DuringTable 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. Contents

TheTable Company’sof stock is 100% privately held and there is no established market for the stock. Contents

TheTable Company’s management periodically evaluates whether there has been a permanent impairment of long-lived 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. Contents

GuestTable occupancyof during the last three years, measured by room nights, was as follows: Contents

Interest,Table net for the year ended December 31, 2002, was approximately $9,101,000 as compared to $9,263,000 for the year ended December 31, 2001. This $162,000 decrease is the result of: a decrease in interest costs associated with the Accounts Receivable credit line of $113,000; a decrease in expense of $143,000 related to the prior Shareholders’ loan, offset by changes in the interest on capitalized leases and the change in rate on the $9,000,000 portion of the GTA loan. Other interest items, net of interest income, in the aggregate increased by $88,000. Contents

EffectiveTable February 3,of 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. Contents

TheTable 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 the amount of funds the individual owner invested in the 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. Contents

onTable aof daily basis. 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. Contents

13 Table of Contents

(a)Table 1.of Financial Statements:Contents

5. TheTable 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): Contents

6. TheTable 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. Contents

/s/Table Merrickof Kleeman Name: Merrick Kleeman Title: President (Chief Executive Officer) Date: March 31, 2003Contents

F-1 Table of Contents

F-2 Table of Contents

F-3 Table of Contents

F-4 Table of Contents

F-6 Table of Contents

F-9 Table of Contents

F-11 Table of Contents

NotesTable toof Consolidated Financial Statements December 31, 2002 and 2001 Contents

/s/Table PricewaterhouseCoopers,of LLP Tampa, Florida March 28, 2003 Contents

F-20 Table of Contents

NotesTable toof Financial Statements Contents

ComputationTable and Allocation of Earnings Under the MLA, which expired on December 31, 2001, Participants and GHR shared Adjusted Gross Revenues in accordance with the terms of the Agreement. Adjusted Gross Revenues consist of revenues earned from the rental of condominiums, net of agents’ commissions, credit card 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 adjustments, is allocated proportionately to Participants, based on the Participation Factor as defined in the Agreement. 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 on an individual per unit basis, as prorated based upon Unit Weighted Days Pool Participation, as defined. In 1996, the distribution was $21.67. In 2002, the Unit Weighted Days distribution was $20.02, and the amount the Company is obligated to pay the GMLA participants for the year ended December 31, 2002, is less than $1,600. In 2001, no amount was paid under the guarantee, as the Average Daily Distribution was $25.73. The GMLA also guarantees that it cannot be terminated before its expiration date and includes a provision for an annual election to participate. Under the NMLA, which became effective January 1, 2002, Participants and GHR share Adjusted Gross Revenues in accordance with the terms of the agreement. Adjusted Gross Revenues are defined as Gross Revenues less agents commissions, audit fees, occupancy fees when the unit is utilized by GHR, linen replacements and credit card fees. GHR receives a management fee of 60% of Adjusted Gross Revenues. Each Participant receives a fixed occupancy fee, based upon apartment size, for each day of occupancy. After allocation of occupancy fees and the payment of general rental pool expenses, the balance is allocated proportionally to the Participants, based on the Participation Factor as defined in the Agreement. The Agreement also provides for GHR to reimburse 50% of the refurbishment costs on each unit associated with the current refurbishment program, with interest calculated as 5% of the unpaid 50% of the refurbishment costs, and continued participation of the unit in the rental pool, so long as the minimum aggregate participation threshold, as defined, is maintained. Repayments are to begin in 2005 and continue through 2009. Should GHR 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. The net interest earned during the year ended December 31, 2002 was approximately $146,000 and is recorded as an adjustment to the gross income distribution in the statement of operations of the distribution fund. Corporate complimentary occupancy fees are rental fees paid by GHR to the Participants for complimentary rooms unrelated to Rental Pool operations. Westin Associate Room FeesContents

InnisbrookTable Rentalof Pool Lease Operation Contents

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

BalanceTable Sheetsof — Distribution Fund Contents

F-36 Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT

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

For the fiscal year ended December 31, ~~2002~~2003

Commission File No. 2-64309

GOLF HOST RESORTS, INC.

Federal Employer Identification No. 84-0631130

591 W. Putnam Ave., Greenwich, CT 06830

Telephone Number: (727) 942-2000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None

Indicate by check mark whether the Registrant

(1)		has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and

(2)		has been subject to such filing requirements for the past 90 days.

Yes ~~x o~~ [X] No [ ]

No established 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~~ December 3031, ~~2002~~ 2003.

Issuer has no common stock subject to this report.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, IIf definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. x [X]

Indicate by check mark if the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes [ ] No [X]

TABLE OF CONTENTS

Part II Part III Part IV SIGNATURES


PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
Part II
	Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures about Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
	Item 9A. Controls and Procedures
Part III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
	Item 14. Principal Accounting Fees and Services
Part IV
	Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
SIGNATURES
Ex-14: Code of Ethics
Ex-31.1: 302 Certification of CEO
Ex-31.2: 302 Certification of CFO
Ex-32.1: 906 Certification of CEO
Ex-32.2: 906 Certification of CFO

~~Indicate~~On byDecember 31, ~~check~~2003, ~~mark~~there ifwere ~~the~~5,000 common shares outstanding of the Registrant’s only class of common stock. On December 31, 2003, there were 4,577,000 shares of 5.6% cumulative preferred stock outstanding, which is anthe only ~~accelerated~~class ~~filer~~of preferred stock outstanding. The Registrant’s parent, Golf Hosts, Inc. (as“GHI”), ~~defined~~wholly inowns both classes of stock, and there is no active ~~Rule 12b-2~~market for the trading of these shares. Therefore, the ~~Act)~~shares are not listed or registered with an exchange.

Yes o x No

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.

PART I

Item 1. Business

Golf Host Resorts, Inc. (the “Company”) is a corporation that was formed in July 1972 and ~~operates~~owns The Westin Innisbrook Golf Resort in Tarpon Springs, Florida (“Innisbrook” or the “Resort”) and ~~operated~~owned the Sheraton Tamarron Resort in Durango, Colorado (“Tamarron”) through November 18, 2001. Innisbrook and Tamarron ~~(the “Resorts”)~~ offer championship quality golf facilities, restaurant and conference facilities, and recreational activities including swimming, tennis and related resort activities. Westin Hotel Company and Sheraton Operating Corporation manage the ~~Resorts,~~Innisbrook Resort and managed Tamarron Resort, respectively, under long-term management agreements. Effective November 19, 2001, Tamarron was sold to an unaffiliated entity.

Prior to June 23, 1997, the Company was an 80% owned subsidiary of 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 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.

The majority of the condominium apartment owners at Innisbrook provide their apartments as resort accommodations under rental pool lease operations. Golf ~~Innisbrook~~Host Resorts, Inc. is the lessee under the lease operation agreements, which ~~provide~~ 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 and financing costs of the rental units. The Company bears the expense of all other operating aspects of Innisbrook.

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 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” (“Association”) 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 certain utilities. The Association assesses fees to defray these expenses and to establish necessary 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 electricity, and to such matters independent of the other unit owners. These expenses would 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.

~~electricity,~~The ~~and~~percentages ~~to such matters independent~~ of the ~~other~~revenue ~~unit~~components ~~owners.~~discussed ~~These expenses~~above ~~would~~as bepart ~~incurred by owners~~ of ~~condominium units, regardless of an election to participate in~~ the ~~rental pool. With respect to governing the~~ ~~affairs~~Company’s oftotal ~~the~~revenues ~~Association, which is subject to state statutes, the participating condominium owners~~ are ~~accorded~~as ~~one vote per condominium unit~~follows: ~~owned.~~

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


	2003			2002			2001
Revenues
Resort facilities		30.6	%		30.3	%		34.1	%
Food and beverage		29.1	%		28.2	%		27.2	%
Golf		28.3	%		28.7	%		27.9	%
Other		12.0	%		12.8	%		10.8	%

Total		100.0	%		100.0	%		100.0	%

	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	%

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. Accordingly, the loss of a single or a few conferences of average size would have no significant adverse effect on the Company’s business.

The ~~Company~~conference-oriented ~~hosts~~resort ~~approximately~~business ~~1,000~~is ~~conferences~~quite ~~and~~competitive; ~~related~~however, ~~group meetings~~the ~~each~~Company ~~year~~has ~~with~~established ~~its~~itself ~~guests~~as ~~representing~~ a ~~variety~~leader ofin ~~industries,~~its ~~primarily~~industry ~~from the central~~ and ~~eastern~~enjoys ~~United~~an excellent ~~States.~~reputation ~~Accordingly,~~within ~~the~~its ~~loss~~market. ofIts amajor ~~single~~competitors orare aother golf ~~few~~and ~~conferences~~conference ~~would~~oriented ~~have~~resorts nothroughout ~~significant adverse effect on~~ the ~~Company’s business~~country.

The ~~conference-oriented~~Resorts’ ~~resort~~revenues ~~business~~are ~~is quite competitive; however~~seasonal, ~~the Company~~with ~~has~~Innisbrook’s ~~established~~peak ~~itself~~season ~~as a leader in its industry and enjoys an~~being ~~excellent~~November ~~reputation~~through ~~within its market~~April. ~~Its~~Tamarron’s ~~major~~peak ~~competitors~~season ~~are~~when ~~other conference~~the ~~and~~Company ~~golf-oriented~~owned ~~resorts~~it ~~throughout~~was in the ~~country~~summer.

~~The~~As ~~Resorts’~~of ~~revenues~~December 31, ~~are seasonal~~2003, ~~with~~the ~~Innisbrook’s~~Company ~~peak~~had, ~~season~~on ~~being~~average, inapproximately ~~the winter~~750 full and ~~spring.~~part ~~Tamarron’s~~time ~~peak season when the Company owned it was in the summer~~employees.

