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, 2000
                               -------------------------------------------------
                                       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 February 9, 2001
------------------------------          ------------------------------------
Common Stock, $ 2.00 par value                     11,480,263 Shares


<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                                    FORM 10-Q

                                QUARTERLY REPORT
                   FOR THE SIX MONTHS ENDED DECEMBER 31, 2000
                                   (Unaudited)

                                TABLE OF CONTENTS

                                                                            PAGE
PART I.           FINANCIAL INFORMATION

         Item 1.         Financial Statements:

                  Consolidated Balance Sheets
                         as of December 31, 2000 and June 30, 2000........1-2

                  Consolidated Statements of Operations
                         for the Three Months and Six Months ended
                         December 31, 2000 and 1999 ........................3

                  Consolidated Statement of Stockholders' Equity
                         for the Six Months ended December 31, 2000.........4

                  Consolidated Statements of Cash Flows
                         for the Six Months ended
                         December 31, 2000 and 1999.........................5

                  Notes to Financial Statements..........................6-11

         Item 2.         Management's Discussion and Analysis of
                         Financial Condition and Results of Operations..12-16

PART II.          OTHER INFORMATION

         Item 6.         Exhibits and Reports on Form 8-K..................17

SIGNATURES.................................................................18

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    AS OF DECEMBER 31, 2000 AND JUNE 30, 2000

                                     ASSETS

                                            December 31,
                                               2000             June 30,
                                            (UNAUDITED)           2000
                                          ----------------   ----------------
CURRENT ASSETS:
     Cash and Cash Equivalents         $          100,599  $         271,119
     Restricted Cash and Investments            1,179,329          1,656,743
     Accounts Receivable                            2,396            427,654
     Prepaid Expenses                             169,826            362,321
     Other Current Assets                         156,579            516,721
                                          ----------------   ----------------
          TOTAL CURRENT ASSETS                  1,608,729          3,234,558
                                          ----------------   ----------------

NET ASSETS OF DISCONTINUED
 OPERATIONS - Long Term                           250,000         30,000,000
                                          ----------------   ----------------

LAND, BUILDINGS AND EQUIPMENT:
     Land and Buildings                           214,097            214,097
     Equipment and Artwork                        499,541          1,199,284
                                          ----------------   ----------------
                                                  713,638          1,413,381
     LESS: Accumulated Depreciation
             and Amortization                     413,943            387,404
                                          ----------------   ----------------

          TOTAL LAND, BUILDINGS
           AND EQUIPMENT, NET                     299,695          1,025,977
                                          ----------------   ----------------


OTHER ASSETS:
     Notes Receivable                          33,000,000         23,000,000
     Deposits and Other Assets                  1,752,868            906,204
                                          ----------------   ----------------
          TOTAL OTHER ASSETS                   34,752,868         23,906,204
                                          ----------------   ----------------


TOTAL ASSETS                           $       36,911,292  $      58,166,739
                                          ================   ================



See Notes to Consolidated Financial Statements.

                                        1

<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    AS OF DECEMBER 31, 2000 AND JUNE 30, 2000

                      LIABILITIES AND SHAREHOLDERS' EQUITY


                                             December 31,
                                                 2000          June 30,
                                              (UNAUDITED)        2000
                                            --------------  --------------
CURRENT LIABILITIES:
     Accounts Payable                      $       58,547  $       62,502
     Accrued Expenses                             480,524         858,510
     Short-Term Debt                              192,154      18,596,709
     Net Liabilities of Discontinued
        Operations - Current                      251,688       1,509,577
                                            --------------  --------------
          TOTAL CURRENT LIABILITIES               982,913      21,027,298
                                            --------------  --------------


DEFERRED INCOME                                 2,951,423       2,786,589
                                            --------------  --------------

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

COMMITMENTS AND CONTINGENCIES                    -               -


STOCKHOLDERS' EQUITY:
     Series A Preferred Stock,$100.00
       Par Value,Authorized 500,000 Shares,
       Issued and Outstanding,362,487 and
       362,484 Shares,Respectively             36,248,675      36,248,375
     Common Stock, $2.00 Par Value,
       Authorized 25,000,000 Shares,
       Issued, 11,884,282 and 11,884,270
       Shares,and Outstanding, 8,980,266
       and 8,980,254 Shares, Respectively      23,768,563      23,768,539
     Capital in Excess of Par                  26,144,216      26,144,540
     (Deficit) (subsequent to
      June 30, 1993, date of quasi-
      reorganization)                         (46,382,291)    (45,003,895)
                                            --------------  --------------
          TOTAL                                39,779,163      41,157,559
     LESS:
        Treasury Stock, 2,904,016
         Shares, at Cost                       (7,260,040)     (7,260,040)
        Deferred Compensation, Net                (24,167)        (26,667)
                                            --------------  --------------
          TOTAL STOCKHOLDERS' EQUITY           32,494,956      33,870,852
                                            --------------  --------------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $   36,911,292  $   58,166,739
                                            ==============  ==============


See Notes to Consolidated Financial Statements.

