FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended                March 31, 2001
                               -------------------------------------------------
                                                   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, 2001
------------------------------            -------------------------------
Common Stock, $ 2.00 par value                   11,480,266  Shares



<PAGE>





                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                                    FORM 10-Q

                                QUARTERLY REPORT
                    for the Nine Months ended March 31, 2001
                                   (Unaudited)


                                TABLE OF CONTENTS

                                                                         PAGE
PART I. FINANCIAL INFORMATION

         Item 1. Financial Statements:

         Consolidated Balance Sheets
                  as of March 31, 2001 and June 30, 2000...................1-2

         Consolidated Statements of Operations
                  for the Three and Nine Months ended
                  March 31, 2001 and 2000 .................................3

         Consolidated Statement of Stockholders' Equity
                  for the Nine Months ended March 31, 2001.................4

         Consolidated Statements of Cash Flows
                  for the Nine Months ended
                  March 31, 2001 and 2000..................................5

         Notes to Financial Statements.....................................6-12

         Item 2. Management's Discussion and Analysis of
                    Financial Condition and Results of Operations.........13-16

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 MARCH 31, 2001 AND JUNE 30, 2000

                                     ASSETS

<TABLE>
                                                     March 31,
                                                       2001             June 30,
                                                    (UNAUDITED)           2000
                                                    -----------      -----------
<CAPTION>
<S>                                                 <C>              <C>
CURRENT ASSETS:
     Cash and Cash Equivalents                      $    38,757      $   271,119
     Restricted Cash and Investments                  1,190,427        1,656,743
     Accounts Receivable                                      0          427,654
     Prepaid Expenses                                    76,987          362,321
     Other Current Assets                             1,021,370          516,721
                                                    -----------      -----------
          TOTAL CURRENT ASSETS                        2,327,541        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                              482,443        1,199,284
                                                    -----------      -----------
                                                        696,540        1,413,381
     LESS: Accumulated Depreciation
           and Amortization                             412,265          387,404
                                                    -----------      -----------

          TOTAL LAND, BUILDINGS
            AND EQUIPMENT, NET                          284,275        1,025,977
                                                    -----------      -----------



OTHER ASSETS:
     Notes Receivable                                33,000,000       23,000,000
     Deposits and Other Assets                        1,291,124          906,204
                                                    -----------      -----------
          TOTAL OTHER ASSETS                         34,291,124       23,906,204
                                                    -----------      -----------


TOTAL ASSETS                                        $37,152,940      $58,166,739
                                                    ===========      ===========
</TABLE>

See Notes to Consolidated Financial Statements.

                                       1
<PAGE>


                   INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                     AS OF MARCH 31, 2001 AND JUNE 30, 2000

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
                                                     March 31,
                                                       2001            June 30,
                                                    (UNAUDITED)         2000
                                                   ------------    ------------
<CAPTION>
<S>                                                 <C>            <C>
CURRENT LIABILITIES:
     Accounts Payable                               $   235,370    $     62,502
     Accrued Expenses                                   530,631         858,510
     Short-Term Debt                                  1,000,000      18,596,709
     Net Liabilities of Discontinued
          Operations - Current                          235,006       1,509,577
                                                    ------------    ------------
          TOTAL CURRENT LIABILITIES                   2,001,007      21,027,298
                                                    ------------    ------------


DEFERRED INCOME                                       3,256,600       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,362,488 and
       362,484 Shares, Respectively                  36,248,775      36,248,375
     Common Stock, $2.00 Par Value, Authorized
       25,000,000 Shares,Issued, 11,480,273
       and 11,884,270 Shares, and Outstanding,
       11,480,273 and 8,980,254 Shares,
       Respectively                                  22,960,545      23,768,539
     Capital in Excess of Par                        20,192,094      26,144,540
     (Deficit) (subsequent to June 30, 1993,
        date of quasi-reorganization)               (47,965,164)    (45,003,895)
                                                    -----------    ------------
          TOTAL                                      31,436,250      41,157,559
     LESS:
        Treasury Stock, 2,904,016 Shares,
         at Cost (retired January 12, 2001)                   0      (7,260,040)
        Deferred Compensation, Net                      (22,917)        (26,667)
                                                    -----------    ------------
          TOTAL STOCKHOLDERS' EQUITY                 31,413,333      33,870,852
                                                    -----------    ------------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $37,152,940     $58,166,739
                                                    ============    ===========

</TABLE>


See Notes to Consolidated Financial Statements.