AsOn ~~of December~~November 3129, ~~2002~~2001, the Company received notice from its primary lender that the Company had, defaulted on ~~average~~the note payable to Golf Trust of America (“GTA”) in the amount of $78,975,000 ~~approximately~~as a ~~750~~result ~~full~~of its failure to make the scheduled October 2001 interest payment and all subsequent principal and ~~part~~interest ~~time~~payments. ~~employees~~The Company has continued to accrue the interest payments to the lender, subsequent to the default. As of December 31, 2003 the total of accrued and unpaid interest due and payable to the lender was approximately $23,751,000. The Company is negotiating a settlement agreement with GTA (the “Settlement Agreement”). (See Note 6 of Notes to Consolidated Financial Statements). If successful, it is expected that there will be no remaining assets in the Company.

OnThe ~~November 29,~~Company ~~2001,~~makes ~~the~~available ~~Company~~free ~~received~~of ~~notice~~charge ~~from~~our ~~its~~annual ~~primary~~report ~~lender~~on ~~that~~Form 10-K, ~~the~~quarterly ~~Company~~reports ~~had~~on ~~defaulted~~Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities ~~note~~Exchange ~~payable~~Act of 1934 as soon as reasonably practicable after we electronically file such material with, inor furnish it to, the ~~amount~~Securities and Exchange Commission. These reports can be obtained free of ~~$78~~charge by contacting: Golf Host Resorts,~~975~~ Inc.,~~000~~ asInvestor Relations, 36750 US a19N, ~~result~~Palm ofHarbor, ~~its~~FL ~~failure~~34684. toThese ~~make~~reports are not available on the ~~scheduled~~Company’s website. ~~October~~The ~~2001~~public ~~interest~~may ~~payment~~read and copy any materials the Company files ~~all~~with ~~subsequent~~the ~~principal~~SEC ~~and~~at ~~interest~~the ~~payments~~SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, DC. 20549. The ~~Company~~public ismay ~~negotiating~~obtain ainformation on the ~~settlement~~operation ~~agreement~~of ~~with~~the Public Reference Room by calling the ~~lender~~SEC ~~(See~~at 1-800-SEC-0330. ~~Note~~The 6SEC ofmaintains ~~Notes~~an toInternet ~~Consolidated~~Site that contains ~~Financial~~reports, ~~Statements~~proxy and information statements, and other issuers that file electronically with the SEC (www.sec.gov). Additional information may be obtained on the Resort's website at www.golfinnisbrookresort.com.

~~The Company makes available free of charge our annual report on Form 10-K,~~Code ~~quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d)~~ of ~~the~~Ethics ~~Securities Exchange Act of 1934 as soon as reasonably practicable after we~~ electronically file such material with, or furnish it to, the Securities and Exchange Commission. These reports can be obtained free of charge by contacting: Golf Host Resorts, Inc., Investor Relations, 591 W. Putnam Avenue, Greenwich, CT 06830. These reports are not available on the Company’s website.

~~Item 2~~The Company has adopted a Code of Ethics that applies to our principal executive officer, our principal financial officer, our principal accounting officer, and our controller as well as all of our directors, officers and employees. ~~Properties~~The Code of Ethics is filed as Exhibit 14 of the Company’s annual Form 10-K for the year ended December 31, 2003.

~~Innisbrook is a condominium resort project situated on approximately 845 acres~~Audit ~~of land located in the northern portion of Pinellas County, Florida, near the~~Committee ~~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

3The Company does not have a separately designated audit committee. As a result, the Company’s entire board of directors serves as the Company’s audit committee. The Company does not have an audit committee financial expert serving on its Board of Directors because the Company is not listed on any national securities exchange and there is no active trading market for its equity shares. The Board of Directors currently consists of Merrick Kleeman, who also serves as the President and Secretary of the Company.

~~Table~~Item of2. ~~Contents~~Properties

~~average~~Innisbrook is a condominium resort project situated on approximately 845 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 remaining eligible units, 500, on average, participate in the rental pool on a year -to -year basis. ~~The~~Approximately ~~resort~~25% of ~~complex~~the ~~includes~~units 72have ~~holes~~internal oflockout ~~golf;~~doors, ~~practice~~which ~~ranges;~~allow ~~three~~the ~~clubhouses~~rental ~~with~~of the ~~retail~~condominium ~~golf,~~unit ~~food~~as ~~and~~two ~~beverage~~hotel ~~outlets;~~rooms. ~~three~~The ~~conference~~average ~~and~~of ~~exhibit~~500 ~~buildings;~~units participating in ~~five~~the ~~swimming~~rental ~~pools;~~pool aat ~~themed~~any ~~water~~one ~~attraction;~~time ais ~~recreation~~equivalent ~~center~~to approximately 600 hotel rooms. The resort complex includes 72 holes of golf; apractice ranges; three clubhouses with ~~tennis/fitness~~retail, ~~facility~~golf and ~~numerous~~food ~~administrative~~ and ~~support~~beverage ~~structures.~~outlets; three

~~Tamarron, which was sold on November 19, 2001, is also a condominium resort~~3 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. At the time Tamarron was sold, there 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.

Atconference ~~December 31,~~and ~~2002,~~exhibit ~~Innisbrook~~buildings; issix ~~encumbered~~swimming bypools ~~various~~including ~~mortgages~~a ~~totaling $78,975,000.~~themed ~~Reference is made to Note 6 of Notes to Consolidated Financial~~water ~~Statements~~attraction; ~~contained~~a ~~elsewhere~~recreation incenter; ~~this filing for~~ a ~~more~~tennis/fitness ~~detailed~~facility ~~description~~and numerous ofadministrative ~~these~~and ~~mortgages~~support structures.

~~Item~~Tamarron, which was sold on November 319, 2001, is also a condominium resort project situated on approximately 730 acres of land located in the northern portion of La Plata County, Colorado. ~~Legal~~It ~~Proceedings~~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. At the time Tamarron was sold, there 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.

~~The~~During ~~Company, in~~ the ~~normal~~years ~~course~~1999 ofand ~~operations~~2001, isapproximately ~~subject~~35 toacres ~~claims~~ and ~~lawsuits.~~ ~~The~~34 ~~Company~~acres, respectively, ~~does not believe that the ultimate resolution~~ of ~~such matters~~developable ~~will~~land ~~materially~~at ~~impair~~Innisbrook, ~~operations~~contiguous orto ~~have~~but annot ~~adverse~~within the ~~effect~~operational onboundaries ~~the Company’s~~of ~~financial~~Innisbrook, ~~position~~was ~~and~~sold ~~results~~to ofa ~~operations~~non-affiliated entity.

~~The Company’s parent (Golf Hosts, Inc.) has been named as a defendant in a~~At ~~consolidated class action lawsuit whereby the plaintiffs allege breaches of contract~~December 31, 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 exists2003, aInnisbrook ~~limitation~~is ofencumbered ~~the~~by ~~total~~various ~~number of club memberships and a~~mortgages ~~limitation~~with ofprincipal ~~golf~~balances ~~course access to persons who are either condominium owners~~totaling ~~who are members~~$78, ~~their accompanied guests~~975,000 ~~or guests of the resort. Depositions of class members~~ and ~~others,~~accrued ~~including~~interest ~~depositions~~payable of ~~former executives~~approximately ~~of the Company~~$23, ~~have been taken and additional discovery remains. The previously scheduled trial date of February 3~~751, ~~2003 had been postponed by the court; a new trial date has not yet been set~~000. AsReference ~~this litigation~~ is ~~still in~~made ~~progress,~~to ~~the~~Note ~~Company~~6 isof ~~not~~Notes ~~yet able~~ to ~~determine~~Consolidated ~~whether~~Financial Statements ~~the~~contained ~~resolution~~elsewhere of in this ~~matter~~filing ~~will~~for ~~have~~ a ~~material~~more ~~adverse~~detailed ~~effect on the Company’s financial~~description ~~condition or results~~ of ~~operations~~these ~~although the Company believes GHI has successful defenses based upon consultations with legal counsel, and intends to vigorously defend this action~~mortgages.

Item 4 3. ~~Submission~~Legal ~~of Matters to a Vote of Security Holders~~ Proceedings

~~Not~~The ~~applicable~~Company, in the normal course of operations, is subject to claims and lawsuits. The Company does not believe that the ultimate resolution of such matters will materially impair operations or have an adverse effect on the Company’s financial position and results of operations.

4GHI was named as a defendant in a consolidated class action lawsuit (“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, 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 court had postponed the previously scheduled trial date of February 3, 2003; a new trail date has not yet been set. As of December 31, 2003, the court had decertified the class and denied the plaintiff’s subsequent motion to permit additional owners to intervene in the lawsuit. In addition, the plaintiffs filed a complaint seeking to “pierce the corporate veil”. The court dismissed the veil piercing complaint with prejudice. The plaintiffs appealed the decertification of the class; the denial to intervene and the veil piercing dismissal to the Florida Court of Appeals, Second District. The Court of Appeals has affirmed the lower court’s decertification of the class and has affirmed the lower court’s dismissal with prejudice of the veil piercing case. No decision on the intervention appeal has been made. 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. However, the Company believes GHI has successful defenses based upon consultations with legal counsel, and intends to vigorously defend this action.

~~Table~~Item 4. Submission of ~~Contents~~Matters to a Vote of Security Holders

~~Part~~Not IIapplicable

~~Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters~~4

~~There~~Part ~~are a total of 1,283 condominium units allowing rental pool participation~~II ~~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. As of December 31, 2002, the condominium units not owned by the Company or its affiliate are held by approximately 1,145 different owners.

