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

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

For the fiscal year ended June 30, 2002

                                       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 No. 0-9624

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                 -----------------------------------------------
             (Exact name of registrant as specified in its charter)


                    Delaware                         22-2332039
          -----------------------------   ---------------------------------
          (State or other jurisdiction    (IRS Employer Identification No.)
                 of incorporation)


          211 Benigno Boulevard, Suite 210, Bellmawr, New Jersey    08031
          ------------------------------------------------------   -------
               (Address of principal executive offices)          (Zip Code)

                                 (856) 931-8163
          ---------------------------------------------------------------
               (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (b) of the Act: Common Stock, par
value $2.00

Indicate by check mark whether registrant: (1) has filed all reports required to
be filed by section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No__

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  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.[ X ]

The  aggregate   market  value  of  the   registrant's   common  stock  held  by
non-affiliates  of the  registrant  as of  October  15,  2002 was  approximately
$1,435,891.  Shares of common stock held by each executive  officer and director
and by each  person who owns 10% or more of our  outstanding  common  stock have
been excluded since such persons may be deemed affiliates. This determination of
affiliate  status  is not  necessarily  a  conclusive  determination  for  other
purposes.

As of  October  15,  2002,  there  were  11,480,275  outstanding  shares  of the
registrant's common stock.

<PAGE>

                                TABLE OF CONTENTS


                                     PART I

Item 1.  Business                                                           1
Item 2.  Properties                                                         6
Item 3.  Legal Proceedings                                                  7
Item 4.  Submission of Matters to a Vote of Security Holders                7

                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder
         Matters                                                            8
Item 6.  Selected Financial Data                                            9
Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                             10
Item 7A. Quantitative and Qualitative Disclosures about Market Risk        18
Item 8.  Financial Statements and Supplementary Data                       18
Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure                                              46

                                    PART III

Item 10. Directors and Executive Officers of the Registrant                47
Item 11. Executive Compensation                                            50
Item 12. Security Ownership of Certain Beneficial Owners and Management    54
Item 13. Certain Relationships and Related Transactions                    56

                                     PART IV

Item 14. Exhibits, Financial Statement Schedule, and Report on Form 8-K    58

<PAGE>

           CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

     We have made  forward-looking  statements in this Form 10-K,  including the
information  concerning possible or assumed future results of our operations and
those  preceded  by,  followed by or that include  words such as  "anticipates,"
"believes,"  "expects," "intends" or similar expressions.  For those statements,
we claim  the  protection  of the safe  harbor  for  forward-looking  statements
contained in the Private  Securities  Litigation  Reform Act of 1995. You should
understand that the following  important factors, in addition to those discussed
elsewhere in this document,  particularly under "Risk Factors," could affect our
future  results and could cause those  results to differ  materially  from those
expressed in our forward-looking statements:

     o    general economic and business conditions;
     o    competition;
     o    execution of our new business strategy;
     o    changes in laws regulating our industry;
     o    fluctuations  in quarterly  operating  results as a result of seasonal
          and weather considerations; and
     o    events  directly or  indirectly  relating to our business  causing our
          stock price to be volatile.

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                                     PART I

     Item 1. Business.

     General

     International  Thoroughbred  Breeders,  Inc., a Delaware  corporation,  was
incorporated  on October  31,  1980.  Until the  January  1999 sale of  Freehold
Raceway  and leasing to a third party of Garden  State Park,  we were  primarily
engaged, through various operating subsidiaries,  in the ownership and operation
of standardbred  and  thoroughbred  racetracks in New Jersey.  For the period of
approximately  22 months after our January 1999 sale of Freehold Raceway and our
leasing  of Garden  State Park to a third  party,  our focus  concentrated  upon
working out the Company's  debt problems,  by selling our real  properties in an
orderly  fashion rather than  permitting  such assets to be lost by foreclosure.
Our efforts in that regard were successful, and in two transactions,  one in May
2000 and the other in November 2000, we sold all of our real properties and paid
our indebtedness in full. Since November 2000, we have evaluated and continue to
look for business  opportunities.  We are committed to remaining as an operating
company.

     To that end, as of April 30,  2001,  we  acquired,  by a bareboat  charter,
operations  of an offshore  gaming  vessel,  the M/V Palm Beach  Princess.  This
vessel sails twice daily from the Port of Palm Beach,  Florida and,  once beyond
the  three-mile  territorial  limit,  engages in a casino  gaming  business.  We
acquired  this  business  pursuant  to a bareboat  charter for a one- year term,
which is continuing on a month-to-month  basis,  and, by negotiating to purchase
the  substantial  debt  secured by a mortgage  against  the  vessel,  we plan to
negotiate  an  acquisition  of the vessel and related  assets.  The  business of
operating  the  cruise  vessel  includes  a  variety  of  shipboard  activities,
including casino gaming, dining, music and other entertainment.

     Current Operations

     Effective  April 30,  2001,  we entered  into a bareboat  charter  with MJQ
Corporation, pursuant to which we charter the vessel M/V Palm Beach Princess for
the purpose of operating a casino  cruise  business from the Port of Palm Beach,
Florida.  Under the bareboat charter agreement,  as amended, we are obligated to
pay  $50,000  per  month  as a  charter  hire  fee to the  vessel's  owner,  MJQ
Corporation.  In order to obtain the bareboat charter,  we entered into a letter
of intent as of April 30, 2001, and then concluded a Master Settlement Agreement
dated  February  22, 2002 with the Chapter 11 Trustee  (the  "Trustee")  for the
Bankruptcy  Estate of Robert E. Brennan,  MJQ Corporation and others,  including
Francis W.  Murray,  our  Chairman,  who is also a director  and  officer of MJQ
Corporation.  (See Item 13, Certain Relationships and Related Transactions.) The
Master  Settlement  Agreement  by its  terms was  subject  to  bankruptcy  court
approval,  and on April 1, 2002,  the approval of the United  States  Bankruptcy
Court for the District of New Jersey,  having  jurisdiction  over the bankruptcy
estate of Robert E. Brennan, was obtained.

     In accordance with the Master Settlement Agreement,  through our Palm Beach
Princess, Inc. subsidiary we entered into a Purchase and Sale Agreement with the
Trustee

                                        1

<PAGE>

which provides for our purchase from the Trustee of the  promissory  note of MJQ
Corporation,  having  an  outstanding  balance  of  principal  and  interest  of
approximately  $15.7  million as of June 30, 2002 and secured by a ship mortgage
against  the M/V Palm Beach  Princess  (the  "Ship  Mortgage  Obligation").  The
purchase price payable by us for the Ship Mortgage Obligation is $13.75 million.
We began making  payments on account of such purchase price  effective April 30,
2001, in monthly installments of $250,000.  Such monthly installments  continued
under the terms of the Purchase  and Sale  Agreement  through July 31, 2002,  at
which time a $9.75 million  balloon  payment was to be due. The balloon  payment
was not made by July 31, 2002, and we exercised our right to extend the time for
payment of the balance of the purchase price for three (3) additional months, by
paying  $70,000 for the first month  extension,  an  additional  $80,000 for the
second month extension and an additional $100,000 for the third month extension,
which  additional  payments will not be credited  towards the purchase price. In
the event that the balloon payment is not made when due (or any other default on
our part occurs which is not cured within the applicable  grace period),  at the
election of the Trustee all of our monthly $250,000  payments (which would total
$4 million as of September  30, 2002) would be forfeited as  liquidated  damages
and the  Trustee  would  have the right to take  possession  and  control of the
vessel M/V Palm Beach Princess,  but we would not have any further liability for
any unpaid  balance of the purchase price of the Ship Mortgage  Obligation.  The
Trustee  would  also  have  the  right to take  over  operating  assets  used in
connection  with the  vessel,  including  the  onboard  cash bank,  inventories,
supplies  and  equipment,  and the  Trustee  would  assume  current  liabilities
including trade debt and payroll. In the event the current assets so acquired by
the Trustee are less than the amount of the  current  liabilities  so assumed by
the Trustee, we would be liable to the Trustee for such deficiency.

     Our  transaction  with  the  Brennan  Bankruptcy  Trustee,   including  our
agreement to purchase the Ship  Mortgage  Obligation,  is an  opportunity  which
arose out of the Brennan Bankruptcy Trustee's claims against MJQ Corporation and
others,  including Mr. Murray, alleging that MJQ Corporation had received a loan
(the Ship Mortgage  Obligation)  from an entity which,  in turn,  received funds
from  offshore  trusts  created  by  Robert E.  Brennan  (the  Company's  former
chairman).  The Brennan Bankruptcy Trustee acquired the Ship Mortgage Obligation
through a settlement of litigation which the Brennan  Bankruptcy Trustee brought
against those offshore trusts. We learned of the opportunity to acquire the Ship
Mortgage  Obligation  and of the  opportunity to acquire,  at least  temporarily
(through the bareboat charter),  the vessel and MJQ Corporation's  casino cruise
business, through Mr. Murray's connection as a director of MJQ Corporation.

     Under the bareboat charter,  we have (on a month-to-month  basis) the right
to operate the M/V Palm Beach  Princess,  which,  once  outside  the  three-mile
territorial coastal limit, operates a casino gaming business.

     The Palm  Beach  Princess  is a  large,  ocean  going  cruise  ship  with a
passenger  capacity of approximately  850 for coastal  voyages.  The ship is 420
feet  long,  6,659  gross  tons,  and  registered  in the  Republic  of  Panama.
Originally built in 1964, the ship was substantially reconstructed, refurbished,
and upgraded in 1973,  1984 and 1997.  The ship fully  complies with the highest
standards of the International Convention on Safety of Life at Sea as applicable
to large  passenger  ships,  and is  regularly  subjected  to safety  and health
inspections by the United States Coast Guard and the United States Public Health
Service.

                                        2

<PAGE>

     The Palm  Beach  Princess  performs  fourteen  cruises  weekly,  that is, a
daytime  and an evening  cruise  each day.  Each  cruise is of five to six hours
duration.  During  each  cruise,  the  Palm  Beach  Princess  offers  a range of
amenities  and services to her  passengers,  including a full  casino,  sit-down
buffet dining, live musical shows, discotheque,  bars and lounges, swimming pool
and  sundecks.  The casino  occupies  15,000  square feet aboard the ship and is
equipped with approximately 400 slot machines, all major table games (blackjack,
dice, roulette and poker), and a sports wagering book.

     Pursuant to the bareboat charter between MJQ Corporation,  the owner of the
vessel,  and  a  subsidiary  of  ours,  the  vessel  is  provided  to  us  on  a
month-to-month  basis, unless earlier terminated.  The charter may be terminated
by the Trustee if we fail to pay the $9.75 million balance of the purchase price
for the Ship  Mortgage  Obligation  by October 31,  2002.  As  charterer  of the
vessel,  we are responsible for maintaining the vessel,  all machinery,  boilers
and other equipment on the vessel,  and are responsible for making all necessary
repairs. We are responsible for all expenses of operations,  including all taxes
payable in respect  thereof.  As charterer,  we have the use of all equipment on
board the vessel at the time it was  delivered  to us, and are  responsible  for
re-delivery  of the vessel and equipment at the end of the charter period in the
same condition as when we received it,  ordinary wear and tear excepted.  We are
also  responsible  for replacing any items of equipment that need to be replaced
and, to the extent  equipment may be leased,  we are  responsible for all rental
and other  liabilities of MJQ  Corporation  under such leases during the term of
the charter. We are to keep all insurance in place for the vessel and equipment.
Further,  MJQ Corporation is to continue to conduct for us certain operations of
the vessel until such time as we obtain,  through our operating subsidiary,  all
permits, licenses and registrations required in connection with the operation of
the  vessel,   including  but  not  limited  to,  the  federal  water  pollution
certification,  registration  under the Gambling  Devices Act,  registration for
Florida sales tax, and Florida alcoholic beverage  licensing.  All costs of such
operations  incurred by MJQ Corporation on our behalf are to be reimbursed by us
to MJQ  Corporation.  Pending  consummation of our purchase of the Ship Mortgage
Obligation,  we have not obtained such permits, licenses or registrations in our
own or our subsidiary's name.

     Prior Operations

     In April of 1998,  our Board of Directors  authorized  the  exploration  of
strategic opportunities for our business, including a possible merger or sale of
all of our assets.  The Board  ultimately  decided that a sale of our assets was
the preferred alternative.

     On January 28, 1999, we completed the sale of Freehold Raceway, the sale of
a ten acre  parcel at Garden  State  Park and the  lease of  Garden  State  Park
facilities to subsidiaries of Greenwood Racing,  Inc. The purchase price was $46
million,  with up to an additional  $10 million in Contingent  Promissory  Notes
which  would  become  payable  only upon,  among  other  things,  the New Jersey
Legislature's  approval of off-track  betting  facilities  or telephone  account
pari-mutuel wagering on horse racing by certain dates and Greenwood's  obtaining
necessary  licenses to operate by January 24,  2002.  Such  contingency  did not
occur.

     On  May  22,  2000,  through  our  wholly-owned  subsidiary,  Orion  Casino
Corporation,  we closed on the sale of the non-operating  former El Rancho Hotel
and Casino in Las Vegas,

                                        3

<PAGE>

Nevada to Turnberry/Las Vegas Boulevard, LLC. The sale price was $45 million and
was paid by: (i)  previous  cash  deposits  totaling  $2  million;  and (ii) the
balance of the sale price paid in cash at the closing.  The proceeds from the El
Rancho sale were  principally  used by us to reduce the outstanding  balances on
our loan from Credit Suisse First Boston  Mortgage  Capital LLC to $14.7 million
and to  purchase  a  promissory  note,  secured  by the  rights  to  100% of the
distributable  cash of the buyer in the event of a default,  of the buyer in the
amount of $23 million,  which will be  convertible  at our option into a 33 1/3%
equity  interest  in the buyer.  The  interest  payable  under such note will be
dependent  upon,  and payable solely out of, the buyer's net cash flow available
for distribution to its equity owners. After the equity investors in the Company
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 us. We will thereafter receive payments under
the Note equal to 33 1/3% of all  distributable  cash until the  maturity  date,
which occurs on the  thirtieth  anniversary  of our purchase of the Note. We may
convert the Promissory  Note, at our option,  into a 33 1/3% equity  interest in
the buyer during a six-month  period  beginning on the fifteenth  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 thirtieth  anniversary of its issuance.
We  have   elected  to  defer  the  gain  on  the  sale  until  such  time  that
collectability,  under the $23 million Note purchased  from Turnberry  after the
closing, can be determined.

     On November 30, 2000,  through our wholly-owned  subsidiary,  GSRT, LLC, we
closed on the sale of our Garden  State Park  property,  located in Cherry Hill,
New Jersey,  to Realen-  Turnberry/Cherry  Hill, LLC. The purchase price was $30
million and was paid by: (i) previous cash deposits totaling $1 million;  (ii) a
Promissory Note in the face amount of $10 million;  and (iii) the balance of the
purchase  price paid in cash at the closing.  The cash  proceeds  from such sale
were  principally  used by us to repay in full the  outstanding  balances on our
debt to Credit Suisse First Boston Mortgage Capital LLC of  approximately  $14.3
million  and to repay in full  approximately  $3.75  million  of  principal  and
interest  on the debt to the  Chapter 11  Bankruptcy  Trustee  for the estate of
Robert E. Brennan  which had been incurred to purchase  2,904,016  shares of our
common stock.

     Under the $10 Million Note,  the interest  payable will be dependent  upon,
and payable solely out of, the buyer's net cash flow available for  distribution
to its equity  owners.  After the equity  investors  in the buyer have  received
aggregate distributions equal to their capital contributions plus an agreed upon
return on their invested  capital,  the next $10 million of  distributable  cash
will be paid to us. We will thereafter  receive payments under the Note equal to
33 1/3% of all  distributable  cash until the maturity date, which occurs on the
fifteenth anniversary of the issuance of the Note. We may convert the Promissory
Note, at our option,  into a 33 1/3% equity interest in  Realen-Turnberry/Cherry
Hill during the  six-month  period  prior to the  fifteenth  anniversary  of the
issuance  of the  Note.  If not then  converted,  the Note  will be  payable  at
maturity in an amount equal to (i) the difference,  if any,  between $10 million
and total payments  previously made to us under the Note and (ii) 33 1/3% of any
excess of the fair market value of  Realen-Turnberry/Cherry  Hill's  assets over
the sum of its  liabilities  (other  than the  Note) and any  unreturned  equity
investment  of its owners.  We have  elected to defer the gain on the sale until
such   time   that   collectability    under   the   $10   million   Note   from
Realen-Turnberry/Cherry Hill can be determined.

                                        4

<PAGE>

     During June 2001, we held  auctions at which all of the personal  property,
including  equipment,  furniture,  furnishings  and art  work,  that we owned at
Garden State Park was sold for approximately $1.2 million in cash.

     Employees

     As  of  June  30,  2002,  we  employed  7  full-time  corporate  executive,
administrative  and  clerical  personnel.  All of the crew of the M/V Palm Beach
Princess (226 persons) and office and  management  personnel of MJQ  Corporation
(78  persons)  are made  available  to us for  operation  of the  casino  cruise
business under an arrangement  between us and MJQ Corporation by which all costs
of such personnel are borne by us.

     Competition

     From July 1, 2001 to December 4, 2001 the M/V Palm Beach  Princess  was the
only vessel  operating a coastal gaming business from the Port of Palm Beach and
our  closest  competition  was  approximately  50 miles away in Ft.  Lauderdale,
Florida.  From  December 10, 2001 until April 29, 2002,  when it returned to its
home port of Boston  Massachusetts,  another  coastal  gaming  vessel,  the S.S.
Horizon Edge, operated from Riviera Beach Marina, which is in close proximity to
the Port of Palm Beach. This vessel was 186 feet and had a passenger capacity of
500 people. The M/V Palm Beach Princess is considerably  larger at 421 feet with
a  passenger  capacity of 850 people.  The  Horizon  Edge  operated on a similar
schedule as the Palm Beach  Princess,  that is, two five hour cruises per day, 7
days a week, however,  due to its smaller size it canceled more cruises than the
Palm Beach Princess for inclement weather.  Additionally, in approximately June,
2002,  the coastal  gaming vessel Texas  Treasure II (formerly the M/V Contessa)
began  operating  from the Port of Palm Beach in  competition  with the M/V Palm
Beach Princess. This vessel is approximately 400 feet, was built in 1968 and has
a passenger  capacity of  approximately  700 people.  This vessel had previously
operated in competition  with the Palm Beach Princess from May 13, 1999 until it
discontinued  operations on May 15, 2000.  The operator of Texas Treasure II has
announced  an  intention  to replace  that  vessel with a larger  vessel,  Texas
Treasure I, which is approximately 419 feet long and has a passenger capacity of
more than 1,000 people.  We compete with Texas Treasure II and expect to compete
with Texas  Treasure  I on the basis of cruise  schedules,  passenger  services,
amenities, prices, and percentages of gaming win. Our agreement with the Port of
Palm Beach  District  (see Item 2 -  Properties,  below) gives us a  competitive
advantage as to preferred  cruise  scheduling times and convenience of passenger
parking areas.

     There is no  assurance  that  other  competing  vessels  will not enter the
gaming  business at the  existing  Port of Palm Beach,  at a new and larger port
facility in Palm Beach or at another port facility in the future.

     In addition to competing  with other  vessels in the coastal  gaming cruise
business,  we compete with a variety of other  entertainment  activities  in and
around Palm Beach,  Florida,  including,  but not limited to,  land-based Indian
gaming casinos, poker rooms, dog racing,  state-sponsored lotteries,  short-term
cruises,  resort  attractions,  various  sports  activities  and numerous  other
recreational activities. There is no assurance that we will be able to

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successfully compete with such other activities.

     Weather and Seasonal Fluctuations

     The success on our casino cruise business depends to significant  extent on
the weather conditions. In particular,  inclement weather, or the threat of such
weather,  has  a  direct  effect  on  passenger  counts,  potentially  adversely
affecting  our  revenues.  On  relatively  rare  occasions,  bad  weather or sea
conditions  may result in the  cancellation  of  cruises.  Our  business is also
subject to seasonal  fluctuations.  Our peak seasons are the late fall,  winter,
and early  spring  seasons  due to the  increased  local  population  as well as
increased tourist populations.

     Federal and State Regulations - Florida

     The effect of  amendments  in 1994 to the Federal  Gambling Ship Act and in
1992 to the  Federal  Johnson  Act was to  repeal  the prior  prohibition  under
Federal law of gambling  aboard  ships  performing  coastal  voyages  beyond the
jurisdiction  of state  territorial  waters  (three  miles on the United  States
Atlantic  coast),  and to permit  individual  states to enact laws regulating or
prohibiting  gambling aboard ships performing coastal voyages from ports located
in such states.  From time to time in prior years, bills have been introduced in
the Florida legislature which, if enacted, would prohibit coastal gaming cruises
from  Florida  ports.  No of such  bills have been  enacted  and no such bill is
currently pending.  There is a risk that the State of Florida may at some future
date regulate or prohibit the coastal cruise gaming business.  In addition,  the
Federal  government  could  determine to enact  regulations  or  prohibition  of
coastal gaming cruises.

     Further,  from time to time,  bills have been  introduced  seeking to place
passenger  surcharges  on cruises  originating  from  ports  within the State of
Florida. Originally, this surcharge was intended to fund a trust fund to be used
for statewide beach  restoration and  management.  Such bills were  subsequently
amended so that the gaming cruise  industry would not be taxed.  However,  there
can be no assurance  that similar  bills  designed to tax  passengers on cruises
such as those offered by us will not be  introduced in the future.  In addition,
while current law and regulations do not now prohibit casino  advertising,  from
time  to  time  bills  have  been  introduced  which,  in  part,   prohibit  the
advertisement  of any  form of  gambling  in any  newspaper,  circular,  poster,
pamphlet,  radio, telegraph,  telephone or otherwise.  There can be no assurance
that such bills will not be  reintroduced  or enacted in the  future.  There has
also been  litigation  instituted in the State of Florida  against gaming cruise
operators for  allegedly  causing a public  nuisance.  There can be no assurance
that  further  litigation  will  not be  instituted  in  the  future  which,  if
successful, could adversely affect the industry in which we operate.

     Item 2. Properties.

     We lease approximately  4,000 square feet of office space in Bellmawr,  New
Jersey which serves as our corporate headquarters. The lease is for a three year
period, expiring on May 31, 2004, and provides for an option to extend such term
for an additional three year period commencing June 1, 2004. We also lease, on a
month to month  basis,  approximately  200 square  feet of office  space in Toms
River, New Jersey which serves as a satellite executive

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<PAGE>

office.

     In addition, through a subsidiary, we have negotiated with the Port of Palm
Beach  District  a new  operating  agreement  and lease of space in a new office
complex constructed at the Port of Palm Beach adjacent to a new cruise terminal.
The new operating  agreement  provides priority scheduled times for our cruises,
operating   rights  from  the  Port,  and  priority  parking  location  for  our
passengers.  The office  space in the new office  complex to be  occupied  by us
comprises 11,105 square feet.  (Pending  construction of the tenant improvements
to the new office space,  we continue to occupy space in the Port which has been
leased to MJQ Corporation,  under  arrangements  with that  corporation.) We are
required  to make  tenant  improvements  to the  new  space,  estimated  to cost
approximately $600,000,  construction of which was to have commenced by July 30,
2002. While we have obtained a commitment for the construction financing, we had
not begun  construction  by July 30, 2002 and  received a notice from the Port's
attorney  asserting  that we may be in  default  in that  regard.  We  intend to
proceed with  construction  of the required  improvements to the leased space in
due course and expect to be able to cure the potential default. Such lease would
then extend for an initial term of five (5) years with our having two additional
five-year renewal options.  The prior holder of the operating agreement with the
Port, Leo Equity Group, Inc.,  permitted us to take the new operating  agreement
and  lease in our own  subsidiary  as a result  of our  agreement  with the sole
stockholder  of Leo Equity  Group,  Inc. to  purchase  all of his shares in that
corporation.  Pursuant to that agreement,  we have agreed to pay $250,000 as the
purchase  price  for the  stock in Leo  Equity  Group,  payable  in ten  monthly
installments of $25,000 each. See Note 15 to our financial  statements ( Related
Party Transactions) below.

     Item 3. Legal Proceedings.

     We are  involved  in  litigation  incidental  to our  prior  ownership  and
operation  of Garden State Race Track and  Freehold  Raceway.  We do not believe
that the resolution of any existing litigation will result in a material adverse
effect on our business, results of operations, or financial condition.

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

     We did not submit  any  matters to a vote of  security  holders  during the
fourth quarter of fiscal year 2002.


                                        7

<PAGE>

                                     PART II


Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
         Matters

     Our common  stock has been traded  infrequently  on the Pink  Sheets  since
September  15,  1998.  The  following  table sets  forth,  for the fiscal  years
indicated,  the high and low sales  prices for each share of our common stock on
the Pink Sheets based upon information supplied by the Pink Sheets.


                                        High    Low
                                        ----    ---
         2001

                       First Quarter     .60   .20
                       Second Quarter    .45   .10
                       Third Quarter     .51   .19
                       Fourth Quarter    .46   .30
         2002
                       First Quarter     .30   .17
                       Second Quarter    .28   .17
                       Third Quarter     .50   .20
                       Fourth Quarter    .50   .23


     On June 30, 2002, there were approximately  30,200 holders of record of the
shares of our outstanding common stock.

     We have not paid any dividends  since our inception.  The  declaration  and
payment of dividends in the future will be  determined by our board of directors
in  light  of  conditions  then  existing,  including  our  earnings,  financial
condition and capital requirements. We do not anticipate paying dividends in the
foreseeable future.

                                        8

<PAGE>

Item 6. Selected Financial Data.

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES
<TABLE>
                                                                           Years Ended June 30,
                                                ---------------------------------------------------------------------------
                                                     2002         2001            2000            1999            1998
                                                -----------   ------------    ------------    -------------   -------------
<CAPTION>
<S>                                            <C>           <C>             <C>             <C>             <C>
Income (Loss) Before Discontinued
      Operations (1)(6)                        $  1,982,603  $  (2,402,142)  $  (6,980,831)  $  (16,034,769) $  (25,468,850)

Income From Discontinued Operations (3)        $          0  $           0   $           0   $    8,144,072  $    7,207,633

Net Income (Loss)                              $  1,982,603  $  (2,402,142)  $  (6,980,831)  $   (7,890,697) $  (18,261,217)

Per Common Share - Basic and Diluted:

Income (Loss) Before Discontinued Operations
  and Extraordinary Item                       $       0.17  $       (0.24)  $       (0.78)  $        (1.38) $        (1.82)

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

Income From Discontinued Operations            $       --    $        --     $         --    $         0.39  $         0.51

Net Income (Loss)                              $       0.17  $       (0.24)  $       (0.78)  $        (0.67) $        (1.31)

Weighted Average Number of Shares                11,480,272      9,987,114       8,980,244       11,554,476      13,978,086

                                                                               June 30,
                                                ---------------------------------------------------------------------------
                                                    2002          2001            2000             1999            1998
                                                -----------   ------------    ------------    -------------   -------------

Working Capital (Deficiency)(2)                $ (2,200,346) $    (190,644)  $ (17,792,740)  $  (33,069,102) $  (36,744,740)

Total Assets                                   $ 45,928,294  $  41,391,208   $  58,166,739   $   76,588,565  $  120,252,901

Long-Term Debt                                 $          0  $     482,000   $     482,000   $            0  $            0

Stockholders' Equity                           $ 33,961,312  $  31,973,708   $  33,870,852   $   40,846,683  $   59,913,361
</TABLE>

(1)  The Company  commenced  operation of a casino cruise vessel as of April 30,
     2001  which  materially  affects  the  comparability  of a  portion  of the
     information reflected in the above data.
(2)  The working  capital  presentation  in Fiscal 2002 reclassed to long term a
     $750,000 deposit that was previously present as current in Fiscal 2001.
(3)  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.
(4)  As a result of the above  described  decision,  the (loss) from  continuing
     operations primarily consists of corporate expenses, charges and write-offs
     for years June 30, 1998 thorough June 30, 2000.
(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, 2002.

                                       9

<PAGE>

Item 7. Management's Discussion And Analysis of Financial Conditions And Results
        of Operations

Liquidity and Capital Resources

     Cash flow and liquidity  during the twelve month period ended June 30, 2002
included approximately $5.4 million in cash generated by the Palm Beach Princess
operations  (prior to cash  payments of  2,750,000  used for the payments to the
Chapter 11 Trustee of the Bankruptcy Estate of Robert E. Brennan), approximately
$1.2  million  from  the  auction  of all of the  personal  property  (including
equipment,  furniture,  furnishings  and artwork)  that we owned at Garden State
Park,  and $906,455 which had been held in escrow from the 1999 sale of Freehold
Raceway and the lease of Garden State Park. Such cash flow was used, in part, to
fund  portions  of the  payments  on account of the  purchase  price of the Ship
Mortgage  Obligation  against the Palm Beach  Princess,  described  in Note 10 -
Commitments and Contingencies to our financial  statements,  to make loans of an
additional  $573,280 to the Southern California golf course and Fort Lauderdale,
Florida real estate development projects during the twelve months ended June 30,
2002 as  described  in Note 15 - Related  Party  Transactions  to our  financial
statements,  and to  explore  other  potential  business  opportunities.  We are
exploring gaming related business opportunities in various foreign countries and
expect  to  continue  to  incur  expenses  for  exploring   potential   business
opportunities  in the  future.  As of June  30,  2002,  we have  made  loans  of
approximately  $350,000 in relation to the foreign  projects  and an  additional
$933,814 has been funded and  expensed in various  foreign  projects  during the
year ended June 30, 2002. We are currently dependent upon operations of the Palm
Beach Princess vessel for substantially all of our cash flow.

     On July 18, 2001, we sold our condominium unit and an ownership interest in
the Ocala Jockey Club that was located in Reddick,  Florida. The sales price was
$94,000 and the proceeds after closing fees and other  expenses were $81,645.  A
gain of $77,577 was recognized during the first quarter of Fiscal 2002.

     Under our bareboat  charter of the vessel,  we are obligated to pay $50,000
per month as the charter hire fee to the vessel's  owner,  MJQ  Corporation.  In
order to obtain the bareboat  charter,  we  negotiated  and on February 20, 2002
entered into a Master  Settlement  Agreement  with the Chapter 11 Trustee of the
Bankruptcy  Estate of Robert E. Brennan (the  "Trustee"),  MJQ  Corporation  and
others.  Pursuant  to the  Master  Settlement  Agreement  we have  incurred  the
following financial commitments:

     1.   For  the  purchase  of the  Ship  Mortgage  Obligation,  we are to pay
          $250,000  per month  through July 31, 2002,  and an  additional  $9.75
          million  balloon  payment was due at that time.  As  permitted  by the
          Master  Settlement  Agreement we have extended the date for payment of
          the balloon payment on a  month-to-month  basis until October 31, 2002
          by paying extension fees of $70,000 for the first month, an additional
          $80,000 for the second month and an additional  $100,000 for the third
          month.  If we fail to make the balloon  payment by October 31, 2002 or
          otherwise are in default under the Purchase and Sale Agreement for the
          Ship  Mortgage  Obligation,  and such  default is not cured within the
          applicable  grace period,  then the Trustee may elect to terminate the
          bareboat  charter  under  which we  operate  the vessel M/V Palm Beach
          Princess,  and the Trustee would then retain,  as liquidated  damages,
          all of the monthly  payments we previously  had made but we would have
          no further  liability  for payment of the  purchase  price.  Upon such
          termination,  we also would be liable to the Trustee for any amount by
          which the current  liabilities  assumed by the Trustee pursuant to the
          Purchase and Sale Agreement  exceed the current assets acquired by the
          Trustee.

     2.   We were obligated to purchase  approximately  1,785,000  shares of our
          common stock from the Trustee at $0.50 per share  (aggregate  purchase
          price of approximately $892,500), on July 1,

                                       10

<PAGE>

          2002. We are currently in negotiations  with the Trustee to extend the
          purchase date and payment of the purchase price for these shares.

     We also are committed to making the tenant improvements to new office space
at the Port of Palm  Beach.  The cost of such  improvements  is  expected  to be
approximately  $600,000.  We have received a commitment  for financing such cost
and expect that funding will be available before October 31, 2002.

     We currently estimate that approximately  $200,000 per month is needed from
operation of the vessel to cover overhead expenses of International Thoroughbred
Breeders,  Inc. We will need to obtain  approximately $1 million in financing in
order to pay the  purchase  price for the stock that was due the Trustee on July
1, 2002 and  approximately $10 million in financing in order to make the balloon
payment of the purchase price of the Ship Mortgage Obligation due on October 31,
2002. We are seeking financing in order to fully pay all such obligations to the
Trustee.  Failure to obtain  such  financing  may result in the loss of our only
operating business and source of working capital.

     Substantially  all of our revenues are currently derived from our operation
of the M/V Palm Beach  Princess.  The cash flow from operations of the vessel is
seasonal and we may generate excess funds in some months and insufficient  funds
in other  months.  The period July 1st to  December  31st is a  seasonably  slow
period for the vessel  operation.  The period from  January 1st to June 30th has
been a period of increased  activity and profits for the vessel.  Certain of our
operating costs,  including the charter fee payable to the vessel's owner,  fuel
costs and wages,  are fixed and cannot be reduced when passenger  loads decrease
or when rising fuel or labor costs cannot be fully passed  through to customers.
Passenger  and gaming  revenues  earned  from the vessel  must be high enough to
cover such expenses.

     Other possible sources of cash include the two promissory notes we received
when we sold our Garden State Park real  property in November,  2000 and our Las
Vegas real  property  in May,  2000.  One such Note is in the face amount of $10
million,  issued by  Realen-Turnberry/Cherry  Hill,  LLC,  the  purchaser of the
Cherry Hill property (the "$10 Million Note"),  and the other promissory note is
in the face amount of $23 million, issued by Turnberry/Las Vegas Boulevard, LLC,
purchaser of our Las Vegas real  property (the "$23 Million  Note").  Under both
Notes,  interest and  principal  payments  will be dependent  upon,  and payable
solely out of, the obligor's net cash flow  available  for  distribution  to its
equity owners.  After the obligor's  equity  investors  have received  aggregate
distributions equal to their capital contributions plus an agreed upon return on
their invested capital,  the next $10 million of distributable  cash in the case
of the $10 Million Note, and the next $23 million of  distributable  cash in the
case of the $23 Million  Note,  will be paid to us, and following our receipt of
the face amount of the Note we will receive 33 1/3% of all distributable cash of
the obligor  until  maturity  of the Note.  The  probable  timing and amounts of
payments  under these Notes cannot be predicted.  We are attempting to borrow on
these Notes for additional  working capital but such borrowing is expected to be
difficult  to obtain as long as the timing and  amounts  of  payments  under the
Notes remain unpredictable.

     While  management  believes  that the $10 Million  Note and the $23 Million
Note  owned  by us have  substantial  value  and,  ultimately,  should  generate
significant  cash  payments  to us, the  timing of receipt of any such  payments
cannot be accurately predicted and we may not receive substantial payments under
the notes for one year or more.  At the same time,  we have  utilized  available
cash over the last  several  months,  and expect to incur  further  costs in the
development  of projects  which,  while believed by management to be worthwhile,
are expected to take more than one year before generating cash returns to us. We
will seek to  borrow  against  the notes in order to obtain  funds for our short
term obligations and current  expenses and also for capital  expenditures of any
new business we enter.  However,  there can be no assurance that we will be able
to borrow the necessary funds.

     On  October  25,  2002 the  Company  received  a Letter of  Interest  for a
proposed $8 million  financing,  subject to additional due diligence.  Principal
and  interest  of  7%  per  annum  would  be  due  monthly,  based  on a 5  year
amortization,  with a balloon payment due 3 years from closing. Additionally the
bank would take a  subordinated  position of $7 million in our $10 million  note
due from the sale of our Garden State Park property.  It is the Company's intent
to borrow an additional $2 million on this note to satisfy the entire payment of
$9.75  million due to the Trustee for the  purchase of the Ship  Mortgage and to
complete the purchase of 1,785,000 Company shares from the Trustee for $892,500.
Additionally,  at this time we are  negotiating  with the  Trustee to extend the
closing date under the Purchase and Sale  Agreement  from October 31, 2002 until
December 31, 2002.  There can be no assurances  that the proposed  loans will be
received, or that we will be successful in our negotiations with the Trustee.

                                       11
<PAGE>

Discussion of Statement of Cash Flows for the Year Ended June 30, 2002.
-----------------------------------------------------------------------

     Cash flows provided by operating  activities  were  $2,570,950 for the year
ended June 30, 2002  compared to cash  provided by operating  activities  in the
amount of $1,198,225 for the same period last year.  Fiscal 2002 includes a full
12 months of  operation  of the M/V Palm  Beach  Princess,  versus two months in
fiscal 2001.

     Our  working  capital as of June 30,  2002 was a negative  ($2,200,346)  as
compared to a negative ($190,644)(after the reclassification presentation on the
Fiscal 2002  financial  statements of the $750,000  deposit on the Ship Mortgage
Obligation  which  became  non-refundable  as a result of the Master  Settlement
Agreement signed on February  20,2002) at June 30, 2001. The decrease in working
capital during the past twelve months was primarily caused by the use of cash to
fund  on-going  development  projects  partially  offset by the cash provided by
operating  activities  and cash  received  from the auction of Garden State Park
personal property.

     Cash used in investing  activities  was  $3,044,925 for the year ended June
30,  2002.  In June  2001,  we held an  auction  at  which  all of the  personal
property,  including  equipment,  furniture,  furnishings  and art work, that we
owned at Garden  State  Park was sold for  approximately  $1.2  million  (net of
costs) in cash,  which was received during the first half of Fiscal 2002 and was
used for working capital  purposes and to make additional  loans of $447,241 for
the  Ft.  Lauderdale  project.  (See  Note  15 -  Related  Party  Transactions.)
Additionally,  cash was used  during the  twelve  month  period for the  monthly
payments made on the Palm Beach Princess Ship Mortgage  Obligation in the amount
of $2,750,000,  for additional loans of $922,751 by us on development  projects,
and for capital  expenditures  of $480,614 which were primarily  associated with
the Palm Beach Princess operations during the year ended June 30, 2002.

     Cash used in financing  activities was $100,000  during the year ended June
30, 2002, primarily consisting of payments on short term notes and inter-company
transactions.

Results of Operations for the Year Ended June 30, 2002 and 2001
---------------------------------------------------------------

     Revenue  for the  year  ended  June 30,  2002  increased  $21,134,500  from
$4,921,091 in Fiscal 2001 to $26,055,591 in Fiscal 2002 primarily as a result of
revenues  generated by the Palm Beach Princess  operations.  Expenses  increased
$16,610,505  from  $7,323,233  in Fiscal  2001 to  $23,933,738  in  Fiscal  2002
primarily as the result of total  operating  expenses of $20,466,948  associated
with the Palm Beach  Princess  during the twelve  month period in Fiscal 2002 as
compared to  $3,767,710  for the two month period of  operations in Fiscal 2001.
General and Administrative  expenses for the parent decreased $904,762 primarily
as a  result  of a  Fiscal  2001  $500,000  non-cash  compensation  cost  of the
2,500,000  shares of Common  Stock issued to Francis W.  Murray,  the  Company's
Chief  Executive  Officer and Fiscal  2001  remediation  costs of  approximately
$300,000 associated with the sale of Freehold Raceway.

     During the year ended June 30, 2002,  our net income was $1,982,603 or $.17
per share on weighted average  outstanding shares of 11,480,272 as compared to a
loss for the comparable  period in prior fiscal year of  ($2,402,142) or ($0.24)
per share on weighted  average  outstanding  shares of 9,987,114.  The change of
$4,384,745  was  primarily  the  result  of the net  income  from a full  year's
operation of the vessel.

     The Palm Beach Princess business is subject to seasonal  fluctuations.  Our
peak  seasons  are the winter  and spring  seasons  due to the  increased  local
population as well as increased tourist populations.  During the year ended June
30,  2002,  our first full year of  operation,  passenger  count was 256,021 and
total revenue from the vessel was  $25,473,777  which included casino revenue of
$20,562,757,  passenger  fares of $3,199,389 and on board revenue of $1,711,631.
Casino operating  expenses which also includes food,  beverage and entertainment
for the twelve month period were $7,147,301 or 35% of casino revenue.

                                       12
<PAGE>

Sales,  marketing and  advertising  expenses were  $2,934,483  and on board gift
shop, catering and cabin expenses were $871,893.  Maritime and maintenance costs
to operate the ship were $6,151,650.  Finance and  administrative  expenses were
$3,361,621.  State Income Tax expense was $139,250. Net income from operation of
the  vessel  for the year ended  June 30,  2002 was  $4,867,579.  Out of the 710
scheduled cruises during the year ended June 30, 2002, 13 cruises were cancelled
for  weather or  mechanical  difficulties.  During the twelve  month  period the
vessel was placed in dry dock for 6 days in  October,  which is a slow  seasonal
period, for general maintenance and repairs.

     From July 1, 2001 to December 4, 2001 the M/V Palm Beach  Princess  was the
only vessel  operating a coastal gaming business from the Port of Palm Beach and
our  closest  competition  was  approximately  50 miles away in Ft.  Lauderdale,
Florida.  From December 10, 2001 until April 29, 2002,  another  coastal  gaming
vessel, the S.S. Horizon Edge,  operated from Riviera Beach Marina,  which is in
close  proximity  to the Port of Palm Beach.  This vessel was 186 feet and has a
passenger  capacity of 500 people.  The M/V Palm Beach Princess is  considerably
larger at 421 feet with a passenger  capacity of 850  people.  The Horizon  Edge
operated  on a similar  schedule as the Palm Beach  Princess,  that is, two five
hour  cruises  per  day,  7 days a week,  however,  due to its  smaller  size it
canceled  more  cruises  than the Palm Beach  Princess  for  inclement  weather.
Another   coastal  gaming  vessel,   Texas  Treasure  II,  began   operating  in
approximately  June 2002 from the Port of Palm Beach in competition with the M/V
Palm Beach Princess.  This vessel is  approximately  400 feet, was built in 1968
and has a passenger  capacity of  approximately  700 people.  Its  operator  has
announced plans to replace it with a larger vessel,  having a passenger capacity
of more than  1,000  people,  which  would  increase  the  uncertainties  of our
business attributable to increased competition.

Results of Operations for the Fiscal Years Ended June 30, 2001 and 2000
-----------------------------------------------------------------------

     Revenue  from  operations  for the year ended June 30,  2001  increased  by
$4,474,503  from $446,588 in Fiscal 2000 to $4,921,091 in Fiscal 2001  primarily
as a result of revenues  generated by the Palm Beach Princess  operations  which
commenced on April 30, 2001. Total expenses decreased $104,186,  from $7,427,419
in Fiscal 2000 to  $7,323,233  in Fiscal  2001.  This  decrease in expenses  was
primarily the net result of: (i) a decrease in interest and financing expense of
$3,273,054 primarily as a result reduced debt; (ii) carrying costs of $1,011,634
during Fiscal 2000 for the El Rancho  property  being  eliminated as a result of
its sale in Fiscal  2000;  partially  offset by (iii)  operating  expenses  of $
3,315,260 associated with the Palm Beach Princess during the two month period in
Fiscal 2001; (iv) an increase in general and administrative expenses of $739,520
primarily  associated with: (a) the $500,000  non-cash  compensation cost of the
2,500,000  shares of  common  stock  issued  to  Francis  W.  Murray,  our Chief
Executive  Officer,  on  January  28,  2001;  and (b)  additional  environmental
remediation costs of approximately $300,000 associated with the sale of Freehold
Raceway.

     Effective  April 30, 2001, we chartered the vessel M/V Palm Beach  Princess
for the purpose of  operating a casino  business  out of the Port of Palm Beach,
Florida.  During the two month  period of May and June 2001,  total  revenue was
$4,592,469  and total  expenses  were  $3,309,269.  Net income for the two month
period of operation was $1,283,200.

     During the year ended June 30, 2001,  the Company  incurred a net loss from
operations  of  ($2,402,142)  as  compared  to a net  loss  from  operations  of
($6,980,831)  for the prior fiscal year.  The decrease in net loss of $4,578,689
for the comparable  fiscal years was the result of those  differences  described
above.

                                       13

<PAGE>

Recently Issued Accounting Standards

     In August 2001, the Financial  Accounting  Standards Board issued Statement
of Financial  Account  Standards  No. 144,  "Accounting  for the  Impairment  of
Long-Lived Assets".  This statement addresses financial accounting and reporting
for the impairment or disposal of long-lived assets.

