Form 10-K Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~ANNUAL~~FORM ~~REPORT~~10-K

ANNUAL REPORT ~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~ANNUAL ~~the~~REPORT ~~fiscal~~PURSUANT ~~year~~TO ~~ended~~SECTION ~~December 31,~~13 ~~2000~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Commission~~For ~~File~~the ~~No.~~fiscal year ended December ~~2-64309~~31, 2002

~~GOLF~~Commission ~~HOST~~File ~~RESORTS, INC~~No. 2-64309

~~State~~GOLF ofHOST ~~Colorado~~RESORTS, ~~Employer Identification No~~INC. ~~84-0631130~~

~~591~~Federal W.Employer ~~Putnam~~Identification ~~Ave~~No.~~, Greenwich, CT 06830~~ 84-0631130

~~Telephone~~591 ~~Number~~W. ~~(727) 942-2000~~Putnam Ave., Greenwich, CT 06830

~~SECURITIES~~Telephone ~~REGISTERED~~Number: ~~PURSUANT TO SECTION 12~~(b727) ~~OF THE ACT:~~ 942-2000

~~None~~SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

~~SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:~~None

~~None~~SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

~~Indicate by check mark whether the registrant~~None

(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 past 90 days.

Indicate by check mark whether the Registrant

Yes No

(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 past 90 days.

~~Issuer has no common stock subject to this report.~~Yes x o No

~~PART~~No Iestablished market exists for the Registrant’s shares of common or preferred stock, so there is no market value for such shares. There are no shares of common or preferred stock held by non-affiliates as of June 30, 2002.

~~Item 1.~~Issuer ~~Business~~has no common stock subject to this report.

~~Golf~~Indicate ~~Host~~by ~~Resorts,~~check ~~Inc.~~mark ~~(the~~if ~~“Company”)~~disclosure ~~was formed in July 1972 and is engaged in the operation~~ of ~~The~~delinquent ~~Westin~~filers ~~Innisbrook~~pursuant Resort in Tarpon Springs, Florida (“Innisbrook”) and Sheraton Tamarron Resort in Durango, Colorado (“Tamarron”). Innisbrook and Tamarron (the “Resorts”) offer championship quality golf facilities, restaurant and conference facilities, recreational activities including swimming and tennis and related resort activities. The Resorts are managed by Westin Hotel Company and Sheraton Operating Corporation, respectively, under long-term management agreements. Hilton Hotel Corporation (“HHC”) managed Tamarron from December 1, 1995 to ~~August 31, 1998. Subsequent to year end, Tamarron was sold to an unaffiliated entity. Prior to June 23, 1997, the Company was an 80% owned subsidiary~~ Item 405 of Golf Hosts, Inc. (“GHI”). The minority shareholders of the Company were also the majority shareholders of GHI. On June 23, 1997, TM Golf Hosts, Inc. (“TMGHI”) acquired all of the outstanding shares of the Company. Concurrently, TMGHI and GHI merged with the legal survivor being GHI, which now owns 100% of the Company. The Company receives significant revenue from food and beverage sales, and from golf operations (primarily golf fees and merchandise sales). Also, during 1994, the Company undertook the development of nine residential homesites at Tamarron, identified as Estates at TamarronRegulation S-~~Highpoint.~~K All of the homesites have been sold and closed with the last closing occurring in 1997. During 1995, the Company began a second development of nine residential homesites, Estates at Tamarron-Pine Ridge. Two of the sites were sold and closed during 1996, four during 1998, and the remaining three were sold and closed during 1999. During 1999, the Company began a third development of nine residential homesites, Estates at Tamarron –Crescent Ridge. All nine homesites were sold and closed during 2000. The majority of the condominium owners at the Resorts provide such apartments as resort accommodations under rental pool lease operations. The Resorts are the lessees under the lease operation agreements, which provide for the distribution of a percentage of room revenues, as defined, to participating condominium owners. Accordingly, the Company does not bear the expense of financing as well as certain other operating costs of the rental units. Condominium ownership, simply stated, is a realty subdivision in which the individual “lots” are apartment units. Instead of owning a plot of ground, the condominium owner owns the air space where his condominium unit is located. This leaves substantial properties in interest which are not ~~individually~~contained ~~owned~~herein, ~~e.g., the underlying land, roadways, parking lots, building foundations, exterior walls~~ and ~~roofs,~~will ~~garden~~not ~~areas,~~be ~~utility lines~~contained, et cetera. These areas are termed “common property” or “common elements” and each condominium owner has an undivided fractional interest in such property. The condominium owners at each of the Resorts have established an “Association of Condominium Owners” to ~~administer and maintain such property and to conduct business of~~ the best ~~condominium owners, such as maintaining insurance on the real property, upkeep~~ of ~~the~~Registrant’s ~~structures~~knowledge, ~~maintenance~~I ofdefinitive ~~the~~proxy ~~grounds,~~or ~~and~~information ~~provisions~~statements incorporated for certain utilities. The Associations assess fees to defray such expenses and to establish necessary reserves. Such charges, if not timely paid, may constitute a lien upon the separate condominium units. Each condominium owner must pay ad valorem property taxes and assessments for electricity, and to such matters independent of the other unit owners. These expenses would be incurred by ~~owners~~reference ~~of condominium units, regardless of an election to participate~~ in ~~the~~Part ~~rental~~III ~~pool. With respect to governing the affairs~~ of ~~the~~this ~~Association,~~Form 10-K ~~which~~or isany ~~subject~~amendments to this ~~state statutes, the participating condominium owners are accorded one (1) vote per condominium unit owned~~Form 10-K. x

~~-2-~~1

~~The~~TABLE ~~percentages~~OF ~~of the foregoing revenue components to total revenues are as follows:~~CONTENTS

		2000			1999			1998
Revenues
	Resort facilities		33.3	%		35.5	%		34.0	%
	Food and beverage		30.9	%		29.4	%		27.0	%
	Golf		25.0	%		25.2	%		26.7	%
	Other		10.8	%		9.9	%		12.3	%
	Total		100.0	%		100.0	%		100.0	%


Part II
Part III
Part IV
SIGNATURES

TheTable Company hosts more than a thousand conferences and related group meetings each year with its clients coming from a variety of industries, primarily from the central and eastern United States. Accordingly, the loss of a single client or a few clients would have no significant adverse effect on the Company’s business. The conference-oriented resort business is quite competitive; however, the Company has established itself as a leader in its industry and enjoys an excellent reputation with its clients. Its major competitors are other conference and golf-oriented resorts throughout the country. The Resorts’ revenues are seasonal, with Innisbrook’s peak season being in the winter and spring and Tamarron’s being in the summer. The Company has, on average, approximately 1,200 employees (900 at Innisbrook and 300 at Tamarron).Contents

~~Item~~Indicate by check mark if the Registrant is an accelerated filer (as defined in Rule 12b-2. ~~Description~~ of ~~Properties~~the Act).

Innisbrook is a condominium resort project situated on approximately 850 acres of land located in the northern portion of Pinellas County, Florida, near the Gulf of Mexico. It is north of Clearwater (approximately 9 miles) and west of Tampa (approximately 20 miles). There are 938 condominium units, 36 of which are strictly residential, with the balance eligible for rental pool participation. Of these 902 eligible units, 550, on average, participate in the rental pool. The resort complex includes 72 holes of golf; practice ranges; three clubhouses with retail golf, food and beverage outlets; three conference and exhibit buildings; five swimming pools; a themed water attraction; a recreation center; tennis/fitness facility and numerous administrative and support structures. Tamarron is a condominium resort project situated on approximately 730 acres of land located in the northern portion of La Plata County, Colorado. It is north of Durango (approximately 18 miles) and south of Silverton (approximately 28 miles). The property is surrounded on three sides by the San Juan National Forest and is readily accessible via U. S. Highway 550. There are 381 condominium units, all of which are eligible for rental pool participation. Approximately 275 units, on average, participate in the rental pool. The resort complex includes 18 holes of golf; a practice range; an indoor swimming pool/fitness facility; several restaurants and lounges; a conference facility; a tennis complex and numerous administrative and support facilities and structures. During 1994 and 1995, approximately 24 acres of land at Tamarron were set aside for the Estates at Tamarron residential homesite development. As of this filing, 27 homesites have been sold and closed. Yes o x No

~~-3-~~On December 31, 2002, there were 5,000 common shares outstanding of the Registrant’s only class of common stock. On December 31, 2002, there were 4,577,000 shares of 5.6% cumulative preferred stock outstanding, which is the only class of preferred stock outstanding. The Registrant’s parent, Golf Hosts, Inc. (“GHI”), wholly owns both classes of stock, and there is no active market for the trading of these shares. Therefore, the shares are not listed or registered with an exchange.

AtPART December 31, 2000, the properties are encumbered by various mortgages totaling $82,142,921. Reference is made to Note 7 of Notes to Consolidated Financial Statements of Golf Host Resorts, Inc. and Subsidiary contained elsewhere in this filing for a more detailed description of these mortgages.I

Item 31. ~~Legal Proceedings~~Business

~~The~~Golf ~~Company,~~Host ~~in the normal course of operations~~Resorts, ~~is subject to claims and lawsuits~~Inc. ~~The~~(the “Company”) ~~does~~is ~~not~~a ~~believe~~corporation that ~~the~~was ~~ultimate~~formed ~~resolution~~in July of1972 ~~such matters will materially impair operations or have an adverse effect on the Company’s financial position~~ and ~~results~~operates ofWestin ~~operations.~~Innisbrook ~~The~~Resort ~~Company has been named as a defendant~~ in aTarpon ~~consolidated~~Springs, ~~class~~Florida (“Innisbrook”) ~~action~~and ~~lawsuit~~operated ~~wherein~~ the ~~plaintiffs~~Sheraton ~~allege~~Tamarron aResort ~~breach of contract~~ in ~~connection~~Durango, ~~with~~Colorado (“Tamarron”) ~~the~~through ~~Rental~~November 18, ~~Pool Master Lease Agreement~~2001. ~~The~~Innisbrook ~~plaintiffs are seeking unspecified damages~~ and aTamarron ~~declaratory judgement declaring that~~ (the “Resorts”) ~~plaintiffs~~offer ~~are~~championship ~~entitled~~quality ~~to participate in the rental pool if one exists and a limitation of~~ golf ~~course access to persons who are either condominium owner members~~facilities, ~~their~~restaurant ~~accompanied~~and conference ~~guests~~facilities, ~~or guests of the resort. Depositions of class members~~ and ~~others,~~recreational activities including ~~depositions of prior executives of Golf Host Resorts~~swimming, ~~have taken place~~ tennis and ~~additional~~related ~~discovery~~resort ~~remains~~activities. AWestin ~~court~~Hotel ~~date has not been set. As this litigation is in its early stages, the~~ Company isand ~~not~~Sheraton ~~yet~~Operating Corporation ~~able~~manage ~~to determine whether~~ the ~~resolution~~Resorts, ofrespectively, ~~this~~under ~~matter~~long-term ~~will~~management agreements. ~~have~~Effective aNovember 19, ~~material~~2001, ~~adverse~~Tamarron ~~effect~~was onsold ~~the Company’s financial condition or results of operations although the Company believes it has successful defenses and intends~~ to ~~vigorously~~an ~~defend this action~~unaffiliated entity.

~~Item~~Prior to June 423, 1997, the Company was an 80% owned subsidiary of GHI. ~~Submission~~The minority shareholders of ~~Matters~~the toCompany awere ~~Vote~~also the majority shareholders of GHI. ~~Security~~On ~~Holders~~June 23, 1997, TM Golf Hosts, Inc. (“TMGHI”) acquired all of the outstanding shares of the Company. Concurrently, TMGHI and GHI merged, with the legal survivor being GHI, which now owns 100% of the Company.

~~Not~~The ~~applicable~~Company receives the majority of its operational revenue from the rental of hotel accommodations, food and beverage sales, and from golf operations (primarily golf fees and merchandise sales) and club membership initiation fees and dues. In addition, the Company, during the years 1994 through 1999, developed twenty-seven residential home sites at the Tamarron property. All other developable land at the Tamarron property was sold contemporaneously with the sale of Tamarron on November 19, 2001.

~~Part~~The IImajority of the condominium apartment owners at Innisbrook provide their apartments as resort accommodations under rental pool lease operations. Innisbrook is the lessee under the lease operation agreements, which provide for the distribution of a percentage of room revenues, as defined, to participating condominium owners. Accordingly, the Company does not bear the expense of financing as well as certain other operating costs of the rental units. The Company bears the expense of all other operating aspects of Innisbrook.

~~Item 5~~Condominium ownership, simply stated, is a realty subdivision in which the individual “lots” are apartment units. ~~Market~~Instead of owning a plot of ground, the condominium owner owns the air space where the condominium unit is located. This leaves substantial properties in interest which are not individually owned, e.g., the underlying land, roadways, parking lots, building foundations, exterior walls and roofs, garden areas, utility lines, et cetera. These areas are termed “common property” or “common elements” and each condominium owner has an undivided fractional interest in the common property. The condominium owners at Innisbrook have established an “Association of Condominium Owners” to administer and maintain this property and to conduct business of the condominium owners, such as maintaining insurance on the real property, upkeep of the structures, maintenance of the grounds, and provisions for ~~Registrant’s~~certain utilities. ~~Common~~The ~~Equity~~Association assesses fees to defray these expenses and ~~Related~~to establish ~~Stockholder~~necessary ~~Matters~~reserves. An assessment, if not timely paid, may constitute a lien upon the separate condominium unit. Each condominium owner must pay ad valorem property taxes and assessments for

The Company’s stock is privately held and there is no established market for the stock. There are a total of 1,283 condominium units allowing rental pool participation by their owners, of which three are owned by a subsidiary of the Company, Golf Host Condominium, Inc. (GHC). Of the units not owned by GHC, 1,259 were sold under Registration Statements effective through March 1, 1983. The remaining 21 units were sold via private offerings exempt from registration with the Securities and Exchange Commission. The condominium units not owned by the Company or its affiliate are held by 1,145 different owners. The condominium units sold by the Company, allowing rental pool participation, are deemed to be securities because of the rental pool feature (see Item 1); however, there is no market for such securities other than the normal real estate market. Since the security is real estate, no dividends have been paid or will be paid.2

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~~Item 6~~electricity, and to such matters independent of the other unit owners. ~~Selected~~These expenses ~~Financial~~would ~~Data~~be incurred by owners of condominium units, regardless of an election to participate in the rental pool. With respect to governing the affairs of the Association, which is subject to state statutes, the participating condominium owners are accorded one vote per condominium unit owned.

									191 day period			174 day period
	Year Ended								ended			ended		Year Ended
	December 31,								December 31,			June 23,		December 31,
	2000			1999			1998		1997			1997		1996
Operating revenue	$	56,591,669		$	59,664,822		$	58,184,711	$	18,023,753		$	31,750,008	$	57,710,742
Net income (loss)	$	(14,806,630	)	$	(7,196,907	)	$	7,822,846	$	(5,492,683	)	$	1,488,116	$	1,370,523
Net income (loss) per common share	$	(3,012.59	)	$	(1,490.64	)	$	1,513.31	$	(1,125.15	)	$	272.98	$	222.84
Total Assets	$	71,062,144		$	86,895,774		$	98,807,861	$	92,897,633		$	—	$	53,135,194
Notes Payable	$	83,101,297		$	84,624,425		$	83,436,029	$	77,999,163		$	—	$	28,474,570
Cash dividends per Common share	$	—		$	—		$	—	$	—		$	—	$	—

The percentages of the revenue components discussed above as part of the Company’s total revenues are as follows:

-5-


	2002			2001			2000

Revenues
Resort facilities		30.3	%		34.1	%		33.3	%
Food and beverage		28.2	%		27.2	%		30.9	%
Golf		28.7	%		27.9	%		25.0	%
Other		12.8	%		10.8	%		10.8	%

Total		100.0	%		100.0	%		100.0	%

~~Item 7~~The Company hosts approximately 1,000 conferences and related group meetings each year with its guests representing a variety of industries, primarily from the central and eastern United States. ~~Results~~Accordingly, the loss of ~~Operations~~a single or a few conferences would have no significant adverse effect on the Company’s business.

~~Guest~~The ~~occupancy~~conference-oriented ~~during~~resort ~~the~~business ~~last~~is ~~three~~quite ~~years~~competitive; however, ~~measured~~the Company byhas ~~room~~established ~~nights,~~itself ~~was~~ as ~~follows:~~a leader in its industry and enjoys an excellent reputation within its market. Its major competitors are other conference and golf-oriented resorts throughout the country.

YEAR	ROOM NIGHTS		% CHANGE
2000		164,052		(4.6	)
1999		171,940		(2.8	)
1998		176,861		11.4

The Resorts’ revenues are seasonal, with Innisbrook’s peak season being in the winter and spring. Tamarron’s peak season when the Company owned it was in the summer.

~~2000~~As ~~Compared~~of ~~to 1999 For the years ended~~ December 31, ~~2000~~2002, ~~and December 31, 1999,~~ the Company recognized total revenue in the approximate amount of $56,592,000 and $59,665,000, respectively, from the rental of condominium units, sales of food and beverage, golf operations, and auxiliary services. The net reduction in overall revenue in the amount of $3,073,000 or 5.2% results from the reduction in room nights noted above equating to revenue reduction of $2,737,000 compounded by a decrease in average spending per room night in the aggregate of $336,000. Average spending per room night decreased from $347.01 in 1999 to $344.96 in 2000. Room nights at both the Innisbrook and Tamarron properties experienced a reduction from 1999. Innisbrook and Tamarron had ~~approximately 7~~,~~300~~ and 600 fewer room nights, respectively. These decreases reflect the continuing increase in competition within this market segment in addition to a general slow down during 2000 in the hospitality industry. The Company continues to seek ways to identify expanded markets for our product. In addition, the Sales and Marketing department has been restructured to further focus and emphasize the core golf aspects of our properties as a competitive advantage. Operating expenses and losses on ~~assets held for sale totaled approximately $61~~average,~~812,000~~ and $55,970,000 for the year ended December 31, 2000, and December 31, 1999, respectively. This increase of $5,842,000 or 10% is a result of: a decrease in the rental pool distribution of $751,000, which is directly related to the reduced room nights noted above; a reduction in Tamarron’s operating losses of $297,000; decreased Sales and Marketing expenses amounting to $233,000; a reduction in the gain on land sales in the amount of $1,295,000; an increase in depreciation and amortization in the amount of $301,000; a provision for intangible impairment of $7,441,000; an increase in payroll and related expenses of $22,000; and a net decrease in all other expenses such as repairs and maintenance, fertilizers and chemicals, office supplies, housekeeping supplies, etc. in the aggregate of $1,935,000. These reductions were implemented in anticipation of reduced operating revenues for the period. Management continues to focus on cost containment measures directed at protecting the Company’s cash flow position. Interest, net for the year ended December 31, 2000, was approximately ~~$9,586,000~~750 ~~as compared to $9,219,000 for the year ended December 31, 1999. This $367,000 increase, or 4.0%, results from the increase in payments~~ full and ~~accruals~~part ~~relating~~time to the GTA financing amounting to $70,000, an increase in utilization of the account receivable credit line generating an $85,000 increase in expense, a reduction in balances owed to the former shareholders producing $10,000 in reduced interest expense, an increase in interest expense associated with accrued property taxes, short-term affiliate loans, capital leases and financial institution service charges, all in the aggregate of approximately $48,000; and a reduction of interest earnings on affiliate advances in the amount of $174,000employees. Effective February 3, 1998, the Company’s election to be treated as a Subchapter S corporation became effective. Subsequent to the 1998 filing period, income taxes are no longer provided for at the Company level.

-On November 29, 2001, the Company received notice from its primary lender that the Company had defaulted on the note payable, in the amount of $78,975,000 as a result of its failure to make the scheduled October 2001 interest payment and all subsequent principal and interest payments. The Company is negotiating a settlement agreement with the lender (See Note 6- of Notes to Consolidated Financial Statements).

