of Operations and Consolidated Financial Statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE COMPANY

Casino Operations And Gaming Activities

Florida:
On May 7, 1999, Alpha Florida was notified by County that it
had received the final approval on a lease to dock and operate a day cruise
vessel out of the County's Haulover Beach Park and Marina adjacent to Bal
Harbour, Florida. The exclusive lease is for five years. The County may
renew this exclusive agreement for two periods of five years each. For this
exclusivity, the Company has agreed to pay the County a minimum
guaranteed monthly base rent, a per-passenger fee and a percentage of
retail merchandise sold in the facility. The lease commenced on November
26, 2000, the date of the vessel's inaugural cruise.

On June 15, 2000, the Company entered into a Charter Agreement
that required that $1,250,000, including the application of a previously
issued $400,000 promissory note, be paid towards the completion of
construction of the vessel and monthly payments over a three-year period
commencing upon the completion. The monthly payments are $41,000
during the first year and $46,667 during years two and three, with an
additional surcharge for each month of the three year period amounting to
one dollar per each passenger during each previous month. At the
completion of the three-year period, the Company has the option to
purchase the vessel at a cost of $4,500,000 towards which all previous
construction payments would be applied. In November 2000, the interior
design and construction was completed on the vessel, the Ella Star, with the
inaugural cruise taking place on November 26, 2000 The Ella Star has an
inherent competitive advantage as it has the fastest route to the three-mile
limit, putting its passengers in gaming action in just 20 minutes. The
vessel's first two decks provide for 7,000 square feet of Las Vegas style
gaming with 165 slot machines and 20 table games. The third deck features
the Star Cafe with seating for 150 people. Included in property and
equipment at December 31, 2000 is $2,345,000 (including $1,250,000 paid
pursuant to the Charter Agreement) of payments related to the construction
of the vessel and related improvements).

On September 7, 2000, the Company entered into a three-year
agreement for the rental of certain furniture and equipment to used relative
to the gaming day cruise vessel. Rental payments, which commenced in
November 2000 and December 2000, are approximately $36,000 per
month.

In October 2000, Alpha Florida merged into Alpha Florida LLC.
Also, in October 2000, the Company received $900,000 from an unrelated
third party and an additional $71,000 of pre-opening expenses paid directly
by that third party, in exchange for a 25% interest in Alpha Florida LLC,
while retaining the remaining 75% interest. In addition, the Company will
receive a monthly management fee amounting to 5% of gross revenues.

Results of Operation:

The following table sets forth the statements of operations for Alpha
Florida's Ella Star before intercompany charges, minority interest and pre-
opening expenses for the year ended December 31, 2000 (dollar amounts
in thousands):

2000

Revenues:
Casino . . . . . . . . . . . . . . . . $ 324
Food and beverage, retail and other. . 25
Total revenues . . . . . . . . . . . 349

Operating expenses:
Casino . . . . . . . . . . . . . . . . 215
Food and beverage, retail and other. . 26
Selling, general and administrative. . 796
Total operating expenses . . . . . . 1,037

Other expenses:
Depreciation and amortization . . . . . 70

Total other expenses . . . .. . . . . 70

Loss before intercompany charges, minority
interest and pre-opening expenses $ (758)

The Ella Star, operating from November 26, 2000, had its
revenues negatively impacted by the unusually poor winter weather
conditions in South Florida. Because of the severe weather the Ella Star
was forced to cancel several cruises and the attendance of those that did
cruise was negatively impacted because of inclement conditions. To
ameliorate the negative impact of poor weather in the future, the Company
pulled the vessel out of the water for several days in January 2001 and
installed bilge keel stabilizers at a cost of $81,000. The retrofitting of the
stabilizers has greatly improved the comfort of the passengers during rough
weather. Casino expenses, representing 66% of casino revenues, included
$96,000 of payroll and related expenses, $78,000 of expenses related to
food and beverage provided gratuitously to customers and other expenses
of $41,000.

Selling, general and administrative expenses include $219,000 of
payroll and related expenses, $176,000 of advertising and marketing
expenses, $175,000 of dock, vessel, equipment and office rental expenses,
$98,000 of insurance, utilities, fuel and other maintenance costs and the
remaining $128,000 for professional fees, office expenses and other
miscellaneous general and administrative expenses.

Mississippi:

On May 14, 1993, the Company, through its subsidiary, Alpha Gulf,
acquired certain of the assets of B.C. of Mississippi, Inc. ("B.C."),
including B.C.'s leasehold interests under certain lease agreements, certain
other assets incidental to the development and ownership of the Jubilee and
B.C.'s interest in certain related license applications, approvals and permits.
The Jubilee commenced gaming operations in Lakeshore, near Waveland,
Hancock County, Mississippi, on January 12, 1994. In October 1995, the
Company consummated the acquisition of The Cotton Club Casino
(subsequently renamed the Jubilation Casino) at its original location in
Greenville, Mississippi. Immediately following such acquisition, the
Company relocated the Jubilee to Greenville and the Jubilation Casino to
Lakeshore. Management believed that these relocations were appropriate
in order to increase the return on the Company's gaming assets, since
management believed that the Jubilee would better serve the larger
Greenville market and that the Jubilation

Casino would adequately serve
the smaller Lakeshore market. The Jubilee reopened in Greenville on
November 17, 1995, and the Jubilation Casino reopened in Lakeshore on
December 21, 1995. In August 1996, the Jubilation Casino was closed due
to its inability to overcome operating deficits.

In or about September 1997, GCP approached the Company with an
offer to purchase the Company's casino operations and assets in Greenville,
Mississippi. During the negotiations of the financial terms of the
transactions it became apparent that it would be impossible for all
conditions precedent to the closing of such transaction to be effected prior
to December 31, 1997 (the expiration of the financing commitment of
GCP's proposed lender). Therefore, the Company and GCP proceeded to
negotiate terms with the lender to lend funds to both GCP and the
Company on or before December 31, 1997 in contemplation of the sale
taking place thereafter.

On December 30, 1997, Alpha Gulf and Greenville Hotel obtained
certain financing (the "Pre-Closing Financing") from Credit Suisse First
Boston Mortgage Capital, L.L.C. (the "Pre-Closing Lender"), pursuant to
which Alpha Gulf and Greenville Hotel borrowed $17.9 million ($23.9
million less loan costs and loan discounts of approximately $6 million),
and concurrently therewith Alpha Gulf applied the net proceeds therefrom
to the payment and discharge of approximately $20 million of the
Company's indebtedness, including $16 million of secured debt. Such
borrowing is herein referred to as the "Pre-Closing Principal Loan." Under
the terms of the sale agreement providing for the sale of the Jubilee and
Greenville Hotel (the "Sale Agreement"); (a) GCP assumed the Pre-Closing
Principal Loan upon closing the sale of the casino assets and (b) the
outstanding principal amount of such Loan was applied and credited
against $26.5 million in cash that would otherwise have been payable to
Alpha Gulf at such closing.

Additionally, in conjunction with and as part of the Pre-Closing
Financing, Alpha Gulf and Greenville Hotel executed and delivered to the
Pre-Closing Lender an unsecured, zero-coupon promissory note (the "Pre-
Closing Subordinated Debt") in the stated principal amount of
approximately $4.9 million, representing additional unfunded financing.
Although no proceeds were received by Alpha Gulf or Greenville Hotel in
conjunction with such promissory note, under the terms of the Sale
Agreement GCP assumed such promissory note upon closing of the sale of
the casino assets.

On March 2, 1998, the Company sold substantially all of the assets
of Alpha Gulf and Greenville Hotel, including the casino barge, boarding
barge, related gaming and other equipment, furniture and improvements
and related permits, licenses, leases and other agreements to GCP. In
exchange for such assets, the Company received from GCP total
consideration of $40.2 million, including approximately $11.8 million in
cash, the assumption of approximately $2 million of certain accounts
payable, accrued expenses, payroll liabilities and a capital lease obligation,
a 25% partnership interest in GCP and the assumption of the Company's
obligation to repay the net proceeds from the Pre-Closing Financing of
$17.9 million.

During 2000, Alpha Gulf sold certain gaming equipment, the
majority of which was transferred to it in 1999 from the idle Jubilation
Casino, for approximately $35,000 and incurred a loss on the sale of
approximately $341,000.

Results of Operations -- Alpha Gulf:

The following table sets forth the statements of operations for Alpha
Gulf's Jubilee before intercompany charges and deferred income tax for the
years ended December 31, 2000, 1999 and 1998 (dollar amounts in
thousands):

2000 1999 1998(1)

Revenues:
Casino . . . . . . . . . . . . $ $ -- $ 4,923
Food and beverage, retail
and other. . . . . . . . . . . 145 15 140
Total revenues . . . . . . . 145 15 5,063

Operating expenses:
Casino . . . . . . . . . . . . -- 1,901
Food and beverage, retail and
other. . . . . . . . . . . . -- 91
Selling, general and
administrative . . . . . . . 89 237 3,211
Total operating expenses . . 89 237 5,203
Income (loss) from operations . . . 56 (222) (140)

Other expenses:
Loss from equity investee. .. -- -- 8,500
Depreciation and
amortization . . . . . . . . 9 17 890
Interest . . . . . . . . . . . 797
Total other expenses . . . . 9 17 10,187

Gain (loss) before intercompany
charges, deferred income
taxes and gain (loss)
on sale of assets . . . . . . . $ 47 $ (239) $(10,327)

1 Relates only to the period through March 2, 1998, when the Jubilee was sold.

Years Ended December 31, 2000, 1999 and 1998:

Selling, general and administrative expenses for the year ended
December 31, 1998, included costs of payroll and related expenses of
approximately $1,243,000, marketing and advertising expenses of
approximately $930,000, occupancy costs of approximately $352,000 and
other operating expenses of $686,000.

The continuing general and administrative costs for the years ended
December 31, 2000 and 1999 consisted of payroll and related expenses
of approximately $48,000 and $100,000, respectively, occupancy costs of
approximately $35,000 and $34,000, respectively, and other expenses of
$6,000 and $103,000, respectively, which included a corporate overhead
allocation of approximately $58,000 in 1999.

Included in other revenue in 2000 is $136,000 awarded the
Company in satisfaction of all claims and counterclaims related to a
dispute with GCP (See "Item 3-Legal Proceedings").

Included in the consideration received in exchange for the sale of
the Jubilee, Alpha Gulf received a 25% partnership interest in GCP,
whose primary assets included the idle Las Vegas Casino, the Jubilee, the
Key West Inn and the Greenville Inn and Suites. The complement of the
Jubilee's currently operating gaming devices is 25 table games and 800
slots, which represents approximately 54% of the devices in the
Greenville market. The two hotels offer 56 rooms and 41 rooms and
suites, respectively. Since the acquisition of substantially all of the assets
of Alpha Gulf

and Greenville Hotel, management has been advised that
GCP has incurred significant operating losses in 2000 and 1999 resulting
in a substantial working capital deficiency and partners' deficiency. GCP
decided to close the Las Vegas Casino in October 1998 in an effort to
decrease expenses and improve the operating performance of the Jubilee.
Nonetheless, management has been advised that GCP continued to incur
operating losses and anticipated incurring operating losses in 2000.
Additionally, management has been advised that GCP is pursuing other
capital sources and attempting to modify its debt service requirements in
a manner designed to provide additional working capital. However, there
can be no assurance that GCP will be able to attract the necessary capital,
modify its debt service requirements or otherwise fund the cost of
operating the Jubilee. In light of these developments and in accordance
with its policy on impairment of long-lived assets, the Company adjusted
the carrying value of its remaining 25% partnership interest in GCP to
zero in 1998.

Interest expense for the year ended December 31, 1998, was
primarily attributable to the Pre-Closing Financing, amounts due to
Bryanston and a capital lease. The Pre-Closing Financing and the capital
lease were extinguished in March 1998 with the proceeds from the March
2, 1998 sale of substantially all of the assets of Alpha Gulf and Greenville
Hotel. A portion of the amounts due to Bryanston was extinguished on
June 30, 1998, pursuant to a restructuring and refinancing of the
Company's debts with Bryanston.

Results of Operations -- Jubilation Lakeshore:

The Company acquired the Cotton Club of Greenville, Inc. (d/b/a
Cotton Club Casino) on October 26, 1995. The Cotton Club Casino's
operations in Greenville were terminated on October 30, 1995. After its
relocation to Lakeshore, the Cotton Club, renamed the Jubilation Casino,
reopened for business on December 21, 1995, but closed in August 1996.
In August 1998, the Company relocated the casino vessel to Mobile,
Alabama, where it was moored at a terminal. On July 8, 1999, the
Company contributed the idle gaming vessel to Casino Ventures in
exchange for $150,000 cash, a promissory note of $1,350,000 plus a
membership interest in Casino Ventures. Upon repayment of the
promissory note and other funding to the venture, the Company's
membership interest in Casino Ventures decreases from its current
percentage of 93% to 15%. The consolidated financial statements of the
Company will include the amounts of Casino Ventures until such time as
the Company's membership interest decreases to less than 50%. See
"Future Operations" for a discussion of Casino Ventures' operating plan
for the vessel.

Years Ended December 31, 2000 (exclusive of Casino Ventures - see
"Future Operations"), 1999 and 1998:

The continuing costs incurred during the year ended December 31,
2000 amounted to $33,000 of warehousing costs. Continuing costs
incurred during the years ended December 31, 1999 and 1998 for
administration, insurance, compensation, settlements with former
employees and vessel mooring and relocation were $185,000 and
$744,000, respectively. Interest expense of $113,000, $146,000 and
$108,000 for the years ended December 31, 2000, 1999 and 1998,
respectively, primarily related to debt to Bryanston. Such debt was
originally related to the idle gaming vessel and equipment until its
contribution to Casino Ventures in July 1999. In connection with the
Company's annual review of the carrying value of its long-lived assets and
in accordance with its policy on impaired long-lived assets, in 1998 the
Company recorded a write-down in the amount of $327,000 with respect
to certain of the Jubilation Lakeshore's impaired property and equipment.

