SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


(Mark One)
 x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

FOR THE FISCAL YEAR ENDED JUNE 30, 2000

          OR

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

For the transition period from  _____  to _____


                          Commission file number 0-9624
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
             (Exact name of registrant as specified in its charter)


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

      ROUTE 70 AND HADDONFIELD ROAD
          CHERRY HILL, NEW JERSEY                         08034
  (Address of principal executive offices)              (Zip Code)


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

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

   COMMON STOCK, $2.00 PAR VALUE
   SERIES A CONVERTIBLE PREFERRED STOCK, $100 PAR VALUE


   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 past 90 days.
                  Yes [X]                          No [ ]

   Indicate by check mark if disclosure of  delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Based on the closing sale price on October 6, 2000 the aggregate market value
of the voting stock held by non-affiliates of the Registrant was $1,697,461.

The number of shares outstanding of the Registrant's Common Stock was 8,980,260
at October 6, 2000.


<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                                    FORM 10-K



                                      INDEX
                                      -----
PART I                                                            PAGE
------                                                            ----
Item 1         Business                                              1

Item 2         Properties                                            6

Item 3         Legal Proceedings                                     6

Item 4         Submission of Matters to a Vote of Security Holders  10

PART II
-------
Item 5         Market for Registrant's Common Equity and Related
               Stockholder Matters                                  11

Item 6         Selected Financial Data                              12

Item 7         Management's Discussion and Analysis of
               Financial Conditions and Results of Operation        13

Item 7A        Quantative and Qualitative Disclosures
               About Market Risk                                    19

Item 8         Financial Statements and Supplemental Data           19

PART III
--------
Item 10        Directors and Executive Officers of
               the Registrant                                       58

Item 11        Executive Compensation                               61

Item 12        Security Ownership of Certain Beneficial
               Owners and Management                                65

Item 13        Certain Relationships and Related Transactions       66

PART IV
-------
Item 14        Exhibits, Financial Statement Schedules
               and Reports on  Form 8-K                             70


<PAGE>


                                     PART I

ITEM 1 - BUSINESS

GENERAL

     International  Thoroughbred Breeders, Inc. ("ITB"), a Delaware corporation,
is a holding company  incorporated  on October 31, 1980.  Until January 28, 1999
when 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., (the "Greenwood  Transaction"),  ITB was
primarily engaged through its operating  subsidiaries,  in (i) the ownership and
operation  of  standardbred  and  thoroughbred  racetracks  in New  Jersey  (the
"Racetrack  Operations")  and until May 22, 2000 when the Company  completed the
sale of the non-operating former El Rancho Hotel and Casino(ii) the ownership of
a non-operating  casino property in Las Vegas,  Nevada (the "Casino  Development
Operations").  ITB owns and operated until January 28, 1999 Garden State Park in
Cherry Hill, New Jersey (through its wholly-owned  subsidiary  Garden State Race
Track,  Inc.) and also owned and operated  Freehold  Raceway and certain  nearby
properties  in  Freehold,  New Jersey  (through  its  wholly-owned  subsidiaries
Freehold Racing Association,  Atlantic City Harness,  Inc. and Circa 1850, Inc.)
until it completed the sale of all the assets of Freehold  Raceway and the lease
of the Garden State Park operations to Greenwood New Jersey, Inc. ("Greenwood"),
a  wholly-owned  subsidiary of Greenwood  Racing,  Inc. which is the operator of
Philadelphia  Park.,  on  January  28,  1999.  The  Greenwood   Transaction  was
subsequently  amended to include Penn National Gaming, Inc. ("Penn National") as
a  50%  joint  venture  between  Greenwood  and  Penn  National  (the  "Pennwood
Transaction").  See "Racing Operations" below. ITB also owned the non- operating
former El Rancho  Hotel and  Casino  (the "El  Rancho  Property")  in Las Vegas,
Nevada (through its wholly-owned  subsidiary Orion Casino  Corporation) until it
completed  the  sale of the  property  on May 22,  2000 to  Turnberry/Las  Vegas
Boulevard,  LLC ("Turnberry").  See "Casino Development  Operations," On January
25,  2000,  the Company  entered into  agreements  to sell the Garden State Park
property.  See "Developments During the Last Fiscal Year" below. As used in this
Form 10-K, the term "Company" includes ITB and its wholly-owned subsidiaries.

     In April 1998, the Company's  Board of Directors  (the "Board")  authorized
the exploration of strategic opportunities for the Company, including a possible
merger or sale of all of the  Company's  assets and prior to June 30, 1998,  the
Company decided to dispose of its  racetracks.  On January 28, 1999, the Company
completed  the sale of all of the real  property and related  assets at Freehold
Raceway and the lease of the real  property  and related  assets at Garden State
Park to  Greenwood,  subsequently  amended to include the  Pennwood  Transaction
("Pennwood").   Accordingly,   operating  results  of  the  Company's  racetrack
subsidiaries have been segregated and reported as discontinued operations in the
accompanying  financial statements for each of the two years ended June 30, 1999
and 1998.

     During the year ended June 30,  2000,  the  Company  incurred a loss before
discontinued   operations  of   ($6,980,831)   as  compared  to  a  loss  before
discontinued  operations  of  ($16,034,769)  for the year ended  June 30,  1999.
Revenue  before  discontinued  operations  for the  year  ended  June  30,  2000
decreased  $31,737  from  $478,325 in Fiscal 1999 to $446,588 in Fiscal 2000 and
expenses  before  discontinued  operations  decreased  $9,085,675  or 55%,  from
$16,513,094  in Fiscal 1999 to $7,427,419  in Fiscal 2000.  In Fiscal 1999,  the
Company  recognized a gain of  $3,657,688 on the sale of Freehold  Raceway,  the
sale of a ten-acre parcel at the Garden State Park facility and the lease of the
Garden State Park facilities in addition to income from  discontinued  racetrack
operations of $4,486,384 for the year ended June 30, 1999. The Company  incurred
a net loss of ($6,980,831) for the year ended June 30, 2000 as compared to a net
loss of ($7,890,697) for the comparable period in Fiscal 1999. See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations."

                                      1
<PAGE>

     As of September 22, 2000, ITB employed six full-time  corporate  executive,
administrative and clerical personnel.

     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.,  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. Greenwood Racing, Inc.
has guaranteed the  performance  by the purchaser of all  obligations  under the
Contingent  Notes,  and Pennwood  Racing,  Inc.  ("Pennwood  "), a joint venture
between Greenwood Racing, Inc. and 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,  has also guaranteed
the Contingent Notes.

     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  returned the loan to a good standing  position
and  extended  the  maturity  date  of the  CSFB  Loan  to June  30,  2000.  See
"Developments During the Last Fiscal Year" below.

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

     On January 25,  2000,  the Company and Garden State Race Track,  Inc.,  the
owner of Garden State Park, entered into an agreement for the sale of all of the
Garden  State Park  property,  excluding  a ten-acre  parcel of land  previously
committed to GS Park Racing,  L.P., to 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.  Under the Agreement
of Sale, as amended,  the purchase price for the Garden State Park real property
is $30 million,  plus assumption of certain monetary  obligations of the Company
with respect to the property sold which  aggregate  approximately  $500,000.  At
closing, $20 million of the purchase price will be payable in cash (of which the
Company has already received deposits of $1,000,000), and the buyer will deliver
its promissory note in the face amount of $10 million.  See "Developments During
the Last  Fiscal  Year"  below  and  Management's  Discussion  and  Analysis  of
Financial Conditions and Results of Operations."

                                       2
<PAGE>

     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.   See  "Developments  During  the  Last  Fiscal  Year"  below  and
"Management's  Discussion  and Analysis of Financial  Conditions  and Results of
Operations."

RACETRACK OPERATIONS

GARDEN STATE PARK

     Garden State Park is owned and was operated  until  January 28, 1999 by the
Company's  wholly- owned  subsidiary,  Garden State Race Track,  Inc.  ("GSRT").
Garden State Park is located on approximately  220 acres of land in Cherry Hill,
New Jersey. Cherry Hill forms part of the Philadelphia  metropolitan area and is
approximately eight miles from downtown Philadelphia.

     The  Company  purchased  the site of Garden  State  Park on March 15,  1983
following a fire which destroyed the original racetrack facility. Following such
purchase,  the Company  undertook an extensive  reconstruction  of the racetrack
facility,  as well as the  construction  of a separate  pavilion  (completed  in
1986). On April 1, 1985, Garden State Park reopened for horse racing.

     The  reconstructed  grandstand  and clubhouse is an  approximately  500,000
square  foot,  seven  level,  steel  frame,  glass  enclosed,  fully  heated and
air-conditioned  facility (the "Clubhouse")  with an adjacent  multi-level glass
covered  thoroughbred  paddock area. The Clubhouse can  accommodate up to 24,000
spectators,  including seating for approximately 9,500 spectators,  and contains
three sit-down restaurants as well as 17 food concession stands. The backstretch
area includes 27 barns and stables capable of accommodating  approximately 1,500
horses,  a  harness  paddock,  a  training  track,  dormitories,  cafeteria  and
recreation buildings for backstretch personnel, an administration  building, and
other service buildings.  Reconstruction  also included  restoration of the main
dirt and turf tracks,  installation of lighting for nighttime racing,  paving of
parking facilities to accommodate approximately 4,000 automobiles,  landscaping,
fencing and other amenities.  The approximately  56,000 square foot, 1-1/2 story
pavilion  (the  "Pavilion")  can be used for closed  circuit  television  events
(racing as well as other sporting and non-sporting events), wagering,  concerts,
special  events,  concessions and other  conveniences.  The Pavilion has seating
capacity for approximately 1,500 spectators.

CASINO DEVELOPMENT OPERATIONS

EL RANCHO PROPERTY

     On January 24,  1996,  the Company  purchased  the  nonoperating  El Rancho
Property from LVEN. The El Rancho Property is an  approximately 21 acre property
bounded  (i) on the west by Las Vegas  Boulevard  South  (Las  Vegas  strip with
approximately 735 feet of frontage),  (ii) on the south by the Algiers Hotel and
Riviera Boulevard, (iii) on the east by an undeveloped lot and (iv) on the north
by a "Wet and Wild" attraction.  The El Rancho Property,  which has not operated
since July 1992,  consists  of a vacant  hotel  building  with 1,008  rooms,  an
approximately  90,000 square foot casino and ancillary  area, a 52-lane  bowling
alley, a swimming pool and a parking  garage.  The El Rancho Property was one of
the first large scale hotel casinos built in Las Vegas and  previously  operated
under an old west theme.

     On May 22, 2000, the Company,  through its wholly-owned  subsidiary,  Orion
Casino  Corporation,

                                       3
<PAGE>

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 Company
used a portion of the proceeds 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. See  "Developments  During the Last Fiscal
Year" below and  "Management's  Discussion and Analysis of Financial  Conditions
and Results of Operations."

DEVELOPMENTS DURING THE LAST FISCAL YEAR

     Effective December 3, 1999, the Board of Directors accepted the
resignation of Christopher C.
Castens, the Company's Secretary and General Counsel. See "Termination and
Severance Agreements."

     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 returned the loan to a good standing position and
extended  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 April 15, 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.

     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 $3,652,226, 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.

                                       4
<PAGE>

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

     On January 25, 2000, the Company entered into an Agreement of Sale pursuant
to which it has agreed to sell the real  property  known as Garden State Park 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.  Under the  Agreement  of Sale,  as amended,  the
purchase  price for the Garden  State Park real  property is $30  million,  plus
assumption of certain  monetary  obligations  of the Company with respect to the
property sold which aggregate  approximately $500,000 (the "Assumed Liability").
The  buyer  also  agreed  to pay  up to  $200,000  per  month  of the  Company's
out-of-pocket  carrying  costs of the Garden State Park property after April 15,
2000 (which includes interest on the Company's  mortgage debt). At closing,  $20
million of the purchase  price will be payable in cash (of which the Company has
already  received a deposits  of  $1,000,000),  and the buyer will  deliver  its
promissory note in the face amount of $10 million (the "Note").  Under the Note,
once the buyer has received  distributions from the buyer equal to the amount of
its invested capital  contributions plus an agreed upon return thereon, the next
$10  million of the buyer's  distributable  cash would be paid under the Note to
the Company,  and the Company  thereafter  would receive payments under the Note
equal to one-third of the distributable  cash of the buyer,  including  (without
limitation) distributable cash generated by development,  sale or leasing of the
Garden State Park property. The agreed upon rate of return to be paid to buyer's
owner on its invested capital contributions, before payments under the Note will
be  made,  will be 15% per  year,  except  that the rate of  return  on  capital
invested by buyer's owner to cover certain costs, in excess of $1,000,000, which
buyer may incur in respect of the Assumed Liability, environmental investigation
and  remediation,  and various other  specified  items  (including the September
extension fee of $146,680 paid to the Company's primary lender, CSFB), may be as
high as 33 1/3% per annum.  Closing is  scheduled  to occur prior to December 1,
2000.  The parties  continue  to  negotiate  certain  issues and there can be no
assurance that the transaction will be consummated. See "Management's Discussion
and Analysis of Financial Conditions and Results of Operations."

     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.

                                       5
<PAGE>

     On May 22, 2000, the Company,  through its wholly-owned  subsidiary,  Orion
Casino  Corporation,  closed on the sale (the "El  Rancho  Transaction")  of the
non-operating  former El Rancho Hotel and Casino (the "El Rancho  Property")  in
Las Vegas,  Nevada, to Turnberry/Las  Vegas Boulevard,  LLC  ("Turnberry").  The
purchase  price was $45  million  and was paid by: (i)  previous  cash  deposits
totaling $2,000,000;  and (ii) the balance of the purchase price paid in cash at
the closing.  The proceeds of the El Rancho Transaction were principally used by
the Company to reduce the outstanding  balance on the Company's loan from Credit
Suisse First Boston Mortgage Capital LLC ("Credit  Suisse") to $14.7 million and
to  purchase  a  promissory  note,   secured  by  the  rights  to  100%  of  the
distributable  cash of the  buyer in the event of  default,  of the buyer in the
amount of $23,000,000  which will be convertible at the Company's  option into a
33 1/3% equity  interest in the buyer.  The interest  rate will be adjusted from
time to time since the interest  actually  payable will be dependent  upon,  and
payable solely out of, the buyer's net cash flow available for  distribution  to
its equity  owners  ("Distributable  Cash").  After the equity  investors in the
buyer have received  total  distributions  equal to their capital  contributions
plus an agreed upon return on their  invested  capital,  the next $23 million of
Distributable  Cash will be paid to the  Company.  The Company  will  thereafter
receive payments under the note equal to 33 1/3% of all Distributable Cash until
the  maturity  date,  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 "Management's  Discussion and Analysis
of Financial Conditions and Results of Operations."

ITEM 2 - PROPERTIES

     In addition  to Garden  State Park  described  above,  the  Company  owns a
condominium  unit and an ownership  interest in the Ocala Jockey Club located in
Reddick,  Florida. This property was purchased at a time when the Company was in
the thoroughbred  breeding  business and is currently being held for the purpose
of generating rental income until such time that it is sold.

ITEM 3 - LEGAL PROCEEDINGS

DELAWARE SETTLEMENT

     On  January  28,  1999,  the  Company  fully and  finally  consummated  the
settlement and dismissal of the following actions: Quigley et al. v. DeSantis et
al., C.A. No. 15919, in the Court of Chancery of the State of Delaware;  Rekulak
v.  DeSantis et al.,  C.A. No.  15920,  in the Court of Chancery of the State of
Delaware;  Green v.  DeSantis,  et al., C.A. No.  97-CV-5657,  in the New Jersey
District Court. These actions were settled in connection and accordance with the
Stipulation and Agreement of Compromise,  Settlement and Release entered into on
July 2, 1998 to resolve the above action entitled  Quigley et al. v. DeSantis et
al. (the "Delaware Settlement").

     Pursuant to the terms of the  Delaware  Settlement,  the Company  purchased
from NPD, Inc. ("NPD")  approximately 2.9 million shares of the Company's common
stock (the "NPD  Shares")  for $4.6  million in cash and assumed a $5.8  million
promissory  note  originally  issued by NPD to acquire the NPD  Shares,  held by
Donald F.  Conway,  Chapter 11 Trustee  for the  Bankruptcy  Estate of Robert E.
Brennan (the "Bankruptcy  Trustee").  In addition,  pursuant to the terms of the
Delaware  Settlement and with the approval of the United States Bankruptcy Court
for the District of New Mexico in an action in which AutoLend Group, Inc. is the
debtor,  NPD returned to AutoLend Group, Inc. the $2 million  originally pledged
by AutoLend Group,  Inc. to secure the  aforementioned  $5.8 million  promissory
note (the  "NPD  Note").  The  Company  understands  that the  Company's  former
director Nunzio P. DeSantis is Chairman,  President and a principal  stockholder
of AutoLend Group,  Inc., and the Company's former chairman and director Anthony
Coelho is a director of AutoLend Group, Inc.

                                       6
<PAGE>

     The approval of certain transactions between ITB and the Bankruptcy Trustee
by the United  States  Bankruptcy  Court for the  District  of New Jersey in the
action  entitled In re Robert E.  Brennan,  C.A. No.  95-35502,  was a condition
precedent to the consummation of the Delaware Settlement. This approval was duly
received and the Company  consummated a separate  settlement with the Bankruptcy
Trustee   necessary  to  consummate  the  Delaware   Settlement   (the  "Trustee
Settlement").  Pursuant  to  the  Trustee  Settlement,  the  Bankruptcy  Trustee
received:  (a) a pay down on the NPD Note from the original principal balance of
$5,808,032 to $3,558,032 (see  Note11-B);  (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.  As a result of the
Trustee Settlement, the Company secured (a) the power to consummate the Delaware
Settlement,  (b) releases from the Bankruptcy Trustee in favor of all parties to
the  Delaware  Settlement,  including  the  Company,  and (c) the right to defer
certain  interest  payments  due under the ITB Note until the  maturity  of such
note.

     Upon consummation of the Delaware Settlement,  Nunzio P. DeSantis,  Anthony
Coelho,  and Joseph  Zappala  immediately  resigned from the Company's  board of
directors  and  terminated  any  and all  employment  agreements  or  consulting
arrangements with the Company.  Francis W. Murray and Robert J. Quigley remained
directors,  and during the quarter  ended March 31, 1999,  John U.  Mariucci and
James J. Murray were elected by the remaining directors to serve on the board of
directors until the next annual stockholders' meeting.

     Also pursuant to the Delaware Settlement,  Las Vegas Entertainment Network,
Inc.  ("LVEN") was granted the  exclusive  right to sell the El Rancho  Property
until November 20, 1998 and the co-extensive  right, along with the Company,  to
sell the El Rancho  Property until April 19, 1999.  Beginning  January 19, 1999,
and ending  upon the  earlier of a sale of the El Rancho  Property  or April 19,
1999,  LVEN was required to pay one-half of the carrying costs  associated  with
maintaining the El Rancho  Property.  LVEN also obtained the right,  exercisable
from March 20, 1999 until April 19, 1999,  to refinance  the El Rancho  Property
and thereby obtain the extended  right to sell the El Rancho  Property until the
earlier of (a) one year from April 19,  1999 or (b) the  midpoint of the term of
the refinancing loan (the "Refinancing Option"). LVEN did not sell the El Rancho
Property nor did it exercise the  Refinancing  Option.  If the Company  sells or
refinances  the El Rancho  property after April 19, 1999 for an amount in excess
of  $44,200,000,  plus one half of the  carrying  costs from January 20, 1999 to
April 19, 1999, plus the customary  transaction costs incurred by the Company in
such sale (the  "Threshold  Amount"),  then LVEN  shall  receive  from such cash
proceeds in excess of the Threshold  Amount up to the amount of  $12,000,000  of
cash sale proceeds over and above the Threshold  Amount,  out of which LVEN will
direct  that the first  $2,000,000  be paid over to NPD.  NPD is owned by Nunzio
DeSantis,  the Company's former Director and CEO and Tony Coelho,  the Company's
former  Director and Chairman of the Board.  On May 22, 2000, the Company closed
on the sale of the El Rancho  property  for  $45,000,000  in cash.  Interest and
one-half of the carrying costs for the period between  January 20, 1999 to April
19, 1999 were in excess of $800,000, therefore, no payments are due to LVEN as a
result of the transaction.

     In exchange for the foregoing,  LVEN (a) executed and delivered releases to
all parties to the Delaware Settlement, including the Company and Credit Suisse,
(b)  returned to ITB for  immediate  cancellation  the  2,093,868  shares of ITB
common stock (the "LVEN Shares") previously issued to Casino-Co Corporation,  a
subsidiary of LVEN, in exchange for the  cancellation of a certain $10.5 million
note

                                       7
<PAGE>

plus  accrued  interest  from ITB to LVEN,  which  note  remains  canceled,  (c)
released any and all LVEN or Casino-Co  Corporation interests in the NPD Shares,
and (d)  cancelled  any and all  agreements  of any  kind or  nature  whatsoever
between LVEN and its affiliates and ITB or any of its subsidiaries.

     The  foregoing  summary  of the  terms  and  transactions  relating  to the
Delaware  Settlement and the Trustee Settlement is qualified by reference to the
actual  documents  filed with the  respective  courts in the  actions  discussed
above.

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 Settlement,  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,  was a purported class action suit brought by the same plaintiffs
as the  Harris-Federal  action.  The  complaint  alleged  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.

NEW JERSEY SETTLEMENT

     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 were to be fully and finally
dismissed with  prejudice,  and ITB and all defendants were 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

                                       8
<PAGE>

 Jersey Memorandum provided that
the Proposed New Jersey  Settlement  would be submitted  for approval to the New
Jersey  Superior  Court,  that a fee petition  would be submitted by plaintiffs'
attorneys  in the New Jersey  Actions for  approval  by the New Jersey  District
Court, and that the Harris-Federal action would be dismissed on the grounds that
the plaintiffs' claims are barred and released as a result of the settlement and
dismissal of the Quigley  Action by the Delaware Court of Chancery on October 6,
1998. Pursuant to the Proposed New Jersey Settlement,  the plaintiffs agreed not
to file objections to the Delaware Settlement.

     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.

     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. On February 16, 2000, the New Jersey
District Court granted the plaintiffs'  motion to vacate the dismissal order and
reopen  the  Harris-Federal  action.  The  plaintiffs  filed a second  motion to
enforce the terms of the Proposed New Jersey Settlement on April 25, 2000.

     On May 24,  2000,  the  parties  to the New  Jersey  Actions  agreed to and
executed a Stipulation  of  Settlement  (the "New Jersey  Settlement").  The New
Jersey  Settlement  provides  that,  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 New Jersey 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.  On June
21,  2000,  in light of the  parties'  agreement  to the terms of the New Jersey
Settlement,  the New Jersey  District  Court  dismissed as moot the  plaintiffs'
second motion to enforce the proposed settlement.

