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               December 31, 1999
                               ------------------------------------------------
                                                     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)

                  P.O. Box 1232, Cherry Hill, New Jersey 08034
-------------------------------------------------------------------------------
               (Address of principal executive offices)(Zip Code)

                                 (856) 488-3838
              (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 5, 2000
-------------------------------                 --------------------------
Common Stock, $ 2.00 par value                        8,980,252 Shares


<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                                    FORM 10-Q

                                QUARTERLY REPORT
                   FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
                                   (Unaudited)

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    AS OF DECEMBER 31, 1999 AND JUNE 30, 1999

                                     ASSETS

                                     December 31,
                                        1999         June 30,
                                     (UNAUDITED)       1999
                                   ---------------  ------------
CURRENT ASSETS:
     Cash and Cash Equivalents     $     198,948  $  1,358,200
     Reserve Escrow Deposits             374,008       182,154
     Accounts Receivable                   2,234       234,774
     Prepaid Expenses                    231,481       349,182
     Other Current Assets                 87,684        53,771
     Net Assets of Discontinued
      Operations - Current               (50,601)      494,699
                                    -------------  ------------
          TOTAL CURRENT ASSETS           843,754     2,672,780
                                    -------------  ------------

NET ASSETS OF DISCONTINUED
 OPERATIONS - Long Term               30,000,000    30,000,000
                                    -------------  ------------

PROPERTY HELD FOR SALE                42,149,755    42,149,755
                                    -------------  ------------

LAND, BUILDINGS AND EQUIPMENT:
     Land and Buildings                  214,097       214,097
     Equipment                           685,886       683,428
                                    -------------  ------------
                                         899,983       897,525
     LESS: Accumulated Depreciation
           and Amortization              358,715       329,667
                                    -------------  ------------

          TOTAL LAND, BUILDINGS
            AND EQUIPMENT, NET           541,268       567,858
                                    -------------  ------------

OTHER ASSETS:
     Deposits and Other Assets         1,003,172     1,198,172
                                    -------------  ------------
          TOTAL OTHER ASSETS           1,003,172     1,198,172
                                    -------------  ------------

TOTAL ASSETS                       $  74,537,949  $ 76,588,565
                                    =============  ============

See Notes to Consolidated Financial Statements.

                                        1

<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    AS OF DECEMBER 31, 1999 AND JUNE 30, 1999

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                    December 31,
                                        1999          June 30,
                                     (UNAUDITED)        1999
                                ----------------  --------------
CURRENT LIABILITIES:
  Accounts Payable              $       273,431   $     267,941
  Accrued Expenses                    1,594,790       1,176,796
  Current Maturities
   of Long-Term Debt                 35,761,471      34,297,145
                               ----------------  --------------
     TOTAL CURRENT LIABILITIES       37,629,692      35,741,882
                               ----------------  --------------


COMMITMENTS AND CONTINGENCIES             -               -


STOCKHOLDERS' EQUITY:
  Series A Preferred Stock,
    $100.00 Par Value,
    Authorized 500,000 Shares,
    Issued and Outstanding,
    362,482 and 362,482
    Shares, Respectively             36,248,175      36,248,175
  Common Stock, $2.00 Par Value,
    Authorized 25,000,000 Shares,
    Issued, 11,884,260 and
    11,884,249 Shares,
    and Outstanding, 8,980,244 and
    8,980,233 Shares Respectively    23,768,519      23,768,497
  Capital in Excess of Par           26,144,760      26,144,782
   (Deficit) (subsequent to
   June 30, 1993,
   date of quasi-reorganization)    (41,963,990)    (38,023,064)
                                ----------------  --------------
       TOTAL                         44,197,464      48,138,390
  LESS:
     Treasury Stock, 2,904,016
      Shares, at Cost                (7,260,040)     (7,260,040)
     Deferred Compensation, Net         (29,167)        (31,667)
                                 ---------------  --------------
       TOTAL STOCKHOLDERS' EQUITY     36,908,257      40,846,683
                                 ---------------  --------------
TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY            $    74,537,949   $  76,588,565
                                ================  ==============

See Notes to Consolidated Financial Statements.

                                       2
<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                   FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
<TABLE>

                                                    Preferred                      Common
                                         -----------------------------------------------------------
                                           Number of                         Number of
                                             Shares           Amount          Shares       Amount
                                         ---------------  ----------------  ------------  ----------
<CAPTION>
<S>                                             <C>     <C>                  <C>        <C>
BALANCE - JUNE 30, 1999                         362,482 $      36,248,175    11,884,249 $ 23,768,497

   Shares Issued for Fractional
    Exchanges With Respect to the
    One-for-twenty Reverse Stock
    Split effected on March 13, 1992                  0                 0            11          22
   Amortization of Deferred
    Compensation Costs                        ---               ---             ---          ---
   Net (Loss) for the Six Months
    Ended December 31, 1999                   ---               ---             ---          ---

                                         ---------------  ----------------  ------------  ----------
BALANCE - DECEMBER 31, 1999                     362,482 $      36,248,175    11,884,260 $ 23,768,519
                                         ===============  ================  ============  ==========
</TABLE>

<TABLE>

                                            Capital          Retained        Treasury     Deferred
                                           in Excess         Earnings         Stock,       Compen-
                                             of Par          (Deficit)        At Cost      sation     Total
                                         ---------------  ----------------  ------------  ---------- ------------
<CAPTION>
<S>                                    <C>              <C>               <C>           <C>         <C>
BALANCE - JUNE 30, 1999                $     26,144,782 $     (38,023,064)$  (7,260,040)$   (31,667)$ 40,846,683

   Shares Issued for Fractional
    Exchanges With Respect to the
    One-for-twenty Reverse Stock
    Split effected on March 13, 1992                (22)        ---             ---          ---       ---
   Amortization of Deferred
    Compensation Costs                        ---               ---             ---           2,500        2,500
   Net (Loss) for the Six Months
    Ended December 31, 1999                   ---              (3,940,926)      ---          ---      (3,940,926)

                                         ---------------  ----------------  ------------  ---------- ------------
BALANCE - DECEMBER 31, 1999            $     26,144,760 $     (41,963,990)$  (7,260,040)$   (29,167)$ 36,908,257
                                         ===============  ================  ============  ========== ============
</TABLE>


See Notes to Consolidated Financial Statements.

                                        3

<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
          FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
                                   (UNAUDITED)


<TABLE>

                                                Three Months Ended         Six Months Ended
                                                   December 31,               December 31,
                                              ------------------------  ---------------------------
                                                  1999          1998         1999          1998
                                              -----------    ---------  -------------  ------------
<CAPTION>
REVENUE:
<S>                                        <C>           <C>           <C>            <C>
  Rental Income                            $      76,206 $           0 $      153,954 $          0
  Interest Income                                 12,244        80,620         29,486      213,081
                                              -----------    ---------  -------------  ------------
                 TOTAL REVENUES                   88,450        80,620        183,440      213,081
                                              -----------    ---------  -------------  ------------
EXPENSES:
  General & Administrative Expenses              842,532     1,422,746      1,324,737    2,735,322
  Interest and Financing Expenses                990,747     1,741,703      2,146,426    3,523,973
  Amortization of Financing Costs                      0       765,813              0    1,529,602
  El Rancho Property Carrying Costs              276,554       203,551        653,203      619,533
                                              -----------    ---------  -------------  ------------
                 TOTAL EXPENSES                2,109,833     4,133,813      4,124,366    8,408,430
                                              -----------    ---------  -------------  ------------
(LOSS) FROM CONTINUING OPERATIONS
BEFORE DISCONTINUED OPERATIONS                (2,021,383)   (4,053,193)    (3,940,926)  (8,195,349)

INCOME FROM DISCONTINUED OPERATIONS:
  Income from  operations of discontinued
  racetrack  operations
    (less  applicable state income taxes
    of $65,500 and $127,500
    for the respective three
   and six months ended December 31, 1998)             0     2,113,840              0    4,256,544
                                              -----------    ---------  -------------  ------------
NET (LOSS)                                 $  (2,021,383)$  (1,939,353)$   (3,940,926)$ (3,938,805)
                                            ============= ============= ============== ============

BASIC PER SHARE DATA:

(LOSS) BEFORE DISCONTINUED OPERATIONS      $       (0.23)$       (0.28)$        (0.44)$      (0.58)

INCOME FROM DISCONTINUED OPERATIONS                 0.00          0.15           0.00         0.30
                                              -----------    ---------  -------------  ------------
NET (LOSS)                                 $       (0.23)$       (0.13)$        (0.44)$      (0.28)
                                             ============ ============= ============== ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING     8,980,245    13,978,103      8,980,240   13,978,107
                                             ============ ============= ============== ============
</TABLE>


See Notes to Consolidated Financial Statements.