                                       2
<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2001 AND 2000


<TABLE>
                                                 Three Months Ended
                                                      March 31,
                                             ---------------------------
                                                 2001            2000
                                             -----------     -----------
<CAPTION>
<S>                                         <C>             <C>
REVENUE:
        Revenue                             $      1,402    $     76,199
        Interest Income                           14,340           5,263
                                             -----------     -----------
                TOTAL REVENUES                    15,742          81,462
                                             -----------     -----------

EXPENSES:
        General & Administrative Expenses      1,524,927         807,295
        Interest and Financing Expenses           73,688       1,139,091
        El Rancho Property Carrying Costs              0         307,291
                                             -----------     -----------
                TOTAL EXPENSES                 1,598,615       2,253,677
                                             -----------     -----------

NET (LOSS)                                  $ (1,582,873)   $ (2,172,215)
                                             ===========     ===========

NET BASIC AND DILUTED
   (LOSS) PER COMMON SHARE                  $      (0.15)   $      (0.24)
                                             ===========     ===========
WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                         10,708,664       8,980,245
                                             ===========     ===========


                                                  Nine Months Ended
                                                      March 31,
                                             ---------------------------
                                                 2001            2000
                                             -----------     -----------
REVENUE:
        Revenue                             $    128,208    $    230,154
        Interest Income                           69,877          34,749
                                             -----------     -----------
                TOTAL REVENUES                   198,085         264,903
                                             -----------     -----------
EXPENSES:
        General & Administrative Expenses      2,688,958       2,132,032
        Interest and Financing Expenses          470,396       3,285,517
        El Rancho Property Carrying Costs              0         960,494
                                             -----------     -----------
                TOTAL EXPENSES                 3,159,354       6,378,043
                                             -----------     -----------

NET (LOSS)                                  $ (2,961,269)   $ (6,113,140)
                                             ===========     ===========

NET BASIC AND DILUTED
   (LOSS) PER COMMON SHARE                  $      (0.31)   $      (0.68)
                                             ===========     ===========
WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                          9,491,211       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 NINE MONTHS ENDED MARCH 31, 2001

<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

   Treasury Shares Retired                       --             --       (2,904,016)     (5,808,032)
   Shares Issued for Compensation                --             --        2,500,000       5,000,000
   Shares Issued for Fractional
      Exchanges With Respect to the
      One-for-twenty Reverse Stock
      Split effected on March 13, 1992              4            400             19              38
   Amortization of Deferred
      Compensation Costs                         --             --             --              --
   Net (Loss) for the Nine Months
      Ended March 31, 2001                       --             --             --              --

                                         ------------   ------------   ------------    ------------
BALANCE - MARCH 31, 2001                      362,488   $ 36,248,775     11,480,273    $ 22,960,545
                                         ============   ============   ============    ============
</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

   Treasury Shares Retired                  (1,452,008)        ---          7,260,040        ---              ---
   Shares Issued for Compensation           (4,500,000)        ---            ---            ---              500,000
   Shares Issued for Fractional
      Exchanges With Respect to the
      One-for-twenty Reverse Stock
      Split effected on March 13, 1992            (438)        ---            ---            ---              ---
   Amortization of Deferred
      Compensation Costs                       ---             ---            ---              3,750            3,750
   Net (Loss) for the Nine Months
      Ended March 31, 2001                     ---          (2,961,269)       ---            ---           (2,961,269)

                                          -------------   -------------  -------------  -------------   --------------
BALANCE - MARCH 31, 2001                 $  20,192,094   $ (47,965,164) $           0  $     (22,917)  $   31,413,333
                                          =============   =============  =============  =============   ==============
</TABLE>

     See Notes to Consolidated Financial Statements.

                                       4
<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED MARCH 31, 2001 AND 2000

<TABLE>
                                                                         Nine Months Ended
                                                                              March 31,
                                                                    ----------------------------
                                                                        2001            2000
                                                                    ------------    ------------
<CAPTION>
<S>                                                                 <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  (LOSS) BEFORE DISCONTINUED OPERATIONS                             $ (2,961,269)   $ (6,113,140)
                                                                    ------------    ------------
  Adjustments to reconcile (loss) to net cash (used in)
          operating activities:
              Depreciation and Amortization                               36,685          47,143
              Compensation Cost of Common Shares Issued                  500,000               0
              Changes in Operating Assets and Liabilities -
                (Increase) in Restricted Cash & Investments              466,316               0
                 Decrease in Accounts Receivable                         427,654         232,541
                 (Increase) Decrease in Other Assets                      48,383          14,768
                 Decrease in Prepaid Expenses                            285,334         218,401
                 Increase in Accounts Payable and Accrued Expenses      (155,011)        271,230
                                                                    ------------    ------------

