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              September 30, 1999
                               -------------------------------------------------
                                                   OR

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

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

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

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

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

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

                                 (856) 488-3838
              (Registrant's telephone number, including area code)


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

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the last 90 days. Yes X No


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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


            Class                           Outstanding at May 5, 2000
------------------------------              --------------------------
Common Stock, $ 2.00 par value                   8,980,252 Shares


<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                                    FORM 10-Q

                                QUARTERLY REPORT
                  for the Three Months ended September 30, 1999
                                   (Unaudited)

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                   AS OF SEPTEMBER 30, 1999 AND JUNE 30, 1999

                                     ASSETS

                                           September 30,
                                               1999             June 30,
                                            (UNAUDITED)           1999
                                          ----------------   ----------------
CURRENT ASSETS:
     Cash and Cash Equivalents         $          291,887  $       1,358,200
     Reserve Escrow Deposits                      407,407            182,154
     Accounts Receivable                           46,885            234,774
     Prepaid Expenses                             244,421            349,182
     Other Current Assets                          53,174             53,771
     Net Assets of Discontinued
      Operations - Current                        522,747            494,699
                                          ----------------   ----------------
          TOTAL CURRENT ASSETS                  1,566,521          2,672,780
                                          ----------------   ----------------

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

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

LAND, BUILDINGS AND EQUIPMENT:
     Land and Buildings                           214,097            214,097
     Equipment                                    684,638            683,428
                                          ----------------   ----------------
                                                  898,735            897,525
     LESS: Accumulated Depreciation
           and Amortization                       344,321            329,667
                                          ----------------   ----------------
          TOTAL LAND, BUILDINGS
           AND EQUIPMENT, NET                     554,414            567,858
                                          ----------------   ----------------
OTHER ASSETS:
     Note Receivable, Deposits
       and Other Assets                         1,003,172          1,198,172
                                          ----------------   ----------------
          TOTAL OTHER ASSETS                    1,003,172          1,198,172
                                          ----------------   ----------------

TOTAL ASSETS                           $       75,273,862  $      76,588,565
                                          ================   ================

See Notes to Consolidated Financial Statements.

                                        1
<PAGE>

                   INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                   AS OF SEPTEMBER 30, 1999 AND JUNE 30, 1999

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                           September 30,
                                               1999             June 30,
                                            (UNAUDITED)           1999
                                          ----------------   ----------------
CURRENT LIABILITIES:
     Accounts Payable                  $           53,845  $         267,941
     Accrued Expenses                           2,270,478          1,176,796
     Current Maturities
      of Long-Term Debt                        34,021,148         34,297,145
                                          ----------------   ----------------
          TOTAL CURRENT LIABILITIES            36,345,471         35,741,882
                                          ----------------   ----------------

COMMITMENTS AND CONTINGENCIES                    -                  -

STOCKHOLDERS' EQUITY:
     Series A Preferred Stock,
      $100.00 Par Value,
       Authorized 500,000 Shares,
       Issued and Outstanding,
       362,482 and 362,482 Shares,
       Respectively                            36,248,175         36,248,175
     Common Stock, $2.00 Par Value,
      Authorized 25,000,000 Shares,
      Issued, 11,884,252 and
      11,884,249 Shares,
      and Outstanding, 8,980,236 and
      8,980,233 Shares Respectively            23,768,505         23,768,497
     Capital in Excess of Par                  26,144,774         26,144,782
     (Deficit) (subsequent to
      June 30, 1993,
        date of quasi-reorganization)         (39,942,606)       (38,023,064)
                                          ----------------   ----------------
          TOTAL                                46,218,848         48,138,390
     LESS:
        Treasury Stock, 2,904,016
         Shares, at Cost                       (7,260,040)        (7,260,040)
        Deferred Compensation, Net                (30,417)           (31,667)
                                          ----------------   ----------------
          TOTAL STOCKHOLDERS' EQUITY           38,928,391         40,846,683
                                          ----------------   ----------------

TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY                  $       75,273,862  $      76,588,565
                                          ================   ================

See Notes to Consolidated Financial Statements.

                                        2
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999

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

   Shares Issued for Fractional
    Exchanges With Respect to the
     One-for-twenty Reverse Stock
     Split effected on March 13, 1992         0            0            4            8
   Amortization of Deferred
      Compensation Costs                 ---         ---          ---          ---
   Net (Loss) for the Three Months
      Ended September 30, 1999           ---         ---          ---          ---

                                       ---------  ----------  ------------  ----------
BALANCE - SEPTEMBER 30, 1999            362,482 $ 36,248,175   11,884,253 $ 23,768,505
                                       =========  ==========  ============  ==========
</TABLE>

See Notes to Consolidated Financial Statements.

