FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For Quarter Ended March 31, 2002

Commission File no. 2-64309

GOLF HOST RESORTS, INC.

(Exact name of registrant as specified in its charter)

Colorado	84-0631130
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

36750 US 19 N., Palm Harbor, Florida 34684

(Address of principal executive offices) (Zip Code)

(727) 942-2000

(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding twelve months, and (2) has been subject to the filing requirements for the past 90 days. — Yes   x    No   o

     Issuer has no common stock subject to this report.

Page 1 of 23

PART I — FINANCIAL INFORMATION

GOLF HOST RESORTS, INC. AND SUBSIDIARY
(a wholly owned subsidiary of Golf Hosts, Inc.)
CONSOLIDATED BALANCE SHEETS

ASSETS
(Substantially all pledged)

			March 31,		December 31,
			2002		2001
			(unaudited)
CURRENT ASSETS:
	Cash		$	2,807,795	$	665,402
	Restricted cash			517,421		1,413,326
	Accounts receivable, net			4,393,182		2,056,232
	Other receivables			46,419		37,530
	Inventories and supplies			981,532		1,070,280
	Prepaid expenses and other assets			649,639		613,962
		Total current assets		9,395,988		5,856,732
INTANGIBLES, net				13,155,744		13,323,572
PROPERTY AND EQUIPMENT, net				39,504,089		40,180,206
OTHER ASSETS				516,535		509,215
			$	62,572,356	$	59,869,725

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

Page 2

GOLF HOST RESORTS, INC. AND SUBSIDIARY
(a wholly owned subsidiary of Golf Hosts, Inc.)
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDER’S DEFICIT

			March 31,			December 31,
			2002			2001
			(unaudited)
CURRENT LIABILITIES:
	Debt due within one year		$	79,533,089		$	79,562,698
	Accounts payable			7,306,287			7,762,297
	Accrued payroll costs			976,179			772,296
	Accrued interest			7,794,837			2,263,163
	Other payables			3,717,202			2,775,026
	Deposits and prepaid fees			2,228,010			2,695,273
	Due to related parties			64,384			48,428
		Total current liabilities		101,619,988			95,879,181
DEBT DUE AFTER ONE YEAR				—			51,213
OTHER LONG-TERM LIABILITIES				9,015,009			12,205,203
DEFERRED INCOME TAXES				1,255,000			1,255,000
		Total liabilities		111,889,997			109,390,597
SHAREHOLDER’S DEFICIT
	Common stock, $1 par, 5,000 shares authorized, issued, and outstanding			5,000			5,000
	5.6% cumulative preferred stock, $1 par, 4,577,000 shares authorized, issued, and outstanding			4,577,000			4,577,000
	Paid-in capital			(8,487,323	)		(8,487,323	)
	Accumulated deficit			(45,412,318	)		(45,615,549	)
	Total shareholder’s deficit			(49,317,641	)		(49,520,872	)
	Total liabilities and shareholder’s deficit		$	62,572,356		$	59,869,725

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

Page 3

GOLF HOST RESORTS, INC. AND SUBSIDIARY
(a wholly owned subsidiary of Golf Hosts, Inc.)
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

		Quarters Ended March 31,
		2002		2001
REVENUES:
	Resort facilities	$	5,018,165	$	7,780,255
	Food and beverage		3,593,430		5,334,599
	Golf		4,556,741		5,784,160
	Other		1,302,492		1,926,638
			14,470,828		20,825,652
COST AND OPERATION EXPENSES:
	Resort facilities		3,340,963		4,851,535
	Food and beverage		2,392,376		3,215,893
	Golf		1,585,600		1,970,617
	Other		2,424,139		2,902,072
	General and administrative		1,217,178		1,606,649
	Depreciation and amortization		872,829		968,284
			11,833,085		15,515,050
INCOME BEFORE LOSS ON LEASED ASSET			2,637,743		5,310,602
LOSS ON LEASED ASSET			—		664,681
INTEREST, NET			2,370,435		2,421,198
NET INCOME			267,308		2,224,723
DIVIDEND REQUIREMENTS ON PREFERRED STOCK			64,077		64,077
NET INCOME AVAILABLE TO COMMON SHAREHOLDER		$	203,231	$	2,160,646

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

Page 4

GOLF HOST RESORTS, INC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDER’S DEFICIT