                                        2

<PAGE>


                   INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE THREE MONTHS ENDED DECEMBER 31,2000 AND 1999
             AND FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999


<TABLE>

                                              Three Months Ended            Six Months Ended
                                                 December 31,                  December 31,
                                          ---------------------------------------------------------
                                              2000          1999           2000            1999
                                          -----------  -------------  -------------   -------------
<CAPTION>
<S>                                      <C>          <C>            <C>             <C>
REVENUE:
     Revenue                             $    50,398  $      76,206  $     126,804   $     153,954
     Interest Income                          24,727         12,244         55,537          29,486
                                          -----------  -------------  -------------   -------------
         TOTAL REVENUES                       75,125         88,450        182,341         183,440
                                          -----------  -------------  -------------   -------------

EXPENSES:
     General & Admini-strative Expenses      592,038        842,532      1,164,030       1,324,737
     Interest and Financing Expenses         391,730        990,747        396,707       2,146,426
     El Rancho Property Carrying Costs             0        276,554              0         653,203
                                          -----------  -------------  -------------   -------------
         TOTAL EXPENSES                      983,768      2,109,833      1,560,737       4,124,366
                                          -----------  -------------  -------------   -------------


NET (LOSS)                               $  (908,643) $  (2,021,383) $  (1,378,396)  $  (3,940,926)
                                          ===========  =============  =============   =============


NET BASIC AND DILUTED
   (LOSS) PER COMMON SHARE               $     (0.10) $       (0.23) $       (0.15)  $       (0.44)
                                          ===========  =============  =============   =============

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                      8,980,262      8,980,226      8,980,259       8,980,240
                                          ===========  =============  =============   =============

</TABLE>


See Notes to Consolidated Financial Statements.

                                        3


<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                   FOR THE SIX MONTHS ENDED DECEMBER 31, 2000

<TABLE>

                                                 Preferred                        Common
                                         -----------------------------------------------------------
                                          Number of                      Number of
                                           Shares          Amount          Shares          Amount
                                         ------------    ------------   -------------   ------------
<CAPTION>
<S>                                          <C>       <C>                <C>         <C>
BALANCE - JUNE 30, 2000                      362,484   $  36,248,375      11,884,270  $   23,768,539

 Shares Issued for Fractional
    Exchanges With Respect to the
    One-for-twenty Reverse Stock Split
    effected on March 13, 1992                     3             300              12              24
 Amortization of Deferred
    Compensation Costs                         ---             ---            ---             ---
 Net (Loss) for the Six Months Ended
    December 31, 2000                          ---             ---            ---             ---

                                         ------------    ------------   -------------   ------------
BALANCE - DECEMBER 31, 2000                  362,487   $  36,248,675      11,884,282  $   23,768,563
                                         ============    ============   =============   ============
</TABLE>

<TABLE>

                                              Capital                        Treasury      Deferred
                                             in Excess                        Stock,       Compen-
                                              of Par         (Deficit)        At Cost       sation        Total
                                            ------------    ------------    ------------   ---------  -------------
<CAPTION>
<S>                                       <C>             <C>             <C>            <C>        <C>
BALANCE - JUNE 30, 2000                   $  26,144,540   $ (45,003,895)  $  (7,260,040) $ (26,667) $   33,870,852

 Shares Issued for Fractional
    Exchanges With Respect to the
    One-for-twenty Reverse Stock Split
    effected on March 13, 1992                     (324)        ---             ---       ---             ---
 Amortization of Deferred
    Compensation Costs                            ---           ---             ---          2,500           2,500
 Net (Loss) for the Six Months Ended
    December 31, 2000                             ---        (1,378,396)        ---       ---           (1,378,396)

                                            ------------    ------------    ------------  ---------   -------------
BALANCE - DECEMBER 31, 2000               $  26,144,216   $ (46,382,291)  $  (7,260,040) $ (24,167) $   32,494,956
                                            ============    ============    ============  =========   =============
</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, 2000 AND 1999

<TABLE>

                                                                          Six Months Ended
                                                                            December 31,
                                                                     ---------------------------
                                                                        2000           1999
                                                                     ------------   ------------
<CAPTION>
<S>                                                                 <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     (LOSS) BEFORE DISCONTINUED OPERATIONS                          $ (1,378,396)  $ (3,940,926)
                                                                     ------------   ------------
     Adjustments to reconcile (loss) to net cash (used in) operating activities:
                  Depreciation and Amortization                           29,039         31,548
                  Changes in Operating Assets and Liabilities -
                     (Increase) in Restricted Cash & Investments         477,414              0
                     Decrease in Accounts Receivable                     425,258        232,541
                     (Increase) Decrease in Other Assets                  10,142        (33,913)
                     Decrease in Prepaid Expenses                        192,495        117,701
                     Increase in Accounts Payable and
                        Accrued Expenses                                (381,938)       423,484
                     Increase in Deferred Revenue                         61,583              0
                                                                     ------------   ------------

     CASH (USED IN) OPERATING ACTIVITIES BEFORE
        DISCONTINUED OPERATIONS                                         (564,403)    (3,169,565)

     CASH (USED IN) PROVIDED BY DISCONTINUED OPERATING ACTIVITIES       (897,847)        25,551
                                                                     ------------   ------------
     NET CASH (USED IN) OPERATING ACTIVITIES                          (1,462,250)    (3,144,014)
                                                                     ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital Expenditures                                                    (259)        (2,458)
    (Increase) in Other Investment Activity                              353,336              0
                                                                     ------------   ------------
     CASH (USED IN) INVESTING ACTIVITIES
       BEFORE DISCONTINUED INVESTING ACTIVITIES                          353,077         (2,458)
     CASH PROVIDED BY (USED IN) DISCONTINUED INVESTING ACTIVITIES     20,000,000       (130,000)
                                                                     ------------   ------------
     NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES              20,353,077       (132,458)
                                                                     ------------   ------------


CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from Loan                                                   150,000              0
    Escrow Deposits Utilized                                                   0        128,151
    Deposit to Escrow Funds                                                    0       (320,000)
    Decrease in Balances Due to/From Discontinued Subsidiaries        18,353,207      2,382,852
    Principal Payments on Short Term Notes                           (18,462,401)      (178,233)
                                                                     ------------   ------------
     CASH PROVIDED BY FINANCING ACTIVITIES
       BEFORE DISCONTINUED FINANCING ACTIVITIES                           40,806      2,012,770
     CASH (USED IN) DISCONTINUED FINANCING ACTIVITIES                (19,086,321)      (408,091)
                                                                     ------------   ------------
     NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES             (19,045,515)     1,604,679
                                                                     ------------   ------------

NET (DECREASE) IN CASH AND CASH EQUIVALENTS                             (154,688)    (1,671,793)
          LESS CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
            FROM DISCONTINUED OPERATIONS                                 (15,832)       512,540
     CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
       BEFORE DISCONTINUED OPERATIONS                                    271,119      1,358,200
                                                                     ------------   ------------

     CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                 $    100,599   $    198,947
                                                                     ============   ============

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

</TABLE>


See Notes to Consolidated Financial Statements.

                                        5

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(1)  BASIS OF PRESENTATION

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming   International    Thoroughbred   Breeders,   Inc.   and   subsidiaries
(collectively,  the "Company")  will continue as a going  concern.  Although the
debt to the Company's  primary  lender was paid following the sale of the Garden
State Park property and the Company has recorded notes  receivable in the amount
of $33  million,  the  Company  has no sources of income or working  capital and
there are no  assurances  that the  Company  would be  successful  in  obtaining
working capital from any sources.

     The Company has sustained  losses of  approximately  $33 million during the
last  three  fiscal  years and a loss of  $1,378,396  for the six  months  ended
December 31,  2000,  all of which raise  substantial  doubt about its ability to
continue as a going concern.

     The Company currently  estimates that  approximately  $200,000 per month is
needed to cover operating expenses of International  Thoroughbred  Breeders. The
Company needs to obtain additional short term loans to fund its operations prior
to March 1, 2001

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

(2)  DISCONTINUED OPERATIONS

     On November 30, 2000,  the Company,  through its  wholly-owned  subsidiary,
GSRT,  LLC,  closed on the sale (the "Garden State  Transaction")  of the Garden
State Park  property  (the "Garden  State Park  Property")  in Cherry Hill,  New
Jersey, to Realen-Turnberry/Cherry  Hill, LLC ("Realen"). The purchase price was
$30 million and was paid by: (i) previous cash  deposits  totaling a $1,000,000;
(ii) a promissory note in the face amount of $10 million (the "Note"); and (iii)
the balance of the purchase price paid in cash at the closing.

     The cash proceeds of the Garden State  Transaction were principally used by
the Company to repay in full the  outstanding  balances on the Company's debt to
Credit  Suisse  First  Boston   Mortgage   Capital  LLC  ("Credit   Suisse")  of
approximately  $14.3 million and to repay in full approximately $3.75 million of
principal and interest on the debt to the Chapter 11 Bankruptcy  Trustee for the
estate of Robert E. Brennan which was incurred to purchase  2,904,016  shares of
the Company's Common Stock.

     Under the Note,  the interest rate will be adjusted from time to time since
the interest actually payable will be dependent upon, and payable solely out of,
the  buyer's  net cash flow  available  for  distribution  to its equity  owners
("Distributable  Cash").  After the equity  investors in the buyer have received
aggregate distributions equal to their capital contributions plus an agreed upon
return on their invested  capital,  the next $10 million of  Distributable  Cash
will be paid to 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 15th  anniversary  of the issuance of the Note.  The Company
may convert the promissory  note, at its option,  into a 33 1/3% equity interest
in Realen  during  the six month  period  prior to the 15th  anniversary  of the
issuance of the Note. If not then converted, the Note will be payable at

                                        6

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

maturity on said 15th  anniversary in an amount equal to (i) the difference,  if
any, between $10 million and total payments previously made to the Company under
the Note and (ii) 33 1/3% of any  excess of the fair  market  value of  Realen's
assets over the sum of its liabilities  (other than the Note) and any unreturned
equity investment of its owners.

The  remaining  net assets of the  operations  to be disposed of included in the
accompanying  consolidated balance sheets as of December 31, 2000 consist of the
following:

Classified As:

Current Assets                                $  544,609

Current Liabilities                            (796,297)
                                              ----------
         Net Liabilities of Discontinued
           Operations - Current                (251,688)

Equipment Assets of Garden State Park            250,000

                                              ----------
         Net Liabilities of Discontinued
           Operations                        $   (1,688)
                                              ==========

(3)  NOTES AND MORTGAGES PAYABLE

         Notes and Mortgages Payable are summarized below:

                                                       December 31, 2000
                                                  --------------------------
                                Interest % Per Annum   Current       Long-Term
                                -------------------- -----------   ------------
International Thoroughbred
Breeders Inc.:

Robert E. Brennan Jr. (A)                            $      -0-    $ 482,000

Other                                    Various        192,154          -0-

Garden State Park:

