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

              FORM 10-K/A

              (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, 2001.

(   ) 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.)

      707 Skokie Boulevard Suite 600 Northbrook, IL  60062
      (Address of principal executive offices)       (Zip Code)

             Issuer's telephone number      (847) 418-3804

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

                                    Name of each exchange
    Title of each class               on which registered

                                                NASDAQ
 Common Stock, $.01 par value per share         Boston Stock Exchange


        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.

     The issuer's revenues for the year ended December 31, 2001
were $3,115,000.

     The aggregate market value on April 1, 2002 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 $14,500,000

     As of May 16, 2002, 4,829,503 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 39.

AMENDMENT NO. 1 ON FORM 10-K FILED BY ALPHA HOSPITALITY CORPORATION ON
APRIL 1, 2002
     The following items amend the Annual Report on Form 10-K
filed by Alpha Hospitality Corporation (the "Company"), as permitted
by rules and regulations promulgated by the Securities and Exchange
Commission.  That Form 10-K is hereby amended and restated to insert
those Items as set forth herein.  All capitalized terms used herein by not
defined shall have the meanings ascribed to them in Form 10-K.




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, and in October 2000 was merged into Alpha
Florida Entertainment, L.L.C. ("Alpha Florida LLC"),  a limited liability
company formed in Florida on October 19, 2000 ( Alpha Florida and
Alpha Florida LLC, collectively,  hereinafter will be referred to as
"Alpha Florida LLC").  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, 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 707 Skokie Boulevard, Suite 600, Northbrook,
Illinois, 60062 and its telephone number is (847) 418-3804.

     Historically, the Company has been engaged in the ownership
and operation of gaming facilities, the most recent of which was the
gaming day cruise vessel, the Ella Star Casino ("Ella Star"), which was
launched in November 2000.  As a result of the severe  negative impact
on the travel and hospitality industries throughout the country from the
September 11th terrorist attack, which was further exacerbated by the
crash of American Airlines flight 587 out of New York's John F.
Kennedy airport on November 12, 2001, passenger levels on the Ella
Star were dramatically reduced.  After the Company's review of the
efforts required to restore the levels of patronage required to operate the
vessel profitably, it was determined to be imprudent to continue
operations, and therefore it was shut down permanently in November
2001.

     Although the Company will continue to pursue its remaining
development activities in gaming and related areas, the Company is
currently assessing its ability to acquire operating businesses or interests
in other areas.  In particular, the Company is evaluating businesses that
have consistently produced reliable cash flow and that can be acquired
at reasonable multiples of cash flows in order to permit the Company to
utilize efficiently its substantial net operating loss tax carry-forwards.
No specific negotiations with regard to any particular businesses have
yet taken place.  There can be no assurance that the Company will
identify, finance or conclude negotiations with respect to any such
acquisition.

Casino Operations and Gaming Activities

Development Activities

     New York. Development of Native American Casinos in the
Northeast. In 1988, Congress passed the Indian Gaming Regulatory Act
("IGRA").  Under specified conditions, IGRA permits casino gambling
on Native American land.  Under IGRA, two immensely successful
Native American casinos opened in Connecticut in the 1990's.
Foxwoods, operated by the Mashantucket Pequot Tribe, is now the
single most successful casino in the world, reportedly generating in
excess of $1 billion in annual gaming revenues.  The Mohegan Sun
casino, reportedly operated by the Mohegan Tribe, is located in the same
general area as Foxwoods and generates in excess of $800 million per
year in revenues.  Because of the unavailability of similar facilities closer
at hand, it is considered likely that a substantial number of the customers
at these casinos are from the New York Metropolitan area.



      IGRA permits a Native American tribe to petition the Governor
of its host state for a so-called "compact" permitting casino gaming on
such tribe's reservation and/or on lands to be acquired and held in trust
by the Unites States Government for the benefit of such tribe.  Approval
of a land-to-trust application for off reservation gaming purposes is
extremely rare.

            A compact is a necessary condition precedent to casino
development under IGRA, and Native American gaming is the only
casino gambling currently permitted in New York State. To date, only
two Native American Tribes have successfully petitioned the Governor
of New York for compacts.  The Oneida Nation received its compact in
1992, and the Mohawks received their compact in 1993.  The Oneidas
opened a very successful casino in western New York known as Turning
Stone in Oneida County, near Syracuse, and the Mohawks opened a
small casino on their Akwesasne Reservation on the Canadian border
with New York, far distant from New York City.

            Formation and Purpose of Catskill Development LLC ("CDL").
From the 1920's until sometime in the 1960's, the Catskill mountain area
of New York was a thriving summer resort community located close to
New York City.  By the 1990's, as a consequence (at least in part) of
cheap transportation, other resort attractions and gambling in Atlantic
City and elsewhere, the Catskill resort area became long on scenery, but
short of jobs and economic development. Sullivan County, however, had
the Monticello Raceway (the "Raceway"), one of the few harness racing
facilities in New York, and its citizens were accustomed to betting and
gambling.  Beginning in early December of 1994, several Sullivan
County businessmen, led by Robert Berman, began exploring ideas to
revitalize, bring jobs to and economically rejuvenate the Catskill resort
area. One idea explored was casino gambling in light of the passage of
IGRA and Foxwoods' hugely successful opening.  The group decided to
proceed with the casino gambling idea  (the "Casino Project"), using the
existing harness racing facility as the cornerstone.

            A real estate sales contract was executed in January 1995 to
purchase the Raceway and approximately 230 acres surrounding it from
an unrelated seller for purposes of acquiring land for ultimate casino and
related hotel, restaurant and hospitality development purposes.  Initial
discussions were had with the Oneida Tribe.  However, discussions with
the Oneida Tribe ended unsuccessfully in mid-1995, due primarily to the
unwillingness of the Oneida Tribe to share the revenue of the proposed
casino with the State. The businessmen became aware that the Company
had business relations with the St. Regis Mohawk Tribe (the "Mohawk
Tribe").  The Company introduced the group to the Mohawk Tribe.  The
group was expanded in 1995 to include the Company, Americas Tower
Partners and Monticello Realty, L.L.C.  Discussions with the Mohawk
Tribe were initiated in October of 1995, and CDL was formed by the
group actively and diligently to pursue the development of the Casino
Project on the land then under contract.  The group's business plan
envisioned three distinct lines of business with the members participating
in those lines somewhat in proportion to the expertise that each member
brought to the venture.  The designated components of the anticipated
business of CDL were: a) casino activities; b) real estate related
activities; and c) the operation of the Raceway.  CDL's plan was to seek
approval under federal statutes governing Native American gaming for
approval of an off-reservation casino to be located in Sullivan County.
This was a unique plan because the land involved was not on a
reservation itself, but off-reservation, far removed from the Mohawk
Tribe's existing reservation lands in upstate New York and Canada.

            On June 3, 1996, CDL acquired the Raceway for $10,000,000.
Of the real property purchased, 29.31 acres adjacent to the Raceway
were set aside for casino purposes to be deeded in trust to the United
States Government for the use and benefit of a Native American tribe.
CDL's negotiations with the Mohawk Tribe were successful, and on July
31, 1996, the first of numerous contracts between CDL (and its affiliates)
and the Mohawk Tribe was entered into.

            Mohawk Management LLC ("MML") was created by CDL to
provide technical and financial expertise to assist the Mohawks in
obtaining financing and to manage, operate and maintain the proposed
casino.  Monticello Raceway Development, LLC ("MRD") was created
by CDL to develop the casino property by providing technical expertise
for the planning, design, engineering, construction and operational start-
up of the proposed casino and the real property surrounding the proposed
casino site. MRD also contracted to assist the Mohawks in obtaining a
loan to finance  constructing, equipping and operating the casino.  CDL,
in conjunction with its affiliates, assumed responsibility for, and
undertook, seeking and obtaining all local, state and federal approvals
required for construction and operation the Casino Project.



            On April 22, 2000, CDL and the Company became aware of a
purported letter agreement between the Mohawk Tribe and Park Place
Entertainment ("PPE"), which agreement (with two irrelevant
exceptions) purportedly gave 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 such purported agreement was not,
and is not, clear.  On November 13, 2000, MML and CDL (collectively,
the "Plaintiffs") joined in a suit (the "PPE Litigation") filed in United
States District Court, Southern District of New York (the "Court")
against PPE, alleging entitlement to substantial damages as a
consequence of, among other things, PPE's wrongful interference with
several agreements between CDL and the Mohawk Tribe pertaining to
the proposed Casino Project.  The Plaintiffs alleged tortuous interference
with contract and prospective business relationships, unfair competition
and state anti-trust violations and sought over $6 billion in damages.  On
May 11, 2001, the District Court granted PPE's motion to dismiss three
of the four claims made by Plaintiffs.  However, on May 30, 2001, the
Plaintiffs moved for reconsideration of that ruling, and, on
reconsideration, the Court reinstated one of the dismissed claims, with
Plaintiffs' claims of tortuous interference with contract and prospective
business relationship remaining after such decision. The case is now in
the final discovery phase, and at this point, a 2002 trial date is expected.

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

            There can be no assurance that the project will receive all
requisite approvals or that the PPE Litigation and certain related
litigation will be satisfactorily resolved. However, if such approvals are
obtained and the PPE Litigation and certain related litigations are
satisfactorily resolved,  it is the Company's intention to proceed with the
development of the Casino Project

            Mohawk's and CDL's Federal Application.  On August 2,
1996, the Mohawks and CDL submitted an application to the United
States Department of the Interior, Bureau of Indian Affairs ("BIA"), to
place the 29.31-acre tract of land for the proposed casino in trust status,
to be held by the United States Government as trustee, as provided under
IGRA.  For approval, the Secretary of the Interior of the United States
had to determine that the Casino Project was in the best interest of the
Mohawks and was not detrimental to the surrounding community.
Pursuant to IGRA, the Governor of New York had to concur with these
determinations in order for the land to be taken into trust by the United
States Government.  While the application to the Department of Interior
took approximately one year to prepare, its review and processing
required an additional three and one-half years. As part of the process
and subsequent to the initial filing many of the agreements were
amended, restated and/or reaffirmed on several occasions.  As part of
that approval process was the complex and lengthy environmental
analysis required under the State of New York's environmental review
act ("SEQRA"), which analysis was successfully completed in March of
1998.  The SEQRA finding became an integral component of the Federal
application.

On December 9, 1998, the Acting Area Director of the Eastern
Area Office of the BIA (the "EAO") transmitted findings and
conclusions with respect to CDL's application for the Mohawks to the
Indian Gaming Management Staff (the "IGMS"), a department of the
BIA.  The memorandum concluded that the proposed Casino Project was
in the best interest of the Mohawks and was not detrimental to the
surrounding community and that the application satisfied all statutory
requirements.  By memorandum dated February 10, 1999, the Deputy
Commissioner of Indian Affairs advised the EAO that she did not concur
in the Director's recommendation.  The application and supporting
documentation were returned to the EAO to address issues enumerated
by the Deputy Commissioner.  In February 1999, officials of the EAO,
the IGMS and the National Indian Gaming Commission ("NIGC") made
a site visit to Monticello to meet with representatives of the State of New
York, the Mohawks and CDL to discuss specific concerns addressed in
the Deputy Commissioner's memorandum.  On August 31, 1999, the
NIGC completed its preliminary review of the revised business plan for
the Casino Project.

            On October 29, 1999, the Director of the EAO again
transmitted the application back to the IGMS with Findings of Fact and
a renewed recommendation that the Secretary of the Interior find that the
proposed Casino Project was in the best interest of the Mohawks and not
detrimental to the surrounding community.  By letter dated April 6,
2000, addressed to Governor George Pataki, Kevin Gover, Assistant
Secretary of the Department of the Interior, advised and notified the
Governor of New York that the Casino Project had been approved and
specifically requested that the Governor concur.


            The Company's History Within CDL. The Company, through
its wholly-owned subsidiary, AMI was party to a General Memorandum
of Understanding (the "Memorandum") with CDL (and, collectively
with AMI, the "Parties") dated December 1, 1995, which among  other
things, provided for the establishment of 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 Mohawk Tribe.
The Memorandum also set forth the general terms for the  funding and
management obligations of CDL 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  (the "Management
Contract") with the Mohawk Tribe for the management of a casino to be
built on the current site of the 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 contained 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%
membership interests 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 pursuant to which AMI (or another affiliate) became entitled
to receive 40% of any basic management fee income and 75% of any
service fee income (which is limited to 10% of casino revenues) (the
"ASR fee"), accruing from the operation of any Native American casino
facility development at the Raceway.  The net result of such settlement
entitled the Company (through its affiliates) to receive approximately
47% of all casino management fee and service income derived from the
underlying casino management and development contracts.  The original
Management Contract contemplated an arrangement specific to the
Mohawk Tribe, while the settlement agreement covers all prospective
federally recognized Native American Nations.  Accordingly, as part of
the settlement, Alpha Casino Management, Inc. ("ACM"), a subsidiary
of Alpha, 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 from Bryanston Group, Inc. ("Bryanston") 5 percentage points
of Bryanston's ownership interest in the real estate component of CDL's
business for $455,000 plus additional consideration if the asset is
liquidated.   In June 2001, the Company agreed to satisfy this obligation
through the issuance of shares of its common stock, valued at $8.00 per
share (the then current market price.)  Additionally, Bryanston agreed to
transfer its 25% interest in the Raceway's parimutuel operations of CDL
to AMI.  Under the previous agreement, AMI did not participate in this
source of revenue.  $2,492,000 and $2,047,000, respectively, of the
Investments and Advances in CDL on the Company's balance sheets at
December 31, 2001 and 2000 are comprised of payments towards the
design, architecture and other costs of the development plans for the
proposed Monticello Casino.