	$1 Par Value				5.6% Cumulative
	Common Stock				Preferred Stock										Total
									Paid-In			Retained			Shareholder's
	Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance, December 31, 2000		5,000	$	5,000		4,577,000	$	4,577,000	$	(13,557,000	)	$	(33,744,244	)	$	(42,719,244	)
Net loss allocated to common shareholder		—		—		—		—		—			(10,610,891	)		(10,610,891	)
Forgiveness of operating deficits		—		—		—		—		5,069,677			—			5,069,677
Contribution from shareholder		—		—		—		—		—			2,667,921			2,667,921
Distribution to shareholder		—		—		—		—		—			(3,928,335	)		(3,928,335	)
Balance, December 31, 2001		5,000		5,000		4,577,000		4,577,000		(8,487,323	)		(45,615,549	)		(49,520,872	)
Net income allocated to common shareholder		—		—		—		—		—			203,231			203,231
Balance, March 31, 2002 (unaudited)		5,000	$	5,000		4,577,000	$	4,577,000	$	(8,487,323	)	$	(45,412,318	)	$	(49,317,641	)

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

Page 5

GOLF HOST RESORTS, INC. AND SUBSIDIARY
(a wholly owned subsidiary of Golf Hosts, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(unaudited)

			2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income before dividend requirements on preferred stock		$	267,308		$	2,224,723
	Adjustments to reconcile net income to net cash provided by operations:
		Depreciation and amortization		872,829			968,284
		Provision for bad debts		223,933			149,063
	Changes in operating working capital			1,018,607			(2,113,984	)
		Cash provided by operations		2,382,677			1,228,086
CASH FLOWS FROM INVESTING ACTIVITIES:
	(Increase)/decrease in other assets			(7,320	)		369,801
	Purchases of property and equipment			(28,886	)		(214,793	)
		Cash (used in)/provided by investing activities		(36,206	)		155,008
CASH FLOWS FROM FINANCING ACTIVITIES:
	Repayment of existing debt			(80,822	)		(88,761	)
	Repayment of line of credit			—			(667,141	)
	(Decreases)/increases in other long-term liabilities			(123,256	)		71,056
		Cash used in financing activities		(204,078	)		(684,846	)
NET INCREASE IN CASH				2,142,393			698,248
CASH, BEGINNING OF PERIOD				665,402			565,400
CASH, END OF PERIOD			$	2,807,795		$	1,263,648
NONCASH FINANCING AND INVESTING ACTIVITIES:
The Company satisfied its preferred stock dividend liability to GHI through the intercompany account			$	64,077		$	64,077

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

Page 6

GOLF HOST RESORTS, INC. AND SUBSIDIARY
(a wholly owned subsidiary of Golf Hosts, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

The financial statements for December 31, 2001 were prepared assuming the Company will continue as a going concern. As discussed in the notes to consolidated financial statements on Form 10-K dated December 31, 2001, the Company has suffered recurring losses from operations, has negative working capital and has a shareholder’s deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in the footnotes. Additionally, as described in Note 7 of the notes to consolidated financial statements on Form 10-K, the Company has defaulted under the terms of its debt agreement and Golf Host, Inc. (the Company’s parent company) is a defendant to a class action lawsuit. These financial statements do not include any adjustments that might result from the outcome of the uncertainties.

These financial statements and related notes are presented for interim periods in accordance with the requirements of Form 10-Q and, consequently, do not include all disclosures normally provided in the Company’s Annual Report on Form 10-K. Accordingly, these financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.

The accompanying consolidated balance sheet for March 31, 2002, and consolidated statements of operations and cash flows for the periods ended March 31, 2002 and 2001, are unaudited but reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature.

The Company’s business is seasonal. Therefore, the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal years.

(2)  INTANGIBLE ASSETS

The Company recorded at closing in 1997, a resort intangible asset of approximately $30,400,000. This intangible related to the purchase of the Innisbrook Resort, which contained an existing rental pool agreement and a recently executed management agreement with Westin Hotels. The intangible is being amortized over twenty years on a straight-line basis. Amortization expense for all intangible assets was approximately $168,000 and $386,000 for the three months ended March 31, 2002 and March 31, 2001, respectively.