                                        4

<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
                                   (UNAUDITED)
<TABLE>
                                                                      Six Months Ended
                                                                         December 31,
                                                              -----------------------------------
                                                                   1999               1998
                                                              ---------------    ----------------
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                         <C>                <C>
     (LOSS) FROM CONTINUING OPERATIONS                      $     (3,940,925)  $      (8,195,349)
                                                              ---------------    ----------------
     Adjustments to reconcile (loss)
      to net cash (used in) operating activities:
        Depreciation and Amortization                                 31,548           1,564,029
        Changes in Operating Assets and Liabilities -
           Decrease in Accounts Receivable                           232,541               3,544
           (Increase)Decrease in Other Assets                        (33,913)             87,693
           Decrease in Prepaid Expenses                              117,701             146,840
           Increase (Decrease) in Accounts Payable
            and Accrued Expenses                                     423,484            (916,311)
                                                             ---------------    ----------------
     CASH (USED IN) CONTINUING OPERATING ACTIVITIES               (3,169,565)         (7,309,554)

     CASH PROVIDED BY DISCONTINUED OPERATING ACTIVITIES               25,551           5,377,105
                                                              ---------------    ----------------
     NET CASH (USED IN) OPERATING ACTIVITIES                      (3,144,014)         (1,932,448)
                                                              ---------------    ----------------


CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital Expenditures                                              (2,458)             (2,709)
                                                              ---------------    ----------------
     CASH (USED IN) CONTINUING
      INVESTING ACTIVITIES                                            (2,458)             (2,709)
     CASH (USED IN) DISCONTINUED INVESTING ACTIVITIES               (130,000)            (52,404)
                                                              ---------------    ----------------
     NET CASH (USED IN) INVESTING ACTIVITIES                        (132,458)            (55,113)
                                                              ---------------    ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Escrow Deposits Utilized                                         128,151           2,365,690
    Deposit to Escrow Funds                                         (320,000)                  0
    Decrease in Balances Due From
      Discontinued Subsidiaries                                    2,382,852           5,038,071
    Principal Payments on Short Term Notes                          (178,233)           (138,950)
                                                              ---------------    ----------------
     CASH PROVIDED BY CONTINUING FINANCING ACTIVITIES              2,012,770           7,264,811
     CASH (USED IN) DISCONTINUED FINANCING ACTIVITIES               (408,091)         (6,018,205)
                                                              ---------------    ----------------
     NET CASH PROVIDED BY FINANCING ACTIVITIES                     1,604,679           1,246,606
                                                              ---------------    ----------------

NET (DECREASE) IN CASH AND CASH EQUIVALENTS                       (1,671,792)           (740,955)
          LESS CASH AND CASH EQUIVALENTS AT END OF PERIOD
            FROM DISCONTINUED OPERATIONS                             512,540             693,504
     CASH AND CASH EQUIVALENTS AT BEGINNING OF
       PERIOD FROM CONTINUING OPERATIONS                           1,358,200             213,795
                                                              ---------------    ----------------

     CASH AND CASH EQUIVALENTS AT END OF PERIOD             $        198,948   $         166,344
                                                              ===============    ================

     Supplemental Disclosures of Cash Flow Information:
                  Cash paid during the period for:
                  Interest                                  $              0   $       3,926,622
                  Income Taxes                              $              0   $               0
</TABLE>

Supplemental Schedule of Non-Cash Investing and Financing Activities:
During  the six  months  ended  December  31,  1998 , the  Company  recorded  an
unrealized loss of $10,840 on trading securities


See Notes to Consolidated Financial Statements.


                                        5

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(1)      BASIS OF PRESENTATION

     On January 28, 1999, the Company completed the sale of Freehold Raceway and
a ten-acre  parcel at the Garden State Park facility and the lease of the Garden
State Park  facilities.  Prior to June 30, 1998, the Company  determined to sell
its  racetracks  and,  accordingly,  the  operating  results  of  the  racetrack
subsidiaries  have been segregated and reported as  discontinued  operations for
each of the periods presented.

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming   International    Thoroughbred   Breeders,   Inc.   and   subsidiaries
(collectively,  the "Company")  will continue as a going concern.  The remaining
debt to the Company's  primary  lender was due June 1, 1999. On May 7, 1999, the
Company  notified  their primary  lender,  Credit  Suisse First Boston  Mortgage
Capital LLC ("Credit Suisse"), of its intent to extend the loan maturity date to
June 1, 2000.  On January 21, 2000 after  obtaining  the written  consent of the
holders of a majority of the outstanding shares of stock of the Company entitled
to vote thereon, the Company entered into a restructuring  agreement with Credit
Suisse. Prior to this agreement, the Company had been in a maturity default with
Credit  Suisse  for its  loan  due on June 1,  1999  (the  "CSFB  Loan")  in the
principal  amount of  $30,500,000  plus unpaid  interest since June 1, 1999. The
restructure  agreement  returns the loan to a good standing position and extends
the maturity date of the CSFB Loan to June 30, 2000.

     On January 25, 2000,  the Company  entered into  agreements  with unrelated
third  parties  for  the  sale  of the  Garden  State  Park  and  the El  Rancho
properties.  Unless the scheduled closing of the El Rancho property on April 30,
2000,  or the further  extended  date of June 1, 2000,  is  consummated  and the
closing of the Garden State Park property is consummated, the Company will be in
default with respect to the Credit Suisse loan due on June 30, 2000. The Company
does  not have  any  committed  source  of  working  capital  and  there  are no
assurances  that the Company would be successful  in obtaining  working  capital
from other sources. There can be no assurances that either sale of the El Rancho
or the  Garden  State  Park  properties  will be  consummated  or to the  timing
thereof.

     The Company has sustained  losses of  approximately  $7.9 million and $18.3
million  during  fiscals  1999  and  1998,   respectively  and  a  net  loss  of
approximately  $3.9  million for the six months ended  December  31,  1999.  The
Company  believes its projected cash flows from its current  operations  will be
sufficient until June 30, 2000. There can be no assurances beyond that date.

     The financial  statements do not include any adjustments  that might result
from the outcome of these uncertainties.

(2)      CLASSIFICATIONS

     Certain  prior years'  amounts have been  reclassified  to conform with the
current years' presentation.

(3)      DISCONTINUED OPERATIONS

     On January 28, 1999,  the Company  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 the lease of the real property and certain
related assets of Garden State Park for a seven-year period.

                                        6

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

The net assets of the operations to be disposed of included in the  accompanying
consolidated balance sheets as of December 31, 1999 consist of the following:

                                               December 31, 1999
                                               -----------------
Classified As:
Current Assets                               $     1,441,925
Current Liabilities                                1,492,526
                                               -----------------
         Net Assets of Discontinued
           Operations - Current                      (50,601)
Long-Term Property Assets of
    Garden State Park                             30,000,000
                                               -----------------
Net Assets of Discontinued Operations        $    29,949,399
                                               =================

     On January 25,  2000,  the Company  entered  into an agreement of sale with
Turnberry/Cherry  Hill LLC,  for the sale of the Garden  State Park real estate.
While the  Company  received  from escrow a $500,000  deposit  made by the buyer
under the terms of the sale,  possible  changes to the  agreement  are currently
being  negotiated  by the  parties.  Upon  execution  of a  modification  of the
definitive  agreement  the Company  expects to  announce  the final terms of the
transaction.

     The sale of the Garden State Race Track property to Turnberry/Cherry  Hill,
LLC or any other buyer  cannot be assured at this time and if for any reason the
potential  buyer of the property is not able to close this  transaction  by June
30,  2000,  the property  may be marketed  and  possibly  sold by the  Company's
lender, Credit Suisse First Boston Mortgage, LLC.

(4)      PROPERTY HELD FOR SALE

     On January 28,  1999,  the Company  consummated  the  settlement  under the
Stipulation and Agreement of Compromise,  Settlement and Release entered into on
July 2, 1998 to resolve the  stockholder  derivative  litigation in the Delaware
Court  of  Chancery  (the  "Delaware  Settlement").  As  part  of  the  Delaware
Stipulation,  the Company has provided  for the  possible  sale of the El Rancho
Property pursuant to the terms enumerated by the Delaware Settlement.

     On March 1,  2000,  International  Thoroughbred  Breeders,  Inc.  signed an
agreement  for the  sale of the El  Rancho  property  in Las  Vegas,  Nevada  to
Turnberry/Las  Vegas  Boulevard,  LLC on  basically  the same  terms  previously
reported in the Company's Form 8-k dated January 21,2000.  The purchase price is
$45,000,000.  The  purchase  price will be paid by: (i) a $100,000  deposit into
escrow at the  signing  of the  Purchase  and Sale  Agreement;  (ii) a  $400,000
additional  deposit into escrow due on March 15, 2000,  and (iii) the balance of
the purchase price due at the closing, payable in cash.

     The closing,  originally  scheduled  to occur by March 31,  2000,  had been
extended  to April 30, 2000 after the buyer:  (i) agreed to pay the  approximate
$100,000  carrying costs of the El Rancho  property for the month of April 2000;
(ii) agreed to pay the  interest  due to Credit  Suisse  First  Boston  Mortgage
Capital,  LLC on a principal amount of $20,000,000 at 12% for the month of April
2000;  and (iii)  released  $1,600,000,  which  included the above  $100,000 and
$400,000 deposits, as a non-refundable  deposit to the Company. The closing date
was further  extended to June 1, 2000 provided the buyer:  (i) agreed to pay the
approximate  $100,000  carrying costs of the El Rancho property for the month of
May 2000; (ii) pays

                                        7

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

the  interest  due to Credit  Suisse First  Boston  Mortgage  Capital,  LLC on a
principal  amount of $19,000,000 at 12% for the month of May 2000; (iii) pays an
additional  deposit  of  $900,000  to the  Company by April 30,  2000,  of which
$400,000 has been received;  and (iv)  demonstrates it has the financial ability
to close.

     The Company has  separately  agreed to  purchase a  promissory  note of the
buyer in the amount of  $23,000,000  which will be  convertible at the Company's
option  into a 33 1/3%  equity  interest in the buyer,  depending  upon  certain
circumstances.

     The note  would  accrue  interest  at a 22% per annum  rate,  which 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 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 the  Company.  The Company  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 the
Company's  purchase of the note. The Company may convert the promissory note, at
its option,  into a 33 1/3%  equity  interest in the buyer at any time after 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 on the day before the
30th anniversary of its issuance. (See Note 13- B)

         The sale of the El Rancho property to Turnberry/Las Vegas Boulevard LLC
or to any other buyer cannot be assured at this time.