~~Since~~The ~~the~~Company’s ~~security~~stock is ~~real~~100% ~~estate,~~privately noheld ~~dividends~~and ~~have~~there ~~been~~is ~~paid~~no orestablished ~~will be paid.~~market ~~However, the Rental Pool Participants are entitled to a contractual distribution paid quarterly, as defined in the Lease Agreements,~~ for the ~~Company’s~~ ~~right to use the Participants’ condominium units in the rental pool~~stock.

5There 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. As of December 31, 2003, approximately 1,145 different owners hold the condominium units not owned by the Company or its affiliate.

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

~~Item 6~~Since the security is real estate, no dividends have been paid or will be paid. However, ~~Selected~~the ~~Financial~~Rental ~~Data~~Pool Participants are entitled to a contractual distribution paid quarterly, as defined in the Lease Agreements, for the Company’s right to use the Participants’ condominium units in the rental pool.

~~The following selected financial data should be read in conjunction with our~~5 consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Report. Historical results are not necessarily indicative of the results to be expected in the future.

	Year Ended December 31,
	2002			2001			2000			1999			1998
Operating revenue	$	40,170,327		$	47,718,937		$	56,591,669		$	59,664,822		$	58,184,711
Net income (loss)		(9,434,541	)		(10,354,579	)		(14,806,630	)		(7,196,907	)		7,822,846
Net income (loss) per common share		(1,886.91	)		(2,070.91	)		(3,012.59	)		(1,490.64	)		1,513.31
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

Item 6 . Selected Financial Data

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

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations


							Year Ended
							December 31,
	2003			2002			2001			2000			1999
Operating revenue	$	38,498,358		$	40,170,327		$	47,718,937		$	56,591,669		$	59,664,822
Net loss		(11,466,217	)		(9,178,229	)		(10,354,579	)		(14,806,630	)		(7,196,907	)
Net loss per common share		(2,344.51	)		(1,886.91	)		(2,122.18	)		(3,012.59	)		(1,490.64	)
Total assets		60,933,367			62,515,650			59,869,725			71,062,144			86,895,774
Notes payable		78,975,000			79,003,552			79,613,911			83,101,297			84,624,425
Cash dividends per common share		—			—			—			—			—
Average daily rental pool distribution (The average daily rental pool distribution is calculated by dividing the rental pool distribution by the total available room nights.)		18.32			20.21			25.73			30.47			28.47
Total rental pool distribution		3,931,606			4,414,815			6,127,360			7,327,216			7,971,769

~~The following accounting policies are considered critical by the Company’s~~6 management. These and other accounting policies require that estimates be made, based on assumptions and judgment, that affect revenues, expenses, assets, liabilities and disclosure of contingencies in the Company’s financial statements. These estimates and assumptions are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. However, actual results may differ from these estimates due to different conditions.

~~The~~Item ~~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~~7. Management’s ~~estimation~~Discussion of assets’ useful lives are critical estimates for the following reasons: (1) forecasting the salvage value for long-lived assets over a long period of time is subjective; (2) changes may take place that could render an asset obsolete or uneconomical; and ~~(3) a~~Analysis ~~change in the useful life~~ of aFinancial ~~long-lived~~Condition ~~asset could have a material impact on reported results of operations~~ and ~~reported~~Results 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.~~ Operations

The ~~Company~~following ~~has~~accounting ~~provided~~policies ~~for~~are anconsidered ~~estimated~~critical ~~net~~by ~~asset~~the ~~and corresponding liability~~Company’s ~~related~~management. toThese ~~the~~and ~~apartment~~other ~~unit~~accounting ~~refurbishment~~policies ~~program~~require ~~pursuant~~that toestimates ~~the~~be ~~Rental Pool~~made ~~Master~~based ~~Lease~~on ~~Agreement~~assumptions ~~(See~~and ~~Note~~judgment, 9which toaffect ~~Consolidated~~revenues, ~~Financial~~expenses, ~~Statements). Both~~assets, ~~the~~liabilities ~~estimated asset~~ and ~~liability~~disclosure ~~amounts~~of ~~are~~contingencies ~~based~~in ~~upon~~the ~~management~~Company’s ~~expectation~~ ~~that the rental pool participants will continue to achieve the~~financial ~~minimum~~statements. ~~unit~~These ~~participation~~estimates ~~threshold~~and asassumptions ~~defined~~are inbased ~~the~~on ~~agreement.~~historical ~~The net~~experience ~~asset~~and ison ~~being~~various ~~expensed~~other onfactors athat ~~straight-line~~are ~~basis~~believed ~~from~~to ~~the~~be ~~time~~reasonable ~~each~~under ~~phase of~~ the circumstances. ~~refurbishment~~However, isactual ~~placed~~results inmay ~~service~~differ ~~through~~from ~~2009.~~these ~~The~~estimates ~~net~~due ~~liability will be~~to ~~retired~~different ~~consistent with the funding requirements in the agreement~~conditions.

~~See~~The ~~the~~Company’s ~~Notes~~management toperiodically ~~the~~evaluates whether there has been a permanent impairment of long-lived assets, in accordance with Financial Accounting ~~Statements~~Standard No. (“FAS”) 144 — Accounting for ~~Golf~~the ~~Host~~Impairment ~~Resorts,~~or ~~Inc~~Disposal of Long-Lived Assets. inThe ~~Note~~Company’s 2management believes that the accounting estimates related ~~hereof~~to asset impairments are critical estimates for ~~additional~~the ~~accounting~~following ~~policies~~reasons: ~~used~~(1) the ongoing changes in ~~the~~management’s ~~preparation~~expectations regarding future utilization of assets; and (2) the impact of an impairment on reported assets and earnings ~~financial~~could ~~statements~~be material. ~~Other~~During ~~new~~the ~~accounting~~years ~~pronouncements~~ended ~~initially~~December 31, ~~effective~~2003 and 2002, the Company’s management evaluated assets for impairment in ~~2002~~accordance ~~are~~with ~~considered~~FAS 144 and concluded that the sum of the undiscounted expected future cash flows (excluding interest charges) from its assets, including the estimated market value of undeveloped land, exceeded its then current carrying values. Accordingly, the company did not ~~applicable~~recognize toan impairment charge in 2003 or 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 ~~following~~Company ~~information~~provides ~~may~~for ~~contain~~depreciation ~~forward~~by the straight-~~looking~~line ~~statements~~method ~~within~~at ~~the~~annual ~~meaning~~rates that amortize the original costs, net of ~~Section 27A~~salvage values, of ~~the~~depreciable assets ~~Securities~~over ~~Act,~~their ~~and~~estimated ~~Section 21E~~useful lives. Management’s estimation of assets’ useful lives are critical estimates for the ~~Exchange~~following reasons: (1) forecasting ~~Act.~~the ~~Such~~salvage ~~statements~~value ~~may~~for belong-lived ~~identified~~assets byover ~~the~~a ~~inclusion~~long period of ~~terms~~time ~~such as~~is ~~“believe,”~~subjective; ~~“expect,”~~(2) changes ~~“hope”~~may take place that could render an asset obsolete or uneconomical; ~~“may.”~~and ~~Although~~(3) a change in the ~~Company~~useful ~~believes~~life ~~that~~of ~~such forward~~a long-~~looking~~lived ~~statements~~asset ~~are~~could have ~~based~~a ~~upon~~material ~~sound~~impact on reported results of operations and ~~reasonable~~reported ~~assumptions,~~asset ~~given~~values. ~~the~~The ~~circumstances~~Company’s inmanagement ~~which~~believes the ~~statements~~estimated ~~are~~useful ~~made,~~life corresponds to the ~~actual~~anticipated ~~results could~~physical ~~differ~~life ~~significantly~~for ~~from~~most ~~those~~assets. ~~described~~Although init is difficult to predict values far into the ~~forward-looking~~future, the Company has a long history of actual ~~statements.~~costs ~~Certain~~and ~~factors~~values that ~~might~~are ~~cause~~considered ~~such~~in reaching a ~~difference~~conclusion ~~include~~as to the ~~following:~~appropriate ~~changes~~useful inlife ~~general~~of ~~economic~~an asset.

7The Company 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, with the final payment being made February 15, 2010.

~~Table~~See the Notes to the Financial Statements for Golf Host Resorts, Inc. in Note 2 hereof for additional accounting policies used in the preparation of ~~Contents~~the consolidated financial statements. Other new accounting pronouncements initially effective in 2003 are considered not applicable to the Company.

~~conditions,~~The ~~changes~~following ininformation ~~rental~~may ~~pool~~contain ~~participation~~forward-looking bystatements ~~the~~within ~~current condominium~~the ~~owners,~~meaning ~~reaching~~of aSection 27A ~~settlement~~of ~~agreement with~~ the ~~Company’s~~Securities ~~primary lender~~Act, ~~settlement~~ ofand ~~the Class~~Section ~~Action~~21E ~~Lawsuit,~~of the ~~ability~~Exchange Act. ofSuch ~~the~~statements ~~Company~~may tobe ~~continue to~~identified ~~operate~~by the ~~Innisbrook~~inclusion ~~property~~of ~~under~~terms ~~its~~such ~~management~~as “believe,” ~~contracts~~“expect,” ~~and~~“hope” or “may.” Although the ~~resale~~ ofCompany ~~condominiums~~believes tothat ~~owners~~such forward-looking ~~who~~statements ~~elect~~are ~~neither~~based toupon ~~participate~~sound inand ~~the~~reasonable ~~rental~~assumptions, ~~pool~~given ~~nor~~the tocircumstances ~~become~~in ~~Club~~which ~~members.~~the ~~Given~~statements ~~these~~are ~~uncertainties~~made, ~~readers~~the ~~are~~actual results ~~cautioned~~could ~~not~~differ tosignificantly ~~put~~from ~~undue~~those ~~reliance~~described onin ~~such~~the forward-looking statements.