  CASH (USED IN) OPERATING ACTIVITIES BEFORE
   DISCONTINUED OPERATIONS                                            (1,351,908)     (5,329,057)

  CASH (USED IN) PROVIDED BY DISCONTINUED OPERATING ACTIVITIES                 0         104,129
                                                                    ------------    ------------
  NET CASH (USED IN) OPERATING ACTIVITIES                             (1,351,908)     (5,224,928)
                                                                    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Non-refundable Deposit on El Rancho                                           0         500,000
 Capital Expenditures                                                          0          (2,458)
 (Increase) in Other Investment Activity                                (587,252)              0
                                                                    ------------    ------------
  CASH (USED IN) INVESTING ACTIVITIES
   BEFORE DISCONTINUED INVESTING ACTIVITIES                             (587,252)        497,542
  CASH PROVIDED BY (USED IN) DISCONTINUED INVESTING ACTIVITIES        20,000,000        (130,000)
                                                                    ------------    ------------
  NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                 19,412,748         367,542
                                                                    ------------    ------------


CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from Loans                                                   1,150,000               0
 Escrow Deposits Utilized                                                      0         502,159
 Deposit to Escrow Funds                                                       0        (320,000)
 Decrease in Balances Due to/From Discontinued Subsidiaries           17,693,013       2,611,679
 Principal Payments on Short Term Notes                              (17,654,555)        773,496
                                                                    ------------    ------------
    CASH PROVIDED BY FINANCING ACTIVITIES
     BEFORE DISCONTINUED FINANCING ACTIVITIES                          1,188,458       3,567,334
    CASH (USED IN) DISCONTINUED FINANCING ACTIVITIES                 (19,491,381)       (678,312)
                                                                    ------------    ------------
    NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES              (18,302,923)      2,889,022
                                                                    ------------    ------------

NET (DECREASE) IN CASH AND CASH EQUIVALENTS                             (242,083)     (1,968,364)
     LESS CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
      FROM DISCONTINUED OPERATIONS                                         9,721         704,184
    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                  $     38,757    $     94,020
                                                                    ============    ============

    Supplemental Disclosures of Cash Flow Information:
               Cash paid during the period for:
               Interest                                             $    109,681    $         0
               Income Taxes                                         $          0    $    61,415


</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 $2,961,269 for the nine months ended March
31, 2001, 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 overhead expenses of International  Thoroughbred  Breeders.  The
Company's  cash  balance as of March 31,  2001 was  $38,757.  From April 1, 2001
through  May 15,  2001,  the  Company  has  relied  on the  re-payment  of loans
previously  given by the  Company to the  property  owner of the Ft.  Lauderdale
project.  The Company made  investments  in this  project  during the second and
third quarter of Fiscal 2001. (See Note 7)

     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
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.


                                        6

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

The  remaining  net assets of the  operations  to be disposed of included in the
accompanying  consolidated  balance  sheets as of March 31, 2001  consist of the
following:

Classified As:

Current Assets                                   $ 519,059

Current Liabilities                               (754,065)
                                                  --------
         Net Liabilities of Discontinued
             Operations - Current                  (235,006)

Equipment Assets of Garden State Park              250,000
                                                  --------
         Net Assets of Discontinued Operations   $  14,994
                                                  ========

(3)  NOTES AND MORTGAGES PAYABLE

     Notes and Mortgages Payable are summarized below:

                                                           March 31, 2001
                                                     --------------------------
                                Interest % Per Annum   Current       Long-Term
                                -------------------- ------------    ----------
International Thoroughbred
Breeders Inc.:

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

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

Garden State Park:

Service America Corporation (C)                6%         320,000           -0-
                                                      -----------      --------
    Totals                                           $  1,320,000    $      -0-

Less Amounts Reclassified to:
  Net Liabilities of Discontinued
    Operations - Current                                (320,000)           -0-
                                                      -----------      --------
    Totals                                           $  1,000,000    $  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  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.


                                        7

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     (B) 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 was 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. On May 14, 2001, the loan was
modified to be due on demand.

     (C) 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  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 May 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 was due on April 25, 2001,  however,  on May 14, 2001,
the loan was  modified  to be due on demand.  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 each of 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  in lieu of cash  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.

