FORM 10-Q/A

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended             September 30, 2003
                               ------------------------------------------------
                                                   OR

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

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

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

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

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

          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)

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

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

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act.)

Yes         No     X
   -------    ---------

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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


             Class                            Outstanding at November 15, 2003
------------------------------                --------------------------------
Common Stock, $ 2.00 par value                         8,252,135 Shares


<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                                   FORM 10-Q/A

                                QUARTERLY REPORT
                  for the Three Months ended September 30, 2003
                                   (Unaudited)

                                TABLE OF CONTENTS

                                                                      PAGE
PART I. FINANCIAL INFORMATION

         Item 1. Financial Statements:

         Consolidated Balance Sheets
                  as of September 30, 2003 and June 30, 2003...........1-2

         Consolidated Statements of Operations
                  for the Three Months ended
                  September 30, 2003 and 2002..........................3

         Consolidated Statement of Stockholders' Equity
                  for the Three Months ended September 30, 2003........4

         Consolidated Statements of Cash Flows
                  for the Three Months ended
                  September 30, 2003 and 2002..........................5

         Notes to Consolidated Financial Statements....................6-24

         Item 2. Management's Discussion and Analysis of
                    Financial Condition and Results of Operations......25-30

         Item 4.  Controls and Procedures..............................30-31

PART II. OTHER INFORMATION

         Item 6. Exhibits and Reports on Form 8-K......................32

SIGNATURES        .....................................................33

CERTIFICATIONS.........................................................34


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

                                EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A amends the Registrant's  Quarterly Report on
Form 10-Q as filed by the  Registrant on November 19, 2003 and is being filed to
amend and restate Items 1 and 2. For the reader's convenience, the Registrant is
re-filing its original Report in its entirety.

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

<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                   AS OF SEPTEMBER 30, 2003 AND JUNE 30, 2003

                                     ASSETS

                                           September 30,
                                                2003           June 30,
                                            (UNAUDITED)         2003
                                          --------------   -------------
CURRENT ASSETS:
     Cash and Cash Equivalents          $     5,638,592  $    6,123,641
     Restricted Cash                          1,294,050               0
     Accounts Receivable                        198,829         193,689
     Prepaid Expenses                           809,752         488,414
     Spare Parts Inventory                    1,115,477       1,078,740
     Other Current Assets                       379,851         390,458
     Net Assets of Discontinued
      Operations - Current                       96,150          98,588
                                          --------------   -------------
     TOTAL CURRENT ASSETS                     9,532,701       8,373,530
                                          --------------   -------------


EQUIPMENT:
     Leasehold Improvements -
      Port of Palm Beach                        954,471         953,110
     Equipment                                1,456,134       1,278,175
                                          --------------   -------------
                                              2,410,605       2,231,285
     LESS: Accumulated Depreciation
            and Amortization                    440,526         306,494
                                          --------------   -------------

     TOTAL EQUIPMENT, NET                     1,970,079       1,924,791
                                          --------------   -------------



OTHER ASSETS:
     Notes Receivable                        33,000,000      33,000,000
     Deposit on Purchase of Palm Beach
      Princess Mortgage                       4,000,000       4,000,000
     Deposits and Other Assets -
      Non-Related Parties                       334,975         535,239
     Deposits and Other Assets -
      Related Parties                         6,758,507       6,687,266
                                          --------------   -------------
     TOTAL OTHER ASSETS                      44,093,482      44,222,505
                                          --------------   -------------


TOTAL ASSETS                            $    55,596,262  $   54,520,826
                                          ==============   =============


See Notes to Consolidated Financial Statements.

                                        1
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                   AS OF SEPTEMBER 30, 2003 AND JUNE 30, 2003

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                   September 30,
                                                       2003           June 30,
                                                   (UNAUDITED)         2003
                                                  -------------   -------------
CURRENT LIABILITIES:
     Accounts Payable                           $    2,391,625  $    2,264,499
     Accrued Expenses                                2,271,207       2,341,209
     Short-Term Debt                                 2,759,073       2,934,330
     Short-Term Debt - Related Parties                 183,164         183,164
                                                  -------------   -------------
     TOTAL CURRENT LIABILITIES                       7,605,069       7,723,202
                                                  -------------   -------------

LONG-TERM DEBT - RELATED PARTIES                     1,318,275         985,017

DEFERRED INCOME                                      8,226,540       8,226,540

COMMITMENTS AND CONTINGENCIES                            -               -


STOCKHOLDERS' EQUITY:
     Series A Preferred Stock, $100 Par Value,
     Authorized 500,000 Shares, 362,489
     Issued and Outstanding                         36,248,875      36,248,875
     Common Stock, $2 Par Value, Authorized
      25,000,000 Shares, Issued, 11,480,279
      and 11,480,278, respectively and Out-
      standing, 8,252,134 and 8,252,133,
      respectively                                  22,960,557      22,960,555
     Capital in Excess of Par                       20,191,982      20,191,984
     (Deficit) (subsequent to June 30, 1993,
     date of quasi-reorganization)                 (39,330,547)    (40,189,608)
                                                  -------------   -------------
                                                    40,070,867      39,211,806
     LESS:
     Treasury Stock, 3,228,145 Shares, at Cost      (1,614,073)     (1,614,073)
     Deferred Compensation, Net                        (10,416)        (11,666)
                                                  -------------   -------------
     TOTAL STOCKHOLDERS' EQUITY                     38,446,378      37,586,067
                                                  -------------   -------------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $   55,596,262  $   54,520,826
                                                  =============   =============


See Notes to Consolidated Financial Statements.

                                        2
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (UNAUDITED)




                                                          September 30,
                                                 -----------------------------
                                                      2003            2002
                                                 -------------   -------------
OPERATING REVENUES:
     Gaming                                    $    6,494,687  $    5,195,735
     Fare                                             655,371         658,149
     On Board                                         425,099         454,203
                                                 -------------   -------------
        NET OPERATING REVENUES                      7,575,157       6,308,087
                                                 -------------   -------------

OPERATING COSTS AND EXPENSES:
     Gaming                                         2,079,617       1,944,693
     Fare                                             713,754         720,188
     On Board                                         195,241         195,221
     Maritime & Legal Expenses                      1,749,269       1,417,924
     General & Administrative Expenses                877,145         716,245
     General & Administrative Expenses - Parent       286,682         489,354
     ITG Vegas Bankruptcy Costs                       258,562               0
     Development Costs                                 25,355          90,896
     Depreciation & Amortization                      135,283          76,220
                                                 -------------   -------------
        TOTAL OPERATING COSTS AND EXPENSES          6,320,908       5,650,741
                                                 -------------   -------------

OPERATING INCOME                                    1,254,249         657,346
                                                 -------------   -------------

OTHER INCOME (EXPENSE):
     Interest and Financing Expenses                 (500,452)       (317,005)
     Interest Income                                   68,695          99,748
     Interest Income Related Parties                    3,254               0
     Other Income                                      50,914              26
                                                 -------------   -------------
        TOTAL OTHER INCOME (EXPENSE)                 (377,589)       (217,231)
                                                 -------------   -------------


INCOME BEFORE TAX PROVISION                           876,660         440,115
     State Income Tax Expense                          17,600          27,000
                                                 -------------   -------------

NET INCOME                                     $      859,060  $      413,115
                                                 =============   =============


NET BASIC AND DILUTED INCOME
   PER COMMON SHARE                            $         0.10  $         0.04
                                                 =============   =============

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING - Basic                       8,252,133      11,480,272
                                                 =============   =============

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING - Diluted                     8,966,996      11,480,272
                                                 =============   =============


See Notes to Consolidated Financial Statements.

                                        3

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003

<TABLE>
                                                            Preferred                     Common
                                                    --------------------------- -----------------------------
                                                    Number of                    Number of
                                                     Shares         Amount        Shares           Amount
                                                    ---------    ------------- -------------     -----------
<CAPTION>
<S>                                                  <C>        <C>              <C>           <C>
BALANCE - JUNE 30, 2003                              362,489    $  36,248,875    11,480,278    $  22,960,555

   Shares Issued for Fractional Exchanges With
    Respect to the One-for-twenty Reverse Stock
    Split effected on March 13, 1992                  ---            ---                  1                2
   Amortization of Deferred Compensation Costs        ---            ---           ---              ---
   Net Income for the Three Months Ended
    September 30, 2003                                ---            ---           ---              ---

                                                    ---------    ------------- -------------     -----------
BALANCE - SEPTEMBER 30, 2003                         362,489    $  36,248,875    11,480,279    $  22,960,557
                                                    =========    ============= =============     ===========
</TABLE>

<TABLE>
                                                      Capital                        Treasury      Deferred
                                                     in Excess                        Stock        Compen-
                                                       of Par         (Deficit)       At Cost       sation        Total
                                                     ------------    ------------   ------------   ----------   ------------
<CAPTION>
<S>                                                <C>             <C>            <C>            <C>          <C>
BALANCE - JUNE 30, 2003                            $  20,191,984   $ (40,189,608) $  (1,614,073) $   (11,666) $  37,586,067

   Shares Issued for Fractional Exchanges With
    Respect to the One-for-twenty Reverse Stock
    Split effected on March 13, 1992                          (2)        ---            ---           ---          ---
   Amortization of Deferred Compensation Costs           ---             ---            ---            1,250          1,250
   Net Income for the Three Months Ended
    September 30, 2003                                   ---             859,060        ---           ---           859,060

                                                     ------------    ------------   ------------   ----------   ------------
BALANCE - SEPTEMBER 30, 2003                       $  20,191,982   $ (39,330,548) $  (1,614,073) $   (10,416) $  38,446,377
                                                     ============    ============   ============   ==========   ============
</TABLE>


See Notes to Consolidated Financial Statements.

