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, 1999

          OR

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

For the transition period from__________to_________


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


               DELAWARE                             22-2332039
     (State or other jurisdiction of            (I.R.S. Employer
      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____ No__X__

     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 May 5, 2000 the  aggregate  market value
of the voting stock held by non-affiliates of the Registrant was $2,714,751.

     The  number of shares  outstanding  of the  Registrant's  Common  Stock was
8,980,252 at May 5, 2000.


<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  (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 owns 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).  On January 25, 2000, the Company entered
into agreements to sell the Garden State Park and the El Rancho properties.  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 the three years ended June 30, 1999, 1998
and 1997.  In addition,  the Company has  determined to dispose of the El Rancho
Property as part of the  Delaware  Settlement  described  below.  On January 25,
2000, the Company entered into an agreement to sell the El Rancho property.  See
"Developments During the Last Fiscal Year" below. There can be no assurance that
the sale of the El  Rancho  Property  will be  consummated  or as to the  timing
thereof.  See "Casino  Development  Operations,"  "Developments  During the Last
Fiscal Year," and "Legal Proceedings-Delaware Settlement."

     The Company's  loss from  continuing  operations  for the fiscal year ended
June 30,  1999  ("Fiscal  1999") was  ($16,034,769)  as  compared to a loss from
continuing operations for the fiscal year ended June 30, 1998 ("Fiscal 1998") of
($25,468,850),  a decrease in the loss of $9,434,081.  This decrease in the loss
from continuing operations is primarily the result of: (i) a decrease in general
and  administrative  expenses of $7,082,988 or 61%, from  $11,615,972  in Fiscal
1998 to $4,532,984 in Fiscal 1999, principally  attributable to: (a) the accrual
in  Fiscal  1998 of the  estimated  charge  of  $3,748,000  associated  with the
acquisition  of  2,904,016   shares  of  the  Company's  Common  Stock  and  the
termination  of  certain  agreements  upon  the  consummation  of  the  Delaware
Settlement,  as described below;  (b) a decrease of approximately


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$1,500,000 in compensation,  travel and director  expenses  primarily  resulting
from the  consummation  of the  Delaware  Settlement;  (c) a  decrease  in legal
expenses of approximately  $2,000,000 primarily associated with various director
and  stockholder  lawsuits in Fiscal  1998;  (ii) a net increase in interest and
financing expenses primarily  associated with: (a) financing costs of $1,742,883
associated  with the  consummation  of the Delaware  Settlement  in Fiscal 1999;
partially offset by (b) a decrease in interest expense of $1,059,266 or 15% as a
result of the reduced debt;  (iii) the estimated  impairment loss in Fiscal 1998
in connection with the adjustment to fair market value of the El Rancho Property
of  $3,429,252;  and  (iv) a  decrease  in  interest  income  of  $345,520.  See
"Management's  Discussion  and Analysis of Financial  Conditions  and Results of
Operations."

     Income  from  discontinued  operations  was  $8,144,072  for  Fiscal  1999,
including a net gain of $3,657,688  recognized on 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  on  January  28,  1999 and income  from  operations  of
$4,486,384 for the seven month period of racetrack operations in Fiscal 1999.

     During  Fiscal 1999,  the Company  incurred a net loss of  ($7,890,697)  as
compared to a net loss of  ($18,261,217)  for Fiscal  1998.  The decrease in net
loss of $10,370,520 is the result of the differences described above, as well as
the Impairment Loss on the El Rancho  Property  recognized in Fiscal 1998 in the
amount of  $3,429,252  as described  above.  See  "Management's  Discussion  and
Analysis of Financial Conditions and Results of Operations."

     As of May 5,  2000,  ITB  employed  seven  full-time  corporate  executive,
administrative and clerical personnel.

     On  January  28,  1999,  the  Company  fully and  finally  consummated  the
Stipulation  and Agreement of  Compromise,  Settlement and Release dated July 2,
1998 (the "Delaware  Stipulation") to settle certain pending lawsuits brought by
certain minority Board members and stockholders (the "Delaware Settlement"). See
"Legal  Proceedings." The Delaware  Settlement provided for, among other things,
the dismissal of certain  litigation with  prejudice,  the disposition of the El
Rancho  Property,  the  repurchase of  approximately  2.9 million  shares of the
Company's  Common  Stock owned by NPD,  Inc., a company  owned by the  Company's
former  Chairman and Chief  Executive  Officer,  the retirement of an additional
approximately  2.1 million  shares of the  Company's  Common  Stock owned by Las
Vegas Entertainment  Network,  Inc. ("LVEN"),  the resignation of certain of the
Company's Board members and the termination of various agreements.  The terms of
the Delaware  Settlement  were approved by the Delaware  Court of Chancery after
notice to all stockholders. The Delaware Settlement was also subject to a number
of other conditions.  See "Legal  Proceedings" and "Management's  Discussion and
Analysis of Financial Conditions and Results of Operations."

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

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<PAGE>

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


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


     On January 25, 2000, the Company  entered into a binding term sheet for the
sale of the El Rancho  property in Las Vegas,  Nevada with  Turnberry/Las  Vegas
Boulevard,  LLC. A formal contract was signed on March 1, 2000 on the same terms
as outlined on the binding term sheet with certain mutually  acceptable  changes
made  during  the  course of  negotiations  of the  definitive  agreements.  The
closing,  originally  scheduled to occur by March 31, 2000, had been extended to
April 30, 2000 after the buyer released  $1,600,000 as a non-refundable  deposit
to the Company.  The closing  date may be further  delayed to June 1, 2000 under
certain  conditions.  See  "Developments  During the Last Fiscal Year" below and
"Management's  Discussion  and Analysis of Financial  Conditions  and Results of
Operations."



Racetrack Operations

     On January 28, 1999,  the Company  completed the sale of Freehold  Raceway,
the sale of a ten-acre  parcel at Garden  State Park and the lease of the Garden
State Park facilities to subsidiaries  of Greenwood  Racing,  Inc.("Greenwood"),
which  owns  Philadelphia  Park  racetrack,  the Turf  Clubs and  Phonebet  (the
"Greenwood  Transaction").  The  purchase  price was $46  million ($1 million of
which  will be  held in  escrow  to  cover  certain  indemnification  and  other
obligations  of the  Company),  with an  additional  $10

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<PAGE>

million in contingent  promissory  notes (the  "Contingent  Notes") which become
effective upon,  among other things,  the New Jersey  Legislature's  approval of
off-track betting facilities or telephone account pari-mutuel  wagering on horse
racing.  Further  adjustments  could be made to increase the  purchase  price if
certain  additional  regulatory  gaming  changes are  approved by the New Jersey
Legislature in the future. The Greenwood Transaction was subsequently amended to
include Penn National Gaming,  Inc.("Penn  National"),  which owns Penn National
Race  Course,  Pocono  Downs  Racetrack,  Charles  Town  Races  and at least ten
off-track  betting  parlors  in  Pennsylvania  as a 50%  joint  venture  between
Greenwood  and  Penn  National  (  "Pennwood").   Greenwood  and  Pennwood  have
guaranteed  the  performance  by the  purchaser  of all  obligations  under  the
Contingent Notes.

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.

     In February  1996,  the Company  announced  its intention to develop the El
Rancho Property using

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the theme  "Starship  Orion." In February  1997,  the Company  announced that it
would develop the property  under a more modest  country and western theme to be
known as "CountryLand". These plans included the development of a 34 story tower
addition  containing 380 hotel rooms, a showroom with seating for  approximately
1,800 spectators,  a 450 seat bullring, a country western dance hall, a swimming
pool,  shopping  mall and new  restaurants.  In  connection  with  the  Delaware
Settlement,  the  Company  has  provided  for the  disposition  of the El Rancho
Property.

     Pursuant to the Delaware  Settlement,  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").  LVEN  did not sell the El  Rancho  Property  nor did it
exercise  the  Refinancing  Option.  On January 25, 2000,  the Company  signed a
binding term sheet for the sale of the El Rancho Property and on March 1, 2000 a
formal  contract  was signed on the same terms as outlined  on the binding  term
sheet  with  certain  mutually  acceptable  changes  made  during  the course of
negotiations of the definitive  agreements.  See  "Developments  During the Last
Fiscal Year" below.  There can be no assurances that the Company will be able to
dispose of the El Rancho Property as  contemplated  by the Delaware  Settlement.
See "Legal Proceedings - Delaware Settlement."

Developments During the Last Fiscal Year

     On July 2, 1998,  the Company  entered into an agreement with Greenwood for
the sale of the real  property  and related  assets at Freehold  Raceway and the
lease for a period of seven years of the real  property  and  related  assets at
Garden State Park. The agreement was subject to the  satisfaction of a number of
conditions,  including without  limitation,  Company stockholder  approval,  the
receipt by the  Company of a fairness  opinion  from an  independent  investment
banker and the receipt by  Greenwood  of  approval  from  applicable  regulatory
authorities.  The original  purchase  price was $45 million,  consisting  of $33
million in cash and a seven year non-contingent promissory note in the amount of
$12 million, with an additional $10 million in contingent promissory notes which
would become  effective  upon,  among other  things,  New  Jersey's  approval of
off-track betting facilities or telephone account pari-mutuel  wagering on horse
racing.  The transaction,  as amended,  was consummated on January 28, 1999. See
below.

     On  July 2,  1998,  Michael  Abraham  and  Kenneth  Scholl  resigned  their
positions on the Board of Directors.

     Effective  August 7,  1998,  the  Company's  Common  Stock and its Series A
Preferred  Stock were  delisted  from  trading  on AMEX for the  failure to meet
certain AMEX listing criteria.  Neither the Common Stock nor the Preferred Stock
had been traded on AMEX since  October 13,  1997 when it was  suspended  for not
satisfying  various AMEX's  guidelines and because the Company had not filed its
Annual  Report on Form 10-K for Fiscal  1997  within the SEC's  prescribed  time
period. The stock is listed for quotation on the NQB Pink Sheets.

     On  January  28,  1999,  the  Company  fully and  finally  consummated  the
settlement  and  dismissal  of the  following  actions  discussed  in the "Legal
Proceedings"  section of this Form 10K:  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

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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 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").  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").  ITB  understands  that  former ITB  director  Nunzio P.
DeSantis is Chairman,  President and a principal  stockholder of AutoLend Group,
Inc., and former ITB chairman and director  Anthony Coelho is a former  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  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

                                       6
<PAGE>

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 January 25, 2000, the
Company  signed a binding term sheet for the sale of the El Rancho  Property and
on March 1, 2000 a formal  contract  was signed on the same terms as outlined on
the binding term sheet with certain mutually  acceptable changes made during the
course of negotiations of the definitive agreements.  There can be no assurances
that  the  Company  will  be  able  to  dispose  of the El  Rancho  Property  as
contemplated by the Delaware Settlement.

     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.

     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 May 7, 1999, the Company  notified their primary lender of its intent to
extend  the loan  maturity  date to June 1,  2000.  On  January  21,  2000 after
obtaining  the written  consent of the holders of a majority of the  outstanding
shares of stock of the Company  entitled to vote  thereon,  the Company  entered
into a restructuring  agreement (the  "Restructure  Agreement") with its primary
lender,  Credit Suisse First Boston  Mortgage  Capital LLC,  ("Credit  Suisse").
Prior to this agreement,  the Company had been in a maturity default with Credit
Suisse  for its loan due on June 1, 1999  (the  "CSFB  Loan")  in the  principal
amount of $30,500,000 plus unpaid interest since June 1, 1999.

     The Restructure  Agreement returns the loan to a good standing position and
extends  the  maturity  date of the CSFB Loan to June 30,  2000.  As part of the
Restructure  Agreement,  the Company  agreed that as of January  21,  2000,  the
restructured  principal  balance  due on the CSFB  Loan was  $33,103,189,  which
consisted  of: (i) the  principal  amount of  $30,500,000  remaining on the CSFB
Loan;  (ii)  accrued  interest  advanced  by Credit  Suisse from June 1, 1999 to
January 21, 2000 in the amount of $2,523,189;  and (iii) an advance of a portion
of Credit  Suisse's  legal fees  incurred  in  connection  with the  Restructure
Agreement in the amount of $80,000.  Credit  Suisse has agreed,  pursuant to the
Restructure  Agreement,  to advance the  monthly  interest  payments  due by the
Company under the CSFB Loan until 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.
Commencing April 16, 2000 and until 30 days following the closing of the sale of
the El Rancho property,  interest accruing shall be paid by Turnberry/Las  Vegas
Boulevard  LLC  ("Turnberry"),  the  purchaser  of the El Rancho  property.  The
potential sale to Turnberry is described later in this section.

                                       7
<PAGE>

     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 remaing principal amount of $3,363,032, as evidenced by a
note dated January 28, 1999 (the "Trustee Note"), entered into an agreement with
the Company  wherein:  (i) the amounts due under the Trustee Note are due at the
earlier  of (a) June 1, 2000 or (b) the date on which the  latter of the  Garden
State Park or El Rancho  property is sold,  provided that the sale of the latter
will satisfy the remaining  balance on the CSFB Loan and the Trustee Note;  (ii)
all interest  due under the Trustee Note will be accrued and deferred  until the
maturity date of the Note; and (iii) the Company shall reimburse the Trustee for
legal and  accounting  fees up to $20,000,  which amount will be advanced by the
Trustee and added to the outstanding principal balance of the Trustee Note.

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

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

     On January 25,  2000,  the Company and Garden State Race Track,  Inc.,  the
owner of Garden State Park, entered into an agreement for the sale of all of the
Garden  State Park  property,  excluding  a ten-acre  parcel of land  previously
committed to GS Park Racing,  L.P., to 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 (see Agreement of Sale
of Garden State Race Track). The Restructure Agreement further provides that (i)
if the proceeds from the sale of the Garden State Park property are insufficient
to pay the outstanding amounts due to Credit Suisse under the CSFB Loan, or (ii)
after the sale or joint venture of the Garden State  property,  the total amount
outstanding  under the CSFB Loan is equal to or greater than  $5,000,000 and the
Company shall not have received a binding  commitment  for a loan or purchase of
the El Rancho Property, then, Orion Casino Corporation must convey the El Rancho
property  to a  new  Delaware  limited  liability  company  ("New  LLC")  having
substantially  same ownership  structure and limited liability company agreement
as GSRT.  Once the El Rancho  property is conveyed to New LLC in accordance with
and upon the  happening  of the  circumstances  and  conditions  provided in the
Restructure Agreement, Orion Casino Corporation,  as the sole member of New LLC,
will have the right to cause New LLC to sell or refinance the El Rancho property
so long as the outstanding  obligations due under the CSFB Loan are paid in full
by such sale or  refinancing  and such sale or  refinancing  closes on or before
June 30, 2000. See "Management's Discussion and Analysis of Financial Conditions
and Results of Operations."


     On January 25,  2000,  the Company  entered  into an agreement of sale with
Turnberry/Cherry  Hill LLC,  for the sale of the Garden  State Park real estate.
While the  Company  received  from escrow a

                                       8
<PAGE>

$500,000 deposit made by the buyer under the terms of the sale, possible changes
to the agreement are currently being  negotiated by the parties.  Upon execution
of a modification  of the definitive  agreement the Company  expects to announce
the final terms of the transaction.