     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.  On March 15,  2001,  the Company was advised by the staff of the
SEC that they intend to recommend  that the SEC bring civil  injunction  actions
against the Company and certain current and former officers. The Company and the
current and former officers will determine the appropriate  response when and if
there is any action brought in this matter.


     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 March 31,  2001,  the
remaining balance of such accrual was $400,000 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 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 May 14, 2001, the Holder has not

                                        8

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

given  notice  in  order  to  accelerate  the  debt,  but  could  do so and take
enforcement  action  against the Company at any time. The tenant at Garden State
Park has caused the liquor license to be transferred to it as a result of which,
it owes a  purchase  price of  $100,000  to the  Company.  If the  tenant is not
awarded a license to own and  operate an  off-track  betting  facility  prior to
January 28,  2002,  the tenant may be  required  by the Company to transfer  the
liquor  license to the Company in  consideration  of the Company's  repayment of
such $100,000 to the Tenant.

     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.  It is expected that this
agreement  with the Trustee  will be replaced by another  agreement as described
below. (See Note 9, Subsequent Events)

     On May 3, 2001, the Company  executed an agreement to lease office space in
Bellmawr,  New Jersey for a three year  period,  expiring on May 31,  2004.  The
lease  provides  for a current  monthly  rent of  $5,527.56  which  amount  will
increase  approximately 3% each year for inflation.  The lease also provides for
an extended lease term option of an additional three year period commencing June
1, 2004.

     The three month  period  ended  December  31,  2000 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.  To that end,  the Company has entered  into a bareboat  charter
vessel and began operating a casino cruise ship business as described in Note 9,
Subsequent Events.

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 March 31, 2001, 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 risks existing at that time. For certain
instruments,  including  cash  and  cash  equivalents,   investments,  non-trade
accounts receivable and

                                        9

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

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
March 31, 2001,  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 March 31, 2001, total warrants outstanding were 2,604,000.  All warrants
are exercisable at March 31, 2001.

(7)  RELATED PARTY TRANSACTIONS

     During the third  quarter  of Fiscal  2001,  the  company  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 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.


                                       10

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     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.

     As more fully  described in Note 9 below,  effective  April 30,  2001,  the
Company entered into a bareboat charter with MJQ Corporation,  pursuant to which
the Company is chartering  the vessel MV Palm Beach  Princess for the purpose of
operating a casino cruise business from the Port of Palm Beach, Florida. Francis
W.  Murray,  the  Company's  Chairman and CEO, is an officer and director of MJQ
Corporation,  and his son, Francis X. Murray, is President and a director of MJQ
Corporation.  Under the  charter  agreement,  the  Company is  obligated  to pay
$50,000 per month as the charter hire fee to MJQ  Corporation.  In addition,  in
order to obtain the bareboat  charter,  the Company has entered into a letter of
intent with the Chapter 11 Trustee of the Bankruptcy Estate of Robert E. Brennan
(the "Trustee"),  MJQ Corporation and others which contemplates that, subject to
the negotiation,  execution and delivery of satisfactory  definitive agreements,
the  Company  would  purchase  from  the  Trustee  the  promissory  note  of MJQ
Corporation,   having  a  balance  of  principal  and  interest  outstanding  of
approximately  $14.1  million  and secured by a ship  mortgage  against the Palm
Beach Princess vessel (the "Ship Mortgage Obligation"),  for a purchase price of
$13.75 million.  Such purchase price would be payable in 12 consecutive  monthly
installments of $250,000, a 13th payment of $10.5 million on April 30, 2002, and
a final  payment of $250,000 on July 1, 2002.  Pursuant to the letter of intent,
MJQ Corporation and its officers and directors  (including Francis W. Murray and
his son) would  exchange  mutual  releases  with the Trustee  and others  having
claims to the Ship Mortgage Obligation.

