FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

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

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

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

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

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

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

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

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

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

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

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act.)
Yes      No   X
   ------  -------

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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


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



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.

                                    FORM 10-Q

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


                                TABLE OF CONTENTS

                                                                    PAGE
                                                                    ----
PART I. FINANCIAL INFORMATION

         Item 1. Financial Statements:

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

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

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

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

         Notes to Consolidated Financial Statements....................6-22

         Item 2. Management's Discussion and Analysis of
                    Financial Condition and Results of Operations......23-26

         Item 4.  Controls and Procedures..............................27

PART II. OTHER INFORMATION

         Item 6. Exhibits and Reports on Form 8-K......................28

SIGNATURES.............................................................29

CERTIFICATIONS.........................................................30



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

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

                                     ASSETS

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


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

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


OTHER ASSETS:
     Notes Receivable                      33,000,000     33,000,000
     Deposit on Purchase of Palm Beach
       Princess Mortgage                    4,000,000      4,000,000
     Deposits and Other Assets -
       Non-Related Parties                    334,975        535,239
     Deposits and Other Assets -
       Related Parties                      5,440,232      5,702,249
                                         ----------------------------
     TOTAL OTHER ASSETS                    42,775,207     43,237,488
                                         -------------   ------------


TOTAL ASSETS                           $   54,277,987  $  53,535,809
                                         =============   ============


See Notes to Consolidated Financial Statements.

                                        1


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

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

                      LIABILITIES AND STOCKHOLDERS' EQUITY

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


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


COMMITMENTS AND CONTINGENCIES                        -              -


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


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $ 54,277,987  $  53,535,809
                                               ============   ============


See Notes to Consolidated Financial Statements.

                                        2


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

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

                                                        September 30,
                                                 ----------------------------
                                                     2003            2002
                                                 ----------------------------
REVENUE:
     Revenue from Operations                   $    7,618,664  $   6,319,402
     Interest Income Related Parties                    3,254              0
     Interest Income                                   68,694         99,773
                                                 -------------   ------------
       TOTAL REVENUES                               7,690,612      6,419,175
                                                 -------------   ------------

EXPENSES:
     Cost of Revenues:
      Operating Expenses                            4,887,244      4,289,340
      Depreciation & Amortization                     135,283         76,220
     General & Administrative Expenses -
      Palm Beach Princess                             720,374        716,245
     General & Administrative Expenses - Parent       286,682        489,354
     ITG Vegas Bankruptcy Costs                       258,562              0
     Development Costs                                 25,355         90,896
     Interest and Financing Expenses                  500,452        317,005
                                                 -------------   ------------
       TOTAL EXPENSES                               6,813,952      5,979,060
                                                 -------------   ------------

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

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


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

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING - Basic                       8,252,133     11,480,272
                                                 ============================
WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING - Diluted                     8,998,145     11,480,272
                                                 ============================

See Notes to Consolidated Financial Statements.

                                        3


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

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


                                                          Preferred                 Common
                                                    -----------------------  ------------------------
                                                    Number of                 Number of
                                                     Shares      Amount        Shares       Amount
                                                    ---------  ------------  ------------  ----------

                                                                             
BALANCE - JUNE 30, 2003                              362,489 $  36,248,875    11,480,278 $ 22,960,555

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

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



                                                        Capital                       Treasury     Deferred
                                                       in Excess                        Stock       Compen-
                                                        of Par        (Deficit)        At Cost      sation         Total
                                                      ------------  ------------- --------------  -----------  --------------

                                                                                               
BALANCE - JUNE 30, 2003                              $ 20,191,984  $ (40,189,608) $  (1,614,073)  $ (11,666)  $   37,586,067

   Shares Issued for Fractional Exchanges
    With Respect to the One-for-twenty
    Reverse Stock Split effected on March 13, 1992             (2)     ---             ---             ---            ---
   Amortization of Deferred Compensation Costs             ---         ---             ---            1,250            1,250
   Net Income for the Three Months Ended
    September 30, 2003                                     ---           859,061       ---             ---           859,061

                                                      ------------  ------------- --------------  -----------  --------------
BALANCE - SEPTEMBER 30, 2003                         $ 20,191,982  $ (39,330,547) $  (1,614,073)  $ (10,416)  $   38,446,378
                                                      ============  ============= ==============  ===========  ==============



See Notes to Consolidated Financial Statements.

                                       4


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

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


                                                                                 September 30,
                                                                          ----------------------------
                                                                              2003            2002
                                                                          ------------    ------------

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

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

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

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

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

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


See Notes to Consolidated Financial Statements.

                                        5


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

     (D) Spare Parts  Inventory - Spare parts  inventory  consists of  operating
supplies,  maintenance  materials  and spare parts.  It is necessary  that these
parts be readily available so that the daily cruise operations are not cancelled
due to mechanical failures. The inventories are carried at cost.

     (E)  Depreciation and Amortization - Depreciation of property and equipment
were computed by the  straight-line  method at rates  adequate to allocate their
cost or  adjusted  fair  value  in  accordance  with U.  S.  generally  accepted
accounting   principles  over  the  estimated  remaining  useful  lives  of  the
respective  assets.  Amortization  expense  consists  of the  write off of major
vessel repairs and maintenance  work normally  completed at dry dock in the fall
of each year.  These  expenses are written off during a twenty four month period
following  the dry dock period.  For the three months ended  September 30, 2003,
there were no amortized  expenses  associated  with a dry dock  period.  For the
three months ended September 30, 2002, the amortized expense was $41,737.