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

     On January 25, 2000, the Company  entered into a binding term sheet for the
sale of the El Rancho  property in Las Vegas,  Nevada with  Turnberry/Las  Vegas
Boulevard,  LLC and on March 1, 2000 a formal  contract  was  signed on the same
terms as outlined on the binding  term sheet with  certain  mutually  acceptable
changes made during the course of negotiations of the definitive agreements. The
purchase  price is  $45,000,000.  The  purchase  price  will be paid  by:  (i) a
$100,000  deposit at the  signing of the  Purchase  and Sale  Agreement;  (ii) a
$400,000  additional  deposit  due on  March  15,  2000,  which  amount  will be
non-refundable,  and (iii) the balance of the purchase price due at the closing,
will be payable in cash.

     The closing,  originally  scheduled  to occur by March 31,  2000,  has been
extended  to April 30, 2000 after the buyer:  (i) agreed to pay the  approximate
$100,000  carrying costs of the El Rancho  property for the month of April 2000;
(ii) agreed to pay the  interest  due to Credit  Suisse  First  Boston  Mortgage
Capital,  LLC on a principal amount of $20,000,000 at 12% for the month of April
2000;  and (iii)  released  $1,600,000,  which  included the above  $100,000 and
$400,000 deposits, as a non-refundable  deposit to the Company. The closing date
may be further  extended to June 1, 2000  provided the buyer:  (i) agrees to pay
the approximate  $100,000 carrying costs of the El Rancho property for the month
of May 2000;  (ii) pays the interest due to Credit Suisse First Boston  Mortgage
Capital,  LLC on a principal  amount of  $19,000,000 at 12% for the month of May
2000;  (iii) pays an additional  deposit of $900,000 to the Company by April 30,
2000, which amount has not yet been received;  and (iv)  demonstrates it has the
financial ability to close.

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

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

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


                                       9
<PAGE>

Item 2 - Properties

     In  addition  to Garden  State  Park and the El Rancho  Property  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

     On or about  September  10, 1997,  three actions were filed in the Delaware
Court of Chancery in and for New Castle County (the "Delaware  Chancery Court"),
each of which  named the  Company  as a nominal  defendant  and one of which was
subsequently dismissed (collectively, the "Delaware Actions"). Additionally, two
actions  were filed in New  Jersey  naming  the  Company as a nominal  defendant
(collectively,  the "New Jersey  Actions"),  one of which is a derivative action
filed on or about February 24, 1998 in the United States  District Court for the
District  of New Jersey (the "New Jersey  District  Court"),  and the other is a
purported  class action filed on or about July 15, 1998 in the Superior Court of
New Jersey (the "New Jersey  Superior  Court").  As described  more fully below,
pursuant to the terms of a Stipulation  and Agreement of Compromise,  Settlement
and Release dated July 2, 1998 (the "Delaware  Stipulation"),  upon satisfaction
of  certain  conditions  set forth in the  Delaware  Stipulation,  the  Delaware
Actions  were  fully and  finally  dismissed  with  prejudice,  and the  parties
provided  mutual  releases of all claims  related to the actions  thereunder  on
January  28,  1999  (the  "Delaware  Settlement").  See  "Delaware  Settlement."
Further,  pursuant to a memorandum of  understanding  entered into on August 18,
1998 (the "New Jersey Memorandum"), upon satisfaction of certain conditions, the
New Jersey Actions are to be fully and finally dismissed with prejudice, and the
parties  are to provide  mutual  releases  of all claims  related to the actions
thereunder (the "New Jersey Settlement"). See "New Jersey Settlement."

Quigley, et al. v. DeSantis, et al.

     Quigley, Leo and The Family Investment Trust v. DeSantis,  Abraham, Coelho,
Scholl,  Zappala,   Corazzi  and  Las  Vegas  Entertainment  Network,  Inc.  and
International   Thoroughbred  Breeders,  Inc.,  C.A.  No.  15919  (the  "Quigley
Action"),  was filed in the Delaware Court of Chancery on or about September 10,
1997, and alleged that the director defendants therein acted in contravention of
ITB's  by-laws,  Delaware law and their  fiduciary  duties.  The Quigley  Action
sought a declaratory judgement that the actions taken by the director defendants
violated  ITB's  by-laws,  Delaware law and the director  defendants'  fiduciary
duties  and that such  actions  are void and should be  rescinded  by the Court.
Moreover,  the Quigley Action sought damages  suffered by ITB in connection with
such  challenged  actions.  ITB asserted  counterclaims  against  Quigley,  Leo,
Murray,  and Dees Jr.,  alleging that such counterclaim  defendants  contravened
Delaware law and such counterclaim  defendants'  fiduciary duties. In connection
with  such   counterclaims,   ITB  sought   injunctive   relief  preventing  the
counterclaim  defendants from interfering with the Company's day-to-day business
affairs,  the  establishment  of a  constructive  trust over certain  assets,  a
declaration that a certain  supermajority by-law was repealed and money damages.
Murray further  counterclaimed  against ITB for wrongful termination and failure
to pay certain  compensation.  All  allegations  of either the plaintiffs or the
counterclaim plaintiffs were denied.

     The  Quigley  Action  was  fully  and  finally  dismissed  and  settled  in
connection with the January 28, 1999 consummation of the Delaware Settlement.

                                       10
<PAGE>

Rekulak v. DeSantis, et al.

     On or about  September 11, 1997, the action  entitled  Rekulak v. DeSantis,
Abraham,  Coelho, Scholl, Zappala,  Corazzi and Las Vegas Entertainment Network,
Inc. and International  Thoroughbred Breeders, Inc., C.A. No. 15920, was brought
in the Delaware Court of Chancery alleging that the defendants  therein acted in
contravention  of  ITB's  by-laws,  Delaware  law and the  director  defendants'
fiduciary  duties (the "Rekulak  Action").  The allegations  made and the relief
sought in the Rekulak Action are virtually identical to the allegations made and
relief sought in the Quigley Action.

     The Rekulak Action was fully and finally  dismissed in connection  with the
January 28, 1999 consummation of the Delaware Settlement.

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 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").  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").  ITB  understands  that  former ITB  director  Nunzio P.
DeSantis is Chairman,  President and a principal  stockholder of AutoLend Group,
Inc., and former ITB 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

                                       11
<PAGE>

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").  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.  As of March 31,  1999,
neither LVEN, nor the Company had sold the El Rancho Property,  and LVEN had not
exercised the  Refinancing  Option.  There can be no assurances that the Company
will be  able to  dispose  of the El  Rancho  Property  as  contemplated  by the
Delaware Settlement.

     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.

     There can be no assurances  that the Company will be able to dispose of the
El Rancho Property as contemplated by the Delaware Settlement.

                                       12
<PAGE>

Harris v. DeSantis, et al.

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

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

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

Harris v. DeSantis, et al.

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

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

New Jersey Settlement

     The New Jersey  Actions are  currently at a standstill  as the parties have
entered  into the New  Jersey

                                       13
<PAGE>

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

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

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

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

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

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

                                       14
<PAGE>

of the  Harris-State  action while the parties are  finalizing  the Proposed New
Jersey Settlement.

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

Other Litigation Relating to Delaware Action

     In  November  1997,  two  separate  actions  were  filed in the New  Jersey
District  Court against  various  directors of the Company and other  affiliated
parties.  The Company is not a party to either of these  actions,  both of which
are summarized below:

NPD, Inc. v. Quigley, et al.

     On or about  November 17, 1997,  an action  entitled  NPD, Inc. v. Quigley,
Francis W. Murray, Leo, Dees Jr., Mariucci,  Koenemund and James J. Murray, C.A.
No.  97-CV-5657,  was filed in the United States District Court for the District
of New Jersey,  alleging that the  defendants  therein had engaged in fraudulent
and conspiratorial conduct in connection with a certain Stock Purchase Agreement
between  Robert E. Brennan and NPD,  Inc.  ("the "NPD  Action").  The NPD Action
sought compensatory and punitive damages. The Company was not a party to the NPD
Action.

     The NPD Action was fully and finally  dismissed  and settled in  connection
with the January 28, 1999 consummation of the Delaware Settlement.

Green v. DeSantis, et al.

     On or about  October  30,  1997,  the action  entitled  Green v.  DeSantis,
Corazzi,  Coelho, Las Vegas Entertainment  Network, Inc. and NPD, Inc., C.A. No.
97-5359 (JHR), was filed in the United States District Court for the District of
New Jersey (the "Green  Action").  The Green Action  alleged that the defendants
therein acted in contravention of ITB's by-laws,  their fiduciary duties and the
contractual   obligations  in  connection  with  Robert  W.  Green's   interests
pertaining to ITB.  Plaintiff Green sought  compensatory and punitive damages in
connection with the  defendants'  actions,  an order  enjoining  defendants from
transferring,  encumbering or alienating  certain of the Company's  common stock
which was subject to an option  agreement  between Green and NPD, Inc., an order
declaring  certain  shares  of  common  stock of the  Company  to be a  nullity,
reformation of the  aforementioned  option  agreement to extend the  termination
date.  The  action  raised  claims  substantially  similar  to those made in the
Quigley Action. The Company was not a party to the Green Action.

     The Green Action was fully and finally  dismissed and settled in connection
with the January 28, 1999 consummation of the Delaware Settlement.

Other Litigation

     The Company is a defendant in two  wrongful  death  actions  arising out of
motor  vehicle/pedestrian  accidents at Freehold  Raceway.  The cases are in the
initial  stages of  discovery.  The Company  believes  that it may have adequate
insurance coverage for the claims,  however,  because of the uncertainties,  the
Company is unable to determine at this time the potential liability, if any. Any
claim for punitive damages

                                       15
<PAGE>

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,  1999.  On  December  27,  1999,  the Company
received consents from a group of its shareholders representing 4,498,264 shares
or 50.09% of the Company's  Common Stock which  authorized  the Company to enter
into a restructuring  agreement with its primary lender. The last annual meeting
of stockholders was held on February 21, 1996.

                                       16
<PAGE>

                                     PART II


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

MARKET INFORMATION

     Until October 13, 1997,  the Company's  Common Stock had been traded on the
American Stock  Exchange  ("AMEX") since April 4, 1985 under the symbol "ITB" On
October 13, 1997,  the AMEX  suspended  trading in the Common Stock  because the
Company had not filed its Annual  Report on Form 10-K for Fiscal 1997 within the
SEC's  prescribed time period.  Effective  August 7, 1998, the Company's  Common
Stock and its  Preferred  Stock were  delisted  from trading on the AMEX for the
failure to comply with certain  listing  criteria.  Neither the Common Stock nor
the Preferred Stock has been traded on AMEX since October 13, 1997. The stock is
listed for quotation on the NQB Pink Sheets.  The following  table indicates the
high and low sale  prices  for such  stock on the NQB Pink  Sheets  for the year
ended June 30, 1999 based upon  information  supplied by the NQB Pink Sheets and
on the American Stock Exchange on a quarterly  basis for the year ended June 30,
1997 and the two  quarters  ended  December  31,  1997,  based upon  information
supplied by the American Stock Exchange:



                          SALES PRICE
QUARTER ENDED           HIGH         LOW

September 30, 1996      4.13         3.50

December 31, 1996       3.88         2.63

March 31, 1997          5.13         2.81

June 30, 1997           5.06         4.00


September 30, 1997      4.56         3.50

December 31, 1997
(Trading was suspended
 on October 13, 1997)   3.88*        3.44*


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

* The last sale price on October 13, 1997 was $3.50.


                                       17
<PAGE>


HOLDERS

     As of June 30,  1999,  there were  30,631  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.


                                       18
<PAGE>


Item 6 - SELECTED FINANCIAL DATA
<TABLE>
                   INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                                                                                  Years Ended June 30,
                                                    -----------------------------------------------------------------------------
                                                          1999            1998            1997            1996          1995(3)
                                                    -------------    ------------    ------------    ------------    ------------
<CAPTION>
<S>                                                 <C>              <C>             <C>             <C>             <C>
(Loss) Income from Continuing Operations (2)(6)     $ (16,034,769)   $(25,468,850)   $(15,144,053)   $ (2,779,987)   $    386,966


Income From Discontinued Operations (1) . .......   $   8,144,073    $  7,207,633    $  1,594,096    $  1,710,276    $  2,011,485

(Loss) Income  Before Extraordinary Item ........   $  (7,890,697)   $(18,261,217)   $(13,549,957)   $ (1,069,712)   $  2,398,452

Net (Loss) Income (4)...............................$  (7,890,697)   $(18,261,217)   $(17,387,582)   $ (1,069,711)   $  2,398,452

Per Common Share:

(Loss) Income Before Discontinued Operations
  and Extraordinary Item ........................   $       (1.38)   $      (1.82)   $      (1.29)   $      (0.26)   $       0.04

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

Income From Discontinued Operations .............   $        0.39    $       0.51    $       0.14    $       0.16    $       0.21

(Loss) Income Before Extraordinary Item..........   $       (0.67)   $      (1.31)   $      (1.15)   $      (0.10)   $       0.25

Net (Loss) Income ...............................   $       (0.67)   $      (1.31)   $      (1.49)   $      (0.10)   $       0.25

Weighted Average Number of Shares ...............      11,554,476      13,978,086      11,715,256      10,536,414       9,551,369
</TABLE>
<TABLE>
                                                                                      June 30,
                                                    -----------------------------------------------------------------------------
                                                         1999            1998            1997            1996            1995
                                                    -------------    ------------    ------------    ------------    ------------
<CAPTION>
<S>                                                 <C>              <C>             <C>             <C>             <C>
Working Capital (Deficiency)........................$ (33,069,102)   $(36,744,740)   $(41,300,996)   $ (3,916,684)   $  7,740,788

Total Assets .......................................$  76,588,565    $ 120,252,901   $164,694,029    $144,880,933    $ 97,469,045

Long-Term Debt .....................................$           0    $           0   $ 13,131,003    $ 50,992,702    $ 15,599,097

Stockholders' Equity (5) ...........................$  40,846,683    $  59,913,361   $ 75,651,933    $ 79,318,105    $ 72,206,437
</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)  income  from
     continuing operations primarily consists of corporate expenses, charges and
     write-offs  for years  subsequent to June 30, 1995. The year ended June 30,
     1995 reflects  investment  income of approximately  $3.4 million reduced by
     corporate expenses and charges.

(3)  On January 1, 1995, the Company completed its purchase of Freehold Raceway.
     The results of operations include the results of Freehold Raceway from such
     date.

(4)  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.  (5) The
     Company  did not pay cash  dividends  during any of the fiscal  years shown
     above.

(6)  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, 1999.

                                       19
<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,  1999,  was a deficit  of
($33,069,102)  which  represents  a decrease  in the  deficit  of  approximately
$3,675,638 from the June 30, 1998 working capital deficit of ($36,744,740).  The
decrease in the deficit was primarily caused by: (i) the funds received from the
sale of the Freehold  operating  assets were (a) in excess of the carrying value
of the  assets  and (b) were used to  retire  $24.5  million  of the debt to the
Company's  primary  lender,  Credit  Suisse First Boston  Mortgage  Capital LLC,
("Credit Suisse");  (ii) the decrease in accrued expenses  primarily  associated
with the  Delaware  Settlement;  (iii) the decrease in reserve  escrow  deposits
primarily associated with the interest payments made from the escrow deposits on
debt;  and (iv) the  addition of a promissory  note in the amount of  $3,558,032
associated with the Company's purchase of its common stock from NPD.