Service America Corporation (B)             6%          320,000          -0-
                                                       ---------     --------
    Totals                                           $  512,154    $     -0-

Less Amounts Reclassified to:
  Net Liabilities of Discontinued
    Operations - Current                               (320,000)         -0-
                                                       ---------     --------
    Totals                                           $  192,154    $ 482,000
                                                       =========     ========

     (A) On February  24, 2000,  the Company  sold several  pieces of artwork to
Robert E. Brennan Jr., son of the Company's  former Chairman and Chief Executive
Officer.  The $218,000  sales price of the artwork was in excess of the original
cost of  $186,600.  The  Company  recorded a $31,400  gain on the sale in Fiscal
2000. In addition,  the Company purchased two large bronze sculptures located on
the Garden State Park property that were  previously on loan to the Company from
Mr. Brennan Jr. The purchase price of the sculptures was $700,000. In connection
with the transaction, the Company signed a $482,000

                                        7

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

promissory note with Mr. Brennan Jr. which represented the purchase price of the
sculptures  less the sales price of the artwork sold to Mr. Brennan Jr. The note
is due on January  31, 2002  without  interest  if the  principal  is paid on or
before  January  31,  2002.  Any amounts not paid prior to January 31, 2002 will
accrue  interest at 8% On July 27,  2000 the Company  received a notice from the
Chapter 11 Trustee  for the  bankruptcy  estate of Robert E.  Brennan  asserting
certain ownership rights in a number of items on loan to the Company,  including
the sculptures  mentioned  above.  On January 26, 2001,  the Company  received a
summons and complaint in an Adversary Proceeding in the matter Donald F. Conway,
Chapter  11  Trustee  for  the  bankruptcy   Estate  of  Robert  E.  Brennan  v.
International Thoroughbred Breeders, Inc. and Robert E. Brennan Jr. in which the
Trustee is pursuing  claims to the  sculptures and proceeds from the sale of the
sculptures.

     (B) In  connection  with the January 28,  1999 lease  transactions  for the
Garden State Park facility,  the Company  purchased  equipment located at Garden
State Park and a liquor license owned by an  unaffiliated  third party,  Service
America Corporation (the "Holder"), for $500,000 ($100,000 of which will be paid
by the lessee if title to the liquor license is  transferred to Pennwood,  which
event has not  occurred as of  December  31,  2000)  financed by a five (5) year
promissory note at a 6% interest rate. The Company paid $100,000 on June 1, 1999
and a principal  and  interest  payment of $99,200 on  December  28,  1999.  The
Company has not made a scheduled  principal payment of $80,000 plus interest due
on December 28, 2000.  As of February 14, 2001,  the Holder has not given notice
in order to accelerate  the debt,  but could do so and take  enforcement  action
against the Company at any time.

(4)  COMMITMENTS AND CONTINGENCIES

     On January  26,  2001,  the Company  borrowed  $1,000,000  from  Michael J.
Quigley,  III, an unrelated party, at an annual interest rate of 10%.  Principal
and interest on the note is due on or about April 25, 2001.  As  collateral  for
the loan, the Company pledged the $33 million in notes  receivable from the sale
of the El Rancho and Garden State Park properties.

     Effective December 1, 2000, the Company entered into a five-year employment
contract with Francis W. Murray,  the Company's  Chief  Executive  Officer.  The
contract  provides  for  annual  compensation  of  $395,000,  a  $1,500  monthly
automobile  expense  allowance,  a country club annual dues allowance and travel
and entertainment  reimbursements for business expenses  reasonably  incurred by
him in addition  to  participation  in various  other  benefits  provided to the
Company's employees.  As part of his contract,  on December 28, 2000, Mr. Murray
was awarded options to purchase  2,000,000  shares of the Company's Common Stock
(with tandem stock appreciation  rights) pursuant to a stock incentive plan (the
"Plan") which the Board of Directors adopted,  subject to stockholder  approval.
Options for 1,116,279 of the 2 million shares are incentive stock options,  have
an exercise  price per share of 110% of the fair market  value of a share on the
date of grant and expire in five years from the date of grant.  Options  for the
other 883,721  shares  granted to Mr. Murray were  non-qualified  stock options,
have an exercise  price of 100% of the fair market  value of a share on the date
of grant  and  expire in ten years  from the date of  grant.  One-  third of the
incentive and non-qualified  options were immediately  vested, and an additional
one-third  will become vested after one year and two years,  respectively,  from
the date of grant. In addition to his employment  contract,  on January 3, 2001,
Mr. Murray was awarded  2,500,000 shares of the Company's Common Stock valued at
$.20 per share as a bonus for his  extraordinary  efforts  over the last several
years  related  to the  successful  litigation  settlements  and the  successful
transactions related to the sale of the Company's real estate assets.


                                        8

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     Commencing in the third quarter of Fiscal 1999,  the Company and certain of
its officers and directors and former officers and directors  received subpoenas
from the  Securities  and Exchange  Commission  (the "SEC")  relating to certain
transactions  and  reports.  The  Company  has fully  cooperated  with the SEC's
investigation.

     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 December 31, 2000, the
remaining balance of such accrual was $112,421 for remediation costs.