~~During~~The ~~1999, the~~ Company ~~changed~~makes ~~its~~available ~~accounting~~free ~~procedures~~of ~~for~~charge ~~start-up~~our ~~costs~~annual ~~related~~report toon ~~the transition from Hilton Hotel Corporation to Westin Hotels and Resorts. This change in accounting policy resulted in a one time write~~Form 10-~~off of $1~~K,~~673,000~~ quarterly inreports ~~1999.~~on ~~1999 Compared to 1998 Revenues from resort operations rose from approximately $58~~Form 10-Q,~~185,000~~ tocurrent ~~$59,665,000.~~reports ~~This~~on ~~increase was a result of a 2.5% increase in guest spending; offset by a 2.~~Form 8%-K ~~decrease in occupancy. Operating expense~~ and ~~losses~~amendments to onthese ~~assets~~reports ~~held~~filed ~~for~~or ~~sale~~furnished ~~increased~~pursuant ~~primarily due~~ to ~~reduced~~Section 13(a) ~~gains~~or on15(d) ~~land~~of ~~sales at Innisbrook in~~ the Securities ~~amount~~Exchange Act of ~~$1,295,000.~~1934 ~~This~~as ~~net~~soon ~~increase~~as inreasonably ~~expenses~~practicable ~~was~~after ~~mitigated~~we electronically byfile ~~management’s~~such ~~efforts~~material towith, ~~reduce~~or ~~operating~~furnish ~~expenses~~it ~~across~~to, the ~~board~~Securities and Exchange ~~on a net basis held the increase in expenses to approximately $536,000~~Commission. ~~The~~These ~~increase~~reports incan ~~interest~~be ~~expense~~obtained isfree ~~primarily~~of ~~attributable~~charge toby contacting: ~~the~~Golf ~~contractual~~Host ~~increase~~Resorts, inInc., ~~the~~Investor ~~GTA~~Relations, ~~interest~~591 ~~rate~~W. ~~That~~Putnam ~~change was approximately $1~~Avenue,~~282~~ Greenwich,~~000.~~ ~~Parent~~CT ~~income~~06830. ~~tax~~These ~~charges~~reports ~~decreased~~are ~~from~~not ~~the~~available ~~1998~~on ~~amount of $13,473,000 to $0 due to~~ the Company’s ~~change to a Subchapter S Corporation during 1998~~ website.

~~Income~~Item 2. ~~Tax Status~~Properties

~~Reference~~Innisbrook is ~~made~~a tocondominium resort project situated on approximately 845 acres of land located in the ~~Notes~~northern toportion ~~Consolidated~~of ~~Financial~~Pinellas ~~Statements~~County, ~~regarding~~Florida, ~~income~~near ~~taxes~~the Gulf of Mexico. It is north of Clearwater (approximately 9 miles) and west of Tampa (approximately 20 miles). There are 938 condominium units, 36 of which are strictly residential, with the balance eligible for rental pool participation. Of these 902 remaining eligible units, 500, on

~~Financial Condition and Liquidity~~3

TheTable Company’s working capital at December 31, 2000, exclusive of assets held for sale, was a deficit of $12,904,000 and the Company’s cash flow from operational sources are currently tight. The Company typically experiences seasonal fluctuation in its net working capital position without significantly impairing its ability to pay trade creditors in a timely manner and satisfy its financial obligations in an orderly fashion. In addition to operational cash flows, the Company anticipates funding its working capital needs through the following sources: available accounts receivable revolving line of credit at Innisbrook amounting to $3,000,000, cash funding by Westin pursuant to the management agreement of up to $2,500,000 per year. The Company is also working with its primary lender, Golf Trust of America, to re-negotiate the participating mortgage. One alternative being discussed is to implement a debt service obligation consistent with available cash flows generated by operations. Changing this loan repayment structure would create a more manageable cash environment. Although this restructuring has not been finalized, a favorable agreement with Golf Trust of America along this line of re-structuring will substantially improve the Company’s ability to meet its obligations. As a result of the additional cash sources described above, the Company assesses its liquidity as manageable.Contents

~~Year~~average, ~~2000~~participate ~~Issue~~in the rental pool on a year to year basis. The resort complex includes 72 holes of golf; practice ranges; three clubhouses with retail golf, food and beverage outlets; three conference and exhibit buildings; five swimming pools; a themed water attraction; a recreation center; a tennis/fitness facility and numerous administrative and support structures.

~~The~~Tamarron, ~~Company~~which ~~has~~was ~~carefully~~sold ~~reviewed~~on ~~the~~November 19, ~~impact~~2001, ofis ~~the~~also ~~Year~~a ~~2000~~condominium ~~issues~~resort project situated on ~~its~~approximately ~~information~~730 ~~technology~~acres ~~and~~of ~~other~~land ~~electronic~~located ~~systems~~in asthe ~~well~~northern portion asof ~~its~~La ~~vendors~~Plata ~~and~~County, ~~suppliers~~Colorado. It ~~has~~is ~~determined~~north ~~the~~of ~~consequences~~Durango (approximately 18 miles) and south of ~~its~~Silverton ~~Year~~(approximately ~~2000~~28 ~~issues~~miles). ~~did~~The ~~not~~property ~~have~~is surrounded on three sides by the San Juan National Forest and ~~will~~is ~~not~~readily accessible ~~have~~via aU. ~~material~~S. ~~impact~~Highway on550. ~~either~~At the ~~future~~time ~~operating~~Tamarron ~~results~~was orsold, ~~financial~~there ~~condition~~were 381 condominium units, all of which were eligible for rental pool participation. Approximately 275 units, on average, participated in the rental pool during the time the Company owned Tamarron. The resort complex included 18 holes of golf; a practice range; an indoor swimming pool/fitness facility; several restaurants and lounges; a conference facility; a tennis complex and numerous administrative and support facilities and structures.

~~-7-~~During the years 1999 and 2001, approximately 35 acres and 34 acres, respectively, of developable land at Innisbrook, contiguous to but not within the operational boundaries of Innisbrook, was sold to a non-affiliated entity.

~~Item~~At December 831, 2002, Innisbrook is encumbered by various mortgages totaling $78,975,000. ~~Financial~~Reference is made to Note 6 of Notes to Consolidated Financial Statements ~~and~~contained ~~Supplementary~~elsewhere ~~Data~~in this filing for a more detailed description of these mortgages.

Index to Consolidated Financial Statements	Page
Report of Independent Certified Public Accountants		F-1
Consolidated Balance Sheets		F-2
Consolidated Statements of Operations		F-3
Consolidated Statements of Changes in Shareholder’s Deficit		F-4
Consolidated Statements of Cash Flows		F-5
Notes to Consolidated Financial Statements – December 31, 2000 and 1999		F-6
Innisbrook Rental Pool Lease Operation		F-19
Tamarron Rental Pool Lease Operation		F-29

Item 3. Legal Proceedings

~~All~~The ~~other~~Company, ~~schedules~~in ~~are~~the ~~omitted~~normal ~~because~~course ~~they~~of ~~are~~operations, is subject to claims and lawsuits. The Company does not ~~applicable~~believe orthat the ~~required~~ultimate ~~information~~resolution isof ~~shown~~such matters inwill materially impair operations or have an adverse effect on the Company’s financial ~~statements~~position orand ~~notes~~results ~~thereto~~of operations.

~~Item 9~~The Company’s parent (Golf Hosts, Inc.) ~~Changes~~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 ~~Disagreements~~declaratory judgment stating that the plaintiffs are entitled to participate in the rental pool if one exists, a limitation of the total number of club memberships and a limitation of golf course access to persons who are either condominium owners who are members, their accompanied guests, or guests of the resort. Depositions of class members and others, including depositions of former executives of the Company, have been taken and additional discovery remains. The previously scheduled trial date of February 3, 2003 had been postponed by the court; a new trial date has not yet been set. As this litigation is still in progress, the Company is not yet able to determine whether the resolution of this matter will have a material adverse effect on ~~Accounting~~the Company’s financial condition or results of operations although the Company believes GHI has successful defenses based upon consultations with legal counsel, and ~~Financial~~intends ~~Disclosure~~to vigorously defend this action.

~~Not applicable~~Item 4. Submission of Matters to a Vote of Security Holders

~~Part~~Not ~~III~~applicable

~~Item 10. Directors and Executive Officers of the Registrant~~4

Name / Position	Age		Five-Year Principal Occupation
Merrick R. Kleeman President, Secretary and Director		37	Managing Director, Starwood Capital Group
Jeffrey R. Rosenthal Senior Vice President		49	Chief Operating Officer, Starwood Capital Group (April 1997 – present) Chief Financial Officer, Reyes Holdings (February 1996 – April 1997) Chief Financial Officer, JBM Realty Company (December 1987 – February 1996)
Jerome C. Silvey Senior Vice President		43	Chief Financial Officer, Starwood Capital Group
Keith Wilt Vice President and Treasurer		48	Vice President and Treasurer, Golf Host Resorts, Inc. (August 1999 – Present) Chief Financial Officer, The Suncoast Companies (March 1997 – August 1999) Consultant (January 1995 – March 1997)

~~All~~Part ~~directors and officers serve a one-year term or until their successors are elected.~~II

~~-8-~~Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

~~Item 11.~~The ~~Executive~~Company’s ~~Compensation~~stock is 100% privately held and there is no established market for the stock.

~~All~~There ~~items~~are ~~for~~a ~~Golf~~total ~~Host~~of ~~Resorts~~1,283 ~~Inc.,~~condominium ~~except~~units ~~those~~allowing ~~set~~rental ~~forth~~pool ~~below,~~participation by ~~have~~their ~~been~~owners, ~~omitted~~of aswhich ~~not~~three ~~applicable~~are orowned ~~not~~by ~~required.~~a ~~Summary~~subsidiary ~~Compensation~~of ~~Table~~the ~~The~~Company, ~~following~~Golf Host ~~table~~Condominium, ~~sets~~Inc. ~~forth~~(GHC). Of the ~~remuneration~~units ~~paid~~not owned by GHC, ~~distributed~~1,259 orwere ~~accrued~~sold under byRegistration ~~Golf~~Statements ~~Host~~effective ~~Resorts~~through March 1, ~~Inc~~1983. ~~and~~The ~~its~~remaining 21 ~~parent,~~units ~~Golf~~were ~~Hosts,~~sold ~~Inc.,~~via ~~during~~private ~~the~~offerings ~~three~~exempt ~~years~~from inregistration with the Securities ~~period~~and ~~ended~~Exchange ~~December~~Commission. As of December 31, ~~2000~~2002, tothe condominium units not owned by the Company’s ~~executive~~or ~~officers~~its affiliate are held by approximately 1,145 different owners.

									Other		All Other
			Fiscal		Salary and				Annual		Compensation
Name and Principal Position			Year		Commission		Bonus		Compensation		(3)
Golf Host Resorts, Inc.
	Merrick R. Kleeman (1)			2000	$	—	$	—	$	—	$	—
		President		1999	$	—	$	—	$	—	$	—
				1998	$	—	$	—	$	—	$	—
	R. Keith Wilt (1) & (2)			2000	$	93,277	$	10,000	$	—	$	—
		Vice President and Treasurer		1999	$	—	$	—	$	—	$	—
				1998	$	—	$	—	$	—	$	—
	Richard L. Akin (1) & (3)			2000	$	—	$	—	$	—	$	—
		Vice President and Treasurer		1999	$	—	$	—	$	—	$	—
				1998	$	—	$	—	$	—	$	—

The condominium units sold by the Company, allowing rental pool participation, are deemed to be securities because of the rental pool feature (see Item 1); however, there is no market for such securities other than the normal real estate market.

~~(1)~~Since ~~Total~~the ofsecurity ~~annual~~is ~~salary~~real ~~and~~estate, ~~bonus~~no ~~was~~dividends ~~not~~have ~~greater~~been ~~than~~paid ~~$100,000~~or ~~for~~will ~~the~~be ~~years~~paid. However, ~~where~~the ~~dollar~~Rental ~~amounts~~Pool Participants are ~~not~~entitled ~~presented.~~to ~~(2)~~a R.contractual distribution ~~Keith~~paid ~~Wilt~~quarterly, ~~became~~as andefined ~~officer~~in ~~August~~the 1Lease Agreements, ~~1999.~~for ~~(3)~~the Company’s ~~Resigned~~right ~~effective~~to ~~May~~use ~~31,~~the ~~1999~~Participants’ condominium units in the rental pool.

~~-9-~~5

PensionTable Plan The Company and its parent, Golf Hosts, Inc., provided a supplemental retirement income plan (the Plan) for officers who had completed 15 years of service, were employed at age 65 by the Company and retired, and were elected to participate in the Plan by the Golf Hosts, Inc. Board of Directors. The Plan provided an annual income of $10,000 for a period of 10 years. Concurrent with the sale of the Company and Golf Hosts, Inc., the Plan was terminated and the related liability, which approximated $297,000, was distributed in cash to the participants.Contents

Item 126. ~~Security~~Selected ~~Ownership~~Financial ~~of Certain Beneficial Owners and Management~~Data

~~(a)~~The ~~Security~~following ~~ownership~~selected financial data should be read in conjunction with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of ~~certain~~Financial ~~beneficial~~Condition ~~owners:~~and Results of Operations” included elsewhere in this Report. Historical results are not necessarily indicative of the results to be expected in the future.

	Name and Address of		Amount Beneficially
	Year Ended December 31,
Title of Class	Beneficial Owner		Owned				Percent of Class
	2002				2001				2000			1999			1998
Golf Host Resorts, Inc.:
Operating revenue	$	40,170,327			$	47,718,937			$	56,591,669		$	59,664,822		$	58,184,711
Common	Golf Hosts, Inc. 591 W. Putnam Ave. Greenwich, CT 06830			5,000				100	%
Net income (loss)		(9,434,541	)			(10,354,579	)			(14,806,630	)		(7,196,907	)		7,822,846
Golf Hosts, Inc.:
Net income (loss) per common share		(1,886.91	)			(2,070.91	)			(3,012.59	)		(1,490.64	)		1,513.31
Common	Golf Host Holdings, Inc. 591 W. Putnam Ave. Greenwich, CT 06830			1				100	%
Total assets		62,515,650				59,869,725				71,062,144			86,895,774			98,807,861
Notes payable		79,003,552				79,613,911				83,101,297			84,624,425			83,436,029
Cash dividends per Common share		—				—				—			—			—
Average Daily Rental Pool Distribution		20.21				25.73				30.47			28.47			24.82

~~(b) Security ownership of management of the Company in Golf Hosts, Inc. (GHI): None (c) Changes in control: None~~6

Item 13.Table Certainof Relationships and Related Transactions Contents

~~(a)~~Item 7. ~~Transactions~~Management’s ~~with~~Discussion ~~Management~~and Analysis of Financial Condition and Results ~~Others~~of Operations

~~GHI~~The ~~charges~~following ~~administrative~~accounting ~~and~~policies ~~other~~are ~~expenses~~considered tocritical ~~the Company on the basis of estimated time and expenses incurred as reasonably determined~~ by ~~GHI. As part of~~ the ~~terms of the~~ Company’s management ~~agreement for Innisbrook, Westin guaranteed minimum cash flow to Innisbrook~~. ~~The~~These ~~terms~~and ofother ~~the~~accounting ~~agreement~~policies ~~provide~~require that ifestimates ~~incentive~~be ~~cash flow~~made, based ason ~~defined,~~assumptions isand ~~less~~judgment, ~~than~~that ~~the~~affect ~~minimum annual payment~~revenues, ~~as defined~~expenses, ~~for the operating year~~assets, liabilities ~~Westin~~and ~~will~~disclosure ~~advance~~of ~~Innisbrook~~contingencies ~~the~~in ~~shortage up to $2.5 million with~~ the ~~advance being repayable when the~~ Company’s ~~has available cash, as defined~~financial statements. InThese ~~addition,~~estimates ~~the~~and ~~Company~~assumptions ~~signed~~are anbased ~~agreement~~on ~~under~~historical ~~which~~experience and ~~Westin~~on ~~will~~various ~~provide~~other ~~50%~~factors ofthat ~~the~~are ~~funding~~believed ~~for~~to ~~approved~~be ~~capital~~reasonable ~~expenditures~~under ~~incurred subsequent to~~ the circumstances. ~~Acquisition in excess of $6 million~~However, ~~plus~~actual ~~50%~~results ofmay ~~capital~~differ ~~expenditures~~from inthese ~~excess~~estimates ofdue ~~capital~~to different ~~reserve requirements on an annual basis, as defined~~conditions.

The Company’s management periodically evaluates whether there has been a permanent impairment of long-10lived assets, in accordance with Financial Accounting Standard No. (“FAS”) 121 — Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of and, beginning in 2002, with FAS 144 — Accounting for the Impairment or Disposal of Long-Lived Assets. The Company’s management believes that the accounting estimates related to asset impairments are critical estimates for the following reasons: (1) the ongoing changes in management’s expectations regarding future utilization of assets; and (2) the impact of an impairment on reported assets and earnings could be material. During the year ended Dec. 31, 2002, the Company’s management evaluated assets for impairment in accordance with FAS 144 and concluded that the sum of the undiscounted expected future cash flows (excluding interest charges) from its assets exceeded its then current carrying values. Accordingly, the company did not recognize an impairment charge in 2002. During the years ended December 31, 2001 and December 31, 2000, the Company’s management evaluated assets for impairment and had determined impairment had occurred and recognized impairment charges in the amounts of $3,000,000 and $7,441,000 respectively.

The Company provides for depreciation by the straight-line method at annual rates that amortize the original costs, net of salvage values, of depreciable assets over their estimated useful lives. Management’s estimation of assets’ useful lives are critical estimates for the following reasons: (b1) forecasting the ~~Certain~~salvage ~~Business~~value ~~Relationships~~for ~~None~~long-lived assets over a long period of time is subjective; (c2) changes ~~Indebtedness~~may oftake ~~Management~~place ~~None~~that could render an asset obsolete or uneconomical; and (d3) a ~~Transactions~~change ~~with~~in ~~Promoters~~the ~~Not~~useful ~~applicable~~life of a long-lived asset could have a material impact on reported results of operations and reported asset values. The Company’s management believes the estimated useful life corresponds to the anticipated physical life for most assets. Although it is difficult to predict values far into the future, the Company has a long history of actual costs and values that are considered in reaching a conclusion as to the appropriate useful life of an asset.

~~Part~~The IVCompany has provided for an estimated net asset and corresponding liability related to the apartment unit refurbishment program pursuant to the Rental Pool Master Lease Agreement (See Note 9 to Consolidated Financial Statements). Both the estimated asset and liability amounts are based upon management’s expectation that the rental pool participants will continue to achieve the minimum unit participation threshold as defined in the agreement. The net asset is being expensed on a straight-line basis from the time each phase of the refurbishment is placed in service through 2009. The net liability will be retired consistent with the funding requirements in the agreement.

~~Item 14.~~See ~~Exhibits,~~the Notes to the Financial ~~Statement~~Statements ~~Schedules~~for Golf Host Resorts, ~~and~~Inc. ~~Reports~~in onNote ~~Form 8-K~~2 hereof for additional accounting policies used in the preparation of the financial statements. Other new accounting pronouncements initially effective in 2002 are considered not applicable to the Company.

(a)		1.	Financial Statements:
			Golf Host Resorts, Inc. and Subsidiary (included in Item 8)
			Innisbrook Rental Pool Lease Operation Financial Statements together with Report of Independent Certified Public Accountants (Included in Item 8)
			Tamarron Rental Pool Lease Operation Financial Statements together with Report of Independent Certified Public Accountants (Included in Item 8)
		2.	Financial Statement Schedules of Golf Host Resorts, Inc.
			None
(b)	Reports on Form 8-K
	Not applicable.
(c)	Exhibits
	Financial statement schedules required by this Item are listed in the index appearing in Item 8 of this report.

The following information may contain forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Such statements may be identified by the inclusion of terms such as “believe,” “expect,” “hope” or “may.” Although the Company believes that such forward-looking statements are based upon sound and reasonable assumptions, given the circumstances in which the statements are made, the actual results could differ significantly from those described in the forward-looking statements. Certain factors that might cause such a difference include the following: changes in general economic

~~-11-~~7

\ Table of Contents

~~SIGNATURES~~conditions, changes in rental pool participation by the current condominium owners, reaching a settlement agreement with the Company’s primary lender, settlement of the Class Action Lawsuit, the ability of the Company to continue to operate the Innisbrook property under its management contracts, and the resale of condominiums to owners who elect neither to participate in the rental pool nor to become Club members. Given these uncertainties, readers are cautioned not to put undue reliance on such statements.