     On May 23, 1997, the Company obtained a credit facility from Credit Suisse.
This  two-year  $55 million  facility  was secured by a pledge of certain of the
personal and real property of the Company and its subsidiaries. Proceeds of this
facility were used to repay in full the Company's  $30 million  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.  At
June 30,  1999,  the  interest  rate on the Credit  Suisse  Credit  Facility was
12.24%.  On January 21, 2000 after  obtaining the written consent of the holders
of a majority of the outstanding shares of stock of the Company entitled to vote
thereon,  the Company entered into a restructuring  agreement (the  "Restructure
Agreement") with Credit Suisse. Prior to this agreement, the Company had been in
a  maturity  default  with  Credit  Suisse for its loan due on June 1, 1999 (the
"CSFB Loan") in the principal  amount of $30,500,000  plus unpaid interest since
June 1, 1999.  The  Restructure  Agreement  returns the loan to a good  standing
position  and extends the maturity  date of the CSFB Loan to June 30,  2000.  As
part of the  Restructure  Agreement,  the Company  agreed that as of January 21,
2000, the restructured  principal  balance due on the CSFB Loan was $33,103,189,
which  consisted of: (i) the principal  amount of  $30,500,000  remaining on the
CSFB Loan; (ii) accrued interest  advanced by Credit Suisse from June 1, 1999 to
January 21, 2000 in the amount of $2,523,189;  and (iii) an advance of a portion
of Credit  Suisse's  legal fees  incurred  in  connection  with the  Restructure
Agreement in the amount of $80,000.  Credit  Suisse has agreed,  pursuant to the
Restructure  Agreement,  to advance the  monthly  interest  payments  due by the
Company under the CSFB Loan until 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.
Commencing April 16, 2000 and until 30 days following the closing of the sale of
the El Rancho property,  interest accruing shall be paid by Turnberry/Las  Vegas
Boulevard LLC  ("Turnberry"),  the purchaser of El Rancho  property.  (See Notes
11-A and 20-B)

     The Credit Suisse Credit Facility is evidenced by a convertible  promissory
note (the "CSFB Note") pursuant to which $10 million of the aggregate  principal
amount of the CSFB Note can be converted in certain circumstances,  including on
the maturity date of the CSFB Note,  upon the prepayment of at least $10 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,  pursuant to the Credit  Suisse loan  agreement,  Credit
Suisse was granted  warrants to purchase  1,044,000 shares of Common Stock at an

                                       20
<PAGE>

exercise  price of $4.375 per share  (subject to adjustment in certain  events).
Warrants to purchase 546,847 shares of Common Stock were immediately exercisable
and warrants to purchase  497,153  shares of Common Stock became  exercisable on
January 28, 1999 in connection with the Delaware  Settlement.  The fair value of
the warrants of $1,242,883 was recorded as a financing expense.  (See Notes 3, 4
and 11-A)

     The net loss for the year ended June 30, 1999 was ($7,890,697).  Cash flows
used by operating activities amounted to approximately $1,952,360.  The net loss
incurred by the Company includes approximately $4,400,000 of non-cash expenses.

     Cash provided by investing activities was $12,834,308 during the year ended
June  30,  1999,   primarily  the  result  of  cash  proceeds  of  approximately
$19,900,000  from the sale of certain assets of Freehold Raceway and the sale of
a ten-acre parcel of land at the Garden State Park facility, partially offset by
the purchase of 2,904,016 shares of Treasury Stock for $6,850,000. (See Notes 3,
4 and 11-B)

     Cash used in financing activities was $8,999,371 during the year ended June
30, 1999,  consisting  principally  of: (i) amounts drawn from the Credit Suisse
interest escrow account in the amount of $10,278,727;  (ii) a $2,500,000 payment
of the Credit  Suisse note (the note was further  reduced by the  assumption  of
$22,000,000  of the principal  balance by the  purchasers of Freehold  Raceway);
(iii) a pay down of the NPD note in the amount of $2,250,000; and (iv) principal
payments of approximately  $13,000,000  primarily associated with the retirement
of the Freehold debt.

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

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

     In connection  with the  Restructure  Agreement,  the Chapter 11 Bankruptcy
Trustee (the "Trustee") for the estate of Robert E. Brennan, to whom the Company
and its subsidiaries  Garden State Race Track, Inc. and Orion Casino Corporation
are indebted to in the remaing 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

                                       21
<PAGE>

(iii) the Company shall  reimburse the Trustee for legal and accounting  fees up
to  $20,000,  which  amount  will be  advanced  by the  Trustee and added to the
outstanding principal balance of the Trustee Note.

     Pursuant  to the  Restructure  Agreement,  Garden  State Race  Track,  Inc.
transferred  title to the  Garden  State  Race Track to GSRT,  LLC  ("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 with
Turnberry/Cherry  Hill LLC,  for the sale of the Garden  State Park real estate.
While the  Company  received  from escrow a $500,000  deposit  made by the buyer
under the terms of the sale,  possible  changes to the  agreement  are currently
being  negotiated  by the  parties.  Upon  execution  of a  modification  of the
definitive  agreement  the Company  expects to  announce  the final terms of the
transaction.

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

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

     On January 25, 2000, the Company  entered into a binding term sheet for the
sale of the El Rancho  property in Las Vegas,  Nevada with  Turnberry/Las  Vegas
Boulevard,  LLC and on March 1, 2000 a formal  contract  was  signed on the same
terms as outlined on the binding  term sheet with  certain  mutually  acceptable
changes made during the course of negotiations of the definitive agreements. The
purchase  price is  $45,000,000.  The  purchase  price  will be paid  by:  (i) a
$100,000  deposit at the  signing of the  Purchase  and Sale  Agreement;  (ii) a
$400,000  additional  deposit  due on  March  15,  2000,  which  amount  will be
non-refundable;  and (iii) the balance of the purchase price due at the closing,
will be payable in cash.

                                       22
<PAGE>

     The closing,  originally  scheduled  to occur by March 31,  2000,  had been
extended  to April 30, 2000 after the buyer:  (i) agreed to pay the  approximate
$100,000  carrying costs of the El Rancho  property for the month of April 2000;
(ii) agreed to pay the  interest  due to Credit  Suisse  First  Boston  Mortgage
Capital,  LLC on a principal amount of $20,000,000 at 12% for the month of April
2000;  and (iii)  released  $1,600,000,  which  included the above  $100,000 and
$400,000 deposits, as a non-refundable  deposit to the Company. The closing date
was further  extended to June 1, 2000 provided the buyer:  (i) agreed to pay the
approximate  $100,000  carrying costs of the El Rancho property for the month of
May 2000;  (ii) pays the  interest due to Credit  Suisse  First Boston  Mortgage
Capital,  LLC on a principal  amount of  $19,000,000 at 12% for the month of May
2000;  (iii) pays an additional  deposit of $900,000 to the Company by April 30,
2000, which amount has not yet been received;  and (iv)  demonstrates it has the
financial ability to close.

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

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

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

     The Company  currently  estimates that the $1.475 million made available on
January 28, 1999 from the Credit  Suisse  Credit  Facility  and the escrow funds
made available on January 21, 2000 associated with the Credit Suisse Restructure
Agreement,  together with the $500,000  deposit made available March 2, 2000 and
the deposit of $1,600,000  received from the extension of the El Rancho  closing
and  cash  generated  from  the  Company's  operations  prior to the sale of the
discontinued  operations,  will be sufficient to finance its current  operations
and expected  expenditures  and carrying  costs of the El Rancho  Property until
June 30, 2000.

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

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

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

                                       23
<PAGE>

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue as a going  concern.  As  discussed in Footnote 1 to the
consolidated  financial statements,  the Company's debt with its major lender is
due June 30,  2000 and the Company has  sustained a loss of  approximately  $7.9
million for the year ended June 30, 1999, which raises  substantial  doubt about
its  ability to  continue as a going  concern.  Management's  plans in regard to
these  matters are also  described in Footnote 1 to the  consolidated  financial
statements. The consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties.

RESULTS OF OPERATIONS FOR THE 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.  Among other actions,
the Delaware Settlement contemplates the disposition of the El Rancho Property.

     For the year  ended  June 30,  1999,  The  Company's  loss from  continuing
operations was  ($16,034,769)  as compared to a loss from continuing  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 from continuing 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.

                                       24
<PAGE>

     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.

RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED JUNE 30, 1998 AND 1997

     As discussed above, the operating results of the racetrack subsidiaries for
the year ended June 30, 1998 has been  segregated  and reported as  discontinued
operations for each of the periods presented.

     The Company's Fiscal 1998 loss from continuing operations was ($25,468,850)
as compared to a loss from  continuing  operations  for the prior fiscal year of
($15,144,053), an increase in the loss of $10,324,797. This increase in the loss
from  continuing  operations  was  primarily  the result of: (a) an  increase in
general and administrative  expenses of $6,073,387;  (b) an increase in interest
expense of $5,517,093;  (c)an  increase in  amortization  of financing  costs of
$1,910,674; and (d) the estimated loss in connection with the adjustment to fair
market value of the El Rancho  Property of $3,429,252.  The increase in the loss
was offset by (i) a write-off  in Fiscal 1997 of  $2,585,000  in  non-refundable
deposits  associated  with the  termination of an option to purchase a parcel of
land adjoining the El Rancho Property,  (ii) a write-off of $2,543,968 in Fiscal
1997  associated  with the  termination  of the Starship  Orion  concept for the
future  development  of the El Rancho  Property,  which  costs were  expensed in
Fiscal 1997,  (iii) a decrease of $799,460 in El Rancho Property  carrying costs
from  $1,773,627  in Fiscal 1997 to $974,167 in Fiscal 1998 and (iv) an increase
in interest income of $677,181.

     General  and  administrative   expenses  of  $11,615,972  for  Fiscal  1998
increased  $6,073,387  or 110% from the prior fiscal year amount of  $5,542,585.
The increase in general and administrative expenses was principally attributable
to: (1) the accrual of an estimated  charge of $3,748,000 the Company will 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;  (2) an increase
in legal  expenses of  $2,400,000  from $900,000 in Fiscal 1997 to $3,300,000 in
Fiscal  1998,  primarily  as the result of legal  expenses  associated  with the
various  director  and  stockholder  lawsuits;  (3) an  increase  in officer and
corporate  administrative salaries and benefits of $470,000; and (4) an increase
in non-employee option expenses of $337,500; offset by decreases in (i) taxes of
$400,000, (ii) rental expense of $360,000 and (iii) various executive travel and
related  expenses  of  $262,000.  In the  absence  of a  public  market  for the
Company's  Common Stock,  management  has determined the estimated fair value of
the Common Stock  referred to in clause (1) above,  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
occur on December 31,  1998,  the  disposal of the  racetrack  assets and the El
Rancho Property, and other transactions contemplated in the Delaware Settlement.
There can be no assurance that all of these  transactions  will occur or if they
will occur at the estimated amounts.

     The  increase  in  interest   expenses  of   $5,517,093   was   principally
attributable  to higher  interest  rates and higher  indebtedness  levels of the
Company and the fact that  interest was expensed  during Fiscal 1998 as compared
to a portion of the interest  being  capitalized  and a portion  being  expensed
during Fiscal 1997,  offset by an increase in interest income of $677,181 on the
Credit  Suisse escrow funds.  The increase in  amortization  of finance costs of
$1,910,674  was  principally  due to the  increased  cost  of the  CSFB  Loan as
compared to the cost of the Foothill loan.

     Income  from  discontinued  operations  was  $7,207,633  for Fiscal 1998 as
compared to income from  discontinued  operations for Fiscal 1997 of $1,594,096,
an increase of $5,613,537. During Fiscal 1998, revenue from racetrack operations
at Freehold  Raceway and Garden State Park increased by an aggregate of $204,568
from the  prior  fiscal  year and  racetrack  operating  expenses  decreased  by
$5,408,969 during

                                       25
<PAGE>

the same  period,  primarily as a result of a decrease in wages and benefits and
outside services at the two facilities.

     During Fiscal 1998,  the Company  incurred a net loss of  ($18,261,217)  as
compared to a net loss of  ($17,387,582)  for Fiscal  1997.  The increase in net
loss of $873,635  was the result of those  differences  described  above and the
loss on early  extinguishment of debt recognized in Fiscal 1997 in the amount of
$3,837,625.

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.

     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

     Nothing of this item impacts the Company.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

     Attached.

                                       26
<PAGE>


ITEM 9- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     On September 28, 1999, the Company was informed by the firm of BDO Seidman,
LLP ("BDO") that the client-auditor relationship between BDO and the Company had
ceased.  On October 29, 1999, the Company  engaged  Stockton  Bates,  LLP as its
principal  accountants  to audit its  financial  statements  for the fiscal year
ended June 30, 1999.

                                       27
<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   balance   sheet  of
International  Thoroughbred Breeders,  Inc. and subsidiaries as of June 30, 1999
and the related consolidated statements of operations,  stockholders' equity and
cash flows for the year 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 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  financial   position  of
International  Thoroughbred  Breeders,  Inc. and its subsidiaries as of June 30,
1999 and the results of their  operations and their cash flows for the year 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 June 30,
2000 and the Company sustained a loss of approximately $7.9 million for the year
ended June 30, 1999, 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
January 13, 2000
[Except for Notes 7, 11-A, 20-B,
  20-C and 20-D as to which the
  date is May 2, 2000]

                                       28
<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   balance   sheet  of
International  Thoroughbred Breeders,  Inc. and subsidiaries as of June 30, 1998
and the related consolidated statements of operations,  stockholders' equity and
cash flows for each of the two years in the period  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 audits.

     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,
1998 and the  results of their  operations  and their cash flows for each of the
two  years in the  period  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


                                       29
<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                          AS OF JUNE 30, 1999 AND 1998

                                     ASSETS


                                                      June 30,        June 30,
                                                      ------------------------
                                                        1999            1998
                                                        ----            ----
CURRENT ASSETS:
        Cash and Cash Equivalents .............   $  1,358,200   $    213,795
        Reserve Escrow Deposits ...............        182,154     10,460,881
        Accounts Receivable ...................        234,774         36,838
        Prepaid Expenses ......................        349,182        322,313
        Other Current Assets ..................         53,771        325,756
        Net Assets of Discontinued
          Operations - Current.................        494,699     12,235,217
                                                     ---------     ----------
             TOTAL CURRENT ASSETS .............      2,672,780     23,594,800
                                                     ---------     ----------

NET ASSETS OF DISCONTINUED
          OPERATIONS - Long Term ..............     30,000,000     45,626,944
                                                    ----------     ----------
PROPERTY HELD FOR SALE ........................     42,149,755     47,434,670
                                                    ----------     ----------
LAND, BUILDINGS AND EQUIPMENT:
        Land and Buildings ....................        214,097        214,097
        Equipment .............................        683,428        814,927
                                                    ----------     ----------
                                                       897,525      1,029,024
        LESS: Accumulated Depreciation
          and Amortization.....................        329,667        308,162
                                                    ----------     ----------
             TOTAL LAND, BUILDINGS AND
               EQUIPMENT, NET .................        567,858        720,862
                                                    ----------     ----------

OTHER ASSETS:
        Deposits and Other Assets .............      1,198,172          3,172
        Deferred Financing Costs, Net .........              0      2,872,453
                                                    ----------     ----------
             TOTAL OTHER ASSETS ...............      1,198,172      2,875,625
                                                    ----------     ----------
TOTAL ASSETS ..................................   $ 76,588,565   $120,252,901
                                                  ============   ============


See Notes to Consolidated Financial Statements.