                   INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999

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

   Shares Issued for Fractional
    Exchanges With Respect to the
      One-for-twenty Reverse Stock
      Split effected on March 13, 1992           (8)      ---          ---        ---         ---
   Amortization of Deferred
      Compensation Costs                   ---           ---           ---           1,250         1,250
   Net (Loss) for the Three Months
      Ended September 30, 1999             ---         (1,919,542)     ---        ---         (1,919,542)

                                        -----------  ------------  ------------  --------- --------------
BALANCE - SEPTEMBER 30, 1999           $ 26,144,774 $ (39,942,606) $ (7,260,040) $ (30,417) $ 38,928,391
                                        ===========  ============  ============  ========= ==============

</TABLE>

See Notes to Consolidated Financial Statements.

                                        3
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

                                                  Three Months Ended
                                                     September 30,
                                               --------------------------
                                                 1999          1998
                                               -------------  -----------
REVENUE:
     Rental Income                            $      77,749  $          0
     Interest Income                                 17,242       132,461
                                              -------------  ------------
       TOTAL REVENUES                                94,991       132,461
                                              -------------  ------------

EXPENSES:
     General & Administrative Expenses              482,205     1,312,576
     Interest and Financing Expenses              1,155,679     1,782,270
     Amortization of Financing Costs                      0       763,789
     El Rancho Property Carrying Costs              376,649       415,982
                                               -------------  -----------
       TOTAL EXPENSES                             2,014,533     4,274,617
                                               -------------  -----------

(LOSS) FROM CONTINUING OPERATIONS
   BEFORE DISCONTINUED OPERATIONS                (1,919,542)   (4,142,156)

INCOME FROM DISCONTINUED OPERATIONS:
     Income from operations of
       discontinued racetrack
       operations (less applicable
       state income taxes
       of $62,000 for the three months
       ended September 30, 1998)                          0     2,142,704
                                              -------------  ------------

NET (LOSS)                                    $  (1,919,542) $ (1,999,452)
                                              =============  ============

BASIC PER SHARE DATA:

(LOSS) BEFORE DISCONTINUED OPERATIONS         $       (0.21) $      (0.30)

INCOME FROM DISCONTINUED OPERATIONS                    0.00          0.15
                                               -------------  ------------
NET (LOSS)                                    $       (0.21) $      (0.15)
                                               =============  ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING        8,980,235    13,978,100
                                               =============  ============

See Notes to Consolidated Financial Statements.

                                        4
<PAGE>


                   INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

                                                       Three Months Ended
                                                          September 30,
                                                  -----------------------------
                                                      1999            1998
                                                  -------------   -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
     (LOSS) FROM CONTINUING OPERATIONS           $  (1,919,542)  $  (4,142,156)
                                                  -------------   -------------
     Adjustments to reconcile (loss) to net
      cash (used in) operating activities:
       Depreciation and Amortization                    15,904         781,018
       Changes in Operating Assets and Liabilities -
          Decrease (Increase) in
           Accounts Receivable                         187,889            (153)
          Decrease in Other Assets                         598          64,024
          Decrease in Prepaid Expenses                 104,761          88,505
          Increase (Decrease) in Accounts
           Payable and Accrued Expenses                879,587         (97,564)
                                                  -------------   -------------
     CASH (USED IN) CONTINUING OPERATING
      ACTIVITIES                                      (730,803)     (3,306,326)

     CASH (USED IN) PROVIDED BY DISCONTINUED
       OPERATING ACTIVITIES                            (25,935)      2,824,044
                                                  -------------   -------------
     NET CASH (USED IN) OPERATING ACTIVITIES          (756,738)       (482,282)
                                                  -------------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital Expenditures                                (1,210)           (741)
                                                  -------------   -------------
     CASH (USED IN) CONTINUING INVESTING
      ACTIVITIES                                        (1,210)           (741)
     CASH (USED IN) DISCONTINUED INVESTING
      ACTIVITIES                                      (130,000)        (18,762)
                                                  -------------   -------------
     NET CASH (USED IN) INVESTING ACTIVITIES          (131,210)        (19,503)
                                                  -------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Escrow Deposits Utilized                            94,747       1,987,585
    Deposit to Escrow Funds                           (320,000)              0
    (Increase) Decrease in Balances Due
     From Discontinued Subsidiaries                    (28,051)      1,779,273
    Principal Payments on Short Term Notes             (80,997)        (69,475)
                                                  -------------   -------------
     CASH (USED IN) PROVIDED BY CONTINUING
      FINANCING ACTIVITIES                            (334,301)      3,697,383
     CASH (USED IN) DISCONTINUED
      FINANCING ACTIVITIES                             286,652      (1,956,840)
                                                  -------------   -------------
     NET CASH (USED IN) PROVIDED BY
      FINANCING ACTIVITIES                             (47,649)      1,740,543
                                                  -------------   -------------