Future Operations

General:

Proposals or prospects for new casinos, other gaming activities or
other opportunities may be presented to the Company, or the Company
may otherwise become aware of such opportunities (any such new casino,
other gaming activities or other opportunities being hereinafter sometimes
referred to as "New Opportunities"). The Company will continue to
investigate and evaluate New Opportunities and, subject to available
resources, may choose to pursue and develop one or more New
Opportunities if the same is deemed to be in the best interest of the
Company and its

stockholders. However, there can be no assurance that
any New Opportunity will be presented to, or otherwise come to the
attention of, the Company, that the Company will elect to pursue or
develop any New Opportunity or that any New Opportunity that the
Company may elect to pursue or develop will actually come to fruition or
(even if brought to fruition) will be profitable.

Except to the extent the Company may pursue any New
Opportunity, as a result of the sale of the Jubilee, the Company has been
since March 1998 effectively transformed to serve as a holding company
and a vehicle to effect acquisitions, whether by merger, exchange of
capital stock, acquisition of assets or other similar business combination
(a "Business Combination") with an operating business (an "Acquired
Business"). To the extent the Company's financial and other resources are
not devoted to, or reserved for, the development of any New Opportunity
or other operations, the business objective of the Company will be to
effect a Business Combination with an Acquired Business that the
Company believes has significant growth potential. The Company intends
to seek to utilize available cash, equity, debt or a combination thereof in
effecting a Business Combination. While the Company may, under certain
circumstances, explore possible Business Combinations with more than
one prospective Acquired Business, in all likelihood, until other financing
provides additional funds, or its stature matures, the Company may be
able to effect only a single Business Combination in accordance with its
business objective, although there can be no assurance that any such
transaction will be effected.

Casino Development:

The Company, through its wholly-owned subsidiary, AMI, is party
to a General Memorandum of Understanding (the "Memorandum") with
Catskill Development, LLC ("CDL" and, collectively with AMI, the
"Parties") dated December 1, 1995, which among other things, provided
for the establishment of Mohawk Management, LLC ("MML"), a New
York limited liability company, for the purpose of entering into an
agreement to manage a proposed casino on land to be owned by the St
Regis Mohawk Indian Tribe (the "Mohawk Tribe"). The Memorandum
also sets forth the general terms for the funding and management
obligations of CDL (25% owned by Bryanston Group, Inc. ("Bryanston"))
and AMI with regard to MML. In January 1996, MML was formed with
each of CDL and AMI owning a 50% membership interest in MML. On
July 31, 1996, MML entered into a Gaming Facility Management
Agreement with the Mohawk Tribe (the "Management Contract") for the
management of a casino to be built on the current site of the Monticello
Raceway in Monticello, New York (the "Monticello Casino"). Among
other things, the Management Contract provided MML with the exclusive
right to manage the Monticello Casino for seven (7) years from its
opening and to receive certain fees for the provision of management and
related services.

By its terms, the Memorandum between CDL and AMI terminated
on December 31, 1998, since all of the governmental approvals necessary
for the construction and operation of the Monticello Casino were not
obtained by MML. The Management Contract between MML and the
Mohawk Tribe contains no such provision. Additionally, the
Memorandum was silent as to the effect of such termination on the
continued existence of MML on the Parties' respective 50% interests
membership therein or on the Management Contract. On December 28,
1998, AMI filed for arbitration, as prescribed by the Memorandum, to
resolve certain disputes between the Parties. In July 2000, the Parties
completed a final settlement agreement whereby the Company's wholly-
owned subsidiary will be entitled to receive 40% of any basic
management fee income and 75% of any service fee income accruing for
the operation of any Native American casino facility development at
Monticello Raceway. The net result of the settlement entitles Alpha's
subsidiary to receive approximately 47% of all management fee and
service income derived from the underlying management contract. The
original agreement contemplated an arrangement specific to the Mohawk
Tribe while the settlement agreement covers all prospective federally
recognized Native American Nations. Accordingly, Alpha Casino
Management Inc. ("ACM") and Monticello Casino Management, L.L.C.
("MCM") were formed to facilitate such potential non-Mohawk Tribe
arrangements.

agreed to
defer payment of this liability until the earlier of the liquidation of the
asset or January 2002. The $456,000 is included in other assets and
liabilities on the consolidated balance sheet as of December 31, 2000.
Additionally, Bryanston has agreed to transfer its 25% ownership in the
Raceway's parimutuel operations to AMI. Under the previous agreement,
AMI did not participate in any of these sources of revenue. For the year
ended December 31, 2000, the Company's share of the Raceway's
parimutuel operations amounted to $72,000. Included in deposits and
other assets as of December 31, 2000 and December 31, 1999, the
Company capitalized $2,047,00 and $1,366,000, respectively towards the
design, architecture and other costs of the development plans for the
proposed Monticello Casino.

On April 6, 2000, in a letter to New York Governor George Pataki,
the U.S. Department of the Interior and its Bureau of Indian Affairs (the
"Department") forwarded its initial Two-Part Determination, which
included the Department's findings that: 1) the Monticello Casino was in
the best interests of the Mohawk Tribe; and 2) that there was local support
for the project. The Department has requested the Governor's
concurrence in their findings. Such concurrence is an integral step in
establishing the trust lands on which the proposed casino would be
developed. On April 19, 2000, MML received a letter from the National
Indian Gaming Commission asking for additional information as it was
completing its review of the underlying management and development
agreements. As explained below, on June 5, 2000, MML notified the
Department of the purported abandonment of the project by the Mohawk
Tribe.

On April 22, 2000 the Company was made aware of a purported
letter agreement between the Mohawk Tribe and Park Place Entertainment
("PPE"), which agreement (with two irrelevant exceptions) would
purportedly give PPE the exclusive rights to develop and manage any
casino development the Mohawk Tribe may have in the State of New
York. The validity of the aforementioned purported agreement is not clear
at this time. On November 13, 2000, MML and CDL (collectively the
"Plaintiffs") joined in a suit filed against PPE, alleging entitlement to
substantial damages as a consequence of, among other things, PPE's
purported interference in the Plaintiffs proposed casino in Monticello.

Subject to the obtaining of requisite approvals and the satisfactory
resolution of the previously mentioned lawsuit, it is anticipated that MML
will undertake the development and management of the proposed casino
in Monticello, New York, and AMI will be responsible for the day-to-day
operations of that casino. It is intended that that casino will be owned by
the Mohawk Tribe and will be located on land to be placed in trust for the
benefit of the Mohawk Tribe.

CDL purchased the 225 acre Monticello Raceway in June 1996.
The Company has been advised by CDL that CDL plans to continue its
racing program at the Monticello Raceway and to explore other
developments at the site in addition to the proposed casino referred to
above.

There can be no assurance that the project will receive all requisite
approvals. However, if such approvals are obtained, it is the Company's
current intention to proceed with the development of this gaming activity.

During 2000, 1999 and 1998, AMI incurred $962,000, $209,000
and $279,000, respectively, of costs, of which $681,000, $0 and $75,000,
respectively, has been capitalized, and the remaining $281,000 $209,000
and $204,000, respectively, has been expensed as casino development
costs, which are substantially comprised of a corporate overhead
allocation.

In March 1998, CDL completed the State Environmental Quality
Review Act process with the Village of Monticello's Planning Board as
lead agency.

Manufactured Housing:

In December 1998, the Company, through its wholly-owned
subsidiary Alpha Peach Tree, entered into letters of intent to acquire all
of the issued and outstanding shares of Sunstate Manufactured Homes of
Georgia, Inc. ("Sunstate") dba Peach State Homes and its affiliated
company, South Georgia Frames Unlimited, Inc. ("South Georgia"), two
closely held corporations engaged in the manufacture and sale of single
family homes. On March 26, 1999, the Company executed definitive
agreements governing the acquisition, which remained subject to certain

conditions, including satisfactory completion of the Company's due
diligence review.

Upon completion of its due diligence (as approved by the
Company's Board of Directors) relative to this transaction, the Company
decided not to consummate this proposed acquisition. Development costs
for the year ended December 31, 2000 incurred by the Company with
respect to the proposed transaction amounted to $341,000, which included
a general corporate overhead allocation of $132,000.

Casino Ventures:

On July 8, 1999, the Company, through its subsidiary, Jubilation
Lakeshore, contributed its inactive gaming vessel, Bayou Caddy's
Jubilation Casino ("Jubilation") to Casino Ventures in exchange for
$150,000 in cash, a promissory note of $1,350,000 plus a membership
interest in Casino Ventures. Upon repayment of the promissory note and
other funding to the venture, the Company's membership interest in
Casino Ventures will decrease from its current percentage of 93% to 15%.
Matthew Walker ("Mr. Walker"), a director of the Company, is a member
in Casino Ventures and serves as its General Manager (see Item 13 -
"Certain Relationships and Related Transactions").

The Jubilation vessel has been relocated to Mhoon Landing in
Tunica, Mississippi ("Tunica"), where it is anticipated it will be
refurbished and operated as a gaming vessel. To fund such costs in 2000,
Casino Ventures was loaned $804,000 from Mr. Walker, $172,000 from
the Company and $29,000 from the holder of a $650,000 mortgage on the
inactive gaming vessel. An additional $350,000 was received by Casino
Ventures in 2000 for the future equity contingent upon final approval of
the casino by the Mississippi Gaming Commission. During 2000 and
1999, the Company capitalized $1,859,000 and $364,000, respectively,
of costs related to the relocation and refurbishing of the vessel and
improvements to its redeployment site in Tunica. An additional $268,000
and $100,000 of start-up costs were incurred in 2000 and 1999,
respectively.

The Company expects Casino Ventures to commence operations
in Tunica in late 2001. The Company is not required to make any further
capital contributions to Casino Ventures. On January 18, 2001, Casino
Ventures received site approval for the casino in Mhoon Landing from the
Mississippi Gaming Commission. If the project is completed as
approved, the casino will be supported by enhanced existing land-based
infrastructure, including restaurant and lodging facilities, as well as the
requisite back of house service areas.

Casino Ventures' interest expense for the year ended December
31, 2000 and 1999, not eliminated in consolidation, amounted to $78,000
and $22,000. This was substantially attributable to a $650,000 mortgage
note payable secured by the vessel and the $804,000 loan from Mr.
Walker.

Louisiana Truckstop/Video Poker:

In December 1998, the Company entered into a memorandum of
understanding with Equity Service, Inc. ("Equity") to exchange the
Company's then-dormant Jubilation vessel plus cash for the ownership of
an operating truckstop and video poker room in Port Allen, Louisiana.
The proposed transaction as originally contemplated in the memorandum
of understanding will not proceed.

Liquidity and Capital Resources

For the year ended December 31, 2000, the Company had net cash
used in operating activities of $3,699,000. The uses were the result of a
net loss of $412,000 plus depreciation and amortization of $113,000,
noncash compensation of $3,251,000, minority interest of $235,000,
interest amortized on loan discount $29,000, other compensation
adjustment of $250,000, loss on sale of assets of $341,000 and a net
increase in working capital of $534,000. The increase in working capital
consisted primarily of a net increase in other current assets of $574,000,
a decrease in accounts payable and other accrued expenses of $86,000 and
an increase in payroll and related liabilities of $126,000.

Cash used in investing activities of $3,858,000 consisted of
$3,087,000 of payments for property and equipment and a $771,000
increase in deposits and other assets.

Cash provided by financing activities of $7,356,000 was
attributable to $3,867,000 of net proceeds form the sale of preferred stock,
$1,321,000 of capital contributed by holders of minority interest and
$2,168,000 of net proceeds from long-term debt and the exercise of
options to purchase the Company's common stock.

The Company has incurred an accumulated deficit
and current net losses of approximately $82,599,000 and $412,000,
respectively, used approximately $2,589,000 in operations during 2000
and has a working capital surplus (excluding Casino Ventures which is
not expected to be paid by the Company during the next twelve months)
of approximately $452,000 at December 31, 2000. While the Company's
2000 efforts were geared primarily at capital raising and pre-opening
activities relating to the November 2000 launching of the Ella Star, the
Company anticipates positive cash flows from the Ella Star during 2001.
Further, the Company anticipates the 2001 repayment of the $1,350,000
promissory note and all other advances to Casino Ventures and an
approximate $250,000 cash infusion from the minority member of Alpha
Florida LLC. Long-term liquidity is dependent on the Company's ability
to attain profitable operations.

Although the Company is subject to continuing litigation, the
ultimate outcome of which cannot presently be determined, management
believes any additional liabilities that may result from pending litigation
in excess of insurance coverage will not be in an amount that will
materially increase the liabilities of the Company as presented in the
attached consolidated financial statements.

Year 2000 Compliance

The Company did not experience any Year 2000 computer
problems that had a materially adverse effect on the Company's
operations.

ITEM 8. FINANCIAL STATEMENTS

See Index to Financial Statements attached hereto.

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

None.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT

The table below sets forth certain information with respect to the
directors and executive officers of the Company.

Name Age Position with the Company

Stanley S. Tollman. . . . . . 70 Chairman of the Board and
Chief Executive Officer
Thomas W. Aro . . . . . . . . 58 Vice President, Secretary
and Director
Brett G. Tollman. . . . . . . 39 Vice President and Director
Craig Kendziera . . . . . . . 46 Treasurer
Robert Steenhuisen. . . . . . 43 Chief Accountant and
Assistant Secretary
James A. Cutler . . . . . . . 49 Director
Matthew B. Walker . . . . . . 50 Director
Herbert F. Kozlov. . . . . . 48 Director

Stanley S. Tollman has served as Chairman of the Board of
Directors and Chief or Co-Chief Executive Officer of the Company since
its formation. Since March 1995, Mr. Tollman has also served as President.
He served as Chairman of the Tollman-Hundley Hotel Group from 1979
to June 1996. He currently serves as Chairman of Bryanston, a hotel
management company, and of Trafalgar Tours International, a tour
operator. The business addresses of Bryanston and Trafalgar Tours
International are, respectively, 1886 Route 52, Hopewell Junction, New
York and 5 Reid Street, Hamilton, Bermuda.

Thomas W. Aro has served as a Director of the Company since
February 1, 1994, and as Vice President of the Company since its
formation. Mr. Aro also serves as Chief Operating Officer of the
Company's subsidiary Alpha Gulf. He has served as Executive Vice
President of the Tollman-Hundley Hotel Group since 1982 and served as
Executive Vice President of Bryanston from 1989 through March 1996.

Brett G. Tollman served as a Vice President of the Company from
its formation until October 29, 1993, and was re-elected to that position
and was selected a Director of the Company on February 1, 1994. He
served as Executive Vice President of the Tollman-Hundley Hotel Group
from 1984 to June 1996. Mr. Tollman currently serves as President of
Tollman-Hundley Hotel Group. He also serves as Director and President
of Bryanston. Mr. Tollman is the son of Stanley S. Tollman, the Chairman
of the Board and Chief Executive Officer of the Company.