(5)      RESERVE ESCROW DEPOSITS

     At December  31,  1999,  $374,948  was held in various  reserve cash escrow
deposit accounts that were established in connection with the Company's two-year
$55  million  credit  facility  with  Credit  Suisse.  The terms of such  credit
facility  provided that such reserve  accounts be held by LaSalle National Bank.
In connection with the January 28, 1999 sale of Freehold Raceway,  the sale of a
ten-acre  parcel at Garden  State  Park and the lease of the  Garden  State Park
facility,  Credit Suisse released to the Company  approximately  $4,475,000 from
its escrow reserves to pay down debt and for working capital purposes. On August
2, 1999,  the Company  made a payment of $320,000 to Credit  Suisse for interest
due  which  was  credited  to  the  escrow  accounts.  In  connection  with  the
restructuring  agreement  on January 21,  2000,  Credit  Suisse  released to the
Company the $167,476  balance in the escrow deposit  accounts which will be used
by the Company for working capital purposes. (See Note 13-A)


                                        8

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(6)      NOTES AND MORTGAGES PAYABLE

         Notes and Mortgages Payable are summarized below:

                                                            December 31, 1999
                                                          ---------------------
                                  Interest % Per Annum     Current    Long-Term
                                ------------------------  ---------------------
International Thoroughbred
Breeders Inc.:
Credit Suisse First Boston (A)     LIBOR Rate plus 7%  $ 32,262,891   $     -0-
                              (12/31/99 rate 12.823%)
REB Bankruptcy Trustee (B)                 Prime Rate     3,361,940
                                (12/31/99 rate 8.50%)
Other                                         Various       136,640         -0-

Garden State Park:
Service America Corporation (C)                    6%       400,000         -0-
Other (D)                                     Various       182,165         -0-
                                                        -----------     -------
    Totals                                             $ 36,343,636   $     -0-
Less Amounts Reclassified to:
  Net Assets of Discontinued
    Operations - Current                                    582,165         -0-
    Totals                                             $ 35,761,471   $     -0-
                                                        ===========     =======

The effective  LIBOR Rate and the Prime Rate at December 31, 1999 was 5.823% and
8.50%, respectively.

     (A) On May 23, 1997, the Company entered into a two-year $55 million credit
facility with Credit Suisse First Boston Mortgage Capital LLC, ("Credit Suisse")
secured by a pledge of certain of the personal and real  property of the Company
and its  subsidiaries  (the "Credit Suisse Credit  Facility").  Proceeds of this
facility were used to repay in full the Company's  $30 million  existing  credit
facility and to provide funds for working  capital and other  general  corporate
purposes,  including,  but not limited  to,  preliminary  development  of the El
Rancho  Property.  Of the remaining  facility  borrowings,  approximately  $16.8
million  was  placed in escrow  accounts,  financing  and  closing  fees of $4.3
million  were  incurred by the Company and $3.9  million was used by the Company
for  general  corporate  purposes  and  repayment  of  certain  other  financial
obligations. Interest under the Credit Suisse Credit Facility is payable monthly
in arrears at 7% over the London  interbank  offered rate ("LIBOR").  The Credit
Suisse  Credit  Facility is  evidenced  by a  convertible  promissory  note (the
"Credit Suisse Note").

     On January 21, 2000 after obtaining the written consent of the holders of a
majority  of the  outstanding  shares of stock of the  Company  entitled to vote
thereon,  the Company entered into a restructuring  agreement (the  "Restructure
Agreement") with Credit Suisse. Prior to this agreement, the

                                        9

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Company had been in a maturity  default  with Credit  Suisse for its loan due on
June 1, 1999 (the  "CSFB  Loan") in the  principal  amount of  $30,500,000  plus
unpaid interest since June 1, 1999. On November 17, 1999, the Company and Credit
Suisse signed a term sheet  outlining the term and conditions of the Restructure
Agreement.  At that time, accrued interest in the amount of $1,762,891 was added
to the principal balance of the note.

     The Restructure  Agreement returns the loan to a good standing position and
extends  the  maturity  date of the CSFB Loan to June 30,  2000.  As part of the
Restructure  Agreement,  the Company  agreed that as of January  21,  2000,  the
restructured  principal  balance  due on the CSFB  Loan was  $33,103,189,  which
consisted  of: (i) the  principal  amount of  $30,500,000  remaining on the CSFB
Loan;  (ii)  accrued  interest  advanced  by Credit  Suisse from June 1, 1999 to
January 21, 2000 in the amount of $2,523,189;  and (iii) an advance of a portion
of Credit  Suisse's  legal fees  incurred  in  connection  with the  Restructure
Agreement in the amount of $80,000.  Credit  Suisse has agreed,  pursuant to the
Restructure  Agreement,  to advance the  monthly  interest  payments  due by the
Company  under the CSFB Loan  until the  maturity  date of June 30,  2000.  Such
amounts  shall,  to the extent not paid when due by the Company,  become part of
the  outstanding  principal  balance of the CSFB Loan on the date such  interest
becomes due.  Commencing  April 16, 2000 and until 30 days following the closing
of the  sale of the El  Rancho  property,  interest  accruing  shall  be paid by
Turnberry/Las Vegas Boulevard LLC ("Turnberry"),  the purchaser of the El Rancho
property.

     The Credit Suisse Credit  Facility also provides for both  affirmative  and
negative covenants, including financial covenants such as tangible net worth, as
defined in the Credit Suisse Credit Facility. The Company's non- compliance with
certain non-financial  covenants at December 31, 1998 were waived on January 28,
1999 in connection with the Delaware Settlement.

     On  January  28,  1999,  a  portion  of the  proceeds  from  the  Greenwood
Transaction  and  $2,500,000  held in escrow  was used to reduce  the  principal
balance on the Credit  Suisse Note to $30.5  million and to pay a 2%  prepayment
fee of $500,000, recorded as financing expenses, to Credit Suisse.

     (B) On January 28, 1999 in  connection  with the Delaware  Settlement,  the
Company ("ITB")  executed a note (the "Trustee Note") in the principal amount of
$3,558,032  to the  Chapter 11  Bankruptcy  Trustee  for the estate of Robert E.
Brennan (the "Trustee") in order to purchase  2,904,016  shares of the Company's
Common Stock from NPD.  Pursuant to the Trustee  Settlement  associated with the
Delaware Settlement,  the Trustee received:  (a) a pay down on the NPD Note from
the original  principal  balance of $5,808,032 to  $3,558,032;  (b) a promissory
note from ITB in the amount of $3,558,032 (the "ITB Note"), on substantially the
same terms as the NPD Note,  except that the ITB Note becomes due and payable on
the earlier to occur of (i) January 15, 2001,  or (ii) the closing of either the
sale of the Company's non- operating El Rancho hotel and casino  property in Las
Vegas, Nevada (the "El Rancho Property"),  or the sale of Garden State Park (the
"Garden State  Property");  (c) a security  interest in the NPD Shares;  (d) the
payment  of the  costs  and  expenses  incurred  by the  Bankruptcy  Trustee  in
connection  with  the  Delaware  Settlement  and  the  Trustee  Settlement;  (e)
subordinate  interests  in both the El  Rancho  Property  and the  Garden  State
Property; and (f) an escrow of the July 15, 1999 interest payment due on the ITB
Note. On July 15, 1999, the escrow  interest  payment in the amount of $195,000,
together with interest earned from January 28, 1999 to that date, was applied to
the principal  balance of the note reducing the principal balance on the note to
$3,361,940.

     In connection with the January 21, 2000  Restructure  Agreement with Credit
Suisse, the Trustee

                                       10

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

entered into an agreement  with the Company  wherein:  (i) the amounts due under
the  Trustee  Note are due at the earlier of (a) June 1, 2000 or (b) the date on
which the  latter  of the  Garden  State  Park or El  Rancho  property  is sold,
provided that the sale of the latter will satisfy the  remaining  balance on the
CSFB Loan and the Trustee  Note;  (ii) all  interest  due under the Trustee Note
will be accrued and deferred  until the maturity date of the Note; and (iii) the
Company shall reimburse the Trustee for legal and accounting fees up to $20,000,
which  amount  will be  advanced  by the  Trustee  and added to the  outstanding
principal balance of the Trustee Note.

     (C) In  connection  with the January 28,  1999 lease  transactions  for the
Garden State Park facility,  the Company purchased the undepreciated  balance of
equipment  located  at  Garden  State  Park  and a  liquor  license  owned by an
unaffiliated third party, Service America Corporation, for $500,000 ($100,000 of
which will be paid by the lessee when title is  transferred  to Pennwood,  which
event  has  not  occurred  as of May  17,  2000)  financed  by a five  (5)  year
promissory  note at a 6% interest  rate.  The Company  paid  $100,000 on June 1,
1999,  $99,200 on December 28, 1999 and is scheduled to make principal  payments
of $80,000 plus interest on December 28th for the next three years.

     (D) In  connection  with the January 28,  1999 lease  transactions  for the
Garden State Park  facility,  a note  associated  with certain  equipment at the
Garden  State  Park  facility  will be paid by  Greenwood  as part of the  lease
agreement.

(7)      INCOME TAX EXPENSE

     The Company's income tax expense for the three and six month periods ending
December  31, 1998 relates to New Jersey  income taxes for its Freehold  Raceway
operations.

(8)      COMMITMENTS AND CONTINGENCIES

     A state has  asserted a tax claim for the period  June 30, 1988 to June 30,
1991 (during which the Company maintained an accounting office in the state) for
a Foreign Corporate  Franchise Tax in the approximate amount of $400,000,  which
amount is accrued,  not taking into consideration any interest or penalties that
may be assessed. At this time, the Company cannot predict the final amount which
may be due. It is likely that  litigation will have to commence in the courts to
pursue a  compromise  of the amount due. It is unknown at this time  whether the
Company will be successful in abating all or part of the tax due.

