FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended                March 31, 2002
                              -------------------------------------------------
                                                    OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to
                              ---------------------  --------------------------

Commission file number                0-9624
                      ---------------------------------------------------------


                    International Thoroughbred Breeders, Inc.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                    22-2332039
-------------------------------------------------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
 incorporation or organization)

                211 Benigno Boulevard, Bellmawr, New Jersey 08031
-------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (856) 931-8163
-------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

-------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report.)

     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 last 90 days.
Yes X  No
   ---   ---
                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the close of the latest practicable date.


           Class                           Outstanding at May 17, 2002
------------------------------         ----------------------------------
Common Stock, $ 2.00 par value                 11,480,274 Shares




<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                                    FORM 10-Q

                                QUARTERLY REPORT
                    FOR THE NINE MONTHS ENDED MARCH 31, 2002
                                   (Unaudited)

                                TABLE OF CONTENTS

                                                                          PAGE
PART I.           FINANCIAL INFORMATION

         Item 1.  Financial Statements:

                  Consolidated Balance Sheets
                         as of March 31, 2002 and June 30, 2001...........1-2

                  Consolidated Statements of Operations
                         for the Three Months and Nine Months ended
                         March 31, 2002 and 2001 .........................3

                  Consolidated Statement of Stockholders' Equity
                         for the Nine Months ended March 31, 2002.........4

                  Consolidated Statements of Cash Flows
                         for the Nine Months ended
                         March 31, 2002 and 2001..........................5

                  Notes to Financial Statements...........................6-15

         Item 2.  Management's Discussion and Analysis of
                         Financial Condition and Results of Operations....16-21

PART II.          OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K........................22

SIGNATURES        ........................................................23



<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                     AS OF MARCH 31, 2002 AND JUNE 30, 2001

                                     ASSETS
<TABLE>
                                         March 31,
                                           2002         June 30,
                                        (UNAUDITED)       2001
                                        -----------   --------------
<CAPTION>
<S>                                     <C>           <C>
CURRENT ASSETS:
     Cash and Cash Equivalents          $ 1,406,224   $ 1,361,287
     Deposit on Purchase of Palm
      Beach Princess Mortgage             3,000,000       750,000
     Accounts Receivable                    629,518       843,385
     Prepaid Expenses                       270,065       362,048
     Other Current Assets                    28,341     1,032,311
     Net Assets of Discontinued
      Operations - Current                   24,695     1,007,398
                                        -----------   -----------
          TOTAL CURRENT ASSETS            5,358,843     5,356,429
                                        -----------   -----------

LAND, BUILDINGS AND EQUIPMENT:
     Land and Buildings                           0       214,097
     Equipment and Artwork                  646,408       289,426
                                        -----------   -----------
                                            646,408       503,523
     LESS: Accumulated Depreciation
            and Amortization                 93,471       285,004
                                        -----------   -----------

          TOTAL LAND, BUILDINGS AND
              EQUIPMENT, NET                552,937       218,519
                                        -----------   -----------

OTHER ASSETS:
     Notes Receivable                    33,000,000    23,000,000
     Note Receivable of Discontinued
      Operations - Long-Term                      0    10,000,000
     Deposits and Other Assets            8,447,072     2,816,260
                                        -----------   -----------
          TOTAL OTHER ASSETS             41,447,072    35,816,260
                                        -----------   -----------

TOTAL ASSETS                            $47,358,852   $41,391,208
                                        ===========   ===========
</TABLE>


See Notes to Consolidated Financial Statements.

                                        1

<PAGE>

                   INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                     AS OF MARCH 31, 2002 AND JUNE 30, 2001

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
                                                     March 31,
                                                       2002          June 30,
                                                    (UNAUDITED)        2001
                                                   ------------    -------------
<CAPTION>
<S>                                                <C>             <C>
CURRENT LIABILITIES:
     Accounts Payable                              $  2,905,495    $  2,549,539
     Accrued Expenses                                 1,539,571       1,247,534
     Short-Term Debt                                  1,208,383       1,000,000
                                                   ------------    ------------
          TOTAL CURRENT LIABILITIES                   5,653,449       4,797,073
                                                   ------------    ------------

DEFERRED INCOME                                       8,243,874       4,138,426
                                                   ------------    ------------

LONG-TERM DEBT                                                0         482,000
                                                   ------------    ------------

COMMITMENTS AND CONTINGENCIES                              --              --

STOCKHOLDERS' EQUITY:
     Series A Preferred Stock, $100 Par Value,
       Authorized 500,000 Shares, Issued and
       Outstanding,362,488 and 362,487 Shares,
       respectively                                  36,248,775      36,248,675
     Common Stock, $2 Par Value, Authorized
       25,000,000 Shares,Issued and Outstanding,
       11,480,274 and 11,480,267, respectively       22,960,547      22,960,533
     Capital in Excess of Par                        20,192,092      20,192,206
     (Deficit) (subsequent to June 30, 1993,
       date of quasi-reorganization)                (45,921,968)    (47,406,038)
                                                   ------------    ------------
                                                     33,479,446      31,995,376
     LESS:
        Deferred Compensation, Net                      (17,917)        (21,667)
                                                   ------------    ------------
          TOTAL STOCKHOLDERS' EQUITY                 33,461,529      31,973,709
                                                   ------------    ------------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $ 47,358,852    $ 41,391,208
                                                   ============    ============
</TABLE>

See Notes to Consolidated Financial Statements.

                                        2

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (UNAUDITED)
<TABLE>
                                                                   Three Months Ended              Nine Months Ended
                                                                         March 31,                     March 31,
                                                               ---------------------------    ----------------------------
                                                                   2002           2001            2002            2001
                                                               ------------   ------------    ------------   -------------
<CAPTION>
<S>                                                            <C>            <C>             <C>            <C>
REVENUE:
     Revenue from Operations                                   $  7,941,213   $          0    $ 18,847,585   $          0
     Other Income                                                         0          1,402          70,056        128,207
     Interest Income                                                108,803         14,340         347,196         69,877
                                                               ------------   ------------    ------------   -------------
                                  TOTAL REVENUES                  8,050,016         15,742      19,264,837        198,084
                                                               ------------   ------------    ------------   -------------

EXPENSES:
     Cost of Revenues:
        Operating Expenses                                        4,601,560              0      13,077,840              0
        Depreciation & Amortization                                  53,921              0          77,966              0
     General & Administrative Expenses - Palm Beach Princess        587,008              0       2,043,202              0
     General & Administrative Expenses - Parent                     578,461      1,461,251       1,726,071      2,474,017
     Development Costs                                              260,352         63,676         501,955        214,940
     Interest and Financing Expenses                                 35,798         73,688         251,733        470,395
                                                                ------------   ------------    ------------   -------------
                                  TOTAL EXPENSES                  6,117,100      1,598,615      17,678,767      3,159,352
                                                                ------------   ------------    ------------   -------------

INCOME (LOSS)  BEFORE TAX PROVISION                               1,932,916     (1,582,873)      1,586,070     (2,961,268)
     State Income Tax Expense                                        80,000              0         102,000              0
                                                                ------------   ------------    ------------   -------------

NET INCOME (LOSS)                                              $  1,852,916   $ (1,582,873)   $  1,484,070   $ (2,961,268)
                                                                ===========    ============    ===========    ============



NET BASIC AND DILUTED INCOME (LOSS)
   PER COMMON SHARE                                            $       0.16   $      (0.15)  $        0.13   $     (0.31)
                                                                ===========    ============   ============   ============

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                                            11,480,273     10,708,664      11,480,271      9,491,211
                                                                ===========    ============   ============   ============
</TABLE>


See Notes to Consolidated Financial Statements.