~~The comparative results exclude the activities of Tamarron. The Company~~7 assumed responsibility for the net income (loss) for Tamarron under the terms of a lease agreement entered into between the Company and Golf Host II during the year ended December 31, 2000. Golf Host II sold Tamarron to an unaffiliated entity on November 19, 2001. The exclusion of Tamarron’s results allows for a comparison of operating results for Innisbrook on a period to period basis.

YEAR	ROOM NIGHTS		% CHANGE
2002		90,960		(15.0	)
2001		106,960		(16.5	)
2000		128,033		(6.3	)

Certain factors that might cause such a difference include the following: changes in general economic 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.

~~2002~~The ~~Compared~~Company assumed responsibility for the net income (loss) for Tamarron under the terms of a lease agreement entered into between the Company and Golf Host II during the year ended December 31, 2000. Golf Host II sold Tamarron to an unaffiliated entity on November 19, 2001.

~~For~~Guest ~~the~~occupancy ~~years~~during ~~ended December 31, 2002 and December 31, 2001,~~ the ~~Company recognized~~last ~~total~~three ~~revenue in the approximate amount of $40~~years,~~170,000~~ ~~and $47,719,000,~~measured 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 the social/transient markets has remained essentially the same between 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~~was ~~were 67,202 and 23,758 respectively~~ as ~~compared to 78,736 and 28,224~~ ~~respectively for the twelve months ended December 31, 2001. Both categories~~follows: ~~showed reductions. On a percentage basis, group and 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.

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 approximately $9,078,000 or 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


YEAR	ROOM NIGHTS		% CHANGE
2003		87,164		(4.2	)
2002		90,960		(15.0	)
2001		106,960		(16.5	)

82003 Compared to 2002

~~Table~~During the year ended December 31, 2003, the Innisbrook Resort and Golf Club continued to struggle with recovering from the reduction in business and leisure travel as a result of ~~Contents~~the 2001 terrorist acts, war with Iraq and the economic downturns of the US economy in general. Operationally, the rental pool participation stabilized during the year and would appear to be positioned to provide at least a minimum number of 600 rental units through the year 2009, or approximately 215,000 available room nights to sell in each of the upcoming years through 2009. Management believes that the 2009 time frame noted is relevant because this is the time frame in which the Resort and the Condominium owners are contracted for in the Master Lease Agreement to recover 100% of the refurbishment costs of their individual condominium units. Total participation in the rental pool during the years ended December 31, 2003 and 2002 made available approximately 215,000 and 211,000 room nights respectively. Actual utilization or sales of room nights decreased by 3,796 or 4.2% for the year ended December 31, 2003 as compared to the previous year. Management has reviewed the overall marketing plan with the Resort Manager and as a result, has instituted enhancements to the marketing and sales team compensation plans. The primary focus of these changes relate to the desire by ownership to improve the capture of the most profitable business available to the Resort. Beginning with the year 2003, the marketing and sales associate compensation plans have been structured to reward the sales team in proportion to the business that includes a golf component within the overall product purchase. From an operational perspective, revenue generation as it relates to bottom line impact is most valuable in the golf department, food and beverage and rooms, in that order. Golf departmental profit during 2003 was at approximately a 38% level. Because the carrying costs to maintain the four golf courses is primarily fixed, the majority of each incremental revenue dollar in this department flows directly to the Resorts net income. Food and Beverage (“F&B”) revenue contributes the second highest departmental profit percentage at approximately 31% and due to the rental pool sharing arrangement with the condominium owners, the room revenue contributes approximately 24% to net income. Total room nights in 2003 were 87,164 as compared to total room nights of 90,960 in 2002. The Resort utilizes the Smith Travel Research to compare itself to what it considers its competitive set. The current competitors utilized are: Preferred Amelia Island Plantation; Doral Golf Resort & Spa; Marriott Sawgrass Resort and PGA National Resort. During the year ended December 31, 2003, the Resort lagged behind its competitive set in both occupancy percentages and

~~in the intangible write down of $3,000,000 and reduction in all other operating~~8 ~~expenses in the aggregate of $1,976,000.~~

~~Effective~~average ~~February~~room rates. While the competitive set occupancy levels remained at 54.9% for the year ended December 331, ~~1998~~2003 and matched the percentage attained as of December 31, 2002, the ~~Company’s~~resorts ~~election~~occupancy percentage declined by 2.6% to 40.6% befor ~~treated~~the asyear ended December 31, 2003. While average room rate at the Resort increased from $133.64 to $135.21 or 1.1% on a year-to-year comparative ~~Subchapter~~basis, Sthe ~~corporation~~competitive ~~became~~set ~~effective~~average room rate for the year ended December 31, 2003 was $150.68, ~~Subsequent~~or a decline of $0.80 per room night. The Resorts net reductions in overall room nights and increase in room revenue were primarily driven by a decrease in group or conference business. Total group room nights decreased by 2,035 from the 67,202 room nights in 2002 to a total of 65,167 room nights in 2003. As a result of market opportunities, the ~~1998~~Resort ~~filing~~was able ~~period~~to increase its market rate for the group rooms revenue on a per room night basis. In the Group sector, ~~income~~the ~~tax~~average ~~calculations~~room ~~are~~rate nowas ~~longer~~increased ~~provided~~by at$1.61 or 1.2% to $133.68 for the ~~Company~~year ~~level~~ended December 31, 2003. The transient or leisure business, which accounts for approximately twenty-five percent of the room night sales in any given year, also saw a reduction in net room nights. Total transient room nights declined by 1,761 room nights on a comparative basis. Average room rate within the transient sector also increased by $1.41 per room night to $134.61 during the year ended December 31, 2003. During the fourth quarter of 2003, the Resort entered into an agreement with an outside provider to develop a new web site, which is expected to assist the Resort with it’s attraction of golf oriented business in 2004 and later years. The web site address is www.golfinnisbrookresort.com.

~~2001~~Although ~~Compared~~room nights decreased, overall density, the number of average guests per room night, increased to ~~2000~~1.6 from 1.5 for the years ended December 31, 2003 and 2002 respectively. This slight increase in number of guests helped improve the capture of Food and Beverage (“F&B”) covers sold during the 2003 year. Total covers increased from 425,692 to 437,174 or 2.7% on a comparative basis. These increased covers sold are a direct reflection of the Resorts initiative to develop a local catering function within its product offerings. In addition during 2003, the Resort reintroduced an Italian buffet style dinner at one of its themed restaurants. This particular offering was well received by both the Resort guests and Club membership. Consequently, the overall F&B revenue decrease had a percentage reduction slightly less than the room segment. Overall F&B revenue was down approximately $117,000 or 0.9% during 2003 as compared to the 2002 numbers. The departmental profit, due to the reduced revenue and slightly higher food costs for the year ended, decreased by approximately $234,000 or 5.4%. Due to cash flow challenges during the year, the Resort was forced to go on a “cash on delivery” basis with its primary food vendor. Beginning in 2004, the Resort is again participating on a national account basis with other Westin Hotels and Resorts on more favorable terms, in an effort to manage food costs in the future.

~~For the years ended December 31, 2001 and December 31, 2000, the Company~~The ~~recognized~~Golf ~~total~~department ~~revenue~~continues into ~~the~~be ~~approximate amount of $47,719,000 and $56,506,000 respectively, from~~ the ~~rental~~most ofprofitable ~~condominium~~sector ~~units, sales~~ of ~~food~~the ~~and beverage, golf operations and auxiliary services~~Resort's business. ~~The~~Total ~~net reduction in overall Innisbrook~~ revenue indeclined ~~the~~by ~~amount~~approximately of $8655,~~787,~~000 orand ~~15.6% results from~~operating ~~the~~profit ~~reduction~~declined ~~in room nights which reduced gross revenues~~ by approximately $91,~~300~~425,000 ~~netted against improvements in room night spending of $513,000~~. ~~Average~~The ~~company~~income ~~wide~~contribution ~~customer~~percentage ~~spending~~declined ~~increased~~ from ~~$403~~48.272% ~~per room night in 2000~~ to ~~$425~~38.~~40 in 2001~~0%. OnThis asignificant ~~specific~~difference ~~property basis, room nights declined at both properties.~~reflects ~~Room~~the ~~nights~~inherent ~~were~~fixed ~~down~~costs ~~approximately~~of ~~21,100~~operating and ~~5,400~~maintaining ~~for~~the ~~Innisbrook~~golf ~~and~~courses. ~~Tamarron~~During ~~respectively. The majority of this reduction occurred in~~ the ~~fourth quarter~~year asended a2003, ~~result of~~ the ~~September 11~~Resort ~~terrorist~~increased ~~attacks~~its oncourse ~~New~~maintenance ~~York and~~expense ~~Washington.~~from ~~For~~approximately ~~example~~$3, ~~in the fourth quarter of 2001~~181,000 ~~Innisbrook~~to ~~and Tamarron~~approximately ~~had 12~~$3,~~763 and 2~~567,~~026~~000 ~~fewer~~to ~~room~~insure ~~nights~~that ~~sold as compared to~~ the ~~same~~ ~~period~~core ~~last~~business ~~year.~~asset ~~The~~would ~~travel~~be ~~market~~in ~~response~~its tobest ~~the~~possible ~~attacks~~condition. ~~coupled~~These ~~with the~~expenses ~~general~~related ~~downturn~~primarily into ~~the~~increased ~~hospitality~~spending ~~industry~~on ~~and~~fertilizers, ~~destination~~pesticides ~~golf~~and ~~resorts in~~other ~~general~~turf ismaintenance aitems. ~~significant~~In ~~challenge~~addition, to the ~~Company.~~operational ~~Operating~~costs ~~expenses~~associated ~~and~~with ~~losses~~non-maintenance onissues, ~~Assets~~including ~~Held~~costs ~~for~~of ~~Sale~~sales, ~~totaled~~increased ~~approximately~~by ~~$49,326,000 and~~approximately $61384,~~812,~~000 ~~for the years ended December 31, 2001 and December 2000 respectively~~. ~~This~~The ~~decrease~~Resort ~~was~~does ~~directly~~not ~~related~~expect to increase the ~~reduction~~course ~~in overall~~maintenance ~~business~~expenses ~~levels~~during ~~for~~2004 ~~the~~and ~~comparative~~believes ~~periods.~~that ~~The~~the ~~reduction~~appropriate inbudget ~~expenses~~is ofin place. ~~$12~~Therefore,~~487,000~~ ~~or 20.2% was~~ the ~~result~~majority of aany ~~reduction~~increases in ~~the~~revenue ~~rental~~is ~~pool distribution~~this ofsector ~~$1,030,000~~is ~~due~~ expected to ~~the~~flow ~~reduction~~directly ininto ~~room~~income ~~nights~~during ~~and~~2004. ~~resultant room~~Subsequent ~~revenue;~~to ~~reductions~~December 31, ~~in the Tamarron losses of $398~~2003,~~000;~~ ~~decrease in~~and ~~depreciation~~prior ~~and~~to ~~amortization~~publication of ~~$425~~this document,~~000;~~ ~~decrease~~the inResort ~~repairs~~initiated ~~and~~several ~~maintenance~~membership ~~expense~~initiatives ofdesigned ~~$527,000;~~to ~~decrease~~enhance inmembership ~~sales~~utilization ~~and~~of ~~marketing~~the ~~expense~~Resorts ofamenities and ~~$481,000;~~to ~~gain on~~increase the ~~sale~~numbers of ~~land~~active ofmembers. ~~$1,153,000;~~While ~~reduction~~the ~~in payroll and related expenses of~~initiatives ~~$1,805,000;~~are ~~reduction~~ in ~~the~~their early ~~intangible write down of $4~~stages,~~441,000~~ ~~and~~the ~~reduction in~~Resort ~~all~~has ~~other~~had ~~operating~~a ~~expenses~~very inpositive ~~the aggregate of $2,227,000.~~response