     In April 2002, the Financial Accounting Standards Board issued Statement of
Financial Statement of Financial  Accounting  Standards No. 145,  "Rescission of
FASB  Statements  No. 4, 44, and 64,  Amendment  of FASB  Statement  No. 13, and
Technical Corrections". This statement rescinds FASB No. 4, "Reporting Gains and
Losses from  Extinguishment  of Debt", and an amendment of that Statement,  FASB
Statement  No.  64,   "Extinguishment  of  Debt  Made  to  Satisfy  Sinking-Fund
Requirements".  This Statement also rescinds FASB Statement No. 44,  "Accounting
for Intangible  Assets of Motor Carriers".  This Statement amends FASB Statement
No. 13,  "Accounting  for Leases".  This  Statement  also amends other  existing
authoritative  pronouncements  to make various  technical  corrections,  clarify
menaings, or describe their applicability under changed conditions.

     In July 2002, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 146,  "Accounting for Costs Associated with
Exit or Disposal Activities". The standard requires companies to recognize costs
associates  with exit or disposal  activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan.

     In October 2002, the Financial  Accounting Standards Board issued Statement
of Financial  Accounting  Standards No. 147,  "Acquisitions of Certain Financial
Institutions".  Except for transactions  between two or more mutual enterprises,
this Statement removes acquisitions of financial  institutions from the scope of
both Statement 72 and  Interpretation 9 and requires that those  transactions be
accounted for in accordance with FASB Statements No. 141, Business Combinations,
and No. 142, Goodwill and Other Intangible Assets.

     Presently,  the Company does not have any circumstances  that would require
the  implementation  of these standards.  Accordingly,  the Company believes the
adoption of these  statements  will have no impact on its financial  position or
results of operations.

Other Information - Risk Factors

     You  should  consider  the  following  risk  factors  that  pertain  to our
business. The realization of any of these risks could result in significant harm
to our results of operations,  financial condition,  cash flows, business or the
market price of our common  stock.  Keep these risk factors in mind when reading
"forward-looking" statements elsewhere in this Form 10-K.

We derive substantially all of our revenues from our offshore gaming operations.

     Substantially  all of our revenues are currently derived from our operation
of the M/V Palm Beach Princess.  Certain of our operating  costs,  including the
charter fee payable to the vessel's owner,  fuel costs and wages,  are fixed and
cannot be reduced  when  passenger  loads  decrease or when rising fuel or labor
costs cannot be fully passed through to customers. Passenger and gaming revenues
earned from the vessel must be high enough to cover such expenses. While we

                                       14
<PAGE>

have generated  sufficient  revenues from the M/V Palm Beach Princess to pay its
expenses and the $250,000 per month payments to the Brennan  Bankruptcy  Trustee
on account of the purchase price for the Ship Mortgage  Obligation,  there is no
guarantee that we will be able to continue to cover  operating  expenses of that
business, and our failure to do so could have materially adverse consequences.

Our acquisition of operations of the M/V Palm Beach Princess remains temporary.

     Our acquisition of operations of the vessel M/V Palm Beach Princess at this
time is derived  from a bareboat  charter  which had an initial term ending July
31,  2002 and which  thereafter  continues  on a  month-to-month  basis.  If MJQ
Corporation  terminates or decides not to extend our bareboat charter,  we stand
to lose our primary operating business and source of revenues.

Retention of the casino cruise  business also depends upon our ability to borrow
approximately $10 million to refinance the Ship Mortgage Obligation.

     At October 31,  2002, a balloon  payment of the  remaining  balance  ($9.75
million) of the purchase price for the Ship Mortgage  Obligation will be due and
payable.  Our  failure  to pay the  balloon  payment  when due will  permit  the
Bankruptcy  Trustee to  terminate  the  bareboat  charter  arrangement  and take
possession of the vessel M/V Palm Beach  Princess.  While we would not be liable
for any unpaid portion of the purchase price of the Ship Mortgage Obligation, we
would forfeit (as liquidated damages) all of the $4.0 million previously paid by
us towards that purchase price.  Our ability to pay the balloon payment when due
is dependent upon our ability to refinance the Ship Mortgage Obligation.  We are
seeking  to borrow a  minimum  of $10  million  with  which to make the  balloon
payment  of the  purchase  price of the  Ship  Mortgage  Obligation.  There is a
substantial risk that we will not be able to obtain such financing.

Revenues from our investments in real estate developments are uncertain.

     When we sold our real estate property located in Las Vegas,  Nevada in May,
2000, we used proceeds from that sale to purchase a promissory note, in the face
amount of $23 million,  issued by the  purchaser of the  property.  And, when we
sold our real estate  property in Cherry Hill,  New Jersey in November,  2000, a
portion  of the  purchase  price  was paid to us in the form of the  purchaser's
promissory note in the face amount of $10 million.  Each such promissory note is
payable solely from distributable cash generated by the purchaser's  development
or sale of the property  purchased  from us, and, in each case, we could receive
more or less  than the face  amount of the note.  The times and  amounts  of all
payments  under  these  notes  are  uncertain  and  depend   entirely  upon  the
profitability  of each  purchaser's  development (or resale) of the subject real
property.

We face competition to our gaming operations.

     We currently  compete with a variety of other  vacation  activities  in and
around Palm Beach, Florida, including short-term cruises, resort attractions and
sporting and other  recreational  activities.  Moreover,  another coastal gaming
vessel is now  operating  from the Port of Palm Beach and the  operator  of that
vessel has  announced  plans to bring in a larger vessel to do so. That vessel's
passenger capacity will be larger than ours. We also expect competition in other
areas  surrounding  Palm Beach in the future.  Within fifty miles of the Port of
Palm Beach,  there are a number of smaller  marinas that are capable of handling
other coastal gaming  vessels,  although any such vessels  necessarily  would be
substantially smaller than the Palm Beach Princess. Our

                                       15
<PAGE>

operations  compete  directly with the other Palm Beach vessel and in the future
we expect  competition  to  increase as new gaming  operators  enter our market,
existing  competitors  expand  their  operations,  gaming  activities  expand in
existing  jurisdictions  and  gaming  is  legalized  in new  jurisdictions.  Our
operations  compete directly with the Texas Treasure at our Palm Beach location.
Increased competition will result from expanded gaming in existing jurisdictions
and as gaming is legalized in new jurisdictions.

     In general,  gaming  activities  include  traditional  land-based  casinos,
dockside gaming, casino gaming on Indian land,  state-sponsored lotteries, video
poker in restaurants, bars and hotels, pari- mutuel betting on horse racing, dog
racing and jai-alai and sports  bookmaking.  Our operations  compete with all of
these forms of gaming and will  compete with any new forms of gaming that may be
legalized in the future, as well as with other types of entertainment.  Over the
past few years,  there has been an attempt to  legalize  gaming  throughout  the
state of Florida.  While this  movement has yet to be  successful,  it is likely
that the gaming  industry  will  continue  to pursue  legalization  of gaming in
Florida,  and we believe that the legalization of gaming in Florida would have a
material adverse impact on our operations.  In addition,  we are also subject to
competition from other gaming  establishments in other jurisdictions,  including
but not limited to Atlantic City, New Jersey,  Las Vegas,  Nevada,  the Bahamas,
and  riverboat  gambling  on  the  Mississippi  river.  Such  competition  could
adversely  affect our  ability to compete  for new gaming  opportunities  and to
maintain revenues.

We are potentially subject to a number of gaming regulations and statutes.

     Under Federal law,  individual states are permitted to regulate or prohibit
coastal gaming. The state of Florida does not currently regulate coastal gaming.
However,  from  time to time in prior  years,  legislation  has been  introduced
which, if enacted, would prohibit the coastal gaming business. There is the risk
that Florida may at some future date regulate the coastal gaming business.  Such
regulation could adversely harm our business.

     In  addition,  the Federal  government  has also  previously  considered  a
Federal tax on casino  revenues and may consider  such tax or other  regulations
that  would  affect  our  gaming  business  in the  future.  From  time to time,
legislators  and special  interest groups have proposed  legislation  that would
expand,   restrict  or  prevent  gaming  operations  in  Florida  and  in  other
jurisdictions  throughout  the country.  Any such taxes,  expansion of gaming or
restriction  on or prohibition  of our gaming  operations  could have a material
adverse effect on our operating results.

We are subject to non-gaming regulations.

     The M/V Palm Beach  Princess and any other  vessels which we may operate in
the  future  must  comply  with  various  international  and  U.S.  Coast  Guard
requirements as to ship design,  on-board facilities,  equipment,  personnel and
general safety. Our inability to maintain compliance with such regulations could
force us to incur additional costs to retain compliance or require us to buy new
vessels. In addition, we are subject to certain Federal,  state and local safety
and health laws,  regulations and ordinances that apply to non-gaming businesses
generally,  such  as  the  Clean  Air  Act,  the  Clean  Water  Act,  and  other
environmental   rules  and  regulations.   The  coverage  and  compliance  costs
associated  with such  laws,  regulations  and  ordinances  may result in future
additional costs to our operations.

                                       16
<PAGE>

We rely on patrons  primarily  from Florida and tourists  from the  Northeastern
United States.

     We derive a  substantial  portion of our  revenues  from  patrons  from the
southern  and  central  portions  of Florida as well as from  tourists  visiting
Florida  from other  parts of the United  States,  particularly  the  Northeast.
Adverse  economic  conditions  in any of these  markets,  or the  failure of our
vessel to  continue  to attract  customers  from these  geographic  markets as a
result of increased  competition  in such markets,  or other factors such as the
recent  terrorist  attacks which may lead to a decline in tourist travel,  could
have a material  adverse effect on our operating  results.  Conditions and other
factors beyond our control include competition from other amusement  properties,
changes in regional and local  population  and  disposable  income  composition,
seasonality,  changes or  cancellations  in local tourist,  athletic or cultural
events,  changes in travel  patterns  or  preferences  which may be  affected by
increases in gasoline prices,  changes in airline  schedules and fares,  strikes
and  weather  patterns,  and our need to make  renovations,  refurbishments  and
improvements to our vessel.

Weather and other conditions could seriously disrupt our operations.

     Our gaming  operations  are  subject  to unique  risks,  including  loss of
service  because of  casualty,  mechanical  failure,  extended or  extraordinary
maintenance  requirements,  flood, hurricane or other severe weather conditions.
Our vessel  faces  additional  risks from its movement and the movement of other
vessels  on  waterways.  Palm  Beach,  Florida  is  subject  to  severe  storms,
hurricanes and occasional flooding.  As a result of such weather conditions,  as
well as the ordinary or extraordinary maintenance requirements of our vessel, if
we are unable to operate our vessel,  our results of operations  will be harmed.
The loss of our vessel  from  service  for any  period of time  could  adversely
affect our revenues.

We depend on our management to execute our business plan.

     Our success is  dependent  upon the efforts of our current  management,  in
particular that of our President and Chief Executive Officer, Francis W. Murray.
Since the business of gaming has expanded significantly over the past few years,
competition for qualified employees will be intense.  There is no assurance that
such persons can be retained or readily replaced, and there is no assurance that
we will be able to continue to add qualified personnel as required.  The loss of
the  services  of any of our  executive  officers  could  adversely  affect  our
business.

We experience quarterly fluctuations in operating results.

     Our  quarterly  operating  results are expected to fluctuate  significantly
because of seasonality and other factors.  We expect to generate the majority of
our income during our third and fourth fiscal  quarters ending March 31 and June
30. Such  fluctuations  could  affect our stock price,  particularly  during the
first and second fiscal quarters.

Our stock price faces volatility as a result of a number of factors.

     The market price of our stock is dependent upon future  operating  results,
and therefore, is highly dependent on specific developments  including,  but not
limited to, any failure on our part to, pay the balloon payment of $9.75 million
for the Ship  Mortgage  Obligation  by  October  31,  2002  passage or defeat of
relevant gaming legislation or related  initiatives,  weather patterns,  and the
general vibrancy of the economy and the Florida tourism industry.  Announcements
concerning  legislation  approving  or  defeating  gaming  legislation,  various
governmental   actions,   developments

                                       17
<PAGE>

in the gaming industry  generally,  announcements  by our  competition,  weather
patterns,  and other  general  economic  matters or tourism  industry may have a
significant impact on the market price of our common stock.

Terrorist Attacks of September 11, 2001

     The  terrorist  attacks  of  September  11,  2001  adversely  impacted  our
operations and have effected our ability to borrow the approximately $10 million
dollars needed in order to make the balloon  payment of the purchase of the Ship
Mortgage  Obligation  due on October 31, 2002 and to pay for the purchase of the
stock that was due to the Trustee on July 1, 2002.  These attacks as well as any
similar  attacks  and/or future  security  alerts could have a material  adverse
effect on our future operations.

Item 7A Quantitative and Qualitative Disclosures about Market Risk.

         Not Applicable

Item 8 Financial Statements and Supplemental Data.


                          INDEX TO FINANCIAL STATEMENTS



                 Report of Independent Public Accountants ...19
                 Balance Sheets .............................20
                 Statements of Operations ...................22
                 Statements of Stockholders' Equity .........23
                 Statements of Cash Flow ....................24

                                       18

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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


     We  have  audited  the   accompanying   consolidated   balance   sheets  of
International  Thoroughbred Breeders,  Inc. and subsidiaries as of June 30, 2002
and 2001 and the related  consolidated  statements of operations,  stockholders'
equity and cash flows for each of the three years ended June 30, 2002,  2001 and
2000. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audit.

     We conducted our audits in accordance with U.S. 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.

     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,  should  the  Company  not be able to  make  payments  in
accordance with the Master Settlement  Agreement with the Chapter 11 Trustee for
the  Bankruptcy  Estate of Robert E.  Brennan,  the  Company  will  forfeit  the
deposits as  liquidated  damages and the bareboat  charter of the M/V Palm Beach
Princess would cease. This condition raises  substantial doubt about its ability
to continue as a going concern.  Management  plans  regarding  those matters are
also  described  in  Note  1.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

     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,
2002, 2001 and 2000 and the results of their operations and their cash flows for
the three  years  ended June 30,  2002,  2001 and 2000 in  conformity  with U.S.
generally accepted accounting principles.



                               STOCKTON BATES, LLP



Philadelphia, Pennsylvania
September 10, 2002

                                       19

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                          AS OF JUNE 30, 2002 AND 2001

                                     ASSETS

<TABLE>
                                                                          June 30,
                                                              ---------------------------------
                                                                   2002              2001
                                                              ---------------    --------------
<CAPTION>
<S>                                                         <C>                <C>
CURRENT ASSETS:
     Cash and Cash Equivalents                              $        796,610   $     1,361,287
     Accounts Receivable                                              37,682           843,385
     Prepaid Expenses                                                190,639           362,048
     Other Current Assets                                            391,596         1,032,311
     Net Assets of Discontinued Operations - Current                 123,569         1,007,398
                                                              ---------------    --------------
     TOTAL CURRENT ASSETS                                          1,540,096         4,606,429
                                                              ---------------    --------------


LAND, BUILDINGS AND EQUIPMENT:
     Land and Buildings                                                    0           214,097
     Equipment and Artwork                                           723,420           289,426
                                                              ---------------    --------------
                                                                     723,420           503,523
     LESS: Accumulated Depreciation and Amortization                 113,061           285,004
                                                              ---------------    --------------

     TOTAL LAND, BUILDINGS AND EQUIPMENT, NET                        610,359           218,519
                                                              ---------------    --------------



OTHER ASSETS:
     Notes Receivable                                             33,000,000        23,000,000
     Note Receivable of Discontinued Operations - Long-Term                0        10,000,000
     Deposit on Purchase of Palm Beach Princess Mortgage           3,500,000           750,000
     Deposits and Other Assets                                     7,277,839         2,816,260
                                                              ---------------    --------------
     TOTAL OTHER ASSETS                                           43,777,839        36,566,260
                                                              ---------------    --------------


TOTAL ASSETS                                                $     45,928,294   $    41,391,208
                                                              ===============    ==============
</TABLE>

See Notes to Consolidated Financial Statements.

                                       20
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                          AS OF JUNE 30, 2002 AND 2001

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
                                                                         June 30,
                                                             ---------------------------------
                                                                  2002              2001
                                                             ---------------    --------------
<CAPTION>
<S>                                                         <C>               <C>
CURRENT LIABILITIES:
     Accounts Payable                                       $     1,324,351   $     2,549,539
     Accrued Expenses                                             1,353,811         1,247,534
     Short-Term Debt                                              1,062,280         1,000,000
                                                             ---------------    --------------
     TOTAL CURRENT LIABILITIES                                    3,740,442         4,797,073
                                                             ---------------    --------------

DEFERRED INCOME                                                   8,226,540         4,138,426
                                                             ---------------    --------------

LONG-TERM DEBT                                                            0           482,000
                                                             ---------------    --------------

COMMITMENTS AND CONTINGENCIES                                      -                    -

STOCKHOLDERS' EQUITY:
     Series A Preferred Stock, $100 Par Value,
      Authorized 500,000 Shares, Issued and Outstanding,
      362,488 and 362,487 Shares, respectively                    36,248,775        36,248,675
     Common Stock, $2 Par Value, Authorized 25,000,000
      Shares, Issued and Outstanding, 11,480,275 and
      11,480,267, respectively                                    22,960,549        22,960,533
     Capital in Excess of Par                                     20,192,090        20,192,206
     (Deficit) (subsequent to June 30, 1993,
      date of quasi-reorganization)                              (45,423,435)      (47,406,038)
                                                             ---------------    --------------
                                                                  33,977,979        31,995,376
     LESS:
      Deferred Compensation, Net                                     (16,667)          (21,667)
                                                             ---------------    --------------
     TOTAL STOCKHOLDERS' EQUITY                                   33,961,312        31,973,709
                                                             ---------------    --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $     45,928,294   $    41,391,208
                                                             ===============    ==============
</TABLE>


See Notes to Consolidated Financial Statements.

                                       21

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED JUNE 30, 2002, 2001 AND 2000


<TABLE>
                                                                                  June 30,
                                                               ---------------------------------------------------
                                                                   2002               2001              2000
                                                               --------------    --------------     --------------
<CAPTION>
<S>                                                          <C>               <C>                <C>
REVENUE:
     Revenue from Operations                                 $    25,501,806   $      4,588,592   $             0
     Other Income                                                     78,163            209,939           337,334
     Interest Income                                                 475,622            122,560           109,254
                                                               --------------    --------------     --------------
                                         TOTAL REVENUES           26,055,591          4,921,091           446,588
                                                               --------------    --------------     --------------

EXPENSES:
     Cost of Revenues:
       Operating Expenses                                         17,734,777          3,273,163                 0
       Depreciation & Amortization                                   139,294             42,097                 0
     General & Administrative Expenses - Palm Beach Princess       2,666,666            452,450                 0
     General & Administrative Expenses - Parent                    2,152,414          3,057,176         2,644,384
     Development Costs                                               933,814                  0                 0
     El Rancho Property Carrying Costs                                     0                  0         1,011,634
     Interest and Financing Expenses                                 306,773            498,347         3,771,401
                                                               --------------    ---------------    --------------
                                         TOTAL EXPENSES           23,933,738          7,323,233         7,427,419
                                                               --------------    ---------------    --------------

INCOME (LOSS)  BEFORE TAX PROVISION                                2,121,853         (2,402,142)       (6,980,831)
     State Income Tax Expense                                        139,250                  0                 0
                                                               --------------    ---------------    --------------

NET INCOME (LOSS)                                            $     1,982,603   $     (2,402,142)  $    (6,980,831)
                                                               ==============    ===============    ==============

NET BASIC AND DILUTED INCOME (LOSS)
   PER COMMON SHARE                                          $          0.17   $          (0.24)  $         (0.78)
                                                               ==============    ===============    ==============

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                                             11,480,272          9,987,114         8,980,244
                                                               ==============    ===============    ==============
</TABLE>


See Notes to Consolidated Financial Statements.

                                       22
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED JUNE 30, 2002, 2001 AND 2000


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

   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992        2         200            21          42
   Amortization of Deferred Compensation Costs                        ---         ---          ---          ---
   Net (Loss) for the Year Ended June 30, 2000                        ---         ---          ---          ---

                                                                    ---------  ----------  ------------  ----------
BALANCE - JUNE 30, 2000                                              362,484 $ 36,248,375   11,884,270 $ 23,768,539

   Treasury Shares Retired                                            ---         ---       (2,904,016)  (5,808,032)
   Shares Issued for Compensation                                     ---         ---        2,500,000    5,000,000
   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992        3         300            13          26
   Amortization of Deferred Compensation Costs                        ---         ---          ---          ---
   Net (Loss) for the Year Ended June 30, 2001                        ---         ---          ---          ---

                                                                    ---------  ----------  ------------  ----------
BALANCE - JUNE 30, 2001                                              362,487 $ 36,248,675   11,480,267 $ 22,960,533

   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992        1         100             8          16
   Amortization of Deferred Compensation Costs                        ---         ---          ---          ---
   Net Income for the Year Ended June 30, 2002                        ---         ---          ---          ---

                                                                    ---------  ----------  ------------  ----------
BALANCE - JUNE 30, 2002                                              362,488 $ 36,248,775   11,480,275 $ 22,960,549
                                                                    =========  ==========  ============  ==========
</TABLE>

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

   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992         (242)      ---            ---             ---
   Amortization of Deferred Compensation Costs                           ---           ---            ---             5,000
   Net (Loss) for the Year Ended June 30, 2000                           ---        (6,980,831)       ---             ---

                                                                      -----------  ------------  ----------     ------------
BALANCE - JUNE 30, 2000                                             $ 26,144,540 $ (45,003,895) $ (7,260,040)  $    (26,667)

   Treasury Shares Retired                                            (1,452,008)      ---         7,260,040        ---
   Shares Issued for Compensation                                     (4,500,000)      ---            ---           ---
   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992         (326)      ---            ---           ---
   Amortization of Deferred Compensation Costs                           ---           ---            ---             5,000
   Net (Loss) for the Year Ended June 30, 2001                           ---        (2,402,142)       ---           ---

                                                                      -----------  ------------   ----------    ------------
BALANCE - JUNE 30, 2001                                             $ 20,192,206 $ (47,406,038) $    (21,667)  $ 31,973,709

   Shares Issued for Fractional Exchanges With Respect to the
      One-for-twenty Reverse Stock Split effected on March 13, 1992         (116)      ---            ---           ---
   Amortization of Deferred Compensation Costs                           ---           ---             5,000          5,000
   Net Income for the Year Ended June 30, 2002                           ---         1,982,603        ---         1,982,603

                                                                      -----------  ------------   ----------    ------------
BALANCE - JUNE 30, 2002                                             $ 20,192,090 $ (45,423,435) $    (16,667)  $ 33,961,312
                                                                      ===========  ============   ==========    ============
</TABLE>


See Notes to Consolidated Financial Statements.

                                       23

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 2002, 2001 AND 2000

<TABLE>
                                                                                          June 30,
                                                                        ---------------------------------------------
                                                                             2002           2001           2000
                                                                        -----------   --------------   --------------
<CAPTION>
<S>                                                                   <C>            <C>              <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
     INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS                     $   1,982,603  $   (2,402,142)  $   (6,980,831)
                                                                        ------------   -------------    -------------
     Adjustments to reconcile income (loss) to net cash provided
     by (used in) operating activities:
       Depreciation and Amortization                                        144,294          47,097           62,737
       (Gain) on Sale of Fixed Assets                                       (77,577)        (81,733)         (31,400)
       Compensation for Common Shares Issued                                                500,000                0
       Changes in Operating Assets and Liabilities -
         Decrease in Restricted Cash & Investments                                0       1,656,743       (1,656,740)
         Decrease in Accounts Receivable                                    805,703        (415,731)        (192,880)
         (Increase) Decrease in Other Assets                               (304,316)       (720,559)          37,049
         Decrease in Prepaid Expenses                                       171,409         750,273          (13,139)
         Increase (Decrease) in Accounts Payable and Accrued Expenses      (151,167)      2,876,062         (523,725)
                                                                        ------------   -------------    -------------

     CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES BEFORE
      DISCONTINUED OPERATIONS                                             2,570,950       2,210,010       (9,298,929)

     CASH (USED IN) PROVIDED BY DISCONTINUED OPERATING ACTIVITIES                 0      (1,011,785)       1,369,362
                                                                        ------------   -------------    -------------
     NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                  2,570,950       1,198,225       (7,929,567)
                                                                        ------------   -------------    -------------

 CASH FLOWS FROM INVESTING ACTIVITIES:
     Deposits on Purchase of Palm Beach Princess Mortgage                (2,750,000)       (750,000)               0
     Proceeds from Auction of Garden State Park Fixed Assets              1,216,481               0                0
     Proceeds from Sale of El Rancho                                              0               0       22,304,540
     Capital Expenditures                                                  (480,615)              0           (2,456)
     Loans made on Development Projects                                    (922,751)     (2,095,105)               0
     (Increase)Decrease in Other Investment Activity                       (108,040)        (17,983)          96,968
                                                                        ------------   -------------    -------------
     CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
      BEFORE DISCONTINUED INVESTING ACTIVITIES                           (3,044,925)     (2,863,088)      22,399,052
     CASH PROVIDED BY (USED IN) DISCONTINUED INVESTING ACTIVITIES                 0      20,000,000         (131,110)
                                                                        ------------   -------------    -------------
     NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES                 (3,044,925)     17,136,912       22,267,942
                                                                        ------------   -------------    -------------

 CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from Short-Term Loans                                               0       1,650,000                0
     Escrow Deposits Utilized                                                     0               0          502,154
     Deposit to Escrow Funds                                                      0               0         (320,000)
     Principal Payments on Short Term Notes                                (100,000)    (17,654,555)       3,473,637
     Decrease in Balances Due to/From Subsidiaries                            9,298      17,747,801      (17,842,995)
                                                                        ------------   -------------    -------------
     CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
      BEFORE DISCONTINUED FINANCING ACTIVITIES                              (90,702)      1,743,246      (14,187,204)
     CASH (USED IN) DISCONTINUED FINANCING ACTIVITIES                        (9,298)    (19,005,177)      (1,947,636)
                                                                        ------------   -------------    -------------
     NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                   (100,000)    (17,261,931)     (16,134,840)
                                                                        ------------   -------------    -------------

 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      (573,975)      1,073,206       (1,796,465)
           LESS CASH AND CASH EQUIVALENTS FROM
             DISCONTINUED OPERATIONS                                          9,298          16,962          709,384
     CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
      BEFORE DISCONTINUED OPERATIONS                                      1,361,287         271,119        1,358,200
                                                                        ------------   -------------    -------------
     CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                   $     796,610  $    1,361,287   $      271,119
                                                                        ============   =============    =============

     Supplemental Disclosures of Cash Flow Information:
                Cash paid during the period for:
                Interest                                              $      13,200  $      109,681   $    1,306,950
                Income Taxes                                          $           0  $            0   $       19,699
</TABLE>

     Supplemental Schedule of Non-Cash Investing and Financing Activities:
     During the year ended June 30, 2002, a non-cash transaction reduced a
     long-term note payable and a long-term note receivable by $350,000.


See Notes to Consolidated Financial Statements.

                                       24

<PAGE>

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

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming   International    Thoroughbred   Breeders,   Inc.   and   subsidiaries
(collectively,  the "Company") will continue as a going concern. As described in
Note 10 below we entered into a Master Settlement Agreement to purchase from the
Chapter 11 Trustee for the Bankruptcy Estate of Robert E. Brennan the promissory
note of MJQ Corporation  for $13.75  million.  Should the Company not be able to
obtain the financing necessary to make the balloon payment scheduled for October
31, 2002 in the amount of $9.75 million, it may lose its only operating business
and source of revenues and will forfeit the $4 million in deposit  payments.  To
date the Company has not been able to obtain such financing.

     On  October  25,  2002 the  Company  received  a Letter of  Interest  for a
proposed $8 million  financing,  subject to additional due diligence.  Principal
and  interest  of  7%  per  annum  would  be  due  monthly,  based  on a 5  year
amortization,  with a balloon payment due 3 years from closing. Additionally the
bank would take a  subordinated  position of $7 million in our $10 million  note
due from the sale of our Garden State Park property.  It is the Company's intent
to borrow an additional $2 million on this note to satisfy the entire payment of
$9.75  million due to the Trustee for the  purchase of the Ship  Mortgage and to
complete the purchase of 1,785,000 Company shares from the Trustee for $892,500.
Additionally,  at this time we are  negotiating  with the  Trustee to extend the
closing date under the Purchase and Sale  Agreement  from October 31, 2002 until
December 31, 2002.  There can be no assurances  that the proposed  loans will be
received, or that we will be successful in our negotiations with the Trustee.

     Other possible sources of cash include the promissory note we received when
we sold our Las Vegas real property in May 2000 in the amount of $23 million. We
may  attempt  to  borrow  on this  Note but such  borrowing  is  expected  to be
difficult to obtain as the timing and amounts of payments under the Note remains
unpredictable.

     The Company has sustained losses totaling approximately $9.4 million during
fiscal 2001 and 2000 and has been in a negative  working capital position at the
end of each of the past  three  years.  The  Company  currently  estimates  that
approximately  $200,000  per  month is  needed to cover  operating  expenses  of
International  Thoroughbred  Breeders.  Should the  Company  lose the Palm Beach
Princess,  its only operating business, the Company will need to seek additional
short  term  loans or collect on its  various  receivables  to fund its  current
payables and future operations.

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

     (A) Nature of  Operations - We are  currently  engaged in an  entertainment
cruise and casino ship business under a bareboat  charter of the vessel M/V Palm
Beach Princess (the "Palm Beach  Princess").  The Palm Beach  Princess  performs
fourteen cruises weekly, that is, a daytime and an evening cruise each day. Each
cruise is of five to six hours  duration.  During  each  cruise,  the Palm Beach
Princess offers a range of amenities and services to her passengers, including a
full casino, sit-down buffet dining, live musical shows,  discotheque,  bars and
lounges,  swimming pool and  sundecks.  The casino  occupies  15,000 square feet
aboard the ship and is equipped with approximately 400 slot machines,  all major
table games (blackjack, dice roulette and poker), and a sports wagering book.

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

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

                                       25

<PAGE>

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


     (D)  Depreciation and Amortization - Depreciation of property and equipment
were computed by the  straight-line  method at rates  adequate to allocate their
cost or adjusted fair value in accordance  with  generally  accepted  accounting
principles 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
Asset  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 relate to those assets to be held and used
for long-lived  assets and certain  identifiable  intangibles to be disposed of.
The Company  reviews the carrying  values of its long-lived  property assets for
possible  impairment  whenever events or changes in circumstances  indicate that
the carrying  amount of the assets may not be recoverable  based on undiscounted
estimated future operating cash flows

     (E) Net Assets of  Discontinued  Operations - At June 30, 2002 an 2001, the
remaining net assets and  liabilities of Garden State Park and Freehold  Raceway
were classified as "Net Assets of Discontinued Operations."

     (F)  Recent  Accounting  Pronouncements  - In August  2001,  the  Financial
Accounting  Standards Board issued Statement of Financial  Account Standards No.
144,  "Accounting for the Impairment of Long-Lived  Assets".  In April 2002, the
Financial  Accounting Standards Board issued Statement of Financial Statement of
Financial  Accounting  Standards No. 145,  "Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical  Corrections".  In
July  2002,  the  Financial  Accounting  Standards  Board  issued  Statement  of
Financial  Accounting  Standards No. 146,  "Accounting for Costs Associated with
Exit  or  Disposal  Activities".  In  October  2002,  the  Financial  Accounting
Standards  Board issued  Statement of Financial  Accounting  Standards  No. 147,
"Acquisitions of Certain Financial Institutions".

     Presently,  the Company does not have any circumstances  that would require
the  implementation  of these standards.  Accordingly,  the Company believes the
adoption of these  statements  will have no impact on its financial  position or
results of operations.

     (G) Revenue  Recognition - The Company  recognized the revenues  associated
with the casino operation on the Palm Beach Princess as they were earned

     (H) 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 o the  difference
between the  financial  statement  carrying  amounts and tax bases of assets and
liabilities. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

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

                                       26

<PAGE>

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


     (J) 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.

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

     (L) Net Income  (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.

     Income (Loss) per common share is computed by dividing net income (loss) by
the weighted average number of shares of common stock  outstanding.  Options and
warrants  to purchase  4,046,500  shares of Common  Stock at various  prices per
share,  for the year ended June 30, 2002 were not included in the computation of
income per share  because the exercise  price of those options and warrants were
above market value.  Options and warrants to purchase 3,104,000 shares of Common
Stock at various prices per share,  for the each of the two years ended June 30,
2001 and 2000,  were not included in the computation of loss per share for those
periods as their effect would have been anti-dilutive.

(2)  NOTES RECEIVABLE

     A portion  of the  proceeds  from the sale of the  non-operating  former El
Rancho  Hotel and  Casino in Las Vegas to  Turnberry/Las  Vegas  Boulevard,  LLC
("Turnberry")  on May 22, 2000 was used by us to purchase a  promissory  note in
the face  amount of  $23,000,000.  The  interest  rate  under  such note 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 i 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 us. We 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 our purchase of the note.
We may  convert  the  promissory  note,  at our  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.

                                       27

<PAGE>

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


     A portion of the proceeds  from the sale on November 30, 2000 of our Garden
State Park property in Cherry Hill, New Jersey, to Realen-Turnberry/Cherry Hill,
LLC ("Realen")  was paid in the form of a promissory  note in the face amount of
$10 million (the  "Note.")  Under the Note,  the interest  rate will be adjusted
from time to time since the interest  actually  payable will be dependent  upon,
and payable solely out of, the buyer's net cash flow available for  distribution
to its equity owners ("Distributable  Cash"). After the buyer's equity investors
have received aggregate  distributions equal to their capital contributions plus
an agreed  upon  return  on their  invested  capital,  the next $10  million  of
Distributable Cash will be paid to us. We will thereafter receive payments under
the Note equal to 33 1/3% of all  Distributable  Cash until the  maturity  date,
which occurs on the 15th anniversary of the issuance of the Note. We may convert
the  promissory  note, at our option,  into a 33 1/3% equity  interest in Realen
during the six month period prior to the 15th anniversary of the issuance of the
Note. If not then  converted,  the Note will be payable at maturity on said 15th
anniversary  in an  amount  equal to (i) the  difference,  if any,  between  $10
million and total payments  previously made to us under the Note and (ii 33 1/3%
of any excess of the fair market  value of  Realen's  assets over the sum of its
liabilities  (other than the Note) and any unreturned  equity  investment of its
owners.

     In  addition,  we sold two large  bronze  sculptures  located at the Garden
State Park  property to Realen,  in exchange  for Realen's  promissory  note due
November 30, 2002, in the principal  amount of $700,000.  The Chapter 11 Trustee
for the  Bankruptcy  Estate o  Robert  E.  Brennan  claimed  ownership  of those
sculptures,  and we settled the  resulting  litigation  over the  sculptures  by
agreeing that the first $350,000 in principal payments made by Realen under such
note would be remitted to the Brennan Bankruptcy Trustee (together with one-half
o the interest paid by Realen under such note).  The  remaining  $350,000 of the
$700,000 note i classified  in other  current  assets on our balance sheet as of
June 30, 2002. As part of the settlement of the sculpture litigation,  the party
who sold us the  sculptures,  agreed to reduce the amount of our  obligation for
payment of the balance of the sculpture price  (described in Note 8(A) below) by
the same principal amount, $350,000, given up by us to the Trustee.

                                       28

<PAGE>

(3)  DEPOSITS AND OTHER ASSETS

     The following  items are  classified as deposits and other assets (See Note
15 - Related Party Transactions):

                                                                June 30,
                                                        ------------------------
                                                           2002          2001
                                                        ------------------------
Loans to the Ft Lauderdale Project                    $ 2,526,074   $ 1,728,000

Loans to the Golf Course Project in California            911,169       351,500

Loans to the South American Gaming Projects               349,472           -0-

Deposits on Port Lease                                     75,000           -0-

Accounts Receivable from MJQ Corporation                  521,583           -0-

Accounts Receivable from Frank Leo                         13,804           -0-

Accounts Receivable from Francis W Murray                  19,236           -0-

Note Receivable from Realen-Turnberry/Cherry Hill, LLC        -0-       700,000

Other Misc. Assets                                         25,252        36,760

Assets Assigned from Leo Equity Group, Inc. (See Note 15):

Note Receivable from Michael J Quigley III*             2,600,749           -0-

Accounts Receivable from MJQ Corp                          21,000           -0-

Accounts Receivable from Ft Lauderdale Project              8,000           -0-

Loans to Francis W Murray                                  93,000           -0-

Accounts Receivable from GMO Travel                       113,500           -0-
                                                        ------------------------
         Total Deposits and Other Assets              $ 7,277,839   $ 2,816,260
                                                        ========================

* The note receivable from Michael J. Quigley III is non-recourse  except to his
stock in MJQ  Corporation.  If the Company  consummates its purchase of stock in
MJQ  Corporation  from Mr.  Quigley,  the  Company  will assume that debt of Mr.
Quigley and accordingly would not receive cash in payment of this receivable.


(4)  DISCONTINUED OPERATIONS

     On January 28, 1999, we 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. On November 30, 2000, the Company, through its wholly-owned
subsidiary,  GSRT, LLC, closed on the sale (the "Garden State  Transaction")  of
the Garden State Park  property  (the "Garden  State Park  Property")  in Cherry
Hill, New Jersey, to Realen-Turnberry/Cherry  Hill, LLC ("Realen"). The purchase
price was $30 million and was paid by: (i)  previous  cash  deposits  totaling a
$1,000,000;  (ii) a  promissory  note in the face  amount  of $10  million  (the
"Note"); and (iii) the balance of the

                                       29

<PAGE>

purchase price paid in cash at the closing (See Note 1). The Company has elected
to defer the gain on the sale  until  such time  that  collectability  under the
$10,000,000 note from Realen can be determined.


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

     In June  2001,  the  Company  conducted  a five-day  public  auction of the
equipment,  furnishings  and artwork  that were not  included in the sale of the
Garden State Park to Realen.  Net proceeds after  commission of the Garden State
Park equipment,  furnishings and artwork were in the amount of $1,110,113  which
are classified as accounts  receivable at June 30, 2001.  Proceeds from the sale
were received in September 2001.

     The  net  assets  of the  operations  to be  disposed  of  included  in the
accompanying consolidated balance sheets as of June 30, 2002 and 2001 consist of
the following:

                                                                June 30,
                                                        -----------------------
Classified As:                                             2002           2001
                                                           ----           ----
Current Assets                                         $  415,166  $  1,542,100

Current Liabilities                                      (291,597)     (534,702)

Deferred Income                                               -0-           -0-
                                                        ----------  ------------
    Net Assets of Discontinued Operations - Current       123,569     1,007,398

  Net Liabilities of Discontinued Operations - Current        -0-           -0-

Property Assets of Garden State Park                          -0-           -0-

Note Receivable of Discontinued Operations - Long-Term        -0-    10,000,000
                                                        ----------  ------------
    Net Assets of Discontinued Operations              $  123,569  $ 11,007,398
                                                        ==========  ============

     On February  20,  2002,  all rights,  title and interest in and to the note
receivable in connection  with the sale of the Garden State Park property in the
amount of  $10,000,000  was  transferred  to the parent  company,  International
Thoroughbred  Breeders,  Inc.  as a result of which such note  receivable  is no
longer  classified as part of the net assets of  discontinued  operations.  (See
Notes 2 & 10)

                                       30

<PAGE>

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


     Cash flows from discontinued  operations for the years ended June 30, 2002,
2001 and 2000 consist of the following:
<TABLE>

                                                                               June 30,
                                                                 -------------------------------------
                                                                    2002         2001           2000
                                                                 ---------  --------------  ----------
<CAPTION>
<S>                                                            <C>         <C>             <C>
Cash Flows From Discontinued Operating Activities:

      Income                                                   $      -0-  $          -0-  $       -0-
                                                                 ---------  --------------  ----------

      Adjustments to reconcile income to net cash provided
      by discontinued operating activities

        Changes in Operating Assets and Liabilities of
        Discontinued Operations:

            Decrease in Restricted Cash and Investments               -0-             -0-       (8,241)

            Decrease (Increase) in Accounts Receivable                -0-      (1,030,285)     772,445

            Decrease in Prepaid Expenses                              -0-             -0-       10,304

            Increase (Decrease) in Accounts and Purses
             Payable and Accrued Expenses                             -0-           1,000     (405,145)

            Increase in Deferred Revenue                              -0-          17,500    1,000,000
                                                                 ---------  --------------  ----------
      Net Cash Provided by Discontinued Operating Activities          -0-      (1,011,785)   1,369,362
                                                                 ---------  --------------  ----------
Cash Flows From Discontinued Investing Activities:

      Proceeds from Sale of Garden State Park                         -0-      20,000,000          -0-

      (Increase) in Other Investments                                 -0-             -0-     (131,110)
                                                                 ---------  --------------  ----------
      Net Cash (Used In) Provided by Discontinued Investing
      Activities                                                      -0-      20,000,000     (131,110)
                                                                 ---------  --------------  ----------
Cash Flows from Discontinued Financing Activities:

      Principal Payments on Short Term Notes                          -0-             -0-      (82,789)

      (Decrease) in Balances Due To/From Continuing Operations    (9,298)     (19,005,177)  (1,864,847)
                                                                 ---------  --------------  ----------
      Net Cash (Used In) Discontinued Financing Activities        (9,298)     (19,005,177)  (1,947,636)
                                                                 ---------  --------------  ----------
      Net (Decrease) Increase in Cash and Cash Equivalents From
      Discontinued Operations                                     (9,298)         (16,962)    (709,384)

        Cash and Cash Equivalents at Beginning of Year From
        Discontinued Operations                                   11,825           28,787      738,168
                                                                 ---------  --------------  ----------
        Cash and Cash Equivalents at End of Year From
        Discontinued Operations                                $   2,527   $       11,825  $    28,787
                                                                 =========  ==============  ==========
</TABLE>

                                       31

<PAGE>

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

(5)  ACQUISITIONS AND DISPOSITIONS

     o    Fiscal 2002

     On July 18, 2001, we sold our condominium unit and an ownership interest in
the Ocala Jockey Club that was located in Reddick,  Florida. The sales price was
$94,000 and the proceeds after closing fees and other  expenses were $81,645.  A
gain of $77,577 was recognized during the first quarter of Fiscal 2002.

     o    Fiscal 2001

     On November 30, 2000,  the Company,  through its  wholly-owned  subsidiary,
GSRT,  LLC, closed on the sale of the Garden State Park property in Cherry Hill,
New Jersey, to Realen- Turnberry/Cherry Hill, LLC ("Realen"). (See Note 2.)

     In June  2001,  the  Company  conducted  a five-day  public  auction of the
equipment,  furnishings and artwork that were excluded in the sale of the Garden
State Park to Realen.

     o    Fiscal 2000

     On May 22, 2000, the Company,  through its wholly-owned  subsidiary,  Orion
Casino  Corporation,  closed on the sale of the  non-operating  former El Rancho
Hotel and Casino in Las Vegas,  Nevada, to Turnberry/Las  Vegas Boulevard,  LLC.
The sales  price was $45  million and was paid by: (i)  previous  cash  deposits
totaling $2,000,000;  and (ii) the balance of the purchase price paid in cash at
the closing.(See Note 2.)

(6) INVESTMENTS

     Interest  income for the fiscal years ended June 30, 2002,  2001,  and 2000
was $475,622, $122,560, and $109,254, respectively. There were no realized gains
or losses  resulting from the sale of trading  securities for fiscals 2002, 2001
and 2000.

(7) LAND, BUILDINGS AND EQUIPMENT

     Land,  buildings and equipment are recorded at cost.  Depreciation is being
computed  over the  estimated  remaining  useful  lives using the  straight-line
method.

                                       32

<PAGE>

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

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

                                                        June 30,
                              Estimated Useful--------------------------------
                               Lives in Years      2002          2001
-----------------------------  -------------  --------------------------------
Buildings and Improvements          15-40    $      -0-     $   214,097

Equipment and Artwork                5-15         723,420       289,426
                                              -------------  -----------
Totals                                            723,420       503,523
Less Accumulated Depreciation
 and Amortization                                 113,061       285,004
                                              -------------  -----------
                                             $    610,359   $   218,519
                                              ============   ===========
(8)  NOTES AND MORTGAGES PAYABLE

     Notes and Mortgages Payable are summarized below:
<TABLE>
                                                 June 30, 2002            June 30, 2001
                                Interest %  ---------------------   ------------------------
                                Per Annum     Current   Long-Term     Current      Long-Term
                                ---------     -------   ---------     -------      ---------
<CAPTION>
<S>                                <C>    <C>            <C>      <C>            <C>
International Thoroughbred
 Breeders, Inc.:
--------------------------
MCJEM, INC. (A)                       15%      132,000      -0-             -0-       482,000

Michael J. Quigley, III (B)           10%      900,000      -0-       1,000,000           -0-

Other                              Various      30,280      -0-             -0-           -0-

Garden State Park:
--------------------------

Service America Corporation (C)        6%      160,000      -0-         240,000           -0-
                                           -----------    -----    ------------   -----------
Totals                                    $  1,222,280   $  -0-   $   1,240,000  $    482,000
 Net Assets of Discontinued
  Operations - Long Term                           -0-      -0-             -0-           -0-

 Net Liabilities of Discontinued
  Operations - Long Term                      (160,000)     -0-        (240,000)          -0-
                                           -----------    -----    ------------   -----------

Totals                                    $  1,062,280   $  -0-   $   1,000,000  $    482,000
                                           ===========    =====    ============   ===========
</TABLE>

There was no short term borrowings outstanding as of June 30, 2002.