                                        4
<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (UNAUDITED)

<TABLE>
                                                                    September 30,
                                                              ------------------------
                                                                  2003         2002
                                                              -----------   ----------
<CAPTION>
<S>                                                         <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                       $    859,060  $   413,115
                                                              -----------   ----------
     Adjustments to reconcile income to net cash
      provided by operating activities:
        Depreciation and Amortization                            135,283       77,470
        Changes in Operating Assets and Liabilities -
          (Increase) in Restricted Cash & Investments         (1,294,048)           0
          (Increase) in Accounts Receivable                       (5,138)     (25,746)
          (Increase) in Other Assets                             (26,130)     (26,761)
          (Increase) Decrease in Prepaid Expenses               (321,337)      19,483
          Increase (Decrease) in Accounts Payable
           and Accrued Expenses                                   57,120       (8,468)
                                                              -----------   ----------
     CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES BEFORE
      DISCONTINUED OPERATIONS                                   (595,190)     449,093
     CASH PROVIDED BY DISCONTINUED OPERATING ACTIVITIES            2,400            0
                                                              -----------   ----------
     NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES        (592,790)     449,093
                                                              -----------   ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Deposits on Purchase of Palm Beach Princess Mortgage               0     (500,000)
    Capital Expenditures                                        (179,320)     (26,407)
    Decrease (Increase) in Other Investment Activity             428,858      (91,510)
                                                              -----------   ----------
     CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
      BEFORE DISCONTINUED INVESTING ACTIVITIES                   249,538     (617,917)
     CASH PROVIDED BY DISCONTINUED INVESTING ACTIVITIES                0            0
                                                              -----------   ----------
     NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES         249,538     (617,917)
                                                              -----------   ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal Payments on Short Term Notes                      (141,834)        (776)
    Decrease in Balances Due to/From Subsidiaries                  2,438          216
                                                              -----------   ----------
     CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
      BEFORE DISCONTINUED FINANCING ACTIVITIES                  (139,396)        (560)
     CASH (USED IN) DISCONTINUED FINANCING ACTIVITIES             (2,438)        (216)
                                                              -----------   ----------
     NET CASH (USED IN) FINANCING ACTIVITIES                    (141,834)        (776)
                                                              -----------   ----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                       (485,086)    (169,600)
      LESS CASH AND CASH EQUIVALENTS  FROM
        DISCONTINUED OPERATIONS                                       37          216
     CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD      6,123,641      796,610
                                                              -----------   ----------

     CASH AND CASH EQUIVALENTS AT END OF THE PERIOD         $  5,638,592  $   627,226
                                                              ===========   ==========

     Supplemental Disclosures of Cash Flow Information:
       Cash paid during the period for:
       Interest                                             $    303,415  $         0
       Income Taxes                                         $          0  $         0
</TABLE>


See Notes to Consolidated Financial Statements.

                                        5
<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A) Nature of  Operations - ITGV is 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
accounts and transactions have been eliminated in consolidation.

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

     (D) Spare Parts  Inventory - Spare parts  inventory  consists of  operating
supplies,  maintenance materials and spare parts. The inventories are carried at
cost. Should the Trustee be able to exercise his right to take possession of the
vessel,  the Company may be required to forfeit the spare parts inventory if the
book value of the assumed  liabilities exceeds the current assets at the time of
his  possession.  It is necessary that these parts be readily  available so that
the daily cruise operations are not cancelled due to mechanical failures.

     (E)  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 U.  S.  generally  accepted
accounting   principles  over  the  estimated  remaining  useful  lives  of  the
respective  assets.  Amortization  expense  consists  of the  write off of major
vessel repairs and maintenance  work normally  completed at dry dock in the fall
of each year.  These  expenses are written off during a twenty four month period
following  the dry dock period.  For the three months ended  September 30, 2003,
there were no amortized  expenses  associated  with a dry dock  period.  For the
three months ended September 30, 2002, the amortized expense was $41,737.

     Long-lived assets and certain identifiable intangibles held and used by the
Company are reviewed for impairment  whenever events or changes in circumstances
warrant  such a  review.  The  carrying  value of a  long-lived  or  amortizable
intangible asset is considered  impaired when the anticipated  undiscounted cash
flow from such asset is  separately  identifiable  and is less than its carrying
value.  In that  event,  a loss is  recognized  based on the amount by which the
carrying value exceeds the fair value of the asset.  Losses on long-lived assets
to be disposed of are  determined in a similar  manner,  except that fair values
are reduced for the cost of  disposition.  Effective  January 4, 2002,  SFAS 142
requires  an annual  impairment  review  based on fair value for all  intangible
assets with indefinite  lives.  The Company  performed an impairment test of its
intangible  assets  with  indefinite  lives  during  the  fiscal  year  2003 and
concluded that there was no impairment.

     (F) Net Assets of Discontinued Operations - At September 30, 2003 and 2002,
the  remaining  net assets and  liabilities  of Garden  State Park and  Freehold
Raceway were classified as "Net Assets of

                                        6

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Discontinued Operations."

     (G)  Deferred  Income - The gain  from the sale of our  Garden  State  Park
property on November 28, 2000 in the amount of $1,439,951  and the gain from our
sale of the El Rancho  property on May 22, 2000 in the amount of $2,786,589 have
been  deferred  until such time as the notes  receivable  on the sales have been
collected.  Other amounts  included in Deferred  Income are  fees/charges to Leo
Equity Group, Inc. in the amount of $3,000,000 and to MJQ Corp. in the amount of
$1,000,000 in connection  with the final  settlement  with the Brennan  Trustee.
(See  Footnote 11 Related Party  Transactions)  These amounts have been deferred
until such time as the funds are received.

     (H) Revenue Recognition - Casino revenue consists of gaming winnings net of
losses. Net income is the difference between wagers placed and winning payout to
patrons and is recorded  at the time wagers are made.  The vast  majority of the
wagers are in the form of cash and we do not grant credit to our  customers to a
significant  extent.  Fare revenues  consist of admissions to our vessel and are
recognized  as  earned.   On  board  revenues  consist  primarily  of  ancillary
activities  aboard  the  vessel  such as the sale of food and  beverages,  cabin
rental,  gift  shop,  spa  facility  and  skeet  shooting.  These  revenues  are
recognized on the date they are earned.

     (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.  As of  September  30,  2003,  funds  classified  as cash  and cash
equivalents,  which are primarily  those of the Palm Beach  Princess  operations
under  debtor-in-possession,  are only available under bankruptcy court approval
guidelines.

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

     (L) Net Income per Common  Share - Income per common  share is  computed by
dividing  net income by the  weighted  average  number of shares of common stock
outstanding. On December 13, 2002, the Company purchased 3,228,145 shares of its
Common Stock from the Trustee and have accounted for the transaction on the cost
method of accounting for treasury  stock.  For the three months ended  September
30,  2003,  options to purchase  2,075,000  shares of Common  Stock at $.269 per
share were used in the  computation  of diluted  income  per share  because  the
exercise  price of those options were above average market price,  however,  the
number of shares that would have been issued from the exercise of stock  options
has been reduced by the number of shares that could have been purchased from the
proceeds at the average  market price of the  Company's  stock.  The  additional
shares  that would have been issued did not  decrease  the stated  earnings  per
share for the three month  period.  Options and  warrants to purchase  4,046,500
shares of Common Stock at various  prices per share,  for the three months ended
September  30,  2002 were not  included in the  computation  of income per share
because the exercise price of those options

                                        7

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

and warrants were above market value.

(2)  ITG VEGAS, INC. CHAPTER 11 PLAN OF REORGANIZATION

     On January 3, 2003, ITG Vegas,  Inc.("ITGV"),  our subsidiary operating the
Palm Beach  Princess,  and MJQ  Corporation  ("MJQ"),  which owns the Palm Beach
Princess vessel, an entity owned by Francis W. Murray, filed voluntary petitions
for  relief  under  Chapter  11  of  the  United  States  Bankruptcy  Code  (the
"Bankruptcy  Code") in the  United  States  Bankruptcy  Court  for the  Southern
District of Florida,  Palm Beach Division (the "Bankruptcy  Court"),  In re: ITG
Vegas,  Inc., Case No. 03-30038.  The petition did not cover the Parent company,
ITB, nor any other of ITB's  subsidiaries.  The Palm Beach Princess continued to
operate as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court
and in accordance  with the  applicable  provisions of the  Bankruptcy  Code and
orders of the Bankruptcy  Court. As described in Note 13 below we had previously
entered  into a Master  Settlement  Agreement  to  purchase  from the Chapter 11
Trustee for the  Bankruptcy  Estate of Robert E.  Brennan  (the  "Trustee")  the
promissory note of MJQ  Corporation  for $13.75  million.  We did not have funds
necessary to complete  that  purchase by January 6, 2003,  the date required for
payment of the balance of such purchase price. Therefore, on January 3, 2003, in
order to protect  our  invested  deposits  and  operation  of the  vessel,  ITGV
(together  with MJQ  Corporation)  filed a voluntary  petition  for relief under
Chapter 11 of the Bankruptcy Code.

     On September 12, 2003, the Bankruptcy  Court issued an order confirming the
Amended Joint Chapter 11 Plan of  Reorganization  (the "Plan") in the Chapter 11
Cases  of ITG  Vegas,  Inc.  and  MJQ  Corporation  (ITG  Vegas,  Inc.  and  MJQ
Corporation  being  hereinafter  called  the  "Debtors").  The Plan is a plan of
reorganization  under  Chapter  11 of the  Bankruptcy  Code  which  was  jointly
proposed by the Debtors.

     As of October 15,  2003,  the  effective  date of the Plan (the  "Effective
Date"),  all claims,  debts,  liens,  security interests and encumbrances of and
against the Debtors and  against  all  property of their  respective  bankruptcy
estates, which arose before confirmation,  were discharged,  except as otherwise
provided  in the  Plan or  confirmation  order.  Post-confirmation,  each of the
Debtors will continue as reorganized debtors.

     The Plan includes the following principal features:

     1. On the Effective Date, all Allowed Administrative Expense Claims and all
Allowed  Priority Tax Claims and Allowed Priority Non-Tax Claims will be paid in
full (to the extent not already paid).

     2. All pre-petition non-insider (non-affiliate), non-insured unsecured debt
of the Debtors will be paid in two installments,  one-half on the Effective Date
and one-half (with interest  thereon at 8% per year from the Effective  Date) on
the six month  anniversary of the Effective  Date. The holders of such unsecured
pre-petition debt will receive security interests in the cash bank maintained on
board the Vessel (approximately $700,000) and in all of the shore side furniture
and equipment to secure the Plan payments to them. In addition,  an amount equal
to  $70,000  will be paid  monthly  into  escrow as further  collateral  for the
holders of such debt.  Through November 14, 2003,  $1,286,051 has been placed in
escrow towards the payments required for distribution.