~~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 Trust of America mortgage of $430,000 less amortization of the effective interest rate adjustment of $401,000 on that loan. Other interest items, net of interest income, in the aggregate reduced by $102,000.

9from the current membership and targeted market. The benefits of these initiatives, if any, will be recognized and reported upon in future periods.

~~Table~~Administrative and General (“A&G”) expenses increased from approximately $2,277,000 to approximately $2,549,000 for the years ended December 31, 2002 and December 31, 2003, respectively. This 11.9% increase was primarily the result of ~~Contents~~a combination of increased credit card transaction costs of approximately $42,000, increased audit fees of approximately $66,000, increased legal fees of approximately $39,000, increased security costs of approximately $42,000, increased human resource costs of approximately $162,000, reduced direct A&G payroll costs of approximately $40,000 and a reduction of other miscellaneous A&G costs in the approximate amount of $39,000.

~~Income~~Sales ~~Tax~~and ~~Status~~Marketing expenses remained relatively flat between the years ended December 31, 2003 and December 31, 2002. Expenses totaled approximately $2,715,000 and $2,725, 000 the years ended December 31, 2003 and December 31,2002 respectively.

~~Reference~~Repairs isand ~~made~~maintenance toexpenses ~~the~~and ~~Note~~energy 7costs also remained flat year-to-year ~~Consolidated~~with ~~Financial~~a ~~Statements~~slight ~~regarding income~~decrease ~~taxes~~of approximately $1,000 on a combined basis.

~~Liquidity~~The ~~and~~Management ~~Capital~~Fees ~~Resources~~payable to the management companies declined as a direct result of decreased Resort revenue as noted above. Total management fees for the year ended December 31, 2003 were approximately $854,000 as compared to approximately $904,000 for the year ended December 31, 2002.

The Rental ~~Company’s~~Pool ~~working~~distribution ~~capital~~or atthat ~~December 31,~~portion ~~2002, (inclusive~~ of ~~debt~~room ~~in default~~revenue inattributable to the ~~approximate~~condominium ~~amount~~owners ofdecreased ~~$78,975,000~~as ~~under the Golf Trust (“GTA”) Deed and Mortgage Agreement), was~~ a ~~deficit~~direct result of ~~$98,078,000 and~~ the ~~Company’s~~room revenue ~~cash~~reductions ~~flows~~noted ~~from operational sources are currently severe~~above. The ~~Company~~distribution ~~has failed~~for tothe ~~timely~~year ~~pay~~ended ~~its~~December 31, ~~primary~~2003 decreased ~~mortgage~~by ~~obligations~~approximately ~~beginning~~$117,000 ~~with~~from the ~~October~~ ~~2001~~preceding ~~requirements and continuing in all subsequent periods~~year. ~~The~~Total ~~Company~~rental ~~typically~~pool ~~experiences~~distributions ~~seasonal~~were ~~fluctuations~~approximately in$4,358,000 ~~its~~and ~~net working capital~~$4,475,000 ~~position~~for ~~without significantly impairing its ability to pay trade creditors in a timely manner. As a result of~~ the ~~default~~years ~~notice~~ended ~~received from GTA (see Note 6 of the Consolidated Financial Statements)~~December 31, ~~the~~2003 ~~Company’s~~and ~~revolving credit facility with Wells Fargo Credit Corporation was terminated by Wells Fargo on May 23~~2002, ~~2002~~respectively.

~~As of March 2003, the Company is seeking to negotiate a Settlement Agreement~~With ~~with GTA. In connection with~~ the ~~proposed~~implementation ~~Settlement~~of ~~Agreement,~~ the ~~Company would~~expanded ~~transfer~~sales toincentive ~~GTA the resort property~~program, ~~three~~new ~~condominium apartments located~~web ~~at the Innisbrook Resort~~site, ~~the GTA stock~~ and ~~Partnership~~100% ~~Unit~~completion ~~(“PU”) interests held by GHI, and all rights, title and interests~~ of the ~~Company~~rooms ~~under~~refurbishment ~~existing~~program, ~~contracts~~management believes and ~~agreements.~~expects Inthat ~~addition,~~ the ~~Company~~Innisbrook ~~would~~Resort ~~provide a limited~~will ~~indemnity~~improve toits ~~defend~~operational ~~and~~results ~~hold~~in ~~harmless~~future ~~GTA~~periods. ~~(and~~This ~~its~~belief ~~affiliates) from~~ and ~~against~~ ~~any~~expectation ~~and~~is ~~all~~based ~~costs,~~upon ~~liabilities,~~a ~~claims,~~presumption ~~losses,~~that ~~judgments~~the orUnited ~~damages arising~~States ~~out~~economy ~~of or~~ in ~~connection~~general ~~with~~will ~~the~~improve, ~~Class Action~~that ~~Lawsuit,~~there aswill ~~well~~be asno ~~liabilities~~further ~~accruing~~terrorist onactivities ornegatively ~~before~~impacting ~~the~~group ~~closing~~and ~~date~~leisure ~~relating to employee benefits and~~travel ~~liabilities~~within ~~for contracts or agreements not disclosed by~~ the ~~Company~~United toStates ~~GTA. In~~and ~~return, it is anticipated~~ that ~~GTA would deliver to~~ the ~~Company~~sales ~~a duly executed release. No Settlement Agreement has yet been signed~~ and nomarketing ~~terms are~~initiatives ~~definite.~~will ~~Neither~~be ~~GTA~~successful. ~~nor~~There ~~any~~can ofbe ~~its~~no ~~affiliates~~assurances isthat ~~under~~ any ~~obligation to~~future ~~continue~~results ~~negotiating~~will ~~with~~be ~~the~~attained ~~Company~~ or tothat ~~execute~~ the ~~Settlement Agreement~~economy, ~~and~~ ~~could~~terrorists ~~initiate~~acts ~~foreclosure~~or United ~~proceedings~~States ~~and~~intervention ~~pursue~~in ~~its~~foreign ~~other~~countries ~~remedies~~will atnot ~~any~~negate these ~~time~~expected operational improvements.

AsInterest expense aincreased ~~result~~by ofapproximately ~~the~~$15,000 ~~lack~~on ofa ~~additional~~year-to-year comparative ~~cash~~basis ~~sources~~between ~~and~~the ~~GTA~~years ~~settlement~~ended ~~issue described above~~December 31, ~~the~~2003 ~~Company~~and December 31, ~~assesses its liquidity as severe~~ 2002. ~~Failure~~This ~~to reach~~net aincrease ~~settlement~~was ~~with~~primarily ~~GTA will seriously impair~~ the ~~Company’s~~result ~~ability~~of toa ~~continue~~reduction asin ainterest ~~going concern~~income.

~~Contractual Obligations and Contingent Liabilities~~10

~~The~~2002 ~~Company~~Compared ~~has~~to ~~entered into an operating lease with Citi Capital for 290 golf~~2001 ~~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~~For the years ended December 31, 2002 and December 31, 2001, the Company recognized istotal arevenue ~~party~~in tothe aapproximate ~~contract~~amount ~~with~~of ~~Pinellas~~$40,170,000 ~~County~~and $47,719,000, ~~Florida~~respectively, ~~which~~from the rental of condominium units, sales of food ~~requires~~and ~~that~~beverages, ~~Innisbrook~~golf ~~accept~~operations and ~~dispose~~auxiliary services. The net reduction in overall Innisbrook revenue in the approximate amount of up$7,549,000 toor 515.8% 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. ~~gallons~~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 ~~not~~the social/transient markets has remained essentially the same ~~less~~between ~~than~~the 2years ended December 31,~~500~~ 2001 and December 31,~~000~~ ~~gallons~~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, 2001. Both categories showed reductions. On a percentage basis, group and 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 ~~effluent~~not ~~water~~only ~~produced~~the September 11, 2001 terrorist acts, but also reflect the continuing concerns by the ~~County~~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.

