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UNITED STATESSECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

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FORM 10-KSB








| |                                                                                      | 
| | ------------------------------------------------------------------------------------ | 
| | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | 
| | For the fiscal year ended December 31, 2003                                          | 
| |                                                                                      | 

Commission File Number: 000-30949

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THOROUGHBRED INTERESTS, INC. 1 RIVERPOINT PLAZA, SUITE 706JEFFERSONVILLE, IN 47130(502) 584-4434


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|                       |  |                                             
|---------------------- |  | --------------------------------------------
|                       |  |                                             
|Incorporated in Nevada |  | I.R.S. EmployerIdentification No. 61-1342734

Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, par value $0.001 per share

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

Check of there is no disclosure of delinquent filers in response
 to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained , to the best of Registrants knowledge, in definitive proxy or information statements
 incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB  ̈

   Registrants revenues for its most recent fiscal year (ended December 31, 2003):
$467,026
   Aggregate market value of voting stock held by non-affiliates: N/A

   Indicate the number of shares outstanding of each of the Registrants classes of common stock:


   16,247,949 common shares were outstanding as of April 14, 2004.

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|THOROUGHBRED
INTERESTS, INC.                           
|-------------------------------------------------------
|FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

# 

# TABLE
OF CONTENTS

|PART I               | Page                                                     
|-------------------- | ---------------------------------------------------------
|                    
|Item 1.              | Description Of Business.                                 
|                    
|Item 2.              | Description Of Property.                                 
|                    
|Item 3.              | Legal Proceedings.                                       
|                    
|Item 4.              | Submission Of Matters To A Vote Of  Security Holders.    
|                    
|PART II             
|                    
|Item 5.              | Market For Common Equity And Related Stockholder Matters.
|                    
|Item 6.              | Managements Discussion And Analysis Of                  
|                     | Financial Condition And Results Of Operations.           
|                    
|Item 7.              | Finanical Statements.                                    
|                    
|Item 8.              | Changes In And Disagreements With Accountants.           
|                    
|Item 8a.             | Controls and Procedures.                                 
|                    
|PART III             |                                                          
|                    
|Item 9.              | Directors and Executive Officers.                        
|                    
|Item 10.             | Executive Compensation.                                  
|                    
|Item 11.             | Security Owneship Of Certain Beneficial Owners           
|                     | And Management.                                          
|                    
|Item 12.             | Certain Relationships And Related Transactions.          
|                    
|Item 13.             | Exhibits And Reports On Form 8-K.                        
|                    
|Item 14.             | Principal Accountant Fees and Services.                  
|                    
|Signatures           |                                                          
|                    
|Financial Statements | F-1                                                      
|                    

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Table of Contents

PART
I

ITEM 1.   DESCRIPTION
OF BUSINESS

GENERAL INFORMATION

Thoroughbred Interests, Inc. is a reporting company under the federal securities laws. Our shares of common stock are publicly traded on the Over-the-Counter Bulletin Board (OTCBB) under the symbol TBRE. We were organized under the laws of Nevada on March 25, 1999.

Our business has been purchasing, training, and selling thoroughbred horses, but on December 31, 2003, our sole director at the time, James D. Tilton, Jr., elected to discontinue our operations and instead to focus our business on investing in small, cash-flow-positive businesses across a range of industries, the initial focus being the gaming and entertainment industries. We intend to make strategic investments in start-up, development-stage, and, in certain circumstances, distressed companies with perceived growth potential. In principle, we will prefer to make investments in companies where we can acquire at least a 51% ownership interest in the outstanding capital of the portfolio company.

Consistent with this new business plan, on January 20, 2004, we filed a Form N-54 with the Securities and Exchange Commission (SEC) indicating that we wish to be regulated as a business development company under the Investment Company Act of 1940. One reason for so doing is that our proposed operating model best approximates that of an investment company. As a business development company, were are required to have at least 70% of our assets in eligible portfolio companies.

Additionally, our status as a business development company will allow us to raise the additional capital necessary to allow us to implement our new business plan, in that business development companies are permitted to issue in any 12-month period, without registration under the Securities Act of 1933, shares with an aggregate offering price of up to $5 million. Consequently, on January 20, 2004, we filed a Form 1-E under the Securities Act notifying the SEC of our intent to sell under this exemption up to $5,000,000 of our common stock.

On February 6, 2004, we signed a definitive agreement to acquire Totemaster software from Great American Financial Corp. (OTCBB: GAFL). Totemaster software is a pari-mutuel wagering system featuring new technologies aimed at revolutionizing wagering techniques in the racing industry. Totemaster software, which is still under final development, will upon completion be marketed to existing US pari-mutuel wagering facilities such as thoroughbred racetracks, greyhound racetracks, Jai Ali facilities and other off-track-betting outlets. We except this acquisition to close in the second quarter of 2004. This transaction is representative of the kinds of transactions we expect to engage in furtherance of our new business plan.

Our business address is 1 RiverPointe Plaza, Suite 706, Jeffersonville, Indiana 47130, and our telephone number is (502) 584-4434.

BUSINESS DEVELOPMENT COMPANIES

A business development company is defined and regulated by the 1940 Act. A business development company must be organized in the United States for the purpose of investing in or lending to primarily private companies and making managerial assistance available to them.

As a business development company, we may not acquire any asset other than qualifying assets unless at the time we make the acquisition the value of our qualifying assets represent at least 70% of the value of our total assets. The principal categories of qualifying assets relevant to our business are as follows:


     securities purchased in transactions not involving any public offering, the issuer of which is an eligible portfolio company;


     securities received in exchange for or distributed with respect to such securities or on exercise of options, warrants or rights relating to such securities; and

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
     cash, cash items, government securities, or high-quality debt securities (within the meaning of the 1940 Act), maturing in one year or less from the time of investment.

An eligible portfolio company is generally a domestic company that is not an investment company (other than a small business investment company wholly owned by a business development company) and that:


     does not have a class of securities registered on an exchange or a class of securities with respect to which a broker may extend margin credit;


     is actively controlled by the business development company and has an affiliate of a business development company on its board of directors; or


     meets such other criteria as may be established by the SEC.

To include certain securities described above as qualifying assets for the purpose of the 70% test, a business development company must make available to the issuer of those securities significant managerial assistance such as providing significant guidance and counsel concerning the management, operations, or business objectives and policies of a portfolio company or making loans to a portfolio company.

We are periodically examined by the SEC for compliance with the 1940 Act. As of the date of this filing we have not been examined by the SEC and have not been notified of a pending examination.

As with other companies regulated by the 1940 Act, a business development company must adhere to certain substantive regulatory requirements. A majority of our directors must be persons who are not interested persons, as that term is defined in the 1940 Act. Additionally, we are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a business development company, we are prohibited from protecting any director or officer against any liability to the Company or our shareholders arising from willful malfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such persons office.

We may not change the nature of our business so as to cease to be, or withdraw our election as, a business development company unless authorized by vote of a majority of the outstanding voting securities, as defined in the 1940 Act.

We have not elected to be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986.