Craig Kendziera has served as Treasurer of the Company since his
appointment on May 12, 1998. He also have served as the Corporate
Controller of the Tollman-Hundley Hotel Group since June 1992 and a
Director, Vice President, Treasurer and Corporate Controller of Bryanston
since March 6, 1998.

Robert Steenhuisen has served as Chief Accountant of the Company
since his appointment on May 12, 1998. He also has served as the Chief
Accountant for the Tollman-Hundley Hotel Group since May 1992 and a
Director, Vice President, Assistant Secretary and Chief Accountant of
Bryanston since March 2, 1998.

James A. Cutler served as Treasurer and Chief Financial Officer of
the Company from its formation until his resignation on March 6, 1998. He
also served as Secretary of the Company from October 29, 1993 to
February 1, 1994. Mr. Cutler was elected a Director of the Company on
June 12, 1996. He served as Senior Vice President and Treasurer of the
Tollman-Hundley Hotel Group until June 1997. He now serves as
President and Chief Executive Officer of Truckee Resorts, Inc., a company
engaged in the community development business.

Matthew B. Walker has served as a Director of the Company since
December 1995. He is an independent businessman involved in
international business ventures, including the Brazilian-based Walker
Marine Oil Supply Business, to which he has been a consultant since 1988.
Mr. Walker co-founded the Splash Casino in Tunica,

Mississippi, in February 1993, where he remained employed until October 1995.
In February 1994, he co-founded the Cotton Club Casino in Greenville,
Mississippi, where he remained employed and as a shareholder until
October 1995. In addition, since 1972, Mr. Walker has been involved in
numerous real-estate transactions as a consultant and has managed E.B.
Walker & Son Lumber Company, a family-owned lumber business in
Alabama.

Herbert F. Kozlov has served as a Director of the Company since
his appointment upon the resignation of Mr. Sanford Freedman in March
of 1998. Mr. Kozlov is a partner is the law firm of Parker, Duryee Rosoff
& Haft, where he has been a partner since 1989. Mr. Kozlov is also a
director of HMG Worldwide Corporation and Magnum Sports &
Entertainment, Inc. (previously named Worldwide Entertainment & Sports
Corporation). Parker Duryee Rosoff & Haft provides legal services to the
Company and receives fees for such services from the Company.

Each Director is elected for a period of one year at the Company's
annual meeting of stockholders and serves until his/her successor is duly
elected by the stockholders. Vacancies and newly created directorships
resulting from any increase in the number of authorized directors may be
filled by a majority vote of Directors then in office. Officers are elected by
and serve at the pleasure of the Board of Directors. Directors are
reimbursed for expenses incurred in connection with the performance of
their duties.

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth all cash compensation for services
rendered in all capacities to the Company and its subsidiaries for the fiscal
years ended December 31, 2000, 1999 and 1998, paid to the Company's
Chief Executive Officer and one executive officer (collectively the "Named
Executive Officers") whose total compensation exceeded $100,000 per
annum. No other executive officers' compensation exceeded $100,000
during the above fiscal years.

Restricted
Name and Principal Stock Options All Other
Position Year Salary(1) Awards /SARS Compensation

Stanley S. Tollman . . . 2000 --
Chairman of the 1999 $250,000 -- 250,000 (2) --
Board of Directors, 1998 $250,000 250,000 --
Chief Executive
Officer and President
Thomas W. Aro . . . . . 2000 $206,500
Vice President and 1999 $160,000 -- 205,000 --
Secretary 1998 $160,000 155,000 --

1 No portions of the cash salaries to which Stanley S. Tollman was entitled
during the periods indicated have been paid; the expense and
liability have been accrued without interest. Mr. Tollman has agreed to waive
his right to receive any salary for the year 2000.

2 Does not include any valuable for the right granted to Mr. Tollman to
convert up to $2,000,000 of deferred compensation into shares of Common Stock
at $2.00 per share.

Option/SAR Grants in Last Fiscal Year. None

The following table sets forth certain information with respect to the
exercise of stock options during fiscal 2000
by the named executive officers and the number and value of unexercised
options held by each of those named executive officers as of December 31, 2000:

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal
Shares Year End Fiscal Year End(1)
Acquired Value
On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable

Stanley S.
Tollman . . . -- -- 500,000(2) -- $ 0 --
Thomas W.
Aro . . . . . . -- -- 420,000 -- $ 0 --

(1) None of the existing options were in-the-money at December 31, 2000.

(2) Does not include the right granted to Mr. Tollman to convert up to
$2,000,000 of deferred compensation into shares of Common Stock
at $2.00 per share.

In November 2000 and December 1998, the Company determined that the
purposes of the Plan were not being adequately achieved with respect to those
employees and consultants holding options that were exercisable at prices
above current market value and that it was in the best interests of
the Company and its shareholders that the Company retain and motivate
such employees and consultants. Therefore, in order to provide such
optionees the opportunity to exchange their above market value options
for options exercisable at the current market value in 2000 and 1998,
respectively, the Company cancelled all options that were outstanding
under the 1998 and 1993 stock option plans at that time and reissued the
options at an exercise price of $1.063, the closing NASDAQ bid prices
on November 30, 2000 and December 12, 1998.

The following table sets forth certain information with respect to
all such cancellations and reissuances with respect to options held by
any executive officer from March 19, 1993 (date of inception) through
December 31, 2000:

Length of
Number of Market Original
Securities Price of Exercise Option Term
Underlying stock at Price at Remaining
Cancellation/ Options time of time of New at Date of
Reissuance Cancelled/ Cancelling/ Cancelling/ Exercise Cancelling/
Date Reissued Reissuing Reissuing Price Reissuing

Thomas
W. Aro 12/12/98 60,000 $1.063 $3.25 $1.063 4.5 years
12/12/98 100,000 $1.063 $2.00 $1.063 9.5 years
10/12/00 75,000 $1.375 $2.00 $1.375 7.5 years
10/12/00 130,000 $1.375 $4.25 $1.375 9.0 years
Brett G.
Tollman 12/12/98 60,000 $1.063 $3.25 $1.063 4.5 years
12/12/98 100,000 $1.063 $2.00 $1.063 9.5 years
10/12/00 75,000 $1.375 $2.00 $1.375 7.5 years
10/12/00 115,000 $1.375 $4.25 $1.375 9.0 years
Craig
Kendziera 12/12/98 12,000 $1.063 $3.25 $1.063 4.5 years
12/12/98 8,000 $1.063 $2.00 $1.063 9.5 years
10/12/00 50,000 $1.375 $2.00 $1.375 7.5 years
10/12/00 15,000 $1.375 $4.25 $1.375 9.0 years
Robert
Steenhuisen 12/12/98 8,000 $1.063 $3.25 $1.063 4.5 years
12/12/98 12,000 $1.063 $2.00 $1.063 9.5 years
10/12/00 50,000 $1.375 $2.00 $1.375 7.5 years
10/12/00 15,000 $1.375 $4.25 $1.375 9.0 years

Compensation of Directors. On May 12, 1998, with shareholder
approval granted in September 1999, the

Board approved an annual
compensation arrangement whereby each of the three outside directors will
receive $6,000 per annum plus options to purchase up to 25,000 shares, and
an additional 15,000 shares for each committee served upon, of the
Company's Common Stock at an exercise price equal to the current market
price at the date the option is granted. Accordingly, in 1999 and 1998 the
Company granted to its outside directors options to purchase an aggregate
amount of up to 150,000 and 285,000 shares, respectively, of its Common
Stock at an exercise price of $4.25 and $1.063, respectively, per share, which
can be exercised any time up to 2009 and 2008, respectively. The amount
granted in 1999 is for services to be rendered in the year 2000. The amount
granted in 1998 represents options to purchase aggregate amounts of up to
135,000 and 150,000 shares for the 1998 and 1999 years of service,
respectively. As compensation to its employee directors, in December 1999
and 1998, the Company granted options to purchase an aggregate amount of
up to 95,000 shares of its Common Stock for each of the 2000, 1999 and
1998 years.

Employment Agreements. The Company and Stanley S. Tollman
entered into an Employment Agreement dated June 1, 1993, whereby Mr.
Tollman agreed to serve as Chairman of the Board and Co-Chief Executive
Officer of the Company for a term of three (3) years from the date of that
Agreement. Thereafter, such Agreement is automatically renewable for
successive twelve (12) month periods unless either party advises the other on
at least ninety (90) days' written notice of his or its intention not to extend
the term of the employment. In the event of a termination of his employment,
under the terms of such Agreement Mr. Tollman is to be retained for two
years to provide consulting services for $175,000 per year. Such Agreement
has been renewed until June 1, 2001. Mr. Tollman's Employment Agreement
provides for a salary in the amount of $250,000 per year, none of which has
been paid under such Agreement since the date thereof. The unpaid salary
accumulates, and the Company does not pay any interest or other penalty
thereon. Such Agreement provides for Mr. Tollman to devote no less than
20% of his business time to the affairs of the Company and its subsidiaries.
Such Agreement contains a non-disclosure provision pursuant to which Mr.
Tollman agrees not to use or disclose any information, knowledge or data
relating to or concerning the Company's operations, sales, business or affairs
to any individual or entity, other than the Company or its designees, except
as required in connection with the business and affairs of the Company. Mr.
Tollman has agreed to waive his right to receive the $250,000 salary for the
year 2000. As of December 31, 2000, accrued salary payable to Mr. Tollman
amounted to $1,529,167. On May 27, 1999, the Company, subject to
approval by the Company's shareholders (which approval was obtained in
September 1999), agreed to afford Mr. Tollman the right to convert up to
$2,000,000 of deferred compensation payable into up to 1,000,000 shares of
the Company's common stock at a stock price of $2.00 per share, the closing
price on that day. Mr. Tollman's right to convert deferred compensation into
the Company's Common Stock shall only be exercisable if he continues to
defer his salary and he remains employed through and including April 2002,
provided, however, that if his employment by the Company is terminated
prior to such date on account of his death or other disability, he or his estate
shall have the right for the period of 90 days after such termination to
exercise such conversion right. During the year ended December 31, 2000,
the Company has recorded a noncash compensation charge of $3,251,000
reflecting an increase in the market price of the Company's Common Stock
since the date of the agreement. The $3,251,000 charge was reversed in 2000
to reflect the decrease in the market price of the Company's common stock
during the year.

BOARD COMPENSATION REPORT

Executive Compensation Policy

General. Decisions concerning executive officers' salaries for 2000
were made by the full Board of Directors. Decisions concerning the grant of
stock options to executive officers were made by the Stock Option
Committee. The Company otherwise has no formal compensation policies
applicable to executive officers. The Board of Directors' recommendations
in each case were based on the subjective evaluation of each officer's
contribution to the Company and the level of compensation necessary to
adequately motivate and reward the officer. The composition and amount of
each item of executive compensation for 2000 did not bear a specific
relationship to any particular measure of performance.

Cash Compensation. Certain of the Company's executive officers
are not compensated directly by the Company based upon the Compensation
Committee's determination that compensation is not prudent at this time
given the Company's financial position. When, and if, the Company's
financial position improves, the Compensation Committee would establish
and review the compensation of those executive officers not presently
directly compensated and the overall employee compensation plan.
Bryanston has, without seeking reimbursement therefor from the Company,
provided salaries and benefits to those of the Company's executive officers
not presently compensated directly by the Company.

Equity Compensation. The grant of stock options to executive
officers constitutes an important element of long-term compensation for the
executive officers. The grant of stock options increases management's equity
ownership in the Company with the goal of ensuring that the interest of
management remains closely aligned with those of the Company's
stockholders. The Board of Directors believes that stock options in the
Company provide a direct link between executive compensation and
stockholders' value. By attaching vesting requirements, stock options also
create an incentive for an executive officer to remain with the Company for
the long term.

Chief Executive Officer Compensation. The compensation of Stanley
S. Tollman, the Chief Executive Officer, is set forth in an Employment
Agreement between the Company and Mr. Tollman, which provides for a
salary in the amount of $250,000 per year, none of which has been paid under
such Agreement. The unpaid salary accumulates, and the Company does not
pay any interest or other penalty thereon. Mr. Tollman has agreed to waive
his rights to receive the $250,000 salary for the year 2000. The terms of the
Employment Agreement were determined based upon Mr. Tollman's ability
to establish and retain a strong management team and to develop and
implement the Company's business plans. In setting compensation for Mr.
Tollman, the Company also considered its financial position and reviewed
compensation levels of chief executive officers at comparable companies
within the Company's industry. In both December 1999 and 1998, the
Company granted to Mr. Tollman options to purchase 250,000 shares of the
Company's Common Stock.

Stanley S. Tollman
Thomas W. Aro
James A. Cutler
Herbert F. Kozlov
Brett G. Tollman
Matthew B. Walker

Corporate Performance Graph. The following graph shows a
comparison of cumulative total stockholders' returns from December 31,
1993 through December 31, 2000 for the Company, the Russell 2000 Index
("Russell") and the Dow Jones Entertainment and Leisure -- Casino Index
("DJ Casino").

The graph assumes the investment of $100 in shares of Common
Stock, securities represented by the Russell Index or DJ Casino Index on
December 31, 1993 and that all dividends were reinvested. No dividends
have been declared or paid on the Common Stock.

NASDAQ ceased listing the Company's warrants in December 1998,
since there ceased being at least two market makers for such securities. The
warrants continue to trade in the over-the-counter market in the "pink sheets"
and on the Boston Stock Exchange.

Section 16(a) Reporting. Under the securities laws of the United
States, the Company's directors, its executive (and certain other) officers, and
any persons holding ten percent or more of the Common Stock must report on
their ownership of the Common Stock and any changes in that ownership to
the Securities and Exchange Commission and to the National Association of
Securities Dealers, Inc. Automated Quotation System. Specific due dates for
these reports have been established. Based upon the Company's review of
Forms 3, 4 and 5 and amendments thereto, if any, furnished to the Company
under Rule 16a-3(e) during and with respect to the Company's most recent
fiscal year and any written representations provided to the effect that no Form
5 is required, no person that, at any time during the Company's last fiscal
year, was an officer, director or beneficial owner of more the 10 percent of the
Company's Common Stock reported on any of the foregoing forms failed to
file, on a timely basis, any reports required by Section 16(a) of the Exchange
Act.