10Operating 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 approximately $9,078,000 or 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

~~Table of Contents~~11

~~The~~$289,000; ~~Company~~increases isin arepairs ~~party~~and tomaintenance aexpenses ~~security~~of ~~agreement with Allied Security~~$259,000; ~~which~~decreases ~~provides~~in ~~for~~sales ~~twenty-four~~and ~~hour~~marketing ~~security~~expense of ~~Innisbrook.~~$590,000 ~~The~~; ~~agreement~~a ~~expires~~decrease in ~~2004~~ ~~and~~the ~~will~~gain beon ~~re-negotiated~~the ~~or replaced at that time. The Innisbrook~~sale ~~Condominium~~of ~~Association~~land ~~(the~~of ~~“Association”)~~$1,083,000; ~~while~~reductions ~~not~~in apayroll ~~direct~~and ~~party~~related toexpenses ~~the agreement~~of $1,923,000 ; ~~reimburses~~reduction in the ~~Company~~intangible ~~for~~write ~~50%~~down of ~~these~~$3,000,000 ~~costs.~~and ~~The~~reduction ~~total~~in ~~annual~~all ~~payments~~other ~~under~~operating ~~the~~expenses ~~contract~~in ~~are reflected through~~ the ~~expiration~~aggregate ~~date~~of in$1,976,000 ~~the table below~~.

~~The Company is a party to a General Agreement with the Association~~Interest, ~~wherein certain~~net ~~mutually~~for ~~beneficial activities are defined. It includes provisions concerning how~~ the ~~parties~~year ~~will~~ended ~~administer~~December 31, ~~payroll services~~2002, ~~security~~was ~~of the~~approximately ~~property~~$9,101,000 ~~water~~as ~~and~~compared ~~sewer~~to ~~costs~~$9,263,000 ~~water~~for ~~softener~~the ~~system~~year ~~costs~~ended ~~and maintenance~~December 31, 2001. ~~linen~~This ~~rooms~~$162,000 ~~and~~decrease ~~miscellaneous~~is ~~day~~the toresult ~~day joint operational issues~~ of ~~Innisbrook.~~: ~~The~~a ~~majority~~decrease ofin ~~these~~interest ~~operational items have been negotiated on a~~costs ~~“value~~associated ~~for~~with ~~value”~~the ~~basis~~Accounts ~~wherein~~Receivable nocredit ~~cash~~line ~~payments~~of by$113,000; ~~either~~a ~~party~~decrease ~~are required.~~in ~~The~~expense ~~Association~~of ~~does~~$143,000 ~~reimburse~~related ~~the~~to ~~Company for~~ the ~~Association~~prior Shareholders’s ~~direct payroll and benefit costs~~loan, ~~water~~offset ~~and~~by ~~sewer charges and security services. The Company~~changes ~~funds~~in the ~~full~~interest ~~water~~on ~~and~~capitalized ~~sewer~~leases ~~billing~~ and ~~is reimbursed by~~ the ~~Association~~change ~~for the~~in ~~Association’s~~rate ~~pro-rata~~on ~~share. The Company funds~~ the ~~full security services~~$9,000,000 ~~billing~~portion ~~and is reimbursed for 50%~~ of ~~these~~the ~~costs~~GTA loan. ~~These~~Other ~~cost~~interest ~~reimbursements are~~items, ~~reflected~~net asof ~~credits~~interest income, in the aggregate ~~table~~increased ~~below~~by $88,000.

~~The~~Effective February 3, 1998, the Company’s ~~has~~election ~~entered~~to ~~into~~be atreated ~~contract~~as ~~with~~a Subchapter ~~Time~~S ~~Warner~~corporation tobecame ~~provide~~effective. ~~cable access~~Subsequent ~~for~~to the ~~condominium~~1998 ~~units~~filing period, ofincome ~~the~~tax ~~resort.~~calculations ~~The~~are ~~contract~~no ~~expires~~longer inprovided ~~2005 as~~at ~~reflected~~the ~~below~~Company level.

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

~~Omni Building Services Co., although without a contract,~~ Reference is ~~currently~~made ~~providing the~~to ~~Company~~Note ~~with~~7 ~~facilities~~to ~~cleaning services at Innisbrook. The amounts included in~~ the ~~table~~Consolidated ~~below~~Financial ~~reflect~~Statements ~~the month to month arrangement currently in~~regarding ~~use.~~income ~~No continuation of this arrangement or any replacement agreement has been negotiated or included beyond 2003~~taxes.

~~The~~Liquidity ~~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~~Capital ~~golf courses. This contract expires in July~~Resources ~~of 2003.~~

The Company’s isworking acapital ~~party~~at toDecember 31, a2003, ~~capital~~(inclusive ~~lease~~of ~~agreement~~debt ~~with~~and interest ~~Verizon,~~in ~~which provides~~default ~~for~~in the ~~acquisition~~approximate amount of ~~property~~$102,726,000 ~~wide~~under the ~~replacement~~GTA ofDeed ~~telephone~~and ~~cabling~~Mortgage Agreement), was a deficit ~~and~~of $107,467,000 and the ~~central~~Company’s ~~telephone~~cash ~~switch~~flows from operational sources are currently severe. The Company ~~lease~~has ~~agreement~~failed ~~was~~to ~~entered~~timely ~~into~~pay its primary mortgage obligations beginning ~~subsequent~~with tothe ~~December~~October ~~31,~~2001 ~~2002,~~requirements ~~expires~~and continuing in ~~2008,~~all ~~and~~subsequent ~~has~~periods. The ~~been~~Company ~~included~~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 ~~table~~GTA ~~below~~(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 of March 2004, the Company is seeking to negotiate a ~~party~~Settlement Agreement with GTA. In connection with the proposed Settlement Agreement, the Company would transfer to ~~multiple~~GTA ~~agreements~~the ~~for~~resort ~~miscellaneous~~property, ~~services~~three ~~such~~condominium apartments located asat ~~waste~~the ~~removal~~Innisbrook Resort, ~~uniform~~the ~~cleaning~~GTA stock and ~~replacement~~Partnership Unit (“PU”) interests held by GHI, ~~armored~~and ~~car~~all ~~services~~rights, title and interests of the Company under existing ~~indoor~~contracts ~~plant~~and ~~maintenance~~agreements. In addition, the Company would provide a limited indemnity to defend and ~~pest~~hold ~~control.~~harmless ~~These~~GTA ~~service~~(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 ~~are~~or agreements not disclosed by the Company to GTA. ~~individually~~In ~~immaterial~~return, it is anticipated that GTA would deliver to the Company a duly executed release. No Settlement Agreement has yet been signed and ~~therefore~~no terms are definite. ~~included~~Neither inGTA nor any of its affiliates is under any obligation to continue negotiating with the ~~aggregate~~Company ~~total~~or to execute the Settlement Agreement, ~~identified~~and ascould initiate foreclosure proceedings and pursue its other ~~miscellaneous~~remedies ~~operational~~at ~~items~~any time. inIf the ~~table~~Settlement ~~below~~Agreement is executed, it is expected that there will be no remaining assets in the Company.

1112

		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

As a result of the lack of additional cash sources and GTA settlement issue described above, the Company assesses its liquidity as severe.

~~Item 7A.~~The Company's ~~Quantitative~~management ~~and~~is ~~Qualitative~~not ~~Disclosures~~aware ~~about~~of ~~Market~~any ~~Risk~~environmental matters that are currently present.

The Company's ~~Registrant~~operation ~~does~~of ~~not~~Innisbrook ~~have~~is ~~significant~~not ~~market~~considered ~~risk with respect~~ to ~~foreign~~be dependent ~~currency~~on ~~exchanges~~any individual or ~~other~~small ~~market~~group ~~rates.~~of ~~The~~customers, ~~Registrant’s debt has a fixed contractual interest rate through~~ the ~~year~~loss ~~2027~~of ~~and,~~who ~~accordingly, fluctuations~~would inhave ~~interest~~a ~~rates~~material ~~are~~adverse ~~not expected to affect financial results~~effect.

~~Item 8.~~Contractual ~~Financial~~Obligations ~~Statements~~ and ~~Supplementary~~Contingent ~~Data~~Liabilities

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, 2002 and 2001		F-6
Innisbrook Rental Pool Lease Operation		F-18
Tamarron Rental Pool Lease Operation		F-29

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 the amount of funds the individual owner invested in the 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.

~~Item 9.~~The ~~Changes~~Company inhas ~~and~~entered ~~Disagreements~~into an operating lease with ~~Accountants~~Citi Capital for 290 golf carts utilized on ~~Accounting~~the four golf courses at Innisbrook. The operating lease expires in January 2006, and ~~Financial~~it ~~Disclosure~~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.

~~None~~The Company is a party to contracts with Citi Capital, which provides for the lease of certain golf course equipment. The leases expire in 2005 and 2007, and the annual lease payments are included in the table below.

12The Company is a party to a contract with Pinellas County Florida, which requires that Innisbrook accept and dispose of up to 5,000,000 gallons and not less than 2,500,000 gallons of effluent water produced by the County on a daily basis. 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.

~~Table~~The Company is a party to a security agreement with Allied Security, which provides for twenty-four hour security of ~~Contents~~Innisbrook. The agreement expires in 2006. The Association, while not a direct party to the agreement, reimburses the Company for their pro rata share of these costs. The total annual payments under the contract are reflected through the expiration date in the table below.