     During 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.  The  Company  has fully  cooperated  with the SEC's
investigation.

     Effective December 3, 1999, the Board of Directors accepted the resignation
of Christopher C. Castens,  the Company's Secretary and General Counsel.  During
the  second  quarter of Fiscal  2000,  the  Company  paid  $79,846 in  severance
payments in association with his employment contract.

     The  Company  is  responsible  for  remediation  costs  associated  with an
environmental  site on the Freehold  Raceway  property.  The Company has accrued
what it believes to be the total cost of remediation. At June 30, 1999 and 1998,
the Company had accrued $300,000 and $100,000, respectively, for remediation

                                       11

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

costs.

     In connection with the January 28, 1999 lease  transactions  for the Garden
State Park  facility,  a note  associated  with certain  equipment at the Garden
State Park facility will be paid by Greenwood as part of the lease agreement. In
the event that the Company or Greenwood  terminates its lease agreement prior to
July 2001 when the note is fully paid, the Company will be  responsible  for the
monthly note payments of approximately $17,000.

     The  Company's  debt with CSFB is due on June 30, 2000.  Unless the sale of
the El Rancho  property and Garden State Park property is  consummated  prior to
that date,  the  Company  will be in default  in  connection  with the CSFB loan
agreement.  Additionally,  the cash proceeds from the sales must be in an amount
sufficient  to satisfy the loan due on the trustee  note  together  with accrued
interest. The total amount due on June 1, 2000 to satisfy the CSFB loan together
with  accrued  interest  and fees and the trustee  note  together  with  accrued
interest is  approximately  $39,500,000.  The  proceeds  from the sale of the El
Rancho and Garden State Park  properties  are expected to be  sufficient to meet
this obligation.

LEGAL PROCEEDINGS

Harris v. DeSantis, et al.

     The first New Jersey  Action,  filed on February 24, 1998 in the New Jersey
District Court, captioned Myron Harris,  derivatively on behalf of International
Thoroughbred  Breeders,  Inc. v. Nunzio P. DeSantis,  Anthony Coelho, Kenneth W.
Scholl,  Michael  Abraham,  Joseph  Zappala,  Frank A. Leo,  Robert J.  Quigley,
Charles  R.  Dees,  Jr.  and  Francis W.  Murray  ("Harris-Federal"),  C.A.  No.
98-CV-517(JBS),  is a derivative  suit brought by a stockholder  of the Company.
The factual allegations and claims asserted in the Harris- Federal complaint are
virtually  identical to the claims asserted in the Quigley  complaint and in the
Counterclaim asserted by the Company in the Quigley action.

     On May 4,  1998,  all  defendants  filed a motion  to  dismiss  or,  in the
alternative,  a motion to stay the Harris-Federal  action, pending resolution of
the Quigley action.  The New Jersey District Court has not ruled on that motion.
On May 4, 1998, the plaintiff filed an amended complaint to, among other things,
add another stockholder as an additional plaintiff.

     As described  more fully below,  pursuant to the New Jersey  Memorandum and
the  satisfaction of certain  conditions set forth therein,  the  Harris-Federal
action is to be fully and finally dismissed with prejudice,  and the parties are
to provide mutual releases of all claims related to the action.  See "New Jersey
Settlement."

Harris v. DeSantis, et al.

     The first New Jersey  Action,  filed on February 24, 1998 in the New Jersey
District Court, captioned Myron Harris,  derivatively on behalf of International
Thoroughbred  Breeders,  Inc. v. Nunzio P. DeSantis,  Anthony Coelho, Kenneth W.
Scholl,  Michael  Abraham,  Joseph  Zappala,  Frank A. Leo,  Robert J.  Quigley,
Charles  R.  Dees,  Jr.  and  Francis W.  Murray  ("Harris-Federal"),  C.A.  No.
98-CV-517(JBS),  is a derivative  suit brought by a stockholder  of the Company.
The Harris-Federal complaint alleges that various individual defendants acted in
contravention  of ITB's  by-laws and their  fiduciary  duties by (i) causing the
Company to undertake  various  actions,  including the issuance of a significant
amount of the Company's common

                                       12

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

stock, in violation of the Supermajority By-law; (ii) usurping certain corporate
opportunities  allegedly belonging to ITB; and (iii) causing the Company to fail
to file current, audited financial statements.

     On May 4,  1998,  all  defendants  filed a motion  to  dismiss  or stay the
Harris-Federal action, pending resolution of the Quigley action. On May 4, 1998,
the plaintiff filed an amended  complaint to, among other things,  add Howard J.
Kaufman, a stockholder of the Company, as an additional plaintiff.

     As described  more fully below,  pursuant to the New Jersey  Memorandum and
the  satisfaction of certain  conditions set forth therein,  the  Harris-Federal
action is to be fully and finally dismissed with prejudice,  and the parties are
to provide mutual releases of all claims related to the action.  See "New Jersey
Settlement."

Harris v. DeSantis, et al.

     A second  New  Jersey  Action,  filed on July  15,  1998 in the New  Jersey
Superior Court, captioned Myron Harris and Howard Kaufman v. Nunzio P. DeSantis,
Anthony Coelho,  Kenneth W. Scholl,  Michael Abraham,  Joseph Zappala,  Frank A.
Leo,  Robert  J.  Quigley  and  Charles  R.  Dees,  Jr.   ("Harris-State"   and,
collectively  with  the  Harris-Federal   action,  the  "New  Jersey  Actions"),
Cam-L-5534-98,  is a purported  class action suit brought by the same plaintiffs
as the  Harris-Federal  action.  The  complaint  alleges  that the  Harris-State
defendants  breached their  fiduciary  duties to the Company's  stockholders  by
failing to file timely  audited  financial  statements for the fiscal year ended
June  30,  1997,  resulting  in the  indefinite  suspension  of  trading  of the
Company's stock on AMEX.

     Prior to filing  pleadings in response to the Harris-State  complaint,  ITB
and the  defendants  in the New Jersey  Actions  entered  into a  memorandum  of
understanding  dated August 18, 1998 (the "New Jersey  Memorandum")  pursuant to
which upon satisfaction of multiple conditions  (including the parties' approval
of definitive settlement  documents,  notice of the settlement to ITB's past and
current stockholders,  and the approval of the New Jersey Superior Court and the
New Jersey District  Court),  the New Jersey Actions are to be fully and finally
dismissed  with  prejudice,  and ITB and all defendants are to receive a release
from all holders of ITB common and preferred  stock of any claims arising out of
the facts and transactions set forth in the complaints in the New Jersey Actions
(the "Proposed New Jersey Settlement").  The New Jersey Memorandum provides that
the Proposed New Jersey  Settlement  would be submitted  for approval to the New
Jersey  Superior  Court,  that a fee petition  would be submitted by plaintiffs'
attorneys  in the New Jersey  Actions for  approval  by the New Jersey  District
Court, and that the Harris-Federal action would be dismissed on the grounds that
the plaintiffs' claims are barred and released as a result of the settlement and
dismissal of the Quigley  Action by the Delaware Court of Chancery on October 6,
1998.

New Jersey Settlement

     The New Jersey  Actions are  currently at a standstill  as the parties have
entered  into the New  Jersey  Memorandum.  Subject to the  approval  of the New
Jersey  District  Court,  the Company will pay, on behalf and for the benefit of
the  individual  defendants  in the New Jersey  Actions,  the  aggregate  sum of
$175,000 for  plaintiffs'  counsel fees and expenses in the New Jersey  Actions.
Any incentive  award to plaintiffs  Harris and Kaufman would be paid out of this
$175,000  sum.  Pursuant to the Proposed New Jersey  Settlement,  following  the
implementation of the Delaware Settlement,  the Board will restructure its Audit
Committee of the Company so as to facilitate the  procurement  and timely filing
of audited  financial  statements  in the  future.  Further,  the ITB Board will
establish a Relisting Committee for the purpose of attempting to secure

                                       13

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

the relisting of the Company's common stock on a public market.


     Pursuant to the Proposed New Jersey  Settlement,  the plaintiffs agreed not
to file  objections  to the Delaware  Settlement.  In addition,  pursuant to the
Proposed New Jersey Settlement, upon consummation of the Delaware Settlement the
plaintiffs  will move for a dismissal,  with  prejudice,  of the  Harris-Federal
action,  and will  provide  releases to the  defendants  and the Company and all
others acting on the Company's behalf for any claims that were asserted or could
have been asserted in the Harris-Federal action. For settlement purposes only, a
class will be certified for Harris-State action consisting of all holders of the
Company's stock between October 13, 1997 (the date AMEX suspended trading of the
Company's  stock)  and the date  the  final  order is  entered  to  dismiss  the
Harris-State action.

     On June 17,  1999,  the New Jersey  Superior  Court acted  unilaterally  to
dismiss the  complaint in the  Harris-State  action  filed under  docket  number
Cam-L-5534-98. On July 30, 1999, the plaintiffs in the Harris-State action filed
in the New Jersey Superior Court a second  complaint,  identical to the original
action and naming as  defendants  the same parties as the original  complaint in
the  Harris-State   action,  under  docket  number  Cam-L-5620-99  (the  "Second
Harris-State  Complaint").  Subsequent to the filing of the Second  Harris-State
Complaint,  the terms of the  Proposed  New Jersey  Settlement  were  amended to
expressly  include the claims asserted by plaintiffs in the Second  Harris-State
Complaint.  Beginning in October  1999,  plaintiffs in the  Harris-State  Action
began  serving  process of the Second  Harris-State  Complaint on certain of the
defendants.

