GOLF HOST RESORTS INC - 10-Q Quarterly Report

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For Quarter Ended June 30, 2001

Commission File no. 2-64309

GOLF HOST RESORTS, INC.

(Exact name of registrant as specified in its charter)


Colorado		84-0631130

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


36750 US 19 N., Palm Harbor, Florida		34684

(Address of principal executive offices)		(Zip Code)

(727) 942-2000

(Registrant’s telephone number, including area code)

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

Issuer has no common stock subject to this report.

Page 1 of 21

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

BALANCE SHEETS

ASSETS
(Substantially all pledged)


			June 30,		December 31,
			2001		2000

			(unaudited)
CURRENT ASSETS:
	Cash		$	699,747	$	565,400
	Restricted cash			1,567,383		1,219,289
	Accounts receivable, net			5,052,477		4,865,607
	Other receivables			72,461		543,651
	Inventories and supplies			1,316,907		1,606,935
	Prepaid expenses and other assets			380,628		197,399

				9,089,603		8,998,281
	Assets held for sale			—		2,435,000

		Total current assets		9,089,603		11,433,281
INTANGIBLES, net				16,850,139		17,376,706
PROPERTY AND EQUIPMENT, net				40,429,951		41,768,369
OTHER ASSETS				509,042		483,788

			$	66,878,735	$	71,062,144

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

Page 2

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

BALANCE SHEETS

LIABILITIES AND SHAREHOLDER’S DEFICIT


			June 30,			December 31,
			2001			2000

			(unaudited)
CURRENT LIABILITIES:
	Accounts payable		$	8,342,697		$	8,614,179
	Line of credit			—			667,141
	Accrued payroll costs			1,071,310			830,072
	Accrued interest			894,891			817,047
	Other payables and accrued expenses			3,261,072			3,076,854
	Deposits and prepaid fees			1,963,741			3,461,783
	Current notes payable			3,034,453			862,058
	Due to related parties			4,989,477			3,572,690

		Total current liabilities		23,557,641			21,901,824
NOTES PAYABLE				79,402,165			82,239,239
OTHER LONG-TERM LIABILITIES				7,940,914			7,869,858
DEFERRED INCOME TAXES				1,770,467			1,770,467

		Total liabilities		112,671,187			113,781,388

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			(36,817,452	)		(33,744,244	)

	Total shareholder’s deficit			(45,792,452	)		(42,719,244	)

	Total liabilities and shareholder’s deficit		$	66,878,735		$	71,062,144

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

Page 3

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

STATEMENTS OF INCOME
(unaudited)


		Quarters ended June 30,						Six months ended June 30,

		2001			2000			2001			2000

REVENUES:
	Resort facilities	$	4,344,924		$	5,131,088		$	12,125,179		$	12,600,061
	Food and beverage		3,729,347			5,767,012			9,063,946			11,111,403
	Golf		3,255,311			3,998,690			9,039,471			9,372,278
	Other		1,388,904			1,663,257			3,315,542			3,302,004

			12,718,486			16,560,047			33,544,138			36,385,746

COST AND OPERATION EXPENSES:
	Resort facilities		3,095,991			3,667,801			7,947,526			8,530,104
	Food and beverage		2,482,346			2,834,018			5,698,239			5,705,804
	Golf		1,687,272			1,987,189			3,657,889			4,040,569
	Other		2,320,834			2,976,038			5,222,906			5,827,321
	General and administrative		1,308,013			1,593,790			2,914,662			3,425,041
	Depreciation and amortization		968,283			995,771			1,936,567			1,951,543

			11,862,739			14,054,607			27,377,789			29,480,382

INCOME BEFORE INCOME/(LOSS) ON ASSET HELD FOR SALE AND LEASED ASSET			855,747			2,505,440			6,166,349			6,905,364
INCOME/(LOSS) ON ASSET HELD FOR SALE AND LEASED ASSET			393,770			(458,615	)		(270,911	)		(1,257,452	)