                                        3
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                    FOR THE NINE MONTHS ENDED MARCH 31, 2002
                                  (UNAUDITED)
<TABLE>
                                                       Preferred                  Common
                                                 -----------------------  --------------------------
                                                 Number of                 Number of
                                                  Shares      Amount        Shares        Amount
                                                 ---------  ------------  ------------  ------------
<CAPTION>
<S>                                               <C>       <C>            <C>          <C>
BALANCE - JUNE 30, 2001                           362,487   $36,248,675    11,480,267   $22,960,533

   Shares Issued for Fractional Exchanges
      With Respect to the One-for-twenty
      Reverse Stock Split effected on
      March 13, 1992                                    1           100             7            14
   Amortization of Deferred Compensation Costs     ---          ---           ---           ---
   Net Income (Loss) for the Nine Months
      Ended March 31, 2002                         ---          ---           ---           ---

                                                 ---------  ------------  ------------  ------------
BALANCE - MARCH 31, 2002                          362,488   $36,248,775    11,480,274   $22,960,547
                                                 =========  ============  ============  ============
</TABLE>


<TABLE>
                                                     Capital                     Deferred
                                                    in Excess                    Compen-
                                                     of Par        (Deficit)     sation       Total
                                                   ------------  --------------  --------  -----------
<CAPTION>
<S>                                                <C>           <C>             <C>       <C>
BALANCE - JUNE 30, 2001                            $20,192,206   $ (47,406,038)  $(21,667) $31,973,709

   Shares Issued for Fractional Exchanges
      With Respect to the One-for-twenty
      Reverse Stock Split effected on
      March 13, 1992                                      (114)       ---          ---         ---
   Amortization of Deferred Compensation Costs         ---            ---           3,750        3,750
   Net Income (Loss) for the Nine Months
      Ended March 31, 2002                             ---           1,484,070     ---       1,484,070

                                                   ------------  --------------  --------  ------------
BALANCE - MARCH 31, 2002                           $20,192,092   $ (45,921,968)  $(17,917) $33,461,529
                                                   ============  ==============  ========  ============
</TABLE>
See Notes to Consolidated Financial Statements.


                                        4
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (UNAUDITED)
<TABLE>
                                                                           Nine Months Ended
                                                                               March 31,
                                                                    -------------------------------
                                                                        2002             2001
                                                                    -------------- ----------------
<CAPTION>
<S>                                                               <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     (INCOME) LOSS BEFORE DISCONTINUED OPERATIONS                 $     1,484,070  $    (2,961,268)
                                                                    --------------   --------------
     Adjustments to reconcile income (loss) to net cash
       provided by (used in) operating activities:
                  Depreciation and Amortization                            81,716           29,039
                  (Gain) on Sale of Fixed Assets                          (77,577)               0
                  Changes in Operating Assets and Liabilities -
                     Decrease in Restricted Cash & Investments                  0          477,414
                     Decrease in Accounts Receivable                      213,866          425,258
                     (Increase) Decrease in Other Assets                 (291,061)          10,142
                     Decrease in Prepaid Expenses                          91,983          192,495
                     Increase (Decrease) in Accounts Payable and
                      Accrued Expenses                                    762,104         (381,938)
                     Increase in Deferred Revenue                               0           61,583
                                                                    --------------   --------------

     CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES BEFORE
        DISCONTINUED OPERATIONS                                         2,265,101       (2,147,275)

     CASH USED IN DISCONTINUED OPERATING ACTIVITIES                             0         (897,847)
                                                                    --------------   --------------
     NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                2,265,101       (3,045,122)
                                                                    --------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Deposits on Purchase of Palm Beach Princess Mortgage               (2,250,000)               0
    Proceeds from Auction of Garden State Park Fixed Assets             1,334,042                0
    Capital Expenditures                                                 (403,602)            (259)
    Loans made on Development Projects                                 (1,508,528)               0
    Decrease in Other Investment Activity                                       0          353,336
                                                                    --------------   --------------
     CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
       BEFORE DISCONTINUED INVESTING ACTIVITIES                        (2,828,088)         353,077
     CASH PROVIDED BY DISCONTINUED INVESTING ACTIVITIES                         0       20,000,000
                                                                    --------------   --------------
     NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES               (2,828,088)      20,353,077
                                                                    --------------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from Short-Term Loans                                              0          150,000
    Principal Payments on Short Term Notes                               (177,766)     (18,462,401)
    Decrease in Balances Due to/From Subsidiaries                         804,565       18,353,207
                                                                    --------------   --------------
     CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
       BEFORE DISCONTINUED FINANCING ACTIVITIES                          (626,799)          40,806
     CASH (USED IN) DISCONTINUED FINANCING ACTIVITIES                           0      (19,086,321)
                                                                    --------------   --------------
     NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                 (626,799)     (19,045,515)
                                                                    --------------   --------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                       63,812       (1,737,560)
          LESS CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
            FROM DISCONTINUED OPERATIONS                                  (18,875)         (15,832)
     CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
       BEFORE DISCONTINUED OPERATIONS                                   1,361,287          271,119
                                                                    --------------   --------------

     CASH AND CASH EQUIVALENTS AT END OF THE PERIOD               $     1,406,224  $    (1,482,273)
                                                                    ==============   ==============

     Supplemental Disclosures of Cash Flow Information:
                  Cash paid during the period for:
                  Interest                                        $             0  $               0
                  Income Taxes                                    $             0  $               0
</TABLE>

     Supplemental Schedule of Non-Cash Investing and Financing Activities:
     During the nine months ended March 31, 2002, a non-cash transaction reduced
     a long-term note payable and a long-term note receivable by $350,000.

See Notes to Consolidated Financial Statements.

                                        5
<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A) Nature of  Operations - We are  currently  engaged in an  entertainment
cruise and casino ship business under a bareboat  charter of the vessel M/V Palm
Beach Princess (the "Palm Beach  Princess").  The Palm Beach  Princess  performs
fourteen cruises weekly, that is, a daytime and an evening cruise each day. Each
cruise is of five to six hours  duration.  During  each  cruise,  the Palm Beach
Princess offers a range of amenities and services to her passengers, including a
full casino, sit-down buffet dining, live musical shows,  discotheque,  bars and
lounges,  swimming pool and  sundecks.  The casino  occupies  15,000 square feet
aboard the ship and is equipped with approximately 400 slot machines,  all major
table games (blackjack, dice, roulette and poker), and a sports wagering book.

     (B)  Principles of  Consolidation  - The accounts of all  subsidiaries  are
included in the consolidated financial statements. All significant inter-company
accounts and transactions have been eliminated in consolidation.

     (C)  Classifications  - Certain prior period amounts have been reclassified
to conform with the current periods' presentation.

     (D)  Depreciation and Amortization - Depreciation of property and equipment
were computed by the  straight-line  method at rates  adequate to allocate their
cost or adjusted fair value in accordance  with  generally  accepted  accounting
principles over the estimated remaining useful lives of the respective assets.

     (E) Net Assets of Discontinued  Operations - At June 30, 2001 and March 31,
2002, the remaining net assets and liabilities of Garden State Park and Freehold
Raceway were classified as "Net Assets of Discontinued Operations."

     (F) Revenue Recognition - We recognize the revenues and expenses associated
with the  casino  operation  on the Palm  Beach  Princess  as they are earned or
incurred.

     (G) Cash and Cash  Equivalents - We consider all highly liquid  investments
with an original maturity of three months or less to be cash equivalents.

     (H) Concentrations of Credit Risk - Financial instruments which potentially
subject us to concentrations  of credit risk are cash and cash  equivalents.  We
place cash  investments  with high credit  quality  financial  institutions  and
currently invest primarily in U.S.  government  obligations that have maturities
of less than 3 months. The amount on deposit in any one institution that exceeds
federally insured limits is subject to credit risk.

     (I)  Use  Of  Estimates  -  The  preparation  of  financial  statements  in
conformity with generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities and disclosure of contingent  assets and liabilities at the dates of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting periods. Actual results could differ from those estimates.

     (J) Net Income  (Loss) per Common Share - Income (Loss) per common share is
computed by dividing net loss by the weighted average number of shares of common
stock  outstanding.  Options and warrants to purchase 5,740,500 shares of Common
Stock at various  prices per share,  for each of the periods  presented were not
included in the computation of diluted income (loss) per share as their effect

                                        6

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

would be anti-dilutive.