     In connection with the January 28, 1999 lease  transactions  for the Garden
State  Park  facility,  the  Company  purchased  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 if title is  transferred  to  Pennwood,  which
event has not  occurred as of  December  31,  2000)  financed by a five (5) year
promissory note at a 6% interest rate. The Company paid $100,000 on June 1, 1999
and a principal  and  interest  payment of $99,200 on  December  28,  1999.  The
Company has not made a scheduled  principal payment of $80,000 plus interest due
on December 28, 2000.  As of February 14, 2001,  the Holder has not given notice
in order to accelerate  the debt,  but could do so and take  enforcement  action
against the Company at any time.  In the event  Pennwood is awarded a license to
own and operate an off-track  betting  facility  prior to January 28, 2002,  the
Company  will be  required  to  transfer  the  liquor  license  to  Pennwood  in
consideration of the $100,000 payment to be made by Pennwood.

     The Chapter 11 Bankruptcy  Trustee (the "Trustee") for the estate of Robert
E.  Brennan  has  asserted   certain   claims   challenging   the  ownership  of
approximately 2,300,000 shares of the Company's Common Stock (the "Shares") held
by certain  individuals.  In order to preserve the Company's net operating  loss
carryforwards  which otherwise may be lost due to the Shares being  transferred,
the Company and the Trustee have  entered into an agreement  whereby the Company
will pay the  Trustee a minimum  of $.50 per share or a maximum  of $1 per share
for the  Trustee's  release of claim to the Shares in the event that the Trustee
is awarded a  judgement  granting  him an  ownership  interest in the Shares and
executes  on such  judgement.  The  price per  share is based  upon the  average
trading  price per share  during the  previous  thirty  day period  prior to the
Trustee  being  awarded the  judgement but will not be less than the agreed upon
$.50 per share or more than $1 per share. The price per share is secured in part
by a letter of credit obtained by the Company.  In order to obtain the letter of
credit, the Company has placed $1,150,000 in escrow.

LEGAL PROCEEDINGS

     The  Company is a defendant  in a wrongful  death  action  arising out of a
motor  vehicle/pedestrian  accident  at  Freehold  Raceway.  The  case is in the
initial stages of discovery. The Company believes that it has adequate insurance
coverage for the claim,  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.
The Company believes it has adequate insurance coverage excluding deductables.

(5)  FAIR VALUE OF FINANCIAL INSTRUMENTS

     As of  December  31,  2000,  in  assessing  the  fair  value  of  financial
instruments,  the Company has used a variety of methods and  assumptions,  which
were based on estimates of market conditions and loan

                                        9

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

risks  existing at that time. For certain  instruments,  including cash and cash
equivalents,   investments,  non-  trade  accounts  receivable  and  loans,  and
short-term  debt, it was estimated that the carrying  amount  approximated  fair
value  for the  majority  of  these  instruments  because  of  their  short-term
maturity.  The carrying  amounts of long term debt  approximate fair value since
the Company's interest rates approximate current interest rates.

(6)  STOCK OPTIONS AND WARRANTS

     (A)  EMPLOYEE AND NON-EMPLOYEE OPTIONS

     On October 16, 2000, the Company  awarded  options to purchase 6,500 shares
of  the  Company's  Common  Stock  to  various   employees  as  part  of  annual
compensation.  On December 28,  2000,  Mr.  Francis W. Murray and Mr.  William H
Warner  were  awarded   options  to  purchase   2,000,000  and  75,000   shares,
respectively,  of the Company's  Common Stock pursuant to a stock incentive plan
(the  "Plan")  which the Board of  Directors  adopted,  subject  to  stockholder
approval.  The options for 75,000  shares  granted to Mr.  Warner are  incentive
stock options, have an exercise price per share equal to 100% of the fair market
value of a share on the date of the option grant,  were  immediately  vested and
expire  ten years from the date of grant.  With  respect  to the  options  for 2
million shares granted to Mr. Murray, options for 1,116,279 shares are incentive
stock options, have an exercise price per share of 110% of the fair market value
of a share of the date of grant and expire in five years from the date of grant.
Options for the other 883,721  shares  granted to Mr. Murray were  non-qualified
stock  options,  have an exercise price of 100% of the fair market value a share
on the date of grant and expire in ten years  from the date of grant.  One-third
of  the  incentive  and  non-qualified   options  granted  to  Mr.  Murray  were
immediately  vested,  one-third will be vested one year after the date of grant,
and the remaining one-third will be vested two years after the date of grant. At
December 31, 2000, total employee  options  outstanding were 3,136,498 and total
non-employee options outstanding were 300,000.

     The Plan was adopted by the Board of Directors  on December  28, 2000.  All
employees,  members of the Board of Directors,  consultants  and advisors to the
Company  are  eligible  to  receive  stock  options,  stock  awards,  and  stock
appreciation  rights under the Plan. A maximum of four million  shares of common
stock of the Company may be issued under the Plan.  The Plan  provides  that the
Plan will be  submitted  to  holders  of the  Company's  common  stock for their
approval  at the next  annual  meeting of  shareholders,  or prior  thereto at a
special meeting of shareholders  expressly called for such purpose,  and that if
approval of the  Company's  common  stockholders  shall not be  obtained  within
twelve months from the date the Plan was adopted by the Board,  the Plan and all
options,  awards  and  stock  appreciation  rights  then  outstanding  under  it
automatically will terminate and be of no force or effect.

     (B)  WARRANTS

     At December  31, 2000,  total  warrants  outstanding  were  2,604,000.  All
warrants are exercisable at December 31, 2000.