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

                                       33
<PAGE>

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

transaction,  the Company signed a $482,000 promissory note with Mr. Brennan Jr.
which  represented  the purchase price of the sculptures  less the sales price o
the artwork  sold to Mr.  Brennan  Jr. On July 27,  2000 the Company  received a
notice  from the  Chapter  11  Trustee  for the  bankruptcy  estate of Robert E.
Brennan  (the  "Chapter 11 Trustee")  asserting  certain  ownership  rights in a
number  of items on loan to the  Company,  including  the  sculptures  mentioned
above.  After the Chapter 11 Trustee  claimed  ownership of the  sculptures,  an
arrangement  was  agreed to  between  the  Company  and the  Chapter  11 Trustee
pursuant to which the Company was  permitted to resell the  sculptures to Realen
in May 2001, free and clear of any claim by the Chapter 11 Trustee,  in exchange
for a $700,000  promissory  note of Realen due  November  30, 2002 (the  "Realen
Sculpture Note").  Pursuant to the agreement between the Company and the Chapter
11 Trustee,  payments by Realen under the Realen  Sculpture Note were to be held
in escrow pending  determination of the Chapter 11 Trustee's claims. On December
29, 2000 the Chapter 11 Trustee  instituted suit against the Company seeking the
right to all payments and proceeds of the Realen  Sculpture Note.  After the end
of the fiscal year, in September  2001, a settlement  agreement was entered into
among the  Company,  Robert E.  Brennan,  Jr., the Chapter 11 Trustee and others
pursuant to which,  among other things, the litigation by the Chapter 11 Trustee
against the Company  was  dismissed  with  prejudice  and the first  $350,000 of
principal  plus  one-half of the interest  received  under the  $700,000  Realen
Sculpture  Note will be paid to the  Chapter  11  Trustee.  The  balance  (up to
$350,000  in  principal  plus  one-half  of the  interest)  will  be paid to the
Company. As a result of this settlement,  the Company and Mr. Brennan Jr. agreed
that (i) all claims of the Company  against Mr.  Brennan Jr.  arising out of his
sale of the  sculptures to the Company will be released and (ii) the  promissory
note issued by the Company to Mr.  Brennan Jr. will be amended (x) to reduce the
principal amount of such promissory note from $482,00 to $132,000, with interest
on that sum at the rate of 15% annum to accrue  from  November  30, 2001 only if
the principal of such note is not paid in full by December 10, 2001, (y) to make
such promissory note due and payable on November 30, 2002, and (z) to permit the
Company  to defer  payment  of the  promissory  note to such  later  date as the
Company shall have received  payment in full of the Realen  Sculpture  Note. The
effect of the aforesaid  settlement is therefore  that the Company's loss of the
amount to be paid under the settlement  agreement to the Chapter 11 Trustee will
be borne by Brennan Jr. by reduction to the Company's promissory note payable to
him.

     (B) On January 26, 2001,  we borrowed  $1,000,000  from Michael J. Quigley,
III at an annual  interest  rate of 10%.  Principal and interest on the note was
due on or about April 25, 2001. On May 14, 2001, the loan was modified to be due
on demand.  As collateral  for the loan, we pledged the $10 million  Realen Note
and the $23 million note issued to us by Turnberry (the  "Turnberry  Note").  On
February 20, 2002 Mr. Quigley released his security  interest in the Realen Note
in connection with the Master  Settlement  Agreement with,  among other parties,
Donald F. Conway,  the Chapter 11 Trustee for the Bankruptcy Estate of Robert E.
Brennan (the "Trustee"). (See Note 10.)

     (C) In  connection  with the January 28,  1999 lease  transactions  for the
Garden State Park facility,  the Company  purchased  equipment located at Garden
State Park and a liquor license owned by an  unaffiliated  third party,  Service
America  Corporation  (the "Holder ), for  $500,000  financed by a five (5) year
promissory note at a 6% interest rate. Yearly principal payments of $80,000 plus
interest are due on December 28, 2002 and December 28, 2003.

                                       34

<PAGE>

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

(9)  INCOME TAX EXPENSE

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

     The  Company's  income tax expense for the year ended June 30, 2002 relates
to state income taxes for its Palm Beach Princess operations.

     The Company has net operating loss carryforwards  aggregating approximately
$171,700,000  at June 30, 2002  expiring in the years June 30, 2003 through June
30, 2022.  SFAS No. 109 requires the  establishment  of a deferred tax asset for
all deductible temporary  differences and operating loss carryforwards.  Because
of the  uncertainty  that  the  Company  will  generate  income  in  the  future
sufficient  to fully or partially  utilize  these  carryforwards,  however,  the
deferred  tax  asset of  approximately  $90,000,000  is  offset  by a  valuation
allowance o 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.

The Company has the following  carryforwards  to offset future taxable income at
June 30, 2002:

       Net Operating Loss                          Year End
         Carryforwards                         Expiration Dates
         -------------                         ----------------
         $ 26,400,000                             6/30/2003

           19,900,000                             6/30/2004

           15,600,000                             6/30/2005

           11,800,000                             6/30/2006

           98,000,000                             6/30/2007
                                              through 6/30/2022
          -----------
         $171,700,000
          ===========


                                       35

<PAGE>

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

(10) COMMITMENTS AND CONTINGENCIES

     See Note 15 for additional commitments and contingencies of the Company and
transactions with related parties.

     Effective December 1, 2000, we entered into a five-year employment contract
with Francis W. Murray, our Chief Executive  Officer.  The contract provides for
annual compensation of $395,000,  a $1,500 monthly automobile expense allowance,
a country club annual dues allowance and travel and entertainment reimbursements
for business expenses reasonably incurred by him in addition to participation in
various other  benefits  provided to our  employees.  As part of his  employment
contract,  Mr. Murray was awarded  options to purchase  2,000,000  shares of our
Common Stock.

     We are responsible for remediation  costs  associated with an environmental
site on the Freehold Raceway property. We have accrued what we believe to be the
total cost of  remediation.  At June 30,  2002,  the  remaining  balance of such
accrual was $130,398 for remediation  costs. These accrued costs are expected to
be incurred during the next twenty months.

     In connection with the January 28, 1999 lease  transactions  for the Garden
State Park  facility,  we purchased a liquor  license  owned by an  unaffiliated
third party,  Service America  Corporation,  for $500,000 financed by a five (5)
year  promissory  note at a 6%  interest  rate.  At June 30,  2002,  the  unpaid
principal  balance was  $160,000.  Yearly  principal  payments  of $80,000  plus
interest are due on December 28, 2002 and December 28, 2003.

     Effective February 20, 2002, we entered into a Master Settlement  Agreement
with the Chapter 11 Trustee (the "Trustee") for the Bankruptcy  Estate of Robert
E. Brennan and a related Stock Purchase  Agreement,  and, through our Palm Beach
Princess, Inc. subsidiary, a Purchase and Sale Agreement, described below. These
agreements  followed many months of negotiation  with the Trustee of the details
of the transactions outlined in the letter of intent that had been signed by the
parties  effective  April 30, 2001. It was on the basis of the letter of intent,
initially,  and then the Master Settlement Agreement that we have been operating
the vessel M/V Palm Beach Princess and conducting a casino cruise business since
April 30, 2001.

     As permitted by the Master Settlement  Agreement with the Trustee,  we have
entered into a bareboat charter with MJQ Corporation,  pursuant to which we have
chartered  the vessel M/V Palm Beach  Princess  for the  purpose of  operating a
casino cruise business from the Port of Palm Beach, Florida.  Under the bareboat
charter  agreement,  we are obligated to pay $50,000 per month as a charter hire
fee  to the  vessel's  owner,  MJQ  Corporation.  Other  parties  to the  Master
Settlement Agreement include MJQ Corporation, Leo Equity Group, Inc. and Francis
W. Murray,  our Chairman,  who is also a director and officer of MJQ Corporation
and  a  director  of  Leo  Equity  Group,  Inc.  (See  Note  15,  Related  Party
Transactions.)

     In accordance with the Master Settlement Agreement,  through our Palm Beach
Princess,  Inc.  subsidiary we entered into a Purchase and Sale Agreement  which
provides  for our  purchase  from  the  Trustee  of the  promissory  note of MJQ
Corporation,  having  an  outstanding  balance  of  principal  and  interest  of
approximately  $15.7  million as of June 30, 2002 and secured by a ship mortgage
against  the M/V Palm Beach  Princess  (the  "Ship  Mortgage  Obligation").  The
purchase price payable by us for the Ship Mortgage Obligation is $13.75 million.
We began making  payments on account of such purchase price  effective April 30,
2001, in monthly installments of $250,000.  Such monthly installments  continued
under the terms of the Purchase  and Sale  Agreement  through July 31, 2002,  at
which time a $9.75 million balloon payment was to be due.  However,  before July
31, 2002, we exercised our right to extend the time for payment of

                                       36

<PAGE>

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


the  balance  of the  purchase  price for up to three (3)  additional  months to
October  31,2002,  by paying  $70,000  for the first  one  month  extension,  an
additional $80,000 for the second month extension and an additional $100,000 for
the third  month  extension  , which  additional  payments  will not be credited
towards the purchase  price.  In the event that the balloon  payment is not made
when due on October 31, 2002 (or any other  default on our part occurs  which is
not cured within the applicable  grace  period),  at the election of the Trustee
all of our monthly  $250,000  payments (which would total $4.0 million) would be
forfeited  as  liquidated  damages and the Trustee  would have the right to take
possession and control of the vessel M/V Palm Beach  Princess,  but we would not
have any further  liability for an unpaid  balance of the purchase  price of the
Ship  Mortgage  Obligation.  The Trustee  would also have the right to take over
operating assets used in connection with the vessel,  including the onboard cash
bank, inventories,  supplies and equipment, and the Trustee would assume current
liabilities including trade debt and payroll. In the event the current assets so
acquired by the Trustee are less than the amount of the current  liabilities  so
assumed by the Trustee, we would be liable to the Trustee for such deficiency.

     The second agreement which we entered into with the Trustee pursuant to the
Master Settlement Agreement is a Stock Purchase Agreement. Under this Agreement,
which  superseded  all prior  agreements and  understandings  between us and the
Trustee for the purchase of our common stock held or claimed by the Trustee,  we
agreed to purchase up to approximately 2,235,000 shares of our common stock at a
purchase  price of $0.50 per share on July 1, 2002. We desired to purchase these
shares in order to preserve our net operating loss carryforwards which otherwise
may be lost if the  shares  are  transferred.  As  collateral  security  for our
payment of the purchase price for these shares, we have granted to the Trustee a
security  interest in all proceeds of (including all payments that might be made
in the future under) the $10 million Realen Note,  described in Note 2 above (in
connection  with which  Michael J.  Quigley,  III  released  his prior  security
interest in the Realen Note).

     We did not pay the  purchase  price under the Stock  Purchase  Agreement on
July 1, 2002 (which price, at that date, was $892,500 for 1,785,000 shares). The
Trustee has issued a default  notice to us and we are  negotiating  an amendment
with the Trustee which would extend the time of payment.

     Through  a  subsidiary,  we have  negotiated  with the  Port of Palm  Beach
District a new operating  agreement  and lease of space in a new office  complex
constructed at the Port of Palm Beach adjacent to a new cruise terminal.  We are
required  to make  tenant  improvements  to the  new  space,  estimated  to cost
approximately $600,000,  construction of which was to have commenced by July 30,
2002. While we have obtained a commitment for the construction financing, we had
not begun  construction  by July 30, 2002 and  received a notice from the Port's
attorney  asserting  that we may be in  default  in that  regard.  We  intend to
proceed with  construction  of the required  improvements to the leased space in
due course and expect to be able to cure the potential default.

     In other  transactions  related  to our  acquisition  of the Ship  Mortgage
Obligation,  we entered into an agreement to purchase the outstanding  shares of
stock  in Leo  Equity  Group,  Inc.,  and  another  agreement  to  purchase  the
outstanding  shares in MJQ Corporation,  in order to acquire control of the Palm
Beach Princess  business on a long-term basis. Leo Equity Group,  Inc. owned the
agreement with the Port of Palm Beach under which the Palm Beach Princess vessel
has been  operating,  an by our  agreement  to purchase  the stock in Leo Equity
Group,  Inc.,  the  shareholder  of Leo Equity  Group,  Inc. has permitted us to
negotiate a new long-term agreement with the Port which would replace Leo Equity
Group's  agreement with the Port.  Further,  the term of our bareboat charter of
the  vessel  from MJQ  Corporation  was  scheduled  to expire on July 31,  2002.
Therefore,  by agreeing to contract for the purchase of the shares of Leo Equity
Group, Inc. and

                                       37
<PAGE>

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


MJQ  Corporation,  we are in a position  to control  both the rights to the Port
agreement and the  ownership of the vessel itself  (subject to the rights of the
Trustee to take over such assets if we fail to pay the  balance of the  purchase
price for the Ship Mortgage  Obligation  when due).  Also in connection with the
purchase of MJQ Corporation, we would be assuming all the executory contracts of
MJQ Corporation  which includes  employment and operation  contracts of the Palm
Beach Princess vessel.

     The purchase price we have agreed to pay for the stock in Leo Equity Group,
Inc. is $250,000,  payable in ten  consecutive  monthly  installments of $25,000
each, without interest. As further  consideration,  we also agreed to reduce the
exercise price of Seller's previously granted options to purchase 200,000 shares
of our common stock, to $0.50 per share. In  consideration  of the sale to us of
the stock in MJQ  Corporation,  we agreed to assume $3.7 million of indebtedness
owing by MJQ Corporation's  sole stockholder,  of which $1.1 million is owing to
Francis W. Murray, our Chairman,  and $2.6 million is owing to Leo Equity Group,
Inc.  Leo Equity  Group,  Inc.  agreed to assign its rights to such $2.6 million
receivable as described in Note 15,  Related Party  Transactions,  and therefore
our assumption of the foregoing  indebtedness to Leo Equity Group, Inc. will not
entail any cash payment.  Mr.  Murray has indicated  that he would be willing to
defer  payment of all or a portion  of the  assumed  indebtedness  owing to him.
Terms for the  satisfaction  of such  indebtedness  have not yet been worked out
between us and Mr. Murray. See Note 15 below, Related Party Transactions.

     In addition to the  commitments  described  above, we are in the process of
negotiating other potential acquisitions of gaming related businesses in foreign
countries. While we explore each business opportunity,  including performance of
due diligence,  and pending negotiation of definitive  agreements,  we have lent
approximately $600,000 to persons and entities having rights to certain of these
gaming  opportunities.  If such  acquisitions  are concluded,  the businesses in
foreign  countries would involve a significant  additional  investment and would
entail substantial risks (including  political risks). There can be no assurance
that definitive  agreements will be concluded or that we would be able to obtain
necessary  funds to proceed,  and there is no assurance  that we will be able to
recover our loans should we not proceed.

     On  October  25,  2002 the  Company  received  a Letter of  Interest  for a
proposed $8 million  financing,  subject to additional due diligence.  Principal
and  interest  of  7%  per  annum  would  be  due  monthly,  based  on a 5  year
amortization,  with a balloon payment due 3 years from closing. Additionally the
bank would take a  subordinated  position of $7 million in our $10 million  note
due from the sale of our Garden State Park property.  It is the Company's intent
to borrow an additional $2 million on this note to satisfy the entire payment of
$9.75  million due to the Trustee for the  purchase of the Ship  Mortgage and to
complete the purchase of 1,785,000 Company shares from the Trustee for $892,500.
Additionally,  at this time we are  negotiating  with the  Trustee to extend the
closing date under the Purchase and Sale  Agreement  from October 31, 2002 until
December 31, 2002.  There can be no assurances  that the proposed  loans will be
received, or that we will be successful in our negotiations with the Trustee.

LEGAL PROCEEDINGS

     We are a defendant in various 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 a material  adverse effect on our financial  position,  results of
operations, or cash flows.

     Commencing in the third quarter of Fiscal 1999,  the Company and certain of
its officers and directors and former officers and directors  received subpoenas
from the  Securities  and Exchange  Commission  (the "SEC")  relating to certain
transactions and reports. We have fully cooperated with the SEC's investigation.
On February 13,  2002,  as a result of actions  brought  against the Company and
certain  current  and  former  officers  by the SEC,  settled  cease and  desist
proceedings  were filed  against  the  Company  and  certain  current and former
officers without the parties  admitting or denying the allegations which settled
this  matter.  The  Commission  found  that the  parties  committed  and  caused
violations of the reporting,  record keeping and internal control  provisions of
the  Securities  Exchange  Act of 1934,  and the parties  without  admitting  or
denying the  Commission's  findings,  consented  to issuance of cease and desist
orders.

                                       38

<PAGE>

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


(11) FAIR VALUE OF FINANCIAL INSTRUMENTS

     As of June 30, 2002, in assessing the fair value of financial  instruments,
the Company has used a variety of methods and  assumptions,  which were based on
estimates of market conditions and loan risks existing at that time. For certain
instruments,  including  cash  and  cash  equivalents,   investments,  non-trade
accounts  receivable and loans,  and short-term  debt, it was estimated that the
carrying amount  approximated  fair value for the majority of these  instruments
because of their short term  maturity.  The  carrying  amounts of long term debt
approximate fair value since the Company's  interest rates  approximate  current
interest rates.

(12) RETIREMENT PLANS

     The Company  maintains a Retirement  Plan under the  provisions  of section
401(k) of the Internal  Revenue Code of 1986,  as amended (the "Code")  covering
all its non-union  full time  employees who have  completed one year of service.
The Company's basic contribution under the plan is 4% of each covered employee's
compensation for such calendar year. In addition,  the Company contributes up to
an additional  50% of the first 4% of  compensation  contributed  by any covered
employee to the plan (an employee's maximum contribution is $11,000 factored for
inflation  annually).   The  Company's  expense  totaled  $40,901,  $36,863  and
$1,911(utilizing  accumulated  forfeitures)  for the fiscal years ended June 30,
2002, 2001 and 2000, respectively.

(13) STOCK OPTIONS AND WARRANTS

     (A)  EMPLOYEE AND NON-EMPLOYEE OPTIONS

     On October 16, 2000, the Company  awarded  options to purchase 6,500 shares
of  the  Company's  Common  Stock  to  various   employees  as  part  of  annual
compensation.  On January  7, 2002,  Mr.  Francis W.  Murray and Mr.  William H.
Warner  were  awarded   options  to  purchase   2,000,000  and  75,000   shares,
respectively,  of the Company's Common Stock, expiring December 31, 2010 with an
exercise  price of $0.26875 per share.  These options  replaced  options for the
same number of shares which had been granted to them in December,  2000 under an
Incentive  Stock Option Plan.  Such Incentive  Stock Option Plan and the options
granted under it  terminated  under the Plan's  requirement  that if approval of
Plan by the Company's  common  stockholders  shall not be obtained within twelve
month from the date the Incentive  Plan was adopted by the Board,  the Incentive
Plan and all options then outstanding under it automatically  will terminate and
be of no force or effect.

     The Company's 1994 Employees' Stock Option Plan ("Option Plan"), remains in
effect.  The Option Plan was approved by the Company's Board and stockholders in
December 1994, and 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 Option Plan provides for the granting of both incentive stock
options  intended to qualify  under  section 422 o 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  Option  Plan  are
non-transferable  except in the event of death and are only  exercisable  by the
holder  while  employed by the  Company.  Unless the Option  Plan is  terminated
earlier by the Board,  the Option Plan will  terminate in June 2004.  As of June
30, 2002, no options were outstanding under this Option Plan.

                                       39

<PAGE>

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


     In  addition to the  non-qualified  options  granted to Messrs.  Murray and
Warner described above, the Company has 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  Option 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. At June 30, 2002,  total employee  options  outstanding were 3,111,500 and
total non-employee options outstanding were 225,000.

     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, 2002:

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

                                                       Exercise         Weighted
                                        Number        Price Range       Average
                                      of Shares        Per Share        Price
                                    -------------  -----------------    --------

     Outstanding at June 30, 1999     1,550,000    $ 4.00  - $ 5.875    $ 4.58

     Granted                              5,000    $ 1.00               $ 1.00

     Canceled                          (200,000)   $ 5.875              $ 5.875
                                    ------------

     Outstanding at June 30, 2000     1,355,000    $ 1.00  - $ 5.00     $ 4.37

     Granted                          2,081,500    $ 0.269 - $ 1.00     $ 0.283
                                    ------------

     Outstanding at June 30, 2001     3,436,500    $ 0.269 - $ 5.00     $ 1.89

     Canceled                        (2,175,000)   $ 0.269 - $ 5.00     $ 0.489

     Granted                          2,075,000    $ 0.269              $ 0.269
                                    ------------

     Outstanding at June 30, 2002     3,336,500    $ 0.269 - $ 5.00     $ 1.800
                                    ============


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

    2000                              1,355,000    $ 1.00  - $5.00      $ 4.37
                                   --------------  ---------------     ---------
    2001                              3,436,500    $ 0.269 - $5.00      $ 1.89
                                   --------------  ---------------     ---------
    2002                              3,336,500    $ 0.269 - $5.00      $ 1.800
                                   --------------  ---------------     ---------


    Options available for future grant
    under the Plan at June 30:                        1994 Plan
                                                   ---------------

    2000                                               475,000

    2001                                               475,000

    2002                                               475,000

                                       40

<PAGE>

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


The following table summarizes information about stock options outstanding at
June 30, 2002:
<TABLE>

                                                                    Ranges                             Total
                                                       ----------------------------------------   --------------
Range of exercise prices                                $0.20 - 0.30   $1.00 - 4.625      $5.00    $0.20 - 5.00
                                                        -------------  -------------      -----    -------------
<CAPTION>
<S>                                                         <C>              <C>        <C>            <C>
Outstanding options:
--------------------

   Number outstanding at June 30, 2002                      2,081,500        955,000    300,000        3,336,500
                                                       -----------------------------------------   --------------
   Weighted average remaining contractual life (years)           8.48           3.97       4.50             6.83
                                                       -----------------------------------------   --------------
   Weighted average exercise price                              $0.269         $4.132     $5.00            $1.80
                                                       -----------------------------------------   --------------
Exercisable options:
--------------------
   Number outstanding at June 30, 2001                      2,081,500        955,000    300,000        3,336,500
                                                       -----------------------------------------   --------------
   Weighted average exercise price                              $0.269         $4.132     $5.00            $1.80
                                                       -----------------------------------------   -------------
</TABLE>

<TABLE>
                                                                    Weighted
                                                   Number of         Average       Weighted
Weighted Average Fair Value of Options Granted       Shares         Exercise     Average Fair
----------------------------------------------                        Price          Value
                                                 ---------------  -------------  ------------
<CAPTION>
<S>                                                   <C>               <C>            <C>
June 30, 2000:
                                                 --------------------------------------------
    Below Market                                          5,000         $1.00          $1.00

    At Market                                              --             --             --

    Above Market                                           --             --             --
                                                 ---------------
                                         Total            5,000
                                                 ---------------
June 30, 2001:
                                                 --------------------------------------------
    Below Market                                      2,081,500         $0.283         $0.128

    At Market                                             --            --               --

    Above Market                                          --            --               --
                                                 ---------------
                                         Total        2,081,500
                                                 ---------------
June 30, 2002:
                                                 --------------------------------------------
    Below Market                                      2,075,000         $0.26875       $0.150

    At Market                                             --            --               --

    Above Market                                          --            --               --
                                                 ---------------
                                         Total        2,075,000
                                                 ---------------
</TABLE>


     During 1995, the Financial  Accounting  Standards Board adopted Statemen 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.

                                       41

<PAGE>

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

SFAS 123 also has certain  disclosure  provisions.  Adoption of the  recognition
provisions of SFAS 123 with regard to these  transactions with non-employees was
required for all such transactions entered into after December 15, 1995, and the
Company adopted these  provisions as required.  The  recognition  provision with
regard to the fair value based method of  accounting  for  stock-based  employee
compensation  plans is  optional.  Accounting  Principles  Board  Opinion No. 25
"Accounting  for Stock Issued to Employees"  ("APB 25") uses what is referred to
as a 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 base on Company  expectations,  and a weighted average expected volatility
of 56.29%.

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

                                                    Years Ended June 30,
                                                    --------------------
                                              2002          2001         2000
                                              ----          ----         ----
Net Income (Loss): As Reported

Income (Loss) Before Discontinued
Operations                              $  1,982,603 $ (2,402,142) $ (6,980,831)
                                          ----------- -------------  -----------
Net Income (Loss)                       $  1,982,603 $ (2,402,142) $ (6,980,831)
                                          ----------- -------------  -----------

Pro Forma Net Income (Loss)

Income (Loss) Before Discontinued
Operations                              $  1,671,353 $ (2,498,508)  $(7,026,581)
                                          ----------- -------------  -----------
Net Income (Loss)                       $  1,671,353 $ (2,498,508)  $(7,026,581)
                                          ----------- -------------  -----------

Net Income (Loss) Per Share- Basic
and Diluted: As Reported

Income (Loss) Before Discontinued
Operations                              $       0.17 $      (0.24)  $     (0.78)
                                          ----------- -------------  -----------
Net Income (Loss)                       $       0.17 $      (0.24)  $     (0.78)
                                          ----------- -------------  -----------

Pro Forma Net Income (Loss) Per Share -
Basic and Diluted

Income (Loss) Before Discontinued
Operations                              $       0.15 $      (0.25)  $     (0.78)
                                          ----------- -------------  -----------
Net Income (Loss)                       $       0.15 $      (0.25)  $     (0.78)
                                          ----------- -------------  -----------

                                       42
<PAGE>

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

     (B)  WARRANTS

     During the fiscal  years ended June 30,  1996,  1997 and 1999,  the Company
issued 925,000, 746,847 and 932,153, respectively of warrants to purchase Common
Stock in connection with financing activities.  During Fiscal 2002, 1,894,000 of
those warrants  expired.  All  outstanding  warrants are exercisable at June 30,
2002. The fair value of warrants issued during the year ended June 30, 1999 were
accounted for as financing expense.

     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, 2002:

                                                     Warrants
                                                     --------

                                                      Exercise       Weighted
                                        Number      Price Range      Average
                                       Of Shares     Per Share        Price
                                       ---------     ---------        -----
Outstanding at June 30,1999,           2,604,000   $2.50  - $5.25     $4.25
 2000 and 2001

Expired During Fiscal 2002            (1,894,000)  $4.375 - $5.25     $4.68
                                       ---------
Outstanding at  June 30, 2002            710,000   $2.50  - $4.00     $3.08
                                       =========

(14) DIVIDENDS

     The Company is required  to pay to the  holders of the  Company's  Series A
Convertible  Preferred  Stock  ("Preferred  Stock") a cash dividend from any net
racetrack earnings, as defined, of Garden State Park. No dividends were required
for fiscals 2002, 2001 and 2000. The Preferred  Stock has liquidation  rights of
$100 per share plus accrued dividends, if any.

(15) RELATED PARTY TRANSACTIONS

     During the third  quarter of Fiscal  2001,  we invested in two  projects in
which our Chairman,  President and Chief Executive  Officer,  Francis W. Murray,
also has a pecuniary interest. In connection with one such project, the Board of
Directors  approved advances,  as loans, of up to $1.5 million,  the proceeds of
which were to be used to pay costs and expenses for development of a golf course
in Southern California.  A limited partnership,  the general partner of which is
owned by Mr. Murray,  has acquired an option to purchase  certain real estate in
Southern California on which it intends to construct a golf club. The project is
a  long-term  one,  requiring  environmental,  engineering  and  other  studies,
regulatory approvals, other governmental entitlements and substantial additional
funding.  Loans by us to the limited partnership will bear interest at an annual
rate of 12%,  and we will have the right to convert  our loans into a 50% equity
interest in the limited  partnership (which percentage interest would be reduced
if additional  investments by others are made in the limited  partnership).  Mr.
Murray  equity  interest  in the  limited  partnership,  indirectly  through his
ownership  of the general  partner,  as of June 30,  2002,  is 64%,  and will be
reduced proportionally if we exercise our right to convert our loans into

                                       43

<PAGE>

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

equity. During the year ended June 30, 2002, we loaned an additional $126,039 on
this project.  At June 30, 2002, $803,291 has been loaned to such project and we
have accrued $107,878 of interest due on the loan.

     In the second project, Mr. Murray is participating in the development of an
oceanfront  parcel  of land,  located  in Fort  Lauderdale,  Florida,  which has
received  all  governmental  entitlements  from the City of Fort  Lauderdale  to
develop a 14-story  building to include a 5-story parking garage,  approximately
6,000 square feet of  commercial  space and a  residential  9-story  tower.  The
property  owner,  MJQ Development  which is owned by Michael J Quigley,  III, is
developing a condominium hotel resort. Mr. Quigley has no relationship to Robert
J. Quigley,  one of our directors  and former  president.  During the year ended
June 30, 2002, we loaned an additional  $447,241 and we have accrued interest in
the amount of $350,833 for the year ended June 30, 2002 on this project. At June
30, 2002, we have lent  $2,175,241 in total to the property  owner.  These loans
bear  interest at 12% and will be  repayable  out of the first  proceeds,  after
payment of bank debts,  generated by the sale of the condominiums.  We will have
the right to convert  our loan into an equity  interest  (subject  to  receiving
certain  third party  approvals),  which would  entitle us to receive a priority
return of our  investment and a priority  profits  interest equal to three times
our investment. Repayment of these loans (and receipt o any return if we convert
our loans to equity)  will be  subject  to  repayment  of,  first,  bank debt of
approximately  $3.8 million  incurred in the purchase of the real  property and,
second,  construction financing expected to amount to $25 to $30 million. If the
project is successful,  Mr. Murray stands to receive a contingent benefit, which
could be substantial,  from the owner for his participation in the project,  but
only after the Company  and the owner have  received  priority  returns of their
investment and priority shares of profits.

     On January 26, 2001, we borrowed $1,000,000 from Michael J. Quigley, III at
an annual interest rate of 10%. Principal and interest on the note was due on or
about  April 25,  2001.  On May 14,  2001,  the loan was  modified  to be due on
demand.  As collateral  for the loan, we pledged the $10 million Realen Note and
the $23 million  Turnberry  Note. On February 20, 2002 Mr. Quigley  released his
security  interest in the Realen Note in connection  with the Master  Settlement
Agreement. (See Note 10.)

     Effective  April 30,  2001,  we  entered  into a bareboat  charter  wit MJQ
Corporation,  pursuant  to which we are  chartering  the  vessel  M/V Palm Beach
Princess for the purpose of operating an  entertainment  casino cruise  business
from the Port of Palm Beach, Florida.  Michael J. Quigley, III is a principal of
MJQ Corporation.  Francis W. Murray, our Chairman, President and Chief Executive
Officer, is an officer and director of MJQ Corporation,  and his son, Francis X.
Murray,  is President  and a director of MJQ  Corporation  and  President of our
subsidiary,  Palm Beach  Princess,  Inc.,  which operates the vessel.  Under the
bareboat  charter  agreement,  we are  obligated to pay $50,000 per month as the
charter hire fee to MJQ Corporation.  All costs of operating the vessel incurred
by MJQ Corporation on our behalf are to be reimbursed by us to MJQ  Corporation.
In  addition,  as  described  in Note 10 above,  we have  entered  into a Master
Settlement  Agreement  with the Chapter 11 Trustee of the  Bankruptcy  Estate of
Robert E. Brennan,  MJQ  Corporation and others to purchase from the Trustee the
Ship Mortgage  Obligation of MJQ Corporation,  having a balance of principal and
interest  outstanding of

                                       44

<PAGE>

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


approximately  $15.7  million as of June 30, 2002 for a purchase  price o $13.75
million.  Pursuant to the Master Settlement  Agreement,  MJQ Corporation and its
officers  and  directors  (including  Francis W.  Murray and his son)  exchanged
mutual  releases wit the Trustee and others  having  claims to the Ship Mortgage
Obligation.

     Also, as set forth in Note 10 above, in separate  transactions,  we entered
into  agreements to purchase all of the shares of  outstanding  stock of each of
MJQ Corporation  and Leo Equity Group,  Inc. Mr. Francis W. Murray is an officer
and  director of MJQ  Corporation  and a director of Leo Equity  Group,  Inc. In
consideration  of the sale of the MJQ stock to us, we have agreed to assume $1.1
million of  indebtedness  owing by Michael J. Quigley,  III to Francis W. Murray
and $2.6  million of  indebtedness  owing by  Michael  J.  Quigley to Leo Equity
Group,  Inc.  Since Leo Equity  Group,  Inc. is  assigning  its right to receive
payment of such $2.6 million of indebtedness to us as payment of the success fee
charged to Leo Equity  Group,  Inc.  in  connection  with the Master  Settlement
Agreement described below, no cash outlay is expected to be made in assuming the
indebtedness  owing to that entity.  Mr. Murray has  indicated  that he would be
willing to defer payment of all or a portion of the assumed  indebtedness  owing
to him.  Final terms for  satisfaction  of such  indebtedness  have not yet been
completed.  Closing on the Leo Equity Group,  Inc.  purchase occurred on October
15, 2002 (See Note 17-D).  The purchase price payable by us for the stock in Leo
Equity  Group,  Inc.  is  $250,000,  payable  without  interest  in  10  monthly
installments  of $25,000  each.  We also agreed to reduce the exercise  price of
previously granted options held by the seller, Frank A. Leo (our former director
and chairman),  to purchase  200,000 shares of our common stock,  from $4.00 per
share to $0.50 per share, while  conditioning  exercise of such options upon our
first having  consummated the purchase of the shares required to be purchased by
us from the  Trustee  under the Stock  Purchase  Agreement.  The  purpose of our
contracting  for such  acquisitions  is to enable us to continue  the Palm Beach
Princess  business on a long term  basis,  subject to our ability to finance the
balance  of the  purchase  price  for the Ship  Mortgage  Obligation  due to the
Trustee.

     The  Master  Settlement  Agreement  with the  Chapter  11  Trustee  for the
Bankruptcy  Estate of Robert  E.  Brennan  included  a final  settlement  by the
Trustee with numerous parties. Among those parties were Frank A. Leo, Leo Equity
Group,  Inc.,  Michael J.  Quigley III and MJQ  Corporation.  During the quarter
ended March 31, 2002 we charged Leo Equity Group  $3,000,000 and MJQ Corporation
$1,000,000  for their  portion of expenses  incurred by us and a success fee for
the efforts of International  Thoroughbred Breeders, Inc. in connection with the
final  settlement  with the Trustee.  Leo Equity Group,  Inc. has assigned to us
certain  receivables  in the  approximate  amount of $3 million,  including  the
receivables  of  approximately  $2.6 million due it from Michael J. Quigley III,
for  payment  of this  obligation.  We  Have  deferred  all  income  from  these
transactions until such time as payment is received.

     On July 12 2002 we borrowed  $300,000  from  Francis W. Murray at an annual
interest rate of 6%. The note is due on demand and interst is payable monthly.


                                     45

<PAGE>

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


(16) TREASURY SHARES RETIRED

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

(17) SUBSEQUENT EVENTS

     (A) The  Company  did  not  pay the  purchase  price  for the  stock  to be
purchased  by it in July,  2002,  under the Stock  Purchase  Agreement  with the
Chapter 11 Trustee for the Bankruptcy Estate of Robert E. Brennan. The number of
shares to be  purchased  at that time is believed to be  1,785,000  shares,  the
purchase price of which was $892,500. The Trustee has issued a default notice to
the Company.  The Company is in the process of negotiating an amendment with the
Trustee which would extend the time for payment.

     (B) Under the Purchase and Sale Agreement between the Company's subsidiary,
Palm Beach Princess, Inc., and the Brennan Chapter 11 Trustee, a balloon payment
of $9.75  million  originally  was  scheduled  to be due on July 31,  2002.  The
Company  exercised its right under the Purchase and Sale Agreement to extend the
time for  payment  thereof  until  October  31,  2002.  See Note 10.  There is a
substantial  risk that the Company may not be able to borrow the necessary funds
in order to make the  balloon  payment  by  October  31,  2002 in which case the
Trustee  may  terminate  the  Company's  bareboat  charter of the M/V Palm Beach
Princess and the Company may lose its only operating business.

     (C) The Company and MJQ Development,  LLC (the entity  developing the ocean
front property in Ft.  Lauderdale) have agreed in principle to a transaction for
MJQ  Development,  LLC to acquire our  receivable for the golf course project in
Southern California.

     (D) The Company closed on the stock  purchase of Leo Equity Group,  Inc. on
October 15, 2002. (See Notes 10 and 15)

     (E) On October  25, 2002 the  Company  received a Letter of Interest  for a
proposed $8 million  financing,  subject to additional due diligence.  Principal
and  interest  of  7%  per  annum  would  be  due  monthly,  based  on a 5  year
amortization,  with a balloon payment due 3 years from closing. Additionally the
bank would take a  subordinated  position of $7 million in our $10 million  note
due from the sale of our Garden State Park property.  It is the Company's intent
to borrow an additional $2 million on this note to satisfy the entire payment of
$9.75  million due to the Trustee for the  purchase of the Ship  Mortgage and to
complete the purchase of 1,785,000 Company shares from the Trustee for $892,500.
Additionally,  at this time we are  negotiating  with the  Trustee to extend the
closing date under the Purchase and Sale  Agreement  from October 31, 2002 until
December 31, 2002.  There can be no assurances  that the proposed  loans will be
received, or that we will be successful in our negotiations with the Trustee.

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

     None

                                       46

<PAGE>

                                    PART III


Item 10. Directors and Executive Officers of the Registrant.

     Set  forth  below  is  certain  information  regarding  our  directors  and
executive officers:


Name                 Age      Position
----                 ---      --------
Francis W. Murray      61     Chairman of the Board, President and
                              Chief Executive Officer
James J. Murray        63     Director
Walter ReDavid         76     Director
Robert J. Quigley      73     Director

-------------------------------------------------------------------------------

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

     Francis  W.  Murray.  Mr.  Murray  has been a  director  since 1996 and our
President,  Chief Executive  Officer and Chairman of the Board since October 10,
2000. On October 15, 2002,  Mr. Murray  assumed the position of Chief  Financial
Officer. 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 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 the city of St. Louis.  Mr.
Murray has been a member of the  Executive  Committee and the  Compensation  and
Stock Options Committee since March 15, 1999.

     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, Mr. Murray
joined the  Philadelphia  Eagles'  public  relations  staff and two years  later
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 our Garden  State Park
subsidiary from  1985-1987.  Mr. Murray has been a member of the Audit Committee
since March 15, 1999.  Mr. Murray is the brother of Francis W. Murray,  who is a
director and our President, Chief Executive Officer and Chairman of the Board.

     Walter  ReDavid.  Mr. ReDavid was elected to the board on July 3, 2001. Mr.
ReDavid is a past Registrar of Wills and has served on various  Delaware County,
Pennsylvania township

                                       47

<PAGE>

boards.  Mr. ReDavid has been practicing  general law as a sole practitioner for
over 50 years.

     Robert J.  Quigley.  Mr.  Quigley  has been a  director  since  1980.  From
February  1996 until  October 15,  1997,  and again from 1999 until  October 10,
2000, Mr. Quigley served as our President.  Mr. Quigley also served as President
from 1988 until July  1992.  Between  November  1995 and May 1996,  Mr.  Quigley
served as our Chairman of the Board and acting  Chief  Executive  Officer.  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.

Executive and Other Key Officers

Our  executive  and other key  officers,  in addition to Mr.  Francis W. Murray,
include:
--------------------------------------------------------------------------------
Name                       Age   Position
----                       ---   --------
William H. Warner          57    Secretary

Christine E. Rice Newell   57    Assistant Treasurer and Controller

Francis X. Murray          36    President and CEO of Palm Beach Princess, Inc.

Jerry Winters              42    Treasurer and CFO of Palm Beach Princess, Inc.

Stephen Flood              42    Vice President of Casino Operations, Palm Beach
                                 Princess, Inc.
--------------------------------------------------------------------------------

     William H. Warner.  Served as Treasurer  and Chief  Financial  Officer from
1983 until  October 15, 2002.  Mr.  Warner  resigned  those  positions  over his
concerns that the Company may not maintain its Director and Officer's  insurance
policy in the  future.  The limits of the policy have been  reduced  from Fiscal
2001  levels.  Mr.  Warner was  appointed  our  Secretary  in  October  2000 and
continues to hold that position.  Mr. Warner is a certified  public  accountant,
and prior to joining us, was employed in public accounting for 11 years.

     Christine E. Rice Newell. Ms. Rice Newell has been our Assistant  Treasurer
and  Controller  since  1990.  From 1986 until  1990,  Ms.  Rice  Newell was our
Corporate Accounting Manager. Ms. Rice Newell is a certified public accountant.

     Francis X. Murray.  Mr.  Murray,  son of our Chairman and CEO,  has,  since
April 2001, been President of our Palm Beach Princess,  Inc.  subsidiary,  which
operates  the cruise ship M/V Palm Beach  Princess and related  offshore  gaming
business. He has also been President of MJQ Corporation since May of 1999, which
corporation  owns the M/V Palm  Beach  Princess  and  operated  the  cruise  and
offshore gaming business from May 1999 until chartering the vessel to Palm Beach
Princess,  Inc. in April, 2001. Prior thereto, Mr. Murray was President (January
1999 to May 1999),  and Vice  President and General  Manager  (February  1998 to
January 1999) of Palm

                                       48

<PAGE>

Beach Casino  Line,  a division of Leo Equity  Group,  Inc.  which  operated the
vessel M/V Palm Beach  Princess;  and in 1997-98 was a consultant for Leo Equity
Group, Inc.

     Jerry Winters.  Mr. Winters has been Treasurer and Chief Financial  Officer
of our Palm Beach Princess,  Inc.  subsidiary since its inception in April 2001.
He has also been Treasurer and CFO of MJQ  Corporation  since March 1999.  Prior
thereto,  Mr. Winters was CFO for Home Care America,  Inc.  (March 1998 to March
1999) and regional CFO for Vencor, Inc., (March 1996 to March 1998). Mr. Winters
is a certified public accountant.

     Stephan  Flood.  Mr.  Flood  joined the  previous  owners of the Plam Beach
Princess in May 1994. From 1997 he served as a casino manager until January 2000
when he assumed his current position of Vice President,  Casino  Operations.  In
that  position,  Mr. Flood is  responsible  for  management and direction of all
aspects of the company's casino operations, including casino marketing, tracking
and customer  service.  Prior to joining the company Mr. Flood was employed in a
range of casino  positions by Norwegian Cruise Line,  Premier  Cruises,  Lucayan
Beach Casino and Charlie  Chester's  London Casino.  He holds licenses issued by
British casino regulatory authorities.

Section 16(a) Beneficial Ownership Reporting Compliance

     Pursuant  to Section  16(a) of the  Securities  Exchange  Act of 1934,  our
executive  officers  and  directors  are  required to file  reports with the SEC
relating to their ownership of and transactions in our equity securities.  Based
on our records and other  information,  we believe that all Section 16(a) filing
requirements  were met for  fiscal  year  2002.

Involvement in Certain Legal Proceedings

     In  February,  2002,  Robert J.  Quigley  and  William H.  Warner,  without
admitting  or  denying  the  allegations,  settled  a  cease  and  desist  order
instituted by the Securities and Exchange Commission relating to filings made in
Fiscal 1997, which included findings by the Commission that Messrs.  Quigley and
Warner  committed and caused  violations of the  reporting,  record  keeping and
internal  control  provisions  of  the  Securities  Exchange  Act of  1934  (the
"Exchange  Act") by causing the Company to  improperly  disclose and account for
certain  related  party  transactions   involving  the  Company's  former  chief
executive officer.  Without admitting or denying the Commission's  findings, Mr.
Quigley  consented  to the  issuance  of an order that he cease and desist  from
causing any  violation or future  violation of Section 13(a) of the Exchange Act
and Rules 12b-20 and 13a-13 thereunder and from committing any violation and any
future  violation  of  Rule  13b2-2.  Also  without  admitting  or  denying  the
Commission's  findings, Mr. Warner consented to the issuance of an order that he
cease and desist from  causing any  violation  or future  violation  of Sections
13(a),  13(b)(2)(A)  and  13(b)(2)(B)  of the  Exchange Act and Rules 12b-20 and
13a-13  thereunder and from committing any violations and any future  violations
of Rules 13b2-1 and 13b2-2.