(2)  NOTES RECEIVABLE

     A portion  of the  proceeds  from the sale of the  non-operating  former El
Rancho  Hotel and  Casino in Las Vegas to  Turnberry/Las  Vegas  Boulevard,  LLC
("Turnberry")  on May 22, 2000 was used by us to purchase a  promissory  note in
the face amount of $23,000,000.  The interest rate will be adjusted from time to
time since the interest issued by Turnberry  actually  payable will be dependent
upon,  and  payable  solely  out of, the  buyer's  net cash flow  available  for
distribution  to its  equity  owners  ("Distributable  Cash").  After the equity
investors in the buyer have received total  distributions equal to their capital
contributions plus an agreed upon return on their invested capital, the next $23
million of  Distributable  Cash will be paid to us. We will  thereafter  receive
payments  under the note  equal to 33 1/3% of all  Distributable  Cash until the
maturity date, which occurs on the 30th anniversary of our purchase of the note.
We may  convert  the  promissory  note,  at our  option,  into a 33 1/3%  equity
interest  in  the  buyer  during  a six  month  period  beginning  at  the  15th
anniversary  of the issuance of the note. If not then  converted,  the note will
convert into a 33 1/3% equity  interest in the buyer at the 30th  anniversary of
its issuance.

     A portion of the proceeds  from the sale on November 30, 2000 of our Garden
State Park property in Cherry Hill, New Jersey, to Realen-Turnberry/Cherry Hill,
LLC ("Realen")  was paid in the form of a promissory  note in the face amount of
$10 million (the  "Note.")  Under the Note,  the interest  rate will be adjusted
from time to time since the interest  actually  payable will be dependent  upon,
and payable solely out of, the buyer's net cash flow available for  distribution
to its equity owners ("Distributable  Cash"). After the buyer's equity investors
have received aggregate  distributions equal to their capital contributions plus
an agreed  upon  return  on their  invested  capital,  the next $10  million  of
Distributable Cash will be paid to us. We will thereafter receive payments under
the Note equal to 33 1/3% of all  Distributable  Cash until the  maturity  date,
which occurs on the 15th anniversary of the issuance of the Note. We may convert
the  promissory  note, at our option,  into a 33 1/3% equity  interest in Realen
during the six month period prior to the 15th anniversary of the issuance of the
Note. If not then  converted,  the Note will be payable at maturity on said 15th
anniversary  in an  amount  equal to (i) the  difference,  if any,  between  $10
million and total payments previously made to us under the Note and (ii) 33 1/3%
of any excess of the fair market  value of  Realen's  assets over the sum of its
liabilities  (other than the Note) and any unreturned  equity  investment of its
owners.

     In  addition,  we sold two large  bronze  sculptures  located at the Garden
State Park  property to Realen,  in exchange  for Realen's  promissory  note due
November 30, 2002, in the principal  amount of $700,000.  The Chapter 11 Trustee
for the  Bankruptcy  Estate of  Robert E.  Brennan  claimed  ownership  of those
sculptures,  and we settled the  resulting  litigation  over the  sculptures  by
agreeing that the first $350,000 in principal payments made by Realen under such
note would be remitted to the Brennan Bankruptcy Trustee (together with one-half
of the interest paid by Realen under such note).  The remaining  $350,000 of the
$700,000  note is  classified  in  long-term  deposits  and other  assets on our
balance sheet as of March 31, 2002.  As part of the  settlement of the sculpture
litigation, the party who sold us the sculptures, agreed to reduce the amount of
our obligation for payment of the balance of the sculpture  price  (described in
Note 4(A) below) by the same principal amount,  $350,000,  given up by us to the
Trustee.


                                        7

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(3)  DISCONTINUED OPERATIONS

     On January 28, 1999, we completed the sale of the real property and certain
related assets at Freehold  Raceway and a ten-acre  parcel of land at the Garden
State Park  facility and on November 30, 2000,  closed on the sale of the Garden
State Park property.  In connection with these transactions,  we received 3 year
contingent  promissory  notes  aggregating  up to $10  million  which would have
become due upon the purchaser receiving all governmental  licenses and approvals
necessary to own and operate off- track and telephone wagering facilities in New
Jersey.  The contingent  notes expired in January 2002 without such  contingency
having been fulfilled.

     The net assets of the operations  disposed of included in the  accompanying
consolidated  balance  sheets as of March 31, 2002 and June 30, 2001  consist of
the following:
<TABLE>

                                                 March 31, 2002   June 30, 2001
                                                 --------------   -------------
<CAPTION>
<S>                                               <C>              <C>
Classified As:
Current Assets                                    $   431,512      $  1,542,100
Current Liabilities                                  (406,817)        (534,702)
                                                    ---------       -----------
                  Net Assets of Discontinued
                     Operations - Current              24,695         1,007,398
           Note Receivable of Discontinued
                     Operations - Long-Term               -0-        10,000,000
                                                    ---------       -----------
         Net Assets of Discontinued Operations    $    24,695      $ 11,007,398
                                                    =========       ===========
</TABLE>

     On  February  20,  2002,  all rights,  title and  interest in and to a note
receivable in connection  with the sale of the Garden State Park property in the
amount of  $10,000,000  was  transferred  to the parent  company,  International
Thoroughbred  Breeders,  Inc.  as a result of which such note  receivable  is no
longer  classified as part of the net assets of  discontinued  operations.  (See
Notes 2 & 6)

(4)  DEPOSITS AND OTHER ASSETS

     The following items are classified as deposits and other assets:

Loans to the Ft Lauderdale Project (See Note 9)                    $  2,936,767

Loans to the Golf Course Project in California (See Note 9)             750,526

Loans to the South American Gaming Projects (See Note 6)                392,792

Accounts Receivable from Leo Equity Group, Inc. (See Note 9)          3,000,000

Accounts Receivable from MJQ Corporation (See Note 9)                 1,000,000

Note Receivable from Realen-Turnberry/Cherry Hill, LLC (See Note 2)     350,000

Other Misc. Assets                                                       16,987
                                                                     -----------
                 Total Deposits and Other Assets                   $  8,447,072
                                                                     ==========


                                        8

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


(5)  NOTES AND MORTGAGES PAYABLE

     Notes and Mortgages Payable are summarized below:
<TABLE>
                                                           March 31, 2002
                                                    ----------------------------
                                      Interest
                                        % Per                         Long-
                                        Annum          Current        Term
                                     -----------    ------------- ------------
<CAPTION>
<S>                                      <C>        <C>           <C>
International Thoroughbred
Breeders Inc.:
--------------------------
MCJEM, INC. (A)                              15%    $    132,000  $     -0-

Michael J. Quigley, III (B)                  10%       1,000,000        -0-

Other                                    Various          76,383        -0-

Garden State Park:
------------------
Service America Corporation (C)               6%         240,000        -0-
                                                     -----------   --------
    Totals                                          $  1,448,383  $     -0-

Less:
Net Liabilities of Discontinued
  Operations - Current                                  (240,000)       -0-
                                                     -----------   --------
    Totals                                          $  1,208,383  $     -0-
                                                     ===========   ========
</TABLE>
<TABLE>
                                                         June 30, 2001
                                                    ------------------------
                                      Interest
                                        % Per                        Long-
                                        Annum         Current        Term
                                     -----------    ------------  ----------
<CAPTION>
<S>                                      <C>        <C>           <C>
International Thoroughbred
Breeders Inc.:
--------------------------
MCJEM, INC. (A)                              15%    $       -0-   $  482,000

Michael J. Quigley, III (B)                  10%       1,000,000         -0-

Other                                    Various            -0-          -0-

Garden State Park:
------------------
Service America Corporation (C)               6%         240,000         -0-
                                                     -----------   ---------
    Totals                                          $  1,240,000  $  482,000

Less:
Net Liabilities of Discontinued
  Operations - Current                                  (240,000)        -0-
                                                     -----------   ---------
    Totals                                          $  1,000,000  $  482,000
                                                     ===========   =========
</TABLE>

     (A) Our promissory  note payable to MCJEM,  INC.  represents the balance of
the  purchase  price  owing from our  purchase  of two large  bronze  sculptures
located on the Garden State Park property.

