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Alpha Hospitality Reports Q2 Results

The results principally reflect the general and administrative expenses related to the pursuit of the Native American casino proposed to be located at the Monticello Raceway in New York State and expenditures incurred in the development of the Company's entertainment/gaming cruise project in Miami Beach, Florida. It is anticipated that the vessel will become operational in the fall of this year.

Additionally, the expenses have been reduced by a noncash adjustment relating to deferred compensation payable to the Company's Chairman and CEO, which pursuant to a 1999 agreement, may be converted into shares of he Company's common stock at a price of $2.00 per share, the closing price on the agreement date.

The $2.3 million noncash adjustment to compensation for the six months ended June 30, 2000 reflects a decrease in market price of the Company's common stock since December 31, 1999.

During the quarter ended June 30, 2000, the Company declared dividends for the 1998 and 1999 years on its preferred stock, Series B, of $6.194 million, which were paid by the issuance of an aggregate 2,393,086 shares of the Company's common stock on July 31, 2000.

On July 31, 2000 (after the end of the fiscal period covered by the accompanying financial statements), the Company received $1.25 million of financing under an agreement with an investor pursuant to which the Company may obtain (subject to certain conditions) up to an additional $750,000 of financing.

Upon receipt of such financing, the Company issued its 4% Convertible Notes due July 31, 2003 in the principal amount of $1.25 million and warrants to purchase 125,000 shares of the Company's common stock at an exercise price (subject to adjustment to provide anti-dilution protections) of 120% of the market price on the trading day preceding the date of issuance of such warrants.

The Convertible Notes are convertible into shares of the Company's common stock at a price (subject to adjustment to provide anti-dilution protections) equal to the lower of (a) 120% of the market price on the trading day preceding the issuance of such Notes and (b) the average of the two lowest closing prices of a share of the Company's common stock during the 30 trading days immediately prior to the date of the investor's exercise of the conversion right.

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