FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended               March 31, 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, 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
   -----      -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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


             Class                       Outstanding at May 16, 2003
-------------------------------      ------------------------------------
Common Stock, $ 2.00 par value                  8,252,133 Shares

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                                    FORM 10-Q

                                QUARTERLY REPORT
                    FOR THE NINE MONTHS ENDED MARCH 31, 2003
                                   (Unaudited)

                                TABLE OF CONTENTS

                                                                      PAGE
PART I.     FINANCIAL INFORMATION

   Item 1.  Financial Statements:

            Consolidated Balance Sheets
                   as of March 31, 2003 and June 30, 2002..............1-2

            Consolidated Statements of Operations
                   for the Three Months and Nine Months ended
                   March 31, 2003 and 2002 ............................3

            Consolidated Statement of Stockholders' Equity
                   for the Nine Months ended March 31, 2003............4

            Consolidated Statements of Cash Flows
                   for the Nine Months ended
                   March 31, 2003 and 2002.............................5

            Notes to Financial Statements..............................6-17

   Item 2.  Management's Discussion and Analysis of
                   Financial Condition and Results of Operations.......18-23

   Item 4.  Controls and Procedures....................................24


PART II.    OTHER INFORMATION

   Item 6.  Exhibits and Reports on Form 8-K...........................25

SIGNATURES.............................................................26

CERTIFICATIONS.........................................................27-29

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                     AS OF MARCH 31, 2003 AND JUNE 30, 2002

                                     ASSETS

                                                  March 31,
                                                    2003          June 30,
                                                 (UNAUDITED)        2002
                                                ------------   ------------
CURRENT ASSETS:
     Cash and Cash Equivalents                  $  3,637,917   $    796,610
     Accounts Receivable                             263,959         37,682
     Prepaid Expenses                                706,431        190,639
     Spare Parts Inventory                         1,076,211              0
     Other Current Assets                            684,451        391,596
     Net Assets of Discontinued
       Operations - Current                          115,152        123,569
                                                 ------------   ------------
     TOTAL CURRENT ASSETS                          6,484,121      1,540,096
                                                 ------------   ------------


EQUIPMENT:
     Leasehold Improvements -
       Port of Palm Beach                            719,488              0
     Equipment                                       871,216        723,420
                                                 ------------   ------------
                                                   1,590,704        723,420
     LESS: Accumulated Depreciation
              and Amortization                       217,802        113,061
                                                 ------------   ------------

     TOTAL EQUIPMENT, NET                          1,372,902        610,359
                                                 ------------   ------------



OTHER ASSETS:
     Notes Receivable                             33,000,000     33,000,000
     Deposit on Purchase of Palm Beach
       Princess Mortgage                           4,000,000      3,500,000
     Deposits and Other Assets -
       Non-Related Parties                            85,560        374,724
     Deposits and Other Assets -
       Related Parties                             5,932,760      6,903,115
                                                 ------------   ------------
     TOTAL OTHER ASSETS                           43,018,320     43,777,839
                                                 ------------   ------------


TOTAL ASSETS                                    $ 50,875,343   $ 45,928,294
                                                 ============   ============


See Notes to Consolidated Financial Statements.

                                        1

<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                     AS OF MARCH 31, 2003 AND JUNE 30, 2002

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                  March 31,
                                                    2003          June 30,
                                                (UNAUDITED)        2002
                                                ------------   ------------
CURRENT LIABILITIES:
     Accounts Payable                           $  2,268,176   $  1,324,351
     Accrued Expenses                              2,036,579      1,353,811
     Short-Term Debt                               2,900,550      1,062,280
     Short-Term Debt - Related Parties               207,560              0
                                                 ------------   ------------
     TOTAL CURRENT LIABILITIES                     7,412,865      3,740,442
                                                 ------------   ------------


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 and
       362,488 Issued and Outstanding,
       respectively                               36,248,875     36,248,775
     Common Stock, $2 Par Value, Authorized
       25,000,000 Shares, Issued, 11,480,278
       and 11,480,275, respectively and
       Outstanding, 8,252,133 and
       11,480,275, respectively                   22,960,555     22,960,549
     Capital in Excess of Par                     20,191,984     20,192,090
     (Deficit)(subsequent to June 30, 1993,
       date of quasi-reorganization)             (42,538,488)   (45,423,435)
                                                 ------------   ------------
                                                  36,862,926     33,977,979
     LESS:
     Treasury Stock, 3,228,145 Shares, at Cost    (1,614,072)             0
     Deferred Compensation, Net                      (12,916)       (16,667)
                                                 ------------   ------------
     TOTAL STOCKHOLDERS' EQUITY                   35,235,938     33,961,312
                                                 ------------   ------------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $ 50,875,343   $ 45,928,294
                                                 ============   ============


See Notes to Consolidated Financial Statements.

                                        2

<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2003 AND 2002
                                   (UNAUDITED)

<TABLE>


                                                   Three Months Ended              Nine Months Ended
                                                        March 31,                      March 31,
                                               --------------------------    ----------------------------
                                                   2003           2002           2003            2002
                                               ------------   -----------    ------------   -------------
<CAPTION>
<S>                                          <C>             <C>           <C>             <C>
REVENUE:
     Revenue from Operations                 $   8,850,009   $ 7,941,213   $  21,962,247   $  18,847,585
     Other Income                                        0             0               0          70,056
     Interest Income                                40,391       108,803         254,439         347,196
                                               ------------   -----------    ------------   -------------
                           TOTAL REVENUES        8,890,400     8,050,016      22,216,686      19,264,837
                                               ------------   -----------    ------------   -------------