~~Part~~The Company ~~III~~is a party to an agreement with the Association, wherein certain mutually beneficial activities are defined. It includes provisions concerning how the parties will pay for shared 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 costs of the Association and Innisbrook. 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 and security services billings and is reimbursed by the Association for the Association’s pro-rata share.

~~Item 10~~The Company has entered into a management contract with the Westin Hotel Company for the Resort’s operation. ~~Directors~~The ~~and~~contract ~~Executive~~expires ~~Officers~~in June 2017. The obligations of the ~~Registrant~~Company under contract include costs based on a percentage of revenue as defined. Included in the table below are costs estimated based upon the 2004 budget through the term of the lease.

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)

The Company has entered into a management contract with Troon Golf LLC for the Resort golf operations. The contract expires in June 2006 with an option to extend for five years. The obligations of the Company under the contract include a management fee based on a percentage of golf revenue, as defined. Included in the table below are cost estimates based upon the 2004 budget through the term of the contract.

~~All~~The Company ~~directors~~has entered into a loan agreement ($78,975,000) with GTA (Note 6) that is in default. The note matures in June 2027. The Company is obligated to pay the base interest, participating interest and ~~officers~~the ~~serve~~Tranche II ainterest ~~one-year~~as ~~term~~defined orby the ~~until~~agreement. ~~their~~The ~~successors~~amounts included in the table below include the ~~are~~current ~~elected~~outstanding principal on the loan, all past due interest, and future interest payments through the term of the loan.

* Resigned effective 06/01/0213

~~Table~~The Company has entered into a contract with Brighthouse, formally known as Time Warner, to provide cable access for the condominium units of ~~Contents~~the resort. The contract expires in 2005 as reflected below.

~~Item 11~~Omni Building Services Co., ~~Executive~~although ~~Compensation~~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-month arrangement currently in use.

~~All~~The ~~items~~Company ~~for~~is ~~Golf~~a ~~Host~~party ~~Resorts,~~to ~~Inc.,~~a ~~except~~contract ~~those~~wherein ~~set~~TruGreen ~~forth~~Landcare ~~below,~~provides landscape ~~have~~services ~~been~~to all of the Innisbrook property excluding the ~~omitted~~Association’s ascommon ~~not~~areas ~~applicable~~and orthe ~~not~~golf ~~required~~courses. This contract expires in July of 2006.

~~Summary~~The ~~Compensation~~Company ~~Table~~is a party to a lease agreement with Verizon, which provides for the property wide replacement of telephone cabling and the central telephone switch. The lease agreement will be initiated in 2004 and expires in 2008 as reflected below.

The Company ~~following~~is ~~table~~a ~~sets~~party ~~forth~~to an agreement with the ~~remuneration~~Westin ~~paid,~~Hotel ~~distributed~~Company wherein orWestin ~~accrued~~has byguaranteed ~~Golf~~certain ~~Host~~minimum ~~Resorts,~~cash ~~Inc~~flows of the Innisbrook resort. ~~and~~Westin ~~its~~has ~~parent,~~made ~~Golf~~advances ~~Hosts,~~under ~~Inc.~~the agreement in an aggregate amount of $10,265,000. ~~during~~The ~~the~~agreement ~~three~~provides ~~years~~for inthe Company to repay the ~~period~~advance ~~ended~~when ~~December~~“Available 31Cash”, ~~2002~~as defined, topermits. ~~the~~The Company’s ~~executive~~cannot ~~officers~~predict with any certainty when the repayments will be made and consequently, this item has not been included in the table below.

								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	$	—	$	—

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

(1) Total of annual salary and bonus was not greater than $100,000 for the years where dollar amounts are not presented.


		In Thousands
		For the Years Ending December 31,
Agreement	Purpose	2004			2005			2006			2007			2008			Thereafter
Innisbrook Rental Pool Master Lease Agreement	Refurbishment reimbursement		$	348		$	1,027		$	1,331		$	1,618		$	1,888		$	2,140
Citi Capital	Golf cart operating lease			188			172			—			—			—		—
Westin Hotel Company	Management agreement			1,633			1,633			1,633			1,633			1,633		13,888
Troon Golf LLC	Golf management agreement			331			331			166			—			—		—
Golf Trust of America	Loan agreement			111,187			9,121			9,121			9,121			9,121		168,536
Allied Security Agreement	Security services			728			728			364			—			—		—
Brighthouse	Cable provider			63			37			—			—			—		—
Omni Building Service Co.	Building cleaning service			252			—			—			—			—		—
TruGreen LandCare	Landscape maintenance			473			473			276			—			—		—
Verizon	Switch and high speed internet			262			262			262			262			131			—
Other miscellaneous operational agreements	Various			400			276			209			103			42			42

			$	115,865		$	14,060		$	13,361		$	12,736		$	12,815		$	184,606

Item 12 7A. ~~Security~~Quantitative ~~Ownership~~and ofQualitative ~~Certain~~Disclosures ~~Beneficial~~about ~~Owners~~Market ~~and Management~~ 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) ~~Security~~fixed contractual ~~ownership~~interest ofrate ~~certain~~through ~~beneficial~~the ~~owners:~~year 2027 and, accordingly, fluctuations in interest rates are not expected to affect financial results.

	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	%

Item 8. Financial Statements and Supplementary Data

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


	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, 2003 and 2002		F-6
Innisbrook Rental Pool Lease Operation		F-18
Tamarron Rental Pool Lease Operation		F-29

~~Item 13.~~Financial statement ~~Certain~~schedules ~~Relationships~~have ~~and~~been ~~Related~~omitted ~~Transactions~~because they are not applicable or the required information is shown in the financial statements or notes thereto.

(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.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

15None.

~~Table~~Item of9A. ~~Contents~~Controls and Procedures

Within the 90 days prior to the date of this report, the Registrant’s management, including the President (bChief Executive Officer), ~~Certain~~the ~~Business~~Principal Financial ~~Relationships~~Officer ~~None~~and the Registrant’s agent (cWestin North American Management Company), ~~Indebtedness~~carried out an evaluation of ~~Management~~the ~~None~~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 (dChief Executive Officer) ~~Transactions~~and ~~with~~the ~~Promoters~~Principal ~~Not~~Financial Officer ~~applicable~~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.

~~Item 14.~~There ~~Controls~~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 ~~Procedures~~the Principal Financial Officer carried out this evaluation.

~~Within~~Part ~~the 90 days prior to the date of this report, the Registrant’s~~III ~~management, including the President (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 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.

~~There~~Item ~~have~~10. ~~been~~Directors noand ~~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~~Officers ~~and~~of the ~~Principal Financial Officer carried out this evaluation.~~ Registrant

Part IV


Name / Position	Age		Five-Year Principal Occupation
Merrick R. Kleeman President, Secretary and Director (Chief Executive Officer)		40	Managing Director, Starwood Capital Group

Jerome C. Silvey Senior Vice President		46	Chief Financial Officer, Starwood Capital Group

R. Keith Wilt		51	Vice President and Treasurer, Golf Host

~~Item~~ 15~~. Exhibits, Financial Statement Schedules, and Reports on Form 8-K~~

Golf Host Resorts, Inc. and Subsidiary (included in Item 10) Innisbrook Rental Pool Lease Operation Financial Statements together with 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)

	2.	Financial Statement Schedules of Golf Host Resorts, Inc.
		None
(b)		Reports on Form 8-K: None.
(c)		Exhibits

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

	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.

Item 11. Executive Compensation

All ~~other~~items ~~schedules~~for ~~are~~Golf ~~omitted~~Host ~~because~~Resorts, ~~they~~Inc., ~~are~~except ~~not~~those ~~applicable~~set ~~or the~~forth ~~required~~below, ~~information~~have isbeen omitted ~~shown~~as innot ~~the~~applicable ~~financial statements~~ or ~~notes thereto~~not required.

~~The~~Summary ~~Registrant~~Compensation ~~does not believe its accounting principles are subject to~~Table ~~significant estimates which would materially impair its financial results.~~

17 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, 2003, to the Company’s executive officers.


							Other
Name and Principal Position	Fiscal		Salary and				Annual		All Other
Golf Host Resorts, Inc.	Year		Commission		Bonus		Compensation		Compensation
Merrick R. Kleeman (1)		2003	$	—	$	—	$	—	$	—
President (Chief Executive Officer)		2002	$	—	$	—	$	—	$	—
		2001	$	—	$	—	$	—	$	—
Jerome C. Silvey (1)		2003	$	—	$	—	$	—	$	—
Senior Vice President		2002	$	—	$	—	$	—	$	—
		2001	$	—	$	—	$	—	$	—
Robert Geimer (1)		2003	$	—	$	—	$	—	$	—
Vice President and Secretary		2002	$	—	$	—	$	—	$	—
		2001	$	—	$	—	$	—	$	—
R. Keith Wilt (1)		2003	$	95,000	$	10,000	$	—	$	—
Vice President and Treasurer (Principal Financial Officer)		2002	$	95,000	$	10,000	$	—	$	—
		2001	$	95,000	$	25,000	$	—	$	—

~~SIGNATURES~~ (1) Total of annual salary and bonus was not greater than $100,000 for the years where dollar amounts are not presented.