As noted in the Company’s 10-K for December 31, 2001, management had determined that due to declining demand in the resort business and reduced rental pool participation which led to declines in operating results, impairment had occurred. At December 31,

Page 7

GOLF HOST RESORTS, INC. AND SUBSIDIARY
(a wholly owned subsidiary of Golf Hosts, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) INTANGIBLE ASSETS

2000, an impairment charge of $7,441,000 was recorded. As a result of the continued decline in destination golf resort business during 2001 and the events of September 11, 2001, the Company determined that further impairment had occurred and consequently had recognized an additional $3,000,000 impairment charge during the quarter ended September 30, 2001.

(3) DEBT

Debt consists of the following:

	March 31,			December 31,
	2002			2001
Participating mortgage note at varying pay rates maturing in 2027 (in default)	$	69,975,000		$	69,975,000
$9,000,000 participation mortgage note credit facility (in default)		9,000,000			9,000,000
Capital leases		558,089			638,911
		79,533,089			79,613,911
Less current maturities		(79,533,089	)		(79,562,698	)
	$	—		$	51,213

(4) CONTINGENCIES

Golf Hosts, Inc., the Company’s parent, has been named as a defendant in a consolidated class action lawsuit whereby the plaintiffs allege breaches of contract, including breaches in connection with the Rental Pool Master Lease Agreement. The plaintiffs are seeking unspecified damages and declaratory judgment stating that the plaintiffs are entitled to participate in the rental pool if one exists and a limitation of golf course access to persons who are either condominium owners, members, their accompanied guests, or guests of the resort. Deposition of class members and others, including depositions of prior executives of Golf Host Resorts, have been taken and additional discovery remains. The previously scheduled trial date of February 3, 2002 has been postponed by the Court; a new trial date has not yet been set. As this litigation continues, the Company is not yet able to determine whether the resolution of this matter will have a material adverse effect on the Company’s financial condition or results of operations although the Company believes Golf Hosts, Inc. has successful defenses based upon consultations with legal counsel and intends to vigorously defend this action.

Page 8

GOLF HOST RESORTS, INC. AND SUBSIDIARY
(a wholly owned subsidiary of Golf Hosts, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(5) TAMARRON’S RESULTS OF OPERATIONS

The Company assumed responsibility for the net income (loss) of Tamarron under the terms of the lease agreement between the Company and Golf Host II, Inc. entered into during 2000. The net loss is as follows and is included in loss on leased asset in the statement of operations:

		Quarter ended
		March 31, 2001
Revenue:
	Hotel	$	654,127
	Food and beverage		513,680
	Golf		169,449
	Other		499,100
			1,836,356
Costs & operating expense:
	Hotel		276,496
	Food and beverage		361,835
	Golf		97,668
	Other		664,511
	General and administrative		1,071,205
	Interest expense		29,322
			2,501,037
Net loss		$	(664,681	)

On November 19, 2001, GH II, an affiliated company and lessor of Tamarron, sold Tamarron for $9,500,000. A portion of the proceeds were contributed to the Company as a capital contribution and were used to settle the remaining balance due under the $5,000,000 mortgage note from the previous owners.

Page 9

GOLF HOST RESORTS, INC.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The comparative results for 2001 exclude the activities of the Tamarron Resort, which the Company assumed responsibility for the net income (loss) under the terms of a lease agreement entered into between the Company and Golf Host II during 2000. Golf Host II sold the Tamarron Resort on November 19, 2001. The exclusion of Tamarron’s results allows for an appropriate comparison on a period to period basis for the Innisbrook property.

During the first quarter of 2002, business results reflect our customers’ increased caution and concerns about travel subsequent to the 9/11 tragedy. Total room nights at the Innisbrook property were down 9,055 or 23.7% as a result of our contingency of business segment having postponed or reduced their travel budget and plans. This decrease was primarily driven by our group business sector as the actual group room nights were down 8,834 or 29.5%. Group meeting planners are scheduling meetings for shorter durations and the booking window has been reduced from 12 to 18 months to 6 to 12 months. It is also more difficult to get these customers to commit to booking time at the resort due to their perception of the uncertain U.S. economy. Coupled with the reduction in room nights, average guest spending dropped from $544.87 to $496.15 per room night for the comparative periods. The combination of reduced room nights and spending per room night produced gross revenue reductions of $6,355,000 or 30.5%. In an effort to respond to these unsatisfactory changes, the Company aggressively reduced operating expenses, in the aggregate of $3,682,000 or 23.7%, in order to manage performance for the first quarter of 2002. The reduction in revenue and the Company’s inability to offset its fixed costs of operating the Innisbrook property resulted in a net reduction of operating income before income (loss) leased assets of $2,638,000.