NET (DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                    (935,597)      1,238,758
     LESS CASH AND CASH EQUIVALENTS
      AT END OF PERIOD FROM
      DISCONTINUED OPERATIONS                         (130,716)       (848,442)
     CASH AND CASH EQUIVALENTS AT
       BEGINNING OF PERIOD FROM
       CONTINUING OPERATIONS                         1,358,200         213,795
                                                  -------------   -------------

     CASH AND CASH EQUIVALENTS AT END OF PERIOD  $     291,887   $     604,111
                                                  =============   =============

     Supplemental Disclosures of Cash Flow Information:
                  Cash paid during the period for:
                  Interest                       $           0   $   1,824,856
                  Income Taxes                   $           0   $           0

Supplemental Schedule of Non-Cash Investing and Financing Activities:
During the three  months  ended  September  30,  1998,  the Company  recorded an
unrealized gain of $10,840 on trading securities.


See Notes to Consolidated Financial Statements.


                                        5
<PAGE>
                   INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

(1) BASIS OF PRESENTATION

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

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

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

     The Company has sustained  losses of  approximately  $7.9 million and $18.3
million  during  fiscals  1999  and  1998,   respectively  and  a  net  loss  of
approximately  $1.9 million for the three months ended  September 30, 1999.  The
Company  believes its projected cash flows from its current  operations  will be
sufficient until June 30, 2000. There can be no assurances beyond that date.

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

(2)      CLASSIFICATIONS

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

(3)      DISCONTINUED OPERATIONS

     On January 28, 1999,  the Company  completed  the sale of the real property
and certain related assets at Freehold  Raceway and a ten-acre parcel of land at
the Garden State Park  facility,  and the lease of the real property and certain
related assets of Garden State Park for a seven-year period.

                                       6
<PAGE>


The net assets of the operations to be disposed of included in the  accompanying
consolidated balance sheets as of September 30, 1999 consist of the following:

Classified As:
Current Assets                                  $                 2,136,347
Current Liabilities                                               1,613,600
                                                     -----------------------
         Net Assets of Discontinued
          Operations - Current                                      522,747
Property Assets of Garden State Park                             30,000,000
                                                     -----------------------
         Net Assets of Discontinued Operations  $                30,522,747
                                                     =======================

(4)      PROPERTY HELD FOR SALE

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

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

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

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

     The note  would  accrue  interest  at a 22% per annum  rate,  which will be
adjusted from time to time since the interest actually payable will be dependent
upon,  and  payable  solely  out of, the  buyer's  net cash flow  available  for
distribution  to its  equity  owners  ("Distributable  Cash").  After the equity
investors in the buyer have received total  distributions equal to their capital
contributions plus an agreed upon return on their invested capital, the next $23
million of  Distributable  Cash will be paid to the  Company.  The Company  will
thereafter receive payments under the note equal to 33 1/3% of all Distributable
Cash  until the  maturity  date,  which  occurs on the 30th  anniversary  of the
Company's  purchase of the note. The Company may convert the promissory note, at
its option,  into a 33 1/3%  equity  interest in the buyer at any time after the
15th  anniversary of the issuance of the note. If not then  converted,  the note
will convert  into a 33 1/3% equity  interest in the buyer on the day before the
30th  anniversary  of its  issuance.  (See Note  13-C)

                                       7
<PAGE>

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

(5)      RESERVE ESCROW DEPOSITS

     At  September  30, 1999,  $407,407 was held in various  reserve cash escrow
deposit accounts that were established in connection with the Company's two-year
$55  million  credit  facility  with  Credit  Suisse.  The terms of such  credit
facility  provided that such reserve  accounts be held by LaSalle National Bank.
In connection with the January 28, 1999 sale of Freehold Raceway,  the sale of a
ten-acre  parcel at Garden  State  Park and the lease of the  Garden  State Park
facility,  Credit Suisse released to the Company  approximately  $4,475,000 from
its escrow reserves to pay down debt and for working capital purposes. On August
2, 1999,  the Company  made a payment of $320,000 to Credit  Suisse for interest
due  which  was  credited  to  the  escrow  accounts.  In  connection  with  the
restructuring  agreement  on January 21,  2000,  Credit  Suisse  released to the
Company the $167,476  balance in the escrow deposit  accounts which will be used
by the Company for working capital purposes. (See Note 13-B)