~~Pursuant~~The tocomparative results exclude the ~~Requirements~~activities of ~~Section~~Tamarron. 13The orCompany assumed 15responsibility for the net income (dloss) for Tamarron under the terms of a lease agreement entered into between the ~~Securities~~Company ~~Exchange~~and ~~Act~~Golf ofHost ~~1934,~~II during the ~~registrant~~year ~~has~~ended ~~duly~~December 31, ~~caused~~2000. ~~this~~Golf ~~report~~Host II sold Tamarron to bean unaffiliated ~~signed~~entity on ~~its~~November 19, ~~behalf~~2001. byThe ~~the~~exclusion ~~undersigned,~~of ~~therefore~~Tamarron’s ~~duly~~results allows ~~authorized~~for a comparison of operating results for Innisbrook on a period to period basis.

~~GOLF~~Guest ~~HOST~~occupancy ~~RESORTS,~~during ~~INC.~~the ~~By:~~last ~~/s/~~three ~~Merrick~~years, R.measured ~~Kleeman~~by ~~By:~~room ~~/s/~~nights, ~~Keith~~was ~~Wilt Merrick R. Kleeman President Keith Wilt Vice President and Treasurer~~as follows:

Dated: March 30, 2001


YEAR	ROOM NIGHTS		% CHANGE

2002		90,960		(15.0	)
2001		106,960		(16.5	)
2000		128,033		(6.3	)

~~-12-~~2002 Compared to 2001

~~Golf~~For ~~Host~~the ~~Resorts~~years ended December 31, ~~Inc~~2002 and December 31, 2001, the Company recognized total revenue in the approximate amount of $40,170,000 and $47,719,000, respectively, from the rental of condominium units, sales of food and beverages, golf operations and auxiliary services. The net reduction in overall Innisbrook revenue in the approximate amount of $7,549,000 or 15.8% resulted from the reduction in room nights, which reduced gross revenues by $7,138,000, coupled with reductions in room night spending of approximately $411,000. Average Company wide guest spending decreased from $446.14 per room night in 2001 to $441.63 in 2002. The mix of room night sales between group business and ~~Subsidiary~~the social/transient markets has remained essentially the same ~~Financial~~between ~~Statements~~the years ended December 31, 2001 and December 31, 2002. Group room nights and social/transient room nights for the twelve months ended December 31, 2002 were 67,202 and 23,758 respectively as compared to 78,736 and 28,224 respectively for the twelve months ended December 31, ~~2000~~2001. Both categories showed reductions. On a percentage basis, group and ~~1999~~social/transient room nights were down 14.6% and 15.8%, respectively, as compared to the same period last year. These reductions are a result of not only the September 11, 2001 terrorist acts, but also reflect the continuing concerns by the Company’s customers about the United States soft economy and the potential for armed conflict in the middle east. Although the loss of any single customer guest does not significantly impact the Company, the dynamics of the large group business base has changed. These groups have begun to pre-book future business in a much shorter window and are reducing the actual number of days overall at the business functions. The spending on a per night basis has also diminished while the guests are not taking full advantage of the Resorts’ amenities. In response to these changes, the Company has taken steps to refocus its sales and marketing efforts to better capture both the smaller group golf related business and the social/transient sectors.

~~Report~~Operating expenses and losses on Assets Held for Sale totaled approximately $40,248,000 and $49,326,000 for the years ended December 31, 2002 and December 31, 2001, respectively. This decrease was directly related to the reduction in overall business levels for the comparative periods. The reduction in expenses of ~~Independent~~approximately ~~Certified~~$9,078,000 ~~Public~~or ~~Accountants~~18.4% was the result of a reduction in the rental pool distribution of $1,538,000 due to the reduction in room nights and resultant room revenue and the amortization of the refurbishment cost; reductions in the Tamarron losses of $1,538,000; decreases in depreciation and amortization of $289,000 ; increases in repairs and maintenance expenses of $259,000 ; decreases in sales and marketing expense of $590,000 ; a decrease in the gain on the sale of land of $1,083,000; reductions in payroll and related expenses of $1,923,000 ; reduction

~~To the Shareholder and Board of Directors of Golf Host Resorts, Inc.~~8

InTable our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of changes in shareholder’s deficit and of cash flows present fairly, in all material respects, the financial position of Golf Host Resorts, Inc. and subsidiary at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Contents

~~As discussed~~ in ~~Note~~the 3intangible towrite ~~the~~down ~~consolidated~~of ~~financial statements~~$3,000,000 ~~the~~and ~~Company changed~~reduction ~~its~~in ~~method~~all ofother operating ~~accounting~~expenses ~~for~~in ~~start-up~~the ~~costs~~aggregate inof ~~1999~~$1,976,000.

~~The~~Interest, ~~accompanying~~net ~~consolidated~~for ~~financial~~the ~~statements~~year ~~have~~ended ~~been~~December 31, ~~prepared~~2002, ~~assuming that~~was ~~the Company will~~approximately ~~continue~~$9,101,000 as acompared ~~going~~to ~~concern.~~$9,263,000 Asfor ~~discussed in Note 1 of~~ the ~~notes~~year toended ~~the consolidated financial statements~~December 31, ~~the~~2001. ~~Company~~This ~~has suffered recurring losses from operations~~$162,000 ~~has~~decrease ~~negative~~is ~~working capital~~the ~~and~~result ~~has~~of: a ~~shareholder’s deficit~~decrease ~~that~~in ~~raise~~interest ~~substantial~~costs associated ~~doubt~~with ~~about~~the ~~its~~Accounts ~~ability~~Receivable tocredit ~~continue~~line asof $113,000; a ~~going concern.~~decrease ~~Management’s plans~~ in ~~regard~~expense toof ~~these~~$143,000 ~~matters~~related ~~are~~to ~~also~~the ~~discussed~~prior inShareholders’ ~~Note~~loan, 1.offset ~~Additionally,~~by aschanges ~~described~~ in ~~Note~~the ~~12,~~interest ~~subsequent~~on ~~to December 31,~~capitalized ~~2000,~~leases and the ~~Company~~change ~~has~~in ~~defaulted~~rate ~~under~~on the ~~terms~~$9,000,000 portion of ~~its~~the ~~debt agreement~~GTA ~~and is a defendant to a class action lawsuit~~loan. ~~The~~Other ~~financial~~interest ~~statements~~items, donet ~~not~~of ~~include~~interest ~~any~~income, ~~adjustments that~~in ~~might result from~~ the ~~outcome~~aggregate ofincreased ~~these~~by ~~uncertainties~~$88,000.

/Effective February 3, 1998, the Company’s/ ~~PricewaterhouseCoopers~~election ~~LLP~~to be treated as a ~~Tampa~~Subchapter S corporation became effective. Subsequent to the 1998 filing period, ~~Florida~~income tax calculations are no longer provided at the Company level.

~~March 30,~~ 2001, ~~except~~Compared ~~for~~to ~~the information in~~2000 ~~Note 12, for which the date is~~ ~~December 26, 2001~~

F-For the years ended December 31, 2001 and December 31, 2000, the Company recognized total revenue in the approximate amount of $47,719,000 and $56,506,000 respectively, from the rental of condominium units, sales of food and beverage, golf operations and auxiliary services. The net reduction in overall Innisbrook revenue in the amount of $8,787,000 or 15.6% results from the reduction in room nights which reduced gross revenues by $9,300,000 netted against improvements in room night spending of $513,000. Average company wide customer spending increased from $403.27 per room night in 2000 to $425.40 in 2001. On a specific property basis, room nights declined at both properties. Room nights were down approximately 21,100 and 5,400 for Innisbrook and Tamarron respectively. The majority of this reduction occurred in the fourth quarter as a result of the September 11 terrorist attacks on New York and Washington. For example, in the fourth quarter of 2001, Innisbrook and Tamarron had 12,763 and 2,026 fewer room nights sold as compared to the same period last year. The travel market response to the attacks coupled with the general downturn in the hospitality industry and destination golf resorts in general is a significant challenge to the Company. Operating expenses and losses on Assets Held for Sale totaled approximately $49,326,000 and $61,812,000 for the years ended December 31, 2001 and December 2000 respectively. This decrease was directly related to the reduction in overall business levels for the comparative periods. The reduction in expenses of $12,487,000 or 20.2% was the result of a reduction in the rental pool distribution of $1,030,000 due to the reduction in room nights and resultant room revenue; reductions in the Tamarron losses of $398,000; decrease in depreciation and amortization of $425,000; decrease in repairs and maintenance expense of $527,000; decrease in sales and marketing expense of $481,000; gain on the sale of land of $1,153,000; reduction in payroll and related expenses of $1,805,000; reduction in the intangible write down of $4,441,000 and reduction in all other operating expenses in the aggregate of $2,227,000.

Interest, net for the year ended December 31, 2001, was approximately $9,263,000 as compared to $9,501,000 for the period ended December 31, 2000. This $237,000 decrease is the result of: a decrease in interest costs associated with the Accounts Receivable credit line of $62,000; a decrease in expense of $102,000 related to the prior Shareholders’ loan, offset by a contractual increase in the Golf ~~Host~~Trust ~~Resorts~~of America mortgage of $430,000 ~~Inc~~less amortization of the effective interest rate adjustment of $401,000 on that loan. ~~and~~Other ~~Subsidiary~~interest items, net of interest income, in the aggregate reduced by $102,000.

~~Consolidated~~Effective ~~Balance~~February 3, ~~Sheets~~1998, the Company’s election to be treated as a Subchapter S corporation became effective. Subsequent to the 1998 filing period, income tax calculations are no longer provided at the Company level.

			December 31,
			2000			1999
Assets
Current assets:
	Cash		$	565,400		$	131,440
	Restricted cash			1,219,289			318,860
	Accounts receivable, net			4,865,607			4,499,990
	Other receivables			543,651			907,568
	Inventories and supplies			1,606,935			1,755,452
	Prepaid expenses and other assets			197,399			132,116
				8,998,281			7,745,426
	Assets held for sale			2,435,000			8,634,596
				11,433,281			16,380,022
Intangibles, net				17,376,706			26,994,645
Property and equipment, net				41,768,369			43,205,256
Other assets				483,788			315,851
		Total assets	$	71,062,144		$	86,895,774
Liabilities and Shareholder’s Deficit
Current liabilities:
	Accounts payable		$	8,614,179		$	5,039,225
	Line of credit			667,141			2,109,316
	Accrued payroll costs			830,072			899,750
	Accrued interest			817,047			691,265
	Other payables and accrued expenses			3,076,854			3,214,321
	Deposits and deferred revenue			3,461,783			2,841,038
	Current notes payable			862,058			795,205
	Due to related parties			3,572,690			1,994,645
				21,901,824			17,584,765
Notes payable				82,239,239			83,829,220
Other long-term liabilities				7,869,858			5,168,028
Deferred income taxes				1,770,467			1,770,467
		Total liabilities		113,781,388			108,352,480
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			(13,557,000	)		(13,557,000	)
	Accumulated deficit			(33,744,244	)		(12,481,706	)
		Total shareholder’s deficit		(42,719,244	)		(21,456,706	)
		Total liabilities and shareholder’s deficit	$	71,062,144		$	86,895,774

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

~~F-2~~Income Tax Status

~~Golf~~Reference ~~Host~~is ~~Resorts,~~made ~~Inc.~~to ~~and~~the ~~Subsidiary~~Note 7 to Consolidated Financial Statements regarding income taxes.

~~Consolidated~~Liquidity ~~Statements~~and ofCapital ~~Operations~~Resources

		Year ended December 31,
		2000			1999			1998
Revenues:
	Resort facilities	$	18,892,485		$	21,194,045		$	19,759,350
	Food and beverage		17,468,331			17,558,360			15,734,890
	Golf		14,131,982			15,008,103			15,561,161
	Other		6,098,871			5,904,314			7,129,310
			56,591,669			59,664,822			58,184,711
Costs and operating expenses:
	Resort facilities		13,430,355			14,898,705			14,524,110
	Food and beverage		10,465,882			11,019,695			10,173,446
	Golf		7,403,772			6,994,183			7,105,350
	Other		10,710,260			11,240,764			11,285,360
	General and administrative		6,043,701			6,796,954			4,963,565
	Depreciation and amortization		4,310,973			4,010,448			4,086,832
	Provision for intangible impairment		7,441,000			—			—
			59,805,943			54,960,749			52,138,663
Loss on assets held for sale and leased asset			2,006,407			1,008,996			3,294,344
Operating (loss) income			(5,220,681	)		3,695,077			2,751,704
Interest, net			9,585,949			9,218,816			8,073,416
Loss before income tax, extraordinary item and cumulative effect of change in accounting principle			(14,806,630	)		(5,523,739	)		(5,321,712	)
Parent income tax charge			—			—			328,828
Loss before extraordinary item and cumulative effect of change in accounting principle			(14,806,630	)		(5,523,739	)		(5,650,540	)
Gain on change in tax status			—			—			13,473,386
Cumulative effect of change in accounting principle			—			(1,673,168	)		—
Net (loss) income			(14,806,630	)		(7,196,907	)		7,822,846
Dividend requirements on preferred stock			256,312			256,312			256,312
Net (loss) income available to common shareholder		$	(15,062,942	)	$	(7,453,219	)	$	7,566,534

The Company’s working capital at December 31, 2002, (inclusive of debt in default in the approximate amount of $78,975,000 under the Golf Trust (“GTA”) Deed and Mortgage Agreement), was a deficit of $98,078,000 and the Company’s cash flows from operational sources are currently severe. The Company has failed to timely pay its primary mortgage obligations beginning with the October 2001 requirements and continuing in all subsequent periods. The Company typically experiences seasonal fluctuations in its net working capital position without significantly impairing its ability to pay trade creditors in a timely manner. As a result of the default notice received from GTA (see Note 6 of the Consolidated Financial Statements), the Company’s revolving credit facility with Wells Fargo Credit Corporation was terminated by Wells Fargo on May 23, 2002.

~~The~~As ~~accompanying~~of ~~notes~~March ~~are~~2003, anthe ~~integral~~Company ~~part~~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 apartments located at the Innisbrook Resort, the GTA stock and Partnership Unit (“PU”) interests held by GHI, and all rights, title and interests of ~~these~~the ~~consolidated~~Company ~~financial~~under ~~statements~~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 relating to employee benefits and liabilities for contracts or agreements not disclosed by the Company to GTA. In return, it is anticipated that 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.

~~F-3~~As a result of the lack of additional cash sources and GTA settlement issue described above, the Company assesses its liquidity as severe . Failure to reach a settlement with GTA will seriously impair the Company’s ability to continue as a going concern.

~~Golf~~Contractual ~~Host~~Obligations ~~Resorts, Inc.~~ and ~~Subsidiary~~Contingent Liabilities

~~Consolidated~~The new Master Lease Agreement (“NMLA”) (See Note 9 of Notes to consolidated Financial Statements), between the Rental Pool Participants and the Company includes a provision that participating condominium owners will be reimbursed by the Company for 50% of ~~Changes~~the amount of funds the individual owner invested in ~~Shareholder’s~~the ~~Deficit~~refurbishment program, as defined in the agreement, plus interest at 5%. The obligation of the Company to make the reimbursement payments during 2005 through 2009 is contingent upon the owners maintaining a minimum unit participation in the rental pool, as defined and tested on a quarterly basis. The projected obligation of the Company as presented in the table below recognizes reimbursement costs and interest payable to the owners, assuming that the participants meet the minimum threshold on a continuing quarterly basis.

	$1 Par Value				5.6% Cumulative							Retained			Total
	Common Stock				Preferred Stock				Paid-in			Earnings			Shareholder's
	Shares		Amount		Shares		Amount		Capital			(Deficit)			Deficit
Balance, December 31, 1998		5,000	$	5,000		4,577,000	$	4,577,000	$	(13,557,000	)	$	1,940,766		$	(7,034,234	)
Net loss available to common shareholder		—		—		—		—		—			(7,453,219	)		(7,453,219	)
Distribution to shareholder		—		—		—		—		—			(6,969,253	)		(6,969,253	)
Balance, December 31, 1999		5,000		5,000		4,577,000		4,577,000		(13,557,000	)		(12,481,706	)		(21,456,706	)
Net loss available to common shareholder		—		—		—		—		—			(15,062,942	)		(15,062,942	)
Distribution to shareholder													(6,199,596	)		(6,199,596	)
Balance, December 31, 2000		5,000	$	5,000		4,577,000	$	4,577,000	$	(13,557,000	)	$	(33,744,244	)	$	(42,719,244	)

The Company has entered into an operating lease with Citi Capital for 290 golf carts utilized on the four golf courses at Innisbrook. The operating lease expires in January 2006, and it is expected that the Company will at that time determine if it will either enter into another operating lease or acquire new carts under some alternative funding mechanism. Included in the table below is the contractual obligation under the current operating lease.

The ~~accompanying~~Company ~~notes~~is ~~are~~a anparty to a contract with Pinellas County Florida, which ~~integral~~requires ~~part~~that Innisbrook accept and dispose of ~~these~~up ~~consolidated~~to ~~financial~~5,000,000 ~~statements.~~gallons and not less than 2,500,000 gallons of effluent water produced by the County

~~F-4~~10

GolfTable Hostof Resorts, Inc. and Subsidiary Contents

~~Consolidated~~on ~~Statements~~a ofdaily ~~Cash~~basis. ~~Flows~~The effluent is utilized by the Resort to water the golf courses and common areas. This agreement stipulates that because Innisbrook is willing to accept the effluent at times when the County does not have alternative demand and disposal alternatives, there is no cost to the Company.

				Year ended December 31,
				2000			1999			1998
Cash flows from operating activities:
	Net (loss) income			$	(14,806,630	)	$	(7,196,907	)	$	7,822,846
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Provision for bad debts			100,300			100,300			92,100
		Depreciation and amortization			4,310,973			4,010,448			4,086,832
		Provision for intangible impairment			7,441,000			—			—
		Write-off of start-up costs			—			1,673,168			—
		Deferred income taxes			—			—			(13,134,558	)
	Changes in operating assets and liabilities:
		(Increases) decreases in:
			Restricted cash		(900,429	)		386,437			1,533,470
			Accounts receivable and other receivables		(697,194	)		2,037,319			(2,165,049	)
			Inventories and supplies		148,517			301,998			(157,852	)
			Prepaid expenses and other assets		(65,283	)		929,552			(377,171	)
		Increases (decreases) in:
			Accounts payable		3,574,954			3,247,051			(2,482,736	)
			Accrued payroll costs		(69,678	)		(303,490	)		67,113
			Accrued interest		125,782			(6,438	)		111,043
			Other payables and accrued expenses		(137,467	)		(106,027	)		(895,478	)
			Deposits and deferred revenue		620,745			(816,875	)		750,441
			Due to related parties		1,321,733			1,278,816			3,060,448
			Cash provided by (used in) operations		967,323			5,535,352			(1,688,551	)
Cash flows from investing activities:
	Increases in other assets				(167,937	)		(114,296	)		(251,810	)
	Purchases of property and equipment				(1,351,796	)		(2,838,892	)		(7,823,091	)
	Decrease in assets held for sale				—			4,049,706			829,007
	Additions to note receivable from GHI				—			(662,593	)		(1,349,823	)
	Payments on notes receivable from GHI				—			2,012,416			—
			Cash (used in) provided by investing		(1,519,733	)		2,446,341			(8,595,717	)
Cash flows from financing activities:
	Additional borrowings on existing debt				33,028			331,780			5,672,421
	Repayment of existing debt				(306,313	)		(381,824	)		(358,855	)
	(Repayments) borrowings on line of credit				(1,442,175	)		(1,723,127	)		3,832,443
	Distribution to shareholder				—			(6,969,256	)		—
	Increases in other long-term liabilities				2,701,830			814,485			1,159,858
			Cash provided by (used in) financing		986,370			(7,927,942	)		10,305,867
Net increase in cash					433,960			53,751			21,599
Cash, beginning of period					131,440			77,689			56,090
Cash, end of period				$	565,400		$	131,440		$	77,689
Noncash financing and investing activities:
	Satisfaction of preferred stock dividend requirement through the intercompany account			$	256,312		$	256,312		$	256,312
	Capital lease obligations			$	23,270		$	1,222,700		$	123,300
	Dividend of Tamarron to Golf Host II, Inc.			$	6,199,596		$	—		$	—
	Settlement with previous owners			$	1,249,843		$	—		$	—
Other information:
	Interest paid in cash			$	9,015,013		$	8,479,738		$	8,219,000

The Company is a party to a security agreement with Allied Security, which provides for twenty-four hour security of Innisbrook. The agreement expires in 2004 and will be re-negotiated or replaced at that time. The Innisbrook Condominium Association (the “Association”), while not a direct party to the agreement, reimburses the Company for 50% of these costs. The total annual payments under the contract are reflected through the expiration date in the table below.