OPERATING INCOME			1,249,517			2,046,825			5,895,438			5,647,912
INTEREST, NET			2,490,959			2,412,075			4,912,157			4,859,357

(LOSS)/INCOME BEFORE DIVIDEND REQUIREMENTS ON PREFERRED STOCK			(1,241,442	)		(365,250	)		983,281			788,555
DIVIDEND REQUIREMENTS ON PREFERRED STOCK			64,077			64,077			128,154			128,154

NET (LOSS)/INCOME AVAILABLE TO COMMON SHAREHOLDER		$	(1,305,519	)	$	(429,327	)	$	855,127		$	660,401

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

Page 4

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

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S DEFICIT


	$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, 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	)
Net income available to common shareholder		—		—		—		—		—			855,127			855,127
Distribution to shareholder		—		—		—		—		—			(3,928,335	)		(3,928,335	)

Balance, June 30, 2001 (unaudited)		5,000	$	5,000		4,577,000	$	4,577,000	$	(13,557,000	)	$	(36,817,452	)	$	(45,792,452	)

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

Page 5

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

STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(unaudited)


			2001			2000

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income before dividend requirements on preferred stock		$	983,281		$	788,555
	Adjustments to reconcile net income to net cash provided by operations:
		Depreciation and amortization		1,936,567			1,951,543
		Early extinguishment of debt		—			(595,193	)
		Provision for bad debts		222,807			68,100
		Gain from sale of assets held for sale		(1,164,911	)		—
		Changes in operating working capital		(157,373	)		571,446

		Cash provided by operations		1,820,371			2,784,451

CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from sale of assets held for sale			3,928,635			—
	Increase in assets held for sale			(47,624	)		—
	Increase in other assets			(25,254	)		(20,487	)
	Purchases of property and equipment			(352,682	)		(164,031	)

		Cash provided by (used in) investing activities		3,503,075			(184,518	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Distribution to shareholders			(3,928,335	)		—
	Repayment of debt			(664,679	)		(161,972	)
	Repayment of line of credit			(667,141	)		(1,331,328	)
	Increases in other long-term liabilities			71,056			318,785

		Cash used in financing activities		(5,189,099	)		(1,174,515	)

NET INCREASE IN CASH				134,347			1,425,418
CASH, BEGINNING OF PERIOD				565,400			131,440

CASH, END OF PERIOD			$	699,747		$	1,556,858

NONCASH FINANCING AND INVESTING ACTIVITIES:
The Company satisfied its preferred stock dividend liability to GHI
	through the intercompany account		$	128,154		$	128,154

Transfer from fixed assets to assets held for sale			$	281,100		$	—

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

Page 6

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PREPARATION

The financial statements for December 31, 2000 were prepared assuming the Company will continue as a going concern. As discussed in the notes to consolidated financial statements on Form 10-K dated December 31, 2000, the Company has suffered recurring losses from operations, has negative working capital and has a shareholder’s deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in the footnotes. Additionally, as described in Note 12 of the notes to consolidated financial statements on Form 10-K, subsequent to December 31, 2000 the Company has defaulted under the terms of its debt agreement and is a defendant to a class action lawsuit. These financial statements do not include any adjustments that might result from the outcome of the uncertainties.

These financial statements and related notes are presented for interim periods on a going concern basis in accordance with the requirements of Form 10-Q and, consequently, do not include all disclosures normally provided in the Company’s Annual Report on Form 10-K. Accordingly, these financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.

The accompanying balance sheet for June 30, 2001, and statements of operations and cash flows for the periods ended June 30, 2001 and 2000, are unaudited but reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented on a going concern basis. All such adjustments are of a normal recurring nature.

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

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

(2) ASSET HELD FOR SALE

On May 4, 2001, the Company sold the remaining land parcel at Innisbrook included in asset 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.