EXPENSES:
     Cost of Revenues:
       Operating Expenses                        4,904,627     4,601,560      13,471,516      13,077,840
       Depreciation & Amortization                  34,991        53,921         164,140          77,966
     General & Administrative Expenses -
       Palm Beach Princess                         800,679       587,008       2,648,848       2,043,202
     General & Administrative Expenses -
       Parent                                      309,809       578,461       1,265,466       1,726,071
     ITG Vegas Bankruptcy Costs                    300,130             0         300,130               0
     Development Costs                             153,507       260,352         295,614         501,955
     Interest and Financing Expenses               387,186        35,798         976,025         251,733
                                               ------------   -----------    ------------   -------------
                           TOTAL EXPENSES        6,890,929     6,117,100      19,121,739      17,678,767
                                               ------------   -----------    ------------   -------------

INCOME BEFORE TAX PROVISION                      1,999,471     1,932,916       3,094,947       1,586,070
     State Income Tax Expense                      121,000        80,000         210,000         102,000
                                               ------------   -----------    ------------   -------------

NET INCOME                                   $   1,878,471   $ 1,852,916   $   2,884,947   $   1,484,070
                                               ============   ===========    ============   =============


NET BASIC AND DILUTED INCOME
   PER COMMON SHARE                          $        0.23   $      0.16   $        0.28   $        0.13
                                               ============   ===========    ============   ============

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                            8,252,133    11,480,273      10,207,869      11,480,271
                                               ============   ===========    ============   ============
</TABLE>

See Notes to Consolidated Financial Statements.

                                        3

<PAGE>
                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                    FOR THE NINE MONTHS ENDED MARCH 31, 2003

<TABLE>

                                                                    Preferred                                Common
                                                        --------------------------------     ---------------------------------
                                                          Number of                            Number of
                                                           Shares            Amount             Shares             Amount
                                                        --------------    --------------     ---------------   ---------------
<CAPTION>
<S>                                                            <C>       <C>                      <C>         <C>
BALANCE - JUNE 30, 2002                                        362,488   $    36,248,775          11,480,275  $     22,960,549

   Purchase of Shares for Treasury in connection
     with REB Trustee
   Shares Issued for Fractional Exchanges With
     Respect to the One-for-twenty Reverse Stock
     Split effected on March 13, 1992                                1               100                   3                 6
   Amortization of Deferred Compensation Costs               ---                ---                 ---               ---
   Net Income for the Nine Months Ended March 31, 2003       ---                ---                 ---               ---

                                                        --------------    ---------------    ---------------   ---------------
BALANCE - MARCH 31, 2003                                       362,489   $    36,248,875          11,480,278  $     22,960,555
                                                        ==============    ===============    ===============   ===============
</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, 2002                                $ 20,192,090   $ (45,423,435)   $          0  $   (16,667)  $   33,961,312

   Purchase of Shares for Treasury in connection
     with REB Trustee                                                                    (1,614,072)                   (1,614,073)
   Shares Issued for Fractional Exchanges With
     Respect to the One-for-twenty Reverse Stock
     Split effected on March 13, 1992                          (106)        ---                            ---            ---
   Amortization of Deferred Compensation Costs               ---            ---                            3,751            3,751
   Net Income for the Nine Months Ended March 31, 2003       ---          2,884,947                        ---          2,884,947

                                                        -----------    -------------    -----------   ----------    -------------
BALANCE - MARCH 31, 2003                               $ 20,191,984   $ (42,538,488)   $ (1,614,072) $   (12,916)  $   35,235,938
                                                        ===========    =============    ===========   ==========    =============
</TABLE>


See Notes to Consolidated Financial Statements.

                                       4

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED MARCH 31, 2003 AND 2002
                                   (UNAUDITED)

<TABLE>

                                                                      Nine Months Ended
                                                                           March 31,
                                                                ---------------------------
                                                                     2003          2002
                                                                -------------   -----------
<CAPTION>
<S>                                                           <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                         $    2,884,947   $ 1,484,070
                                                                -------------   -----------
Adjustments to reconcile income to net cash provided
 by operating activities:
  Depreciation and Amortization                                      164,140        81,716
  (Gain) on Sale of Fixed Assets                                           0       (77,577)
  Changes in Operating Assets and Liabilities -
   (Increase) Decrease in Accounts Receivable                       (226,278)      213,866
   Decrease (Increase) in Other Assets                                29,783      (291,061)
   (Increase) Decrease in Prepaid Expenses                          (515,792)       91,983
   Increase in Accounts Payable and Accrued Expenses               1,909,029       762,104
                                                                -------------   -----------
    CASH PROVIDED BY OPERATING ACTIVITIES                          4,245,829     2,265,101
                                                                -------------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Deposits on Purchase of Palm Beach Princess Mortgage            (500,000)   (2,250,000)
    Deposits on Purchase of Additional Vessel                       (300,000)            0
    Investment in Port Lease                                        (250,000)            0
    Proceeds from Auction of Garden State Park Fixed Assets                0     1,334,042
    Capital Expenditures                                            (885,185)     (403,602)
    Loans made on Development Projects                                     0    (1,508,528)
    Decrease in Other Investment Activity                            262,129             0
                                                                -------------   -----------
     CASH USED IN INVESTING ACTIVITIES                            (1,673,056)   (2,828,088)
                                                                -------------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from Related Party Loans                                207,346             0
    Proceeds from Bank Financing                                     200,000             0
    Principal Payments on Short Term Notes                          (140,029)     (177,766)
    Decrease in Balances Due to/From Subsidiaries                         (0)      804,565
                                                                -------------   -----------
    CASH PROVIDED BY FINANCING ACTIVITIES                            267,317       626,799
                                                                -------------   -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                          2,840,090        63,812
     LESS CASH AND CASH EQUIVALENTS  FROM
      DISCONTINUED OPERATIONS                                          1,217       (18,875)
    CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD             796,610     1,361,287
                                                                -------------   -----------

    CASH AND CASH EQUIVALENTS AT END OF THE PERIOD            $     3,637,917  $ 1,406,224
                                                                =============   ===========

Supplemental Disclosures of Cash Flow Information:
    Cash paid during the period for:
    Interest                                                  $      282,082   $         0
    Income Taxes                                              $        3,448   $         0
</TABLE>



Supplemental Schedule of Non-Cash Investing and Financing Activities:
On November 13, 2002 parts inventory in the amount of $1,103,125
  was recorded on the balance sheet as part of a non-cash transaction
  offset by existing liabilities.
On Decemberr 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.