The ~~accompanying~~Company ~~notes~~is a party to a General Agreement with the Association, wherein certain mutually beneficial activities are andefined. ~~integral~~It ~~part~~includes provisions concerning how the parties will administer payroll services, security of the property, water and sewer costs, water softener system costs and maintenance, linen rooms and miscellaneous day to day joint operational issues of Innisbrook. The majority of these ~~consolidated~~operational ~~financial~~items ~~statements~~have been negotiated on a “value for value” basis wherein no cash payments by either party are required. The Association does reimburse the Company for the Association’s direct payroll and benefit costs, water and sewer charges and security services. The Company funds the full water and sewer billing and is reimbursed by the Association for the Association’s pro-rata share. The Company funds the full security services billing and is reimbursed for 50% of these costs. These cost reimbursements are reflected as credits in the table below.

~~F-5~~The Company has entered into a contract with Time Warner to provide cable access for the condominium units of the resort. The contract expires in 2005 as reflected below.

~~Golf~~The ~~Host~~Company ~~Resorts,~~has ~~Inc~~an agreement with Don Shula’s Steak House to provide consulting services related to DY’s restaurant located at Innisbrook. The contract does not have an expiration date, and ~~Subsidiary~~therefore the table below includes the full obligation through 2007.

~~Notes~~Omni Building Services Co., although without a contract, is currently providing the Company with facilities cleaning services at Innisbrook. The amounts included in the table below reflect the month to ~~Consolidated~~month ~~Financial~~arrangement ~~Statements~~currently in ~~December 31,~~use. ~~2000~~No ~~and~~continuation ~~1999~~of this arrangement or any replacement agreement has been negotiated or included beyond 2003.

1.		Organization, Business and Liquidity
		Golf Host Resorts, Inc. (the “Company”) owns The Westin Innisbrook Resort (“Innisbrook”) in Tarpon Springs, Florida and for part of 2000, the Sheraton Tamarron Resort (“Tamarron”) in Durango, Colorado (the “Resorts”). The Resorts offer championship quality golf facilities, restaurant and conference facilities, and related resort facilities. A majority of the condominium apartment owners at the Resorts provide their units as resort accommodations under rental pool lease operations.
		Golf Host Condominium, Inc. (“GHC”), a wholly owned subsidiary of the Company, was formed on December 1, 1997. GHC’s assets consist of three Innisbrook condominiums previously owned by the Company. A lease agreement between Lost Oaks, L.P., a related party to the Company, and Golf Trust of America, L.P. (“GTA”), the Company’s primary lender, is secured by 89.1 % of the stock of GHC and the stock of Golf Host, Inc. (“GHI”), the parent of the Company. Subsequent to December 31, 2000, GTA shareholders approved a plan of liquidation (Note 12).
		On June 23, 1997, TM Golf Hosts, Inc. (“TMGHI”) acquired the Company. The purchase price of the Company was approximately $66,333,000, including assumption of certain liabilities. For financial statement purposes, the acquisition was accounted for as a purchase and accordingly, the purchase price was allocated based upon the fair value of assets and liabilities acquired.
		During 2000, the Company released the previous owners from all claims under the Acquisition and the previous owners amended and restated the mortgage note from $4,418,000 to $3,168,000. Terms of the amended mortgage note call for principal payments of $500,000 on June 23, 2001 and $2,668,000 on June 23, 2002. In the event a portion or all of the collateral is sold prior to June 23, 2002, proceeds will be used to pay down the then outstanding mortgage note balance. The write-down under the terms of the amended mortgage note, net of balances due from the previous owners was approximately $655,000, which was recorded as a reduction of intangible assets. Additionally, the previous owners of the Company agreed to release their security interest in Tamarron assets for a security interest in a land parcel at Innisbrook. Subsequent to December 31, 2000, the mortgage note was paid in full (Note 12).
		During 2000, the Company dividended the assets and liabilities of Tamarron of approximately $6,200,000, net, to GHI, who contributed them to Golf Host II, Inc., a wholly owned subsidiary of GHI. Concurrently with the dividend of Tamarron, the Company entered into a lease agreement whereby Golf Host II, Inc. (“GH II”) leased Tamarron to the Company. Rent is payable in the amount of $1 per annum and the Company assumes responsibility for Tamarron’s Net Income (Loss), as defined by the lease agreement. Subsequent to December 31, 2000, Tamarron was sold and the Company has no remaining responsibility under the lease and rental pool agreements (Note 12).
		The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has negative working capital at December 31, 2000 of $12,904,000,

The Company is a party to a contract wherein TruGreen Landcare provides landscape services to all of the Innisbrook property excluding the Association’s common areas and the golf courses. This contract expires in July of 2003.

~~F-6~~The Company is a party to a capital lease agreement with Verizon, which provides for the acquisition of property wide replacement of telephone cabling and the central telephone switch. The lease agreement was entered into subsequent to December 31, 2002, expires in 2008, and has been included in the table below.

~~Golf~~The ~~Host~~Company ~~Resorts~~is a party to multiple agreements for miscellaneous services such as waste removal, ~~Inc~~uniform cleaning and replacement, armored car services, indoor plant maintenance and pest control. These service and ~~Subsidiary~~contracts are individually immaterial and therefore are included in the aggregate total identified as other miscellaneous operational items in the table below.

~~Notes to Consolidated Financial Statements~~11 ~~December 31, 2000 and 1999~~

		exclusive of assets held for sale of $2,435,000, and has incurred losses before income taxes for each of the periods since the Acquisition. Additionally as described in Note 12, subsequent to December 31, 2000, the Company failed to make a scheduled interest payment and has defaulted under the terms of its debt agreement and is a defendant to a class action lawsuit.
		Management is presently engaged in discussions with its lender regarding modifications of the existing payment terms under its note payable. In addition, management is developing a plan to increase total resort revenues through targeting guests likely to utilize more resort amenities and is undertaking a review of its operating costs to determine where cost savings can be achieved. Management also expects the Company will need a significant infusion of cash to fund retained operations during the year ended December 31, 2001. The Company has a $3,000,000 line of credit collateralized by Innisbrook’s accounts receivable and anticipates funding current obligations, with the undrawn portions of the available line of credit. The Company also has an agreement with Westin Hotel Company (“Westin”) whereby cash deficiencies, as limited and defined by the agreement, arising from the Innisbrook operation will be temporarily funded by Westin (Note 11).
		The Company’s failure to obtain adequate financing and to meet its plan will result in liquidity problems. As a result of these matters, substantial doubt exists about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
2.		Accounting Policies
		Principles of Consolidation
		The consolidated financial statements include the accounts of Golf Host Resorts, Inc. and Golf Host Condominium, Inc. All significant intercompany balances and transactions are eliminated in consolidation.
		Use of Estimates
		Preparation of these consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions which affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
		Cash, Cash Equivalents and Restricted Cash
		The Company considers all short-term highly liquid investments with a purchased maturity of three months or less to be cash equivalents. At December 31, 2000 and 1999, the balance represents cash restricted for capital improvements and cash collected on behalf of the former shareholders.

F-7


		For the Years Ending December 31,

Agreement	Purpose	2003		2004		2005		2006		2007		Thereafter

Innisbrook Rental Pool Master Lease Agreement	Refurbishment reimbursement	$	290	$	368	$	1,086	$	1,408	$	1,711	$	4,260
Citi Capital	Golf cart operating lease		188		188		188		172		—		—
Allied Security Agreement	Security services		182		—		—		—		—		—
Time Warner	Cable provider		63		63		37		—		—		—
Don Shula’s Steak House	Consulting (Franchise Fee)		60		60		60		60		60		60
Omni Building Service Co.	Building cleaning service		252		—		—		—		—		—
TruGreen LandCare	Landscape maintenance		210		—		—		—		—		—
Verizon	Switch and high speed internet		143		262		262		262		262		131
Other miscellaneous operational agreements	Various		307		176		132		87		87		88

		$	1,695	$	1,117	$	1,765	$	1,989	$	2,120	$	4,539

~~Golf~~Item 7A. ~~Host~~Quantitative ~~Resorts,~~and ~~Inc.~~Qualitative ~~and~~Disclosures ~~Subsidiary~~about Market Risk

~~Notes~~The Registrant does not have significant market risk with respect to ~~Consolidated~~foreign currency ~~Financial~~exchanges ~~Statements~~or other market rates. The Registrant’s debt has a fixed ~~December 31,~~contractual ~~2000~~interest rate through the year 2027 and, ~~1999~~accordingly, fluctuations in interest rates are not expected to affect financial results.

Accounts Receivable Accounts receivable represents amounts due from resort guests and is net of allowances of $81,000 and $123,000 for doubtful accounts at December 31, 2000 and 1999, respectively. Inventories and Supplies The Company records materials and supplies inventories at the lower of first-in, first-out cost or market. Note Receivable from GHI At December 31, 1998, approximately $1,350,000 was due to the Company for services under the terms of a $2,500,000 demand note receivable from GHI. The note, dated December 31, 1998, bore interest at Item 8.~~5%,~~ ~~was~~Financial ~~payable~~Statements ~~monthly in arrears~~ and ~~was~~Supplementary due on demand. Effective October 1, 1999, the note receivable was paid. The Company earned interest income of approximately $108,000 and $56,000 for the years ended December 31, 1999 and 1998, respectively. Assets Held for Sale During 2000, the Company dividended the assets and liabilities of Tamarron, an asset acquired at acquisition and held for sale. At December 31, 2000, assets held for sale are land parcels at Innisbrook. Subsequent to December 31, 2000, the remaining land parcel included in assets held for sale was sold by the Company (Note 12). Property and Equipment Costs of maintenance and repairs of property and equipment used in operations are charged to expense as incurred, while renewals and betterments are capitalized. When property and equipment are replaced, retired or otherwise disposed, the costs are deducted from the asset and accumulated depreciation accounts. Gains or losses on sales or retirements of buildings, vehicles and certain golf course and recreational facilities are recorded in income. Gains or losses on sales or retirements of all other property and equipment are recorded in the applicable accumulated depreciation accounts in accordance with the composite method. Depreciation is recorded using the straight-line unit method for buildings, vehicles and certain golf course and recreational facilities and the straight-line composite method for the other components. Estimates of useful lives used in computing annual depreciation are as follows:Data

	Estimated useful
Index to Consolidated Financial Statements	Page
	life in years
Report of Independent Certified Public Accountants		F-1
Land improvements	28 to 30
Consolidated Balance Sheets		F-2
Buildings		40
Consolidated Statements of Operations		F-3
Recreational facilities		30
Consolidated Statements of Changes in Shareholder’s Deficit		F-4
Machinery and equipment	10 to 15
Consolidated Statements of Cash Flows		F-5
Notes to Consolidated Financial Statements – December 31, 2002 and 2001		F-6
Innisbrook Rental Pool Lease Operation		F-18
Tamarron Rental Pool Lease Operation		F-29

~~F-8~~Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

~~Golf Host Resorts, Inc~~None. ~~and Subsidiary~~

~~Notes to Consolidated Financial Statements~~12 ~~December 31, 2000 and 1999~~

OtherTable Assets Other assets consist of costs incurred in conjunction with refurbishment of condominium units provided as resort accommodations under the rental pool lease operations. As of December 31, 1999, other assets also included amounts due from the former shareholders related to working capital differences at Acquisition. In accordance with the revised MLA (Note 12), the Company is reimbursed for a portion of the costs incurred by individual condominium owners upon completion of the refurbishment project. The Company will amortize its costs incurred over the term of the revised MLA upon completion of the refurbishment project. As of December 31, 1998, other assets also consisted of start-up costs associated with the change in management of Innisbrook to Westin and were being amortized over a five-year term. During 1999, the start-up costs were written off (Note 3). Long-Lived Assets FAS 121, “Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of ” requires the Company to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the discounted cash flows. Intercompany Allocations and Advances The Company reimburses GHI for administrative and other expenses based on estimated time and expenses incurred. Amounts charged were approximately $203,000, $514,000 and $321,000, for the years ended December 31, 2000, 1999 and 1998, respectively, of which $60,000 were payable to GHI at December 31, 2000 and 1999. During 1999, the Company provided services to Lost Oaks, L.P., an affiliated company, including payroll, accounting, purchasing and cash management. The Company was reimbursed for these services at approximately cost under the terms of a note receivable from GHI that was paid in full in 1999 (Note 2). Revenue Revenue from resort operations is recognized as the related service is performed. Revenue includes rental revenues from condominium units owned by third parties participating in the rental pool lease operations. If these rental units were owned by the Company, normal costs associated with ownership such as depreciation, interest, real estate taxes and maintenance would have been incurred. Instead, costs and operating expenses include distributions of approximately $7,362,000, $8,102,000 and $7,601,000 for the years ended December 31, 2000, 1999 and 1998, to the rental pool participants, respectively.Contents

~~F-9~~Part III

~~Golf~~Item 10. ~~Host~~Directors ~~Resorts,~~and ~~Inc.~~Executive ~~and~~Officers ~~Subsidiary~~of the Registrant

Notes to Consolidated Financial Statements December 31, 2000 and 1999


Name/Position	Age		Five-Year Principal Occupation

Merrick R. Kleeman President, Secretary and Director (Chief Executive Officer)		39	Managing Director, Starwood Capital Group

Jeffrey R. Rosenthal * Senior Vice President		51	Chief Operating Officer, Starwood Capital Group (April 1997 – present) Chief Financial Officer, Reyes Holdings (February 1996 – April 1997) Chief Financial Officer, JBM Realty Company (December 1987 – February 1996)

Jerome C. Silvey Senior Vice President		45	Chief Financial Officer, Starwood Capital Group

Keith Wilt Vice President and Treasurer (Chief Financial Officer)		50	Vice President and Treasurer, Golf Host Resorts, Inc. (August 1999 – Present) Chief Financial Officer, The Suncoast Companies (March 1997 – August 1999) Consultant (January 1995 – March 1997)

Robert Geimer Vice President and Secretary		36	Sr. Vice President, Starwood Asset Management (April 1998 – present)

		Interest, Net
		The Company’s cash management policy is to utilize cash resources to minimize net interest expense, through either temporary cash investments or reductions in existing interest-bearing obligations. Accordingly, temporary cash investments and interest income vary from period to period. Interest expense is net of interest income of approximately $6,700, $6,500 and $140,000 for the years ended December 31, 2000, 1999 and 1998, respectively.
		Employee Benefit Plans
		GHI maintains a defined contribution Employee Thrift and Investment Plan (the “Plan”) which provides retirement benefits for all eligible employees who have elected to participate. Employees must fulfill a 90-day service requirement to be eligible. The Company currently matches one half of the first 6% of an employee’s contribution. Company contributions approximated $215,000, $212,000 and $188,000, for the years ended December 31, 2000, 1999 and 1998, respectively, and are fully funded.
		Reclassifications
		Certain prior year balances have been reclassified to conform with current year presentation.
3.		Accounting Change
		In 1999, the Company adopted Accounting Standards Executive Committee Statement of Position 98-5 (“SOP 98-5”), “Reporting on the Costs of Start-Up Activities,” effective for fiscal years beginning after December 15, 1998. Previously, the Company capitalized start-up costs and amortized these costs over a five-year useful life. In accordance with SOP 98-5, the Company expensed these costs amounting to $1,673,168 to operations during 1999. The initial application of SOP 98-5 has been reported as a cumulative effect of a change in accounting principle in the consolidated financial statements.
4.		Property and Equipment
		Property and equipment consists of the following:

All directors and officers serve a one-year term or until their successors are elected.

	December 31,
	2000			1999
Land and land improvements	$	6,405,463		$	6,318,054
Buildings		11,904,743			11,965,802
Golf courses and recreational facilities		16,542,399			16,542,399
Machinery and equipment		9,681,713			9,999,680
Capital leases		1,385,565			1,362,295
Construction in progress		2,477,380			1,323,975
		48,397,263			47,512,205
Less accumulated depreciation		(6,628,894	)		(4,306,949	)
	$	41,768,369		$	43,205,256

Resigned effective 06/01/02

~~F-10~~13

GolfTable Hostof Resorts, Inc. and Subsidiary Contents

~~Notes to Consolidated Financial Statements December~~Item ~~31,~~11. ~~2000~~Executive ~~and 1999~~Compensation

		Construction in progress (“CIP”) consists of costs incurred while constructing resort amenities. Interest costs of approximately $80,000 and $147,000 were capitalized to CIP for the years ended December 31, 2000 and 1999, respectively.
		Depreciation expense of approximately $2,789,000, $2,458,000, and $2,086,000 were recorded for the years ended December 31, 2000, 1999 and 1998, respectively.
5.		Intangible Assets
		Resulting from the Acquisition, a resort intangible of approximately $30,400,000, relating to acquiring an operating resort property with an existing rental pool agreement, was recorded and is being amortized on a straight-line basis over 20 years. Amortization expense for all intangible assets was approximately $1,522,000, $1,553,000 and $2,001,000 for the years ended December 31, 2000, 1999 and 1998, respectively.
		During the year ended December 31, 2000, the Company recorded a provision for intangible impairment of approximately $7,441,000. The Company has experienced significant changes in business and market conditions, which has led to declines in the results of operations and the number of participants in the rental pool. As a result, the Company concluded that impairment had occurred. An impairment charge was required because estimated fair value of the intangible was less than its carrying value.
6.		Other Accounts Payable and Accrued Expenses
		Other accounts payable and accrued expenses consist of the following:

All items for Golf Host Resorts, Inc., except those set forth below, have been omitted as not applicable or not required.

	December 31,
	2000		1999
Rental pool lease distribution	$	1,576,517	$	1,677,601
Taxes, other than income taxes		1,030,411		966,384
Other		469,926		570,336
	$	3,076,854	$	3,214,321

Summary Compensation Table

~~F-11~~ The following table sets forth the remuneration paid, distributed or accrued by Golf Host Resorts, Inc. and its parent, Golf Hosts, Inc., during the three years in the period ended December 31, 2002, to the Company’s executive officers.

Golf Host Resorts, Inc. and Subsidiary


								Other		All Other
Name and Principal Position		Fiscal		Salary and				Annual		Compensation
Golf Host Resorts, Inc.		Year		Commission		Bonus		Compensation		(3)

Merrick R. Kleeman (1)			2002	$	—	$	—	$	—	$	—
	President (Chief Executive Officer)		2001	$	—	$	—	$	—	$	—
			2000	$	—	$	—	$	—	$	—
Jerome C. Silvey (1)			2002	$	—	$	—	$	—	$	—
	Senior Vice President		2001	$	—	$	—	$	—	$	—
			2000	$	—	$	—	$	—	$	—
Robert Geimer (1)			2002	$	—	$	—	$	—	$	—
	Vice President and Secretary		2001	$	—	$	—	$	—	$	—
			2000	$	—	$	—	$	—	$	—
R. Keith Wilt (1)			2002	$	95,000	$	10,000	$	—	$	—
	Vice President and Treasurer (Principal Financial Officer)		2001	$	95,000	$	25,000	$	—	$	—
			2000	$	84,000	$	25,000	$	—	$	—

~~Notes~~(1) toTotal ~~Consolidated~~of ~~Financial~~annual ~~Statements December 31~~salary and bonus was not greater than $100,000 ~~2000~~for ~~and~~the ~~1999~~ years where dollar amounts are not presented.