     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)  TREASURY SHARES RETIRED

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

(9)  SUBSEQUENT EVENTS

     (A) Effective April 30, 2001, the Company  entered into a bareboat  charter
of the vessel MV Palm Beach  Princess with MJQ  Corporation,  a  corporation  of
which the Company's Chairman and Chief Executive Officer, Mr. Francis W. Murray,
is an officer and director.  By the bareboat  charter,  the Company acquires the
right to operate the vessel MV Palm Beach Princess, which the Company intends to
utilize  for the purpose of carrying  on a casino  cruise  business.  The vessel
sails  from the  Port of Palm  Beach,  Florida  and,  once  outside  the  3-mile
territorial  limit,  operates a casino  gaming  business.  The charter  hire fee
payable by the  Company to MJQ  Corporation  is $50,000  per month.  In order to
obtain the bareboat  charter,  the Company  entered into a letter of intent with
the Chapter 11

                                       11

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                               NOTES TO FINANCIAL
                                   (Unaudited)

Trustee of the  Bankruptcy  Estate of Robert E.  Brennan,  MJQ  Corporation  and
others,  under  which,  subject  to  the  completion  of  mutually  satisfactory
definitive  agreements,  the Company  would  purchase  from the Trustee the Ship
Mortgage  Obligation  of MJQ  Corporation,  having a balance  of  principal  and
interest  outstanding  of  approximately  $14.1,  for a purchase price of $13.75
million. See Note 7, "Related Party  Transactions,"  above. The bareboat charter
is for a one-year  term ending  April 30,  2002,  although it may be  terminated
earlier if definitive  agreements  with the Trustee and MJQ  Corporation are not
reached by May 31, 2001 or, after entering definitive agreements, if the Company
fails to pay when due any of the installments of the purchase price for the Ship
Mortgage  Obligation.  In the event of such  default,  the Company  would not be
liable  for any  unpaid  balance  of the  purchase  price for the Ship  Mortgage
Obligation.

     The letter of intent referred to above also contemplates  that,  subject to
satisfactory  definitive  agreements,  the Company  would agree to purchase  the
Trustee's  rights to  certain  shares of the  common  stock in the  Company  the
ownership of which has been  challenged by the Trustee.  The Company  desires to
purchase  the  Trustee's  rights to stock in the Company in order to protect the
net operating loss  carryforward  which  otherwise may be lost if the shares are
transferred.  The letter of intent  contemplates that the Company would agree to
purchase  1,335,000  shares of the Company's common stock at a purchase price of
$0.50 per share on July 1, 2002, and that the Company would secure such purchase
obligation  by  pledging  $667,500 of  proceeds  receivable  by it under the $10
million  promissory  note  payable to the Company  from the sale of Garden State
Race Track.  The Company also would  obtain an option to purchase the  Trustee's
rights to an  additional  2,300,000  shares of common stock in the Company at an
exercise price of $.50 per share. The definitive  agreement  between the Company
and the Trustee for the purchase of such shares and the Trustee's rights thereto
would supersede the existing agreement between the Company and the Trustee under
which the Company is obligated to purchase the  Trustee's  claims to 2.3 million
shares of the  Company's  common stock,  which is secured by $1,150,000  held in
escrow. As a result, such $1,150,000 escrow will become available to the Company
for working capital purposes.

     (B) On May 3, 2001, the Company executed an agreement to lease office space
in Bellmawr,  New Jersey for a three year period,  expiring on May 31, 2004. The
lease  provides  for a current  monthly  rent of  $5,527.56  which  amount  will
increase  approximately 3% each year for inflation.  The lease also provides for
an extended lease term option of an additional three year period commencing June
1, 2004.


                                       12

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

            MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
                OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
                                 MARCH 31, 2001

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 March 31,  2001,  was  $326,534 as
compared  to a deficit  at March  31,  2000 of  ($38,942,557).  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"); (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;  and
(iii) the  reclassification  of approximately  $900,000 in environmental  escrow
deposits which are scheduled to be released to the Company in January 2002.

     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 was used for the  Company's  working
capital. The Company's cash balance as of March 31, 2001 was $38,757. From April
1, 2001 through May 15, 2001,  the Company has relied on the re-payment of loans
previously  given by the  Company to the  property  owner of the Ft.  Lauderdale
project.  The  Company  made an  investment  in this  project  during  the third
quarter.  (See Note 7) The Company has a $1,150,000  Certificate of Deposit that
matures  on May 18,  2001.  As a result  of  negotiations  with the  Chapter  11
Bankruptcy  Trustee for the estate of Robert E.  Brennan  (See Notes 4 & 9), the
Company expects to have access to these funds on May 18, 2001.

     The Company  anticipates  selling the personal  property  located at Garden
State Park at a public  auction  scheduled  for June 22, 2001  through  June 25,
2001.  The Company has  contracted  with a local auction  company to conduct the
auction.  The proceeds from the auction,  which  includes  artwork,  kitchen and
restaurant equipment, concession stands, office furniture and fixtures, vehicles
and track  equipment,  are  anticipated  to be  sufficient to fund the Company's
overhead expenses for several months.