(6)      NOTES AND MORTGAGES PAYABLE

         Notes and Mortgages Payable are summarized below:

                                                          September 30, 1999
                                                       -----------------------
                                 Interest % Per Annum     Current    Long-Term
                                 --------------------  ------------- ---------
International Thoroughbred
Breeders Inc.:
Credit Suisse First Boston (A)  LIBOR Rate plus 7%
                               (9/30/99 rate 12.37%)   $ 30,500,000   $  -0-

REB Bankruptcy Trustee (B)       Prime Rate
                               (9/30/99 rate 8.25%)       3,361,940      -0-

Other                             Various                   159,208      -0-

Garden State Park:
Service America Corporation (C)     6%                      400,000      -0-

Other (D)                         Various                   303,560      -0-
                                                         ----------     ----
    Totals                                             $ 34,724,708   $  -0-
Less Amounts Reclassified to:
  Net Assets of Discontinued
    Operations - Current                                    703,560      -0-
    Totals                                             $ 34,021,148   $  -0-
                                                         ==========     ====

The effective  LIBOR Rate and the Prime Rate at September 30, 1999 was 5.37% and
8.25%, respectively.

     A) On May 23, 1997, the Company  entered into a two-year $55 million credit
facility with Credit Suisse First Boston Mortgage Capital LLC, ("Credit Suisse")
secured by a pledge of certain of the personal and real  property of the Company
and its  subsidiaries  (the "Credit Suisse Credit  Facility").  Proceeds of this
facility were used to repay in full the Company's  $30 million  existing  credit
facility and to provide funds for working  capital and other  general  corporate
purposes,  including,  but not limited  to,  preliminary  development  of the El
Rancho  Property.  Of the remaining  facility  borrowings,  approximately

                                       8
<PAGE>

$16.8 million was placed in escrow accounts,  financing and closing fees of $4.3
million  were  incurred by the Company and $3.9  million was used by the Company
for  general  corporate  purposes  and  repayment  of  certain  other  financial
obligations. Interest under the Credit Suisse Credit Facility is payable monthly
in arrears at 7% over the London  interbank  offered rate ("LIBOR").  The Credit
Suisse  Credit  Facility is  evidenced  by a  convertible  promissory  note (the
"Credit Suisse Note").

     On January 21, 2000 after obtaining the written consent of the holders of a
majority  of the  outstanding  shares of stock of the  Company  entitled to vote
thereon,  the Company entered into a restructuring  agreement (the  "Restructure
Agreement") with Credit Suisse. Prior to this agreement, the Company had been in
a  maturity  default  with  Credit  Suisse for its loan due on June 1, 1999 (the
"CSFB Loan") in the principal  amount of $30,500,000  plus unpaid interest since
June 1, 1999. On November 17, 1999,  the Company and Credit Suisse signed a term
sheet  outlining the term and conditions of the Restructure  Agreement.  At that
time,  accrued  interest in the amount of $1,762,891  was added to the principal
balance of the note.

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

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

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

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


                                      9
<PAGE>


     In connection with the January 21, 2000  Restructure  Agreement with Credit
Suisse, the Trustee entered into an agreement with the Company wherein:  (i) the
amounts due under the Trustee Note are due at the earlier of (a) June 1, 2000 or
(b) the date on which the latter of the Garden State Park or El Rancho  property
is sold, provided that the sale of the latter will satisfy the remaining balance
on the CSFB Loan and the Trustee  Note;  (ii) all interest due under the Trustee
Note will be accrued and deferred until the maturity date of the Note; and (iii)
the Company  shall  reimburse  the Trustee for legal and  accounting  fees up to
$20,000,  which  amount  will  be  advanced  by the  Trustee  and  added  to the
outstanding principal balance of the Trustee Note.

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

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

(7)      INCOME TAX EXPENSE

     The  Company's  income  tax  expense  for the  three  month  period  ending
September 30, 1998 relates to New Jersey  income taxes for its Freehold  Raceway
operations.

(8)      COMMITMENTS AND CONTINGENCIES

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

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

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

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

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

                                       10
<PAGE>

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

LEGAL PROCEEDINGS

Harris v. DeSantis, et al.

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

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

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

Harris v. DeSantis, et al.

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

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

                                       11
<PAGE>

of the Quigley Action by the Delaware Court of Chancery on October 6, 1998.