~~7. Line of Credit and Notes Payable~~14

		December 31,
		2000		1999
Line of credit
	Revolving line of credit limited to a percentage of qualifying accounts receivable with interest at the prime rate plus 0.75% (10.25% at December 31, 2000); the loan matures on October 8, 2004	$	667,141	$	2,109,316
Notes payable
	Participating mortgage note at varying pay rates maturing in 2027	$	69,975,000	$	69,975,000
	$9,000,000 participating mortgage note credit facility		9,000,000		9,000,000
	Mortgage note at 6.34%, maturing in 2002		3,167,921		4,417,764
	Capital leases ranging from 1.89% to 17.37%		958,376		1,231,661
			83,101,297		84,624,425
	Less current maturities		862,058		795,205
		$	82,239,239	$	83,829,220

~~The Company has an accounts receivable line of credit with a financial institution which matures in October 2004~~Item 12. AtSecurity ~~December~~Ownership ~~31, 2000 and 1999, approximately $2,313,000 and $770,000 was available under the $3,000,000 accounts receivable line~~ of ~~credit,~~Certain ~~net~~Beneficial ofOwners ~~$20,000~~ and $121,000 in letters of credit. Concurrent with the Acquisition, the Company obtained a $78,975,000 note payable from GTA. The note payable has two components: a $69,975,000 participating mortgage note and a $9,000,000 credit facility. The note payable is secured by substantially all assets other than Innisbrook’s accounts receivable and is guaranteed by GHI. The agreement defines Tamarron, undeveloped land at Innisbrook, unpledged GTA shares, or the proceeds of the sale of any of those as Additional Collateral. The note payable agreement stipulates that Additional Collateral will be released when the ratio of Innisbrook’s Net Operating Income equals or exceeds a ratio to Debt Service, as defined. For the year ended December 31, 1998 the release ratio was met, and accordingly, Additional Collateral of $4,956,837 was released as security during 1999. The release ratio was not met for the years ended December 31, 2000 and 1999. The participating mortgage note was used to finance the Company’s Acquisition and the purchase of GTA stock. The participating mortgage note calls for initial annual interest payments of $6,739,063 with an annual 5% increase in the interest payment commencing January 1, 1998 (prorated to 2.616% for 1998) and continuing each year through 2002. Interest, payable monthly, has been recorded using the effective interest method. The effective interest rate is approximately 11.5% over the life of the note payable. In addition, the participating mortgage note calls forManagement

~~F-12~~ (a) Security ownership of certain beneficial owners:

Golf Host Resorts, Inc. and Subsidiary


	Name and Address of	Amount Beneficially
Title of Class	Beneficial Owner	Owned		Percent of Class

Golf Host Resorts, Inc.:
Common	Golf Hosts, Inc. 591 W. Putnam Ave. Greenwich, CT 06830		5,000		100	%
Golf Hosts, Inc.:
Common	Golf Host Holdings, Inc. 591 W. Putnam Ave. Greenwich, CT 06830		1		100	%

~~Notes~~(b) toSecurity ~~Consolidated~~ownership ~~Financial~~of ~~Statements December 31~~management of the Company in Golf Hosts, ~~2000~~Inc. ~~and~~(GHI): ~~1999~~ None (c) Changes in control: None

~~participation payments based upon levels of revenue, as defined, of the Innisbrook property (“Participating Interest”)~~Item 13. ~~The~~Certain ~~Participating~~Relationships ~~Interest incurred by the Company was $0, $0~~ and ~~$243,000~~Related for the years ended December 31, 2000, 1999 and 1998, respectively. Principal on the GTA note payable is due at maturity on June 23, 2027. Upon expiration or earlier termination of the participating mortgage note, GTA has the option to purchase Innisbrook at fair market value. The $9,000,000 credit facility bears interest initially at a 9.75% fixed rate with an annual 5% interest escalator commencing January 1, 1998 (11.03%, 10.51% and 10.01% for the years ended December 31, 2000, 1999 and 1998, respectively) and continuing each year through 2002. As of December 31, 2000, the Company has drawn the full $9,000,000 available under this facility. The Company incurred interest expense of $9,227,000, $9,005,000 and $7,767,000 on the GTA note payable during the years ended December 31, 2000, 1999 and 1998 of which $3,838,000 and $3,359,000 was payable at December 31, 2000 and 1999. Accrued interest of $718,500 represents interest payable during the next fiscal year. The balance of accrued interest is included in other long-term liabilities and results from the effective interest method discussed above. The Company obtained a $5,000,000 mortgage note on June 20, 1997, collateralized by certain assets at Innisbrook, from the previous owners as a part of the acquisition. The note bears interest at a fixed rate of 6.34% with interest payable quarterly. The Company incurred interest expense of $240,000, $291,000 and $340,000 for the years ended December 31, 2000, 1999 and 1998, of which $6,100 and $8,400 was payable at December 31, 2000 and 1999. Subsequent to December 31, 2000, the mortgage note was paid (Note 12). The Company has leased property under capital leases expiring in 2003. Principal payments under the leases are payable as follows: 2001 — $362,000; 2002 — $558,000 and 2003 — $39,000. As a condition under the note payable agreement with GTA, the Company acquired 159,326 common shares of Golf Trust of America, Inc. (the 100% owner of GTA) and 274,000 Operating Partnership Units (“OPUs”) in GTA for $8,975,000 with an option to acquire for $26 per unit 150,000 additional OPUs. The note payable agreement restricts the Company’s ability to sell its investments in GTA until certain Company operating results, as defined, are attained. The Company distributed its GTA investment to its parent upon acquisition. In 1998, GHI sold 65,000 of the common shares. The proceeds from the sale of $2,253,000 were held by GTA as Additional Collateral in accordance with the terms of the note payable and were released to GHI during 1999. Subsequent to December 31, 2000, GTA shareholders approved a plan of liquidation (Note 12).Transactions

F-13

(a)		Transactions with Management and Others

		GHI charges administrative and other expenses to the Company on the basis of estimated time and expenses incurred as reasonably determined by GHI.

		As part of the terms of the management agreement for Innisbrook, Westin guaranteed minimum cash flow to Innisbrook. The terms of the agreement provide that if incentive cash flow, as defined, is less than the minimum annual payment, as defined, for the operating year, Westin will advance Innisbrook the shortfall up to $2.5 million with the advance being repayable when the Company has available cash, as defined. In addition, the Company signed an agreement under which Westin will provide 50% of the funding for approved capital expenditures incurred subsequent to the Acquisition in excess of $6 million, plus 50% of capital expenditures in excess of the annual capital reserve requirements on an annual basis, as defined. The aggregate amounts outstanding, including accounts payable, were approximately $12,015,000 and $13,895,000 for the year ended December 31, 2002 and December 31, 2001, respectively. The December 31, 2002 balance consists of two components: approximately $1,750,000 represents unpaid management fees and reimbursable expenses as defined in the Management Agreement, and $10,265,000 represents the minimum annual payment noted above.

		During 2000, the Company contributed the assets and liabilities of Tamarron of approximately $6,200,000, net, to GHI, who contributed them to Golf Host II, Inc., a wholly owned subsidiary of GHI. Concurrently with the dividend of Tamarron, the Company entered into a lease agreement whereby Golf Host II, Inc. (“GH II”) leased Tamarron to the Company. Rent was payable in the amount of $1 per annum, and the Company assumed responsibility for Tamarron’s net income (loss), as defined by the lease agreement. Effective November 19, 2001, Tamarron was sold to an unrelated entity, and the Company has no remaining responsibility under the lease or rental pool agreements.

~~Golf Host Resorts, Inc. and Subsidiary~~15

NotesTable toof Consolidated Financial Statements December 31, 2000 and 1999 Contents

8.		Income Taxes
		On April 17, 1998, the Company filed an election with the Internal Revenue Service to change its tax status to a Qualified Subchapter S Subsidiary effective February 3, 1998. As a result of this election, all applicable deferred tax liabilities have been removed from the balance sheet and reflected as an extraordinary item in the consolidated statements of operations. The remaining deferred tax liability represents the estimated liability for taxes to be paid on built-in gains associated with the planned sale of assets within the statutory 10-year period from Acquisition.
		No valuation allowance is provided on deferred tax assets as management believes it is more likely than not that such assets will be realized upon sale of its assets held for sale. Under the Internal Revenue Code, if certain substantial changes in the Company’s ownership occur, there are annual limitations on utilization of loss carryforwards.

(b)		Certain Business Relationships

		None

(c)		Indebtedness of Management

		None

(d)		Transactions with Promoters

		Not applicable

			December 31,
			2000			1999
Deferred income taxes consist of the following:
	Deferred income tax asset:
		Net operating loss	$	1,113,700		$	1,113,700
	Deferred income tax liability:
		Basis difference in property and intangible assets		(2,884,167	)		(2,884,167	)
Total deferred income tax liability			$	(1,770,467	)	$	(1,770,467	)

Item 14. Controls and Procedures

~~Prior~~Within the 90 days prior to the ~~Qualified~~date ~~Subchapter~~of Sthis ~~Subsidiary~~report, ~~election~~the Registrant’s management, including the ~~provision~~President ~~for~~(Chief ~~income~~Executive ~~taxes~~Officer), ~~consisted~~the Principal Financial Officer and the Registrant’s agent (Westin North American Management Company), carried out an evaluation of the ~~following:~~effectiveness of the design and operation of the disclosure controls and procedures of the Company pursuant to Exchange Act Rules 13a-14 and 15d-14. Based upon the evaluation, the Registrant’s President (Chief Executive Officer) and the Principal Financial Officer concluded that the Registrant’s disclosure controls and procedures are effective, in a manner that provides reasonable assurance that the information required to be disclosed by the Company in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

			For the 33-day
			period ended
			February 2,
			1998
Charges to operations:
	Current income tax (benefit) expense		$	—
		Federal		—
		State		—
				—
	Deferred income tax expense (benefit):
		Federal		280,711
		State		48,117
				328,828
Total income tax expense (benefit)			$	328,828

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.

~~The~~Part ~~following table reconciles total income tax expense (benefit) to an amount produced by multiplying pretax income by the 37.5% blended federal and state statutory rate.~~IV

FItem 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-14K

~~Golf~~(a) ~~Host Resorts, Inc~~1. ~~and~~Financial ~~Subsidiary~~ Statements:

~~Notes~~Golf toHost ~~Consolidated~~Resorts, Inc. and Subsidiary (included in Item 10) Innisbrook Rental Pool Lease Operation Financial Statements ~~December 31,~~ ~~2000~~together ~~and~~with ~~1999~~ Report of Independent Certified Public Accountants (Included in Item 10) Tamarron Rental Pool Lease Operation Financial Statements together with Report of Independent Certified Public Accountants (Included in Item 10)

			For the 33-day
	2.	Financial Statement Schedules of Golf Host Resorts, Inc.
			period ended
		None
			February 2,
(b)		Reports on Form 8-K: None.
			1998
(c)		Exhibits
Tax computed at the federal statutory rate			$	287,694
Increase (decrease) in tax from:
	State income taxes, net			30,716
	Meals and entertainment			10,418
Total income tax expense (benefit)			$	328,828

		The Company filed a consolidated tax return with related parties for the period ended February 2, 1998. Tax expense or benefit was allocated based on the consolidated group’s tax sharing agreement.
9.		Tamarron’s Results of Operations
		As defined in Note 1, the Company assumes responsibility for the Net Income (Loss) of Tamarron under the terms of the lease agreement between the Company and Golf Host II, Inc. for the period of lease inception through December 31, 2000, the Net Income (Loss) is as follows and is included in loss on assets held for sale and leased asset in the statement of operations:

		For the 203-day
		period ended
		December 31, 2000
Revenue:
	Hotel	$	2,280,871
	Food and beverage		1,472,584
	Golf		1,271,125
	Other		1,012,459
			6,037,039
Costs & operating expense:
	Hotel		886,966
	Food & Beverage		1,143,930
	Golf		561,612
	Other		1,799,372
	General and administrative		2,471,298
	Interest expense		47,181
			6,910,359
Net loss		$	(873,320	)

F-15

	99.1		Chief Executive Officer Certification required under Section 906 of Sarbanes-Oxley Act of 2002.

	99.2		Principal Financial Officer Certification required under Section 906 of Sarbanes-Oxley Act of 2002.

~~Golf~~All ~~Host~~other ~~Resorts,~~schedules ~~Inc.~~are ~~and~~omitted ~~Subsidiary~~because they are not applicable or the required information is shown in the financial statements or notes thereto.

~~Notes~~The toRegistrant ~~Consolidated~~does ~~Financial~~not ~~Statements~~believe its accounting principles are subject to ~~December 31,~~significant ~~2000~~estimates ~~and~~which ~~1999~~would materially impair its financial results.

10.		Commitments and Contingencies
		Rental Pool Distribution
		The Company offered, effective January 1, 1998, a separate Guaranteed Distribution Master Lease Agreement (“GMLA”) to Innisbrook participants. Among other things, the GMLA provides for an equal sharing between the Company and Innisbrook participants of Adjusted Gross Revenues and includes as deductions from the Gross Income Distribution, as defined, a 5.5% Management Fee and a 3% Marketing Fee. The Company has also guaranteed that distributions will not be less than an amount which approximates the 1996 Gross Income Distribution, as prorated based upon Weighted Days Pool Participation, as defined. For the years ended December 31, 2000 and 1999, no amounts were paid under the guarantee. The GMLA has a noncancelable term through 2011 with an annual rental pool participation election by individual unit owners. Subsequent to December 31, 2000, a revised MLA was presented to the rental pool participants, effective January 1, 2002 (Note 12).
		Legal
		The Company, in the normal course of operations, is subject to claims and lawsuits by employees, guest, and vendors. The Company does not believe that the ultimate resolution of these matters will materially impair operations or have an adverse effect on the Company’s financial position and results of operations.
11.		Westin Agreements
		Westin became manager of Innisbrook effective July 15, 1997, for a 20-year term unless terminated earlier. Westin receives annual management fees, based on revenues of Innisbrook, and certain cost reimbursements. Westin’s management fee amounted to $885,000, $893,000 and $853,000 for the years ended December 31, 2000, 1999 and 1998, respectively.
		The Westin management agreement requires the Company to maintain a capital replacement fund based on a percentage of gross revenues. The Company contributed $2,292,000 and $2,295,000 for the years ended December 31, 2000 and 1999, respectively. At December 31, 2000 and 1999, the capital replacement fund has a balance of $971,000 and $82,000 and is included in restricted cash in the accompanying consolidated balance sheets.
		In April 1998, the Company signed an agreement under which Westin will provide 50% of the funding for approved capital expenditures incurred subsequent to the Acquisition in excess of the annual capital replacement fund requirements defined above in addition to providing 50% of the funding for the initial capital requirements over $6,000,000, as defined.
		Additionally, under the terms of the Innisbrook management agreement, Westin guarantees a minimum cash flow to Innisbrook. The agreement provides that if Incentive Cash Flow, as defined, is less than the Minimum Annual Payment, as defined, for the operating year, then Westin will fund a non-interest bearing advance to Innisbrook for the shortage up to $2,500,000, with the advance being repayable when the Company has Available Cash, as defined.

F-16 Table of Contents

~~Golf Host Resorts, Inc. and Subsidiary~~SIGNATURES

~~Notes~~Pursuant to ~~Consolidated~~the ~~Financial~~Requirements ~~Statements December~~of Section 3113 or 15(d) of the Securities Exchange Act of 1934, ~~2000~~the ~~and~~Registrant ~~1999~~has duly caused this report to be signed on its behalf by the undersigned, therefore duly authorized.

		Amounts payable to Westin of $9,073,000, and $4,795,000 in the aggregate as of December 31, 2000 and 1999, include management fees, amounts advanced under the terms of the guarantee, and certain cost reimbursements and are included in accrued expenses and other long-term liabilities, as applicable.
		GOLF HOST RESORTS, INC.
12.		Subsequent Events
Date: March 31, 2003		By: /s/ Merrick Kleeman Merrick Kleeman President (Chief Executive Officer)
		On May 4, 2001, the Company sold the remaining land parcel at Innisbrook included in assets held for sale as of December 31, 2000 for $4,578,000. Net proceeds of $3,929,000 were distributed by the Company to its shareholder.
Date: March 31, 2003		By: /s/ R. Keith Wilt R. Keith Wilt Vice President & Treasurer (Principal Financial Officer)
		On May 22, 2001, GTA, the lender on the $78,975,000 note payable, announced that its shareholders approved a plan for its liquidation. The impact of GTA’s plan of its liquidation on the Company, if any, is uncertain. Additionally, the Company was informed by GTA on November 29, 2001 that the Company is in default on the $78,975,000 note payable with GTA arising from the Company’s failure to pay the October 2001 interest payment. GTA has asserted its right to accelerate payment of the total outstanding principal amounts. The Company is currently discussing with GTA a possible restructuring of the terms of the note payable. However, no agreement has been reached.
		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 used to settle the remaining balance due under the $5 million mortgage note from the previous owners, which will be accounted for as a capital contribution to the Company.
		The Company has been named as a defendant in a consolidated class action lawsuit whereby the plaintiffs allege a breach of contract in connection with the Rental Pool Master Lease Agreement. The plaintiffs are seeking unspecified damages and a declaratory judgment declaring 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. Depositions of class members and others, including depositions of prior executives of Golf Host Resorts, have been taken and additional discovery remains. A court date has not been set. As this litigation is still in its early stages, 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 it has successful defenses and intends to vigorously defend this action.
		A revised MLA (“Revised MLA”) has been presented to the rental pool participants, effective January 1, 2002, resulting from the expiration of the existing MLA between the Company and rental pool participants under the existing MLA on December 31, 2001. On an annual basis, beginning in 2002, each condominium owner will elect to participate in either the Revised MLA or the GMLA. As of December 26, 2001, 605 rental units have elected participation in the Revised MLA and 13 in the GMLA. The Revised MLA provides for Adjusted Gross Revenues, as defined, to be divided 40% to the Innisbrook rental pool participants and 60% to the Company. In addition, the Company has agreed as part of the Revised MLA, to reimburse participants in the Revised MLA for up to 50% of actual unit refurbishment costs. If the company proves unsuccessful in its defenses in the class action lawsuit, any rental pool participant who elects, subject to the Revised MLA, will forego reimbursement by the Company for renovations equal to their pro-rata amount of the class action settlement proceeds.
		On October 3, 2001, the FASB issued FASB Statement No. 144 (“FAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets. FAS 144 excludes goodwill from its scope and, therefore, eliminates the requirement to allocate goodwill to long-lived assets to be tested for impairment. The provisions of FAS 144 will be effective for fiscal years beginning after December 15, 2001. The Company has not completed the process of evaluating the impact that will result from adopting FAS 144.

~~F-17~~18

ReportTable of Independent Certified Public Accountants Contents

ToI, ~~Golf~~Merrick ~~Host Resorts~~Kleeman, ~~Inc.~~certify ~~and the Lessors of the~~that: ~~Innisbrook Rental Pool Lease Operation~~

In 1. I ~~our~~have ~~opinion,~~reviewed ~~the~~this ~~accompanying~~annual ~~balance~~report ~~sheets~~on and the related statements of operations and of changes in participants’ fund balance present fairly, in all material respects, the financial position of the Innisbrook Rental Pool Lease Operation at DecemberForm ~~31,~~10-K ~~2000 and 1999, and the results~~ of ~~its~~Golf ~~operations and the changes in participants’ fund balance for~~Host ~~each of the three years in the period ended December 31~~Resorts, ~~2000 in conformity with accounting principles generally accepted in the United States of America~~Inc. ~~These financial statements are the responsibility of the rental pool’s operators~~; ~~our responsibility is to express~~ ~~an opinion on~~ these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As 2. Based ~~discussed~~on inmy ~~Note~~knowledge, 1this annual report does not contain any untrue statement of ~~the~~a ~~notes~~material fact or omit to ~~financial~~state ~~statements,~~a ~~the~~material ~~Innisbrook~~fact ~~Rental~~necessary ~~Pool~~to ~~Lease Operation~~make isthe ~~party~~statements tomade, ~~lease~~in ~~agreements~~light ~~with~~of anthe ~~affiliated~~circumstances ~~entity~~under which such statements were made, ~~whose~~not ~~ability to~~misleading ~~continue~~with asrespect ~~a going~~to ~~concern~~the isperiod covered inby ~~substantial~~this ~~doubt.~~annual report;

~~/s/ PricewaterhouseCoopers~~ 3. Based ~~LLP~~on my knowledge, the financial statements, and other ~~Tampa~~financial information included in this annual report, ~~Florida~~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 annual report;

~~March 30,~~ 4. The ~~2001,~~Registrant’s ~~except~~other certifying officer and I are responsible for establishing ~~the~~and ~~information~~maintaining indisclosure ~~Note~~controls 5and procedures (as defined ~~for~~in ~~which~~Exchange Act Rules 13a-14 and 15d-14) for the ~~date~~Registrant isand ~~December 26,~~we ~~2001~~have:

~~F-18~~ (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 annual 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 annual report (the “Evaluation Date”); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

~~Innisbrook~~ 5. The ~~Rental~~Registrant’s ~~Pool~~other ~~Lease~~certifying ~~Operation~~officer 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 function):

~~Balance~~(a) ~~Sheets~~all —significant ~~Distribution~~deficiencies ~~Fund~~ 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

		December 31,
		2000		1999
Assets
	Receivable from Golf Host Resorts, Inc. for distribution	$	1,579,097	$	1,677,827
	Interest receivable from Maintenance Escrow Fund		45,643		67,667
		$	1,624,740	$	1,745,494
Liabilities and Participants’ Fund Balance
	Due to participants for distribution	$	1,285,558	$	1,406,654
	Due to Maintenance Escrow Fund		339,182		338,840
	Participants’ fund balance		—		—
		$	1,624,740	$	1,745,494

6. The Registrant’s other certifying officer and I have indicated in this annual 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.