RISK FACTORS

We are subject to various risks that may materially harm our business, financial condition and results of operations. If any of these risks or uncertainties actually occurs, the trading price of our common stock could decline and you could lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS

We have historically lost money, and our losses may continue in the future

We have historically lost money. As of December 31, 2003, we had had an accumulated deficit of $(2,623,869). Further such losses are likely to occur in the future, and we may experience significant liquidity and cash flow problems if we are not able to raise additional capital as needed and on acceptable terms. We can give no assurances that we will be successful in reaching or maintaining profitable operations.

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We will need to raise additional capital to finance operations

We have relied almost entirely on external financing to fund our operations. This financing has historically come from a combination of borrowings and from the sale of common stock and assets to third parties. We will need to raise additional capital to fund our anticipated operating expenses and future expansion. Among other things, external financing will be required to cover our operating costs. We cannot assure you that financing, whether from external sources or related parties, will be available if needed or on favorable terms. The sale of our common stock to raise capital may cause dilution to our existing shareholders. Our inability to obtain adequate financing will result in the need to curtail business operations. Any of these events would be materially harmful to our business and may result in a lower stock price.

There is substantial doubt about our ability to continue as a going concern due to recurring losses and working capital shortages

The report of our independent accountants on our December 31, 2003, financial statements includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to recurring losses and working capital shortages. Our ability to continue as a going concern will be determined by our ability to obtain additional funding.

Our common stock may be affected by limited trading volume and may fluctuate significantly

There has been a limited public market for our common stock, and we can give no assurances that an active trading market for our common stock will develop. The lack of an active trading market could adversely affect our shareholders ability to sell our common stock without delay, or possibly at all. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations that could adversely affect the market price of our common stock regardless of our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. Substantial fluctuations in our stock price could significantly reduce the price of our stock.

Our common stock is traded on the Over-the-Counter Bulletin Board, which may make it more difficult for investors to resell their shares due to suitability requirements

Our common stock is currently traded on the Over-the-Counter Bulletin Board (OTCBB), where we expect it to remain for the foreseeable future. Broker-dealers often decline to trade in OTCBB stocks because the market for such securities is often limited, the stocks are more volatile, and the risks to investors are greater. These factors may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to find buyers for their shares. This could cause our stock price to decline.

We could lose the services of our chief executive officer

Our future success depends, in significant part, on the continued services of James D. Tilton, Jr., our chief executive officer. Our loss of his services could adversely affect our ability to develop our business plan. We do not have an employment agreement with Mr. Tilton, nor do we currently maintain key-man life insurance policies on him.

Nevada law and our charter may inhibit a takeover of our company that stockholders may consider favorable

Provisions of Nevada law, such as its business combination statute, may have the effect of delaying, deferring, or preventing a change in control of our company. As a result, these provisions could limit the price some investors might be willing to pay in the future for shares of our common stock.

Our officers and directors have the ability to exercise significant influence over matters submitted for stockholder approval and their interests may differ from other stockholders

Our executive officers and directors, in the aggregate, have the ability to nominate two members to our board of directors. Accordingly, our directors and executive officers, whether acting alone or together, may have significant influence in determining the outcome of any corporate transaction or other matter submitted to our board of directors for approval, including issuances of common and preferred stock and the appointment of officers. This influence could make it more difficult for someone to acquire us.

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RISKS RELATED TO OUR OPERATION AS A BUSINESS DEVELOPMENT COMPANY

Investing in private companies involves a high degree of risk

If we develop a portfolio, it will consist primarily of investments in private companies. Investments in private businesses involve a high degree of business and financial risk and can result in substantial losses, and accordingly should be considered speculative. There is generally no publicly available information about the kinds of companies that we expect to invest in, and we would rely significantly on the diligence of our employees and agents in obtaining information in connection with our investment decisions.

Our portfolio of investments would be illiquid

The majority of the investments in our portfolio may be subject to restrictions on resale or otherwise have no established trading market. We would typically exit our investments when the portfolio company has a liquidity event such as a sale, recapitalization, or initial public offering of the company. The illiquidity of our investments may adversely affect our ability to dispose of debt and equity securities at times when it may be otherwise advantageous for us to liquidate such investments. In addition, if we were forced to immediately liquidate some or all of the investments in the portfolio, the proceeds of such a liquidation would be significantly less than the current value of such investments.

We operate in a competitive market for investment opportunities

We compete for investments with a large number of investment banks, equity and non-equity based investment funds, and other sources of financing, including traditional financial services companies such as commercial banks. Many of our competitors have greater resources than we do. Increased competition would make it more difficult for us to purchase or originate investments at attractive prices. As a result of this competition, we may sometimes be precluded from making otherwise attractive investments.

We may change our investment policies without further shareholder approval

Although we are limited by the Investment Company Act of 1940 with respect to the percentage of our assets that must be invested in qualified investment companies, we are not limited with respect to the minimum standard that any investment company must meet, nor the industries in which those investment companies must operate. We may make investments without shareholder approval and such investments may deviate significantly from our historic operations. Any change in our investment policy or selection of investments could adversely affect our stock price, liquidity, and the ability of our shareholders to sell their stock.

Our investments may not generate sufficient income to cover our operations

We intend to make investments into qualified companies that will provide the greatest overall return on our investment. However, certain of those investments may fail, in which case we will not receive any return on our investment. In addition, our investments may not generate income, either in the immediate future, or at all. As a result, we may have to sell additional stock, or borrow money, to cover our operating expenses. The effect of such actions could cause our stock price to decline or, if we are not successful in raising additional capital, we could cease to continue as a going concern.

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ITEM 2.
DESCRIPTION OF PROPERTY.

Our executive and administrative office is located at 1 RiverPointe Plaza, Suite 706, Jeffersonville, Indiana 47130.  These premises are owned by James D. Tilton, Jr., our chief executive officer.  Through June 30, 2003, he did not charge the company any rent for our use of these premises.  Starting July 1, 2003, he has charged the company $1,250 per month for its use of these premises.

ITEM 3. LEGAL
PROCEEDINGS.

As
of December 31, 2003, and as of the date of this filing, the Company is not a party to
any pending or threatened litigation,  claim or assessment.

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

No
matters were submitted for shareholder approval during the forth quarter of the fiscal
year covered by this Report.

PART II.

ITEM 5. MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

A
limited public market for the Companys Common Stock exists on the NASDAQ Bulletin Board
under the symbol "TBRE."

The
following table sets forth the range of high and low closing prices for the Companys
Common Stock for each quarterly period  indicated, as reported by brokers and dealers
making a market in the capital stock. Such quotations reflect inter-dealer prices
without retail markup, markdown or commission, and may not necessarily represent actual
transactions. The Companys Common Stock  commenced trading on November 30, 2001.

|                                      | High |  | Low
|------------------------------------- | ---- |  | ---
|                                      |      | 
|For the year ended December 31, 2003: |      |  |    
|Fourth quarter                        |      |  | $  
|Third quarter                         |      |  | $  
|Second quarter                        |      |  | $  
|First quarter                         |      |  | $  
|                                      |      | 
|For the year ended December 31, 2002: |      |  |    
|Fourth quarter                        |      |  | $  
|Third quarter                         |      |  | $  
|Second quarter                        |      |  | $  
|First quarter                         |      |  | $  

As
of March 31, 2004, there were approximately 1,000 record holders of the Companys Common
Stock.