New Jersey Settlement

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

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

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

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

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

     In January 2000, the plaintiffs in the  Harris-State  action filed Requests
to Enter  Default  against  those  defendants  who had not answered or otherwise
responded to the Second  Harris-State  Complaint.  Counsel for the defendants in
the Harris-State  action are currently  engaged in negotiations with counsel for
the plaintiffs

                                       12
<PAGE>

in an effort to reach an agreement that  plaintiffs  will take no further action
in prosecution of the  Harris-State  action while the parties are finalizing the
Proposed New Jersey Settlement.

     ITB is hopeful that the Company and the D&O Carrier will reach an agreement
in the near  future to allow the  parties to the New  Jersey  Actions to proceed
with the Proposed  New Jersey  Settlement.  There is no assurance  that any such
agreement  will be reached or that the  Proposed New Jersey  Settlement  will be
approved by the New Jersey Superior Court and the contemplated fee petition will
be approved by the New Jersey  District Court. No prediction can be made at this
time as to the outcome of the New Jersey Actions.

Other Litigation

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

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

     For additional  information see Footnote 13 in the  consolidated  financial
statements  included in the  Company's  Form 10-K for the fiscal year ended June
30, 1999.

(9)      DEFERRED FINANCING COSTS

     Deferred  financing  costs at  September  30, 1998  include  those  amounts
associated with its May 23, 1997 financing  agreement with Credit Suisse.  These
costs of $6,238,731  were being  expensed over the original two year life of the
loan.  Amortization  expense for the three months ended  September  30, 1998 was
$763,789.


(10)     STOCK OPTIONS AND WARRANTS

         (A)      EMPLOYEE AND  NON-EMPLOYEE OPTIONS

     At September 30, 1999,  total employee  options  outstanding were 1,255,000
and total non-employee options outstanding were 300,000.

         (B)      WARRANTS

     At September 30, 1999,  total warrants  outstanding were 2,604,000 and have
been accounted for as financing costs and costs  associated with the acquisition
of the El Rancho  property.  The fair value of the warrants issued in connection
with the acquisition of the El Rancho property had been  capitalized and were to
be amortized  when the facility  became  operational;  however,  the Company has
determined to dispose of the El Rancho Property.


                                       13
<PAGE>

(11) RELATED PARTY TRANSACTIONS

     Kenneth  Scholl,  a director of the Company  until July 23, 1998,  provides
consulting services to LVEN and certain of its subsidiaries through the Stanford
Company  of which he is the  president.  Until  December  31,  1997,  LVEN  paid
Stanford  Company  $10,000  per month for  consulting  services,  including  Mr.
Scholl's  services  as  project  manager  for the El Rancho  Property.  LVEN was
reimbursed  by the Company  for the  payments  to  Stanford  Company.  Effective
January 1, 1998,  the  Company  began  paying Mr.  Scholl  $10,000 per month for
ongoing  consulting  services  as project  manager  for the El Rancho  Property.
During the three months ended  September 30, 1999 and 1998, the Company paid Mr.
Scholl $30,000 for these  services.  Additionally,  Mr. Scholl was paid director
fees of $10,000 in Fiscal 1998. Mr. Scholl was elected president and director of
Casino-Co  in March 1996,  he  resigned as a board  member on March 14, 1997 and
resigned as  president  on May 19,  1997.  Mr.  Scholl also held the position of
Secretary and resigned the position on March 1, 1998.

     For  additional   information  regarding  related  party  transactions  see
Footnote 18 in the consolidated  financial  statements included in the Company's
Form 10-K for the fiscal year ended June 30, 1999.

(12)     STOCK TRADING INFORMATION

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

(13) SUBSEQUENT EVENTS

     (A)  Effective  December  3,  1999,  the Board of  Directors  accepted  the
resignation  of  Christopher  C. Castens,  the  Company's  Secretary and General
Counsel.