     Pursuant to the New Jersey  Settlement,  on June 30,  2000,  the New Jersey
Superior Court  certified  preliminarily,  for the  settlement  purposes only, a
plaintiff  class (the "Class")  consisting of all holders of the Company's stock
between  October  13,  1997 (the date AMEX  suspended  trading of the  Company's
stock) and June 30,  2000,  the date the New Jersey  Superior  Court  entered an
order  approving the form of the proposed  Notice of Settlement to the Class. On
July 13, 2000, pursuant to the New Jersey Settlement,  the Company mailed to all
record  holders of ITB stock within the Class period a Notice of  Settlement  of
the Harris-State action and a Notice of Dismissal of the Harris-Federal action.

     On August  21,  2000,  the New  Jersey  Superior  Court  held a hearing  to
consider  the  fairness  of the

                                       9
<PAGE>

  New  Jersey  Settlement  to the  Class.  At the
conclusion of the hearing,  the New Jersey  Superior  Court entered an order (i)
certifying  the Class  pursuant to New Jersey Rule 4:32;  (ii) approving the New
Jersey Settlement as fair, reasonable, adequate and in the best interests of the
Class;  (iii)  dismissing  the Harris-  State  action with  prejudice;  and (iv)
releasing all Class claims against the  defendants  arising from and relating to
the facts alleged in the Second Harris-State Complaint.

     On  September  26,  2000,  the New Jersey  Federal  Court held a hearing to
consider the proposed dismissal of the Harris-Federal action and the application
by plaintiffs'  counsel for payment of attorneys' fees and expenses  incurred in
connection  with pursuing the New Jersey  Actions.  During the hearing,  the New
Jersey Federal Court requested the submission of additional  materials  relating
to the New Jersey Settlement and the Delaware  Settlement.  Plaintiffs'  counsel
submitted the requested  materials to the New Jersey  Federal Court on September
29, 2000.  ITB is hopeful that the New Jersey  Federal  Court,  after  reviewing
these  materials,  will enter  shortly an order  dismissing  the  Harris-Federal
action with  prejudice  and awarding  plaintiffs'  counsel  attorneys'  fees and
reimbursement  of the expenses to be paid by the Company in accordance  with the
New Jersey  Settlement.  There is no assurance that the plaintiffs' 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 Harris-Federal Action.

OTHER LITIGATION

     The Company is a defendant in a wrongful  death action arising out of motor
vehicle/pedestrian  accident  at  Freehold  Raceway.  The case is in the initial
stages of discovery.  The Company  believes that it may have 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;
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.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters  were  submitted  to a vote of  security  holders by the Company
during the quarter ended June 30, 2000.


                                       10
<PAGE>


                                    PART II


ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
              RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

     The Company's Common Stock has been listed for quotation on the Pink Sheets
since  September 15, 1998. The following  table  indicates the high and low sale
prices for such stock on the Pink  Sheets for the year ended June 30, 2000 based
upon information supplied by the Pink Sheets:


                                SALES PRICE
QUARTER ENDED                  HIGH     LOW
-------------                  ----     ---
September 30, 1998
(Trading commenced
 on the NQB Pink Sheets
 on September 15, 1998)          .25   .25

December 31, 1998               1.00   .10

March 31, 1999                   .75   .25

June 30, 1999                    .75   .20



September 30, 1999               .75   .20

December 31, 1999                .75   .35

March 31, 2000                   .58   .25

June 30, 2000                    .89   .29


HOLDERS

     As of June 30,  2000,  there were  30,447  recordholders  of the  Company's
Common Stock.


DIVIDENDS

     The  Company  has not paid any  dividends  on its  Common  Stock  since its
inception. Anticipated capital requirements of the Company make it unlikely that
any dividends will be declared in the foreseeable  future.  Furthermore,  25% of
the "net  racetrack  earnings"  from the Company's  Garden State Park  racetrack
facility  are  required to be paid by the Company in  dividends  on its Series A
Preferred  Stock and,  thus,  would not be available for payment as dividends on
the Common Stock.  Additionally,  the Company's ability to pay dividends in cash
or property or by obligation is limited by the terms of the Credit Suisse Credit
Facility.


                                       11
<PAGE>


Item 6 - SELECTED FINANCIAL DATA

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
<TABLE>

                                                                      Years Ended June 30,
                                            -----------------------------------------------------------------------------
                                                  2000          1999             1998            1997            1996
                                            ------------  -------------   --------------  --------------  --------------
<CAPTION>

<S>                                         <C>           <C>             <C>             <C>             <C>
(Loss) Before Discontinued Operations (2)(5)$ (6,980,831) $ (16,034,769)  $  (25,468,850) $  (15,144,053) $   (2,779,987)

Income From Discontinued Operations (1)     $          0  $   8,144,072   $    7,207,633  $    1,594,096  $    1,710,276

(Loss)  Before Extraordinary Item           $ (6,980,831) $  (7,890,697)  $  (18,261,217) $  (13,549,957) $   (1,069,712)

Net (Loss)  (3)                             $ (6,980,831) $  (7,890,697)  $  (18,261,217) $  (17,387,582) $   (1,069,711)

Per Common Share - Basic and Diluted:

(Loss) Before Discontinued Operations
  and Extraordinary Item                    $      (0.78) $       (1.38)  $        (1.82) $        (1.29) $        (0.26)

Gain on Sale of Net Assets of
   Discontinued Operations                  $       0.00  $        0.32   $    --         $   --          $         --

Income From Discontinued Operations         $       0.00  $        0.39   $         0.51  $         0.14  $         0.16

(Loss) Before Extraordinary Item            $      (0.78) $       (0.67)  $        (1.31) $        (1.15) $        (0.10)

Net (Loss)                                  $      (0.78) $       (0.67)  $        (1.31) $        (1.49) $        (0.10)

Weighted Average Number of Shares              8,980,244     11,554,476       13,978,086      11,715,256      10,536,414
</TABLE>
<TABLE>

                                                                              June 30,
                                             ----------------------------------------------------------------------------
                                                2000           1999             1998           1997            1996
                                             ------------   ------------   --------------  --------------  --------------
<CAPTION>
<S>                                         <C>           <C>             <C>             <C>             <C>
Working Capital (Deficiency)                $(17,792,740) $ (33,069,102)  $  (36,744,740) $  (41,300,996) $   (3,916,684)

Total Assets                                $ 58,166,739  $  76,588,565   $  120,252,901  $  164,694,029  $  144,880,933

Long-Term Debt                              $    482,000  $           0   $            0  $   13,131,003  $   50,992,702

Stockholders' Equity (4)                    $ 33,870,852  $  40,846,683   $   59,913,361  $   75,651,933  $   79,318,105
</TABLE>

(1)  Prior to June 30, 1998, the Company decided to sell its racing  operations.
     As  a  result,   such  operations  have  been  classified  as  discontinued
     operations for all periods presented.
(2)  As a result of the above  described  decision,  the (loss) from  continuing
     operations primarily consists of corporate expenses, charges and write-offs
     for years subsequent to June 30, 1996.
(3)  The Net  (Loss)  for the  fiscal  year  ended  June  30,  1997 is  after an
     extraordinary  loss  on  early  extinguishment  of debt  in the  amount  of
     $3,837,625.
(4)  The Company did not pay cash dividends during any of the fiscal years shown
     above.
(5)  See  Management's  Discussion  and  Analysis of  Financial  Conditions  and
     Results of Operations  and the  consolidated  financial  statements and the
     notes thereto for additional information for each of the three years in the
     period ended June 30, 2000.


                                       12
<PAGE>


ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
               RESULTS OF OPERATIONS

 LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  working  capital,  as of June 30,  2000,  was a deficit  of
($17,792,740)  which  represents  a decrease  in the  deficit  of  approximately
$15,276,362 from the June 30, 1999 working capital deficit of ($33,069,102). The
decrease in the deficit was primarily caused by: (i) the funds received from the
sale of the El Rancho property that were; (a) in excess of the carrying value of
the property; (b) were used to retire $17.9 million of the debt to the Company's
primary  lender,  Credit  Suisse First  Boston  Mortgage  Capital LLC,  ("Credit
Suisse");  and (c) were used to purchase a $23,000,000  promissory note from the
buyer;  ii) a  $2,004,276  decrease  in net  assets  of  Discontinued  Racetrack
Operations  primarily  the  result  of:  (a) cash  used by the  Company  to fund
corporate activities;  and (b) non-refundable deposits of $1,000,000 on the sale
of the Garden  State Park  property  classified  as deferred  income at June 30,
2000.

     The net loss for the year ended June 30, 2000 was ($6,980,831).  Cash flows
used by operating  activities  amounted to approximately  $7,929,567  during the
year ended June 30, 2000.

     Cash provided by investing activities was $22,267,942 during the year ended
June  30,  2000,   primarily  the  result  of  cash  proceeds  of  approximately
$22,300,000 from the sale of the El Rancho property. (See Note 4)

     Cash used in financing  activities  was  $16,134,840  during the year ended
June 30, 2000,  consisting  principally of principal  payments of  approximately
$17,800,000  primarily  associated with reducing the CSFB debt. (See Notes 4 and
8)

     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  credit  facility
with Foothill  Capital  Corporation  ("Foothill") 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 of land at the Garden State Park facility.  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  returned the loan to a good standing
position and extended  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  agreed,  pursuant  to the
Restructure  Agreement,  to advance the  monthly  interest  payments  due by the
Company under the CSFB Loan until April 15, 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. On May
22, 2000, the proceeds from the sale of the El Rancho property were  principally
used by the  Company  to  reduce  the  outstanding  balance  on the CSFB

                                       13
<PAGE>

Loan to $14,668,022.  The Company has entered into an Agreement of sale pursuant
to which it has agreed to sell the real  property  known as Garden State Park to
Turnberry/Cherry  Hill LLC.  CSFB has agreed to extend the maturity  date of the
Company's  mortgage  indebtedness  to November  30, 2000 in order to permit this
sale to the buyer, subject to payment of interest monthly in advance and payment
of monthly  extension  fees for  September,  October and November,  2000, in the
amount of $146,680 per month. The buyer has been paying the interest accruing to
CSFB since April 15, 2000 and has paid the  extension  fee for  September in the
amount of $146,680.  Extension  fees paid by the buyer for October and November,
2000 will be credited towards the purchase price at closing.  If the transaction
fails to close by November 30, 2000, or if the buyer (or its principal) fails to
pay either the monthly interest or extension fee due on October 1 or November 1,
CSFB may declare a default and proceed to sell the Garden  State Park  property.
At June 30, 2000,  the interest rate on the Credit  Suisse  Credit  Facility was
13.64%.(See Notes 8 and 10)

     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 Trustee Note is subordinate to the
CSFB Loan,  thereby  principal and interest payments on the Trustee Note will be
made only if and when the CSFB Loan is paid in full.

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

     On January 25, 2000, the Company entered into an Agreement of Sale pursuant
to which it has agreed to sell the real  property  known as Garden State Park 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.  Under the  Agreement  of Sale,  as amended,  the
purchase  price for the Garden  State Park real  property is $30  million,  plus
assumption of certain  monetary  obligations  of the Company with respect to the
property sold which aggregate  approximately $500,000 (the "Assumed Liability").
The  buyer  also  agreed  to pay  up to  $200,000  per  month  of the  Company's
out-of-pocket  carrying  costs of the Garden State Park property after April 15,
2000  (including  interest on the  Company's  mortgage  debt).  At closing,  $20
million of the purchase  price will be payable in cash (of which the Company has
already  received  deposits  of  $1,000,000),  and the buyer  will  deliver  its
promissory note in the face amount of $10 million (the "Note").  Under the Note,
once the buyer has received  distributions from the buyer equal to the amount of
its invested capital  contributions plus an agreed upon return thereon, the next
$10  million of the buyer's  distributable  cash would be paid under the Note to
the Company,  and the Company  thereafter  would receive payments under the Note
equal to one-third of the distributable  cash of the buyer,  including  (without
limitation) distributable cash generated by development,  sale or leasing

                                       14
<PAGE>

of the Garden State Park property.  The agreed upon rate of return to be paid to
buyer's owner on its invested capital  contributions,  before payments under the
Note  will be made,  will be 15% per  year,  except  that the rate of  return on
capital  invested  by  buyer's  owner to  cover  certain  costs,  in  excess  of
$1,000,000,  which  buyer  may  incur  in  respect  of  the  Assumed  Liability,
environmental  investigation and remediation,  and various other specified items
(including the September extension fee of $146,680 paid to the Company's primary
lender,  CSFB),  may be as high as 33 1/3% per annum.  Closing is  scheduled  to
occur prior to  December 1, 2000.  The  parties  continue to  negotiate  certain
issues and there can be no assurance that the transaction will be consummated.

     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 May 22, 2000, the Company,  through its wholly-owned  subsidiary,  Orion
Casino  Corporation,  closed on the sale (the "El  Rancho  Transaction")  of the
non-operating  former El Rancho Hotel and Casino (the "El Rancho  Property")  in
Las Vegas,  Nevada, to Turnberry/Las  Vegas Boulevard,  LLC  ("Turnberry").  The
purchase  price was $45  million  and was paid by: (i)  previous  cash  deposits
totaling $2,000,000;  and (ii) the balance of the purchase price paid in cash at
the closing.  The proceeds of the El Rancho Transaction were principally used by
the Company to reduce the outstanding  balance on the Company's loan from Credit
Suisse First Boston Mortgage Capital LLC ("Credit  Suisse") to $14.7 million and
to  purchase  a  promissory  note,   secured  by  the  rights  to  100%  of  the
distributable  cash of the  buyer in the event of  default,  of the buyer in the
amount of $23,000,000  which will be convertible at the Company's  option into a
33 1/3% equity  interest in the buyer.  The interest  rate will be adjusted from
time to time since the interest  actually  payable will be dependent  upon,  and
payable solely out of, the buyer's net cash flow available for  distribution  to
its equity  owners  ("Distributable  Cash").  After the equity  investors in the
buyer have received  total  distributions  equal to their capital  contributions
plus an agreed upon return on their  invested  capital,  the next $23 million of
Distributable  Cash will be paid to the  Company.  The Company  will  thereafter
receive payments under the note equal to 33 1/3% of all Distributable Cash until
the  maturity  date,  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

                                       15
<PAGE>

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
acting Chief  Executive  Officer,  Mr. Francis  Murray,  in order to finance its
current  operations  until November 30, 2000.  The Company  expects to repay the
note with a portion of the Garden State Park sale proceeds.

     The Company  currently  estimates that the proceeds from the sale of the El
Rancho  property,  the $500,000  deposit made available March 2, 2000 toward the
sale of the Garden State Park  property  and a short term loan of $150,000  made
available  on  September  18,  2000 will be  sufficient  to finance  its current
operations through November 30, 2000.

     The Company's  debt with CSFB is due on November 30, 2000.  Unless the sale
of the Garden  State Park  property  is  consummated  prior to that date or CSFB
further  extends  the due date of the Note,  the  Company  will be in default in
connection  with the CSFB loan agreement.  Additionally,  the cash proceeds from
the sale must be in an amount  sufficient to satisfy the loan due on the trustee
note together with accrued  interest.  The total amount due on November 30, 2000
to satisfy the CSFB loan together with accrued interest and fees and the trustee
note together with accrued interest is approximately  $18,600,000.  The proceeds
from the sale of the Garden State Park property are expected to be sufficient to
meet this obligation.

     The Company currently  estimates that  approximately  $150,000 per month is
needed to cover  operating  expenses  of  International  Thoroughbred  Breeders.
Should the closing of the Garden State Park property be delayed beyond  November
30,  2000,  the  Company  will  need to seek  additional  short  term  loans  or
additional advances from the buyer to fund its operations.

     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 November 30, 2000 and the Company has sustained losses of approximately  $45
million during the last three fiscal years, all of which raise 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 FISCAL YEARS ENDED JUNE 30, 2000 AND 1999

     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 two years ended June 30, 1999 and 1998.

     Revenue for the year ended June 30, 2000 decreased $31,737 from $478,325 in
Fiscal 1999 to $446,588 in Fiscal 2000  primarily as a result of: (i) a decrease
in interest  income  primarily the result the decrease in cash during the fiscal
year;  partially  offset by (ii) an increase in rental  income from the lease of
the Garden  State  property for the full year in Fiscal 2000 as compared to five
months in Fiscal 1999. Expenses from continuing  operations decreased $9,085,675
or 55%, from $16,513,094 in Fiscal 1999 to

                                       16
<PAGE>

$7,427,419  in Fiscal 2000.  This  decrease in expenses was primarily the result
of: (i) a decrease in general and  administrative  expenses of $2,023,353 or 43%
from  $4,667,737 in Fiscal 1999 to $2,644,384 in Fiscal 2000; (ii) a decrease in
interest and financing  expense of  $4,059,620  primarily as a result of reduced
debt and a financing  expense for  warrants of  $1,242,883  associated  with the
Delaware  Settlement  in the third  quarter of fiscal 1999;  and (iii) bank fees
associated  with the debt no longer being  amortized in Fiscal 2000.  These fees
were fully amortized in Fiscal 1999.

     The  decrease of  $2,023,353  in general and  administrative  expenses  was
principally attributable to: (i) a decrease in expenses primarily as a result of
the Delaware Settlement in Fiscal 1999 of; (a) approximately $1,064,000 in legal
expenses  associated with the various  director and stockholder  lawsuits in the
prior  fiscal  year;  (b) a decrease  in officer  and  corporate  administrative
salaries and benefits of approximately  $532,000  primarily  associated with the
termination of certain agreements upon consummation of the Delaware  Settlement;
(c) a decrease in consulting and director fees of $246,000  associated  with the
termination of certain agreements upon consummation of the Delaware  Settlement;
(d)  a  decrease  of   approximately   $311,000  in  travel   expenses  and  the
administrative  costs of  operating  an office in New Mexico;  (e) a decrease of
approximately  $231,000  in  printing,   mailing  and  transfer  agent  expenses
associated with an information statement sent to stockholder in Fiscal 1999; and
(e) a  decrease  in costs of  $60,000 in  penalties  assessed  by the New Jersey
Racing  Commission  associated with the Casino-Co Stock issuance in Fiscal 1999;
(ii) a  decrease  in  accounting  fees of  $334,000;  and  (iii) a  decrease  in
political  contributions  of  $50,000  associated  with New  Jersey  legislation
affecting  racetrack  operations;  partially  offset  by  (iv)  an  increase  of
approximately  $549,000 in corporate expenses  associated with discontinuing the
racing  operations which includes  $150,000 to replace sprinkler system parts as
provided  in the  lease  with  Pennwood;  (v)  an  increase  in  legal  fees  of
approximately  $136,000  during the second and third  quarters of Fiscal 2000 in
connection  with  various  corporate   activities;   and  (vi)  an  increase  of
approximately  $113,000  primarily  associated  with an  increase in expense for
officers and directors insurance.

     During the year ended June 30,  2000,  the  Company  incurred a loss before
discontinued   operations  of   ($6,980,831)   as  compared  to  a  loss  before
discontinued  operations of ($16,034,769)  for the year ended June 30, 1999. The
Company  recognized  a net  gain of  $3,657,688,  following  the  write  down of
approximately  $14,000,000 to fair value of the remaining assets of Garden State
Park and the  approximate  gain of $17,600,000 on the sale of Freehold  Raceway,
the sale of a ten-acre parcel at the Garden State Park facility and the lease of
the Garden  State Park  facilities  in Fiscal  1999 in  addition  to income from
discontinued  racetrack  operations  of  $4,486,384  for the year ended June 30,
1999.

     During the year ended June 30,  2000,  the  Company  incurred a net loss of
($6,980,831) as compared to a net loss of ($7,890,697) for the comparable period
in Fiscal  1999.  The  decrease in net loss of $909,866  was the result of those
differences described above.

RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED JUNE 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 to  subsidiaries of Greenwood  Racing,  Inc.,  which owns
Philadelphia  Park  racetrack,  the Turf Clubs,  and  Phonebet  (the  "Greenwood
Transaction.")  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"). Accordingly, the operating results of the racetrack
subsidiaries  have been segregated and reported as  discontinued  operations for
each of the periods presented.  Also, on the same date, the Company  consummated
the settlement under the Stipulation and Agreement of Compromise, Settlement and
Release  entered  into on  July  2,  1998 to  resolve  the  pending  stockholder
derivative litigation in the Delaware Court of Chancery.

                                       17
<PAGE>

     For the year ended June 30, 1999,  The Company's  loss before  discontinued
operations  was  ($16,034,769)  as  compared  to  a  loss  before   discontinued
operations for the comparable  period in prior fiscal year of  ($25,468,850),  a
decrease  in  the  loss  of  $9,434,081.   This  decrease  in  the  loss  before
discontinued  operations  was primarily the result of: (i) a decrease in general
and administrative expenses of $7,082,988; (ii) the estimated loss in connection
with the adjustment to fair market value of the El Rancho Property of $3,429,252
recognized  in fiscal 1998;  partially  offset by (iii) an increase in financing
expenses of $1,807,736  primarily  associated with fees and warrants  granted in
connection  with the  Delaware  Settlement  partially  offset by a  decrease  of
$1,059,266 or 15% in interest  expenses  primarily  associated with reducing the
debt during the third quarter.

     General and administrative expenses of $4,532,984 for Fiscal 1999 decreased
$7,082,988  or 61% from the  prior  fiscal  year  amount  of  $11,615,972.  This
decrease in general and administrative expenses was principally attributable to:
(i) a decrease in legal expenses of approximately  $2,000,000 from $3,300,000 in
Fiscal  1998 to  $1,318,000  in Fiscal  1999,  primarily  as the result of legal
expenses  associated with the various director and stockholder  lawsuits;  (2) a
decrease  in officer  and  corporate  administrative  salaries  and  benefits of
$554,216  previously  associated with the termination of certain agreements with
directors  and  officers  who  resigned  upon   consummation   of  the  Delaware
Settlement; (3) a decrease in non- employee option expenses of $786,000; and (4)
the  accrual in Fiscal 1998 of an  estimated  charge of  $3,748,000  the Company
would incur in connection with the purchase of the 2,904,016 shares from NPD and
the  termination  of  certain  agreements  upon  consummation  of  the  Delaware
Settlement;  the charge of  $3,748,000  represents  the  difference  between the
amount the Company will pay for the shares and their estimated fair value.

     Income from discontinued  racetrack  operations was $4,486,384 for the year
ended June 30, 1999. As a result of operations  being  discontinued  after seven
months in the  fiscal  1999 year,  this  income is not  comparable  to the prior
year's results of operations.  The Company  recognized a net gain of $3,657,688,
following  the write  down of  approximately  $14,000,000  to fair  value of the
remaining assets of Garden State Park and the approximate gain of $17,600,000 on
the sale of Freehold Raceway,  the sale of a ten-acre parcel at the Garden State
Park facility and the lease of the Garden State Park facilities.