     The Company has adopted the provisions of Statement of Financial Accounting
Standards  No. 121 ("SFAS 121")  "Accounting  for the  Impairment  of Long-Lived
Assets  and for  Long-Lived  Assets to Be  Disposed  Of."  SFAS 121  establishes
accounting standards to account for the impairment of long-lived assets, certain
identifiable  intangibles  and  goodwill  related to those  assets  and  certain
identifiable  intangibles  to be disposed  of. The Company  reviews the carrying
values of its  long-lived  assets for  possible  impairment  whenever  events or
changes in circumstances indicate that the carrying amount of the assets may not
be recoverable based on undiscounted estimated future operating cash flows.

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

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

     (H) Cash and Cash  Equivalents  - The Company  considers  all highly liquid
investments with an

                                        6


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

original  maturity  of  three  months  or  less to be  cash  equivalents.  As of
September 30, 2003,  funds  classified as cash and cash  equivalents,  which are
primarily    those   of   the   Palm    Beach    Princess    operations    under
debtor-in-possession,   are  only  available  under  bankruptcy  court  approval
guidelines.

     (I) Concentrations of Credit Risk - Financial instruments which potentially
subject  the  Company  to  concentrations  of  credit  risk  are  cash  and cash
equivalents.  The Company places its cash  investments  with high credit quality
financial  institutions  and  currently  invests  primarily  in U.S.  government
obligations that have maturities of less than 3 months. The amount on deposit in
any one institution that exceeds  federally  insured limits is subject to credit
risk.

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

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

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

     On January 3, 2003, ITG Vegas,  Inc.("ITGV"),  our subsidiary operating the
Palm Beach  Princess,  and MJQ  Corporation  ("MJQ"),  which owns the Palm Beach
Princess vessel, an entity owned by Francis W. Murray, filed voluntary petitions
for  relief  under  Chapter  11  of  the  United  States  Bankruptcy  Code  (the
"Bankruptcy  Code") in the  United  States  Bankruptcy  Court  for the  Southern
District of Florida,  Palm Beach Division (the "Bankruptcy  Court"),  In re: ITG
Vegas,  Inc., Case No. 03-30038.  The petition did not cover the parent company,
ITB, nor any other of ITB's  subsidiaries.  The Palm Beach Princess continued to
operate as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court
and in accordance  with the  applicable  provisions of the  Bankruptcy  Code and
orders of the Bankruptcy  Court. As described in Note 12 below we had previously
entered  into a Master  Settlement  Agreement  to  purchase  from the Chapter 11
Trustee for the  Bankruptcy  Estate of Robert E.  Brennan  (the  "Trustee")  the
promissory note of MJQ  Corporation  for $13.75  million.  We did not have funds
necessary to complete  that  purchase by January 6, 2003,  the date required for
payment of the balance of such purchase price. Therefore, on January 3, 2003, in
order to protect  our  invested  deposits  and  operation  of the  vessel,  ITGV
(together  with MJQ  Corporation)  filed a voluntary  petition  for relief under
Chapter 11 of the Bankruptcy Code.

                                        7


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

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

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

     The Plan includes the following principal features:

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

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

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

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

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

          (a) The  balance of the  purchase  price that had been  payable by ITG
     Vegas for the

                                        8


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     purchase  of the  ship  mortgage  against  the  Vessel,  in the  amount  of
     $9,750,000;

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

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

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

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

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

     The maximum amount of funds  permitted to be upstreamed by ITG Vegas to the
Company is $100,000 per month under the Tax Sharing Agreement (and, beginning in
2005, 25% of ITG's annual Free Cash Flow, as defined).  The Company has no other
source of funds presently

                                        9


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

available.  For these  reasons,  and since the  $100,000  per month tax  sharing
payment  will be  suspended  at any time when the  Debtors  are not  current  in
payment of their  obligations to the Brennan Trustee,  no assurance can be given
that the Company  will be able to function as a going  concern and pay its debts
as they become due.

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

     ITG Vegas and the Company  negotiated a document,  executed on November 10,
2003 (See Note 12), entitled  Amendment to Master Settlement  Agreement with the
Brennan  Trustee,   which  incorporated  the  above-described  terms  and  other
modifications to the Master Settlement  Agreement previously entered into by the
Brennan  Trustee,  the Company,  Palm Beach Princess,  Inc.  (predecessor of ITG
Vegas, Inc.), MJQ Corporation and others.

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

     By reaching the foregoing  consensual plan of  reorganization  by agreement
with the Brennan  Trustee,  the Debtors  have  avoided the costs and delays of a
contested  confirmation hearing with their largest creditor and developed a Plan
believed to be feasible.

(3)  NOTES RECEIVABLE

     A portion  of the  proceeds  from the sale of the  non-operating  former El
Rancho  Hotel and  Casino in Las Vegas to  Turnberry/Las  Vegas  Boulevard,  LLC
("Turnberry")  on May 22, 2000 was used by us to purchase a  promissory  note in
the face  amount of  $23,000,000.  The  interest  rate  under  such note will be
adjusted from time to time since the interest actually payable will be dependent
upon,  and  payable  solely  out of, the  buyer's  net cash flow  available  for
distribution  to its  equity  owners  ("Distributable  Cash").  After the equity
investors in the buyer have received total  distributions equal to their capital
contributions plus an agreed upon return on their invested capital, the next $23
million of  Distributable  Cash will be paid to us. We will  thereafter  receive
payments  under the note  equal to 33 1/3% of all  Distributable  Cash until the
maturity date, which occurs on the 30th anniversary of our purchase of the note.
We may  convert  the  promissory  note,  at our  option,  into a 33 1/3%  equity
interest  in  the  buyer  during  a six  month  period  beginning  at  the  15th
anniversary  of the issuance of the note. If not then  converted,  the note will
convert into a 33 1/3% equity  interest in the buyer at the 30th  anniversary of
its issuance.