1998 and 1993 Stock Option Plan

The purpose of the Company's Stock Option Plans ("1998 Stock
Option Plan", "1993 Stock Option Plan" or "Stock Option Plans" as
applicable) are to provide additional incentive to the officers and employees
of the Company who are primarily responsible for the management and
growth of the Company. Each option granted pursuant to the Stock Option
Plans shall be designated at the time of grant as either an "incentive stock
option" or as a "non-qualified stock option". The following description of the
Stock Option Plans is qualified in its entirety by reference to the Stock Option
Plans.

Administration of the Plan

The Stock Option Plans are administered by a Stock Option
Committee (currently consisting of Messrs. S. Tollman, Cutler, Kozlov and
Walker), which determines whom among those eligible will be granted
options, the time or times at which options will be granted, the number of
shares to be subject to options, the durations of options, any conditions to the
exercise of options and the manner in and price at which options may be
exercised. The Stock Option Committee is authorized to amend, suspend or
terminate the Stock Option Plans, except that it cannot, without stockholder
approval (except with regard to adjustments resulting from changes in
capitalization): (i) increase the maximum number of shares that may be issued
pursuant to the exercise of options granted under the Stock Option Plans, (ii)
permit the grant of a stock option under the Stock Option Plans with an
exercise price less than 100% of the fair market value of the shares at the time
such option is granted, (iii) change the eligibility requirements for
participation in the Stock Option Plans, (iv) extend the term of any
option or the period during which any option may be granted under
the Stock Option Plans or (v) decrease an option exercise price
(although an option may be canceled and new option granted at a lower
exercise price).

Shares Subject to the Plan

The 1998 Stock Option Plan and 1993 Stock Option Plan provide that
options may be granted with respect to a total of up to 4,000,000 and 900,000
shares of Common Stock, respectively, subject to adjustment upon certain
changes in capitalization without receipt of consideration by the Company. In
addition, if the Company is involved in a merger, consolidation, dissolution or
liquidation, the options granted under the Stock Option Plans will be adjusted
or, under certain conditions, will terminate, subject to the right of each
option holder to exercise his/her options or comparable options substituted
at the discretion of the Company prior to such event. If any option expires or
terminates for any reason, without having been exercised in full, the
unpurchased shares subject to such option will be available again for the
purposes of the Stock Option Plans. All of the shares of Common Stock
underlying options that can be granted pursuant to the Stock Option Plans have
been registered.

Participation

Any employee is eligible to receive incentive stock options or non-
qualified stock options granted under the Stock Option Plans.

Option Price

The exercise price of each option will be determined by the Stock
Option Committee or the Board of Directors, but may not be less than 100%
of the fair market value of a share of Common Stock on the date the option is
granted. If an incentive stock option is to be granted to an employee who
owns over 10% of the total combined voting power of all classes of the
Company's stock, then the exercise price may not be less than 110% of the fair
market value of a share of Common Stock on the date the option is granted.

Terms of Options

The Stock Option Committee shall, in its discretion, fix the term of
each options, provided that the maximum term of each option shall be ten
years. Incentive stock options granted to an employee who owns over 10% of
the total combined voting power of all classes of stock of the Company shall
expire not more than five years after the date of grant. The Stock Option Plans
provide for the earlier expiration of options of a participant in the event of
certain terminations of employment.

Restrictions on Grant and Exercise

An option may not be transferred other than by will or the laws of
descent and distribution and during the lifetime of the option holder may be
exercised solely by him or her. The aggregate fair market value (determined
at the time the option is granted) of the shares as to which an employee may
first exercise incentive stock options in any one calendar year may not exceed
$100,000. The Stock Option Committee may impose such other conditions on
exercise as it deems appropriate.

Option Grants

Under the Stock Option Plans, net of certain simultaneous
cancellations to existing employees, there were 1,389,000 and 1,065,000 total
options granted, including 775,000 and 565,000 to executive officers, during
the fiscal years ended December 31, 1999 and 1998. As of December 31,
2000, 1,905,000 and 623,000 options to purchase shares of Common Stock
granted under the 1998 Stock Option Plan and 1993 Stock Option Plan,
respectively, were outstanding, which amounts reflect the cancellation of
certain options following the termination of employment of the holders
thereof.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

OWNERSHIP OF SECURITIES

As of March 23, 2001, there were issued and outstanding 20,748,312
shares of Common Stock, 821,496 shares of Series B Preferred Stock, 135,162
shares of Series C Preferred Stock and 2,100 shares of Series D Preferred
Stock.

Each share of Common Stock, Series B Preferred Stock and Series C
Preferred Stock entitles the holder thereof to, respectively, one, eight and
twenty-four votes. The Series D Preferred Stock has no voting rights prior to
its conversion into Common Stock.

The following table sets forth certain information as of March 23,
2001, with respect to each beneficial owner of five percent (5%) or more of
the outstanding shares of Common Stock or of any series or class of Preferred
Stock, each officer and director of the Company and all officers and directors
as a group. Unless otherwise indicated, the address of each such person or
entity is c/o Alpha Hospitality Corporation, 12 East 49th Street, New York,
New York 10017.

Title of Class Name and Address No. of Percent
Shares(1) of Class(2)

Common Stock Stanley Tollman(3)(4) 500,000 2.35
$.01 par value Beatrice Tollman(4)(9) 1,815,890 8.05
Thomas W. Aro (6) 430,000 2.03
Brett G. Tollman (7) 1,949,875 8.59
James A. Cutler (8) 255,000 1.21
Matthew B. Walker (5) 412,905 1.95
Herbert F. Kozlov (11) 200,000 0.95
Craig Kendziera (12) 85,300 0.41
Robert Steenhuisen (13) 85,000 0.41
Bryanston Group,
Inc. (9) 13,869,258 40.07
1886 Route 52
Hopewell Junction,
N.Y.
Societe Generale (14) 1,912,922 8.4
1221 Ave of the Americas
New York, N.Y.
All Officers and Directors
as a group (8 persons)
(3, 5-8, 11-13) 3,918,080 20.97
Preferred Stock,
Series B Bryanston Group, Inc. 777,238 94.60
$29.00
liquidation BP Group, Ltd. (10) 44,258 5.4
value 5111 Islesworth Country
Club Dr.
Windemere, Fl 34786
Preferred Stock,
Series C Bryanston Group, Inc 135,162 100.0
$72.00
liquidation
value

Preferred Stock,
Series D Societe Generale 2,100 100.0
$1,000.00
liquidation
value

(1) Each person exercises sole voting and dispositive power with
respect to the shares reflected in the table, except for those shares of
Common Stock that are issuable upon the exercise of options or the
conversion of Series D Preferred Stock, which shares of Common
Stock cannot be voted until the options are exercised or such Series
D Preferred Stock is converted by the holder thereof. Includes
shares of Common Stock that may be acquired upon exercise of
options or conversion of convertible securities that are presently
exercisable or convertible or become exercisable or convertible
within 60 days.

(2) Each beneficial owner's percentage ownership is determine by
assuming that options, warrants and convertible securities that are
held by such owner (but not those held by any other owner) and that
are exercisable or convertible within 60 days from the date hereof
have been exercised or converted.

(3) Includes 500,000 shares of common stock issuable upon the
exercise of options granted to Stanley S. Tollman, the Chairman of
the Board, Chief Executive Officer and President of the Company.
Does not include any shares of Common Stock issuable upon the
exercise of the right granted to Mr. Tollman to convert up to
$2,000,000 of deferred compensation into shares of Common Stock
at $2.00 per share since he is not currently entitled to exercise such
right. Each of Brett G. Tollman, Stanley S. Tollman and Beatrice
Tollman disclaims beneficial ownership of the shares beneficially
owned by any of the other of them.

(4) Stanley S. Tollman is the spouse of Beatrice Tollman. Stanley
S. Tollman disclaims beneficial ownership of the shares beneficially
owned by Beatrice Tollman. Each of Brett G. Tollman, Stanley S.
Tollman and Beatrice Tollman disclaims beneficial ownership of the
shares beneficially owned by any of the other of them.

(5) Includes 90,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Walker, all of which options are
currently exercisable.

(6) Includes 420,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Aro, all of which options are
currently exercisable.

(7) Includes 390,000 shares of Common Stock issuable upon the
exercise of options granted to Brett G. Tollman, all of which options
are currently exercisable, and 1,000,000 shares held in the Tollman
Family Trust, of which Brett G. Tollman is the sole Trustee. Brett
G. Tollman is the son of Stanley S. Tollman and Beatrice Tollman.
Each of Brett G. Tollman, Stanley S. Tollman and Beatrice Tollman
disclaims beneficial ownership of the shares beneficially owned by
any of the other of them.

(8) Includes 255,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Cutler, all of which options are
currently exercisable. Does not include 4,000 shares owned by Mr.
Cutler's children, of which shares he disclaims beneficial ownership.

(9) Includes: (i) 6,217,904 shares of Common Stock issuable upon
conversion of 777,238 shares of Series B Preferred Stock owned by
Bryanston; and (ii) 3,243,888 shares of Common Stock issuable
upon conversion of 135,162 shares of Series C Preferred Stock
owned by Bryanston. All of such shares of Preferred Stock are
currently convertible into shares of Common Stock. On May 17,
1998, the Company declared a dividend of approximately 1,519,000
shares of Common Stock to Bryanston with respect to, and in lieu
of the cash dividend accrued on, the outstanding shares of Preferred
Stock held by Bryanston in 1997. Such shares of Common Stock
were issued on January 5, 1999. During 2000, the Company
declared and issued 426,000 and 1,831,000 additional shares of
common stock in lieu of cash dividends payable with respect to
Bryanston's shares of Series B Preferred Stock for the 1999 and
1998 calendar years, respectively. As of January 30, 2001, the
Company became obligated to issue to Bryanston approximately
2,996,000 additional shares of Common Stock in lieu of the cash
dividend payable with respect to Bryanston's shares of Series B
Preferred Stock for the 2000 calendar year. None of such shares of
Common Stock is included in the table above as they have not yet
been issued. Bryanston is an affiliate of the Company, and Beatrice
Tollman, Stanley S. Tollman's spouse, is a 50% stockholder of
Bryanston. Each of Bryanston and Beatrice Tollman disclaims
beneficial ownership of the shares beneficially owned by the other
of them.

(10) On May 17, 1998, the Company declared a dividend of
approximately 86,000 shares of Common Stock to BP Group, Ltd
("BP") with respect to, and in lieu of the cash dividend accrued on,
the outstanding shares of Series B Preferred Stock held by BP in
1997. Such shares of Common Stock were issued on January 5,
1999. In addition, during 2000, the Company declared and issued
to BP approximately 24,000 and 111,000 additional shares of
Common Stock in lieu of the cash dividend payable with respect to
BP's shares of Series B Preferred Stock for the 1999 and 1998
calendar years, respectively. As of January 30, 2001, the Company
became obligated to issue to BP approximately 171,000 additional
shares of common stock in lieu of the cash

dividend payable with
respect to BP's shares of Series B Preferred Stock for the 2000
calendar year. None of such shares of Common Stock is included
in the table above as they have not yet been issued. Patricia Cohen
is the sole stockholder of BP. This table does not include 100,352
shares of Common Stock owned by Patricia Cohen, who was a
Director of the Company during the period February 1, 1994 to
December 12, 1997, and 354,064 shares of Common Stock issuable
upon conversion of 44,258 shares of Series B Preferred Stock
owned by BP. All of such shares of Preferred Stock are currently
convertible into shares of Common Stock.

(11) Includes 200,000 shares of Common Shares issuable upon the
exercise of options granted to Mr. Kozlov, all of which options are
currently exercisable.

(12) Includes 85,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Kendziera, 52,500 of which
options are currently exercisable.

(13) Includes 85,000 shares of Common Stock issuable upon the
exercise of options granted to Mr. Steenhuisen, 52,500 of which
options are currently exercisable.

(14) Includes an additional 1,912,922 shares of Common Stock
issuable to Societe Generale to reach the maximum issuable of
3,300,000 in connection with its remaining 2,100 shares of the
Company's Series D Preferred Stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS

Bryanston

Bryanston is an affiliate of the Company and Beatrice Tollman, Mr.
Stanley S. Tollman's spouse, is a 50% stockholder of Bryanston. On June 26,
1996, Bryanston converted the amount due on a Working Capital Loan
(approximately $19,165,000) into shares of Series B Preferred Stock. The
Company was charged a 5% transaction fee (approximately $958,000), which
was also converted into shares of Series B Preferred Stock. The conversion
was effective June 26, 1996, and the total of approximately $20,123,000 was
converted into 693,905 shares of Series B Preferred Stock based on the fair
market value of a share of Common Stock on the date of conversion ($3.625).

On September 30, 1997, the Company issued 83,333 shares of Series
B Preferred Stock in settlement of $2,000,000 due to Bryanston. Each share
of outstanding Series B Preferred Stock: (i) entitles the holder to eight votes;
(ii) has a liquidation value of $29.00 per share; (iii) has a cash dividend rate
of 10% of the liquidation value, which rate increases to 13% of the
liquidation value if the cash dividend is not paid within 30 days of the end of
each fiscal year and in such event is payable in shares of Common Stock; and
(iv) is convertible into eight shares of Common Stock. On December 17,
1997, the Company declared a 1996 dividend payable to Bryanston in
approximately 730,000 shares of the Company's Common Stock, which were
issued in April 1998. On May 12, 1998, the Company declared a 1997
dividend payable to Bryanston in approximately 1,519,000 shares of
Common Stock, which were issued on January 5, 1999. During 2000, the
Company declared and issued 426,000 and 1,831,000 additional shares of
common stock in lieu of cash dividends payable with respect to Bryanston's
shares of Series B Preferred Stock for the 1999 and 1998 calendar years,
respectively. As of January 30, 2001, the Company became obligated to
issue to Bryanston approximately 2,996,000 additional shares of Common
Stock in lieu of the cash dividend payable with respect to Bryanston's shares
of Series B Preferred Stock for the 2000 calendar year.