                                        8

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



     3. All non-insider  claims covered by insurance will be entitled to payment
in accordance  with the insurance  coverages.  There are no policy limits on the
Debtors' liability coverages and the holders of these claims will be required to
pursue  the  insurance  proceeds  for  payment,   except  with  respect  to  the
deductible, for which the Debtors shall remain obligated.

     4. The Debtor's principal creditor,  Donald F. Conway as Chapter 11 Trustee
for the  Bankruptcy  Estate of Robert E. Brennan (the "Brennan  Trustee"),  will
receive  payment in full of all  obligations  over a period not to exceed  three
years. Significantly,  the Debtors' obligations to the Brennan Trustee have been
combined  with the Company's  indebtedness  to the Brennan  Trustee,  for all of
which the Debtors and the Company will be jointly and severally  liable.  All of
the  obligations to the Brennan Trustee will be secured by a first priority ship
mortgage  against  the Vessel  and,  with  certain  exceptions,  first  priority
security  interests in all of the other  assets of the  Debtors,  subject to the
security  interests  being  granted  in  favor  of  the  pre-petition  unsecured
creditors as described in paragraph 2 above.

     5. The payment  obligations  to the  Brennan  Trustee  will  consist of the
following:

       (a) The balance of the purchase  price that had been payable by ITG Vegas
for the  purchase of the ship  mortgage  against  the  Vessel,  in the amount of
$9,750,000;

       (b) The balance of the Company's  indebtedness  to the Brennan Trustee in
respect of the  purchase of stock in the  Company,  in the  principal  amount of
$1,511,035.70,  plus interest thereon from December 13, 2002 to January 23, 2003
at 9% per annum and thereafter at 11% per annum until the Effective Date;

       (c) A new  obligation  of the Company for the  purchase of an  additional
450,000  shares of the Company's  stock from the Brennan  Trustee,  at $0.50 per
share, or $225,000;

     The amounts  described in  subparagraphs  (a), (b) and (c) are collectively
called the  "Payment  Obligations".  A  forbearance  fee of $350,000  also shall
accrue to the Brennan  Trustee on the Effective  Date, of which $100,000 will be
payable on the  Effective  Date and the balance of  $250,000  will be due on the
earliest to occur of the date the Payment  Obligation is paid in full, the third
anniversary  of the  Effective  Date,  or any date on which ITG Vegas shall have
monitized  its  receivable  from OC Realty,  LLC, an affiliate of the  Company's
Chairman and CEO.

     The Payment  Obligation  shall  accrue  interest at 12% per annum.  Monthly
payments of $400,000 will be required to be made to the Brennan  Trustee,  to be
applied  first to  interest  accrued and then to  principal.  In  addition,  the
Brennan  Trustee  shall be  entitled to payment of a Stay Bonus in the amount of
$200,000  if the Payment  Obligation  shall not have been paid in full within 12
months  after the  Effective  Date,  and an  additional  $100,000 if the Payment
Obligation shall not have been paid in full within 24 months after the Effective
Date.  Beginning  with ITG Vegas'  2004  internal  accounting  year  (commencing
December 29, 2003) and annually thereafter, 75% of ITG Vegas' Free Cash Flow (as
defined in the Plan) for the  period  shall be paid to the  BrennanTrustee  as a
Sweep  Payment,  to be applied  first to accrued  and unpaid  interest,  then to
principal

                                        9

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

on the Payment Obligation, and thereafter to any unpaid Forbearance Fee and Stay
Bonuses.

     6.  Restrictions are imposed under the Plan on ITG Vegas making payments to
affiliated  entities,  including the Parent company.  Payment of indebtedness to
affiliated entities of ITG Vegas generally will be subordinated and intercompany
advances  and  transfers  from  ITG to  affiliated  entities  generally  will be
prohibited,  except that, if no default exists in the obligations to the Brennan
Trustee,  (i) $50,000 per month may be paid by ITG Vegas to MJQ  Corporation  in
respect of the bareboat  charter fee for use of the Vessel and (ii) $100,000 per
month will be  permitted  to be paid by ITG Vegas to the  Company  under the Tax
Sharing  Agreement  between  them.  The  Company  will enter into a Tax  Sharing
Agreement with ITG Vegas effective on the Effective Date,  pursuant to which ITG
Vegas will  compensate  the Company for the tax savings  realized as a result of
ITG Vegas's  inclusion in the  Company's  consolidated  group of  companies  for
federal income tax purposes,  in the amount of $100,000 per month, provided that
no such  payments are  permitted to be made if any default  exists in respect of
the obligations to the Brennan Trustee.

     The maximum amount of funds permitted to be up streamed by ITG Vegas to the
Company is $100,000 per month under the Tax Sharing Agreement (and, beginning in
2005, 25% of ITG's annual Free Cash Flow, as defined).  The Company has no other
source of funds presently  available.  For these reasons, and since the $100,000
per month tax sharing payment will be suspended at any time when the Debtors are
not current in payment of their obligations to the Brennan Trustee, no assurance
can be given that the Company  will be able to  function as a going  concern and
pay its debts as they become due.

     The foregoing  summary of the Plan, the Payment  Obligations to the Brennan
Trustee and the terms  thereof  are not  intended  to be  complete.  For further
information about the Payment Obligations and collateral therefor, the covenants
of the Company and the  Debtors,  events of default and other terms agreed to in
principle among the Debtors,  the Company and the Brennan Trustee,  reference is
made to the Term Sheet for Plan of Reorganization which is attached as Exhibit A
to the Plan and  filed  with  the  Securities  and  Exchange  Commission  on the
Company's Form 8-K filed on September 22, 2003.

     ITG Vegas and the Company  negotiated a document,  executed on November 10,
2003 (See Note 13), entitled  Amendment to Master Settlement  Agreement with the
Brennan  Trustee,   which  incorporated  the  above-described  terms  and  other
modifications to the Master Settlement  Agreement previously entered into by the
Brennan  Trustee,  the Company,  Palm Beach Princess,  Inc.  (predecessor of ITG
Vegas, Inc.), MJQ Corporation and others.

     7.  All of the  outstanding  shares  of  stock in ITG  Vegas  are  owned by
International  Thoroughbred Gaming Development Corporation ("ITGD"),  which is a
wholly owned subsidiary of the Company. While ITGD will pledge all of its shares
of stock in ITG Vegas as additional  collateral to the Brennan  Trustee,  in all
other  respects  the  Company's  indirect  stock  ownership  of ITG Vegas is not
affected  by  the  Plan.

     By reaching the foregoing  consensual plan of  reorganization  by agreement
with the


                                       10

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Brennan  Trustee,  the Debtors  have avoided the costs and delays of a contested
confirmation  hearing with their largest  creditor and developed a Plan believed
to be feasible.

(3)  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 in the buyer have received total  distributions equal to their capital
contributions plus an agreed upon return on their invested capital, the next $23
million of  Distributable  Cash will be paid to 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. Fair value and the collectability of this note was determined by a
real estate  appraisal  completed in July,  2003 for a bank in  anticipation  of
financing for Turnberry.

     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.  Fair value and  collectability  of this note was  determined  by a real
estate  appraisal  completed  in  March,  2002  for a bank  in  anticipation  of
financing for Turnberry.

     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 of  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
of the interest paid by Realen under such note).  The remaining  $350,000 of the
$700,000 note is  classified in other current  assets on our balance sheet as of
June 30, 2003. 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 10(A)below) by
the  same  principal  amount,  $350,000,  given up by us to the  Trustee.  As of
November 14, 2003,

                                       11

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Realen had not made the payment  due to ITB in the amount of $350,000  which was
due on November 30, 2002. On January 30, 2003, the Trustee instituted litigation
against  Realen and the  Company  demanding  payment of the first  $350,000.  On
August 18, 2003 the judge granted a summary judgement against  Realen-Turnberry/
Cherry Hill,  LLC in the sculpture  litigation  and dismissed a cross claim that
Realen- Turnberry/Cherry Hill, LLC had brought against ITB.

(4)  DEPOSITS AND OTHER ASSETS - NON RELATED PARTIES

     The  following  items  are  classified  as  deposits  and  other  assets  -
non-related parties:

                                          September 30,      June 30,
                                               2003            2003
                                          -------------    -----------
Port Lease Rights                      $        250,000 $      250,000
Deposit on Ship Purchase (See Note 6-D)             -0-        200,000
Other Misc. Assets                               84,975         85,239
         Total                         $        334,975 $      535,239
                                          =============    ===========

(5)  DEPOSITS AND OTHER ASSETS - RELATED PARTIES

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

                                                        September 30,   June 30,
                                                            2003         2003
                                                        -----------  -----------
Loans to the Ft Lauderdale Project (OC Realty, LLC)    $ 2,034,405  $ 2,034,405

Loan Transferred from Golf Course Project to
 OC Realty, LLC                                            735,584      735,584

Note Receivable from Francis W. Murray *                 2,600,749    2,600,749

Accounts Receivable from Francis W. Murray                  35,099       35,099

Loans to Francis W. Murray                                  93,000       93,000

Advances to OC Realty, LLC                                  76,458       77,162

Accrued Interest on Loans to the Ft. Lauderdale
 Project (OC Realty, LLC)                                  678,498      606,553

Accrued Interest Transferred from Golf Course
 Project to OC Realty, LLC                                 287,327      287,327

Accounts Receivable from Frank Leo                          23,441       23,441

Goodwill on Purchase of GMO Travel                         193,946      193,946
                                                         ---------    ---------
         Total Deposits and Other Assets               $ 6,758,507  $ 6,687,266
                                                         =========    =========

* The note receivable from Francis W. Murray is non-recourse except to his stock
in MJQ Corporation  which stock was previously  owned Michael J. Quigley and now
owned by our CEO, Francis W. Murray, subject to our lien.