(3) LONG-TERM OBLIGATIONS

Long-term obligations consist of the following:


	June 30,			December 31,
	2001			2000

Participating mortgage note at varying pay rates maturing in 2027	$	69,975,000		$	69,975,000
$9,000,000 participation mortgage note credit facility		9,000,000			9,000,000
Mortgage note at 6.34%, maturing in 2002		2,668,000			3,167,921
Capital leases ranging from 1.89% to 10.76%		793,618			958,376

		82,436,618			83,101,297
Less current maturities		(3,034,453	)		(862,058	)

	$	79,402,165		$	82,239,239

Page 7

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3) LONG-TERM OBLIGATIONS CONT.

On May 22, 2001, Golf Trust of America, Inc. (“GTA”), the lender on the $78,975,000 participating mortgage, 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.

(4) CONTINGENCIES

The Company has been named as a defendant in 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 judgement declaring that the plaintiffs are entitled to participate in the rental pool if one exits 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. A court date of February 3, 2003 has 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.

(5) TAMARRON’S RESULTS OF OPERATIONS

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. entered into during 2000. The net loss is as follows and is included in loss on assets held for sale and leased asset in the statement of operations:


		Six months ended			19 days ended
		June 30,			June 30,
		2001			2000

Revenue:
	Hotel	$	1,212,509		$	123,355
	Food and beverage		953,377			120,212
	Golf		646,998			69,539
	Other		914,606			83,568

			3,727,490			396,674

Costs & operating expense:
	Hotel		534,570			67,127
	Food and beverage		699,003			87,936
	Golf		361,703			42,580
	Other		1,275,205			122,196
	General and administrative		2,235,375			201,199
	Interest expense		57,456			—

			5,163,312			521,038

Net loss		$	(1,435,822	)	$	(124,364	)

Page 8

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6) SUBSEQUENT EVENTS

The Company was informed by GTA on November 29, 2001 that the Company is in default on the $78,975,000 participating mortgage 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.

As a result of the default, Wells Fargo Business Credit, Inc. has elected to terminate their credit line with the Company effective May 23, 2002. The Company expects to develop a replacement facility upon reaching a resolution with GTA.

As of July 2002, the Company is seeking to negotiate a Settlement Agreement with GTA. In connection with the proposed Settlement Agreement, the Company would transfer to GTA the resort property, three condominium properties located at the Innisbrook Resort, the Company’s GTA stock interests, and all rights, title, and interests of the Company under existing contracts and agreements. In addition, the Company would provide a limited indemnity to defend and hold harmless GTA (and its affiliates) from and against any and all costs, liabilities, claims, losses, judgements 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 to negotiate with the Company or to execute the Settlement Agreement and could initiate foreclosure proceedings and pursue its other remedies at any time.

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

A revised Master Lease Agreement (“Revised MLA”) has been presented to the rental pool participants, effective January 1, 2002, resulting from the expiration of the existing Master Lease Agreement (“MLA”) between the Company and rental pool participants under the existing Master Lease Agreement 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 Guaranteed Master Lease Agreement (“GMLA”). As of December 26, 2001, 605 rental units had 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 (Note 4), any rental pool participant who elects, subject to the Revised MLA, will forego reimbursement by the Company for renovations or offset against future quarterly distributions 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.

Page 9

GOLF HOST RESORTS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Quarter Ended June 30, 2001

During the second quarter of 2001, the Company has continued to experience a downturn in resort business as a result of an overall decline in the hotel golf resort industry. Occupancy percentages declined 10.8% (3,905 room nights) from the same period last year. Revenue per room night also fell short of the prior year results by $63.66. Average guest spending went from $458.09 in 2000, down to $394.43 per room night, or about 14%. The downturn of group business and the related planned functions caused a net reduction in gross revenue of $3,841,561 for the second quarter comparative numbers. Operating expenses declined by $2,191,868, or 15.6%; however, operating income for the quarter of $855,747 was $1,649,693 less than the same period last year.

Interest expense was approximately $79,000 greater in the current quarter over last year. Approximately $108,000 of this increase relates to the Golf Trust of America’s annual contractual escalator of 5%. Offsetting this contractual increase was a reduction of interest expense of approximately $29,000 due to a reduced utilization of the Accounts Receivable revolving credit line.