            The Company and certain members of CDL have spent
considerable amounts of money in purchasing the Raceway and pursuing
the development of a Native American casino on a portion of the
Raceway property.   These contributions must be repaid before any
earnings would be available for distribution to the Company.  As of
December 31, 2001, the aggregate amount needed to satisfy the payment
of priority returns to CDL and obligations to certain members of CDL
was approximately $40,429,000.  Under the CDL operating agreement,
member's capital contributions are entitled to a cumulative annual
preferred return of ten percent (10%) per annum from the date of any
such contribution, compounded at the end of each fiscal year.  As of
December 31, 2001, the Company's preferred capital balance is
approximately $3,968,000 out of a total preferred capital balance for all
the members of approximately $34,227,000.  Currently, the Company
has capitalized approximately $2,492,000 of these capital contributions
on its balance sheet (on a cost basis).  These preferred capital balances
are subordinate to a mortgage which, at December 31, 2001, is
approximately $6,202,000.  Currently, any cash flow from the operations
of the Raceway are being retained by CDL for working capital purposes
and to fund litigation and development expenses in conjunction with
other potential gaming operations at the track.  As a result, the Company
is not expected to receive any distributions from CDL with respect to its
interests in CDL (other than with respect to its preferred capital
contributions and interest thereon), until CDL has achieved additional
net revenues sufficient to discharge the payment of these priority returns.



            In October 2001, the New York State Legislature passed a bill
that expanded the nature and scope of permitted gaming in the state
("VLT Legislation").  That bill was signed by the Governor on October
31, 2001.  The provision of the VLT Legislation relevant to Alpha and
its development partner, CDL, include: a) authority given to the
Governor to negotiate casino licenses for up to three Native American
casinos in the Catskills; and b) the authority for several of New York's
racetracks, including the Raceway, to operate video lottery terminal
("VLTs") in their facilities.  The VLT operation will be conducted by the
New York State Lottery (the "Lottery") with the racetracks functioning
largely as an agent for the Lottery.  Details of how the VLTs will be
operated and how revenues will be shared have yet to be worked out
with the Lottery.  Alpha and its partner, CDL, are aggressively exploring
how this recently enacted VLT Legislation may impact upon its future
activities at the Raceway.

            On February 12, 2002, the Company entered into an agreement
with Watertone Holdings, L.P. ("Watertone") providing for the
acquisition of 47.5% of Watertone's economic interests in the casino and
racetrack business components of the business of CDL.  This agreement
replaced and superseded an agreement previously entered into with
Watertone in August 2001 pursuant to which the Company had agreed
to acquire all of Watertone's economic interest in the casino and
racetrack business components of CDL's business.  The transaction
contemplated by this agreement closed on March 12, 2002.  In
consideration for such economic interests, the Company issued 575,874
shares of its common stock for the benefit of Watertone.  Additionally,
as part of the proposed transactions, the Company entered into
employment agreements with two principals of Watertone, Messrs.
Robert Berman and Scott Kaniewski, providing for annual aggregate
salaries of $500,000 (which is subject to deferral under certain
circumstances) and options to purchase, at an exercise price of $17.49
per share, up to an aggregate of 180,302 shares of the Company's
common stock (which number of shares will be subject to increase to an
aggregate of up to 591,378 upon shareholder approval).

            Upon closing those transactions, before consideration of the
ASR fee, the Company's interest in any net revenues derived from
CDL's business component related to the casino and wagering
operations increased effectively from 40% to approximately 49% and its
interest in net revenues derived from the Raceway's parimutuel
operation  will increase effectively from 25% to approximately 37%.

            During 2001, 2000 and 1999, AMI incurred $470,000,
$962,000 and $209,000, respectively, of costs related to the proposed
development of the Casino Project, of which $445,000, $681,000, and
$0, respectively, has been capitalized, and the remaining $25,000,
$281,000 and $209,000, respectively, of which has been expensed are
substantially a corporate overhead allocation.

            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.  Under certain circumstances,
the Company's current 93% interest in Casino Ventures may be subject
to dilution or other reduction.  Matthew Walker ("Mr. Walker"), a
former 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, Casino
Ventures was loaned $876,000and  $604,000 from Mr. Walker in 2001
and 2000, respectively, $172,000 from the Company in 2000 and
$29,000 and $4,000 in 2001 and 2000, respectively, from the holder of
a $650,000 mortgage on the vessel.  An additional $550,000 and
$350,000, respectively, was received by Casino Ventures in the years
2001 and 2002, as future equity investments  contingent upon final
approval of the casino by the Mississippi Gaming Commission.  During
2001, 2000 and 1999, the Company capitalized $691,000, $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 $219,000, $268,000 and $100,00 of start-up costs
were incurred in 2001, 2000 and 1999, respectively.    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.  The Company expects Casino Ventures to commence
operations in Tunica in late 2002.

            Casino Ventures' interest expense for the years ended
December 31, 2001 and 2000, not eliminated in consolidation, amounted
to $184,000 and  $78,000, respectively.  This was substantially
attributable to interest on  the


$650,000 mortgage note payable secured by the  vessel, which is
currently in default, and on the loans from Mr. Walker.

Discontinued Activities

            Ella Star.  On May 7, 1999,  Alpha Florida LLC 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 was for five years.  For this exclusivity
Alpha Florida LLC  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, Alpha Florida LLC 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 completion.  The monthly payments
were $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 any time during  the three-year period, Alpha Florida LLC
had the option to purchase the vessel at a cost of $4,500,000, towards
which all previous construction payments would be applied.

            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, approximated $36,000 per month.

            In October 2000, Alpha Florida LLC 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, with the Company retaining the remaining 75% interest.
In 2001, Alpha Florida LLC received an additional $250,000 from the
same unrelated third party.

            Following the September 11th terrorist attack, the passenger
levels on the Ella Star fell dramatically from those enjoyed immediately
prior to the September 11th attack.  It was the opinion of the Company
that this condition, further exacerbated by the crash of American Airlines
flight 587 out of New York's John F. Kennedy airport, would extend
into and possibly through the upcoming high tourism season.  On
November 15, 2001, as a consequence of this assessment, the Company
decided to suspend operations at the Ella Star and on  December 19,
2001, Alpha Florida LLC  terminated its leases with Miami-Dade County
and the boat and equipment lessors.

            The Bayou Caddy's Jubilee Casino.  On March 2, 1998,
Company sold, through Alpha Gulf and Greenville Hotel, the Jubilee
Casino, the Greenville Hotel and other related assets to Greenville
Casino Partners, L.P.  ("GCP") and retained a 25% (subsequently
reduced to approximately 19% for capital call adjustments) interest in
GCP and entered into a hotel management contract with GCP.  In March
2002, the Company sold its 19% interest in GCP to JMBS Casino LLC
for approximately $2,500,000.  In addition, in March 2002, the Company
sold its management contract with GCP to Greenville C.P., Inc. for
approximately $500,000.

            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").

Seasonal Fluctuations

            Florida.  It was expected that the Ella Star's results would
reflect seasonal fluctuations. More particularly,  the results of the Ella
Star were anticipated to be impacted by weather in its primary feeder
market, as well as in it operating venue. The winter weather that the Ella
Star experienced in South Florida during 2000 and  2001 was the worst
for the region in approximately 25 years. The extraordinary weather
conditions had a materially adverse effect on the Company's financial
condition and results of operations.

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 regulations
relating to environmental protection.



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 beneficial owner of a substantial
interest (usually 5% or more) in the operation, members of the board of
directors, each officer and all key personnel be found suitable, and be
approved, by the applicable regulatory governing body. The failure of
any person required to be approved to be, and remain, qualified to hold
a license could result in the loss of the license.  In such instances, it is the
common industry practice that any such individual would recuse and
remove himself from such license entity.

            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 included the regulation of the Company
in regard to its 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 September 2001 for a three-year
period. No person may receive any percentage of profits from a gaming
subsidiary of a holding company without first obtaining a finding 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.

            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 were to be unable to continue to satisfy
the registration requirements of Mississippi law, the Company and its
Mississippi Gaming Subsidiaries would not be permitted to 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

            Certain officers, directors and key employees of the Company
and Alpha Gulf (as the owner of the 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 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 partnership interest in GCP,  the
Company retained its finding of suitability, which  was renewed in
October 2001 for a three-year period.

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 the Company's
potential operations in New York State, required documentation has
been filed with the National Indian Gaming Commission.

Employees

            As of December 31, 2001, the Company employed 7 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 6.  SELECTED FINANCIAL DATA
                (Dollars in thousands, except per share amounts)

     Years ended December 31, 2001, 2000, 1999, 1998 and  1997




                         2001        2000        1999      1998        1997
                                                    
Revenues              $  3,115     $   872     $   185   $   5,424  $   31,633
Loss from
    continuing
    operations        $ (9,477)    $  (647)    $ (5,763) $ (13,399) $   (1,774)
Loss per common
     share from
     continuing
     operations,
     basic and
     diluted          $  (4.02)   $   (.04)    $   (.34) $  (1.09)  $     (.23)


                                             December 31,
                         2001        2000        1999       1998       1997

Total assets          $ 10,388    $ 13,533     $  8,128  $ 10,196   $   29,993
Long-term debt        $  6,476    $  5,767     $  1,407  $  2,108   $    8,088
Stockholders' equity
     (deficit)        $ (2,942)   $  3,576     $  2,761  $  5,163   $    8,833





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

Ella Star:

  On May 7, 1999,  Alpha Florida LLC 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 was for five years.  The County could renew this exclusive
agreement for two periods of five years each.  For this exclusivity, Alpha
Florida LLC 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, Alpha Florida LLC 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 completion.  The monthly payments
were $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 all times during the three-year period, Alpha Florida LLC had
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.

  On September 7, 2000, Alpha Florida LLC 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, approximated $36,000 per month.

  Following the dramatic impact of the September 11th terrorist
attack, the passenger levels on the Ella Star fell dramatically from those
enjoyed immediately prior to the September 11th attack.  It was the
opinion of the Company that this condition, further exacerbated by the
crash of American Airlines flight 587 out of New York's John F.
Kennedy airport, would extend into and possible through the upcoming
high tourism season.  On November 15, 2001, as a consequence of this
assessment, Alpha Florida LLC decided to suspend operations at the Ella
Star and on  December 19, 2001, the Company terminated its leases with
Miami-Dade County and the boat and equipment lessors.  The loss
incurred for the year ended December 31, 2001 including losses
associated with the abandonment of the Company's assets related to the
Ella Star amounted to approximately $1,800,000.  No provision has been
made for any future payments on any contractual obligations entered into
by Alpha Florida.





Results of Operations:

  The following table sets forth the statements of operations for
Alpha Florida LLC's Ella Star before intercompany charges, minority
interest and pre-opening expenses for the years ended December 31, 2001
and 2000 (dollar amounts in the table below are in thousands):




                                                       2001           2000
                                                            
      Revenues:
          Casino . . . . . . . . . . . . . . . .   $   2,898       $     324
          Food and beverage, retail and other. .          73              25
          Other . . . .                                   58
            Total revenues . . . . . . . . . . .       3,029             349

     Operating expenses:
          Casino . . . . . . . . . . . . . . . .       1,737             215
          Food and beverage, retail and other. .          70              26
          Selling, general and administrative. .       4,259             796
          Interest. . .                                   40
            Total operating expenses . . . . . .       6,106           1,037

     Other expenses:
          Depreciation and amortization . . . . .        720              70
            Total other expenses . . . .. . . . .        720              70


     Loss before intercompany charges, minority
          interest, loss on abandonment of asset
          and pre-opening expenses                   $(3,797)        $  (758)



             The Ella Star, from its opening on November 26,
2000 through its Closing on November 14, 2001, had its revenues
negatively impacted by a series of unexpected events, the most dramatic
being the September 11, 2001 terrorist attack and the crash of American
Airlines flight 587 out of New York's John F. Kennedy airport, a prime
feeder market.  Weather problems began with wind weather conditions
dramatically above the norm for South Florida.  Because of the severe
weather, the Ella Star was forced to cancel several cruises, and the
attendance on those cruises that did sail in the face of poor weather or
predictions of poor weather were negatively impacted.  To partially
ameliorate the negative impact of these conditions, the Company pulled
the vessel out of the water for several days in January 2001 and installed
bilge keel stabilizers at a cost to the operation in excess of $100,000 and
then restarted its sailing schedule.  The extraordinary wind patterns
continued on into the fall, with a late season hurricane just missing the
Miami area.  Compounding the difficult weather conditions, bridge
construction throughout the summer on the Haulover Bridge created
severe delays on traffic attempting to access the Marina, the main artery
to the casino's site.