     (B) RESTRUCTURING AGREEMENT WITH CREDIT SUISSE

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

     The Restructure  Agreement returns the loan to a good standing position and
extends  the  maturity  date of the CSFB Loan to June 30,  2000.  As part of the
Restructure  Agreement,  the Company  agreed that as of January  21,  2000,  the
restructured  principal  balance  due on the CSFB  Loan was  $33,103,189,  which
consisted  of: (i) the  principal  amount of  $30,500,000  remaining on the CSFB
Loan;  (ii)  accrued  interest  advanced  by Credit  Suisse from June 1, 1999 to
January 21, 2000 in the amount of $2,523,189;  and (iii) an advance of a portion
of Credit  Suisse's  legal fees  incurred  in  connection  with the  Restructure
Agreement in the amount of $80,000.  Credit  Suisse has agreed,  pursuant to the
Restructure  Agreement,  to advance the
monthly  interest  payments  due by the  Company  under the CSFB Loan  until the
maturity date of June 30,

                                       14
<PAGE>

2000. Such amounts shall, to the extent not paid when due by the Company, became
part of the  outstanding  principal  balance  of the CSFB  Loan on the date such
interest becomes  due.Commencing  April 16, 2000 and until 30 days following the
closing of the sale of the El Rancho property,  interest  accruing shall be paid
by  Turnberry/Las  Vegas  Boulevard LLC  ("Turnberry"),  the purchaser of the El
Rancho property.

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

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

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

     On January 25,  2000,  the Company and Garden State Race Track,  Inc.,  the
owner of Garden State Park, entered into an agreement for the sale of all of the
Garden  State Park  property,  excluding  a ten-acre  parcel of land  previously
committed to GS Park Racing,  L.P., to  Turnbury/Cherry  Hill, LLC. The terms of
the sale meet all the  conditions  required by Credit  Suisse to be a valid GSRT
Option, according to a letter received from Credit Suisse (see Agreement of Sale
of Garden State Race Track). The Restructure Agreement further provides that (i)
if the proceeds from the sale of the Garden State Park property are insufficient
to pay the outstanding amounts due to Credit Suisse under the CSFB Loan, or (ii)
after the sale or joint venture of the Garden State  property,  the total amount
outstanding  under the CSFB Loan is equal to or greater than  $5,000,000 and the
Company shall not have received a binding  commitment  for a loan or purchase of
the El Rancho Property, then, Orion Casino Corporation must convey the El Rancho
property  to a  new  Delaware  limited  liability  company  ("New  LLC")  having
substantially  same ownership  structure and limited liability company agreement
as GSRT.  Once the El Rancho  property is conveyed to New LLC in accordance with
and upon the  happening  of the  circumstances  and  conditions  provided in the
Restructure Agreement, Orion Casino Corporation,  as the sole member of New LLC,
will have the right to cause New LLC to sell or refinance the El Rancho property
so long as the outstanding  obligations due under the CSFB

                                       15
<PAGE>


Loan are paid in full by such sale or  refinancing  and such sale or refinancing
closes on or before June 30, 2000. (See Notes 5 and 6-A)

         (C)      AGREEMENT OF SALE OF EL RANCHO

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

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

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

     The note  would  accrue  interest  at a 22% per annum  rate,  which will be
adjusted from time to time since the interest actually payable will be dependent
upon,  and  payable  solely  out of, the  buyer's  net cash flow  available  for
distribution  to its  equity  owners  ("Distributable  Cash").  After the equity
investors in the buyer have received total  distributions equal to their capital
contributions plus an agreed upon return on their invested capital, the next $23
million of  Distributable  Cash will be paid to the  Company.  The Company  will
thereafter receive payments under the note equal to 33 1/3% of all Distributable
Cash  until the  maturity  date,  which  occurs on the 30th  anniversary  of the
Company's  purchase of the note. The Company may convert the promissory note, at
its  option,  into a 33 1/3%  equity  interest  in the buyer  during a six month
period  beginning at the 15th  anniversary  of the issuance of the note.  If not
then  converted,  the note will  convert  into a 33 1/3% equity  interest in the
buyer at the 30th anniversary of its issuance. (See Note 4)

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

         (D)      AGREEMENT OF SALE OF GARDEN STATE RACE TRACK

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

     The sale of the Garden State Race Track property to  Turnbury/Cherry  Hill,
LLC or any other buyer


                                       16
<PAGE>

cannot be assured at this time and if for any reason the potential  buyer of the
property is not able to close this  transaction  by June 30, 2000,  the property
may be marketed and possibly sold by the Company's  lender,  Credit Suisse First
Boston Mortgage, LLC.


                                       17
<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
              AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
                               SEPTEMBER 30, 1999


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

 Liquidity and Capital Resources

     The Company's  working capital,  as of September 30, 1999, was a deficit of
($34,778,950)  which  represents  a decrease  in the  deficit  of  approximately
$2,970,680 from the September 30, 1998 working capital deficit of ($37,749,630).
The decrease in the deficit was primarily caused by: (i) the retirement of $24.5
million of the debt to the Company's primary lender,  Credit Suisse First Boston
Mortgage Capital LLC, ("Credit  Suisse");  (ii) the decrease in accrued expenses
primarily associated with the Delaware Settlement; partially offset by (iii) the
sale of the  Freehold net  operating  assets  which were  classified  as current
assets in the prior fiscal year;  (iv) the decrease in reserve  escrow  deposits
primarily  associated  with the interest on debt; and (v) the promissory note in
the amount of $3,358,032  associated  with the Company's  purchase of its common
stock from NPD.