                                       12

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(6)  NOTES AND MORTGAGES PAYABLE

     Notes and Mortgages Payable are summarized below:

<TABLE>

                                                         September 30, 2003           June 30, 2003
                                        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-   $     132,000   $    -0-

Chapter 11 Trustee (the "Trustee")
for the Bankruptcy Estate of Robert E.
Brennan (B)                                    11%     1,511,036         -0-       1,511,036        -0-

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

Florida Bank, N.A. (D)                Prime + .25%           -0-         -0-         200,000        -0-

First Insurance Funding Corp.(E)             6.95%        86,283         -0-          28,117        -0-

Francis X. Murray (F)                           8%       159,164         -0-         159,164        -0-

William H. Warner(F)                           12%        24,000         -0-          24,000        -0-

Other                                      Various        25,000         -0-          25,000        -0-

ITG Vegas, Inc.:
----------------
International Game Technology (G)               8%        10,279         -0-          16,709        -0-

Corporate Interiors (H)                 Prime + 2%        94,475         -0-         121,468        -0-

Garden State Park:
------------------
Service America Corporation (I)                 6%       160,000         -0-         160,000        -0-
                                                     -----------    --------    ------------    -------
                 Totals                             $  2,942,237   $     -0-   $   3,277,494   $    -0-

Net Assets of Discontinued
  Operations - Long Term                                     -0-         -0-             -0-        -0-

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

 Related Party Notes                                    (183,164)        -0-        (183,164)       -0-
                                                     -----------    --------    ------------    -------
                 Totals                             $  2,759,073   $     -0-   $   2,934,330   $    -0-
                                                     ===========    ========    ============    =======
</TABLE>
The effective Prime Rate at September 30, 2003 and June 30, 2003 was 4%.

     (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

                                       13

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

sculptures  located on the Garden State Park  property  that were  previously on
loan to the Company from Mr.  Brennan Jr. The purchase  price of the  sculptures
was $700,000. In connection with the transaction,  the Company signed a $482,000
promissory note with Mr. Brennan Jr. which represented the purchase price of the
sculptures  less the sales price of the artwork sold to Mr.  Brennan Jr. 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 $482,000
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 December 13, 2002, we issued a twelve month  promissory  note in the
amount of $1,648,403  including  interest of $34,330 (the "Stock Purchase Note")
bearing interest at 9% (increases to 11% after default) to Donald F. Conway, the
Chapter  11  Trustee  (the  "Trustee")  for the  Bankruptcy  Estate of Robert E.
Brennan for the purchase of 3,228,146 shares of our common stock held or claimed
by the Trustee.  The first  principal  payment of $137,367 was also paid on that
date. At June 30, 2003, the principal  balance on the note was  $1,511,036.  The
Stock  Purchase Note is secured by a security  interest in proceeds and payments
receivable  under the $10 million  Realen Note. A principal  payment of $137,367
was  made  in  December  2002.  In  connection  with  the  Chapter  11  Plan  of
Reorganization,  the Trustee has accepted a revised  schedule of payments  which
will  satisfy this note.  If we are unable to continue to make timely  payments,
the  3,228,146  shares of stock,  which have been pledged as security,  could be
sold by

                                       14

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

the  Trustee.   The  sale  ofsaid   shares  by  the  Trustee  along  with  other
uncontrollable  stock transfer  events could effect the  preservation of our net
operating  loss tax carry  forwards  (NOL's).  As of  6/30/03  the  Company  had
$147,000,000  available in Net Operating Loss carryforwards which can be used to
offset taxable income.  Loss of our NOL's would cause the Company to pay Federal
Income taxes on its reported  taxable  income and reduce  reportable net income.
(See Notes 2-5 (b) & (c) and 8)

     (C) 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. The loan is secured by a pledge of the $10 million Realen Note, which
is subordinate  to the security  interest of the Trustee which secures the Stock
Purchase Note and by a pledge of the $23 million  Turnberry Note. As of November
15, 2003, the remaining balance of $900,000 of the loan is due on demand.

     (D) On March 19, 2003, we issued a two month  promissory note in the amount
of  $200,000  bearing  interest  at prime plus .25% to Florida  Bank,  N.A.  The
proceeds of such note were used to fund a escrow  deposit in  connection  with a
charter/purchase  of an offshore gaming vessel.  The escrow deposit was returned
to us on May 7, 2003 following the expiration of the negotiation  period, and we
have satisfied the note to Florida Bank, N.A.

     (E) Our  directors  and  officers  liability  policy was  financed by First
Insurance  Funding  Corp.  for a $128,388  one year  promissory  note at a 7.99%
interest  rate.  At September 30, 2003,  the  principal  balance on the note was
$86,283.

     (F) On March 1, 2003,  we issued a promissory  note for a line of credit up
to $225,000 bearing interest at 8% to Francis X. Murray. The outstanding balance
on the line of credit note at September  30, 2003 was  $159,164.  On February 3,
2003, we issued a promissory note for $20,000 bearing interest at 12% to William
H. Warner,  Secretary of the Company.  On June 30, 2003, Mr. Warner  advanced to
the Company an  additional  $4,000.  The proceeds from the all the related party
loans were used as working capital.

     (G) On December 6, 2002,  Palm Beach  Princess,  Inc.  issued a twenty four
month  promissory  note in the  amount  of  $21,000  bearing  interest  at 8% to
International Game Technology for the purchase of gaming equipment. A payment of
$2,100  was  paid  on  delivery  of the  equipment  and 23  consecutive  monthly
installments  of  $854.80  were to be paid on the  balance.  As a result  of the
institution  of  proceedings by our  subsidiary,  ITGV,  under Chapter 11 of the
bankruptcy code, payments have been delayed until the effective date of the Plan
of Reorganization  (See Note 2). At September 30, 2003, the principal balance on
the note was $10,279.

     (H) On April 30 2003, ITG Vegas,  Inc. issued a one year promissory note in
the amount of $161,958 bearing interest at prime plus 2% to Corporate  Interiors
for the purchase of office  furniture.  Monthly payments of $13,496.46 are being
paid on the note. At September 30, 2003,  the principal  balance on the note was
$94,475.

     (I) 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)


                                       15

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

year promissory note at a 6% interest rate. Yearly principal payments of $80,000
plus interest were dueon December 28, 2002 and on December 28, 2003. The payment
due on December 28, 2002 has not been made as of November  15,  2003.  We are in
default on the  principal  and interest  payments due to Service  America in the
approximate  amount of $160,000 for the purchase of the liquor license at Garden
StatePark.  The Company is continuing to negotiate new terms under this note and
if unsuccessful the creditor may seek to enforce payment of the note.

(7)  LONG TERM DEBT - RELATED PARTIES

     The following items are classified as long-term debt (See Note 11 - Related
Party Transactions):

                                                    September 30,    June 30,
                                                        2003           2003
                                                     -----------    ---------
Loan from Francis W. Murray                          $   250,000    $ 250,000

Accrued Wages due and Advances from Francis W. Murray    617,974      404,204

Advances from MJQ Corporation (FWM ownership)            450,301      330,813
                                                     -----------    ---------
         Total Long Term Debt - Related Parties      $ 1,318,275    $ 985,017
                                                     ===========    =========

(8)  COMMITMENTS AND CONTINGENCIES

     See Note 2 for additional commitments and contingencies with respect to the
Chapter 11 Bankruptcy filing.

     See Note 11 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.  On January 4, 2003, we began  deferring  payments of compensation
due to Mr.  Murray  due to a lack of funds  resulting  from the  institution  of
proceedings by our subsidiary,  ITGV,  under Chapter 11 of the bankruptcy  code.
The related liability as of September 30, 2003 totaled $462,874.

     With the sale of our  Freehold  Raceway  property  on January  28,  1999 we
assumed  full  responsibility  for the  costs  associated  with the  clean up of
petroleum  and related  contamination  caused by the  leakage of an  underground
storage  tank  which was  removed in 1990,  prior to our  purchase  of  Freehold
Raceway.  In  February  2000 the N.J.  Department  of  Environmental  Protection
approved our remedial  investigation  workplan  ("RIW").  Under the RIW numerous
test wells were  drilled  and the soil tested and  monitored  to  determine  the
extent and direction of the flow of underground  hazardous  material and reports
and conclusions of the tests were prepared for the State of New Jersey. However,
prior to obtaining a remedial action workplan from the State of New Jersey,  the
work was  stopped  due to a lack of funds  resulting  from  the  institution  of
proceedings by our subsidiary, ITGV, under Chapter 11 of the bankruptcy code. At
this time we are unable to predict the effects that such delay may cause, but it
is likely that some retesting of the wells may be necessary. Prior to the delays
it was estimated that the cost to remediate the


                                       16

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

site  would  be  approximately  $750,000.  As of June  30,  1999 we had  accrued
$362,000 and we accruedan  additional  amount of  approximately  $388,000 during
fiscal 2001 as the scope of the project was further defined.  Such accruals were
made with the help of the environmental  consulting firm engaged by the Company.
These  costs  include  drilling  of test  wells  and  monitoring,  lab  testing,
engineering and  administrative  reports,  equipment and remediation of the site
through a "pump and treat" plan. The Company has made payments of  approximately
$93,600,   $200,000,   and  $323,000  during  fiscal  years  2000,   2001,  2002
respectively  which were charged  against the accrued  balances.  As of June 30,
2003 the accrued  balance was $130,398.  It is estimated that  completion of the
site  clean  up will  take  approximately  18  months  from the time the work is
reinstated.  It  is  unlikely  that  the  Company  will  receive  any  insurance
reimbursement for our costs of this remediation project.

     In connection with the January 28, 1999 sale and 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 December 31, 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.  The payment due on
December 28, 2002 has not been made as of November 15, 2003. The Company entered
into a sale and lease agreement for the lease of our premises from Jan. 28, 1999
to May 29, 2001 and the sale of a 10 acre portion to be used as an OTB facility.
Under the terms of our sale and lease agreement the  lessee/buyer  had the right
to (i) take  possession  of the liquor  license if during the three year  period
from Jan.  28, 1999 until Jan.  27, 2002 it had a use for the liquor  license at
the OTB facility  and (ii) to transfer the license to its name by paying  Garden
State Park $100,000. The leaser/buyer has transferred the license to its name by
paying us $100,000.  During the three year period Jan. 28, 1999 to Jan. 28, 2002
no OTB facility was built and the lessee/buyer did not have a use for the liquor
license.  By the terms of the contract  the Company has the right to  re-acquire
the liquor  license for  $100,000 and has  exercised  such right,  however,  the
lessee/buyer  has refused to perform.  The Company believes it will need to take
legal action to enforce its right to the liquor license.