                                       49

<PAGE>

Item 11. Executive Compensation

     The  following  table sets forth the cash  compensation  as well as certain
other  compensation  paid or accrued during fiscal years 2002,  2001 and 2000 to
the  individuals  who served as our chief  executive  officer during fiscal year
2002 and four  other  executive  officers  of the  Company  or key  officers  of
subsidiaries   who  earned   more  than   $100,000   during   fiscal  year  2002
(collectively, the "Named Executives"):
<TABLE>
                                                                        Long-Term
                                                                       Compensation
                                          Annual Compensation             Awards
                                          -------------------             ------
                                                                        Securities       All
Name and                                                 Other Annual   Underlying      Other
Principal Position      Year        Salary       Bonus   Compensation     Options   Compensation
                                      ($)         ($)         ($)           (#)          ($)
<CAPTION>
<S>                     <C>         <C>         <C>         <C>        <C>            <C>
Francis W. Murray,      2002        387,404       -0-       17,049(2)  2,000,000(3)   18,658(4)
President, Chief        2001        278,654     500,000(1)  17,011         -0-        18,537
Executive Officer       2000        122,308       -0-       17,737         -0-        10,997
and Chief Financial
Officer

Francis X. Murray,      2002        277,885     135,320     11,423(5)      -0-        21,930(6)
President of Palm       2001         63,462(14)  12,000      1,904         -0-         1,074
Beach Princess, Inc.    2000          -0-         -0-        -0-           -0-         -0-

William H. Warner,      2002        176,346       -0-        3,244(7)     75,000(8)   18,650(9)
Secretary               2001        123,693       -0-        -0-           -0-        15,430
                        2000        126,000       -0-        -0-           -0-        11,219

Jerry Winters,          2002        147,269      35,000      6,000(10)     -0-         2,458(11)
Treasurer of Palm       2001         32,308(14)   -0-        1,000         -0-           605
Beach Princess, Inc.    2000          -0-         -0-        -0-           -0-         -0-

Stephan Flood,          2002        110,385      26,250      6,000(12)     -0-         2,258(13)
Vice President of       2001         24,231(14)   -0-        1,500         -0-           470
Palm Beach Princess,    2000          -0-         -0-        -0-           -0-         -0-
Inc.
------------------------------------------------------------------------------------------------
</TABLE>

(1)  In recognition of Mr. F. W. Murray's  efforts in successfully  settling the
     significant  litigation in Delaware  involving Mr.  DeSantis,  successfully
     closing the transactions  involving the sale of our real properties located
     in Las Vegas,  Nevada and Cherry  Hill,  New Jersey,  paying off all of our
     bank debt and acquiring  valuable interests in the profits from development
     of the  properties  sold,  we  awarded a bonus to Mr.  Murray of  $500,000,
     payable  solely in shares of our  common  stock  valued at $0.20 per share,
     which was  determined by the Board of Directors to equal or exceed the fair
     market value per share of our common stock. Accordingly,  such compensation
     was paid in the form of 2,500,000 shares of our common stock.

(2)  Consists of monthly automobile lease payments.

(3)  Represents the number of shares under options  granted in fiscal 2002. Such
     options  replaced  options  for the same  number of  shares  which had been
     granted in fiscal 2001 and terminated in fiscal 2002.

                                       50

<PAGE>

(4)  Fiscal  2002  amounts  consist of $7,908 of life and  long-term  disability
     insurance  premiums paid by the Company with respect to term life insurance
     payable  to  beneficiaries  designated  by Mr.  F. W.  Murray  and  $10,750
     contributed by the Company under the Company's 401(k) plan.

(5)  Consists of monthly automobile lease payments.

(6)  Fiscal 2002 amounts consist of $877 of life insurance  premiums paid by the
     Company  with  respect  to term life  insurance  payable  to  beneficiaries
     designated  by Mr. F. X. Murray,  $1,231  contributed  by the Company under
     MJQ's 401(k) plan and $19,822 of golf  membership  dues as provided with an
     MJQ employment contract.

(7)  Fiscal  2002  amounts of $811 per month of  automobile  allowance  for four
     months.

(8)  Represents the number of shares under options  granted in fiscal 2002. Such
     options  replaced  options  for the same  number of  shares  which had been
     granted in fiscal 2001 and terminated in fiscal 2002.

(9)  Fiscal  2002  amounts  include  $7,868  of life  and  long-term  disability
     insurance  premiums paid by the Company with respect to term life insurance
     payable to beneficiaries designated by Mr. Warner and $9,225 contributed by
     the Company under the Company's 401(k) plan.

(10) Fiscal 2002 amounts of $500 per month of automobile allowance

(11) Fiscal 2002 amounts consist of $653 of life insurance  premiums paid by the
     Company  with  respect  to term life  insurance  payable  to  beneficiaries
     designated by Mr. Winters and $1,805 contributed by the Company under MJQ's
     401(k) plan.

(12) Fiscal 2002 amounts of $500 per month of automobile allowance

(13) Fiscal 2002 amounts consist of $602 of life insurance  premiums paid by the
     Company  with  respect  to term life  insurance  payable  to  beneficiaries
     designated by Mr. Flood and $1,656  contributed  by the Company under MJQ's
     401(k) plan.

(14) Includes compensation in Fiscal 2001 from April 30, 2001 to June 30, 2001.

                                       51

<PAGE>

Stock Options Grants

     The following table contains information concerning grants of stock options
to the Named Executives during fiscal year 2002.
<TABLE>

                                   Option Grants in Fiscal 2002
------------------------------------------------------------------------------------------------------
                       Individual Grants
                       -----------------
                    Number of     % of Total
                    Securities    Options                              Potential Realizable
                    Underlying    Granted to   Exercise                Value At Assumed Annual Rates
                    Options       Employees    Price      Expiration   of Stock Price Appreciation for
Name                Granted(#)    In 2002      ($/Sh)     Date         Option Term (1)
----                -----------   ----------   --------   -----------  -------------------------------
<CAPTION>
<S>                  <C>           <C>          <C>        <C>             <C>        <C>
                                                                           5% ($)     10% ($)
                                                                           ------     ---------
Francis W. Murray    2,000,000     96.4         0.268750   12/31/10        338,030    856,636

Francis X. Murray        0          --              --         --            --         --

William H. Warner       75,000      3.60        0.268750   12/31/10         12,676     32,124

Jerry Winters            0          --              --         --            --         --

Stephan Flood            0          --              --         --            --         --
------------------------------------------------------------------------------------------------------
</TABLE>
(1)  Illustrates  the value  that might be  received  upon  exercise  of options
immediately  prior to the  assumed  expiration  of their  term at the  specified
compounded rates of appreciation  based on the market price for the common stock
when the options were granted. Assumed rates of appreciation are not necessarily
indicative of future stock performance.


Stock Option Exercises and Holdings

     The  following  table sets  forth the value of options  held by each of the
Named  Executives at June 30, 2002. None of the Named  Executives  exercised any
options during fiscal year 2002.
<TABLE>

            Aggregated Option Exercises in 2002 and Option Values at June 30, 2002
-------------------------------------------------------------------------------------------------
                                            Number of Securities        Value of Unexercised
                                            Underlying Unexercised      In-the-Money Options
                                            Options at June 30, 2002(#) at June 30, 2002 ($)(1)
                   Shares        Value
                   Acquired on   Realized
Name               Exercise (#)  ($)        Exercisable  Unexercisable  Exercisable  Unexercisable
<CAPTION>
<S>                  <C>         <C>         <C>                   <C>     <C>                 <C>
Francis W. Murray    --          --          2,300,000             0       62,500              0
William H. Warner    --          --             75,000             0        2,344              0
--------------------------------------------------------------------------------------------------
</TABLE>

(1) The value of  unexercised  in-the-money  options is based on the  difference
between the last  reported  sale price of a share of common stock as reported on
the Pink Sheets on June 26, 2002 ($0.30) and the exercise  price of the options,
multiplied by the number of options.

                                       52

<PAGE>

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.

Employment Contracts

     Effective December 1, 2000, we entered into a five-year employment contract
with Mr. Francis W. Murray as our Chief Executive Officer. The contract provides
for  annual  compensation  of  $395,000,  a $1,500  monthly  automobile  expense
allowance,  a country club annual dues  allowance  and travel and  entertainment
reimbursements for business expenses  reasonably incurred by him, in addition to
participation  in various other benefits  provided to our employees.  As part of
his contract,  on December 28, 2000, Mr. Murray was awarded  options to purchase
2,000,0000  shares of our common stock under an stock  incentive  plan which was
subject to stockholder  approval.  Such options  terminated in fiscal 2002 since
the Plan was not submitted for shareholder  approval,  and  replacement  options
were  granted  in fiscal  2002 with an  exercise  price of  $0.26875  per share,
expiring December 31, 2010.

     In  connection  with  the  bareboat  charter  with MJQ  Corporation  we are
obligated to honor several  employment  contracts between key executives and MJQ
Corporation.  Should  we be  successful  in  purchasing  from  the  Trustee  the
promissory  note  of  MJQ  Corporation,  it is  our  intention  to  honor  these
employment  contracts.  The first  contract  is for  Francis  X.  Murray,  which
provides for a base salary of $290,000 and $310,000 respectively during calendar
years 2002 and 2003.  Additionally the contract  provides for an annual bonus of
up to 30% of the executive's base salary if certain EBITDA performance goals are
met,  membership to a golf club and other  expense  allowances.  The  employment
contract with Jerry Winters  provides for a base salary of $140,000 and $147,000
respectively  during  calendar  years 2002 and 2003.  Additionally  the contract
provides  for an annual  bonus of up to 25% of the  executive's  base  salary if
certain  EBITDA  performance  goals are met, and other expense  allowances.  The
employment  contract with Stephen  Flood  provides for a base salary of $105,000
and $110,000 respectively during calendar years 2002 and 2003.  Additionally the
contract  provides  for an  annual  bonus of up to 20% of the  executive's  base
salary if certain EBITDA performance goals are met.

Compensation Committee Interlocks and Insider Participation

     Mr. Francis W. Murray, a member of the Compensation  Committee of the Board
of Directors, currently serves as our President and Chief Executive Officer. See
also "Item 13. Certain  Relationships  and Related  Transactions" for additional
information with respect to Mr. Murray.

                                       53

<PAGE>

Item 12.  Security  Ownership  of  Certain  Beneficial  Owners  and  Management.

Security Ownership of Certain Beneficial Owners

     The  following  table sets forth  certain  information  with respect to the
beneficial ownership, as of September 16, 2002, of each person who we knew to be
the  beneficial  owner  of  more  than  5% of  our  common  stock.  Each  of the
stockholders  named below has sole voting and  investment  power with respect to
such shares, unless otherwise indicated.

--------------------------------------------------------------------------------
                                          Common Stock
                                          ------------
Name and Address of
Beneficial Owner             Number of Shares       Percent
----------------             ----------------       -------
The Family Investment Trust     1,090,731        (1)  12.5%
Henry Brennan, Trustee
340 North Avenue
Cranford, NJ 07016

Francis W. Murray               4,800,000        (2)  33.6%
211 Benigno Boulevard
Suite 210
Bellmawr, NJ 08031

Frank A. Leo                      736,201        (3)   5.2%
44 Minebrook Rd
Colts Neck, NJ 07722
--------------------------------------------------------------------------------

(1)  Henry  Brennan is the brother of Robert E. Brennan,  our former  president,
     whose adult sons are the beneficiaries of the trust.
(2)  Includes  2,300,000  shares of common stock  issuable  upon the exercise of
     warrants.
(3)  Includes 200,000 shares purchasable under stock options.

Security Ownership of Management

     The  following  table sets forth  certain  information  with respect to the
beneficial ownership,  as of September 16, 2002, of (i) each director,  (ii) the
Named  Executives  and (iii) all of our directors  and  executive  officers as a
group. Each of the stockholders named below has sole voting and investment power
with respect to such shares, unless otherwise indicated.

--------------------------------------------------------------------------------

Name of Beneficial Owner             Number of Shares(1)   Percent of Class
------------------------             -------------------   ----------------
Francis W. Murray                      4,800,000     (2)         33.6%
James J. Murray                           25,000     (3)           *
Walter ReDavid                                 0                   *
Robert J. Quigley                        105,830     (4)           *
William H. Warner                         75,124     (5)           *
All executive officers and             5,010,954                 35.8%
directors as a group (6 persons)
--------------------------------------------------------------------------------
* Less than 1 percent.
(1)  With  respect  to each  stockholder,  includes  any  shares  issuable  upon
     exercise of any options or warrants  held by such  stockholder  that are or
     will become exercisable within sixty days of September 16, 2002.

                                       54

<PAGE>

(2)  Includes 2,300,000 shares issuable upon the exercise of stock options.
(3)  Consists of shares of common stock issuable upon the exercise of options.
(4)  Includes  100,000  shares of common  stock  issuable  upon the  exercise of
     options.
(5)  Includes 75,000 shares issuable upon the exercise of stock options.


Equity Compensation Plan Information

     The following table contains  information on Equity Compensation Plans that
have been and have not been approved by securityholders at June 30, 2002:
<TABLE>
                                                                        Number of securities
                                                                        remaining available for
                        Number of                                       future issuance under
                        Securities to be         Weighted average       equity compensation
                        issued upon exercise     exercise price of      plans (excluding
                        of outstanding options,  outstanding options,   securities reflected in
                        warrants and rights      warrants and rights    column (a)
Plan Category                     (a)                   (b)                        (c)
----------------------  -----------------------  --------------------   ------------------------
<CAPTION>
<S>                           <C>                        <C>                     <C>
Equity compensation
plans approved by                -0-                     N/A                     N/A
securityholders

Equity compensation
plans not approved by         4,046,500                  2.02                    -0-
securityholders

Total                         4,046,500                  2.02                    -0-
</TABLE>


     Set forth below is a summary of the material terms of stock options granted
by the Company which were not approved by the Company's securityholders.

     Pursuant to a  Non-qualified  Stock Option  Agreement dated January 7, 2002
between the Company  and each of Francis W.  Murray and William H.  Warner,  the
Company  granted an option to purchase  2,000,000  shares of Common Stock to Mr.
Murray and to purchase 75,000 shares of Common Stock to Mr. Warner, in each case
for a purchase price of $0.26875 per share.  The options vested  immediately and
expire December 31, 2010. The options are not transferable other than by will or
the laws of descent and distribution,  and, during the lifetime of the optionee,
are exercisable only by the optionee.  The options remain exercisable  following
termination of employment, until their scheduled expiration date.

     In Fiscal 1997, the Company granted a  non-qualified  stock option to Frank
A. Leo, its then chairman,  to purchase  200,000 shares of Common Stock at $4.00
per share.  In fiscal 2002,  in  connection  with the  agreement to purchase Mr.
Leo's stock in Leo Equity Group, Inc., the Company agreed to reduce the purchase
price for shares under Mr. Leo's stock option to $0.50 per share and imposed, as
a condition of exercise of such option,  the requirement  that the Company first
shall have  consummated its purchase of Company Common Stock from the Chapter 11
Trustee for the  Bankruptcy  Estate of Robert E.  Brennan  pursuant to the Stock
Purchase Agreement dated as of February 22, 2002, between the Company and such

                                       55

<PAGE>

Trustee.  Mr. Leo's option  survived  termination  of his employment and expires
December 20,2006.

     In connection with prior agreements with former officers and directors, the
Company  granted  options to purchase  925,000  shares of Common Stock at prices
ranging from $4.00 to $5.00 per share.  These  options  expire at various  times
from January 2006 to January 2007.

     In Fiscal 1999, the Company granted  warrants to purchase 435,000 shares of
Common Stock at $2.50 per share in connection  with obtaining  financing.  These
warrants  expire in May 2004.  In Fiscal  1996 the Company  granted  warrants to
purchase  275,000 shares of Common Stock at $4.00 per share as a finder's fee in
connection with the purchase of its El Rancho property. These warrants expire in
April 2006.

Item 13. Certain Relationships and Related Transactions.

     During the third  quarter of fiscal year 2001,  we invested in two projects
which our Chairman,  President and Chief Executive  Officer,  Francis W. Murray,
also has a pecuniary interest. In connection with one such project, we agreed to
advance, as a loan, up to $1.5 million, the proceeds of which were to be used to
pay costs and expenses for development of a golf course in Southern  California.
At June 30, 2002,  approximately $803,291 has been loaned to such project and we
have accrued  $107,878 of interest due on the loan. A limited  partnership,  the
general  partner  of which is owned by Mr.  Murray,  has  acquired  an option to
purchase  certain  real  estate in  Southern  California  on which it intends to
construct a golf club. Loans by us to the limited partnership will bear interest
at an annual rate of 12%, and we will have the right to convert our loans into a
50% equity interest in the limited  partnership (which percentage interest would
be  reduced  if  additional  investments  by  others  are  made  in the  limited
partnership).   Mr.  Murray's  equity  interest  in  the  limited   partnership,
indirectly  through his ownership of the general partner,  presently is 80%, and
would be reduced  proportionally  if we exercise  our right to convert our loans
into equity.

     In the second project, Mr. Murray is participating in the development of an
oceanfront  parcel  of land  located  in Fort  Lauderdale,  Florida,  which  has
received all  governmental  entitlements  from the City of Fort  Lauderdale,  to
develop a 14-story  building to include a 5-story parking garage,  approximately
6,000 square feet of  commercial  space and a  residential  9-story  tower.  The
property owner,  MJQ Development  which is owned by Michael J. Quigley,  III, is
developing a vacation  membership/condominium  hotel resort.  Mr. Quigley has no
relationship to Robert J. Quigley,  the Company's director and former president.
At June 30, 2002, the Company has lent  $2,175,241  and has accrued  $350,833 of
interest  incurred  on the loan to the  property  owner.  Our  loans  will  bear
interest at 12% and will be repayable out of the first  proceeds,  after payment
of  bank  debts,  generated  by  the  sale  of  vacation  memberships  or  hotel
condominiums. We will have the right to convert our loan into an equity interest
(subject to receiving certain third party approvals);  which would entitle us to
receive a priority  return of our  investment  and a priority  profits  interest
equal to three times our investment.  Repayment of our loans (and receipt of any
return if we convert  our loans to equity)  will be  subject  to  repayment  of,
first,  bank debt of approximately  $3.8 million incurred in the purchase of the
real  property and,  second,  construction  financing  expected to amount to $25
million to $30  million.  If the project is  successful,  Mr.  Murray  stands to
receive a contingent benefit, which could be substantial, from the owner for his
participation  in the  project,  but only after we and the owner  have  received
priority returns of our investment and priority shares of profits.

                                       56

<PAGE>

     On January  26,  2001,  the Company  borrowed  $1,000,000  from  Michael J.
Quigley,  III at an annual  interest rate of 10%.  Principal and interest on the
loan was due on or about April 25, 2001. On May 14, 2001,  the loan was modified
to be due on demand.  As collateral  for the loan,  the Company  pledged the $33
million in notes receivable from the sale of the El Rancho and Garden State Park
properties.  On February 22, 2002, Mr. Quigley released his security interest in
the Garden State Park Note in connection with the Master  Settlement  Agreement.
(See Note 10.)

     Effective  April 30,  2001,  we entered  into a bareboat  charter  with MJQ
Corporation,  pursuant  to which we are  chartering  the  vessel  M/V Palm Beach
Princess for the purpose of operating a casino cruise  business from the Port of
Palm Beach,  Florida.  Francis W.  Murray,  our  Chairman,  President  and Chief
Executive Officer,  is an officer and director of MJQ Corporation,  and his son,
Francis X. Murray,  is President  and a director of MJQ  Corporation.  Under the
charter agreement, we are obligated to pay $50,000 per month as the charter hire
fee to MJQ  Corporation.  All costs of  operating  the  vessel  incurred  by MJQ
Corporation  on our behalf are to be  reimbursed  by us to MJQ  Corporation.  In
addition,  in order to maintain  the  bareboat  charter,  we have entered into a
Master Settlement Agreement with the Chapter 11 Trustee of the Bankruptcy Estate
of Robert E. Brennan,  MJQ  Corporation and others,  and a related  Purchase and
Sale  Agreement,  providing for our purchase from the Trustee of the  promissory
note of MJQ Corporation,  having a balance of principal and interest outstanding
of  approximately  $15.7  million  as of June  30,  2002 and  secured  by a ship
mortgage against the Palm Beach Princess vessel,  for a purchase price of $13.75
million. See Notes 10 and 17. Pursuant to the Master Settlement  Agreement,  MJQ
Corporation and its officers and directors  (including Francis W. Murray and his
son) exchanged  mutual  releases with the Trustee and others having claim to the
Ship Mortgage Obligation.

     On July 12 2002 we borrowed  $300,000  from  Francis W. Murray at an annual
interest rate of 6%. The note is due on demand and interst is payable monthly.


                                       57

<PAGE>

                                     PART IV


Item 14. Exhibits, Financial Statement Schedules, and Reports On Form 8-K.

(a)  The following documents are filed as part of this report

     1.   Financial Statements.

          See index to Financial Statements at Item 8 on page 18 of this report.

     2.   Financial Statement Schedules.

          See index to Financial Statements at Item 8 on page 18 of this report.

     3.   Exhibits.

     The following  exhibits are filed as part of, or  incorporated by reference
into, this report:


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

     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).

     10.1 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)

     10.2 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).

     10.3 * Employment  Agreement by and between the  Registrant  and Francis W.
            Murray dated as of December 1, 2000

                                       58

<PAGE>

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

     10.4 First  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 8-K dated January 28, 1999).

     10.5 Lease  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 8-K dated January 28,
          1999).

     10.6 Agreement  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 8-K dated  January  28,
          1999).

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

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

     10.9 $23,000,000.00  Promissory Note dated May 18, 2000, from Turnberry/Las
          Vegas  Boulevard,  LLC (the "Maker") to Orion Casino  Corporation (the
          "Payee")   (incorporated   by   reference   to  Exhibit  10.3  to  the
          Registrant's Current Report on Form 8-K dated May 22, 2000).

     10.10Security   Agreement,   dated  as  of  May  18,  2000,  by  and  among
          Turnberry/Las Vegas Boulevard,  LLC (the "Joint Venture"), the members
          of the Joint  Venture  parties to this  Agreement  (said members being
          collectively called the "Pledgers"),  and Orion Casino Corporation,  a
          Nevada  corporation  (the  "Purchaser")  (incorporated by reference to
          Exhibit 10.4 to the Registrant's  Current Report on Form 8-K dated May
          22, 2000).

     10.11Note Agreement  between GSRT, LLC, and  Realen-Turnberry/Cherry  Hill,
          LLC,  as Issuer,  dated as of  November  29,  2000.  (incorporated  by
          reference to Exhibit 10.1 to the  Registrant's  Current Report on Form
          8-K dated November 30, 2000)

     10.12$10,000,000.00  Promissory  Note dated November 29, 2000, from Realen-
          Turnberry/Cherry Hill, LLC to GSRT, LLC. (incorporated by reference to
          Exhibit  10.2 to the  Registrant's  Current  Report  on Form 8-K dated
          November 30, 2000)

                                       59

<PAGE>

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

     10.13Security  Agreement,  dated as of  November  29,  2000,  by and  among
          Realen-     Turnberry/Cherry    Hill,    LLC,    its    sole    member
          Realen-Turnberry/Cherry  Hill Associates and GSRT, LLC.  (incorporated
          by  reference to Exhibit 10.3 to the  Registrant's  Current  Report on
          Form 8-K dated November 30, 2000)

     10.14Amended and Restated  Bareboat  Charter  between Palm Beach  Princess.
          Inc. and MJQ Corporation

     10.15Master  Settlement  Agreement  dated  February  22,  2002,  among  the
          Chapter 11 Trustee for the Bankruptcy Estate of Robert E. Brennan, the
          Company,  and, among others, MJQ Corporation,  Leo Equity Group, Inc.,
          Francis W. Murray, Frank A. Leo and Michael J. Quigley, III

     10.16Purchase and Sale  Agreement  dated  February  22, 2002,  between Palm
          Beach  Princess,  Inc.  and the Chapter 11 Trustee for the  Bankruptcy
          Estate of Robert E. Brennan

     10.17Stock Purchase  Agreement dated February 22, 2002, between the Company
          and the  Chapter 11  Trustee  for the  Bankruptcy  Estate of Robert E.
          Brennan

     10.18* Non-Qualified  Stock Option Agreement dated January 7, 2002, between
            the Company and Francis W. Murray

     10.19* Non-Qualified  Stock Option Agreement dated January 7, 2002, between
            the Company and William H. Warner

     10.20 * Stock Option granted to Francis W. Murray on January 15, 1997

     10.21 * Stock Option granted to Frank A. Leo on December 20, 1996

     21   Subsidiaries.

     99.1 Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

     99.2 Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

--------------------------------------------------------------------------------
*    Constitutes a management contract or compensation plan.

(b)  Reports on Form 8-K.

     No reports on Form 8-K were filed by the Registrant during the last quarter
of fiscal year 2002.

                                       60

<PAGE>

                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto  duly  authorized,  in Bellmawr,  New
Jersey, this 25th day of October,2002.

           INTERNATIONAL THOROUGHBRED BREEDERS, INC.


           By:/s/ Francis W. Murray
              --------------------------------------------------------
              Francis W. Murray
              Chairman of the Board, President and Chief Executive Officer

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  this report has been signed by the  following  persons on
behalf of the Registrant and in the capacities and on the dates indicated.

      Signature                         Title                         Date
      ---------                         -----                         ----

/s/ Francis W. Murray       Chairman of the Board, President    October 25,2002
---------------------       and Chief Executive Officer
Francis W. Murray           (Principal Executive Officer)


/s/ Francis W. Murray       Chief Financial Officer             October 25,2002
------------------------    (Principal Financial and
Francis W. Murray           Accounting Officer)



/s/ James J. Murray         Director                            October 25,2002
------------------------
James J. Murray


/s/ Robert J. Quigley       Director                            October 25,2002
------------------------
Robert J. Quigley


/s/ Walter ReDavid          Director                            October 25,2002
------------------------
Walter ReDavid


                                       61


<PAGE>



                      CERTIFICATION PURSUANT TO RULE 13a-14
               OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I. Francis W. Murray, the President and Chief Executive Officer of International
Thoroughbred Breeders, Inc., certify that:

1.   I  have  reviewed  this  annual  report  on  Form  10-K  of   International
     Thoroughbred Breeders, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.


Date:  October 25, 2002             s/Francis W. Murray
                                    -------------------------------
                                    Francis W. Murray
                                    President and Chief Executive Officer





                      CERTIFICATION PURSUANT TO RULE 13a-14
               OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Francis W. Murray, the Chief Financial Officer and Treasurer of International
Thoroughbred Breeders, Inc., certify that:

1.   I  have  reviewed  this  annual  report  on  Form  10-K  of   International
     Thoroughbred Breeders, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report.


Date:  October 25, 2002             s/ Francis W. Murray
                                    ---------------------------------------
                                    Francis W. Murray
                                    Chief Financial Officer and Treasurer





                                       62

<PAGE>

                                  EXHIBIT INDEX


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

     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).

     10.1 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)

     10.2 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).

     10.3 * Employment  Agreement by and between the  Registrant  and Francis W.
            Murray dated as of December 1, 2000

     10.4 First  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 8-K dated January 28, 1999).

     10.5 Lease  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 8-K dated January 28,
          1999).

     10.6 Agreement  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 8-K dated  January  28,
          1999).

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

                                       63

<PAGE>

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

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

     10.9 $23,000,000.00  Promissory Note dated May 18, 2000, from Turnberry/Las
          Vegas  Boulevard,  LLC (the "Maker") to Orion Casino  Corporation (the
          "Payee")   (incorporated   by   reference   to  Exhibit  10.3  to  the
          Registrant's Current Report on Form 8-K dated May 22, 2000).

     10.10Security   Agreement,   dated  as  of  May  18,  2000,  by  and  among
          Turnberry/Las Vegas Boulevard,  LLC (the "Joint Venture"), the members
          of the Joint  Venture  parties to this  Agreement  (said members being
          collectively called the "Pledgers"),  and Orion Casino Corporation,  a
          Nevada  corporation  (the  "Purchaser")  (incorporated by reference to
          Exhibit 10.4 to the Registrant's  Current Report on Form 8-K dated May
          22, 2000).

     10.11Note Agreement  between GSRT, LLC, and  Realen-Turnberry/Cherry  Hill,
          LLC,  as Issuer,  dated as of  November  29,  2000.  (incorporated  by
          reference to Exhibit 10.1 to the  Registrant's  Current Report on Form
          8-K dated November 30, 2000)

     10.12$10,000,000.00  Promissory  Note dated November 29, 2000, from Realen-
          Turnberry/Cherry Hill, LLC to GSRT, LLC. (incorporated by reference to
          Exhibit  10.2 to the  Registrant's  Current  Report  on Form 8-K dated
          November 30, 2000)

     10.13Security  Agreement,  dated as of  November  29,  2000,  by and  among
          Realen-     Turnberry/Cherry    Hill,    LLC,    its    sole    member
          Realen-Turnberry/Cherry  Hill Associates and GSRT, LLC.  (incorporated
          by  reference to Exhibit 10.3 to the  Registrant's  Current  Report on
          Form 8-K dated November 30, 2000)

     10.14Amended and Restated  Bareboat  Charter  between Palm Beach  Princess.
          Inc. and MJQ Corporation

     10.15Master  Settlement  Agreement  dated  February  22,  2002,  among  the
          Chapter 11 Trustee for the Bankruptcy Estate of Robert E. Brennan, the
          Company,  and, among others, MJQ Corporation,  Leo Equity Group, Inc.,
          Francis W. Murray, Frank A. Leo and Michael J. Quigley, III

     10.16Purchase and Sale  Agreement  dated  February  22, 2002,  between Palm
          Beach  Princess,  Inc.  and the Chapter 11 Trustee for the  Bankruptcy
          Estate of Robert E. Brennan

     10.17Stock Purchase  Agreement dated February 22, 2002, between the Company
          and the  Chapter 11  Trustee  for the  Bankruptcy  Estate of Robert E.
          Brennan

                                       64

<PAGE>

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

     10.18* Non-Qualified  Stock Option Agreement dated January 7, 2002, between
            the Company and Francis W. Murray

     10.19* Non-Qualified  Stock Option Agreement dated January 7, 2002, between
            the Company and William H. Warner

     10.20 * Stock Option granted to Francis W. Murray on January 15, 1997

     10.21 * Stock Option granted to Frank A. Leo on December 20, 1996

     21   Subsidiaries.

     99.1 Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

     99.2 Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

--------------------------------------------------------------------------------
*    Constitutes a management contract or compensation plan.

                                       65

<PAGE>

                                                                 EXHIBIT 10.14

                  THE BALTIC AND INTERNATIONAL MARITIME CONFERENCE
                            STANDARD BAREBOAT CHARTER
                             CODE NAME: "BARECON A"

                                     PART I

1.       Shipbroker

         None

2.       Place and date

         Riviera Beach, Florida;

3.       Owners(Lessors)/Place of business

         MJQ Corporation
         777 East Port Road
         Riviera Beach, Florida 33404

4.       Charterers (Lessors)/Place of business

         Palm Beach Princess, Inc
         777 East Port Road
         Riviera Beach, Florida 33404

5.       Vessel's name (Cl. 8)

         Palm Beach Princess

6.       Flag & county of registry (Cl. 8)

         Panama

7.       Call sign

         3FNQ2

8.       Type of Vessel (motor or steam, dry-cargo, tank, reefer or passenger)

         Motor passenger vessel

9.       GRT/NRT

         6,659GRT/2,499NRT

10.      When/where built

         Finland; 1964

11.      Total dw. (abt.) in tons of 2,240 lbs. on summer freeboard

         Not Applicable

12.      Class (Cl. 8)

         Det norske Veritas + 1A1 ICE A

13.      Date of last special survey by the Vessel's classification society

         October, 1998

14.      Further particulars of Vessel (also indicate minimum number of months'
         validity of class certificates agreed acc. to Cl. 13)

         LOA 421 feet; beam 53.5 feet; draft 14.5 feet. Passenger capacity: 870
         on coastal cruises; 480 on Bahamas cruises. Minium 6 months validity of
         class certificates on redelivery.

15.      Port or Place of delivery (Cl. 1)

         Palm Beach, Florida

16.      Time for delivery (Cl. 2)

         [Intentionally left blank]

17.      Cancelling date (Cl. 3)

         Not Applicable

18.      Port of redelivery (Cl. 13)

         Palm Beach, Florida

19.      Running days' notice if other than stated in Cl. 2

         [Intentionally left blank]

20.      Frequency of dry-docking if other than stated in Cl. 8(f)

         See Clause 8 (f).

21.      Trading Limits (Cl. 4)

         United States east coast; Bahamas; Gulf of Mexico; Caribbean.

22.      Charter period

         _________ (____) months, through July 31, 2002, and thereafter for up
         to twelve (12) additional, successive one-month periods, at Charterers'
         option, unless terminated earlier pursuant to clause 33 of Part II.

23.      Charter hire (Cl. 9)

         U.S. $50,000 per month.

24.      Currency and method of payment (Cl. 9)

         United States Dollars, by wire transfer.

25.      Place of payment; also state beneficiary and bank account (Cl. 9)

         Deerfield Beach, Florida; account no. 2090002690578 of MJQ Corporation
         at First Union National Bank, 1950 West Hillsboro Boulevard, Deerfield
         Beach, Florida 33442 ABA no. 067006432

26.      Bank guarantee/bond (sum and place) (Cl. 21) (optional)

         None

27.      Mortgage(s), if any (Cl. 10)

         1.  First Union National Bank
         2.  Cambridge Capital Group, Inc.

28.      Insurance (marine and war risks) (state value acc. to Cl. 11(e)
         or, if applicable, acc. to Cl. 12(k)) (also state if Cl. 12 applies)

         U. S. $18,000,000 value.  Clause 12 not applicable.

29.      Additional insurance cover, if any, for Owners' account limited
         to (Cl. 11(b)) or, if applicable, (Cl. 12(g))

         None

30.      Additional insurance cover for Charterers' account limited to
         (Cl. 11(b))or, if applicable, (Cl. 12(g))

         None

31.      Brokerage commission and to whom payable (Cl. 24)

         None

32.      Latent defects (only to be filled in if period other than
         stated in Cl. 1)

         [Intentionally left blank]

33.      Applicable law (Cl. 25)

         United States

34.      Place of arbitration (Cl. 25)

         New York City

35.      Hire/Purchase agreement (state ifPart III applies) (optional)

         Not Applicable

36.      Number of additional clauses covering special provisions, if agreed

         Clauses 33 and 38

     PREAMBLE.  - It is mutually  agreed that this  Contract  shall be performed
subject to the  conditions  contained in this Charter which shall include Part I
as well as Part II. In the event of a conflict of conditions,  the provisions of
Part I shall prevail over those of Part II to the extent of such conflict. It is
further  mutually agreed that Part III shall only apply and shall only form part
of this Chart if  expressly  agreed and stated in Box 35. If Part III applies it
is further  mutually  agreed that in the event of a conflict of conditions,  the
provisions  of Part I and Part II shall  prevail  over  those of Part III to the
extent of such conflict.


Signature (Owners(Lessors))              Signature (Charterers(Lessees))

      MJQ CORPORATION                       PALM BEACH PRINCESS, INC.
      By: /s/ Michael J. Quigley            By: /s/ Francis X. Murray
              Chairman                              President


                                     PART II
                      "BARECON A" Standard Bareboat Charter

1.   Delivery
     The Vessel shall be delivered and taken over by the  Charterers at the port
     or place  indicated  in Box 13, in such ready berth as the  Charterers  may
     direct.
     The Owners shall before and at the time of delivery  exercise due diligence
     to make the Vessel seaworthy and in every respect ready in hull,  machinery
     and equipment for service under this Charter.  The Vessel shall be properly
     documented at time of delivery.
     The  delivery  to the  Charterers  of the Vessel and the taking over of the
     Vessel by the Charterers  shall constitute a full performance by the Owners
     of all the Owners'  obligations  hereunder,  and  thereafter the Charterers
     shall not be  entitled  to make or assert any claim  against  the Owners on
     account of any  conditions,  representations  or  warranties  expressed  or
     implied with respect to the Vessel but the Owners shall be responsible  for
     repairs  or  renewals  occasioned  by latent  defects  in the  Vessel,  her
     machinery  or  appurtenances,existing  at the time of  delivery  under  the
     Charter,  provided such defects have manifested themselves within 18 months
     after delivery unless otherwise provided in Box 32.

2.   Time for Delivery
     The Vessel to be delivered  not before the date  indicated in Box 16 unless
     with the Charterers' consent. Unless otherwise agreed in Box 19, the Owners
     to give the  Charterers  not less than 30 running days'  preliminary of the
     date on which the Vessel is expected to be ready for  delivery.  The Owners
     to keep the Charterers  closely advised of possible changes in the Vessel's
     position.

3.   Cancelling
     Should the Vessel not be delivered  latest by the cancelling date indicated
     in Box 17, the Charterers to have the option of cancelling this Charter.
     If it appears that the Vessel will be delayed beyond the  cancelling  date,
     the  Owners  shall,  as  soon as  they  are in a  position  to  state  with
     reasonable  certainty  the day on which the  Vessel  should be ready,  give
     notice  thereof to the  Charterers  asking whether they will exercise their
     option of  cancelling,  and the  option  must then be  declared  within one
     hundred and  sixty-eight  (168) hours of the receipt by the  Charterers  of
     such  notice.  If the  Charterers  do not then  exercise  their  option  of
     cancelling,  the seventh day after the readiness date stated in the Owners'
     notice shall be regarded as a new  cancelling  date for the purpose of this
     Clause.

4.   Trading Limits
     The Vessel shall be employed in lawful  trades for the carriage of suitable
     lawful   merchandise  within  the  trading  limits  indicated  in  Box  21.
     Notwithstanding any other provisions contained in this Charter it is agreed
     that  nuclear  fuels or  radioactive  products  or waste  are  specifically
     excluded  from the  cargo  permitted  to be loaded or  carried  under  this
     Charter.  This exclusion does not apply to radio-isotopes  used or intended
     to be  used  for  any  industrial,  commercial,  agricultural,  medical  or
     scientific  purposes  provided the Owners' prior approval has been obtained
     to loading thereof.

5.   Surveys
     Survey on Delivery and Redelivery.  - The Owners and Charterers  shall each
     appoint  surveyors for the purpose of  determining  and agreeing in writing
     the  condition  of the  Vessel  at the  time  of  delivery  and  redelivery
     hereunder.  The Owners shall bear all expenses of the  On-Survey  including
     loss of time,  if any,  and the  Charterers  shall bear all expenses of the
     Off-Survey  including  loss of time, if any, at the rate of hire per day or
     pro  rata,  also  including  in  each  case  the  cost of any  docking  and
     undocking, if required, in connection herewith.

6.   Inspection
     Inspection.  - The  Owners  shall  have the right at any time to inspect or
     survey the Vessel or instruct a duly authorized  surveyor to carry out such
     survey on their behalf to ascertain the condition of the Vessel and satisfy
     themselves  that the  Vessel is being  properly  repaired  and  maintained.
     Inspection  or survey in dry- dock shall be made only when the Vessel shall
     be in dry-dock for the Charterers' purpose.  However, the Owners shall have
     the right to require  the Vessel to be  dry-docked  for  inspection  if the
     Charterers are not docking her at normal classification intervals. The fees
     for such  inspection or survey shall in the event of the Vessel being found
     to be in the  condition  provided in Clause 9 of this Charter be payable by
     the  Owners  and shall be paid by the  Charterers  only in the event of the
     Vessel being found to require  repairs or  maintenance  in order to achieve
     the condition so provided. All time taken in respect of inspection,  survey
     or repairs  shall  count as time on hire and shall form part of the Charter
     period.
     The  Charterers  shall also permit the Owners to inspect the  Vessel's  log
     books whenever  requested and shall whenever required by the Owners furnish
     them with full  information  regarding any casualties or other accidents or
     damage to the Vessel.  For the purpose of this Clause, the Charterers shall
     keep the Owners advised of the intended employment of the Vessel.

7.   Inventories and Consumable Oil and Stores
     A complete inventory of the Vessel's entire equipment,  outfit,  appliances
     and of all  consumable  stores  on board  the  Vessel  shall be made by the
     Charterers  in  conjunction  with  the  Owners  on  delivery  and  again on
     redelivery  of the Vessel.  The  Charterers  and the Owners,  respectively,
     shall at the time of  delivery  and  redelivery  take  over and pay for all
     bunkers,  lubricating oil, water and unbroached  provisions,  paints, oils,
     ropes and other  consumable  stores in the said Vessel at the then  current
     market prices at the ports of delivery and redelivery, respectively.

8.   Maintenance and Operation
     (a) The Vessel  shall during the Charter  period be in the full  possession
     and at the absolute  disposal for all purposes of the  Charterers and under
     their complete control in every respect.  The Charterers shall maintain the
     Vessel,  her machinery,  boilers,  appurtenances  and spare parts in a good
     state of repair,  in efficient  operating  condition and in accordance with
     good commercial  maintenance practice and, except as provided for in Clause
     12(l)they shall keep the Vessel with unexpired  classification of the class
     indicated in Box 12 and with other  required  certificates  in force at all
     times.
     The Charterers to take immediate  steps to have the necessary  repairs done
     within a reasonable  time failing  which the Owners shall have the right of
     withdrawing  the Vessel from the service of the  Charterers  without noting
     any  protest and without  prejudice  to any claim the Owners may  otherwise
     have against the Charterers under the Charter.
     Unless  otherwise  agreed,  in the  event  of any  improvement,  structural
     changes or expensive  new  equipment  becoming  necessary for the continued
     operation  of  the  Vessel  by  reason  of  new  class  requirements  or by
     compulsory legislation costing more than 5 per cent. of the Vessel's marine
     insurance value as stated in Box 28, then the  arbitrators  under Clause 25
     shall have the power to  renegotiate  this  contract  in a  reasonable  way
     having regard,  inter alia, to the length of the period remaining under the
     Charter and may decide the ratio in which the cost of  compliance  shall be
     shared between the parties concerned.
     The Charterers are required to establish and maintain financial security or
     responsibility  in respect of oil or other pollution  damage as required by
     any government,  including Federal, state or municipal or other division or
     authority  thereof,  to enable  the  Vessel,  without  penalty  or  charge,
     lawfully  to enter,  remain at, or leave any port,  place,  territorial  or
     contiguous  waters of any country,  state or municipality in performance of
     this Charter without any delay.  This obligation shall apply whether or not
     such requirements have been lawfully imposed by such government or division
     or  authority   thereof.   The  Charterers  shall  make  and  maintain  all
     arrangements  by bond or  otherwise  as may be  necessary  to satisfy  such
     requirements  at the  Charterers'  sole  expense and the  Charterers  shall
     indemnify the Owners against all consequences whatsoever (including loss of
     time) for any failure or inability to do so.

     TOVALOP  SCHEME  (Applicable  to oil  tank  vessels  only).  [Intentionally
     Deleted]

     (b) The Charterers  shall at their own expense and by their own procurement
     man,  victual,  navigate,  operate,  supply,  fuel and  repair  the  Vessel
     whenever  required during the Charter period and they shall pay all charges
     and expenses of every kind and nature  whatsoever  incidental  to their use
     and  operation  of the Vessel  under this  Charter,  including  any foreign
     general  municipality and/or state taxes. The Master,  officers and crew of
     the  Vessel  shall  be the  servants  of the  Charterers  for all  purposes
     whatsoever, even if for any reason appointed by the Owners.
     Charterers shall comply with the regulations regarding officers and crew in
     force in the country of the Vessel's flag or any other applicable law.

     (c) During the  currency  of this  Charter,  the  Vessel  shall  retain her
     present  name as indicated in Box 5 and shall remain under and fly the flag
     as indicated in Box 6. Provided,  however,  that the Charterers  shall have
     the liberty to paint the Vessel in their own  colours,  install and display
     their  funnel  insignia  and  fly  their  own  house  flag.   Painting  and
     re-painting,  installment  and  re-installment  to be for  the  Charterers'
     account and time used thereby to count as time on hire.

     (d) The  Charterers  shall  make no  structural  changes  in the  Vessel or
     changes in the  machinery,  boilers,  appurtenances  or spare parts thereof
     without in each instance first securing the Owners'  approval  thereof.  If
     the  Owners so agree,  the  Charterers  shall,  if the  Owners so  require,
     restore the Vessel to its former  condition  before the  termination of the
     Charter.