             During 2001, casino expenses, representing 60%
of casino revenues, included $916,000 of payroll and related expenses,
$358,000 of expenses related to food and beverage provided gratuitously
to customers and other expenses of $463,000.  In 2000, 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 in
2001 and 2000 were comprised of $1,433,000 and $219,000,
respectively, for payroll and related expenses, $804,000 and $176,000,
respectively, for advertising and marketing expenses, $1,125,000 and
$175,000, respectively, for dock, vessel and office rental expenses,
$384,000 and $98,000, respectively, for insurance, utilities, fuel and
other maintenance costs and the remaining $513,000 and $128,000,
respectively, for professional fees, office expenses and other
miscellaneous general and administrative expenses.



Mississippi:

             On March 2, 1998, the Company sold, through
Alpha Gulf and Greenville Hotel, the Jubilee Casino, the Greenville
Hotel and other related assets to Greenville Casino Partners, L.P.
("GCP") and retained a 25% interest in GCP (subsequently reduced to
approximately 19% for capital call adjustments) and entered into a hotel
management contract with GCP.  In March 2002, the Company sold its
19% interest in GCP to JMBS Casino LLC for approximately
$2,500,000.  In addition, in March 2002, the Company sold its
management contract with GCP to Greenville Casino Partners, Inc. for
approximately $500,000.

Results of Operations -- Alpha Gulf:

             The continuing general and administrative costs
for the years ended December 13, 2001, 2001 and 1999 consisted of
payroll and related expenses of approximately $5,000, $48,000 and
$100,000, respectively, occupancy costs of $13,000, $35,000 and
$34,000, respectively, and other expenses of $4,000, $6,000 and
$103,000, respectively.

             Certain old trade payables of Alpha Gulf were
settled in 2001 resulting in a reduction of selling, general and
administrative expenses of approximately $88,000.  In addition, Alpha
Gulf disposed of worthless equipment in 2001 resulting in an expense of
$32,000.

             Included in other revenue in 2000 was $136,000
awarded the Company in satisfaction of all claims and counterclaims
related to a dispute with GCP.

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.
Under certain circumstances, the Company's current 93% membership
interest in Casino Ventures may be subject to reduction and dilution.
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.

             The continuing costs incurred during each of  the
years ended December 31, 2001 and 2000 amounted to $33,000 of
warehousing costs. Continuing costs incurred during the years ended
December 31, 1999 for administration, insurance, compensation, dispute
settlements and vessel mooring and relocation were $185,000.  Interest
expense of $23,000, $113,000 and $146,000 for the years ended
December 31, 2001, 2000 and 1999, respectively, primarily related to
debt owed to Bryanston.  Such debt was originally related to the idle
gaming vessel and equipment until its contribution to Casino Ventures
in July 1999.  In June 2001, Bryanston agreed to settle the debt through
the issuance by the Company of shares of its common stock, which
occurred in January 2002.  Certain old trade payables were settled in
2001, resulting in a reduction of selling, general and administrative
expenses of approximately $247,000.






Future Operations

General:

             Proposals or prospects for acquisition
opportunities may be presented to the Company, or the Company may
otherwise become aware of such opportunities (any such new
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.

             The Company currently serves 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 steady profitability 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:

             Development of Native American Casinos in the
Northeast. In 1988, Congress passed the IGRA.  Under specified
conditions, IGRA permits casino gambling on Native American land.
Under IGRA, two immensely successful Native American casinos
opened in Connecticut in the 1990's.  Foxwoods, operated by the
Mashantucket Pequot Tribe, is now reportedly the single most successful
casino in the world, reportedly generating in excess of $1 billion in
annual gaming revenues.  The Mohegan Sun casino, operated by the
Mohegan Tribe, is located in the same general area as Foxwoods and
reportedly generates in excess of $800 million per year in revenues.
IGRA permits a Native American tribe to petition the Governor of its
host state for a so-called "compact" permitting casino gaming on a
reservation and/or on lands to be acquired and held in trust by the Unites
States Government for the benefit of the tribe.  Approval of a land-to-
trust application for off reservation gaming purposes is extremely rare.

            A compact is a necessary condition precedent to casino
development under IGRA, and Native American gaming is the only
casino gambling currently permitted in New York State. To date, only
two Native American Tribes have successfully petitioned the Governor
of New York for compacts.  The Oneida Nation in 1992 and the
Mohawks received their compact in 1993.  The Oneidas opened a very
successful casino in western New York known as Turning Stone in
Oneida County, near Syracuse, and the Mohawks opened a small casino
on their Akwesasne Reservation on the Canadian border with New York,
far distant from New York City.

            Formation and Purpose of Catskill Development LLC ("CDL").
From the 1920's until sometime in the 1960's, the Catskill mountain area
of New York was a thriving summer resort community located close to
New York City.  By the 1990's, as a consequence (at least in part) of
cheap transportation, other resort attractions and gambling in Atlantic
City and elsewhere, the Catskill resort area became long on scenery, but
short of jobs and economic development. Sullivan County, however, had
the Monticello Raceway (the "Raceway"), one of the few harness racing
facilities in New York, and its citizens were accustomed to betting and
gambling.  Beginning in early December of 1994, several Sullivan
County businessmen, led by Robert Berman, began exploring ideas to
revitalize, bring jobs to and economically rejuvenate the Catskill resort
area. One idea explored was casino gambling in light of the passage of
IGRA and Foxwoods' hugely successful opening.  The group decided to
proceed with the casino gambling idea  (the "Casino Project"), using the
existing harness racing facility as the cornerstone.

            A real estate sales contract was executed in January 1995 to
purchase the Raceway and approximately 230 acres surrounding it from
an unrelated seller for purposes of acquiring land for ultimate casino and
related hotel, restaurant and hospitality development purposes.  Initial
discussions were had with the Oneida Tribe.  However, discussions with
the Oneida Tribe ended unsuccessfully in mid-1995, due primarily to the
unwillingness of the Oneida Tribe to share the revenue of the proposed
casino with the State. The businessmen became aware that the Company
had business relations with the St. Regis Mohawk Tribe (the "Mohawk
Tribe").  The Company introduced the group to the Mohawk Tribe.  The
group was expanded in 1995 to include the Company, Americas Tower
Partners and Monticello



Realty, L.L.C.  Discussions with the Mohawk Tribe were initiated in
October of 1995 and CDL was formed by the group actively and
diligently to pursue the development of the Casino Project on the land
then under contract.  The group's business plan envisioned three distinct
lines of business with the members participating in those lines somewhat
in proportion to the expertise that each member brought to the venture.
The designated components of the anticipated business of CDL were: a)
casino activities; b) real estate related activities; and c) the operation of
the Raceway.  CDL's plan was to seek approval under federal statutes
governing Native American gaming for approval of an off-reservation
casino to be located in Sullivan County.  This was a unique plan because
the land involved was not on a reservation itself, but off-reservation, far
removed from the Mohawk Tribe's existing reservation lands in upstate
New York and Canada.

            On June 3, 1996, CDL acquired the Raceway for $10,000,000.
Of the real property purchased, 29.31 acres adjacent to the Raceway
were set aside for casino purposes to be deeded in trust to the United
States Government for the use and benefit of a Native American tribe.
CDL's negotiations with the Mohawk Tribe were successful, and on July
31, 1996, the first of numerous contracts between CDL (and its affiliates)
and the Mohawk Tribe was entered into.

            Mohawk Management LLC ("MML") was created by CDL to
provide technical and financial expertise to assist the Mohawks in
obtaining financing and to manage, operate and maintain the proposed
casino.  Monticello Raceway Development, LLC ("MRD") was created
by CDL to develop the casino property by providing technical expertise
for the planning, design, engineering, construction and operational start-
up of the proposed casino and the real property surrounding the proposed
casino site. MRD also contracted to assist the Mohawks in obtaining a
loan to finance  constructing, equipping and operating the casino.  CDL,
in conjunction with its affiliates, assumed responsibility for, and
undertook, seeking and obtaining all local, state and federal approvals
required for construction and operation the Casino Project.

            On April 22, 2000, CDL and the Company became aware of a
purported letter agreement between the Mohawk Tribe and Park Place
Entertainment ("PPE"), which agreement (with two irrelevant
exceptions) purportedly gave 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 such purported agreement was not,
and is not, clear.  On November 13, 2000, MML and CDL (collectively,
the "Plaintiffs") joined in a suit (the "PPE Litigation") filed in United
States District Court, Southern District of New York (the "Court")
against PPE, alleging entitlement to substantial damages as a
consequence of, among other things, PPE's wrongful interference with
several agreements between CDL and the Mohawk Tribe pertaining to
the proposed Casino Project.  The Plaintiffs alleged tortuous interference
with contract and prospective business relationships, unfair competition
and state anti-trust violations and sought over $6 billion in damages.  On
May 11, 2001, the District Court granted PPE's motion to dismiss three
of the four claims made by Plaintiffs.  However, on May 30, 2001, the
Plaintiffs moved for reconsideration of that ruling, and, on
reconsideration, the Court reinstated one of the dismissed claims, with
Plaintiffs' claims of tortuous interference with contract and prospective
business relationship remaining after such decision. The case is now in
the final discovery phase, and at this point, a 2002 trial date is expected.

            Subject to the obtaining of requisite approvals and satisfactory
resolution of the PPE litigation and certain related litigation, 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 a  Native American Nation
and will be located on land to be placed in trust for the benefit of such
Native American Nation.

            There can be no assurance that the project will receive all
requisite approvals or that the PPE Litigation and certain related
litigation will be satisfactorily resolved. However, if such approvals are
obtained and the PPE Litigation and certain related litigations are
satisfactorily resolved,  it is the Company's intention to proceed with the
development of the Casino Project

            Mohawk's and CDL's Federal Application.  On August 2,
1996, the Mohawks and CDL submitted an application to the United
States Department of the Interior, Bureau of Indian Affairs ("BIA"), to
place the 29.31-acre tract of land for the proposed casino in trust status,
to be held by the United States Government as trustee, as provided under
IGRA.  For approval, the Secretary of the Interior of the United States
had to determine that the Casino Project was in the best interest of the
Mohawks and was not detrimental to the surrounding community.
Pursuant to IGRA, the Governor of New York had to concur with these
determinations in order for the land to be taken into trust by the United
States Government.  While the application to the Department of Interior
took approximately one year to prepare, its review and processing
required an additional three and one-half years. As part of the process
and subsequent to the initial filing many of the agreements were
amended, restated and/or reaffirmed on several occasions.  As part of
that approval process was the complex and lengthy environmental
analysis required under the State of New York's environmental review
act ("SEQRA"), which analysis was successfully completed in March of
1998.  The SEQRA finding became an integral component of the Federal
application.



On December 9, 1998, the Acting Area Director of the Eastern
Area Office of the BIA (the "EAO") transmitted findings and
conclusions with respect to CDL's application for the Mohawks to the
Indian Gaming Management Staff (the "IGMS"), a department of the
BIA.  The memorandum concluded that the proposed Casino Project was
in the best interest of the Mohawks and was not detrimental to the
surrounding community and that the application satisfied all statutory
requirements.  By memorandum dated February 10, 1999, the Deputy
Commissioner of Indian Affairs advised the EAO that she did not concur
in the Director's recommendation.  The application and supporting
documentation were returned to the EAO to address issues enumerated
by the Deputy Commissioner.  In February 1999, officials of the EAO,
the IGMS and the National Indian Gaming Commission ("NIGC") made
a site visit to Monticello to meet with representatives of the State of New
York, the Mohawks and CDL to discuss specific concerns addressed in
the Deputy Commissioner's memorandum.  On August 31, 1999, the
NIGC completed its preliminary review of the revised business plan for
the Casino Project.

            On October 29, 1999, the Director of the EAO again
transmitted the application back to the IGMS with Findings of Fact and
a renewed recommendation that the Secretary of the Interior find that the
proposed Casino Project was in the best interest of the Mohawks and not
detrimental to the surrounding community.  By letter dated April 6,
2000, addressed to Governor George Pataki, Kevin Gover, Assistant
Secretary of the Department of the Interior, advised and notified the
Governor of New York that the Casino Project had been approved and
specifically requested that the Governor concur.