On June 30, 1998, the Company restructured its existing obligations
to Bryanston by extinguishing its notes payable of $7,800,000, $1,399,000
and $432,000 plus accrued interest on the notes aggregating $3,098,000, in
exchange for the issuance of Series C Preferred Stock, and a $3,000,000
mortgage note on the Company's idle gaming vessel located in Mobile,
Alabama. The Series C Preferred Stock has voting rights of twenty-four
votes per preferred share, is convertible to twenty-four shares of Common
Stock and carries an annual dividend of $5.65 per share. In addition, the
terms of the preferred shares include a provision allowing the Company the
option of calling the preferred shares based upon the occurrence of certain
capital events that realize a profit in excess of $5,000,000.

Upon contribution of the idle gaming vessel in July 1999 to Casino
Ventures (see "Certain Relationships and Related Transactions - Casino
Ventures"), the $3,000,000 mortgage note was converted to a promissory
note.

Casino Ventures

On July 8, 1999, the Company contributed its inactive vessel, the
Jubilation Casino, to Casino Ventures. Matthew Walker, a director of the
Company, is a partner in Casino Ventures and serves as its General Manager.
At the time of the contribution, the vessel (including its gaming equipment,
furniture and other items) had a net book value of approximately $4,149,000.
In exchange, the Company received $150,000 in cash, a promissory note in
the principal amount of $1,350,000 and a membership interest in Casino
Ventures. The promissory note accrues interest at an initial rate of 8.75% per
annum, payable quarterly, with the principal balance due July 8, 2002. The
initial interest rate of 8.75% is adjusted daily to prime plus one percent with
a minimum rate of 8.75%. Upon repayment of the promissory note and
certain other funding to the venture, the Company's membership interest in
Casino Ventures will decrease from its current percentage of 93% to 15%.
Mr. Walker advanced funds to Casino Ventures in 1999 and 2000, which
were used for site and vessel improvements. As of December 31, 2000, the
loan payable to Mr. Walker amounted to $804,000. The loan accrues interest
at 8% and is payable in April 2002. In addition, $100,000 and $12,000 of the
Casino Venture start-up costs in 2000 and 1999, respectively, were made to
entities in which Mr. Walker has an ownership interest. The consolidated
financial statements of the Company will include the accounts of Casino
Ventures until such time as the Company's membership interest decreases
therein to less that 50%. During the year ended December 31, 2000, the
Company capitalized $1,859,000 of costs related to the relocation and
refurbishing of the vessel and improvements to its site in Tunica, Mississippi.
An additional $268,000 of start-up costs were incurred during 2000. During
the year, the vessel was used as collateral to obtain funding of $650,000
towards the aforementioned costs of Casino Ventures.

BP Group

Ms. Patricia Cohen, a director of the Company from February 1,
1994 to December 12, 1997, is the sole shareholder of BP. On June 26, 1996,
BP converted the amount due on a BP Loan (approximately $1,222,000) into
shares of Series B Preferred Stock. The Company was charged a 5%
transaction fee (approximately $61,000), which was also converted into
shares of Series B Preferred Stock. The conversion was effective June 26,
1996, and the total of approximately $1,283,000 was converted into 44,258
shares of Series B Preferred Stock, based on the fair market value of a share
of Common Stock on the date of conversion ($3.625). The terms of the shares
of Series B Preferred Stock, issued to BP are identical to those of the shares
of Series B Preferred Stock issued to Bryanston in June 1996 and September
1997.

On December 17, 1997, the Company declared a 1996 dividend
payable to BP in approximately 47,000 shares of Common Stock, which were
issued in April 1998. On May 12, 1998, the Company declared a 1997
dividend payable to BP in approximately 86,000 shares of the Common
Stock, which were issued on January 5, 1999. In addition, during 2000, the
Company declared and issued to BP approximately 24,000 and 111,000
additional shares of Common Stock in lieu of the cash dividend payable with
respect to BP's shares of Series B Preferred Stock for the 1999 and 1998
calendar years, respectively. As of January 30, 2001, the Company became
obligated to issue to BP approximately 171,000 additional shares of common
stock in lieu of the cash dividend payable with respect to BP's shares of
Series B Preferred Stock for the 2000 calendar year.

Other

On September 15, 1998, $250,000 was advanced to Southern
Classic, Inc. ("Southern") pursuant to a 9 1/4% promissory note maturing
January 30, 1999. Southern defaulted on its payment in January 1999 and
filed for bankruptcy in February 1999. Accordingly, a $250,000 reserve was
recorded as of December 31, 1998. James Cutler, a member of the Board of
Directors of the Company, formerly served as Southern's Chief Financial
Officer.

All current transactions between the Company and its officers,
directors and principal stockholders or any affiliates thereof are, and in the
future such transactions will be, on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS

The following documents are filed or part of this report:

1. FINANCIAL REPORTS

ALPHA HOSPITALITY CORPORATION

Independent Auditors' Report F-1

Consolidated Balance Sheets F-2

Consolidated Statements of Operations F-3

Consolidated Statements of Stockholders'
Equity F-4

Consolidated Statements of Cash Flows F-5

Notes to Consolidated Financial Statements F-7

2. FINANCIAL STATEMENT SCHEDULE

Schedule II Valuation and Qualifying
Accounts for the Years Ended December
31, 2000, 1999 and 1998 S-1

3. EXHIBITS

*2 Deleted
*3(a) Certificate of Incorporation
*3(b) Form of Certificate of Amendment to Certificate of
Incorporation
*3(c) By-Laws, as amended
*4(a) Form of Common Stock Certificate
*4(b) Form of Warrant Certificate
4(c) Certificate of Designation
4(d) Omitted
4(e) Certification of Designation - Series D Preferred Stock
4(f) Registration Rights Agreement
5 Opinion of Parker Duryee Rosoff & Haft, P.C.
*10(a) Form of Employment Agreement between the Company
and Stanley S. Tollman
10(b) Deleted
*10(c) Form of Indemnification Agreement between the Company
and directors and executive officers of the Company
*10(d) 1993 Stock Option Plan
*10(e) Form of Service Agreement between the Company and
Bryanston
*10(f) Deleted
*10(g) Deleted
*10(h) Deleted
*10(i) Deleted
*10(j) Form of Warrant Agreement among the Company, the
Transfer Agent and the Underwriters
*10(k) Deleted
*10(l) Deleted
*10(m) Deleted
*10(n) Deleted

*10(p) Deleted
*10(q) Deleted
*10(r) Deleted
*10(s) Deleted
*10(t) Deleted
*10(u) Form of Limited Standstill Agreement of the Existing
Stockholders f/b/o the Underwriters
*10(v) Deleted
*10(w) Deleted
*10(x) Deleted
*10(y) Deleted
*10(z) Deleted
*10(aa) Deleted
*10(ab) Deleted
*10(ac) Deleted
*10(ad) Deleted
*10(ae) Deleted
*10(af) Form of Underwriters' Warrant
***10(ag) Deleted
***10(ah) Deleted
***10(ai) Non-Revolving Promissory Note with Bryanston Group,
Inc.
***10(aj) $20,000,000 Non-Revolving Promissory Note dated
January 5, 1996
***10(ak) Stock Purchase Agreement dated October 20, 1996
***10(al) Stock Acquisition Agreement dated January 25, 1996
***10(am) Form 8-K dated October 31, 1996
***10(an) Deleted
****10(ao) Asset Purchase Agreement between Alpha Gulf Coast, Inc.
and Alpha Greenville Hotel, Inc. and Greenville Casino
Partners, L.P.
10(ap) Deleted
10(aq) Deleted
10(ar) Securities Purchase Agreement dated February 8, 2000
*****10(as) 1998 Stock Option Plan
******10(at) Securities Purchase Agreement, dated February 8, 2000,
between the Company and Societe Generale with respect
to the issuance and sale of shares of the Company's Series
D Preferred Stock
******10(au) Certificate of Designations of the Company's Series D
Preferred Stock
******10(av) Registration Rights Agreement, dated February 8, 2000,
between the Company and Societe Generale with respect
to the shares of common stock underlying the Company's
Series D Preferred Stock
*******10(aw) Securities Purchase Agreement, dated July 31, 2000,
between the Company and Societe Generale with respect
to the issuance and sale of the Company's 4% Convertible
Notes due July 31, 2003 and warrants
*******10(ax) Registration Rights Agreement, dated July 31, 2000,
between the Company and Societe Generale with respect
to the shares of common stock underlying the Company's
4% Convertible Notes due July 31, 2003 and the warrants
*******10(ay) Form of the Company's 4% Convertible Notes due July
31, 2003
*******10(az) Form of the Warrants
23(a) Consent of Rothstein Kass & Co.
23(b) Consent of Parker Duryee Rosoff & Haft, P.C. (Included
in Exhibit 5)
*11 Statement Re: Computation of Per Share Earnings
21 List of Subsidiaries

(b) Reports on Form 8-K

There were no 8-Ks filed by the Company during the last quarter of the
period covered by this report.

* Incorporated by reference, filed with Company's Registration Statement
filed

on Form SB-2 (File No. 33-64236) filed with the Commission on June
10, 1993 and as amended on September 30, 1993, October 25, 1993,
November 2, 1993 and November 4, 1993, which Registration Statement
became effective November 5, 1993. Such Registration Statement was
further amended by Post Effective Amendment filed on August 20, 1999.

** See Consolidated Financial Statements

*** Incorporated by reference, filed with Company's Form 10-KSB for the
year ended December 31, 1994 or filed with Company's Form 10-K for the
year ended December 31, 1995.

**** Incorporated by reference, filed with the Company's Proxy Statement
on Schedule 14A sent to stockholders of the Company on or about February
12, 1998.

***** Incorporated by reference, filed with Proxy Statement pursuant to
Section 14(a) of the Securities Exchange Act of 1934, as amended filed with
the Commission on August 25, 1999.

******Incorporated by reference, filed with the Company's Current Report
on Form 8-K as filed with the
Commission on February 15, 2000.

*******Incorporated by reference, filed with the Company's Registration
Statement on Form S-3 as filed with the
Commission on October 12, 2000.

Schedule 21.

List of Subsidiaries:

Name State of
Incorporation/Formati
on
Alpha Gulf Coast, Inc. Delaware
Alpha St. Regis, Inc. Delaware
Alpha Missouri, Inc. Delaware
Alpha Monticello, Inc. Delaware
Alpha Rising Sun, Inc. Delaware
Jubilation Lakeshore, Inc. Mississippi
(including its 93% owned
subsidiary)
Casino Ventures, L.L.C. Mississippi
Alpha Greenville Hotel, Inc. Delaware
Alpha Entertainment, Inc. Delaware
Alpha Florida Entertainment,
Inc. Florida
Alpha Peach Tree Corporation Delaware
Alpha Florida Entertainment,
L.L.C. Florida
Alpha Casino Management Inc. Delaware

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

ALPHA HOSPITALITY CORPORATION

By: /s/ Stanley S. Tollman
Stanley S. Tollman
Title: Chairman of the Board
and Chief Executive Officer

Date: March 23, 2001

By: /s/ Robert Steenhuisen
Robert Steenhuisen
Title: Chief Accounting Officer

Date: March 23, 2001

In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

Signature Title Date

/s/ Stanley S. Tollman Chairman of the Board and March 23, 2001
Stanley S. Tollman Chief Executive Officer

/s/ Thomas W. Aro Vice President, Secretary March 23, 2001
Thomas W. Aro and Director

/s/ Brett G. Tollman Vice President and Director March 23, 2001
Brett G. Tollman

/s/ James A. Cutler Director March 23, 2001
James A. Cutler

/s/ Matthew B. Walker Director March 23, 2001
Matthew B. Walker

/s/ Herbert F. Kozlov Director March 23, 2001
Herbert F. Kozlov

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
ALPHA HOSPITALITY CORPORATION
New York, New York

We have audited the accompanying consolidated balance sheets
of Alpha Hospitality Corporation and Subsidiaries
as of December 31, 2000 and 1999, and the related consolidated statements
of operations, stockholders' equity and cash flows for each of the years
in the three-year period ended December 31, 2000. These consolidated
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the
financial position of Alpha Hospitality Corporation and Subsidiaries as
of December 31, 2000 and 1999, and the results of their operations and
their cash flows for each of the years in the three-year period
ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on
the basic consolidated financial statements taken
as a whole. The financial statement schedule listed on Page S-1
is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the
basic consolidated financial statements. This schedule
has been subjected to the auditing procedures applied in the audits
of the basic consolidated financial statements and, in our opinion,
is fairly stated, in all material respects, in relation to the basic
consolidated financial statements taken as a whole.