~~The~~Date: ~~accompanying~~March 31, ~~notes are an~~2003 ~~integral part of these financial statements.~~

~~F-19~~ /s/ Merrick Kleeman

~~Innisbrook~~Merrick ~~Rental~~Kleeman President (Chief ~~Pool~~Executive ~~Lease Operation~~Officer)

~~Balance Sheets — Maintenance Escrow Fund~~19

		December 31,
		2000		1999
Assets
	Cash and cash equivalents	$	1,472,396	$	893,477
	Short-term investments		1,045,000		3,705,000
	Construction in progress		11,484		2,435,821
	Receivable from Distribution Fund		339,182		338,840
	Carpet care receivable		—		13,280
	Interest receivable		27,301		82,429
		$	2,895,363	$	7,468,847
Liabilities and Participants’ Fund Balance
	Accounts payable	$	760,544	$	379,834
	Construction retainage		154,419		—
	Interest payable to Distribution Fund		45,643		67,667
	Carpet reserve		4,856		—
	Participants’ fund balance		1,929,901		7,021,346
		$	2,895,363	$	7,468,847

~~The~~I, ~~accompanying~~R. ~~notes~~Keith ~~are~~Wilt, ~~an integral~~certify ~~part of these financial statements.~~that:

F 1. I have reviewed this annual report on Form 10-20K of Golf Host Resorts, Inc.;

~~Innisbrook~~ 2. Based ~~Rental~~on ~~Pool~~my ~~Lease~~knowledge, ~~Operation~~this annual 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 annual report;

~~Statements~~ 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of ~~Operations~~operations —and ~~Distribution~~cash flows ~~Fund~~of the Registrant as of, and for, the periods presented in this annual report;

		For the year ended December 31,
		2000			1999			1998
Gross revenues		$	18,551,171		$	20,563,724		$	19,484,376
Deductions:
	Agents’ commissions		898,800			1,189,691			775,083
	Credit card fees		124,314			153,233			173,718
	Audit fees		13,000			13,000			13,000
			1,036,114			1,355,924			961,801
Adjusted gross revenues			17,515,057			19,207,800			18,522,575
Management fee			(8,727,226	)		(9,570,271	)		(9,223,148	)
Gross income distribution			8,787,831			9,637,529			9,299,427
Adjustments to gross income distribution:
	Management fee		(962,083	)		(1,065,487	)		(998,760	)
	Marketing fee		(524,772	)		(581,174	)		(544,778	)
	Miscellaneous pooled expenses		(73,619	)		(98,886	)		(88,870	)
	Corporate complimentary occupancy fees		49,264			35,305			32,984
	Westin Associate room fees		77,678			59,927			23,366
	Payment under guarantee		—			—			10,918
	Occupancy fees		(1,628,544	)		(1,713,493	)		(1,776,640	)
	Advisory Committee expenses		(38,806	)		(29,242	)		(29,933	)
Net income distribution			5,686,949			6,244,479			5,927,714
Adjustments to net income distribution:
	Occupancy fees		1,628,544			1,713,493			1,776,640
	Hospitality suite fees		217			324			134
	Greens fees		8,596			9,753			12,588
	Additional participation credits		2,910			3,720			5,100
Amount available for distribution to participants		$	7,327,216		$	7,971,769		$	7,722,176

4. The Registrant’s other certifying officer 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:

~~The~~(a) ~~accompanying~~designed ~~notes~~such ~~are~~disclosure ~~an integral~~controls ~~part~~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 annual report is being prepared; (b) evaluated the effectiveness of ~~these~~the ~~financial~~Registrant’s ~~statements.~~ disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

~~F-21~~ 5. The Registrant’s other certifying officer 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 function):

~~Innisbrook~~(a) ~~Rental~~all ~~Pool~~significant ~~Lease~~deficiencies ~~Operation~~ 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

~~Statements~~ 6. The ofRegistrant’s ~~Changes~~other certifying officer and I have indicated in this ~~Participants’~~annual ~~Fund~~report ~~Balance~~whether —or ~~Distribution~~not ~~Fund~~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.

		For the year ended December 31,
		2000			1999			1998
Balance, beginning of year		$	—		$	—		$	—
Additions:
	Amounts available for distribution to participants		7,327,216			7,971,769			7,722,176
	Interest earned from Maintenance Escrow Fund		207,604			174,805			92,721
Reductions:
	Amounts withheld for Maintenance Escrow Fund		(1,450,443	)		(1,547,718	)		(1,580,182	)
	Amounts accrued or paid to participants		(6,084,377	)		(6,598,856	)		(6,234,715	)
Balance, end of year		$	—		$	—		$	—

Date: March 31, 2003

~~The~~/s/ ~~accompanying~~R. ~~notes~~Keith ~~are an integral part of these financial statements.~~ Wilt

~~F-22~~R. Keith Wilt Vice President and Treasurer (Principal Financial Officer)

~~Innisbrook Rental Pool Lease Operation~~20

StatementsTable of Changes in Participants’ Fund Balance — Maintenance Escrow Fund Contents

		For the year ended December 31,
		2000			1999			1998
Balance, beginning of year		$	7,021,346		$	2,505,110		$	1,901,616
Additions:
	Amounts withheld from occupancy fees		1,450,443			1,526,064			1,580,182
	Interest earned		207,604			174,805			92,721
	Charges to participants to establish or restore escrow balances		424,020			4,815,118			198,492
Reductions:
	Maintenance charges		(635,188	)		(1,340,680	)		(941,153	)
	Refurbishment Phase 1		(5,523,364	)		—			—
	Carpet care reserve deposit		(73,831	)		(57,487	)		(35,533	)
	Interest accrued or paid to Distribution Fund		(207,604	)		(174,805	)		(92,721	)
	Refunds to participants due under Lease Agreements		(733,525	)		(426,779	)		(198,494	)
Balance, end of year		$	1,929,901		$	7,021,346		$	2,505,110

Chief Executive Officer Certification required under Section 906 of Sarbanes-Oxley Act of 2002

~~The~~I, ~~accompanying~~Merrick ~~notes are an~~Kleeman, ~~integral part of these financial statements.~~

~~F-23~~President of the Company, certify, that:

~~Innisbrook~~1) ~~Rental~~the ~~Pool~~Report ~~Lease~~fully ~~Operation~~ complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934, as amended; and 2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.

~~Notes~~/s/ toMerrick ~~Financial~~Kleeman ~~Statements~~ Name: Merrick Kleeman Title: President (Chief Executive Officer) Date: March 31, 2003

1.		Rental Pool Lease Operation and Rental Pool Lease Agreements
		Organization and Operations
		The Innisbrook Rental Pool Lease Operation (the “Rental Pool”) consists of condominiums at the Westin Innisbrook Resort (“Innisbrook”) which are provided as resort accommodations by their owners. The condominium owners (“Participants”) have entered into Annual Rental Pool Lease Agreements (“ALAs”) and either a Master Lease Agreement (“MLA”) or, effective January 1, 1998, a Guaranteed Distribution Master Lease Agreement (“GMLA”), which define the terms and conditions related to each ALA with Golf Host Resorts, Inc. (“GHR”), the lessee of the Rental Pool. The MLA, GMLA and ALAs are referred to collectively as the “Agreements.” The ALAs expire at the end of each calendar year and the MLA and GMLA will remain in effect through December 31, 2001 and December 31, 2011, respectively. At December 31, 2000, 80 condominium owners had elected to participate in the MLA while 690 had elected to participate in the GMLA.
		The Rental Pool consists of two funds: the Distribution Fund and the Maintenance Escrow Fund. The Distribution Fund balance sheets primarily reflect amounts receivable from GHR for the Rental Pool distribution payable to Participants and amounts due to the Maintenance Escrow Fund. The operations of the Distribution Fund reflect Participants’ earnings in the Rental Pool. The Maintenance Escrow Fund reflects the accounting for certain escrowed assets of the Participants and, therefore, has no operations. It consists primarily of amounts escrowed by Participants or due from the Distribution Fund to meet escrow requirements, fund the carpet care reserve and maintain the interior of the unit.
		GHR, the lessee of the Rental Pool, has experienced recurring net losses and working capital deficiencies, which creates substantial doubt about GHR’s ability to continue as a going concern. The continuation of the Rental Pool lease agreement is contingent upon the continuation of operations of Innisbrook. GHR is presently evaluating its financial position and plans to obtain adequate financing for the continuity of its operations and funding of its current obligations
		Computation and Allocation of Earnings
		Under the GMLA, Participants and GHR share equally in Adjusted Gross Revenues, while GHR receives as deductions from the Gross Income Distribution a 5.5% Management Fee, a 3% Marketing Fee and Miscellaneous Pooled Expenses comprised of linen and other pooled expenses. The GMLA guarantees Rent (Net Income Distribution plus Occupancy and Hospitality Suite Fees) will not be less than an amount which approximates the 1996 Gross Income Distribution, as prorated based upon Weighted Days Pool Participation, as defined. In 2000 and 1999, no amounts were paid under the guarantee. The GMLA also guarantees a noncancelable term through 2011 with an annual rental pool participation election.
		Under the MLA, Participants and GHR share Adjusted Gross Revenues in accordance with the terms of the Agreements. Adjusted Gross Revenues consist of revenues earned from rental of condominiums, net of agents’ commissions, credit cards fees and audit fees. GHR receives a Management Fee equal to 47% of Adjusted Gross Revenues. Each Participant receives a fixed Occupancy Fee, based on apartment size, for each day of occupancy. After allocation of Occupancy Fees, the balance of Adjusted Gross Revenues, net of the Management Fee and

F-24 Table of Contents

~~Innisbrook~~Principal ~~Rental~~Financial ~~Pool~~Officer ~~Lease~~Certification ~~Operation~~required under Section 906 of Sarbanes-Oxley Act of 2002

~~Notes~~I, toR. ~~Financial~~Keith ~~Statements~~Wilt,

~~adjustments,~~Vice isPresident allocated proportionately to Participants, based on the Participation Factor as defined in the Agreements. Corporate complimentary occupancy fees are rental fees paid by GHR to the Participants for complimentary rooms unrelated to Rental Pool operations. Westin Associate room fees represent total room revenues earned from rental of condominiums by Westin employees passed through to the Rental Pool. Owners who purchased units prior to January 1, 1991 and ~~who~~Treasurer ~~participate in the Rental Pool under the MLA for at least 50%~~ of the year or 50% of the time they own their unit receive Additional Participation Credits. Participation in greens fees is restricted to original condominium owners participating in the MLA who executed purchase agreements for certain units prior to April 13Company, 1972. Greens fees and Additional Participation Credits are requirements of agreements other than the current Agreements; these amounts are included in Adjustments to Net Income Distribution of the Rental Pool as this treatment is consistent with the method utilized by GHR to pay such amounts to the applicable Participants. Maintenance Escrow Fund Accounts The MLA and GMLA provide that 75% and 90%certify, respectively, of the Occupancy Fees earned by each Participant are deposited in the Participant’s Maintenance Escrow Fund account. This account provides funds for payment of amounts which are due from Participants under the Agreements for maintenance and refurbishment services. Under the MLA, when the balance of the Participant’s Maintenance Escrow Fund account exceeds 75% of the defined furniture replacement value, the excess is refunded to the Participant upon their election. Should a Participant’s balance fall below that necessary to provide adequate funds for maintenance and replacements, the Participant is required to restore the escrow balance to an adequate level. The GMLA provides for an Occupancy Fee deposit into the Participant’s Maintenance Escrow Fund account until the balance in the account equals the total anticipated charges for maintenance, repair and refurbishing of the condominium. Under the MLA and GMLA, a percentage of the Occupancy Fees are deposited into the carpet care reserve in the Maintenance Escrow Fund which will bear the expenses of carpet cleaning for all Participants. This percentage is estimated to provide the amount necessary to fund carpet cleaning expenses and may be adjusted annually. The amounts expended for carpet care were $56,000, $68,000, and $66,000 for 2000, 1999 and 1998, respectively. These expenditures were in excess of the carpet care reserve for 2000 and 1999. GHR places the maintenance escrow funds on behalf of the participants as instructed by the Lessors’ Advisory Committee and in compliance with restrictions in the Agreements. The Lessors’ Advisory Committee consists of nine Participants elected to advise GHR in Rental Pool matters. Income earned on these investments is allocated proportionately to Participants’ Maintenance Escrow Fund accounts and paid quarterly through the Distribution Fund. Included in cash and cash equivalents at December 31, 2000 are certificates of deposit of $760,000 at cost, maturing between January 2001 and March 2001, and bearing interest at rates from 6.2% to 6.3%, with the remainder held in a money market account. Included in short-term investments at:

F-25

	3)		the Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934, as amended; and

	4)		the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.

~~Innisbrook~~/s/ ~~Rental~~R. ~~Pool~~Keith ~~Lease~~Wilt ~~Operation~~ Name: R. Keith Wilt Title: Vice President and Treasurer (Chief Financial Officer) Date: March 31, 2003

~~Notes to Financial Statements~~22

DecemberTable 31, 2000 are certificates of deposit of $1,045,000 at cost, maturing between February 2001 and August 2001, and bearing interest at rates from 6.2% to 6.85%. Construction in progress and refurbishment includes costs incurred in conjunction with the condominium refurbishment project authorized by the Participants of the Rental Pool. The refurbishment project is expected to be completed within the next two years. 2. Summary of Significant Accounting Policies Basis of Accounting The accounting records of the funds are maintained on the accrual basis of accounting. Use of Estimates Preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions which affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Actual results could differ from those estimates. Income Taxes No federal or state taxes have been reflected in the accompanying financial statements as the tax effect of fund activities accrued to the Participants and shareholder of GHR. 3. Affiliate Owned Condominiums Golf Host Condominium, Inc., a wholly owned subsidiary of GHR, owns three condominiums. Its condominiums participated in the Rental Pool under the GMLA in the same manner as all others. 4. Commitments and Contingencies Hilton Hotels Corporation (“HHC”) managed Innisbrook from April 1993 to July 15, 1997, at which time the management was changed to Westin Hotel Company. In connection with the HHC agreement, HHC funded certain special projects and property improvements, including installation of life-safety equipment in condominium units participating in the Rental Pool and related common areas. Separately, the Rental Pool agreed to reimburse GHR the cost of installing the life-safety equipment, including reimbursements to condominium apartment owners for previously installed equipment, in an amount equal to $1,779,000, plus interest at 7.75% per annum for no more than five years on each related draw thereunder. Payments were required for years in which the Amount Available for Distribution to Participants exceeded $7,375,000 in an amount equal to 50% of such excess. Participants withdrawing from the Rental Pool for any reason, other than a sale, before the obligation to GHR had been fully repaid were required to immediately pay their proportionate share of the unpaid balance. In 1996 and 1995, repayment requirements of $362,593 and $150,036, respectively, resulted, yielding a balance of $1,591,341. Under the terms of the related agreement, the Rental Pool was not obligated to reimburse GHR if the management agreement between HHC and GHR was terminated. Therefore, effective withContents

~~F-26~~Report of Independent Certified Public Accountants

~~Innisbrook~~To ~~Rental~~the ~~Pool~~Shareholder ~~Lease~~and ~~Operation~~Board of Directors of Golf Host Resorts, Inc.

~~Notes~~In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of changes in shareholder’s deficit and of cash flows present fairly, in all material respects, the financial position of Golf Host Resorts, Inc. and subsidiary at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to ~~Financial~~express ~~Statements~~an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

		the July 15, 1997 change in management, the obligation of the Rental Pool to continue to make reimbursements ceased. The former shareholders of GHR retained all notes receivable, including the amount due from the Rental Pool, and have disputed the termination. The outcome of this matter is uncertain at this time. GHR is holding $240,000 in escrow as potential payments to the former shareholders pending resolution of this matter.
5.		Subsequent Events
		Effective January 1, 2002, the Company will replace the MLA, which expires on December 31, 2001, with a revised Master Lease Agreement (“Revised MLA”). The Revised MLA provides for Adjusted Gross Revenues, as defined, to be divided 40% to the Innisbrook participants and 60% to the Company.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 of the notes to the consolidated financial statements, 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 Note 1 and 6. Additionally, as described in Notes 6 and 9, the Company has defaulted under the terms of its debt agreement and its parent, Golf Host, Inc., is a defendant to a class action lawsuit wherein the plaintiffs allege breaches of contract by the Company. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

~~F-27~~/s/ PricewaterhouseCoopers, LLP Tampa, Florida March 28, 2003

~~Report of Independent Certified Public Accountants~~F-1

ToTable Golf Host Resorts, Inc. and the Lessors of the Tamarron Rental Pool Lease Operation Contents

~~In our opinion, the accompanying balance sheets and the related statements of~~ ~~operations~~Golf ~~and~~Host ~~of changes in participants’ fund balance present fairly~~Resorts, in all material respects, the financial position of the Tamarron Rental Pool Lease Operation at December 31, 2000 and 1999, and the results of its operations and the changes in participants’ fund balance for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of AmericaInc. These financial statements are the responsibility of the rental pool’s operators; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and ~~perform the audit to obtain reasonable assurance about whether the~~Subsidiary financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

AsConsolidated ~~discussed~~Balance ~~in Note 1, the Sheraton Tamarron Resort was sold on November 19,~~Sheets ~~2001 to an unaffiliated entity who assumed all responsibility under the Tamarron Rental Pool Lease Operation.~~

/s/ PricewaterhouseCoopers LLP Tampa, Florida


			December 31,
			2002			2001
Assets
Current assets:
	Cash		$	—		$	665,402
	Restricted cash			2,520,849			1,413,326
	Accounts receivable, net			2,069,962			2,056,232
	Other receivables			61,554			37,530
	Inventories and supplies			1,157,792			1,070,280
	Prepaid expenses and other assets			514,493			613,962

				6,324,650			5,856,732

Intangibles, net				12,463,987			13,323,572
Property and equipment, net				38,025,063			40,180,206
Other assets				5,701,950			509,215

		Total assets	$	62,515,650		$	59,869,725

Liabilities and Shareholder’s Deficit
Current liabilities:
	Cash overdrafts		$	69,846		$	—
	Debt due within one year			79,003,552			79,562,698
	Accounts payable			4,973,036			7,762,297
	Accrued payroll costs			893,224			772,296
	Accrued interest			14,538,319			5,453,357
	Other payables and accrued expenses			2,721,823			2,775,026
	Deposits and deferred revenue			2,003,938			2,695,273
	Due to related parties			198,802			48,428

				104,402,540			99,069,375
Debt due after one year				—			51,213
Other long-term liabilities				10,265,009			9,015,009
Long-term refurbishment				5,548,514			—
Deferred income taxes				1,255,000			1,255,000

		Total liabilities		121,471,063			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			(55,050,090	)		(45,615,549	)

		Total shareholder’s deficit		(58,955,413	)		(49,520,872	)

		Total liabilities and shareholder’s deficit	$	62,515,650		$	59,869,725

~~March 30,~~The ~~2001,~~accompanying ~~except~~notes ~~for~~are ~~the~~an ~~information~~integral ~~in Note~~part ~~1 for~~of ~~which~~these ~~the~~consolidated ~~date~~financial ~~is December 26, 2001~~statements.