     During the year ended June 30,  1999,  the  Company  incurred a net loss of
($7,890,697)  as  compared  to a net loss of  ($18,261,217)  for the  comparable
period in Fiscal 1998. The decrease in net loss of $10,370,520 was the result of
those differences described above.

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
computer systems or its vendors associated with a Year 2000 issue.

INFLATION

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


                                       18
<PAGE>

            IMPORTANT FACTORS RELATING TO FORWARD LOOKING STATEMENTS

     This Report contains certain forward-looking  statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities  Exchange Act of 1934, as amended,  and is subject to the safe-harbor
created by such  sections.  Such  statements  concern the Company's  operations,
economic  performance  and  financial  condition,  including  the  impact on the
Company's  operations  of the sale and lease of the  Company's  racetracks,  the
disposition of the El Rancho Property,  the Delaware  Settlement,  the Company's
restructuring  of the Credit  Suisse  Credit  Facility and the forward-  looking
statements  in this Report  involve known and unknown  risk,  uncertainties  and
other factors that may cause the actual results, performance, or achievements to
differ from those expressed or implied by such forward-looking  statements. Such
factors  include,  among others,  the following:  general  economic and business
conditions;  competition;  changes in business strategy; the indebtedness of the
Company; quality of management; business abilities and judgment of the Company's
personnel; the availability,  terms and deployment of capital; and various other
factors referenced in the Report. The forward-looking  statements are made as of
the date of this Report,  and the Company  assumes no  obligation  to update the
forward-  looking  statements or to update the reasons why actual  results could
differ from those projected in the forward-looking statements.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's primary debt obligation at June 30, 2000 was with its primary
lender CSFB. Interest under the Credit Suisse Credit Facility is payable monthly
in arrears at 7% over the London  interbank  offered rate ("LIBOR").  Therefore,
management  believes  that  the  Company  has a  material  risk  from  its  debt
obligations should there be a material increase in market interest rates.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

     Attached.

                                       19
<PAGE>


6               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
International Thoroughbred Breeders, Inc.
Cherry Hill, New Jersey


     We  have   audited  the   accompanying   consolidated   balance   sheet  of
International  Thoroughbred Breeders,  Inc. and subsidiaries as of June 30, 2000
and 1999 and the related  consolidated  statements of operations,  stockholders'
equity and cash flows for each of the two years then ended.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,   in  all  material   respects,   the  financial   position  of
International  Thoroughbred  Breeders,  Inc. and its subsidiaries as of June 30,
2000 and 1999 and the results of their  operations  and their cash flows for the
two  years  then  ended  in  conformity  with  generally   accepted   accounting
principles.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial statements, the Company's debt to its major lender is due November 30,
2000 and the Company  sustained losses of  approximately  $33 million during the
last three fiscal years, all of which raise  substantial doubt about its ability
to continue as a going  concern.  Management's  plans in regard to these matters
are also  described  in Note 1. The  financial  statements  do not  include  any
adjustments that might result from the outcome of these uncertainties.





                                             STOCKTON BATES, LLP


Philadelphia, Pennsylvania
October 10, 2000


                                       20
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
International Thoroughbred Breeders, Inc.
Cherry Hill, New Jersey


     We have audited the  accompanying  consolidated  statements of  operations,
stockholders' equity and cash flows of International Thoroughbred Breeders, Inc.
and subsidiaries for the year ended June 30,1998.  These consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

     We conducted  our audit in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  financial  statement  presentation.  We  believe  that  our  audit
provides a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,  in all material  respects,  the results of operations and cash
flows of International  Thoroughbred Breeders, Inc. and its subsidiaries for the
year  ended June 30,  1998 in  conformity  with  generally  accepted  accounting
principles.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company was in violation  of several loan  covenants
with its major lender, was party to various legal proceedings and their proposed
settlements and has sustained a loss of approximately $18.3 million for the year
ended June 30, 1998, all of which raise  substantial  doubt about its ability to
continue as a going concern.  Management's  plans in regard to these matters are
also  described  in  Note  1.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of these uncertainties.



                                             BDO SEIDMAN, LLP


Philadelphia, Pennsylvania
October 9, 1998


                                       21
<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                          AS OF JUNE 30, 2000 AND 1999

                                     ASSETS

<TABLE>

                                                         June 30,
                                            -----------------------------------
                                                   2000               1999
                                            ----------------   ----------------
<CAPTION>
CURRENT ASSETS:
<S>                                      <C>                 <C>
     Cash and Cash Equivalents           $          271,119  $       1,358,200
     Restricted Cash and Investments              1,656,743                  0
     Reserve Escrow Deposits                              0            182,154
     Accounts Receivable                            427,654            234,774
     Prepaid Expenses                               362,321            349,182
     Other Current Assets                           516,721             53,771
     Net Assets of Discontinued
         Operations - Current                             0            494,699
                                            ----------------   ----------------
          TOTAL CURRENT ASSETS                    3,234,558          2,672,780
                                            ----------------   ----------------


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

PROPERTY HELD FOR SALE                                    0         42,149,755
                                            ----------------   ----------------

LAND, BUILDINGS AND EQUIPMENT:
     Land and Buildings                             214,097            214,097
     Equipment and Artwork                        1,199,284            683,428
                                            ----------------   ----------------
                                                  1,413,381            897,525
     LESS: Accumulated Depreciation
            and Amortization                        387,404            329,667
                                            ----------------   ----------------

          TOTAL LAND, BUILDINGS AND
              EQUIPMENT, NET                      1,025,977            567,858
                                            ----------------   ----------------



OTHER ASSETS:
     Notes Receivable                            23,000,000                  0
     Deposits and Other Assets                      906,204          1,198,172
                                            ----------------   ----------------
          TOTAL OTHER ASSETS                     23,906,204          1,198,172
                                            ----------------   ----------------


TOTAL ASSETS                             $       58,166,739  $      76,588,565
                                            ================   ================
</TABLE>


See Notes to Consolidated Financial Statements.

                                       22
<PAGE>




                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                          AS OF JUNE 30, 2000 AND 1999

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>


                                                          June 30,
                                                -------------------------------
                                                     2000           1999
                                                -------------  ---------------
<CAPTION>
CURRENT LIABILITIES:
<S>                                             <C>            <C>
     Accounts Payable                           $      62,502  $     267,941
     Accrued Expenses                                 858,510      1,176,796
     Current Maturities of Long-Term Debt          18,596,709     34,297,145
     Net Liabilities of Discontinued
         Operations - Current                       1,509,577              0
                                                 -------------  -------------
          TOTAL CURRENT LIABILITIES                21,027,298     35,741,882
                                                 -------------  -------------


DEFERRED INCOME                                     2,786,589              0
                                                 -------------  -------------

LONG-TERM DEBT, Net of Current Portion                482,000              0
                                                 -------------  -------------

COMMITMENTS AND CONTINGENCIES                           -              -


STOCKHOLDERS' EQUITY:
     Series A Preferred Stock,
       $100.00 Par Value,
       Authorized 500,000 Shares,
       Issued and Outstanding,
       362,484 and 362,482 Shares, Respectively    36,248,375     36,248,175
     Common Stock, $2.00 Par Value,
      Authorized 25,000,000
      Shares,Issued, 11,884,270 and 11,884,249
      Shares,and Outstanding, 8,980,254 and
      8,980,233 Shares,Respectively                23,768,539     23,768,497
     Capital in Excess of Par                      26,144,540     26,144,782
     (Deficit) (subsequent to June 30, 1993,
        date of quasi-reorganization)             (45,003,895)   (38,023,064)
                                                 -------------  -------------
          TOTAL                                    41,157,559     48,138,390
     LESS:
      Treasury Stock, 2,904,016 Shares, at Cost    (7,260,040)    (7,260,040)
      Deferred Compensation, Net                      (26,667)       (31,667)
                                                 -------------  -------------
          TOTAL STOCKHOLDERS' EQUITY               33,870,852     40,846,683
                                                 -------------  -------------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $  58,166,740  $  76,588,565
                                                 =============  =============
</TABLE>


See Notes to Consolidated Financial Statements.

                                       23
<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998

<TABLE>

                                                         Years Ended June 30,
                                              ------------------------------------------
                                                   2000          1999           1998
                                              ------------------------------------------
<CAPTION>
REVENUE:
<S>                                           <C>           <C>            <C>
     Revenue                                  $    337,334  $    134,753   $          0
     Interest Income                               109,254       343,572        689,092
                                               ------------  ------------   ------------
                  TOTAL REVENUES                   446,588       478,325        689,092
                                               ------------  ------------   ------------

EXPENSES:
     General & Administrative Expenses           2,644,384     4,667,737     11,615,972
     Interest and Financing Expenses             3,771,401     7,831,021      7,084,968
     Amortization of Financing Costs                     0     2,900,749      3,053,583
     El Rancho Property Carrying Costs           1,011,634     1,113,587        974,167
     Impairment Loss on El Rancho Property               0             0      3,429,252
                                               ------------  ------------   ------------
                  TOTAL EXPENSES                 7,427,419    16,513,094     26,157,942
                                               ------------  ------------   ------------

(LOSS) BEFORE DISCONTINUED OPERATIONS           (6,980,831)  (16,034,769)   (25,468,850)
                                               ------------  ------------   ------------

INCOME FROM DISCONTINUED OPERATIONS:
     Net Gain on Sale of Net Assets of
       Discontinued Operations                           0     3,657,688              0
       (less applicable state income
         taxes of $1,335,500)
     Income from operations of discontinued
      racetrack operations (less
       applicable state income taxes of
       $119,348 and $135,100 for the years
       ended June 30, 1999 and 1998)                     0     4,486,384      7,207,633
                                               ------------  ------------   ------------
     INCOME FROM DISCONTINUED OPERATIONS                 0     8,144,072      7,207,633
                                               ------------  ------------   ------------

NET (LOSS)                                    $ (6,980,831) $ (7,890,697)  $(18,261,217)
                                               ============  ============   ============


BASIC AND DILUTED PER SHARE DATA:
(LOSS) BEFORE DISCONTINUED OPERATIONS         $      (0.78) $      (1.38)  $      (1.82)
NET GAIN ON SALE OF NET ASSETS
   OF DISCONTINUED OPERATIONS                         0.00          0.32           0.00
INCOME FROM DISCONTINUED OPERATIONS                   0.00          0.39           0.52
                                               ------------- -------------  ------------
NET (LOSS)                                    $      (0.78) $      (0.67)  $      (1.31)
                                               ============= =============  ============

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                            8,980,244    11,554,476     13,978,086
                                               ============= =============  ============

</TABLE>


See Notes to Consolidated Financial Statements.

                                       24
<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998

<TABLE>

                                                           Preferred                 Common
                                                      ---------------------  ------------------------
                                                      Number of               Number of
                                                       Shares     Amount       Shares        Amount
                                                      ---------  ----------  ------------  ----------
<CAPTION>
<S>            <C> <C>                                 <C>     <C>            <C>        <C>
BALANCE - JUNE 30, 1997                                362,470 $ 36,246,975   13,978,060 $ 27,956,119

   Compensation for Options Granted
     to Non-Employees                                   ---         ---          ---          ---
   Shares Issued for Fractional Exchanges
     With Respect to the
     One-for-twenty Reverse Stock Split effected
     on March 13, 1992                                      10        1,000           39           78
   Amortization of Deferred Compensation Costs          ---         ---          ---          ---
   Gain on Sale of Land                                 ---         ---          ---          ---
   Net (Loss) for the Year Ended June 30, 1998          ---         ---          ---          ---
                                                      ---------  ----------  ------------  ----------
BALANCE - JUNE 30, 1998                                362,480 $ 36,247,975   13,978,099 $ 27,956,197

   Shares Canceled in connection with
     Delaware Settlement                                ---         ---       (2,093,868)  (4,187,736)
   Purchase of 2,904,016 Shares for Treasury
     in connection with  Delaware Settlement            ---         ---          ---          ---
   Compensation for Options Granted to Non-Employees    ---         ---          ---          ---
   Shares Issued for Fractional Exchanges With
     Respect to the One-for-twenty Reverse Stock
     Split effected on March 13, 1992                        2          200           18           36
   Financing Costs for Warrants Issued
     in Connection with Debt Financing                  ---         ---          ---          ---
   Warrants Issued in Connection With
     Debt Retirement (See Note 11-A)                    ---         ---          ---          ---
   Amortization of Deferred Compensation Costs          ---         ---          ---          ---
   Net (Loss) for the Year Ended June 30, 1999          ---         ---          ---          ---
                                                      ---------  ----------  ------------  ----------
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                              2          200           21           42
   Amortization of Deferred Compensation Costs          ---         ---          ---          ---
   Net (Loss) for the Year Ended June 30, 2000          ---         ---          ---          ---
                                                      ---------  ----------  ------------  ----------
BALANCE - JUNE 30, 2000                                362,484 $ 36,248,375   11,884,270 $ 23,768,539
                                                      =========  ==========  ============  ==========
</TABLE>

<TABLE>

                                                        Capital                   Treasury      Deferred
                                                       in Excess                   Stock,        Compen-
                                                         of Par      (Deficit)     At Cost        sation      Total
                                                       ------------ -------------  ------------  ----------  ------------
<CAPTION>
<S>            <C> <C>                                <C>          <C>            <C>           <C>         <C>
BALANCE - JUNE 30, 1997                               $ 25,048,751 $ (13,558,246) $          0  $  (41,667) $ 75,651,933

   Compensation for Options Granted
     to Non-Employees                                      830,550       ---          ---        ---             830,550
   Shares Issued for Fractional Exchanges
     With Respect to the
     One-for-twenty Reverse Stock Split effected
     on March 13, 1992                                      (1,077)      ---          ---        ---              ---
   Amortization of Deferred Compensation Costs             ---           ---          ---            5,000         5,000
   Gain on Sale of Land                                    ---         1,687,096      ---                      1,687,095
   Net (Loss) for the Year Ended June 30, 1998             ---       (18,261,217)     ---        ---         (18,261,217)
                                                       ------------ -------------  ------------  ----------  ------------
BALANCE - JUNE 30, 1998                               $ 25,878,224 $ (30,132,367) $          0  $  (36,667) $ 59,913,362

   Shares Canceled in connection with
     Delaware Settlement                                (1,046,934)      ---          ---          ---        (5,234,670)
   Purchase of 2,904,016 Shares for Treasury
     in connection with  Delaware Settlement               ---           ---        (7,260,040)    ---        (7,260,040)
   Compensation for Options Granted to Non-Employees        44,550       ---          ---          ---            44,550
   Shares Issued for Fractional Exchanges With
     Respect to the One-for-twenty Reverse Stock
     Split effected on March 13, 1992                         (236)      ---          ---          ---            ---
   Financing Costs for Warrants Issued
     in Connection with Debt Financing                      26,296       ---          ---          ---            26,296
   Warrants Issued in Connection With
     Debt Retirement (See Note 11-A)                     1,242,882       ---          ---          ---         1,242,882
   Amortization of Deferred Compensation Costs             ---           ---          ---            5,000         5,000
   Net (Loss) for the Year Ended June 30, 1999             ---        (7,890,697)     ---          ---        (7,890,697)
                                                       ------------ -------------  ------------  ----------  ------------
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                               (242)      ---          ---          ---              ---
   Amortization of Deferred Compensation Costs            ---            ---          ---            5,000         5,000
   Net (Loss) for the Year Ended June 30, 2000            ---         (6,980,831)     ---          ---        (6,980,831)
                                                       ------------ -------------  ------------  ----------  ------------
BALANCE - JUNE 30, 2000                               $ 26,144,540 $ (45,003,895) $ (7,260,040) $  (26,667) $ 33,870,852
                                                       ============ =============  ============  ==========  ============
</TABLE>

See Notes to Consolidated Financial Statements.


                                       25
<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998

<TABLE>

                                                                                              Years Ended June 30,
                                                                                ---------------------------------------------
                                                                                      2000            1999           1998
                                                                                ---------------------------------------------
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                <C>            <C>            <C>
     (LOSS) BEFORE DISCONTINUED OPERATIONS .....................................   $(6,980,831)   $(16,034,769)  $(25,468,850)
                                                                                   -----------    ------------    -----------
     Adjustments to reconcile (loss) to net cash (used in) operating activities:
                  Depreciation and Amortization ................................        62,737       2,958,067      3,125,272
                  Financing Cost from Warrants Granted .........................             0       1,269,178              0
                  Compensation for Options Granted .............................             0          44,550        830,550
                  (Gain) Loss on Disposal of Fixed Assets ......................       (31,400)        146,238         31,666
                  Estimated charge in connection with the repurchase
                    of the NPD shares ..........................................             0               0      3,748,000
                  Estimated loss in connection with the adjustment to
                    fair market value of the El Rancho Property ................             0               0      3,429,251
                  Other ........................................................             0               0        303,002
                  Changes in Operating Assets and Liabilities -
                     (Increase) in Restricted Cash & Investments ...............    (1,656,740)              0              0
                     (Increase) in Accounts Receivable .........................      (192,880)       (197,935)       (31,455)
                     (Increase) Decrease in Other Assets .......................        37,049         271,985       (282,609)
                     (Increase) Decrease in Prepaid Expenses ...................       (13,139)        (26,869)       239,628
                     (Decrease) in Accounts Payable and Accrued Expenses .......      (523,725)       (538,387)      (771,010)
                                                                                   -----------    ------------    -----------
     CASH (USED IN) OPERATING ACTIVITIES BEFORE
        DISCONTINUED OPERATIONS ................................................    (9,298,929)    (12,107,942)   (14,846,555)

     CASH PROVIDED BY DISCONTINUED OPERATING ACTIVITIES ........................     1,369,362      10,155,578      9,192,657
                                                                                   -----------    ------------    -----------
     NET CASH (USED IN) OPERATING ACTIVITIES ...................................   $(7,929,567)   $ (1,952,364)   $(5,653,898)
                                                                                   -----------    ------------    -----------
</TABLE>
                          CONTINUED ON FOLLOWING PAGE


See Notes to Consolidated Financial Statements.


                                       26
<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998

CONTINUED FROM PREVIOUS PAGE
<TABLE>

                                                                                                Years Ended June 30,
                                                                                -----------------------------------------------
                                                                                      2000            1999             1998
                                                                                -----------------------------------------------
<CAPTION>
CASH FLOWS FROM INVESTING ACTIVITIES:
<S>                                                                               <C>             <C>             <C>
    Proceeds from Sale of El Rancho ....................................           $22,304,540    $          0    $          0
    Proceeds from Sale of Freehold .....................................                     0      17,900,000               0
    Proceeds from Sale of Land at Garden State Park ....................                     0       2,000,000               0
    Purchase of 2,904,016 Shares of Treasury Stock .....................                     0      (6,850,000)              0
    Purchase and Development of El Rancho Property .....................                     0               0        (239,588)
    Deposits on New Mexico Racetrack Options ...........................                     0               0        (600,000)
    Capital Expenditures ...............................................                (2,456)        (69,044)       (284,271)
    (Increase) Decrease in Other Investments ...........................                96,968               0          27,405
                                                                                  ------------    ------------    ------------
     CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
       BEFORE DISCONTINUED INVESTING ACTIVITIES ........................            22,399,052      12,980,956      (1,096,454)
     CASH (USED IN) DISCONTINUED INVESTING ACTIVITIES ..................              (131,110)       (146,648)      8,224,665
                                                                                  ------------    ------------    ------------
     NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ...............            22,267,942      12,834,308       7,128,211
                                                                                  ------------    ------------    ------------


CASH FLOWS FROM FINANCING ACTIVITIES:
    Escrow Deposits Utilized ...........................................               502,154      10,278,727       7,683,063
    Deposit to Escrow Funds ............................................              (320,000)              0               0
    Proceeds from Land Sale to Reserve Escrow Deposits .................                     0               0       1,370,120)
    Deferred Financing Costs ...........................................                     0               0         (22,445)
    Decrease in Balances Due From Discontinued Subsidiaries ............             3,473,637      (1,823,666)      8,376,135
    Principal Payments on Short Term Notes .............................           (17,842,995)     (5,016,770)       (303,020)
                                                                                  ------------    ------------    ------------
     CASH PROVIDED BY FINANCING ACTIVITIES
        BEFORE DISCONTINUED FINANCING ACTIVITIES ........................          (14,187,204)      3,438,291      14,363,613
     CASH (USED IN) DISCONTINUED FINANCING ACTIVITIES ..................            (1,947,636)    (12,437,662)    (16,242,127)
                                                                                  ------------    ------------    ------------
     NET CASH PROVIDED BY FINANCING ACTIVITIES .........................           (16,134,840)     (8,999,371)     (1,878,514)
                                                                                  ------------    ------------    ------------

NET (DECREASE) IN CASH AND CASH EQUIVALENTS ............................            (1,796,465)      1,882,573        (404,200)
          LESS CASH AND CASH EQUIVALENTS AT END OF THE YEAR
            FROM DISCONTINUED OPERATIONS ...............................               709,384        (738,168)     (3,166,900)
     CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
       BEFORE DISCONTINUED OPERATIONS ..................................             1,358,200         213,795       3,784,895
                                                                                  ------------    ------------    ------------

     CASH AND CASH EQUIVALENTS AT END OF THE YEAR ......................          $    271,119    $  1,358,200    $    213,795
                                                                                  ============    ============    ============

     Supplemental Disclosures of Cash Flow Information:
                  Cash paid during the period for:
                  Interest .............................................          $  1,306,950    $  6,498,191    $  7,936,680
                  Income Taxes .........................................          $     19,699    $  1,490,000    $    200,000
</TABLE>

     Supplemental Schedule of Non-Cash Investing and Financing Activities:
     During the year ended June 30, 1998, the Company recorded unrealized losses
       of $19,174 on trading  securities.  For the year ended June 30, 1999, the
       Company realized a loss of $12,908 on trading securities.
     During the years  ended June 30, 1999 and 1998,  respectively,  the Company
       issued warrants to purchase 497,153 shares,  and 300,000 shares of Common
       Stock  at fair  values  of  $1,242,882  and  $830,550,  respectively,  in
       connection with financing agreements.
     During the year ended June 30, 1998, the Company issued options to purchase
       300,000  shares of Common  Stock at a fair value of  $786,000 to three of
       the Company's directors.
     During the year ended June 30, 1999, the Company canceled  2,093,868 shares
       of Common Stock in connection with the Delaware Settlement.
     During the year ended June 30, 1999,  the  purchase of 2,904,016  shares of
       Common  Stock  was  financed,  in part,  through  a long term note in the
       amount of $3,558,032.
     During the year ended June 30, 1999,  $22,000,000  of the  Company's  short
       term debt was assumed by the the purchaser in in connection with the sale
       of certain assets at Freehold Raceway and Garden State Park.
     During the year ended June 30,  2000,  a note payable to the Company in the
       amount of $23,000,000  was issued by the purchaser in connection with the
       sale of the El Rancho property.