                                       10


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

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

     In  addition,  we sold two large  bronze  sculptures  located at the Garden
State Park  property to Realen,  in exchange  for Realen's  promissory  note due
November 30, 2002, in the principal  amount of $700,000.  The Chapter 11 Trustee
for the  Bankruptcy  Estate of  Robert E.  Brennan  claimed  ownership  of those
sculptures,  and we settled the  resulting  litigation  over the  sculptures  by
agreeing that the first $350,000 in principal payments made by Realen under such
note would be remitted to the Brennan Bankruptcy Trustee (together with one-half
of the interest paid by Realen under such note).  The remaining  $350,000 of the
$700,000 note is  classified in other current  assets on our balance sheet as of
June 30, 2003. As part of the settlement of the sculpture litigation,  the party
who sold us the  sculptures,  agreed to reduce the amount of our  obligation for
payment of the balance of the sculpture price (described in Note 10(A) below) by
the  same  principal  amount,  $350,000,  given up by us to the  Trustee.  As of
November 14,  2003,  Realen had not made the payment due to ITB in the amount of
$350,000  which was due on November 30, 2002.  On January 30, 2003,  the Trustee
instituted  litigation  against Realen and the Company  demanding payment of the
first $350,000. On August 18, 2003 the judge granted a summary judgement against
Realen-Turnberry/  Cherry Hill, LLC in the sculpture  litigation and dismissed a
cross claim that Realen- Turnberry/Cherry Hill, LLC had brought against ITB.

(4)  DEPOSITS AND OTHER ASSETS - NON RELATED PARTIES

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

                                           September 30,    June 30,
                                                2003          2003
                                           -------------   ---------
Port Lease Rights                       $        250,000 $   250,000

Deposit on Ship Purchase (See Note 6-D)              -0-     200,000

Other Misc. Assets                                84,975      85,239
                                           -------------   ---------
         Total                          $        334,975 $   535,239
                                           =============   =========

                                       11


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(5)  DEPOSITS AND OTHER ASSETS - RELATED PARTIES - NET

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


                                                      September 30, 2003              June 30, 2003
                                                   -------------------------  -------------------------------

                                                                                    
Loans to the Ft Lauderdale Project (OC Realty,
LLC)                                               $ 2,034,405                $       2,034,405

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

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

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

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


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

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

Advances (from) MJQ Corporation (FWM
ownership)                                            (450,301)                        (330,813)

Advances to OC Realty, LLC                              76,458                           77,162
                                                    ----------                  ---------------
Total Loans to OC Realty, LLC/Francis W.
Murray                                                         $  4,257,020                     $  4,590,982

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

Accrued Interest Transferred from Golf Course
Project to OC Realty, LLC                          $   287,327                $         287,327
                                                    ----------                  ---------------
Total Accrued Interest on Loans to OC Realty,
LLC                                                                 965,825                          893,880

Accounts Receivable from Frank Leo                                   23,441                           23,441

Goodwill on Purchase of GMO Travel                                  193,946                          193,946
                                                                -----------                      -----------
         Total Deposits and Other Assets                       $  5,440,232                     $  5,702,249
                                                                ===========                      ===========

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

                                       12


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(6)  NOTES AND MORTGAGES PAYABLE

     Notes and Mortgages Payable are summarized below:


                                                          September 30, 2003        June 30, 2003
                                         Interest %     ---------------------- -----------------------
                                         Per Annum         Current   Long-Term   Current     Long-Term
                                       ---------------  ------------ --------- ------------  ---------

                                                                              
International Thoroughbred Breeders,
Inc.:
- ------------------------------------
MCJEM, INC. (A)                                    15%  $    132,000 $    -0-  $    132,000  $     -0-
Chapter 11 Trustee (the "Trustee")
for the Bankruptcy Estate of Robert E.
Brennan (B)                                        11%     1,511,036      -0-     1,511,036        -0-

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

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

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

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

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

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

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

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

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

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

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

 Related Party Notes                                        (183,164)     -0-      (183,164)       -0-
                                                         -----------   ------   -----------   --------
Totals                                                  $  2,759,073 $    -0-  $  2,934,330  $     -0-
                                                         ===========   ======   ===========   ========

The effective Prime Rate at September 30, 2003 and June 30, 2003 was 4%.


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

                                       13


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

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

     (B) On December 13, 2002, we issued a twelve month  promissory  note in the
amount of $1,648,403  including  interest of $34,330 (the "Stock Purchase Note")
bearing interest at 9% (increases to 11% after default) to Donald F. Conway, the
Chapter  11  Trustee  (the  "Trustee")  for the  Bankruptcy  Estate of Robert E.
Brennan for the purchase of 3,228,146 shares of our common stock held or claimed
by the Trustee.  The first  principal  payment of $137,367 was also paid on that
date. At June 30, 2003, the principal  balance on the note was  $1,511,036.  The
Stock  Purchase Note is secured by a security  interest in proceeds and payments
receivable  under the $10 million  Realen Note. A principal  payment of $137,367
was  made  in  December  2002.  In  connection  with  the  Chapter  11  Plan  of
Reorganization,  the Trustee has accepted a revised  schedule of payments  which
will satisfy this note. (See Notes 2-5 (b) & (c) and 7)

     (C) On January 26, 2001,  we borrowed  $1,000,000  from Michael J. Quigley,
III at an annual  interest  rate of 10%.  Principal and interest on the note was
due on or about April 25, 2001. On May 14, 2001, the loan was modified to be due
on demand. The loan is secured by a pledge of the $10 million Realen Note, which
is subordinate  to the security  interest of the Trustee which secures the Stock
Purchase Note and by a pledge of the $23 million  Turnberry Note. As of November
15, 2003, the remaining balance of $900,000 of the loan is due on demand.

                                       14


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

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

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

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

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

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

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

(7)  COMMITMENTS AND CONTINGENCIES

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

     See Note 10 for additional commitments and contingencies of the Company and
transactions with related parties.