     Effective  April 30, 2001,  the Company  commenced  operations  of the Palm
Beach  Princess,  a  casino  cruise  ship  operating  from a port in Palm  Beach
Florida.  (See Note 9, Subsequent  Events) It is anticipated  that the cash flow
generated by the ship will be sufficient to fund the Company's cash requirements
in the near future.  However, no assurances can be given considering the various
uncertainties of such a business.

     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 nine months  ended  March 31,  2001 was  ($2,961,269).
Cash flows used in operating activities amounted to $1,351,908.

     Cash provided by investing activities (sale of discontinued operations) was
$19,412,748 during the nine months ended March 31, 2001, primarily the result of
the cash proceeds from the sale of the Garden State Park property.

     Cash used in financing  activities was  $18,302,923  during the nine months
ended March 31, 2001,  consisting  principally of the principal  payments on the
short-term debt.



                                       13

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

            MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
                OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
                                 MARCH 31, 2001

     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
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

                                       14

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

            MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
                OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
                                 MARCH 31, 2001

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.  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  approximately  $200,000 per month is
needed to cover overhead expenses of International Thoroughbred Breeders.

     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, while now operating a casino  business,  has an uncertain source of
funds and limited 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 March 31, 2001 and 2000

     Revenue from operations for the three months ended March 31, 2001 decreased
primarily  as a result of of rental  income  generated  by the Garden State Park
lease discontinued as a result of the sale on

                                       15

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

            MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
                OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
                                 MARCH 31, 2001

     November 30, 2000 partially offset by increased  interest income.  Expenses
for the three month period  decreased  $655,062 or 29% for the third  quarter of
Fiscal 2001.  This  decrease in expenses was  primarily the result of a decrease
in: (i) a decrease in interest and financing expense of $599,017  primarily as a
result of reduced debt:  (ii) carrying  costs for the El Rancho  property  being
eliminated as a result of its sale in Fiscal 2000:  partially offset by (iii) an
increase in general and administrative expenses of $717,632 primarily associated
with; (a) the $500,000  non-cash  compensation  cost of the 2,500,000  shares of
Common Stock issued to Francis W. Murray,  the Company's Chief Executive Officer
on  January  28,  2001;  (b)  additional  environmental   remediation  costs  of
approximately  $300,000 associated with the sale of Freehold Raceway:  partially
offset by (d) a decrease  of  approximately  $120,000  in legal fees  during the
comparable periods.

     During the third  quarter of Fiscal 2001,  the Company  incurred a net loss
from  operations of  ($1,582,873)  as compared to a net loss from  operations of
($2,172,215) for the comparable quarter in Fiscal 2000. The decrease in net loss
of  $589,342  for the three  month  period was the  result of those  differences
described above.

Results of Operations for the Nine Months Ended March 31, 2001 and 2000

     Revenue from  operations for the nine months ended March 31, 2001 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 decreased $3,218,690 or 50%,
from  $6,378,043 in Fiscal 2000 to  $3,159,353 in Fiscal 2001.  This decrease in
expenses was  primarily  the result of: (i) a decrease in interest and financing
expense of $2,815,122  primarily as a result  reduced debt:  (ii) carrying costs
for the El Rancho  property  being  eliminated as a result of its sale in Fiscal
2000:  partially  offset by (iii) an  increase  in  general  and  administrative
expenses  of $556,926  primarily  associated  with;  (a) the  $500,000  non-cash
compensation  cost described  above;  (b) additional  environmental  remediation
costs of approximately  $300,000  associated with the sale of Freehold  Raceway:
partially  offset by (d) a  decrease  of  approximately  $450,000  in legal fees
during the comparable periods.

     During the nine months  ended March 31,  2001,  the Company  incurred a net
loss from  operations of  ($3,159,353) as compared to a net loss from operations
of  ($6,378,043)  for the comparable  period in Fiscal 2000. The decrease in net
loss of $3,151,871 for the nine month period 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

     The  Company  did not file any  reports on 8-K with  respect to the quarter
ended March 31, 2001.


                                       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.




May 15, 2001                       /s/Francis W. Murray
                                   ----------------------------------
                                   Francis W. Murray, President and
                                      Chief Executive Officer



May 15, 2001                       /s/William H. Warner
                                   ----------------------------------
                                   William H. Warner
                                   Secretary/Treasurer
                                   (Principal Financial and Accounting Officer)



                                       18

<PAGE>