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

     BASIS OF PRESENTATION

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming   International    Thoroughbred   Breeders,   Inc.   and   subsidiaries
(collectively,  the "Company")  will continue as a going concern.  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
unrelated  affiliate 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 Palm Beach Princess is continuing 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 6 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. ITGV and MJQ are in the process of preparing a  reorganization
plan (the "Plan").  The Bankruptcy  Court has granted an extension of the May 5,
2003 date, at which our exclusive right to file a plan of  reorganization  would
have expired,  to June 2, 2003. Our future is dependant,  among other things, on
the timely  filing of the Plan,  approval  of the Plan by a majority of the ITGV
and MJQ creditors and  implementation  and performance by us of an approved Plan
which would enable us to exit the Chapter 11 proceedings. At this time it is not
possible  to predict  the  outcome of the Plan or the effect it will have on our
reorganization.

     The financial  statements do not include any adjustments  that might result
from  the  outcome  of  the  above  uncertainties  associated  with  a  plan  of
reorganization.

     (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.

                                        6

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     (D)  Depreciation and Amortization - Depreciation of property and equipment
were computed by the  straight-line  method at rates  adequate to allocate their
cost or adjusted fair value in accordance  with  generally  accepted  accounting
principles over the estimated  remaining useful lives of the respective  assets.
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 one year period following the dry dock period.
For the nine months ended March 31, 2003, the amortized expense was $55,650.

     (E) Net Assets of Discontinued  Operations - At March 31, 2003 and June 30,
2002, the remaining net assets and liabilities of Garden State Park and Freehold
Raceway were classified as "Net Assets of Discontinued Operations."

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

     (G) 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  March  31,  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.

     (H) 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.

     (I)  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.

     (J) 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.  For the three  months  ended March 31, 2003 and 2002 the  weighted
average number of shares outstanding is 8,252,133 and 11,480,273,  respectively.
For the nine months ended March 31, 2003 and 2002 the weighted average number of
shares outstanding is 10,207,869 and 11,480,271,  respectively.  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.  Options and warrants to purchase  4,046,500 of Common Stock
at various prices per share,  for the three and nine months ended March 31, 2003
and 2002 were not included in the  computation  of income per share  because the
exercise price of those options and warrants were above market value.

     (K) 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.

                                        7

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


(2)  NOTES RECEIVABLE

     A portion  of the  proceeds  from the sale of the  non-operating  former El
Rancho  Hotel and  Casino in Las Vegas to  Turnberry/Las  Vegas  Boulevard,  LLC
("Turnberry") on May 22, 2000 was used by us to purchase a Turnberry  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.

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

     In  addition,  we sold two large  bronze  sculptures  located at the Garden
State Park  property to Realen,  in exchange  for Realen's  promissory  note due
November 30, 2002, in the principal  amount of $700,000.  The Chapter 11 Trustee
for the Bankruptcy Estate of Robert E. Brennan (the "Trustee") 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  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 March 31,
2003 and June 30, 2002. As part of the  settlement of the sculpture  litigation,
the  party  who sold us the  sculptures  agreed  to  reduce  the  amount  of our
obligation for payment of the balance of the sculpture price  (described in Note
5(A)  below)  by the  same  principal  amount,  $350,000,  given up by us to the
Trustee.  As of May 15,  2003,  Realen had not made the payment in the amount of
$700,000  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. Realen, in its answer an counter-claim in such case, has claimed
that the Company defrauded it by misrepresenting the value of the sculptures.

                                        8

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(3)  DEPOSITS AND OTHER ASSETS - RELATED PARTIES

     The following items are classified as deposits and other assets (See Note 9
     - Related Party Transactions):
<TABLE>
                                                                                   March 31,           June 30,
                                                                                     2003                2002
                                                                                --------------       ------------
<CAPTION>
<S>                                                                  <C>          <C>               <C>
Loans to the Ft Lauderdale Project (OC Realty, LLC)                  $ 2,034,304  $                 $ 2,067,363

Loan Transferred from Golf Course Project to OC Realty, LLC              735,584                            -0-

Note Receivable from Francis W. Murray *                               2,600,749                            -0-

Accounts Receivable from Francis W. Murray                                35,099                         19,236

Loans to Francis W. Murray                                                93,000                            -0-

Loan from Francis W. Murray                                             (250,000)                           -0-

Accrued Wages due and Advances from Francis W. Murray                   (282,432)                           -0-

Advances from MJQ Corporation (FWM ownership)                           (157,704)                           -0-

Advances to OC Realty, LLC                                                76,848                            -0-
                                                                      -----------
Net Receivable from OC Realty, LLC/Francis W. Murray                                4,885,448

Accrued Interest on Loans to the Ft. Lauderdale Project (OC
Realty, LLC)                                                             537,415                        458,711

Accrued Interest Transferred from Golf Course Project to OC
Realty, LLC                                                          $   155,945
                                                                      -----------
Total Accrued Interest on Loans to OC Realty, LLC                                     693,360

Loans including accrued interest to the Golf Course Project in                            -0-           911,169
California

Advances to MJQ Corporation (MJQ ownership)                                               -0-           521,583

Accounts Receivable from Frank Leo                                                    103,952            13,804

Port Lease Rights                                                                     250,000            75,000

Assets Assigned from Leo Equity Group, Inc. (See Note 9):

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

Accounts Receivable from MJQ Corp                                                         -0-            21,000

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

Loans to Francis W Murray                                                                 -0-            93,000

Accounts Receivable from GMO Travel                                                       -0-           113,500
                                                                                   -----------       ----------

                                    Total Deposits and Other Assets               $ 5,932,760       $ 6,903,115
                                                                                   ===========       ==========
</TABLE>


* 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.