Year to Date June 30, 2001

During the six months ended June 30, gross revenues decreased $2,841,608, or 7.8%, from the same period in 2000. Room nights for the six months ended were down 5,325 as compared to the 2000 period. Total rooms sold were 70,466 and 75,791 for the six months ended June 2001 and 2000, respectively. While overall revenue was less than last year due to the reduced room nights, the average daily room rate and golf revenue per round achieved gains of 3.5% and 9.2%, respectively.

Operating expenses for the six months were reduced 7.1% from the prior year. The expenses decreased from $29,480,382 in 2000, to $27,377,789 in 2001. With the reduction in revenue partially offset by a reduction in expenses, the Company had a reduction of $739,015 in operating income, or 10.7% for the six-month comparative period.

Interest expense for 2001 exceeded the 2000 amount by $52,800. This is due to the contractual increase in the Golf Trust of America’s obligation in the aggregate of $216,000, offset by reductions in the utilization of the Accounts Receivable credit line.

During the six months ended June 30, 2001, the Company set aside capital reserves in the amount of $1,186,968. Of this amount, the Company invested $485,951 in the property, plant and equipment. These funds were used to finalize the Highlands Clubhouse renovation, repair the Island Clubhouse roof and water heater, replace the Innisbrook property water softener, fund the property’s golf cart lease and certain golf course equipment and upgrade and maintain the computer systems and software.

Page 10

Financial Condition and Liquidity

The Company’s working capital position (exclusive of Assets Held for Sale) has dropped to a deficit of $14,468,038. This reduction from the December 31, 2000 deficit of $12,903,543 is primarily the result of the reclassification of the long-term note payable of $2,668,000, due to the prior shareholders from long term to short term. That note is due to be retired in June 2002. The Company ultimately retired the obligation with the proceeds from the sale of the Tamarron property in November 2001.

The Company continues to experience seasonal fluctuations in its net working capital position. These fluctuations are managed through the utilization of an Accounts Receivable revolving credit line of $3,000,000 and advances from Westin Hotel Corporation under the annual guarantee agreement. Management believes that the Company will have to restructure the GTA loan for the economic viability of the Resort.

The Company was informed by GTA on November 29, 2001 that the company is in default on the $78,975,000 participating mortgages 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.

As of July 2002, the Company is seeking to negotiate a Settlement Agreement with GTA. In connection with the proposed Settlement Agreement, the Company would transfer to GTA the resort property, three condominium properties located at the Innisbrook Resort, the Company’s GTA stock interests, and all rights, title and interests of the Company under existing contracts and agreements. In addition, the Company would provide a limited indemnity to defend and hold harmless GTA (and its affiliates) from and against any and all costs, liabilities, claims, losses, judgments or damages arising out of or in connection with the Class Action Lawsuit, as well as liabilities accruing on or before the closing date 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.

Page 11

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Item 2. Changes in Securities

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

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

Not applicable.

Item 5. Other Information

Pursuant to an agreement with the SEC staff, included in this 10-Q filing are unaudited financial statements of the Innisbrook Rental Pool Lease Operation and the Tamarron Rental Pool Lease Operation for the quarter ended June 30, 2001 and 2000.

Page 12

RENTAL POOL LEASE OPERATIONS

The following unaudited financial statements of the Innisbrook Rental Pool Lease Operation and the Tamarron Rental Pool Lease Operation (the Rental Pools) are for the quarters and six months ended June 30, 2001 and 2000.

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

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.

The operations of the Rental Pools are more fully discussed in Form 10-K, for the fiscal year ended December 31, 2000 (file No. 2-64309).