     (B) On January 26, 2001,  we borrowed  $1,000,000  from Michael J. Quigley,
III at an annual  interest  rate of 10%.  Principal and interest on the note was
due on or about April 25, 2001. On May 14, 2001, the loan was modified to be due
on demand.  As collateral  for the loan, we pledged the $10 million  Realen Note
and the $23 million note issued to us by Turnberry (the  "Turnberry  Note").  On
February 20, 2002 Mr. Quigley released his security  interest in the Realen Note
in connection with the Master  Settlement  Agreement with,  among other parties,
Donald F. Conway,  the Chapter 11 Trustee for the Bankruptcy Estate of Robert E.
Brennan (the "Trustee"). (See Note 6)

     (C) In  connection  with the January 28,  1999 lease  transactions  for the
Garden State Park facility,  we purchased equipment located at Garden State Park
and a liquor  license  owned by an  unaffiliated  third party,  Service  America
Corporation (the "Holder"),  for $500,000 financed by a five (5) year promissory
note at a 6% interest  rate.  We have paid  $260,000 as of December 31, 2001 and
yearly  principal  payments of $80,000  plus  interest are due on December 28 of
each year until December 28, 2003 when all outstanding principal will be due.



                                        9

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(6)  COMMITMENTS AND CONTINGENCIES

     See Note 9 for additional  commitments and contingencies of the Company and
transactions with related parties.

     Effective December 1, 2000, we entered into a five-year employment contract
with Francis W. Murray, our Chief Executive  Officer.  The contract provides for
annual compensation of $395,000,  a $1,500 monthly automobile expense allowance,
a country club annual dues allowance and travel and entertainment reimbursements
for business expenses reasonably incurred by him in addition to participation in
various other  benefits  provided to our  employees.  As part of his  employment
contract,  Mr. Murray was awarded  options to purchase  2,000,000  shares of our
Common Stock.

     We are responsible for remediation  costs  associated with an environmental
site on the Freehold Raceway property. We have accrued what we believe to be the
total cost of  remediation.  At March 31, 2002,  the  remaining  balance of such
accrual was $155,000 for remediation  costs. These accrued costs are expected to
be incurred during the next seventeen months.

     In connection with the January 28, 1999 lease  transactions  for the Garden
State Park  facility,  we purchased a liquor  license  owned by an  unaffiliated
third party,  Service America  Corporation,  for $500,000 financed by a five (5)
year  promissory  note at a 6%  interest  rate.  At March 31,  2002,  the unpaid
principal  balance was  $240,000.  Yearly  principal  payments  of $80,000  plus
interest  are due on December 28 of each year until  December  28, 2003 when all
outstanding principal will be due.

     Effective February 20, 2002, we entered into a Master Settlement  Agreement
and related  agreements  with the  Chapter 11 Trustee  (the  "Trustee")  for the
Bankruptcy  Estate of Robert E. Brennan and a related Stock Purchase  Agreement,
Stock Option Agreement and, through our Palm Beach Princess, Inc. subsidiary,  a
Purchase and Sale Agreement,  described below.  These  agreements  followed many
months of  negotiation  with the  Trustee  of the  details  of the  transactions
outlined in the letter of intent  that had been signed by the parties  effective
April 30,  2001.  It was on the basis of the letter of intent  that we have been
operating  the vessel M/V Palm Beach  Princess and  conducting  a casino  cruise
business since April 30, 2001.

     As permitted in the letter of intent with the Trustee,  effective April 30,
2001, we entered into a bareboat charter with MJQ Corporation, pursuant to which
we have  chartered  the  vessel  M/V Palm  Beach  Princess  for the  purpose  of
operating a casino cruise business from the Port of Palm Beach,  Florida.  Under
the bareboat charter  agreement,  we are obligated to pay $50,000 per month as a
charter hire fee to the vessel's owner, MJQ Corporation.  In order to obtain the
bareboat charter, we have been negotiating and, on February 20, 2002, concluded,
a Master  Settlement  Agreement with the Trustee,  MJQ  Corporation  and others,
including Francis W. Murray, our Chairman, who is also a director and officer of
MJQ Corporation. (See Note 9, Related Party Transactions.) The Master Settlement
Agreement by its terms was subject to bankruptcy court approval, and on April 1,
2002, the approval of the United States Bankruptcy Court for the District of New
Jersey, having jurisdiction over the bankruptcy estate of Robert E. Brennan, was
obtained.

     In accordance with the Master Settlement Agreement,  through our Palm Beach
Princess,  Inc.  subsidiary we entered into a Purchase and Sale Agreement  which
provides  for our  purchase  from  the  Trustee  of the  promissory  note of MJQ
Corporation,  having  an  outstanding  balance  of  principal  and  interest  of
approximately  $15.7 million as of March 31, 2002 and secured by a ship mortgage
against  the M/V

                                       10

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Palm Beach Princess (the "Ship Mortgage Obligation"). The purchase price payable
by us for the Ship  Mortgage  Obligation  is  $13.75  million.  We began  making
payments on account of such purchase price  effective April 30, 2001, in monthly
installments of $250,000.  Such monthly installments continue under the terms of
the Purchase  and Sale  Agreement  through July 31, 2002,  at which time a $9.75
million  balloon  payment will be due. In the event that the balloon  payment is
not made by July 31, 2002,  we may extend the time for payment of the balance of
the purchase price for up to three (3) additional  months, by paying $70,000 for
a one month extension,  an additional $80,000 for the second month extension and
an additional $100,000 for the third month extension,  which additional payments
will not be credited  towards the purchase  price. In the event that any monthly
payment or the balloon payment is not made when due (or any other default on our
part  occurs)  which is not cured within the  applicable  grace  period,  at the
election of the Trustee all of our monthly $250,000  payments (which would total
$3.75  million  assuming  each  month's  payment is made prior to July 31, 2002)
would be forfeited as liquidated damages and the Trustee would have the right to
take possession and control of the vessel M/V Palm Beach Princess,  but we would
not have any further  liability for any unpaid  balance of the purchase price of
the Ship Mortgage Obligation. The Trustee would also have the right to take over
operating assets used in connection with the vessel,  including the onboard cash
bank, inventories,  supplies and equipment, and the Trustee would assume current
liabilities including trade debt and payroll. In the event the current assets so
acquired by the Trustee are less than the amount of the current  liabilities  so
assumed by the Trustee, we would be liable to the Trustee for such deficiency.

     The second agreement which we entered into with the Trustee pursuant to the
Master Settlement Agreement is a Stock Purchase Agreement. Under this Agreement,
which  superseded  all prior  agreements and  understandings  between us and the
Trustee for the purchase of our common stock held or claimed by the Trustee,  we
agreed to  purchase  approximately  2,235,000  shares of our  common  stock at a
purchase  price of $0.50 per share on July 1, 2002. We desired to purchase these
shares in order to preserve our net operating loss carryforwards which otherwise
may be lost if the  shares  are  transferred.  As  collateral  security  for our
payment of the purchase price for these shares, we have granted to the Trustee a
security  interest in all proceeds of (including all payments that might be made
in the future under) the $10 million Realen Note,  described in Note 2 above (in
connection  with which Michael J. Quigley,  III has released his prior  security
interest in the Realen Note).

     The third agreement we entered into with the Trustee pursuant to the Master
Settlement Agreement is a Stock Option Agreement, under which we have the right,
exercisable at our option, to purchase any additional shares of our common stock
over which the Trustee  might obtain  possession  and control as a result of its
claims in the Chapter 11  proceeding.  If the  Trustee  obtains  possession  and
control over shares in such  proceeding,  the Trustee will notify us and we will
then  have a limited  period of time  within  which to  decide to  exercise  our
option.  If we  exercise  the  option,  we will be  obligated  to  purchase  the
specified shares of our common stock at a price of $0.50 per share.

     In other  transactions  related  to our  acquisition  of the Ship  Mortgage
Obligation,  we entered into an agreement to purchase the outstanding  shares of
stock  in Leo  Equity  Group,  Inc.,  and  another  agreement  to  purchase  the
outstanding  shares in MJQ Corporation,  in order to acquire control of the Palm
Beach Princess  business on a long-term basis. Leo Equity Group,  Inc. has owned
the  agreement  with the Port of Palm Beach under which the Palm Beach  Princess
vessel has been  operating,  and by our  agreement  to purchase the stock in Leo
Equity Group,  Inc., the shareholder of Leo Equity Group,  Inc. has permitted us
to negotiate a new  long-term  agreement  with the Port which would  replace Leo
Equity Group's  agreement with the Port.  Further,  our bareboat  charter of the
vessel from MJQ Corporation is scheduled to expire in August,  2002.  Therefore,
by agreeing to contract for the purchase of the shares of Leo Equity

                                       11

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Group, Inc. and MJQ Corporation, we are in a position to control both the rights
to the Port  agreement and the  ownership of the vessel  itself  (subject to the
rights of the  Trustee to take over such  assets if we failto pay the balance of
the purchase price for the Ship Mortgage Obligation when due).