                                       30
<PAGE>



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                          AS OF JUNE 30, 1999 AND 1998

                      LIABILITIES AND STOCKHOLDERS' EQUITY


                                           June 30,        June 30,
                                           ------------------------
                                             1999            1998
                                             ----            ----
CURRENT LIABILITIES:
 Accounts Payable ....................$    267,941    $     278,786
 Accrued Expenses ....................   1,176,796        4,852,328
 Current Maturities of
  Long-Term Debt .....................  34,297,145       55,208,426
                                        ----------       ----------
       TOTAL CURRENT LIABILITIES .....  35,741,882       60,339,540
                                        ----------       ----------
COMMITMENTS AND CONTINGENCIES ........      --               --

STOCKHOLDERS' EQUITY:
 Series A Preferred Stock,
  $100.00 Par Value,
   Authorized 500,000 Shares,
   Issued and Outstanding,
   362,482 and 362,480 Shares,
   Respectively ......................  36,248,175       36,247,975
 Common Stock, $2.00 Par Value,
  Authorized 25,000,000
  Shares, Issued, 11,884,249
  and 13,978,099 Shares,
  and Outstanding, 8,980,233 and
  13,978,099 Shares, Respectively.....  23,768,497       27,956,197
 Capital in Excess of Par ............  26,144,782       25,878,224
 (Deficit) (subsequent to
    June 30, 1993,
    date of quasi-reorganization) .... (38,023,064)     (30,132,368)
                                        ----------       ----------
      TOTAL ..........................  48,138,390       59,950,028
 LESS:
    Treasury Stock, 2,904,016
     Shares, at Cost .................  (7,260,040)               0
    Deferred Compensation, Net .......     (31,667)         (36,667)
                                        ----------       ----------
      TOTAL STOCKHOLDERS' EQUITY .....  40,846,683       59,913,361
                                        ----------       ----------

TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY ................$ 76,588,565    $ 120,252,901
                                       ===========    =============


See Notes to Consolidated Financial Statements.


                                       31
<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED JUNE 30, 1999, 1998 AND 1997
<TABLE>
                                                                     Years Ended June 30,
                                                        --------------------------------------------
                                                             1999            1998            1997
                                                        ------------    ------------    ------------
<CAPTION>
<S>                                                     <C>             <C>             <C>
EXPENSES:
        General & Administrative Expenses ...........   $  4,532,984    $ 11,615,972    $  5,542,585
                                                        ------------    ------------    ------------
        (including legal fees of $1,318,151,
        $3,306,877,and $896,729,respectively,
        and the estimated charge in connection
        with the repurchase of the NPD shares of
        $3,748,000 for the 1998 year)................
        Interest and Financing Expenses .............      7,831,021       7,084,968       1,567,875
        Interest Income .............................       (343,572)       (689,092)        (11,911)
        Amortization of Financing Costs .............      2,900,749       3,053,583       1,142,909
        El Rancho Property Carrying Costs ...........      1,113,587         974,167       1,773,627
        Impairment Loss on El Rancho Property .......      3,429,252               0
        Write Off of Deposits on Land ...............              0               0       2,585,000
        Write Off of Starship Orion Costs ...........              0               0       2,543,968

(LOSS) FROM CONTINUING OPERATIONS BEFORE                 ------------    ------------    ------------
   DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM ...    (16,034,769)    (25,468,850)    (15,144,053)
                                                         ------------    ------------    ------------
INCOME FROM DISCONTINUED OPERATIONS:
        Net Gain on Sale of Net Assets of Discontinued
        Operations ..................................      3,657,688            --              --
          (less applicable state income taxes
                  of $1,335,500)
        Income from operations of discontinued
          racetrack operations (less applicable
          state income taxes of $119,348,
          $135,100 and $55,617) .....................      4,486,385       7,207,633       1,594,096
                                                        ------------    ------------    ------------
        INCOME FROM DISCONTINUED OPERATIONS .........      8,144,072       7,207,633       1,594,096
                                                        ------------    ------------    ------------
(LOSS) BEFORE EXTRAORDINARY ITEM ....................     (7,890,697)    (18,261,217)    (13,549,957)

EXTRAORDINARY ITEM -
        (Loss) on Early Extinguishment of Debt ......              0               0      (3,837,625)
                                                         ------------    ------------    ------------
NET (LOSS) ..........................................   $ (7,890,697)   $(18,261,217)   $(17,387,582)
                                                        ============    ============    ============

BASIC AND DILUTED PER SHARE DATA:
(LOSS) BEFORE DISCONTINUED OPERATIONS
  AND EXTRAORDINARY ITEM ............................   $      (1.38)   $      (1.82)   $      (1.29)
NET GAIN ON SALE OF NET ASSETS OF DISCONTINUED
  OPERATIONS.........................................           0.32             --               --
INCOME FROM DISCONTINUED
  RACETRACK OPERATIONS............. .................           0.39            0.51            0.14
EXTRAORDINARY ITEM ..................................           --               --            (0.33)
NET (LOSS) ..........................................   $      (0.67)   $      (1.31)   $      (1.48)
                                                         ------------    ------------    ------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ..........     11,554,476      13,978,086      11,715,256
                                                         ============    ============    ============
</TABLE>


See Notes to Consolidated Financial Statements.


                                       32
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED JUNE 30, 1999, 1998 AND 1997
<TABLE>
                                                                          Preferred                  Common
                                                                     ---------------------   --------------------------
                                                                      Number of               Number of
                                                                       Shares     Amount       Shares          Amount
                                                                       ------     ------       ------          ------
<CAPTION>

<S>                                                                   <C>     <C>             <C>           <C>
BALANCE - JUNE 30, 1996 ...........................................   362,462 $ 36,246,175    11,651,487    $ 23,302,973

   Shares Issued in Connection with Retirement of Debt ............      --           --       2,326,520       4,653,040
   Compensation for Options Granted to Non-Employees ..............      --           --            --              --
   Financing Costs for Warrants Issued
       in Connection with Debt Financing ..........................      --           --            --              --
   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992         8          800            53             106
   Amortization of Deferred Compensation Costs ....................      --           --            --              --
   Cancellation of Options Granted for Deferred Compensation ......      --           --            --              --
   Net (Loss) for the Year Ended June 30, 1997 ....................      --           --            --              --
                                                                      -------   ----------    ----------      ----------
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
                                                                      ======= ============    ==========    ============
</TABLE>

<TABLE>
                                                                         Capital         Retained      Treasury
                                                                        in Excess        Earnings        Stock,
                                                                         of Par          (Deficit)      At Cost
                                                                      ------------    ------------    -----------
<CAPTION>
<S>                                                                   <C>             <C>             <C>
BALANCE - JUNE 30, 1996 ...........................................   $ 16,111,652    $  3,829,336    $         0

   Shares Issued in Connection with Retirement of Debt ............      6,671,245            --             --
   Compensation for Options Granted to Non-Employees ..............        493,050            --             --
   Financing Costs for Warrants Issued
       in Connection with Debt Financing ..........................      1,893,451            --             --
   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992           (906)           --             --
   Amortization of Deferred Compensation Costs ....................           --              --             --
   Cancellation of Options Granted for Deferred Compensation ......       (119,741)           --             --
   Net (Loss) for the Year Ended June 30, 1997 ....................           --       (17,387,582)          --
                                                                       ------------    ------------    -----------
BALANCE - JUNE 30, 1997 ...........................................     25,048,751     (13,558,246)             0

   Compensation for Options Granted to Non-Employees ..............        830,550            --             --
   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992         (1,078)           --             --
   Amortization of Deferred Compensation Costs ....................           --              --             --
   Gain on Sale of Land ...........................................           --         1,687,095           --
   Net (Loss) for the Year Ended June 30, 1998 ....................           --       (18,261,217)          --
                                                                       ------------    ------------    -----------
BALANCE - JUNE 30, 1998 ...........................................     25,878,224     (30,132,367)             0

   Shares Canceled in connection with Delaware Settlement .........     (1,046,934)           --             --
   Purchase of 2,904,016 Shares for Treasury in connection with
      Delaware Settlement .........................................           --              --       (7,260,040)
   Compensation for Options Granted to Non-Employees ..............         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            --             --
   Warrants Issued in Connection With Debt Retirement
      (See Note 11-A) .............................................      1,242,882            --             --
   Amortization of Deferred Compensation Costs ....................           --              --             --
   Net (Loss) for the Year Ended June 30, 1999 ....................           --        (7,890,697)          --
                                                                      ------------    ------------    -----------
BALANCE - JUNE 30, 1999 ...........................................   $ 26,144,782    $(38,023,064)   $(7,260,040)
                                                                      ============    ============    ===========
</TABLE>

<TABLE>
                                                                       Deferred
                                                                       Compen-
                                                                       sation          Total
                                                                      ---------    ------------
<CAPTION>
<S>                                                                   <C>          <C>
BALANCE - JUNE 30, 1996 ...........................................   $(172,031)   $ 79,318,105

   Shares Issued in Connection with Retirement of Debt ............        --        11,324,285
   Compensation for Options Granted to Non-Employees ..............        --           493,050
   Financing Costs for Warrants Issued
       in Connection with Debt Financing ..........................        --         1,893,451
   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992        --              --
   Amortization of Deferred Compensation Costs ....................      10,623          10,623
   Cancellation of Options Granted for Deferred Compensation ......     119,741            --
   Net (Loss) for the Year Ended June 30, 1997 ....................        --       (17,387,582)
                                                                       ---------    ------------
BALANCE - JUNE 30, 1997 ...........................................     (41,667)     75,651,933

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

   Shares Canceled in connection with Delaware Settlement .........        --        (5,234,670)
   Purchase of 2,904,016 Shares for Treasury in connection with
      Delaware Settlement .........................................        --        (7,260,040)
   Compensation for Options Granted to Non-Employees ..............        --            44,550
   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992        --              --
   Financing Costs for Warrants Issued
       in Connection with Debt Financing ..........................        --            26,296
   Warrants Issued in Connection With Debt Retirement
      (See Note 11-A) .............................................        --         1,242,882
   Amortization of Deferred Compensation Costs ....................       5,000           5,000
   Net (Loss) for the Year Ended June 30, 1999 ....................        --        (7,890,697)
                                                                       ---------    ------------
BALANCE - JUNE 30, 1999 ...........................................   $ (31,667)   $ 40,846,683
                                                                       =========    ============
</TABLE>

See Notes to Consolidated Financial Statements.


                                       33
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 1999, 1998 AND 1997
<TABLE>

                                                                                     Years Ended June 30,
                                                                         ---------------------------------------------
                                                                              1999            1998            1997
                                                                         ------------    ------------    ------------
<CAPTION>
<S>                                                                      <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
(LOSS) FROM CONTINUING OPERATIONS ....................................   $(16,034,769)   $(25,468,850)   $(18,981,678)
                                                                         ------------    ------------    ------------
Adjustments to reconcile (loss) to net cash (used in)
    operating activities:
        Depreciation and Amortization ................................      2,958,067       3,125,272       2,775,194
        Financing Cost from Options Granted ..........................      1,269,178
        Compensation for Options Granted .............................         44,550         830,550         493,050
        Loss on Disposal of Fixed Assets .............................        146,238          31,666               0
        Write-Off of Deposits on Land ................................              0               0       2,585,000
        Estimated charge in connection with the repurchase
          of the NPD shares ..........................................              0       3,748,000               0
        Estimated loss in connection with the adjustment to
          fair market value of the El Rancho Property ................              0       3,429,251               0
        Write-Off of Starship Orion Costs ............................              0               0       2,543,968
        Extraordinary Item - Loss on Early Extinguishment of Debt ....              0               0       3,837,625
        Other ........................................................              0         303,002            (783)
        Changes in Operating Assets and Liabilities -
           Decrease in Restricted Cash and Investments ...............              0               0        (758,785)
           Decrease (Increase) in Accounts Receivable ................       (197,935)        (31,455)        395,687
           Decrease (Increase) in Other Assets .......................        271,985        (282,609)       (297,570)
           (Increase) Decrease in Prepaid Expenses ...................        (26,869)        239,628        (190,815)
           (Decrease) Increase in Accounts and Purses Payable
            and Accrued Expenses .....................................       (538,387)       (771,010)      1,340,766
           Icrease in Deferred Revenue ...............................              0               0         251,123
                                                                          ------------    ------------
CASH (USED IN) CONTINUING OPERATING ACTIVITIES .......................    (12,107,942)    (14,846,555)

CASH PROVIDED BY DISCONTINUED OPERATING ACTIVITIES ...................     10,155,578       9,192,657
                                                                          ------------    ------------    ------------
NET CASH (USED IN) OPERATING ACTIVITIES ..............................     (1,952,364)     (5,653,898)     (4,413,122
                                                                          ------------    ------------    ------------
</TABLE>

Continued on following page


See Notes to Consolidated Financial Statements.