     The  parties  in the New Jersey  Actions  have  resolved  nearly all issues
necessary to execute the definitive  settlement  stipulation required to solicit
the requisite  approval of the Proposed New Jersey  Settlement by the New Jersey
Superior  Court and the requisite  approval by the New Jersey  District Court of
the fee petition by plaintiffs' attorneys. Because of ITB's distressed financial
condition, the Company cannot agree to pay any amount approved by the New Jersey
District Court pursuant to the  contemplated  fee petition  unless and until the
carrier of the Company's  directors and officers liability insurance policy (the
"D&O   Carrier")   agrees  to  cover  entirely  the  fee  award  and  settlement
implementation  costs.  The Company is continuing to negotiate  such issues with
the D&O Carrier.

     On December 3, 1999, plaintiffs in the Harris-Federal action filed with the
New Jersey  District  Court a motion for an order  enforcing  the  Proposed  New
Jersey Settlement. On December 3, 1999, the New Jersey District Court entered an
order dismissing the  Harris-Federal  action without costs and without prejudice
to the plaintiffs' right to reopen the action within 60 days if the Proposed New
Jersey  Settlement is not  consummated.  In light of the entry of this order, on
December 7, 1999, the New Jersey  District Court  dismissed as moot  plaintiffs'
motion for an order enforcing the Proposed New Jersey Settlement.  On January 6,
2000,  plaintiffs  in the  Harris-Federal  action moved to vacate the New Jersey
District  Court's  dismissal  order and to pursue the original motion to enforce
the Proposed New Jersey Settlement.

     In January 2000, the plaintiffs in the  Harris-State  action filed Requests
to Enter  Default  against  those  defendants  who had not answered or otherwise
responded to the Second  Harris-State  Complaint.  Counsel for the defendants in
the Harris-State  action are currently  engaged in negotiations with counsel for
the plaintiffs in an effort to reach an agreement that  plaintiffs  will take no
further action in prosecution of the  Harris-State  action while the parties are
finalizing the Proposed New Jersey Settlement.

     ITB is hopeful that the Company and the D&O Carrier will reach an agreement
in the near future

                                       14

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

to allow the parties to the New Jersey  Actions to proceed with the Proposed New
Jersey Settlement. There is no assurance that any such agreement will be reached
or that the  Proposed New Jersey  Settlement  will be approved by the New Jersey
Superior  Court and the  contemplated  fee petition  will be approved by the New
Jersey  District Court. No prediction can be made at this time as to the outcome
of the New Jersey Actions.

Other Litigation

     The Company is a defendant in two  wrongful  death  actions  arising out of
motor  vehicle/pedestrian  accidents at Freehold  Raceway.  The cases are in the
initial  stages of  discovery.  The Company  believes  that it may have adequate
insurance coverage for the claims,  however,  because of the uncertainties,  the
Company is unable to determine at this time the potential liability, if any. Any
claim for punitive damages would not be covered by insurance.

     The Company is a defendant  in various  other  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  material  adverse  effect  on the  Company's  financial
position, results of operations, or cash flows.

     For additional  information  regarding legal  proceedings see Footnote13 in
the consolidated  financial  statements  included in the Company's Form 10-K for
the fiscal year ended June 30, 1999.

(9)      DEFERRED FINANCING COSTS

     Deferred  financing  costs at  December  31,  1998  include  those  amounts
associated with its May 23, 1997 financing  agreement with Credit Suisse.  These
costs of $6,238,731  were being  expensed over the original two year life of the
loan.  Amortization expense for the three and six months ended December 31, 1998
were $765,813 and $1,529,602, respectively.

(10)     STOCK OPTIONS AND WARRANTS

         (A)      EMPLOYEE AND  NON-EMPLOYEE OPTIONS

     At December 31, 1999, total employee options outstanding were 1,055,000 and
total non-employee options outstanding were 300,000.

         (B)      WARRANTS

     At December 31, 1999,  total warrants  outstanding  were 2,604,000 and have
been accounted for as financing costs and costs  associated with the acquisition
of the El Rancho  property.  The fair value of the warrants issued in connection
with the acquisition of the El Rancho property had been  capitalized and were to
be amortized  when the facility  became  operational;  however,  the Company has
determined to dispose of the El Rancho Property.

                                       15

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



(11)     RELATED PARTY TRANSACTIONS

     Kenneth  Scholl,  a director of the Company  until July 23, 1998,  provides
consulting services to LVEN and certain of its subsidiaries through the Stanford
Company  of which he is the  president.  Until  December  31,  1997,  LVEN  paid
Stanford  Company  $10,000  per month for  consulting  services,  including  Mr.
Scholl's  services  as  project  manager  for the El Rancho  Property.  LVEN was
reimbursed  by the Company  for the  payments  to  Stanford  Company.  Effective
January 1, 1998,  the  Company  began  paying Mr.  Scholl  $10,000 per month for
ongoing  consulting  services  as project  manager  for the El Rancho  Property.
During the six months  ended  December  31, 1999 and 1998,  the Company paid Mr.
Scholl $60,000 for these  services.  Additionally,  Mr. Scholl was paid director
fees of $10,000 in Fiscal 1998. Mr. Scholl was elected president and director of
Casino-Co  in March 1996,  he  resigned as a board  member on March 14, 1997 and
resigned as  president  on May 19,  1997.  Mr.  Scholl also held the position of
Secretary and resigned the position on March 1, 1998.

     For  additional   information  regarding  related  party  transactions  see
Footnote18 in the consolidated  financial  statements  included in the Company's
Form 10-K for the fiscal year ended June 30, 1999.

(12)     STOCK TRADING INFORMATION

     Effective  August 7, 1998,  the  Company's  Common Stock and its  Preferred
Stock were delisted from trading on the American Stock Exchange ("AMEX") for the
failure to comply with certain  listing  criteria.  Neither the Common Stock nor
the  Preferred  Stock has been traded on AMEX since October 13, 1997 when it was
suspended  because the Company had not filed its Annual  Report on Form 10-K for
fiscal 1997 within the  Securities  and Exchange  Commission's  prescribed  time
period. The stock is listed for quotation on the NQB Pink Sheets.

(13)     SUBSEQUENT EVENTS

         (A)      RESTRUCTURING AGREEMENT WITH CREDIT SUISSE

     On January 21, 2000 after obtaining the written consent of the holders of a
majority  of the  outstanding  shares of stock of the  Company  entitled to vote
thereon,  the Company entered into a restructuring  agreement (the  "Restructure
Agreement") with its primary lender, Credit Suisse First Boston Mortgage Capital
LLC,  ("Credit  Suisse").  Prior to this  agreement,  the  Company had been in a
maturity  default with Credit Suisse for its loan due on June 1, 1999 (the "CSFB
Loan") in the principal amount of $30,500,000 plus unpaid interest since June 1,
1999.

     The Restructure  Agreement returns the loan to a good standing position and
extends  the  maturity  date of the CSFB Loan to June 30,  2000.  As part of the
Restructure  Agreement,  the Company  agreed that as of January  21,  2000,  the
restructured  principal  balance  due on the CSFB  Loan was  $33,103,189,  which
consisted  of: (i) the  principal  amount of  $30,500,000  remaining on the CSFB
Loan;  (ii)  accrued  interest  advanced  by Credit  Suisse from June 1, 1999 to
January 21, 2000 in the amount of $2,523,189; and (iii)

                                       16

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

an advance of a portion of Credit  Suisse's  legal fees  incurred in  connection
with the  Restructure  Agreement  in the amount of  $80,000.  Credit  Suisse has
agreed,  pursuant to the Restructure Agreement,  to advance the monthly interest
payments due by the Company  under the CSFB Loan until the maturity date of June
30, 2000.  Such amounts  shall,  to the extent not paid when due by the Company,
became part of the  outstanding  principal  balance of the CSFB Loan on the date
such interest becomes due. Commencing April 16, 2000 and until 30 days following
the closing of the sale of the El Rancho  property,  interest  accruing shall be
paid by Turnberry/Las Vegas Boulevard LLC ("Turnberry"), the purchaser of the El
Rancho property.

     In connection  with the  Restructure  Agreement,  the Chapter 11 Bankruptcy
Trustee (the "Trustee") for the estate of Robert E. Brennan, to whom the Company
and its subsidiaries  Garden State Race Track, Inc. and Orion Casino Corporation
are indebted to in the remaining principal amount of $3,363,032, as evidenced by
a note dated  January 28, 1999 (the "Trustee  Note"),  entered into an agreement
with the Company wherein:  (i) the amounts due under the Trustee Note are due at
the  earlier  of (a) June 1,  2000 or (b) the date on which  the  latter  of the
Garden State Park or El Rancho  property is sold,  provided that the sale of the
latter will satisfy the remaining balance on the CSFB Loan and the Trustee Note;
(ii) all interest due under the Trustee Note will be accrued and deferred  until
the maturity date of the Note; and (iii) the Company shall reimburse the Trustee
for legal and  accounting  fees up to $20,000,  which amount will be advanced by
the Trustee and added to the outstanding principal balance of the Trustee Note.

     Pursuant to the  Restructure  Agreement,  the Company paid at closing:  (i)
legal fees in the amount of $146,000  which were  incurred  by Credit  Suisse in
connection  with the Restructure  Agreement;  (ii) real estate transfer taxes in
the amount of $56,275 on behalf of Garden State Race Track,  Inc. in  connection
with the transfer  discussed  below; and (iii) loan servicing fees in the amount
of $7,174.  Credit  Suisse  released  to the  Company  $167,476 of funds held in
various escrow  accounts in connection  with the CSFB Loan which will be used by
the Company for working capital purposes.