            The Company's History Within CDL. The Company, through
its wholly-owned subsidiary, AMI was party to a General Memorandum
of Understanding (the "Memorandum") with CDL (and, collectively
with AMI, the "Parties") dated December 1, 1995, which among  other
things, provided for the establishment of 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 Mohawk Tribe.
The Memorandum also set forth the general terms for the  funding and
management obligations of CDL 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  (the "Management
Contract") with the Mohawk Tribe for the management of a casino to be
built on the current site of the 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 contained 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%
membership interests 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 pursuant to which AMI (or another affiliate) became entitled
to receive 40% of any basic management fee income and 75% of any
service fee income (which is limited to 10% of casino revenues) (the
"ASR fee"), accruing from the operation of any Native American casino
facility development at the Raceway.  The net result of such settlement
entitled the Company (through its affiliates) to receive approximately
47% of all casino management fee and service income derived from the
underlying casino management and development contracts.  The original
Management Contract contemplated an arrangement specific to the
Mohawk Tribe, while the settlement agreement covers all prospective
federally recognized Native American Nations.  Accordingly, as part of
the settlement, Alpha Casino Management, Inc. ("ACM"), a subsidiary
of Alpha, 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 from Bryanston Group, Inc. ("Bryanston") 5 percentage points
of Bryanston's ownership interest in the real estate component of CDL's
business for $455,000 plus additional consideration if the asset is
liquidated.   In June 2001, the Company agreed to satisfy this obligation
through the issuance of shares of its common stock, valued at $8.00 per
share (the then current market price.)  Additionally, Bryanston agreed to
transfer its 25% interest in the Raceway's parimutuel operations of CDL
to AMI.  Under the previous agreement, AMI did not participate in this
source of revenue.  $2,492,000 and $2,047,000, respectively, of the
Investments and Advances in CDL on the Company's balance sheets at
December 31, 2001 and 2000 are comprised of payments towards the
design, architecture and other costs of the development plans for the
proposed Monticello Casino.



            The Company and certain members of CDL have spent
considerable amounts of money in purchasing the Raceway and pursuing
the development of a Native American casino on a portion of the
Raceway property.   These contributions must be repaid before any
earnings would be available for distribution to the Company.  As of
December 31, 2001, the aggregate amount needed to satisfy the payment
of priority returns to CDL and obligations to certain members of CDL
was approximately $40,429,000.  Under the CDL operating agreement,
member's capital contributions are entitled to a cumulative annual
preferred return of ten percent (10%) per annum from the date of any
such contribution, compounded at the end of each fiscal year.  As of
December 31, 2001, the Company's preferred capital balance is
approximately $3,968,000 out of a total preferred capital balance for all
the members of approximately $34,227,000.  Currently, the Company
has capitalized approximately $2,492,000 of these capital contributions
on its balance sheet (on a cost basis).  These preferred capital balances
are subordinate to a mortgage which, at December 31, 2001, is
approximately $6,202,000.  Currently, any cash flow from the operations
of the Raceway are being retained by CDL for working capital purposes
and to fund litigation and development expenses in conjunction with
other potential gaming operations at the track.  As a result, the Company
is not expected to receive any distributions from CDL with respect to its
interests in CDL (other than with respect to its preferred capital
contributions and interest thereon), until CDL has achieved additional
net revenues sufficient to discharge the payment of these priority returns.

            In October 2001, the New York State Legislature passed a bill
that expanded the nature and scope of permitted gaming in the state
("VLT Legislation").  That bill was signed by the Governor on October
31, 2001.  The provision of the VLT Legislation relevant to Alpha and
its development partner, CDL, include: a) authority given to the
Governor to negotiate casino licenses for up to three Native American
casinos in the Catskills; and b) the authority for several of New York's
racetracks, including the Raceway, to operate video lottery terminal
("VLTs") in their facilities.  The VLT operation will be conducted by the
New York State Lottery (the "Lottery") with the racetracks functioning
largely as an agent for the Lottery.  Details of how the VLTs will be
operated and how revenues will be shared have yet to be worked out
with the Lottery.  Alpha and its partner, CDL, are aggressively exploring
how this recently enacted VLT Legislation may impact upon its future
activities at the Raceway.

            On February 12, 2002, the Company entered into an agreement
with Watertone Holdings, L.P. ("Watertone") providing for the
acquisition of 47.5% of Watertone's economic interests in the casino and
racetrack business components of the business of CDL.  This agreement
replaced and superseded an agreement previously entered into with
Watertone in August 2001 pursuant to which the Company agreed to
acquire all of Watertone's economic interest in the casino and racetrack
business components of CDL's business.  The transaction contemplated
by this agreement closed on March 12, 2002.  In consideration for such
economic interests, the Company issued 575,874 shares of its common
stock for the benefit of Watertone.  Additionally, as part of the proposed
transactions, the Company entered into employment agreements with
two principals of Watertone, Messrs. Robert Berman and Scott
Kaniewski, providing for annual aggregate salaries of $500,000 (which
is subject to deferral under certain circumstances) and options to
purchase, at an exercise price of $17.49 per share, up to an aggregate of
180,302 shares of the Company's common stock (which number of
shares will be subject to increase to an aggregate of up to 591,378 upon
shareholder approval).

            Upon closing those transactions, before consideration of the
ASR fee, the Company's interest in any net revenues derived from
CDL's business component related to the casino and wagering
operations increased effectively from 40% to approximately 49% and its
interest in net revenues derived from the Raceway's parimutuel
operation , will increase effectively from 25% to approximately 37%.

            During 2001, 2000 and 1999, AMI incurred $470,000,
$962,000 and $209,000, respectively, of costs related to the proposed
development of the Casino Project, of which $445,000, $681,000, and
$0, respectively, has been capitalized, and the remaining $25,000,
$281,000 and $209,000, respectively, of which has been expensed are
substantially as a corporate overhead allocation.

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.  Under certain circumstances,
the Company's current 93% interest in Casino Ventures may be subject
to dilution or other reduction.  Matthew Walker ("Mr. Walker"), a
former 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,
Casino Ventures was loaned $876,000 and  $604,000 from Mr. Walker
in 2001 and 2000, respectively, $172,000 from the Company in 2000
and $29,000 and $4,000 in 2001 and 2000, respectively, from the holder
of a $650,000 mortgage on the vessel.  An additional $550,000 and
$350,000, respectively, was received by Casino Ventures in the years
2001 and 2002, respectively, as future equity investments  contingent
upon final approval of the casino by the Mississippi Gaming
Commission.  During 2001, 2000 and 1999, the Company capitalized
$691,000, $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 $219,000, $268,000 and
$100,000 of start-up costs were incurred in 2001, 2000 and 1999,
respectively.  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.  The Company expects Casino Ventures to commence
operations in Tunica in late 2002.

            Casino Ventures' interest expense for the years ended
December 31, 2001 and 2000, not eliminated in consolidation, amounted
to $184,000 and $78,000, respectively .  This was substantially
attributable to interest on  $650,000 mortgage note payable secured by
the  vessel and on the loans from Mr. Walker.

Liquidity and Capital Resources

            For the year ended December 31, 2001, the Company had net
cash used in operating activities of $3,952,000. The uses were the result
of a net loss of $9,477,000 includes depreciation and amortization of
$759,000, noncash compensation of $2,594,000, minority interest of
$1,077,000, interest amortized on loan discount $81,000, other
compensation adjustment of $250,000, loss on abandonment of assets of
$1,846,000 and a net decrease in working capital of $1,079,000.  The
decrease in working capital consisted primarily of a net decrease in other
current assets of $597,000, a decrease in other liabilities of $238,000, an
increase in accounts payable and other accrued expenses of $663,000
and an increase in payroll and related liabilities of $50,000.

            Cash used in investing activities of $1,300,000 consisted of
$879,000 of  payments for property and equipment, $444,000 of
investments and advances in CDL and a $23,000 increase in deposits and
other assets.

            Cash provided by financing activities of $4,009,000 was
substantially attributable to $800,000 of capital contributed by holders
of minority interests and $3,195,000 of proceeds from related party long-
term debt.

            As discussed in Note 2 to the audited financial statements, there
is substantial doubt about the Company's ability to continue as a going
concern.  The Company currently has no operations.  It has incurred an
accumulated deficit and current net losses of approximately $95,173,000
and $9,477,000, respectively, used approximately $3,950,000 in
operations during 2001 and has a working capital deficit (excluding a
payable to Casino Ventures, which is not expected to be paid by the
Company during the next twelve months) of approximately $4,615,000
at December 31, 2001.  In March 2002, the Company sold its investment
in GCP, along with its related supervisory management contract, for an
aggregate amount of approximately $3,000,000.    In April 2002, the
Company used a portion of the proceeds to pay $1,250,000 of the loan
payable to Bryanston, a major stockholder.  The Company also
anticipates the receipt of funds in 2002 relative to the complete or partial
liquidation in its interest in Casino Ventures.  In addition, the Company
continues to consider issuing equity securities to meet working capital
requirements and to acquire businesses that will enhance the Company's
operations and take advantage of its net operating loss carry-forwards.
Future liquidity could also come from the resolution of the PPE
Litigation.

            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.



New Pronouncements:
            In July 2001, the Financial Accounting Standards Board
("FASB") issued SFAS No. 141 "Business Combinations" and SFAS
No. 142 "Goodwill and Other Intangible Assets".  SFAS 141 requires
business combinations initiated after June 30, 2001 to be accounted for
using the purchase method of accounting, and broadens the criteria for
recording intangible assets separate from goodwill.  Recorded goodwill
will be evaluated against the new criteria and may result in certain
amounts initially recorded as goodwill being separately identified and
recognized apart from goodwill.  SFAS No. 142 requires the use of a
non-amortization approach to account for purchased goodwill and
certain intangibles.  Under such approach, goodwill and certain
intangibles will not be amortized into results of operations, but instead
would be reviewed for impairment and written down and charged to
operations only in periods in which the recorded value of goodwill and
intangibles exceeds it fair value.  The statements are fully effective
January 1, 2002.   The provisions of the statements are not expected to
have a significant effect on the Company's financial position or
operating results.

            The FASB also recently issued SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets", that is applicable to
financial statements issued for fiscal years beginning after December 15,
2001.  The FASB's new rules on asset impairment supersede SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", and portions of Accounting
Principles Board Opinion 30, "Reporting the Results of Operations".
This statement provides a single accounting model for long-lived assets
to be disposed of and significantly changes the criteria that would have
to be met to classify an asset as held-for-sale.  Classification as held-for-
sale is an important distinction since such assets are not depreciated and
are stated at the lower of fair value or carrying amount.  This statement
also requires expected future operating losses from discontinued
operations to be displayed in the period(s) in which the losses are
incurred, rather than as of the measurement date as presently required.
The Company has not yet determined the effect of this statement on its
financial position or operating results.


ITEM 8.  FINANCIAL STATEMENTS

     See Index to Financial Statements attached hereto.