                                       34
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 1999, 1998 AND 1997

CONTINUED FROM PREVIOUS PAGE
<TABLE>
                                                                           Years Ended June 30,
                                                                         ---------------------------------------------
                                                                             1999            1998            1997
                                                                         ------------    ------------    ------------
<CAPTION>
<S>                                                                      <C>             <C>             <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from Sale of Freehold ...................................     17,900,000               0               0
    Proceeds from Sale of Land at Garden State Park ..................      2,000,000               0               0
    Purchase of 2,904,016 Shares of Treasury Stock ...................     (6,850,000)              0               0
    Purchase and Development of El Rancho Property ...................              0        (239,588)     (2,016,133)
    Deposits on Purchase of Land .....................................              0               0      (2,115,000)
    Deposits on New Mexico Racetrack Options .........................              0        (600,000)              0
    Capital Expenditures .............................................        (69,044)       (284,271)     (1,428,227)
    Decrease in Other Investments ..................................              0          27,405          68,170
                                                                          ------------    ------------
        CASH PROVIDED BY (USED IN) CONTINUING INVESTING ACTIVITIES ...     12,980,956      (1,096,454)
        CASH (USED IN) PROVIDED BY DISCONTINUED INVESTING ACTIVITIES .       (146,648)      8,224,665
                                                                          ------------    ------------    ------------
        NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ..........     12,834,308       7,128,211      (5,491,190)
                                                                          ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of Long Term Notes ........................              0               0         827,891
    Proceeds from Line of Credit - Foothill ..........................              0               0       9,138,690
    Proceeds from Credit Suisse Financing ............................              0               0      55,000,000
    Proceeds from Sun Bank Refinance of Foreign Notes ................              0               0       6,000,000
    Deferred Financing Costs .........................................              0         (22,445)     (4,926,943)
    Escrow Deposits Utilized .........................................     10,278,727       7,683,063     (16,762,059)
    Proceeds from Land Sale to Reserve Escrow Deposits ...............              0      (1,370,120)              0
    (Decrease) Increase in Balances Due From Discontinued Subsidiaries     (1,823,666)      8,376,135               0
    Principal Payments on Foreign Notes ..............................              0               0      (6,000,000)
    Principal Payments on Foothill Notes .............................              0               0     (29,976,010)
    Principal Payments on Short Term Notes ...........................     (5,016,770)       (303,020)       (836,874)
    Principal Payments on Long Term Notes ............................              0               0      (2,991,844)
                                                                          ------------    ------------
        CASH PROVIDED BY CONTINUING FINANCING ACTIVITIES .............      3,438,291      14,363,613
        CASH (USED IN) DISCONTINUED FINANCING ACTIVITIES .............    (12,437,662)    (16,242,127)
                                                                          ------------    ------------    ------------
        NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES ..........     (8,999,371)     (1,878,514)      9,472,851
                                                                          ------------    ------------    ------------
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS ..................      1,882,573        (404,200)       (431,461)
          LESS CASH AND CASH EQUIVALENTS AT END OF YEAR
            USED IN (PROVIDED BY) DISCONTINUED OPERATIONS ............       (738,168)     (3,166,900)           --
        CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
          FROM CONTINUING OPERATIONS .................................        213,795       3,784,895       4,216,356
                                                                          ------------    ------------    ------------
        CASH AND CASH EQUIVALENTS AT END OF PERIOD ...................   $  1,358,200    $    213,795    $  3,784,895
                                                                          ============    ============    ============

        Supplemental Disclosures of Cash Flow Information:
                Cash paid during the year for:
                Interest .............................................   $  6,498,191    $  7,936,680    $  4,849,949
                Income Taxes .........................................   $  1,490,000    $    200,000    $          0
</TABLE>

Supplemental Schedule of Non-Cash Investing and Financing Activities:

During the years ended June 30, 1998 and 1997, the Company  recorded  unrealized
     losses of $19,174 and $40,000, respectively, 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, 1998 and 1997,  respectively,  the Company
     issued  warrants to purchase  497,153  shares,  300,000  shares and 746,847
     shares  of  Common  Stock  at  fair  values  of  $1,242,882,  $830,550  and
     $1,893,451, 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, 1997,  the Company  exchanged debt totaling $10.5
     million plus accrued interest of  approximately  $1.1 million for 2,326,520
     shares of Common Stock.

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.

See Notes to Consolidated Financial Statements.


                                       35
<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 1, 1999. On May 7, 1999, the
Company  notified  their primary  lender,  Credit  Suisse First Boston  Mortgage
Capital LLC ("Credit Suisse"), of its intent to extend the loan maturity date to
June 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 returns the loan to a good standing position and extends
the maturity date of the CSFB Loan to June 30, 2000.

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

     The Company has  sustained  losses of  approximately  $7.9  million,  $18.3
million and $17.4 million during fiscals 1999, 1998 and 1997, respectively.  The
Company  believes its projected cash flows from its current  operations  will be
sufficient until June 30, 2000 and there can be no assurances beyond that date.

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

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A) Nature of  Operations  - The  Company is  currently  in the  process of
effecting a sale of its two properties:  (i) the non-operating  former El Rancho
Hotel and Casino (the "El Rancho Property") in Las Vegas,  Nevada;  and (ii) the
Garden  State Park  Property in Cherry  Hill,  New Jersey.  Prior to January 28,
1999,  the Company  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.

                                       36
<PAGE>

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

     (D)  Depreciation and Amortization - Goodwill was the excess of the cost of
acquired  net assets at Freehold  over their fair value and was being  amortized
over 30 years under the straight line method.  Accumulated  amortization at June
30, 1998 was $666,941.  At June 30, 1998, the Goodwill was  reclassified to "Net
Assets of Discontinued Operations - current".

     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 and  identifiable
intangible  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 Notes 4, 13 & 20).

     (F) Net Assets of  Discontinued  Operations - At June 30, 1998,  the Garden
State  Property  and  Freehold   Raceway  were  classified  to  "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 property.

                                       37
<PAGE>

     (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  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 liablities 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.

     (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

                                       38
<PAGE>

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,  3,271,847,  and 3,271,847 shares of Common Stock at various
prices  per  share,   for  the  years  ended  June  30,  1999,  1998  and  1997,
respectively,  were not included in the computation of diluted loss per share as
their effect would be anti- dilutive.

(3) SALE AND LEASE OF ASSETS

     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. (See Note 9)

     The Company  recognized  a net gain of  $3,657,688  on the sale of Freehold
Raceway,  following  the write  down to fair  value of the  remaining  assets of
Garden  State  Park,  the sale of a  ten-acre  parcel at the  Garden  State Park
facility  and the lease of the  Garden  State Park  facilities  during the third
quarter of Fiscal 1999.

                                       39
<PAGE>


(4) LITIGATION 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.

     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.

                                       40
<PAGE>

     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 January 25,  2000,  the Company
signed a binding term sheet for the sale of the El Rancho Property. There can be
no assurances that the Company will be able to dispose of the El Rancho Property
as contemplated by the Delaware Settlement. (See Note 13 - Legal Proceedings)

     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.

     There can be no assurances  that the Company will be able to dispose of the
El Rancho Property as contemplated  by the Delaware  Settlement.  (See Note 13 -
Legal Proceedings)


                                       41
<PAGE>

(5)  DISCONTINUED OPERATIONS

     On January 28, 1999,  the Company  completed  the sale of the real property
and certain related assets at Freehold  Raceway and a ten-acre parcel of land at
the Garden State Park  facility,  and the lease of the real property and certain
related assets of Garden State Park for a seven-year period. (See Note 3).

     The discontinued operations are summarized as follows:

                                          Years Ended June 30,

DISCONTINUED RACETRACK OPERATIONS:    1999 *        1998        1997

REVENUE                           $ 37,992,012 $ 68,636,449  $ 68,431,882
                                  ------------ ------------   -----------

EXPENSES:

Cost of Revenues:

Purses                              12,591,222   22,370,695    23,120,176

Operating Expenses                  16,612,009   31,794,410    35,531,034

Depreciation & Amortization          1,078,701    1,665,206     1,579,903

General & Administrative Expenses    2,619,944    4,607,984     5,606,265

Interest Expenses                      484,404      855,421       944,791
                                  ------------ ------------   -----------
TOTAL EXPENSES                      33,386,280   61,293,716    66,782,169
                                  ------------ ------------   -----------
INCOME FROM DISCONTINUED RACETRACK

OPERATIONS BEFORE TAXES              4,605,732    7,342,733     1,649,713

INCOME TAX EXPENSE                     119,348      135,100        55,617
                                  ------------ ------------   -----------
                                     4,486,384    7,207,633     1,594,096

NET GAIN ON SALE OF NET ASSETS
OF DISCONTINUED OPERATIONS
 (NET OF $1,335,500 STATE
  INCOME TAXES)                      3,657,688       -0-          -0-
                                  ------------ ------------   -----------
INCOME FROM DISCONTINUED
RACETRACK OPERATIONS              $  8,144,072  $ 7,207,633  $  1,594,096
                                  ============  ===========  ============
* July 1, 1998 to January 28, 1999

     As of June 30, 1998,  the Garden State  Property was  reclassified  to "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 property.

                                       42
<PAGE>

     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:

                                              June 30,
                                              --------

CLASSIFIED AS:                             1999       1998
                                           ----       ----

CURRENT ASSETS                        $ 2,201,036  $ 28,249,055

CURRENT LIABILITIES                     1,706,337    16,013,838
                                        ---------    ----------

Net Assets of Discontinued
Operations - Current                      494,699    12,235,217

Property Assets of Garden State Park   30,000,000    45,626,944
                                       ----------    ----------

NET ASSETS OF DISCONTINUED OPERATIONS $30,494,699  $ 57,862,161
                                      ===========  ============


     Cash flows from  discontinued  operations  for the year ended June 30, 1999
and 1998 consist of the following:


CASH FLOWS FROM DISCONTINUED OPERATING ACTIVITIES:        June 30,

                                                    1999           1998
                                                -----------     ----------
 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 Purse 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 (EXCLUDING INCOME)                   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
                                                 -----------    ----------


                                       43
<PAGE>

                                                            June 30,
                                                            --------
                                                         1999       1998
                                                         ----       ----

CASH FLOWS FROM DISCONTINUED FINANCING ACTIVITIES:

 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)   1,175,195

 CASH AND CASH EQUIVALENTS AT BEGINNING
 OF YEAR FROM DISCONTINUEDOPERATIONS                3,166,900    1,991,705
                                                  -----------   ----------
 CASH AND CASH EQUIVALENTS AT END OF
 YEAR FROM DISCONTINUED OPERATIONS              $     738,168 $  3,166,900
                                                ============= ============


(6)  ACQUISITIONS AND DISPOSITIONS

      Fiscal 1999

     On January 28, 1999 as described above,  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. (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. (See Notes 3 & 11 - E)

     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

                                       44
<PAGE>

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.

     Fiscal 1997

     The Company  executed an agreement to purchase 15 acres of unimproved  land
in Las Vegas,  Nevada in fiscal 1996. The Company made  non-refundable  deposits
aggregating  $2,585,000  through fiscal 1997. The land is located  contiguous to
the El Rancho Property. The Company could not arrange the necessary financing to
finalize  the  purchase.  As a result,  these  deposits  were  forfeited  during
December 1996.

(7)  PROPERTY HELD FOR SALE

     On January 28,  1999,  the Company  consummated  the  settlement  under the
Stipulation and Agreement of Compromise,  Settlement and Release entered into on
July 2, 1998 to resolve the  stockholder  derivative  litigation in the Delaware
Court  of  Chancery  (the  "Delaware  Settlement").  As  part  of  the  Delaware
Stipulation,  the Company has provided  for the  possible  sale of the El Rancho
Property pursuant to the terms enumerated by the Delaware Settlement.  (See Note
4) On June 30, 1998, the El Rancho Property was reclassified from  "Construction
in Progress" to "Property  held for Sale" after  recording an impairment  charge
during the fourth quarter of Fiscal 1998 of  approximately  $3,430,000 to adjust
the El Rancho  Property to its estimated  fair value,  after taking into account
the  estimated  fair value of the  reversion of the LVEN Shares (See Note 4). In
the absence of a public market for the Company's  Common Stock,  management  has
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  assets and
operations,  and the El Rancho Property, and other transactions  contemplated by
the Delaware Settlement. (See Notes 4 and 20-C)

     On January 25, 2000, the Company  entered into a binding term sheet for the
sale of the El Rancho  property in Las Vegas,  Nevada with  Turnberry/Las  Vegas
Boulevard,  LLC and on March 1, 2000 a formal  contract  was  signed on the same
terms as outlined on the binding  term sheet with  certain  mutually  acceptable
changes made during the course of negotiations of the definitive agreements. The
purchase price is anticipated to be $45,000,000. The purchase price will be paid
by: (i) a $100,000  deposit at the signing of the Purchase  and Sale  Agreement;
(ii) a $400,000  additional  deposit due on March 15, 2000, which amount will be
non-refundable,  and (iii) the balance of the purchase price due at the closing,
payable in cash.

     The closing,  originally  scheduled  to occur by March 31,  2000,  had been
extended  to April 30, 2000 after the buyer:  (i) agreed to pay the  approximate
$100,000  carrying costs of the El Rancho  property for the month of April 2000;
(ii) agreed to pay the  interest  due to Credit  Suisse  First  Boston  Mortgage

                                       45
<PAGE>

Capital,  LLC on a principal amount of $20,000,000 at 12% for the month of April
2000;  and (iii)  released  $1,600,000,  which  included the above  $100,000 and
$400,000 deposits, as a non-refundable  deposit to the Company. The closing date
was further  extended to June 1, 2000 provided the buyer:  (i) agrees to pay the
approximate  $100,000  carrying costs of the El Rancho property for the month of
May 2000;  (ii) pays the  interest due to Credit  Suisse  First Boston  Mortgage
Capital,  LLC on a principal  amount of  $19,000,000 at 12% for the month of May
2000;  (iii) pays an additional  deposit of $900,000 to the Company by April 30,
2000, which amount has not yet been received;  and (iv)  demonstrates it has the
financial ability to close.

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

     The note  would  accrue  interest  at a 22% per annum  rate,  which will be
adjusted from time to time since the interest actually payable will be dependent
upon,  and  payable  solely  out of, the  buyer's  net cash flow  available  for
distribution  to its  equity  owners  ("Distributable  Cash").  After the equity
investors in the buyer have received total  distributions equal to their capital
contributions plus an agreed upon return on their invested capital, the next $23
million of  Distributable  Cash will be paid to the  Company.  The Company  will
thereafter receive payments under the note equal to 33 1/3% of all Distributable
Cash  until the  maturity  date,  which  occurs on the 30th  anniversary  of the
Company's  purchase of the note. The Company may convert the promissory note, at
its option,  into a 33 1/3%  equity  interest in the buyer at any time after the
15th  anniversary of the issuance of the note. If not then  converted,  the note
will convert  into a 33 1/3% equity  interest in the buyer on the day before the
30th anniversary of its issuance. (See Notes 4 and 20-C)

(8)  INVESTMENTS

     Interest  income for the fiscal years ended June 30, 1999,  1998,  and 1997
was $343,572,  $689,092,  and $11,911,  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 1998 and 1997 .

(9)  RESERVE ESCROW DEPOSITS

     At June 30, 1999,  $182,154 was held in various reserve cash escrow deposit
accounts that were  established  in connection  with the Company's  two-year $55
million credit  facility with Credit Suisse.  The terms of such credit  facility
provided  that such  reserve  accounts  be held by LaSalle  National  Bank ("the
Depository").  In connection with the January 28, 1999 sale of Freehold Raceway,
the sale of a ten-acre  parcel at Garden  State Park and the lease of the Garden
State  Park  facility,  Credit  Suisse  released  to the  Company  approximately
$4,475,000  from its escrow  reserves to pay down debt and for  working  capital
purposes.  On August 2, 1999,  the Company  made a payment of $320,000 to Credit
Suisse for interest due which was credited to the escrow accounts. In connection
with the restructuring  agreement on January 21, 2000, Credit Suisse released to
the Company the $167,476  balance in the escrow  deposit  accounts which will be
used by the Company for working capital purposes. (See Note 20-B)

                                       46
<PAGE>

(10) 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. The property assets
acquired with the acquisition of Freehold  Raceway in January 1995 were recorded
at their fair values as required under the purchase  method of  accounting.  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       1999          1998
                          --------------       ----          ----

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

Equipment                     5-15            683,428        814,927
                                              -------        -------

Totals                                        897,525      1,029,024

Less Accumulated Depreciation
and Amortization                              329,667        308,162
                                              -------        -------

                                          $   567,858    $   720,862
                                          ===========    ===========


     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".