See Notes to Consolidated Financial Statements.


                                       27
<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 30, 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 30, 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
restructuring  agreement  returned  the  loan to a good  standing  position  and
extended 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 El Rancho properties. On
May 22,  2000 the  Company  closed  on the sale of the El  Rancho  property  and
reduced the debt to Credit Suisse to $14,668,022.  Unless the scheduled  closing
of the Garden State Park property prior to December 1, 2000 is consummated,  the
Company  will be in  default  with  respect  to the  Credit  Suisse  loan due on
November 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
the sale of the Garden State Park property will be  consummated or to the timing
thereof.

     The Company has sustained losses of approximately $7 million,  $7.9 million
and $18.3 million during fiscals 2000, 1999 and 1998,  respectively and has been
in a negative  working  capital  position at the end of each of the three years.
The Company  believes its projected cash flows from its current  operations will
be sufficient until November 30, 2000 and there can be no assurances beyond that
date.

     The Company currently  estimates that  approximately  $150,000 per month is
needed to cover  operating  expenses  of  International  Thoroughbred  Breeders.
Should the closing of the Garden state Park property be delayed beyond  November
30,  2000,  the  Company  will  need to seek  additional  short  term  loans  or
additional advances from the buyer to fund its operations

     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) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A) Nature of  Operations  - The  Company is  currently  in the  process of
effecting a sale of its Garden State Park  Property in Cherry Hill,  New Jersey.
Prior to  January  28,  1999,  the  Company

                                       28
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


conducted live race meetings for Thoroughbred and Harness  (Standardbred) horses
and participated in intrastate and interstate  simulcast  wagering as a host and
receiving  track in Cherry Hill  ("Garden  State Park") and Freehold  ("Freehold
Raceway"), New Jersey.

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

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

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

     The Company has adopted the provisions of Statement of Financial Accounting
Standards  No. 121 ("SFAS 121")  "Accounting  for the  Impairment  of Long-Lived
Assets  and for  Long-Lived  Assets to Be  Disposed  Of."  SFAS 121  establishes
accounting   standards  for  the  impairment  of  long-lived   assets,   certain
identifiable  intangibles  and  goodwill  related to those assets to be held and
used for long-lived assets and certain  identifiable  intangibles to be disposed
of. The Company  reviews the carrying  values of its long- lived property assets
for possible  impairment  whenever events or changes in  circumstances  indicate
that  the  carrying  amount  of the  assets  may  not be  recoverable  based  on
undiscounted  estimated  future  operating  cash flows.  As of June 30, 1998 and
1999, the Company determined that an impairment had occurred. (See E below).

     (E) Property Held for Sale - As of June 30, 1997,  construction in progress
included the purchase price as well as  construction  costs in conjunction  with
the development of the El Rancho Property.  These amounts included real property
acquisition  costs  in the  amount  of  approximately  $43,500,000,  capitalized
interest of $4,182,007, consulting and other development costs. As of July 1997,
development of the El Rancho  Property was  suspended.  On January 28, 1999, the
Company fully and finally  consummated the settlement  agreement entered into on
July 2, 1998 ("the Delaware  Settlement").  As part of the Delaware  Settlement,
the  Company  provided  for the sale of the El Rancho  Property.  As of June 30,
1998, the El Rancho Property was  reclassified to "Property held for Sale" after
recording  an  impairment  charge  during the fourth  quarter of Fiscal  1998 of
approximately  $3,430,000 to adjust it to fair value,  after taking into account
the estimated  fair value of the reversion of Las Vegas  Entertainment  Network,
Inc.'s shares of the Company's  common stock.  In the absence of a public market
for the Company's Common Stock,  management  determined the estimated fair value
of the Common Stock to be the anticipated book value  attributable to the Common
Stock  after  taking into  account the  estimated  operating  results  until the
disposition of the racetrack operations assumed to have occurred on December 31,
1998, the disposal of the racetrack assets and the El Rancho Property, and other
transactions contemplated in the Delaware Settlement. (See Note 4)

     (F) Net Assets of  Discontinued  Operations - At June 30, 1998,  the Garden
State  Property  and  Freehold   Raceway  were  classified  as  "Net  Assets  of
Discontinued  Operations."  During the third quarter of Fiscal 1999, the Company
recognized a net gain of $3,657,688 from the sale of Freehold Raceway,  the sale
of a ten-acre  parcel at the Garden  State  Park  facility  and the lease of the
Garden State Park facilities after applying  approximately  $14,000,000 from the
transaction to reduce the fair value of the Garden State

                                       29
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


property.  At June 30, 2000, the remaining net assets and  liabilities of Garden
State  Park  and  Freehold  Raceway  were  classified  as  "Net  Liabilities  of
Discontinued Operations."

     (G)  Recent  Accounting  Pronouncements  -  In  June  1998,  the  Financial
Accounting  Standards Board issued Statement of Financial  Account Standards No.
133,  "Accounting  for  Derivative  Instruments"  ("SFAS  133 as amended by SFAS
137").  SFAS 137 delays the effective date of  implementation of SFAS 133 by one
year.  SFAS 133  establishes  accounting and reporting  standards for derivative
instruments  and for  hedging  activities.  SFAS  133  requires  that an  entity
recognize  all  derivatives  as either assets or  liabilities  and measure those
instruments at fair market value. Presently, the Company does not use derivative
instruments  either in hedging  activities or as investments.  Accordingly,  the
Company  believes  that the  adoption  of SFAS 133 will  have no  impact  on its
financial position or results of operations.

     The  Company  has no  material  comprehensive  income  items as  defined in
Statement of Financial  Accounting  Standards No. 130, "Reporting  Comprehensive
Income".

     (H) Deferred  Financing  Costs - Deferred  financing costs at June 30, 1998
include those amounts associated with its May 23, 1997 financing  agreement with
Credit Suisse First Boston Mortgage Capital LLC("Credit Suisse"). These costs of
$6,238,731  were  expensed  over  the  two-year  life of the loan  which  had an
original due date of June 30, 1999.

     (I) Revenue  Recognition - The Company  recognized the revenues  associated
with horse racing at Garden State Park and Freehold Raceway as they were earned.
Both Garden State Park and Freehold Raceway operated as satellite wagering sites
for both  thoroughbred  and harness racing meets conducted at other  racetracks.
The tracks  received  broadcasts  of live  racing  from other  racetracks  under
various  simulcasting  agreements.  The tracks also provided  broadcasts of live
racing  conducted at the Company's  facilities to other racetracks under various
host  simulcasting  agreements.  Under these contracts,  the Company received or
paid  pari-mutuel  commissions of varying  percentages of simulcast  pari-mutuel
wagering.  Costs and expenses associated with horse racing revenues were charged
against  income  in those  periods  in which  the  horse  racing  revenues  were
recognized. Other costs and expenses, including advertising,  were recognized as
they actually occur throughout the year.

     (J) Income Taxes - The Company has adopted the  provisions  of Statement of
Financial  Accounting  Standards No. 109,  "Accounting  for Income Taxes" ("SFAS
109").  SFAS 109 requires a company to recognize  deferred tax  liabilities  and
assets  for the  expected  future  tax  consequences  of  events  that have been
recognized  in its  financial  statements  or tax  returns.  Under this  method,
deferred  tax  liabilities  and assets are  determined  based on the  difference
between the  financial  statement  carrying  amounts and tax bases of assets and
liabilities. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

     (K) Cash and Cash  Equivalents  - The Company  considers  all highly liquid
investments  with  an  original  maturity  of  three  months  or less to be cash
equivalents.

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

                                       30
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

     (N) Net Loss per Common  Share - In March 1997,  the  Financial  Accounting
Standards  Board issued  Statement of Financial  Accounting  Standards  No. 128,
"Earnings  Per Share"  ("SFAS  128").  SFAS 128  provides a different  method of
calculating  earnings  per  share  than was  used in APB  Opinion  15.  SFAS 128
provides for the  calculation  of basic and diluted  earnings  per share.  Basic
earnings  per share  includes  no dilution  and is  computed by dividing  income
available to common stockholders by the weighted average number of common shares
outstanding  for the period.  Diluted  earnings per share reflects the potential
dilution of securities that could share in the earnings of an entity.

     Loss per common  share is  computed by  dividing  net loss by the  weighted
average  number of shares of common stock  outstanding.  Options and warrants to
purchase  3,104,000  shares of Common Stock at various prices per share, for the
each of the two  years  ended  June 30,  2000 and 1999 and  3,271,847  shares of
Common Stock at various prices per share, for the year ended June 30, 1998, were
not included in the  computation of diluted loss per share as their effect would
be anti-dilutive.

(3) 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.,  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. Greenwood Racing, Inc.
has guaranteed the  performance  by the purchaser of all  obligations  under the
Contingent  Notes,  and Pennwood  Racing,  Inc.  ("Pennwood  "), a joint venture
between Greenwood Racing, Inc. and 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,  has also guaranteed
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 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
for working capital purposes, to reduce debt and pay fees.


                                       31
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


    The discontinued operations are summarized as follows:
--------------------------------------------------------------------------------
                                          Years Ended June 30,
                                          --------------------
DISCONTINUED RACETRACK OPERATIONS:        1999 *         1998
                                          ------         ----

REVENUE                               $  37,992,012 $  68,636,449
                                      ------------- -------------

EXPENSES:

  Cost of Revenues:

    Purses                               12,591,222    22,370,695

    Operating Expenses                   16,612,009    31,794,410

    Depreciation & Amortization           1,078,701     1,665,206

  General & Administrative Expenses       2,619,944     4,607,984

  Interest Expenses                         484,404       855,421
                                      ------------- -------------

           TOTAL EXPENSES                33,386,280    61,293,716
                                      ------------- -------------

INCOME FROM DISCONTINUED RACETRACK

  OPERATIONS BEFORE TAXES                 4,605,732     7,342,733

    INCOME TAX EXPENSE                      119,348       135,100
                                      ------------- -------------
                                          4,486,384     7,207,633

NET GAIN ON SALE OF NET ASSETS OF
 DISCONTINUED OPERATIONS
 (NET OF $1,335,500 STATE
  INCOME TAXES)                           3,657,688             0
                                      ------------- -------------

INCOME FROM DISCONTINUED
 RACETRACK OPERATIONS                 $   8,144,072 $   7,207,633
                                      ============= =============

--------------------------------------------------------------------------------
* July 1, 1998 to January 28, 1999

     As of June 30, 1998, the Garden State Property was  reclassified to "Net As
sets of Discontinued  Operations."  During the third quarter of Fiscal 1999, the
Company  recognized a net gain of $3,657,688 from the sale of Freehold  Raceway,
the sale of a ten-acre parcel at the Garden State Park facility and the lease of
the Garden State Park facilities after applying approximately  $14,000,00 0 from
the transaction to reduce the fair value of the Garden State property.

                                       32
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The  net  assets  of the  operations  to be  disposed  of  included  in the
accompanying consolidated balance sheets as of June 30, 1999 and 1998 consist of
the following:
<TABLE>
                                                                      June 30,
                                                           ----------------------------
Classified As:                                                  2000           1999
                                                                ----           ----
<CAPTION>
<S>                                                       <C>            <C>
Current Assets                                            $     546,034  $   2,201,036
Current Liabilities                                          (1,055,611)     1,706,337
Deferred Income                                              (1,000,000)           -0-
                                                           --------------  ------------
   Net Assets of Discontinued Operations - Current                   -0-       494,699
   Net Liabilities of Discontinued Operations - Current      (1,509,577)           -0-
Property Assets of Garden State Park                         30,000,000     30,000,000
                                                           --------------  ------------
         Net Assets of Discontinued Operations            $  28,490,423  $  30,494,699
                                                           ==============  ============
</TABLE>

     Cash flows from  discontinued  operations  for the year ended June 30, 1999
and 1998 consist of the following:
<TABLE>
                                                                                       June 30,
Cash Flows From Discontinued Operating Activities:                              1999              1998
                                                                           ---------------   ---------------
<CAPTION>
<S>                                                                      <C>          <C>
      Income                                                             $ 8,144,072  $  7,207,633
                                                                          -----------   -----------
      Adjustments to reconcile income to net cash provided by
          discontinued operating activities

        Depreciation and Amortization                                      1,078,701     1,665,206

        Net (Gain) Loss on Sale of Discontinued Operations                (3,657,688)        1,007

        Changes in Operating Assets and Liabilities of
           Discontinued Operations:

                   Decrease in Restricted Cash and Investments             3,444,267       277,040
                   Decrease in Accounts Receivable                           331,742       287,694
                   Decrease in Other Assets                                   21,142       140,165
                   Decrease in Prepaid Expenses                              773,312       534,625
                   Increase (Decrease) in Accounts and Purses
                    Payable and Accrued Expenses                           1,790,189      (940,299)
                   (Decrease) Increase in Deferred Revenue                (1,770,159)       19,587
                                                                          -----------   -----------
      Net Cash Provided by Discontinued Operating Activities              10,155,578     9,192,657
                                                                          -----------   -----------
Cash Flows From Discontinued Investing Activities:

      Proceeds from Sale of Land                                                 -0-     8,449,904
      Capital Expenditures                                                   (69,616)     (212,227)
      (Increase) in Other Investments                                        (77,032)      (13,012)
                                                                          -----------   -----------
      Net Cash (Used In) Provided by Discontinued Investing Activities   $  (146,648) $  8,224,665
                                                                          -----------   -----------
</TABLE>

                                       33
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
                                                                             June 30,
                                                                             --------
                                                                      1999              1998
                                                                 ---------------   ---------------
<CAPTION>
Cash Flows from Discontinued Financing Activities:
<S>                                                            <C>               <C>
      Principal Payments on Sun Mortgage                       $            -0-  $    (6,000,000)
      Principal Payments on Short Term Notes                          (856,475)         (733,719)
      Increase (Decrease) in Balances Due To/From
       Continuing Operations                                         1,823,666        (8,376,135)
      Principal Payments on Long Term Notes                        (13,404,853)       (1,132,272)
                                                                 ---------------   ---------------
      Net Cash (Used In) Discontinued Financing Activities         (12,437,662)      (16,242,126)
                                                                 ---------------   ---------------

      Net (Decrease) Increase in Cash and Cash Equivalents
      From Discontinued Operations                                  (2,428,732)        1,175,197

        Cash and Cash Equivalents at Beginning of Year
        From Discontinued Operations                                 3,166,900         1,991,705
                                                                 ---------------  --------------
        Cash and Cash Equivalents at End of Year From
        Discontinued Operations                                $       738,168   $     3,166,900
                                                                 ===============  ==============
</TABLE>

     On January 25, 2000, the Company entered into an Agreement of sale pursuant
to which it has agreed to sell the real  property  known as Garden State Park to
Turnberry/Cherry Hill LLC. Under the Agreement of Sale, as amended, the purchase
price for the Garden State Park real property is $30 million, plus assumption of
certain  monetary  obligations  of the Company with respect to the property sold
which aggregate approximately $500,000 (the "Assumed Liability"). The buyer also
agreed to pay up to $200,000 per month of the Company's  out-of-pocket  carrying
costs of the Garden State Park property after April 15, 2000 (including interest
on the Company's  Mortgage debt). At closing,  $20 million of the purchase price
will be payable in cash (of which the Company has already  received  deposits of
$1,000,000),  and the buyer will deliver its promissory  note in the face amount
of $10  million  (the  "Note").  Under  the Note,  once the  buyer has  received
distributions  from  the  buyer  equal to the  amount  of its  invested  capital
contributions  plus an agreed upon return  thereon,  the next $10 million of the
buyer's  distributable cash would be paid under the Note to the Company, and the
Company  thereafter  would receive payments under the Note equal to one-third of
the   distributable   cash  of  the  buyer,   including   (without   limitation)
distributable cash generated by development, sale or leasing of the Garden State
Park property. The agreed upon rate of return to be paid to buyer's owner on its
invested  capital  contributions,  before  payments under the Note will be made,
will be 15% per year,  except  that the rate of return on  capital  invested  by
buyer's owner to cover certain costs,  in excess of $1,000,000,  which buyer may
incur in respect  of the  Assumed  Liability,  environmental  investigation  and
remediation,   and  various  other  specified  items  (including  the  September
extension fee of $146,680 paid to the Company's primary lender, CSFB), may be as
high as 33 1/3% per annum.  Closing is  scheduled  to occur prior to December 1,
2000.  The parties  continue  to  negotiate  certain  issues and there can be no
assurance that the transaction will be consummated.


                                       34
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(4) SALE OF THE El RANCHO PROPERTY

     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
sales 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 can be convertible at the Company's option into a 33
1/3% equity interest in the buyer.

     The  interest  rate will be adjusted  from time to time since the  interest
actually  payable will be dependent upon, and payable solely out of, the buyer's
net cash flow available for  distribution  to its equity owners  ("Distributable
Cash").   After  the  equity   investors  in  the  buyer  have  received   total
distributions equal to their capital contributions plus an agreed upon return on
their invested capital,  the next $23 million of Distributable Cash will be paid
to the Company.  The Company will  thereafter  receive  payments  under the note
equal to 33 1/3% of all Distributable Cash until the maturity date, 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 sales price of  $45,000,000  exceeded the  remaining  basis and closing
costs in the property by  $2,786,589.  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.

(5) ACQUISITIONS AND DISPOSITIONS

       Fiscal 2000

     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.

       Fiscal 1999

     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.,  which owns
Philadelphia Park racetrack,  the Turf Clubs and Phonebet. The transaction later
included Pennwood Racing,  Inc. ("Pennwood "), a joint venture between Greenwood
Racing, Inc. and

                                       35
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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. (See Note 3)

     In connection with the January 28, 1999 transactions, 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).  This asset is recorded
in net assets of discontinued operations.

     Pursuant to the terms of the  Delaware  Settlement,  the Company  purchased
from NPD, Inc. ("NPD") approximately 2.9 million shares of ITB common stock (the
"NPD Shares") for $4.6 million cash and the  assumption by ITB of a $5.8 million
promissory  note  originally  issued by NPD to acquire the NPD  Shares,  held by
Donald F.  Conway,  Chapter 11 Trustee  for the  Bankruptcy  Estate of Robert E.
Brennan (the "Bankruptcy Trustee").

       Fiscal 1998

     On July 1, 1997, the Company made a  non-refundable  payment of $600,000 to
purchase  an  option  to  acquire  the  leasehold   interests  from  D&C  Gaming
Corporation  ("D&C"),  a company owned equally by the Company's former Director,
CEO  and  President,  Nunzio  P.  DeSantis,  and by the  Chairman  of Las  Vegas
Entertainment  Network,  Inc. ("LVEN"),  to acquire operating leases for two New
Mexico racetracks. Subsequently, the option agreement has been terminated by the
Company and D&C. In the Delaware  litigation,  the minority  Board  members have
challenged the authorization and enforceability of certain agreements, including
the option agreement.  In connection with the Delaware Settlement,  the $600,000
has been included in the calculation of the purchase price of the NPD shares.

     On October 20, 1997, the Company sold a parcel of land contiguous to Garden
State Park for $9,000,000 exclusive of closing costs of approximately  $545,190.
The carrying  value of such  property was  $6,767,715.  $6,000,000 of such sales
proceeds was used to repay an existing  mortgage on the property.  The resulting
gain was recorded as an adjustment to  Stockholders'  Equity in accordance  with
accounting principles applicable to a quasi-reorganization.

(6) INVESTMENTS

     Interest  income for the fiscal years ended June 30, 2000,  1999,  and 1998
was $109,254,  $343,572, and $689,092,  respectively.  Realized losses resulting
from the sale of trading securities for fiscals 1999 were $12,908. There were no
realized  gains or losses  resulting  from the sale of  trading  securities  for
fiscals 2000 and 1998 .

                                       36
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(7) LAND, BUILDINGS AND EQUIPMENT

     Land,  buildings and equipment  acquired prior to June 30, 1993 are carried
at their adjusted fair value in accordance with accounting principles applicable
to a  quasi-reorganization  which was completed on that date. All other property
assets are recorded at cost.  Depreciation  is being computed over the estimated
remaining useful lives using the straight-line method.

Major classes of land, buildings and equipment consist of the following:


                         Estimated Useful         June 30,
                                                  --------
                          Lives in Years     2000           1999
                          --------------     ----           ----

Buildings and Improvements   15-40       $  214,097     $  214,097

Equipment and Artwork        5-15         1,199,284        683,428
                                          ---------        -------

Totals                                    1,413,381        897,525

Less Accumulated Depreciation
 and Amortization                           387,404        329,667
                                          ---------        -------
                                         $1,025,977     $  567,858
                                         ==========     ==========


     As of June 30, 1999 and 1998, Land,  Buildings and Improvements,  Equipment
relating to the racetrack  operations and the El Rancho Property were classified
as "Property Held For Sale", "Net Assets of Discontinued  Operations - Current",
and "Net Assets of  Discontinued  Operations - Long Term".  As of June 30, 2000,
Land, Buildings and Improvements, Equipment relating to the racetrack operations
were classified as "Net Liabilities of Discontinued  Operations - Current",  and
"Net Assets of Discontinued Operations - Long Term".

                     (This space intentionally left blank)


                                       37
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8)  NOTES AND MORTGAGES PAYABLE
         Notes and Mortgages Payable are summarized below:

<TABLE>

                                                                       June 30, 2000            June 30, 1999
                                                                       -------------            -------------
                                           Interest %
                                           Per Annum               Current    Long-Term      Current   Long-Term
                                    ----------------------------------------------------------------------------
<CAPTION>
International Thoroughbred
Breeders, Inc.:

<S>                                                          <C>             <C>         <C>            <C>
Credit Suisse First Boston (A)            LIBOR Rate plus 7% $   14,668,022  $      -0-  $  30,500,000  $  -0-
                                      (6/30/00  rate 13.64%)

REB Bankruptcy Trustee (B)             Prime Rate   (6/30/00      3,652,226         -0-      3,558,032     -0-
                                                 rate 9.50%)

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

Other                                                Various        276,461         -0-        239,113     -0-

Garden State Park:

Service America Corporation (D)                           6%        320,000         -0-        400,000     -0-

Other (E)                                            Various        179,375         -0-        344,954     -0-
                                                             --------------  ----------  -------------  ------
    Totals                                                   $   19,181,082  $  482,000  $  35,042,099  $  -0-

 Net Assets of Discontinued
  Operations - Long Term                                                -0-         -0-      (744,954)     -0-

 Net Liabilities of Discontinued
  Operations - Long Term                                          (499,375)         -0-            -0-
                                                             --------------  ----------  -------------  ------
Totals                                                       $   18,596,709  $  482,000  $  34,297,145  $  -0-
                                                             ==============  ==========  =============  ======
</TABLE>


The  effective  LIBOR  Rate and the Prime  Rate at June 30,  2000 were 6.64% and
9.50%,  respectively.  There was no short term borrowings outstanding as of June
30, 2000.