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' Reports

              F-1, F-2

              Consolidated Balance Sheets

              F-3

              Consolidated Statements of Operations

              F-4

              Consolidated Statements of Stockholders' Equity

              F-5

              Consolidated Statements of Cash Flows

              F-6

              Notes to Consolidated Financial Statements

              F-8

2.   FINANCIAL STATEMENT SCHEDULE

              Schedule II Valuation  and Qualifying Accounts
              for the Years Ended December 31, 2001, 2000 and 1999
              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)       Form of Indemnification Agreement between the
                 Company and  directors and executive officers of the
                 Company
    *10(c)       1993 Stock Option Plan
    *10(d)       Form of Service Agreement between the Company
                 and Bryanston
    *10(e)       Form of Warrant Agreement among the Company,
                 the Transfer Agent and the Underwriters
    *10(f)       Form of Limited Standstill Agreement of the Existing
                 Stockholders f/b/o the Underwriters
    *10(g)       Form of Underwriters' Warrant
    ***10(h)     Non-Revolving Promissory Note with
                 Bryanston Group, Inc.
    ***10(i)     $20,000,000 Non-Revolving
                 Promissory Note dated January 5, 1996
    ***10(j)     Stock Purchase Agreement dated
                 October 20, 1996
    ***10(k)     Stock Acquisition Agreement dated
                 January 25, 1996
    ***10(l)     Form 8-K dated October 31, 1996
    ***10(m)     Deleted
    ****10(n)    Asset Purchase Agreement between
                 Alpha Gulf Coast, Inc. and Alpha
                 Greenville Hotel, Inc. and Greenville
                 Casino Partners, L.P.
    10(o)        Securities Purchase Agreement dated February 8,
                 2001
 *****10(p)      1998 Stock Option Plan
******10(q)      Securities Purchase Agreement, dated
                 February 8, 2001, between the
                 Company and Societe Generale with
                 respect to the issuance and sale of
                 shares of the Company's Series D
                 Preferred Stock
******10(r)      Certificate of Designations of the
                 Company's Series D Preferred Stock
******10(s)      Registration Rights Agreement, dated
                 February 8, 2001, between the
                 Company and Societe Generale with
                 respect to the shares of common stock
                 underlying the Company's Series D
                 Preferred Stock
*******10(t)     Securities Purchase Agreement, dated July 31, 2001,
                 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(u)     Registration Rights Agreement, dated July 31, 2001,
                 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(v)     Form of the Company's 4% Convertible Notes due
                 July 31, 2003
*******10(w)     Form of the Warrants
    10(x)        Amended and Restated Contribution Agreement,
                 dated as of February 8, 2002, by and between Alpha
                 Hospitality Corporation and Watertone Holdings, LP
                 (incorporated by reference - filed as an exhibit to
                 Form 8-K filed by Alpha Hospitality Corporation of
                 February 26, 2002)
    10(y)        Employment Agreement - Berman
                 Stock Option Agreement - Berman
                 Employment Agreement - Kaniewski
                 Stock Option Agreement - Kaniewski
                 Tag- Along Agreement, dated as of March 12, 2002,
                 by and between Bryanston and Watertone Holdings L.P
    10(z)        Exhibit 3.1 Amendment to Certificate of
                 Incorporation
                 Exhibit 4.1 Specimen Stock Certificate
    10(aa)       Irrevocable Proxy for Meeting of Shareholders of
                 Alpha Hospitality Corporation, dated March 12,
                 2002, given by Bryanston to Watertone Holdings,
                 L.P.
    10(ab)       Amendments to By-Laws



    23(a)        Consent of Rothstein Kass & Co.
    *11          Statement Re: Computation of Per Share Earnings
    21           List of Subsidiaries

(b)  Reports on Form 8-K in the last quarter covered by this report.

            Date filed - November 16, 2001
            Item 5. Other Events

            Date filed - February 12, 2002
            Item 4. Changes in Registrants Certifying Accountants
            Item 7 - Financial Statements and Exhibits

            Date filed - February 26, 2002
            Item 5 - Other Events
            Item 7 - Financial Statements, Proforma Financial

Information and Exhibits

 *  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, 2001.

*******Incorporated by reference, filed with the Company's
Registration Statement on Form S-3 as filed with the
Commission on October 12, 2001.





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/    Scott A. Kaniewski
           Scott A. Kaniewski

Title:     Executive Vice President of Finance and Development


Date:      May 22, 2002



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

Date:      May 22, 2002





FRIEDMAN ALPREN & GREEN LLP
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS

1700 BROADWAY
NEW YORK, NY 10019
212-582-1600
FAX 212-265-4761



     INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
ALPHA HOSPITALITY CORPORATION

            We have audited the accompanying consolidated
balance sheet of ALPHA HOSPITALITY CORPORATION AND
SUBSIDIARIES as of December 31, 2001, and the related
consolidated statements of operations, stockholders' equity
and cash flows for the year then ended.  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 audit.

            We conducted our audit 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 consolidated
financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated 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 audit provides 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, 2001, and the
consolidated results of their operations and their cash flows for
the year then ended in conformity with accounting principles
generally accepted in the United States of America.

            As discussed further in Note 2, subsequent to March
20, 2002, the date of our original report, the company paid
$1,250,000 of a loan payable to major stockholder.  As of
March 31, 2002, based on its unaudited financial statements,
the Company had no operations and its current liabilities
exceeded its current assets by over $3,800,000.  Additionally,
the Company is in default on a mortgage on certain property.
These factors, which are described in Note 2, create a
substantial doubt about the Company's ability to continue as
a going concern.  Management's plans in regard to these
matter are also described in Note 2.  The financial statements
do not include any adjustments that might result from the
outcome of this uncertainty.

            Our audit was 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 audit 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/ Friedman Alpren & Green LLP
New York, New York

March 20, 2002, except for the first paragraph of Note 2 and
the first schedule of Note 8, as to which the date is April 5,
2002.




     INDEPENDENT AUDITORS' REPORT


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

We have audited the accompanying consolidated balance
sheet of Alpha Hospitality Corporation and Subsidiaries as
of December 31, 2000, and the related consolidated
statements of operations, stockholders' equity and cash flows
for each of the years in the two-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 the 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 the
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 the results of their operations
and their cash flows for each of the years in the two-year
period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States
of America.


       /s/Rothstein, Kass & Company, P.C.

Roseland, New Jersey
February 23, 2001




         ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED BALANCE SHEETS
                   December 31, 2001 and 2000
           (In thousands, except for per share data)


                                             2001           2000
                            ASSETS
                                                 
CURRENT ASSETS:
     Cash                             $        20       $  1,263
     Other current assets                      56            696
       Total current assets                    76          1,959

PROPERTY AND EQUIPMENT, net                    11          2,311

INVESTMENT AND ADVANCES IN CATSKILL
    DEVELOPMENT, LLC                        2,947          2,503

ASSETS OF CASINO VENTURES, including
    idle property and
    equipment of $7,063 and $6,373          7,176          6,448

DEPOSITS AND OTHER ASSETS                     178            312
                                        $  10,388      $  13,533

        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
    Related party debt                  $   2,594      $      --
    Accounts payable and accrued
       expenses                             1,770           1,329
    Accrued payroll and related
       liabilities                            229             178
    Current liabilities of Casino
       Ventures                             1,453           1,597
       Total current liabilities            6,046           3,104

LONG-TERM RELATED PARTY DEBT,
     including accrued interest             1,046           4,003

LONG-TERM RELATED PARTY LIABILITIES
    OF CASINO VENTURES                      1,480             804

OTHER LIABILITIES                             267             960

LIABILITIES TO BE SETTLED WITH COMMON
    STOCK                                   3,683              --

COMMITMENTS AND CONTINGENCIES

MINORITY INTEREST                             808           1,086

STOCKHOLDERS' EQUITY (DEFICIENCY):
   Common stock, $.01 par value,7,500 shares
   authorized, 2,629 and 2,075 issued and
   outstanding in 2001 and 2000,
   respectively                                26              20
     Preferred stock, 5,000 shares
     authorized $.01 par value;
     Series B, 821 issued and outstanding       8               8
     Series C, 135 issued and outstanding       1               1
     Series D, 1 and 2 issued and
          outstanding in 2001 and 2000,
          respectively                          0               0
     Capital in excess of par value        92,196          86,146
     Accumulated deficit                  (95,173)        (82,599)
       Total stockholders' equity
         (deficiency)                      (2,942)          3,576
                                        $  10,388       $  13,533


   See accompanying notes to consolidated financial statements




         ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF OPERATIONS
          Years Ended December 31, 2001, 2000 and 1999
           (In thousands, except for per share data)



                                             2001        2000         1999
                                                          
REVENUES:
     Casino                               $ 2,898      $   324    $    --
     Food and beverage, retail and other      217          548        185
       Total revenues                       3,115          872        185

COSTS AND EXPENSES:
     Casino                                 1,737          215         --
     Food and beverage, retail and other       70           26         --
     Stock  compensation to employees       2,594       (3,251)     3,251
     Selling, general and administrative    6,128        2,424      1,649
     Interest                                 443          251        168
     Depreciation and amortization            759          113         38
     Pre-opening and development costs         92        1,400        842
     Loss on abandonment of assets          1,846          341         --
          Total costs and expenses         13,669        1,519      5,948

NET LOSS BEFORE MINORITY INTEREST         (10,554)        (647)    (5,763)

MINORITY INTEREST                           1,077          235         --

NET LOSS                                   (9,477)        (412)    (5,763)

DIVIDENDS ON PREFERRED STOCK               (5,789)      (6,194)        --

LOSS APPLICABLE TO COMMON SHARES         $(15,266)     $(6,606)   $(5,763)

WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING, basic and diluted         2,355        1,868      1,677


LOSS PER COMMON SHARE, basic and diluted $  (6.48)    $  (3.54)  $  (3.44)




   See accompanying notes to consolidated financial statements




                     ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      Years Ended December 31, 2001, 2000 and 1999
                        (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,
  January 1, 1999  821        8       135         1                    1,518     15    72,508       2,861  (70,230)
Common stock
  issued in
  settlement
  of preferred
  stock dividend
  payable . . .                                                          160      2     2,859      (2,861)
Common stock
  issued from
  exercise
  of warrants. .                                                           2               60
Common stock to
  be issued in
  settlement of
  certain
  liabilities. .                                                                                       50
Stock compensation
  to employees. .                                                                       3,251
Net loss. . . . .                                                                                                   (5,763)
Balances, December
  31, 1999. . . . 821       8        135         1                     1,680     17    78,678          50          (75,993)
Preferred stock
  issued in private
  placement    . .                                        4       0                     3,867
Preferred stock
  converted to
  common stock. .                                        (2)             139      1        (1)
Common stock
  issued from
  exercise of
  options. . . .                                                          14              148
Preferred stock
  dividend payable
  in common
  stock. . . .                                                           239      2     6,192                       (6,194)
Common stock issued
  in settlement
  of certain
  liabilities  . .                                                         3               50       (50)
Warrant issued   . .                                                                        213
Stock compensation
  to employees. . .                                                                    (3,251)
Compensation expense,
  services
  contributed . . .                                                                       250
Net loss . . . . . .                                                                                                  (412)
Balances, December
  31, 2000. . . . . 821      8        135        1        2       0    2,075     20    86,146         0            (82,599)
Preferred stock
  dividend
  payable in
  common stock . .                                                       317      3     3,094                       (3,097)
Stock compensation
  to employees. . .                                                                     2,594
Common stock issued
  from exercise of
  stock options . .                                                       29      1        10
Preferred stock
  converted to
  common stock . . .                                     (1)             191      2        (2)
Long term debt
  converted to
  common stock . . .                                                      17              104
Compensation expense
  services
  contributed . . .                                                                       250
Net loss . . . .                                                                                                    (9,477)
Balances, December
  31, 2001. . . . 821  $   8         135    $    1        1    $   0   2,629   $ 26   $92,196    $    0          $ (95,173)



                  See accompanying notes to consolidated financial statements


           ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS
            Years Ended December 31, 2001, 2000 and 1999
              (In thousands, except for per share data)



                                          2001          2000          1999
                                                         
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                          $ (9,477)    $     (412)    $  (5,763)
     Adjustments to reconcile net loss
        to net cash used in operating
        activities:
     Minority interest                   (1,077)          (235)           --
     Depreciation and amortization          759            113            38
     Stock compensation to employees      2,594         (3,251)        3,251
     Interest amortized on loan discount     81             29            --
     Compensation payable in common stock   250            250            --
     Loss on abandonment of assets        1,846            341            --
     Changes in operating assets and
        liabilities:
        (Increase) decrease in other
        current assets                      597          (574)            81
        Increase in accounts
        payable and accrued expenses        663           (86)           360
        Increase in accrued
        payroll and related liabilities      50           126             75
        Decrease in other liabilities      (238)           --             --

NET CASH USED IN OPERATING ACTIVITIES    (3,952)       (3,699)        (1,958)

CASH FLOWS FROM INVESTING ACTIVITIES:
    Investments and advances in Catskill
    Development, L.L.C.                   (444)         (681)              0
    Purchases of property and equipment   (879)       (3,087)           (385)
    (Payments) receipts for deposits
    and other assets                        23           (90)            (39)

NET CASH USED IN INVESTING ACTIVITIES   (1,300)       (3,858)           (424)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Capital contributed by holders of
    minority interest                      800         1,321               --
    Proceeds from sale of preferred
    stock, net                              --         3,867               --
    Proceeds from related party
    long-term debt                       3,195            --               --
    Proceeds from exercised
    warrants and stock options              10           148               60
    Proceeds from other long-term
    debt and warrants, net of
    loan costs                               4         2,020              650
    Payments on long-term debt              --            --             (701)

NET CASH PROVIDED IN  FINANCING
  ACTIVITIES                             4,009         7,356                9

NET DECREASE IN CASH                    (1,243)         (201)          (2,373)

CASH, beginning of year.                 1,263         1,464            3,837

CASH, end of year                    $      20     $   1,263        $   1,464



     See accompanying notes to consolidated financial statements



           ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF CASH FLOWS -- (Continued)
            Years Ended December 31, 2001, 2000 and 1999
              (In thousands, except for per share data)




                                              2001      2000      1999
                                                     
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION, cash paid for interest
    during the year. . . . . . . . .     $       21  $    110  $    158

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 issued in
   conversion of long-term debt . . ..  $      104

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

  Common stock issued in settlement
   of preferred stock dividends . . .   $    3,097   $ 6,194   $ 2,861






      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, is engaged in the development and
operation of gaming operations in New York, Mississippi and Florida.
In November 2001, the Company ceased operating its gaming day
cruise vessel operating in Florida.  The Company is pursuing
additional gaming-related and other opportunities.  Its major effort is
investing in the development and management of a potential casino in
Monticello, New York

Note 2. Going Concern

    The Company has sustained net losses over the past few years
and, at December 31, 2001, had a net working capital deficit, of
$3,376.  In addition, Casino Ventures, a subsidiary of the Company,
is in default of a mortgage on its gaming boat.  The Company also had
ceased operations of it gaming boat in Florida and has no other
operations.  Finally, on April 5, 2002, the Company paid $1,250 of the
loan payable to Bryanston, a major stockholder, out of the proceeds of
the sale of its interest in Greenville casino Partners, LP ("GCP").  Its
main activity, the development of its interest in a proposed casino in
Monticello, New York, is discussed in Note 5.