F-282

TamarronTable Rentalof Pool Lease Operation Contents

~~Balance~~Golf ~~Sheets~~Host —Resorts, ~~Distribution~~Inc. ~~Fund~~and Subsidiary

		December 31,
		2000		1999
Assets
	Cash	$	1,000	$	1,000
	Receivable from Golf Host Resorts, Inc. for distribution		181,539		132,557
	Interest receivable from Maintenance Escrow Fund		1,549		2,195
		$	184,088	$	135,752
Liabilities and Participants’ Fund Balance
	Due to participants for distribution	$	152,957	$	93,415
	Due to Maintenance Escrow Fund		31,131		42,337
	Participants’ fund balance		—		—
		$	184,088	$	135,752

Consolidated Statements of Operations

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


		Year ended December 31,
		2002			2001			2000
Revenues:
	Resort facilities	$	12,156,198		$	16,286,752		$	18,892,485
	Food and beverage		11,335,921			12,965,848			17,468,331
	Golf		11,528,611			13,320,099			14,131,982
	Other		5,149,597			5,146,238			6,013,636

			40,170,327			47,718,937			56,506,434

Costs and operating expenses:
	Resort facilities		9,659,301			11,810,655			13,430,355
	Food and beverage		7,974,357			9,034,212			10,465,882
	Golf		6,186,797			6,570,304			7,403,772
	Other		8,527,711			9,342,146			10,710,260
	General and administrative		4,302,602			5,226,262			6,043,701
	Depreciation and amortization		3,597,040			3,886,360			4,310,973
	Provision for intangible impairment		—			3,000,000			7,441,000

			40,247,808			48,869,939			59,805,943

Income (loss) before loss on assets held for sale and leased asset			(77,481	)		(1,151,002	)		(3,299,509	)
Loss on assets held for sale and leased asset			—			455,729			2,006,407

Operating (loss) income			(77,481	)		(1,606,731	)		(5,305,916	)
Interest, net			9,100,748			9,263,315			9,500,714

Loss before income tax benefit			(9,178,229	)		(10,870,046	)		(14,806,630	)
Income tax benefit			—			515,467			—

Net loss			(9,178,229	)		(10,354,579	)		(14,806,630	)
Dividend requirements on preferred stock			256,312			256,312			256,312

Net loss attributable to common shareholder		$	(9,434,541	)	$	(10,610,891	)	$	(15,062,942	)

~~F-29~~The accompanying notes are an integral part of these consolidated financial statements.

~~Tamarron Rental Pool Lease Operation~~F-3

BalanceTable Sheetsof — Maintenance Escrow Fund Contents

			December 31,
			2000		1999
Assets
	Cash and cash equivalents		$	129,635	$	125,514
	Due from Distribution Fund			31,131		42,337
	Inventory:
		Linen		16,496		26,832
		Materials and supplies		7,306		9,950
	Deposits			6,292		—
			$	190,860	$	204,633
Liabilities and Participants’ Fund Balance
	Accounts payable		$	14,597	$	14,100
	Interest payable to Distribution Fund			1,549		2,195
	Participants’ fund balance			174,714		188,338
			$	190,860	$	204,633

Golf Host Resorts, Inc. and Subsidiary

~~The~~Consolidated ~~accompanying~~Statements ~~notes are an integral part~~ of ~~these~~Changes ~~consolidated~~in ~~financial~~Shareholder’s ~~statements.~~Deficit

F-30


	$1 Par Value				5.6% Cumulative
	Common Stock				Preferred Stock										Total
									Paid-in			Accumulated			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 available to common shareholder		—		—		—		—		—			(10,610,891	)		(10,610,891	)
Forgiveness of operating deficits (Note 8)		—		—		—		—		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 loss available to common shareholder		—		—		—		—		—			(9,434,541	)		(9,434,541	)

Balance, December 31, 2002		5,000	$	5,000		4,577,000	$	4,577,000	$	(8,487,323	)	$	(55,050,090	)	$	(58,955,413	)

~~Tamarron~~The ~~Rental~~accompanying ~~Pool~~notes ~~Lease~~are ~~Operation~~an integral part of these consolidated financial statements.

~~Statements of Operations~~F-4 ~~— Distribution Fund~~

		For the year ended December 31,
		2000			1999			1998
Gross revenues		$	3,098,682		$	3,385,651		$	3,225,267
Deductions:
	Agents’ commissions		78,378			95,409			115,790
	Sales and marketing expenses		232,401			253,924			241,895
	Audit fees		13,000			13,000			13,000
			323,779			362,333			370,685
Adjusted gross revenues			2,774,903			3,023,318			2,854,582
Management fee			(1,458,618	)		(1,511,659	)		(1,427,291	)
Gross income distribution			1,316,285			1,511,659			1,427,291
Adjustments to gross income distribution:
	Corporate complimentary occupancy fees		3,794			2,236			2,611
	Occupancy fees		(311,856	)		(317,383	)		(317,350	)
	Designated items		(44,827	)		(103,558	)		(90,950	)
	Advisory Committee expenses		(6,044	)		(8,684	)		(11,226	)
Pooled income			957,352			1,084,270			1,010,376
Adjustments to pooled income:
	Hospitality suite fees		—			—			—
	Occupancy fees		311,856			317,383			317,350
Net income distribution		$	1,269,208		$	1,401,653		$	1,327,726

~~The~~Golf ~~accompanying~~Host ~~notes~~Resorts, ~~are~~Inc. anand ~~integral part of these consolidated financial~~Subsidiary ~~statements.~~

~~F-31~~Consolidated Statements of Cash Flows

Tamarron Rental Pool Lease Operation


				Year ended December 31,
				2002			2001			2000
Cash flows from operating activities:
	Net loss			$	(9,178,229	)	$	(10,354,579	)	$	(14,806,630	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Provision for bad debts			37,057			126,442			100,300
		Depreciation and amortization			3,597,040			3,886,360			4,310,973
		Provision for intangible impairment			—			3,000,000			7,441,000
		Gain on disposition of capital lease			(294,821	)		—			—
		Amortization of refurbishment costs			407,015			—			—
		Affiliate asset contribution			(425,688	)		—			—
		Gain on sale of asset held for sale			—			(1,164,911	)		—
		Income tax benefit			—			(515,467	)		—
	Changes in operating assets and liabilities:
		(Increases) decreases in:
			Restricted cash		(1,107,523	)		(194,037	)		(900,429	)
			Accounts receivable and other receivables		(74,811	)		3,189,054			(697,194	)
			Inventories and supplies		(87,512	)		536,655			148,517
			Prepaid expenses and other assets		99,469			(416,563	)		(65,283	)
		Increases (decreases) in:
			Cash overdraft		69,846			—			—
			Accounts payable		(1,113,573	)		(851,882	)		3,574,954
			Accrued payroll costs		120,928			(57,776	)		(69,678	)
			Accrued interest		9,084,962			4,636,310			125,782
			Other payables and accrued expenses		(53,203	)		(301,828	)		(137,467	)
			Deposits and deferred revenue		(691,335	)		(766,510	)		620,745
			Due to related parties		(105,938	)		1,289,103			1,321,733

			Cash provided by operating activities		283,684			2,040,371			967,323

Cash flows from investing activities:
	Increases in other assets				(51,236	)		(25,427	)		(167,937	)
	Purchases of property and equipment				(714,668	)		(1,526,163	)		(1,351,796	)
	(Increase) decrease in assets held for sale				—			(47,624	)		—
	Proceeds from sale of asset held for sale				—			3,928,635			—

			Cash (used in) provided by investing activities		(765,904	)		2,329,421			(1,519,733	)

Cash flows from financing activities:
	Additional borrowings on existing debt				—			—			33,028
	Repayment of existing debt				(183,182	)		(3,487,386	)		(306,313	)
	Repayments on line of credit				—			(667,141	)		(1,442,175	)
	Distribution to shareholder				—			(3,928,335	)		—
	Contribution from shareholder				—			2,667,921			—
	Increases in other long-term liabilities				—			1,145,151			2,701,830

			Cash (used in) provided by financing activities		(183,182	)		(4,269,790	)		986,370

Net (decrease) increase in cash					(665,402	)		100,002			433,960
Cash, beginning of period					665,402			565,400			131,440

Cash, end of period				$	—		$	665,402		$	565,400

Noncash financing and investing activities:
	Satisfaction of preferred stock dividend requirement through the intercompany account			$	256,312		$	256,312		$	256,312
	Capital lease obligations				—			—			23,270
	Dividend of Tamarron to Golf Host II, Inc.				—			—			6,199,596
	Settlement with previous owners				—			—			1,249,843
	Forgiveness of operating deficits				—			5,069,677			—
	Transfer of fixed assets to asset held for sale				—			281,100			—
	Refurbishment program				5,548,514			—			—
Other information:
	Interest paid in cash			$	129,151		$	7,781,358		$	9,015,013

~~Statements~~The ofaccompanying ~~Changes~~notes inare ~~Participants’~~an ~~Fund~~integral ~~Balance~~part —of ~~Distribution~~these ~~Fund~~consolidated financial statements.

		For the year ended December 31,
		2000			1999			1998
Balance, beginning of year		$	—		$	—		$	—
Additions:
	Amounts available for distribution		1,269,209			1,401,654			1,327,727
	Interest earned from Maintenance Escrow Fund		4,364			2,195			1,103
Reductions:
	Amounts withheld for Maintenance Escrow Fund		(155,935	)		(158,700	)		(158,683	)
	Amounts accrued or paid to participants		(1,117,638	)		(1,245,149	)		(1,170,147	)
Balance, end of year		$	—		$	—		$	—

F-5

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

~~F-32~~Golf Host Resorts, Inc. and Subsidiary

~~Tamarron~~Notes ~~Rental~~to ~~Pool~~Consolidated ~~Lease~~Financial ~~Operation~~Statements December 31, 2002 and 2001

Statements of Changes in Participants’ Fund Balance — Maintenance Escrow Fund

1.		Organization, Business and Liquidity

		Golf Host Resorts, Inc. (the “Company”) is a wholly owned subsidiary of Golf Host, Inc. (“GHI”) and owns The Westin Innisbrook Resort (“Innisbrook”) in Tarpon Springs, Florida and, through November 18, 2001, operated the Sheraton Tamarron Resort (“Tamarron”) in Durango, Colorado (the “Resorts”). The Resorts offer championship quality golf facilities, restaurant and conference facilities, and related resort facilities. A majority of the condominium apartment owners at the Resorts provide their units as resort accommodations under rental pool lease operations.

		On June 23, 1997, TM Golf Hosts, Inc. (“TMGHI”) acquired the Company (the “Acquisition”). The purchase price was approximately $66,333,000, including assumption of certain liabilities. For financial statement purposes, the Acquisition was accounted for as a purchase and accordingly, the purchase price was allocated based upon the fair value of assets and liabilities acquired.

		During 2000, the Company dividended the assets and liabilities of Tamarron of approximately $6,200,000, net, to GHI, who contributed them to Golf Host II, Inc., a wholly owned subsidiary of GHI. Concurrently with the dividend of Tamarron, the Company entered into a lease agreement whereby Golf Host II, Inc. (“GH II”) leased Tamarron to the Company. Rent was payable in the amount of $1 per annum and the Company assumed responsibility for Tamarron’s net income (loss), as defined by the lease agreement. Effective November 19, 2001, Tamarron was sold and the Company has no remaining responsibility under the lease and related rental pool agreements (Note 9).

		During 2000, the previous owners were released from all continuing claims under the Acquisition and the previous owners amended and restated the mortgage note from $4,418,000 to $3,168,000. The write-down under the terms of the amended mortgage note, net of balances due from the previous owners was approximately $655,000, which was recorded as a reduction of intangible assets. On November 19, 2001, the Tamarron property was sold and the remaining balance of the mortgage note was paid in full (Note 6).

		Golf Host Condominium, Inc. (“GHC”), a wholly owned subsidiary of the Company, was formed on December 1, 1997. GHC’s assets consist of three Innisbrook condominiums. A lease agreement between Lost Oaks, L.P., a related party to the Company, and Golf Trust of America, L.P. (“GTA”), the Company’s primary lender, is secured by 89.1% of the stock of GHC and the stock of Golf Host, Inc. (“GHI”), the parent of the Company.

		The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has negative working capital at December 31, 2002 of approximately $98,078,000 and has incurred operating losses for each of the periods since the Acquisition. Additionally, as described in Note 6, the Company failed to make scheduled interest payments beginning with October 2001, has defaulted under the terms of its debt agreement, and GHI is a

		For the year ended December 31,
		2000			1999			1998
Balance, beginning of year		$	188,338		$	174,111		$	165,522
Additions:
	Amounts withheld from occupancy fees		155,935			158,700			158,682
	Interest earned		4,364			2,195			1,103
	Reimbursement of designated items		44,827			103,559			90,950
	Charges to participants to establish or restore escrow balances		230,778			74,372			375,597
Reductions:
	Maintenance and inventory charges		(366,945	)		(190,025	)		(254,270	)
	Refurbishing charges		—			5,447			(254,907	)
	Interest accrued or paid to Distribution Fund		(4,364	)		(2,195	)		(1,103	)
	Designated items		(44,827	)		(103,559	)		(90,950	)
	Refunds to participants as prescribed by Master Lease Agreement		(33,392	)		(34,267	)		(16,513	)
Balance, end of year		$	174,714		$	188,338		$	174,111

F-6

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

~~F-33~~Golf Host Resorts, Inc. and Subsidiary

~~Tamarron~~Notes ~~Rental~~to ~~Pool~~Consolidated ~~Lease~~Financial ~~Operation~~Statements December 31, 2002 and 2001

Notes to Financial Statements

		defendant to a class action lawsuit the basis of which relates to alleged actions by the Company (Note 9).

		Management is seeking to negotiate a settlement agreement with its lender (Note 6). In addition, management has developed and implemented sales and marketing plans to increase total Resort revenues through targeting guests likely to utilize more Resort amenities and continues to review its operating costs to determine where cost savings can be achieved. The Company has an agreement with Westin Hotel Company (“Westin”) whereby cash deficiencies, as limited and defined by the agreement, arising from the Innisbrook operation will be temporarily funded by Westin (Note 10).

		As a result of the preceding matters, substantial doubt exists about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

2.		Accounting Policies

		Principles of Consolidation

		The consolidated financial statements include the accounts of Golf Host Resorts, Inc. and Golf Host Condominium, Inc. All significant intercompany balances and transactions are eliminated in consolidation.

		Use of Estimates

		Preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions, which affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

		Cash, Cash Equivalents and Restricted Cash

		The Company considers all short-term highly liquid investments with a purchased maturity of three months or less to be cash equivalents.

		At December 31, 2002 and 2001, the balance in restricted cash of approximately $2,520,000 and $1,413,000, respectively, mainly represents cash restricted for capital improvements pursuant to the Company’s loan agreement with Golf Trust of America.

		Accounts Receivable

		Accounts receivable represents amounts due from Resort guests and is net of allowances of approximately $160,000 and $192,000 for doubtful accounts at December 31, 2002 and 2001, respectively.

1.		Rental Pool Lease Operation and Rental Pool Lease Agreement
		Organization and Operations
		The Tamarron Rental Pool Lease Operation (the “Rental Pool”) consists of condominiums at Sheraton Tamarron Resort which are provided as resort accommodations by their owners. The condominium owners (“Participants”) have entered into Annual Rental Pool Lease Agreements (ALAs) and a Master Lease Agreement (“MLA”), which define the terms and conditions related to each ALA, with Golf Host Resorts, Inc. (“GHR”), the lessee of the Rental Pool. The MLA and ALAS are referred to collectively as the “Agreements.” The ALAs expire at the end of each calendar year and the MLA will remain in effect through December 31, 2003.
		The Rental Pool consists of two funds: the Distribution Fund and the Maintenance Escrow Fund. The Distribution Fund balance sheets primarily reflect amounts due from GHR for the Rental Pool distribution payable to Participants and amounts due to the Maintenance Escrow Fund. The operations of the Distribution Fund reflect Participants’ earnings in the Rental Pool. The Maintenance Escrow Fund reflects the accounting for certain escrowed assets of the Participants and, therefore, has no operations. It consists primarily of amounts escrowed by Participants or due from the Distribution Fund to meet escrow requirements, maintain the interior of the unit and purchase adequate inventory items, as defined.
		Funding of the estimated amounts receivable from GHR for distribution is due at least weekly to the extent that borrowings available to GHR under its various lines of credit are less than amounts due to the Distribution Fund.
		During 2000, GHR dividended the assets and liabilities of Tamarron to its parent, Golf Host, Inc., who contributed them to Golf Host II, Inc. (“GH II”), a wholly-owned subsidiary of GH I. On November 19, 2001, GH II sold Tamarron to a third-party. As a result, GHR has no remaining responsibility under the terms of the Agreements.
		Computation and Allocation of Earnings
		Participants and GHR share Adjusted Gross Revenues in accordance with the terms of the Agreements. Adjusted Gross Revenues consist of revenues earned from rental of condominiums net of Sales and Marketing expenses (limited to 7.5% of Gross Revenues), agents’ commissions (not to exceed 5.5% of Gross Revenues) and audit fees. GHR receives a Management Fee equal to 50% of Adjusted Gross Revenues.
		Each Participant receives a fixed Occupancy Fee, based on apartment size, for each day of occupancy. After allocation of Occupancy Fees, the balance of Adjusted Gross Revenues, net of the Management Fee adjustments, is allocated proportionately to Participants based on the Participation Factor as defined in the Agreements.
		Corporate complimentary occupancy fees are rental fees paid by GHR for complimentary rooms unrelated to Rental Pool operations. Designated items are purchases of supplies to maintain the interior of the units, as defined in the Agreements.

F-7

F-34 Table of Contents

~~Tamarron~~Golf ~~Rental~~Host ~~Pool~~Resorts, ~~Lease~~Inc. ~~Operation~~and Subsidiary

Notes to Consolidated Financial Statements December 31, 2002 and 2001

		Maintenance Escrow Fund Accounts
		The Agreements provide that 50% of the Occupancy Fees earned by each Participant is deposited in the Participant’s Maintenance Escrow Fund account. This account provides funds for payment of amounts which are due from the Participant under the Agreements for maintenance and refurbishment services. When the balance of the Participant’s Maintenance Escrow Fund account exceeds the maximum specified in the Agreements, the excess is refunded to the Participant, as provided in the Agreements. Should a Participant’s balance fall below that necessary to provide adequate funds for maintenance and replacements, the Participant is required to restore the escrow balance to an adequate level.
		Funds deposited in the Maintenance Escrow Fund are invested on behalf of the Participants. Income earned on these investments is allocated proportionately to Participants’ Maintenance Escrow Fund accounts and paid quarterly through the Distribution Fund. Cash and cash equivalents at December 31, 2000 and 1999 consists of an interest bearing demand account.
2.		Summary of Significant Accounting Policies
		Basis of Accounting
		The accounting records of the funds are maintained on the accrual basis of accounting
		Use of Estimates
		Preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions which affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Actual results could differ from those estimates.
		Income Taxes
		No federal or state taxes have been reflected in the accompanying financial statements as the tax effect of fund activities accrued to the Participants and the shareholder of GHR.
3.		Linen and Materials and Supplies Inventory
		Linen amortization and the cost of Participants’ actual usage of certain supplies, collectively referred to as Designated Items, are charged to all Participants as a group and allocated to Participants based upon their Participation Factors. Linen inventory is stated at cost, less accumulated amortization of $59,000 and $98,000 at December 31, 2000 and 1999, respectively. Linen amortization is computed on the straight-line method over an estimated useful life of 48 months.
		Materials and supplies inventories consist primarily of minor apartment furnishings and appliances carried at cost, determined on a first-in, first-out basis. The costs of such items, not considered Designated Items, are charged to Participants’ individual Maintenance Escrow Fund accounts based on actual usage.

		Inventories and Supplies

		The Company records inventories and supplies at the lower of first-in, first-out cost or market.