     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. In October 2002, Mr. Murray  purchased
the stock of MJQ  Corporation  and  effective  October 27, 2002 we purchased the
stock of Leo Equity Group, Inc.

                                       17

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


     In accordance with the Master Settlement Agreement,  through our Palm Beach
Princess,  Inc.  subsidiary  (which has been merged into ITGV) 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 original balance of principal
and  interest of  approximately  $15.7  million  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 the balance
of the purchase price for up to three (3) additional months, to October 31,2002,
by paying  fees of  $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.  On October 30,  2002,  the Master  Settlement  Agreement  was
amended to provide  for a further  extension  of the due date for payment of the
$9.75  million  balance under the Purchase and Sale  Agreement  until January 6,
2003,  in  consideration  of our  payment of $220,000  as an  extension  fee. On
January 3, 2003,  we did not have the funds to complete  the purchase by January
6, 2003 and the  Trustee  denied  our  request  for a further  extension  of the
January 6, 2003 due date. Therefore, on January 3, 2003, in order to protect our
invested deposits and operation of the vessel,  ITGV, successor by merger to our
subsidiary the Palm Beach Princess,  Inc., filed a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code. MJQ Corporation,  the entity which owns
the vessel,  also filed for relief under Chapter 11 of the Bankruptcy  Code. The
Trustee is the  largest  creditor in the  MJQ/ITGV  cases,  and his  position is
secured by a mortgage  against  the  vessel.  In order to re-  organize  under a
Chapter 11 plan on a basis under which we would  continue to operate the vessel,
we will need to pay or provide for payment of a minimum of $9.75 million payable
to the Trustee plus approximately $1.3 million of debt to unsecured creditors of
ITGV (excluding debt to related parties).  Through November 15, 2003, $1,286,051
has been  placed  in escrow  towards  payments  required  to be  distributed  to
creditors.  The Bankruptcy  Court has required and approved ITGV to pay interest
on said $9.75  million  monthly to the  Trustee at an  interest  rate of 12% per
year. Interest of $679,562 has been paid through September 30, 2003.

     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 11, 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 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. We
were unable to pay the purchase price under the Stock Purchase Agreement on July
11, 2002 (which  price,  at that date,  was $892,500 for 1,785,000  shares).  On
October 30, 2002,  the Stock  Purchase  Agreement  was amended to provide for an
extension of the due date on the purchase of the shares until  December 13, 2002
at which time the Trustee  agreed to accept  payment of the  purchase  price for
3,228,145 shares  (including  additional  shares over which the Trustee obtained
control)  in the form of a twelve  month  promissory  note  bearing  interest at
9%(increasing  to 11%  after  default)  in the  amount of  $1,648,402  including
interest of $34,330. (See Note 6 (B).) Should the Trustee obtain control over an
additional  450,000 shares, we are further obligated to purchase those shares at
$0.50 per share.  A principal  payment of $137,367 was made in December 2002. In
connection

                                       18

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

with the Chapter 11 Plan of  Reorganization,  the Trustee has accepted a revised
schedule of payments  whichwill  satisfy this note. If we are unable to continue
to make timely payments,  the 3,228,146 shares of stock, which have been pledged
as  security,  could  be sold by the  Trustee.  The sale of said  shares  by the
Trustee along with other  uncontrollable  stock transfer events could effect the
preservation of our net operating loss tax carry forwards (NOL's). As of 6/30/03
the Company had $147,000,000 available in Net Operating Loss carryforwards which
can be used to offset  taxable  income/loss of our NOL's would cause the Company
to pay Federal Income taxes on its reported taxable income and reduce reportable
net income.

     In the event the  Company  is  unable  to make all the  payments  under the
agreements with the Brennan Trustee or otherwise  defaults in performance of the
terms of such  indebtedness,  the  Company  stands  to lose  its only  operating
business. Subject to applicable grace periods, the Brennan Trustee can cause the
liquidation of our only operating business, the Palm Beach Princess line.

     Through ITGV, 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 effective, as modified,
May 5, 2003.  The term of the initial  lease is five years at $183,200  per year
payable  monthly.  We are also required to make tenant  improvements  to the new
space in a minimum amount of $333,000,  however that the actual cost to make the
improvements was approximately  $950,000.  We will have the right to a credit of
up to the minimum amount of  improvements  required of $333,000 of  construction
costs against the initial term of our five year lease.

     The  following  summarizes  commitments  on  non-cancelable  contracts  and
leases,  including  the amounts  due to the  Brennan  Trustee as a result of the
amended Master Settlement Agreement executed in November 2003:

<TABLE>
                                     Twelve Months Ended September 30,
                       -------------------------------------------------------------
                                                                                       There-
                          2004         2005           2006         2007        2008     after        Total
                       ----------   ---------      ----------    ---------    ------    ------     ----------
<CAPTION>
<S>                   <C>         <C>           <C>           <C>           <C>       <C>       <C>
Minimum Amounts
due to Brennan
Trustee               $ 4,150,000 $ 5,060,000   $  4,960,000  $  1,060,000  $    -0-  $    -0-  $  15,230,000

Employee Contracts
(excluding severance
agreements)               956,750     755,884         77,500           -0-       -0-       -0-      1,790,134

Boat Charter Fees         550,000     600,000        600,000       100,000       -0-       -0-      1,800,000

Operating Leases          307,875     209,891        174,618       116,603    68,018       -0-        877,005

Casino Contracts           15,715         -0-            -0-           -0-       -0-       -0-         15,715
                       ----------   ---------      ----------    ---------    ------    ------     ----------
               Total  $ 5,980,340 $ 6,625,775   $  5,812,118  $  1,276,603  $ 68,018   $   -0-  $  19,712,854
                       ==========   =========      ==========    =========    ======    ======     ==========
</TABLE>

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.

     Our  subsidiary,  ITG  Vegas,  Inc.,  successor  by  merger  to Palm  Beach
Princess, Inc., initiated

                                       19

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

proceedings  under Chapter 11 of the  Bankruptcy  Code on January 3, 2003.  (See
Note 2.)

(9)  FAIR VALUE OF FINANCIAL INSTRUMENTS

     As of  September  30,  2003,  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. On our $33 million notes receivable,  we have elected to
defer the gain on the sale and the  interest to be accrued  until such time that
collect ability can be determined (See Note 3).

(10) STOCK OPTIONS AND WARRANTS

     At a meeting of the Board of Directors of the Company  held  September  11,
2003, the Board unanimously  authorized future grants of stock options for up to
385,000 shares of common stock,  at an exercise price of $0.50 per share, to ITG
Vegas,  Inc.'s  management  team,  which included  180,000 shares  earmarked for
Francis  X.  Murray,  son  of  the  Company's  Chairman,  subject,  however,  to
confirmation  of ITG  Vegas'  Plan of  Reorganization  and  subject to the prior
payment  of  all   obligations  of  the  Company  to  the  Bankruptcy   Trustee.
Accordingly,  no such  options  will be issued or granted  until the  Bankruptcy
Trustee  shall  have  been  paid in full,  at which  time  the  Company  will be
authorized  (but not obligated) to grant such options  provided that the grantee
is still employed by the Company at that time.

     Also at the September 11, 2003 meeting of the Company's  Board of Director,
the Board  unanimously  authorized  the future  grant of options to  purchase an
additional  20,000 shares of common stock to Mr. Francis X. Murray, at $0.50 per
share,  subject to  confirmation  of ITG Vegas' Plan of  Reorganization  and the
prior payment of all  obligations of the Company to the Bankruptcy  Trustee.  No
such options shall be granted or issued until the Bankruptcy  Trustee shall have
been  paid in  full,  at which  time the  Company  will be  authorized  (but not
obligated) to grant such options provided that Mr. F.X. Murray is still employed
by the Company at that time.  Such action was taken in order to  compensate  Mr.
F.X.  Murray for his having  personally  guaranteed  a loan of $300,000  for the
Company and for his providing to the Bankruptcy  Trustee a personal guaranty for
portions of the Company's obligations to the Bankruptcy Trustee.

     At a meeting of the Board of  Directors of the Company held on November 18,
2003, the Board authorized the future grant of options to purchase 25,000 shares
of common stock to each non- employee director,  Mr. James Murray and Mr. Walter
ReDavid,  at $0.50 per share, as  compensation  for their services as directors,
subject,  however, to the prior payment of all obligations of the Company to the
Bankruptcy Trustee. Accordingly, no such options will be issued or granted until
the  Bankruptcy  Trustee shall have been paid in full, at which time the Company
will be authorized  (but not obligated) to grant such options  provided that the
grantee is still serving as a director of the Company at that time.

     Also at the November 18, 2003  meeting of the Board,  the Board  authorized
the future grant of shares of common stock to each of Mr.  Francis W. Murray and
Mr. Robert J. Quigley as

                                       20

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


compensation  in lieu of their  respective  salaries,  which have been  deferred
since January 3, 2003, and in payment of the unpaid  principal of a $24,000 loan
to the Company by Mr. William  H.Warner,  the Company's  Secretary.  The Company
will be authorized to pay the accrued salaries to Messrs. Murray and Quigley and
the unpaid loan  principal to Mr. Warner in shares of common  stock,  valued for
such purpose at $0.50 per share, subject to the prior payment of all obligations
of the  Company to the  Bankruptcy  Trustee.  No such shares will be granted and
none of the accrued compensation will be paid until the Bankruptcy Trustee shall
have been paid in full,  at which time the Company will be  authorized  (but not
obligated) to grant such shares provided that the grantee (Mr.  Murray,  Quigley
or Warner,  as  applicable)  agrees to accept such  shares  (valued at $0.50 per
share) in payment of a  portion,  specified  by the  grantee,  of the  Company's
obligation to him and that he is still employed by the Company at the time.