                                       47
<PAGE>

(11) NOTES AND MORTGAGES PAYABLE
     Notes and Mortgages Payable are summarized below:
<TABLE>

                                                             June 30, 1999            June 30, 1998
                                                             -------------            -------------
                                       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%  $ 30,500,000   $  -0-    $ 55,000,000 $        -0-
                                       (6/30/99  rate
                                              12.67%)

REB Bankruptcy Trustee (B)                 Prime Rate     3,558,032      -0-           -0-            -0-
                                 (6/30/99 rate 7.75%)

Other                                         Various       239,113      -0-         208,426          -0-

Freehold  Raceway:

Kenneth R. Fisher (C)                    80% of Prime           -0-      -0-         625,000   10,000,000
                                   (not to exceed 6%)
                                    (6/30/98 rate 6%)

Kenneth R. Fisher (D)                    80% of Prime           -0-      -0-         225,000    1,572,049
                                  (6/30/98 rate 6.6%)
Garden State Park:

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

Other (F)                                     Various       344,954      -0-         351,429      426,682
                                                        ------------- ------      ----------- ------------
    Totals                                             $ 35,042,099   $  -0-      56,409,855 $ 11,998,731

Less Amounts Reclassified to:
 Net Assets of Discontinued
 Operations - Current                                           -0-      -0-        (850,000) (11,572,049)

 Net Assets of Discontinued
  Operations - Long Term                                  (744,954)      -0-        (351,429)    (426,682)
                                                        -------------- -----    ------------ ------------
Totals                                                 $ 34,297,145$  $  -0-    $ 55,208,426 $        -0-
                                                        ============== =====    ============ ============
</TABLE>


The  effective  LIBOR  Rate and the Prime  Rate at June 30,  1998 were 5.72% and
8.50%,  respectively.  There was no short term borrowings outstanding as of June
30, 1998.

     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

                                       48
<PAGE>

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

     The Restructure  Agreement returns the loan to a good standing position and
extends  the  maturity  date of the CSFB Loan to June 30,  2000.  As part of the
Restructure  Agreement,  the Company  agreed that as of January  21,  2000,  the
restructured  principal  balance  due on the CSFB  Loan was  $33,103,189,  which
consisted  of: (i) the  principal  amount of  $30,500,000  remaining on the CSFB
Loan;  (ii)  accrued  interest  advanced  by Credit  Suisse from June 1, 1999 to
January 21, 2000 in the amount of $2,523,189;  and (iii) an advance of a portion
of Credit  Suisse's  legal fees  incurred  in  connection  with the  Restructure
Agreement in the amount of $80,000.  Credit  Suisse has agreed,  pursuant to the
Restructure  Agreement,  to advance the  monthly  interest  payments  due by the
Company under the CSFB Loan until 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.
Commencing April 16, 2000 and until 30 days following the closing of the sale of
the El Rancho property,  interest accruing shall be paid by Turnberry/Las  Vegas
Boulevard LLC ("Turnberry"),  the purchaser of the El Rancho property. (See Note
20-B)

     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. (See Notes 13 and 20-B)

     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.  Credit Suisse's right to receive
further shares upon the  consummation of a proposed  related  acquisition by the
Company of Casino-Co  Corporation  ("Casino-Co"),  a wholly-owned  subsidiary of
LVEN,  equal to 10% of the  stock  consideration  paid by the  Company  for such
acquisition, has been terminated by the above described

                                       49
<PAGE>

Delaware Settlement.  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. The Company's  non-compliance with
certain non-financial  covenants at December 31, 1998 were waived on January 28,
1999 in connection with the Delaware Settlement. (See Note 4)

     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. (See Note 3)

     (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.

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

     (C) On February 2, 1995,  the Company  entered into an  agreement  with the
former  owner of  Freehold  Raceway  whereby  the $12.5  million  balance of the
purchase  price of the  Freehold  Raceway  was  financed  by an  eight  (8) year
promissory note at 80% of the prevailing  prime rate, not to exceed 6%. The note
was secured by a mortgage on the land and  buildings at Freehold  Raceway.  This
note was paid in  connection  with the sale of the Freehold  assets (See Notes 3
and 6)

     (D) On  February  2,  1995,  the seller of  Freehold  Raceway  advanced  to
Freehold Raceway  $2,584,549  towards the retirement of $5.2 million of existing
debt on Freehold  Raceway.  The seller received from Freehold  Raceway in fiscal
1995, a promissory note evidencing the  indebtedness  secured by mortgage on the
racetrack  property and other collateral.  This note was paid in connection with
the sale of the Freehold assets (See Note 3)

                                       50
<PAGE>

     (E) 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  March  1,  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. (See Note 6)

     (F) 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.

(12) 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 years  ending June 30, 1998 and
1997 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
$210,210,000  at June 30, 1999  expiring in the years June 30, 2002 through June
30,  2018.  During the fiscal year ended June 30,  1999,  the  Company  utilized
approximately  $2,022,000 of the net operating loss  carryforward  to offset the
taxable income for June 30, 1999. 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  $88,000,000  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.

                                       51
<PAGE>


The Company has the following  carryforwards  to offset future taxable income at
June 30, 1999:


     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

         90,760,000             6/30/2007
        ___________          through 6/30/2013

        $210,210,000
        ============


(13) 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.

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

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

     The Company has operating  lease  commitments for Fiscal 2000 in the amount
of  $6,980  and  possible  construction  contract  commitments  on the El Rancho
property in the amount of approximately $217,000.

     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.

                                       52
<PAGE>

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

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

LEGAL PROCEEDINGS

     On or about  September  10, 1997,  three actions were filed in the Delaware
Court of Chancery in and for New Castle County (the "Delaware  Chancery Court"),
each of which  named the  Company  as a nominal  defendant  and one of which was
subsequently dismissed (collectively, the "Delaware Actions"). Additionally, two
actions  were filed in New  Jersey  naming  the  Company as a nominal  defendant
(collectively,  the "New Jersey  Actions"),  one of which is a derivative action
filed on or about February 24, 1998 in the United States  District Court for the
District  of New Jersey (the "New Jersey  District  Court"),  and the other is a
purported  class action filed on or about July 15, 1998 in the Superior Court of
New Jersey (the "New Jersey  Superior  Court").  As described  more fully below,
pursuant to the terms of a Stipulation  and Agreement of Compromise,  Settlement
and Release dated July 2, 1998 (the "Delaware  Stipulation"),  upon satisfaction
of  certain  conditions  set forth in the  Delaware  Stipulation,  the  Delaware
Actions  were  fully and  finally  dismissed  with  prejudice,  and the  parties
provided  mutual  releases of all claims  related to the actions  thereunder  on
January  28,  1999  (the  "Delaware  Settlement").  See  "Delaware  Settlement."
Further,  pursuant to a memorandum of  understanding  entered into on August 18,
1998 (the "New Jersey Memorandum"), upon satisfaction of certain conditions, the
New Jersey Actions are to be fully and finally dismissed with prejudice, and the
parties  are to provide  mutual  releases  of all claims  related to the actions
thereunder (the "New Jersey Settlement"). See "New Jersey Settlement."

QUIGLEY, ET AL. V. DESANTIS, ET AL.

     Quigley, Leo and The Family Investment Trust v. DeSantis,  Abraham, Coelho,
Scholl,  Zappala,   Corazzi  and  Las  Vegas  Entertainment  Network,  Inc.  and
International   Thoroughbred  Breeders,  Inc.,  C.A.  No.  15919  (the  "Quigley
Action"),  was filed in the Delaware Court of Chancery on or about September 10,
1997, and alleged that the director defendants therein acted in contravention of
ITB's  by-laws,  Delaware law and their  fiduciary  duties.  The Quigley  Action
sought a declaratory judgement that the actions taken by the director defendants
violated  ITB's  by-laws,  Delaware law and the director  defendants'  fiduciary
duties  and that such  actions  are void and should be  rescinded  by the Court.
Moreover,  the Quigley Action sought damages  suffered by ITB in connection with
such  challenged  actions.  ITB asserted  counterclaims  against  Quigley,  Leo,
Murray,  and Dees Jr.,  alleging that such counterclaim  defendants  contravened
Delaware law and such counterclaim  defendants'  fiduciary duties. In connection
with  such   counterclaims,   ITB  sought   injunctive   relief  preventing  the
counterclaim  defendants from interfering with the Company's day-to-day business
affairs,  the  establishment  of a  constructive  trust over certain  assets,  a

                                       53
<PAGE>

declaration that a certain  supermajority by-law was repealed and money damages.
Murray further  counterclaimed  against ITB for wrongful termination and failure
to pay certain  compensation.  All  allegations  of either the plaintiffs or the
counterclaim plaintiffs were denied.

     The  Quigley  Action  was  fully  and  finally  dismissed  and  settled  in
connection with the January 28, 1999 consummation of the Delaware Settlement.

REKULAK V. DESANTIS, ET AL.

     On or about  September 11, 1997, the action  entitled  Rekulak v. DeSantis,
Abraham,  Coelho, Scholl, Zappala,  Corazzi and Las Vegas Entertainment Network,
Inc. and International  Thoroughbred Breeders, Inc., C.A. No. 15920, was brought
in the Delaware Court of Chancery alleging that the defendants  therein acted in
contravention  of  ITB's  by-laws,  Delaware  law and the  director  defendants'
fiduciary  duties  (the"Rekulak  Action").  The allegations  made and the relief
sought in the Rekulak Action are virtually identical to the allegations made and
relief sought in the Quigley Action.

     The Rekulak Action was fully and finally  dismissed in connection  with the
January 28, 1999 consummation of the Delaware Settlement.

     See "Other  Litigation  Relating to Delaware  Action" below for  additional
information.


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 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").  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").  ITB  understands  that  former ITB  director  Nunzio P.
DeSantis is Chairman,  President and a principal  stockholder of AutoLend Group,
Inc., and former ITB 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

                                       54
<PAGE>

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  Note7-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");  copyright 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  (Freehold
Raceway) 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
copyright  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").  Neither LVEN, nor the Company
have sold the El Rancho  Property,  and LVEN did not  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. There can
be no  assurances  that the  Company  or LVEN will be able to  dispose of the El
Rancho Property as contemplated by the Delaware Settlement.

     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

                                       55
<PAGE>

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

HARRIS V. DESANTIS, ET AL.

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

     Prior to filing  pleadings in response to the Harris-State  complaint,  ITB
and the  defendants  in the New Jersey  Actions  entered  into a  memorandum  of
understanding  dated August 18, 1998 (the "New Jersey  Memorandum")  pursuant to
which upon satisfaction of multiple conditions  (including the parties' approval
of definitive settlement  documents,  notice of the settlement to ITB's past and
current stockholders,  and the approval of the New Jersey Superior Court and the
New Jersey District  Court),  the New Jersey Actions are to be fully and finally
dismissed  with  prejudice,  and ITB and all defendants are to receive a release
from all holders of ITB common and preferred  stock of any claims arising out of
the facts and transactions

                                       56
<PAGE>

set forth in the  complaints in the New Jersey Actions (the "Proposed New Jersey
Settlement").  The New Jersey  Memorandum  provides that the Proposed New Jersey
Settlement  would be submitted  for approval to the New Jersey  Superior  Court,
that a fee  petition  would be  submitted  by  plaintiffs'  attorneys in the New
Jersey  Actions for  approval  by the New Jersey  District  Court,  and that the
Harris-Federal  action would be  dismissed  on the grounds that the  plaintiffs'
claims are barred and released as a result of the  settlement  and  dismissal of
the Quigley Action by the Delaware Court of Chancery on October 6, 1998.

NEW JERSEY SETTLEMENT

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

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

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

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

                                       57
<PAGE>

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

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

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

(See Note 4 - Litigation Settlement)

OTHER LITIGATION RELATING TO DELAWARE ACTION

     In  November  1997,  two  separate  actions  were  filed in the New  Jersey
District  Court against  various  directors of the Company and other  affiliated
parties.  The Company is not a party to either of these  actions,  both of which
are summarized below:

NPD, INC. V. QUIGLEY, ET AL.

     On or about  November 17, 1997,  an action  entitled  NPD, Inc. v. Quigley,
Francis W. Murray, Leo, Dees Jr., Mariucci,  Koenemund and James J. Murray, C.A.
No.  97-CV-5657,  was filed in the United States District Court for the District
of New Jersey,  alleging that the  defendants  therein had engaged in fraudulent
and conspiratorial conduct in connection with a certain Stock Purchase Agreement
between  Robert E. Brennan and NPD,  Inc.  ("the "NPD  Action").  The NPD Action
sought compensatory and punitive damages. The Company was not a party to the NPD
Action.

     The NPD Action was fully and finally  dismissed  and settled in  connection
with the January 28, 1999 consummation of the Delaware Settlement.

                                       58
<PAGE>

GREEN V. DESANTIS, ET AL.

     On or about  October  30,  1997,  the action  entitled  Green v.  DeSantis,
Corazzi,  Coelho, Las Vegas Entertainment  Network, Inc. and NPD, Inc., C.A. No.
97-5359 (JHR), was filed in the United States District Court for the District of
New Jersey (the "Green  Action").  The Green Action  alleged that the defendants
therein acted in contravention of ITB's by-laws,  their fiduciary duties and the
contractual   obligations  in  connection  with  Robert  W.  Green's   interests
pertaining to ITB.  Plaintiff Green sought  compensatory and punitive damages in
connection with the  defendants'  actions,  an order  enjoining  defendants from
transferring,  encumbering or alienating  certain of the Company's  common stock
which was subject to an option  agreement  between Green and NPD, Inc., an order
declaring  certain  shares of common  stock of the Company to be a nullity,  and
reformation of the  aforementioned  option  agreement to extend the  termination
date.  The  action  raised  claims  substantially  similar  to those made in the
Quigley Action. The Company was not a party to the Green Action.

     The Green Action was fully and finally  dismissed and settled in connection
with the January 28, 1999 consummation of the Delaware Settlement.

OTHER LITIGATION

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

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

(14)  FAIR VALUE OF FINANCIAL INSTRUMENTS

     As of June 30, 1999, 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.  Estimated discounted value of future cash
flows,  has been used to determine  fair value for long term debt.  The carrying
amounts of long term debt  approximate  fair value since the Company's  interest
rates approximate current interest rates.

(15) 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

                                       59
<PAGE>

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 $137,091,  $216,848 and $238,201 for the fiscal years ended June
30, 1999, 1998 and 1997, respectively.

     For collectively bargained, multi-employer pension plans, contributions are
made in accordance  with  negotiated  labor contracts and generally are based on
the number of hours worked. With the passage of the Multi-Employer  Pension Plan
Amendments   Act  of  1980  (the  "Act"),   the  Company  may,   under   certain
circumstances,  become subject to liabilities  in excess of  contributions  made
under  collective  bargaining  agreements.   Generally,  these  liabilities  are
contingent  upon the  termination,  withdrawal,  or partial  withdrawal from the
plans. Total contributions  charged to expense under all collectively  bargained
multi-employer  pension  plans were  $442,110,  $1,089,070,  and  $1,106,906  in
fiscals 1999, 1998 and 1997, respectively.

(16) 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  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.