     Effective December 1, 2000, we entered into a five-year employment contract
with Francis W. Murray, our Chief Executive  Officer.  The contract provides for
annual compensation of $395,000, a

                                       15


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

$1,500  monthly  automobile  expense  allowance,  a  country  club  annual  dues
allowance  and travel and  entertainment  reimbursements  for business  expenses
reasonably  incurred  by him in  addition  to  participation  in  various  other
benefits  provided to our  employees.  As part of his employment  contract,  Mr.
Murray was awarded options to purchase  2,000,000 shares of our Common Stock. On
January 4, 2003, we began deferring  payments of compensation  due to Mr. Murray
due to a lack of funds  resulting  from the  institution  of  proceedings by our
subsidiary, ITGV, under Chapter 11 of the bankruptcy code. The related liability
as of September 30, 2003 totaled $462,874.

     We are responsible for remediation  costs  associated with an environmental
site on the Freehold Raceway property. We have accrued what we believe to be the
total cost of remediation.  At September 30, 2003, the remaining balance of such
accrual was  $130,398  for  remediation  costs.  The  remediation  work has been
delayed due to a lack of funds  resulting from the institution of proceedings by
our subsidiary,  ITGV, under Chapter 11 of the bankruptcy code. At this time, we
are unable to predict the effects that such delays may cause.

     In connection with the January 28, 1999 lease  transactions  for the Garden
State Park  facility,  we purchased a liquor  license  owned by an  unaffiliated
third party,  Service America  Corporation,  for $500,000 financed by a five (5)
year  promissory  note at a 6% interest  rate. At December 31, 2002,  the unpaid
principal  balance was  $160,000.  Yearly  principal  payments  of $80,000  plus
interest are due on December 28, 2002 and December 28, 2003.  The payment due on
December 28, 2002 has not been made as of November 15, 2003.

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

     As permitted by the Master Settlement  Agreement with the Trustee,  we have
entered into a bareboat charter with MJQ Corporation,  pursuant to which we have
chartered  the vessel M/V Palm Beach  Princess  for the  purpose of  operating a
casino cruise business from the Port of Palm Beach, Florida.  Under the bareboat
charter  agreement,  we are obligated to pay $50,000 per month as a charter hire
fee  to the  vessel's  owner,  MJQ  Corporation.  Other  parties  to the  Master
Settlement Agreement include MJQ Corporation, Leo Equity Group, Inc. and Francis
W. Murray,  our Chairman,  who is also a director and officer of MJQ Corporation
and a director of Leo Equity Group,  Inc. In October 2002, Mr. Murray  purchased
the stock of MJQ  Corporation  and  effective  October 27, 2002 we purchased the
stock of Leo Equity Group, Inc..

     In accordance with the Master Settlement Agreement,  through our Palm Beach
Princess,  Inc.  subsidiary  (which has been merged into ITGV) we entered into a
Purchase and Sale Agreement  which provides for our purchase from the Trustee of
the promissory note of MJQ Corporation,  having an original balance of principal
and  interest of  approximately  $15.7  million  and secured by a ship  mortgage
against  the M/V Palm Beach  Princess  (the  "Ship  Mortgage  Obligation").  The
purchase price payable by us for the Ship Mortgage Obligation is $13.75 million.
We began making payments on account of such purchase

                                       16


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

price  effective  April 30, 2001,  in monthly  installments  of  $250,000.  Such
monthly  installments  continued  under  the  terms  of the  Purchase  and  Sale
Agreement  through July 31, 2002, at which time a $9.75 million  balloon payment
was to be due.  However,  before July 31, 2002, we exercised our right to extend
the time for  payment of the balance of the  purchase  price for up to three (3)
additional  months, to October 31,2002,  by paying fees of $70,000 for the first
one month extension, an additional $80,000 for the second month extension and an
additional  $100,000 for the third month  extension.  On October 30,  2002,  the
Master  Settlement  Agreement was amended to provide for a further  extension of
the due date for payment of the $9.75  million  balance  under the  Purchase and
Sale  Agreement  until  January  6, 2003,  in  consideration  of our  payment of
$220,000 as an extension  fee. On January 3, 2003,  we did not have the funds to
complete the purchase by January 6, 2003 and the Trustee  denied our request for
a further  extension of the January 6, 2003 due date.  Therefore,  on January 3,
2003,  in order to protect our invested  deposits  and  operation of the vessel,
ITGV, successor by merger to our subsidiary the Palm Beach Princess, Inc., filed
a voluntary  petition for relief under Chapter 11 of the  Bankruptcy  Code.  MJQ
Corporation,  the entity  which  owns the  vessel,  also filed for relief  under
Chapter 11 of the Bankruptcy  Code.  The Trustee is the largest  creditor in the
MJQ/ITGV cases, and his position is secured by a mortgage against the vessel. In
order to re-  organize  under a Chapter 11 plan on a basis  under which we would
continue to operate the vessel,  we will need to pay or provide for payment of a
minimum of $9.75 million payable to the Trustee plus  approximately $1.3 million
of debt to unsecured  creditors  of ITGV  (excluding  debt to related  parties).
Through November 15, 2003, $1,286,051 has been placed in escrow towards payments
required to be distributed to creditors.  The Bankruptcy  Court has required and
approved ITGV to pay interest on said $9.75 million monthly to the Trustee at an
interest  rate of 12% per year.  Interest  of  $679,562  has been  paid  through
September 30, 2003.