     The purchase price we have agreed to pay for the stock in Leo Equity Group,
Inc. is $250,000,  payable in ten  consecutive  monthly  installments of $25,000
each, without interest. As further  consideration,  we also agreed to reduce the
exercise price of the Seller's  previously  granted options to purchase  300,000
shares of our common stock, to $0.50 per share. In  consideration of the sale to
us of the stock in MJQ  Corporation,  we have agreed to assume  $3.7  million of
indebtedness owing by MJQ Corporation's sole stockholder,  of which $1.1 million
is owing to Francis W. Murray,  our  Chairman,  and $2.6 million is owing to Leo
Equity  Group,  Inc. Leo Equity  Group,  Inc. has agreed to assign its rights to
such $2.6 million receivable as described in Note 9, Related Party Transactions,
therefore our assumption of the foregoing indebtedness to Leo Equity Group, Inc.
will not entail any cash  payment.  Mr.  Murray has  indicated  that he would be
willing to defer payment of all or a portion of the assumed  indebtedness  owing
to him. Terms for the satisfaction of such indebtedness have not yet been worked
out between us and Mr. Murray. See Note 9 below, Related Party Transactions.

     In addition to the  commitments  described  above, we are in the process of
negotiating other potential acquisitions of gaming related businesses in foreign
countries. While we explore each business opportunity,  including performance of
due diligence,  and pending negotiation of definitive  agreements,  we have lent
approximately $400,000 to persons and entities having rights to certain of these
gaming   opportunities.   We  are  in  the  process  of  negotiating   terms  of
participation in these business  opportunities and expect the loans to be repaid
in the event definitive  agreements are not reached for our  participation or if
we  determine  not to proceed.  If  definitive  agreements  are  concluded,  the
businesses in foreign countries would involve a significant investment, expected
to be between  $6 million to $8  million,  and would  entail  substantial  risks
(including   political  risks).  There  can  be  no  assurance  that  definitive
agreements will be concluded or that we would be able to obtain  necessary funds
to proceed,  and there is no assurance that we will be able to recover our loans
should we not proceed.

LEGAL PROCEEDINGS

     We are a defendant in various lawsuits incidental to the ordinary course of
business.  It is not  possible to  determine  with any  precision  the  probable
outcome or the amount of liability,  if any, under these lawsuits;  however,  in
the opinion of the Company and its counsel,  the  disposition  of these lawsuits
will not have a material  adverse effect on our financial  position,  results of
operations, or cash flows.

     Commencing in the third quarter of Fiscal 1999,  the Company and certain of
its officers and directors and former officers and directors  received subpoenas
from the  Securities  and Exchange  Commission  (the "SEC")  relating to certain
transactions and reports. We have fully cooperated with the SEC's investigation.
On March 27,  2002,  as a result of actions  brought  against  the  Company  and
certain  current and former  officers by the SEC, a final  judgement was entered
against the Company and certain current and former officers  without the parties
admitting or denying the allegations which settled this matter.



                                       12

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(7)  FAIR VALUE OF FINANCIAL INSTRUMENTS

     As of March 31, 2002, in assessing the fair value of financial instruments,
we have used a variety of methods and assumptions, which were based on estimates
of  market  conditions  and  loan   risksexisting  at  that  time.  For  certain
instruments,  including  cash  and  cash  equivalents,   investments,  non-trade
accounts  receivable and loans,  and short-term  debt, it was estimated that the
carrying amount  approximated  fair value for the majority of these  instruments
because of their  short-term  maturity.  The carrying  amounts of long term debt
approximate  fair value since our interest rates  approximate  current  interest
rates that would be available to us in the market place.

     Management  believes that the carrying  amounts of the two long-term  notes
receivable  approximate  fair value and will continue to evaluate the fair value
of these instruments.

(8)  STOCK OPTIONS AND WARRANTS

     (A)  EMPLOYEE AND NON-EMPLOYEE OPTIONS

     At March 31, 2002,  total employee  options  outstanding were 3,136,500 and
total  non-  employee  options  outstanding  were  300,000.   All  employee  and
non-employee options were exercisable at March 31, 2002.

     (B)  WARRANTS

     At March 31, 2002, total warrants outstanding were 2,604,000.  All warrants
were exercisable at March 31, 2002.

(9)  RELATED PARTY TRANSACTIONS

     During the third  quarter of Fiscal  2001,  we invested in two  projects in
which our Chairman,  President and Chief Executive  Officer,  Francis W. Murray,
also has a pecuniary interest. In connection with one such project, the Board of
Directors have agreed to advance, as a loan, up to $1.5 million, the proceeds of
which are to be used to pay costs and expenses for  development of a golf course
in Southern California.  A limited partnership,  the general partner of which is
owned by Mr. Murray,  has acquired an option to purchase  certain real estate in
Southern California on which it intends to construct a golf club. The project is
a  long-term  one,  requiring  environmental,  engineering  and  other  studies,
regulatory approvals, other governmental entitlements and substantial additional
funding.  Loans by us to the limited partnership will bear interest at an annual
rate of 12%,  and we will have the right to convert  our loans into a 50% equity
interest in the limited  partnership (which percentage interest would be reduced
if additional  investments by others are made in the limited  partnership).  Mr.
Murray's  equity  interest in the limited  partnership,  indirectly  through his
ownership of the general partner, as of March 31 Mr. Murray's equity interest is
80%, and will be reduced  proportionally if we exercise our right to convert our
loans into equity.  During the three and nine months  ended March 31,  2002,  we
loaned an additional  $73,273 on this project.  At March 31, 2002,  $750,526 has
been  loaned to such  project.  Additional  loans by us may be  required  in the
future in order to maintain our rights.

     In the second project, Mr. Murray is participating in the development of an
oceanfront  parcel  of land,  located  in Fort  Lauderdale,  Florida,  which has
received  all  governmental  entitlements  from the City of Fort  Lauderdale  to
develop a 14-story  building to include a 5-story parking garage,  approximately
6,000

                                       13

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

square feet of commercial  space and a residential  9-story tower.  The property
owner, MJQ Development which is owned by Michael J. Quigley,  III, is developing
a  condominium  hotel  resort.  Mr.  Quigley  has no  relationship  to Robert J.
Quigley,  one of our directors and former  president.  During the three and nine
months   ended  March  31,   2002,   we  loaned  an   additional   $405,540  and
$1,042,462,respectively  and we have  accrued  interest in the amount of $18,822
and $247,001  for the three and nine months ended March 31, 2002,  respectively,
on this  project.  At March 31, 2002,  we have lent  $2,936,767  to the property
owner.  These loans bear  interest at 12% and will be repayable out of the first
proceeds,   after  payment  of  bank  debts,   generated  by  the  sale  of  the
condominiums. We will have the right to convert our loan into an equity interest
(subject to receiving certain third party approvals),  which would entitle us to
receive a priority  return of our  investment  and a priority  profits  interest
equal to three times our  investment.  Repayment  of these loans (and receipt of
any return if we convert our loans to equity) will be subject to  repayment  of,
first,  bank debt of approximately  $3.8 million incurred in the purchase of the
real property and, second,  construction  financing expected to amount to $25 to
$30  million.  If the  project is  successful,  Mr.  Murray  stands to receive a
contingent  benefit,  which  could  be  substantial,  from  the  owner  for  his
participation  in the  project,  but only after the  Company  and the owner have
received priority returns of their investment and priority shares of profits.