                                       60
<PAGE>


     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, 1999:

                                         Stock Options
                                         -------------

                                             Exercise       Weighted
                                Number      Price Range     Average
                               of Shares     Per Share       Price
                               ---------     ---------       -----
Outstanding at June 30, 1996   1,275,000   $4.00 - $5.875    $ 4.59

Granted                          875,000   $4.00 - $5.00     $ 4.51

Canceled                        (550,000)  $4.00 - $5.875    $ 4.43
                               ---------
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
                               =========





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

1997                        1,600,000    $4.00 - $5.875      $4.59
                            ---------    --------------      -----
1998                        1,900,000    $4.00 - $5.875      $4.50
                            ---------    --------------      -----
1999                        1,550,000    $4.00 - $5.875      $4.58
                            ---------    --------------      -----
Options available for
future grant under
the Plan at June 30:                       1994 Plan
                                           ---------
1997                                        275,000

1998                                        275,000

1999                                        275,000


                                       61
<PAGE>

     The following table summarizes  information about stock options outstanding
at June 30, 1999:

                                                Ranges                 Total
                                      ---------------------------  -------------
Range of exercise prices              $4.00 - 4.625 $5.00 - 5.875  $4.00 - 5.875

Outstanding options:

   Number outstanding at June 30, 1999      975,000       575,000      1,550,000
                                      ---------------------------  -------------
   Weighted average remaining
    contractual life (years)                   6.80          4.40           5.90
                                      ---------------------------  -------------
   Weighted average exercise price            $4.14         $5.30          $4.58
                                      ---------------------------  -------------

Exercisable options:

   Number outstanding at June 30, 1999      975,000       575,000      1,550,000
                                      ---------------------------  -------------
   Weighted average exercise price            $4.14         $5.30          $4.58
                                      ---------------------------  -------------


                                                    Weighted        Weighted
Weighted Average Fair Value of         Number of     Average         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
                                        -------

                                       62
<PAGE>

     Options to purchase an aggregate  of 6,000,000  shares of Common Stock that
were to have been granted,  subject to  stockholder  approval,  to the Company's
former  Chief  Executive  Officer  and former  Chairman of the Board and are not
reflected  in the  above  tables.  On  August  21,  1997,  the  Company  granted
non-qualified stock options to purchase an aggregate of 300,000 shares of Common
Stock to certain former directors. Upon consummation of the Delaware Settlement,
options to  purchase  an  aggregate  of  6,300,000  shares of Common  Stock were
terminated. (See Note 4)

     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 Employers"  ("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%.

                                       63
<PAGE>


     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:
<TABLE>

                                                             Years Ended June 30,
                                                   1999              1998            1997
<CAPTION>
<S>                                         <C>               <C>             <C>
Net (Loss): As Reported
(Loss) Before Discontinued Operations &
Extraordinary Item                          $  (16,034,769)   $  (25,468,850) $   (15,144,053)

Income from Discontinued Operations              8,144,072         7,207,633        1,594,096

Extraordinary Item                                                        -0-      (3,837,625)
                                         ------------------------------------------------------
Net (Loss)                                  $   (7,890,697)   $  (18,261,217) $   (17,387,582)
                                         ------------------------------------------------------

Pro Forma Net (Loss)
(Loss) Before Discontinued Operations &
Extraordinary Item                          $  (16,034,769)   $  (25,468,850) $   (16,090,903)

Income from Discontinued Operations              8,144,072         7,207,633        1,594,096

Extraordinary Item                                                        -0-      (3,837,625)
                                         ------------------------------------------------------
Net (Loss)                                  $   (7,890,697)   $  (18,261,217) $   (18,334,432)
                                         ------------------------------------------------------
Net (Loss) Per Share: As Reported
(Loss) Before Discontinued Operations &
Extraordinary Item                          $        (1.38)   $        (1.82) $         (1.29)

Income from Discontinued Operations                   0.71              0.51             0.14

Extraordinary Item                                      -0-               -0-           (0.33)
                                         ------------------------------------------------------
Net (Loss)                                  $        (0.67)   $        (1.31) $         (1.48)
                                         ------------------------------------------------------
</TABLE>
<TABLE>

                                       64
<PAGE>

                                                            Years Ended June 30,
                                                            --------------------
                                                 1999               1998             1997
                                                 ----               ----             ----
<CAPTION>
<S>                                         <C>               <C>             <C>
Pro Forma Net (Loss) Per Share
(Loss) Before Discontinued Operations &
Extraordinary Item                          $        (1.38)   $        (1.82) $          (1.38)

Income From Discontinued Operations                   0.71              0.51              0.14

Extraordinary Item                                     -0-               -0-            (0.33)
                                         -----------------------------------------------------
Net (Loss)                                  $        (0.67)   $        (1.31) $         (1.57)
                                         -----------------------------------------------------
</TABLE>


 (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.

     The fair value of warrants  issued  during the years  ended June 30,  1999,
1998 and 1997 was $1,269,179, $0 and $1,893,451, respectively. The 1999 warrants
were accounted for as financing  expenses.  The 1997 warrants were accounted for
as deferred  financing costs and costs associated with the acquisition of the El
Rancho Property.  The deferred  financing costs were amortized over the terms of
the related  indebtedness.  The fair value of the warrants  issued in connection
with the  acquisition  of the El Rancho  Property was  capitalized  and would be
amortized if and when the facility became operational;  however, the Company has
determined to dispose of the El Rancho Property.

     Certain deferred financing costs recorded by the Company in connection with
the Foothill and other financing agreements were expensed during the fiscal year
ended June 30, 1997.  Total  expense  recorded by the Company  during the fiscal
year ended June 30, 1997 associated with these warrants amounted to $1,287,258.

                                       65
<PAGE>


     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, 1996     925,000    $4.00 - $5.25    $4.76

Granted                           746,847    $4.375- $5.00    $4.54
                               ----------
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   2,604,000    $2.50 - $5.25    $4.25
                               ==========

(17) 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 1999, 1998 and 1997. The Preferred  Stock has liquidation  rights of
$100 per share plus accrued dividends, if any.

(18)  RELATED PARTY TRANSACTIONS

     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. (See Notes 4 & 13).

     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

                                       66
<PAGE>

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.

     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,

                                       67
<PAGE>

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 January 25,
2000,  the  Company  signed a binding  term  sheet for the sale of the El Rancho
Property and on March 1, 2000 a formal  contract was signed on the same terms as
outlined on the binding term sheet with certain mutually acceptable changes made
during the course of negotiations of the definitive agreements.  There can be no
assurances that the Company will be able to dispose of the El Rancho Property as
contemplated by 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.

     During  fiscals  1998 and 1997,  the  Company  paid  $12,200  and  $217,000
respectively,  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  and  $160,000
during  fiscals  1998 and  1997,  respectively,  and  which  LVEN had  agreed to
reimburse  the Company.  The $337,000  owed to the Company was offset by certain
conditions agreed upon in the consummation of the Delaware Settlement. (See Note
4)

     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.

                                       68
<PAGE>

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.  Until  December  31,  1997,  LVEN  paid
Stanford  Company  $10,000  per month for  consulting  services,  including  Mr.
Scholl's  services  as  project  manager  for the El Rancho  Property.  LVEN was
reimbursed  by the Company  for the  payments  to  Stanford  Company.  Effective
January 1, 1998,  the  Company  began  paying Mr.  Scholl  $10,000 per month for
ongoing  consulting  services  as project  manager  for the El Rancho  Property.
During  Fiscal 1999,  the Company paid Mr. Scholl  $120,000 for these  services.
Additionally,  Mr.  Scholl was paid  director fees of $10,000 for each of fiscal
1998 and 1997.  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. (See Notes 4 & 13)

     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. suite. (See Note
4 & 13).

     During fiscals 1999, 1998 and 1997, the Company paid $90,510 , $141,350 and
$128,000 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.

                                       69
<PAGE>

     During fiscal 1997,  the Company paid  approximately  $75,300 for the legal
services of Sterns and Weinroth,  a law firm partially  owned by Joel H. Sterns,
the Company's former chairman.

     During fiscal 1997, the Company paid $35,685 in consulting fees to Goldman,
Beale  Associates,  a company  partially  owned by  Clifford  Goldman,  a former
director of the Company.

     During fiscal 1997,  the Company paid  approximately  $102,000 to Robert E.
Brennan (the  Company's  former  Chairman and a  significant  stockholder  until
January 15, 1997) for  reimbursement  of Mr.  Brennan's legal fees in connection
with the  investigation by New Jersey  regulatory  authorities which oversee the
casino and horse racing industries in the state.

     During fiscal 1997, the Company paid LVEN $150,000 under a letter agreement
executed  in  connection  with the  purchase  of the El Rancho  Property,  which
provided for a $25,000 per month fee with respect to maintenance and supervision
of the property  prior to and during  development.  The Company  terminated  the
letter agreement on December 17, 1997.

     During fiscal 1997, the Company paid  approximately  $118,800 to Francis W.
Murray,  a director of the Company,  for legal fees and reimbursed  expenses and
for consulting  fees prior to his becoming an employee.  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 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.

     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.

     For  additional   information  regarding  related  party  transactions  see
Footnote 4 in the Consolidated Financial Statements.

                                       70
<PAGE>

(19)  LOSS FROM RETIREMENT OF DEBT

     During  the  fourth  quarter  of  fiscal  1997,  the  Company  recorded  an
extraordinary  loss  of  $3,837,625  for  the  early  retirement  of  debt.  The
extraordinary  losses consist  primarily of write-offs of deferred finance costs
associated with the retired indebtedness.

(20)  SUBSEQUENT EVENTS

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

     (B) RESTRUCTURING AGREEMENT WITH CREDIT SUISSE

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

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

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

                                       71
<PAGE>

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

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

     On January 25,  2000,  the Company and Garden State Race Track,  Inc.,  the
owner of Garden State Park, entered into an agreement for the sale of all of the
Garden  State Park  property,  excluding  a ten-acre  parcel of land  previously
committed to GS Park Racing,  L.P., to 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 (see Agreement of Sale
of Garden State Race Track). The Restructure Agreement further provides that (i)
if the proceeds from the sale of the Garden State Park property are insufficient
to pay the outstanding amounts due to Credit Suisse under the CSFB Loan, or (ii)
after the sale or joint venture of the Garden State  property,  the total amount
outstanding  under the CSFB Loan is equal to or greater than  $5,000,000 and the
Company shall not have received a binding  commitment  for a loan or purchase of
the El Rancho Property, then, Orion Casino Corporation must convey the El Rancho
property  to a  new  Delaware  limited  liability  company  ("New  LLC")  having
substantially  same ownership  structure and limited liability company agreement
as GSRT.  Once the El Rancho  property is conveyed to New LLC in accordance with
and upon the  happening  of the  circumstances  and  conditions  provided in the
Restructure Agreement, Orion Casino Corporation,  as the sole member of New LLC,
will have the right to cause New LLC to sell or refinance the El Rancho property
so long as the outstanding  obligations due under the CSFB Loan are paid in full
by such sale or  refinancing  and such sale or  refinancing  closes on or before
June 30, 2000.

     (C) AGREEMENT OF SALE OF EL RANCHO

     On January 25, 2000, the Company  entered into a binding term sheet for the
sale of the El Rancho  property in Las Vegas,  Nevada with  Turnberry/Las  Vegas
Boulevard, LLC. It is expected that a formal contract will be signed in the near
future  incorporating  the same terms as outlined on the binding term sheet with
certain  mutually  acceptable  changes made during the course of negotiations of
the  definitive  agreements . The purchase  price is  $45,000,000.  The purchase
price will be paid by: (i) a $100,000 deposit at the signing of the Purchase and
Sale Agreement;  (ii) a $400,000 additional deposit due on March 15, 2000, which
amount will be  non-refundable,  and (iii) the balance of the purchase price due
at the closing, will be payable in cash.

                                       72
<PAGE>

     The closing,  originally  scheduled  to occur by March 31,  2000,  had been
extended  to April 30, 2000 after the buyer:  (i) agreed to pay the  approximate
$100,000  carrying costs of the El Rancho  property for the month of April 2000;
(ii) agreed to pay the  interest  due to Credit  Suisse  First  Boston  Mortgage
Capital,  LLC on a principal amount of $20,000,000 at 12% for the month of April
2000;  and (iii)  released  $1,600,000,  which  included the above  $100,000 and
$400,000 deposits, as a non-refundable  deposit to the Company. The closing date
may be further  extended to June 1, 2000  provided the buyer:  (i) agrees to pay
the approximate  $100,000 carrying costs of the El Rancho property for the month
of May 2000;  (ii) pays the interest due to Credit Suisse First Boston  Mortgage
Capital,  LLC on a principal  amount of  $19,000,000 at 12% for the month of May
2000;  (iii) pays an additional  deposit of $900,000 to the Company by April 30,
2000, which amount has not yet been received;  and (iv)  demonstrates it has the
financial ability to close.

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

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

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

     (D) AGREEMENT OF SALE OF GARDEN STATE RACE TRACK

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

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

                                       73
<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       Director
                         January 1997
                         February 22, 1999

Francis W. Murray 58     May 1996               Director

James J. Murray   61     November 1996 to       Director
                         January 1997
                         February 22, 1999

Robert J. Quigley 71     October 1980           Director
                         February 1996 to
                         October 1997           President
                         January 1999           President


     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.  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.

                                       74
<PAGE>

     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.
Murray  and  Mariucci  are the  current  members of the  Compensation  and Stock
Options Committee.

                                       75
<PAGE>


 The  following  is a summary of the  composition  of these  committees
 during Fiscal 1999:
<TABLE>
                                                                    Compensation and Stock
Effective Date      Executive Committee      Audit Committee           Options Committee
--------------      -------------------      ---------------           -----------------
<CAPTION>

<S>                 <C>                      <C>                       <C>
January 19, 1998    Anthony Coelho           Michael Abraham (1)       Anthony Coelho
                    Nunzio P. DeSantis       Charles R. Dees, Jr.(1)   Francis W. Murray
                    Frank A. Leo(1)          Joseph Zappala            Kenneth S. Scholl(1)
                    Francis W. Murray                                  Joseph Zappala
                    Joseph Zappala

July 31, 1998       Anthony Coelho(2)        Robert J. Quigley         Anthony Coelho(2)
                    Nunzio P. DeSantis(2)    Joseph Zappala(2)         Francis W. Murray
                    Francis W. Murray                                  Joseph Zappala(2)
                    Joseph Zappala(2)

March 15, 1999      Francis W. Murray        John U. Mariucci          Francis W. Murray
                    Robert J. Quigley        James J. Murray           John U. Mariucci
</TABLE>


(1) Resigned on July 2, 1998.
(2) Resigned on January 28, 1999.


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             Treasurer

Christopher C. Castens   48             Secretary and Corporate Counsel
                                        (Resigned December 3, 1999)

Christine E. Rice Newell 53             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.

                                       76
<PAGE>

     Christopher C. Castens. Mr. Castens had been General Counsel to the Company
since  December  1986.  Prior to joining  the  Company,  Mr.  Castens  served as
in-house counsel and assistant to the Executive Vice President of Harness Tracks
of America.

     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.