We have not paid any cash or other dividends on its Common Stock since its inception
and does not anticipate paying any  such dividends in the foreseeable future.  We intend to retain any earnings to use in our operations and to
finance the expansion of our business.

SALES OF UNREGISTERED SECURITIES

On October 28, 2003, we issued to Pinnacle Investment Partners, L.P. 1,754,385 shares of our common stock upon conversion by Pinnacle of 350 shares of Class A preferred stock. The number of shares of common stock issued to Pinnacle was determined by multiplying the liquidation preference of those shares ($35,000) by the conversion price of $0.01995. The conversion price equals 75% of the average of the closing bid prices of our common stock for the five consecutive trading days preceding the conversion date.

On October 28, 2003, and November 13, 2003, we issued to Augustine Fund, L.P., 1,201,923 and 1,193,181 shares of our common stock, respectively, upon conversion of amounts due under a debenture that we issued to Augustine Fund in November 1999. The number of shares of common stock issued to Augustine Fund was determined by multiplying the conversion amount by the conversion price of $0.0208 (on October 28, 2003) and $0.0176 (on November 13, 2003). The conversion price equals 80% of the average of the closing bid prices of our common stock for the five consecutive trading days preceding the conversion date.

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On November 21, 2003, our sole director at the time, James D. Tilton, Jr., created a series of preferred stock, designated Class B preferred stock, consisting of 100,000 shares. Each share of Class B preferred stock is entitled to 1,000 votes on all shareholder matters, but is otherwise not entitled to receive any dividends, interest payments, or liquidation rights. In December 2003, we issued to our chief executive officer, James D. Tilton, Jr., as compensation in lieu of salary for services performed by him during 2003, 100,000 shares of our Class B preferred stock. These shares were exchanged for 10,900,000 shares of Class C convertible preferred stock in January 2004.

ITEM 6.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Annual Report on Form 10-KSB and the information incorporated by reference may include forward-looking statements within the meaning of Section 27(a) of the Securities Act and section 21(e) of the Exchange Act. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. All statements regarding our expected financial position and operating results, our business strategy, our financing plans and the outcome of any contingencies are forward-looking statements. The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth or implied by any forward-looking statements.

The following
discussion should be read in conjunction with Thoroughbred Interests financial statements and the related notes
included in this Form 10-KSB.

Overview

Thoroughbred
Interests, Inc. was incorporated under the laws of the State of Nevada in 1999. Following its incorporation, Thoroughbred
Interests entered into the pinhooking and racing of thoroughbred horses.  To date, substantially all of Thoroughbred Interests
revenues have been generated from the pinhooking of thoroughbred horses.

Operating Results
for the Twelve Months Ended December 31, 2003 and 2002

Revenues.     
Our revenues during 2003 decreased to $467,026 as compared with $1,972,307 in 2002. This decrease was due to our decision to broaden the focus of our business, which resulted in our buying and selling fewer horses.

Cost of Horses Sold.     
Our cost of horses sold during 2003 decreased to $336,950 as compared to $810,500 in 2002. This decrease is the result of our owning and reselling fewer horses during 2003.

Operational
Expenses     
Our operational expenses during 2003 decreased to $424,430 as compared to $844,124 in 2002. This decrease reflects largely the termination of the horse
operation.

General and Administrative.     
Our general and administrative expenses during 2003 increased to $1,465,080 as compared with $212,662 in 2002. This increase reflects an increase in expenses, such as accounting and legal fees associated with being a publicly traded company, as well as the increased salary recognized to our president, and stock based compensation to consultants in 2003.

Interest Expense.     
Our interest expense during 2003 increased to $19,487 as compared to $10,887 during 2002. This increase is due to an increase in the interest rate of the Augustine debenture, as well as interest on debentures issued to Compass Capital in November 2003.

Net Income (Loss).     
Our net loss during 2003 increased to $1,778,906 as compared to net income of $81,447 during 2002. The change in profitability is due to our buying and selling fewer horses, our recognition of our presidents 2003 salary, the expense of stock issued to consultants for services, and generally higher accounting and legal costs associated with being a public company.

Changes In
Balance Sheet.     
As of December 31, 2003, we had current assets of $38,156 as compared to $495,069 at December 31, 2002, total assets of $56,630 at December 31, 2003 as compared to $559,649 at December 31, 2002, total liabilities of $1,154,284 as compared to $687,872 at December 31, 2002 and stockholders equity (deficit) at December 31, 2003 ($1,097,654) as compared to ($123,223) at December 31, 2002. The decrease in current and total assets is the result of no longer carrying any horses as inventory and the decrease in stockholders equity (deficit) is primarily the result of the loss incurred during 2003.

Liquidity, Capital Resources and Cash Requirements.     
We have historically financed our operations via convertible-debt and preferred-stock financing obtained from various private equity firms. These funds intend, over time, to convert their positions into shares of our common stock. This will cause dilution to existing shareholders.

In the immediate future, we intend to finance our operations and any growth via acquisitions by issuing shares of our common stock under the exemption from registration offered by Regulation E under the Securities Act. Because we are regulated as a business development company and have made the appropriate filings with the Securities and Exchange Commission, we qualify for this exemption. Because we have access to this source of financing, we feel that we have sufficient cash and capital resources available to operate and grow our business for the next 12 months.

Change in
Number of Employees

Finances permitting, in 2004 we may consider hiring employees in the areas of marketing and sales.

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ITEM 7.
FINANCIAL STATEMENTS.

The
financial statements of Thoroughbred Interests, Inc., including the notes thereto and the
report of independent accountants  thereon, commence at page F-1 of this Report.

ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

None.

ITEM 8a.
CONTROLS AND PROCEDURES

Based on his evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2003, our Chief Executive Officer has concluded that our disclosure controls and procedures are effective and sufficient to ensure that we record, process, summarize and report information required to be disclosed by us in our periodic reports.None.

Subsequent to the date of his evaluation, there have not been any significant changes in our internal controls or in other factors that could significantly affect these controls, including any corrective action with regard to significant deficiencies and material weaknesses.

PART III

ITEM 9.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.

(a)   The
following table sets forth the name, age and position with the Company of each officer
and director of the Company as of  the date of this report.

|Name                 | Age |  | Position
|-------------------- | --- |  | --------
|                     |     | 
|James D. Tilton, Jr. |     |  | 43      
|                     |     | 
|Hiram Woo            |     |  | 68      
|                     |     | 
|Peter Klamka         |     |  | 35      

BIOGRAPHICAL INFORMATION

James D. Tilton, Jr., has served as chairman of our board of directors, chief executive officer, president, secretary, treasurer and sole director since we were formed. Mr. Tilton has more than 10 years experience in the securities industry. From 1995 to 1996, he was stockbroker at Morgan Keegan. From 1997 to 1999, he worked independently in the securities industry, specializing in corporate finance and investment banking. Mr. Tilton has been involved in the financing of private and public small-growth companies. Since January 1999, Mr. Tilton has also been TuneIn Media, Inc.s chief executive officer and president. TuneIn Media, Inc. was an interactive media content provider and currently is a dormant company. Mr. Tilton has a B.A. in Political Science with an emphasis in Accounting/Business from the University of Louisville.

