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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


For Quarter Ended March 31, 2002

Commission File no. 2-64309

GOLF HOST RESORTS, INC.


(Exact name of registrant as specified in its charter)
     
Colorado   84-0631130

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

36750 US 19 N., Palm Harbor, Florida 34684


(Address of principal executive offices) (Zip Code)

(727) 942-2000


(Registrant’s telephone number, including area code)

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

     Issuer has no common stock subject to this report.

Page 1 of 23


 

PART I — FINANCIAL INFORMATION

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

ASSETS
(Substantially all pledged)

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

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

Page 2


 

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

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

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

Page 3


 

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

CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

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

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

Page 4


 

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

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

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

Page 5


 

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

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

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

Page 6


 

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

(1) BASIS OF PRESENTATION

  The financial statements for December 31, 2001 were prepared assuming the Company will continue as a going concern. As discussed in the notes to consolidated financial statements on Form 10-K dated December 31, 2001, the Company has suffered recurring losses from operations, has negative working capital and has a shareholder’s deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in the footnotes. Additionally, as described in Note 7 of the notes to consolidated financial statements on Form 10-K, the Company has defaulted under the terms of its debt agreement and Golf Host, Inc. (the Company’s parent company) is a defendant to a class action lawsuit. These financial statements do not include any adjustments that might result from the outcome of the uncertainties.
 
  These financial statements and related notes are presented for interim periods in accordance with the requirements of Form 10-Q and, consequently, do not include all disclosures normally provided in the Company’s Annual Report on Form 10-K. Accordingly, these financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.
 
  The accompanying consolidated balance sheet for March 31, 2002, and consolidated statements of operations and cash flows for the periods ended March 31, 2002 and 2001, are unaudited but reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature.
 
  The Company’s business is seasonal. Therefore, the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal years.

(2)  INTANGIBLE ASSETS

  The Company recorded at closing in 1997, a resort intangible asset of approximately $30,400,000. This intangible related to the purchase of the Innisbrook Resort, which contained an existing rental pool agreement and a recently executed management agreement with Westin Hotels. The intangible is being amortized over twenty years on a straight-line basis. Amortization expense for all intangible assets was approximately $168,000 and $386,000 for the three months ended March 31, 2002 and March 31, 2001, respectively.
 
  As noted in the Company’s 10-K for December 31, 2001, management had determined that due to declining demand in the resort business and reduced rental pool participation which led to declines in operating results, impairment had occurred. At December 31,

Page 7


 

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

(2) INTANGIBLE ASSETS

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

(3) DEBT

  Debt consists of the following:

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

(4) CONTINGENCIES

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

Page 8


 

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

(5) TAMARRON’S RESULTS OF OPERATIONS

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

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

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

Page 9


 

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

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

  Results of Operations
 
  The comparative results for 2001 exclude the activities of the Tamarron Resort, which the Company assumed responsibility for the net income (loss) under the terms of a lease agreement entered into between the Company and Golf Host II during 2000. Golf Host II sold the Tamarron Resort on November 19, 2001. The exclusion of Tamarron’s results allows for an appropriate comparison on a period to period basis for the Innisbrook property.
 
  During the first quarter of 2002, business results reflect our customers’ increased caution and concerns about travel subsequent to the 9/11 tragedy. Total room nights at the Innisbrook property were down 9,055 or 23.7% as a result of our contingency of business segment having postponed or reduced their travel budget and plans. This decrease was primarily driven by our group business sector as the actual group room nights were down 8,834 or 29.5%. Group meeting planners are scheduling meetings for shorter durations and the booking window has been reduced from 12 to 18 months to 6 to 12 months. It is also more difficult to get these customers to commit to booking time at the resort due to their perception of the uncertain U.S. economy. Coupled with the reduction in room nights, average guest spending dropped from $544.87 to $496.15 per room night for the comparative periods. The combination of reduced room nights and spending per room night produced gross revenue reductions of $6,355,000 or 30.5%. In an effort to respond to these unsatisfactory changes, the Company aggressively reduced operating expenses, in the aggregate of $3,682,000 or 23.7%, in order to manage performance for the first quarter of 2002. The reduction in revenue and the Company’s inability to offset its fixed costs of operating the Innisbrook property resulted in a net reduction of operating income before income (loss) leased assets of $2,638,000.
 
  Interest expense of approximately $2,370,000 in 2002 is relatively consistent with the 2001 amount of $2,421,000. The Company continues to accrue its monthly interest liability associated with the Golf Trust of America participating mortgage even though it has been unable to make the cash payments of principal and interest beginning with the October 1, 2001 due date. The Company is still negotiating with Golf Trust and expects to arrive at an amicable solution before the end of first half of 2003. Note 7 of the Company’s 2001 10-K and the Financial Condition and Liquidity discussion provide a more detailed description regarding this mortgage.
 