/S/ ROTHSTEIN, KASS & COMPANY, P.C.
Roseland, New Jersey
February 23, 2001

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999
(In thousands, except for per share data)

2000 1999
ASSETS

CURRENT ASSETS:
Cash, including restricted
cash of $373 in 1999 $ 1,263 $ 1,464
Other current assets 696 90
Total current assets 1,959 1,554

PROPERTY AND EQUIPMENT, net 2,311 448

ASSETS OF CASINO VENTURES 6,448 4,587

DEPOSITS AND OTHER ASSETS 2,815 1,539
$ 13,533 $ 8,128

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 1,329 $ 1,121
Accrued payroll and
related liabilities 178 53
Current liabilities of
Casino Ventures 1,597 60
Total current liabilities 3,104 1,234

LONG-TERM DEBT 2,473 1,407

OTHER LIABILITIES 2,490 2,076

LONG-TERM LIABILITIES OF CASINO
VENTURES 804 650

COMMITMENTS AND CONTINGENCIES

MINORITY INTEREST 1,086

STOCKHOLDERS' EQUITY:
Common stock, $.01 par
value,75,000 shares
authorized, 20,748 and
16,803 issued and
outstanding in 2000
and 1999, respectively 207 168
Preferred stock, 5,000
shares authorized:
Series B, $.01 par value,
821 issued
and outstanding 8 8
Series C, $.01 par value,
135 issued
and outstanding 1 1
Series D, $.01 par value,
2 issued and
outstanding in 2000 0
Common stock to be issued 50
Capital in excess of par value 85,959 78,527
Accumulated deficit (82,599) (75,993)
Total stockholders' equity 3,576 2,761
$ 13,533 $ 8,128

See accompanying notes to consolidated financial statements

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2000, 1999 and 1998
(In thousands, except for per share data)

2000 1999 1998

REVENUES:
Casino $ 324 $ $ 4,923
Food and beverage, retail
and other 548 185 501
Total revenues 872 185 5,424

COSTS AND EXPENSES:
Casino 215 1,901
Food and beverage, retail
and other 26 91
Noncash compensation (3,251) 3,251
Selling, general and administrative 2,424 1,649 5,097
Interest 251 168 1,062
Depreciation and amortization 113 38 909
Pre-opening and development costs 1,400 842 359
Provision for loss on note receivable 250
Write-down of property and equipment 327
Total costs and expenses 1,178 5,948 9,996

OTHER INCOME (LOSS):
Loss from equity investee (8,500)
Gain (loss) on sale of assets (341) 6,048
Total other loss, net (341) (2,452)

LOSS FROM OPERATIONS
BEFORE DEFERRED INCOME TAX AND
MINORITY INTEREST (647) (5,763) (7,024)

DEFERRED INCOME TAX (6,375)

NET LOSS BEFORE MINORITY INTEREST (647) (5,763) (13,399)

MINORITY INTEREST 235

NET LOSS (412) (5,763) (13,399)

DIVIDENDS ON PREFERRED STOCK 6,194 2,861

LOSS APPLICABLE TO COMMON SHARES $ (6,606) $(5,763) $(16,260)

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING, basic and diluted 18,679 16,770 14,966

LOSS PER COMMON SHARE, basic and diluted $ (.35) $ (.34) $ (1.09)

See accompanying notes to consolidated financial statements

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 2000, 1999 and 1998
(In thousands, except for per share data)

Common
Preferred Stock Preferred Stock Preferred Stock Capital in Stock
Series B Series C Series D Common Stock Excess of To be Accumulated
Shares Amount Shares Amount Shares Amount Shares Amount Par Value Issued Deficit

Balances,
December 31, 1997 821 $ 8 $ -- $ -- 14,406 $ 145 $ 61,259 $ 1,391 $(53,970)
Preferred stock
issued in
settlement of
due to affiliate 135 1 9,728
Common stock issued
in settlement of
preferred stock
dividend payable 777 7 1,384 (1,391)
Preferred stock
dividend payable
in common stock 2,861 (2,861)
Net loss (13,399)
Balances,
December 31,1998 821 8 135 1 15,183 152 72,371 2,861 (70,230)
Common stock issued
in settlement
of preferred stock
dividend payable 1,605 16 2,845 (2,861)
Common stock issued
from exercise
of warrants 15 60
Common stock to be
issued in
settlement of
certain
liabilities 50
Noncash
compensation 3,251
Net loss (5,763)
Balances,
December 31, 1999 821 8 135 1 16,803 168 78,527 50 (75,993)
Preferred stock
issued in private
placement 4 0 3,867
Preferred stock
converted to
common stock (2) 1,387 14 (14)
Common stock
issued from
exercise of
options 135 1 147
Preferred stock
dividend payable
in common stock 2,393 24 6,170 (6,194)
Common stock
issued in
settlement of
certain liabilities 30 50 (50)
Warrant issued 213
Noncash compensation (3,251)
Compensation expense,
services contributed 250
Net loss (412)
Balances,
December 31, 2000 821 $ 8 135 $ 1 2 $ 0 20,748 $ 207 $85,959 $ -- $(82,599)

See accompanying notes to consolidated financial statements

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2000, 1999 and 1998
(In thousands, except for per share data)

2000 1999 1998

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (412)$ (5,763)$ (13,399)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Minority interest (235) -- --
Depreciation and amortization 113 38 909
Noncash compensation (3,251) 3,251 --
Interest amortized on loan discount 29 -- --
Provision for loss on note receivable -- -- 250
Other compensation adjustment 250 -- --
Deferred tax -- -- 6,375
Loss from equity investee -- -- 8,500
(Gain) loss on sale of assets 341 -- (6,048)
Write-off of property and equipment -- -- 327
Changes in operating assets and
liabilities:
(Increase) decrease in other
current assets (574) 81 388
Increase (decrease) in accounts
payable and accrued expenses (86) 360 (2,824)
Increase (decrease) in accrued
payroll and related liabilities 126 75 (398)

NET CASH USED IN OPERATING
ACTIVITIES (3,699) (1,958) (5,920)

CASH FLOWS FROM INVESTING ACTIVITIES:
Hotel construction costs -- -- (1,086)
Purchases of property and equipment (3,087) (385)
Payment on note receivable -- -- (250)
Proceeds from hotel construction escrow -- -- 1,700
Proceeds from sale of assets,
net of related costs -- -- 11,388
Proceeds from (payments for) deposits
and other assets (771) (39) 13

NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (3,858) (424) 11,765

CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributed by holders of
minority interest 1,321 -- --
Proceeds from sale of preferred
stock, net 3,867 -- --
Payments to affiliate -- -- (3,294)
Proceeds from exercised warrants
and stock options 148 60 --
Proceeds from long-term debt and
warrants, net of loan costs 2,020 650
Payments on long-term debt -- (701) (925)

NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 7,356 9 (4,219)

NET INCREASE (DECREASE) IN CASH (201) (2,373) 1,626

CASH, beginning of year 1,464 3,837 2,211

CASH, end of year $ 1,263 $ 1,464 $ 3,837

See accompanying notes to consolidated financial statements

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (Continued)
Years Ended December 31, 2000, 1999 and 1998
(In thousands, except for per share data)

2000 1999 1998

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION, cash paid for interest
during the year. . . . . . . . . . . . . $ 110 $ 158 $ 425

SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING
AND FINANCING ACTIVITIES:

Increase in other liabilities related to
an investment in real property which
the Company received from an affiliate . $ 456

Issuance of stock warrants with debt. . . $ 213

Common stock to be issued in
settlement of certain liabilities. . . . . $ 50

Increase in other current assets related to
receivable from sale of equipment. . . . . $ 35

Restructuring and conversion of
Bryanston obligations:
Issuance of preferred stock . . . . . . . . $ 9,729

Mortgage on Jubilation gaming vessel . . . $ 3,000

Extinguishment of debt including
accrued interest of $3,098 . . . . . . . $ 12,729

Non-cash consideration received in
exchange for sale of assets:
Investment in GCP. . . . . . $ 8,500

Assumption by GCP of net
proceeds of pre-financing. . . . . . . . . $ 17,900

Assumption by GCP of certain
accounts payable, accrued
expenses, payroll liabilities
and capital lease obligation . . . . . . . $ 2,000

Common stock issued in settlement
of preferred stock dividends . . . . . . $ 6,194 $ 2,861 $ 1,391

Increase in property and equipment
included in Accounts payable . . . . . . $ 1,110

See accompanying notes to consolidated financial statements

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for per share data)

Note 1. Nature of Business

Alpha Hospitality Corporation (the "Company"), incorporated in Delaware
on March 19, 1993, was engaged in the ownership and operation of a gaming
vessel in Greenville, Mississippi, which was operated by the Company's wholly-
owned subsidiary, Alpha Gulf Coast, Inc. ("Alpha Gulf"), and the construction
of an adjacent hotel which was handled through the Company's wholly-owned
subsidiary, Alpha Greenville Hotel, Inc. ("Greenville Hotel"). On March 2,
1998, the Company sold substantially all of these assets to Greenville Casino
Partners, L.P. ("GCP") (see Note 3). Included in the consideration, the Company
received a 25% limited partnership interest in GCP, whose assets include an
additional casino and hotel located in Greenville, Mississippi. In October 2000,
the Company became a 75% member of Alpha Florida Entertainment, L.L.C.
("Alpha Florida LLC"). In November 2000, Alpha Florida LLC, launched its
gaming day cruise vessel (the Ella Star Casino ("Ella Star")) operations out of
Miami-Dade County's Haulover Beach Park and Marina adjacent to Bal
Harbour, Florida.

In addition, the Company is pursuing additional gaming-related and other
opportunities through its other wholly-owned subsidiaries: Alpha St. Regis, Inc.
("Alpha St. Regis"), Alpha Missouri, Inc. ("Alpha Missouri"), Alpha Monticello,
Inc. ("AMI"), Alpha Rising Sun, Inc.("Alpha Rising Sun"), Jubilation Lakeshore,
Inc. ("Jubilation Lakeshore") (including Jubilation Lakeshore's 93% owned
subsidiary Casino Ventures, L.L.C. ("Casino Ventures") (see Note 7)), Alpha
Entertainment, Inc.("Alpha Entertainment"), Alpha Casino Management, Inc.
("Alpha Casino") and Alpha Peach Tree Corporation ("Alpha Peach Tree").

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and its wholly-owned and majority-owned
subsidiaries. All significant intercompany balances and transactions have been
eliminated in consolidation.

Cash. The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not incurred any
losses in such accounts and believes it is not exposed to any significant credit
risk on cash.

Property and Equipment. Property and equipment is stated at cost less
accumulated depreciation and amortization. The Company provides for
depreciation and amortization using the straight-line method over the following
estimated useful lives:

Estimated
Useful
Assets Lives

Boat and improvements 20 years
Leasehold and improvements 10-20 years
Gaming equipment 5-7 years
Furniture, fixtures and equipment 5-7 years

Investments. The Company's 25% limited partnership interest in GCP is
being accounted for under the equity method of accounting. Accordingly, the
investment is recorded at cost and adjusted by the Company's proportionate share
of GCP's undistributed earnings or losses (see Note 3). The Company's 5%
investment in real property holdings on Monticello Raceway is being accounted
for under the cost method of accounting.

Pre-opening and Development Costs. The Company incurs costs in
connection with start-up casino operations

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --
(Continued)
(In thousands, except for per share data)

Note 2. Summary of Significant Accounting Policies (CONTINUED)

and joint ventures. The Company's policy is to expense pre-opening and
development costs as incurred.

Earnings (Loss) Per Common Share. Earnings (loss) per common share is
based on the weighted average number of common shares outstanding.

The Company complies with Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share", which requires dual presentation of
basic and diluted earnings per share. Basic earnings per share excludes dilution
and is computed by dividing income available to common stockholders by the
weighted-average common shares outstanding for the year. Diluted earnings per
share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock
or resulted in the issuance of common stock that then shared in the earnings of
the entity. Since the effect of outstanding options and warrants is
antidilutive,they have been excluded form the Company's computation of loss
per common share. Therefore, basic and diluted loss per common share for
the years ended December 31, 2000, 1999 and 1998 were the same.

Income Taxes. The Company complies with SFAS No. 109, "Accounting for
Income Taxes", which requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed for differences between the financial statement and tax
bases of assets and liabilities that will result in future taxable or deductible
amounts, based on enacted tax laws and rates to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.

The Company does not provide for deferred taxes on the unremitted
earnings of its wholly-owned subsidiaries since, under existing tax laws, its
investment could be liquidated tax-free. As a result, any excess outside
financial basis over tax basis is not expected to result in taxable income
upon reversal and thus is not a temporary difference.

Casino Revenue. Casino revenue is the net win from gaming activities,
which is the difference between gaming wagers less the amount paid out to
patrons.

Promotional Allowances. Promotional allowances primarily consists of food
and beverage furnished gratuitously to customers. Revenues do not include the
retail amount of food and beverage of $44 and $496 for the years ended
December 31, 2000 and 1998, respectively, provided gratuitously to customers.
The cost of these items of $39 and $418 for the years ended December 31, 2000
and 1998, respectively, are included in casino expenses.

Fair Value of Financial Instruments. The fair values of the Company's assets
and liabilities that qualify as financial instruments under SFAS No. 107
approximate their carrying amounts presented in the consolidated balance sheets
at December 31, 2000 and 1999.

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

Impairment of Long-Lived Assets. The Company periodically reviews the
carrying value of its long-lived assets in relation to historical results,
as well as management's best estimate of future trends, events and overall
business climate. If such reviews indicate that the carrying value of
such assets may not be recoverable, the Company would then estimate the
future cash flows (undiscounted and without interest charges). If such
future cash flows are insufficient to recover the carrying amount of
the assets, then impairment is triggered and the carrying value of any
impaired assets would then be reduced to fair value.

Reclassifications. Certain prior year amounts have been reclassified to
conform to the 2000 presentation.

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --
(Continued)
(In thousands, except for per share data)

Note 3. Sale of Assets

On March 2, 1998, the Company sold substantially all of the assets of Alpha
Gulf and Greenville Hotel, including the casino barge, boarding barge, related
gaming and other equipment, furniture and improvements and related permits,
licenses, leases and other agreements to GCP for approximately $40,200.
Specifically, the Company received cash of $11,800 and a 25% limited
partnership interest in GCP. Additionally, GCP assumed approximately $2,000
of certain accounts payable, accrued expenses, payroll liabilities and a capital
lease obligation and the Company's obligations to repay the net proceeds from
certain financing of $17,900. The Company recognized a gain on the sale of
$6,048.

Subsequent to the acquisition of substantially all of the assets of Alpha
Gulf and Greenville Hotel, management was advised that GCP incurred significant
operating losses resulting in a substantial working capital deficiency and a
partners' deficiency through December 31, 1998. In light of these developments
and in accordance with its policy on impairment of long-lived assets, the
Company adjusted the carrying value of its remaining 25% limited partnership
interest in GCP to zero in 1998.

Note 4. Property and Equipment

At December 31, 2000 and 1999, property and equipment is comprised of the
following (see Note 8):

2000 1999

Boat and improvements 9,034 $ 5,322
Leasehold and
improvements 88 82
Gaming equipment 2,224 3,023
Furniture, fixtures
and equipment 1,970 1,837
13,316 10,264
Less accumulated
depreciation
and amortization 4,622 5,287
Less amounts
included in assets
of Casino Ventures
(see Note 7) 6,383 4,529
$ 2,311 $ 448

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands, except for per share data)

Note 5. Long-Term Debt

Long-term debt at December 31, 2000 and 1999 was comprised of the following:

Interest
Rate 2000 1999

Loan payable. . . . . . . . . . . . . . 4% $ 1,066 $ --

Loan payable to a director of the Company,
due in April 2002. . . . . . . . . 8% 804

Note payable to Bryanston Group, Inc.
("Bryanston"), an affiliate, with
interest payable monthly and
principal payments, commencing
January 1, 2001, not to exceed
$1,000 per annum, with any unpaid
balance due at maturity in April 2005.
Bryanston has agreed, subject to certain
terms and conditions, to subordinate its
rights to repayment of principal and
to payment of cash dividends to the prior
payment of amounts due to the holders of
the preferred stock, series D (see
Notes 8 and 9). . . . . . . . . . 8% 1,407 1,407

Mortgage note collateralized by the Company's
inactive vessel (see Note 7) with
interest payable monthly and principal
due in January 2001 . . . . . 8% 650 650

Promissory note payable, due March 2001. . . . 6% 29
3,956 2,057
Less amounts included in liabilities of Casino
Ventures (see Note 7). . . . 1,483 650
$ 2,473 $ 1,407

Aggregate future required principal payments of long-term debt
are as follows:

Years Ending December 31:
2001 . . . . . . $ 679
2002 . . . . . . 804
2003 . . . . . . 1,250
2004 . . . . . .
2005 . . . . . . 1,407
$ 4,140

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands, except for per share data)

Note 6. Accounts Payable and Accrued Expenses

At December 31, 2000 and 1999, accounts payable and accrued
expenses are comprised of the following:

2000 1999

Property and equipment $ 1,110 $ --
Due to GCP -- 462
Insurance 167 202
Accrued professional fees 280 221
Accrued interest 114 13
Other 576 283
Less amounts included in
liabilities of
Casino Ventures
(see Note 7) 918 60
$ 1,329 $ 1,121

Note 7. Investment in Casino Ventures, L.L.C.