Interest expense of approximately $2,370,000 in 2002 is relatively consistent with the 2001 amount of $2,421,000. The Company continues to accrue its monthly interest liability associated with the Golf Trust of America participating mortgage even though it has been unable to make the cash payments of principal and interest beginning with the October 1, 2001 due date. The Company is still negotiating with Golf Trust and expects to arrive at an amicable solution before the end of first half of 2003. Note 7 of the Company’s 2001 10-K and the Financial Condition and Liquidity discussion provide a more detailed description regarding this mortgage.

During the quarter, the Company has set aside $580,000 to be utilized for capital improvements. Expenditures during the quarter include $109,000 that have been utilized to fund golf cart, golf course equipment, computer equipment and food & beverage equipment leases. In addition, $19,000 was used for maintenance and minor repairs on the food and beverage facilities.

Financial Condition and Liquidity

The Company’s working capital position inclusive of loans in default in the amount of $78,975,000, has decreased to approximately $89,157,000 as of March 31, 2002. An $865,000 improvement in working capital from the December 31, 2001 deficit of $90,022,000 is primarily the result of net income after interest of $203,000.

The Company experiences seasonal fluctuations in operations, which impact its net working capital position. Fluctuations in working capital have been managed in the past through the utilization of a $3,000,000 accounts receivable revolving credit line. As described below, the company has defaulted on its mortgage obligation to Golf Trust of America (“GTA”). As a result of that default, Wells Fargo Business Credit, Inc. elected to terminate their credit line with Golf Host Resorts effective May 23, 2002. While the company has utilized this credit line to facilitate short-term cash needs in past years, its utilization during 2002 has been limited. The Resort will attempt to develop a replacement facility upon completion of the loan settlement agreement. Management believes that the Company will have to restructure the GTA loan for the economic viability of the Resort.

Page 10

GOLF HOST RESORTS, INC.
Management’s Discussion and Analysis
of Finanical Condition and Results of Operations

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Continued

In order to preserve its legal position, GTA has asserted its right to accelerate payments of the total outstanding principal and interest amounts and continues to negotiate a settlement as described below. As of January, 2003. The Company is seeking to negotiate a Settlement Agreement with GTA. In connection with the proposed Settlement Agreement, the Company would transfer to GTA the resort property, three condominium properties located at the Innisbrook Resort, the Company’s GTA stock interests, and all rights, title and interests of the Company under existing contracts and agreements. In addition, the Company would provide a limited indemnity to defend and hold harmless GTA (and its affiliates) from and against any and all costs, liabilities, claims, losses, judgments or damages arising out of or in connection with the Class Action Lawsuit, as well as liabilities accruing on or before the closing date related to employee benefits and liabilities for contracts or agreements not disclosed by the Company to GTA. In return, it is anticipated the GTA would deliver to the Company a duly executed release. No Settlement Agreement has yet been signed and no terms are definite. Neither GTA nor any of its affiliates is under any obligation to continue negotiating with the Company or to execute the Settlement Agreement and could initiate foreclosure proceedings and pursue its other remedies at any time.

As noted in the Company’s 10-K for December 31, 2001, management determined that due to declining demand in the hotel golf resort business and reduced rental pool participation which led to declines in operating results, impairment had occurred. At December 31, 2000, an impairment charge of $7,441,000 was recorded. As a result of the continued decline in destination golf resort business during 2001 and the events of September 11, 2001, the Company determined that further impairment had occurred and, consequently, recognized an additional $3,000,000 impairment during the quarter ended September 30, 2001.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

The Registrant does not have significant market risk with respect to foreign currency exchanges or other market rates. The Registrant’s debt has a fixed contractual interest rate through the year 2027 and, accordingly, fluctuations in interest rates are not expected to affect financial results.

ITEM 4. Controls and Procedures

Within the 90 days prior to the date of this report, the Registrant’s management, including the Chief Executive Officer, the Principal Financial Officer and the Registrant’s agent (Westin North American Management Company), carried out an evaluation of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon the evaluation, the Registrant’s Chief Executive Officer and the Principal Financial Officer concluded that the Registrant’s disclosure controls and procedures are effective in timely alerting them to material information to be included in the Registrant’s periodic SEC filings.