     (e) The  CharterersF  shall  have  the use of all  outfit,  equipment,  and
     appliances  on board the Vessel at the time of delivery,  provided the same
     or  their  substantial  equivalent  shall  be  returned  to the  Owners  on
     redelivery in the same good order and condition as when received,  ordinary
     wear and tear excepted.  The Charterers  shall from time to time during the
     Charter  period  replace  such items of equipment as shall be so damaged or
     worn as to be unfit for use. The Charterers are to procure that all repairs
     to or  replacement  of any  damaged,  worn or lost  parts or  equipment  be
     effected  in such  manner  (both as  regards  workmanship  and  quality  of
     materials) as not to diminish the value of the Vessel.  The Charterers have
     the right to fit  additional  equipment  at their  expense and risk but the
     Charterers  shall  remove  such  equipment  at the  end of  the  period  if
     requested by the Owners.
     Any equipment  including  radio  equipment on hire on the Vessel at time of
     delivery  shall be kept and maintained by the Charterers and the Charterers
     shall assume the  obligations and liabilities of the Owners under any lease
     contracts in connection  therewith  and shall  reimburse the Owners for all
     expenses  incurred  in  connection  therewith,  also for any new  equipment
     required in order to comply with radio regulations.

     (f) The  Charterers  shall  dry-dock  the  Vessel  and  clean and paint her
     underwater parts whenever the same may be necessary, but not less than once
     in every eighteen calendar months after delivery unless otherwise agreed in
     Box 20.

9.   Hire
     (a) The  Charterers  shall pay to the  Owners for the hire of the Vessel at
     the lump sum per calendar  month as indicated in Box 23  commencing  on and
     from the date and hour of her delivery to the  Charterers  and at and after
     the agreed  lump sum for any part of a month.  Hire to  continue  until the
     date and hour  when  theVessel  is  redelivered  by the  Charterers  to her
     Owners.

     (b)  Payment  of Hire,  except  for the first  and last  month's  Hire,  if
     sub-clause (c) of this Clause is applicable,  shall be made in cash without
     discount  every  month in  advance  on the first  day of each  month in the
     currency and in the manner  indicated in Box 24 and at the place  mentioned
     in Box 25.

     (c) Payment of Hire for the first and last month's Hire if less than a full
     month shall be calculated proportionally according to the number of days in
     the  particular   calendar  month  and  advance   payment  to  be  effected
     accordingly.

     (d) Should the Vessel be lost or  missing,  Hire to cease from the date and
     time when she was lost or last  heard of.  Any Hire paid in  advance  to be
     adjusted accordingly.

     (e) In default of payment beyond a period of seven running days, the Owners
     shall  have the  right to  withdraw  the  Vessel  from the  service  of the
     Charterers without noting any protest and without interference by any court
     or any other  formality  whatsoever,  and shall,  without  prejudice to any
     other claim the Owners may otherwise have against the Charterers  under the
     Charter, be entitled to damages in respect of all costs and losses incurred
     as a result of the  Charterers'  default and the ensuing  withdrawal of the
     Vessel.

     (f) Any delay in payment of Hire shall entitle the Owners to an interest of
     10 percent per annum.

10.  Mortgage
     Owners  warrant  that they have not  effected  any  mortgage  of the Vessel
     unless otherwise indicated in Box 27. Owners hereby undertake not to effect
     any (other)  mortgage  without  the prior  consent of the  Charterers.  Any
     mortgage  approved  by  Charterers  hereunder  is herein  referred to as an
     "approved  mortgage" and any mortgagee under an approved mortgage is herein
     referred to as an "approved mortgagee."

11.  Insurance and Repairs
     (a) During the  Charter  period  the  Vessel  shall be kept  insured by the
     Charterers  at  their  expense  against  marine,  war  and  Protection  and
     Indemnity risks in such form as the Owners shall in writing approve,  which
     approval shall not be unreasonably withheld.  Such marine war and P. and I.
     insurances  shall be arranged by the Charterers to protect the interests of
     both the  Owners  and the  Charterers  and  mortgagees  (if  any),  and the
     Charterers  shall be at  liberty  to  protect  under  such  insurances  the
     interests of any managers they may appoint. All insurance policies shall be
     in the joint names of the Owners and the Charterers as their  interests may
     appear.
     If the Charterers  fail to arrange and keep any of the insurances  provided
     for under the  provisions of sub- clause (a) above in the manner  described
     therein,  the Owners shall notify the  Charterers  whereupon the Charterers
     shall rectify the position within seven running days,  failing which Owners
     shall  have the  right to  withdraw  the  Vessel  from the  service  of the
     Charterers  without  prejudice to any claim the Owners may  otherwise  have
     against the Charterers.
     The  Charterers  shall,  subject  to the  approval  of the  Owners  and the
     Underwriters,  effect all insured repairs and shall undertake settlement of
     all costs in  connection  with such  repairs  as well as  insured  charges,
     expenses and  liabilities  (reimbursement  to be secured by the  Charterers
     from the  Underwriters)  to the  extent of  coverage  under the  insurances
     herein provided for.
     The  Charterers  also to remain  responsible  for and to effect repairs and
     settlement of costs and expenses  incurred  thereby in respect of all other
     repairs not covered by the  insurances  and/or not  exceeding  any possible
     franchise(s) or deductibles  provided for in the insurances.  All time used
     for repairs under the  provisions of sub-clause  (a) of this Clause and for
     repairs  of  latent  defects  according  to  Clause 1 above  including  any
     deviation  shall  count as time on hire and shall form part of the  Charter
     period.

     (b) If the conditions of the above insurances permit  additional  insurance
     to be placed by the parties,  such cover shall be limited to the amount for
     each  party set out in Box 29 and Box 30,  respectively.  The Owners or the
     Charterers  as the case may be shall  immediately  furnish  the other party
     with particulars of any additional insurance effected,  including copies of
     any cover notes or policies and the written  consent of the insurers of any
     such  required  insurance in any case where the consent of such insurers is
     necessary.

     (c) Should the Vessel become an actual, constructive, compromised or agreed
     total loss under the insurances required under sub-clause (a) of Clause 12,
     all  insurance  payments for such loss shall be paid to the  Mortgagee,  if
     any,  in the  manner  described  in the  Deed(s)  of  Covenant,  who  shall
     distribute  the moneys  between  themselves,  the Owners and the Charterers
     according to their respective interests.

     (d) The Owners shall upon the request of the Charterers,  promptly  execute
     such  documents as may be required to enable the  Charterers to abandon the
     Vessel to insurers and claim a constructive total loss.

     (e) For the  purpose of  insurance  coverage  against  marine and war risks
     under the  provisions  of sub-clause  (a) of this Clause,  the value of the
     Vessel is the sum indicated in Box 28.

12.  Insurance, Repairs and Classification
     (Optional only to apply if expressly  agreed and stated in Box 28, in which
     event Clause 11 shall be considered deleted).

     [Intentionally Deleted]

13.  Re-delivery
     The Charterers  shall at the expiration of the Charter period redeliver the
     Vessel at a safe and  ice-free  port or place as  indicated  in Box 18. The
     Charterers shall give the Owners not less than 30 running days' preliminary
     and not less than 14 days' definite notice of expected date, range of ports
     of redelivery  or port or place of  redelivery.  Any changes  thereafter in
     Vessel's position shall be notified immediately to the Owners.
     Should the Vessel be ordered on a voyage by which the Charter period may be
     exceeded  the  Charterers  to have the use of the Vessel to enable  them to
     complete the voyage,  provided it could be reasonably  calculated  that the
     voyage would allow  redelivery  about the time fixed for the termination of
     the Charter.
     The  Vessel  shall  be  redelivered  to the  Owners  in the same or as good
     structure,  state,  condition and class as that in which she was delivered,
     fair wear and tear not affecting class excepted.
     The Vessel  upon  redelivery  shall  have her survey  cycles up to date and
     class certificates valid for at least the number of onths agreed in Box 14.

14.  Non-Lien
     Charterers  will  not  suffer,  nor  permit  to be  continued,  any lien or
     encumbrance  incurred by them or their  agents,  which might have  priority
     over the title and interest of the Owners in the Vessel.
     The Charterers further agree to fasten to the Vessel in a conspicuous place
     and to keep so  fastened  during  the  Charter  period a notice  reading as
     follows:-

          "This Vessel is the property of (name of Owners).  It is under charter
          to (name of Charterers)  and by the terms of the Charter Party neither
          the  Charterers  nor the Master have any right,  power or authority to
          create,  incur  or  permit  to be  imposed  on  the  Vessel  any  lien
          whatsoever."

     Charterers shall indemnify and hold the Owners harmless against any lien of
     whatsoever  nature  arising upon the Vessel during the Charter period while
     she is under the control of the Charterers,  and against any claims against
     the Owners  arising out of or in relation to the operation of the Vessel by
     the Charterers.  Should the Vessel be arrested by reason of claims or liens
     arising out of her operation  hereunder by the  Charterers,  the Charterers
     shall at their own expense take all reasonable  steps to secure that within
     a  reasonable  time the Vessel is released  and at their own expense put up
     bail to secure release of the Vessel.

15.  Lien
     The Owners to have a lien upon all cargoes and  sub-freights  belonging  to
     the  Charterers  and any Bill of Lading  freight for all claims  under this
     Charter,  and the  Charterers  to have a lien on the  Vessel for all moneys
     paid in advance and not earned.

16.  Salvage
     All salvage and towage performed by the Vessel shall be for the Charterers'
     benefit and the cost of repairing damage occasioned  thereby shall be borne
     by the Charterers.

17.  Wreck Removal
     In the event of the Vessel  becoming a wreck or  obstruction  to navigation
     the Charterers shall indemnify the Owners against any sums whatsoever which
     the Owners shall become liable to pay and shall pay in  consequence  of the
     Vessel becoming a wreck or obstruction to navigation.

18.  General Average
     General  Average,  if any, shall be adjusted  according to the York-Antwerp
     Rules 1974 or any subsequent  modification  thereof  current at the time of
     the casualty.
     The Charter Hire not to contribute to General Average.

19.  Assignment and Sub-Demise
     The  Charterers  shall not assign this  Charter nor  sub-demise  the Vessel
     except with the prior  consent in writing of the Owners  which shall not be
     unreasonably  withheld  and  subject  to such terms and  conditions  as the
     Owners shall approve.

20.  Bills of Lading

     [Intentionally Deleted]

21.  Bank Guarantee
     The Charterers undertake to furnish, before delivery of the Vessel, a first
     class bank  guarantee  or bond in the sum and at the place as  indicated in
     Box 26 as guarantee for full  performance of their  obligations  under this
     Charter. (Optional, only to apply if Box 26 filled in).

22.  Requisition/Acquisition
     (a)  In the  event  of the  Requisition  for  Hire  of  the  Vessel  by any
     governmental  or other  competent  authority  (hereinafter  referred  to as
     "Requisition for Hire")  irrespective of the date during the Charter period
     when  "Requisition  for  Hire" may occur  and  irrespective  of the  length
     thereof and whether or not it be for an indefinite  or a limited  period of
     time,  and  irrespective  of whether it may or will remain in force for the
     remainder of the Charter  period,  this Charter shall not be deemed thereby
     or thereupon to be frustrated or otherwise  terminated  and the  Charterers
     shall  continue to pay the stipulated  hire in the manner  provided by this
     Charter until the time when the Charter would have  terminated  pursuant to
     any of the provisions  hereof always provided  however that in the event of
     "Requisition  for Hire" any Requisition  Hire or  compensation  received or
     receivable  by the Owners  shall be payable  to the  Charterers  during the
     remainder of the Charter period or the period of the "Requisition for Hire"
     whichever be the shorter.
     The Hire under this  Charter  shall be payable to the Owners  from the same
     time as the Requisition Hire is payable to the Charterers.

     (b) In the event of the Owners  being  deprived of their  ownership  in the
     Vessel by any Compulsory Acquisition of the Vessel or requisition for title
     by any governmental or other competent authority  (hereinafter  referred to
     as "Compulsory  Acquisition"),  then,  irrespective  of the date during the
     Charter period when "Compulsory  Acquisition" may occur, this Charter shall
     be deemed  terminated as of the date of such "Compulsory  Acquisition".  In
     such event Charter Hire to be considered as earned and to be paid up to the
     date and time of such "Compulsory Acquisition".

23.  War
     (a) The Vessel unless the consent of the Owners be first obtained not to be
     ordered  nor  continue  to any  place or on any  voyage  nor be used on any
     service which will bring her within a zone which is dangerous as the result
     of  any  actual  or  threatened  act  of  war,  war,  hostilities,  warlike
     operations, acts of piracy or of hostility or malicious damage against this
     or any other vessel or its cargo by any person,  body or State  whatsoever,
     revolution,  civil war, civil  commotion or the operation of  international
     law,  nor be  exposed  in any  way to any  risks  or  penalties  whatsoever
     consequent  upon the imposition of Sanctions,  nor carry any goods that may
     in any way expose her to any risks of seizure,  capture,  penalties  or any
     other  interference  of any kind  whatsoever by the belligerent or fighting
     powers or parties or by any Government or Ruler.

     (b) The Vessel to have liberty to comply with any orders or  directions  as
     to  departure,  arrival,  routes,  ports of call,  stoppages,  destination,
     delivery or in any other wise  whatsoever  given by the  Government  of the
     nation  under whose flag the Vessel  sails or any other  Government  or any
     person (or body)  acting or  purporting  to act with the  authority of such
     Government  or by any committee or person having under the terms of the war
     risks  insurance  on the  Vessel  the  right  to give any  such  orders  or
     directions.

     (c) In the event of outbreak of war (whether  there be a declaration of war
     or not) between any two or more of the  countries as stated in Box 31, both
     the Owners and the Charterers  shall have the right to cancel this Charter,
     whereupon  the  Charterers  shall  redeliver  the  Vessel to the  Owners in
     accordance  with  Clause  14,  if she has  cargo on board  after  discharge
     thereof at  destination,  or if debarred under this Clause from reaching or
     entering it at a near open and safe port as  directed by the Owners,  or if
     she has no cargo on board, at the port at which she then is or if at sea at
     a near open and safe port as  directed  by the  Owners.  In all cases  hire
     shall  continue  to be paid in  accordance  with  clause  l0 and  except as
     aforesaid   all  other   provisions  of  this  Charter  shall  apply  until
     redelivery.

     (d) If in compliance with the provisions of this Clause anything is done or
     is not done, such not to be deemed a deviation.

24.  Commission
     The  Owners  to pay a  commission  at the rate  indicated  in Box 32 to the
     Brokers  named in Box 32 on any Hire paid under the  Charter but in no case
     less than is  necessary  to cover the actual  expenses of the Brokers and a
     reasonable fee for their work. If the full Hire is not paid owing to breach
     of Charter by either of the parties the party liable  therefor to indemnify
     the Brokers against their loss of commission.
     Should the parties agree to cancel the Charter, the Owners to indemnify the
     Brokers  against any loss of commission but in such case the commission not
     to exceed the brokerage on one year's Hire.

25.  Law and Arbitration
     This Charter  shall be governed by the law of the country  agreed in Box 33
     (if Box 33 is not filled in, English Law shall apply).  Any dispute arising
     out of this Charter  shall be referred to  arbitration  in London or at the
     place agreed in Box 34, as the case may be, the dispute  being settled by a
     single  Arbitrator  to be appointed by the parties  hereto.  If the parties
     cannot  agree upon the  appointment  of the single  Arbitrator  the dispute
     shall  be  settled  by  three   Arbitrators,   each  party  appointing  one
     Arbitrator, the third being appointed by the Arbitrators of the parties. If
     the Arbitrators  fail to agree on the appointment of the third  Arbitrator,
     such  appoint  shall  be  made by The  Baltic  and  International  Maritime
     Conference in Copenhagen. If either of the appointed Arbitrators refuses or
     is incapable of acting,  the party who  appointed  him shall  appoint a new
     Arbitrator in his place.
     If one party fails to appoint an  Arbitrator - either  originally or by way
     of substitution - for two weeks after the other party having  appointed his
     Arbitrator has sent the party making default notice by mail, cable or telex
     to make the appointment,  The Baltic and International  Maritime Conference
     shall,  after  application  from the party having appointed his Arbitrator,
     also appoint an Arbitrator on behalf of the party making default.
     The award rendered by the Arbitration Court shall be final and binding upon
     the  parties  and may if  necessary  be  enforced by the Court or any other
     competent  authority  in the same  manner  as a  judgment  in the  Court of
     Justice.

<PAGE>
                                    PART III
                      "BARECON A" Standard Bareboat Charter

                             HIRE/PURCHASE AGREEMENT
       (Optional, only to apply if expressly agreed and stated in Box 35)

26.      [Intentionally Deleted]

27.      [Intentionally Deleted]

28.      [Intentionally Deleted]

29.      [Intentionally Deleted]

30.      [Intentionally Deleted]

31.      [Intentionally Deleted]

32.      [Intentionally Deleted]

     Additional Clauses

     33.  This Charter may be terminated  prior to the end of the Charter period
          stated in Box 22 of Part 1 in the event that an Event of Default shall
          exist under Section 3(b) of the Purchase and Sale  Agreement  dated of
          even date  herewith  between  the  Charterers  and  Donald F.  Conway,
          Chapter Eleven Trustee for the Bankruptcy  Estate of Robert E. Brennan
          (herein the  "Trustee").  Upon occurrence of such an Event of Default,
          the Trustee,  shall have the right,  among other things,  to cause the
          termination  of  this  Charter  upon  notice  to the  Owners  and  the
          Charterers.

     34.  Upon delivery of the Vessel by the Owners to the Charterers under this
          Charter,  the Owners shall continue to conduct  certain  operations of
          the Vessel  until such time as the  Charterers  shall have applied for
          and  obtained  any and all  permits,  licenses,  and/or  registrations
          necessary or desirable in connection  with the  Charterers'  acting as
          operators of the Vessel.  Such applications  shall include,  but shall
          not be limited to, those for Federal  water  pollution  certification,
          registration under the Gambling Devices Act,  registration for Florida
          sales tax, and Florida alcoholic beverages  licensing.  The Charterers
          shall diligently pursue such applications.

     35.  This Charter and the rights of the  Charterers  under it are and shall
          be subject and subordinate  both to the provisions of the Indenture of
          First Naval Mortgage,  and the lien created  thereby,  given as of May
          13,  1999  by the  Owners  to  First  Union  National  Bank  as  First
          Mortgagee,  and to the  provisions  of the  Indenture  of Second Naval
          Mortgage,  and the lien created  thereby,  given as of May 13, 1999 by
          the Owners to Cambridge Capital Group, Inc. as Second Mortgagee.

     36.  This  Charter  shall not be  assigned or amended by the parties in the
          absence of the prior  written  approval of the Trustee,  and Clause 35
          shall not be amended  without the prior written  approval of the First
          and Second Mortgagees.

     37.  The  provisions  of Clauses 33, 35 and 36 are for the express  benefit
          of,  and shall be  enforceable  by, the  Trustee.  The  provisions  of
          Clauses  35 and 36 are  for the  express  benefit  of,  and  shall  be
          enforceable by, the holders of the First and Second Mortgagees.

     38.  This Charter  supersedes and replaces the previous  charter  agreement
          dated  April 30,  2001  between  the  Owners and the  Charterers  with
          respect to the Vessel.

<page>

                                                                   EXHIBIT 10.15

                                                                  EXECUTION COPY

                           MASTER SETTLEMENT AGREEMENT

     This MASTER  SETTLEMENT  AGREEMENT (the "Agreement") is made as of the 22nd
day of February,  2002,  to be  effective  as of April 30, 2001 (the  "Effective
Date") by and among DONALD F. CONWAY,  THE CHAPTER 11 TRUSTEE FOR THE BANKRUPTCY
ESTATE OF ROBERT E. BRENNAN,  a bankruptcy  estate formed pursuant to Chapter 11
of Title 11 of the  United  States  Code (the  "Trustee"),  MJQ  CORPORATION,  a
Delaware   corporation   ("MJQ"),   MICHAEL  J.  QUIGLEY,   III,  an  individual
("Quigley"),  LEO EQUITY GROUP, INC., a Florida  corporation  ("LEG"),  FRANK A.
LEO,  an  individual  ("Leo"),   DEERBROOKE  INVESTMENTS,   INC.,  a  Panamanian
corporation  ("Deerbrooke"),   FRANCIS  W.  MURRAY,  an  individual  ("Murray"),
CAMBRIDGE   CAPITAL   GROUP,   INC.,  a  Delaware   corporation   ("Cambridge"),
INTERNATIONAL  THOROUGHBRED BREEDERS,  INC., a Delaware corporation ("ITB"), and
PALM BEACH PRINCESS, INC., a Delaware corporation ("PBP").

                                   Background

     A. On August 7, 1995,  Robert E. Brennan (the  "Debtor")  filed a voluntary
petition for relief under  Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the District of New
Jersey (the "Bankruptcy Court"),  Case No.  95-35502(KCF).  Pursuant to an Order
entered June 10, 1997, the Bankruptcy  Court approved the appointment of Trustee
as trustee for the bankruptcy estate of the Debtor (the "Estate").

     B. Debtor is the grantor of three  pre-petition  offshore asset  protection
trusts (the "Offshore Trusts")  established in Gibraltar pursuant to the laws of
Gibraltar.  Debtor appointed STG Valmet Trustees Limited ("STG"), formerly known
as Seamark  Trust  Company  (Gibraltar)  Limited,  as the  trustee of two of the
Offshore Trusts. Peter M. Bond ("Bond") is a principal of STG.

     C. The Palm Beach Princess f/k/a the Viking Princess, Patente of Navigation
No. 14348-84-D,  radio call signal 3FNQ2, (the "Ship") is an ocean-faring casino
cruise ship under  Panamanian  flag owned by MJQ and operated out of the Port of
Palm Beach, Florida.

     D. On April 28, 1998 the Trustee commenced  litigation in Gibraltar against
STG in the Supreme  Court of Gibraltar  which action is numbered  1998 C. No. 87
(the  "Gibraltar  Litigation")  to recover the assets  claimed by the Trustee to
have been diverted to the Offshore  Trusts,  including the Ship  Obligations (as
defined  below) and the Valmet Shares (as defined  below).  On December 7, 2000,
the Trustee on the one hand, and STG and Bond, on the other,  signed two written
settlement  agreements  (collectively,  the "STG  Settlement  Agreement")  which
resolve the Gibraltar Litigation and provide,  inter alia, for the assignment by
Oceanic Venture Funding Ltd. ("OVFL"),  an Isle of Man entity, to the Trustee of
all the right,  title and interest of OVFL in and to (1) that certain Promissory
Note dated May 13, 1999 (the "Ship  Note") in the original  principal  amount of

<PAGE>

$12,000,000  payable  by MJQ to the  order of  Cambridge,  and (2) that  certain
Indenture of Second Naval  Mortgage  dated as of May 13, 1999 by MJQ in favor of
Cambridge  securing the  obligations of MJQ under the Ship Note and  encumbering
the Ship (collectively,  the "Ship  Obligations").  In addition,  Bond agreed to
assign certain shares of common stock of  International  Thoroughbred  Breeders,
Inc. (the "Valmet  Shares")  held by entities  owned or controlled by him to the
Trustee.  The  performance  of the STG  Settlement  Agreement  by the parties is
conditioned upon Bankruptcy Court approval in the Pirates Litigation (as defined
below) as well as approval by the Supreme  Court of Gibraltar  in the  Gibraltar
Litigation.  On February 21, 2001, the Bankruptcy  Court entered an Order in the
Pirates  Litigation  approving the STG Settlement  Agreement pursuant to Federal
Rule of Bankruptcy  Procedure  9019. On September 27, 2001, the Supreme Court of
Gibraltar  entered  an  order  approving  the  STG  Settlement   Agreement  (the
"Gibraltar Court Approval Order").

     E.  On May  13,  1998,  the  Trustee  commenced  an  adversary  proceeding,
captioned  Conway v. Pirates  Associates,  et al.,  Adv.  Pro. No.  98-3245 (the
"Pirates Litigation"),  seeking, inter alia, avoidance of the Debtor's transfers
of assets to the  Offshore  Trusts and  avoidance  of  certain  of the  Debtor's
transfers of shares of  International  Thoroughbred  Breeders,  Inc.  ("ITB") to
non-debtor  entities (the "Pirates  Shares").  On November 29, 2000, the Trustee
obtained  leave to file the Third  Amendment  to the  Complaint  in the  Pirates
Litigation seeking, inter alia, avoidance of certain transfers from the Offshore
Trusts to the Ship (the "Ship Claims"). In the Third Amendment to the Complaint,
the Trustee joined MJQ, LEG,  Deerbrooke,  Cambridge,  Quigley,  Leo, and Murray
(collectively the "Ship Defendants"), among others, as defendants to the Pirates
Litigation.

     F. On  June  9,  1998,  the  Trustee  commenced  an  adversary  proceeding,
captioned  Conway v. Abbey  Investors of America,  Inc.,  et al.,  Adv. Pro. No.
98-3283 (the "Abbey Litigation"),  seeking,  inter alia, avoidance of certain of
the Debtor's  transfers of certain  shares of ITB to  non-debtor  entities  (the
"Abbey  Shares")  (the Abbey  Shares  and the  Pirates  Shares are  collectively
referred to herein as the "Litigated Shares").

     G. PBP is a wholly owned  subsidiary of International  Thoroughbred  Gaming
Development   Corporation  ("ITG"),  which  is  a  wholly  owned  subsidiary  of
International Thoroughbred Breeders, Inc. ("ITB"), a Delaware corporation. GSRT,
LLC  ("GSRT")  is a  wholly  owned  subsidiary  of ITB and is the  payee of that
certain promissory note dated November 29, 2000 in the original principal amount
of $10,000,000 payable by Realen-  Turnberry/Cherry  Hill, LLC (the "GSP Note").
To facilitate the continued  operation of the Ship as a going  concern,  ITB and
PBP desire to participate in the Master Settlement Agreement. PBP shall purchase
the Ship Obligations.

     H.  The  Trustee  has  agreed  to,  among  other  things,  assign  the Ship
Obligations to PBP and release the Ship Claims in consideration of the agreement
by and among the Ship Defendants that in the event of certain defaults by PBP in
connection with its obligation to purchase the Ship Obligations or certain other
obligations  to be  undertaken  by the parties  hereto,  the Trustee  shall take
control of the Ship,  and shall  thereafter  be free to sell the Ship along with
its Related Assets as a going concern,  free and clear of all claims of the Ship
Defendants,  with the proceeds of such sale being applied by the Trustee for the
benefit of the Estate.

                                       2

<PAGE>

     I. The Trustee and Ship Defendants  intend that this Agreement  resolve the
Ship Claims and all other  claims  asserted by and against  each of them without
exposing  either party to any further costs or uncertainty  of the outcome.  The
Trustee and Ship Defendants each desire to terminate the litigation with respect
to the Ship Claims and deliver and exchange  mutual  general  releases  upon the
approval of this Agreement by the Bankruptcy  Court and by certain third parties
more particularly set forth below.

                                    Agreement

     NOW,  THEREFORE,  in  consideration of the foregoing  recitals,  the mutual
covenants,  and  agreements  contained  in this  Agreement,  and other  good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged,  the parties hereto,  intending to be legally bound hereby, agree,
subject to Bankruptcy Court approval, as follows:

     1. Defined Terms; Interpretation.

        (a) The following  capitalized  terms  generally  used in this Agreement
shall have the meanings defined or referenced below:

     "Abbey  Litigation"  shall have the  meaning  ascribed  to such term in the
Background of this Agreement.

     "Abbey  Shares"  shall  have  the  meaning  ascribed  to  such  term in the
Background of this Agreement.

     "Additional Shares" shall have the meaning ascribed to such term in Section
3(a)(iii) of this Agreement.

     "Agreement"  shall have the meaning ascribed to such term in the Background
of this Agreement.

     "Assumed Contracts" shall have the meaning ascribed to such term in Section
11(a)(i) of this Agreement.

     "Assumed  Liabilities"  shall  have the  meaning  ascribed  to such term in
Section 11(a) of this Agreement.

     "Balloon  Payment" shall have the meaning  ascribed to such term in Section
3(a)(i) of this Agreement.

     "Bankruptcy  Code"  shall  have the  meaning  ascribed  to such term in the
Background of this Agreement.

     "Bankruptcy  Court"  shall have the  meaning  ascribed  to such term in the
Background of this Agreement.

                                       3

<PAGE>

     "Bankruptcy  Court Approval Order" shall have the meaning  ascribed to such
term in Section 2(b) of this Agreement.

     "Bareboat  Charter" shall have the meaning ascribed to such term in Section
3(b)(ii) of this Agreement.

     "Benefit  Plans"  shall have the  meaning  ascribed to such term in Section
11(b) of this Agreement.

     "Business"  shall have the meaning  ascribed to such term in the definition
of Related Assets below.

     "Bond" shall have the meaning  ascribed to such term in the  Background  of
this Agreement.

     "Cambridge"  shall have the meaning ascribed to such term in the Background
of this Agreement.

     "Charter  Rent"  shall have the  meaning  ascribed  to such term in Section
3(b)(ii) of this Agreement.

     "Cherry  Hill  Property"  shall have the  meaning  ascribed to such term in
Section 5(b) of this Agreement.

     "Closing Date" shall have the meaning ascribed to such term in the Purchase
and Sale Agreement.

     "Control  Date" shall mean the date,  if any,  on which the  Trustee  takes
control of the Ship pursuant to the Foreclosure Documents.

     "Control Date Working Capital Statement" shall have the meaning ascribed to
such term in Section 11(c)(i) hereof.

     "Current   Assets"  and  "Current   Liabilities"   shall  mean  assets  and
liabilities,  respectively,  of MJQ and PBP that would be  classified as current
assets and current  liabilities,  respectively,  in  accordance  with  generally
accepted accounting principles.

     "Debtor" shall have the meaning  ascribed to such term in the Background of
this Agreement.

     "Deerbrooke" shall have the meaning ascribed to such term in the Background
of this Agreement.

     "Discharge"  shall  have  the  meaning  ascribed  to such  term in  Section
3(d)(ii) of this Agreement.

     "District"  shall have the meaning ascribed to such term in Section 3(c)(i)
of this Agreement.

                                        4

<PAGE>

     "Eligible  Assets"  shall mean those  categories of assets set forth on the
pro  forma  consolidated  financial  statements  of MJQ and PBP as set  forth on
Schedule 6(e) attached hereto  consisting of (a) prepaid  shipyard  expenses and
insurance premiums,  (b) on board casino cash float, (c) accounts receivable (as
set forth in clause (j) of the definition of "Related  Assets" set forth below),
(d) prepaid  expenses,  (e) security  deposits and (f)  inventory (as defined in
clause (i) of the definition of "Related Assets" set forth below).

     "Eligible Liabilities" shall mean those categories of liabilities set forth
on the pro forma consolidated  financial  statements of MJQ and PBP as set forth
on Schedule 6(e) attached hereto  consisting of (a) accounts  payable arising in
the ordinary  course of business  (excluding  payments to  affiliates  and third
party professional  fees), (b) accrued  purchases,  (c) accrued expense payable,
(c) unearned  passenger  fare,  (e) wages  payable for any pay period except the
current  payroll  period,  (f) other  miscellaneous  payables  other  than those
related to the  current  pay period and (f) taxes  payable,  other than  current
quarterly payroll taxes.

     "Environmental  Claims"  shall have the  meaning  ascribed  to such term in
Section 11(b) of this Agreement.

     "Environmental  Laws"  shall  have the  meaning  ascribed  to such  term in
Section 11(b) of this Agreement.

     "Escrow  Agreement" shall have the meaning ascribed to such term in Section
8 of this Agreement.

     "Escrow  Excess"  shall have the  meaning  ascribed to such term in Section
3(e) of this Agreement.

     "Escrow Funds" shall have the meaning ascribed to such term in Section 2(c)
of this Agreement.

     "Estoppel  Letter" shall have the meaning  ascribed to such term in Section
3(a)(iv) of this Agreement.

     "Excess  Related Asset Value" shall have the meaning  ascribed to such term
in Section 11(c)(v) of this Agreement.

     "Foreclosure  Documents"  shall have the  meaning  ascribed to such term in
Section 3(b)(i) of this Agreement.

     "Fraudulent  Conveyance Litigation" shall mean the litigation over the Ship
Claims in the Pirates Litigation.

     "Gibraltar  Litigation" shall have the meaning ascribed to such term in the
Background of this Agreement.

     "Gibraltar  Court Approval  Order" shall have the meaning  ascribed to such
term in Section 2(b) of this Agreement.

                                        5

<PAGE>

     "GSP Escrow"  shall have the meaning  ascribed to such term in Section 3(e)
of this Agreement.

     "GSP Note" shall have the meaning  ascribed to such term in the  Background
of this Agreement.

     "GSRT" shall have the meaning  ascribed to such term in the  Background  of
this Agreement.

     "Individual Settlors" means, collectively, Leo, Murray and Quigley.

     "Installment  Payments"  shall have the  meaning  ascribed  to such term in
Section 3(a)(i) of this Agreement.

     "ITB" shall have the meaning  ascribed  to such term in the  Background  of
this Agreement.

     "ITB Security  Agreement"  shall have the meaning  ascribed to such term in
Section 3(a)(iv) of this Agreement.

     "ITG" shall have the meaning  ascribed  to such term in the  Background  of
this Agreement.

     "LEG" shall have the meaning  ascribed  to such term in the  Background  of
this Agreement.

     "Leo" shall have the meaning  ascribed  to such term in the  Background  of
this Agreement.

     "Liquidated  Damages"  shall  have the  meaning  ascribed  to such  term in
Section 3(a)(i) of this Agreement.

     "Litigated  Shares"  shall have the  meaning  ascribed  to such term in the
Background of this Agreement.

     "MJQ" shall have the meaning  ascribed  to such term in the  Background  of
this Agreement.

     "Materials of  Environmental  Concern"  shall have the meaning  ascribed to
such term in Section 11(b) hereof.

     "Murray" shall have the meaning  ascribed to such term in the Background of
this Agreement.

     "Murray Guaranty Agreement" shall have the meaning ascribed to such term in
Section 3(a)(vi) of this Agreement.

     "Offshore  Trusts"  shall  have the  meaning  ascribed  to such term in the
Background of this Agreement.

     "Operating  Agreement"  shall  have the  meaning  ascribed  to such term in
Section 3(c)(i) of this Agreement.

                                       6

<PAGE>

     "Operational Documents" shall have the meaning ascribed to such term in the
definition of "Related Assets" below.

     "Option" shall have the meaning ascribed to such term in Section  3(a)(iii)
of this Agreement.

     "Other LEG  Agreements"  shall have the  meaning  ascribed  to such term in
Section 3(c)(ii) of this Agreement.

     "OVFL" shall have the meaning  ascribed to such term in the  Background  of
this Agreement.

     "PBP Ship Mortgage Assignment" shall have the meaning ascribed to such term
in Section 3(d)(i) of this Agreement.

     "PBP" shall have the meaning  ascribed  to such term in the  Background  of
this Agreement.

     "Pirates  Litigation"  shall have the meaning  ascribed to such term in the
Background of this Agreement.

     "Pirates  Shares"  shall  have the  meaning  ascribed  to such  term in the
Background of this Agreement.

     "Port Management Agreement" shall have the meaning ascribed to such term in
Section 3(b)(iii) of this Agreement.

     "Port Management  Agreement  Assignment" shall have the meaning ascribed to
such term in Section 3(b)(iii) of this Agreement.

     "Purchase and Sale Agreement"  shall have the meaning ascribed to such term
in Section 3(a)(i) of this Agreement.

     "Quigley" shall have the meaning ascribed to such term in the Background of
this Agreement.

     "Realen-Turnberry"  shall have the meaning ascribed to such term in Section
3(a)(v) of this Agreement.

     "Related Assets" means the following:

     (a)  the leases  under which MJQ or PBP is a lessee,  listed as of the date
          hereof in Schedule 1(a) attached hereto (with the  understanding  that
          some of those leases may expire and additional  leases may be added in
          the  ordinary  course of business  between the date of the  Settlement
          Agreement  and the Closing Date or the Control  Date,  as the case may
          be);

     (b)  all casino  equipment  owned by MJQ or PBP used in connection with the
          operation of the  business  known as the "Palm Beach Casino Line" (the

                                       7

<PAGE>

          "Business"),  which includes (among other things) the operation of the
          Ship  in the  casino  cruise  business,  and  all of  MJQ's  or  PBP's
          leasehold  interests in any and all casino  equipment  being leased to
          MJQ or PBP and used in the Business,  which casino equipment is listed
          as of the date hereof in Schedule 1(b) (it being understood and agreed
          that some of those leases may expire, and others may be added, between
          the date hereof and the Closing Date or the Control  Date, as the case
          may be);

     (c)  all office  equipment owned by MJQ or PBP and used in the Business and
          all of  MJQ's  or  PBP's  leasehold  interest  in any and  all  office
          equipment leased to MJQ or PBP and used in the Business,  which office
          equipment  is listed as of the date hereof in Schedule  1(c)  attached
          hereto (it being  understood  and agreed that some of those leases may
          expire,  and  others  may be added,  between  the date  hereof and the
          Closing Date or the Control Date, as the case may be);

     (d)  any  and  all  other  equipment  (including  but  not  limited  to all
          electrical,  navigational,  radar and  computer  systems),  machinery,
          furniture,  fixtures,  life boats,  engines,  charts,  test equipment,
          tools  and  other  fixed  assets  owned by MJQ and PBP and used in the
          Business,  whether on board the Ship or on shore, and all of MJQ's and
          PBP's  leasehold  interests  in any  and  all  such  equipment,  which
          equipment  is listed as of the date hereof in Schedule  1(d)  attached
          hereto (it being  understood  and agreed  that some of such leases may
          expire,  and  others  may be added,  between  the date  hereof and the
          Closing Date and the Control Date, as the case may be);

     (e)  all executory contracts, agreements, and commitments of or in favor of
          MJQ or PBP entered into in the ordinary  course of the Business (other
          than insurance policies and collective bargaining agreements including
          all prepayments and security  deposits  thereunder),  which contracts,
          agreements  and  commitments  are  listed  as of the  date  hereof  in
          Schedule 1(e)  attached  hereto (it being  understood  and agreed that
          some of such contracts,  agreements and  commitments  may expire,  and
          others may be added,  between the date hereof and the Closing Date and
          the Control Date, as the case may be);

     (f)  all of MJQ and PBP's right, title and interest in and to all licenses,
          permits,  franchises,  approvals,  certificates,   authorizations  and
          rights issued by any federal,  state or local  government  relating to
          the  Business  to the  extent  such  rights,  title and  interest  are
          transferable or assignable to the Trustee or its designee;

     (g)  all  right,  title and  interest  (if any) of MJQ and PBP to the trade
          names "Palm Beach  Princess" and "Palm Beach Casino Line",  and to any
          variations thereof;

     (h)  all right,  title and  interest  of MJQ  Corporation  d/b/a Palm Beach
          Casino Line in and to Florida Alcoholic  Beverages License  #60-11456,
          Series 4COP-SPX;

                                        8

<PAGE>

     (i)  all  inventories  and  supplies  of MJQ and  PBP,  including,  without
          limitation,  inventories of food, beverages,  spare parts, phone cards
          held for sale to  employees,  gift shop  inventory  and the  remaining
          bunkers and unused  lubricating  oils but only to the extent such oils
          are in  storage  tanks or  sealed  drums or  otherwise  in the  Ship's
          system; and

     (j)  the casino cash float on board the Ship on the Control Date (including
          but not limited to cash in slot machines), credit card receivables and
          other receivables arising in the ordinary course of business.

The licenses, permits, leases of real property, leases of personal property, and
other  executory  contracts  and  agreements  included  in  the  Related  Assets
described above are hereinafter collectively called the "Operational Documents."
It is agreed that the following  assets are expressly  excluded from the Related
Assets:  all automobile leases and automobile  finance  agreements;  any and all
accounts  receivable  and notes  receivable  owing  from  MJQ,  PBP or any other
affiliated or related persons and entities and claims by MJQ and PBP which arose
prior to the  Trustee's  acquisition  of  control  of the  Ship;  all  insurance
policies of MJQ or PBP (including any unearned premiums);  all bank accounts and
certificates  of deposit of PBP and MJQ; and employment  contracts of Francis X.
Murray, John McTighe, and Jerry Winters.

     "Release"  shall have the meaning  ascribed to such term in Section 2(a) of
this Agreement.

     "Related Asset Value  Deficiency"  shall have the meaning  ascribed to such
term in Section 11(c)(v) of this Agreement.

     "Retained  Liabilities"  shall have the  meaning  ascribed  to such term in
Section 11(b) of this Agreement.

     "Settlement  Documents"  shall mean this  Agreement,  the Purchase and Sale
Agreement,  the Stock  Purchase  Agreement,  the ITB Security  Agreement,  Stock
Option Agreement,  the Escrow Agreement, the Release and all other documents and
agreements  executed  concurrently  with  the  execution  and  delivery  of this
Agreement as set forth in Section 3.

     "Ship  Claims"  shall  have  the  meaning  ascribed  to  such  term  in the
Background of this Agreement.

     "Ship  Defendants"  shall  have the  meaning  ascribed  to such term in the
Background of this Agreement.

     "Ship  Mortgage"  shall have the  meaning  ascribed to such term in Section
3(d)(i) of this Agreement.

     "Ship Note" shall have the meaning  ascribed to such term in the Background
of this Agreement.

     "Ship  Obligations"  shall have the  meaning  ascribed  to such term in the
Background of this Agreement.

                                        9

<PAGE>

     "Ship  Obligation Event of Default" shall have the meaning ascribed to such
term in Section 9 of this Agreement.

     "Ship" shall have the meaning  ascribed to such term in the  Background  of
this Agreement.

     "STG Settlement  Agreement" shall have the meaning ascribed to such term in
the Background of this Agreement.

     "STG" shall have the meaning  ascribed  to such term in the  Background  of
this Agreement.

     "Stock  Acquisition  Event of Default"  shall have the meaning  ascribed to
such term in Section 9(b) of this Agreement.

     "Stock Purchase  Agreement" shall have the meaning ascribed to such term in
Section 3(a)(ii) of this Agreement.

     "Taxes"  shall have the meaning  ascribed to such term in Section  11(b) of
this Agreement.

     "Trustee Ship Mortgage  Assignment" shall have the meaning ascribed to such
term in Section 3(d)(i) of this Agreement.

     "Trustee"  shall mean  Donald F.  Conway,  the  Chapter 11 Trustee  for the
Bankruptcy Estate of Robert E. Brennan, and any successor thereto.

     "Valmet  Closing"  shall have the meaning  ascribed to such term in Section
3(a)(ii) of this Agreement.

     "Valmet  Payment"  shall have the meaning  ascribed to such term in Section
3(e) of this Agreement.

     "Valmet  Shares"  shall  have  the  meaning  ascribed  to such  term in the
Background of this Agreement.

     "Working  Capital  Deficiency"  shall  mean the  amount  by which  Eligible
Liabilities exceeds Eligible Assets.

     "Working Capital Test Date" shall have the meaning ascribed to such term in
Section 6(e) of this Agreement.

        (b) The  parties  hereto  acknowledge  and  agree  that  certain  of the
transactions  described herein shall be implemented by the Settlement Documents,
and that in the  event  of a  conflict  between  the  terms  of this  Settlement
Agreement  and any of the  Settlement  Documents,  the  terms of the  Settlement
Documents shall govern and control.

     2. Settlement; Effectiveness.

        (a)  Settlement.  On the terms  hereinafter set forth and subject to the
conditions set forth in Section 2(b) hereof, the Trustee and the Ship Defendants
shall cause the

                                       10

<PAGE>

Fraudulent  Conveyance  Litigation to be settled,  discontinued and ended,  with
prejudice, and the parties shall execute and deliver a mutual general release in
the form attached as Exhibit "A" to this Agreement (the "Release").  The Release
delivered by the parties hereto shall  incorporate  mutual  general  releases by
each of the Trustee,  the Ship Defendants and each of the business  entities and
persons set forth on Exhibit "B" to this Agreement.

        (b)  Effectiveness.  The  effectiveness  of this Agreement is contingent
upon  (i) the  entry of a final  order by the  Bankruptcy  Court  approving  the
Purchase and Sale  Agreement  pursuant to 11 U.S.C.  ss.363(b)(1)  and approving
this  Agreement   pursuant  to  Federal  Rule  of  Bankruptcy   Procedure  9019,
respectively,  which Order shall  require that all claims to or against the Ship
Obligations  shall  attach to and be  satisfied  solely from the payments of the
purchase  price for the Ship  Obligations,  and the time for obtaining a stay of
such Order shall have passed  without any stay of such Order having been granted
or, if such stay shall have been granted,  the Order shall have become final and
non-appealable  (the "Bankruptcy  Court Approval  Order");  (ii) the entry of an
order by the Supreme Court of Gibraltar  approving the STG Settlement  Agreement
and  ordering  the  assignment  of the  Ship  Obligations  to the  Trustee  (the
"Gibraltar Court Approval  Order");  and (iii) the Trustee shall have received a
written assignment by OVFL of all of OVFL's right, title and interest in and to,
and all claims against, the Ship Obligations and the Ship. In the event that the
foregoing  items (i),  (ii) and (iii) have not occurred on or prior to April 30,
2002,  this Settlement  Agreement  shall terminate and the Settlement  Documents
shall be null and void and of no further  force and effect;  provided,  however,
that in any such event the  penultimate  sentence  of Section  2(c) below  shall
remain in effect.