On July 8, 1999, the Company contributed its inactive vessel,
Jubilation, to Casino Ventures (see Notes 1, 4 and 5). At the time of the
contribution, the vessel (including gaming equipment, furniture and other items)
had a net book value of $4,149. In exchange, the Company received $150 in
cash, a promissory note of $1,350 and a membership interest in Casino
Ventures. The promissory note accrues interest at an initial rate of 8.75% per
annum, payable quarterly, with the principal balance due July 8, 2002. The
initial interest rate of 8.75% is adjusted daily to prime plus one percent with
a minimum rate of 8.75%. Upon repayment of the promissory note and certain
other funding to the venture, the Company's membership interest in Casino
Ventures decreases from its current percentage of 93% to 15%. The
consolidated financial statements of the Company includes the accounts of
Casino Ventures until such time as the Company's membership interest
decreases to less than 50%. A director of the Company is a member in Casino
Ventures and serves as its General Manager. That director advanced funds to
Casino Ventures in 1999 and 2000 that were used for site and vessel
improvements. As of December 31, 2000, the loan payable to the director
amounted to $804. The loan accrues interest at 8% and matures April 2002.
In addition, $100 and $12 of the Casino Ventures start up costs in 2000 and
1999, respectively, were paid to entities in which the director has an ownership
interest. During the years ended December 31, 2000 and 1999, the Company
capitalized $1,859 and $364 of costs, respectively, related to the
refurbishment of the vessel and improvement to its site in Tunica,
Mississippi and incurred $268 and $100 of start-up costs, respectively.
Additionally, during the year ended December 31, 1999, the vessel was
used as collateral to obtain funding
of $650 towards the aforementioned costs of Casino Ventures (see Note 5).
Total interest expense on Casino Venture debt for 2000 and 1999 amounted to
$79 and $22, respectively. Pursuant to an amendment agreement effective
April 18, 2000, the total maximum borrowings allowed to be collateralized by
the vessel is $1,000.

At December 31, 2000 and 1999, assets and liabilities of Casino
Ventures consisted of the following:

2000 1999

Assets:
Property and equipment $ 6,383 $ 4,529
Deposits 54 50
Other 11 8
6,448 4,587
Current liabilities:
Long-term liability,
current maturities 679
Accounts payable and
accrued expenses 918 60
1,597 60
Long-term liabilities,
Long-term debt, less
current maturities $ 804 $ 650

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --
(Continued)
(In thousands, except for per share data)

Note 8. Commitments, Contingencies and Related Party Transactions

The Company, through its wholly-owned subsidiary, AMI, is
party to a General Memorandum of Understanding (the "Memorandum") with
Catskill Development, LLC ("CDL" and, collectively with AMI, the "Parties")
dated December 1, 1995, which among other things, provided for the
establishment of Mohawk Management, LLC ("MML"), a New York limited
liability company, for the purpose of entering into an agreement to manage a
proposed casino on land to be owned by the St Regis Mohawk Indian Tribe (the
"Mohawk Tribe"). The Memorandum also sets forth the general terms for the
funding and management obligations of CDL (25% owned by Bryanston) and
AMI with regard to MML. In January 1996, MML was formed with each of
CDL and AMI owning a 50% membership interest in MML. On July 31, 1996,
MML entered into a Gaming Facility Management Agreement with the
Mohawk Tribe (the "Management Contract") for the management of a casino
to be built on the current site of the Monticello Raceway in Monticello, New
York (the "Monticello Casino"). Among other things, the Management Contract
provided MML with the exclusive right to manage the Monticello Casino for
seven (7) years from its opening and to receive certain fees for the provision
of management and related services.

In July 2000, the Parties completed a final settlement agreement
whereby AMI will be entitled to receive 40% of any basic management fee
income and 75% of any service fee income accruing from the operation of any
Native American casino facility development at Monticello Raceway. The net
result of the settlement entitles AMI to receive approximately 47% of all
management fee and service income derived from the underlying management
contract. The original agreement contemplated an arrangement specific to the
Mohawk Tribe while the settlement agreement covers all prospective federally
recognized Native American Nations. Accordingly, Alpha Casino Management
Inc. ("ACM") and Monticello Casino Management, L.L.C. ("MCM") were
formed to facilitate such potential non-Mohawk Tribe arrangements.

As part of and in conjunction with such settlement, AMI acquired
five percentage points of Bryanston's ownership interest in its real property
holdings at the Monticello Raceway for $456 plus consideration if the asset is
liquidated. That holding includes the Raceway's building and equipment and
approximately 200 acres of land. Bryanston has agreed to defer payment of this
liability until the earlier of the liquidation of the asset or January 2002.
The $456 is included in other assets and liabilities on the consolidated
balance sheet as of December 31, 2000. Additionally, Bryanston has agreed
to transfer its 25% ownership in the Raceway's parimutuel operations to AMI.
Under the previous agreement, AMI did not participate in any
of these sources of revenue.
For the year ended December 31, 2000, the Company's share of the Raceway's
parimutuel operations amounted to $72. Included in deposits and other assets
as of December 31, 2000 and December 31, 1999, the Company capitalized
$2,047 and $1,366, respectively towards the design, architecture and other costs
of the development plans for the proposed Monticello Casino.

On April 6, 2000, in a letter to New York Governor George
Pataki, the U.S. Department of the Interior and its Bureau of Indian Affairs
(the "Department") forwarded its initial Two-Part Determination, which included
the Department's findings that: 1) the Monticello Casino was in the best
interests of the Mohawk Tribe; and 2) there was local support for the project.
The Department has requested the Governor's concurrence in its findings. Such
concurrence is an integral step in establishing the trust lands on which the
proposed casino would be developed. On April 19, 2000, MML received a
letter from the National Indian Gaming Commission asking for additional
information as it was completing its review of the underlying management and
development agreements. As explained below, on June 5, 2000, MML notified
the Department of the purported abandonment of the project by the Mohawk
Tribe.

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --
(Continued)
(In thousands, except for per share data)

Note 8. Commitments, Contingencies and Related Party Transactions
(CONTINUED)

rights to develop and manage any casino development the Mohawk Tribe may
have in the State of New York. The validity of the aforementioned purported
agreement is not clear at this time. On November 13, 2000, MML and CDL
(collectively the "Plaintiffs") joined in a suit filed against PPE, alleging
entitlement to substantial damages as a consequence of, among other things,
PPE's purported interference in the Plaintiffs' proposed casino in Monticello.

The Company is obligated under operating leases relative to real
property and equipment expiring through 2005. The Company made $392 of
refundable payments to a lessor in connection with certain of these leases. The
$392 receivable from that lessor is included in other current assets as of
December 31, 2000. Future aggregate minimum annual rental payments under
all of these leases are as follows:

Years Ending December 31:

2001. . . . . . . . . .$ 1,505
2002. . . . . . . . . . 1,500
2003. . . . . . . . . . 1,395
2004. . . . . . . . . . 383
2005. . . . . . . . . . 116
$ 4,899

Rent expense under these operating and terminated leases
amounted to $533, $375 and $501 for the years ended December 31, 2000,
1999 and 1998, respectively.

The Company is obligated under an employment contract with its
Chairman and Chief Executive Officer ("CEO").Under this agreement, the
Company accrues deferred compensation of $250 per year. The agreement is
automatically renewable for successive twelve-month periods, unless either
party shall advise the other on ninety days written notice of his or its
intention not to extend the term of the employment. In the event of
termination of employment, the CEO will be retained to provide consulting
services for two years at $175 per annum. The CEO has agreed to waive
his rights to receive the $250 salary for the year 2000. The Company has
reflected this waiver as a $250 increase in capital in excess of par value
for services contributed. As of December 31, 2000 and 1999, deferred
compensation payable to the CEO was
approximately $1,530. During 1999, the Company agreed to afford the CEO
the right to convert up to $2,000 of deferred compensation payable into up to
1,000 shares of the Company's common stock at a stock price of two dollars per
share, the closing price on the agreement date. The CEO's right to convert
deferred compensation to the Company's common stock shall only be
exercisable if he continues to defer his salary and he remains employed through
and including April 2002, or such later date as the Board of Directors may
determine. In addition, these conversion rights shall not be exercisable before
April 2002. During the year ended December 31, 1999, the Company recorded
a noncash compensation charge of $3,251 reflecting the increase in the market
price of the Company's common stock from the date of the agreement to the
end of 1999. The $3,251 charge was reversed in 2000 to reflect the decrease
in the market price of the Company's common stock during the year.

On September 30, 1999, the CEO agreed to defer all cash
payments owing pursuant to his employment contract with the Company until
January 1, 2001, and further deferred in December 2000, until April 2002. This
includes the $1,530 payable as of December 31, 2000, and future amounts
accruing to the CEO. This does not effect the CEO's rights to convert up to
$2,000 of deferred compensation payable into up to 1,000 shares of the
Company's common stock. Additionally, a former officer of the Company
also has agreed to defer all cash payments against a $266 liability owing
pursuant to his previous employment contract with the Company until January
1, 2001 and in December 2000, agreed to further defer such cash payments until
April 2002. Accordingly, other liabilities, on the Company's consolidated
balance sheet as of December 31, 2000 and 1999, includes $1,796 of deferred
compensation payable.

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --
(Continued)
(In thousands, except for per share data)

Note 8. Commitments, Contingencies and Related Party Transactions
(CONTINUED)

To comply with State requirements regarding the Company's 25%
partnership interest in Greenville Casino Partners, L.P., the Company has
received a finding of suitability from the Mississippi Gaming Commission. The
Company's finding of suitability was renewed in November 1999 for a two year
period. The Company anticipates renewal of this finding of suitability in
November 2001.

In January 1996, the Company was named as a defendant in an
action brought in the Circuit Court of Hinds County, Mississippi (Amos vs
Alpha Gulf Coast, Inc.; Batiste vs Alpha Gulf Coast, Inc.; Ducre vs Alpha Gulf
Coast, Inc.; Johnston vs Alpha Gulf Coast, Inc.; Rainey vs Alpha Gulf Coast,
Inc.). Based on the theory of "liquor liability" for the service of alcohol to a
customer, plaintiffs alleged that on January 16, 1995, a vehicle operated by Mr.
Amos collided with a vehicle negligently operated by Mr. Rainey, an individual
who was allegedly served alcoholic beverages by the Company. Plaintiffs
alleged that they suffered personal injuries and seek compensatory damages
aggregating $17,100 and punitive damages aggregating $37,500. On March 1,
2000, mediation took place between the Company's insurance company and
plaintiffs Amos, Batiste and Ducre with settlements being reached in all three
cases for an aggregate amount of $110, of which $85 was covered by the
Company's insurance. Although the Company's insurance company has
initiated settlement discussions with plaintiffs Johnston and Rainey, neither
case has been settled nor can there be any assurance that settlements can be
reached. Accordingly, no provision for liability to the Company that may
result upon adjudication has been made in the accompanying consolidated
financial statements. The Company believes that the remaining risk referred
to in this paragraph is adequately covered by insurance.

The Company is a party to various other legal actions that have
arisen in the normal course of business. In the opinion of the Company's
management, the resolution of these other matters will not have a material or
adverse effect on the consolidated financial position, results of operations or
cash flows of the Company.

The Company was involved in a dispute with Greenville Casino
Partners, L.P. ("GCP") regarding an agreement dated December 17, 1997. In
September 2000, an arbitrator awarded the Company a net amount of $136 in
satisfaction of all claims and counterclaims of the dispute. Such amount is
included in other current assets as of December 31, 2000 and in other revenues
for the year ended December 31, 2000.

On March 2, 1998, the Company entered into a supervisory hotel
management agreement with GCP (see Note 1) for a term of ten years, pursuant
to which the Company is entitled to receive $100 per annum for management
services, payable monthly. Commencing July 2000, the Company no longer
accrues the management fees as the likelihood of collection is remote.
Supervisory management fees earned for the years ended December 31, 2000
and 1999, amounted to $50 and $100, respectively.

On May 12, 1998, with shareholder approval granted in
September 1999, the Board approved an annual compensation arrangement
whereby each of the three outside directors will receive $6 per annum plus,
pursuant to the 1998 Stock Option Plan (see Note 10), options to purchase up
to 25 shares, and an additional 15 shares for each committee served upon, of the
Company's Common Stock at an exercise price equal to the current market price
on the date the option was granted. Accordingly, in 1999 and 1998 the
Company granted to its outside directors options to purchase an aggregate
amount of up to 150 and 285 shares, respectively, of its Common Stock at an
exercise price of $4.25 and $1.063, respectively, per share, which can be
exercised any time up to 2009 and 2008, respectively. The amount granted in
1999 is for services to be rendered in the year 2000. The amount granted in
1998 represents options to purchase aggregate amounts of up to 135 and 150
shares for the 1998 and 1999 years of service, respectively. As compensation
to its employee directors, in December 1999 and 1998, the Company granted
options to purchase an aggregate amount of up to 95 shares of its Common
Stock for each of the 2000, 1999 and 1998 years.