     The second agreement which we entered into with the Trustee pursuant to the
Master Settlement Agreement is a Stock Purchase Agreement. Under this Agreement,
which  superseded  all prior  agreements and  understandings  between us and the
Trustee for the purchase of our common stock held or claimed by the Trustee,  we
agreed to purchase up to approximately 2,235,000 shares of our common stock at a
purchase price of $0.50 per share on July 11, 2002. We desired to purchase these
shares in order to preserve our net operating loss carryforwards which otherwise
may be lost if the  shares  are  transferred.  As  collateral  security  for our
payment of the  purchase  price for these  shares,  we granted to the  Trustee a
security  interest in all proceeds of (including all payments that might be made
in the future under) the $10 million Realen Note,  described in Note 2 above. We
were unable to pay the purchase price under the Stock Purchase Agreement on July
11, 2002 (which  price,  at that date,  was $892,500 for 1,785,000  shares).  On
October 30, 2002,  the Stock  Purchase  Agreement  was amended to provide for an
extension of the due date on the purchase of the shares until  December 13, 2002
at which time the Trustee  agreed to accept  payment of the  purchase  price for
3,228,145 shares  (including  additional  shares over which the Trustee obtained
control)  in the form of a twelve  month  promissory  note  bearing  interest at
9%(increasing  to 11%  after  default)  in the  amount of  $1,648,402  including
interest of $34,330. (See Note 6 (B).) Should the Trustee obtain control over an
additional  450,000 shares, we are further obligated to purchase those shares at
$0.50 per share.  A principal  payment of $137,367 was made in December 2002. In
connection with the Chapter 11 Plan of Reorganization,  the Trustee has accepted
a revised  schedule of payments which will satisfy this note. (See Notes 2-5 (b)
& (c))

     Through ITGV, we have negotiated with the Port of Palm Beach District a new
operating  agreement and lease of space in a new office  complex  constructed at
the Port of Palm Beach adjacent to a new cruise terminal effective, as modified,
May 5, 2003.  The term of the initial  lease is five years at $183,200  per year
payable  monthly.  We are also required to make tenant  improvements  to the new
space

                                       17


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

in a minimum  amount  of  $333,000,  however  that the  actual  cost to make the
improvements was approximately  $950,000.  We will have the right to a credit of
up to the minimum amount of  improvements  required of $333,000 of  construction
costs against the initial term of our five year lease.

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


                                    Twelve Months Ended September 30,
                      --------------------------------------------------------------
                                                                                       There-
                          2004        2005           2006         2007        2008      after      Total
                      ------------ -----------   -----------  ------------  --------   ------  -------------

                                                                          
Minimum Amounts
due to Brennan
Trustee               $  4,150,000 $ 5,060,000   $ 4,960,000  $  1,060,000  $    -0-   $  -0-  $  15,230,000

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

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

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

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


LEGAL PROCEEDINGS

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

     Our  subsidiary,  ITG  Vegas,  Inc.,  successor  by  merger  to Palm  Beach
Princess, Inc., initiated proceedings under Chapter 11 of the Bankruptcy Code on
January 3, 2003. (See Note 2.)

(8)  FAIR VALUE OF FINANCIAL INSTRUMENTS

     As of  September  30,  2003,  in  assessing  the fair  value  of  financial
instruments,  the Company has used a variety of methods and  assumptions,  which
were based on estimates  of market  conditions  and loan risks  existing at that
time. For certain instruments, including cash and cash equivalents, investments,
non- trade accounts  receivable and loans, and short-term debt, it was estimated
that the  carrying  amount  approximated  fair value for the  majority  of these
instruments because of their short-term  maturity.  The carrying amounts of long
term debt approximate fair value since the Company's  interest rates approximate
current interest rates. On our $33 million notes receivable,  we have elected to
defer the gain on the sale and the  interest to be accrued  until such time that
collectability can be determined (See Note 3).

                                       18


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(9) STOCK OPTIONS AND WARRANTS

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

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

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

     Also at the November 18, 2003  meeting of the Board,  the Board  authorized
the future grant of shares of common stock to each of Mr.  Francis W. Murray and
Mr.  Robert J. Quigley as  compensation  in lieu of their  respective  salaries,
which have been  deferred  since  January 3, 2003,  and in payment of the unpaid
principal  of a $24,000  loan to the  Company  by Mr.  William  H.  Warner,  the
Company's Secretary.  The Company will be authorized to pay the accrued salaries
to Messrs.  Murray and Quigley and the unpaid loan  principal  to Mr.  Warner in
shares of common stock,  valued for such purpose at $0.50 per share,  subject to
the prior payment of all  obligations of the Company to the Bankruptcy  Trustee.
No such shares will be granted and none of the accrued compensation will be paid
until the  Bankruptcy  Trustee  shall have been paid in full,  at which time the
Company will be authorized  (but not  obligated)  to grant such shares  provided
that the grantee (Mr. Murray, Quigley or Warner, as applicable) agrees to accept
such shares  (valued at $0.50 per share) in payment of a portion,  specified  by
the grantee, of the Company's obligation to him and that he is still employed by
the Company at the time.

                                       19


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

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

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

(10) RELATED PARTY TRANSACTIONS

     During the third  quarter of Fiscal  2001,  we invested in two  projects in
which our Chairman,  President and Chief Executive  Officer,  Francis W. Murray,
also has a pecuniary interest. In connection with one such project, the Board of
Directors  approved  advances,  as  loans,  of up to $1.5  million  to a limited
partnership  in which  Francis W.  Murray  owned,  at that  time,  an 80% equity
interest and owned the general partner, the proceeds of which were to be used to
pay costs and expenses for development of a golf course in Southern  California.
Mr. Murray's equity interest in the limited partnership,  indirectly through his
ownership of the general partner,  as of December 26, 2002, was 64%. At December
26, 2002,  loans of $735,584 were outstanding on such project and we had accrued
$155,945  of  interest  due on the loans.  On  December  26,  2002,  the limited
partnership's  indebtedness  to us was  assumed  by OC  Realty,  LLC,  a Florida
limited liability company which is owned by Francis W. Murray and which owns the
second real estate project  described below.  Such  indebtedness is due December
31, 2004 and bears an interest rate of 6%.