     Pursuant  to the  Restructure  Agreement,  Garden  State Race  Track,  Inc.
transferred  title to the  Garden  State  Race Track to GSRT,  LLC  ("GSRT"),  a
Delaware limited liability company in which Garden State Race Track, Inc. is the
sole member the result of which effects no change in real ownership. Pursuant to
the limited  liability company agreement of GSRT entered into in connection with
the Restructure Agreement, Garden State Race Track, Inc. may cause GSRT to enter
into an  arm's-length  sale or joint venture of the Garden State  Property under
certain  enumerated  circumstances  and conditions,  including that the purchase
price for such sale or joint venture be at least equal to  fifty-percent  of the
combined  outstanding  principal  balance of the CSFB Loan and the Trustee Note,
which  amount must be paid to Credit  Suisse,  and the contract for such sale or
joint  venture  be  entered  into on or prior to  January  25,  2000 (the  "GSRT
Option").

     On January 25,  2000,  the Company and Garden State Race Track,  Inc.,  the
owner of Garden State Park, entered into an agreement for the sale of all of the
Garden  State Park  property,  excluding  a ten-acre  parcel of land  previously
committed to GS Park Racing,  L.P., to  Turnbury/Cherry  Hill, LLC. The terms of
the sale meet all the  conditions  required by Credit  Suisse to be a valid GSRT
Option, according to a letter received from Credit Suisse (see Agreement of Sale
of Garden State Race Track). The Restructure Agreement further provides that (i)
if the proceeds from the sale of the Garden State Park property are insufficient
to pay the outstanding amounts due to Credit Suisse under the CSFB Loan, or (ii)
after the sale or joint venture of the Garden State  property,  the total amount
outstanding under the CSFB Loan is equal

                                       17

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

to or greater than  $5,000,000 and the Company shall not have received a binding
commitment for a loan or purchase of the El Rancho Property,  then, Orion Casino
Corporation  must  convey  the El  Rancho  property  to a new  Delaware  limited
liability company ("New LLC") having  substantially same ownership structure and
limited  liability  company  agreement as GSRT.  Once the El Rancho  property is
conveyed  to  New  LLC  in  accordance  with  and  upon  the  happening  of  the
circumstances and conditions provided in the Restructure Agreement, Orion Casino
Corporation, as the sole member of New LLC, will have the right to cause New LLC
to  sell  or  refinance  the El  Rancho  property  so  long  as the  outstanding
obligations due under the CSFB Loan are paid in full by such sale or refinancing
and such sale or refinancing closes on or before June 30, 2000.

         (B)      AGREEMENT OF SALE OF EL RANCHO

     On March 1,  2000,  International  Thoroughbred  Breeders,  Inc.  signed an
agreement  for the  sale of the El  Rancho  property  in Las  Vegas,  Nevada  to
Turnberry/Las  Vegas  Boulevard,  LLC on  basically  the same  terms  previously
reported in the Company's Form 8-k dated January 21,2000.  The purchase price is
$45,000,000.  The  purchase  price will be paid by: (i) a $100,000  deposit into
escrow at the  signing  of the  Purchase  and Sale  Agreement;  (ii) a  $400,000
additional  deposit into escrow due on March 15, 2000,  and (iii) the balance of
the purchase price due at the closing, payable in cash.

     The closing,  originally  scheduled  to occur by March 31,  2000,  had been
extended  to April 30, 2000 after the buyer:  (i) agreed to pay the  approximate
$100,000  carrying costs of the El Rancho  property for the month of April 2000;
(ii) agreed to pay the  interest  due to Credit  Suisse  First  Boston  Mortgage
Capital,  LLC on a principal amount of $20,000,000 at 12% for the month of April
2000;  and (iii)  released  $1,600,000,  which  included the above  $100,000 and
$400,000 deposits, as a non-refundable  deposit to the Company. The closing date
was further  extended to June 1, 2000 provided the buyer:  (i) agrees to pay the
approximate  $100,000  carrying costs of the El Rancho property for the month of
May 2000;  (ii) pays the  interest due to Credit  Suisse  First Boston  Mortgage
Capital,  LLC on a principal  amount of  $19,000,000 at 12% for the month of May
2000;  (iii) pays an additional  deposit of $900,000 to the Company by April 30,
2000, of which  $400,000 has been  received;  and (iv)  demonstrates  it has the
financial ability to close.

     The Company has agreed to  purchase a  promissory  note of the buyer in the
amount of $23,000,000  which will be convertible at the Company's  option into a
33 1/3% equity interest in the buyer.

     The note  would  accrue  interest  at a 22% per annum  rate,  which 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 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 the  Company.  The Company  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 the
Company's  purchase of the note. The Company may convert the promissory note, at
its  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. (See Note 4)



                                       18

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     The sale of the El Rancho property to Turnberry/Las  Vegas Boulevard LLC or
to any other buyer cannot be assured at this time.


         (C)      AGREEMENT OF SALE OF GARDEN STATE RACE TRACK

     On January 25,  2000,  the Company  entered  into an agreement of sale with
Turnberry/Cherry  Hill LLC,  for the sale of the Garden  State Park real estate.
While the  Company  received  from escrow a $500,000  deposit  made by the buyer
under the terms of the sale,  possible  changes to the  agreement  are currently
being  negotiated  by the  parties.  Upon  execution  of a  modification  of the
definitive  agreement  the Company  expects to  announce  the final terms of the
transaction.

     The sale of the Garden State Race Track property to Turnberry/Cherry  Hill,
LLC or any other buyer  cannot be assured at this time and if for any reason the
potential  buyer of the property is not able to close this  transaction  by June
30,  2000,  the property  may be marketed  and  possibly  sold by the  Company's
lender, Credit Suisse First Boston Mortgage, LLC.




                                       19

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
             AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS
                             ENDED DECEMBER 31, 1999


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

 Liquidity and Capital Resources

     The Company's  working  capital,  as of December 31, 1999, was a deficit of
($36,785,938)  which  represents  a decrease  in the  deficit  of  approximately
$1,506,514 from the December 31, 1998 working capital deficit of  ($38,292,452).
The decrease in the deficit was primarily caused by: (i) the retirement of $24.5
million of the debt to the Company's primary lender,  Credit Suisse First Boston
Mortgage Capital LLC, ("Credit  Suisse");  (ii) the decrease in accrued expenses
primarily associated with the Delaware Settlement; partially offset by (iii) the
sale of the  Freehold net  operating  assets  which were  classified  as current
assets in the prior fiscal year;  (iv) the decrease in reserve  escrow  deposits
primarily  associated  with the interest on debt; (v) the increase in the Credit
Suisse debt  associated  with the accrued  interest in the amount of  $1,762,891
being added to the principal  balance of the note on November 17, 1999; and (vi)
the promissory  note in the amount of $3,361,940  associated  with the Company's
purchase of its common stock from NPD.

     On May 23, 1997, the Company obtained a credit facility from Credit Suisse.
This  two-year  $55 million  facility  was secured by a pledge of certain of the
personal and real property of the Company and its subsidiaries. Proceeds of this
facility were used to repay in full the Company's  $30 million  existing  credit
facility and were used to provide  funds for working  capital and other  general
corporate purposes,  including,  but not limited to, preliminary  development of
the El Rancho  property.  Interest  under the Credit Suisse  Credit  Facility is
payable monthly in arrears at 7% over the LIBOR rate. Of the remaining  facility
borrowings,  approximately  $16.8  million  was  placed  in  escrow  accounts  (
including  $10 million in an interest  reserve  account).  Financing and closing
fees of $4.3  million  were paid and $3.9  million  was used by the  Company for
general corporate  purposes and repayment of certain financial  obligations.  On
January 28, 1999, the credit facility was reduced to $30.5 million in connection
with the sale of certain  assets of Freehold  Raceway and the sale of a ten-acre
parcel  land at the Garden  State Park  facility.  At  December  31,  1999,  the
interest rate on the Credit Suisse Credit  Facility was 12.823%.  On January 21,
2000 after  obtaining  the  written  consent of the holders of a majority of the
outstanding shares of stock of the Company entitled to vote thereon, the Company
entered into a restructuring agreement (the "Restructure Agreement") with Credit
Suisse. Prior to this agreement, the Company had been in a maturity default with
Credit  Suisse  for its  loan  due on June 1,  1999  (the  "CSFB  Loan")  in the
principal  amount of  $30,500,000  plus unpaid  interest since June 1, 1999. The
Restructure  Agreement  returns the loan to a good standing position and extends
the maturity date of the CSFB Loan to June 30, 2000. As part of the  Restructure
Agreement,  the Company  agreed that as of January 21,  2000,  the  restructured
principal balance due on the CSFB Loan was $33,103,189,  which consisted of: (i)
the principal  amount of  $30,500,000  remaining on the CSFB Loan;  (ii) accrued
interest advanced by Credit Suisse from June 30, 1999 to January 21, 2000 in the
amount of $2,523,189; and (iii) an advance of a portion of Credit Suisse's legal
fees  incurred in  connection  with the  Restructure  Agreement in the amount of
$80,000.  Credit Suisse has agreed,  pursuant to the Restructure  Agreement,  to
advance the monthly  interest  payments  due by the Company  under the CSFB Loan
until the maturity date of June 30, 2000.  Such interest  amounts shall,  to the
extent  not  paid  when  due by the  Company,  become  part  of the  outstanding
principal balance of the CSFB Loan on the date

                                       20

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
             AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS
                             ENDED DECEMBER 31, 1999


such interest becomes due. Commencing April 16, 2000 and until 30 days following
the closing of the sale of the El Rancho  property,  interest  accruing shall be
paid by Turnberry/Las Vegas Boulevard LLC ("Turnberry"), the purchaser of the El
Rancho property. (See Notes 6-A and 13-A)

     The Credit Suisse Credit Facility is evidenced by a convertible  promissory
note (the "CSFB Note") pursuant to which $10 million of the aggregate  principal
amount of the CSFB Note can be converted in certain circumstances,  including on
the maturity date of the CSFB Note,  upon the prepayment of at least $10 million
in an aggregate  principal  amount of the CSFB Note or upon  acceleration of the
CSFB Note, at the option of Credit Suisse,  into shares of the Company's  Common
Stock at a conversion price of $8.75 per share (subject to adjustment in certain
events).