  During the quarter, the Company has set aside $580,000 to be utilized for capital improvements. Expenditures during the quarter include $109,000 that have been utilized to fund golf cart, golf course equipment, computer equipment and food & beverage equipment leases. In addition, $19,000 was used for maintenance and minor repairs on the food and beverage facilities.
 
  Financial Condition and Liquidity
 
  The Company’s working capital position inclusive of loans in default in the amount of $78,975,000, has decreased to approximately $89,157,000 as of March 31, 2002. An $865,000 improvement in working capital from the December 31, 2001 deficit of $90,022,000 is primarily the result of net income after interest of $203,000.
 
  The Company experiences seasonal fluctuations in operations, which impact its net working capital position. Fluctuations in working capital have been managed in the past through the utilization of a $3,000,000 accounts receivable revolving credit line. As described below, the company has defaulted on its mortgage obligation to Golf Trust of America (“GTA”). As a result of that default, Wells Fargo Business Credit, Inc. elected to terminate their credit line with Golf Host Resorts effective May 23, 2002. While the company has utilized this credit line to facilitate short-term cash needs in past years, its utilization during 2002 has been limited. The Resort will attempt to develop a replacement facility upon completion of the loan settlement agreement. Management believes that the Company will have to restructure the GTA loan for the economic viability of the Resort.

Page 10


 

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

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

  In order to preserve its legal position, GTA has asserted its right to accelerate payments of the total outstanding principal and interest amounts and continues to negotiate a settlement as described below. As of January, 2003. The Company is seeking to negotiate a Settlement Agreement with GTA. In connection with the proposed Settlement Agreement, the Company would transfer to GTA the resort property, three condominium properties located at the Innisbrook Resort, the Company’s GTA stock interests, and all rights, title and interests of the Company under existing contracts and agreements. In addition, the Company would provide a limited indemnity to defend and hold harmless GTA (and its affiliates) from and against any and all costs, liabilities, claims, losses, judgments or damages arising out of or in connection with the Class Action Lawsuit, as well as liabilities accruing on or before the closing date related to employee benefits and liabilities for contracts or agreements not disclosed by the Company to GTA. In return, it is anticipated the GTA would deliver to the Company a duly executed release. No Settlement Agreement has yet been signed and no terms are definite. Neither GTA nor any of its affiliates is under any obligation to continue negotiating with the Company or to execute the Settlement Agreement and could initiate foreclosure proceedings and pursue its other remedies at any time.
 
  As noted in the Company’s 10-K for December 31, 2001, management determined that due to declining demand in the hotel golf resort business and reduced rental pool participation which led to declines in operating results, impairment had occurred. At December 31, 2000, an impairment charge of $7,441,000 was recorded. As a result of the continued decline in destination golf resort business during 2001 and the events of September 11, 2001, the Company determined that further impairment had occurred and, consequently, recognized an additional $3,000,000 impairment during the quarter ended September 30, 2001.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

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

ITEM 4. Controls and Procedures

  Within the 90 days prior to the date of this report, the Registrant’s management, including the Chief Executive Officer, the Principal Financial Officer and the Registrant’s agent (Westin North American Management Company), carried out an evaluation of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon the evaluation, the Registrant’s Chief Executive Officer and the Principal Financial Officer concluded that the Registrant’s disclosure controls and procedures are effective in timely alerting them to material information to be included in the Registrant’s periodic SEC filings.
 
  There have been no significant changes in the Registrant’s internal controls or in other factors that could significantly affect internal controls subsequent to the date the Chief Executive Officer and the Principal Financial Officer carried out this evaluation.

Page 11


 

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 2. Changes in Securities and Use of Proceeds

  Not applicable.

Item 3. Defaults Upon Senior Securities

  Not applicable

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

  Not applicable

Item 5. Other Information

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

Item 6. Exhibits and Reports on Form 8-K

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

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

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

Page 12


 

SIGNATURES

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

GOLF HOST RESORTS, INC.

         
Date: March 6, 2003   By:   /s/ Merrick Kleeman

     
        Merrick Kleeman
President
 
Date: March 6, 2003   By:   /s/ R. Keith Wilt

     
        R. Keith Wilt
Vice President and Treasurer
(Principal Financial Officer)

Page 13


 

RENTAL POOL LEASE OPERATION

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

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

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

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

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

Page 14


 

INNISBROOK RENTAL POOL LEASE OPERATION
BALANCE SHEETS

DISTRIBUTION FUND

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

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

Page 15


 

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

DISTRIBUTION FUND

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

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

Page 16


 

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

DISTRIBUTION FUND

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

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

Page 17


 

RENTAL POOL LEASE OPERATION

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

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

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

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

Page 18


 

TAMARRON RENTAL POOL LEASE OPERATION
BALANCE SHEETS

DISTRIBUTION FUND

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

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

Page 19


 

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

DISTRIBUTION FUND

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

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

Page 20


 

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

DISTRIBUTION FUND

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

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

Page 21