     On May 23, 1997, the Company obtained a credit facility from Credit Suisse.
This  two-year  $55 million  facility  was secured by a pledge of certain of the
personal and real property of the Company and its subsidiaries. Proceeds of this
facility were used to repay in full the Company's  $30 million  existing  credit
facility and were used to provide  funds for working  capital and other  general
corporate purposes,  including,  but not limited to, preliminary  development of
the El Rancho  property.  Interest  under the Credit Suisse  Credit  Facility is
payable monthly in arrears at 7% over the LIBOR rate. Of the remaining  facility
borrowings,  approximately  $16.8  million  was  placed  in  escrow  accounts  (
including  $10 million in an interest  reserve  account).  Financing and closing
fees of $4.3  million  were paid and $3.9  million  was used by the  Company for
general corporate  purposes and repayment of certain financial  obligations.  On
January 28, 1999, the credit facility was reduced to $30.5 million in connection
with the sale of certain  assets of Freehold  Raceway and the sale of a ten-acre
parcel land at the Garden  State Park  facility.  At  September  30,  1999,  the
interest rate on the Credit Suisse  Credit  Facility was 12.37%.  On January 21,
2000 after  obtaining  the  written  consent of the holders of a majority of the
outstanding shares of stock of the Company entitled to vote thereon, the Company
entered into a restructuring agreement (the "Restructure Agreement") with Credit
Suisse. Prior to this agreement, the Company had been in a maturity default with
Credit  Suisse  for its  loan  due on June 1,  1999  (the  "CSFB  Loan")  in the
principal  amount of  $30,500,000  plus unpaid  interest since June 1, 1999. The
Restructure  Agreement  returns the loan to a good standing position and extends
the maturity date of the CSFB Loan to June 30, 2000. As part of the  Restructure
Agreement,  the Company  agreed that as of January 21,  2000,  the  restructured
principal balance due on the CSFB Loan was $33,103,189,  which consisted of: (i)
the principal  amount of  $30,500,000  remaining on the CSFB Loan;  (ii) accrued
interest  advanced by Credit Suisse from June 1, 1999 to January 21, 2000 in the
amount of $2,523,189; and (iii) an advance of a portion of Credit Suisse's legal
fees  incurred in  connection  with the  Restructure  Agreement in the amount of
$80,000.  Credit Suisse has agreed,  pursuant to the Restructure  Agreement,  to
advance the monthly  interest  payments  due by the Company  under the CSFB Loan
until the maturity date of June 30, 2000.  Such interest  amounts shall,  to the
extent  not  paid  when  due by the  Company,  become  part  of the  outstanding
principal  balance  of the CSFB  Loan on the date  such  interest  becomes  due.
Commencing April 16, 2000 and until 30 days following the closing of the sale of
the El Rancho property,  interest accruing shall be paid by Turnberry/Las  Vegas
Boulevard LLC ("Turnberry"), the purchaser of the El Rancho property. (See Notes
6-A and 13-B)

     The Credit Suisse Credit Facility is evidenced by a convertible  promissory
note (the "CSFB Note") pursuant to which $10 million of the aggregate  principal
amount of the CSFB Note can be converted in certain circumstances,  including on
the maturity date of the CSFB Note,  upon the prepayment of at least $10

                                       18
<PAGE>

million in an aggregate  principal amount of the CSFB Note or upon  acceleration
of the CSFB Note, at the option of Credit  Suisse,  into shares of the Company's
Common Stock at a conversion  price of $8.75 per share (subject to adjustment in
certain events).

     The  net  loss  for  the  three  months  ended   September   30,  1999  was
($1,919,542). Cash flows used in operating activities amounted to $756,738.

     Cash used in  investing  activities  was  $131,210  during the three months
ended  September  30, 1999,  primarily  the result of cash used by  discontinued
operations.

     Cash used in financing activities was $47,649 during the three months ended
September  30, 1999,  consisting  principally  of amounts  drawn from the Credit
Suisse interest escrow account and cash provided by discontinued operations.