Hiram Woo is a self-employed certified public accountant licensed in the State of California. From 1985 through 1997, Mr. Woo was president of Regal Financial & Development Corporation, a real-estate development and planning firm. While at Regal Financial & Development Corporation, Mr. Woo was responsible for acquisitions, feasibility analyses, financing, and the overall coordination of all development and construction projects with an emphasis on residential single family homes and multiple residential units. Mr. Woo managed over $300 million of real estate development projects in the Western United States under this entity. Mr. Woo has broad experience in accounting, taxes, and management advisory services, actively practicing in his mid-size CPA firm for a period of ten years. Mr. Woo had been the president and a director of Steakhouse Partners, Inc. (SIZLQ.PK), an operator of up to 65 full-service steakhouse restaurants located in 11 states since January 1997. On February 15, 2002, Steakhouse Partners, Inc. filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. Mr. Woo is a member of the board of directors of New Frontier Media, Inc. (NASDAQ: NOOF). Mr. Woo graduated from the University of California-Berkeley with a Bachelor of Science Degree in Accounting and Finance.

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Peter Klamka has been the chairman of the board and chief executive officer of Legend Mobile, Inc. (OTCBB:LGMB.OB) since its inception in May 1997. Through its subsidiary Legend Credit, Inc., Legend Mobile develops and markets stored value cards. Mr. Klamka has been active in creating, marketing and developing various licensed products. He has also bought and sold several businesses, including Sunset Interactive Network Inc., which was sold to American Sports History Inc. (OTCBB: AMSH), and General Display Devices Inc., which was sold to Daktronics Inc. (NASDAQ: DAKT). In 1994, Mr. Klamka founded Wilshire Fragrance and served as its chief executive officer. Mr. Klamka received his Bachelor of Arts degree from the University of Michigan.

We have not yet fully developed a written code of ethics policy as instituted by the Sarbanes-Oxley Act nor have we formed an audit committee. We are currently developing a written form of ethics that will update and formalize our long standing informal policy and we are also forming an audit committee outside the purview of our chief executive officer.

SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under section 16 of the Exchange Act, our directors and executive officers and beneficial owners of more than 10% of the our common stock are required to file certain reports, within specified time periods, indicating their holdings of and transactions in our common stock and derivative securities. Based solely on a review of those reports provided to us and written representations from those persons regarding the necessity to file any such reports, we are not aware of any failures to file reports or report transactions in a timely manner during our fiscal year ended December 31, 2003, except that James D. Tilton, Jr. was late in filing a Form 3.

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ITEM 10.
EXECUTIVE COMPENSATION.

EXECUTIVE
COMPENSATION

The
following table sets forth the compensation awarded to, earned by or paid to Mr. Tilton
from inception of our company  (March, 1999) through December 31, 2003. We had no other
officers during this period.

|                                                                               |  | Long-Term Compensation Awards |     
|------------------------------------------------------------------------------ |  | ----------------------------- | ----
|
|                                                                               |  |                              
|James D. Tilton, Jr Chairman of the Board,Chief Executive Officerand President |  |                               | 2001
|                                                                               |  |                              
|James D. Tilton, Jr Chairman of the Board,Chief Executive Officerand President |  |                               | 2002
|                                                                               |  |                              
|James D. Tilton, Jr Chairman of the Board,Chief Executive Officerand President |  |                               | 2003

(1)     In 2001, 2002, and 2003 we did not pay Mr. Tilton a regular salary. Under his employment agreement with us, in 2001 and 2002 we were required to pay him an annual salary of $120,000 and $180,000, respectively. We agreed to pay him an annual salary of $180,000 in 2003.

(2)     
Under our Millennium Stock Option Plan, on January 3, 2000, we granted Mr. Tilton options to purchase 3,000,000 shares of our common stock at an exercise price of $0.11. These options were cancelled upon our electing to be regulated as a business development company.

(3)     Due to the fact that in 2002 and 2003 we did not pay Mr. Tilton any salary, in 2002 and 2003 we made lump-sum compensation payments to Mr. Tilton of $45,000 and $125,000, respectively.

(4)     As further compensation in lieu of salary for services performed by him during 2003, in December 2003 we issued to Mr. Tilton 100,000 shares of our Class B preferred stock. These shares were given an imputed value of $50,000 based on the closing bid price of the common stock on the date of issuance. In January 2004 these shares were exchanged for 10,900,000 shares of Class C convertible preferred stock.

EMPLOYMENT AGREEMENT

Our employment agreement with James D. Tilton, Jr., ended on December 31, 2002. This agreement provided for payment of an annual base salary of $90,000 for calendar year 2000, $120,000 for calendar year 2001, and $180,000 for calendar year 2002. During those years, we did not pay him a salary. We agreed to pay Mr. Tilton a salary of $180,000 during 2003, but did not actually pay him a salary.

The shortfall between the salary we undertook to pay Mr. Tilton between January 1, 2000 and December 31, 2003, and the compensation payments actual made to him equals $350,000. In recognition of that fact, in December 2003 we agreed to pay to Mr. Tilton, as and when the board of directors determines that funds are available to do so and in one or more payments of $200,000.

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Mr.  Tiltons employment agreement also provided for the one-time grant under our Millennium Stock Option Plan of 3,000,000 incentive stock options (reduced to 300,000 by the ten-for-one reverse stock split effected in January 2004) to Mr. Tilton at 110% of the fair market value of our common stock on the date of the grant. These options have vested and are exercisable immediately.

As of yet we have not entered into a new employment agreement with Mr. Tilton.

We do not pay our directors any compensation for serving as such. We did, however, issue to each of Peter Klamka and Hiram Woo 250,000 shares of our Class C preferred stock upon their joining our board of directors.

12

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Table of Contents

ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table shows, as of March 18, 2004, the beneficial ownership of our common stock and preferred stock (1) by any person or group that we know beneficially owns more than 5% of the outstanding common stock or any class of preferred stock, (2) by each director and executive officer, and (3) by all directors and executive officers as a group. Unless otherwise indicated, the holders of the shares shown in this table have sole voting and investment power with respect to those shares. The address of all individuals for whom an address is not otherwise indicated is One RiverPointe Plaza, Suite 706, Jeffersonville, Indiana 47131.

|Name and Address ofBeneficial Owner | Number of Shares ofBeneficially Owned | Class of Stock | Percentage of Class (1)
|----------------------------------- | ------------------------------------- | -------------- | -----------------------
|James D. Tilton, Jr                 |                                       | 1,039,947      |                        
|                                    |                                       | 10,900,000     |                        
|                                    |                                      
|Peter Klamka, Director              |                                       | 250,000(2)     |                        
|                                    |                                       | 250,000        |                        
|                                    |                                      
|Hiram Woo, Director                 |                                       | 250,000(2)     |                        
|                                    |                                       | 250,000        |                        
|                                    |                                      
|All directors and                   |                                       | 1,039,947      |                        
|officers as a group                 |                                       | 11,400,000     |                        

(1)    
Figures based on 13,850,720 shares of common stock and 11,400,000 shares of Class C preferred stock being outstanding as of March 18, 2004, with each share of Class C preferred stock being convertible at any time, at the option of the holder, into one share of common stock.