     At September 30, 2003,  total employee  options  outstanding were 3,111,500
and total non-employee  options  outstanding were 425,000. At September 30, 2003
all of the employee and non-employee options were exercisable.

     At  September  30, 2003,  total  warrants  outstanding  were  710,000.  All
warrants were exercisable at September 30, 2003.

(11) 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  to a limited
partnership  in which  Francis W.  Murray  owned,  at that  time,  an 80% equity
interest and owned the general partner, the proceeds of which were to be used to
pay costs and expenses for development of a golf course in Southern  California.
Mr. Murray's equity interest in the limited partnership,  indirectly through his
ownership of the general partner,  as of December 26, 2002, was 64%. At December
26, 2002,  loans of $735,584 were outstanding on such project and we had accrued
$155,945  of  interest  due on the loans.  On  December  26,  2002,  the limited
partnership's  indebtedness  to us was  assumed  by OC  Realty,  LLC,  a Florida
limited liability company which is owned by Francis W. Murray and which owns the
second real estate project  described below.  Such  indebtedness is due December
31, 2004 and bears an interest rate of 6%.

     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 and the
state of Florida 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 had been owned by MJQ  Development,  LLC, which was
owned by Michael J. Quigley,  III until  December 26, 2002 when the property was
acquired by OC Realty,  LLC, the entity owned by Mr. Murray.  Mr. Quigley has no
relationship to Robert J. Quigley, one of our directors. OC Realty is developing
a condominium  hotel resort on the property as discussed  above. As of September
30, 2003, we had lent $2,034,405 in total to MJQ Development and we have accrued
interest  in the amount of  $678,498 on the loan.  Upon the  acquisition  of the
property,  OC Realty assumed MJQ  Development's  indebtedness to us. 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 also
have the right to receive, as participation  interest,  from available cash flow
of OC Realty if the project is successful, a priority return of our

                                       21

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

investment and a priority profits interest for up to three times our investment.
Repayment  of these  loans and our  participation  interest  will be  subject to
repayment  of,  first,  bank  debt of  approximately  $5.5  million(at  present)
incurred  in the  purchase  of  the  real  property  and,  second,  construction
financing  expected to amount to $25 to $30 million and third,  capital invested
by a joint  venture  partner  (expected to be up to $6.5 million) plus a 15% per
annum return thereon.  At the time the loans to MJQ  Development  were approved,
Mr.  Murray  stood  to  receive  a  substantial   contingent  benefit  from  MJQ
Development for his participation in the project.  Fair value and collectability
of the original  investment of $2,034,405 and accrued interest was determined by
the joint venture through  projections  evidencing our collection upon build out
and sale of the project..

     In order to raise the capital which with to proceed in the  development  of
the Ft. Lauderdale property, OC Realty has placed the Ft. Lauderdale property in
a joint  venture in connection  with which the other joint venture  partner will
fund up to $6.5 million for development and receive a 50% equity  interest.  Our
loan and  participation  interest  will be payable out of OC Realty 50% share of
distributions  after repayment of debt and the new investor's capital investment
and 15% annual return thereon.  The Company has assessed the  collectability  of
the advances  made to OC Reality based on  projections  and  assessments  of the
future value and returns,  and  believes  the  carrying  value of these  amounts
represents fair value.

     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.  The principal balance on the note at September 30, 2003 is $900,000 and
we have  accrued  interest  through  that  date in the  amount of  $253,699.  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.
As of November 15, 2003, the loan is due on demand. (See Note 6.)

     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 an  entertainment  casino cruise  business
from the Port of Palm Beach, Florida. Michael J. Quigley, III was a principal of
MJQ Corporation. In October 2002, Francis W. Murray, our Chairman, President and
Chief Executive  Officer  purchased the stock of MJQ Corporation and has been an
officer and director of MJQ Corporation.  Francis X. Murray,  the son of Francis
W. Murray,  is President and a director of MJQ  Corporation and President of our
subsidiary,  ITG Vegas,  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 6 above,  we have entered into an amended 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 an original  balance of
principal and interest outstanding of approximately $15.7 million for a purchase
price of $13.75  million.  Pursuant  to the  Master  Settlement  Agreement,  MJQ
Corporation  and its  officers  and  directors  (including  Francis  W.  Murray)
exchanged  mutual releases with the Trustee and others having claims to the Ship
Mortgage Obligation.

     We entered into an  agreement to purchase all of the shares of  outstanding
stock of Leo Equity Group, Inc. Mr. Francis W. Murray has been a director of Leo
Equity Group, Inc. Closing on the Leo Equity Group, Inc. stock purchase occurred
effective October 27, 2002. The purchase price payable

                                       22

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

by us for the stock in Leo Equity  Group,  Inc. was  $250,000,  payable  without
interest in 10 monthly  installments of $25,000 each. As of March 31, 2003, this
note was paid in full. 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.  Due to the  uncertainties
that these options will be exercisable, the Company has not recorded any expense
for the change in exercise price.  The purpose of such acquisition was to enable
us to obtain  the  lease and  operating  agreement  with the Port of Palm  Beach
District  which had been owned by Leo Equity  Group,  Inc.  During the period we
made the $25,000 monthly installments to Mr. Leo and before the note was paid in
full, we made advances on Mr. Leo's behalf. These advances totaled $23,439 as of
June 30, 2003.

     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. Prior to our acquisition of Leo Equity Group,
Inc.,  Leo  Equity  Group,  Inc.  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, in payment of this  obligation.
We have deferred all income from these  transactions  until such time as payment
is  received.  That  $2.6  million  debt  from  Mr.  Quigley  is a  non-recourse
obligation  which is  payable  solely  from  pledged  shares of his stock in MJQ
Corporation  (the  "MJQ  Debt").   Mr.  Francis  W.  Murray  purchased  the  MJQ
Corporation  stock  subject to our lien  securing  payment of the MJQ Debt.  The
Company has  assessed  the  collectablity  of the MJQ Debt in the amount of $2.6
million.  This amount is secured by the stock of MJQ Corporation  which owns the
Palm Beach  Princess  vessel.  Based on  appraisals  of the vessel,  the Company
believes the loan amounts are carried at fair value.

     Through  the  purchase  of Leo  Equity,  we also  purchased  the assets and
operations of GMO Travel which was a 100% owned  subsidiary  of Leo Equity.  GMO
Travel  provides  reservations  and travel  services for our Palm Beach Princess
subsidiary and other non-ship related travel activities. Travel services for the
Palm Beach Princess  include  reservations  and travel services for its numerous
foreign  employees and our customers,  many of which rely on air travel to reach
our location.  The goodwill  recorded in the amount of $193,946  represents  the
fair value of GMO Travel based on its  discounted  cash flows and the  synergies
and cost savings gained by the Palm Beach Princess.

     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 interest is payable  monthly.
As of September 30, 2003, the balance of the note was $250,000 and is classified
as Long-Term Debt - Related Parties on the balance sheet.

     On November 13, 2002, the Company and MJQ  Corporation  signed an agreement
and  bill of sale  which  transferred  maintenance  materials  and  spare  parts
inventory previously maintained by MJQ Corporation to Palm Beach Princess,  Inc.
The value of the parts inventory sold and assigned was  $1,103,125.  Payment for
the inventory was made by way of offsets on amounts previously due to Palm Beach
Princess,  Inc. by MJQ Corporation.  Fair value of this inventory was determined
by actual  invoice  prices and  estimates  made by the Palm Beach  Princess ship
engineers.


                                       23

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     Francis X. Murray,  President of our ITG Vegas, Inc.  subsidiary and son of
Francis W. Murray, our President,  CFO and CEO has agreed to loan the company up
to  $225,000  in the form of a line of  credit.  As of  September  30,  2003 and
November 15, 2003, these loans totaled $159,164. (See Note 6)

(12) TREASURY SHARES PURCHASED

     On December 13, 2002, the Company issued a promissory note in the amount of
$1,648,403 to purchase  3,228,145 shares of its Common Stock from the Chapter 11
Trustee for the bankruptcy estate of Robert E. Brennan.

(13) SUBSEQUENT EVENTS

     (A) On November 10, 2003, the conditions to the Plan of Reorganization were
satisfied and the Plan became effective October 15, 2003. Payments of $1,254,000
were disbursed from an escrow account previously  established for the benefit of
our  creditors.  These funds were  classified as restricted  cash on the Balance
Sheet as of September 30, 2003.


                                       24

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
                 AND RESULTS OF OPERATIONS FOR THE THREE MONTHS
                            ENDED SEPTEMBER 30, 2003

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

Forward-Looking Statements

     We have made  forward-looking  statements in this Form 10-Q,  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 under "Risk
Factors" in our most recent Annual Report on Form 10-K,  could affect our future
results and could cause those results to differ  materially from those expressed
in our forward-looking statements:

     o    termination of the bareboat  charter under which we operate our gaming
          business;
     o    lack of cash flow for the Parent  Company to  continue  to operate and
          pay its  debts  as a  result  of the  Chapter  11  proceedings  of our
          operating  subsidiary and agreed upon  restrictions in connection with
          such subsidiary's indebtedness;
     o    general  economic  and  business  conditions   affecting  the  tourism
          business in Florida;
     o    competition;
     o    changes in laws regulating the gaming 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.

Liquidity and Capital Resources

     Cash flow and liquidity  during the three month period ended  September 30,
2003  included  approximately  $1.1 million in cash  generated by the Palm Beach
Princess  operations.  Such cash flow was used to fund an escrow account for the
first payments to the Chapter 11 creditors of $1,294,050. Until January 3, 2003,
all of our cash flow during the current fiscal year had come from the Palm Beach
Princess vessel.