                                        9

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(4)  DEPOSITS AND OTHER ASSETS - NON RELATED PARTIES

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

                                                 March 31,       June 30,
                                                   2003            2002
                                            ----------------  ---------------

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

Other Misc. Assets                                    85,560           25,252
                                            ----------------  ---------------
         Total                            $           85,560 $        374,724
                                            ================  ===============

(5) NOTES AND MORTGAGES PAYABLE

     Notes and Mortgages Payable are summarized below:
<TABLE>

                                         Interest         March 31, 2003             June 30, 2002
                                          % Per    --------------------------   -----------------------
                                          Annum        Current     Long-Term      Current     Long-Term
                                         --------  -------------  -----------   -----------   ---------
<CAPTION>
International Thoroughbred
Breeders Inc.:

<S>                                      <C>      <C>            <C>           <C>           <C>
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-             -0-        -0-

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

Florida Bank, N.A. (D)                      4.5%         200,000        -0-

First Insurance Funding Corp.(E)           6.95%         112,468        -0-             -0-        -0-

Francis X. Murray (F)                         8%         187,560        -0-             -0-        -0-

William H. Warner(F)                         12%          20,000        -0-

Other                                    Various          45,046        -0-          30,280        -0-

Garden State Park:

Service America Corporation (G)               6%         160,000        -0-         160,000        -0-
                                                    ------------   --------     -----------   --------
    Totals                                        $    3,268,110 $      -0-    $  1,222,280  $     -0-
Less:
Net Liabilities of Discontinued
  Operations - Current                                  (160,000)       -0-        (160,000)       -0-
                                                    ------------   --------     -----------   --------
    Totals                                        $    3,108,110 $      -0-    $  1,062,280  $     -0-
                                                    ============   ========     ===========   ========
</TABLE>

                                       10

<PAGE>


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     (A) Our promissory  note payable to MCJEM,  INC.  represents the balance of
the  purchase  price  owing from our  purchase  of two large  bronze  sculptures
located on the Garden State Park property.  This note is due upon  collection of
our note receivable from Realen in the amount of $350,000. (See Note 2.)

     (B) On December 13, 2002, we issued a twelve month  promissory  note in the
amount  of  $1,648,403  (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 March 31,
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.  We are  currently  in default on the monthly  payments of  principal  and
interest from January 13, 2003 through May 13, 2003. (See Note 6.)

     (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 May 15,
2003, the loan is due on demand. (See Note 9.)

     (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 $314,677  one year  promissory  note at a 6.95%
interest  rate.  At  March  31,  2003,  the  principal  balance  on the note was
$112,468.

     (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 March 31, 2003 was $187,560.  On February 3, 2003,
we issued a promissory  note for $20,000  bearing  interest at 12% to William H.
Warner,  Secretary of the Company. The outstanding balances on the note at March
31, 2003 was $20,000. The proceeds from both notes were used as working capital.

     (G) In  connection  with the January 28,  1999 lease  transactions  for the
Garden State Park facility,  the Company  purchased  equipment located at Garden
State Park and a liquor license owned by an  unaffiliated  third party,  Service
America  Corporation  (the "Holder"),  for $500,000  financed by a five (5) year
promissory note at a 6% interest rate. Yearly principal payments of $80,000 plus
interest are due on December 28, 2002 and December 28, 2003.  The payment due on
December 28, 2002 has not been made as of May 15, 2003.

                                       11

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(6)  COMMITMENTS AND CONTINGENCIES

     See Note 9 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  which as of March 31,  2003 total  $91,153  due to a lack of
funds  resulting from the  institution of proceedings by our  subsidiary,  ITGV,
under Chapter 11 of the bankruptcy code.

     We are responsible for remediation  costs  associated with an environmental
site on the Freehold Raceway property. We have accrued what we believe to be the
total cost of  remediation.  At March 31, 2003,  the  remaining  balance of such
accrual was  $130,398  for  remediation  costs.  The  remediation  work has been
delayed 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 delays may cause.

     In connection with the January 28, 1999 lease  transactions  for the Garden
State Park  facility,  we purchased a liquor  license  owned by an  unaffiliated
third party,  Service America  Corporation,  for $500,000 financed by a five (5)
year  promissory  note at a 6% interest  rate. At 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 May 15, 2003.

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

     As permitted by the Master Settlement  Agreement with the Trustee,  we have
entered into a bareboat charter with MJQ Corporation,  pursuant to which we have
chartered  the vessel M/V Palm Beach  Princess  for the  purpose of  operating a
casino cruise business from the Port of Palm Beach, Florida.  Under the bareboat
charter  agreement,  we are obligated to pay $50,000 per month as a charter hire
fee  to the  vessel's  owner,  MJQ  Corporation.  Other  parties  to the  Master
Settlement Agreement include MJQ Corporation, Leo Equity Group, Inc. and Francis
W. Murray,  our Chairman,  who is also a director and officer of MJQ Corporation
and a director of Leo Equity Group,  Inc. 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. (See Note 9, Related Party Transactions.)

                                       12

<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 ownes
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 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  $1.7  million  of debt to  unsecured  creditors  of ITGV  and MJQ
Corporation  (excluding  debt to  related  parties).  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 $282,082 has been paid
through March 31, 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.  (See Note
5(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.  We are  currently in default on
all monthly payments of principal and interest that were due to the Trustee from
January 13, 2003 through May 13, 2003.