        (c) Escrow of Installment  Payments.  The  Installment  Payments will be
paid into the Registry of the Bankruptcy  Court in an interest  bearing  account
(the "Escrow  Funds") and not released until the conditions set forth in Section
2(b) hereof have been fully  satisfied.  If the  conditions set forth in Section
2(b) hereof are fully satisfied,  then Trustee shall be entitled to the entry of
an order by the Bankruptcy  Court  permitting the release of the Escrow Funds to
the  Trustee,  subject to the  release and  delivery by the Escrow  Agent to all
parties of the Release more particularly  described in Section 3(a), and ITB and
PBP consent to the entry of such an order by the Bankruptcy  Court releasing the
Escrow Funds to the Trustee.  Upon the satisfaction of the conditions in Section
2(b) hereof, all Installment  Payments paid thereafter shall be made directly to
the Trustee.  If the  conditions set forth herein are not met by April 30, 2002,
then PBP shall be entitled to terminate  the Purchase and Sale  Agreement and to
the entry of an Order permitting the release of the Escrow Funds to PBP, and the
Trustee  consents to the entry of such an Order  releasing  the Escrow  Funds to
PBP.  The  effect  of a  failure  of the  Closing  to occur  as a result  of the
inability to satisfy various other conditions  precedent or a material breach by
any party is provided for in the Purchase and Sale Agreement.

     3.  Settlement  Documents.   Simultaneously  with  the  execution  of  this
Agreement  the parties to this  Agreement  shall execute the Release and deposit
the Release with the Escrow Agent, and the following documents, certain of which
are being executed  simultaneously with this Settlement  Agreement and others of
which may be required to be executed after the execution of this  Agreement,  in
either case are being or when executed  shall be deposited with the Escrow Agent
to be held in accordance with the terms of the Escrow Agreement:

                                       11

<PAGE>

        (a)  ITB and PBP  Agreements:  Simultaneously  with  the  execution  and
delivery of this  Settlement  Agreement,  ITB or PBP, as the case may be,  shall
execute and deposit the following with the Escrow Agent:

            (i) Purchase and Sale  Agreement.  A Purchase and Sale  Agreement in
the form  attached  hereto as Exhibit "C" (the  "Purchase  and Sale  Agreement")
pursuant  to which PBP agrees to purchase  the Ship  Obligations.  The  purchase
price  of the  Ship  Obligations  shall be  $13,750,000,  payable  by PBP in (A)
sixteen (16) consecutive monthly installments of $250,000 each (the "Installment
Payments"),  with  the  first  payment  being  made as of  April  30,  2001  and
continuing  on the  last  day of each  calendar  month  thereafter  through  and
including July 31, 2002 and (B) a payment of $9,750,000 (the "Balloon  Payment")
due on the Closing Date.  Until the  conditions in Section 2(b) hereof are fully
satisfied,  the  Installment  Payments  shall  be  held in the  Registry  of the
Bankruptcy  Court  pursuant  to Section  2(c)  hereof.  Thereafter,  Installment
Payments  by PBP shall be made  directly  to the  Trustee.  The  closing  of the
transactions  contemplated by the Purchase and Sale Agreement shall be scheduled
to occur on or before July 31,  2002,  as such date may be extended  pursuant to
the terms of the  Purchase  and Sale  Agreement,  but in no event shall it occur
prior to Bankruptcy  Court  Approval and the  conditions  set forth in Paragraph
2(b) hereof have been satisfied.  Upon the occurrence of a Ship Obligation Event
of Default  under the Purchase and Sale  Agreement,  the Trustee  shall have the
right in his sole  discretion to terminate  the Purchase and Sale  Agreement and
the Trustee  shall be permitted to retain as  liquidated  damages any and all of
the Installment  Payments  theretofore made (the "Liquidated  Damages").  In the
event that the Trustee  terminates the Purchase and Sale  Agreement,  the Escrow
Agent shall take all actions  necessary to convey the Ship to the Trustee or its
designee,  record the Foreclosure  Documents and otherwise perfect the ownership
and possessory interest of the Trustee in and to the Ship.

            (ii) Stock Purchase  Agreement.  A Stock  Purchase  Agreement in the
form attached hereto as Exhibit "D" (the "Stock Purchase Agreement") pursuant to
which the Trustee shall agree to sell and ITB shall agree to purchase all of the
Valmet Shares at $.50 per share, upon the terms and conditions more particularly
set forth therein. The purchase of the Valmet Shares shall be scheduled to occur
(subject to satisfaction of certain  conditions  precedent) on or before July 1,
2002 ("Valmet Closing").

            (iii) Stock Option  Agreement.  A Stock Option Agreement in the form
attached  hereto as Exhibit  "E"  pursuant to which ITB shall have the option to
purchase the Litigated  Shares and any other shares of ITB common stock that the
Trustee  may come into  possession  of (the  "Additional  Shares") at a purchase
price of $.50 per share (the "Option")  exercisable  within forty-five (45) days
of  written  notice  from the  Trustee  that the  Trustee  is  entitled  to take
possession of the Litigated  Shares or the Additional  Shares.  ITB acknowledges
and agrees that the  Trustee  shall have no  obligation  to take  possession  or
control of the Litigated Shares or the Abbey Shares, regardless of the Trustee's
ability  to do so.  ITB  further  acknowledges  and  agrees  that the  Trustee's
agreement to grant an option to ITB does not  constitute an election of remedies
in the Pirates Litigation, the Abbey Litigation or otherwise.

            (iv)  ITB  Security  Agreement.  A  security  agreement  in the form
attached as Exhibit "F" hereto (the "ITB Security  Agreement") pursuant to which
ITB's

                                       12

<PAGE>

obligations  to purchase the Valmet  Shares from the Trustee shall be secured by
the proceeds of the GSP Note.

            (v) Estoppel Letter.  An estoppel letter in the form attached hereto
as Exhibit "G" from Realen-Turnberry/Cherry Hill, LLC ("Realen-Turnberry"),  the
payor of the GSP Note, with such changes as may be approved by the Trustee.

            (vi) Murray  Guaranty.  A guaranty  agreement  in the form  attached
hereto as  Exhibit  "H" (the  "Murray  Guaranty  Agreement")  pursuant  to which
Francis W. Murray  ("Murray") shall  unconditionally  guaranty and act as surety
for the obligation to pay the Related Asset Value Deficiency to the Trustee.

            (vii) Quigley  Guaranty.  A guaranty  agreement in the form attached
hereto as Exhibit  "I" (the  "Quigley  Guaranty  Agreement")  pursuant  to which
Quigley shall  unconditionally  guaranty and act as surety for the obligation to
pay the Related Asset Value Deficiency to the Trustee.

        (b) MJQ Agreements.

            (i) Foreclosure Documents.  Those documents and agreements set forth
on Schedule 3(b)(i) hereto (collectively, the "Foreclosure Documents"), pursuant
to which MJQ, PBP and other necessary parties consent to the entry of a judgment
of strict  foreclosure in favor of the Trustee.  MJQ, PBP and the Trustee or any
of their respective  assignees shall execute any and all documents  necessary or
reasonably  requested by the other to effectuate  the Trustee's sale of the Ship
and the  Related  Assets  during the  existence  of a Ship  Obligation  Event of
Default,  including but not limited to an Assignment and Assumption Agreement in
the form  attached  hereto as Exhibit J. At the  Trustee's  election  during the
existence  of a Ship  Obligation  Event of Default,  the Trustee  shall have the
right to retain all of the Installment  Payments and any other sums  theretofore
paid to Trustee  under the Purchase and Sale  Agreement,  to take control of the
Ship and to  foreclose,  market and sell the Ship and the Related  Assets in his
sole discretion with the proceeds of any sale being paid over to the Estate. The
Trustee shall receive the installment payments, the proceeds of such foreclosure
and  sale of the  Ship  and  Related  Assets  in full  satisfaction  of the Ship
Obligations, and neither MJQ nor any other Ship Defendants shall be liable for a
deficiency with respect to Ship Obligations.  The Foreclosure Documents shall be
executed  simultaneously  with the  execution of this  Agreement and held by the
Escrow Agent in escrow and released to the Trustee upon the occurrence of a Ship
Obligation Event of Default.

            (ii) Bareboat Charter.  A bareboat charter (the "Bareboat  Charter")
pursuant  to which PBP  charters  the Ship  effective  as of April 30,  2001 and
ending on July 31, 2002,  subject to extension as provided therein.  The Charter
shall  provide  that PBP will pay  monthly  rent in the  amount of not less than
Fifty Thousand Dollars ($50,000) (the "Charter Rent"). The Charter Rent shall be
an amount  sufficient to cover MJQ's monthly  installment  payments of principal
owed to First Union  National  Bank under that  certain  term loan dated May 13,
1999 and secured by an Indenture of First Naval Mortgage  encumbering  the Ship.
The Bareboat Charter shall automatically terminate upon the occurrence of a Ship
Obligation  Event

                                       13

<PAGE>

of Default.  The  Trustee  consents to MJQ and PBP  entering  into the  Bareboat
Charter in the form of Exhibit "K" attached hereto.

            (iii) Port Management  Agreement.  An assignment to PBP all of MJQ's
right, title and interest in, to and under the Port Management Agreement for the
Ship dated May 13, 1999 between MJQ and LEG (the "Port  Management  Agreement").
Said  assignment  will provide that it shall  terminate upon the occurrence of a
Ship  Obligation  Event of Default.  MJQ will execute an  assignment in the form
attached hereto as Exhibit "L",  pursuant to which MJQ assigns to the Trustee of
all its right, title and interest in, to and under the Port Management Agreement
to the Trustee ("Port  Management  Agreement  Assignment").  The Port Management
Agreement Assignment shall be executed  simultaneously with the execution of the
Purchase and Sale  Agreement and held by the Escrow Agent in escrow and released
to the  Trustee  upon  termination  by the  Trustee  of the  Purchase  and  Sale
Agreement  due to the  occurrence  of a Ship  Obligation  Event of Default.  The
Trustee acknowledges that prior to closing under the Purchase and Sale Agreement
PBP may enter into a new operating  agreement with the District,  subject to the
consent  and  approval of the  Trustee,  and upon the  effectiveness  of the new
operating agreement,  the Port Management Agreement shall terminate and be of no
further force and effect.

            (iv) Insurance. Hull, Machinery and Third Party Liability polices of
insurance  identifying  the Trustee as a co-insured  and as a loss payee "as its
interest may appear in form and  substance  satisfactory  to the Trustee and its
counsel".  The Trustee  acknowledges  that the  existing  policies of  insurance
identified on Schedule  3(b)(iv)  attached  hereto and copies of which have been
furnished to Trustee are satisfactory in form and substance.

            (v) Power of Attorney. Irrevocable Power of Attorney issued in favor
of the  Trustee in the event of a Ship  Obligation  Event of Default in the form
attached hereto as Exhibit "M".

            (vi)  Transcript  of  Registry.   A  Certificate  of  Ownership  and
Encumbrance  disclosing  that  the Ship is free  and  clear of all  encumbrances
except the Ship  Obligations,  a First  Naval  Mortgage  in favor of First Union
National  Bank,  N.A.  and a  Subordination  Agreement  among MJQ,  First  Union
National Bank, N.A. and Cambridge (the "First Union Subordination Agreement").

            (vii)  Other  Agreements.  Upon  request by the  Trustee,  MJQ shall
execute any and all documents  reasonably  necessary to effectuate the Trustee's
sale of the Ship and the Related Assets as a going concern and shall  reasonably
cooperate in obtaining any and all third party approvals  required in connection
with  the  assignment  and  sale of the  Ship  as  provided  herein.  All of the
foregoing  shall be held in escrow by the Escrow Agent  pursuant to Section 8 of
this Agreement.

        (c) LEG Agreements.

            (i)  Operating  Agreement.  An  Assignment  Agreement in the form of
Exhibit "N" (the "Operating Agreement  Assignment")  attached hereto pursuant to
which LEG

                                       14

<PAGE>

assigns to the Trustee all of its right, title and interest in, to and under the
Operating Agreement (the "Operating  Agreement") dated May 29, 1996, as renewed,
with the Port of Palm Beach District (the "District").  The Trustee acknowledges
that prior to closing under the Purchase and Sale Agreement PBP may enter into a
new operating  agreement with the District,  subject to the consent and approval
of the Trustee,  in which event PBP shall enter into an assignment  agreement in
form and substance reasonably satisfactory to the Trustee.

            (ii) Other LEG Assignments.  An Assignment and Assumption  Agreement
in the form of Exhibit  "O" hereto  pursuant to which LEG assigns to the Trustee
all  agreements,  contracts  and leases to which it is a party  necessary to the
operations  of the  Ship  ("Other  LEG  Agreements").  The  Operating  Agreement
Assignment and Other LEG Assignments shall be held in escrow pursuant to Section
8 of this Agreement.

            (iii)  Consents.  LEG  consents  to  MJQ's  assignment  of the  Port
Management  Agreement to PBP and the Trustee. LEG agrees to execute such further
documents and  agreements  as may be  reasonably  required by the Trustee in his
sole discretion to confirm or further evidence such consent.

            (iv)  Other  Agreements.  Upon  request  of the  Trustee,  LEG shall
execute any and all documents reasonably necessary to effectuate the sale of the
Ship  and the  Related  Assets  by the  Trustee  as a going  concern  and  shall
reasonably  cooperate in obtaining any and all third party approvals required in
connection with the assignment and sale of the Ship as provided  herein.  All of
the foregoing  shall be held in escrow by the Escrow Agent pursuant to Section 8
of this Agreement.

        (d) Cambridge Agreements.

            (i) Mortgage Assignments. Two assignments in the form of Exhibit "P"
attached hereto (the "Mortgage  Assignment") pursuant to which Cambridge assigns
the  Indenture of Second  Naval  Mortgage by MJQ dated as of May 19, 1999 ("Ship
Mortgage") encumbering the Ship. One Mortgage Assignment will be in favor of the
Trustee ("Trustee Ship Mortgage Assignment") and one Mortgage Assignment will be
in favor of PBP ("PBP Ship  Mortgage  Assignment").  The Trustee  Ship  Mortgage
Assignment and the PBP Ship Mortgage Assignment (collectively the "Ship Mortgage
Assignments")  shall be held in escrow by the Escrow Agent pursuant to Section 8
of this Agreement.

            (ii)  Discharge.  A discharge  of  Mortgage in the form  attached as
Exhibit  "Q"  hereto  ("Discharge")  to be held in  escrow by the  Escrow  Agent
pursuant to Section 8 of this Agreement.

            (iii)  Other  Documents.  Cambridge  agrees to  execute  any and all
documents as may be reasonably  required by Trustee for the  recordation  of the
Mortgage  Assignment  and  Discharge  in the  Republic of Panama or to otherwise
terminate  of  record  the Ship  Obligations  or the First  Union  Subordination
Agreement.

                                       15

<PAGE>

            (iv) Other Agreements. Cambridge shall execute any and all documents
as may be  reasonably  required by Trustee in his sole  discretion to effectuate
the  sale  of  the  Ship  Obligations  and  to  terminate  of  record  the  Ship
Obligations.  All of the  foregoing  shall be held in escrow by the Escrow Agent
pursuant to Section 8 of this Agreement.

        (e) GSRT Agreements. ITB shall cause GSRT to endorse the GSP Note to the
order of ITB  effective  as of April 30, 2001.  All payments  made under the GSP
Note prior to the closing of the Trustee's sale of the Valmet Shares to ITB (the
"Valmet  Payment")  shall be held in escrow  (the "GSP  Escrow")  by the  Escrow
Agent. ITB shall notify the  Realen-Turnberry to make all payments to the Escrow
Agent. ITB shall, by appropriate documentation reasonably acceptable to Trustee,
covenant  and agree that it shall  waive its right to convert the GSP Note to an
equity interest in  Realen-Turnberry as long as the proceeds of the GSP Note are
pledged as collateral.  Prior to the Valmet Payment, ITB shall have the right to
direct  the  Escrow  Agent to apply the GSP  Escrow  toward  the  payment of the
Installment  Payments under the Purchase and Sale Agreement.  If the amount held
in the GSP Escrow  exceeds the amount  required to  purchase  the Valmet  Shares
pursuant to the Stock Purchase  Agreement ("Escrow Excess") at any time prior to
the Closing Date of the Purchase  and Sale  Agreement,  the Escrow Agent will be
permitted to release the Escrow Excess to ITB if requested in writing by ITB. In
the event ITB  fails to timely  make the  Valmet  Payment,  Escrow  Agent  shall
release the GSP Escrow to the Trustee.

     4. Trustee  Covenants.  The Trustee shall file an  application  pursuant to
Federal  Rule  of  Bankruptcy  Procedure  9019  and  Section  363(b)(1)  of  the
Bankruptcy Code with the Bankruptcy  Court to set a hearing to approve the terms
of this Agreement  within ten (10) days after the execution and delivery of this
Agreement  and the  Settlement  Documents.  The Trustee  covenants and agrees to
reasonably  cooperate  with  ITB and MJQ in  explaining  to third  parties  this
Agreement in order to maintain,  establish or reestablish relationships with the
District or MJQ's suppliers, contractors or creditors.

     5. Representations and Warranties.

        (a) ITB. ITB represents and warrants that (i) ITB is a corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware and has all requisite  corporate power and authority to enter into this
Agreement and to perform its obligations hereunder; (ii) the execution, delivery
and  performance  of this  Agreement,  and other  agreements and documents to be
executed and delivered  pursuant  hereto,  by ITB and the consummation by ITB of
the  transactions  contemplated  hereby and thereby have been duly authorized by
the Board of Directors of ITB, and no other corporate proceedings on the part of
ITB are necessary to authorize this Agreement and the transactions  contemplated
hereby and thereby; and (iv) this Agreement has been duly executed and delivered
by ITB and  constitutes,  and the other  agreements and documents to be executed
and delivered by ITB pursuant  hereto,  when executed and delivered by ITB, will
have been duly  executed and  delivered by ITB and will  constitute,  the legal,
valid and binding obligations of ITB, enforceable against ITB in accordance with
their  respective  terms,  except as  remedies  may be  limited  by  bankruptcy,
insolvency,  fraudulent  conveyance and other laws affecting  creditors'  rights
generally and by general principles of equity.

                                       16

<PAGE>

        (b) GSP Note.  ITB represents and warrants that (i) the GSP Note matures
on November 28, 2015; however,  the indebtedness  evidenced by the Note shall be
prepaid  upon the  sale of all  real  property  owned  by  Realen-Turnberry  and
previously  owned by GSRT  consisting of 57.9 acres of real property  located at
Route 70 and Haddonfield Road, Cherry Hill Township,  Camden County,  New Jersey
(the "Cherry Hill  Property").  ITB shall promptly  notify Trustee in writing of
any and all significant developments of which it obtains knowledge in connection
with the sale of the Cherry Hill Property.

        (c) PBP. PBP represents and warrants that (i) PBP is a corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware and has all requisite  corporate power and authority to enter into this
Agreement and to perform its obligations hereunder; (ii) the execution, delivery
and  performance  of this  Agreement,  and other  agreements and documents to be
executed and delivered  pursuant  hereto,  by PBP and the consummation by PBP of
the  transactions  contemplated  hereby and thereby have been duly authorized by
the Board of Directors of PBP, and no other corporate proceedings on the part of
PBP are necessary to authorize this Agreement and the transactions  contemplated
hereby and thereby;  (iii) this Agreement,  has been duly executed and delivered
by PBP and  constitutes,  and the other  agreements and documents to be executed
and delivered by PBP pursuant  hereto,  when executed and delivered by PBP, will
have been duly  executed and  delivered by PBP and will  constitute,  the legal,
valid and binding obligation of PBP,  enforceable against PBP in accordance with
their  respective  terms,  except as  remedies  may be  limited  by  bankruptcy,
insolvency,  fraudulent  conveyance and other laws affecting  creditor's  rights
generally and by general  principles  of equity;  and (iv) PBP charters the Ship
pursuant to the Bareboat Charter.

        (d) Deerbrooke.  Deerbrooke  represents and warrants that (i) Deerbrooke
is a corporation duly organized, validly existing and in good standing under the
laws of the  Republic  of  Panama  and has all  requisite  corporate  power  and
authority to enter into this Agreement and to perform its obligations hereunder;
(ii) the  execution,  delivery  and  performance  of this  Agreement,  and other
agreements  and  documents  to be executed and  delivered  pursuant  hereto,  by
Deerbrooke and the consummation by Deerbrooke of the  transactions  contemplated
hereby and  thereby  have been duly  authorized  by the Board of  Directors  and
shareholders of Deerbrooke,  and no other  corporate  proceedings on the part of
Deerbrooke  are  necessary  to authorize  this  Agreement  and the  transactions
contemplated  hereby  and  thereby;  and  (iii)  this  Agreement,  has been duly
executed and delivered by Deerbrooke and  constitutes,  and the other agreements
and documents to be executed and delivered by Deerbrooke  pursuant hereto,  when
executed and delivered by Deerbrooke, will have been duly executed and delivered
by Deerbrooke and will constitute,  the legal,  valid and binding  obligation of
Deerbrooke,  enforceable  against Deerbrooke in accordance with their respective
terms, except as remedies may be limited by bankruptcy,  insolvency,  fraudulent
conveyance and other laws affecting  creditor's  rights generally and by general
principles of equity.

        (e) MJQ. MJQ represents and warrants that (i) MJQ is a corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware and has all requisite  corporate power and authority to enter into this
Agreement and to perform its obligations hereunder; (ii) the execution, delivery
and  performance  of this  Agreement,  and other  agreements and documents to be
executed and delivered pursuant hereto, by MJQ and the

                                       17

<PAGE>

consummation  by MJQ of the  transactions  contemplated  hereby and thereby have
been duly authorized by the Board of Directors and sole  shareholder of MJQ, and
no other  corporate  proceedings  on the part of MJQ are  necessary to authorize
this Agreement and the transactions  contemplated hereby and thereby;  and (iii)
this Agreement, has been duly executed and delivered by MJQ and constitutes, and
the other  agreements and documents to be executed and delivered by MJQ pursuant
hereto,  when  executed and  delivered by MJQ,  will have been duly executed and
delivered by MJQ and will constitute, the legal, valid and binding obligation of
MJQ,  enforceable  against MJQ in accordance with their respective terms, except
as remedies may be limited by bankruptcy,  insolvency, fraudulent conveyance and
other laws affecting  creditor's  rights generally and by general  principles of
equity  and  (iv) MJQ  charters  the Ship to PBP  pursuant  to the  terms of the
Bareboat Charter.

        (f) Additional Representations and Warranties of MJQ. MJQ represents and
warrants that (i) the Ship is currently registered in the Republic of Panama and
flies the  Panamanian  flag and that it is owned by MJQ and is free and clear of
all liens, taxes, encumbrances, and claims of every kind, nature and description
whatsoever  except the First Ship Mortgage and the Second Naval  Mortgage  dated
May 13, 1999 and that all personal property owned by MJQ contained in and on the
Ship is also free and clear of any  liens,  encumbrances,  claims,  and  demands
whatsoever, except as set forth in Schedule 5(f)-1; (ii) at the time of Closing,
any  individual  or entity  still owed for any  outstanding  services,  dockage,
supplies, labor, or materials rendered to, or for the benefit of, the Ship shall
be paid in full by MJQ; and that the Ship is not  currently  under  contract for
charter or otherwise  leased or hired out to any third parties,  including,  but
not limited to,  claims for future use or charter of the Ship,  except:  (A) the
Bareboat  Charter;  and (B) the contracts and  agreements  disclosed on Schedule
5(f)-2.  MJQ further  represents  that,  except as disclosed on Schedule 5(f)-3,
there are no personal  injury claims now  outstanding  against the Ship;  and no
judgment  or  decree  has  been  entered  in any  court of any  state,  country,
territory, province against MJQ which remains unsatisfied; and (iii) MJQ further
acknowledges that Trustee is relying on these  representations and warranties in
completing  the  transaction;  accordingly,  MJQ,  its  heirs,  representatives,
successors,  and assigns,  shall indemnify and hold harmless Trustee against and
from any claim, lien encumbrance, penalty, loss or expense trustee might suffer,
including,  but not limited to, court costs and legal fees, arising by reason of
breach of its above representations and warranties.

        (g) LEG. LEG represents and warrants that (i) LEG is a corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Florida and has all requisite  corporate  power and authority to enter into this
Agreement and to perform its obligations hereunder; (ii) the execution, delivery
and  performance  of this  Agreement,  and other  agreements and documents to be
executed and delivered  pursuant  hereto,  by LEG and the consummation by LEG of
the  transactions  contemplated  hereby and thereby have been duly authorized by
the Board of Directors of LEG, and no other corporate proceedings on the part of
LEG are necessary to authorize this Agreement and the transactions  contemplated
hereby  and  thereby;  and (iii)  this  Agreement,  has been duly  executed  and
delivered by LEG and  constitutes,  and the other agreements and documents to be
executed and  delivered by LEG pursuant  hereto,  when executed and delivered by
LEG, will have been duly executed and delivered by LEG and will constitute,  the
legal,  valid  and  binding  obligation  of  LEG,  enforceable  against  LEG  in
accordance  with their  respective  terms,  except as remedies may be limited by
bankruptcy,

                                       18

<PAGE>

insolvency,  fraudulent  conveyance and other laws affecting  creditor's  rights
generally and by general principles of equity.

        (h) Cambridge. Cambridge represents and warrants that (i) Cambridge is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite  corporate power and authority to
enter into this  Agreement and to perform its  obligations  hereunder;  (ii) the
execution,  delivery and performance of this Agreement, and other agreements and
documents to be executed and  delivered  pursuant  hereto,  by Cambridge and the
consummation by Cambridge of the  transactions  contemplated  hereby and thereby
have been duly  authorized by the Board of Directors of Cambridge,  and no other
corporate  proceedings  on the part of Cambridge are necessary to authorize this
Agreement and the transactions  contemplated hereby and thereby;  and (iii) this
Agreement,  has been duly executed and  delivered by Cambridge and  constitutes,
and the other agreements and documents to be executed and delivered by Cambridge
pursuant hereto,  when executed and delivered by Cambridge,  will have been duly
executed and delivered by Cambridge and will  constitute,  the legal,  valid and
binding  obligation of Cambridge,  enforceable  against  Cambridge in accordance
with their  respective  terms,  except as remedies may be limited by bankruptcy,
insolvency,  fraudulent  conveyance and other laws affecting  creditor's  rights
generally and by general principles of equity.

        (i) By Individual  Settlors.  Each of the Individual Settlors represents
and warrants  that he is sui juris and of full capacity to make and perform this
agreement.

        (j) Documents and Agreements.  ITB, PBP, and each of the Ship Defendants
severally  represent  and  warrant  with  respect  to  each  of the  Operational
Documents  all of which  are in  effect  on the  date  hereof  and set  forth on
Schedules 1(a), 1(b), 1(c), 1(d) and 1(e) attached hereto, as follows:

            (i) such agreements,  leases, licenses and permits constitute all of
the  agreements,  leases,  licenses  and  permits  used in  connection  with the
operation of the Ship and conduct of the related businesses.

            (ii) there is no pending,  or to such party's knowledge,  threatened
litigation  affecting  any of the  Operational  Documents,  any of  which  would
constitute  a lien,  charge,  or claim of any kind  against  any of the  party's
interests in and to the Operational Documents;

            (iii) each of the copies of the  Operational  Documents  provided to
the Trustee  constitute  the entire  agreement  relating,  in each case,  to the
subject matter thereof are true, correct and complete and remain unmodified;

            (iv) there has been no default in any  material  aspect under any of
the Operational Documents that would entitle any party thereto to terminate such
document or to increase the financial  obligations of the  non-defaulting  party
thereunder;

                                       19

<PAGE>

            (v) all of the Operational Documents remain in full force and effect
and constitute the valid,  legal,  binding and enforceable  obligation of MJQ or
PBP, as applicable, except as remedies may be limited by bankruptcy, insolvency,
fraudulent  conveyance and other laws affecting  creditor's rights generally and
by general  principles  of equity,  and except that  certain of the  Operational
Documents may be  continuing  beyond their stated terms and may be terminated at
will by either party at any time;

            (vi) the list set forth as Schedule  5(j)(vi)  hereto sets forth all
agreements,  leases,  licenses  and permits for which third party  consents  are
required in connection with the assignment of each of the Operational  Documents
to the Trustee;

            (vii) none of the parties to any of the  operational  Documents  has
given any notice of default under any of the Operational Documents which default
remains uncured; and

            (viii) none of the parties to any of the  Operational  Documents has
received   notice   (whether   actual  or   constructive)   of  any  assignment,
hypothecation,  mortgage  or pledge of any  interest  in any of the  Operational
Documents or any sums payable thereunder, except as may be specified in Schedule
5(j)(viii) hereto.

        (k)  By  Trustee.  The  Trustee  represents  and  warrants  as  follows:

            (i)  Trustee  has the  power to and  authority  to enter  into  this
Agreement  and perform  its  obligations  hereunder,  subject to approval by the
Bankruptcy Court.

            (ii) This  Agreement has been duly executed and delivered by Trustee
and constitutes the legal, valid and binding obligations of Trustee, enforceable
against  Trustee in  accordance  with its  terms,  subject  to  approval  by the
Bankruptcy Court.

            (iii) The  execution,  delivery and  performance  by Trustee of this
Agreement  does not and will not (with or without  the passage of time or giving
of notice) violate or conflict with any law or regulation,  judgment or order of
any court or arbitrator binding upon Trustee.

            (iv) No  consents,  approvals  of or  registrations,  notifications,
filings and /or declarations with any court, government,  governmental agency or
instrumentality  or any other person are required to be given or made by Trustee
in connection  with the execution,  delivery and  performance of this Agreement,
except  for  the  approvals  of the  Gibraltar  Court  Approval  Order  and  the
Bankruptcy Court Approval Order.

            (v) There are no  judicial,  administrative,  governmental  or other
actions,  proceedings  or  investigations  pending,  or to the  knowledge of the
Trustee,  threatened against or involving the Trustee,  that question any of the
transactions contemplated by, or the validity of, this Agreement, except for the
proceedings  seeking  the  requisite  approval  of the  Gibraltar  Court and the
Bankruptcy Court.

     6. Additional Covenants.

                                       20

<PAGE>

        (a)  Appraisal.  The  Trustee  shall  have  the  right  to have  one (1)
appraisal  made at the  Trustee's  expense of the Ship,  the Related  Assets and
business  operations at any time after the execution of this Agreement and prior
to the Closing Date or the Control  Date,  as the case may be. ITB, PBP, MJQ and
LEG  severally  covenant and agree to  reasonably  cooperate  and use their best
efforts to cause their agents to reasonably  cooperate  with the Trustee and his
agents in conducting such appraisal.

        (b)  Title to Ship.  Until  Closing  Date,  MJQ shall  not  transfer  or
otherwise  encumber  ownership of the Ship or grant any security interest in the
Ship unless with express written consent of the Trustee.

        (c) Conduct of Ship Business. From the date hereof through Closing Date,
except as  otherwise  consented  to by Trustee  in  writing  or as  specifically
contemplated  by this Agreement,  ITB, PBP, MJQ and LEG shall:  (i) carry on the
Ship's  business  operations  in, and only in, the usual,  regular and  ordinary
course in  substantially  the same manner as  conducted  heretofore  and, to the
extent consistent with such business operations,  use reasonable efforts to keep
available the services of its present employees and preserve the goodwill of the
Ship and  relationships  with insurance  companies,  suppliers,  customers,  and
others having  business  dealings with the Ship,  (ii) maintain all its material
equipment and other  property in good repair,  order and  condition,  except for
depletion,  depreciation,  ordinary wear and tear and damage by casualty,  (iii)
keep in full force and effect insurance coverages no less than those now carried
by it (although  deductibles  may be reasonably  increased to avoid increases in
insurance premiums above current levels),  (iv) perform in all material respects
all of its obligations under agreements,  contracts and instruments  relating to
or affecting its  properties,  assets and the Ship's  business  operations,  (v)
maintain  its books of account  and records in the usual,  regular and  ordinary
manner,  (vi)  comply  in  all  material  respects  with  all  statutes,   laws,
ordinances,  rules and  regulations  applicable  to it and to the conduct of the
Ship's  business  operations  and keep in full force and  effect  all  licenses,
permits  and  approvals  necessary  for  the  conduct  of  the  Ship's  business
operations,  and (vii)  promptly  advise  Trustee in  writing of any  materially
adverse change in the Ship's  business or its financial  condition,  operations,
properties or prospects.

        (d)  Access.  MJQ  represents  that all  records  and  books of  account
relating to the operation of the Ship are presently  maintained at 777 East Port
Road,  Riviera Beach,  Florida,  and shall remain there, or at such other office
facilities as may be leased by MJQ prior to the Closing  Date.  PBP and MJQ will
provide the Trustee and his agents  with  reasonable  access to all  information
regarding the Ship, its operations and financial condition ("Ship Information").
The  Trustee  and his  agents  will  have the  right to  inspect  and copy  Ship
Information  during  normal  business  hours upon three (3) business  days prior
notice  to PBP and MJQ at the  offices  of MJQ at 777 East  Port  Road,  Riviera
Beach,  Florida or at  offices  of PBP or MJQ at which the books and  records of
account may be  maintained  in the future.  MJQ shall  provide the Trustee  with
written  notice prior to the  relocation  of the offices where books and records
are  maintained  and such notice  shall set forth the  address of the  relocated
offices in which such books and records shall be maintained.

        (e) Financial Reporting;  Working Capital Deficiency.  PBP and MJQ shall
not permit to exist at any  Working  Capital  Test Date (as  defined  below),  a
Working Capital

                                       21

<PAGE>

Deficiency in excess of Seven Hundred Fifty Thousand Dollars ($750,000.00).  For
purposes hereof, a "Working Capital Test Date" shall mean the quarterly  periods
ending March 31, 2002, June 30, 2002 and, if necessary,  September 29, 2002. PBP
and MJQ shall  deliver to the Trustee not later than fifteen (15) days after the
last day of each monthly  accounting  period during the term of this Agreement a
consolidated  financial statement prepared in accordance with generally accepted
accounting  principles  and a  consolidated  financial  statement in the form of
Schedule 6(e) attached hereto,  all of the foregoing  certified by an officer of
each of MJQ and PBP as true, correct and complete in all material respects.  For
purposes  hereof,  each  monthly  accounting  period  during  the  term  of this
Agreement  during the calendar  year 2002 shall end on January 27,  February 24,
March 31, April 28, May 26, June 30, July 28, August 25 and September 29.

     7.  Litigation.  The Trustee and Ship  Defendants  agree that all discovery
related to the Ship Claims in the  Pirates  Litigation  shall be stayed  pending
Bankruptcy Court Approval.

     8. Escrow  Closing Items.  PBP, ITB, Ship  Defendants and the Trustee agree
that  Drinker  Biddle &  Shanley  LLP shall act as the  Escrow  Agent  hereunder
pursuant  to the terms of the Escrow  Agreement  attached  hereto as Exhibit "R"
(the "Escrow Agreement"). The Escrow Agent will hold the Settlement Documents in
escrow pursuant to the terms of the Escrow Agreement.

     9. Default.

        (a) The occurrence of any one or more of the following shall  constitute
an "Ship  Obligation Event of Default" under this Agreement and the Purchase and
Sale Agreement:

            (i)  failure  by PBP to pay the  Installment  Payment,  the  Balloon
Payment or any fee or other  amount  payable  under any of the Purchase and Sale
Agreement or Operational  Documents,  which, in the case of a failure to pay the
Installment  Payment when due, shall not be cured within five (5) days after the
date of such  payment  became  due,  and in the  case of a  failure  to make any
payment under any Operational Document, shall not have been cured within fifteen
(15) days after  written  notice of such failure shall have been given to PBP by
the Trustee,  provided,  however, that no Ship Obligation Event of Default shall
be  deemed  to  exist in  respect  of any  failure  to make a  payment  under an
Operational  Document to the extent such  payment is  contested in good faith by
appropriate proceedings by MJQ, PBP, LEG or ITB;

            (ii) failure by MJQ and PBP to comply with Section 6(e) hereof,  and
such failure  shall not have been cured within  fifteen (15) days after  written
notice of such failure shall have been given to PBP by the Trustee;

            (iii) any  representation or warranty made by PBP in this Agreement,
the Purchase and Sale Agreement,  the Assignment and Assumption  Agreement,  the
Port Management Agreement Assignment or the Operating Agreement Assignment shall
be untrue or misleading in any material respect at the time when made;

            (iv) any  representation or warranty made by PBP, ITB, MJQ or LEG in
this Agreement, the Operational Documents or any financial information furnished
to the

                                       22

<PAGE>

Trustee's  fiscal  agent by PBP or MJQ  shall be  untrue  or  misleading  in any
material respect at the time when made;

            (v)  any  material  default  by  ITB,  PBP,  MJQ or  LEG in the  due
observance or performance of any of its covenants contained in this Agreement or
the Operational Documents which is not cured within thirty (30) days after their
receipt of written notice of such default from the Trustee;

            (vi) (1) ITB,  PBP, MJQ or LEG shall  commence any  voluntary  case,
proceeding or other action (a) under the Bankruptcy Code, or under any other law
of any jurisdiction,  domestic or foreign,  relating to bankruptcy,  insolvency,
reorganization  or relief of  debtors,  seeking to  adjudicate  it a bankrupt or
insolvent  or  seeking  reorganization,   arrangement,  adjustment,  winding-up,
liquidation, dissolution, composition or relief with respect to its debts or (b)
seeking appointment of a receiver,  custodian or other similar, official for all
or  substantially  all of its assets or any of ITB, PBP, MJQ or LEG shall make a
general assignment for the benefit of creditors; or (2) there shall be commenced
against any of ITB,  PBP, MJQ or LEG any case,  proceeding  or other action of a
nature  referred to in clause (1) of this Section which (a) results in the entry
of an order  for  relief  or any  adjudication  or  appointment  or (b)  remains
unstayed  and  undismissed  for a period of time of thirty  (30) days (but in no
event shall the Closing occur  hereunder if such case remains  undismissed);  or
(3) there  shall be issued  against  any of ITB,  PBP,  MJQ or LEG a warrant  of
attachment, execution, distraint or similar process against any or a substantial
part of its assets  material to the operation of the Ship,  which results in the
entry of an order for any such relief;  or (4) any of ITB, PBP, MJQ or LEG shall
generally not, or shall admit in writing its inability to, pay its debts as they
become due;

            (vii) the happening of any default under any financial instrument of
any kind or nature,  including  but not limited to  financing  leases,  security
agreements, mortgages or loan agreements, by which there is secured or evidenced
any  indebtedness  for money  borrowed or  guaranteed by any of PBP, MJQ or LEG,
whether  such  indebtedness  presently  exists or is  hereafter  created,  which
default  shall  result in such  indebtedness  becoming  or being  deemed due and
payable  prior  to the date on which it  would  otherwise  have  become  due and
payable; or

            (viii) any governmental  certification,  license, or permit required
in  connection  with  the  operation  of the  Ship as a going  concern  shall be
revoked, terminated or withdrawn.

        (b)  The  occurrence  of a  default  by ITB  under  the  Stock  Purchase
Agreement  shall  constitute a "Stock  Acquisition  Event of Default" under this
Agreement.

     10. Specific Remedies.

        (a) During the  existence  of a Ship  Obligation  Event of Default,  the
Trustee's sole and exclusive  remedy shall be to terminate the Purchase and Sale
Agreement, in which case:

            (i) all of the  Installment  Payments then paid shall be immediately
paid over to the Trustee as liquidated damages;

                                       23

<PAGE>

            (ii)  the  Trustee  may  notify  Escrow  Agent  to  cause  the  Ship
Obligations and Foreclosure Documents to be released to Trustee or its agents or
designees;  provided,  however,  that the  Trustee  hereby  agrees that its sole
remedies  under the Ship  Obligations  shall be to take  control of the Ship and
Related  Assets,  foreclose and sell the Ship and Related  Assets and accept the
proceeds  thereof  in full  satisfaction  of all  indebtedness  under  the  Ship
Obligations,  and, in either  case,  MJQ shall not be liable for any  deficiency
under the Ship Obligations;

            (iii) MJQ,  LEG,  ITB and PBP shall  execute  any and all  documents
reasonably  necessary  to  effectuate  the  Trustee's  sale of the  Ship and the
Related  Assets and shall  reasonably  cooperate in obtaining  any and all third
party approvals  required in connection with the assignment and sale of the Ship
as provided herein.

            (iv) MJQ,  PBP and the  Trustee  shall take such  actions as are set
forth in Section 11 of this Agreement.

            (v) The  Trustee  may take any and all other  actions  necessary  or
appropriate  to assume  control  of the  operation  of the Ship and the  Related
Assets.

            (vi) PBP shall have no further  liability in respect of the purchase
price under the Purchase and Sale  Agreement and the liability of MJQ in respect
of the Ship Obligations shall be non-recourse except to the Ship and the Related
Assets.

        (b) During the existence of a Stock  Acquisition  Event of Default,  the
Trustee  shall  have the  rights and  remedies  set forth in the Stock  Purchase
Agreement.

     11. Certain  Liabilities  and  Obligations of the Parties After the Control
Date.

        (a)  Liabilities.  On the Control  Date,  PBP and MJQ will assign to the
Trustee and the Trustee will assume only those obligations or liabilities of PBP
and MJQ enumerated below:

            (i) The  liabilities  and obligations of PBP and MJQ (x) to the Port
of Palm Beach  District  under the Operating  Agreement and (y) to third parties
(other than LEG, PBP or MJQ) under all Operational Documents then in effect, but
in each case only to the extent such  liabilities or  obligations  become due or
are initially to be performed  (other than by reason of acceleration as a result
of a breach or  default  occurring  prior to the  Control  Date) on or after the
Control Date (the "Assumed Contracts");

            (ii) The  liabilities  and  obligations of PBP and MJQ for all trade
indebtedness and accounts payable arising in the ordinary course of the Business
from the purchase of inventory,  supplies or other current  assets by PBP or MJQ
before the  Control  Date or the  performance  of  services  (excluding  payroll
expense)  before the Control Date  (including  any such accounts  payable to the
extent  accrued  prior to the Control Date under the  Operational  Documents but
excluding  any such  accounts  payable to LEG, PBP or MJQ and  accounts  payable
arising from performance of professional services); and

                                       24

<PAGE>

            (iii)  All  unpaid  payroll  expense  (including  salaries,   wages,
benefits  and payroll  taxes)  accrued to the  Control  Date for the current pay
period in which the Control Date occurs.

The liabilities  accrued prior to the Control Date to be assumed as described in
Sections 11(a)(ii) and (iii) are collectively called the "Assumed Liabilities".