     In the second project, Mr. Murray is participating in the development of an
oceanfront  parcel  of land,  located  in Fort  Lauderdale,  Florida,  which has
received all governmental  entitlements from the City of Fort Lauderdale and the
state of Florida to develop a  14-story  building  to include a 5-story  parking
garage,  approximately  6,000 square feet of commercial  space and a residential
9-story tower.  The property had been owned by MJQ  Development,  LLC, which was
owned by Michael J. Quigley,  III until  December 26, 2002 when the property was
acquired by OC Realty,  LLC, the entity owned by Mr. Murray.  Mr. Quigley has no
relationship to Robert J. Quigley, one of our directors. OC Realty is developing
a condominium  hotel resort on the property as discussed  above. As of September
30, 2003, we had lent $2,034,405 in total to MJQ Development and we have accrued
interest  in the amount of  $678,498 on the loan.  Upon the  acquisition  of the
property,  OC Realty assumed MJQ  Development's  indebtedness to us. These loans
bear  interest at 12% and will be  repayable  out of the first  proceeds,  after
payment of bank debts,  generated by the sale of the condominiums.  We will also
have the right to receive, as participation  interest,  from available cash flow
of OC Realty if the project is successful,  a priority  return of our investment
and a priority profits interest for up to three times our investment.  Repayment
of these loans and our  participation  interest will be subject to repayment of,
first,  bank debt of  approximately  $5.5 million (at  present)  incurred in the
purchase of the real property and, second,  construction  financing  expected to
amount to $25 to $30 million  and third,  capital  invested  by a joint  venture
partner (expected to be up to $6.1 million) plus a 15% per annum return thereon.
At the time the loans to MJQ  Development  were  approved,  Mr.  Murray stood to
receive  a  substantial   contingent   benefit  from  MJQ  Development  for  his
participation in the project.

     In order to raise the capital which with to proceed in the  development  of
the Ft. Lauderdale property, OC Realty has placed the Ft. Lauderdale property in
a joint  venture in connection  with which the other joint venture  partner will
fund up to $6.5 million for development and receive a 50% equity  interest.  Our
loan and participation  interest will be payable out of OC Realty  distributions
from the joint venture.

                                       20


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

     On January 26, 2001, we borrowed $1,000,000 from Michael J. Quigley, III at
an annual interest rate of 10%. Principal and interest on the note was due on or
about  April 25,  2001.  On May 14,  2001,  the loan was  modified  to be due on
demand.  The principal balance on the note at September 30, 2003 is $900,000 and
we have  accrued  interest  through  that  date in the  amount of  $253,699.  As
collateral  for the loan,  we pledged  the $10  million  Realen Note and the $23
million  Turnberry Note. On February 20, 2002 Mr. Quigley  released his security
interest in the Realen Note in connection with the Master Settlement  Agreement.
As of November 15, 2003, the loan is due on demand. (See Note 6.)

     Effective  April 30,  2001,  we entered  into a bareboat  charter  with MJQ
Corporation,  pursuant  to which we are  chartering  the  vessel  M/V Palm Beach
Princess for the purpose of operating an  entertainment  casino cruise  business
from the Port of Palm Beach, Florida. Michael J. Quigley, III was a principal of
MJQ Corporation. In October 2002, Francis W. Murray, our Chairman, President and
Chief Executive  Officer  purchased the stock of MJQ Corporation and has been an
officer and director of MJQ Corporation.  Francis X. Murray,  the son of Francis
W. Murray,  is President and a director of MJQ  Corporation and President of our
subsidiary,  ITG Vegas,  Inc.,  which  operates  the vessel.  Under the bareboat
charter agreement, we are obligated to pay $50,000 per month as the charter hire
fee to MJQ  Corporation.  All costs of  operating  the  vessel  incurred  by MJQ
Corporation  on our behalf are to be  reimbursed  by us to MJQ  Corporation.  In
addition,  as described in Note 6 above,  we have entered into an amended Master
Settlement  Agreement  with the Chapter 11 Trustee of the  Bankruptcy  Estate of
Robert E. Brennan,  MJQ  Corporation and others to purchase from the Trustee the
Ship  Mortgage  Obligation  of MJQ  Corporation,  having an original  balance of
principal and interest outstanding of approximately $15.7 million for a purchase
price of $13.75  million.  Pursuant  to the  Master  Settlement  Agreement,  MJQ
Corporation  and its  officers  and  directors  (including  Francis  W.  Murray)
exchanged  mutual releases with the Trustee and others having claims to the Ship
Mortgage Obligation.

     The  Master  Settlement  Agreement  with the  Chapter  11  Trustee  for the
Bankruptcy  Estate of Robert  E.  Brennan  included  a final  settlement  by the
Trustee with numerous parties. Among those parties were Frank A. Leo, Leo Equity
Group,  Inc.,  Michael J.  Quigley III and MJQ  Corporation.  During the quarter
ended March 31, 2002 we charged Leo Equity Group  $3,000,000 and MJQ Corporation
$1,000,000  for their  portion of expenses  incurred by us and a success fee for
the efforts of International  Thoroughbred Breeders, Inc. in connection with the
final settlement with the Trustee. Prior to our acquisition of Leo Equity Group,
Inc.,  Leo  Equity  Group,  Inc.  assigned  to us  certain  receivables  in  the
approximate  amount of $3 million,  including the  receivables of  approximately
$2.6 million due it from Michael J. Quigley III, in payment of this  obligation.
That $2.6 million debt from Mr. Quigley was assumed by Francis W. Murray when he
purchased the MJQ Corporation  shares and is a non-recourse  obligation which is
payable solely from pledged shares of his stock in MJQ  Corporation.  Mr. Murray
purchased the MJQ Corporation stock subject to our lien securing payment of that
debt.  We have  deferred all income from these  transactions  until such time as
payment is received.