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

      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

                                       38
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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  returned the loan to a good standing  position
and extended 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  agreed,  pursuant  to the
Restructure  Agreement,  to advance the  monthly  interest  payments  due by the
Company under the CSFB Loan until April 15, 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.

       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. On May 22,
2000, the proceeds from the sale of the El Rancho property were principally used
by  the  Company  to  reduce  the  outstanding  balance  on  the  CSFB  Loan  to
$14,668,022. The Company has entered into an Agreement of sale pursuant to which
it has  agreed  to  sell  the  real  property  known  as  Garden  State  Park to
Turnberry/Cherry  Hill LLC.  CSFB has agreed to extend the maturity  date of the
Company's  mortgage  indebtedness  to November  30, 2000 in order to permit this
sale to the buyer, subject to payment of interest monthly in advance and payment
of monthly  extension  fees for  September,  October and November,  2000, in the
amount of $146,680 per month. The buyer has been paying the interest accruing to
CSFB since April 15, 2000 and has paid the  extension  fee for  September in the
amount of $146,680.  Extension  fees paid by the buyer for October and November,
2000 will be credited towards the purchase price at closing.  If the transaction
fails to close by November 30, 2000, or if the buyer (or its principal) fails to
pay either the monthly interest or extension fee due on October 1 or November 1,
CSFB may declare a default and proceed to sell the Garden State Park property.

      The Credit Suisse Credit Facility is evidenced by a convertible promissory
note (the "Credit  Suisse Note")  pursuant to which $10 million of the aggregate
principal  amount of the CSFB Note can be  converted  in certain  circumstances,
including on the maturity date of the CSFB Note, upon the prepayment of at least
$10  million  in an  aggregate  principal  amount  of  the  CSFB  Note  or  upon
acceleration  of the CSFB Note, at the option of Credit  Suisse,  into shares of
the Company's  Common Stock at a conversion price of $8.75 per share (subject to
adjustment in certain events).  In addition,  Credit Suisse was granted warrants
to purchase  1,044,000  shares  (valued at  $1,269,579)  at an exercise price of
$4.375 per share  (subject to  adjustment  in certain  events).  The warrants to
purchase  546,847  shares  are  immediately  exercisable,  have  been  valued at
approximately  $1.6 million and have been recorded as original  issue  discount.
The warrants to purchase  497,153  shares became  exercisable  January 28, 1999,
following  the  consummation  of the Delaware  Settlement  and were  recorded as
financing  expenses  in the amount of  $1,242,883  during  the third  quarter of
Fiscal 1999.

                                       39
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


      Credit Suisse also received  232,652 shares of the Company's  Common Stock
upon the prior  conversion  of a $10.5  million  promissory  note  issued by the
Company  to LVEN in  consideration  for Credit  Suisse's  consent  and  advisory
services in connection  with this  transaction.  The Company has granted  Credit
Suisse certain  registration rights with respect to the above described warrants
and shares.

      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.

     (B) On January 28, 1999, in connection  with the Delaware  Settlement,  the
Company  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. Proceeds from the sale of the El Rancho property (See Note 4) were used to
reduce the CSFB debt due to this note being  subordinate to the CSFB debt.  (See
below)

      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.  Pursuant to the Restructure
Agreement,  the Trustee Note is subordinate to the CSFB Loan,  thereby principal
and interest payments on the Trustee Note will be made only if and when the CSFB
Loan is paid in full.

      (C) 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.

                                       40
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


      (D) 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 September  30,  2000)  financed by a five (5) year
promissory  note at a 6% interest  rate.  The Company  paid  $100,000 on June 1,
1999, a principal  and  interest  payment of $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.

      (E) 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.

(9) INCOME TAX EXPENSE

      In the event the Company  incurs  income  taxes in the future,  any future
income tax benefits  resulting from the utilization of net operating  losses and
other  carryforwards  existing at June 30, 1993 to the extent  resulting  from a
quasi-reorganization  of the Company's assets effective June 30, 1993, including
those assets  associated  with the possible  sale of the Garden State  Property,
will be excluded from the results of operations and credited to paid in capital.

      The Company's income tax expense for the year ending June 30, 1998 relates
to New Jersey  income  taxes for its  Freehold  Raceway  operations  and for the
fiscal  year ended June 30,  1999  relates  to New Jersey  income  taxes for its
Freehold Raceway operations and for the sale of the property.

      At  June  30,  1993,  the  Company  effected  a  quasi-reorganization   in
conformity  with generally  accepted  accounting  principles.  The effect of the
quasi-reorganization  was to decrease asset values for financial reporting,  but
not for  Federal  income tax  purposes.  Accordingly,  depreciation  expense for
Federal income tax purposes continues to be based on amounts that do not reflect
the accounting quasi-reorganization.

      The Company has net operating loss carryforwards aggregating approximately
$217,000,000  at June 30, 2000  expiring in the years June 30, 2002 through June
30, 2020.  SFAS No. 109 requires the  establishment  of a deferred tax asset for
all deductible temporary  differences and operating loss carryforwards.  Because
of the  uncertainty  that  the  Company  will  generate  income  in  the  future
sufficient  to fully or partially  utilize  these  carryforwards,  however,  the
deferred  tax  asset of  approximately  $90,000,000  is  offset  by a  valuation
allowance of the same amount. Accordingly, no deferred tax asset is reflected in
these financial statements.

      Certain amounts of the net operating loss  carryforward may be limited due
to possible changes in the Company's stock ownership.  In addition,  the sale of
Common Stock by the Company to raise  additional  operating funds, if necessary,
could limit the  utilization  of the  otherwise  available  net  operating  loss
carryforwards.  The grant and/or  exercise of stock options by others would also
impact the number of shares which could be sold by the Company or by significant
stockholders without affecting the net operating loss carryforwards.


                                       41
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company has the following  carryforwards  to offset future taxable income at
June 30, 2000:

     Net Operating Loss          Year End
       Carryforwards         Expiration Dates
       -------------         ----------------

        $45,750,000             6/30/2002

         26,400,000             6/30/2003

         19,900,000             6/30/2004

         15,600,000             6/30/2005

         11,800,000             6/30/2006

         97,730,000             6/30/2007
         ----------         through 6/30/2020
       $217,000,000
       ============

(10)  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 was accrued in Fiscal 1998), 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.

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

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

     In connection  with the  environmental  evaluation on the Garden State Park
property by the  prospective  buyer,  the Company has been made aware of certain
environmental  issues that may have to be addressed  with respect to the sale of
the property.  At this time, the Company cannot make a  determination  as to any
costs that would be  necessary  to correct  the  situation  or the extent of any
violations.  In addition,  the State of New Jersey has fined the Company $75,000
for alleged violations with respect to required  environmental reports not being
filed with the state following the property's lease to Pennwood.  The Company is
negotiating  with Pennwood to recover the cost in  accordance  with the terms of
the lease.

                                       42
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


      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 is being paid by Greenwood as part of the lease  agreement.
In the event that the Company or Pennwood  terminates its lease  agreement prior
to July 2001 when the note is fully paid,  the Company will be  responsible  for
the monthly note payments of approximately  $17,000. The Company may be required
to reimburse approximately $240,000 to Pennwood for all the payments made on the
note from the  inception  of the lease should the Company sell the property to a
third  party.  The Company is currently  negotiating  with  Turnberry  for these
reimbursement costs to be included as a cost of purchasing the property.

      In connection with the January 28, 1999 lease  transactions for the Garden
State  Park  facility,  the  Company  purchased  a  liquor  license  owned by an
unaffiliated third party, Service America Corporation, for $500,000 ($100,000 of
which will be paid by the lessee when title is  transferred  to Pennwood,  which
event has not  occurred as of September  30,  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. In the event
Pennwood is awarded a license to own and operate an off-track  betting  facility
prior to January 28,  2002,  the Company  will be required to release the liquor
license to  Pennwood  in  consideration  of the  $100,000  payment to be made by
Pennwood for the transfer of the title to the liquor license.

      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 from being lost due to the shares being  transferred,  the Company
and the Trustee have entered into an agreement whereby the Trustee has agreed to
accept a letter of credit for $1,150,000,  which will be secured by an amount of
$1,150,000  held in escrow,  that will be used to purchase  his  interest in the
Shares in the event that he is awarded a  judgement  granting  him an  ownership
interest in the Shares.

      The Company's debt with CSFB is due on November 30, 2000.  Unless the sale
of the 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 sale must be in an amount  sufficient to satisfy the loan
due on the trustee note together with accrued interest.  The total amount due on
November 30, 2000 to satisfy the CSFB loan  together  with accrued  interest and
fees and the trustee  note  together  with  accrued  interest  is  approximately
$18,600,000.  The proceeds  from the sale of the Garden State Park  property are
expected to be sufficient to meet this obligation.

LEGAL PROCEEDINGS

DELAWARE SETTLEMENT

     On  January  28,  1999,  the  Company  fully and  finally  consummated  the
settlement and dismissal of the following actions: Quigley et al. v. DeSantis et
al., C.A. No. 15919, in the Court of Chancery of the State of Delaware;  Rekulak
v.  DeSantis et al.,  C.A. No.  15920,  in the Court of Chancery of the State of
Delaware;  Green v.  DeSantis,  et al., C.A. No.  97-CV-5657,  in the New Jersey
District Court. These actions were settled in connection and accordance with the
Stipulation and Agreement of Compromise,  Settlement and Release entered into on
July 2, 1998 to resolve the above action entitled  Quigley et al. v. DeSantis et
al. (the "Delaware Settlement").

                                       43
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Pursuant to the terms of the  Delaware  Settlement,  the Company  purchased
from NPD, Inc. ("NPD")  approximately 2.9 million shares of the Company's common
stock (the "NPD  Shares")  for $4.6  million in cash and assumed a $5.8  million
promissory  note  originally  issued by NPD to acquire the NPD  Shares,  held by
Donald F.  Conway,  Chapter 11 Trustee  for the  Bankruptcy  Estate of Robert E.
Brennan (the "Bankruptcy  Trustee").  In addition,  pursuant to the terms of the
Delaware  Settlement and with the approval of the United States Bankruptcy Court
for the District of New Mexico in an action in which AutoLend Group, Inc. is the
debtor,  NPD returned to AutoLend Group, Inc. the $2 million  originally pledged
by AutoLend Group,  Inc. to secure the  aforementioned  $5.8 million  promissory
note (the  "NPD  Note").  The  Company  understands  that the  Company's  former
director Nunzio P. DeSantis is Chairman,  President and a principal  stockholder
of AutoLend Group,  Inc., and the Company's former chairman and director Anthony
Coelho is a director of AutoLend Group, Inc.

     The approval of certain transactions between ITB and the Bankruptcy Trustee
by the United  States  Bankruptcy  Court for the  District  of New Jersey in the
action  entitled In re Robert E.  Brennan,  C.A. No.  95-35502,  was a condition
precedent to the consummation of the Delaware Settlement. This approval was duly
received and the Company  consummated a separate  settlement with the Bankruptcy
Trustee   necessary  to  consummate  the  Delaware   Settlement   (the  "Trustee
Settlement").  Pursuant  to  the  Trustee  Settlement,  the  Bankruptcy  Trustee
received:  (a) a pay down on the NPD Note from the original principal balance of
$5,808,032 to $3,558,032 (see  Note11-B);  (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.  As a result of the
Trustee Settlement, the Company secured (a) the power to consummate the Delaware
Settlement,  (b) releases from the Bankruptcy Trustee in favor of all parties to
the  Delaware  Settlement,  including  the  Company,  and (c) the right to defer
certain  interest  payments  due under the ITB Note until the  maturity  of such
note.

      Upon consummation of the Delaware Settlement,  Nunzio P. DeSantis, Anthony
Coelho,  and Joseph  Zappala  immediately  resigned from the Company's  board of
directors  and  terminated  any  and all  employment  agreements  or  consulting
arrangements with the Company.  Francis W. Murray and Robert J. Quigley remained
directors,  and during the quarter  ended March 31, 1999,  John U.  Mariucci and
James J. Murray were elected by the remaining directors to serve on the board of
directors until the next annual stockholders' meeting.

     Also pursuant to the Delaware Settlement,  Las Vegas Entertainment Network,
Inc.  ("LVEN") was granted the  exclusive  right to sell the El Rancho  Property
until November 20, 1998 and the co-extensive  right, along with the Company,  to
sell the El Rancho  Property until April 19, 1999.  Beginning  January 19, 1999,
and ending  upon the  earlier of a sale of the El Rancho  Property  or April 19,
1999,  LVEN was required to pay one-half of the carrying costs  associated  with
maintaining the El Rancho  Property.  LVEN also obtained the right,  exercisable
from March 20, 1999 until April 19, 1999,  to refinance  the El Rancho  Property
and thereby obtain the extended  right to sell the El Rancho  Property until the
earlier of (a) one year from April 19,  1999 or (b) the  midpoint of the term of
the refinancing loan (the "Refinancing

                                       44
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Option").  LVEN did not sell the El  Rancho  Property  nor did it  exercise  the
Refinancing  Option.  If the Company sells or refinances the El Rancho  property
after  April 19, 1999 for an amount in excess of  $44,200,000,  plus one half of
the carrying  costs from January 20, 1999 to April 19, 1999,  plus the customary
transaction costs incurred by the Company in such sale (the "Threshold Amount"),
then LVEN  shall  receive  from such cash  proceeds  in excess of the  Threshold
Amount up to the amount of  $12,000,000 of cash sale proceeds over and above the
Threshold  Amount,  out of which LVEN will direct that the first  $2,000,000  be
paid over to NPD. NPD is owned by Nunzio DeSantis, the Company's former Director
and CEO and Tony  Coelho,  the  Company's  former  Director  and Chairman of the
Board. On January 25, 2000, the Company signed a binding term sheet for the sale
of the El Rancho Property.

     In exchange for the foregoing,  LVEN (a) executed and delivered releases to
all parties to the Delaware Settlement, including the Company and Credit Suisse,
(b)  returned to ITB for  immediate  cancellation  the  2,093,868  shares of ITB
common stock (the "LVEN Shares") previously issued to Casino- Co Corporation,  a
subsidiary of LVEN, in exchange for the  cancellation of a certain $10.5 million
note plus accrued  interest from ITB to LVEN, which note remains  canceled,  (c)
released any and all LVEN or Casino-Co  Corporation interests in the NPD Shares,
and (d)  cancelled  any and all  agreements  of any  kind or  nature  whatsoever
between LVEN and its affiliates and ITB or any of its subsidiaries.

     The  foregoing  summary  of the  terms  and  transactions  relating  to the
Delaware  Settlement and the Trustee Settlement is qualified by reference to the
actual  documents  filed with the  respective  courts in the  actions  discussed
above.

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 Settlement,  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."

                                       45
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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,  was a purported class action suit brought by the same plaintiffs
as the  Harris-Federal  action.  The  complaint  alleged  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.

NEW JERSEY SETTLEMENT

     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 were to be fully and finally
dismissed with  prejudice,  and ITB and all defendants were 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 provided that
the Proposed New Jersey  Settlement  would be submitted  for approval to the New
Jersey  Superior  Court,  that a fee petition  would be submitted by plaintiffs'
attorneys  in the New Jersey  Actions for  approval  by the New Jersey  District
Court, and that the Harris-Federal action would be dismissed on the grounds that
the plaintiffs' claims are barred and released as a result of the settlement and
dismissal of the Quigley  Action by the Delaware Court of Chancery on October 6,
1998. Pursuant to the Proposed New Jersey Settlement,  the plaintiffs agreed not
to file objections to the Delaware Settlement.

     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.

     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.  On  February  16,  2000,  the New Jersey
District Court granted the plaintiffs'  motion to vacate the dismissal

                                       46
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


order and reopen the Harris-Federal action. The plaintiffs filed a second motion
to enforce the terms of the Proposed New Jersey Settlement on April 25, 2000.

     On May 24,  2000,  the  parties  to the New  Jersey  Actions  agreed to and
executed a Stipulation  of  Settlement  (the "New Jersey  Settlement").  The New
Jersey  Settlement  provides  that,  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 New Jersey 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.  On June
21,  2000,  in light of the  parties'  agreement  to the terms of the New Jersey
Settlement,  the New Jersey  District  Court  dismissed as moot the  plaintiffs'
second motion to enforce the proposed settlement.

      Pursuant to the New Jersey  Settlement,  on June 30, 2000,  the New Jersey
Superior Court  certified  preliminarily,  for the  settlement  purposes only, a
plaintiff  class (the "Class")  consisting of all holders of the Company's stock
between  October  13,  1997 (the date AMEX  suspended  trading of the  Company's
stock) and June 30,  2000,  the date the New Jersey  Superior  Court  entered an
order  approving the form of the proposed  Notice of Settlement to the Class. On
July 13, 2000, pursuant to the New Jersey Settlement,  the Company mailed to all
record  holders of ITB stock within the Class period a Notice of  Settlement  of
the Harris-State action and a Notice of Dismissal of the Harris-Federal action.

     On August  21,  2000,  the New  Jersey  Superior  Court  held a hearing  to
consider  the  fairness  of the  New  Jersey  Settlement  to the  Class.  At the
conclusion of the hearing,  the New Jersey  Superior  Court entered an order (i)
certifying  the Class  pursuant to New Jersey Rule 4:32;  (ii) approving the New
Jersey Settlement as fair, reasonable, adequate and in the best interests of the
Class;  (iii)  dismissing  the Harris-  State  action with  prejudice;  and (iv)
releasing all Class claims against the  defendants  arising from and relating to
the facts alleged in the Second Harris-State Complaint.

     On  September  26,  2000,  the New Jersey  Federal  Court held a hearing to
consider the proposed dismissal of the Harris-Federal action and the application
by plaintiffs'  counsel for payment of attorneys' fees and expenses  incurred in
connection  with pursuing the New Jersey  Actions.  During the hearing,  the New
Jersey Federal Court requested the submission of additional  materials  relating
to the New Jersey Settlement and the Delaware  Settlement.  Plaintiffs'  counsel
submitted the requested  materials to the New Jersey  Federal Court on September
29, 2000.  ITB is hopeful that the New Jersey  Federal  Court,  after  reviewing
these  materials,  will enter  shortly an order  dismissing  the  Harris-Federal
action with  prejudice  and awarding  plaintiffs'  counsel  attorneys'  fees and
reimbursement  of the expenses to be paid by the Company in accordance  with the
New Jersey  Settlement.  There is no assurance that the plaintiffs' 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 Harris-Federal Action.


                                       47
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



OTHER LITIGATION

     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;
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.

(11)  FAIR VALUE OF FINANCIAL INSTRUMENTS

      As of June 30, 2000, in assessing the fair value of financial instruments,
the Company has used a variety of methods and  assumptions,  which were based on
estimates of market conditions and loan risks existing at that time. For certain
instruments,  including  cash  and  cash  equivalents,   investments,  non-trade
accounts  receivable and loans,  and short-term  debt, it was estimated that the
carrying amount  approximated  fair value for the majority of these  instruments
because of their  short-term  maturity.  The carrying  amounts of long term debt
approximate fair value since the Company's  interest rates  approximate  current
interest rates.

(12)  RETIREMENT PLANS

      The Company  maintains a Retirement  Plan under the  provisions of section
401(k) of the Internal  Revenue Code of 1986,  as amended (the "Code")  covering
all its non-union  full time  employees who have  completed one year of service.
The Company's basic contribution under the plan is 4% of each covered employee's
compensation for such calendar year. In addition,  the Company contributes up to
an additional  50% of the first 4% of  compensation  contributed  by any covered
employee to the plan (an employee's maximum contribution is $10,000 factored for
inflation annually). The Company's expense totaled $1,911(utilizing  accumulated
forfeitures),  $137,091  and  $216,848 for the fiscal years ended June 30, 2000,
1999 and 1998, respectively.



(13)  STOCK OPTIONS AND WARRANTS

      (A)  EMPLOYEE AND NON-EMPLOYEE OPTIONS

     In December 1994, the Company's Board of Directors and stockholders adopted
and approved the 1994  Employees'  Stock Option Plan ("Plan").  The Plan permits
the grant of options to  purchase  up to 475,000  shares of Common  Stock,  at a
price per share no less than 100% of the fair market  value of the Common  Stock
on the date the option is granted.  The price would be no less than 110% of fair
market value in the case of an incentive  stock option granted to any individual
who owns more  than 10% of the  Company's  outstanding  Common  Stock.  The Plan
provides for the granting of both  incentive  stock options

                                       48
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


intended to qualify  under  section  422 of the Code,  and  non-qualified  stock
options  which do not  qualify.  No option may have a term  longer than 10 years
(limited  to five  years in the case of an option  granted  to a 10% or  greater
stockholder of the Company).  Options under the Plan are non-transferable except
in the event of death and are only  exercisable  by the holder while employed by
the Company.  Unless the Plan is terminated  earlier by the Board, the Plan will
terminate in June 2004.

      In addition,  the Company has also granted non-qualified stock options for
the purchase of Common Stock to employees  and directors of the Company that are
not part of the above mentioned Plan. These options have been granted with terms
of five and ten years.  These options have been granted at prices per share that
have been below, equal to or above the fair market value on the grant date.