     On January 3, 2003, ITG Vegas,  Inc.("ITGV"),  our subsidiary operating the
Palm Beach Princess,  and MJQ Corporation ("MJQ"), an entity owned by Francis W.
Murray,  filed  voluntary  petitions  for relief under  Chapter 11 of the United
States  Bankruptcy Code (the "Bankruptcy  Code") in the United States Bankruptcy
Court for the Southern District of Florida, Palm Beach Division (the "Bankruptcy
Court"), In re: ITG Vegas, Inc., Case No. 03-30038.  The petition does not cover
the Parent company, ITB, nor any other of ITB's subsidiaries. The Parent Company
has used all the available  funds that we had prior to the bankruptcy  filing to
pay some of our expenses and needs to find  immediate  financing in order to pay
remaining existing liabilities as well as future expenses.  Since the bankruptcy
filing, the only source of funds to the Parent Company has been limited to loans
made  by  Company  officers,  collection  of a loan  previously  made to a South
American  gaming  project and refunds from vendors and tax agencies  relating to
our prior racetrack operations.  The Palm Beach Princess continued to operate as
"debtor-in-possession"  under the jurisdiction of the Bankruptcy Court until the
Effective Date,  October 15, 2003 and  subsequently as reorganized  debtors (See
Note 13) in accordance with the applicable provisions of the Bankruptcy Code and
orders of the Bankruptcy

                                       25

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
                 AND RESULTS OF OPERATIONS FOR THE THREE MONTHS
                            ENDED SEPTEMBER 30, 2003

Court.

     The  Bankruptcy  filing has  severely  limited  our  ability to make timely
payments by our Parent to its creditors and corporate vendors which has affected
our  ability to retain  the  professional  services  and  vendors  who serve our
company.  Since  January  2001 our  Chairman  and the  President  of our  Brazil
subsidiary  have deferred  their  salaries and other officers and employees have
not  received  reimbursement  of many of  their  business  expenses  in order to
conserve  cash.  Additionally  employee  benefits  have been  reduced and salary
increases  have been  restricted.  The Parent  Company has been forced to reduce
services  and its  budget.  The  majority  of our  vendors  continue  to provide
services however it may be likely that some will stop providing  services in the
near future if payment terms are not successfully  negotiated.  This may include
the  services  provided by our  professionals  or the  services  provided to our
stockholders through our stock transfer agent. Additionally,  we risk losing the
services  of some of our  employees.  The Company  believes  that it has several
options to cure such  deficiencies.  On  September  12,  2003 the United  States
Bankruptcy  Court for the  Southern  District of Florida  (Palm Beach  Division)
issued an order  confirming the Amended Joint Chapter 11 Plan of  Reorganization
(the "Plan") in the Chapter 11 cases of ITG Vegas,  Inc.,  the Company's  wholly
owned subsidiary, and MJQ Corporation.  On the effective date of the Plan and so
long as the ITGV  subsidiary  remains current with its obligations to the Donald
F. Conway,  as Chapter 11 Trustee for the bankruptcy estate of Robert E. Brennan
("the  Brennan  Trustee")  then ITGV will be permitted to upstream  $100,000 per
month to the Parent Company. (See the paragraphs below concerning the bankruptcy
order).  The currently monthly budgeted cash expenses,  including  payroll,  but
exclusive  of the Chairman and the  President of the Brazil  subsidiary,  of the
Parent  company are  approximately  $100,000  per month.  The  Company  plans to
negotiate the payment of past bills while keeping  essential bills current.  The
Company  continues to expense funds for  exploring  potential  opportunities  in
various foreign countries. If the company were to discontinue its exploration of
these opportunities additional funds could be used for payment of Parent Company
expenses but the Company would lose the  potential  business  opportunities.  So
long as the Brennan Bankruptcy  Trustee continues to be our principal  creditor,
payments to the Parent company will be limited to $100,000 per month.  We intend
to re-finance that debt as soon as reasonably  possible in order to eliminate or
lessen restrictions on our operating  subsidiary's  providing cash to the Parent
Company.

     On September 12, 2003, the United States  Bankruptcy Court for the Southern
District of Florida (Palm Beach Division) issued an order confirming the Amended
Joint Chapter 11 Plan of Reorganization  (the "Plan") in the Chapter 11 cases of
ITG Vegas, Inc., the Company's wholly owned subsidiary, and MJQ Corporation.  On
the effective date of the Plan (the "Effective Date"), all claims, debts, liens,
security  interests and  encumbrances of and against the Debtors and against all
property  of  their   respective   bankruptcy   estates,   which  arose   before
confirmation,  will be discharged,  except as otherwise  provided in the Plan or
confirmation  order.  Post-confirmation,  each of the Debtors  will  continue as
reorganized debtors. See Note 2 to the financial statements for a summary of our
obligations in connection with the Plan.

     The Plan includes the following  principal  features:  (i) On the Effective
Date,  all  administrative  expense  claims and tax claims will be paid in full;
(ii) All pre-petition debtors will be paid in two installments,  one-half on the
Effective  Date and  one-half  (with  interest  thereon  at 8% per year from the
Effective  Date) on the six month  anniversary of the Effective  Date; and (iii)
The Debtor's principal  creditor,  the Brennan Trustee,  will receive payment in
full of all  obligations  over a period  not to exceed  three  years  which will
consist of (a) the balance of the  purchase  price that had been  payable by ITG
Vegas for the purchase of the ship mortgage against the Vessel, in the amount of
$9,750,000; (b) the balance of the Company's indebtedness to the Brennan Trustee
in respect of the purchase of stock in the Company,  in the principal  amount of
$1,511,035.70, plus interest

                                       26

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
                 AND RESULTS OF OPERATIONS FOR THE THREE MONTHS
                            ENDED SEPTEMBER 30, 2003

thereon  from  December  13,  2002  to  January  23,  2003 at 9% per  annum  and
thereafter at 11% per annum until the Effective  Date;  (c) a new  obligation of
the Company for the purchase of an  additional  450,000  shares of the Company's
stock  from the  Brennan  Trustee,  at  $0.50  per  share,  or  $225,000;  (d) a
forbearance  fee of $350,000  also shall  accrue to the  Brennan  Trustee on the
Effective  Date, of which $100,000 will be payable on the Effective Date and the
balance  of  $250,000  will be due on or  about  the  third  anniversary  of the
Effective Date.

     Monthly  payments of $400,000  with  interest at 12% will be required to be
made to the Brennan Trustee, to be applied first to interest accrued and then to
principal.  In addition,  the Brennan  Trustee shall be entitled to payment of a
Stay Bonus in the amount of $200,000 if the  Payment  Obligation  shall not have
been paid in full within 12 months after the Effective  Date,  and an additional
$100,000  if the Payment  Obligation  shall not have been paid in full within 24
months  after the  Effective  Date.  Beginning  with ITG  Vegas'  2004  internal
accounting year (commencing December 29, 2003) and annually  thereafter,  75% of
ITG Vegas' Free Cash Flow (as defined in the Plan) for the period  shall be paid
to the Brennan Trustee as a Sweep Payment to be applied to the foresaid debt.

     Under the Plan, the maximum amount of funds  permitted to be up streamed by
ITG Vegas to the Parent  Company is $100,000 per month as a tax sharing  payment
(See Note 2 to the financial statements). The Parent Company has no other source
of funds presently  available  without the consent of the Brennan  Trustee.  For
these  reasons,  and since the  $100,000  per month tax sharing  payment will be
suspended  at any time when the  Debtors  are not  current  in  payment of their
obligations to the Brennan  Trustee,  no assurance can be given that the Company
will be able to  function  as a going  concern  and pay its debts as they become
due.

     In the event the  Company  is  unable  to make all the  payments  under the
agreements with the Brennan Trustee or otherwise  defaults in performance of the
terms of such  indebtedness,  the  Company  stands  to lose  its only  operating
business. Subject to applicable grace periods, remedies available to the Brennan
Trustee, if we default,  include the liquidation of our only operating business,
the Palm  Beach  Princess  line.  Additionally,  if we default  (subject  to the
applicable grace periods) the 3,228,146 shares of stock which we are buying from
the Brennan Trustee,  all of which are pledged to the Brennan Trustee,  could be
sold by the Brennan Trustee.  The sale of these shares by the Trustee along with
other  uncontrollable stock transfer events could affect the preservation of our
net operating  loss tax carry  forwards  (NOL's).  As of 6/30/03 the Company had
$147,000,000  available in Net Operating Loss carryforwards which can be used to
offset taxable income.  Loss of our NOL's would cause the Company to pay Federal
Income taxes on its reported taxable income and reduce reportable net income.

     We are in default on the  principal  and  interest  payments due to Service
America in the  approximate  amount of $160,000  for the  purchase of the liquor
license at Garden State Park.  The Company is  continuing to negotiate new terms
under this note and if unsuccessful  the creditor may bring action to attempt to
collect this debt.

     ITGV's cash flow from operations of the vessel is seasonal. 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 ITGV's 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.

                                       27

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
                 AND RESULTS OF OPERATIONS FOR THE THREE MONTHS
                            ENDED SEPTEMBER 30, 2003

     Unless and until ITGV  successfully  emerges  from its  Chapter 11 case and
pays in full all the debts to the Brennan Trustee,  our possible sources of cash
(in addition to the $100,000 per month tax sharing  payments as mentioned above)
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.

     Another  source of cash to the Company  would be the  collection  of a note
currently  due from Realen-  Turnberry/Cherry  Hill,  LLC from the sale of horse
statues at Garden State Park.  The amount due and owing is $350,000 plus accrued
interest,  however, when the collection of this note is made the Company will be
required  to pay an  offsetting  note due to the  original  seller  of the horse
statues  when they  were  sold to us in the  amount  of  $132,000  plus  accrued
interest.  The net funds that would be collected  would be $218,000 plus accrued
interest. The Company is negotiating with  Realen-Turnberry/Cherry  Hill LLC for
collection of this note but the timing of such collection is uncertain.

     Our working  capital as of September 30, 2003 was $1,927,632 as compared to
$650,328 at June 30, 2003. The increase in working capital during the past three
months  was  primarily  provided  by an  increase  in cash  from  the  operating
activities,   disbursement   of  which  is   restricted   by   ITGV's   Plan  of
Reorganization.