    Management is vigorously pursuing the litigation relative to
the development of a casino in Monticello, New York and is raising
funds by selling its inactive properties (see Note 4).  In March 2002,
the Company sold its 19% interest in  GCP and related management
contract for a gain of approximately $3,000.  The Company has
received $500 in cash and anticipates receiving the remaining $2,500
in April 2002.

    The Company anticipates issuing equity securities to meet
working capital requirements and acquire businesses that will enhance
the Company's operations and also take advantage of its net operating
loss carryforwards.

    The Company's consolidated financial statements have been
presented on the basis that the Company is a going concern.
Accordingly, the consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities or any
other adjustments that might result should the Company be unable to
continue as a going concern.

Note 3. 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 several banks
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

Property and equipment held for disposal is not depreciated or
amortized.



  ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

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

Note 3. Summary of Significant Accounting Policies
(CONTINUED)

    Investments.  The Company's 19% limited partnership interest
in Greenville Casino Partners ("GCP") is being accounted for under
the equity method of accounting. Because of GCP's significant
operating losses, the Company wrote the investment down to zero and
did not recognize its proportionate share of GCP's undistributed
earnings or losses (see Note 4).  The Company's investment in Catskill
Development, LLC ("CDL") is limited to access to net earnings and,
if applicable, liquidation.  Because it does not have significant
influence in operating CDL, the Company accounts for its investment
in CDL using the cost method.

    Pre-opening and Development Costs. The Company incurs
costs in connection with start-up casino operations and joint ventures.
The Company's policy is to expense pre-opening and development
costs as incurred.

    Earnings (Loss) Per Common Share. 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 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 from the Company's computation of loss per common share.
Therefore, basic and diluted loss per common share for the years
ended December 31, 2001, 2000 and 1999 were the same.

    Income Taxes. The Company applies the 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
$73 and $44 for the years ended December 31, 2001 and 2000,
respectively, provided gratuitously to customers. The cost of these
items of $70 and $39 for the years ended December 31, 2001 and
2000, respectively, are included in casino expenses.

    Fair Value of Financial Instruments. The Company's
financial instruments primarily consist of debt owed to related parties,
a mortgage owed to a third party, and the investment in CDL.  The
mortgage is currently in default.  The fair value of the related party
debt and mortgage is not reasonably determinable because no market
exists for these instruments and it was impracticable to estimate fair
values.  The fair value of the investment in CDL is not reasonably
determinable because no market exists for that instrument and it was
impracticable to estimate its fair value.

    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.

    Certain estimates used by management are particularly
susceptible to significant changes, such as the recoverability of the idle
property and equipment of Casino Ventures and  the investment  and
advances in CDL.  Management expects



   ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

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

Note 3. Summary of Significant Accounting Policies
(CONTINUED)

to recover the full amount of both investments (see Note 5 and 6).

    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.

    Recent Accounting Pronouncements.  In July 2001, the
Financial Accounting Standards Board ("FASB") issued SFAS No.
141 "Business Combinations" and SFAS No. 142 "Goodwill and
Other Intangible Assets".  SFAS 141 requires business combinations
initiated after June 30, 2001 to be accounted for using the purchase
method of accounting and broadens the criteria for recording
intangible assets separate from goodwill.  Recorded goodwill will be
evaluated against the new criteria and may result in certain amounts
initially recorded as goodwill being separately identified and
recognized apart from goodwill.  SFAS No. 142 requires the use of a
non-amortization approach to account for purchased goodwill and
certain intangibles.  Under such approach, goodwill and certain
intangibles will not be amortized into results of operations, but instead
would be reviewed for impairment and written down and charged to
operations only in periods in which the recorded value of goodwill and
intangibles exceeds it fair value.  The statements are fully effective
January 1, 2002.   The provisions of the statements are not expected
to have a significant effect on the Company's financial position or
operating results.

    The FASB also recently issued SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets", that is
applicable to financial statements issued for fiscal years beginning
after December 15, 2001.  The FASB's new rules on asset impairment
supersede SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of", and
portions of Accounting Principles Board Opinion 30, "Reporting the
Results of Operations".  This statement provides a single accounting
model for long-lived assets to be disposed of and significantly changes
the criteria that would have to be met to classify an asset as held-for-
sale.  Classification as held-for-sale is an important distinction since
such assets are not depreciated and are stated at the lower of fair value
or carrying amount.  This statement also requires expected future
operating losses from discontinued operations to be displayed in the
period(s) in which the losses are incurred, rather than as of the
measurement date as presently required.  The Company has not yet
determined the effect of this statement on its financial position or
operating results.

    Reclassifications. Certain prior year amounts have been
reclassified to conform to the 2001 presentation.

Note 4.  Investment in Greenville Casino Partners

    On March 2, 1998, the Company sold substantially all of the
assets of Alpha Gulf and Greenville Hotel, the Bayou Jubilee casino,
the Greenville Hotel and other related assets to Greenville Casino
Partners, L.P.  ("GCP") and retained a 25% interest (subsequently
reduced to approximately 19% for capital call adjustments) and
entered into a management contract with GCP.  Subsequent to the sale,
management was advised that GCP incurred significant operating
losses resulting in a substantial working capital deficiency and a
partners' deficiency through December 31, 1998.  Accordingly, in
accordance with its policy on impairment of long-lived assets, the
Company adjusted the carrying value of it 19% limited partnership
interest in GCP to zero in 1998.The Company was not responsible for
any of GCP's liabilities and, accordingly, did not record its share of
any of GCP's losses.  In March 2002, the Company agreed to sell its
19% interest in GCP to JMBS Casino LLC for approximately $2,500
and its management contract to Greenville C.P. Inc. for approximately
$500.  The Company will recognize its gain on the sale in the first
quarter of 2002.




   ALPHA HOSPITALITY CORPORATION AND
             SUBSIDIARIES

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

Note 5. Investment in Catskill Development, LLC

    In October of 1995, Catskill Development, LLC ("CDL") was
formed to actively and diligently pursue the development of the casino
gambling idea  (the "Casino Project").  The group's business plan
envisioned three distinct lines of business with the members
participating in those lines somewhat in proportion to the expertise
that each group brought to the venture.  The defined lines of business
included: a) casino activities; b) real estate related activities; and c) the
operation of the Monticello Raceway (the "Raceway").  CDL's plan
was to seek approval under federal statutes governing Native
American gaming for an off-reservation casino to be located in
Monticello, New York.  This was a unique plan because the land
involved was not on a reservation itself, but off-reservation, far
removed from the Mohawk Tribe's existing reservation lands in
upstate New York and Canada.

    On June 3, 1996, CDL acquired the Raceway for $10,000.  Of
the real property purchased, 29.31 acres adjacent to the Raceway were
set aside for casino purposes to be deeded in trust to the United States
Government for the use and benefit of a Native American tribe.
CDL's negotiations with the Mohawk Tribe were successful, and on
July 31, 1996, the first of numerous contracts between CDL (and its
affiliates) and the Mohawk Tribe was entered into.

    Mohawk Management LLC ("MML") was created by CDL
to provide technical and financial expertise to assist the Mohawks in
obtaining financing and to manage, operate and maintain the proposed
casino.  Monticello Raceway Development, LLC ("MRD") was
created by CDL to develop the casino property by providing technical
expertise for the planning, design, engineering, construction and
operational start-up of the proposed casino and the real property
surrounding the proposed casino site. MRD also contracted to assist
the Mohawks in obtaining a loan to finance  constructing, equipping
and operating the proposed casino.  CDL, in conjunction with its
affiliates, assumed responsibility for, and undertook, seeking and
obtaining all local, state and federal approvals required for
construction and operation the Casino Project.

    On April 22, 2000, the Company and  CDL became aware of
a purported letter agreement between the Mohawk Tribe and Park
Place Entertainment ("PPE"), which agreement purportedly gave 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 such purported agreement was not, and is not, clear.  On November
13, 2000, MML and CDL (collectively, the "Plaintiffs") joined in a
suit (the "PPE Litigation") filed in United States District Court,
Southern District of New York (the "Court") against PPE, alleging
entitlement to substantial damages as a consequence of, among other
things, PPE's wrongful interference with several agreements between
CDL and the Mohawk Tribe pertaining to the proposed Casino
Project.

    Mohawk's and CDL's Federal Application.  On August 2,
1996, the Mohawks and CDL submitted an application to the United
States Department of the Interior, Bureau of Indian Affairs ("BIA"),
to place the 29.31-acre tract of land for the proposed casino in trust
status, to be held by the United States Government as trustee, as
provided under Indian Gaming Regulatory Act ("IGRA").  For
approval, the Secretary of the Interior of the United States had to
determine that the proposed Casino Project was in the best interest of
the Mohawks and was not detrimental to the surrounding community.
Pursuant to IGRA, the Governor of New York had to concur with
these determinations in order for the land to be taken into trust by the
United States Government.  While the application to the Department
of Interior took approximately one year to prepare, its review and
processing required an additional three and one-half years.  As part of
the process and subsequent to the initial filing many of the agreements
were amended, restated and/or reaffirmed on several occasions.  Part
of that approval process required the complex and lengthy
environmental analysis required under the State of New York's
environmental review act ("SEQRA"), which was successfully
completed in March of 1998.  The SEQRA finding became an integral
component of the Federal application.

On December 9, 1998, the Acting Area Director of the
Eastern Area Office of the BIA (the "EAO") transmitted findings and
conclusions with respect to CDL's application for the Mohawks to the
Indian Gaming Management Staff (the "IGMS"), a department of the
BIA.  The memorandum concluded that the proposed Casino Project
was in the best interest of the Mohawks and was not detrimental to the
surrounding community and that the application satisfied all statutory
requirements.  By memorandum dated February 10, 1999, the Deputy
Commissioner of Indian Affairs advised the EAO that she did not
concur in the Director's recommendation.  The application and
supporting documentation were returned



   ALPHA HOSPITALITY CORPORATION AND
             SUBSIDIARIES

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

Note 5. Investment in Catskill Development, LLC (CONTINUED)

to the EAO to address issues enumerated by the Deputy
Commissioner.  In February 1999, officials of the EAO, the IGMS and
the National Indian Gaming Commission ("NIGC") made a site visit
to Monticello to meet with representatives of the State of New York,
the Mohawks and CDL to discuss specific concerns addressed in the
Deputy Commissioner's memorandum.  On August 31, 1999, the
NIGC completed its preliminary review of the revised business plan
for the proposed Casino Project.

            On October 29, 1999, the Director of the EAO again
transmitted the application back to the IGMS with Findings of Fact
and a renewed recommendation that the Secretary of the Interior find
that the proposed Casino Project was in the best interest of the
Mohawks and not detrimental to the surrounding community.  By
letter dated April 6, 2000, addressed

to Governor George Pataki, Kevin Gover, Assistant Secretary of the
Department of the Interior, advised and notified the Governor of New
York that the Casino Project had been approved and specifically
requested that the Governor concur.

            The Company's History Within CDL. The Company, through
its wholly-owned subsidiary, AMI was party to a General
Memorandum of Understanding (the "Memorandum") with CDL (and,
collectively with AMI, the "Parties") dated December 1, 1995, which
among  other things, provided for the establishment of 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
Mohawk Tribe.  The Memorandum also set forth the general terms for
the  funding and management obligations of CDL 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  (the "Management Contract") with the Mohawk Tribe for
the management of a proposed casino to be built on the current site of
the 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 contained 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% membership interests 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 pursuant to which AMI (or another affiliate) became
entitled to receive 40% of any basic management fee income and 75%
of any service fee income (which is limited to 10% of casino revenues)
(the "ASR fee"), accruing from the operation of any Native American
casino facility development at the Raceway.  The net result of such
settlement entitled the Company (through its affiliates) to receive
approximately 47% of all casino management fee and service income
derived from the underlying casino management and development
contracts.  The original Management Contract contemplated an
arrangement specific to the Mohawk Tribe, while the settlement
agreement covers all prospective federally recognized Native
American Nations.  Accordingly, as part of the settlement, Alpha
Casino Management, Inc. ("ACM"), a subsidiary of Alpha, 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 from Bryanston Group, Inc. ("Bryanston") 5 percentage
points of Bryanston's ownership interest in the real estate component
of CDL's business for $455 plus additional consideration if the asset
is liquidated.   In June 2001, the Company agreed to satisfy this
obligation through the issuance of shares of its common stock, valued
at $8.00 per share (the then current market price.)  Additionally,
Bryanston agreed to transfer its 25% interest in the Raceway's
parimutuel operations to AMI.  Under the previous agreement, AMI
did not participate in this source of revenue.  As of December 31, 2001
and December 31, 2000, the Company capitalized $2,492 and $2,047,
respectively towards the design, architecture and other costs of the
development plans for the proposed Monticello Casino.