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

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

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


                                       19
<PAGE>

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

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

     While the Company received from escrow a $500,000 deposit made by the buyer
under the terms of the sale,  possible  changes to the  agreement  are currently
being  negotiated  by the  parties.  Upon  execution  of a  modification  of the
definitive  agreement  the Company  expects to  announce  the final terms of the
transaction. The closing is scheduled to be held on or before June 30, 2000.

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

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

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

     The closing,  originally  scheduled  to occur by March 31,  2000,  had been
extended  to April 30, 2000


                                      20
<PAGE>

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

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

     The note  would  accrue  interest  at a 22% per annum  rate,  which will be
adjusted from time to time since the interest actually payable will be dependent
upon,  and  payable  solely  out of the  buyer's  net cash  flow  available  for
distribution  to its  equity  owners  ("Distributable  Cash").  After the equity
investors in the buyer have received total  distributions equal to their capital
contributions plus an agreed upon return on their invested capital, the next $23
million of  Distributable  Cash will be paid to the  Company.  The Company  will
thereafter receive payments under the note equal to 33 1/3% of all Distributable
Cash  until the  maturity  date,  which  occurs on the 30th  anniversary  of the
Company's  purchase of the note. The Company may convert the promissory note, at
its option,  into a 33 1/3%  equity  interest in the buyer at any time after the
15th  anniversary of the issuance of the note. If not then  converted,  the note
will convert  into a 33 1/3% equity  interest in the buyer on the day before the
30th anniversary of its issuance. (See Note 4)

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

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

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

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

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

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue as a going  concern.  As  discussed in Footnote 1 to the
consolidated  financial statements,  the Company's debt with its major lender is
due June 30,  2000 and the Company has  sustained a loss of  approximately  $1.9
million for the three months ended September 30, 1999, which raises  substantial
doubt about its ability to continue as a going  concern.  Management's  plans in
regard to these  matters are also  described  in Footnote 1 to the  consolidated
financial statements.  The consolidated  financial statements do not include any
adjustments that might result from the outcome of these uncertainties.

Results of Operations for the Three Months Ended September 30, 1999 and 1998

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

     Revenue from continuing operations for the three months ended September 30,
1999  decreased  $37,470 from  $132,461 in Fiscal 1999 to $94,991 in Fiscal 2000
primarily as a result of decreased  interest income  partially  offset by rental
income  generated  by the Garden  State Park  lease.  Expenses  from  continuing
operations  decreased  $2,260,084  or 53%,  from  $4,274,617  in Fiscal  1999 to
$2,014,533  in Fiscal 2000.  This  decrease in expenses was primarily the result
of: (i) a decrease  in general  and  administrative  expenses of $830,371 or 63%
from  $1,312,576  in Fiscal 1999 to $482,205 in Fiscal 2000;  (ii) a decrease in
interest  expense of $626,591  primarily as a result reduced debt; and (iii) the
costs associated with the debt no longer being amortized.

     The  decrease  in general  and  administrative  expenses  of  $830,371  was
principally  attributable  to: (i) a decrease in legal expenses of approximately
$442,000  primarily as the result of legal expenses  associated with the various
director and  stockholder  lawsuits in the prior fiscal year; (ii) a decrease in
officer and  corporate  administrative  salaries and  benefits of  approximately
$166,000 associated with the termination of certain agreements upon consummation
of the  Delaware  Settlement;  (iii) a decrease  in  consulting  fees of $78,000
associated with the termination of certain  agreements upon  consummation of the
Delaware Settlement; (iv) a decrease of approximately $65,000 in travel expenses
and the  administrative  costs of operating  an office in New Mexico;  and (v) a
decrease  in  political  contributions  of  $50,000  associated  with New Jersey
legislation affecting racetrack operations.

     For the first quarter of Fiscal 2000,  the Company's  loss from  continuing
operations was ($1,919,542) as compared to a loss from continuing operations for
the comparable  period in prior fiscal year of  ($4,142,156),  a decrease in the
loss of $2,222,614 or 54%. Income from  discontinued  operations was $2,142,704
for the first quarter of Fiscal 1999. The decrease in net loss was the result of
those differences described above.

Inflation

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


                                       22
<PAGE>


Impact of Year 2000 on the Company's Systems

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

                                       23

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES


                                     Part II

                                OTHER INFORMATION


Item 6.

     During the quarter  ended  September  30, 1999,  the  registrant  filed the
following Current Reports on Form 8-K:



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


September 28, 1999         Change of Accountants




                                       24

<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                                   SIGNATURES


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



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.




May 16, 2000                             /s/Robert J. Quigley
                                            --------------------
                                            Robert J. Quigleys,
                                            President and
                                            Chairman of the Board




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



                                       25

<PAGE>