(7)  RELATED PARTY TRANSACTIONS

     During the third  quarter of Fiscal  2001,  the company has invested in two
projects in which its President and Chief Executive Officer,  Francis W. Murray,
also has a pecuniary interest.  In connection with one such project, the Company
has agreed to advance, as a loan, up to $1.5 million, the proceeds of

                                       10

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

which are to be used to pay costs and expenses for  development of a golf course
in Southern California.  A limited partnership,  the general partner of which is
owned by Mr. Murray,  has acquired an option to purchase  certain real estate in
Southern California on which it intends to construct a golf club. The project is
a  long-term  one,  requiring  environmental,  engineering  and  other  studies,
regulatory approvals and other governmental  entitlements.  Loans by the Company
to the limited  partnership will bear interest at an annual rate of 12%, and the
Company  will have the right to convert its loans into a 50% equity  interest in
the  limited   partnership  (which  percentage  interest  would  be  reduced  if
additional  investments  by others  are made in the  limited  partnership).  Mr.
Murray's  equity  interest in the limited  partnership,  indirectly  through his
ownership  of the  general  partner,  presently  is 80%,  and  will  be  reduced
proportionally  if the  Company  exercises  its right to convert  its loans into
equity.

     In the second project, Mr. Murray is participating in the development of an
oceanfront  parcel  of land,  located  in Fort  Lauderdale,  Florida,  which has
received  all  governmental  entitlements  from the City of Fort  Lauderdale  to
develop a 14-story  building to include a 5-story parking garage,  approximately
6,000 square feet of  commercial  space and a  residential  9-story  tower.  The
property owner is developing a vacation  ownership  resort and is in the process
of offering vacation membership  interests in the resort. The Company has agreed
to lend up to $1.5 million to the property owner.  The Company's loans will bear
interest at 12% and will be repayable out of the first  proceeds,  after payment
of bank debts,  generated by the sale of vacation memberships.  The Company will
have the right to convert its loan into an equity interest (subject to receiving
certain  third party  approvals),  which would  entitle it to receive a priority
return of its  investment and a priority  profits  interest equal to three times
its investment.  It is expected that, once one-half of the memberships are under
agreement of sale, the property owner will proceed with construction.  Repayment
of the  Company's  loans (and  receipt of any return if it converts its loans to
equity) will be subject to repayment of, first, bank debt of approximately  $3.8
million incurred in the purchase of the real property and, second,  construction
financing  expected  to  amount  to $25  to  $30  million.  If  the  project  is
successful,  Mr. Murray stands to receive a contingent  benefit,  which could be
substantial, from the owner for his participation in the project, but only after
the Company and the owner have received priority returns of their investment and
priority shares of profits.

     On September  18, 2000,  the Company  borrowed  $150,000 from the Company's
Chairman, Mr. Francis Murray at an interest rate of 10%, in order to finance its
current operations. On February 8, 2001, the Company repaid said loan.

     For  additional   information  regarding  related  party  transactions  see
Footnote 15 in the consolidated  financial  statements included in the Company's
Form 10-K for the fiscal year ended June 30, 2000.

(8)  SUBSEQUENT EVENTS

     Effective  January 12, 2001, the Company  retired  2,904,016  shares of the
Company's Common Stock which were held as Treasury Stock.


                                       11

<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, 2000


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, 2000,  was $625,816 as
compared to a deficit at  December  31,  1999 of  ($36,785,938).  The change was
primarily  caused by: (i) the retirement of the $32.3 million of the debt to the
Company's  primary  lender,  Credit  Suisse First Boston  Mortgage  Capital LLC,
("Credit Suisse");  and (ii) the retirement of the $3.4 million of the Company's
debt to the Chapter 11 Bankruptcy Trustee for the estate of Robert E. Brennan.

     At December 31, 2000 the Company's  cash balance was  $100,599.  On January
26, 2001 the Company  borrowed  $1,000,000  from  Michael J.  Quigley,  III. The
proceeds  were  partially  used to (1) repay the balance of a loan to Francis W.
Murray in the amount of approximately $105,000; (2) make loans in the amounts of
$351,500 on the golf club  project in Southern  California  (see  Related  Party
Transactions);  and (3) make loans in the amount of  $250,000  for the  vacation
ownership  resort  project  in  Fort  Lauderdale,  Florida  (see  Related  Party
Transactions).  The balance will be used for the Company's working capital.  The
cash balance as of February 14, 2001 will be sufficient to fund the Company only
until approximately March 1, 2001.

     The Company will need additional  loans to fund its operations  after March
1, 2001 and  additional  loans  and/or an  extension  of the loan due Michael J.
Quigley III to fund the  $1,000,000  payment due on April 26, 2001.  The Company
anticipates  borrowing  on  its  existing  note  receivables  in the  amount  of
$33,000,000  payable by Realen  and  Turnberry  as  described  below  (currently
pledged as collateral on the Michael J. Quigley III loan).  No assurances can be
made that the Company will obtain such needed loans.

     The net loss for the six months ended  December 31, 2000 was  ($1,378,396).
Cash flows used in operating activities amounted to $1,462,250.

     Cash provided by investing activities was $20,353,077 during the six months
ended December 31, 2000, primarily the result of the cash proceeds from the sale
of the Garden State Park property.

     Cash used in financing  activities  was  $19,045,515  during the six months
ended December 31, 2000, consisting principally of the principal payments on the
short-term debt.