(2)    
Consists of 250,000 shares of Class C preferred stock, each convertible at any time at the option of the holder into one share of common stock.

EQUITY COMPENSATION PLAN INFORMATION

We currently have no equity compensation plan. Upon our electing in January 2004 to be regulated as a business development company, we discontinued our Millennium Stock Option Plan, which had been our sole compensation plan.

ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The premises housing our executive and administrative office are owned by James D. Tilton, Jr., our chief executive officer. See Description of Property. Starting July 1, 2003, he has charged the company $1,250 per month for our use of these premises.

By way of compensation in lieu of unpaid salary, in 2003 we issued shares to Mr. Tilton and in 2002 and 2003 we made lump-sum payments to him. See Executive Compensation. In addition, in December 2003 we agreed to pay to Mr. Tilton, as and when the board of directors determines that funds are available to do so and in one or more payments, a bonus of $250,000 in lieu of unpaid salary. In January 2004 we agreed to pay him, on the same basis, a further such bonus of $150,000. See Employment Agreement.

13

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ITEM 13.
EXHIBITS AND REPORTS ON FORM 8-K.

The
following Exhibits are filed herewith and made a part hereof.

|No. |  | Description                                                                      
|--- |  | ---------------------------------------------------------------------------------
|3.1 |  | Articles
of Incorporation of Thoroughbred  Interests, Inc., dated March 25, 1999*

|3.2 |  | By-Laws
of Thoroughbred Interests, Inc.*
|--- |  | ----------------------------------------

|10.1 |  | Indemnity
Agreement dated September 27,  1999, between James D. Tilton and  Thoroughbred Interests,
Inc.*
|---- |  | ---------------------------------------------------------------------------------------------------------

|10.2 |  | Form of debenture issued by Thoroughbred Interests, Inc. to Compass Capital Group dated November 9, 2003, in the amount of $50,000 and dated November 18, 2003, in the amount of $200,000 **
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.1 |  | Certification
of Chief Executive Officer **
|---- |  | -------------------------------------------

|32.2 |  | Certification
of Chief Accounting Officer **
|---- |  | --------------------------------------------

*            Incorporated
by reference to the Companys Form  10-SB, as amended, filed with the Securities and
Exchange Commission on July 5, 2000.

**  
    Filed herewith.

REPORTS ON FORM
8-K:  None

ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Aggregate fees billed to us for the fiscal years ended December 31, 2003 and 2002 by our principal accountant, Baum & Company, P.A., are as follows:

|                   | For the Years EndedDecember 31,
|------------------ | -------------------------------
|
|                   |                                
|Audit Fees         |                                
|Audit-Related Fees |                                
|Tax Fees           |                                
|Other Fees         |                                

The audit-related fees relate to review services performed by our accountant; the tax fees relate to preparation of our tax returns by our accountant.

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our independent accountants must now be approved in advance by the audit committee to assure that those services do not impair the accountants independence. We do not have an audit committee, so our board of directors reviews and approves audit and permissible non-audit services performed by Baum & Company, P.A., as well as the fees they charge for performing those services.

14

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SIGNATURES

In
accordance with the requirements of Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be  signed on its behalf by the undersigned,
thereunto duly authorized.

|      |                                                                                                                                                          | THOROUGHBRED INTERESTS, INC.
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------
|      | Registrant                                                                                                                                              
|     
|Date: | April 20, 2004                                                                                                                                           |                             
|      | James D. Tilton
Chairman, President, Secretary and
Chief Executive Officer
(Principal Executive Officer and
Principal Financial and
 Accounting Officer)

In accordance with the requirements of the Exchange Act, this report is signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

|Signature                                                                                                 | Title                                        | Date          
|--------------------------------------------------------------------------------------------------------- | -------------------------------------------- | --------------
|                                                                                                         
|/s/  James D. Tilton, JrJames D. Tilton, Jr.(Principal Executive Officer andPrincipal Accounting Officer) | ChairmanPresident andChief Executive Officer | April 20, 2004
|
|                                                                                                         
|/s/  Peter KlamkaPeter Klamka                                                                             | Director                                     | April 20, 2004
|
|                                                                                                         

15

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|THOROUGHBRED
INTERESTS, INC.FINANCIAL STATEMENTSDECEMBER 31, 2003 AND 2002
|--------------------------------------------------------------------------

|                                                                            | PAGE
|--------------------------------------------------------------------------- | ----
|INDEPENDENT AUDITORS REPORT                                                | F-2 
|                                                                           
|Balance Sheets as of December 31, 2003 and 2002                             | F-3 
|                                                                           
|Statements of Operations for the Years Ended December 31, 2003 and 2002     | F-4 
|                                                                           
|Statements of Changes in Stockholders Equity (Deficit) for the Years Ended | F-5 
|December 31, 2003 and 2002                                                  |     
|                                                                           
|Statements of Cash Flows for the Years Ended December 31, 2003 and 2002     | F-6 
|                                                                           
|Notes to Financial Statements                                               | F-7 

F-1

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# BAUM
& COMPANY, P.A.Certified Public Accountants1515 University Drive, Suite, 209Coral Springs, Florida 33071

# 

INDEPENDENT
AUDITORS REPORT

The
Board of Directors Thoroughbred Interests, Inc. Jeffersonville, Indiana

We
have audited the accompanying balance sheets of Thoroughbred Interests, Inc. as
of December 31, 2003 and 2002 and the related statements of operations, changes in
stockholders equity (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In
our opinion, the financial statements present fairly, in all material respects,
the financial position of Thoroughbred Interests, Inc. at December 31, 2003 and
2002 and the statement of operations, changes in stockholders equity (deficit) and
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will
continue as a going concern.  As discussed in Note 9 to the financial statements the Companys
dependence on outside financing, lack of existing commitments from lenders to provide necessary
financing and lack of sufficient working capital  raise substantial doubts about its ability to continue
as a going concern.  Managements plans concerning these matters are also described in Note 9.
The financial statements do not include any adjustments that might result from the outcome of this
uncertainty.

/s/  Baum & Company,
P.A.