                                       77
<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, 1999, 1998 and 1997 to
(i) the Company's acting Chief Executive  Officer,  (ii) the Company's four most
highly  compensated  executive officers (other than the Chief Executive Officer)
who were  serving in such  capacity at the end of Fiscal 1999 and (iii) a former
executive officer of the Company who was not serving in such capacity at the end
of Fiscal 1999.

<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)                1999           268,269      10,500(2)        -0-              -0-
Former Chief Executive Officer       1998           450,000      78,000           -0-              -0-
of the Company                       1997           204,231      39,000       5,000,000(3)         -0-

Francis W. Murray                    1999           120,692      15,145(4)        -0-             12,323(5)
Acting Chief Executive Officer       1998           129,333      16,000           -0-             87,292
of the Company                       1997            50,769       -0-             -0-             50,769

Robert J. Quigley                    1999           138,461       4,000(6)        -0-             12,267(7)
President of the Company             1998           220,000       -0-             -0-             11,160
                                     1997           210,000       -0-             -0-             10,971

Christopher C. Castens(8)            1999           123,693       -0-             -0-              9,260(9)
Secretary of the Company             1998           115,770       -0-             -0-              8,060
                                     1997            89,039       -0-             -0-              6,577

William H. Warner                    1999           123,693       -0-             -0-            117,355(10)
Chief Financial Officer              1998           125,693       -0-             -0-              9,498
of the Company                       1997           120,000       -0-             -0-              9,360

Christine E. Rice Newell             1999            77,308       3,600(12)       -0-              6,112(13)
Assistant Treasurer and              1998            78,308       3,600           -0-              6,455
Controller                           1997            74,808       1,800           -0-              5,661


</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.
     See "Termination Agreements" below.

(2)  Consisted of $5,000 per month non-accountable  expense allowance and $1,500
     per  month  automobile   allowance  pursuant  to  an  employment  agreement
     effective January 15, 1997. See "Termination Agreements" below.

(3)  Mr.  DeSantis  was  granted  options  to  purchase  5,000,000  shares at an
     exercise  price of $4.00  per  share.  Upon  consummation  of the  Delaware
     Settlement these options were canceled. See "Legal Proceedings."

                                       78
<PAGE>

(4)  Consisted of $1,262 per month automobile lease payment.

(5)  Fiscal 1999 amounts  consist of $2,016 of life  insurance  premiums paid by
     the Company with respect to term life  insurance  payable to  beneficiaries
     designated  by Mr.  Murray,  $7,307  contributed  by the Company  under the
     Company's 401(k) plan, and $3,000 for director fees.

(6)  Consists of $1,000 per month automobile allowance effective March 1, 1999.

(7)  Fiscal 1999 amounts  consist of $1,411 of life  insurance  premiums paid by
     the Company with respect to term life  insurance  payable to  beneficiaries
     designated  by Mr.  Quigley,  $7,856  contributed  by the Company under the
     Company's 401(k) plan and $3,000 for director fees.

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

(9)  Fiscal 1999 amounts  include $2,016 of life insurance  premiums paid by the
     Company  with  respect  to term life  insurance  payable  to  beneficiaries
     designated by Mr.  Castens and $7,244  contributed by the Company under the
     Company's 401(k) plan.

(10) Fiscal 1999 amounts  include six months  severance in the amount of $60,000
     and the proceeds of $47,974 for the cash value of a life  insurance  policy
     to which Mr. Warner was entitled to associated  with the  expiration of Mr.
     Warner's employment contract on December 31, 1998, $2,016 of life insurance
     premiums paid by the Company with respect to term life insurance payable to
     beneficiaries  designated  by Mr.  Warner  and  $7,365  contributed  by the
     Company under the Company's 401(k) plan.

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

(12) Fiscal 1999 amounts  include $1,512 of life insurance  premiums paid by the
     Company  with  respect  to term life  insurance  payable  to  beneficiaries
     designated by Ms. Rice Newell and $4,600  contributed  by the Company under
     the Company's 401(k) plan.


STOCK OPTIONS

OPTIONS GRANTED IN LAST FISCAL YEAR

     The Company did not grant any options during the fiscal year ended June 30,
1999 to any of the persons named in the Summary Compensation Table.

                                       79
<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, 1999 by each person named in the Summary Compensation Table. No options were
exercised during Fiscal 1999 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
----                    -------------------------   -------------------------

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

William H. Warner
(Expired Decembe 31, 1999)      75,000/-0-                -0-/-0-

Christopher C. Castens
(Expired December 31, 1999)     50,000/-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 $.25 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.  Under the terms of his consulting agreement with the
Company,  Mr. Coelho  received $2,500 per Board meeting in which he participated
until the consummation of the Delaware Settlement on January 28, 1999.

                                       80
<PAGE>

TERMINATION AND SEVERANCE AGREEMENTS

     Nunzio DeSantis - Chief Executive Officer and President.  Effective January
15,  1997,  Mr.  DeSantis  and the Company  entered  into a ten-year  employment
agreement pursuant to which Mr. DeSantis serves as the Company's Chief Executive
Officer at an  initial  annual  base  salary of  $450,000.  The  Agreement  also
provided for a performance bonus each year equal to the amount, if any, by which
the net income of the Company  (before  deduction  of federal  and state  income
taxes) exceeds $2 million.  The maximum amount of such performance bonus for any
fiscal  year was  limited to the amount of Mr.  DeSantis'  base  salary for such
year. Subject to stockholder  approval at the Company's next annual meeting, Mr.
DeSantis was granted options to purchase up to 5,000,000 shares of the Company's
Common  Stock at an  exercise  price of $4.00  per  share.  If  approved  by the
Company's stockholders, options exercisable for 1,000,000 shares of Common Stock
would have been  exercisable  immediately  and the  remaining  options  becoming
exercisable in eight equal annual  installments  commencing on January 15, 1999.
If Mr.  DeSantis was  discharged  without cause or resigns for good reason,  all
options  would vest  immediately  and Mr.  DeSantis  would have been entitled to
receive an amount  equal to his then base salary for the  remaining  term of the
agreement or eighteen  months,  whichever was greater.  Upon a change of control
(as  defined in the  agreement)  and Mr.  DeSantis'  resignation  in  connection
therewith, all options were to vest immediately and Mr. DeSantis was entitled to
receive an amount  equal to his then base salary for the  remaining  term of the
agreement or three years, whichever was lesser. In the event of the death of Mr.
DeSantis,  his estate would have received a lump sum payment of $1 million.  Mr.
DeSantis  also   received  a  monthly   automobile   expense   allowance  and  a
non-accountable  expense account in an aggregate amount of $6,500.  For a period
of two  years  following  the  termination  of the  agreement  or  while  he was
receiving  severance  payments from the Company,  Mr.  DeSantis  would have been
bound by the terms of a non-competition clause. See "Summary Compensation." Upon
consummation of the Delaware Settlement,  Mr. DeSantis' employment agreement was
terminated and his options were canceled. See "Legal Proceedings."

     William H. Warner - Treasurer.  The Company and Mr.  Warner were parties to
an employment  agreement  effective January 1, 1996 pursuant to which Mr. Warner
serves  as the  Company's  treasurer  at an  annual  salary  of  $123,693.  This
agreement expired on December 31, 1998. In addition to other customary and usual
terms, Mr. Warner's agreement provided that upon termination, the Company was to
pay Mr.  Warner  six  months  salary  and the  cash  surrender  value  of a life
insurance  policy the Company  owns on Mr.  Warner's  behalf in the  approximate
amount of $50,000.  The Company's  Board of Directors  approved a payment to Mr.
Warner  associated with the expiration the employment  contract in the amount of
$60,000  (accrued in the fourth  quarter of Fiscal 1999) and the payment for the
cash value of a life  insurance  policy in the  amount of $47,000 to Mr.  Warner
(which was borrowed  from the life  insurance  company and paid to Mr. Warner in
the first  quarter of Fiscal 2000).  Mr. Warner  continues to be employed by the
Company on a non-contract basis at $120,000 per year.

     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.

                                       81
<PAGE>


     Kerry B.  Fitzpatrick.  The Company and Mr.  Fitzpatrick were parties to an
employment  contract  pursuant  to which Mr.  Fitzpatrick  served as Director of
Special  Projects and Business  Opportunities to the company at an annual salary
of $65,000.  Under the terms of this  agreement  which  expired on December  31,
1998, the Company was required to pay Mr. Fitzpatrick $32,500, which represented
six months salary.

     Richard E.  Orbann - Vice  President-Track  Operations.  The  Company  Paid
$100,000 to Mr. Orbann and transferred title to his Company car in settlement of
his  employment  contract in  connection  with the  January  28, 1999  Greenwood
Transaction.

     Edward Ryan - General  Manager-Freehold  Raceway.  The Company and Mr. Ryan
were parties to an employment  contract pursuant to which Mr. Ryan served as the
general manager of Freehold  Raceway at an annual salary of $128,200.  Under the
terms of this  agreement  which  expired on December 31,  1998,  the Company was
required to pay Mr. Ryan $69,231, which represented six months salary and unused
vacation pay. In addition,  the Company transferred to Mr. Ryan 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 Messrs.
Coelho, Murray and Zappala until January 28, 1999 and, effective March 15, 1999,
consists of Mr. James J. Murray and Mr. Marriucci. No officer or employee of the
Company  participated in  deliberations  of the  Compensation  and Stock Options
Committee.

     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.  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.

                                       82
<PAGE>

     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."

                                       83
<PAGE>


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following  table sets forth,  as of March 1, 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 May 5, 2000,  the Company had  11,884,268  shares of Common
Stock issued and 8,980,252 shares outstanding.  In addition to the Common Stock,
the Company has 362,483 shares of Preferred  Stock issued and  outstanding.  The
Preferred Stock is not convertible into Common Stock and has no voting rights.


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

Credit Suisse First
Boston Mortgage Capital LLC
Eleven Madison Avenue
New York, NY 10010                2,419,509(1)         20.6%

The Family Investment Trust
(Henry Brennan, Trustee)
340 North Avenue
Cranford, NJ  07016               1,090,731(2)          9.3%

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

Francis W. Murray                   300,000(4)          2.5%

Robert J. Quigley                   105,830(5)           *

Christopher C. Castens                  200(6)           *

William H. Warner                       124              *

All Executive Officers
and Directors as a Group
(4 persons)(4)(5)(6)                406,154             3.5%


The above  persons  have sole  voting and  investment  power,  unless  otherwise
indicated below.

* Less than 1%.

                                       84
<PAGE>


(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.  See  "Developments  During the Last Fiscal Year" and "Legal
     Proceedings."


(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 shares of Common Stock issuable upon exercise of options.

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

(6)  Includes 200 shares of Common Stock owned of record by Mr.  Castens'  wife,
     as to which Mr. Castens may be deemed to be the beneficial owner.

                                       85
<PAGE>


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     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. (See Notes 4 & 13).

     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 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

                                       86
<PAGE>

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.

     During  fiscals  1998 and 1997,  the  Company  paid  $12,200  and  $217,000
respectively,  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  and  $160,000  during
fiscals 1998 and 1997, respectively,  and which LVEN had agreed to reimburse the
Company.  The  $337,000  owed to the  Company  was offset by certain  conditions
agreed upon in the consummation of the Delaware Settlement. (See Note 4)

     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.

                                       87
<PAGE>

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.  Until  December  31,  1997,  LVEN  paid
Stanford  Company  $10,000  per month for  consulting  services,  including  Mr.
Scholl's  services  as  project  manager  for the El Rancho  Property.  LVEN was
reimbursed  by the Company  for the  payments  to  Stanford  Company.  Effective
January 1, 1998,  the  Company  began  paying Mr.  Scholl  $10,000 per month for
ongoing  consulting  services  as project  manager  for the El Rancho  Property.
During  Fiscal 1999,  the Company paid Mr. Scholl  $120,000 for these  services.
Additionally,  Mr.  Scholl was paid  director fees of $10,000 for each of fiscal
1998 and 1997.  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. (See Notes 4 & 13).

     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. suite. (See Note
4 & 13).

     During fiscals 1999, 1998 and 1997, the Company paid $90,510 , $141,350 and
$128,000 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.

     During fiscal 1997,  the Company paid  approximately  $75,300 for the legal
services of Sterns and Weinroth,  a law firm partially  owned by Joel H. Sterns,
the Company's former chairman.

                                       88
<PAGE>

     During fiscal 1997, the Company paid $35,685 in consulting fees to Goldman,
Beale  Associates,  a company  partially  owned by  Clifford  Goldman,  a former
director of the Company.

     During fiscal 1997,  the Company paid  approximately  $102,000 to Robert E.
Brennan (the  Company's  former  Chairman and a  significant  stockholder  until
January 15, 1997) for  reimbursement  of Mr.  Brennan's legal fees in connection
with the  investigation by New Jersey  regulatory  authorities which oversee the
casino and horse racing industries in the state.

     During fiscal 1997, the Company paid LVEN $150,000 under a letter agreement
executed  in  connection  with the  purchase  of the El Rancho  Property,  which
provided for a $25,000 per month fee with respect to maintenance and supervision
of the property  prior to and during  development.  The Company  terminated  the
letter agreement on December 17, 1997.

     During fiscal 1997, the Company paid  approximately  $118,800 to Francis W.
Murray,  a director of the Company,  for legal fees and reimbursed  expenses and
for consulting  fees prior to his becoming an employee.  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.

     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.

     For  additional   information  regarding  related  party  transactions  see
Footnote  4 in the  Consolidated  Financial  Statements.  See  also  "Item  11 -
Compensation Committee Interlocks and Insider Participation."

                                       89
<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)

                                       90
<PAGE>

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)

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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)

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)

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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)

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)

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

21   Subsidiaries

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


(B)  Financial Statements

     Reports of independent certified public accountants.
     Consolidated Balance Sheets as of June 30, 1999 and 1998.
     Consolidated Statements of Operations for the Years
      Ended June 30, 1999, 1998 and 1997.
     Consolidated Statements of Stockholders' Equity for the Years
      Ended June 30, 1999, 1998 and 1997.
     Consolidated Statements of Cash Flows for the Years Ended
      June 30, 1999, 1998 and 1997.
     Notes to Consolidated Financial Statements.

(C)  Reports on Form 8-K

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

     During the quarter ended March 31, 2000 in Fiscal 2000, the Company filed a
current report on Form 8-K dated January 21, 2000 reporting the following:

  ITEM 5.       OTHER EVENTS

     On December 27, 1999,  the Company  received  consents  from a group of its
shareholders  representing  4,498,264  shares or 50.09% of the Company's  Common
Stock which authorized the Company to enter into a restructuring  agreement with
its primary lender.

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                    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

Freehold Racing Association                                    New Jersey

Garden State Race Track, Inc.                                  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


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                              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 May 11, 2000.

                                      INTERNATIONAL THOROUGHBRED
                                           BREEDERS, INC.


                                      By:
                                      Robert J. Quigley, President
                                      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:________________________________   Treasurer (Principal     5/11/2000
   William H. Warner                  Financial and
                                      Accounting Officer)


By:________________________________   Director                 5/11/2000
   John Mariucci


By:________________________________   Director                 5/11/2000
   James Murray


By:________________________________   Director                 5/11/2000
   Francis W. Murray


By:________________________________   Director                 5/11/2000
   Robert J. Quigley


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