   ALPHA HOSPITALITY CORPORATION AND
             SUBSIDIARIES

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

Note 5. Investment in Catskill Development, LLC (CONTINUED)

            The Company and certain member of CDL have spent
considerable amounts of money in purchasing the Raceway and
pursuing the development of a Native American casino on a portion
of the Raceway property.   These contributions must be repaid before
any earnings would be available for distribution to the Company.  As
of December 31, 2001, the aggregate amount needed to satisfy the
payment of priority returns to CDL and obligations to certain members
of CDL was approximately $40,429.  Under the CDL operating
agreement, member's capital contributions are entitled to a cumulative
annual preferred return of ten percent (10%) per annum from the date
of any such contribution, compounded at the end of each fiscal year.
As of December 31, 2001, the Company's preferred capital balance is
approximately $3,968 out of a total preferred capital balance for all the
members of approximately $34,227.  Currently, the Company has
capitalized approximately $2,492 of these capital contributions on its
balance sheet (on a cost basis).  These preferred capital balances are
subordinate to a mortgage which, at December 31, 2001, is
approximately $6,202.  Currently, any cash flow from the operations
of the Raceway are being retained by CDL for working capital
purposes and to fund litigation and development expenses in
conjunction with other potential gaming operations at the track.  As a
result, the Company is not expected to receive any distributions from
CDL with respect to its interests in CDL (other than with respect to its
preferred capital contributions and interest thereon), until CDL has
achieved additional net revenues sufficient to discharge the payment
of these priority returns.

            In October 2001, the New York State Legislature passed a bill
that expanded the nature and scope of gaming in the state ("VLT
Legislation").  That bill was signed by the Governor on October 31,
2001.  The provision of the VLT Legislation relevant to the Company
and its development partner, CDL, include: a) authority given to the
Governor to negotiate casino licenses for up to three Native American
casinos in the Catskills; and b) the authority for several of New York's
racetracks, including the Raceway, to operate video lottery terminal
("VLTs") in their facilities.  The VLT operation will be conducted by
the New York State Lottery (the "Lottery") with the racetracks
functioning largely as agents for the Lottery.  Details of how the VLTs
will be operated and how revenues will be shared have yet to be
worked out with the Lottery.  The Company and its partner, CDL, are
aggressively exploring how this recently enacted VLT Legislation
may impact upon its future activities at the Raceway.

            On February 12, 2002, the Company entered into an
agreement with Watertone Holdings, L.P. ("Watertone") providing for
the acquisition of 47.5% of Watertone's economic interests in the
casino and racetrack business components of the business of CDL.
This agreement replaced and superseded an agreement previously
entered into with Watertone in August 2001 pursuant to which the
Company had agreed to acquire all of Watertone's economic interest
in the casino and racetrack business components of CDL's business.
The transaction contemplated by this agreement closed on March 12,
2002.  In consideration for such economic interests, the Company
issued 576 shares of its common stock for the benefit of Watertone.
Additionally, as part of the proposed transactions, the Company
entered into employment agreements with two principals of
Watertone, Messrs. Robert Berman and Scott Kaniewski, providing
for annual aggregate salaries of $500 (which is subject to deferral
under certain circumstances) and options to purchase, at an exercise
price of $17.49 per share, up to an aggregate of 180 shares of the
Company's common stock (which number of shares will be subject to
increase to an aggregate of up to 591 upon shareholder approval).

            Upon closing those transactions, before consideration of the
ASR fee, the Company's interest in any net revenues derived from
CDL's business component related to the casino and wagering
operations increased effectively from 40% to approximately 49% and
its interest in net revenues derived from the Raceway's parimutuel
operation increased effectively from 25% to approximately 37%.

       During 2001, 2000 and 1999, AMI incurred $470, $962 and
$209, respectively, of costs related to the proposed development of the
Casino Project, of which $444, $681, and $0, respectively, has been
capitalized, and the remaining $25, $281 and $209, respectively, of
which has been expensed are substantially as a corporate overhead
allocation.



    ALPHA HOSPITALITY CORPORATION AND
SUBSIDIARIES

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

Note 6. Investment in Casino Ventures, L.L.C.

       On July 8, 1999, the Company contributed its inactive vessel,
Jubilation, to Casino Ventures.  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 prime plus
one percent with a minimum rate of 8.75%, payable quarterly, with the
principal balance due July 8, 2002.  Under certain circumstances, the
Company's current 93% membership interest in Casino Ventures may
be subject to reduction and dilution. 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 former director of the Company is a member in
Casino Ventures and serves as its General Manager. That former
director advanced funds to Casino Ventures in 2000 and 2001 that
were used for site and vessel improvements.  As of December 31,
2001, the loan payable to the former director amounted to $1,480.  The
loan accrues interest at 8% and matures April 2003.  In addition, $100
and $12 of the Casino Ventures start up costs in 2000 and 1999,
respectively, were paid to entities in which the former director has an
ownership interest.  During the years ended December 31, 2001, 2000
and 1999, the Company capitalized  $691, $1,859 and $364 of costs,
respectively, related to the refurbishment of the vessel and
improvement to its site in Tunica, Mississippi and incurred $219, $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 8).   The $650 mortgage is currently in default.  Total
interest expense on Casino Venture debt for 2001, 2000 and 1999
amounted to $184, $79 and $22, respectively.  Pursuant to an
amendment agreement effective April 18, 2001, the total maximum
borrowings allowed to be collateralized by the vessel is $1,000.

       At December 31, 2001 and 2000, assets and liabilities of
Casino Ventures consisted of the following:




                                2001      2000
                                   
Assets:
       Property and equipment   $ 7,063  $  6,383
       Deposits                      54        54
       Other                         59        11
                                  7,176     6,448
Current liabilities:
 Long-term liability,
   current maturities               683       679
 Accounts payable and
   accrued expenses                 770       918
                                  1,453     1,597
Long-term liabilities,
     Long-term debt            $  1,480  $    804






           ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

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

Note 7. Property and Equipment

 At December 31, 2001 and 2000, property and equipment in use is
comprised of the following:




                                   2001             2000
                                           
   Boat and improvements           $    --        $ 1,852
   Leasehold improvements               --             88
   Gaming equipment                     --            280
   Furniture, fixtures and equipment   159            489
                                       159          2,709
   Less accumulated depreciation
       and  amortization               148            398
                                   $    11        $ 2,311



 Since the inception of its operations, the Ella Star
Casino had not achieved the revenues originally anticipated by
management.  Following the events of September 11, 2001, the Ella
Star Casino experienced a further decrease in passenger levels as a
result of a general decline in tourism.  As a result, the Ella Star Casino
incurred a net loss of $3,800 during the period January 1, 2001 to
November 14, 2001.  In November 2001, the Company suspended and
subsequently terminated its Ella Star Casino operations.  The
Company abandoned its leasehold on the Ella Star and returned the
ship to the lessor, incurring an abandonment loss of $1,815.

 On July 8, 1999, the Company contributed idle
equipment to Casino Ventures (see Note 6).  These assets are being
held for disposal and are not being depreciated.  At December 31,
2001 and 2000, property and equipment held for disposal is as
follows:




                                       2001      2000
                                           
          Boat and improvements        $ 7,872   $ 7,182
          Gaming equipment               1,944     1,944
          Furniture, fixtures
           and equipment                 1,471     1,481
                                        11,287    10,607
          Less accumulated
           depreciation
           and amortization            (4,224)   (4,224)
                                     $  7,063  $  6,383





           ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

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

 Note 8. Long-Term Debt and Other Non-Current Liabilities

Long-term debt at December 31, 2001 and 2000 was comprised of the following:




                                          Interest
                                          Rate         2001         2000
                                                       
Related Party Debt
     Loan payable (a). . . . .             4%     $   1,046     $    1,066

     Loan payable to a director
      of the Company,
      due in April 2003. . . . .           8%         1,480            804

     Note payable to Bryanston Group,
      Inc. ("Bryanston"),
      a major stockholder, 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 (b). . . . .  8%         1,407          1,407

     Loan payable to Bryanston,
      due on demand.  On April 5,
      2002, the Company paid $1,250
      of this loan, including accrued
      interest. . . . . .                  8%         2,594             --

     Accrued compensation (c). . . .                  1,529          1,530

     Other payables and accrued
      expenses . . . . .                                747             --
       Total related party debt. . . .                8,803          4,807

    Mortgage note collateralized by
     the Company's inactive vessel
     (see Note 6) with interest payable
     monthly and principal due in
     January 2001 . . . . .               8%            650            650

    Promissory note payable,
     due on demand . . . . . .            6%             33             29
                                                      9,486          5,868
     Less amounts included in
      liabilities of Casino
      Ventures (see Note 6). . . .                    2,363          1,483
                                                    $ 7,123      $   4,003



     (a) On July 31, 2000, the Company received a  $1,250 loan
from the holder of the Company's preferred stock, Series D (see Note 11).
Simultaneously with the closing of that loan, the lender also
received 125 warrants exercisable at a price of $2.40 per share,
which expire in July 2003.  The loan accrues
interest at a rate of 4% per annum, and Bryanston has agreed,
subject to certain terms and conditions, to subordinate its
entitlement to receive cash dividends in lieu of
payment on the preferred stock, Series B and C, owned by it and on the Company
indebtedness owed to it to the prior payment of such loan,
as well as payments due with respect to the preferred stock, Series D.

     Relative to the $1,250 principal amount of the loan and
warrants issued, the Company has allocated approximately $213 as the estimated
value of the warrants issued with the loan.  This amount is being amortized as
additional interest expense and an increase to notes payable over
the life of the loan using the effective interest method until such
loan is repaid or the warrants are converted into common stock. In 2001,
$100 of the principal amount was converted into 17 shares of the
Company's common stock.  At December 31, 2001, approximately $109 has
been amortized and the remaining balance of approximately
$104  at December 31, 2001 is reflected as a reduction of the loan payable.

     (b) Bryanston 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.

     (c) The Company was obligated under an employment
contract with Stanley S. Tollman, its former Chairman and
Chief Executive Officer ("CEO").  Under this agreement the
Company accrued deferred compensation of $250 per year.  The CEO
agreed to waive his rights to receive the $250 salary for the 2001
and 2000 years.  As of December 31, 2001, the CEO was owed
$1,529 of deferred compensation.  Further on September 30, 2001,
the CEO agreed to be paid only in common stock and rescind any
previous conversion agreements.



           ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

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

 Note 8. Long-Term Debt (CONTINUED)

     Aggregate future required principal payments ,
exclusive of debt discounts and liabilities to be settled with common
stock, of long-term debt are as follows:

     Years Ending December 31:

            2002 . . . . . . $      683
            2003 . . . . . .      5,120
                              $   5,830

     Interest expenses on related party debt totaled
$450 and $251 for the years ended December 31, 2001 and 2000,
respectively.

     The Company has classified $3,683 of long-term
debt and other liabilities as noncurrent because the creditors have
agreed to accept shares of common stock in settlement of the
following debt and liabilities:

     Note to Bryanston                     $ 1,407
     Accrued compensation                    1,529
     Other payables and accrued expenses       747
                                          $  3,683

     In January the Company issued 238 shares of
common stock to settle the note to Bryanston and other liabilities
totaling $1,904.

Note 9. Commitments, Contingencies and Related Party
Transactions

     Lease Commitments. The Company is obligated
under operating leases relative to real property and equipment expiring
through 2003. Future aggregate minimum annual rental payments
under all of these leases are as follows:

       Years Ending December 31:
       2002. . . . . . . . . .$      342
       2003. . . . . . . . . .        11
                              $      353

       In December  2001, the Company vacated
its office space in New York City.  The lease does not expire until
2004.  Management is actively seeking a subleasee to offset future
rental expense.   Rent expense under these operating and terminated
leases, including a provision in 2001 for a contingent future rentals on
vacated leases of $342, amounted to approximately $1,642, $533 and
$375 for the years ended December 31, 2001, 2000 and 1999,
respectively.