Page 13

INNISBROOK RENTAL POOL LEASE OPERATION

BALANCE SHEETS


	June 30,		December 31,
	2001		2000

	(unaudited)
DISTRIBUTION FUND

ASSETS

RECEIVABLE FROM GOLF HOST RESORTS, INC FOR DISTRIBUTION	$	1,542,890	$	1,579,097
INTEREST RECEIVABLE FROM MAINTENANCE ESCROW FUND		25,144		45,643

	$	1,568,034	$	1,624,740

LIABILITIES AND PARTICIPANTS’ FUND BALANCES

DUE TO PARTICIPANTS FOR DISTRIBUTION	$	1,197,210	$	1,285,558
DUE TO MAINTENANCE ESCROW FUND		370,824		339,182

	$	1,568,034	$	1,624,740

MAINTENANCE ESCROW FUND

ASSETS

CASH AND CASH EQUIVALENTS	$	2,258,627	$	2,517,396
RECEIVABLE FROM DISTRIBUTION FUND		370,824		339,182
CONSTRUCTION WORK IN PROGRESS		—		11,484
INTEREST RECEIVABLE		22,724		27,301

	$	2,652,175	$	2,895,363

LIABILITIES AND PARTICIPANTS’ FUND BALANCES

ACCOUNTS PAYABLE	$	2,017	$	760,544
CONSTRUCTION RETAINAGE		48,033		154,419
INTEREST PAYABLE TO DISTRIBUTION FUND		25,144		45,643
CARPET CARE RESERVE		24,263		4,856
PARTICIPANTS’ FUND BALANCES		2,552,718		1,929,901

	$	2,652,175	$	2,895,363

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

Page 14

INNISBROOK RENTAL POOL LEASE OPERATION

STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(unaudited)

DISTRIBUTION FUND


			Current Quarter						Year-to-Date

			2001			2000			2001			2000

GROSS REVENUES			$	3,958,629		$	5,012,349		$	11,226,479		$	12,387,505

DEDUCTIONS:
		Agents’ commissions		155,741			255,530			454,383			620,918
		Credit Card fees		30,528			40,071			81,793			88,434
		Audit fees		3,625			3,251			7,250			6,501

				189,894			298,852			543,426			715,853

ADJUSTED GROSS REVENUES				3,768,735			4,713,497			10,683,053			11,671,652
MANAGEMENT FEE				(1,878,220	)		(2,348,432	)		(5,324,427	)		(5,816,593	)

GROSS INCOME DISTRIBUTION				1,890,515			2,365,065			5,358,626			5,855,059
ADJUSTMENTS TO GROSS INCOME
	DISTRIBUTION:
		Management fee		(205,978	)		(259,799	)		(584,766	)		(644,365	)
		Marketing fee		(112,352	)		(141,709	)		(318,964	)		(351,472	)
		Miscellaneous pooled expense		(18,670	)		(20,786	)		(40,800	)		(43,580	)
		Corporate complimentary occupancy fees		10,450			13,444			21,246			23,855
		Westin Associate room fees		27,881			21,301			51,940			39,675
		Occupancy fees		(415,730	)		(460,399	)		(900,093	)		(958,410	)
		Advisory Committee expenses		(51,623	)		(8,146	)		(88,249	)		(16,186	)

NET INCOME DISTRIBUTION				1,124,493			1,508,971			3,498,940			3,904,576
ADJUSTMENTS TO NET INCOME DISTRIBUTION:
		Occupancy fees		415,730			460,399			900,093			958,410
		Hospitality suite fees		—			135			—			135
		Greens fees		1,977			2,322			5,851			5,700
		Additional participation credit		690			720			1,410			1,470

AMOUNT AVAILABLE FOR DISTRIBUTION TO PARTICIPANTS			$	1,542,890		$	1,972,547		$	4,406,294		$	4,870,291

Average daily distribution			$	25.64		$	32.50		$	37.43		$	40.95
Average room rate			$	122.77		$	138.65		$	159.32		$	163.44
Occupied room nights				32,245			36,150			70,466			75,791
Available room nights				60,171			60,701			117,720			118,929
Occupancy percentage				53.6	%		59.6	%		59.9	%		63.7	%
Average number of available units				661			667			650			653

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

Page 15

INNISBROOK RENTAL POOL LEASE OPERATION

STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(unaudited)