     On January 26, 2001, we borrowed $1,000,000 from Michael J. Quigley, III at
an annual interest rate of 10%. Principal and interest on the note was due on or
about  April 25,  2001.  On May 14,  2001,  the loan was  modified  to be due on
demand.  As collateral  for the loan, we pledged the $10 million Realen Note and
the $23 million  Turnberry  Note. On February 20, 2002 Mr. Quigley  released his
security  interest in the Realen Note in connection  with the Master  Settlement
Agreement. (See Note 6)

     Effective  April 30,  2001,  we entered  into a bareboat  charter  with MJQ
Corporation,  pursuant  to which we are  chartering  the  vessel  M/V Palm Beach
Princess for the purpose of operating an  entertainment  casino cruise  business
from the Port of Palm Beach, Florida.  Michael J. Quigley, III is a principal of
MJQ Corporation.  Francis W. Murray, our Chairman, President and Chief Executive
Officer, is an officer and director of MJQ Corporation,  and his son, Francis X.
Murray,  is President  and a director of MJQ  Corporation  and  President of our
subsidiary,  Palm Beach  Princess,  Inc.,  which operates the vessel.  Under the
bareboat  charter  agreement,  we are  obligated to pay $50,000 per month as the
charter hire fee to MJQ Corporation.  All costs of operating the vessel incurred
by MJQ Corporation on our behalf are to be reimbursed by us to MJQ  Corporation.
As of March 31, 2002 we owed MJQ Corporation $1,656,395 for such expenses.  Such
amounts are  classified as current  accounts  payable on our balance  sheet.  In
addition, as described in Note 6 above, we have entered into a Master Settlement
Agreement  with the  Chapter 11 Trustee  of the  Bankruptcy  Estate of Robert E.
Brennan , MJQ  Corporation  and others to  purchase  from the  Trustee  the Ship
Mortgage  Obligation  of MJQ  Corporation,  having a balance  of  principal  and
interest  outstanding of approximately  $15.7 million as of March 31, 2002 for a
purchase price of $13.75 million.  Pursuant to the Master Settlement  Agreement,
MJQ Corporation and its officers and directors  (including Francis W. Murray and
his son) exchanged  mutual releases with the Trustee and others having claims to
the Ship Mortgage Obligation.

     Also,  as set forth in Note 6 above,  we have  entered into  agreements  to
purchase all of the shares of outstanding  stock of each of MJQ  Corporation and
Leo Equity Group,  Inc. Mr.  Francis W. Murray is an officer and director of MJQ
Corporation  and a director of Leo Equity Group,  Inc. In  consideration  of the
sale  of the  MJQ  stock  to us,  we have  agreed  to  assume  $1.1  million  of
indebtedness  owing by Michael  J.  Quigley,  III to Francis W.  Murray and $2.6
million of  indebtedness  owing by Michael J. Quigley to Leo Equity Group,  Inc.
Since Leo Equity Group,  Inc. is assigning its right to receive  payment of such
$2.6  million of  indebtedness  to us, no cash  outlay is expected to be made in
assuming the indebtedness owing

                                       14

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

to that  entity.  Mr.  Murray  has  indicated  that he would be willing to defer
payment  of all or a portion of the  assumed  indebtedness  owing to him.  Final
terms for  satisfaction of such  indebtedness  have not yet been completed.  The
purchase  price  payable  by us for the  stock  in Leo  Equity  Group,  Inc.  is
$250,000,  payable without interest in 10 monthly  installments of $25,000 each.
We alsoagreed to reduce the exercise price of previously granted options held by
the seller, Frank A. Leo (our former director and chairman), to purchase 300,000
shares of our  common  stock,  from  $4.00 per share to $0.50 per  share,  while
conditioning  exercise of such  options upon our first  having  consummated  the
purchase of the shares required to be purchased by us from the Trustee under the
Stock Purchase  Agreement.  The purpose of our contracting for such acquisitions
is to enable us to  continue  the Palm Beach  Princess  business  on a long term
basis,  subject to our ability to finance the balance of the purchase  price for
the Ship Mortgage Obligation due to the Trustee.

     The  Master  Settlement  Agreement  with the  Chapter  11  Trustee  for the
Bankruptcy  Estate of Robert  E.  Brennan  included  a final  settlement  by the
Trustee with numerous parties. Among those parties were Frank A. Leo, Leo Equity
Group,  Inc.,  Michael J.  Quigley III and MJQ  Corporation.  During the quarter
ended March 31, 2002 we charged Leo Equity Group  $3,000,000 and MJQ Corporation
$1,000,000  for their  portion of expenses  incurred by us and a success fee for
the efforts of International  Thoroughbred Breeders, Inc. in connection with the
final  settlement  with the  Trustee.  We have  deferred  all income  from these
transactions until such time as it is received. Leo Equity Group is to assign to
us certain  receivables in the approximate  amount of $3 million,  including the
receivables  of  approximately  $2.6 million due it from Michael J. Quigley III,
for payment of this obligation.

     For  additional   information  regarding  related  party  transactions  see
Footnote  6 of this  Form 10-Q and  Footnote  14 in the  consolidated  financial
statements included in our Form 10-K for the fiscal year ended June 30, 2001.


(10) SUBSEQUENT EVENTS

     On April 1, 2002 the Master  Settlement  Agreement  and related  agreements
with the Trustee for the Bankruptcy  Estate of Robert E. Brennan was approved by
the  United  States   Bankruptcy   Court.   Such   approval   became  final  and
non-appealable  on April 11, 2002.  Until such time as the Settlement  Agreement
was  approved  by the  Bankruptcy  Court,  and such  approval  became  final and
non-appealable,  our deposits in the amount of  $3,000,000  as of March 31, 2002
were refundable to us.  Effective  April 11, 2002 these deposits,  classified as
Current Assets as of March 31, 2002,  along with future monthly deposits will no
longer be refundable to us and  subsequently  will be classified as Other Assets
on our Balance Sheet.


                                       15

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2002



ITEM 2 -  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITIONS  AND
--------------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------

Forward-Looking Statements
--------------------------

     We have made  forward-looking  statements in this Form 10-Q,  including the
information  concerning possible or assumed future results of our operations and
those  preceded  by,  followed by or that include  words such as  "anticipates,"
"believes," "expects," "intends," or similar expressions.  For those statements,
we claim  the  protection  of the safe  harbor  for  forward-looking  statements
contained in the Private  Securities  Litigation  Reform Act of 1995. You should
understand that the following  important factors, in addition to those discussed
under  "Risk  Factors"  in our most  recent  Annual  Report on Form 10- K, could
affect our future  results and could cause  those  results to differ  materially
from those expressed in our forward-looking statements:

          o    inability to obtain financing;
          o    termination  of the bareboat  charter  under which we operate our
               gaming business;
          o    general  economic and business  conditions  affecting the tourism
               business in Florida;
          o    competition;
          o    execution of our new business strategy;
          o    changes in laws regulating the gaming industry;
          o    fluctuations  in  quarterly  operating  results  as a  result  of
               seasonal and weather considerations; and
          o    events  directly or indirectly  relating to our business  causing
               our stock price to be volatile.

Liquidity and Capital Resources
-------------------------------

     Cash flow and  liquidity  during the nine month period ended March 31, 2002
were influenced by receipt of approximately $1.2 million from the auction of all
of the  personal  property  (including  equipment,  furniture,  furnishings  and
artwork) that we owned at Garden State Park,  and receipt of $906,455  which had
been held in  escrow  from the 1999 sale of  Freehold  Raceway  and the lease of
Garden State Park.  Such cash flow was used,  in part,  to fund  portions of the
payments  on  account  of the  purchase  price of the Ship  Mortgage  Obligation
against the Palm Beach Princess,  described in Note 6 above, to make loans of an
additional   $1,115,735  to  the  Southern   California  golf  course  and  Fort
Lauderdale,  Florida  real estate  development  projects  during the nine months
ended March 31, 2002 as described in Note 9 - Related Party Transactions, and to
explore other potential business opportunities.  We are exploring gaming related
business  opportunities  in various foreign  countries and expect to continue to
incur expenses for exploring potential business  opportunities in the future. As
of March 31, 2002, we have made loans of  approximately  $400,000 in relation to
the foreign projects and an additional  $501,955 has been funded and expensed in
various foreign projects during the 9 months ended March 31, 2002.

     On July 18, 2001, we sold our condominium unit and an ownership interest in
the Ocala Jockey Club that was located in Reddick,  Florida. The sales price was
$94,000 and the proceeds after closing fees

                                       16

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2002

and other  expenses were $81,645.  A gain of $77,577 was  recognized  during the
first quarter of Fiscal 2002.