     On July 12, 2002, we borrowed  $300,000 from Francis W. Murray at an annual
interest rate of 6%. The note is due on demand and interest is payable  monthly.
As of September 30, 2003, the balance of the note was $250,000 and is classified
as Deposits and Other Assets - Related Parties on the balance sheet as an offset
to previous advances to Mr. Murray.

     On November 13, 2002, the Company and MJQ  Corporation  signed an agreement
and  bill of sale

                                       21


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

which  transferred  maintenance  materials and spare parts inventory  previously
maintained  by MJQ  Corporation  to Palm Beach  Princess,  Inc. The value of the
parts inventory sold and assigned was $1,103,125.  Payment for the inventory was
made by way of offsets on amounts previously due to Palm Beach Princess, Inc. by
MJQ Corporation.

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

(11) TREASURY SHARES PURCHASED

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

(12) SUBSEQUENT EVENTS

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

                                       22


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

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

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

Forward-Looking Statements

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

          o    termination  of the bareboat  charter  under which we operate our
               gaming business;
          o    lack of cash flow for the Parent  Company to  continue to operate
               and pay its debts as a result of the  Chapter 11  proceedings  of
               our  operating   subsidiary  and  agreed  upon   restrictions  in
               connection with such subsidiary's indebtedness;
          o    general  economic and business  conditions  affecting the tourism
               business in Florida;
          o    competition;
          o    changes in laws regulating the gaming industry;
          o    fluctuations  in  quarterly  operating  results  as a  result  of
               seasonal and weather considerations; and
          o    events  directly or indirectly  relating to our business  causing
               our stock price to be volatile.

Liquidity and Capital Resources

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

     On January 3, 2003, ITG Vegas,  Inc.("ITGV"),  our subsidiary operating the
Palm Beach Princess,  and MJQ Corporation ("MJQ"), an entity owned by Francis W.
Murray,  filed  voluntary  petitions  for relief under  Chapter 11 of the United
States  Bankruptcy Code (the "Bankruptcy  Code") in the United States Bankruptcy
Court for the Southern District of Florida, Palm Beach Division (the "Bankruptcy
Court"), In re: ITG Vegas, Inc., Case No. 03-30038.  The petition does not cover
the parent company, ITB, nor any other of ITB's subsidiaries. The Parent Company
has used all the available  funds that we had prior to the bankruptcy  filing to
pay some of our expenses and needs to find  immediate  financing in order to pay
remaining existing liabilities as well as future expenses.  Since the bankruptcy
filing, the only source of funds to the Parent Company has been limited to loans
made  by  Company  officers,  collection  of a loan  previously  made to a South
American  gaming  project and refunds from vendors and tax agencies  relating to
our prior racetrack  operations.  The Bankruptcy filing has severely limited our
ability to make timely  payments by our parent to its  creditors  and  corporate
vendors which has affected our ability to retain the  professional  services and
vendors who serve our company.  The Palm Beach Princess  continued to operate as
"debtor-in-possession" under the jurisdiction

                                       23


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

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

of the  Bankruptcy  Court  until  the  Effective  Date,  October  15,  2003  and
subsequently  as  reorganized  debtors  (See  Note  12) in  accordance  with the
applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

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

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

     ITGV's cash flow from operations of the vessel is seasonal. The period July
1st to December 31st is a seasonably slow period for the vessel  operation.  The
period from January 1st to June 30th has been a period of increased activity and
profits for the vessel. Certain of ITGV's operating costs, including the charter
fee payable to the vessel's owner, fuel costs and wages, are fixed and cannot be
reduced when passenger  loads decrease or when rising fuel or labor costs cannot
be fully passed through to customers.  Passenger and gaming revenues earned from
the vessel must be high enough to cover such expenses.

     Unless and until ITGV  successfully  emerges  from its  Chapter 11 case and
pays in full all the debts to the Brennan Trustee,  our possible sources of cash
(in addition to the $100,000 per month tax sharing  payments as mentioned above)
include the two promissory  notes we received when we sold our Garden State Park
real property in November,  2000 and our Las Vegas real  property in May,  2000.
One  such   Note  is  in  the   face   amount   of  $10   million,   issued   by
Realen-Turnberry/Cherry  Hill,  LLC, the  purchaser of the Cherry Hill  property
(the "$10 Million Note"), and the other promissory note is in the face amount of
$23 million, issued by Turnberry/Las Vegas Boulevard,  LLC, purchaser of our Las
Vegas real property  (the "$23 Million  Note").  Under both Notes,  interest and
principal  payments  will be  dependent  upon,  and  payable  solely out of, the
obligor's net cash flow available for  distribution to its equity owners.  After
the obligor's equity investors have received  aggregate  distributions  equal to
their  capital  contributions  plus an  agreed  upon  return  on their  invested
capital,  the  next $10  million  of  distributable  cash in the case of the $10
Million Note, and the next $23 million of distributable  cash in the case of the
$23  Million  Note,  will be paid to us, and  following  our receipt of the face
amount  of the Note we will  receive  33 1/3% of all  distributable  cash of the
obligor until maturity of the Note. The probable  timing and amounts of payments
under these Notes cannot be predicted.

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

                                       24


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

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


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

     Overall
     -------

     Revenue  from for the three  months  ended  September  30,  2003  increased
$1,271,437 from $6,419,175 in Fiscal 2003 to $7,690,612 in Fiscal 2004 primarily
as a result of revenues  generated by the Palm Beach Princess  operations during
the comparable periods. Expenses increased $834,891 from $5,979,061 in the three
month period in Fiscal 2003 to $6,813,952 in Fiscal 2004 primarily the result of
an  increase  in Palm Beach  Princess  operating  costs  during  the  comparable
quarters and a net increase in financing  costs  incurred  primarily  associated
with  interest  payments of $294,904  paid to the Trustee  during Fiscal 2004 as
compared  to  extension  fees of  $150,000  paid  under  the  Purchase  and Sale
Agreement for the Palm Beach Princess  during Fiscal 2003, and costs  associated
with the  bankruptcy  filing of  $258,562,  partially  offset by a  decrease  in
corporate general and administrative  expenses during the comparable periods and
a decrease in development costs.

