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Greate Bay Casino Reports Increase in Q3 Results

The increase in revenues and net income was due to a dramatic increase in software installation revenues at Advanced Casino Systems Corporation (ACSC), Greate Bay's sole remaining operating subsidiary.

For the nine months ended September 30, 2001, Greate Bay reported net income of $235,000 on revenues of $27.4 million compared to a net loss of $5.2 million on revenues of $9.5 million for the comparable nine months of 2000. The improvement in operating results for the nine months is attributable to the previously mentioned increase in ACSC software installation revenues.

Greate Bay's only remaining operating activity is the development, installation and maintenance of casino systems by ACSC. At September 30, 2001, Greate Bay and its subsidiaries had debt outstanding to Hollywood Casino Corporation (HCC) consisting of demand notes and accrued interest thereon totaling $9.9 million and a 14.875% promissory note due 2006 together with interest thereon totaling $51.9 million. Semi-annual interest payments of approximately $3.5 million attributable to the 14.875% secured promissory note became payable commencing in August 2001.

ACSC's operations do not generate sufficient cash flow to provide debt service on the HCC notes and, consequently, Greate Bay is insolvent. Greate Bay is currently negotiating with HCC to restructure its obligations and, in that connection, has entered into certain standstill agreements with HCC.

Under the standstill agreements, all payments of principal and interest due from HCC during the period from March 1, 2000 through November 1, 2001 with respect to a note have been deferred until December 1, 2001 in consideration of HCC's agreement not to demand payment of principal or interest on Greate Bay's obligations to HCC.

The fair market value of Greate Bay's assets is substantially less than its existing obligations to HCC, and accordingly, management anticipates that any restructuring of Greate Bay's obligations will result in the conveyance of all of its assets (or the proceeds from the sale of its assets) to HCC, resulting in no cash or other assets remaining available for distribution to Greate Bay's shareholders.

Any restructuring of Greate Bay's obligations, consensual or otherwise, will require it to file for protection under federal bankruptcy laws and will ultimately result in the liquidation of Greate Bay.

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