Coral
Springs, FloridaApril 10, 2004

F-2

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|THOROUGHBRED
INTERESTS, INC.BALANCE SHEETSDECEMBER 31, 2003 AND 2002
|--------------------------------------------------------------------

|                                                                          | December 31,
|------------------------------------------------------------------------- | ------------
|
|Assets:                                                                   |             
|Current assets                                                            |             
|Cash                                                                      |             
|Accounts receivable                                                       |             
|Investment in thoroughbred horses                                         |             
|                                                                          |             
|                                                                          |             
|Other assets                                                              |             
|Loan Receivable - related party                                           |             
|                                                                          |             
|Total Assets                                                              |             
|                                                                          |             
|                                                                          |             
|Liabilities & Stockholders Equity (Deficit):                             |             
|Current Liabilities                                                       |             
|Bank overdraft                                                            |             
|Notes and debentures payable                                              |             
|Accounts payable and accrued expenses                                     |             
|Accrued compensation - related party                                      |             
|Accrued preferred stock dividends                                         |             
|                                                                          |             
|                                                                          |             
|Stockholders Equity (Deficit):                                           |             
|Preferred stock, Class A; par value $0.001; 10,000 shares authorized;     |             
|4,500 and 5,000 shares issued in 2003 and 2002, respectively              |             
|Preferred stock, Class B; par value $0.001; 100,000 shares authorized and |             
|issued in 2003                                                            |             
|Common stock, par value $0.001; 100,000,000 shares authorized;            |             
|77,109,828 and 29,292,813 shares issued and outstanding                   |             
|in 2003 and 2002, respectively                                            |             
|Additional paid-in capital                                                |             
|Accumulated deficit                                                       |             
|                                                                          |             
|Total stockholders' equity (deficit)                                      |             
|                                                                          |             
|Total Liabilities & Stockholders Equity (Deficit)                        |             
|                                                                          |             

The
accompanying notes are an integral part of these financial statements.

F-3

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|THOROUGHBRED
INTERESTS, INC.STATEMENTS OF OPERATIONSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
|--------------------------------------------------------------------------------------------------

|                                                                              | 2003 |  | 2002 |           
|----------------------------------------------------------------------------- | ---- |  | ---- | ----------
|                                                                              |      |  |      |           
|Revenues                                                                      |      |  | $    | 467,026   
|Revenues - related party                                                      |      |  |      | -         
|                                                                              |      |  |      |           
|                                                                              |      |  |      | 467,026   
|Cost of horses sold                                                           |      |  |      | 336,950   
|                                                                              |      |  |      |           
|                                                                              |      | 
|Gross profit                                                                  |      |  |      | 130,076   
|                                                                              |      | 
|Operational expenses                                                          |      |  |      | 424,430   
|General & administrative                                                      |      |  |      | 1,465,080 
|                                                                              |      |  |      |           
|                                                                              |      | 
|Total operating expenses                                                      |      |  |      | 1,889,510 
|                                                                              |      |  |      |           
|                                                                              |      | 
|Net (loss) income before other income and expense                             |      |  |      | (1,759,434
|                                                                              |      |  |      |           
|                                                                              |      | 
|Other income (expense)                                                        |      | 
|Interest income                                                               |      |  |      | 15        
|Interest expense                                                              |      |  |      | (19,487   
|Interest expense - related party                                              |      |  |      | -         
|                                                                              |      |  |      |           
|Total other income (expense)                                                  |      |  |      | (19,472   
|                                                                              |      |  |      |           
|Net (loss) income before provision for income taxes                           |      |  |      | (1,778,906
|Provision for income taxes                                                    |      |  |      | -         
|                                                                              |      |  |      |           
|Net (loss) income                                                             |      |  | $    | (1,778,906
|                                                                              |      |  |      |           
|                                                                              |      | 
|Net (loss) income per common share - basic and diluted                        |      |  | $    | (0.05     
|Weighted average number of common shares outstanding -      basic and diluted |      |  |      | 33,959,454
|                                                                              |      |  |      |           

The
accompanying notes are an integral part of these financial statements.

F-4

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|THOROUGHBRED
INTERESTS, INC.STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
|--------------------------------------------------------------------------------------------------------------------------------

|                                                |  |  |  |            | Total  
|----------------------------------------------- |  |  |  | ---------- | -------
|                                                | 
|                                                |  |  |  |            | Paid-in
|                                                |  |  |  | Shares     |        
|                                                |  |  |  |            |        
|Balance - December 31, 2001                     |  |  |  | 26,661,000 |        
|                                                |  | 
|Redemption of note payable and accrued interest |  |  |  | 1,238,600  |        
|Common stock issued for                         |  |  |  |            |        
|underwriting fee                                |  |  |  | 1,000,000  |        
|Class A preferred stock issued for cash         |  |  |  | -          |        
|Common stock issued for                         |  |  |  |            |        
|consulting fee                                  |  |  |  | 2,000,000  |        
|Cancellation of common                          |  |  |  |            |        
|stock issued for                                |  |  |  |            |        
|consulting fees                                 |  |  |  | (1,963,484 | )      
|Common stock issued for                         |  |  |  |            |        
|debt conversion                                 |  |  |  | 356,797    |        
|Net income                                      |  |  |  | -          |        
|Dividends accrued                               |  |  |  | -          |        
|                                                |  |  |  |            |        
|Balance - December 31, 2002                     |  |  |  | 29,292,813 |        
|                                                |  |  |  |            |        
|Common stock issued for                         |  |  |  |            |        
|consulting services                             |  |  |  | 41,140,000 |        
|Common stock issued to                          |  |  |  |            |        
|redeem debt                                     |  |  |  | 2,883,199  |        
|Common stock issued to                          |  |  |  |            |        
|redeem Class A preferred stock                  |  |  |  | 3,793,816  |        
|Preferred stock - class B - issued              |  |  |  |            |        
|for compensation                                |  |  |  | -          |        
|Net loss                                        |  |  |  | -          |        
|Dividends accrued                               |  |  |  | -          |        
|                                                |  |  |  |            |        
|Balance - December 31, 2003                     |  |  |  | 77,109,828 |        
|                                                |  |  |  |            |        

The
accompanying notes are an integral part of these financial statements.