There have been no significant changes in the Registrant’s internal controls or in other factors that could significantly affect internal controls subsequent to the date the Chief Executive Officer and the Principal Financial Officer carried out this evaluation.

Page 11

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Golf Hosts, Inc. the Company’s parent, has been named as a defendant in a consolidated class action lawsuit whereby the plaintiffs allege breaches of contract, including breaches in connection with the Rental Pool Master Lease Agreement. The plaintiffs are seeking unspecified damages and declaratory judgment stating that the the plaintiffs are entitled to participate in the rental pool if one exists and a limitation of golf course access to persons who are either condominium owners, members, their accompanied guest, or guests of the resort. Deposition of class members and others, including depositions of prior executives of Golf Host Resorts, have been taken and additional discovery remains. The previously scheduled trial date of February 3, 2002 has been postponed by the Court; a new trial date has not yet been set. As this litigation continues, the Company is not yet able to determine whether the resolution of this matter will have a material adverse effect on the Company’s financial condition or results of operations although the Company believes Golf Hosts, Inc. has successful defenses based upon consultations with legal counsel and intends to vigorously defend this action.

Item 2. Changes in Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable

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

Not applicable

Item 5. Other Information

Pursuant to an agreement with the SEC staff, included in the 10-Q filing are unaudited financial statements of the Innisbrook Rental Pool Lease Operation for the quarters ended March 31, 2002 and 2001 and of the Tamarron Rental Pool Lease Operation for the quarter ended March 31, 2001.

Item 6. Exhibits and Reports on Form 8-K

(a) The following exhibits are included in this Form 10-Q:

99.1	President Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
99.2	Principal Financial Officer Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

(b) The Registrant did not file Form 8-K during the three months ended March 31, 2002.

Page 12

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.

GOLF HOST RESORTS, INC.

Date: March 6, 2003	By:	/s/ Merrick Kleeman
		Merrick Kleeman President
Date: March 6, 2003	By:	/s/ R. Keith Wilt
		R. Keith Wilt Vice President and Treasurer (Principal Financial Officer)

Page 13

RENTAL POOL LEASE OPERATION

The following unaudited financial statements of the Innisbrook Rental Pool Lease Operation (the Rental Pool) are for the quarters ended March 31, 2002 and 2001.

The operation of the Rental Pool is tied closely to that of Golf Host Resorts, Inc. (the Company), and provide for distribution of a percentage of the Company’s room revenues, as defined in the Rental Pool Master Lease Agreements (“MLA”), to participating condominium owners (Participants).

Effective January 1, 2002, the Company replaced the MLA, which expired on December 31, 2001, with a new Mater Lease Agreement (“NMLA”). The NMLA provides for Adjusted Gross Revenues, as defined, to be divided 40% to the Innisbrook participants and 60% to the Company. At December 31, 2001, 605 condominium owners had elected to participate in the NMLA while 13 had elected to participate or remain in the Guaranteed Distribution Master Lease Agreement (“GMLA”).

The Innisbrook Rental Pool Operation is party to lease agreements with an affiliated entity, whose ability to continue as a going concern is in substantial doubt.

The operation of the Rental Pool is more fully discussed in Form 10-K, for the fiscal year ended December 31, 2001 (file No. 2-64309).

Page 14

INNISBROOK RENTAL POOL LEASE OPERATION
BALANCE SHEETS

DISTRIBUTION FUND

	March 31,
	2002		December 31,
	(unaudited)		2001
ASSETS
RECEIVABLE FROM GOLF HOST RESORTS, INC. FOR DISTRIBUTION	$	1,790,798	$	948,703
INTEREST RECEIVABLE FROM MAINTENANCE ESCROW FUND		15,856		17,408
	$	1,806,654	$	966,111
LIABILITIES AND PARTICIPANTS’ FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION		1,480,977		763,301
DUE TO MAINTENANCE ESCROW FUND		325,677		202,810
	$	1,806,654	$	966,111
MAINTENANCE ESCROW FUND
ASSETS
CASH AND CASH EQUIVALENTS	$	2,806,956	$	1,242,415
SHORT-TERM INVESTMENTS		2,185,000		1,330,000
RECEIVABLE FROM DISTRIBUTION FUND		325,677		202,810
CONSTRUCTION WORK IN PROGRESS		7,284		—
CARPET CARE RECEIVABLE		23,576		13,692
INTEREST RECEIVABLE		9,012		13,925
	$	5,357,505	$	2,802,842
LIABILITIES AND PARTICIPANTS’ FUND BALANCES
ACCOUNTS PAYABLE	$	2,820	$	58,976
INTEREST PAYABLE TO DISTRIBUTION FUND		15,856		17,408
PARTICIPANTS’ FUND BALANCES		5,338,829		2,726,458
	$	5,357,505	$	2,802,842

These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of the Rental Pool Operation, include all adjustments which are necessary for a fair presentation.