     The sources of cash described above were of a non-recurring  nature. We are
currently dependent upon operations of the Palm Beach Princess vessel, described
below, for substantially all of our cash flow.

     Effective  April 30,  2001,  we entered  into a bareboat  charter  with MJQ
Corporation, pursuant to which we charter the vessel M/V Palm Beach Princess for
the purpose of operating a casino cruise business out of the Port of Palm Beach,
Florida.  Under the bareboat charter agreement,  we are obligated to pay $50,000
per month as the charter hire fee to the vessel's  owner,  MJQ  Corporation.  In
order to obtain the bareboat  charter,  we  negotiated  and on February 20, 2002
entered into a Master  Settlement  Agreement  with the Chapter 11 Trustee of the
Bankruptcy  Estate of Robert E. Brennan (the  "Trustee"),  MJQ  Corporation  and
others.  As  more  fully  described  in Note 6  above,  pursuant  to the  Master
Settlement Agreement we have incurred the following financial commitments:

     o    For  the  purchase  of the  Ship  Mortgage  Obligation,  we are to pay
          $250,000  per month  through July 31, 2002,  and an  additional  $9.75
          million balloon payment is due at that time; provided,  however,  that
          we may  extend  the date  for  payment  of the  balloon  payment  on a
          month-to-month  basis for up to three months,  until October 31, 2002,
          if we pay extension fees of $70,000 for the first month, an additional
          $80,000 for the second month and an additional  $100,000 for the third
          month.  If we fail to make any payment  when due or  otherwise  are in
          default  under the Purchase and Sale  Agreement  for the Ship Mortgage
          Obligation,  and such  failure  or  default  is not cured  within  the
          applicable  grace period,  then the Trustee may elect to terminate the
          bareboat  charter  under  which we  operate  the vessel M/V Palm Beach
          Princess,  and the Trustee would then retain as liquidated damages all
          of the monthly  payments we  previously  had made but we would have no
          further  liability  for  payment  of the  purchase  price.  Upon  such
          termination,  we also would be liable to the Trustee for any amount by
          which the current  liabilities  assumed by the Trustee pursuant to the
          Purchase and Sale Agreement  exceed the current assets acquired by the
          Trustee.

     o    We are  obligated to purchase  approximately  2,235,000  shares of our
          common stock from the Trustee at $0.50 per share  (aggregate  purchase
          price of approximately $1,117,500), on July 1, 2002.

     Accordingly,  we expect  that we will need to generate  $300,000  per month
from operation of the vessel to pay the monthly bareboat charter fee and monthly
installments of the purchase price for the Ship Mortgage Obligation,  until July
31, 2002. Further,  we currently estimate that approximately  $200,000 per month
is  needed  from  operation  of  the  vessel  to  cover  overhead   expenses  of
International   Thoroughbred   Breeders,   Inc.  In  addition  to  such  monthly
requirements,  we will need to obtain approximately $1.2 million in financing in
order to pay the  purchase  price for the stock due the  Trustee on July 1, 2002
and  approximately $10 million in financing in order to make the balloon payment
of the purchase  price of the Ship Mortgage  Obligation due as early as July 31,
2002.  We are  seeking  financing  for the vessel in order to fully pay all such
obligations to the Trustee.

     Substantially  all of our revenues are currently derived from our operation
of the M/V Palm Beach  Princess.  The cash flow from operations of the vessel is
seasonal and we may generate excess funds in some months and insufficient  funds
in other months. Certain of our operating costs, including the

                                       17

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2002


charter fee payable to the vessel's owner,  fuel costs and wages,  are fixed and
cannot be reduced  when  passenger  loads  decrease or when rising fuel or labor
costs cannot be fully passed through to customers. Passenger and gaming revenues
earned from the vessel must be high enough to cover such expenses.  We have from
time to time not generated  sufficient revenues from the M/V Palm Beach Princess
to pay our expenses  and to timely make the  $250,000 per month  payments to the
Trustee on account of the purchase price for the Ship Mortgage Obligation during
the three and nine months ended March 31, 2002. However, we are current with the
payments  through  April  30,  2002 and  expect to remain  current  through  the
remainder of the fiscal year.

     The period July 1st to December  31st is a  seasonably  slow period for the
vessel operation.  The period from January 1st to June 30th has been a period of
increased  activity and profits for the vessel.  Although we believe we can meet
all our obligations this fiscal year, there is no guarantee that we will be able
to continue to make all the required  payments  during this fiscal year, or that
we may be able to  finance  the  stock  purchase  price  due July 1, 2002 or the
balloon payment due as early as July 31, 2002 to the Trustee, and the failure to
do so in the future would  materially harm our revenues and cause us to lose our
only operating asset.

     In addition to the financial  commitments to the Trustee, we are continuing
to explore new business  opportunities.  Subject to our entering into definitive
agreements,  we anticipate  committing to fund or obtain  financing for start-up
businesses  of up to $4  million  in one case and $2  million  in  another,  for
capital expenditures and potential cash flow deficits of those new businesses.

     Other possible sources of cash include the two promissory notes we received
when we sold our Garden State Park real  property in November,  2000 and our Las
Vegas real  property  in May,  2000.  One such Note is in the face amount of $10
million,  issued by  Realen-Turnberry/Cherry  Hill,  LLC,  the  purchaser of the
Cherry Hill property (the "$10 Million Note"),  and the other promissory note is
in the face amount of $23 million, issued by Turnberry/Las Vegas Boulevard, LLC,
purchaser of our Las Vegas real  property (the "$23 Million  Note").  Under both
Notes,  interest and  principal  payments  will be dependent  upon,  and payable
solely out of, the obligor's net cash flow  available  for  distribution  to its
equity owners.  After the obligor's  equity  investors  have received  aggregate
distributions equal to their capital contributions plus an agreed upon return on
their invested capital,  the next $10 million of distributable  cash in the case
of the $10 Million Note, and the next $23 million of  distributable  cash in the
case of the $23 Million  Note,  will be paid to us, and following our receipt of
the face amount of the Note we will receive 33 1/3% of all distributable cash of
the obligor  until  maturity  of the Note.  The  probable  timing and amounts of
payments under these Notes cannot be predicted.  If we need  additional  working
capital, we may attempt to borrow on these Notes, but such borrowing is expected
to be  difficult  to obtain as long as the timing and amounts of payments  under
the Notes remain unpredictable.

     While  management  believes  that the $10 Million  Note and the $23 Million
Note  owned  by us have  substantial  value  and,  ultimately,  should  generate
significant  cash  payments  to us, the  timing of receipt of any such  payments
cannot be accurately predicted and we may not receive substantial payments under
the notes for one year or more.  At the same time,  we have  utilized  available
cash over the last  several  months,  and expect to incur  further  costs in the
development  of projects  which,  while believed by management to be worthwhile,
are expected to take more than one year before generating cash returns to us. We
will seek to  borrow  against  the notes in order to obtain  funds for our short
term obligations and current  expenses and also for capital  expenditures of any
new business we enter.  However,  there can be no assurance that we will be able
to borrow the necessary funds.

                                       18

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2002


Discussion of Statement of Cash Flows for the Nine Months Ended March 31, 2002.
-------------------------------------------------------------------------------

     Cash flows provided by operating  activities  were  $2,265,101 for the nine
months ended March 31, 2002 as compared to cash (used) for operating  activities
in the amount of ($3,045,122) for the same period last year.

     Our  working  capital  as of March 31,  2002 was a negative  ($294,606)  as
compared to a negative  ($190,644)  at June 30,  2001.  The  negative  change in
working  capital during the past nine months was primarily  caused by the use of
cash to fund on-going development projects partially offset by the cash provided
by operating  activities  and cash  received from the Garden State Park personal
property auction proceeds.

     Cash used in investing  activities  was  $2,828,088  during the nine months
ended  March 31,  2002.  In June  2001,  we held an  auction at which all of the
personal property,  including  equipment,  furniture,  furnishings and art work,
that we owned at Garden  State Park was sold for  approximately  $1.3 million in
cash,  which was  received  during  the past nine  months  and used for  working
capital  purposes  and to make  additional  loans  (which as of March  31,  2002
totaled $2,936,767) for the Ft. Lauderdale project.  (See Note 9 - Related Party
Transactions.) Additionally,  cash was used during the nine month period for the
monthly payments made on the Palm Beach Princess Ship Mortgage Obligation in the
amount  of  $2,250,000,  for  the  additional  loans  of  $1,508,528  by  us  on
development  projects,  and for  capital  expenditures  of  $403,602  which were
primarily  associated  with the Palm Beach Princess  operations  during the nine
months ended March 31, 2002.