F-5

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|THOROUGHBRED
INTERESTS, INC.STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
|--------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | For the years ended December 31,
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------
|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|Cash flows from operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                 
|Net (loss) income                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                 
|Adjustments to reconcile net income (loss) to net cash provided by                                                                                                                                                                                                                                                                                                                                                                                                    |                                 
|operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                 
|Class B preferred stock issued for compensation                                                                                                                                                                                                                                                                                                                                                                                                                       |                                 
|Common stock issued to redeem Class A preferred stock                                                                                                                                                                                                                                                                                                                                                                                                                 |                                 
|Common stock issued for interest expense                                                                                                                                                                                                                                                                                                                                                                                                                              |                                 
|Common stock issued for services                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|Changes in operating assets and liabilities                                                                                                                                                                                                                                                                                                                                                                                                                          
|(Increase) decrease in accounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                            |                                 
|Increase (decrease) in investment in thoroughbred horses                                                                                                                                                                                                                                                                                                                                                                                                              |                                 
|Increase (decrease) in accrued compensation - related party                                                                                                                                                                                                                                                                                                                                                                                                           |                                 
|Increase (decrease) in accounts payable and accrued expenses                                                                                                                                                                                                                                                                                                                                                                                                          |                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|Net cash (used) provided from operations                                                                                                                                                                                                                                                                                                                                                                                                                              |                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|Cash flows from financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                 
|Increase (decrease) in bank overdraft                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                 
|Increase (decrease) in note payable - related party                                                                                                                                                                                                                                                                                                                                                                                                                   |                                 
|(Increase) decrease in Loan Receivable - related party                                                                                                                                                                                                                                                                                                                                                                                                                |                                 
|Proceeds of sale of Class A preferred stock                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 
|Proceeds from debenture                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|Net cash provided (used) from financing activities                                                                                                                                                                                                                                                                                                                                                                                                                    |                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|Net increase (decrease) in cash                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                 
|Cash - beginning                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|Cash - ending                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|Supplemental Disclosure of Cash Flow Information:                                                                                                                                                                                                                                                                                                                                                                                                                     |                                 
|Cash paid during the year for:                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                 
|Taxes Paid                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                 
|Non-Cash
Transactions: a.) The Company issued 1,000,000 shares of common stock to satisfy a
$100,000 convertible note payable in March 2002. b.) The Company issued 356,797 shares of
common stock to reduce a  note payable by $12,100 in December 2002.c.)  The Company issued 2,883,199
shares of common stock to reduce note payable by $53,000 in 2003.d.)  The Company issued 3,793,816
shares of common stock to redeem 500 shares of preferred stock in 2003.

The
accompanying notes are an integral part of these financial statements.

F-6

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|THOROUGHBRED
INTERESTS, INC.NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2003 AND 2002
|-----------------------------------------------------------------------------------

NOTE
1  BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS AND
ORGANIZATION

The
Company was organized under the laws of Nevada on March 25, 1999. The Company
business consists of purchasing, training and sales of thoroughbred horses. The
Company has emerged from its development stage in early 2000. The Company
incurred a deficit of $134,167 in its development stage.

As of December 31, 2003, the Company has liquidated its entire inventory of thoroughbred horses. On January 20, 2004, the Company
has filed the required forms to be regulated as a business development company under the Investment Company Act of 1940.  The Company
filed Form 1-E under the Securities and Exchange Act notifying the SEC of the intent to sell under this exemption up to $5 million of the
Company's common stock.

On March 18, 2004, the stockholders of the Company consented to change the corporate name to Phoenix Interests, Inc.

ORGANIZATION
COSTS

The
Company has incurred various expenditures in the formation of its corporate and
organizational structure. In accordance with SOP 98-5 these costs will be
expensed as incurred.

REVENUE
RECOGNITION

Revenue
is recognized when thoroughbred horses are purchased for cash or approved credit
and title is transferred to the purchaser. The purchaser is responsible for
delivery and ultimate possession of the horses acquired.

INVESTMENT IN
THOROUGHBRED HORSES

The
Companys investment in thoroughbred horses are stated at the lower of cost
or market. Costs of maintaining horses and other direct horse related costs are
expensed in the period incurred.

MANAGEMENT
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 revenues and expenses.
The actual outcome of the estimates could differ from the estimates made in the
preparation of the financial statements.

F-7

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Table of Contents

NOTE
1  BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
CONTINUED

NET LOSS PER
COMMON SHARE

The  Company  reports  earnings  per share in  accordance  with SFAS No.  128,
Earnings per Share. Basic  earnings  per share is computed by dividing  income
(loss) available  to common  stockholders  by the  weighted  average  number of
common shares available. Diluted earnings per share is computed similar to basic
earnings per share except the  denominator is increased to include the number of
additional  common  shares that would have been  outstanding.  The following potential common shares have been excluded from the computation of
diluted net loss per share for the periods  presented  because the effect  would
have been anti-dilutive.

|                                                               | For the years ended December 31,
|-------------------------------------------------------------- | --------------------------------
|                                                               | 2003                            
|Options outstanding under the Companys stock option plan      | 3,000,000                       
|Common stock issuable upon conversion of certain Notes Payable | 22,056,867                      
|Warrants issued in connection with Notes Payable               | 2,375,000                       
|Common Stock issuable upon conversion of Preferred Stock       | 17,142,857                      
|                                                               |                                 
|                                                              

NOTE
2  RELATED PARTY TRANSACTIONS

Under the previous employment agreement, the CEO received a grant of incentive
stock options pursuant to Company's Millennium Stock Option Plan of three million
shares of common stock.

The
Company commenced in April 2000 utilizing an office facility leased by the CEO on an
informal agreement at $2,638 per month to conduct its business operations. The Company relocated
its office in July 2003 and presently operates from a residence owned by the CEO at $1,250 per month.  In review of
this transaction, the disclosures pursuant to FASB 13 is not required since the Company
has no legal commitment for future payment of rent at its option. The Company in the
normal course of its business operates in conjunction with its CEO in various business
dealings. In order to achieve certain economic savings, the Company has conducted itself
in certain horse related transactions such as boarding, training, insurance coverage in
the name of the CEO.

In 2002 and 2003, due to cash flow, Mr. Tilton, the Company president was paid advances equal to $45,000 and $125,000, respectively.
In December 2003, the Company issued to its CEO, Mr. Tilton, 5,000 shares of its Class B preferred stock valued at
$50,000 for compensation.  In January 2004, these shares were exchanged for 10,900,000 shares of Class C convertible preferred
stock.

F-8

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Table of Contents

NOTE
3  CAPITAL TRANSACTIONS

a.)    

The Company issued 2,000,000 shares of restricted common stock for services
on February 11, 2002 which was valued at $20,000 and accrued in 2001. In April
2002 1,813,334 of the stock was returned.

b.)    

The Company converted a $100,000 note payable plus accrued interest of
approximately $23,500 into 1,238,350 of shares of common stock.

c.)    

In April 2002 the Company issued 5,000 shares of preferred stock for
$500,000. The stock purchase agreement requires the Company to pay a preferred
stock dividend of $2.00 per share per month.  Annual preferred dividends of $106,325
and $85,000 have been accrued as of December 31, 2003 and 2002, respectively.

d.)    

In April 2002, in conjunction with the sale of preferred stock the Company
issued 1,000,000 shares of restricted common stock for investment banking
services valued at $40,000.

e.)    

In December 2002, the Company issued 356,797 shares of common stock to the
Augustine Fund, LP in the conversion of $12,100 of its note payable.

f.)    

In May of 2003, the Company issued 1,500,000 shares of restricted common stock for consulting services
provided valued at $15,000.

g.)    

In May of 2003, the Company issued 488,095 shares of common stock to Augustine Fund, LP for the conversion of $7,000
of its note payable.

h.)    

In June of 2003, the Company issued 589,870 shares of common stock to Pinnacle Investment Partners for the
conversion of $10,000 of its preferred stock.

i.)    

In July of 2003, the Company issued 678,887 shares of common stock to Pinnacle  Investment Partners for the
conversion of $5,000 of its preferred stock.