Page 15

INNISBROOK RENTAL POOL LEASE OPERATION
STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED MARCH 31, 2002 AND 2001
(unaudited)

DISTRIBUTION FUND

		Year-to-Date
		2002			2001
GROSS REVENUES		$	4,927,742		$	7,267,850
DEDUCTIONS:
	Agents’ commissions		194,790			298,642
	Credit card fees		116,319			51,265
	Audit fees		4,562			3,625
	Uncollectable room rents		16,132			—
	Linen replacements		42,921			—
	Rental pool complimentary fees		795			—
			375,519			353,532
ADJUSTED GROSS REVENUES			4,552,223			6,914,318
MANAGEMENT FEE			(2,728,932	)		(3,446,207	)
GROSS INCOME DISTRIBUTION			1,823,291			3,468,111
ADJUSTMENTS TO GROSS INCOME DISTRIBUTION:
	Management fee		(1,412	)		(378,788	)
	Marketing fee		(770	)		(206,612	)
	Miscellaneous pooled expense		(92	)		(22,130	)
	Corporate complimentary occupancy fees		3,818			10,796
	Interest (Paragraph 3.1 (3))		(3,183	)		—
	Westin Associate room fees		22,736			24,059
	Occupancy fees		(361,863	)		(484,363	)
	Advisory Committee expenses		(55,451	)		(36,626	)
NET INCOME DISTRIBUTION			1,427,074			2,374,447
ADJUSTMENTS TO NET INCOME DISTRIBUTION:
	Occupancy fees		361,863			484,363
	Hospitality suite fees		1,861			—
	Greens fees		—			3,874
	Additional participation credit		—			720
AMOUNT AVAILABLE FOR DISTRIBUTION TO PARTICIPANTS		$	1,790,798		$	2,863,404
Average daily distribution		$	35.32		$	49.76
Average room rate		$	168.96		$	190.15
Occupied room nights			29,166			38,221
Available room nights			50,707			57,549
Occupancy percentage			57.5	%		66.4	%
Average number of available units			563			639

These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of the Rental Pool Operation, include all adjustments which are necessary for a fair presentation.

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INNISBROOK RENTAL POOL LEASE OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES
FOR THE QUARTERS ENDED MARCH 31, 2002 AND 2001
(unaudited)

DISTRIBUTION FUND

		Year-to-date
		2002			2001
BALANCE, beginning of period		$	—		$	—
ADDITIONS:
	Amount available for distribution		1,790,798			2,863,404
	Interest received or receivable from Maintenance Escrow Fund		15,856			24,172
REDUCTIONS:
	Amounts withheld for Maintenance Escrow Fund		(325,677	)		(432,074	)
	Amounts accrued or paid to participants		(1,480,977	)		(2,455,502	)
BALANCE, end of period		$	—		$	—
MAINTENANCE ESCROW FUND
BALANCE, beginning of period		$	2,726,458		$	1,929,901
ADDITIONS:
	Amounts withheld from occupancy fees		325,677			432,074
	Interest earned		15,856			24,172
	Other cost reimbursement		—			397,412
	Charges to participants to establish or restore escrow balances		4,176,234			222,168
REDUCTIONS:
	Maintenance charges		(172,738	)		(161,024	)
	Refurbishment Phase II		(1,152,467	)		—
	Carpet care reserve deposit		(14,475	)		(24,219	)
	Interest accrued or paid to Distribution Fund		(15,856	)		(24,172	)
	Refunds to participants as prescribed by the master lease agreements		(549,860	)		(57,806	)
BALANCE, end of period		$	5,338,829		$	2,738,506

These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of the Rental Pool Operation, include all adjustments which are necessary for a fair presentation.