     Cash provided by financing  activities was $626,799  during the nine months
ended March 31, 2002,  primarily  consisting of payments on short term notes and
inter-company transactions.

Results of Operations for the Three Months Ended March 31, 2002 and 2001
------------------------------------------------------------------------

     Revenue for the three months ended March 31, 2002 increased $8,034,274 from
$15,742 in Fiscal 2001 to  $8,050,016  in Fiscal 2002  primarily  as a result of
revenues  generated by the Palm Beach Princess  operations.  Expenses  increased
$4,518,485  from  $1,598,615  in the  three  month  period  in  Fiscal  2001  to
$6,117,100  primarily the result of operating expenses of $4,601,560  associated
with the Palm Beach  Princess  during the third quarter of Fiscal 2002.  General
and  Administrative  expenses for the parent for the comparable period in Fiscal
2002  decreased  $882,790  from Fiscal 2001  primarily as a result of a $500,000
non-cash  compensation  cost of the  2,500,000  shares of Common Stock issued to
Francis W. Murray,  the Company's Chief Executive  Officer and remediation costs
of approximately  $300,000 associated with the sale of Freehold Raceway, both of
which occurred in the third quarter of fiscal 2001.

     Effective  April 30, 2001, we chartered the vessel M/V Palm Beach  Princess
for the purpose of operating an entertainment  and casino cruise business out of
the  Port  of  Palm  Beach,  Florida.  This  business  is  subject  to  seasonal
fluctuations.  Our peak  seasons  are the winter and spring  seasons  due to the
increased local population as well as increased tourist populations.  During the
third quarter of Fiscal 2002,  passenger count was 68,687 and total revenue from
the vessel was $7,941,213 which included casino revenue of $6,461,117, passenger
fares of $1,030,335 and on board revenue of $449,761.  Casino operating expenses
which also includes food,  beverage and entertainment for the three month period
were  $1,843,792 or 28% of casino  revenue.  Sales,  marketing  and  advertising
expenses were $740,573 and on board gift shop,  catering and cabin expenses were
$213,137. Maritime and maintenance costs to operate

                                       19

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2002


the ship were  $1,664,996.  Finance and  administrative  expenses were $646,918.
State Income Tax expense was $80,000.  Net income for the third quarter from the
operation of the vessel was $2,751,797.

     The Palm  Beach  Princess  performs  fourteen  cruises  weekly,  that is, a
daytime  and an evening  cruise  each day.  Each  cruise is of five to six hours
duration.  During  each  cruise,  the  Palm  Beach  Princess  offers  a range of
amenities  and  services to her  passengers.  Out of the  scheduled  182 cruises
during the third  quarter,  no cruises were  cancelled for weather or mechanical
difficulties.

     From July 1, 2001 to December 4, 2001 the M/V Palm Beach  Princess  was the
only vessel  operating a coastal gaming business from the Port of Palm Beach and
our  closest  competition  was  approximately  50 miles away in Ft.  Lauderdale,
Florida.  From  December 10, 2001 until April 29, 2002.  when it returned to its
home port of Boston  Massachusetts,  another  coastal  gaming  vessel,  the S.S.
Horizon Edge, operated from Riviera Beach Marina, which is in close proximity to
the Port of Palm Beach. This vessel was 186 feet and has a passenger capacity of
500 people. The M/V Palm Beach Princess is considerably  larger at 421 feet with
a  passenger  capacity of 850 people.  The  Horizon  Edge  operated on a similar
schedule as the Palm Beach  Princess,  that is, two five hour cruises per day, 7
days a week, however,  due to its smaller size it canceled more cruises than the
Palm Beach Princess for inclement weather.  Additionally, the Port of Palm Beach
is currently  constructing a new terminal and larger port facilities  which will
enable the port to handle  increased  capacity,  including  possibly  additional
gaming cruise vessels.  It is our  understanding  that the coastal gaming vessel
Texas Treasure II (formerly the M/V Contessa)  will begin  operating in the near
future  from  the  Port of Palm  Beach in  competition  with the M/V Palm  Beach
Princess.  This vessel is  approximately  400 feet,  was built in 1968 and has a
passenger capacity of approximately 700 people.  This vessel previously operated
in  competition  with  the  Palm  Beach  Princess  from  May 13,  1999  until it
discontinued  operations  on May 15,  2000.  There is no  assurance  that  other
competing  vessels will not enter the gaming  business at the  existing  Port of
Palm Beach,  at a new and larger port facility under  construction in Palm Beach
or at another port facility in the future.

     For the third quarter of Fiscal 2002, our income was $1,852,916 or $.16 per
share on weighted average  outstanding shares of 11,480,273 as compared to a net
loss for the comparable  period in prior fiscal year of  ($1,582,873) or ($0.15)
per share on weighted average  outstanding  shares of 10,708,664.  The change of
$3,435,789  was  primarily  the result of the net income from  operation  of the
vessel.

Results of Operations for the Nine Months Ended March 31, 2002 and 2001
-----------------------------------------------------------------------

     Revenue for the nine months ended March 31, 2002 increased $19,066,753 from
$198,084 in Fiscal 2001 to  $19,264,837  in Fiscal 2002 primarily as a result of
revenues  generated by the Palm Beach Princess  operations.  Expenses  increased
$14,519,415  from  $3,159,352  in the  nine  month  period  in  Fiscal  2001  to
$17,678,767 primarily the result of operating expenses of $13,077,840 associated
with the Palm  Beach  Princess  during  the nine  month  period in Fiscal  2002.
General and Administrative  expenses for the parent decreased $747,946 primarily
as a result of the decreased  compensation  and  environmental  costs during the
third quarter as discussed above.

     As described  above,  the Palm Beach  Princess  performs  fourteen  cruises
weekly.  During  the nine  months  ended  March 31,  2002,  passenger  count was
194,683,  total revenue from the vessel was  $18,847,585  which included  casino
revenue of  $15,269,234,  passenger  fares of $2,335,678 and on board revenue of
$1,242,673.  Casino  operating  expenses which also includes food,  beverage and
entertainment

                                       20

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2002


for the nine month  period  were  $5,267,961  or 35% of casino  revenue.  Sales,
marketing  and  advertising  expenses  were  $2,139,412  and on board gift shop,
catering and cabin expenses were  $663,866.  Maritime and  maintenance  costs to
operate the ship were  $4,623,465.  Finance  and  administrative  expenses  were
$2,437,727.  State Income Tax expense was $102,000. Net income from operation of
the vessel for the nine months ended March 31, 2002 was  $3,613,154.  Out of the
534  scheduled  cruises  during the nine months ended March 31, 2002, 13 cruises
were  cancelled  for weather or mechanical  difficulties.  During the nine month
period the vessel was placed in dry dock for 6 days in October,  which is a slow
seasonal period, for general maintenance and repairs.

     See Results of  Operations  for the Three  Months  Ended March 31, 2002 and
2001 for information dealing with new competition.

     During the nine months ended March 31, 2002,  our net income was $1,484,070
or $.13 per  share on  weighted  average  outstanding  shares of  11,480,271  as
compared  to  a  loss  for  the  comparable  period  in  prior  fiscal  year  of
($2,961,268)  or ($0.31) per share on  weighted  average  outstanding  shares of
9,491,211.  The change of $4,445,338  was primarily the result of the net income
from operation of the vessel.


                                       21

<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                                     PART II

                                OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K
        --------------------------------

     The  Company  did not file any  reports  on Form  8-K with  respect  to the
quarter ended March 31, 2002.


                                       22

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                                   SIGNATURES



     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.



         May 20, 2002         /s/Francis W. Murray
                              --------------------------------------------
                              Francis W. Murray, President, and
                                 Chairman of the Board




         May 20, 2002         /s/William H. Warner
                              --------------------------------------------
                              William H. Warner
                              Secretary/Treasurer
                              (Principal Financial and Accounting Officer)










                                       23

<PAGE>