        (b)  Retained  Liabilities.  Except for the  Assumed  Contracts  and the
Assumed  Liabilities,  the  Trustee  does  not and  will not  assume  or  become
obligated  to pay or perform  any  liabilities  or  obligations  of MJQ and PBP,
respectively,  whatsoever, whether accrued, absolute, fixed or contingent, known
or unknown or  otherwise  (all such  liabilities  and  obligations  being called
collectively  the  "Retained  Liabilities"),  and the Trustee  acknowledges  and
agrees that PBP and MJQ shall remain fully  liable for and  responsible  to pay,
satisfy or otherwise discharge the Retained  Liabilities.  Retained  Liabilities
shall include,  without  limitation,  liabilities and obligations of PBP and MJQ
with respect to (i) Environmental  Claims (as defined below), (ii) PBP and MJQ's
collective bargaining agreements, including, without limitation, such agreements
identified on Schedule  11(b)-1;  Benefit Plans (as defined below),  (iii) Taxes
(as defined  below)  (excluding  payroll taxes  described in Section  11(a)(iii)
above),  (iv) liabilities to former and existing  employees arising out of their
employment with PBP or MJQ, as the case may be, including,  without  limitation,
wages, salaries, other compensation and benefits,  severance payments,  workers'
compensation claims, grievances,  discrimination,  harassment and similar claims
(except that wages,  salaries,  benefits and payroll taxes for the pay period in
progress at the Control Date shall be assumed and paid by the Trustee),  and (v)
any other items enumerated on Schedule 11(b)-2.  "Environmental Claim" means any
written  or  oral  demand,   claim,  suit,  lien,  action,   expense  (including
consequential  damages  and counsel  fees),  cause of action,  investigation  or
notice  by  any  person  or  entity  alleging  actual  or  potential   liability
(including, without limitation,  potential or actual liability for investigatory
costs,  cleanup costs,  governmental  response costs, natural resources damages,
property damages,  personal injuries,  or penalties) arising out of ore relating
to any Materials of Environmental  Concern or any violation of or non-compliance
with or alleged  violation  of or  non-compliance  with any  Environmental  Law.
"Environmental  Laws" means all  federal,  state and local laws and  regulations
relating  to  pollution  or  protection  of  human  health  or  the  environment
(including,  without limitation,  ambient air, surface water, groundwater,  land
surface or subsurface strata), including,  without limitation, the Comprehensive
Environmental Response,  Compensation,  and Liability Act ("CERCLA"), 42 U.S.C.A
ss.ss.  9601 et. seq., the Resource  Conservation and Recovery Act ("RCRA"),  42
U.S.C.A.  ss.ss. 6901 et. seq., the Clean Water Act, 33 U.S.C.A. ss.ss. 1251 et.
seq.,  the  Clean  Air Act,  42  U.S.C.A.  ss.ss.  7401 et.  seq.,  and laws and
regulations  relating  to  emissions,  spills,  leaks,  discharges,  releases or
threatened releases of Materials of Environmental Concern, or otherwise relating
to the manufacture, possession, distribution, use, treatment, storage, disposal,
transport or handling of  Materials  of  Environmental  Concern.  "Materials  of
Environmental  Concern" means any "hazardous substance" or "hazardous waste", as
defined in Environmental Laws, petroleum and petroleum products,  natural gas or
synthetic  gas,  material  that  is a  source,  special  nuclear  or  by-product
material,  as defined by the Atomic Energy Act of 1954, 42 U.S.C.A.  ss.ss. 3011
et. seq., and the regulations  promulgated thereto and "hazardous chemical",  as
defined  in 29 C.F.R.  Part 1910.  "Benefit  Plans"  means all bonus,  incentive
compensation,   deferred   purchase  stock  option,   stock   ownership,   stock
appreciation rights,

                                       25

<PAGE>

phantom stock, leave of absence,  layoff, vacation, day or dependent care, legal
services, cafeteria, life, health, accident, disability,  workmen's compensation
or other  insurance,  severance,  separation  or other  employee  benefit  plan,
practice, policy or arrangement of any kind, whether written or oral, including,
without  limitation,  any "employee  benefit plan" within the meaning of Section
3(3)  of the  Employee  Retirement  Income  Security  Act of  1974,  as  amended
("ERISA") and any Multi-employer Plan") within the meaning of Section 4001(a)(3)
of ERISA,  which  currently or were  previously  maintained by PBP and/or MJQ or
which PBP and/or MJQ currently is participating or previously participated in or
to which PBP and/or MJQ is or was  required  to  contribute.  "Taxes"  means all
taxes,  assessments and other governmental charges or impositions (including any
interest  or  penalties)  which are or were due and  payable by PBP and/or  MJQ,
including,  without limitation,  income taxes,  franchise taxes, transfer taxes,
sales taxes, use taxes,  unemployment  compensation taxes, social security taxes
and other withholding taxes (including those required under applicable law to be
withheld  from PBP  and/or  MJQ's  employees)  and  obligations  or  liabilities
relating  to the filing or failure  to file of any tax or  information  returns,
declarations and other reports or statements required to be filed or sent by PBP
and/or MJQ in respect of any of the foregoing.

        (c) The Excess  Related Asset Value (as defined  below) shall be paid by
the Trustee to PBP, or the Related  Asset Value  Deficiency  (as defined  below)
shall be paid by PBP to the Trustee, in accordance with the following procedure:

            (i) As soon as  possible  after the Control  Date,  and in any event
within  fifteen (15) days  thereafter,  the Trustee,  with the  cooperation  and
assistance  of PBP and its  representative,  shall  prepare and deliver to PBP a
statement  (the "Control Date Working  Capital  Statement") of the book value of
the Related Assets constituting current assets as of the Control Date and of the
book value of the Assumed Liabilities constituting current liabilities as of the
Control Date, all determined in accordance  with generally  accepted  accounting
principles,  and setting forth the Trustee's resulting calculation of the Excess
Related Asset Value or Related Asset Value  Deficiency,  as the case may be. The
current assets shall include the amounts of security deposits and prepayments in
respect  of the  Operating  Agreement  with  the  District  and the  Operational
Documents,  and shall be determined giving effect to the physical inventories of
the casino cash float and of the inventory and supplies  included in the Related
Assets as of the Control Date, as described below.  Rental and utilities for the
month (or the applicable  rental or billing period) under leases included in the
Related  Assets shall be allocated  between the Trustee and PBP such that (A) if
paid by PBP or MJQ, the portion attributable to the period from the Control Date
to the end of the month (or other applicable  rental or billing period) shall be
included  as a  current  asset  and (B) if not paid by PBP or MJQ,  the  portion
attributable to the period from the beginning of the month (or other  applicable
rental or billing  period) to the  Control  Date shall be  included as a current
liability assumed by the Trustee.

            (ii) On the Control Date or as soon as possible thereafter,  PBP and
the  Trustee  will  jointly  conduct a physical  count of the casino  cash float
(including,  without  limitation,  cash in slot machines) and of the inventories
and supplies of the Business,  including  without  limitation the inventories of
food,  beverages and spare parts,  phone cards held for sale to employees,  gift
shop inventory,  and the remaining bunkers and unused lubricating oils (but only
to the extent such oils are in storage tanks or sealed drums or otherwise in the
Ship's system).

                                       26

<PAGE>

Each party shall have the right to have the physical  inventory  observed by its
outside  accountants or other  representatives,  provided that such  observation
shall not delay the conduct of the physical inventory. The amount of casino cash
float and book value of the  inventories  and supplies will be based on physical
quantities on hand as of the Control  Date. No such cash,  inventory or supplies
will be used or removed from the Ship until completion of the physical inventory
at the Ship.  Either party shall have the right to have the  physical  inventory
conducted  overnight or during other than operating hours, upon reasonable prior
notice (not to exceed three (3) days).  Notwithstanding  the  foregoing,  in the
event that either  party shall fail to  cooperate in the conduct of the physical
inventory or make available the necessary personnel,  the other party shall have
the right to conduct the physical  inventory  without  observation  by the other
party.

            (iii)  For a period  of  fifteen  (15) days  after  delivery  of the
Control Date Working  Capital  Statement to PBP (the  "Objection  Period"),  PBP
shall have the right to review,  investigate,  verify and, by written  notice to
the Trustee (an "Objection Notice") given before the expiration of the Objection
Period,  dispute or object to any item or amount included in or omitted from the
Control Date Working Capital  Statement.  Each of MJQ, PBP and the Trustee shall
provide  the other  with full  access to the  books,  records,  work  papers and
facilities  of the Ship  and  cooperate  fully  with  the  other  to the  extent
reasonably  required by the other in connection  with the  preparation,  review,
investigation and verification of the Control Date Working Capital Statement and
the aforesaid  inventory count. All matters  concerning the Control Date Working
Capital  Statement  delivered  by the  Trustee  as to which PBP does not give an
Objection Notice within the Objection Period shall be deemed accepted by PBP and
shall be final, binding and conclusive on the parties hereto.

            (iv) In the event PBP shall  give an  Objection  Notice  before  the
expiration  of the  Objection  Period,  PBP and the  Trustee  shall  attempt  to
reconcile their differences in good faith as promptly as reasonably practicable.
If PBP and the Trustee are unable to resolve any disputed items specified in the
Objection Notice within ten (10) days after the end of the Objection Period, PBP
and the Trustee shall submit the items  remaining in dispute for resolution to a
qualified,  impartial firm of independent public accountants  acceptable to both
PBP and the Trustee,  which firm shall,  as soon as  practicable,  determine and
issue a written report to PBP, MJQ and the Trustee upon such remaining  disputed
items in accordance with the provisions hereof, and such report shall be binding
and  conclusive  on the parties  hereto.  If PBP and the Trustee are not able to
agree upon a qualified,  impartial  firm of  independent  public  accountants as
aforesaid,  the items remaining in dispute shall be submitted for arbitration to
the  American  Arbitration   Association  (in  Miami)  in  accordance  with  its
Commercial Arbitration Rules then in effect, and the arbitrator's award shall be
binding and conclusive on the parties hereto.  The fees and disbursements of the
accounting firm retained to resolve the dispute, or the costs of the arbitrator,
as  applicable  (any  such  firm or  arbitrator  being  hereinafter  called  the
"Arbitrator"),  shall  be  allocated  between  PBP and the  Trustee  in the same
proportion  that  the  aggregate  amount  of such  remaining  disputed  items so
submitted  to the  Arbitrator  which were  unsuccessfully  disputed  by each (as
finally determined by the Arbitrator) bears to the total amount of such disputed
items so submitted.  Judgment upon the Arbitrator's determination may be entered
in any court of competent  jurisdiction.  The dispute  resolution  mechanism set
forth in this Section  11(c)(iv)  relates  solely to the accuracy of the Control
Date Working Capital

                                       27

<PAGE>

Statement and its compliance with the requirements of this Agreement,  and shall
not apply to the  application or  interpretation  of any other provision of this
Agreement.

            (v) In the event that the book value of the current assets  included
in the Related  Assets  exceeds the book value of the Assumed  Liabilities as of
the close of business on the day  immediately  proceeding the Control Date (such
excess being hereinafter  called the "Excess Related Asset Value"),  the Trustee
shall pay an amount equal to the Excess Related Asset Value to PBP in accordance
with  subparagraph  (vi) of this Section 11(c). In the event that the book value
of the Assumed  Liabilities  as of the close of business on the day  immediately
proceeding  the Control Date shall  exceed the book value of the current  assets
included in the Related  Assets (such  excess  being herein  called the "Related
Asset Value  Deficiency"),  PBP shall pay an amount  equal to the Related  Asset
Value  Deficiency to the Trustee in accordance  with  subparagraph  (vi) of this
Section 11(c).

            (vi) MJQ and PBP shall  jointly  and  severally  pay the Trustee any
Related  Asset  Value  Deficiency  and the  Trustee  shall pay to PBP any Excess
Related Asset Value, as applicable,  in United States dollars by certified check
or wire transfer of immediately  available funds to an account designated by the
recipient.  Such payment  shall be due, if PBP does not timely give an Objection
Notice, no later than five days after the end of the Objection  Period,  and, if
PBP shall have timely given an Objection  Notice,  no later than five days after
the disputed  items are resolved in accordance  with  subparagraph  (iv) of this
Section 11(c).

     12.  Jurisdiction.  This  Agreement  shall be governed by and  construed in
accordance  with the laws of the State of New Jersey  without  giving  effect to
principles of conflicts of laws,  and any and all disputes  under and/or related
to this Agreement shall be resolved by the Bankruptcy Court.

     13. Notices.  All notices that are required or may be given pursuant to the
terms of this  Agreement  shall be in  writing  and shall be  sufficient  in all
respects if given in writing and delivered by hand or national overnight courier
service,  transmitted  by telecopy or mailed by  registered  or certified  mail,
postage prepaid, as follows:

         To ITB, PBP, & GSRT:

         c/o International Thoroughbred Breeders, Inc.
         211 Beningo Boulevard, Suite 210
         Bellmawr, NJ 08031
         Attention: President
         Tel: (856) 931-8163
         Fax: (856) 931-8165

         With Copy to:

         Cozen O'Connor
         The Atrium
         1900 Market Street
         Philadelphia, PA 19103
         Attention: David S. Petkun, Esq.
         Tel: (215) 665-2000
         Fax: (215) 665-2013

                                       28

<PAGE>

         To Trustee:

         Druker, Rahl & Fein
         3625 Quakerbridge Road
         Hamilton, New Jersey 08619
         Attention: Donald F. Conway, Trustee
         Tel: (609) 689-2317
         Fax: (609) 689-9720

         With Copy to:

         Drinker Biddle & Shanley LLP
         500 Campus Drive
         Florham Park, NJ 07932
         Attention: A. Dennis Terrell, Esq.
         Tel: (973) 360-1100
         Fax: (973) 360-9831

         To MJQ:

         MJQ Corporation
         Port of Palm Beach
         777 E. Port Road
         Riviera Beach, FL 33404
         Attention: Francis X. Murray, President
         Tel: (561) 845-2101
         Fax: (561) 845-1201

         With Copy to:

         Richards, Layton & Finger
         One Rodney Square
         P.O. Box 551
         Wilmington, DE 19899
         Attention: Kevin G. Abrams, Esq.
         Tel: (302) 658-6541
         Fax: (302) 658-6548

                                       29

<PAGE>

         To Leo:

         Gibbons, Del Deo, Dolan,
         Griffinger & Vecchione
         One Riverfront Plaza
         Newark, New Jersey 07102
         Attention: Lawrence S. Lustberg, Esq.
         Tel: (973) 596-4500
         Fax: (973) 596-0545

         To LEG and Deerbrooke:

         Page, Mrachek,
         Fitzgerald & Rose, P.A.
         505 South Flagler Drive, Suite 200
         West Palm Beach, FL. 33401
         Attention: Alan B. Rose, Esq.
         Tel: (561) 655-2250
         Fax: (561) 655-5537

         To Quigley:

         Swidler, Berlin, Shereff, Friedman L.L.P.
         The Chrysler Building
         405 Lexington Avenue
         New York, New York 10174
         Attention: Guy Petrillo, Esq.
         Tel: (212) 891-9438
         Fax: (212) 891-9598

                                       30

<PAGE>

         To Cambridge:

         Cambridge Capital Group, Inc.
         5335 Wisconsin Avenue, N.W.
         Suite 440
         Washington, DC 20015
         Attention: Mr. Eric L. Cummings, President
         Tel: (202)237-7600
         Fax: (202)237-8100

         With Copy to:

         Thomas A. Mauro & Associates, P.C.
         1050 Seventh Street N.W.
         Suite 1200
         Washington, DC 20036
         Attention: Thomas A. Mauro, Esq.
         Tel: (202) 452-9865
         Fax: (202) 452-0092

or such other address or addresses as any party hereto shall have  designated by
notice in writing to the other parties hereto.  A notice shall be deemed to have
been given (a) upon  personal  delivery,  if delivered  by hand or courier,  (b)
three (3) business days after the date of deposit in the mails, postage prepaid,
if mailed by certified or registered  mail, or (c) the next business day if sent
by facsimile transmission (if receipt is electronically confirmed).

     14. Waivers.  Trustee, on the one hand, and ITB and PBP, on the other hand,
may, by written notice to the other,  (a) extend the time for the performance of
any of the obligations or other actions of the other under this  Agreement;  (b)
waive  any  inaccuracies  in the  representations  or  warranties  of the  other
contained  in this  Agreement  or in any  document  delivered  pursuant  to this
Agreement;  or (c) waive  compliance with any of the covenants and agreements of
the other  contained  in this  Agreement.  Except as provided  in the  preceding
sentence,  no  action  taken  pursuant  to this  Agreement,  including,  without
limitation,  any investigation by or on behalf of any party,  shall be deemed to
constitute  a waiver by the party  taking  such  action of  compliance  with any
representations,   warranties,   covenants  or  agreements   contained  in  this
Agreement.  The waiver by any party hereto of a breach of any  provision of this
Agreement  shall not  operate  or be  construed  as a waiver  of any  subsequent
breach.

     15. Entire Agreement.  This Agreement,  including the Settlement Documents,
constitute  the entire  agreement of the parties  concerning  the subject matter
hereof,  and shall not be amended,  modified or  supplemented  unless by written
agreement  executed by the parties hereto.  This Agreement shall be binding upon
and inure to the  benefit of the  parties and their  respective  successors  and
assigns.  This Agreement  supercedes all prior written and oral agreements among
the parties concerning the subject matter hereof.

                                       31

<PAGE>

     16.  Counterparts.  This Agreement may be executed by the parties hereto in
separate counterparts,  each of which when so executed and delivered shall be an
original,  but all such counterparts  shall together  constitute but one and the
same instrument.

     17. No Assignment.  The rights and  obligations  under this Agreement shall
not be  assignable  to  any  person  except  with  the  written  consent  of the
non-assigning parties.

     18. Further Assurances.  Each of the Trustee,  ITB, PBP, GSRT or any of the
Ship  Defendants  hereby  agrees  from  time-to-time  upon  request of any party
hereto,  to take  such  additional  actions  and to  execute  and  deliver  such
additional  documents and  instruments as such party may  reasonably  request to
effect  the  transactions  contemplated  by and to carry out the  intent of this
Agreement.

     19.  Headings.  The headings set forth  herein are for the  convenience  of
reference only and shall not be used in the  interpretation  or  construction of
this Agreement.

     20. Date of  Execution.  The parties  hereto  authorize the Trustee to date
this Agreement and any of the  Settlement  Documents upon the date of receipt of
the complete fully executed  counterparts  of the Settlement  Documents,  or any
other date  determined to be appropriate  by the Trustee in his sole  reasonable
discretion.

     IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the day and year first above written.


ATTEST/WITNESS:                         DONALD F. CONWAY, CHAPTER 11
                                        TRUSTEE FOR THE BANKRUPTCY
                                        ESTATE OF ROBERT E. BRENNAN

/s/Karl Piirimae                        /s/Donald F. Conway
----------------                        -------------------
                                        By:Donald F. Conway, Trustee

ATTEST/WITNESS:                         INTERNATIONAL THOROUGHBRED
                                        BREEDERS, INC.

/s/David Petkun                         /s/Francis W. Murray
---------------                         --------------------
                                        Name:Francis W. Murray
                                        Title:President

ATTEST/WITNESS:                         PALM BEACH PRINCESS, INC.

/s/David Petkun                         /s/Francis X. Murray
---------------                         --------------------
                                        Name:Francis X. Murray
                                        Title:President

                                       32

<PAGE>

ATTEST/WITNESS:                         MJQ CORPORATION

/s/David Petkun                         /s/Francis X. Murray
---------------                         --------------------
                                        Name:Francis X. Murray
                                        Title:President

ATTEST/WITNESS:                         LEO EQUITY GROUP

/s/David Petkun                         /s/Frank A. Leo
---------------                         ---------------
                                        Name:Frank A. Leo
                                        Title:President

ATTEST/WITNESS:                         CAMBRIDGE CAPITAL GROUP, INC.

                                        /s/Eric L. Cummings
                                        -------------------
                                        Name:Eric L Cummings
                                        Title:President

ATTEST/WITNESS:

/s/David Petkun                         /s/Frank A. Leo
---------------                         ---------------
                                        Frank A. Leo

ATTEST/WITNESS:

/s/David Petkun                         /s/Michael J. Quigley, III
---------------                         --------------------------
                                        Michael J. Quigley, III

ATTEST/WITNESS:                         DEERBROOKE INVESTMENTS, INC.

/s/David Petkun                         /s/Francis X. Murray
---------------                         --------------------
                                        Name:Francis X. Murray
                                        Title:Secretary

ATTEST/WITNESS:

/s/David Petkun                         /s/Francis W. Murray
---------------                         --------------------
                                        Francis W. Murray

                                       33

<PAGE>
                                                                   EXHIBIT 10.16

                           PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of this 22nd
day of  February,  2002 to be  effective  as of April 30,  2001 (the  "Effective
Date"),  by and among,  DONALD F. CONWAY,  CHAPTER 11 TRUSTEE FOR THE BANKRUPTCY
ESTATE OF ROBERT E. BRENNAN  having an address at c/o A. Dennis  Terrell,  Esq.,
Drinker  Biddle & Shanley  LLP,  500  Campus  Drive,  Florham  Park,  New Jersey
07932-1047 ("Seller"),  PALM BEACH PRINCESS, INC., a Delaware corporation having
an  address  at 777 East Port  Road,  Riviera  Beach,  Florida  33404  ("PBP" or
"Purchaser").

                                   Background

     A. Seller is the holder of that certain Promissory Note dated as of May 13,
1999 (the  "Note")  from MJQ  Corporation  ("MJQ" or  "Borrower")  to  Cambridge
Capital Group,  Inc.  ("Cambridge")  in the original  principal amount of Twelve
Million  Dollars  ($12,000,000.00).  The  obligations  of MJQ under the Note are
secured by, among other things,  an Indenture of Second Naval Mortgage dated May
13, 1999 (the "Mortgage") by and between MJQ Corporation and Cambridge  pursuant
to which MJQ granted to Cambridge a second  priority lien  encumbering the ocean
faring motor vessel "M/V Palm Beach  Princess"  registered  under the Panamanian
flag with International Call Sign 3FNQ2 and Patente of Navigation No. 14348-84-D
(the  "Ship").  The Note,  the  Mortgage  and all other  documents  executed  or
delivered in connection  therewith are described on Exhibit "A" attached  hereto
and collectively referred to herein as the "Loan Documents".

     B. Pursuant to the terms of that certain Standard Bareboat Charter dated as
of April 30, 2001 (the  "Bareboat  Charter")  by and  between  MJQ and PBP,  PBP
chartered the Ship from MJQ.

     C. Subject to the terms and conditions  hereof,  Seller desires to sell and
assign to Purchaser,  and  Purchaser  desires to purchase from Seller and assume
all of Seller's right, title and interest in and to the Loan Documents.

                                    Agreement

     NOW, THEREFORE, the parties hereto, in consideration of the mutual promises
contained herein,  and intending to be legally bound,  hereby covenant and agree
as follows:

     1. Certain  Definitions.  Capitalized  terms not otherwise  defined  herein
shall have the  meanings  assigned  to them in that  certain  Master  Settlement
Agreement  dated of even date  herewith to be  effective as of April 30, 2001 by
and  among  Seller,   Purchaser  and  certain  other  parties  (the  "Settlement
Agreement").

     2. Purchase and Sale. Subject to the terms and conditions set forth herein,
Seller hereby assigns, sells, transfers and conveys to Purchaser,  and Purchaser
hereby purchases,  all of Seller's right,  title and interest in and to the Loan
Documents;  provided however that, Seller and Purchaser shall have no obligation
to complete the Closing (as defined in Section 4(a) below)

<PAGE>

unless:  (a) the United States  Bankruptcy  Court for the District of New Jersey
(the "Bankruptcy  Court") shall have entered an order in that certain  adversary
proceeding commenced under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy  Code") and styled Conway v. Pirates  Associates,  et al., Adv. Pro.
No.  98-3245 (KCF) (the  "Bankruptcy  Case")  approving  this  Agreement and the
Settlement  Agreement  under 11 U.S.C.  ss.363(b)(1)  and Bankruptcy  Rule 9019,
respectively,  and  ordering  that all claims to or against  the Loan  Documents
shall attach and be satisfied  solely from the payment of the Purchase Price (as
defined  below) (the  "Order");  (b) the time for  obtaining a stay of the Order
shall have passed without any stay of such Order having been granted or, if such
stay  shall  have  been   granted,   the  Order  shall  have  become  final  and
non-appealable  and (c) Seller  shall  have  received  a written  assignment  by
Oceanic Venture Funding Ltd. ("OVFL") pursuant to which OVFL shall assign to the
Seller the Loan Documents and release all of OVFL's right, title and interest in
and to,  and all  claims  against  the Loan  Documents  or the Ship  (the  "OVFL
Release").

     3. Purchase Price; Default.

        (a) The purchase price for all of Seller's right,  title and interest in
and to the Loan  Documents  shall be an amount equal to Thirteen  Million  Seven
Hundred Fifty  Thousand  Dollars  ($13,750,000.00)  (such amount,  the "Purchase
Price"), which shall be due and payable as follows:

            (i) Four Million Dollars  ($4,000,000.00)  by the payment of sixteen
(16)  equal  monthly   installments  of  Two  Hundred  Fifty  Thousand   Dollars
($250,000.00)  each by certified  check,  beginning as of the Effective Date and
continuing on the last day of each month  thereafter  through and including July
31,  2002   (individually  an  "Installment   Payment"  and  collectively,   the
"Installment Payments").  Notwithstanding anything herein to the contrary, prior
to the  satisfaction  of  the  conditions  provided  in  Section  2  above,  the
Installment  Payments  shall  be  made by  check  sent  to the  registry  of the
Bankruptcy  Court,  and  following  the  satisfaction  of  such  conditions  the
Installment Payments shall be released from the registry of the Bankruptcy Court
to Seller, and all subsequent  Installment  Payments shall be made to an account
designated  in writing by the Seller to Purchaser.  In the event the  conditions
set forth in  Section 2 hereof are not  satisfied  on or prior to April 1, 2002,
either  Purchaser  or  Seller  may  terminate  this  Agreement,  and  upon  such
termination all of the Installment Payments shall be repaid to Purchaser.

            (ii)   Nine   Million   Seven   Hundred   Fifty   Thousand   Dollars
($9,750,000.00)  by wire transfer of immediately  available funds at Closing (as
defined in Section 4(c) below) (the "Balloon Payment").

Any and all sums payable  hereunder,  including  but not limited to the Purchase
Price and any of the payments to be made in connection with  Purchaser's  notice
to extend the  Closing as  provided  in Section  4(b)  hereof,  shall be made in
United  States  dollars by (i)  Purchaser's  check mailed to the Registry of the
Bankruptcy  Court until  satisfaction  of the conditions set forth in Section 2,
and (ii) thereafter by certified check or wire transfer of immediately available
funds.

        (b) At Closing  (as  defined in Section  4(a)  below),  the  Installment
Payment shall be credited  against the Purchase  Price. In the event that any of
the following  (each, an "Event of Default") shall have occurred:  (i) Purchaser
shall fail to pay any installment of the Installment  Payment on or prior to the
date that is five (5) days after the date when such payment

                                      -2-

<PAGE>

is due  hereunder;  or (ii)  Purchaser  shall  fail in any  material  respect to
perform any other obligation to be performed hereunder by Purchaser at or before
Closing (as defined in Section  4(a) below) and shall fail to cure such  failure
within  fifteen (15) days after the Seller has given written  notice  thereof to
Purchaser, or (iii) there shall have occurred any other Ship Obligation Event of
Default (as defined in the  Settlement  Agreement),  Seller's sole and exclusive
remedy shall be to terminate this Agreement by written notice to Purchaser,  and
upon any such  termination of this Agreement by Seller,  Seller shall (x) retain
that  portion of the  Installment  Payment  paid to Seller or released to Seller
pursuant to Section 3(a)(i) as liquidated  damages,  (y) notify the Escrow Agent
of the occurrence of the Event of Default, whereupon Escrow Agent shall take all
actions  necessary  to cause the Ship and the Related  Assets (as defined in the
Settlement  Agreement) to be transferred into the custody of the Seller and sold
by  foreclosure  and (z)  neither  Seller nor  Purchaser  shall have any further
right, obligation or liability under this Agreement;  provided, however, that in
connection  with the transfer of the Ship and the Related  Assets (as defined in
the  Settlement  Agreement) to Seller upon the occurrence of an Event of Default
hereunder,  the Purchaser and Seller shall perform an accounting of the value of
the Related Assets in accordance with Section 11 of the Settlement Agreement and
the provisions of said Section 11 shall apply.

        (c) The entire outstanding  balance of the Purchase Price may be prepaid
in whole  (but not in part) at any time upon not less  than five (5) days  prior
written notice to Seller without premium or penalty by Purchaser.

     4. Settlement; Conditions Precedent.

        (a) Closing  hereunder (the "Closing")  shall take place on the later to
occur of (i) July 31, 2002,  subject to Purchaser's  right to extend the Closing
Date for up to three (3) additional months pursuant to Section 4(b) hereof, (ii)
ninety (90) days  following  the  satisfaction  of the  conditions  set forth in
Section 2 hereof or (iii) such  earlier date as  Purchaser  shall  specify by at
least ten (10) days prior written notice to Seller, provided,  however that such
notice shall only be effective  so long as all  conditions  precedent to Closing
shall have been  satisfied  or are then  reasonably  capable of being  satisfied
prior to the date set forth in  Purchaser's  notice  (the  "Closing  Date") and,
unless  before  said date Seller and  Purchaser  shall have agreed on a definite
time, date and place, at 10:00 A.M. on such day at the offices of Drinker Biddle
& Shanley LLP, 500 Campus Drive,  Florham Park,  New Jersey 07932.  For purposes
hereof,  a "Business Day" shall be any day other than a day on which  commercial
banks in the State of New Jersey are required or permitted by law to close.

        (b) Notwithstanding the foregoing, so long as no Event of Default exists
under this  Agreement and no Ship  Obligation  Event of Default exists under the
Settlement  Agreement at the time of exercise,  Purchaser may extend the Closing
Date as follows:

            (i) upon written notice from Purchaser delivered to Seller not later
than July 15, 2002, together with a non-refundable  payment to Seller of Seventy
Thousand Dollars ($70,000.00),  the Closing Date shall be extended to August 31,
2002.

            (ii) in the event that  Purchaser  shall have  extended  the Closing
Date as provided in subsection  (b)(i) above, upon written notice from Purchaser
delivered  to  Seller  not  later  than  August  15,  2002,   together   with  a
non-refundable  payment to Seller of Eighty Thousand Dollars  ($80,000.00),  the
Closing Date shall be extended to September 30, 2002.

                                      -3-

<PAGE>

            (iii) in the event that  Purchaser  shall have  extended the Closing
Date as provided in subsection (b)(i) and subsection (b)(ii) above, upon written
notice from  Purchaser  delivered to Seller not later than  September  15, 2002,
together with a non-refundable payment to Seller of One Hundred Thousand Dollars
($100,000.00), the Closing Date shall be extended to October 31, 2002.

The  payments  under  Sections  3(b)(i),  (ii) and (iii) shall not be applied in
reduction of the Purchase Price, and constitute additional consideration for the
extension  of the Closing  Date by Seller.  Except as set forth in this  Section
4(b),  Purchaser  shall have no right or option to extend the Closing Date.  Any
and all notices to extend the Closing Date shall be  irrevocable,  and shall not
be binding upon Seller unless  accompanied  by the payment of the sums set forth
herein by certified check or wire transfer of immediately available funds to the
Escrow Agent.

        (c) Purchaser  agrees that  Seller's  obligation to complete the Closing
hereunder shall be subject to the  fulfillment,  at or prior to the Closing,  of
the following conditions  precedent,  provided however, that Seller, in its sole
discretion,  may  elect  to  waive  any  thereof:  (i) the  representations  and
warranties  of Purchaser  pursuant to Section 6 hereof shall be true and correct
in all material  respects;  (ii) Purchaser  shall pay to Seller the  Installment
Payment and Balloon Payment;  (iii) all of the conditions set forth in Section 2
hereof  shall  have been  satisfied;  and (iv) no Event of Default  shall  exist
hereunder  and no Ship  Obligation  Event  of  Default  shall  exist  under  the
Settlement Agreement.

        (d) Seller  agrees that  Purchaser's  obligation to complete the Closing
hereunder shall be subject to the  fulfillment,  at or prior to the Closing,  of
the following conditions  precedent,  provided however,  that Purchaser,  in its
sole discretion,  may elect to waive any thereof:  (i) the  representations  and
warranties  of Seller  pursuant to Section 5 hereof shall be true and correct in
all material  respects;  (ii) Seller shall cause the Escrow Agent to deliver the
Loan Documents and the other instruments  relevant to Section 4(e) to Purchaser;
and (iii) all of the conditions in Section 2 hereof shall have been satisfied.

        (e) At the Closing, Seller shall:

            (i) Deliver to Purchaser the original Note,  which (a) if previously
endorsed  to  Seller  shall  be  endorsed  by  Seller:  "Pay  to  the  order  of
_________________,  without  recourse or warranty"  and (b)  otherwise  shall be
endorsed  in blank by (x) OVFL or such  other  person or entity to whom the Note
shall have been last endorsed (if the Note shall have been  endorsed  before the
Closing) or (y) Cambridge  Capital Group,  Inc.  ("Cambridge") if the Note shall
not have been endorsed by it before the Closing,  and any endorsement by OVFL or
Cambridge may be made without recourse or warranty;

            (ii) Deliver to Purchaser the original Mortgage,  and an original or
a copy of each of the documents listed on Exhibit "A" attached hereto and all of
the other documents  referred to in Sections 3(b), (c) and (d) of the Settlement
Agreement; and

            (iii)  Execute,  acknowledge  and deliver to Purchaser an Assignment
and  Assumption  Agreement  in the form  attached  hereto  as  Exhibit  "B" (the
"Assignment").

                                      -4-

<PAGE>

        (f) At the Closing, Purchaser shall:

            (i) pay the Balloon Payment to Seller; and

            (ii)  execute  and  deliver  to  Seller  a  document   acknowledging
Purchaser's  receipt and acceptance of the Loan Documents.  Purchaser shall bear
all of the costs of recording any and all  documents  required to be recorded in
connection with the purchase and sale hereunder.

     5. Seller's Representations and Warranties.

        (a) Seller  hereby  represents  and warrants to  Purchaser,  which as to
matters  within  clauses  (i) and (v) are  made to the best of  Seller's  actual
knowledge  without  independent   investigation,   as  follows,   and  all  such
representations  and  warranties  shall  be  deemed  repeated  at  and as at the
Settlement Date:

            (i) Seller has been granted title to the Loan Documents  pursuant to
the order entered into in the Gibraltar Litigation;

            (ii) Seller is transferring  the Loan Documents and the indebtedness
evidenced thereby pursuant to the Order;

            (iii) Seller has the right,  power,  legal capacity and authority to
execute  and  deliver  this  Agreement  and  to  consummate   the   transactions
contemplated by this Agreement;

            (iv) this Agreement has been duly and validly executed and delivered
by Seller and  constitutes  the legal,  valid and binding  obligation  of Seller
enforceable   in   accordance   with  its  terms   except  to  the  extent  such
enforceability  may be limited by applicable  bankruptcy,  insolvency  and other
laws affecting creditor's rights generally; and

            (v) except for the Order and the OVFL Assignment, no approval of any
person or entity is required for the  execution  of this  Agreement by Seller or
the consummation by Seller of the  transactions  contemplated by this Agreement,
excluding any consents received on or prior to the date hereof.

        (b) Seller has made and makes no  warranty or  representation  regarding
the perfection or priority of the Mortgage,  the condition,  value or use of the
Ship, or any other matter not specifically set forth above.

     6. Purchaser's Representations and Warranties.  Purchaser hereby represents
and warrants to Seller as follows:

        (a)  Purchaser  has the right,  power,  legal  capacity and authority to
execute  and  deliver  this  Agreement  and  to  consummate   the   transactions
contemplated  by this  Agreement.  This  Agreement  has been  duly  and  validly
executed  and  delivered  by  and  constitutes  the  legal,  valid  and  binding
obligation of Purchaser  enforceable in accordance  with its terms except to the
extent such enforceability may be limited by applicable  bankruptcy,  insolvency
and other laws affecting creditor's rights generally.

                                      -5-

<PAGE>

        (b) To the best of  Purchaser's  knowledge  no approval of any person or
entity is required  for the  execution  of this  Agreement  by  Purchaser or the
consummation  by Purchaser of the  transactions  contemplated by this Agreement,
excluding any consents received on or prior to the date hereof; and

        (c) Purchaser hereby  acknowledges and agrees that it has become a party
hereto in reliance upon its own independent analysis of the Borrowers' financial
condition  and  creditworthiness  based on such  documents  and  information  as
Purchaser   deemed   appropriate  or  necessary  and  not  in  reliance  on  any
representation,  warranty,  analysis or advice, whether express or implied, made
by Seller.

     7. Appraisal. Between the Effective Date and the Closing Date, Seller shall
have the right to cause a single market value  appraisal of the Ship and related
equipment  and business  operations  (the  "Appraisal")  to be made, at Seller's
expense.  Once Seller  notifies  Purchaser of Seller's  retention of a specified
appraiser to conduct the Appraisal,  Purchaser shall permit such appraiser,  his
employees  and  agents,  to enter the Ship,  at  reasonable  times  which do not
interfere  with the normal  operation  of the Ship from the Port of Palm  Beach,
scheduled upon at least five (5) Business  Days' prior notice to Purchaser,  for
the purpose of  conducting  such studies and reports (at Seller's  sole cost and
expense) as are reasonably necessary for the preparation of the Appraisal.

     8. Non-Recourse;  No Survival of Representations and Warranties.  Except as
specifically  provided  herein  or the  Assignment,  the  transfer  of the  Loan
Documents to Purchaser  shall be without  representation,  recourse or warranty,
express or implied. The trustee of Seller shall not be personally liable for any
of the  transactions or obligations of Seller hereunder and any judgment entered
against the Seller or the Estate shall be satisfied  only from the assets of the
Estate.  Except as set forth in  Sections  5(a)(iii),  5(a)(iv)  and 6(a) (which
representations and warranties shall survive the Closing for two (2) years after
the Closing Date) the  representations  and warranties provided herein shall not
survive the Closing.

     9. Entire Agreement.  This Agreement and the Settlement  Agreement together
supersede  any  prior  negotiations,   discussions  or  communications   between
Purchaser and Seller and constitutes the entire agreement  between Purchaser and
Seller with respect to the Loan Documents and the Mortgaged Premises.

     10. Termination.  This Agreement may be terminated at any time prior to the
Closing as follows:

        (a) by mutual  written  consent of Purchaser  and Seller,  the effect of
which  (including  any right PBP may have to have any refund of the  Installment
Payment) shall be as determined by the mutual  agreement  between  Purchaser and
Seller;

        (b) by Seller,  if an Event of Default  occurs as set forth in, and with
the effect set forth in, Section 3(b) above; and

        (c) by  Purchaser,  if the Closing  shall not have occurred (i) due to a
breach of this  Agreement by Seller in any material  respect  which Seller shall
not have cured within thirty

                                      -6-

<PAGE>

(30) days after  notice from  Purchaser to Seller or (ii) due to failure to have
satisfied any of the conditions precedent set forth in Section 2(a) hereof to be
satisfied. In the event that Purchaser terminates this Agreement as set forth in
this  Section,  Purchaser  shall be  entitled  to (A) the  refund  of any of the
Installment  Payments  or any  other sum paid to Seller  hereunder  or  specific
performance  of this Agreement and (B) solely in the event of the willful breach
of this Agreement, an action for money damages.

     11. Time is of the Essence.  Time is of the essence for the  performance of
this Agreement.

     12.  Notices.  All  notices,   statements,   demands,  requests,  consents,
communications  and  certificates to be given under this Agreement shall be duly
and  properly  given if  delivered  personally  or given  verbally  and promptly
confirmed in writing or sent by overnight  courier service to the party entitled
to such  notice or demand at the  address  set  forth  below,  or at such  other
address as such party may,  from time to time,  specify in writing  and shall be
effective when actually received by such party.

         Address for PBP:

                  Palm Beach Princess, Inc.
                  777 East Port Road
                  Riviera Beach, Florida 33404
                  Attention: Francis X. Murray

         with a copy to:

                  David S. Petkun, Esq.
                  Cozen O'Connor
                  The Atrium
                  1900 Market Street
                  Philadelphia, Pennsylvania 19103

         Address for Seller:

                  c/o Drinker Biddle & Shanley LLP
                  500 Campus Drive
                  Florham Park, New Jersey 07932-1047
                  Attention: A. Dennis Terrell, Esq.

     13. Headings.  The headings contained in this Agreement are for convenience
only and shall not affect the interpretation of any provision hereof.

     14.  Governing  Law.  This  Agreement  and the rights and duties  described
herein shall be governed by, and interpreted in accordance with, the laws of the
State of New Jersey without reference to conflict of laws provisions.

                                      -7-

<PAGE>

     15. Counterparts.  This Agreement may be executed in several  counterparts,
and by the parties hereto on separate counterparts, each of which is an original
but all of which together shall constitute one document.

     16. No Recording.  This Agreement  shall not be lodged for recording in any
place or office of public  record and any action in violation of this  provision
shall be deemed to be a default  hereunder  and permit the other party hereto to
terminate this Agreement immediately and without further notice.

     17. No  Assignment.  Neither  this  Agreement,  nor the rights,  duties and
obligations  hereunder,  may be  assigned  by a party  hereto  without the prior
written consent of the other party.

     IN WITNESS  WHEREOF,  the parties hereto have duly executed this Agreement,
under seal, as of the day and year first-above written.

WITNESS                               DONALD F. CONWAY, CHAPTER 11 TRUSTEE
                                      FOR THE BANKRUPTCY ESTATE OF
                                      ROBERT E. BRENNAN

/s/Karl Piirimae                      By:/s/Donald F. Conway
----------------------                   ----------------------------------
Name:                                    Name: Donald F. Conway
Title:


WITNESS                               PALM BEACH PRINCESS, INC.

/s/David Petkun                       By:/s/Francis X. Murray
----------------------                   ----------------------------------
Name:                                    Name:Francis X. Murray
Title:                                   Title:President

                                       -8-

<PAGE>

                                   EXHIBIT "A"

                                 Loan Documents

1.   Promissory  Note  dated May 13,  1999  from MJQ  Corporation  to  Cambridge
     Capital Group, Inc.

2.   Indenture of Second Naval Mortgage dated May 13, 1999 from MJQ  Corporation
     to Cambridge Capital Group, Inc.

3.   Debt and Security  Interest  Subordination  Agreement dated May 13, 1999 by
     and among Cambridge, First Union National Bank, MJQ and Michael J. Quigley.

<PAGE>

                                   EXHIBIT "B"

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

     THIS ASSIGNMENT AND ASSUMPTION  AGREEMENT (this  "Agreement") is made as of
the ____ day of ______,  2002,  by DONALD F. CONWAY,  CHAPTER 11 TRUSTEE FOR THE
BANKRUPTCY ESTATE OF ROBERT E. BRENNAN,  ("Assignor"),  and PALM BEACH PRINCESS,
INC. ("Assignee").

                                   Background

     Assignor  is the owner and holder of a that  certain  (i)  Promissory  Note
dated as of May 13, 1999 (the "Note") from MJQ Corporation ("MJQ" or "Borrower")
to the Cambridge  Capital Group,  Inc.  ("Cambridge") in the original  principal
amount of Twelve Million Dollars ($12,000,000.00);  and (ii) Indenture of Second
Naval  Mortgage  dated May 13,  1999 (the  "Mortgage")  by and  between  MJQ and
Cambridge  pursuant to which MJQ granted to  Cambridge  a second  priority  lien
encumbering the ocean faring vessel "M/V Palm Beach Princess"  registered  under
the Panamanian flag with International Call Sign 3FNQ2 and Patente of Navigation
Number  14348-84-D (the "Ship").  The Note, the Mortgage and all other documents
executed or  delivered  in  connection  therewith  are  described on Exhibit "A"
attached  hereto and  collectively  referred to herein as the "Loan  Documents".
Assignor  desires to sell,  assign,  transfer  and convey the Loan  Documents to
Assignee on the terms and conditions set forth in this Agreement.

                                    Agreement

     NOW, THEREFORE,  Assignor and Assignee, for the consideration  specified in
that certain Purchase and Sale Agreement dated February __, 2002 to be effective
as of April  30,  2001  among  Assignor,  Assignee  and  others  (the  "Purchase
Agreement"),  which  Purchase  Agreement is hereby  incorporated  herein by this
reference,  to Assignor in hand paid,  the receipt and  sufficiency of which are
hereby acknowledged,  and the mutual promises contained herein, and intending to
be legally bound hereby, covenant and agree as follows:

     1. Assignment.  Assignor hereby sells, assigns, transfers, conveys and sets
over to Assignee the Loan  Documents.  The assignment and transfer  accomplished
hereby shall be effective as of the date of this Agreement.

     2. Acceptance. Assignee hereby accepts the foregoing assignment of the Loan
Documents  and assumes all of the  liabilities  and  obligations  under the Loan
Documents  effective as of the date of this  Agreement,  subject to the terms of
the Debt and Security Interest Subordination Agreement dated May 13, 1999 by and
among Cambridge, First Union National Bank, MJQ and Michael J. Quigley III.

     3. No  Representations.  Except  as  expressly  set  forth in the  Purchase
Agreement,  this  Assignment  is  without  recourse,  warranty,  representation,
obligation or responsibility of any

<PAGE>

type,  kind,  character or nature,  whether  expressed or implied,  statutory or
otherwise, in fact or in law.

     IN WITNESS WHEREOF, Assignor and Assignee have duly executed this Agreement
as of the day and year first above written.


                                      Assignor:
                                      DONALD F. CONWAY, CHAPTER 11 TRUSTEE
                                      FOR THE BANKRUPTCY ESTATE OF
                                      ROBERT E. BRENNAN


                                      By:
                                         -----------------------
                                         Name:  Donald F. Conway


                                      Assignee:
                                      PALM BEACH PRINCESS, INC.