     For the first quarter of Fiscal 2004,  our net income was $859,061 or $0.10
per share as compared to income for the  comparable  period in the prior  fiscal
year of $413,114 or $0.04 per share.

     Vessel Operations
     -----------------

     During the three months ended September 30, 2003, total revenue from vessel
operations  was  $7,575,158 as compared to $6,308,088 for the three months ended
September 30, 2002. The increase in revenue of $1,267,070  during the comparable
quarters  primarily resulted from an increase in casino gaming revenue primarily
the result of a slight  increase in the passenger  count and an approximate  17%
increase in the average  revenue per passenger  during the  comparable  periods.
Total expenses before income taxes for the comparable periods increased $944,077
from  $5,279,724 for the three months ended September 30, 2002 to $6,223,801 for
the three months ended  September 30, 2003  primarily as a result of an increase
in the  number of  passengers  which  increased  operating  costs,  $286,774  in
financing fees, costs  associated with the bankruptcy  filing of $258,562 and an
increase in other operating  expenses.  Income before income tax expense for the
first  quarter  of  operation  in Fiscal  2004 was  $1,351,357  as  compared  to
$1,028,364 in the comparable quarter of Fiscal 2003.

     The Palm  Beach  Princess  performs  fourteen  cruises  weekly,  that is, a
daytime  and an evening  cruise  each day.  Each  cruise is of five to six hours
duration.  During  each  cruise,  the  Palm  Beach  Princess  offers  a range of
amenities  and services to her  passengers,  including a full  casino,  sit-down
buffet dining, live musical shows, discotheque,  bars and lounges, swimming pool
and  sundecks.  The casino  occupies  15,000  square feet aboard the ship and is
equipped with approximately 400 slot machines, all major table games (blackjack,
dice,  roulette and poker), and a sports wagering book. During the first quarter
of Fiscal 2004 the ship  completed  167 cruises  and eleven  (11)  cruises  were
missed due to scheduled wet dock maintenance. During the first quarter of Fiscal
2003 179 cruises were completed.

                                       25


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

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

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


                                                     Three Months Ended
                                                        September 30,
                                                -----------------------------
             Description                            2003              2002        Change
- ---------------------------------------------   -------------     -----------   -----------

                                                                      
Passenger Count                                        61,487          60,385         1,102
Number of Cruises                                         167             179           (12)

Revenue:
    Fare                                      $       655,371   $     658,149  $     (2,778)
    On Board                                          425,100         454,204       (29,104)
    Casino                                          6,494,687       5,195,735     1,298,952
                                                -------------     -----------   -----------
    Total Revenue                                   7,575,158       6,308,088     1,267,070
                                                -------------     -----------   -----------
Expenses:
    Casino Operating Expenses                       2,079,618       1,944,693       134,925
    Hotel and Gift Shop Expenses                      195,241         195,221            20
    Sales, Marketing and Advertising Expenses         713,754         720,188        (6,434)
    Maritime and Legal Expenses                     1,749,269       1,417,924       331,345
    Administrative and Finance Expenses             1,485,919       1,001,698       484,221
                                                -------------     -----------   -----------
    Total Expenses                                  6,223,801       5,279,724       944,077
                                                -------------     -----------   -----------
             Income Before Income Tax Expense $     1,351,357   $   1,028,364  $    322,993
                                                =============     ===========   ===========


Inflation
- ---------

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

                                       26


Item 4. - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

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

CHANGES IN INTERNAL CONTROLS

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

                                       27


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES


                                     Part II

                                OTHER INFORMATION


Item 6.

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


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

                                       28


                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.
                                AND SUBSIDIARIES

                                   SIGNATURES


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



                    INTERNATIONAL THOROUGHBRED BREEDERS, INC.




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

                                       29


               CERTIFICATION PURSUANT TO RULE 13A-14 AND 15D-14 OF
                     THE SECURITIES AND EXCHANGE ACT OF 1934

I, Francis W. Murray, certify that:

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

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

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

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

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

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

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

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

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

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

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


Date: November 19, 2003

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

                                       30


                                                                    Exhibit 99.1


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

     In  connection  with the  filing  of the  Quarterly  Report on Form 10-Q of
International  Thoroughbred Breeders,  Inc. (the "Company") for the three months
ended September 30, 2003 as filed with the Securities and Exchange Commission on
the date hereof (the "Report"), I, Francis W. Murray, Chief Executive Officer of
the Company,  hereby certify pursuant to 18 U.S.C.  ss.1350, as adopted pursuant
to  Section  906 of the  Sarbanes-Oxley  Act of  2002,  that,  to the best of my
knowledge:

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

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



 /s/ Francis W. Murray
 -----------------------
Name:   Francis W. Murray
Title:  President and CEO
November 19, 2003

                                       31


                                                                    Exhibit 99.2

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

     In  connection  with the  filing  of the  Quarterly  Report on Form 10-Q of
International  Thoroughbred Breeders,  Inc. (the "Company") for the three months
ended September 30, 2003 as filed with the Securities and Exchange Commission on
the date hereof (the "Report"), I, Francis W. Murray, Chief Financial Officer of
the Company,  hereby certify pursuant to 18 U.S.C.  ss.1350, as adopted pursuant
to  Section  906 of the  Sarbanes-Oxley  Act of  2002,  that,  to the best of my
knowledge:

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

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



 /s/ Francis W. Murray
 ---------------------
Name:  Francis W. Murray
Title: Chief Financial Officer
November 19, 2003

                                       32