                Results of Operations for the Three Months Ended
                           September 30, 2003 and 2002

     Overall

     Revenue  from for the three  months  ended  September  30,  2003  increased
$1,267,070 from $6,308,088 in Fiscal 2003 to $7,575,158 in Fiscal 2004 primarily
as a result of increased  gaming  revenues  generated by the Palm Beach Princess
operations during the comparable periods.  Operating expenses increased $670,176
from $5,650,742 in the three month period in Fiscal 2003 to $6,320,908 in Fiscal
2004 primarily the result of an increase in Palm Beach Princess  operating costs
during the  comparable  quarters,  a net  increase in financing  costs  incurred
primarily  associated  with  interest  payments of $294,904  paid to the Trustee
during  Fiscal  2004 as compared to  extension  fees of $150,000  paid under the
Purchase and Sale Agreement for the Palm Beach Princess  during Fiscal 2003, and
costs associated with the bankruptcy  filing of $258,562,  partially offset by a
decrease in corporate general and administrative  expenses during the comparable
periods and a decrease in development costs.

     For the first quarter of Fiscal 2004,  our net income was $859,060 or $0.10
per share as compared to income for the  comparable  period in the prior  fiscal
year of $413,115 or $0.04 per share.



                                       28

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
                 AND RESULTS OF OPERATIONS FOR THE THREE MONTHS
                            ENDED SEPTEMBER 30, 2003

     Vessel Operations

     During the three months ended September 30, 2003, total revenue from vessel
operations  was  $7,575,158 as compared to $6,308,088 for the three months ended
September 30, 2002. The increase in revenue of $1,267,070  during the comparable
quarters  primarily resulted from an increase in casino gaming revenue primarily
the result of a slight  increase in the passenger  count and an approximate  17%
increase in the average revenue per passenger during the comparable periods. Net
fare and on board income  decreased  $31,882 or less than 3%.  Casino  operating
expenses which also includes food, beverage and entertainment increased $134,924
from  $1,944,693 or 37% of casino revenue in Fiscal 2003 to $2,079,617 or 32% of
casino  revenue in Fiscal 2004  primarily the result of the increased  passenger
count despite a decrease in the number of cruises during the comparable periods.
Sales,  marketing  and  advertising  expenses  decreased  slightly  due  to  the
reduction in the number of cruises scheduled  primarily as a result of scheduled
wet  dock  maintenance.  Maritime  and  maintenance  costs to  operate  the ship
increased  $331,345 from $1,417,924 in Fiscal 2003 to $1,749,269 in Fiscal 2004,
also  primarily  due  to  the  scheduled  wet  dock  maintenance.   Finance  and
administrative  expenses  increased $484,222 or 48% in Fiscal 2004 primarily the
result  of costs  associated  with the  bankruptcy  filing  of  $258,562  and an
increase in other operating  expenses.  Income before income tax expense for the
first  quarter  of  operation  in Fiscal  2004 was  $1,351,357  as  compared  to
$1,028,364 in the comparable quarter of Fiscal 2003.

     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. During the first quarter
of Fiscal 2004 the ship  completed  167 cruises  and eleven  (11)  cruises  were
missed due to scheduled wet dock maintenance. During the first quarter of Fiscal
2003 179 cruises were completed.



                                       29

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
                 AND RESULTS OF OPERATIONS FOR THE THREE MONTHS
                            ENDED SEPTEMBER 30, 2003


The following is a comparative  summary of income and expenses of the Palm Beach
Princess operation for the three months ended September 30, 2003 and 2002:
<TABLE>

                                                     Three Months Ended
                                                        September 30,
                                               --------------------------------
             Description                           2003                2002            Change
------------------------------------------     --------------     -------------     -----------
<CAPTION>
<S>                                         <C>                 <C>             <C>
Passenger Count                                        61,487            60,385           1,102
Number of Cruises                                         167               179             (12)

Operating Revenue:
    Casino                                  $       6,494,687   $     5,195,735 $     1,298,952
    Fare                                            1,703,087         1,741,423         (38,336)
    On Board                                          754,726           772,284         (17,558)
    Less: Promotional Allowances                   (1,377,343)       (1,401,355)         24,012
                                               --------------     -------------     -----------
    Net Operating Revenue                           7,575,157         6,308,087       1,267,070
                                               --------------     -------------     -----------
Operating Costs and Expenses:
    Gaming                                          2,079,617         1,944,693         134,924
    Fare                                              713,754           720,188          (6,434)
    On Board                                          195,241           195,221              20
    Maritime and Legal Expenses                     1,749,269         1,417,924         331,345
    General and Administrative Expenses               795,962           675,770         120,192
    Professional Fees - Bankruptcy                    258,562                 0         258,562
    Interest and Financing Fees                       300,999           254,882          46,117
    Depreciation and Amortization                     130,397            71,046          59,351
                                               --------------     -------------     -----------
    Total Operating Costs and Expenses              6,223,801         5,279,724         944,077
                                               --------------     -------------     -----------
          Income Before Income Tax Expense  $       1,351,357   $     1,028,364  $      322,993
                                               ==============     =============     ===========
</TABLE>

Inflation

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

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

     We maintain  disclosure controls and procedures that are designed to ensure
that  information  required  to be  disclosed  in our  Exchange  Act  reports is
recorded,  processed,  summarized and reported within the time periods specified
in the SEC's  rules and forms,  and that such  information  is  accumulated  and
communicated to our management,  including our chief executive officer and chief
financial officer, as appropriate,  to allow timely decisions regarding required
disclosure.  In designing and evaluating the disclosure controls and procedures,
management  recognized  that any  controls  and  procedures,  no matter how well
designed and operated,  can provide only  reasonable  assurance of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating the  cost-benefit  relationship of possible  controls and
procedures.


                                       30

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                  MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
                 AND RESULTS OF OPERATIONS FOR THE THREE MONTHS
                            ENDED SEPTEMBER 30, 2003

     The Company's  management  with the  participation  of our chief  executive
officer and chief financial officer is continuing to perform  evaluations of the
design and  operation of the Company's  entire  system of internal  controls and
financial  reporting  over a period  of time  that  will be  adequate  for it to
determine,  whether,  as of the end of the Company's  current  fiscal year,  the
design and operation of our internal controls and procedures are effective.

CHANGES IN INTERNAL CONTROLS

     There were no changes that occurred  during the fiscal  quarter  covered by
this  Quarterly  Report  on Form  10-Q that  have  materially  affected,  or are
reasonablely  likely to materially  affect, our internal controls over financial
reporting.


                                       31

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES


                                     Part II

                                OTHER INFORMATION


Item 6.

     a. Reports on Form 8-K

     During the quarter  ended  September  30, 2003,  the  registrant  filed the
following Current Reports on Form 8-K:


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

September 12, 2003   Plan of  Reorganization  confirmed  by the  Bankruptcy
                     Court  related to the Chapter 11 filing of ITG Vegas,
                     operator of the Palm Beach Princess vessel.


     b. The following exhibits are filed as part of this Form 10-Q/A.

          31.1 Certification  pursuant to rule  13a-14(a)  or  15d-14(a)  of the
               Securities Exchange Act of 1934)

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





                                       32

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                                   SIGNATURES


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



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.


November 19, 2003        /s/Francis W. Murray
                         ----------------------------------------------------
                         Francis W. Murray, President, Chief Executive Officer
                         and Chief Financial Officer



                                       33

<PAGE>


                                                                    Exbibit 31.1


               CERTIFICATION PURSUANT TO RULE 13A-14 AND 15D-14 OF
                  SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
                     THE SECURITIES AND EXCHANGE ACT OF 1934

I, Francis W. Murray, certify that:

          1.   I  have   reviewed  this   quarterly   report  on  Form  10-Q  of
               International Thoroughbred Breeders;

          2.   Based on my knowledge, this quarterly 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 quarterly
               report;

          3.   Based  on my  knowledge,  the  financial  statements,  and  other
               financial  information included in this quarterly 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 quarterly report;

          4.   The registrant's other certifying  officers and I are responsible
               for   establishing  and  maintaining   disclosure   controls  and
               procedures  (as defined in Exchange  Act Rules 13a-14 and 15d-14)
               for the registrant and we have:

                    a)   designed  such  disclosure  controls and  procedures to
                         ensure  that  material   information  relating  to  the
                         registrant, including its consolidated subsidiaries, is
                         made  known  to us by  others  within  those  entities,
                         particularly  during the period in which this quarterly
                         report is being prepared;

                    b)   evaluated  the   effectiveness   of  the   registrant's
                         disclosure  controls and procedures as of a date within
                         90 days  prior  to the  filing  date of this  quarterly
                         report (the "Evaluation Date"); and

                    c)   presented  in this  quarterly  report  our  conclusions
                         about the effectiveness of the disclosure  controls and
                         procedures based on our evaluation as of the Evaluation
                         Date;

          5.   The registrant's other certifying  officers and I have disclosed,
               based on our most recent evaluation, to the registrant's auditors
               and the audit  committee of  registrant's  board of directors (or
               persons performing the equivalent functions);

                    a)   all significant deficiencies in the design or operation
                         of internal  controls which could adversely  affect the
                         registrant's ability to record, process,  summarize and
                         report  financial  data  and  have  identified  for the
                         registrant's   auditors  any  material   weaknesses  in
                         internal controls; and

                    b)   any  fraud,  whether  or not  material,  that  involves
                         management  or other  employees  who have a significant
                         role in the registrant's internal controls; and

          6.   The registrant's  other certifying  officers and I have indicated
               in this quarterly  report  whether or not there were  significant
               changes  in  internal  controls  or in other  factors  that could
               significantly  affect internal controls subsequent to the date of
               our most recent evaluation, including any corrective actions with
               regard to significant deficiencies and material weaknesses.


Date: November 19, 2003

                             /s/Francis W. Murray
                             --------------------------------
                             Chairman/Chief Executive Officer/
                             Chief Financial Officer

                                       34

<PAGE>


                                                                    Exhibit 32.1

                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  Quarterly  Report on Form 10-Q of
International  Thoroughbred Breeders,  Inc. (the "Company") for the three months
ended September 30, 2003 as filed with the Securities and Exchange Commission on
the date hereof (the "Report"),  I, Francis W. Murray,  Chief Executive  Officer
and 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: President, CEO and CFO
 November 19, 2003

                                       35

<PAGE>


                                                                    Exhibit 32.2

                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  Quarterly  Report on Form 10-Q of
International  Thoroughbred Breeders,  Inc. (the "Company") for the three months
ended September 30, 2003 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
November 19, 2003


                                       36

<PAGE>