     The net loss for the six months ended  December 31, 1999 was  ($3,940,926).
Cash flows used in operating activities amounted to $3,144,013.

     Cash used in investing  activities was $132,458 during the six months ended
December 31, 1999, primarily the result of cash used by discontinued operations.

     Cash provided by financing  activities was $1,604,679 during the six months
ended December 31, 1999, consisting principally of decreases in amounts due from
Discontinued Operations.

     On January 28, 1999,  the Company  completed the sale of Freehold  Raceway,
the sale of a ten-acre  parcel at Garden  State Park and the lease of the Garden
State Park facilities to subsidiaries  of Greenwood  Racing,  Inc.("Greenwood"),
which  owns  Philadelphia  Park  racetrack,  the Turf  Clubs and  Phonebet  (the
"Greenwood  Transaction").  The  purchase  price was $46  million ($1 million of
which  will be  held in  escrow  to  cover  certain  indemnification  and  other
obligations  of the  Company),  with an  additional  $10  million in  contingent
promissory  notes (the  "Contingent  Notes") which become  effective upon, among
other  things,  the New  Jersey  Legislature's  approval  of  off-track  betting
facilities or telephone account  pari-mutuel  wagering on horse racing.  Further
adjustments  could be made to increase the purchase price if certain  additional
regulatory  gaming  changes are  approved by the New Jersey  Legislature  in the
future.  The  Greenwood  Transaction  was  subsequently  amended to include Penn
National Gaming,  Inc.("Penn  National"),  which owns Penn National Race Course,
Pocono Downs  Racetrack,  Charles Town Races and at least ten off-track  betting
parlors  in  Pennsylvania  as a 50% joint  venture  between  Greenwood  and Penn
National ( "Pennwood").  Greenwood and Pennwood have  guaranteed the performance
by the purchaser of all obligations under the Contingent Notes.

     The proceeds of the  Greenwood  Transaction  were  principally  used by the
Company to pay off the first lien on the assets of Freehold Raceway,  reduce the
outstanding  balance on the  Company's  loan from  Credit  Suisse  First  Boston
Mortgage  Capital LLC ("Credit  Suisse") to $30.5 million and to consummate  the
Delaware  Settlement.  In addition,  Credit  Suisse also released to the Company
approximately  $4.475  million from its escrow  reserves of which $1.475 million
was used for working capital purposes and $3 million was used to reduce debt and
pay fees.



                                       21

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
             AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS
                             ENDED DECEMBER 31, 1999


     In connection  with the  Restructure  Agreement,  the Chapter 11 Bankruptcy
Trustee (the "Trustee") for the estate of Robert E. Brennan, to whom the Company
and its subsidiaries  Garden State Race Track, Inc. and Orion Casino Corporation
are indebted to in the remaining principal amount of $3,363,032, as evidenced by
a note dated  January 28, 1999 (the "Trustee  Note"),  entered into an agreement
with the Company wherein:  (i) the amounts due under the Trustee Note are due at
the  earlier  of (a) June 1,  2000 or (b) the date on which  the  latter  of the
Garden State Park or El Rancho  property is sold,  provided that the sale of the
latter will satisfy the remaining balance on the CSFB Loan and the Trustee Note;
(ii) all interest due under the Trustee Note will be accrued and deferred  until
the maturity date of the Note; and (iii) the Company shall reimburse the Trustee
for legal and  accounting  fees up to $20,000,  which amount will be advanced by
the Trustee and added to the outstanding principal balance of the Trustee Note.

     Pursuant  to the  Restructure  Agreement,  Garden  State Race  Track,  Inc.
transferred  title to the Garden State Race Track to GSRT,  LLC , a wholly owned
subsidiary of the Company  ("GSRT"),  a Delaware  limited  liability  company in
which  Garden  State Race Track,  Inc. is the sole  member,  the result of which
effects no change in real ownership.  Pursuant to the limited  liability company
agreement of GSRT entered into in  connection  with the  Restructure  Agreement,
Garden State Race Track,  Inc. may cause GSRT to enter into an arm's-length sale
or  joint  venture  of  the  Garden  State  Property  under  certain  enumerated
circumstances and conditions, including that the purchase price for such sale or
joint  venture be at least equal to  fifty-percent  of the combined  outstanding
principal  balance of the CSFB Loan and the Trustee  Note,  which amount must be
paid to  Credit  Suisse,  and the  contract  for such sale or joint  venture  be
entered into on or prior to January 25, 2000 (the "GSRT Option").

     On January 25,  2000,  the Company and Garden State Race Track,  Inc.,  the
owner of Garden State Park, entered into an agreement for the sale of all of the
Garden  State Park  property,  excluding  a ten-acre  parcel of land  previously
committed to GS Park Racing,  L.P., to Turnberry/Cherry  Hill, LLC. The terms of
the sale meet all the  conditions  required by Credit  Suisse to be a valid GSRT
Option, according to a letter received from Credit Suisse.

     On January 25,  2000,  the Company  entered  into an agreement of sale with
Turnberry/Cherry  Hill LLC,  for the sale of the Garden  State Park real estate.
While the  Company  received  from escrow a $500,000  deposit  made by the buyer
under the terms of the sale,  possible  changes to the  agreement  are currently
being  negotiated  by the  parties.  Upon  execution  of a  modification  of the
definitive  agreement  the Company  expects to  announce  the final terms of the
transaction.

     The sale of the Garden State Race Track property to Turnberry/Cherry  Hill,
LLC or any other buyer  cannot be assured at this time and if for any reason the
potential  buyer of the property is not able to close this  transaction  by June
30,  2000,  the property  may be marketed  and  possibly  sold by the  Company's
lender, Credit Suisse First Boston Mortgage, LLC.

     The Restructure  Agreement  further  provides that (i) if the proceeds from
the  sale  of the  Garden  State  Park  property  are  insufficient  to pay  the
outstanding  amounts due to Credit Suisse under the CSFB Loan, or (ii) after the
sale or joint venture of the Garden State property, the total amount outstanding
under the CSFB Loan is equal to or greater than $5,000,000 and the Company shall
not have received a

                                       22

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
             AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS
                             ENDED DECEMBER 31, 1999


binding commitment for a loan or purchase of the El Rancho Property, then, Orion
Casino  Corporation must convey the El Rancho property to a new Delaware limited
liability company ("New LLC") having  substantially same ownership structure and
limited  liability  company  agreement as GSRT.  Once the El Rancho  property is
conveyed  to  New  LLC  in  accordance  with  and  upon  the  happening  of  the
circumstances and conditions provided in the Restructure Agreement, Orion Casino
Corporation, as the sole member of New LLC, will have the right to cause New LLC
to  sell  or  refinance  the El  Rancho  property  so  long  as the  outstanding
obligations due under the CSFB Loan are paid in full by such sale or refinancing
and such sale or refinancing closes on or before June 30, 2000.

     On March 1,  2000,  International  Thoroughbred  Breeders,  Inc.  signed an
agreement  for the  sale of the El  Rancho  property  in Las  Vegas,  Nevada  to
Turnberry/Las  Vegas  Boulevard,  LLC on  basically  the same  terms  previously
reported in the Company's Form 8-k dated January 21,2000.  The purchase price is
estimated to be $45,000,000.  The purchase price will be paid by: (i) a $100,000
deposit into escrow at the signing of the Purchase  and Sale  Agreement;  (ii) a
$400,000  additional  deposit into escrow due on March 15,  2000,  and (iii) the
balance of the purchase price due at the closing, payable in cash.

     The closing,  originally  scheduled  to occur by March 31,  2000,  had been
extended  to April 30, 2000 after the buyer:  (i) agreed to pay the  approximate
$100,000  carrying costs of the El Rancho  property for the month of April 2000;
(ii) agreed to pay the  interest  due to Credit  Suisse  First  Boston  Mortgage
Capital,  LLC on a principal amount of $20,000,000 at 12% for the month of April
2000;  and (iii)  released  $1,600,000,  which  included the above  $100,000 and
$400,000 deposits, as a non-refundable  deposit to the Company. The closing date
was further  extended to June 1, 2000 provided the buyer:  (i) agreed to pay the
approximate  $100,000  carrying costs of the El Rancho property for the month of
May 2000;  (ii) pays the  interest due to Credit  Suisse  First Boston  Mortgage
Capital,  LLC on a principal  amount of  $19,000,000 at 12% for the month of May
2000;  (iii) pays an additional  deposit of $900,000 to the Company by April 30,
2000, of which  $400,000 has been  received;  and (iv)  demonstrates  it has the
financial ability to close.

     The Company has  separately  agreed to  purchase a  promissory  note of the
buyer in the amount of  $23,000,000  which will be  convertible at the Company's
option  into a 33 1/3%  equity  interest in the buyer,  depending  upon  certain
circumstances.