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RENTAL POOL LEASE OPERATION

The following unaudited financial statements of the Tamarron Rental Pool Lease Operation (the Rental Pool) are for the quarter ended March 31, 2001.

The operation of the Rental Pool was tied closely to that of Golf Host Resorts, Inc. (the Company), and provided for distribution of a percentage of the Company’s room revenues, as defined in the Rental Pool Master Lease Agreement, to participating condominium owners (Participants).

On November 19, 2001, Golf Host II, Inc., owners of Tamarron, sold the Tamarron Resort for $9,500,000.

The operation of the Rental Pool is more fully discussed in Form 10-K, for the fiscal year ended December 31, 2001 (file No. 2-64309).

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TAMARRON RENTAL POOL LEASE OPERATION
BALANCE SHEETS

DISTRIBUTION FUND

		March 31,
		2001
		(unaudited)
ASSETS
CASH		$	1,000
RECEIVABLE FROM GOLF HOST RESORTS, INC. FOR DISTRIBUTION			263,981
INTEREST RECEIVABLE FROM MAINTENANCE ESCROW FUND			1,123
		$	266,104
LIABILITIES AND PARTICIPANTS’ FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION		$	205,042
DUE TO MAINTENANCE ESCROW FUND			61,062
		$	266,104
MAINTENANCE ESCROW FUND
ASSETS
CASH AND CASH EQUIVALENTS		$	102,691
DUE FROM DISTRIBUTION FUND			61,062
INVENTORY:
	Linen		45,343
	Materials and supplies		6,597
DEPOSITS			4,829
		$	220,522
LIABILITIES AND PARTICIPANTS’ FUND BALANCES
ACCOUNTS PAYABLE		$	3,428
INTEREST PAYABLE TO DISTRIBUTION FUND			1,123
PARTICIPANTS’ FUND BALANCES			215,971
		$	220,522

These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of the Rental Pool Operation, include all adjustments which are necessary for a fair presentation.

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TAMARRON RENTAL POOL LEASE OPERATION
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 2001
(unaudited)

DISTRIBUTION FUND

			Year-to-date
			2001
GROSS REVENUES			$	607,826
DEDUCTIONS:
	Agents’ commissions			27,085
	Sales and marketing expenses			45,587
	Audit fees			3,255
				75,927
ADJUSTED GROSS REVENUES				531,899
MANAGEMENT FEE				(265,949	)
GROSS INCOME DISTRIBUTION				265,950
ADJUSTMENTS TO GROSS INCOME DISTRIBUTION:
		Corporate complimentary occupancy fees		769
		Occupancy fees		(98,032	)
		Designated items		(11,045	)
		Advisory Committee expenses		(2,174	)
POOLED INCOME				155,468
ADJUSTMENTS TO POOLED INCOME:
		Occupancy fees		98,032
NET INCOME DISTRIBUTION			$	253,500
		Average daily distribution	$	12.15
		Average room rate	$	82.83
		Room nights		7,338
		Available room nights		20,856
		Occupancy percentage		35.0	%
		Average number of available units		233

These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of the Rental Pool Operation, include all adjustments which are necessary for a fair presentation.

Page 20

TAMARRON RENTAL POOL LEASE OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES
FOR THE QUARTER ENDED MARCH 31, 2001
(unaudited)

DISTRIBUTION FUND

		Year-to-date
		2001
BALANCE, beginning of period		$	—
ADDITIONS:
	Amounts available for distribution		253,500
	Interest received or receivable from Maintenance Escrow Fund		1,123
REDUCTIONS:
	Amounts withheld for Maintenance Escrow Fund		(49,581	)
	Amounts accrued or paid to participants		(205,042	)
BALANCE, end of period		$	—
MAINTENANCE ESCROW FUND
BALANCE, beginning of period		$	174,714
ADDITIONS:
	Amounts withheld from occupancy fees		49,016
	Interest earned		1,123
	Reimbursement of designated items		11,045
	Charges to participants to establish or restore escrow balances		27,772
REDUCTIONS:
	Maintenance and inventory charges		(33,005	)
	Refurbishing charges		—
	Interest accrued or paid to Distribution Fund		(1,123	)
	Designated items		(11,045	)
	Refunds to participants as prescribed by Master Lease Agreement		(2,526	)
BALANCE, end of period		$	215,971

These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of the Rental Pool Operation, include all adjustments which are necessary for a fair presentation.

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