      The  following  table  contains  information  on stock options for options
granted  from the Plan and options  granted  outside the Plan for the three year
period ended June 30, 2000:

                                    Stock Options
                                    -------------
                                       Exercise      Weighted
                         Number       Price Range     Average
                        of Shares      Per Share       Price
                        ---------      ---------       -----
Outstanding at
June 30, 1997            1,600,000  $ 4.00 - $ 5.875  $ 4.59


Granted                    300,000  $ 4.00            $ 4.00
                         ---------
Outstanding at
June 30, 1998            1,900,000  $ 4.00 - $ 5.875  $ 4.50


Canceled                  (350,000) $ 4.00 - $ 5.00   $ 4.14
                         ---------
Outstanding at
June 30, 1999            1,550,000  $ 4.00 - $ 5.875  $ 4.58


Granted                      5,000  $ 1.00            $ 1.00

Canceled                  (200,000) $ 5.875           $ 5.875
                         ---------
Outstanding at
June 30, 2000            1,355,000  $ 1.00 - $ 5.00   $ 4.37
                         =========

                                      Exercise      Weighted
                                     Price Range     Average
                      Option shares   Per Share       Price
                      -------------   ---------       -----
Exercisable at June 30:

1998                    1,900,000   $4.00 - $5.875    $4.50
                        ---------   --------------    -----
1999                    1,550,000   $4.00 - $5.875    $4.58
                        ---------   --------------    -----
2000                    1,355,000   $1.00 - $5.00     $4.37
                        ---------   --------------    -----
Options available for
future grant
under the Plan at
June 30:                              1994 Plan
                                      ---------
1998                                   275,000

1999                                   275,000

2000                                   475,000


                                       49
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following table summarizes  information  about stock options  outstanding at
June 30, 2000:

                                        Ranges                  Total
                                 ------------------------    ------------
Range of exercise prices         $1.00 - 4.625      $5.00    $1.00 - 5.00

Outstanding options:

   Number outstanding at
   June 30, 2000                       980,000    375,000       1,355,000
                                 ------------------------    ------------
   Weighted average remaining
   contractual life (years)               5.85       5.50            6.75
                                 ------------------------    ------------
   Weighted average exercise price       $4.13      $5.00           $4.37
                                 ------------------------    ------------
Exercisable options:

   Number outstanding at
   June 30, 2000                       980,000    375,000       1,355,000
                                 ------------------------    ------------
   Weighted average exercise price       $4.13      $5.00           $4.37
                                 ------------------------    ------------




                                             Weighted
Weighted Average Fair Value of    Number of   Average        Weighted Average
Options Granted                    Shares   Exercise Price    Fair Value
---------------                    ------   --------------   ----------------
During Fiscal Year Ended:
-------------------------

June 30, 1997:

    Below Market                       --         --             --

    At Market                          --         --             --

    Above Market                    875,000     $4.51           $1.78
                                    --------
                                    875,000
                                    --------
June 30, 1998:
                                    -------- --------------   ----------------
    Below Market                    300,000     $4.00           $2.62

    At Market                          --         --             --

    Above Market                       --         --             --
                                    --------
                                    300,000
                                    --------
June 30, 2000:
                                    -------- --------------   ----------------
    Below Market                      5,000     $1.00           $1.00

    At Market                          --         --             --

    Above Market                       --         --             --
                                    --------
                                      5,000
                                    --------

                                       50
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     During 1995, the Financial  Accounting Standards Board adopted Statement of
Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation,"  which has  recognition  provisions  that  establish a fair value
based method of  accounting  for  stock-based  employee  compensation  plans and
established  fair value as the  measurement  basis for  transactions in which an
entity  acquires  goods or services  from  non-employees  in exchange for equity
instruments.  SFAS 123 also has certain disclosure  provisions.  Adoption of the
recognition  provisions  of SFAS 123 with  regard  to  these  transactions  with
non-employees was required for all such transactions entered into after December
15, 1995, and the Company adopted these provisions as required.  The recognition
provision  with  regard  to the  fair  value  based  method  of  accounting  for
stock-based employee compensation plans is optional. Accounting Principles Board
Opinion No. 25 "Accounting  for Stock Issued to Employees"  ("APB 25") uses what
is referred to as an intrinsic value based method of accounting. The Company has
decided to continue to apply APB 25 for its stock- based  employee  compensation
arrangements. Accordingly, no compensation cost has been recognized. The Company
estimates the fair value of each option and warrant granted on the date of grant
using the Black-Scholes  option-pricing model with the following assumptions:  a
weighted  average  risk-free  interest rate of 6.3%, a weighted average expected
life of 5 years based on Company  expectations,  and a weighted average expected
volatility of 56.29%.

      Had  compensation  cost for the Company's  employee stock option plan been
determined  based on the fair value at the grant date for awards  under the Plan
consistent  with the method of SFAS 123, the Company's net loss and net loss per
share would have been increased to the pro forma amounts indicated below:



                                         Years Ended June 30,
                                         --------------------
                                  2000           1999            1998
                                  ----           ----            ----
Net (Loss): As Reported

(Loss) Before Discontinued
       Operations            $ (6,980,831) $ (16,034,769) $  (25,468,850)

Income from Discontinued
       Operations                     -0-      8,144,072       7,207,633
                              ------------- --------------  --------------
Net (Loss)                   $ (6,980,831) $  (7,890,697) $  (18,261,217)
                              ------------- --------------  --------------

Pro Forma Net (Loss)

(Loss) Before Discontinued
       Operations            $ (7,026,581) $ (16,034,769) $  (25,468,850)

Income from Discontinued
       Operations                     -0-      8,144,072       7,207,633
                              ------------- --------------  --------------
Net (Loss)                   $ (7,026,581) $  (7,890,697) $  (18,261,217)
                              ------------- --------------  --------------


                                       51
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                               Years Ended June 30,
                                               --------------------
                                              2000    1999       1998
                                              ----    ----       ----
Net (Loss) Per Share- Basic and Diluted:
 As Reported

(Loss) Before Discontinued Operations     $  (0.78) $ (1.38)  $  (1.82)

Income from Discontinued Operations            -0-     0.71       0.51
                                           --------- --------  ---------
Net (Loss)                                $  (0.78) $ (0.67)  $  (1.31)
                                           --------- --------  ---------
Pro Forma Net (Loss) Per Share - Basic
 and Diluted

(Loss) Before Discontinued Operations     $  (0.78) $ (1.38)  $  (1.82)

Income From Discontinued Operations            -0-     0.71       0.51
                                           --------- --------  ---------
Net (Loss)                                $  (0.78) $ (0.67)  $  (1.31)
                                           --------- --------  ---------


      (B)  WARRANTS

     During the fiscal year ended June 30, 1996, the Company issued  warrants to
purchase  925,000  shares  of  Common  Stock in  connection  with its  financing
activities  and the purchase of the El Rancho  Property.  During the fiscal year
ended June 30, 1997, the Company issued  warrants to purchase  746,847 shares of
Common Stock in connection with its financing  activities,  including the Credit
Suisse Credit Facility.  During the fiscal year ended June 30, 1999, the Company
issued  warrants to purchase  932,153 shares of Common Stock in connection  with
its financing  activities,  including the Credit  Suisse  Credit  Facility.  All
warrants are exercisable at June 30, 2000.

     The fair value of warrants  issued during the years ended June 30, 1999 and
1998 was $1,269,179, and $0, respectively.  The 1999 warrants were accounted for
as financing expenses.

     Warrants have been granted to acquire Common Stock at various prices above,
below  and at fair  market  value  at the date of  grant.  The  following  table
contains information on warrants for the three-year period ended June 30, 1999:

                                                 Warrants
                                                 --------
                                           Exercise       Weighted
                               Number     Price Range      Average
                             Of Shares     Per Share        Price
                            --------------------------------------
Outstanding at
 June 30, 1997 and 1998        1,671,847  $4.00 - $5.25     $4.66


Granted During Fiscal 1999       497,153  $4.375            $4.375

Granted During Fiscal 1999       435,000  $2.50             $2.50
                               ---------
Outstanding at
 June 30, 1999 and 2000        2,604,000  $2.50 - $5.25     $4.25
                               =========

                                       52
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(14)  DIVIDENDS

     The Company is required  to pay to the  holders of the  Company's  Series A
Convertible  Preferred  Stock  ("Preferred  Stock") a cash dividend from any net
racetrack earnings, as defined, of Garden State Park. No dividends were required
for fiscals 2000, 1999 and 1998. The Preferred  Stock has liquidation  rights of
$100 per share plus accrued dividends, if any.

(15)  RELATED PARTY TRANSACTIONS

     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 September  18, 2000,  the Company  borrowed  $150,000 from the Company's
acting Chief  Executive  Officer,  Mr. Francis  Murray,  in order to finance its
current  operations  until November 30, 2000.  The Company  expects to repay the
note with a portion of the Garden State Park sale proceeds.

     Mr.  James J.  Murray was elected by the Board of  Directors  to serve as a
Director of the Company on February 22, 1999.  Mr.  Murray is the brother of Mr.
Francis W. Murray who is a Director  and also serves as acting  Chief  Executive
Officer of the Company.

     Effective December 3, 1999, the Board of Directors accepted the resignation
of Christopher C. Castens,  the Company's Secretary and General Counsel.  During
the third quarter of Fiscal 2000,  the Company paid $10,000 in  consulting  fees
for services Mr. Castens performed.

     Mr. DeSantis,  former director and Chief Executive  Officer of the Company,
and Mr. Joseph Corazzi, President and Chairman of LVEN, each own one-half of the
stock of D&C Gaming,  Inc..  On July 1, 1997,  the Company paid for an option to
acquire certain leasehold  interests relating to two New Mexico racetracks for a
non-refundable deposit of $600,000 which was to be credited towards the purchase
price.  In the Delaware  litigation,  the minority Board members  challenged the
authorization and  enforceability of certain  agreements,  including this option
agreement.  In connection with the Delaware Settlement,  the $600,000 due to the
Company  was offset by the price the  Company  paid to  purchase  the  2,904,016
shares of the Company's Common Stock held by NPD.

     In connection with the NPD acquisition,  NPD borrowed the sum of $2,900,000
from Casino-Co,  from whom the Company purchased the El Rancho Property and with
whom the  Company  has  various  contractual  obligations  with  respect  to the
purchase  of the El Rancho  Property  including,  but not  limited  to, a profit
participation note and an entertainment  management contract.  Upon consummation
of the

                                       53
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Delaware  Settlement,  the  profit  participation  note  and  the  entertainment
management  contract were terminated.  The Casino-Co loan, together with accrued
interest,  was  repaid in July  1997.  Mr.  DeSantis  holds  options  to acquire
1,500,000 shares of LVEN's common stock at an exercise price of $1.00 per share.
Mr.  DeSantis was also paid a commitment  fee by LVEN of $110,000 in  connection
with a standby  financing  commitment  he made to LVEN on  October  31,  1996 as
replacement  financing  for  the El  Rancho  Property.  This  standby  financing
commitment was never drawn upon and was terminated in January 1997. Mr. DeSantis
is a 25% owner in Electric Media Company,  Inc., ("EMC"), a Delaware corporation
and subsidiary of LVEN, for which investment Mr. DeSantis paid $375,000.

     Mr. DeSantis owned 80% of Nordic Gaming Corporation, an Ontario corporation
which purchased the Fort Erie Racetrack in Fort Erie, Canada on August 27, 1997.
The Company was offered,  but the Executive Committee rejected,  the opportunity
to make this  investment  because of the  demands on cash  flow.  Nordic  Gaming
borrowed  $182,000  from LVEN for a deposit on the purchase  which was repaid to
LVEN at the closing.  LVEN has also  provided  Nordic Gaming with a $1.3 million
secured line of credit to fund operating  losses at the Fort Erie Racetrack.  On
May 15,  1998,  Mr.  DeSantis  sold his  Nordic  Gaming  shares  to Erie  Gaming
Organization, Inc., an Ontario corporation which holds the other 20% interest in
Nordic Gaming. In consideration for his shares, Mr. DeSantis received $10.00 and
each of Nordic Gaming,  Mr.  DeSantis and Erie Gaming  exchanged  mutual general
releases. In the Delaware litigation,  the minority Board members challenged the
decision of the Executive  Committee to reject the  opportunity  to purchase the
Fort Erie Racetrack. In connection with the Delaware Settlement,  the litigation
was dropped.

     Pursuant to the Tri-Party  Agreement executed in connection with the Credit
Suisse Credit  Facility,  the Company issued an aggregate of 2,326,520 shares of
Common Stock (based on a value of $5.00 per share) in exchange for  cancellation
of the Casino-Co Note plus accrued  interest.  Of such shares,  2,093,868 shares
were issued to  Casino-Co  (the  "Conversion  Shares")  and 232,652  shares were
issued to  Credit  Suisse  in  consideration  for its  consent  and for  certain
advisory  services  on  the  transaction.   In  accordance  with  the  Tri-Party
Agreement,  the Company had also  agreed,  subject to,  among other  things,  an
independent  valuation,  receipt  of a  fairness  opinion  from  an  independent
investment  banking  firm and Board and  stockholder  approval,  to complete the
Casino-Co  transaction.  LVEN and Casino-Co granted Mr. DeSantis a proxy to vote
any or all of the  Conversion  Shares until the occurrence of certain events and
agreed  to grant  Mr.  DeSantis  a proxy to vote any or all of the  shares to be
issued to LVEN in the Casino-Co  transaction.  In the Delaware  litigation,  the
minority  Board members  challenged  the  authorization  and  enforceability  of
certain agreements,  including the Tri-Party Agreement. Upon consummation of the
Delaware  Settlement,  the Tri-Party Agreement was terminated and the Conversion
Shares were retired.

     In connection with the Credit Suisse Credit Facility,  the Company and LVEN
entered into the Bi- Lateral  Agreement  which set the amount the Company  could
recoup prior to Casino-Co receiving  consideration under the $160 million profit
participation note at $35 million. In addition,  the Bi-Lateral  Agreement fixed
the maximum debt service to be netted  against cash flow from  operations of the
El Rancho  Property in  computing  "adjusted  cash flow" under the $160  million
profit  participation  note at $65  million.  In the  Delaware  litigation,  the
minority  Board members  challenged  the  authorization  and  enforceability  of
certain agreements, including the Bi-Lateral Agreement. The Bi-Lateral Agreement
and the $160 million profit participation note were terminated upon consummation
of the Delaware Settlement.

                                       54
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Pursuant to the Delaware Settlement,  Las Vegas Entertainment Network, Inc.
("LVEN") was granted the exclusive  right to sell the El Rancho  Property  until
November 20, 1998 and the co-extensive  right,  along with the Company,  to sell
the El Rancho  Property  until April 19, 1999.  Beginning  January 19, 1999, and
ending April 19, 1999,  LVEN was required to pay one-half of the carrying  costs
associated  with  maintaining  the El Rancho  Property.  LVEN also  obtained the
right, exercisable from March 20, 1999 until April 19, 1999, to refinance the El
Rancho  Property  and thereby  obtain the  extended  right to sell the El Rancho
Property  until  the  earlier  of (a) one year from  April  19,  1999 or (b) the
midpoint of the term of the refinancing loan (the "Refinancing  Option"). If the
Company sells or refinances  the El Rancho  property after April 19, 1999 for an
amount  in excess  of  $44,200,000,  plus one half of the  carrying  costs  from
January  20,  1999 to April  19,  1999,  plus the  customary  transaction  costs
incurred by the Company in such sale (the "Threshold  Amount"),  then LVEN shall
receive  from such cash  proceeds  in excess of the  Threshold  Amount up to the
amount of $12,000,000 of cash sale proceeds over and above the Threshold Amount,
out of which LVEN will direct that the first $2,000,000 be paid over to NPD. NPD
is owned by Nunzio  DeSantis,  the  Company's  former  Director and CEO and Tony
Coelho,  the Company's  former Director and Chairman of the Board. As of January
25,  2000  LVEN did not sell the El Rancho  Property  and did not  exercise  the
Refinancing  Option.  On May 22, 2000,  the Company closed on the sale of the El
Rancho property for  $45,000,000 in cash.  Interest and one-half of the carrying
costs for the period  between  January 20, 1999 to April 19, 1999 were in excess
of  $800,000,  therefore,  no  payments  are  due to  LVEN  as a  result  of the
transaction.

     Effective  January  15,  1997,  the  Company  entered  into  an  employment
agreement with Nunzio P. DeSantis,  the Company's Chief Executive Officer, for a
ten-year term at an initial  annual base salary of $450,000 per year plus $5,000
in non-accountable expenses and $1,500 auto allowance,  respectively, each month
in addition to a grant, subject to shareholder approval, of 5,000,000 options to
purchase up to  5,000,000  shares of the  Company's  Common Stock at an exercise
price of $4.00  per share and the use of a  private  charter  jet for  travel on
Company business. In the Delaware litigation, which was dismissed with prejudice
upon  consummation  of the  Delaware  Settlement,  the  minority  Board  members
challenged the authorization and enforceability of certain agreements, including
Mr.  DeSantis'   employment   agreement.   Upon  consummation  of  the  Delaware
Settlement,  Mr.  DeSantis'  employment  agreement  was  terminated  and options
granted to him in the employment agreement were canceled.

     During fiscal 1998,  the Company paid  $12,200,  on behalf of Southwest Jet
Group in  connection  with the use of a  private  jet by  certain  officers  and
directors of the Company including Mr. DeSantis, for Company business. Southwest
Jet Group is a Nevada  corporation,  owned by Mr.  DeSantis' son, which operates
private jets, including one which was partially financed by Messrs. DeSantis and
Corrazzi.  Messrs.  DeSantis and Corazzi used private jets operated by Southwest
Jet  Group  for  certain   personal  matters  for  which  the  Company  advanced
approximately $177,000 during fiscal 1998 and which LVEN had agreed to reimburse
the Company.  The $177,000 owed to the Company was offset by certain  conditions
agreed upon in the consummation of the Delaware Settlement.

     During fiscal 1999,  the Company paid $70,000 in consulting  fees,  $25,000
for  director  fees,  $3,500  for an  auto  allowance  and  $10,607  in  expense
reimbursements to Anthony Coelho, the Company's former Chairman,  pursuant to an
agreement  effective  January 15, 1997.  During  fiscal  1998,  the Company paid
$120,000 in  consulting  fees,  $22,500 for  director  fees,  $6,000 for an auto
allowance and $44,500 in expense  reimbursements  to Mr.  Coelho.  Mr.  Coelho's
consulting  agreement  was month to month,  under which he is to be paid $10,000
per month for  ongoing  consulting  services,  $2,500 for each board  meeting he
attended and a $500 monthly automobile  allowance.  In the Delaware  litigation,
which was

                                       55
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


dismissed with  prejudice  upon  consummation  of the Delaware  Settlement,  the
minority  Board members  challenged  the  authorization  and  enforceability  of
certain   agreements,   including  Mr.  Coelho's  consulting   agreement.   Upon
consummation of the Delaware  Settlement,  Mr. Coelho's consulting agreement was
terminated and options granted to him in the consulting agreement were canceled.

     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.  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 Fiscal 2000, the Company paid
Mr.  Scholl  $120,000  for these  services.  Additionally,  Mr.  Scholl was paid
director fees of $10,000 for each of fiscal years 1999 and 1998. The Company has
continued to pay Mr. Scholl $10,000 per month for ongoing  consulting  services.
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.

     During fiscal 1999,  the Company paid  approximately  $70,000 in consulting
fees and $21,777 of reimbursed  expenses to Joseph Zappala, a former director of
the Company.  During  fiscal 1998,  the Company paid  approximately  $110,000 in
consulting fees and $38,000 of reimbursed expenses to Mr. Zappala. During fiscal
1997, the Company paid  approximately  $15,000 in consulting fees, and $4,757 of
reimbursed   expenses  to  Mr.  Zappala.   Upon  consummation  of  the  Delaware
Settlement,  Mr. Zappala's  consulting  arrangement was terminated.  Mr. Zappala
also provided consulting services to EMC during fiscal 1997 pursuant to which he
was paid $100,000.

     During  fiscals 1999 and 1998,  the Company made payments for legal fees in
the amount of $696,500 and  $759,755,  respectively,  on behalf of the following
current  and  former  directors:  Robert J.  Quigley,  Frank A. Leo,  Francis W.
Murray,  Charles R. Dees, Jr., John Mariucci, and James J. Murray. These amounts
were for legal fees in connection with the various  lawsuits brought against the
Company.

     During  fiscals 1999 and 1998,  the Company made payments for legal fees in
the amount of $50,000 and $45,586 on behalf of Robert Green.  Those amounts were
for legal fees in connection with the Green v. DeSantis, et al. suit.

     During  fiscals  1999 and 1998,  the Company  paid  $90,510  and  $141,350,
respectively, to Public Strategies,  L.L.C., a company owned by Roger A. Bodman,
a former  director of the  Company,  in  consideration  for  ongoing  consulting
services  pursuant  to an  agreement  which  expired in  December  1997.  Public
Strategies provided consulting services to the Company on a month-to-month basis
from January 1, 1998 to January 31, 1999.

     During  fiscal 1998,  the Company made payment for legal fees in the amount
of $148,342 on behalf of The Family Investment Trust, a trust for the benefit of
Mr.  Brennan's  children and of which Mr. Brennan's  brother is the trustee,  in
connection with the then Delaware litigation.

     The Company  subleased a portion of its office  space in  Albuquerque,  New
Mexico to AutoLend Group, Inc. for $600 per month, which sublease was terminable
on 30 days' notice. Mr. DeSantis is the Chairman,  Chief Executive Officer and a
principal stockholder of AutoLend and Mr. Coelho was a director. Under the terms
of the  Delaware  Settlement,  AutoLend  assumed  the  Company's  lease  for the
Albuquerque  office space. Upon such assumption of the lease,  AutoLend retained
the leasehold

                                       56
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


improvements  and furniture  purchased by the Company in the amount of $ 211,423
in  exchange  for  assuming  the lease and as an offset of the price the Company
paid NPD to purchase the 2,904,016  shares of the Company's Common Stock held by
NPD (of which Mr.  DeSantis  and Mr.  Coelho  were  owners).  In  addition,  the
computer  equipment  in the amount of $12,040  purchased  by the Company for the
Albuquerque office was sold to AutoLend for $5,000.

     The Company also reimbursed AutoLend for $150,000 it paid to Communications
Associates  for  investment  advisory  services in  connection  with  locating a
potential  financing  source for the  Company.  Communications  Associates  is a
consulting firm owned by Mr. Corazzi,  the Chairman of LVEN. LVEN also subleased
an office from the Company in  Albuquerque.  In  exchange  for its first  year's
rent, LVEN provided  certain  furniture for the executive and reception areas of
the  Company's  Albuquerque  office  space.  Upon  consummation  of the Delaware
Settlement, the Albuquerque lease was assumed by AutoLend.


                                       57
<PAGE>

                                    PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

BOARD OF DIRECTORS

         The directors of the Company are:

Name                Age  Director Since                 Position
----                ---  --------------                 --------

John U. Mariucci    60   November 1996 to January 1997
                         February 22, 1999              Director
Francis W. Murray   59   November 1995
                         October 2000                   Director
                                                        President
                                                        Chairman of the Board
James J. Murray     62   November 1996 to January 1997
                         February 22, 1999              Director
Robert J. Quigley   71   October 1980
                         February 1996 to October 1997
                         January 1999 to October 2000   Director
                                                        President
                                                        President
                                                        Chairman of the Board

     Set forth below is certain  biographical  information  with respect to each
director set forth above,  including his  principal  occupation  and  employment
during the past five years.

     John U.  Mariucci.  Mr.  Mariucci  was elected by the Board of Directors on
February 22, 1999. Mr. Mariucci  previously  served as a director of the Company
from November 6, 1996 to January 15, 1997. Mr.  Mariucci has spent 30 years with
the advertising firm of Doyle Dane  Bernbach/DDB  Needham  Worldwide,  including
seven  years as a member of the board of DDB Needham  Worldwide.  In 1986 he was
appointed  Executive Vice President,  Executive Creative Director of DDB Needham
Worldwide,  a position he held until his retirement in 1994. He is the recipient
of more than 100 awards for his advertising,  including Cleos,  Stephan F. Kelly
Effies and the One Show Awards. He has developed major advertising campaigns for
clients such as American Tourister  Luggage,  Michelin,  Volkswagen,  Hershey's,
Weight Watchers,  Sony, Citicorp,  Nabisco, GTE, Seagrams,  IBM and the New York
State  Lottery.  Mr.  Mariucci has been a member of the Audit  Committee and the
Compensation and Stock Options  Committee since March 15, 1999. Mr. Mariucci has
previously  served on the Compensation and Stock Options Committee from December
20, 1996 to January 15, 1997.