     On November 30, 2000,  the Company,  through its  wholly-owned  subsidiary,
GSRT,  LLC,  closed on the sale (the "Garden State  Transaction")  of the Garden
State Park  property  (the "Garden  State Park  Property")  in Cherry Hill,  New
Jersey, to Realen-Turnberry/Cherry  Hill, LLC ("Realen"). The purchase price was
$30 million and was paid by: (i) previous cash  deposits  totaling a $1,000,000;
(ii) a promissory note in the face amount of $10 million (the "Note"); and (iii)
the balance of the purchase price paid in cash at the closing. The cash proceeds
of the Garden State Transaction were principally used by the Company to repay in
full the  outstanding  balances on the  Company's  debt to Credit  Suisse  First
Boston Mortgage Capital LLC ("Credit Suisse") of approximately $14.3 million and
to repay in full  approximately  $3.75  million of principal and interest on the
debt to the Chapter 11  Bankruptcy  Trustee for the estate of Robert E.  Brennan
which was incurred to purchase  2,904,016  shares of the Company's Common Stock.
Under the Note,  the interest  rate will be adjusted from time to time since the
interest actually payable will be

                                       12

<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, 2000


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  aggregate  distributions  equal to their
capital  contributions plus an agreed upon return on their invested capital, the
next $10 million of Distributable Cash will be paid to 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 15th anniversary
of the issuance of the Note. The Company may convert the promissory note, at its
option,  into a 33 1/3% equity  interest in Realen  during the six month  period
prior  to  the  15th  anniversary  of the  issuance  of the  Note.  If not  then
converted,  the Note will be payable at maturity on said 15th  anniversary in an
amount  equal to (i) the  difference,  if any,  between  $10  million  and total
payments  previously  made to the Company under the Note and (ii) 33 1/3% of any
excess  of the  fair  market  value  of  Realen's  assets  over  the  sum of its
liabilities  (other than the Note) and any unreturned  equity  investment of its
owners.  The  Company  has elected to defer the gain on the sale until such time
that collectability,  under the $10,000,000 note purchased from Realen after the
closing, can be determined.

     On February 24, 2000,  the Company sold several pieces of artwork to Robert
E.  Brennan  Jr.,  son of the  Company's  former  Chairman  and Chief  Executive
Officer.  The $218,000  sales price of the artwork was in excess of the original
cost of  $186,600.  The  Company  recorded a $31,400  gain on the sale in Fiscal
2000. In addition,  the Company purchased two large bronze sculptures located on
the Garden State Park property that were  previously on loan to the Company from
Mr. Brennan Jr. The purchase price of the sculptures was $700,000. In connection
with the  transaction,  the Company signed a $482,000  promissory  note with Mr.
Brennan Jr. which  represented  the purchase  price of the  sculptures  less the
sales  price of the artwork  sold to Mr.  Brennan Jr. The note is due on January
31, 2002  without  interest if the  principal  is paid on or before  January 31,
2002. Any amounts not paid prior to January 31, 2002 will accrue interest at 8%.
On July 27, 2000 the  Company  received a notice from the Chapter 11 Trustee for
the bankruptcy estate of Robert E. Brennan asserting certain ownership rights in
a number of items on loan to the Company,  including  the  sculptures  mentioned
above.  On January 26, 2001, the Company  received a summons and complaint in an
Adversary Proceeding in the matter Donald F. Conway,  Chapter 11 Trustee for the
bankruptcy Estate of Robert E. Brennan v. International  Thoroughbred  Breeders,
Inc.  and Robert E.  Brennan Jr. in which the Trustee is pursuing  claims to the
sculptures and proceeds from the sale of the sculptures.

     On May 22, 2000, the Company,  through its wholly-owned  subsidiary,  Orion
Casino  Corporation,  closed on the sale (the "El  Rancho  Transaction")  of the
non-operating  former El Rancho Hotel and Casino (the "El Rancho  Property")  in
Las Vegas,  Nevada, to Turnberry/Las  Vegas Boulevard,  LLC  ("Turnberry").  The
purchase  price was $45  million  and was paid by: (i)  previous  cash  deposits
totaling $2,000,000;  and (ii) the balance of the purchase price paid in cash at
the closing.  The proceeds of the El Rancho Transaction were principally used by
the Company to reduce the outstanding  balance on the Company's loan from Credit
Suisse First Boston Mortgage Capital LLC ("Credit  Suisse") to $14.7 million and
to  purchase  a  promissory  note,   secured  by  the  rights  to  100%  of  the
distributable  cash of the  buyer in the event of  default,  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 interest  rate will be adjusted from
time to time since the interest  actually  payable will be dependent  upon,  and
payable solely out of, the buyer's net cash flow available for  distribution  to
its equity  owners  ("Distributable  Cash").  After the 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,

                                       13

<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, 2000


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.  The Company has elected to defer the gain on the sale until such
time that  collectability,  under the $23,000,000  note purchased from Turnberry
after the closing, can be determined.

     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.

     On September  18, 2000,  the Company  borrowed  $150,000 from the Company's
Chairman,  Mr. Francis Murray,  in order to finance its current  operations.  On
February 8, 2001, the Company repaid said loan.

     The Company  currently  estimates that the proceeds of the January 26, 2001
loan of $1,000,000  borrowed from Michael J. Quigley,  III, an unrelated  party,
will be sufficient to finance its current operations through March 1, 2001.

     The Company currently  estimates that  approximately  $200,000 per month is
needed to cover operating expenses of International  Thoroughbred  Breeders. The
Company will need to obtain  additional short term loans or additional  advances
to fund its operations prior to March 1, 2001.