                                       13

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     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  April 25,
2002.  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 we estimate that the actual cost to make the
improvements  will be approximately  $885,000.  As of May 15, 2003, we have made
payments  in the amount of $785,472 on such  improvements.  Additionally  we are
committed to purchase  approximately $450,000 in office furniture and equipment.
As of May 15,  2003,  we have  made  payments  on these  items in the  amount of
$313,618.  We will continue  payments on the project under the protection of the
Bankruptcy Court. 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.

     In February 2003, an unrelated party deposited $200,000 to our escrow agent
on behalf of the Company for an option to charter a second  gaming  vessel which
would operate out of the Port of Palm Beach.  These funds were replaced on March
19,  2003 by a loan  obtained  from the  Florida  Bank,  N.A.  in the  amount of
$200,000.  In  consideration  for the deposit made by the unrelated third party,
Mr.  Francis W.  Murray  transferred  200,000 of his  options  to  purchase  the
Company's common stock to the third party.  These options have an exercise price
of $0.20 and will not be exercisable  by the  transferee  until August 14, 2004.
The Company  assumed a Promissory  Note  negotiated  by Francis W. Murray in the
amount of $25,000 due on May 24, 2003.  This note was  negotiated to cover legal
and  transactions  fees for the $200,000 escrow advance on the gaming vessel and
the stock option agreement.


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 proceedings under Chapter 11 of the Bankruptcy Code on
January 3, 2003. (See Note 1.)

(7)  FAIR VALUE OF FINANCIAL INSTRUMENTS

     As of March 31, 2003, in assessing the fair value of financial instruments,
we have 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 our interest rates  approximate  current  interest
rates that would be available to us in the market place.

     Management  believes that the carrying  amounts of the two long-term  notes
receivable  approximate  fair value and will continue to evaluate the fair value
of these instruments.

                                       14

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(8)  STOCK OPTIONS AND WARRANTS

     (A)  EMPLOYEE AND NON-EMPLOYEE OPTIONS

     At March 31, 2003,  total employee  options  outstanding were 2,911,500 and
total non-employee  options  outstanding were 425,000. On February 24, 2003, Mr.
Francis W. Murray  transferred  200,000  options to an unrelated  third party in
consideration  of an escrow  deposit  of funds on behalf of the  Company.  These
options are not  exercisable  until August 4, 2004. At March 31, 2003 all of the
employee and 225,000 of the non-employee options were exercisable.

     (B)  WARRANTS

     At December 31, 2002, total warrants outstanding were 710,000. All warrants
were exercisable at March 31, 2003.

(9)  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,  $735,584 had been loaned to such project and we had accrued  $155,945
of interest due on the loan.  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  ownes 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.  At March 31,
2003,  we had lent  $2,034,304 in total to MJQ  Development  and we have accrued
interest  in the amount of  $537,415 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
if the project is successful, a priority return of our 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.  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.

                                       15

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


     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 March 31, 2003 is $900,000 and we
have accrued interest through that date in the amount of $208,575. 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 May
15, 2003, the loan is due on demand. (See Note 5.)

     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.

     Also  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 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.  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 $103,953
as of March 31, 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,

                                       16

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

in payment of this  obligation.  That $2.6  million  debt from Mr.  Quigley  was
assumed by Francis W. Murray when he purchased the MJQ Corporation shares and is
a  non-recourse  obligation  which is payable  solely from pledged shares of his
stock in MJQ Corporation. Mr. Murray purchased the MJQ Corporation stock subject
to our lein  securing  payment of that debt.  We have  deferred  all income from
these transactions until such time as payment is received.

     On July 12, 2002, we borrowed  $300,000 from Francis W. Murray at an annual
interest rate of 6%. The note is due on demand and interest is payable  monthly.
As of March 31, 2003,  the balance of the note was $250,000 and is classified as
Deposits and Other Assets - Related Parties on the balance sheet as an offset to
previous advances to Mr. Murray.

     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.

     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 March 31, 2003,  these loans
totaled $187,560.  (See Note 5) The proceeds of the loans were used to: (i) make
the final payment on the port lease purchase in the amount of $75,000; (ii) make
a $100,000  escrow deposit on an option to charter a second gaming vessel (which
deposit was returned to Mr. Murray on April 17, 2003); and (iii) provide working
capital in the amount of $12,560.  As of May 15, 2003,  the unpaid  principle of
the loan totaled $148,335.

     Mr.  Francis X. Murray  guaranteed  on the  Company's  behalf,  a loan from
Florida Bank, N.A. in the amount of $200,000 which was also used as a deposit on
the second  gaming  vessel  (which  deposit  was  returned to the bank on May 7,
2003). The Company agreed to indemnify Mr. Murray for the guaranteed  obligation
with respect to this loan.

     During the quarter,  a Company officer loaned $20,000 to the Company.  This
note is due on demand  and bears  interest  at 12%.  These  funds  were used for
working capital requirements of the parent company.

     For  additional   information  regarding  related  party  transactions  see
Footnote 15 in the consolidated  financial  statements included in the Company's
Form 10-K for the fiscal year ended June 30, 2002.

(10) SUBSEQUENT EVENTS

     (A) On April 17, 2003, we returned the $100,000 loan to us from Mr. Francis
X.  Murray  that was used as a deposit on the option  negotiation  on the gaming
vessel.

     (B) On May 5, 2003,  the  Bankruptcy  Court extended the date, at which our
exclusive right to file a plan of reorganization  would have expired, to June 2,
2003.

     (C) On May 7, 2003, the escrow agent  returned the $200,000  deposit on the
option negotiation on the gaming vessel to the Florida Bank, N.A.