     Francis W. Murray.  From time to time from  November  1995 until June 1999,
Mr.  Murray  served as President  of the  Company's  subsidiaries  International
Thoroughbred   Gaming   Development   Corporation   ("ITG")  and  Orion   Casino
Corporation.  From  November  1993 through  June 1995,  Mr.  Murray  served as a
General Partner of Healthcare Properties,  a partnership operating nursing homes
in New Jersey and as a consultant to ITG.  From  December 1988 through  November
1993, Mr. Murray was the co-owner and President of the New England  Patriots and
co-founder  of the St.  Louis  NFL  Partnership,  which  attempted  to obtain an
expansion  NFL  franchise  for St.  Louis.  Mr.  Murray has been a member of the
Executive Committee and the Compensation and Stock Options Committee since March
15, 1999.  Mr.

                                       58
<PAGE>

Murray has previously  served on the Executive  Committee from February 21, 1996
to July 9, 1996 and from December 20, 1996 to February 12, 1997.

     James J.  Murray.  Mr.  Murray  was  elected by the Board of  Directors  on
February 22, 1999.  Mr.  Murray  previously  served as a director of the Company
from November 6, 1996 to January 15, 1997.  Mr. Murray is a member of the Ronald
McDonald House of Charities Local Operations Advisory Council and past President
of Jim Murray,  Ltd., a sports  promotion  and marketing  firm. In 1969,  Murray
joined the  Philadelphia  Eagles' public  relations staff and two years later he
became the NFL team's administrative  assistant.  In 1974, just five years after
joining the  organization,  he was named the Eagles'  General  Manager and spent
more than nine years in that post,  during  which the Eagles'  appeared in Super
Bowl XV. He also served as Director of Marketing for the Company's  Garden State
Park  subsidiary  from  1985-  1987.  Mr.  Murray has been a member of the Audit
Committee  since  March  15,  1999.  Mr.  Murray  has  previously  served on the
Executive  Committee  and the  Compensation  and Stock  Options  Committee  from
December 20, 1996 to January 15, 1997.  Mr.  Murray is the brother of Francis W.
Murray who is a Director  and is also acting as the Chief  Executive  Officer of
the Company.

     Robert J. Quigley.  From February 1996 until October 15, 1997,  Mr. Quigley
served as President of the Company.  Mr. Quigley also served as President of the
Company  from 1988 until  July 1992.  Between  November  1995 and May 1996,  Mr.
Quigley  served as Chairman of the Board and acting Chief  Executive  Officer of
the Company.  From July 1992 until  November 1995, Mr. Quigley was President and
Chief Operating Officer of Retama Park Association,  Inc., a racetrack  facility
in San Antonio,  Texas.  Mr.  Quigley has  previously  served as a member of the
Executive Committee from July 9, 1996 to December 20, 1996.

COMMITTEES OF THE BOARD

     Executive Committee.  The Executive Committee is authorized to exercise all
of the  authority  of the  Board in the  management  of the  Company's  business
affairs  between Board  meetings  except as otherwise  provided by the Company's
By-laws or applicable  corporate law. Messrs.  Francis W. Murray and Quigley are
the current members of the Executive Committee.

     Audit Committee.  The Audit Committee provides general financial oversight.
The  committee  periodically  meets and confers with the  Company's  independent
auditors concerning the Company's  accounting systems and the maintenance of its
books and  records,  reviews the scope of the audit of the  Company's  financial
statements,  and the results  thereof,  and  performs  other  services.  Messrs.
Mariucci and James J. Murray are the current members of the Audit Committee.

     Compensation  and  Stock  Options  Committee.  The  Compensation  and Stock
Options Committee establishes director and executive  compensation levels and is
responsible for the  administration  of the employee stock option plan.  Messrs.
Francis W. Murray and Mariucci are the current members of the  Compensation  and
Stock Options Committee.

                                       59
<PAGE>


     The following is a summary of the  composition of these  committees  during
Fiscal 2000:

                                                       COMPENSATION AND STOCK
EFFECTIVE DATE  EXECUTIVE COMMITTEE  AUDIT COMMITTEE     OPTIONS COMMITTEE
--------------  -------------------  ---------------     -----------------
March 15, 1999  Francis W. Murray    John U. Mariucci    Francis W. Murray
                Robert J. Quigley    James J. Murray     John U. Mariucci


EXECUTIVE AND OTHER KEY OFFICERS

     The executive and other key officers of the Company, in addition to Messrs.
Murray and Quigley, are:

Name                     Age            Position
----                     ---            --------
William H. Warner        55             Secretary/Treasurer

Christine E. Rice Newell 55             Assistant Treasurer and Controller


     Set forth below is certain  biographical  information  with respect to each
such executive and other key officers:

     William H. Warner. Mr. Warner is a certified public accountant and has been
employed by the Company since September 1983. Mr. Warner has served as Treasurer
of the Company since December 1983. Prior to joining the Company, Mr. Warner was
employed in public  accounting for 11 years. Mr. Warner was elected Secretary of
the Company on October 10, 2000,

     Christine E. Rice Newell.  Ms. Rice Newell is a certified public accountant
and has been employed by the Company since  December  1986.  Ms. Rice Newell has
served as Assistant  Treasurer of the Company since November 1990. From December
1986 to November  1990 Ms. Rice Newell was the  Company's  Corporate  Accounting
Manager.

                                       60
<PAGE>

 ITEM 11 - EXECUTIVE COMPENSATION

     The following table sets forth information concerning the compensation paid
or accrued by the Company during the years ended June 30, 2000, 1999 and 1998 to
(i) the Company's acting Chief Executive Officer, (ii) the Company's most highly
compensated executive officers (other than the Chief Executive Officer) who were
serving in such capacity at the end of Fiscal 2000 and (iii) a former  executive
officer of the Company who was not serving in such capacity at the end of Fiscal
2000.

<TABLE>

                                   SUMMARY COMPENSATION TABLE
                                                                                     Long-Term
                                                Annual Compensation                 Compensation
                                                -------------------                 ------------
                                                                        Securities       All
Name and                                                  Other Annual  Underlying      Other
Principal Position                   Year       Salary    Compensation   Options    Compensation
                                                   $            $                          $
------------------                   ----       ------    ------------   -------    ------------
<CAPTION>
<S>                                  <C>        <C>          <C>            <C>        <C>
Nunzio P. DeSantis(1)                2000           -0-         -0-         -0-          -0-
Former Chief Executive Officer       1999       268,269      10,500         -0-          -0-
of the Company                       1998       450,000      78,000         -0-          -0-

Francis W. Murray                    2000       122,308      17,737(2)      -0-         10,997(3)
Acting Chief Executive Officer       1999       120,692      15,145         -0-         12,323
of the Company and effective         1998       129,333      16,000         -0-         87,292
October 10, 2000, President
and Chairman of the Board of
the Company

Robert J. Quigley                    2000        71,346      12,000(4)      -0-          6,593(5)
President and Chairman of the        1999       138,461       4,000         -0-         12,267
Board of the Company until           1998       220,000        -0-          -0-         11,160
October 10, 2000

Christopher C. Castens(6)            2000        57,031        -0-          -0-         57,211(7)
Secretary of the Company             1999       123,693        -0-          -0-          9,260
                                     1998       115,770        -0-          -0-          8,060

William H. Warner                    2000       126,000        -0-          -0-         11,219(8)
Treasurer and                        1999       123,693        -0-          -0-        117,355
Chief Financial Officer              1998       125,693        -0-          -0-          9,498
of the Company and effective
October 10, 2000, Secretary

Christine E. Rice Newell             2000        86,625       3,600(9)      -0-          7,782(10)
Assistant Treasurer and              1999        77,308       3,600         -0-          6,112
Controller                           1998        78,308       3,600         -0-          6,455
</TABLE>


(1)  Mr. DeSantis  became Chief Executive  Officer of the Company on January 15,
     1997 following the NPD  Acquisition  and upon  consummation of the Delaware
     Settlement on January 28, 1999, Mr. DeSantis' employment was terminated.

(2)  Consisted of monthly automobile lease payments.

(3)  Fiscal 2000 amounts  consist of $3,659 of life  insurance  premiums paid by
     the Company with respect to term life  insurance  payable to  beneficiaries
     designated  by Mr. Murray and $7,338  contributed  by the Company under the
     Company's 401(k) plan.

(4)  Fiscal 2000 consists of $1,000 per month automobile allowance.

                                       61
<PAGE>

(5)  Fiscal 2000 amounts  consist of $2,313 of life  insurance  premiums paid by
     the Company with respect to term life  insurance  payable to  beneficiaries
     designated by Mr.  Quigley and $4,280  contributed by the Company under the
     Company's 401(k) plan.

(6)  Effective December 3, 1999, Mr. Castens resigned his position.

(7)  Fiscal 2000 amounts  include $1,324 of life insurance  premiums paid by the
     Company  with  respect  to term life  insurance  payable  to  beneficiaries
     designated  by Mr.  Castens,  $764  contributed  by the  Company  under the
     Company's 401(k) plan and six months severance in the amount of $55,123.

(8)  Fiscal 2000 amounts  include $3,659 of life insurance  premiums paid by the
     Company  with  respect  to term life  insurance  payable  to  beneficiaries
     designated  by Mr. Warner and $7,560  contributed  by the Company under the
     Company's 401(k) plan.

(9)  Consists of $300 per month automobile allowance.

(10) Fiscal 2000 amounts  include $2,585 of life insurance  premiums paid by the
     Company  with  respect  to term life  insurance  payable  to  beneficiaries
     designated by Ms. Rice Newell and $5,197  contributed  by the Company under
     the Company's 401(k) plan.

STOCK OPTIONS

OPTIONS GRANTED IN LAST FISCAL YEAR

                   OPTION GRANTS IN LAST FISCAL YEAR

                         Individual Grants
                         -----------------
                                                               Potential
                           % of Total                          Realizable Value
               Number of   Options                             At Assumed Annual
               Securities  Granted to                          Rates of Stock
               Underlying  Employees    Exercise               Price
               Options     In Fiscal    Price      Expiration  Appreciation
Name           Granted(#)  Year         ($/Sh)     Date        for Option Term
----           ----------  ----         ------     ----        ---------------
                                                                5%(1)   10%(1)
                                                                -----   ------
Christine E.
 Rice Newell   1,500       30%          $1.00      1/1/2005       -0-     -0-
--------------------------------------------------------------------------------
(1)  Calculated  based on the market price of the Company's Common Stock of $.41
     per share on June 30,  2000  minus  the  aggregate  exercise  price of such
     options.  The options will have  greater,  lesser or no value to the extent
     that the market price of the Company's Common Stock appreciates or declines
     from the grant date to the exercise date.


                                       62
<PAGE>




AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

    The following table indicates the outstanding stock options held at June 30,
2000 by each person  named in the Summary  Compensation  Table.  No options were
exercised during Fiscal 2000 by any of the named executive employees.


                       Number of Securities Underlying    Value of Unexercised
                           Unexercised Options           In-the-Money Options at
                           At Fiscal Year End              Fiscal Year End (1)
Name                     Exercisable/Unexercisable     Exercisable/Unexercisable
----                     -------------------------     -------------------------
Francis W. Murray               300,000/-0-                    -0-/-0-

Robert J. Quigley               100,000/-0-                    -0-/-0-

Christine E. Rice Newell          1,500/-0-                    -0-/-0-


(1)  The  Company's  Common  Stock has been trading on the NQB Pink Sheets since
     August 1998 and the sales have averaged  approximately $.68 per share. As a
     result,  the Company  believes that the market price of the Common Stock is
     below the exercise price of such options.

COMPENSATION OF DIRECTORS

     Outside  directors are provided  compensation of $1,000 for each regular or
special meeting of the Board in which each outside director  participates either
in person or by telephone.

TERMINATION AND SEVERANCE AGREEMENTS

     Christopher C. Castens - Secretary and General Counsel. The Company and Mr.
Castens  were  parties to an  employment  agreement  effective  October 16, 1997
pursuant to which Mr.  Castens  served as the  Company's  Secretary  and General
Counsel at an annual salary of $123,700.  Effective  December 3, 1999, the Board
of Directors  accepted Mr. Castens'  resignation and the Company paid $79,846 in
the second quarter of Fiscal 2000  associated with his employment  contract.  In
addition, the Company transferred to Mr. Castens the title to his Company car.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The compensation of the Company's  executive  officers is determined by the
Company's  Compensation  and Stock  Options  Committee,  which  consisted of Mr.
Francis W.  Murray and Mr.  Marriucci.  No officer or  employee  of the  Company
participated in deliberations of the Compensation and Stock Options Committee.

     On September  18, 2000,  the Company  borrowed  $150,000 from the Company's
acting Chief  Executive  Officer,  Mr. Francis  Murray,  in order to finance its
current  operations  until November 30, 2000.  The Company  expects to repay the
note with a portion of the Garden State Park sale proceeds.

     During  Fiscal 1999,  the Company paid Mr.  Anthony  Coelho,  the Company's
former Chairman, pursuant to an agreement effective January 15, 1997, $70,000 in
consulting fees and $10,607 in reimbursed  expenses,  $25,000 for Board meetings
he attended and $3,500 for an auto allowance.  Mr. Coelho's consulting agreement
was month to month,  under which he is to be paid  $10,000 per month for ongoing
consulting  services,  $2,500 for each  Board  meeting  he  attended  and a $500
monthly automobile  allowance.

                                       63
<PAGE>

In the Delaware  Litigation,  the minority  Board  members have  challenged  the
authorization and enforceability of certain  agreements,  including Mr. Coelho's
consulting  agreement.  Mr. Coelho's consulting agreement was terminated and his
options were canceled. See "Legal Proceedings."

     During Fiscal 1999,  the Company paid  approximately  $70,000 in consulting
fees and $21,777 in  reimbursed  expenses to Joseph  Zappala,  a director of the
Company. The Company paid Mr. Zappala  approximately  $10,000 per month in which
he provided consulting  services.  Upon consummation of the Delaware Settlement,
Mr. Zappala's consulting arrangement was terminated. See "Legal Proceedings."

     Kenneth  Scholl,  a former  director of the  Company,  provided  consulting
services to LVEN and certain of its subsidiaries through the Stanford Company of
which he is the  president.  Until  December 31, 1997,  LVEN  advanced  Stanford
Company  $10,000 per month and was  reimbursed  by the  Company  for  consulting
services,  including Mr. Scholl's  services as project manager for the El Rancho
Property. 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 Fiscal 1999 the Company paid Mr. Scholl  $120,000.  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.

     Commencing  July 2, 1998 upon  execution of the Delaware  Stipulation,  the
Company  began  compensating  Mr.  Frances W. Murray as an employee at a rate of
$120,000 per year retroactive to June 1997.

     The Company  subleased a portion of its office  space in  Albuquerque,  New
Mexico to AutoLend for $600 per month, which sublease was terminable on 30 days'
notice.  Under  the  terms of the  Delaware  Settlement,  AutoLend  assumed  the
Company's  lease for the Albuquerque  office space.  Upon such assumption of the
lease,  AutoLend retained the leasehold  improvements and furniture purchased by
the Company in the amount of $ 211,423 in exchange for assuming the lease and as
an offset of the price the Company paid NPD to purchase the 2,904,016  shares of
the  Company's  Common Stock held by NPD (of which Mr.  DeSantis and Mr.  Coelho
were  owners).  In  addition,  the  computer  equipment in the amount of $12,040
purchased  by the Company for the  Albuquerque  office was sold to Autolend  for
$5,000.  Mr DeSantis is the Chairman,  Chief  Executive  Officer and a principal
stockholder of AutoLend and Mr. Coelho was a director. See "Legal Proceedings."


                                       64
<PAGE>


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following  table sets forth,  as of September  30, 2000,  the number of
shares of the Company's  Common Stock owned  beneficially by (i) each beneficial
owner of more than 5% of such Common Stock,  (ii) each named  executive  officer
and director of the Company and (iii) all  executive  officers and  directors of
the  Company as a group  (calculated  in  accordance  with Rule 13d-3  under the
Exchange  Act).  In the  case of  persons  other  than  executive  officers  and
directors  of the  Company,  such  information  is based  solely  on a review of
Schedules 13D and 13G filed with the SEC. Except as otherwise noted below,  each
person or entity has sole  voting  and  dispositive  power  with  respect to the
shares of Common Stock listed below.  As of September 30, 2000,  the Company had
11,884,273  shares of Common Stock issued and 8,980,257 shares  outstanding.  In
addition to the Common Stock,  the Company has 362,485 shares of Preferred Stock
issued and outstanding. The Preferred Stock is not convertible into Common Stock
and has no voting rights.


                            AMOUNT AND
NAME AND ADDRESS OF         NATURE OF                  PERCENT OF
5% BENEFICIAL OWNER         BENEFICIAL OWNERSHIP(1)    CLASS
-------------------         -----------------------    -----

Credit Suisse First
Boston Mortgage
Capital LLC
Eleven Madison Avenue
New York, NY 10010          2,419,509(1)               20.5%


The Family Investment Trust
(Henry Brennan, Trustee)
340 North Avenue
Cranford, NJ  07016         1,090,731(2)                9.2%


Frank A. Leo                  736,201(3)                6.2%


John U. Mariucci               60,500(4)                 *


Francis W. Murray             300,000(5)                2.5%


James J. Murray                25,000(5)                 *


Robert J. Quigley             105,830(6)                 *


William H. Warner                 124                    *


Christine E. Rice Newell        1,500(5)                 *


All Executive Officers
and Directors as a Group
(6 persons)(4)(5)(6)          492,954                   4.2%


The above persons have sole voting and investment power, unless otherwise
indicated below.
* Less than 1%.

(1)  Includes  1,044,000  shares of  Common  Stock  issuable  upon  exercise  of
     warrants and 1,142,857  shares of Common Stock issuable upon  conversion of
     the CSFB Note.

(2)  Henry Brennan is the brother of Robert E. Brennan, whose adult sons are the
     beneficiaries of the trust.

(3)  Includes 200,000 shares of Common Stock issuable upon exercise of options.

(4)  Consists  of 25,000  shares of  Common  Stock  issuable  upon  exercise  of
     options.

(5)  Consists of shares of Common Stock issuable upon exercise of options.

(6)  Includes 100,000 shares of Common Stock issuable upon exercise of options.

                                       65
<PAGE>

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     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 from Mr. Brennan Jr. two large bronze
sculptures  located on the Garden State Park  property  that were  previously on
loan to the Company.  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.

     Mr.  James J.  Murray was elected by the Board of  Directors  to serve as a
Director of the Company on February 22, 1999.  Mr.  Murray is the brother of Mr.
Francis W. Murray who is a Director  and also serves as acting  Chief  Executive
Officer of the Company.

     On September  18, 2000,  the Company  borrowed  $150,000 from the Company's
acting Chief  Executive  Officer,  Mr. Francis  Murray,  in order to finance its
current  operations  until November 30, 2000.  The Company  expects to repay the
note with a portion of the Garden State Park sale proceeds.

     Mr. DeSantis,  former director and Chief Executive  Officer of the Company,
and Mr. Joseph Corazzi, President and Chairman of LVEN, each own one-half of the
stock of D&C Gaming,  Inc..  On July 1, 1997,  the Company paid for an option to
acquire certain leasehold  interests relating to two New Mexico racetracks for a
non-refundable deposit of $600,000 which was to be credited towards the purchase
price.  In the Delaware  litigation,  the minority Board members  challenged the
authorization and  enforceability of certain  agreements,  including this option
agreement.  In connection with the Delaware Settlement,  the $600,000 due to the
Company  was offset by the price the  Company  paid to  purchase  the  2,904,016
shares of the Company's Common Stock held by NPD.

     In connection with the NPD acquisition,  NPD borrowed the sum of $2,900,000
from Casino-Co,  from whom the Company purchased the El Rancho Property and with
whom the  Company  has  various  contractual  obligations  with  respect  to the
purchase  of the El Rancho  Property  including,  but not  limited  to, a profit
participation note and an entertainment  management contract.  Upon consummation
of the Delaware Settlement,  the profit participation note and the entertainment
management  contract were terminated.  The Casino-Co loan, together with accrued
interest,  was  repaid in July  1997.  Mr.  DeSantis  holds  options  to acquire
1,500,000 shares of LVEN's common stock at an exercise price of $1.00 per share.
Mr.  DeSantis was also paid a commitment  fee by LVEN of $110,000 in  connection
with a standby  financing  commitment  he made to LVEN on  October  31,  1996 as
replacement  financing  for  the El  Rancho  Property.  This  standby  financing
commitment was never drawn upon and was terminated in January 1997. Mr. DeSantis
is a 25% owner in Electric Media Company,  Inc., ("EMC"), a Delaware corporation
and subsidiary of LVEN, for which investment Mr. DeSantis paid $375,000.

     Mr. DeSantis owned 80% of Nordic Gaming Corporation, an Ontario corporation
which purchased

                                       66
<PAGE>

the Fort Erie Racetrack in Fort Erie, Canada on August 27, 1997. The Company was
offered,  but the Executive  Committee  rejected,  the  opportunity to make this
investment  because of the demands on cash flow. Nordic Gaming borrowed $182,000
from LVEN for a deposit on the purchase which was repaid to LVEN at the closing.
LVEN has also provided  Nordic Gaming with a $1.3 million secured line of credit
to fund  operating  losses  at the Fort Erie  Racetrack.  On May 15,  1998,  Mr.
DeSantis  sold his Nordic Gaming  shares to Erie Gaming  Organization,  Inc., an
Ontario  corporation  which holds the other 20%  interest in Nordic  Gaming.  In
consideration  for his shares,  Mr. DeSantis  received $10.00 and each of Nordic
Gaming,  Mr. DeSantis and Erie Gaming exchanged mutual general releases.  In the
Delaware  litigation,  the minority Board members challenged the decision of the
Executive  Committee  to  reject  the  opportunity  to  purchase  the Fort  Erie
Racetrack.  In  connection  with the Delaware  Settlement,  the  litigation  was
dropped.

     Pursuant to the Tri-Party  Agreement executed in connection with the Credit
Suisse Credit  Facility,  the Company issued an aggregate of 2,326,520 shares of
Common Stock (based on a value of $5.00 per share) in exchange for  cancellation
of the Casino-Co Note plus accrued  interest.  Of such shares,  2,093,868 shares
were issued to  Casino-Co  (the  "Conversion  Shares")  and 232,652  shares were
issued to  Credit  Suisse  in  consideration  for its  consent  and for  certain
advisory  services  on  the  transaction.   In  accordance  with  the  Tri-Party
Agreement,  the Company has also  agreed,  subject to,  among other  things,  an
independent  valuation,  receipt  of a  fairness  opinion  from  an  independent
investment  banking  firm and Board and  stockholder  approval,  to complete the
Casino-Co  transaction.  LVEN and Casino-Co granted Mr. DeSantis a proxy to vote
any or all of the  Conversion  Shares until the occurrence of certain events and
agreed  to grant  Mr.  DeSantis  a proxy to vote any or all of the  shares to be
issued to LVEN in the Casino-Co  transaction.  In the Delaware  litigation,  the
minority  Board members  challenged  the  authorization  and  enforceability  of
certain agreements,  including the Tri-Party Agreement. Upon consummation of the
Delaware  Settlement,  the Tri-Party Agreement was terminated and the Conversion
Shares were retired.