		Current Quarter						Year-to-date

		2001			2000			2001			2000

DISTRIBUTION FUND

BALANCE, beginning of period		$	—		$	—		$	—		$	—
ADDITIONS:
	Amount available for distribution		1,542,890			1,972,547			4,406,294			4,870,291
	Interest received or receivable from Maintenance Escrow Fund		25,144			56,707			49,316			112,692
REDUCTIONS:
	Amounts withheld for Maintenance Escrow Fund		(370,824	)		(410,031	)		(802,898	)		(854,302	)
	Amounts accrued or paid to participants		(1,197,210	)		(1,619,223	)		(3,652,712	)		(4,128,681	)

BALANCE, end of period		$	—		$	—		$	—		$	—


MAINTENANCE ESCROW FUND

BALANCE, beginning of period		$	2,738,506		$	7,018,143		$	1,929,901		$	7,021,346
ADDITIONS:
	Amounts withheld from occupancy fees		370,824			410,031			802,898			854,302
	Interest earned		25,144			56,707			49,316			112,692
	Receivable from Innisbrook		—			—			397,412			—
	Charges to participants to establish or restore escrow balances		23,449			117,043			245,617			165,221
REDUCTIONS:
	Maintenance charges		(109,868	)		(125,068	)		(270,892	)		(226,786	)
	Carpet care reserve deposit		(20,787	)		(21,577	)		(45,006	)		(41,480	)
	Interest accrued or paid to Distribution Fund		(25,144	)		(56,707	)		(49,316	)		(112,692	)
	Refunds to participants as prescribed by the master lease agreements		(449,406	)		(148,810	)		(507,212	)		(522,841	)

BALANCE, end of period		$	2,552,718		$	7,249,762		$	2,552,718		$	7,249,762

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

Page 16

TAMARRON RENTAL POOL LEASE OPERATION

BALANCE SHEETS


		June 30,		December 31,
		2001		2000

		(unaudited)
DISTRIBUTION FUND

ASSETS

CASH		$	1,000	$	1,000
RECEIVABLE FROM GOLF HOST RESORTS, INC. FOR DISTRIBUTION			193,431		181,539
INTEREST RECEIVABLE FROM MAINTENANCE ESCROW FUND			922		1,549

		$	195,353	$	184,088


LIABILITIES AND PARTICIPANTS’ FUND BALANCES

DUE TO PARTICIPANTS FOR DISTRIBUTION		$	137,122	$	152,957
DUE TO MAINTENANCE ESCROW FUND			58,231		31,131

		$	195,353	$	184,088


MAINTENANCE ESCROW FUND

ASSETS

CASH AND CASH EQUIVALENTS		$	97,330	$	129,635
DUE FROM DISTRIBUTION FUND			58,231		31,131
INVENTORY:
	Linen		40,131		16,496
	Materials and supplies		13,715		7,306
DEPOSITS			4,729		6,292

		$	214,136	$	190,860


LIABILITIES AND PARTICIPANTS’ FUND BALANCES

ACCOUNTS PAYABLE		$	2,954	$	14,597
INTEREST PAYABLE TO DISTRIBUTION FUND			922		1,549
PARTICIPANTS’ FUND BALANCES			210,260		174,714

		$	214,136	$	190,860

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

Page 17

TAMARRON RENTAL POOL LEASE OPERATION

STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(unaudited)

DISTRIBUTION FUND


				Current Quarter						Year-to-date

				2001			2000			2001			2000

GROSS REVENUES				$	517,459		$	709,134		$	1,125,285		$	1,139,021

DEDUCTIONS:
	Agents’ commissions				19,722			12,279			46,806			40,498
	Sales and marketing expenses				38,809			53,185			84,396			85,427
	Audit fees				3,255			3,255			6,510			6,510

					61,786			68,719			137,712			132,435

ADJUSTED GROSS REVENUES					455,673			640,415			987,573			1,006,586
MANAGEMENT FEE					(257,836	)		(355,791	)		(523,786	)		(538,876	)