     The note  would  accrue  interest  at a 22% per annum  rate,  which 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 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 the  Company.  The Company  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 the
Company's  purchase of the note. The Company may convert the promissory note, at
its option,  into a 33 1/3%  equity  interest in the buyer at any time after 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 on the day before the
30th anniversary of its issuance. (See Note 4)


                                       23

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
             AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS
                             ENDED DECEMBER 31, 1999


     The sale of the El Rancho property to Turnberry/Las  Vegas Boulevard LLC or
to any other buyer cannot be assured at this time.

     The Company  currently  estimates  that the escrow funds made  available on
January  21,  2000  associated  with the Credit  Suisse  Restructure  Agreement,
together with the $500,000  deposit made available March 2, 2000 and the deposit
of  $1,600,000  received  from the  extension of the El Rancho  closing and cash
generated from the Company's  operations  prior to the sale of the  discontinued
operations,  will be sufficient to finance its current  operations  and expected
expenditures and carrying costs of the El Rancho Property until June 30, 2000.

     The  Company's  debt with CSFB is due on June 30, 2000.  Unless the sale of
the El Rancho  property and Garden State Park property is  consummated  prior to
that date,  the  Company  will be in default  in  connection  with the CSFB loan
agreement.  Additionally,  the cash proceeds from the sales must be in an amount
sufficient  to satisfy the loan due on the trustee  note  together  with accrued
interest.  The  total  amount  due on June 30,  2000 to  satisfy  the CSFB  loan
together  with  accrued  interest and fees and the trustee  note  together  with
accrued interest is approximately $39,500,000. The proceeds from the sale of the
El Rancho and Garden State Park properties are expected to be sufficient to meet
this obligation.

     The Company currently  estimates that  approximately  $200,000 per month is
needed to cover operating  expenses of International  Thoroughbred  Breeders and
$100,000  per  month is  needed  to cover  the  carrying  costs of the El Rancho
Property.

     The  Company's  Board  is  continuing  to  consider  all of  the  Company's
strategic  options  to  maximize  stockholder  value  and  alternatives  for the
Company's future.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue as a going  concern.  As  discussed in Footnote 1 to the
consolidated  financial statements,  the Company's debt with its major lender is
due June 30,  2000 and the Company has  sustained a loss of  approximately  $3.9
million for the six months ended  December 31,  1999,  which raises  substantial
doubt about its ability to continue as a going  concern.  Management's  plans in
regard to these  matters are also  described  in Footnote 1 to the  consolidated
financial statements.  The consolidated  financial statements do not include any
adjustments that might result from the outcome of these uncertainties.

Results of Operations for the Three Months Ended December 31, 1999 and 1998

     On January 28, 1999,  the Company  completed the sale of Freehold  Raceway,
the sale of a ten-acre  parcel at Garden State Park, and the lease of the Garden
State Park  facilities,  accordingly,  the  operating  results of the  racetrack
subsidiaries  have been segregated and reported as  discontinued  operations for
each of the periods presented.

     Revenue from continuing  operations for the three months ended December 31,
1999 increased  slightly primarily as a result of rental income generated by the
Garden State Park lease partially offset by decreased interest income.  Expenses
from continuing operations for the three month periods decreased

                                       24

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
             AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS
                             ENDED DECEMBER 31, 1999


$2,023,980 or 49%, for the second  quarter of Fiscal 2000.  This decrease in the
expenses  was   primarily   the  result  of  a  decrease  in:  (i)  general  and
administrative  expenses of $580,214  or 41% from  $1,422,746  in Fiscal 1999 to
$842,532 in Fiscal 2000;  (ii) a decrease in interest and  financing  expense of
$750,956  primarily as a result reduced debt and the costs  associated  with the
debt  no  longer  being  amortized.  Income  from  discontinued  operations  was
$2,113,840 for the second quarter of Fiscal 1999.

     The  decrease  in general  and  administrative  expenses  of  $580,214  was
principally   attributable   to:  (i)  a  decrease  in  officer  and   corporate
administrative  salaries and benefits of approximately  $152,000 associated with
the  termination  of  certain  agreements  upon  consummation  of  the  Delaware
Settlement;   (ii)  a  decrease  in   consulting   fees  and  director  fees  of
approximately  $121,500  associated with the  termination of certain  agreements
upon consummation of the Delaware  Settlement;  (iii) a decrease in professional
fees of $141,320  associated  with the change of accountants for Fiscal 1999 and
2000; (iv) corporate costs associated with the information statement provided to
the Company's stockholders in the second quarter of Fiscal 1999 of approximately
$126,000;  (v)a  decrease of  approximately  $91,000 in travel  expenses and the
administrative  costs of  operating  an  office in New  Mexico;  (vi) a costs of
$60,000 in penalties  assessed by the New Jersey  Racing  Commission  associated
with the Casino-Co Stock issuance in Fiscal 1999;  partially  offset by (vii) an
increase in legal fees of approximately $91,000 during the quarter in connection
with an SEC investigation of Company transactions and reports.

     During the second quarter of Fiscal 2000,  the Company  incurred a net loss
from  continuing  operations  of  ($2,021,383)  as  compared  to a net loss from
continuing operations of ($1,939,353) for the comparable quarter in Fiscal 1999.
Income from  discontinued  operations  was  $2,113,840 for the second quarter of
Fiscal  1999.  The  increase  in net loss of  $82,030  was the  result  of those
differences described above.

Results of Operations for the Six Months Ended December 31, 1999 and 1998

     As a result of the sale and lease of racetrack  assets described above, the
operating  results of the racetrack  subsidiaries for the six month periods have
been segregated and reported as discontinued  operations for each of the periods
presented.

     Revenue from  continuing  operations  for the six months ended December 31,
1999  decreased  $29,641 from $213,081 in Fiscal 1999 to $183,440 in Fiscal 2000
primarily as a result of decreased  interest income  partially  offset by rental
income  generated  by the Garden  State Park  lease.  Expenses  from  continuing
operations  decreased  $4,283,064  or 51%,  from  $8,408,430  in Fiscal  1999 to
$4,124,366  in Fiscal 2000.  This  decrease in expenses was primarily the result
of: (i) a decrease in general and  administrative  expenses of $1,410,585 or 52%
from  $2,735,322 in Fiscal 1999 to $1,324,737 in Fiscal 2000; (ii) a decrease in
interest and financing expense of $1,377,547 primarily as a result reduced debt;
and the costs associated with the debt no longer being amortized.

     The  decrease of  $1,410,585  in general and  administrative  expenses  was
principally  attributable to: (i) a decrease of approximately  $441,000 in legal
expenses  associated with the various  director and stockholder  lawsuits in the
prior fiscal year partially offset by an increase in legal fees of approximately

                                       25

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
             AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS
                             ENDED DECEMBER 31, 1999


$91,000 during the second  quarter in connection  with an SEC  investigation  of
Company  transactions  and  reports;  (ii) a decrease in officer  and  corporate
administrative   salaries  and  benefits  of  approximately  $335,000  primarily
associated with the termination of certain  agreements upon  consummation of the
Delaware  Settlement;  (iii) a  decrease  in  consulting  and  director  fees of
$210,000 associated with the termination of certain agreements upon consummation
of the Delaware Settlement;  (iv) a decrease of approximately $150,000 in travel
expenses and the administrative  costs of operating an office in New Mexico; (v)
a  decrease  in  accounting  fees of  $141,320  associated  with the  change  of
accountants  for Fiscal  1999 and 2000;  (vi) a costs of  $60,000  in  penalties
assessed by the New Jersey Racing Commission associated with the Casino-Co Stock
issuance in Fiscal 1999;  (vii) an increase in corporate  costs  associated with
the information  statement  provided to the Company's  stockholders as discussed
above; and (viii) a decrease in political  contributions  of $50,000  associated
with New Jersey legislation affecting racetrack operations.

     During the first half of Fiscal 2000, the Company  incurred a net loss from
continuing  operations of ($4,124,366) as compared to a net loss from continuing
operations of ($8,408,430) for the comparable period in Fiscal 1999. Income from
discontinued  operations  was  $4,256,544 for the first half of Fiscal 1999. The
slight increase in net loss was the result of those differences described above.

Inflation

     To  date,  inflation  has  not  had a  material  effect  on  the  Company's
operations.

Impact of Year 2000 on the Company's Systems

     The year 2000 issue was the result of computer programs being written using
two  digits  rather  than four to define  the  applicable  year,  which may have
resulted in systems  failures and  disruptions to operations at January 1, 2000.
Management  determined where  appropriate  action was necessary and at a cost of
approximately  $5,000 brought the Company's  accounting and operational  systems
into year 2000 compliance. The Company has not experienced any problems with its
vendors associated with a Year 2000 issue.




                                       26

<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                                     PART II

                                OTHER INFORMATION

Item 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

     On December 9, 1998, 7,619,446 shares of Common Stock representing 54.5% of
the outstanding Common Stock were voted in favor of the following:

     (A)  The sale of Freehold  Raceway and a ten-acre  parcel of land at Garden
          State Park to Greenwood New Jersey.

     (B)  The lease of substantially all of the real property and related assets
          of Garden State Park.

     (C)  The disposition by sale,  exchange or otherwise of all or a portion of
          Garden  State Park in Cherry  Hill,  New Jersey and the  non-operating
          former El Rancho Hotel and Casino in Las Vegas, Nevada.

Item 6.   Exhibits and Reports on Form 8-K

     During the quarter  ended  December  31,  1999,  the  registrant  filed the
following Current Reports on Form 8-K:



        Date                              Subject Matter
--------------------      ---------------------------------------------------


November 1, 1999           Change of Accountants



                                       27

<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 16, 2000                /s/Robert J. Quigley
                               Robert J. Quigley, President, and
                               Chairman of the Board




May 16, 2000                /s/William H. Warner
                               William H. Warner
                               Treasurer
                               (Principal Financial and Accounting Officer)




                                       28

<PAGE>