                                       17

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 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    Chapter 11 proceedings  affecting our Palm Beach Princess business and
          our   ability   to   successfully   develop  a  Chapter   11  plan  of
          re-organization;
     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;
     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 nine month period ended March 31, 2003
included  approximately  $5 million in cash generated by the Palm Beach Princess
operations.  Such cash flow was used,  in part, to fund $500,000 of the payments
on account of the purchase  price of the Ship  Mortgage  Obligation  against the
Palm Beach  Princess,  $470,000 of fees to extend the closing under the Purchase
and Sale Agreement as described below and  approximately  $800,000 for leasehold
improvements  and equipment in connection  with the Port of Palm Beach lease. We
have explored gaming related business opportunities in various foreign countries
and  may  continue  to  incur   expenses  for   exploring   potential   business
opportunities in the future. As of March 31, 2003,  $295,614 has been funded and
expensed in various  foreign  projects  during the nine  months  ended March 31,
2003. 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,  our only  source of cash from  operations  was cut off
when ITG Vegas,  Inc.("ITGV"),our  subsidiary operating the Palm Beach Princess,
and MJQ Corporation  ("MJQ"), an unrelated affiliate 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

                                       18

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2003

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 need 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 Bankruptcy filing has severely limited our ability to
make timely  payments to our creditors and corporate  vendors which has affected
our  ability to retain  the  professional  services  and  vendors  who serve our
company.    The   Palm   Beach    Princess   will   continue   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.

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

     o    For the purchase of the Ship Mortgage Obligation, we paid $250,000 per
          month through July 31, 2002, and an additional  $9.75 million  balloon
          payment was due at that time.  As permitted  by the Master  Settlement
          Agreement we extended the date for payment of the balloon payment on a
          month-to-month  basis until October 31, 2002 by paying  extension fees
          of $70,000 for the first month,  an additional  $80,000 for the second
          month and an additional  $100,000 for the third month.  On October 30,
          2002,  the Master  Settlement  Agreement  was amended to provide for a
          further  extension of the due date for the Purchase and Sale Agreement
          until January 6, 2003 by paying $220,000 in extension fees. We did not
          have the necessary  funds to complete the purchase by January 6, 2003.
          Therefore,  on  January  3, 2003,  in order to  protect  our  invested
          deposits  and our  operation  of the  vessel,  ITGV filed a  voluntary
          petition for relief under Chapter 11 of the Bankruptcy  Code. Prior to
          the bankruptcy filing, our subsidiary, Palm Beach Princess, Inc. which
          operated the vessel,  was merged into ITGV. MJQ Corporation also filed
          for relief under Chapter 11 of the Bankruptcy Code. The Trustee is the
          largest  creditor  in the MJQ  Corp./ITGV  cases,  and 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  year plus  approximately  $1.7
          million of debt to  unsecured  creditors  of ITGV and MJQ  Corporation
          (excluding debt to related parties). 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.

     o    We were obligated to purchase  approximately  1,785,000  shares of our
          common stock from the Trustee at $0.50 per share  (aggregate  purchase
          price of approximately  $892,500), on July 11, 2002 and we were unable
          to make  such  payment.  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  has
          obtained control) in the form of a twelve month promissory note in the
          amount of $1,648,402

                                       19

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2003


          bearing  interest at 9%  (increasing  to 11% after  default) per year.
          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.  We are
          currently in default on payments of principal  and interest  that were
          due to the Trustee  under such note from  January 13, 2003 through May
          13, 2003.

     ITGV is committed to making the tenant  improvements to new office space at
the Port of Palm Beach.  Total  costs of such  improvements  are  expected to be
approximately  $885,000  and we  are  committed  to  approximately  $140,000  of
additional  furniture and fixture costs.  As of May 15, 2003,  ITGV had expended
$785,472 for such  improvements and an additional  $314,000 for office furniture
and equipment.

     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.

     Unless and until ITGV  successfully  emerges from its Chapter 11 case,  our
possible  sources of cash include the two  promissory  notes we received when we
sold our Garden  State Park real  property in  November,  2000 and our Las Vegas
real property in May,  2000. One such Note is in the face amount of $10 million,
issued by  Realen-Turnberry/Cherry  Hill,  LLC, the purchaser of the Cherry Hill
property (the "$10 Million Note"),  and the other promissory note is in the face
amount of $23 million,  issued by Turnberry/Las Vegas Boulevard,  LLC, purchaser
of our Las Vegas real  property  (the "$23  Million  Note").  Under both  Notes,
interest and principal  payments will be dependent  upon, and payable solely out
of, the obligor's net cash flow available for distribution to its equity owners.
After the obligor's equity investors have received aggregate distributions equal
to their  capital  contributions  plus an agreed upon  return on their  invested
capital,  the  next $10  million  of  distributable  cash in the case of the $10
Million Note, and the next $23 million of distributable  cash in the case of the
$23  Million  Note,  will be paid to us, and  following  our receipt of the face
amount  of the Note we will  receive  33 1/3% of all  distributable  cash of the
obligor until maturity of the Note. The probable  timing and amounts of payments
under these Notes  cannot be  predicted.  We are  attempting  to borrow on these
Notes for  additional  working  capital  but such  borrowing  is  expected to be
difficult  to obtain as long as the timing and  amounts  of  payments  under the
Notes remain unpredictable.

     Our  working  capital  as of March 31,  2003 was a negative  ($928,744)  as
compared  to a negative  ($2,200,346)  at June 30,  2002.  The change in working
capital during the past nine months was primarily  caused by an increase in cash
provided by the operating  activities  which is limited to  disbursement  by the
Bankruptcy  Court,  the use of cash to make  payments  of  $500,000  on the Ship
Mortgage  Obligation,  pay the extension fees of $470,000 on the purchase and to
fund  on-going  development  projects  partially  offset by the cash provided by
operating activities.  Other transactions affecting working capital that did not
require the use of cash was the  purchase of the spare  parts  inventory  in the
amount of  $1,103,125  because  the amount due for the  inventory  was offset by
amounts owed to the Company from the seller that were  previously  classified as
other long term assets and the  assumption of additional  debt  primarily to the
Trustee in the amount of $1,648,403 for the purchase of 3,296,806  shares of the
Company's common stock.