GROSS INCOME DISTRIBUTION					197,837			284,624			463,787			467,710
ADJUSTMENTS TO GROSS INCOME
		DISTRIBUTION:
			Corporate complimentary occupancy fees		875			590			1,644			1,123
			Occupancy fees		(73,083	)		(70,835	)		(171,115	)		(132,992	)
			Designated items		(20,689	)		(20,239	)		(31,734	)		(30,540	)
			Advisory Committee expenses		(5,281	)		(2,477	)		(7,455	)		(2,640	)

POOLED INCOME					99,659			191,663			255,127			302,661
ADJUSTMENTS TO POOLED INCOME:
			Occupancy fees		73,083			70,835			171,115			132,992

NET INCOME DISTRIBUTION				$	172,742		$	262,498		$	426,242		$	435,653

	Average daily distribution			$	7.89		$	10.94		$	9.95		$	9.14
	Average room rate			$	94.65		$	99.12		$	87.87		$	84.32
	Room nights				5,467			7,154			12,805			13,508
	Available Rooms				21,900			24,015			42,756			47,617
	Occupancy percentage				24.9	%		29.8	%		29.8	%		28.4	%
	Average number of available units				240			267			236			262

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

Page 18

TAMARRON RENTAL POOL LEASE OPERATION

STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(unaudited)


		Current Quarter						Year-to-date

		2001			2000			2001			2000

DISTRIBUTION FUND
BALANCE, beginning of period		$	—		$	—		$	—		$	—
ADDITIONS:
	Amounts available for distribution		172,742			262,498			425,677			435,653
	Interest received or receivable from Maintenance Escrow Fund		922			1,231			2,045			1,374
REDUCTIONS:
	Amounts withheld for Maintenance Escrow Fund		(36,542	)		(35,419	)		(85,558	)		(66,499	)
	Amounts accrued or paid to participants		(137,122	)		(228,310	)		(342,164	)		(370,528	)

BALANCE, end of period		$	—		$	—		$	—		$	—


MAINTENANCE ESCROW FUND

BALANCE, beginning of period		$	215,971		$	189,482		$	174,714		$	188,338
ADDITIONS:
	Amounts withheld from occupancy fees		36,542			35,419			85,558			66,499
	Interest earned		922			1,231			2,045			1,374
	Reimbursement of designated items		20,689			20,239			31,734			30,540
	Charges to participants to establish or restore escrow balances		13,837			94,378			41,609			101,858
REDUCTIONS:
	Maintenance and inventory charges		(53,503	)		(94,867	)		(86,508	)		(124,049	)
	Refurbishing charges		—			—			—			—
	Interest accrued or paid to Distribution Fund		(922	)		(1,231	)		(2,045	)		(1,374	)
	Designated items		(20,689	)		(20,239	)		(31,734	)		(30,540	)
	Refunds to participants as prescribed by Master Lease Agreement		(2,587	)		(8,796	)		(5,113	)		(17,030	)

BALANCE, end of period		$	210,260		$	215,616		$	210,260		$	215,616

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

Page 19

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

None

(b) Reports on Form 8-K

None

Page 20

SECTION 906 CERTIFICATION

The following statement is provided by the undersigned to accompanying Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and shall not be deemed filed pursuant to any provision of the Exchange Act of 1934 or any other securities law.

Each of the undersigned certifies that the foregoing Report on Form 10-Q fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operation of Golf Host Resorts, Inc.


/s/ Merrick Kleeman Merrick Kleeman President Golf Host Resorts, Inc.		/s/ R. Keith Wilt R. Keith Wilt Vice President and Treasurer Golf Host Resorts, Inc.

SIGNATURES

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

GOLF HOST RESORTS, INC.
For the quarter ended June 30, 2001


Date: September 20, 2002	By:	/s/ Merrick Kleeman Merrick Kleeman President



Date: September 20, 2002	By:	/s/ R. Keith Wilt R. Keith Wilt Vice President and Treasurer (Principal Financial Officer)

Page 21