       On December 19, 2001, the Company
terminated its lease with Miami-Dade County, in connection with its
Ella Star Casino.  No provision has been recorded for any future
amounts related to any contractual agreements entered into by Alpha
Florida Entertainment, L.L.C.  ("Alpha Florida LLC").

       On February 12, 2002, the Company's Board
of Directors (the "Board") accepted the resignations of Stanley S.
Tollman and one of its other directors.  Robert A. Berman was
appointed by the Board to fill the vacancy left by Mr. Tollman's
retirement and Scott Kaniewski was appointed by the Board to fill
theother  Board vacancy.  The Company entered into employment
agreements with Mr. Berman and Mr. Kaniewski providing for annual
salaries of $300 and $200, respectively, payment of which is subject
to deferral under certain circumstances.  Additionally, each of Mr.
Berman and Mr. Kaniewski was granted options to purchase up to 95
shares of the Company's common stock, which number of shares is
subject to be increased to 296 shares to each of Mr. Berman and Mr.
Kaniewski.



    ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

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

Note 9. Commitments, Contingencies and Related Party
Transactions (CONTINUED)

         To comply with State requirements regarding the
Company's 19% 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 October  2001 for a three year period.

         Litigation. In January 1996, the Company was named
as a defendant in an action based on the theory of "liquor liability"
for the service of alcohol to a customer. This case was settled in 2002
with funds substantially provided by the Company's insurance
carrier.

         The Company was named as a defendant in an action
brought by Global Trading Group, Inc. in the U. S. District Court for
the Northern District of Mississippi.  The plaintiff alleges entitlement
to a finder's fee arising out of the sale of the Jubilee Casino and seeks
contractual and compensatory damages of $1,563, punitive damages
of $10,000 and costs, attorneys' fees and interest.  The Company has
denied liability in this matter and is vigorously defending this claim.
Trial is scheduled for April 2002.

         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 and adverse effect on the consolidated
financial position, results of operations or cash flows of  the
Company.

           Other Transactions.  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 12), options to purchase up to 2.5
shares, and an additional 1.5 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.  In 2001, the
Company granted to its outside directors options to purchase an
aggregate amount of up to 15.5 shares of its common stock for the
2001 year at an exercise price of $4.40 per share, which can be
exercised at any time up to 2011.  In 1999 and 1998 the Company
granted to its outside directors options to purchase an aggregate
amount of up to 15 and 28.5 shares, respectively, of its Common
Stock at an exercise price of $42.50 and $10.63, 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 2001.  The amount granted in 1998 represents
options to purchase aggregate amounts of up to 13.5 and 15 shares
for the 1998 and 1999 years of service, respectively. As
compensation to its employee directors, in the Company granted
options to purchase an aggregate amount of up to 8 shares of its
Common Stock for the 2001 year at an exercise price of $4.40 per
share and up to  9.5 shares of its common stock for each of the 2000
and 1999 years at exercise prices of $42.50 and $10.63, respectively,
per share.

         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, were originally exercisable at a price per share equal to the
closing NASDAQ bid prices on the dates of the respective grants.
The exercise price for the 250 options granted in 1999 and 1998 to
the Company's Chairman to purchase the Company's common stock
were exercisable at prices per share equal to 100% and 110%,
respectively, of the closing NASDAQ bid prices on the respective
dates of the grants.  As a result of the cancellation and reassurances
(see Note 12) in 2001 of all the aforementioned director options, the
current exercise price is equal to $4.40 per share, the closing
NASDAQ bid price on the cancellation date in 2001.

         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, 2001, 2000 and 1999, have been recorded
at approximately $193, $200 and $204, respectively, related to
general corporate matters.





    ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

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

Note 10. Accounts Payable and Accrued Expenses

     At December 31, 2001 and 2000, accounts payable and accrued
expenses are comprised of the following:




                                           2001      2000
                                             
     Property and equipment              $    557   $ 1,110
     Lease (see Note 9 Lease Commitment)      342        --
     Advertising                              143        --
     Insurance                                216       167
     Accrued professional fees                546       280
     Accrued interest                         300       114
     Other                                    443       576
     Less amounts included in
      liabilities of
      Casino Ventures (see Note 6)           (777)     (918)
                                         $  1,770   $ 1,329


Note 11. Stockholders' Equity

Activity

  In June 2001, shareholder approval was received to
amend the Company's Certificate of Incorporation, which provided for
a 1 for 10 reverse split of the Company's common stock.
Accordingly, common stock and per share data has been retroactively
restated to give effect to the reverse stock split.

  In April 2001, the Company issued 317 shares of the
Company's common stock in connection with dividends on its Series
B Preferred Stock (see below).

  On June 13, 2001, the Company authorized satisfied
liabilities to Bryanston aggregating $1,904 by agreeing to issue
approximately 238 shares of its common stock at a price of $8 per
share, which was the closing market price on that date.  Such shares
were issued in January 2002.  In addition, the Company also agreed in
2001 to satisfy deferred compensation of $1,529 due to the CEO and
on other payables totaling of $250 with common stock.

  A noncash compensation adjustment related to certain
increases in the price of the Company's common stock for both
exercised and unexercised stock options was recorded in 2001, which
is reflected as an increase of $2,594 in capital in excess of par value.

  During 2001, $100 of debt was converted into 17
shares of the Company's common stock.

  During 1999, 2000 and 2001, 2, 14 and 29 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 and fluctuations
in the market price of the Company's common stock.  Further, in 2001
and 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 9).

  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 2001 and 2000, 1.02 and 1.9 shares, respectively, of Series D
Preferred Stock were converted into 191 and 139 shares, respectively,
of the Company's common stock.




    ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

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

Note 11. Stockholders' Equity (CONTINUED)

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

  In February 2002, the Board of Directors authorized
the issuance of 300 shares of commons stock to settle dividends due
to holders of preferred stock.  The holders of Series B Preferred Stock
received 241 common shares and the holders of the Series C Preferred
Stock received 59 common shares.

  In February 2002, the Company issued 576 shares of
common stock for the benefit of Watertone, and Watertone assigned
to the benefit of the Company 47.5% of its economic interest in the
casino and horse racing components of the business of  CDL.

  In January 2002, the Company issued 622 and 324
shares of common stock for 777 shares of Series B Preferred Stock
and all of the Series C. Preferred Stock.

Descriptions of Preferred Stock and Dividends

     The Company's Series B Preferred Stock has voting
rights of .8 votes per preferred share, is convertible to .8 shares of
common stock for each share of preferred stock and carries a
liquidation value of $29 per share, a cumulative 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 by January 30 next following the year
for which such dividend has accrued, the dividend will be payable in
common stock.   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 45 and 194, respectively, of shares of the Company's common
stock. These shares were issued in July 2000.  In January 2002, the
Company declared and issued dividends on the Series B Preferred
Stock for the 2001 year amounting to 241 shares of the Company's
common stock.  After the January 2002 common stock issuance, there
were no dividends in arrears.  Additionally, in January 2002,
Bryanston, a major shareholder, converted its 777 shares of the
Company's Series B Preferred Stock into 622 shares of the
Company's common stock.

  The Series C Preferred Stock has voting rights of 2.4
votes per preferred share, is convertible into 2.4 shares of common
stock and carries a sumulative 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. In January 2002, the Company declared and issued dividends
for the 1998, 1999, 2000 and 2001 years amounting to a total of 161
shares of the Company's common stock.  Additionally, in January
2002, Bryanston, the sole holder of the Company's Series C Preferred
Stock, converted its Series C Preferred Stock into 324 shares of the
Company's common stock.

  The Series D Preferred Stock is convertible into shares
of the Company's common stock at a conversion price of the lesser of
$60 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
increases 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.


    ALPHA HOSPITALITY CORPORATION AND
SUBSIDIARIES

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

Note 12. 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 9) and 1993 Stock Option Plans
providing for incentive stock options and non-qualified stock options.
The Company has reserved 400 and 90 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 June 2001, November 2000 and December 1998,
the Company determined that the purposes of the 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 2001, 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
new options at an exercise price equal to the closing NASDAQ bid
prices on the respective dates in July 2001 ($4.40 per share),
November 2000 and December 1998.

  In 2001 and 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, resulted in noncash compensation expense
in 2001 of $2,594.

The following table summarizes common stock option activity,
excluding the simultaneous cancellations and reissuances in 2001 and
2000, as noted above:




                                                            Weighted
                                                            Average
                                                Range of    Exercise
                                    Number of   Exercise    Price Per
                                    Shares      Price       Share
                                                  
Options outstanding at
   January 1, 1999                  127      $10.63-13.75   $10.88
      Granted in 1999               139      $13.75         $13.75

Options outstanding at
   December 31, 1999                266      $10.63-13.75   $12.38
       Exercised in 2000             13      $10.63-20.00   $10.98

Options outstanding at
    December 31, 2001               253      $10.63-13.75   $12.45

Granted in 2001                     243      $4.40         $4.40
Exercised in 2001                  (29)      $4.40         $4.40
Cancelled in 2001                 (253)      $4.40         $4.40
Options outstanding at
   December 31, 2001                238





           ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES

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

Note 12. Stock Options and Warrants (CONTINUED)

 The following table summarizes information regarding stock
options outstanding at December 31, 2001:

                    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, 2001 Life in Years Share       Dec 31, 2001 Price

$4.40        238             7.5       $4.40       238           $4.40


       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; risk-free interest rate of five percent
for 1999; no dividend yield and option life of ten years.  For the year
ended December 31, 1999, the Company's net loss and net loss per
share would have increased to the pro forma amounts indicated:

       Net loss, as indicated     $   (5,763)
       Net loss, pro forma            (9,918)
       Loss per common share,
         basic and diluted,
         as reported                   (.34)
       Net loss per common shares,
         basic and diluted, pro forma  (.59)


Other Stock Options

       During the years ended December 31, 2000
and 1999, options to purchase 348 and 50 shares, respectively, of the
Company's common stock at exercise prices of $5.375 and $5.00,
respectively, expired.  No other options were outstanding at
December 31, 2001.

Warrants

       In conjunction with its November 1993
initial public offering, the Company issued 86.3 redeemable common
stock purchase warrants at $1.00 per warrant. Each warrant entitled
the holder to purchase one share of common stock at the exercise
price of $120.00, 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 $40.00
through December 31, 2001 and to $60.00 through December 31,
2001. During the year ended December 31, 1999, 1.5 warrants were
exercised.  In connection with a loan to the Company (see Note 8),
the holder of the Company's Series D Preferred Stock (see Note 11)
received 12.5 warrants exercisable at a price of $24.00 per share,
which expire in July 2003.  As of December 31, 2001, only the 12.5
warrants to the holder of the Company's Series D Preferred Stock
were outstanding.




   ALPHA HOSPITALITY CORPORATION AND
             SUBSIDIARIES

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

Note 13. Income Taxes

     The Company and all of its subsidiaries file a consolidated federal
income tax return. At December 31, 2001 and 2000, the Company's
deferred income tax asset was comprised of the tax benefit associated
with the following items based on the statutory tax rates currently in
effect:




                                              2001              2000
                                                       
     Net operating loss
       carryforwards . . . . .             $  25,600         $  18,236
     Differences between financial and tax
       bases of assets and liabilities . .     7,760             7,758
     Other             . . . . . . . .           277               277
     Deferred income tax asset,
       gross           . . . . . . . .        33,305            26,271
    Valuation allowance. . . . . . . .       (33,505)          (26,271)
     Deferred income tax asset, net        $      --          $     --



       As of December 31, 2001, the Company has
available for federal income tax purposes a net operating loss
carryforward of approximately $64,000 expiring in the years 2008
through 2021.

Note 14. Unaudited Quarterly Data



                              First     Second    Third     Fourth
                              Quarter   Quarter   Quarter   Quarter
                                               
       2001
        Total revenue.       $    982   $  1,313  $   681   $   139
        Net loss . . . .     $ (1,346)  $   (737) $(1,346)  $(6,048)
        Net loss applicable
            to common shares $ (1,346)  $ (3,834) $(1,346)  $(8,740)
        Net loss per common
            share. . . . . . $   (.65)  $  (1.59) $  (.55)  $ (3.70)


       2000
        Total revenue. . . . $     36   $     52  $   132   $   652
        Net loss
        Net loss applicable
            to common shares $   (129)  $ (4,444) $  (120)  $(1,913)
        Net loss per common
            share. . . . . . $   (.10)  $  (2.60) $  (.10)  $  (.70)





SCHEDULE II

           ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
                  VALUATION AND QUALIFYING ACCOUNTS
            Years Ended December 31, 2001, 2000 and 1999
                           (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, 1999:                  $    635        --        --        --       635
   Allowance for doubtful
     accounts

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

Year Ended December
 31, 2001:                  $    635        --        --       635         0
   Allowance for doubtful
      accounts

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

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

Year Ended December
 31, 2001:
   Allowance for doubtful
     note                   $    250        --        --      250         0