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --
(Continued)
(In thousands, except for per share data)

Note 8. Commitments, Contingencies and Related Party Transactions
(CONTINUED)

Additionally, in both December 1999 and 1998, pursuant to the
1998 Stock Option Plan as approved by the Company's shareholders in
September 1999, the Company granted to the Company's Chairman options to
purchase 250 shares of the Company's common stock. All of the options to
purchase the Company's common stock under the 1998 Plan, which were
granted in 1998 to its outside and employee directors, excluding the Chairman,
are exercisable at a price per share equal to the closing NASDAQ bid prices on
the dates of the grants in December 1999 and 1998 of $4.25 and $1.063,
respectively. The exercise price for the 250 options granted in 1999 and 1998
to the Chairman to purchase the Company's common stock are exercisable at
prices per share of $4.25 and $1.13, respectively, which is equal to 100% and
110%, respectively, of the closing NASDAQ bid prices on the dates of the
grants in December 1999 and 1998 (see Note 10).

On September 15, 1998, $250 was advanced to Southern Classic,
Inc. ("Southern") pursuant to a 9 1/4% promissory note maturing January 30,
1999. Southern defaulted on its payment in January 1999 and filed for
bankruptcy in February 1999. Accordingly, a $250 reserve was recorded as of
December 31, 1998. A member of the Board of Directors of the Company
formerly served as Southern's Chief Financial Officer.

A director of the Company is a partner in a law firm that provides
legal services to the Company. Fees to such firm in the years ended December
31, 2000, 1999 and 1998, has been recorded at approximately $200, $204 and
$200, respectively, related to general corporate matters.

Note 9. Stockholders' Equity

Activity
In June 1998, the Company issued 135 shares of Series C
Preferred Stock (see description below) in settlement of $9,729 of obligations
to Bryanston.

During 1999 and 2000, 15 and 135 shares, respectively, of the
Company common stock was issued upon the exercise of warrants and options.

During 1999 and 2000, the Company recorded a $3,251 increase
and decrease, respectively, to capital in excess of par value to reflect
a noncash compensation adjustment (see Note 8). Further, in 2000, the
Company's Chairman and CEO's election to waive $250 of salary has been
reflected as an increase in capital in excess of par value for contributed
services (see Note 8).

In February 2000, the Company privately sold 4 shares of its 7%
convertible Series D Preferred Stock (see description below) for an aggregate
price of $3,867 net of closing costs of $133. During 2000, 1.9 shares of Series
D Preferred Stock were converted into 1,387 shares of the Company's common
stock.

In August 2000, in connection with certain debt financing with the
holder of the Company's Series D Preferred Stock, the Company has allocated
$213 as the estimated value of warrants issued in connection with a loan
advanced to the Company by such holder.

Descriptions of Preferred Stock and Dividends
The Company's Series B Preferred Stock has voting rights of eight
votes per preferred share, is convertible to eight shares of common stock for
each share of preferred stock and carries a dividend of $2.90 per share, payable
quarterly, which increases to $3.77 per share if the cash dividend is not paid
within 30 days of the end of each quarter. In the event the dividend is not
paid at the end of the Company's fiscal year (December 31), the dividend will be
payable in common stock. On December 17, 1997, the Company declared a
1996 dividend of $1,391, payable in 777 shares of the Company's common
stock, which were issued in April 1998. On May 12, 1998, the Company
declared a 1997 dividend of $2,861, payable in approximately 1,605 shares of
common stock, which were issued in January 1999. On May 12, 2000, the
Company declared dividends of $3,097 on the Series B Preferred Stock for
both the 1999 and 1998 fiscal years, respectively, amounting to 450 and 1,943,
respectively, of shares of the Company's common stock. These shares were
issued in July 2000. As of December 31, 2000, dividends in arrears on the
Series B Preferred Stock, amounted to approximately 3,167 shares.

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --
(Continued)
(In thousands, except for per share data)

Note 9. Stockholders' Equity (CONTINUED)

The Series C Preferred Stock has voting rights of twenty-four
votes per preferred share, is convertible into twenty-four shares of common
stock and carries a dividend of $5.65 per share. In addition, the terms of the
preferred shares include a provision allowing the Company the option of calling
the preferred shares based upon the occurrence of certain capital events that
realize a profit in excess of $5,000. As of December 31, 2000, dividends in
arrears on the Series C Preferred Stock, amounted to approximately $382, $763
and $763 for 1998, 1999 and 2000, respectively.

The Series D Preferred Stock is convertible into shares of the
Company's common stock at a conversion price of the lesser of $6 per share or
a price based upon the prevailing market price of the Company's common
stock, and accrues dividends at a rate of 7% per annum. In the event the
preferred stock is not converted into shares of the Company's stock by February
8, 2005, there will be a mandatory redemption at that time, payable in shares of
the Company's common stock at the same aforementioned conversion price.
The dividends are payable in arrears on the earlier of the date of conversion of
a share of Series D Preferred Stock or the date of redemption. At the
Company's option, the dividends are payable in the form of cash or shares of
the Company's common stock. The maximum aggregate total number of shares
of the Company's common stock issuable relative to the conversions and
payments of dividends is 3,300 shares. In the event such limitation prevents
the conversion of any Series D Preferred Stock, the dividend rate will increase
to 15% per annum to be payable in cash in arrears, semi-annually on June 30 and
December 31. The Series D Preferred Stock has no voting rights prior to its
conversion into common stock.

Note 10. Stock Options and Warrants

1998 and 1993 Stock Option Plans
In May 1998 and June 1993, the Company's Board of Directors
adopted the 1998 (see Note 8) and 1993 Stock Option Plans providing for
incentive stock options and non-qualified stock options. The Company has
reserved 4,000 and 900 shares of common stock for issuance upon the exercise
of options to be granted under the 1998 and 1993 Stock Option Plans,
respectively. The exercise price of an ISO or NQSO will not be less than 100%
of the fair market value of the Company's common stock at the date of the
grant. The maximum term of each option granted under the Plan is ten years,
however, options granted to an employee owning greater than 10% of the
Company's common stock will have a maximum term of five years.

In October 2000 and December 1998, the Company determined
that the purposes of the Stock Option Plans were not being adequately achieved
with respect to those employees and consultants holding options that were
exercisable at prices above current market value and that it was in the best
interests of the Company and its shareholders that the Company retain and
motivate such employees and consultants. Therefore, in order to provide such
optionees the opportunity to exchange their above market value options for
options exercisable at the current market value in 2000 and 1998, respectively,
the Company cancelled all outstanding options , not "in the money" at the
respective dates, and reissued the options at an exercise price of $1.375 and
$1.063, respectively, the closing NASDAQ bid prices on October 12, 2000 and
December 12, 1998.

On November 30, 2000, the Company repriced certain stock
options which, under Financial Accounting Standards Board Interpretation
Number 44 ("FIN44"), requires them to be accounted for under variable plan
accounting. The application of FIN 44, which was effective July 1, 2000, can
result in the recognition of non-cash compensation expense. Although there
was no compensation expense in the year ended December 31, 2000 as a result
of applying FIN 44, FIN 44 could result in significant future non-cash
compensation expense.

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --
(Continued)
(In thousands, except for per share data)

Note 10. Stock Options and Warrants (CONTINUED)

The following table summarizes common stock option activity,
excluding the simultaneous cancellations and reissuances on November 30,
2000, as noted above:

Weighted
Average
Range of Exercise
Number of Exercise Price Per
Shares Price Share

Options outstanding at
December 31, 1997 409 $1.063-$1.375 $1.090
Granted 1,065 $1.063-$1.17 1.088
Cancelled (200) $1.063-2.000 1.063

Options outstanding at
December 31, 1998 1,274 $1.063-1.375 $1.088
Granted in 1999 1,389 $1.375 1.375

Options outstanding at
December 31, 1999 2,663 $1.063-1.375 $1.238
Exercised in 2000 135 $1.063-2.000 $1.098

Options outstanding at
December 31, 2000 2,528 $1.063-1.375 $1.245

The following table summarizes information regarding stock options
outstanding at December 31, 2000:

Options Outstanding Options Exercisable
Weighted Weighted
Number Average Average Number Weighted
Range of Outstanding Remaining Exercise Exercisable Average
Exercise at Contractual Price Per at Exercise
Prices Dec 31, 2000 Life in Years Share Dec 31, 2000 Price

$1.063 876 6.67 $1.063 876 $1.063
1.17 250 7.92 1.17 250 1.17
1.375 1,402 8.60 1.375 1,327 1.375

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --
(Continued)
(In thousands, except for per share data)

Note 10. Stock Options and Warrants (CONTINUED)
Other Stock Options
During the years ended December 31, 2000, 1999 and 1998,
options to purchase 348, 50 and 600 shares, respectively, of the Company's
common stock at exercise prices of $5.375, $5.00 and $14.00, respectively,
expired. No other options were outstanding at December 31, 2000.

Warrants
In conjunction with its November 1993 initial public offering, the
Company issued 863 redeemable common stock purchase warrants at $.10 per
warrant. Each warrant entitled the holder to purchase one share of common stock
at the exercise price of $12.00, commencing in November 1993 until November
1998. In September 1998, the expiration date was extended to December 31,
2001 and the exercise price was amended to $4.00 through December 31, 2000
and to $6.00 through December 31, 2001. During the year ended December 31,
1999, 15 warrants were exercised. In connection with a loan to the Company
(see Note 6), the holder of the Company's Series D Preferred Stock (see Note 9)
received 125 warrants exercisable at a price of $2.40 per share, which expire in
July 2003. As of December 31, 2000, 973 warrants were outstanding, including
the 125 warrants outstanding to the holder of the Company's Series D Preferred
Stock.

Pro forma Information
The Company complies with the disclosure-only provisions of
SFAS 123, "Accounting for Stock-Based Compensation". Accordingly, no
compensation cost has been recognized for the Company's Stock Option Plans.
Had compensation cost for such Plans been determined based on the fair value
at the grant date of awards in the years ended December 31, 1999 and 1998
consistent with the provisions of SFAS 123, the Company's net loss and loss per
common share would have been increased to the pro forma amounts indicated
below:

1999 1998

Net loss, as reported $ (5,763)$ (16,260)
Net loss, pro forma (9,918) (17,473)
Loss per common share,
basic and diluted
as reported (.34) (1.09)
Loss per common share,
basic and diluted,
pro forma (.59) (1.17)

Because the SFAS 123 method of accounting has not been applied
to options granted prior to January 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expensed on
future years.

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-
average assumptions: volatility was calculated at 114% for 1999 and 100% for
1998; risk-free interest rate of five percent for 1999 and 1998; no
dividend yield and option life of ten years.

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --
(Continued)
(In thousands, except for per share data)

Note 11. Income Taxes

The Company and all of its subsidiaries file a consolidated federal income
tax return. At December 31, 2000 and 1999, the Company's deferred income tax
asset is comprised of the tax benefit associated with the following items based
on the statutory tax rates currently in effect:

2000 1999

Net operating loss
carryforwards . . . . . $ 18,236 $ 19,310
Differences between financial
and tax bases of assets and
liabilities . . . . . 7,758 7,756
Other . . . . . . . . 277 385
Deferred income tax asset,
gross . . . . . . . . 26,271 27,451
Valuation allowance. . . . . . . . (26,271) (27,451)
Deferred income tax asset, net $ -- $ --

During 1998, upon termination of its obligation under a lease in
Lakeshore, Mississippi, the Company exercised a tax write-off of leasehold and
improvements, written-off for book purposes in 1996. The tax write-off from
operations and 1998 losses exceeded the tax gain generated by the sale of
assets.Consequently, the Company did not utilize any of its net operating loss
carryforwards during 1998. These events skewed deferred (taxes) benefit in
relationship to loss before deferred (taxes) benefit in the year ended December
31, 1998.

As of December 31, 2000, the Company has available for federal
income tax purposes a net operating loss carryforward of approximately $45,590
expiring in the years 2008 through 2020.

Note 12. Liquidity

The Company has incurred and current net losses of approximately
$82,599 and $412, respectively, used approximately $2,589 in operations during
2000 and has a working capital surplus (excluding Casino Ventures which is not
expected to be paid by the Company during the next twelve months) of
approximately $452 at December 31, 2000. While the Company's 2000 efforts
were geared primarily at capital raising and pre-opening activities relating
to the November 2000 launching of the Ella Star, the Company anticipates
positive cash flows from the Ella Star during 2001. Further, the Company
anticipates the 2001 repayment of the $1,350 promissory note and all other
advances to Casino Ventures (see Note 7) and an approximate $250 cash
infusion from the minority member of Alpha Florida LLC. Long-term liquidity
is dependent on the Company's ability to attain profitable operations.

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands, except for per share data)

Note 13. Unaudited Quarterly Data

First Second Third Fourth
Quarter Quarter Quarter Quarter

2000
Total revenue. . . . . . $ 36 $ 52 $ 132 $ 652
Net loss applicable
to common shares . . . . . $ (129) $ (4,444) $ (120) $ (1,913)
Net loss per common
share. . . . . . . . $ (.01) $ (.26) $ (.01) $ (.07)

1999
Total revenue. . . . . . $ 43 $ 27 $ 25 $ 90
Net loss applicable
to common shares . . . . . $ (495) $ (828) $ (706) $ (3,734)
Net loss per common
share. . . . . . . . $ (.03) $ (.05) $ (.04) $ (.22)

SCHEDULE II

ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2000, 1999 and 1998
(In thousands)

Additions
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
Description of Year Expenses Accounts Deductions of Year

Year Ended
December 31, 1998: $ 635 -- -- -- 635
Allowance for
doubtful accounts

Year Ended
December 31, 1999: $ 635 -- -- -- 635
Allowance for
doubtful accounts

Year Ended
December 31, 2000: $ 635 -- -- -- 635
Allowance for
doubtful accounts

Year Ended
December 31, 1998: $ -- 250 -- -- 250
Allowance for
doubtful note

Year Ended
December 31, 1999: $ 250 -- -- -- 250
Allowance for
doubtful note

Year Ended
December 31, 2000:
Allowance for
doubtful note $ 250 -- -- -- 250

EXHIBIT 23(a)

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the registration statements of
Alpha Hospitality Corporation on Forms S-3 (File Nos. 333-45610, 333-33204,
333-39887 and 333-43861), S-8 (File Nos. 333-37293 and 333-90611) and Post
Effective Amendment of Form S-3 to Registration State on Form SB-2 (File no.
33-64236) of our report dated February 23, 2001, on our audits of the
consolidated financial statements and financial statement schedule of Alpha
Hospitality Corporation as of December 31, 2000 and 1999 and for the years
ended December 31, 2000, 1999 and 1998, which report is included in this
Annual Report on Form 10-K.

/S/ ROTHSTEIN, KASS & COMPANY, P.C.

ROSELAND, NEW JERSEY
March 30, 2001