                                       20

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2003

Results of Operations for the Three Months Ended March 31, 2003 and 2002

     Revenue for the three months ended March 31, 2003  increased  $840,384 from
$8,050,016 in Fiscal 2002 to $8,890,400 in Fiscal 2003  primarily as a result of
increased  revenues  generated by the Palm Beach Princess  operations during the
comparable  quarters.  Expenses  increased $773,829 from $6,117,100 in the three
month period in Fiscal 2002 to $6,890,929 in Fiscal 2003 primarily the result of
an  increase  in Palm Beach  Princess  operating  costs  during  the  comparable
quarters,  financing  costs  incurred  during the third  quarter of Fiscal  2003
primarily  associated with the amended  Purchase and Sale Agreement for the Palm
Beach Princess  operation in the amount of $286,774,  and costs  associated with
the bankruptcy filing of $300,130, partially offset by a decrease in development
costs and a decrease in corporate general and administrative expenses during the
comparable quarters.

     During the three  months ended March 31,  2003,  total  revenue from vessel
operations  was  $8,830,317 as compared to $7,931,587 for the three months ended
March 31,  2002.  The  increase  in revenue of  $898,730  during the  comparable
quarters  primarily resulted from an increase in casino gaming revenue primarily
the result of an increase in the passenger count during the comparable  periods,
partially  offset by a  decrease  in fare  revenues  primarily  associated  with
competitive pricing related to the ship competing with another gaming vessel for
one half of the quarter of  operation  in Fiscal  2003.  Total  expenses  before
income taxes for the comparable periods increased $1,209,347 from $5,099,790 for
the three months ended March 31, 2002 to  $6,309,137  for the three months ended
March 31, 2003  primarily as a result of an increase in the number of passengers
which  increased  operating  costs,  increases in sales and  marketing  expenses
associated with  competition,  $286,774 in financing fees, costs associated with
the bankruptcy  filing of $300,130 and an increase in other operating  expenses.
Income  before  income tax expense for the third  quarter of operation in Fiscal
2003 was  $2,521,180  as compared to  $2,831,797  in the  comparable  quarter of
Fiscal 2002.

     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.  Out of the scheduled
cruises during the third quarter in both fiscal years, no cruises were cancelled
for weather or  mechanical  difficulties.  Five (5)  cruises  were missed due to
scheduled wet dock maintenance.

                                       21

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2003

     The following is a  comparative  summary of income and expenses of the Palm
Beach  Princess  operation  for the three month periods ended March 31, 2003 and
2002:
<TABLE>

                                                                  Three Months Ended
                                                                       March 31,
                                                    ---------------------------------------------
         Description                                     2003             2002          Change
--- ---------------------------------------------   -------------    -------------   ------------
<CAPTION>
<S>                                                <C>              <C>             <C>
Passenger Count                                            76,855           68,687         8,168
Number of Cruises                                             177              182            (5)

Revenue:
    Fare                                           $      889,464   $    1,030,335  $   (140,871)
    On Board                                              442,085          449,761        (7,676)
    Casino                                              7,498,768        6,451,491     1,047,277
                                                     ------------     ------------   ------------
    Total Revenue                                       8,830,317        7,931,587       898,730
                                                     ------------     ------------   -----------
Expenses:
    Casino Operating Expenses                           1,976,157        1,843,792       132,365
    Hotel and Gift Shop Expenses                          220,803          213,137         7,666
    Sales, Marketing and Advertising Expenses             872,179          740,573       131,606
    Maritime and Legal Expenses                         1,665,867        1,655,370        10,497
    Administrative and Finance Expenses                 1,574,131          646,918       927,213
                                                     ------------     ------------   -----------
    Total Expenses                                      6,309,137        5,099,790     1,209,347
                                                     ------------     ------------   -----------
                 Income Before Income Tax Expense  $    2,521,180   $    2,831,797  $   (310,617)
                                                     ============     ============   ===========
</TABLE>

     For the third  quarter of Fiscal  2003,  our net income was  $1,878,471  or
$0.23 per share as  compared  to net income for the  comparable  period in prior
fiscal year of $1,852,916 or $0.16 per share.

Results of Operations for the Nine Months Ended March 31, 2003 and 2002

     Revenue for the nine months ended March 31, 2003 increased  $2,951,849 from
$19,264,837  in Fiscal 2002 to  $22,216,686 in Fiscal 2003 primarily as a result
of increased revenues generated by the Palm Beach Princess operations during the
comparable  periods.  Expenses  increased by $1,442,972 from  $17,678,767 in the
nine month period in Fiscal 2002 to  $19,121,739  in Fiscal 2003  primarily  the
result  of an  increase  in Palm  Beach  Princess  operating  costs  during  the
comparable  quarters and financing  costs  incurred  during the second and third
quarters  of  Fiscal  2003  primarily  associated  with  the  extentions  of the
scheduled  maturity dates for payment to the Trustee under the Purchase and Sale
Agreement  for the Palm Beach  Princess  operation in the amount of $756,774 and
costs associated with the bankruptcy  filing of $300,130,  partially offset by a
decrease  in  development   costs  and  a  decrease  in  corporate  general  and
administrative expenses during the comparable periods.