     In connection with the Credit Suisse Credit Facility,  the Company and LVEN
entered into the Bi- Lateral  Agreement  which set the amount the Company  could
recoup prior to Casino-Co receiving  consideration under the $160 million profit
participation note at $35 million. In addition,  the Bi-Lateral  Agreement fixed
the maximum debt service to be netted  against cash flow from  operations of the
El Rancho  Property in  computing  "adjusted  cash flow" under the $160  million
profit  participation  note at $65  million.  In the  Delaware  litigation,  the
minority  Board members  challenged  the  authorization  and  enforceability  of
certain agreements, including the Bi-Lateral Agreement. The Bi-Lateral Agreement
and the $160 million profit participation note were terminated upon consummation
of the Delaware Settlement.

     Effective  January  15,  1997,  the  Company  entered  into  an  employment
agreement with Nunzio P. DeSantis,  the Company's Chief Executive Officer, for a
ten-year term at an initial  annual base salary of $450,000 per year plus $5,000
in non-accountable expenses and $1,500 auto allowance,  respectively, each month
in addition to a grant, subject to shareholder approval, of 5,000,000 options to
purchase up to  5,000,000  shares of the  Company's  Common Stock at an exercise
price of $4.00  per share and the use of a  private  charter  jet for  travel on
Company business. In the Delaware litigation, which was dismissed with prejudice
upon  consummation  of the  Delaware  Settlement,  the  minority  Board  members
challenged the authorization and enforceability of certain agreements, including
Mr.  DeSantis'   employment   agreement.   Upon  consummation  of  the  Delaware
Settlement,  Mr.  DeSantis'  employment  agreement  was  terminated  and options
granted to him in the employment agreement were canceled.

                                       67
<PAGE>

     During  fiscals  1998,  the Company paid $12,200 on behalf of Southwest Jet
Group in  connection  with the use of a  private  jet by  certain  officers  and
directors of the Company including Mr. DeSantis, for Company business. Southwest
Jet Group is a Nevada  corporation,  owned by Mr.  DeSantis' son, which operates
private jets, including one which was partially financed by Messrs. DeSantis and
Corazzi.  Messrs.  DeSantis and Corazzi used private jets  operated by Southwest
Jet  Group  for  certain   personal  matters  for  which  the  Company  advanced
approximately  $177,000  during  fiscals  1998  and  which  LVEN had  agreed  to
reimburse  the Company.  The $177,000  owed to the Company was offset by certain
conditions agreed upon in the consummation of the Delaware Settlement.

     During fiscal 1999,  the Company paid $70,000 in consulting  fees,  $25,000
for  director  fees,  $3,500  for an  auto  allowance  and  $10,607  in  expense
reimbursements to Anthony Coelho, the Company's former Chairman,  pursuant to an
agreement  effective  January 15, 1997.  During  fiscal  1998,  the Company paid
$120,000 in  consulting  fees,  $22,500 for  director  fees,  $6,000 for an auto
allowance and $44,500 in expense  reimbursements  to Mr.  Coelho.  During fiscal
1997, the Company paid $55,000 in consulting fees, $18,000 for director fees and
$2,750 for an auto allowance to Mr. Coelho.  Mr. Coelho's  consulting  agreement
was month to month,  under which he is to be paid  $10,000 per month for ongoing
consulting  services,  $2,500 for each  board  meeting  he  attended  and a $500
monthly automobile  allowance.  In the Delaware litigation,  which was dismissed
with prejudice upon consummation of the Delaware Settlement,  the minority Board
members challenged the authorization and  enforceability of certain  agreements,
including Mr. Coelho's consulting  agreement.  Upon consummation of the Delaware
Settlement, Mr. Coelho's consulting agreement was terminated and options granted
to him in the consulting agreement were canceled.

     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.  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 Fiscal 2000, the Company paid
Mr.  Scholl  $120,000  for these  services.  Additionally,  Mr.  Scholl was paid
director fees of $10,000 for each of fiscal years 1999 and 1998. The Company has
continued to pay Mr. Scholl $10,000 per month for ongoing  consulting  services.
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.

     During fiscal 1999,  the Company paid  approximately  $70,000 in consulting
fees and $21,777 of reimbursed  expenses to Joseph Zappala, a former director of
the Company.  During  fiscal 1998,  the Company paid  approximately  $110,000 in
consulting  fees  and  $38,000  of  reimbursed  expenses  to Mr.  Zappala.  Upon
consummation of the Delaware Settlement,  Mr. Zappala's  consulting  arrangement
was terminated.

     During  fiscals 1999 and 1998,  the Company made payments for legal fees in
the amount of $696,500 and  $759,755,  respectively,  on behalf of the following
current  and  former  directors:  Robert J.  Quigley,  Frank A. Leo,  Francis W.
Murray,  Charles R. Dees, Jr., John Mariucci, and James J. Murray. These amounts
were for legal fees in connection with the various  lawsuits brought against the
Company.

     During  fiscals 1999 and 1998,  the Company made payments for legal fees in
the amount of $50,000 and $45,586 on behalf of Robert Green.  Those amounts were
for legal fees in connection with the Green

                                       68
<PAGE>

v. DeSantis, et al. suit.

     During  fiscal 1998,  the Company made payment for legal fees in the amount
of $148,342 on behalf of The Family Investment Trust, a trust for the benefit of
Mr.  Brennan's  children and of which Mr. Brennan's  brother is the trustee,  in
connection with the then Delaware litigation.

     Commencing  July 2, 1998 upon  execution of the Delaware  Stipulation,  the
Company began  compensating  Mr. Murray as an employee at a rate of $120,000 per
year.

     The Company  subleased a portion of its office  space in  Albuquerque,  New
Mexico to AutoLend Group, Inc. for $600 per month, which sublease was terminable
on 30 days' notice. Mr. DeSantis is the Chairman,  Chief Executive Officer and a
principal stockholder of AutoLend and Mr. Coelho was a director. Under the terms
of the  Delaware  Settlement,  AutoLend  assumed  the  Company's  lease  for the
Albuquerque  office space. Upon such assumption of the lease,  AutoLend retained
the leasehold  improvements and furniture purchased by the Company in the amount
of $ 211,423 in exchange  for  assuming  the lease and as an offset of the price
the Company paid NPD to purchase the 2,904,016  shares of the  Company's  Common
Stock  held by NPD (of  which Mr.  DeSantis  and Mr.  Coelho  were  owners).  In
addition,  the  computer  equipment  in the amount of $12,040  purchased  by the
Company for the Albuquerque office was sold to AutoLend for $5,000.

     The Company also reimbursed AutoLend for $150,000 it paid to Communications
Associates  for  investment  advisory  services in  connection  with  locating a
potential  financing  source for the  Company.  Communications  Associates  is a
consulting firm owned by Mr. Corazzi,  the Chairman of LVEN. LVEN also subleases
an office from the Company in  Albuquerque.  In  exchange  for its first  year's
rent, LVEN provided  certain  furniture for the executive and reception areas of
the  Company's  Albuquerque  office  space.  Upon  consummation  of the Delaware
Settlement, the Albuquerque lease was assumed by AutoLend.

     For  additional   information  regarding  related  party  transactions  see
Footnote  15 in the  Consolidated  Financial  Statements.  See  also  "Item 11 -
Compensation Committee Interlocks and Insider Participation."


                                       69
<PAGE>


                                     PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) Exhibits

Exhibit
Number    Description of Exhibit
------    ----------------------

3.1  Certificate  of  Incorporation,  as amended  (incorporated  by reference to
     Exhibit 3(A) to the Registrant's  Registration  Statement on Form S-1, File
     No. 2-70153, filed December 5, 1980)

3.2  Amendment to the Certificate of Incorporation (incorporated by reference to
     Exhibit  3(a)(11)  to  Amendment  No.  3 to the  Registrant's  Registration
     Statement on Form S-1, File No. 2-70153)

3.3  Amended and Restated  By-Laws of the Registrant  (incorporated by reference
     to  Exhibit  3.3 to the  Registrant's  Annual  Report  on Form 10-K for the
     Fiscal Year Ended June 30, 1997)

4.1  Warrant  No.  1  dated  May 23,  1997 to  purchase  546,847  shares  of the
     Registrant's Common Stock (incorporated by reference to Exhibit 10.2 to the
     Registrant's Current Report on Form 8-K dated May 23, 1997)

4.2  Warrant  No.  2  dated  May 23,  1997 to  purchase  497,153  shares  of the
     Registrant's Common Stock (incorporated by reference to Exhibit 10.3 to the
     Registrant's Current Report on Form 8-K dated May 23, 1997)

4.3  Convertible  Promissory Note dated May 23, 1997 from the Registrant to CSFB
     (incorporated by reference to Exhibit 4.3 to the Registrant's Annual Report
     on Form 10-K for the Fiscal Year Ended June 30, 1997)

10.1 Stipulation and Agreement of Compromise,  Settlement and Release dated July
     2, 1998  (incorporated  by reference  to Exhibit  10.1 of the  Registrant's
     Current Report on Form 8-K dated July 2, 1998)

10.2 Asset  Purchase  Agreement  dated as of July 2, 1998 by,  between and among
     Greenwood New Jersey, Inc., Garden State Race Track, Inc., Freehold Raceway
     Association,  Atlantic City  Harness,  Inc.,  Circa 1850 and  International
     Thoroughbred Breeders, Inc. together with exhibits thereto (incorporated by
     reference to Exhibit 10.2 on Form 8-K dated July 2, 1998)

10.3 Loan  Agreement  dated May 23,  1997 by and among CSFB and the  Company and
     certain of its  subsidiaries  (incorporated by reference to Exhibit 10.1 to
     the Registrant's Current Report on Form 8-K dated May 23, 1997)

                                       70
<PAGE>

Exhibit
Number    Description of Exhibit
------    ----------------------

10.4 Registration  Rights  Agreement  dated  as of  May  23,  1997  between  the
     Registrant  and CSFB  (incorporated  by  reference  to Exhibit  10.4 to the
     Registrant's Current Report on Form 8-K dated May 23, 1997)

10.5 Proxy dated  October 31,  1997 of LVEN and  Casino-Co  granted to Nunzio P.
     DeSantis  (incorporated  by reference  to Exhibit 10.3 to the  Registrant's
     Annual Report on Form 10- K for the Fiscal Year Ended June 30, 1997)

10.6 Registration Rights Agreement dated July 1, 1997 between the Registrant and
     Casino-Co  (incorporated  by reference to Exhibit 10.2 to the  Registrant's
     Current Report on Form 8-K dated July 1, 1997)

10.7 Letter  Agreement  dated as of January 22, 1996 among LVEN,  the Registrant
     and Orion Casino Corporation  (incorporated by reference to Exhibit 10.1 to
     the Registrant's Current Report on Form 8-K dated January 24, 1996)

10.8 Stock Purchase  Agreement made as of January 1, 1995 for the acquisition by
     the  Registrant of all the  outstanding  capital stock of Freehold  Raceway
     (incorporated  by reference to Exhibit 10.6 to the  Registrant's  Form 10-K
     for the year ended June 30, 1996)

10.9 Tri-Party Agreement by and among the Registrant, CSFB and LVEN, dated as of
     May 23, 1997 (incorporated by reference to Exhibit 10.7 to the Registrant's
     Form 10-K for the year ended June 30, 1997)

10.10Bi-Lateral  Agreement by and between the Registrant  and LVEN,  dated as of
     May 23, 1997 (incorporated by reference to Exhibit 10.8 to the Registrant's
     Form 10-K for the year ended June 30, 1997)

10.11* Employment  Agreement by and between the Registrant and Nunzio  DeSantis,
     dated as of January 15, 1997  (incorporated by reference to Exhibit 10.9 to
     the Registrant's Form 10-K for the year ended June 30, 1997)

10.12* Consulting  Agreement by and between the Registrant  and Anthony  Coelho,
     dated as of January 15, 1997 (incorporated by reference to Exhibit 10.10 to
     the Registrant's Form 10- K for the year ended June 30, 1997)

10.13* Amended and Restated  Employment  Agreement by and between the Registrant
     and  Richard E.  Orbann,  dated as of October  16,  1997  (incorporated  by
     reference to Exhibit 10.11 to the Registrant's Form 10-K for the year ended
     June 30, 1997)

10.14* Employment  Agreement by and between the  Registrant  and  Christopher C.
     Castens,  dated as of January 1, 1996 (incorporated by reference to Exhibit
     10.2 to the Registrant's Form 10-K for the year ended June 30, 1996)

                                       71
<PAGE>

Exhibit
Number    Description of Exhibit
------    ----------------------

10.14.1* Amendment No. 2 to Employment Agreement, dated as of October 16, 1997

10.15First  Amendment to Asset Purchase  Agreement  dated as of January 28, 1999
     among  the  Company,   Garden  State  Race  Track,  Inc.,  Freehold  Racing
     Association,  Atlantic City Harness,  Inc., Circa 1850, Inc., Greenwood New
     Jersey,   Inc.  and  Penn  National  Gaming,   Inc.   (without   Exhibits).
     (incorporated  by  reference to Exhibit  10.1 to the  Registrant's  Current
     Report on Form 8K dated January 28, 1999)

10.16Lease Agreement  between Garden State Race Track,  Inc. and GS Park Racing,
     L.P. (without Exhibits).  (incorporated by reference to Exhibit 10.2 to the
     Registrant's Current Report on Form 8K dated January 28, 1999)

10.17Approval  Agreement  dated  January 28, 1999  between  Credit  Suisse First
     Boston Mortgage  Capital LLC, the Company,  Garden State Race Track,  Inc.,
     Freehold Racing Association,  International Thoroughbred Gaming Development
     Corporation and Orion Casino Corporation (without Exhibits).  (incorporated
     by reference to Exhibit 10.3 to the Registrant's  Current Report on Form 8K
     dated January 28, 1999)

10.18Agreement  dated  January 6, 1999 between the Company and Donald F. Conway,
     Chapter 11 Trustee for the Bankruptcy  Estate of Robert E. Brennan (without
     Exhibits).  (incorporated  by reference to Exhibit 10.4 to the Registrant's
     Current Report on Form 8K dated January 28, 1999)

10.19$1,000,000  Deferred  Purchase Price  Promissory  Note from GS Park Racing,
     L.P. and FR Park Racing, L.P. (incorporated by reference to Exhibit 10.5 to
     the Registrant's Current Report on Form 8K dated January 28, 1999)

10.20$5,000,000  Contingent  Promissory  Note from GS Park  Racing,  L.P. and FR
     Park  Racing,  L.P. to the  Company,  as Agent for Garden State Race Track,
     Inc.,  Freehold Racing Association,  Atlantic City Harness,  Inc. and Circa
     1850, Inc.  (incorporated  by reference to Exhibit 10.6 to the Registrant's
     Current Report on Form 8K dated January 28, 1999)

10.21$3,000,000  Contingent  Promissory  Note from GS Park  Racing,  L.P. and FR
     Park  Racing,  L.P. to the  Company,  as Agent for Garden State Race Track,
     Inc.,  Freehold Racing Association,  Atlantic City Harness,  Inc. and Circa
     1850, Inc.  (incorporated  by reference to Exhibit 10.7 to the Registrant's
     Current Report on Form 8K dated January 28, 1999)

                                       72
<PAGE>

Exhibit
Number    Description of Exhibit
------    ----------------------

10.22$2,000,000  Contingent  Promissory  Note from GS Park  Racing,  L.P. and FR
     Park  Racing,  L.P. to the  Company,  as Agent for Garden State Race Track,
     Inc.,  Freehold Racing Association,  Atlantic City Harness,  Inc. and Circa
     1850, Inc.  (incorporated  by reference to Exhibit 10.8 to the Registrant's
     Current Report on Form 8K dated January 28, 1999)

10.23Mortgage and Security  Agreement,  dated January 28, 1999,  between FR Park
     Racing,  L.P. and the Company,  as agent for Garden State Race Track, Inc.,
     Freehold Racing  Association,  Atlantic City Harness,  Inc. and Circa 1850,
     Inc. (incorporated by reference to Exhibit 10.9 to the Registrant's Current
     Report on Form 8K dated January 28, 1999)

10.24$3,558,032  Note from the Company to Donald F.  Conway,  Chapter 11 Trustee
     for the Bankruptcy Estate of Robert E. Brennan.  (incorporated by reference
     to  Exhibit  10.10  to the  Registrant's  Current  Report  on Form 8K dated
     January 28, 1999)

10.25Security  Agreement,  dated  January 28,  1999,  between  Garden State Race
     Track,  Inc.  and Donald F. Conway,  Chapter 11 Trustee for the  Bankruptcy
     Estate of Robert E. Brennan. (incorporated by reference to Exhibit 10.11 to
     the Registrant's Current Report on Form 8K dated January 28, 1999)

10.26Security   Agreement,   dated  January  28,  1999,   between  Orion  Casino
     Corporation  and Donald F.  Conway,  Chapter 11 Trustee for the  Bankruptcy
     Estate of Robert E. Brennan. (incorporated by reference to Exhibit 10.12 to
     the Registrant's Current Report on Form 8K dated January 28, 1999)

10.27Employment  Termination  Agreement,  dated  January 28,  1999,  between the
     Company and Richard Orbann.  (incorporated by reference to Exhibit 10.13 to
     the Registrant's Current Report on Form 8K dated January 28, 1999)

10.28Restructure  Agreement  dated  January  21,  2000,  between the Company and
     Credit   Suisse   (incorporated   by  reference  to  Exhibit  10.1  to  the
     Registrant's Current Report on Form 8K dated January 21, 2000)

10.29Limited  Liability  Company  Agreement of GSRT, LLC between the Company and
     Credit   Suisse   (incorporated   by  reference  to  Exhibit  10.2  to  the
     Registrant's Current Report on Form 8K dated January 21, 2000)

10.30Letter  approving Garden State joint venture  transaction  (incorporated by
     reference to Exhibit  10.3 to the  Registrant's  Current  Report on Form 8K
     dated January 21, 2000)

                                       73
<PAGE>

Exhibit
Number    Description of Exhibit
------    ----------------------

10.31Letter regarding possible El Rancho transaction  (incorporated by reference
     to Exhibit 10.4 to the Registrant's Current Report on Form 8K dated January
     21, 2000)

10.32Modification   of  Mortgage,   Deed  of  Trust  and  Other  Loan  Documents
     (incorporated  by  reference to Exhibit  10.5 to the  Registrant's  Current
     Report on Form 8K dated January 21, 2000)

10.33Indemnification  Agreement  (incorporated  by  reference to Exhibit 10.6 to
     the Registrant's Current Report on Form 8K dated January 21, 2000)

10.34Agreement  of Sale Between  Orion Casino  Corporation  (the  "Seller")  and
     Turnberry/Las  Vegas  Boulevard,   LLC  (the  "Buyer").   (incorporated  by
     reference to Exhibit  10.1 to the  Registrant's  Current  Report on Form 8K
     dated May 22, 2000)

10.35Note Purchase  Agreement  Between Orion Casino  Corporation,  as Purchaser,
     and  Turnberry/Las  Vegas Boulevard,  LLC, as Issuer,  Dated as of March 1,
     2000.  (incorporated  by  reference  to  Exhibit  10.2 to the  Registrant's
     Current Report on Form 8K dated May 22, 2000)

10.36$23,000,000.00  Promissory  Note  dated May 18,  2000,  from  Turnberry/Las
     Vegas  Boulevard,  LLC,  (the  "Maker") to Orion Casino  Corporation,  (the
     "Payee").  (incorporated  by reference to Exhibit 10.3 to the  Registrant's
     Current Report on Form 8K dated May 22, 2000)

10.37Security  Agreement,  dated as of May 18, 2000, by and among  Turnberry/Las
     Vegas  Boulevard,  LLC,  (the  "Joint  Venture"),  the members of the Joint
     Venture parties to this Agreement (said members being  collectively  called
     the "Pledgers"),  and Orion Casino  Corporation,  a Nevada corporation (the
     "Purchaser").   (incorporated   by   reference   to  Exhibit  10.4  to  the
     Registrant's Current Report on Form 8K dated May 22, 2000)

21   Subsidiaries

27   Financial Data Schedule
-------------------
* Constitutes a management contract or compensation plan.

                                       74
<PAGE>


(B)  Financial Statements                                          Page

     Reports of independent certified public accountants.           20
     Consolidated Balance Sheets as of June 30, 2000 and 1999.      22
     Consolidated Statements of Operations for the Years
       Ended June 30, 2000, 1999 and 1998.                          24
     Consolidated Statements of Stockholders' Equity for the Years
       Ended June 30, 2000, 1999 and 1998.                          25
     Consolidated Statements of Cash Flows for the Years Ended
       June 30, 2000, 1999 and 1998.                                26
     Notes to Consolidated Financial Statements.                    28

(C)  Reports on Form 8-K

                                       75
<PAGE>

     No reports  were  filed on Form 8-K  during the last  quarter of the fiscal
year covered by this report.


              INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                           AND SUBSIDIARIES

                              EXHIBIT 21


     The  following   table   indicates  the   subsidiaries   of   International
Thoroughbred  Breeders,  Inc.  and their  states of  incorporation.  All of such
subsidiaries are wholly owned.

Name                                                   State of Incorporation
----                                                   ----------------------

Atlantic City Harness, Inc.                            New Jersey

Circa 1850, Inc.                                       New Jersey

Holdfree Racing Association                            New Jersey

Garden State Race Track, Inc.                          New Jersey

GSRT, LLC                                              New Jersey

International Thoroughbred Breeders
   Management, Inc.                                    New Jersey

International Thoroughbred Gaming
   Development Corporation                             New Jersey

Olde English Management Co., Inc.                      New Jersey

Orion Casino Corporation                               Nevada


                                       76
<PAGE>


                              SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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, on October 13, 2000.

                                           INTERNATIONAL THOROUGHBRED
                                           BREEDERS, INC.


                                           By:_______________________
                                           Francis W. Murray, President and
                                           Chairman of the Board


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

Name                          Title                                Date
----                          -----                                ----

By:___________________        Secretary Treasurer (Principal     10/13/2000
     William H. Warner        Financial and
                              Accounting Officer)

By:___________________        Director                           10/13/2000
     John Mariucci


By:___________________        Director                           10/13/2000
     James Murray


By:___________________        Director                           10/13/2000
     Francis W. Murray


By:___________________        Director                           10/13/2000
     Robert J. Quigley


                                       77
<PAGE>