                                      By:
                                         ----------------------
                                         Name:
                                         Title:

                                       -2-

<PAGE>

                                                                   EXHIBIT 10.17

                            STOCK PURCHASE AGREEMENT

     THIS  AGREEMENT  made  this 22nd day of  February  2002  between  DONALD F.
CONWAY,  THE CHAPTER 11 TRUSTEE,  FOR THE BANKRUPTCY ESTATE OF ROBERT E. BRENNAN
(the "Seller"),  maintaining an office at Druker, Rahl & Fein, 3625 Quakerbridge
Road, Hamilton, New Jersey 08619, and INTERNATIONAL THOROUGHBRED BREEDERS, INC.,
a  Delaware  corporation  ("Purchaser"  or "ITB")  maintaining  an office at 211
Beningo Boulevard, Bellmawr, New Jersey 08031.

                                   Background

     A. On August 7, 1995,  Robert E. Brennan (the  "Debtor")  filed a voluntary
petition for relief under  Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the District of New
Jersey (the  "Bankruptcy  Court"),  Case No.  95-35502(KCF).  Seller is the duly
appointed  Chapter  11  Trustee  of the  bankruptcy  estate of the  Debtor  (the
"Estate").

     B. On December 7, 2000, the Seller entered into that certain  Agreement for
Settlement of Controversy  (the "Bond  Agreement") with Peter M. Bond on his own
and  on  behalf  of  certain   companies   and   entities   identified   therein
(collectively,  "Bond"), which provides for the transfer of all of the shares of
ITB common stock owned by Bond to the Trustee (the "Valmet Shares").

     C. The  performance of the Bond Agreement and the Trustee's  receipt of the
Valmet Shares are contingent  upon the Bankruptcy  Court's  approval of the Bond
Agreement. On February 21, 2001, the Bankruptcy Court entered an Order approving
the Bond Agreement pursuant to Federal Rule of Bankruptcy Procedure 9019.

     D. Seller and  Purchaser  are  parties to that  certain  Master  Settlement
Agreement dated the date hereof by and among Seller, Purchaser, MJQ Corporation,
Michael J.  Quigley,  II,  Leo  Equity  Group,  Inc.,  Frank A. Leo,  Deerbrooke
Investments,  Inc.,  Francis W. Murray and Cambridge  Capital  Group,  Inc. (the
"Settlement  Agreement"),  pursuant  to which  the  parties  agreed  to  settle,
discontinue and end certain litigation relating to various assets of the Debtor,
including, but not limited to, the Valmet Shares.

     E. In furtherance of the Settlement  Agreement,  Seller desires to sell all
of its interest in and to the Valmet Shares to Purchaser,  and Purchaser desires
to purchase all of Seller's  interest in and to the Valmet Shares upon the terms
and conditions set forth herein.

                                    Agreement

     NOW,  THEREFORE,  in  consideration  of the mutual covenants and agreements
contained  herein,  the parties  hereto,  intending to be legally  bound hereby,
agree as follows:

<PAGE>

     1. Sale of Shares.  Subject to the terms of this Agreement,  at the Closing
(as  hereinafter  defined),  Seller  shall sell and cause to be  transferred  to
Purchaser  all of the  Valmet  Shares  that the Seller  may  receive  and obtain
control from Bond under the Bond Agreement,  and Purchaser shall purchase all of
Seller's  interests  and rights in and to such Valmet  Shares,  for the purchase
price  specified in Paragraph 2 hereof.  Purchaser and Seller  acknowledge  that
Seller's  rights in and to the Valmet Shares are derived from the Bond Agreement
and that Seller  presently  does not have  possession  and control of the Valmet
Shares. Although the parties have approximated the number of Valmet Shares to be
2,235,000, the exact number of Valmet Shares cannot presently be determined.

     2. Purchase Price. The aggregate  purchase price for the Valmet Shares (the
"Purchase  Price")  shall be the amount in United States  dollars  determined by
multiplying  (i) the number of Valmet  Shares to be  transferred  to  Purchaser;
times (ii) U.S. $.50 (fifty cents). For example, if the Valmet Shares consist of
2,235,000  shares of ITB common stock,  the Purchase  Price shall be $1,117,500.
The per share  purchase  price shall be  equitably  adjusted in the event of any
stock   split,   reverse   stock  split,   reclassification,   recapitalization,
reorganization  or other  transaction which affects the capital structure of ITB
or changes the number, rights or the nature of the Valmet Shares or other shares
of ITB capital stock from the date hereof to the Closing.

     3.  Payment of the  Purchase  Price.  The  Purchase  Price shall be paid by
Purchaser  at the Closing to Seller by wire  transfer of  immediately  available
funds pursuant to instructions  given by Seller to Purchaser for that purpose or
by delivery  of a  certified  or bank  cashier's  check  payable to the order of
Seller.

     4.  Security for  Purchaser's  Obligations.  The  obligations  of Purchaser
hereunder  are secured by the Pledge and Security  Agreement  (the "ITB Security
Agreement") dated the date hereof made between ITB and Seller and all collateral
pledged to Seller thereunder.

     5.  Delivery of the Shares.  Seller shall deliver to Purchaser at Closing a
certificate or  certificates  representing  all of the Valmet Shares,  each duly
endorsed in the name of Purchaser or accompanied by a duly executed stock power,
all in good form for transfer of all such Valmet Shares to Purchaser.

     6.  Representations and Warranties of Purchaser.  Purchaser  represents and
warrants to Seller,  knowing and  intending  that Seller is relying  hereon,  as
follows:

        (a) Purchaser is a corporation, and GSRT is a limited liability company,
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Delaware and Purchaser has all requisite  corporate power and authority
to enter into this Agreement and to perform its obligations hereunder;

        (b) The execution,  delivery and performance of this Agreement,  the ITB
Security  Agreement,  and other all  agreements and documents to be executed and
delivered  pursuant hereto by Purchaser and GSRT  (collectively,  the "Purchaser
Transaction  Documents")  and the  consummation  by  Purchaser  and  GSRT of the
transactions  contemplated  hereby and thereby have been duly  authorized by the
Board of Directors  of  Purchaser  and by the Board of Directors

                                       2

<PAGE>

of Garden  State Race  Track,  Inc.,  as the sole  member of GSRT,  and no other
corporate  proceedings  on the  part of  Purchaser  and GSRT  are  necessary  to
authorize this Agreement and the transactions contemplated hereby and thereby.

        (c) This Agreement has been duly executed and delivered by Purchaser and
constitutes,  and the other Purchaser  Transaction  Documents to be executed and
delivered by Purchaser and GSRT  pursuant  hereto when executed and delivered by
Purchaser and GSRT will constitute,  the legal, valid and binding obligations of
Purchaser and GSRT,  enforceable  against  Purchaser and GSRT in accordance with
their respective terms.

        (d)  The  execution,  delivery  and  performance  by  Purchaser  of this
Agreement and by Purchaser and GSRT of the  Purchaser  Transaction  Documents do
not and will not (with or without  the  passage of time or the giving of notice)
violate or conflict with Purchaser's  certificate of incorporation or by-laws or
any agreement,  law or regulation,  judgement or order binding upon Purchaser or
its  assets or GSRT's  certificate  of  formation,  operating  agreement  or any
agreement, law or regulation, judgment or order binding upon GSRT or its assets.

        (e) No consents, approvals of, or registrations,  notifications,  filing
and/or  declarations  with,  any  court,  government,   governmental  agency  or
instrumentality  or any  other  person  are  required  to be  given  or  made by
Purchaser or GSRT in connection with the execution,  delivery and performance of
this Agreement and the Purchaser Transaction Documents.

        (f)  There  are  no  judicial,  administrative,  governmental  or  other
actions,  proceedings  or  investigations  pending,  or,  to  the  knowledge  of
Purchaser  threatened against or involving  Purchaser or GSRT, that question any
of the  transactions  contemplated by, or the validity of, this Agreement or any
of the other Purchaser Transaction Documents.

     7. Representations and Warranties of Seller. Seller represents and warrants
to Purchaser, knowing that Purchaser is relying hereon, as follows:

        (a) Seller has the power to and  authority to enter into this  Agreement
and perform its  obligations  hereunder,  subject to approval by the  Bankruptcy
Court.

        (b) This  Agreement  has been duly  executed and delivered by Seller and
constitutes  the legal,  valid and binding  obligations  of Seller,  enforceable
against  Seller  in  accordance  with its  terms,  subject  to  approval  by the
Bankruptcy Court.

        (c) The execution,  delivery and performance by Seller of this Agreement
do not and will not (with or  without  the  passage of time or giving of notice)
violate or conflict with any law or  regulation,  judgment or order of any court
or arbitrator binding upon Seller.

        (d) No consents, approvals of or registrations,  notifications,  filings
and  /or  declarations  with  any  court,  government,  governmental  agency  or
instrumentality  or any other  person are required to be given or made by Seller
in connection  with the execution,  delivery and  performance of this Agreement,
except for the approval of the Bankruptcy Court referred to in Sections 9(a) and
9(b).

                                       3

<PAGE>

        (e)  There  are  no  judicial,  administrative,  governmental  or  other
actions,  proceedings or investigations  pending, or to the knowledge of Seller,
threatened  against or involving  Seller,  that question any of the transactions
contemplated by, or the validity of, this

Agreement,  except for the  proceedings  seeking the  requisite  approval of the
Gibralter Court and the Bankruptcy Court.

     8. Obligations of Purchaser Until Closing.

        (a)  Purchaser  shall not take any action  with  respect to its  capital
structure,  or change the number,  rights or the nature of the Valmet  Shares or
other  shares of the capital  stock of ITB,  including,  but not limited to, the
effecting   of  a  stock   split,   reverse   stock   split,   recapitalization,
reclassification,  or  reorganization,  without  the prior  written  consent  of
Seller, which consent shall not be unreasonably withheld or delayed.

        (b) Purchaser shall maintain,  and cause GSRT to maintain, its corporate
existence and good standing in its jurisdiction of organization.

        (c) Purchaser shall operate its business,  and cause GRST to operate its
business, in the ordinary course,  including, but not limited to, maintaining in
full  force and effect  all  licenses,  permits,  authorizations  and  insurance
policies necessary to do business. For purposes of this subsection,  Purchaser's
operation of its business in the ordinary  course shall include  acquisitions of
other businesses and assets;  provided,  however, that any such acquisition from
an  "Affiliate"  of Purchaser  shall be on terms no less  favorable to Purchaser
than such terms  Purchaser  would receive in a transaction  at arms length.  For
purposes  of  this  Section  8(c),  the  term  "Affiliate"   shall  include  MJQ
Corporation,  Leo Equity Group,  Inc.,  Cambridge Capital Group,  Inc., Frank A.
Leo,  Francis W. Murray,  Michael J. Quigley,  III, all persons and entities set
forth on Schedule A hereto and any and all persons or entities  having any legal
or beneficial  interest in or with any of the persons and entities named in this
subsection or on Schedule A.

        (d) Purchaser  shall promptly  advise Seller in writing of the threat or
commencement of any dispute,  claim,  action, suit,  proceeding,  arbitration or
investigation  which could materially  adversely affect  Purchaser's  ability to
perform its obligations  under this Agreement or which  challenges or may affect
the validity of this Agreement.

        (e) Purchaser  shall not take, or enter into any agreement or commitment
to take, any of the following actions:

            (i) Purchaser  shall not make any change in its authorized or issued
capital stock,  grant any stock option or other right to purchase  shares of its
capital stock or other securities or purchase,  redeem, retire or make any other
acquisition of any shares of any capital stock or other securities,  except for:
(1) the purchase of the Valmet  Shares as  contemplated  by this  Agreement  and
shares of ITB common stock  purchased by Purchaser  under the terms of the Stock
Option Agreement between  Purchaser and Seller dated of even date herewith,  (2)
issuance's  by  Purchaser of shares of its common stock upon the due exercise of
stock options and warrants  granted and  outstanding  as of the date hereof,  (a
list of such  options and  warrants is set forth on Schedule B hereto);  and (3)
Purchaser's substitution and replacement of stock options for Francis Murray and
William Warner as set forth in Schedule C hereto.

                                       4

<PAGE>

Notwithstanding the foregoing exception in 8(e)(i)(2) above, Purchaser shall not
permit  Francis  Murray to exercise any stock  options held by him and Purchaser
shall not issue any shares of its capital stock upon any  attempted  exercise or
exchange thereof.

            (ii) Purchaser shall not liquidate or dissolve.

            (iii)  Purchaser  shall not sell all or a  material  portion  of its
assets.

            (iv) Purchaser shall not enter any agreement of merger, combination,
or  consolidation,  unless such  agreement  expressly  provides for  Purchaser's
consummation  of the  purchase of the Valmet  Shares  hereunder  before any such
merger, combination or consolidation may take place.

            (v)   Purchaser   shall  not  declare  or  pay  any   dividends   or
distributions.

            (vi) Purchaser shall not amend its certificate of  incorporation  or
bylaws  which  could  adversely  affect the rights of the  holders of ITB common
stock.

            (vii) Purchaser shall not  unreasonably  increase cash  compensation
paid to its management or pay cash bonuses.

        (f) Purchaser  shall promptly  advise Seller in writing,  promptly after
becoming  aware,  of any  event or the  existence  of any fact  which  (i) makes
untrue, or will make untrue as of the Closing, any representation or warranty of
Purchaser  set forth in this  Agreement  or in any other  Purchaser  Transaction
Document or (ii) would constitute a breach of this Agreement by Purchaser.

     9. Conditions Precedent to Seller's Obligations.

     The  obligation  of Seller to  consummate  the sale of the Valmet Shares is
subject to fulfillment by or at Closing of each of the following conditions:

        (a) Bankruptcy  Court Approval.  The Bankruptcy Court shall have entered
an Order (the "Approval  Order") pursuant to Section 363(b)(1) of the Bankruptcy
Code  approving this  Agreement and the  consummation  of the sale of the Valmet
Shares  contemplated  herein and providing,  among other  matters,  that (i) the
Valmet Shares shall be  transferred  to the Purchaser  free and clear of any and
all liens, encumbrances,  security interests,  charges, claims and interests and
free of any stamp or similar  tax  requirements;  (ii) any and all liens  and/or
encumbrances against the Valmet Shares shall attach to the proceeds of the sale,
and (iii)  the  Purchaser  is a good  faith  purchaser  entitled  to  protection
pursuant to Section 363(m) of the Bankruptcy Code.

        (b) Final Order.  The Approval Order becomes a Final Order. The Approval
Order shall be considered a "Final  Order" when the Approval  Order has not been
stayed, vacated or otherwise rendered ineffective and either (i) the time period
for taking an appeal  therefrom  shall have passed  without an appeal  therefrom
having  been  taken or (ii) if any such  appeal  shall  have been  taken or stay
granted,  such appeal  shall have been  dismissed or resolved or such stay shall
have been vacated or terminated and all applicable periods for further appeal of
such order shall have passed.

                                       5

<PAGE>

        (c) Seller  obtains  possession  and  control of the Valmet  Shares duly
endorsed for transfer by Bond.

        (d)  Purchaser's   representations  and  warranties  contained  in  this
Agreement  shall be made  again as at the  Closing  and  shall  then be true and
correct in all material respects.

        (e) Purchaser shall have performed or complied in all material  respects
with all agreements,  covenants and conditions  required by this Agreement to be
performed or complied with by it prior to or at the Closing.

        (f)   Purchaser   shall  have   executed  and  delivered  the  Purchaser
Transaction Documents with no default thereunder.

        (g) The  Closing  shall not  violate any order or decree of any court or
governmental body of competent jurisdiction and no suit, action,  investigation,
or legal or  administrative  proceeding shall have been brought or threatened by
any person  other than Seller or an  affiliate  of Seller  which  questions  the
validity or legality of this Agreement or the transaction contemplated hereby.

     10. Conditions Precedent To Purchaser's Obligations.

     The obligation of Purchaser to consummate the purchase of the Valmet Shares
is subject to fulfillment by or at Closing of each of the following conditions.

        (a) Bankruptcy  Court Approval.  The Bankruptcy Court shall have entered
the Approval Order.

        (b) Final Order. The Approval Order becomes a Final Order.

        (c) Seller  obtains  possession  and  control of the Valmet  Shares duly
endorsed for transfer by Bond, on behalf of the record  owner,  and Seller shall
deliver to Purchaser  good and marketable  title to the Valmet Shares,  free and
clear of all liens,  security  interests and adverse claims  pursuant to Section
363 of the Bankruptcy Code. Purchaser hereby acknowledges that the Valmet Shares
are held of record by non United States  persons and entities and,  accordingly,
Purchaser  hereby waives,  on behalf of itself and its stock transfer agent, all
requirements that stock powers or other stock transfer documents bear signatures
with "medallion guarantees".

        (d) Seller's  representations and warranties contained in this Agreement
shall be made again as at the  Closing and shall then be true and correct in all
material respects.

        (e) Seller shall have  performed  or complied in all  material  respects
with all agreements,  covenants and conditions  required by this Agreement to be
performed or complied with by it prior to or at the Closing.

        (f) The  Closing  shall not  violate any order or decree of any court or
governmental body of competent jurisdiction and no suit, action,  investigation,
or legal or  administrative  proceeding shall have been brought or threatened by
any person other than Purchaser or an

                                       6

<PAGE>

affiliate  of  Purchaser  which  questions  the  validity  or  legality  of this
Agreement or the transaction contemplated hereby.

     11. Closing.

        (a) The  closing  of the  purchase  and sale of the Valmet  Shares  (the
"Closing")  shall take place at the office of Drinker  Biddle & Shanley LLP, 500
Campus Drive,  Florham Park,  New Jersey 07932 on the later of: (i) July 1, 2002
or (ii) the date  occurring 90 days after the Approval  Order of the  Bankruptcy
Court becomes a Final Order (the "Closing Date") or at such other date and place
as may be agreed to by Purchaser and Seller.

        (b) At the  Closing,  Seller  shall  deliver or cause to be delivered to
Purchaser the following:

            (i) all  certificates  representing  the Valmet Shares duly endorsed
for transfer or with stock powers affixed thereto; and

            (ii) a  certificate  dated as of the Closing  Date to the effect set
forth in Section 7.

        (c) At the Closing, Purchaser shall deliver to Seller the following:

            (i) the Purchase Price;

            (ii) a certificate,  dated the Closing Date, to the effect set forth
in Section 6; and

            (iii)  a copy  of the  resolutions  of the  board  of  directors  of
Purchaser  authorizing  the execution,  delivery and performance by Purchaser of
this Agreement,  the ITB Security Agreement and the other Purchaser  Transaction
Documents.

     12. Termination.

     This Agreement may be terminated at any time prior to the Closing:

        (a) by mutual written consent of Seller and Purchaser;

        (b) by Seller,  if (i) any  representation or warranty of Purchaser made
in or pursuant to this Agreement is untrue or incorrect in any material respect,
(ii)  Purchaser  breaches in any material  respect any covenant or obligation or
other  term of this  Agreement  and such  breach  is not  cured  within  10 days
thereafter  ((i) and (ii) above being  hereinafter  referred to as a  "Purchaser
Event  of  Default"),  or  (iii)  any of the  conditions  precedent  to  Closing
contained in Section 9 are not satisfied by July 1, 2002.

        (c) by Purchaser,  if (i) any  representation or warranty of Seller made
in or pursuant to this Agreement is untrue or incorrect in any material respect,
(ii)  Seller  breaches  any  covenant or other term of this  Agreement  and such
breach  is not  cured  within  10 days  thereafter

                                       7

<PAGE>

((i)  and  (ii)  above  being  hereinafter  referred  to as a  "Seller  Event of
Default")  or (iii) any of the  conditions  precedent  to Closing  contained  in
Section 10 are not satisfied by July 1, 2002.

        (d) In the event of  termination  of this  Agreement by either Seller or
Purchaser as provided above, this Agreement shall immediately become void and of
no further  force and effect,  except that Seller and  Purchaser  shall have the
remedies set forth in Section 13(a) and (b), respectively.

     13. Remedies.

        (a) In the event of a Purchaser Event of Default or a Stock  Acquisition
Event of Default occurs as defined in the Settlement Agreement,  Purchaser shall
immediately be liable to Seller for the Purchase Price  hereunder for all Valmet
Shares  over which  Purchaser  has  possession  and  control at the time of such
default, plus all costs of enforcement,  collection and disposition,  including,
but not limited to, reasonable attorneys fees and costs (collectively, "Costs").
Without limiting any of its remedies,  Seller shall  immediately have all of the
rights and  remedies  entitled to it under the ITB  Security  Agreement  and the
Settlement Agreement and shall have the right to dispose of the Valmet Shares to
another party at any price.  In the event Seller sells some or all of the Valmet
Shares to a third party, the amount of Purchaser's  liability hereunder shall be
reduced  by the  net  proceeds  of  such  sale(s).  Upon  Seller's  recovery  or
collection  from  Purchaser or from  disposition  of the Pledged  Collateral (as
defined in the ITB Security  Agreement)  of the  Purchase  Price (or the balance
thereof  if Seller has  previously  sold some of the  Valmet  Shares),  plus all
Costs,  Seller shall  transfer to Purchaser  the Valmet  Shares which it has not
previously  sold.  No failure to exercise and no delay in exercising on the part
of Seller any right,  remedy or power  shall  operate as a waiver  thereof,  nor
shall any single or partial exercise of any right,  remedy or power preclude any
other or further  exercise  thereof.  The  rights,  remedies  and powers  herein
provided are  cumulative  and not  exclusive  of any rights,  remedies or powers
provided herein or by law or equity.

        (b) In the  event  of a  Seller  Event of  Default,  Purchaser  shall be
entitled  to specific  performance  for the  delivery  of the Valmet  Shares and
injunctive  relief, as well as all other remedies available at law or in equity,
but only to the  extent  Seller  obtains  possession  and  control of the Valmet
Shares.  Purchaser acknowledges that Seller's inability to obtain possession and
control of the Valmet Shares or the failure of the Bankruptcy Court to issue the
Approval  Order or the  failure of the  Approval  Order to become a Final  Order
shall not  constitute  a breach by Seller  hereunder.  Purchaser  shall  have no
recourse against Donald Conway, individually.

     14. Survival. The representation and warranties made by the parties in this
Agreement and in the certificates,  documents and schedules  delivered  pursuant
hereto shall survive the consummation of the transactions herein contemplated.

     15. Notices.  All notices that are required or may be given pursuant to the
terms of this  Agreement  shall be in  writing  and shall be  sufficient  in all
respects if given in writing and delivered by hand or national overnight courier
service,  transmitted  by telecopy or mailed by  registered  or certified  mail,
postage prepaid, as follows:

                                        8

<PAGE>

                  To Purchaser:

                  International Thoroughbred Breeders, Inc.
                  211 Beningo Boulevard, Suite 210
                  Bellmawr, NJ 08031
                  Fax No. (856) 931-8165
                  Attention: Francis W. Murray, President

                  With Copy to:

                  Cozen O'Connor
                  The Atrium
                  1900 Market Street
                  Philadelphia, PA 19103
                  (215) 665-2000
                  Attention: David S. Petkun, Esquire

                  To Seller:

                  Druker, Rahl & Fein
                  3625 Quakerbridge Road
                  Hamilton, New Jersey 08619
                  (609) 689-2317
                  Attention: Donald F. Conway, Trustee

                  With Copy to:

                  Drinker Biddle & Shanley LLP
                  500 Campus Drive
                  Florham Park, NJ 07932
                  (973) 360-1100
                  Attention: A. Dennis Terrell, Esquire

or such other address or addresses as any party hereto shall have  designated by
notice in writing to the other parties hereto.  A notice shall be deemed to have
been given (a) upon  personal  delivery,  if delivered  by hand or courier,  (b)
three (3) days  after the date of  deposit in the  mails,  postage  prepaid,  if
mailed by certified or registered  mail, or (c) the next business day if sent by
facsimile transmission (if receipt is electronically confirmed).

     16. Best Efforts.  Purchaser and Seller shall use their  commercially  best
efforts to cause to occur the  transactions  contemplated  hereby in  accordance
with the terms  hereof and to cause all  conditions  hereto  that are within its
control to be satisfied.

     17.  Jurisdiction.  This  Agreement  shall be governed by and  construed in
accordance  with the laws of the State of New Jersey  without  giving  effect to
principles of conflicts of laws,  and

                                       9

<PAGE>

any and all disputes under and/or related to this Agreement shall be resolved by
the Bankruptcy Court.

     18.  Waivers.  Seller,  on the one hand, and Purchaser,  on the other hand,
may, by written notice to the other,  (a) extend the time for the performance of
any of the obligations or other actions of the other under this  Agreement;  (b)
waive  any  inaccuracies  in the  representations  or  warranties  of the  other
contained  in this  Agreement  or in any  document  delivered  pursuant  to this
Agreement;  or (c) waive  compliance with any of the covenants and agreements of
the other  contained  in this  Agreement.  Except as provided  in the  preceding
sentence,  no  action  taken  pursuant  to this  Agreement,  including,  without
limitation,  any investigation by or on behalf of any party,  shall be deemed to
constitute  a waiver by the party  taking  such  action of  compliance  with any
representations,   warranties,   covenants  or  agreements   contained  in  this
Agreement.  The waiver by any party hereto of a breach of any  provision of this
Agreement  shall not  operate  or be  construed  as a waiver  of any  subsequent
breach.

     19. Entire Agreement. This Agreement,  including the documents incorporated
herein by reference,  constitutes the entire agreement of the parties concerning
the subject matter hereof,  and shall not be amended,  modified or  supplemented
unless by written agreement executed by the parties hereto. This Agreement shall
be binding  upon and inure to the benefit of the  parties  and their  respective
successors  and assigns.  This  Agreement  supercedes all prior written and oral
agreements  among the parties  concerning the subject matter hereof,  including,
without  limitation,  the letter  agreement  between  Purchaser and Seller dated
January 4, 2000.

     20.  Counterparts.  This Agreement may be executed by the parties hereto in
separate counterparts,  each of which when so executed and delivered shall be an
original,  but all such counterparts  shall together  constitute but one and the
same instrument.

     21. No Assignment.  The rights and  obligations  under this Agreement shall
not be  assignable  to  any  person  except  with  the  written  consent  of the
non-assigning parties.

     22.  Further  Assurance.  Each party hereby agrees from  time-to-time  upon
written request of the other, to take such additional actions and to execute and
deliver  such  additional  documents  and  instruments  as such other  party may
reasonably  request to effect the transactions  contemplated by and to carry out
the intent of this Agreement.

     23.  Severability.  In the event that any provision of this Agreement shall
be held  invalid,  illegal,  or  unenforceable  in any  respect,  the  validity,
legality, enforceability of the remaining provisions contained in this Agreement
shall not in any way be affected or impaired  thereby,  and this Agreement shall
otherwise remain in full force and effect.

     24. Brokers.  The Seller and the Purchaser  represent and warrant that they
have not employed any broker,  finder or investment banker who might be entitled
to any brokerage, finder's fee, underwriting discount or other fee or commission
from the Purchaser or the Seller in connection with the sale of the Shares.

     25.  Fees.  Each party  shall be  responsible  for all legal and other fees
incurred by it in  connection  with the  negotiation  of this  Agreement and the
consummation of the transaction contemplated hereby.

                                       10

<PAGE>

     26.  Headings.  The headings set forth  herein are for the  convenience  of
reference only and shall not be used in the  interpretation  or  construction of
this Agreement.

     27.  Voting of Shares;  Standing:  Purchaser  acknowledges  that Seller may
obtain voting  proxies for the Valmet  Shares and Purchaser  shall not object to
Seller's  voting of such Valmet Shares for which Seller has valid proxies on any
matter for which a  stockholder  of ITB may vote.  Purchaser  also  agrees  that
Seller shall have standing as a stockholder of ITB as to such Valmet Shares over
which Seller has possession and control to bring, or participate in, any action,
in the capacity as a stockholder, against ITB and/or its directors and officers.

     IN WITNESS WHEREOF,  parties hereto have duly executed the Agreement on the
date first above written.


WITNESS:                               SELLER:


/s/Karl Piirimae                       /s/Donald F. Conway
------------------                     -------------------
                                       DONALD F. CONWAY, TRUSTEE
                                       For the Bankruptcy Estate of Robert E.
                                       Brennan

                                       PURCHASER:

ATTEST:                                INTERNATIONAL THOROUGHBRED
                                       BREEDERS, INC.

                                       By:/s/Francis W. Murray
                                          Name:Francis W. Murray
                                          Title:President

                                       11

<PAGE>

                                                                   EXHIBIT 10.18

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                      NON-QUALIFIED STOCK OPTION AGREEMENT

     This AGREEMENT,  dated as of January 7, 2002, is made between International
Thoroughbred  Breeders,   Inc.  (the  "Company")  and  Francis  W.  Murray  (the
"Optionee").

                              W I T N E S S E T H;

     1. Grant of Option.  Subject to the terms and conditions  herein set forth,
the Company  hereby grants to the Optionee the right,  exercisable at the option
of the Optionee,  to purchase from the Company up to an aggregate of Two Million
(2,000,000)  shares of the  Company's  Common  Stock  ($2.00  par  value) at the
purchase price of $0.26875 per share (the "Option").

     2. Terms and  Conditions.  The Option is subject to the following terms and
conditions:

          a.  Expiration  Date.  The  Option  shall  expire  at 5 p.m.  (Eastern
Standard Time) on December 31, 2010 (the "Expiration Date").


          b.  Exercise  of  Option.  Subject  to the  terms  of  this  Agreement
regarding the  exercisability  of the Option,  the Option shall vest immediately
and may be  exercised  in whole or from time to time in part by  Optionee at any
time until  expiration of the Option..  Any exercise  shall be  accompanied by a
written  notice to the Company  specifying  the number of shares as to which the
Option is being  exercised.  Notation of any partial or total  exercise shall be
made by the  Company on its books and  records.  In no event shall the Option be
exercisable for the purchase of fractional shares.

          c.  Payment  of  Purchase  Price  upon  Exercise.  At the  time of any
exercise as aforesaid,  the purchase  price of the shares as to which the Option
shall be exercised shall be paid to the Company in cash by certified check or by
such other  means,  including  in shares of the  Company's  common stock or in a
combination  of cash and shares,  as the Board of  Directors  of the Company may
from time to time designate. The Option shall not be deemed exercised unless and
until payment of the purchase  price shall have been delivered to the Company in
the manner provided herein. Any shares of the Company's common stock utilized to
pay any portion of the purchase price of shares under the Option shall be valued
at their fair market value as reasonably determined by the Company.

          d.Termination of Employment.  In the event that Optionee's  employment
with the Company is terminated for any reason, the Option shall remain in effect
until it is fully  exercised  or until the  Expiration  Date (at which time such
Option shall no longer be exercisable), whichever first occurs.

          e. Nontransferability.  The Option and the Optionee's rights hereunder
shall  not be  transferable  other  than by will or by the laws of  descent  and
distribution.  During the lifetime of Optionee,  the Option shall be exercisable
only by the Optionee.

          f. Adjustments. In the event of any change in the stock of the Company
by reason  of any  stock  dividend,  recapitalization,  reorganization,  merger,
consolidation, stock-split, combination or exchange of shares, or of any similar
change  affecting the stock,  the number and kind of share subject to the Option
and their purchase price per share shall be  appropriately  adjusted  consistent
with such change in such manner as the Board of Directors may deem  equitable to
prevent dilution or enlargement of the rights granted to Optionee hereunder. Any
adjustments so made shall be final and binding upon Optionee.

          g. No  Rights  as  Stockholder.  Optionee  shall  have no  rights as a
stockholder  with respect to any shares of stock  subject to the Option prior to
the date of  issuance  to Optionee of a  certificate  or  certificates  for such
shares.

          h. No Right to Continued  Employment.  This  Agreement  and the Option
shall not  confer  upon  Optionee  any right  with  respect  to  continuance  of
employment  by the Company or any  affiliate,  nor shall it interfere in any way
with the right of the  Company  to  terminate  his  employment  at any time.  i.
Compliance  with Laws and  Regulations.  The  Option and the  obligation  of the
Company to sell and deliver shares  hereunder shall be subject to all applicable
federal and state  laws,  rules and  regulations  and to such  approvals  by any
government  or  regulatory  agency as may be  required.  The  Option  may not be
exercised if its exercise,  or the receipt of shares of stock pursuant  thereto,
would be contrary to  applicable  law.  Without  limiting the  generality of the
foregoing,  the Option shall not be exercised  unless the shares  issuable  upon
such exercise  shall have been  registered  under the Securities Act of 1933, as
amended,  and under any applicable  state securities laws, or, in the opinion of
counsel satisfactory to the Company, shall be exempt from such registration. The
Company shall have no obligation to comply with the terms of any exemption  from
registration requirements in order to permit the exercise of the Option.

     3. Exercise Representations. The Company may require Optionee to furnish to
the Company, prior to the issuance of any shares upon the exercise of all or any
part of the Option,  an agreement  (in such form as the Board of  Directors  may
specify)  in which  Optionee  represents  that the shares  acquired  by him upon
exercise are being  acquired for investment and not for resale or with a view of
distribution thereof and that Optionee has been advised and understands that (i)
such shares have not been  registered  under the  Securities Act of 1933 and are
"restricted  securities" within the meaning of Rule 144 under the Securities Act
and are subject to  restrictions  on  transfer  and (ii) the Company is under no
obligation  to register  such  shares  under the  Securities  Act or to take any
action  which would make  available  to the  Optionee  any  exemption  from such
registration  in order to permit any transfer of shares  issued upon exercise of
the Option.

     4. Notices. Any notice hereunder to the Company shall be addressed to it at
its office at the following address:

                                       -2-
<PAGE>

                           International Thoroughbred Breeders, Inc.
                           211 Benigno Boulevard
                           Suite 210
                           Bellmawr, NJ 08031
                           Attention:  Chief Financial Officer

and any notice hereunder to Optionee shall be addressed to him at:

                           Francis W. Murray
                           1293 Farm Road
                           Berwyn, PA  19312


subject  to the right of either  party to  designate  at any time  hereafter  in
writing some other address.

     5.  Amendment.  The Board of  Directors  shall have the right to amend this
Agreement,  subject to the Optionee's  consent only if such amendment  adversely
affects the rights of the Optionee hereunder.

     6.  Withholding of Taxes.  Whenever the Company  proposes or is required to
deliver or transfer  shares in  connection  with the exercise of an option,  the
Company  shall have the right to (a) require the recipient to remit or otherwise
make available to the Company an amount sufficient to satisfy any federal, state
and/or local  withholding tax requirements  prior to the delivery or transfer of
any  certificate  or  certificates  for such shares or (b) take  whatever  other
action  it  deems  necessary  to  protect  its  interests  with  respect  to tax
liabilities. The Company's obligation to make any delivery or transfer of shares
shall  be   conditioned  on  the   Optionee's   compliance,   to  the  Company's
satisfaction, with any withholding requirement.

     7.   Counterparts.   This   Agreement  may  be  executed  in  one  or  more
counterparts,  each of which when so executed shall  constitute one and the same
instrument.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
an appropriate officer and Optionee has executed this Agreement,  both as of the
day and year first above written.

                        INTERNATIONAL THOROUGHBRED BREEDERS, INC.


                        By:/s/ William H. Warner
                           ------------------------------------
                           Treasurer


                        ACCEPTED BY:

                           /S/  Francis W. Murray
                           ------------------------------------

                                       -3-
<PAGE>

                                                                   EXHIBIT 10.19

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                      NON-QUALIFIED STOCK OPTION AGREEMENT

     This AGREEMENT,  dated as of January 7, 2002, is made between International
Thoroughbred  Breeders,   Inc.  (the  "Company")  and  William  H.  Warner  (the
"Optionee").

                              W I T N E S S E T H;

     1. Grant of Option.  Subject to the terms and conditions  herein set forth,
the Company  hereby grants to the Optionee the right,  exercisable at the option
of the Optionee, to purchase from the Company up to an aggregate of Seventy-Five
Thousand  (75,000) shares of the Company's Common Stock ($2.00 par value) at the
purchase price of $0.26875 per share (the "Option").

     2. Terms and  Conditions.  The Option is subject to the following terms and
conditions:

          a.  Expiration  Date.  The  Option  shall  expire  at 5 p.m.  (Eastern
Standard Time) on December 31, 2010 (the "Expiration Date").

          b.  Exercise  of  Option.  Subject  to the  terms  of  this  Agreement
regarding the  exercisability  of the Option,  the Option shall vest immediately
and may be  exercised  in whole or from time to time in part by  Optionee at any
time until  expiration of the Option..  Any exercise  shall be  accompanied by a
written  notice to the Company  specifying  the number of shares as to which the
Option is being  exercised.  Notation of any partial or total  exercise shall be
made by the  Company on its books and  records.  In no event shall the Option be
exercisable for the purchase of fractional shares.

          c.  Payment  of  Purchase  Price  upon  Exercise.  At the  time of any
exercise as aforesaid,  the purchase  price of the shares as to which the Option
shall be exercised shall be paid to the Company in cash by certified check or by
such other  means,  including  in shares of the  Company's  common stock or in a
combination  of cash and shares,  as the Board of  Directors  of the Company may
from time to time designate. The Option shall not be deemed exercised unless and
until payment of the purchase  price shall have been delivered to the Company in
the manner provided herein. Any shares of the Company's common stock utilized to
pay any portion of the purchase price of shares under the Option shall be valued
at their fair market value as reasonably determined by the Company.

          d.Termination of Employment.  In the event that Optionee's  employment
with the Company is terminated for any reason, the Option shall remain in effect
until it is fully  exercised  or until the  Expiration  Date (at which time such
Option shall no longer be exercisable), whichever first occurs.

          e. Nontransferability.  The Option and the Optionee's rights hereunder
shall  not be  transferable  other  than by will or by the laws of  descent  and
distribution.  During the lifetime of Optionee,  the Option shall be exercisable
only by the Optionee.

          f. Adjustments. In the event of any change in the stock of the Company
by reason  of any  stock  dividend,  recapitalization,  reorganization,  merger,
consolidation, stock-split, combination or exchange of shares, or of any similar
change  affecting the stock,  the number and kind of share subject to the Option
and their purchase price per share shall be  appropriately  adjusted  consistent
with such change in such manner as the Board of Directors may deem  equitable to
prevent dilution or enlargement of the rights granted to Optionee hereunder. Any
adjustments so made shall be final and binding upon Optionee.

          g. No  Rights  as  Stockholder.  Optionee  shall  have no  rights as a
stockholder  with respect to any shares of stock  subject to the Option prior to
the date of  issuance  to Optionee of a  certificate  or  certificates  for such
shares.

          h. No Right to Continued  Employment.  This  Agreement  and the Option
shall not  confer  upon  Optionee  any right  with  respect  to  continuance  of
employment  by the Company or any  affiliate,  nor shall it interfere in any way
with the right of the Company to terminate his employment at any time.

          i. Compliance with Laws and Regulations. The Option and the obligation
of the  Company to sell and  deliver  shares  hereunder  shall be subject to all
applicable  federal and state laws,  rules and regulations and to such approvals
by any government or regulatory agency as may be required. The Option may not be
exercised if its exercise,  or the receipt of shares of stock pursuant  thereto,
would be contrary to  applicable  law.  Without  limiting the  generality of the
foregoing,  the Option shall not be exercised  unless the shares  issuable  upon
such exercise  shall have been  registered  under the Securities Act of 1933, as
amended,  and under any applicable  state securities laws, or, in the opinion of
counsel satisfactory to the Company, shall be exempt from such registration. The
Company shall have no obligation to comply with the terms of any exemption  from
registration requirements in order to permit the exercise of the Option.

     3. Exercise Representations. The Company may require Optionee to furnish to
the Company, prior to the issuance of any shares upon the exercise of all or any
part of the Option,  an agreement  (in such form as the Board of  Directors  may
specify)  in which  Optionee  represents  that the shares  acquired  by him upon
exercise are being  acquired for investment and not for resale or with a view of
distribution thereof and that Optionee has been advised and understands that (i)
such shares have not been  registered  under the  Securities Act of 1933 and are
"restricted  securities" within the meaning of Rule 144 under the Securities Act
and are subject to  restrictions  on  transfer  and (ii) the Company is under no
obligation  to register  such  shares  under the  Securities  Act or to take any
action  which would make  available  to the  Optionee  any  exemption  from such
registration  in order to permit any transfer of shares  issued upon exercise of
the Option.

     4. Notices. Any notice hereunder to the Company shall be addressed to it at
its office at the following address:



                                       -2-

<PAGE>



                           International Thoroughbred Breeders, Inc.
                           211 Benigno Boulevard
                           Suite 210
                           Bellmawr, NJ 08031
                           Attention:  Chief Financial Officer

and any notice hereunder to Optionee shall be addressed to him at:

                           William H. Warner
                           51 Cranmoor Drive
                           Toms River, NJ  08753


subject  to the right of either  party to  designate  at any time  hereafter  in
writing some other address.

     5.  Amendment.  The Board of  Directors  shall have the right to amend this
Agreement,  subject to the Optionee's  consent only if such amendment  adversely
affects the rights of the Optionee hereunder.

     6.  Withholding of Taxes.  Whenever the Company  proposes or is required to
deliver or transfer  shares in  connection  with the exercise of an option,  the
Company  shall have the right to (a) require the recipient to remit or otherwise
make available to the Company an amount sufficient to satisfy any federal, state
and/or local  withholding tax requirements  prior to the delivery or transfer of
any  certificate  or  certificates  for such shares or (b) take  whatever  other
action  it  deems  necessary  to  protect  its  interests  with  respect  to tax
liabilities. The Company's obligation to make any delivery or transfer of shares
shall  be   conditioned  on  the   Optionee's   compliance,   to  the  Company's
satisfaction, with any withholding requirement.

     7.   Counterparts.   This   Agreement  may  be  executed  in  one  or  more
counterparts,  each of which when so executed shall  constitute one and the same
instrument.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
an appropriate officer and Optionee has executed this Agreement,  both as of the
day and year first above written.

                        INTERNATIONAL THOROUGHBRED BREEDERS, INC.


                        By: /s/ Francis W. Murray
                            ---------------------------------
                            President


                        ACCEPTED BY:

                           /S/ William H. Warner
                           ---------------------------------

                                       -3-

<PAGE>

                                                                      EXHIBIT 21

                    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

Garden State Race Track, Inc.                                    New Jersey

GSRT, LLC                                                        New Jersey

Holdfree Racing Association                                      New Jersey

International Thoroughbred Breeders Management, Inc.             New Jersey

International Thoroughbred Gaming Development Corporation        New Jersey

ITG - Brazil, Inc.                                               Delaware

ITG - Venezuela, Inc.                                            Delaware

Olde English Management Co., Inc.                                New Jersey

Orion Casino Corporation                                         Nevada

Palm Beach Princess, Inc.                                        Delaware

ITG Vegas, Inc                                                   Nevada

South America Thoroughbred Company, LLC                          Delaware

<PAGE>

                                                                    EXHIBIT 99.1

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                      AS ADOPTED PURSUANT TO SECTION 906 OF
                         THE SARBANES-OXLEY ACT OF 2002

     In  connection  with  the  filing  of the  Annual  Report  on Form  10-K of
International  Thoroughbred  Breeders,  Inc. (the  "Company") for the year ended
June 30, 2002 as filed with the Securities  and Exchange  Commission on the date
hereof (the  "Report"),  I, Francis W. Murray,  Chief  Executive  Officer of the
Company,  hereby certify pursuant to 18 U.S.C.  ss.1350,  as adopted pursuant to
Section  906 of the  Sarbanes-Oxley  Act  of  2002,  that,  to  the  best  of my
knowledge:

     (1) The Report fully  complies  with the  requirements  of Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.



 s/ Francis W. Murray
 -------------------------------
 Name:  Francis W. Murray
 Title: President and CEO
 October  25, 2002

<PAGE>

                                                                    EXHIBIT 99.2

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                      AS ADOPTED PURSUANT TO SECTION 906 OF
                         THE SARBANES-OXLEY ACT OF 2002

     In  connection  with  the  filing  of the  Annual  Report  on Form  10-K of
International  Thoroughbred  Breeders,  Inc. (the  "Company") for the year ended
June 30, 2002 as filed with the Securities  and Exchange  Commission on the date
hereof (the  "Report"),  I, Francis W. Murray,  Chief  Financial  Officer of the
Company,  hereby certify pursuant to 18 U.S.C.  ss.1350,  as adopted pursuant to
Section  906 of the  Sarbanes-Oxley  Act  of  2002,  that,  to  the  best  of my
knowledge:

     (1) The Report fully  complies  with the  requirements  of Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.



s/ Francis W. Murray
---------------------------------
Name:  Francis W. Murray
Title: Chief Financial Officer
October 25, 2002

<PAGE>