     During the nine months  ended March 31,  2003,  total  revenue  from vessel
operations was  $21,910,595 as compared to $18,829,943 for the nine months ended
March 31, 2002.  The  increase in revenue of  $3,080,652  during the  comparable
periods  primarily  resulted  from an  increase  in casino  gaming  and on board
revenue  primarily  the result of an  increase  in the  passenger  count and the
number of cruises during the comparable  periods  partially offset by a decrease
in fare revenues  primarily  associated with the competitive  pricing  discussed
above. Total expenses before income taxes for the comparable periods increased

                                       22

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2003

$2,110,200  from  $15,053,714  for the  nine  months  ended  March  31,  2002 to
$17,163,913 for the nine months ended March 31, 2003 primarily as a result of an
increase in the number of passengers  and the number of cruises which  increased
operating  costs,  increases in sales and  marketing  expenses  associated  with
competition,  a $231,000 increase in accrued employee bonus  compensation  costs
related to our full  calendar  year of  operation,  $756,774 in financing  fees,
costs associated with the bankruptcy  filing of $300,130 and a decrease in other
operating  expenses.  Income  before taxes from  operation of the vessel for the
nine months ended March 31, 2003 was  $4,746,682 as compared to  $3,674,229  for
the nine months ended March 31, 2002.  Out of the 539 scheduled  cruises  during
the nine  months  ended  March 31,  2003,  none were  cancelled  for  weather or
mechanical  difficulties  as compared to Fiscal 2002 where out of 534  scheduled
cruises, 13 cruises were cancelled for weather or mechanical difficulties.

     The following is a  comparative  summary of income and expenses of the Palm
Beach  Princess  operation  for the nine month  periods ended March 31, 2003 and
2002:

<TABLE>
                                                         Nine Months Ended
                                                             March 31,
                                                    ---------------------------
         Description                                    2003            2002         Change
--- ----------------------------------------------  ------------    -----------    ----------
<CAPTION>
<S>                                                <C>             <C>           <C>
Passenger Count                                          190,387        173,262        17,125
Number of Cruises                                            539            521            18

Revenue:
    Fare                                           $   2,118,151   $  2,335,679  $   (217,528)
    On Board                                           1,294,969      1,242,673        52,296
    Casino                                            18,497,475     15,251,591     3,245,884
                                                    ------------    -----------    ----------
    Total Revenue                                     21,910,595     18,829,943     3,080,652
                                                    ------------    -----------    ----------
Expenses:
    Casino Operating Expenses                          5,779,935      5,267,962       511,973
    Hotel and Gift Shop Expenses                         617,811        663,867       (46,056)
    Sales, Marketing and Advertising Expenses          2,382,961      2,139,412       243,549
    Maritime and Legal Expenses                        4,446,554      4,623,465      (176,911)
    Administrative and Finance Expenses                3,936,652      2,359,008     1,577,645
                                                    ------------    -----------    ----------
    Total Expenses                                    17,163,913     15,053,714     2,110,200
                                                    ------------    -----------    ----------
    Income Before Income Tax Expense               $   4,746,682   $  3,674,229  $    862,453
                                                    ============    ===========    ==========
</TABLE>

     During the nine months ended March 31, 2003,  our income was  $2,884,947 or
$.28 per share as compared to income for the comparable period in Fiscal 2002 of
$1,484,070 or $0.13 per share. The change of $1,400,877 was primarily the result
of the increase in net income from operation of the vessel.

                                       23

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC
                                AND SUBSIDIARIES

          MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
                    OPERATIONS FOR THE THREE AND NINE MONTHS
                              ENDED MARCH 31, 2003

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.

     Within  90 days  prior  to the  filing  of this  report,  we  completed  an
evaluation,  under the supervision and with the participation of our management,
including  our chief  executive  officer  and chief  financial  officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures.  Based on the  foregoing,  our  chief  executive  officer  and chief
financial  officer  concluded  that  the  Company's   disclosure   controls  and
procedures were effective.

CHANGES IN INTERNAL CONTROLS

     There  have not been any  significant  changes  in the  Company's  internal
controls or in other  factors that could  significantly  affect  these  controls
subsequent to the date of their evaluation.

                                       24

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                                     PART II

                                OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

     During the quarter ended March 31, 2003, the registrant filed the following
Current Reports on Form 8-K:



       Date                                    Subject Matter
-------------------          ---------------------------------------------------
January 3, 2003              Chapter  11 filing of ITG  Vegas,  operator  of the
                             Palm  Beach Princess vessel

                                       25

<PAGE>

                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                                   SIGNATURES

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





                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.



May 20, 2003          /s/Francis W. Murray
                      ----------------------------------------------------
                      Francis W. Murray, President, Chief Executive Officer
                      and Chief Financial Officer

                                       26

<PAGE>

CERTIFICATION  PURSUANT TO RULE 13A-14 AND 15D-14 OF
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: May 20, 2003

                           /s/Francis W. Murray________________
                              Chairman/Chief Executive Officer/
                              Chief Financial Officer

                                       27

<PAGE>

                                                                    Exhibit 99.1

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                      AS ADOPTED PURSUANT TO SECTION 906 OF
                         THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the  filing  of the  Quarterly  Report on Form 10-Q of
International Thoroughbred Breeders, Inc. (the "Company") for the three and nine
months ended March 31, 2003 as filed with the Securities and Exchange Commission
on the date hereof (the "Report"), I, Francis W. Murray, Chief Executive Officer
of the  Company,  hereby  certify  pursuant  to 18 U.S.C.  ss.1350,  as  adopted
pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002, that, to the best of
my knowledge:

     (1) The Report fully  complies  with the  requirements  of Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.



/s/ Francis W. Murray
------------------------
Name:  Francis W. Murray
Title: President and CEO
May 20, 2003

                                       28

<PAGE>

                                                                    Exhibit 99.2

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                      AS ADOPTED PURSUANT TO SECTION 906 OF
                         THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the  filing  of the  Quarterly  Report on Form 10-Q of
International Thoroughbred Breeders, Inc. (the "Company") for the three and nine
months ended March 31, 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
May 20, 2003

                                       29

<PAGE>