     The three month period ended  December 31, 2000 has marked the  substantial
completion of the Company's  divestiture  of its real estate  properties.  Where
once the Company was engaged in operating  businesses,  including operating race
tracks,  and more  recently in owning real estate,  the Company now holds assets
principally  comprised of promissory  notes.  These  promissory notes constitute
"securities" for purposes of the Investment Company Act of 1940, which regulates
companies primarily engaged in the business of investing, reinvesting or trading
in securities. The Company's Board of Directors believes that the Company should
continue as an operating  company,  rather than an investment  company,  and the
Board intends for the Company to be primarily engaged, as soon as possible, in a
business other than that of investing,  reinvesting,  owning, holding or trading
in securities.  As a result,  the Company believes it is temporarily exempt from
the registration  requirements of the Investment  Company Act.  However,  if the
Company is not able to acquire or develop a business  or  businesses  other than
that of investing,  reinvesting,  owning,  holding or trading in securities such
that no more than 45% of the value of its assets (exclusive of

                                       14

<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, 2000


government  securities and cash items)  consists of, and no more than 45% of its
net income after taxes is from, securities,  then the Company may be required to
register as an investment  company.  Such  registration  would impose  extensive
regulatory requirements upon the Company.

     While  management  believes that promissory notes owned by the Company have
substantial value and, ultimately,  should generate significant cash payments to
the Company,  the timing of receipt of any such  payments  cannot be  accurately
predicted and the Company may not receive  substantial  payments under the notes
for one year or more. At the same time, the Company has utilized  available cash
over the last several  months to invest in the  development  of projects  which,
while  believed by management to be  worthwhile,  are expected to take more than
one year before generating cash returns to the Company. The Company will seek to
borrow against its notes in order to obtain funds for short term obligations and
current  expenses.  However,  there can be no assurance that the Company will be
able to borrow the necessary funds.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue in a going  concern.  As  discussed in Footnote 1 to the
consolidated  financial statements and in this discussion above, the Company has
sustained  losses of  approximately  $33  million  during the last three  fiscal
years,  and now has no  source  of funds and no  working  capital,  all of which
raises  substantial doubt about its ability to continue as a going concern.  The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.

Results of Operations for the Three Months Ended December 31, 2000 and 1999

     Revenue  from  operations  for the three  months  ended  December  31, 2000
decreased  primarily as a result of rental income  generated by the Garden State
Park lease  discontinued  as a result of the sale on November 30, 2000 partially
offset by increased  interest  income.  Expenses from  operations  for the three
month  periods  decreased  $1,126,065  or 53%, for the second  quarter of Fiscal
2001.  This  decrease in the expenses was primarily the result of a decrease in:
(i) general  and  administrative  expenses  of $250,494 or 30% from  $842,532 in
Fiscal 2000 to $592,038  in Fiscal 2001  primarily  as a result of a decrease of
approximately  $340,000 in legal fees  partially  offset by an increase in costs
associated with the Company's efforts to establish a viable operating  business;
(ii) a decrease in interest  and  financing  expense of $599,017  primarily as a
result reduced debt;  and (iii) carrying costs for the El Rancho  property being
eliminated as a result of its sale in Fiscal 2000.

     During the second quarter of Fiscal 2001,  the Company  incurred a net loss
from  operations  of  ($908,643)  as compared to a net loss from  operations  of
($2,021,383) for the comparable quarter in Fiscal 2000. The decrease in net loss
of $1,112,740 was the result of those differences described above.

Results of Operations for the Six Months Ended December 31, 2000 and 1999

     Revenue  for the six months  ended  December  31, 2000  decreased  slightly
primarily as a result of rental income  generated by the Garden State Park lease
discontinued  as a result of the sale on November 30, 2000  partially  offset by
increased interest income. Expenses decreased $2,563,629 or 62%, from $4,124,366
in Fiscal 2000 to  $1,560,737  in Fiscal  2001.  This  decrease in expenses  was
primarily the result of: (i) a decrease in general and  administrative  expenses
of  $160,707  from  $1,324,737  in Fiscal  2000 to  $1,164,030  in  Fiscal  2001
primarily  as a result of a decrease  of  approximately  $340,000  in legal fees
partially offset by an increase in costs  associated with the Company's  efforts
to  establish a viable  operating  business;  (ii) a decrease  in  interest  and
financing expense of $1,749,719 primarily as a result reduced debt;

                                       15

<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, 2000


and (iii) carrying costs for the El Rancho property being eliminated as a result
of its sale in Fiscal 2000.

     During the first half of Fiscal  2001,  the Company  incurred a net loss of
($1,378,396) as compared to a net loss of ($3,940,926) for the comparable period
in Fiscal 2000.  The decrease in net loss of $2,562,530  was the result of those
differences described above.

Inflation

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



                                       16

<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                                     PART II

                                OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

         During the quarter ended December 31, 2000,  the  registrant  filed the
following Current Reports on Form 8-K:



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

November 30, 2000          Sale of Garden State Park property



                                       17

<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.


February 14, 2001               /s/Francis W. Murray
                                --------------------------------
                                Francis W. Murray, President and
                                  Chief Executive Officer



February 14, 2001                /s/William H. Warner
                                 -------------------------------
                                William H. Warner
                               Secretary/Treasurer
                                 (Principal Financial and Accounting Officer)




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