		Assets Held for Sale

		During 2000, the Company dividended the net assets and liabilities of Tamarron, approximately $6,200,000, which was an asset acquired at acquisition and held for sale. On May 4, 2001, the Company sold the remaining land parcel at Innisbrook included in assets held for sale for $4,578,000. Net proceeds of $3,928,000 were distributed by the Company to its shareholder.

		Property and Equipment

		Property and equipment are stated at cost, less accumulated depreciation and amortization. Costs of maintenance and repairs of property and equipment used in operations are charged to expense as incurred, while renewals and betterments are capitalized. When property and equipment are replaced, retired or otherwise disposed of, the costs are deducted from the asset and accumulated depreciation accounts. Gains or losses on sales or retirements of buildings, vehicles and certain golf course and recreational facilities are recorded in income.

		Depreciation is recorded using the straight-line unit method for buildings, vehicles and certain golf course and recreational facilities, and the straight-line composite method for the other components. Estimates of useful lives used in computing annual depreciation are as follows:

F-35


	Estimated useful
	life in years

Land improvements	28 to 30
Buildings		40
Recreational facilities		30
Machinery and equipment	10 to 15

		Other Assets

		Other assets consist of costs incurred in conjunction with refurbishment of condominium units provided as Resort accommodations under the rental pool lease operations. In accordance with the revised MLA (Note 9), the Company will be reimbursed for 50% of the costs incurred by individual condominium owners upon completion of their refurbishment project. The Company will amortize the remaining costs on a straight-line basis over the term of the revised MLA, subsequent to the completion of the refurbishment project.

		Long-Lived Assets

		Statement of Financial Accounting Standards (“FAS”) No. 144 (“FAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets, requires the Company to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a

F-8

Golf Host Resorts, Inc. and Subsidiary

Notes to Consolidated Financial Statements
December 31, 2002 and 2001

		comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the discounted cash flows. The Company has performed an evaluation of the long-term resort assets and related intangibles. Based upon that analysis, gross cash flows exceed the carrying value of property and equipment and the related intangibles. However, the value is significantly less than the carrying value of secured debt and past due interest.

		Intercompany Allocations and Advances

		The Company reimburses GHI for administrative and other expenses based on estimated time and expenses incurred. Amounts charged were approximately $384,000, $293,000 and $203,000, for the years ended December 31, 2002, 2001 and 2000, respectively, of which $1,807,000 and $1,423,000 were payable to GHI at December 31, 2002 and 2001, respectively.

		Revenue

		Revenue from Resort operations is recognized as the related service is performed. Revenue includes rental revenues generated from condominium units owned by third parties participating in the rental pool lease operations. If these rental units were owned by the Company, normal costs associated with ownership such as depreciation, interest, real estate taxes and maintenance would have been incurred. Instead, costs and operating expenses include distributions of approximately $4,475,000, $6,322,000 and $7,352,000 for the years ended December 31, 2002 2001 and 2000, respectively, to the rental pool participants.

		Interest, Net

		The Company’s cash management policy is to utilize cash resources to minimize net interest expense, through either temporary cash investments or reductions in existing interest-bearing obligations. Accordingly, temporary cash investments and interest income vary from period to period. Interest expense is net of interest income of approximately $43,000, $35,000 and $85,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

		Employee Benefit Plans

		GHI maintains a defined contribution Employee Thrift and Investment Plan (the “Plan”), which provides retirement benefits for all eligible employees who have elected to participate. Employees must fulfill a 90-day service requirement to be eligible. The Company currently matches one half of the first 6% of an employee’s contribution. Company contributions approximated $173,000, $209,000 and $215,000, for the years ended December 31, 2002, 2001 and 2000, respectively, and are fully funded.

		Reclassifications

		Certain prior year balances have been reclassified to conform to the current year presentation.

F-9

Golf Host Resorts, Inc. and Subsidiary

Notes to Consolidated Financial Statements
December 31, 2002 and 2001

3.		Property and Equipment

		Property and equipment consists of the following:


	December 31,
	2002			2001
Land and land improvements	$	6,432,158		$	6,420,231
Buildings		12,299,872			12,271,599
Golf courses and recreational facilities		16,541,528			16,534,687
Machinery and equipment		10,865,381			10,480,541
Capital leases		614,809			1,385,565
Construction in progress		2,334,997			2,260,613

		49,088,745			49,353,236
Less accumulated depreciation		(11,063,682	)		(9,173,030	)

	$	38,025,063		$	40,180,206

		Construction in progress (“CIP”) consists of costs incurred while constructing Resort amenities. Interest costs of approximately $29,000 and $50,000 was capitalized to CIP for the years ended December 31, 2002 and 2001, respectively.

		Depreciation expense of approximately $2,737,000, $2,833,000 and $2,789,000 was recorded for the years ended December 31, 2002, 2001 and 2000, respectively.

4.		Intangible Assets

		Resulting from the Acquisition, a Resort intangible of approximately $30,400,000, relating to acquiring an operating Resort property with an existing rental pool agreement, was recorded and is being amortized on a straight-line basis over 20 years. In accordance with FASB Statement No. 142, Goodwill and Other Intangible Assets, the Company’s intangible asset has been specifically identified and will continue to be amortized over its remaining useful life. Amortization expense for all intangible assets was approximately $860,000, $1,053,000 and $1,522,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

		During the year ended December 31, 2000, the Company recorded a provision for intangible impairment of approximately $7,441,000. The Company experienced significant changes in business and market conditions, which led to declines in the results of operations and the number of participants in the rental pool. Due to these changes, the Company concluded that impairment had occurred. An impairment charge was required because the Company had determined that the estimated fair value of the intangible was less than its carrying value.

		During 2001, the Company continued to experience significant declines in business associated both with its corporate and transient customers. Advance bookings for 2002 and subsequent years continued to lag behind the Company’s historical results and from all indications, did not appear to indicate a reversal of that trend in the foreseeable future. As a result, the Company again had to evaluate its carrying value of the intangible asset. Proforma cash flow estimates were developed based upon expected business levels, which indicated that further impairment of

F-10

Golf Host Resorts, Inc. and Subsidiary

Notes to Consolidated Financial Statements
December 31, 2002 and 2001

		the intangible had occurred. Consequently, the Company recognized an additional $3,000,000 impairment of the intangible asset during 2001.

		During 2002, the Company reviewed the carrying value of the intangible asset and determined that further impairment had not occurred. Advance bookings and rental pool participation had stabilized from a historical perspective, and the pro forma cash flows, based upon advance bookings indicate that no further deterioration in the carrying value should be recognized in 2002.

5.		Other Payables and Accrued Expenses

		Other payables and accrued expenses consists of the following:


	December 31,

	2002		2001

Rental pool lease distribution	$	730,143	$	959,360
Taxes, other than income taxes		1,507,970		1,359,911
Other		483,710		455,755

	$	2,721,823	$	2,775,026

Line of Credit and Notes Payable


			December 31,

			2002			2001

Notes payable
	Participating mortgage note at varying pay rates maturing in 2027 (in default)		$	69,975,000		$	69,975,000
	$9,000,000 participating mortgage note credit facility maturing in 2027 (in default)			9,000,000			9,000,000
	Capital leases ranging from 1.89% to 17.37%			28,552			638,911

				79,003,552			79,613,911
		Less current maturities		(79,003,552	)		79,562,698

			$	—		$	51,213

		At December 31, 2001, $2,980,000 was available under the $3,000,000 accounts receivable line of credit, net of a $20,000 reserve. Effective May 23, 2002, this credit facility was terminated by the lender as a result of the GTA default.

		Concurrent with the Acquisition, the Company obtained a $78,975,000 note payable from GTA. The note payable has two components: a $69,975,000 participating mortgage note and a $9,000,000 credit facility. The note payable is guaranteed by GHI and secured by substantially all assets other than the Company’s accounts receivable and approximately 40 acres of undeveloped land.

F-11

Golf Host Resorts, Inc. and Subsidiary

Notes to Consolidated Financial Statements
December 31, 2002 and 2001

		The note payable agreement stipulates that Additional Collateral is released when the ratio of the Innisbrook Resorts Net Operating Income equals or exceeds a coverage ratio to Debt Service, as defined. The coverage ratio was not met for the three years ended December 31, 2002. The agreement defines unpledged GTA shares and/or the proceeds of the sale of these shares as Additional Collateral.

		The participating mortgage note was used to finance the Company’s Acquisition and purchase of GTA stock. The participating mortgage note calls for initial annual interest payments of $6,739,063 with an annual 5% increase in the interest payment, prorated for partial years, commencing January 1, 1998 and continuing each year through 2002. Interest, payable monthly, has been recorded using the effective interest method. The effective interest rate is approximately 11.5%, as defined in the loan agreement, over the life of the note payable. In addition, the participating mortgage note calls for participation payments based upon levels of revenue, as defined, of the Innisbrook property (“Participating Interest”). No participating interest has been incurred for the three years ending December 31, 2002.

		Principal on the GTA note payable is due at maturity on June 23, 2027. Upon expiration or earlier termination of the participating mortgage note, GTA has the option to purchase Innisbrook at fair market value.

		The $9,000,000 credit facility bears interest initially at a 9.75% fixed rate with an annual 5% interest escalator commencing January 1, 1998 (effectively 11.94%, 11.37% and 10.83% for the years ended December 31, 2002, 2001 and 2000, respectively) and continuing each year through 2002. As of December 31, 2002, the Company has drawn the full $9,000,000 available under this facility.

		The Company was informed by GTA on November 29, 2001 that the Company is in default on the $78,975,000 note payable arising from the Company’s failure to pay the October 2001 interest payment and all subsequent principal and interest payments, which have not been made. GTA has asserted its right to accelerate payment of the total outstanding principal and interest amounts.

		As of March 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 units located at the Innisbrook Resort, the acquired interest in GTA stock and operations held by the parent, 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 relating to employee benefits and liabilities for contracts or agreements not disclosed by the Company to GTA. In return, it is anticipated that GTA would deliver to the Company a duly executed release. A Settlement Agreement has yet to be 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

F-12

Golf Host Resorts, Inc. and Subsidiary

Notes to Consolidated Financial Statements
December 31, 2002 and 2001

		Settlement Agreement, and could initiate foreclosure proceedings and pursue its other remedies at any time.

		The Company incurred interest expense of approximately $9,120,000, $9,070,000 and $9,227,000 on the GTA note payable during the years ended December 31, 2002, 2001 and 2000, of which $14,838,000 and $5,448,000 was payable at December 31, 2002 and 2001. Accrued interest is classified as current as a result of the default on the GTA loan and the effective interest method discussed above.

		As a condition under the note payable agreement with GTA, the Company acquired 159,326 common shares of Golf Trust of America, Inc. (the 100% owner of GTA) and 274,000 Operating Partnership Units (“OPUs”) in GTA for $8,975,000 with an option to acquire for $26 per unit 150,000 additional OPUs. The note payable agreement restricts the Company’s ability to sell its investments in GTA until certain Company operating results, as defined, are attained. The Company distributed its GTA investment to its parent upon acquisition.

		The Company obtained a $5,000,000 mortgage note on June 20, 1997, collateralized by certain assets at Innisbrook, from the previous owners as a part of the acquisition. The note bore interest at a fixed rate of 6.34% with interest payable quarterly. The Company incurred interest expense of $162,000 and $240,000 for the years ended December 31, 2001 and 2000. This note was paid in full commensurate with the sale of the Tamarron property (Note 8).

		The Company has leased property under capital leases, which expire in 2003.

7.		Income Taxes

		On April 17, 1998, the Company filed an election with the Internal Revenue Service to change its tax status to a Qualified Subchapter S Subsidiary effective February 3, 1998. As a result of this election, all applicable deferred tax liabilities were removed from the balance sheet and reflected as an extraordinary item in the consolidated statements of operations. The remaining deferred tax liability represents the estimated liability for taxes to be paid on built-in gains associated with the sale of assets within the statutory 10-year period from Acquisition. During 2001, certain of these assets were sold, resulting in an income tax benefit of $515,000.

		No valuation allowance is provided on deferred tax assets as management believes it is more likely than not that such assets will be realized upon sale of its assets or settlement with GTA. Under the Internal Revenue Code, if certain substantial changes in the Company’s ownership occur, there are annual limitations on utilization of loss carryforwards.

F-13

Golf Host Resorts, Inc. and Subsidiary

Notes to Consolidated Financial Statements
December 31, 2002 and 2001


			December 31,

			2002			2001

Deferred income taxes consist of the following:
	Deferred income tax asset:
		Net operating loss	$	331,875		$	331,875
	Deferred income tax liability:
		Basis difference in property and intangible assets		(1,586,875	)		(1,586,875	)

Total deferred income tax liability			$	(1,255,000	)	$	(1,255,000	)

8.		Tamarron’s Results of Operations

		The Company assumed responsibility for the Net Income (Loss), as defined, of Tamarron under the terms of the lease agreement between the Company and Golf Host II, Inc., for the period of lease inception through November 18, 2001. The net loss is included in loss on assets held for sale and leased asset in the statement of operations:


		For the
		period ended
		November 18, 2001

Revenue:
	Hotel	$	2,843,360
	Food and beverage		1,926,520
	Golf		1,753,375
	Other		1,815,138

			8,338,393

Costs & operating expense:
	Hotel		1,106,787
	Food & Beverage		1,392,295
	Golf		824,233
	Other		2,701,941
	General and administrative		3,751,385
	Interest expense		100,108

			9,876,749

Net loss		$	(1,538,356	)

On November 19, 2001, GH II, an affiliated company and lessor of Tamarron, sold Tamarron to an unrelated entity. A portion of the proceeds were used to settle the remaining balance due under the $5,000,000 mortgage note from the previous owners (Note 6), which has been accounted for as a capital contribution to the Company. In conjunction with the sale, the accumulation of operating deficits not funded by the Company was forgiven by GH II. The unfunded accumulated operating deficits totaled $5,070,000 and were recorded as an adjustment to paid-in-capital.

F-14

Golf Host Resorts, Inc. and Subsidiary

Notes to Consolidated Financial Statements
December 31, 2002 and 2001

9.		Commitments and Contingencies

		Rental Pool Distribution

		The Company offered, effective January 1, 1998 and amended and restated effective January 1, 2000, a separate Guaranteed Distribution Master Lease Agreement (“GMLA”) to Innisbrook participants. Among other things, the GMLA provides for an equal sharing between the Company and Innisbrook participants of Adjusted Gross Revenues, and includes as deductions from the Gross Income Distribution, as defined, a 5.5% Management Fee and a 3% Marketing Fee. The Company also guaranteed that distributions will not be less than an amount which approximates the 1996 Gross Income Distribution on an individual unit basis, as prorated based upon Weighted Days Pool Participation, as defined. For the year ended December 31, 2002, the Company was obligated to pay the GMLA participants less than $1,000. No amounts were required to be paid under the guarantee for the year ended December 31, 2001 and 2000. The GMLA has a noncancelable term through 2011 with an annual rental pool participation election by individual unit owners.

		A new MLA (“NMLA”) was effective January 1, 2002. On an annual basis, beginning in 2002, each condominium owner may elect to participate in either the NMLA or the GMLA. If an owner elects to participate in the NMLA, the owner is prohibited from returning to the GMLA. The NMLA provides for Adjusted Gross Revenues, as defined, to be divided 40% to the Innisbrook rental pool participants and 60% to the Company. In addition, the Company has agreed, as part of the NMLA, to reimburse rental pool participants in the NMLA for up to 50% of actual unit refurbishment costs beginning in 2005 through 2009, so long as the rental pool participation threshold, as defined,is maintained. In addition, the Company has agreed to pay the participants interest at 5% on the unpaid 50% of the refurbishment costs, beginning in 2002 so long as the participation threshold is maintained. Interest in the amount of approximately $159,000 was incurred under this agreement in 2002. Should the Company elect to terminate the NMLA before its expiration in 2011, all unpaid balances of refurbishment costs and related interest would be due and payable to the Participants. If the Company proves unsuccessful in its defenses in the class-action lawsuit described below, any rental pool participant who elected, subject to the NMLA, will forego reimbursement by the Company for renovations equal to their pro-rata amount of the class-action settlement proceeds. The net liability for the Company’s share of the estimated cost of the refurbishments completed as of December 31, 2002 is $5,549,000 and is included in long-term refurbishments on the balance sheet. The corresponding asset is included in other assets and is being expensed equally over the period from the time each phase of the refurbishment is placed in service through the completion of payment in 2009. The net expense for the year ended December 31, 2002 is approximately $407,000 and is included in resort facilities expense.

		Legal

		GHI 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

F-15

Golf Host Resorts, Inc. and Subsidiary

Notes to Consolidated Financial Statements
December 31, 2002 and 2001

		the plaintiffs are entitled to participate in the rental pool if one exists, a limitation of the total number of Club memberships 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, 2003 had been postponed by the court; a new trial date has not yet been set. As this litigation is still in progress, 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 GHI has successful defenses based upon consultations with legal counsel and intends to vigorously defend this action.

		The Company, in the normal course of operations, is also subject to claims and lawsuits by employees, guests and vendors. The Company does not believe that the ultimate resolution of these matters will materially impair operations or have an adverse effect on the Company’s financial position and results of operations.

10.		Westin Agreements

		Westin became manager of Innisbrook effective July 15, 1997, for a 20-year term unless terminated earlier as provided for in the agreement. Westin receives annual management fees, based on revenues of Innisbrook, and certain cost reimbursements. Westin’s management fee amounted to $584,000, $716,000 and $885,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

		The Westin management agreement requires the Company to maintain a capital replacement fund based on an amount calculated as the greater of 3% of gross revenues or a minimum threshold amount as defined in the agreement, calculated on a monthly basis. The Company contributed $2,125,000 and $1,845,000 for the years ended December 31, 2002 and 2001, respectively, and an additional $862,000 and $366,000 is required to be segregated at December 31, 2002 and 2001, respectively. At December 31, 2002 and 2001, the capital replacement fund had a balance of approximately $1,394,000 and $708,000, respectively, and is included in restricted cash in the accompanying consolidated balance sheets.

		In April 1998, the Company signed an agreement, under which Westin will provide 50% of the funding for approved capital expenditures incurred subsequent to the Acquisition in excess of the annual capital replacement fund requirements, defined above, in addition to providing 50% of the funding for the initial capital requirements over $6,000,000, as defined. During the year ended December 31, 2002, Westin and the Company agreed that the amount due under the agreement was approximately $426,000. This amount was offset against unpaid management fees and reimbursable expenses due Westin under the management agreement and is included in other income for the year ended December 31, 2002.

		Additionally, under the terms of the Innisbrook management agreement, Westin guarantees a minimum cash flow to Innisbrook. The agreement provides that if Incentive Cash Flow, as

F-16

Golf Host Resorts, Inc. and Subsidiary

Notes to Consolidated Financial Statements
December 31, 2002 and 2001

		defined, is less than the Minimum Annual Payment, as defined, for the operating year, then Westin will fund a non-interest bearing advance to Innisbrook for the shortage up to $2,500,000, with the advance being repayable when the Company has Available Cash, as defined. As of December 31, 2002 and 2001, $10,265,000 and $9,015,000 had been advanced to the Company and are included in other long-term liabilities.

		Amounts payable to Westin of $1,750,000 and $4,880,000 at December 31, 2002 and 2001, respectively, include management fees and certain cost reimbursements and are included in other payables and accrued expenses at December 31, 2002 and 2001, respectively.

F-17

Report of Independent Certified Public Accountants

To Golf Host Resorts, Inc. and the Lessors of the
Innisbrook Rental Pool Lease Operation

In our opinion, the accompanying balance sheets and the related statements of operations and of changes in participants’ fund balance present fairly, in all material respects, the financial position of the Innisbrook Rental Pool Lease Operation at December 31, 2002 and 2001, and the results of its operations and the changes in participants’ fund balance for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the rental pool’s operators; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 of the notes to financial statements, the Innisbrook Rental Pool Lease Operation is party to lease agreements with an affiliated entity, whose ability to continue as a going concern is in substantial doubt.

/s/ PricewaterhouseCoopers, LLP
Tampa, Florida
March 28, 2003

F-18

Filing Compare · GOLF HOST RESORTS INC