F-9

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Table of Contents

NOTE
4  STOCK OPTION PLAN

The
Board of Directors has approved The Millennium Stock Option Plan effective as of
January 3, 2000 to compensate executives, key management personnel and
consultants of the Company. The plan document has authorized a maximum of
10,000,000 shares of common stock to be optioned at an exercise price to be
determined by the Company. In the case of the incentive stock option the
exercise price shall not be less than 100% of the fair market value of the
shares on the date the option is granted. The stock options are exercisable no
sooner than six months nor more than ten years from the date it is granted. The
fair market value of common stock options granted will be reflected as
compensation issued.

A
summary of the status of the Companys stock option plan at December 31,
2003:

|                                 | Shares |  | WeightedAverageExercisePrice
|-------------------------------- | ------ |  | ----------------------------
|Outstanding at January 1, 2003   |        |  |                             
|Granted                          |        |  |                             
|Exercised                        |        |  |                             
|Forfeited                        |        |  |                             
|                                 |        |  |                             
|Outstanding at December 31, 2003 |        |  |                             
|                                 |        |  |                             
|                                 |        | 
|                                 |        |  |                             
|Options exercisable at year-end  |        |  |                             
|                                 |        |  |                             

The stock option plan was terminated as of December 31, 2003.

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Table of Contents

NOTE
4  STOCK OPTION PLAN, CONTINUED

The
Company has adopted only the disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. It applies Accounting
Principles Bulletin (APB) Opinion No. 25. Accounting for Stock
Issued to Employees, and related interpretations in accounting for its
Stock Option Plan and does not recognize compensation expense for its Stock
Option Plan other than for restricted stock and options issued to outside third
parties. The weighted average remaining contractual life of options outstanding
issued under the Stock Option Plan is 9.75 years at December 31, 2002. No
compensation expense was recognized as a result of the issuance of stock options
during the years ended December 31, 2002 and 2001. For options granted during
the year ended December 31, 2000 where the exercise price equaled the stock
price at the date of the grant, the weighted-average fair value of such options
was $0.11 and the weighted-average exercise price of such options was $0.10. No
options were granted during the year ended December 31, 2003 where the exercise
price was greater than the stock price at the date of grant or where the
exercise price was less than the stock price at the date of the grant.

NOTE
5  NOTES PAYABLE

On September 30, 1999 pursuant to a written promissory note the Company was
loaned $300,000 from Augustine Fund, L.P. The note has no stated interest but
calls for the payment of $375,000 in (180) one hundred eighty days from
September 30, 1999. The Augustine Fund L.P. has the right to convert all or any
portion of the $375,000 into 3,750,000 shares of common stock (the Converted
Shares) at $0.10 per share and warrants exercisable into one-half the number
of Converted Shares (1,875,000 shares) at $0.15 per share. As security for this
loan, the President of the company placed in escrow 6,000,000 restricted shares
of common stock, which has since been released. The
Augustine Fund, L.P. granted the company an extension to November 4, 2003 and the Company
modified the terms of the Note to allow it to become convertible into common
stock at conversion price equal to 80% of the market price. In addition, the
extension calls for the accrual of interest on the unpaid balance of $375,000 at
18% per annum.  For the years ended December 31, 2003 and 2002, The Augustine Fund, L.P.
converted $53,000 and $12,100 of note principle for shares of common stock exempt under 144K.
On December 31, 2003, the unpaid principle of $309,900 was extended and rolled into a convertible debenture maturing December 31, 2004.

NOTE
6  DEBENTURES PAYABLE

December 31,2003
     2002Augustine Fund, LP, bears interest at 8% per annum, convertible tocommon stock at a price equal to 70% of the closing bid price.The debenture matures on December 31, 2004.
     
     
     $
     309,900
     
     $
     362,900Compass Capital Group, bears interest at 8% per annum, convertible to
common stock at a price equal to 65% of the closing bid price.The debenture was converted to common stock in 2004.
     50,000
        
     -Compass Capital Group, bears interest at 8% per annum, convertible tocommon stock at a price equal to 65% of the closing bid price.The debenture matures on December 31, 2004.
     
     
     
     200,000
     
     
     -Totals
     
     
     $
     559,900
     
     $
     362,900
NOTE
7  INCOME TAXES


The Company accounts for income taxes using the asset and liability method.
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using currently enacted tax rates. The
effect on deferred tax assets and liabilities of a change in the tax rates is
recognized in results of operations in the period that includes the enactment
date. Because of the uncertainty regarding the Company's future profitability,
the future tax benefit of its losses have been fully reserved for. Therefore, no
benefit for the net operating loss has been recorded in the accompanying
financial statements. The net operating losses of approximately $2,400,000 can
be carried forward fifteen years through 2017 to be offset against net income.



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Table of Contents





NOTE
8  LITIGATION SETTLEMENT


In November 2003, the Company executed a settlement agreement to settle lawsuits entitled Charles Henricks, Inc.
d/b/a Starkey & Henricks vs. Thoroughbred Interests, Inc. and James D. Tilton, Jr.  The settlement
requires an initial payment of $1,500 and monthly installments of $1,000 commencing December 1, 2003
until the settled balance of $45,000 is paid in full.  The Company's CEO, James Tilton,
has personally guaranteed $15,000 of the obligation.





NOTE
9  GOING CONCERN


The Company has prepared its financial  statements assuming a going concern.  The Company
has historically received extensions of its indebtedness from the Augustine Fund, LP in the past;
it is certain, and anticipates that additional extensions will be
granted to satisfy its debenture obligations of $559,900, which includes debentures completed in November
2003 with Compass Capital Group.  The Company
also feels the preferred stockholder with a principal balance of $485,000 and accrued dividends of $175,000 will
continue to rollover its obligation at such necessary time.  The debenture holders and preferred stockholder
has expressed a willingness over time to convert its debt and equity interest into common stock
of the Company. This will cause dilution to existing shareholders.



Because the Company is regulated as a business development company, it feels it has access to sufficient cash and capital resources to operate and grow the business for the next 12 months.  Specifically, the Company intends to sell up to $5,000,000 in common stock permitted under the exemption from registration offered by Regulation E of the Securities Act.



NOTE
10  SUBSEQUENT EVENTS


On February 6, 2004, the Company entered into an asset purchase agreement with Great American Financial Corp.
(a Delaware Company).  The assets to be acquired consists of a computer software program known as Totemaster
and all related source code and technical documentation.  The consideration for the assets acquired consists of 750,000 shares of common stock and a royalty based on 5% of qualified revenues generated.  The acquisition is expected to close in May 2004.


On February 7, 2004, the Company executed a convertible debenture agreement with Pinnacle Investment Partners LP whereby
the Company will receive net proceeds of $240,000.  The convertible debenture will bear interest at 12% per annum and will
mature on February 7, 2005.  The face value of the debenture is $540,000.  The difference between the face value and the net proceeds is $300,000 which will extinguish the accrued dividends on the Company's preferred stock, Class A and accrued fees due to Pinnacle.


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