~~Pursuant to the Requirements of Section 13 or 15(d) of the Securities~~17 ~~Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, therefore duly authorized.~~

		GOLF HOST RESORTS, INC.
Date: March 31, 2003		By: /s/ Merrick Kleeman Merrick Kleeman President (Chief Executive Officer)
Date: March 31, 2003		By: /s/ R. Keith Wilt R. Keith Wilt Vice President & Treasurer (Principal Financial Officer)

18 Item 12. Security Ownership of Certain Beneficial Owners and Management

~~Table~~(a) Security ownership of ~~Contents~~certain beneficial owners:

I, Merrick Kleeman, certify that:


	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	%

~~1. I~~(b) ~~have~~Security ~~reviewed~~ownership ~~this~~of ~~annual~~management ~~report~~of onthe ~~Form 10-K~~Company ofin Golf ~~Host Resorts~~Hosts, Inc.; (GHI): None (c) Changes in control: None

~~3. Based~~(a) Transactions onwith myManagement ~~knowledge, the financial statements,~~ and ~~other~~Others ~~financial information included in this annual report, fairly present in all~~ ~~material respects the financial condition, results of operations and cash~~ ~~flows of the Registrant as of, and for, the periods presented in this annual~~ ~~report;~~

~~4. The~~GHI ~~Registrant’s~~charges administrative and other ~~certifying~~expenses ~~officer~~to the Company on the basis of estimated time and Iexpenses ~~are~~incurred ~~responsible~~as reasonably determined by GHI. As part of the terms of the management agreement for ~~establishing~~ 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 $11,399,000 and ~~maintaining~~$12,015,000 ~~disclosure~~for ~~controls~~the year ended December 31, 2003 and ~~procedures~~December (31, 2002, respectively. The December 31, 2003 balance consists of two components: approximately $1,134,000 represents unpaid management fees and reimbursable expenses as defined in ~~Exchange~~the ~~Act~~Management ~~Rules 13a-14~~Agreement, and ~~15d-14~~approximately $10,265,000 represents the accumulation of 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 ~~Registrant~~lease agreement. Effective November 19, 2001, Tamarron was sold to an unrelated entity, and wethe ~~have:~~ Company has no remaining responsibility under the lease or rental pool agreements.

(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;18

(ab) ~~all~~Certain ~~significant~~Business ~~deficiencies~~Relationships inNone ~~the~~(c) ~~design~~Indebtedness ~~or operation~~ of ~~internal~~Management ~~controls~~None 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 (bd) ~~any~~Transactions ~~fraud,~~with ~~whether~~Promoters orNot ~~not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and~~applicable

6Item 14. ~~The~~ ~~Registrant’s~~Principal ~~other~~Accounting ~~certifying~~Fees ~~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. Services

~~Date:~~PricewaterhouseCoopers LLP ~~March~~served as the Company’s independent auditors for the fiscal year ended December 31, 2003.

/The following fees were paid to PricewaterhouseCoopers LLP for services rendered during the Company’s~~/ Merrick~~ ~~Kleeman~~last two fiscal years.

~~Merrick~~Audit ~~Kleeman President (Chief~~Fees: ~~Executive~~$270,000 ~~Officer)~~ and $230,000 for the fiscal years ended December 31, 2003 and 2002, respectively for professional services rendered for the audit of the Company’s annual financial statements, review of the financials statements included in its Form 10-Q and services that are normally provided by the auditors in connection with statutory filings or engagements for those fiscal years.

19Audit Related Fees: None

~~Table~~Tax Fees: ~~of Contents~~None

~~I, R. Keith Wilt, certify that~~All Other Fees: None

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

2Item 15. ~~Based~~ ~~on my knowledge~~Exhibits, ~~this~~Financial ~~annual~~Statement ~~report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made~~Schedules, inand ~~light~~Reports ofon ~~the~~Form ~~circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;~~ 8-K

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 and cash flows of the Registrant as of, and for, the periods presented in this annual report;

(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)

42. ~~The~~ ~~Registrant’s~~Financial ~~other~~Statement ~~certifying~~Schedules ~~officer~~of ~~and~~Golf IHost ~~are~~Resorts, ~~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:~~ Inc.

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):

(b)		Reports on Form 8-K: None.

(c)		Exhibits

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and19

Date: March 31, 2003


14		Code of Ethics

31.1		Chief Executive Officer Certification required under Section 302 of Sarbanes-Oxley Act of 2002.

31.2		Principal Financial Officer Certification required under Section 302 of Sarbanes-Oxley Act of 2002.

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

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

~~/s/~~All R.other ~~Keith~~schedules ~~Wilt~~are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

R.The ~~Keith~~Registrant ~~Wilt Vice~~does ~~President~~not ~~and~~believe ~~Treasurer~~its accounting principles are subject to ~~(Principal~~significant ~~Financial~~estimates, ~~Officer)~~which would materially impair its financial results.

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

IPursuant to the Requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ~~Merrick~~the ~~Kleeman~~Registrant has duly caused this report to be signed on its behalf by the undersigned, therefore duly authorized.

President of the Company, certify, that:


	GOLF HOST RESORTS, INC.

Date: April 23, 2004	By:	/s/	Merrick Kleeman

			Merrick Kleeman
			President
			(Chief Executive Officer)

Date: April 23, 2004	By:	/s/	R. Keith Wilt

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

1) the Report fully 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.21

21Golf Host Resorts, Inc. and Subsidiary Financial Statements December 31, 2003 and 2002

~~Principal~~Report ~~Financial~~of ~~Officer~~Independent ~~Certification~~Certified ~~required~~Public ~~under Section 906 of~~Accountants ~~Sarbanes-Oxley Act of 2002~~

I,To R.the ~~Keith~~Shareholder ~~Wilt~~and Board of Directors of Golf Host Resorts, Inc.

~~Vice~~In ~~President~~our opinion, the accompanying consolidated balance sheets and ~~Treasurer~~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, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 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, ~~certify~~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.

	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.

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.

/s/ R.PricewaterhouseCoopers, ~~Keith~~LLP Tampa, ~~Wilt Name: R. Keith Wilt Title: Vice President and Treasurer (Chief Financial Officer) Date:~~ Florida March 31 30, ~~2003~~2004

22F-1

~~Report~~Golf ofHost ~~Independent~~Resorts, ~~Certified~~Inc. ~~Public~~and ~~Accountants~~Subsidiary

ToConsolidated ~~the~~Balance ~~Shareholder and Board of Directors of Golf Host Resorts, Inc.~~Sheets

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 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.


	December 31,
	2003			2002
Assets
Current assets:
Cash	$	—		$	—
Restricted cash		2,489,761			2,520,849
Accounts receivable, net		1,578,294			2,069,962
Other receivables		120,966			61,554
Inventories and supplies		1,348,526			1,157,792
Prepaid expenses and other assets		350,161			514,493

		5,887,708			6,324,650

Intangibles, net		11,602,195			12,463,987
Property and equipment, net		37,164,124			38,025,063
Other assets		6,279,340			5,701,950

Total assets	$	60,933,367		$	62,515,650

Liabilities and Shareholder’s Deficit
Current liabilities:
Cash overdrafts	$	—		$	69,846
Debt due within one year		78,975,000			79,003,552
Accounts payable		4,501,132			4,973,036
Accrued payroll costs		885,531			893,224
Accrued interest		23,751,133			14,538,319
Other payables and accrued expenses		2,541,365			2,721,823
Deposits and deferred revenue		1,867,326			2,003,938
Due to related parties		832,774			198,802

		113,354,261			104,402,540
Other long-term liabilities		10,265,009			10,265,009
Long-term refurbishment		6,960,748			5,548,514
Deferred income taxes		1,255,000			1,255,000

Total liabilities		131,835,018			121,471,063

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	)
Shareholders receivable		(223,709	)		—
Accumulated deficit		(66,772,619	)		(55,050,090	)

Total shareholder’s deficit		(70,901,651	)		(58,955,413	)

Total liabilities and shareholder’s deficit	$	60,933,367		$	62,515,650

The accompanying ~~consolidated~~notes ~~financial~~are ~~statements~~an ~~have~~integral ~~been~~part ~~prepared assuming that the Company will continue as a going concern. As discussed in Note 1~~ of ~~the~~these ~~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.~~

~~/s/ PricewaterhouseCoopers, LLP Tampa,~~F-2 ~~Florida March 28,~~ ~~2003~~

~~Table~~Golf ofHost ~~Contents~~Resorts, Inc. and Subsidiary

~~Golf~~Consolidated ~~Host~~Statements ~~Resorts,~~of ~~Inc. and Subsidiary~~Operations

Consolidated Balance Sheets


	Year ended December 31,
	2003			2002			2001
Revenues:
Resort facilities	$	11,785,522		$	12,156,198		$	16,286,752
Food and beverage		11,213,597			11,335,921			12,965,848
Golf		10,873,605			11,528,611			13,320,099
Other		5,061,906			5,575,210			5,146,238

		38,934,630			40,595,940			47,718,937

Costs and operating expenses:
Resort facilities		10,168,879			9,659,301			11,810,655
Food and beverage		8,036,799			7,974,357			9,034,212
Golf		7,157,362			6,186,797			6,570,304
Other		8,284,514			8,527,711			9,342,146
General and administrative		4,640,210			4,728,215			5,226,262
Depreciation and amortization		2,997,546			3,597,040			3,886,360
Provision for intangible impairment		—			—			3,000,000

		41,285,310			40,673,421			48,869,939

Loss before loss on assets held for sale and leased asset		(2,350,680	)		(77,481	)		(1,151,002	)
Loss on assets held for sale and leased asset		—			—			455,729

Operating loss		(2,350,680	)		(77,481	)		(1,606,731	)
Interest expense, net		9,115,537			9,100,748			9,263,315

Loss before income tax benefit		(11,466,217	)		(9,178,229	)		(10,870,046	)
Income tax benefit		—			—			515,467

Net loss		(11,466,217	)		(9,178,229	)		(10,354,579	)
Dividend requirements on preferred stock		256,312			256,312			256,312

Net loss attributable to common shareholder	$	(11,722,529	)	$	(9,434,541	)	$	(10,610,891	)

			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

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

~~The accompanying notes are an integral part of these consolidated financial statements.~~F-3

~~Table~~Golf ofHost ~~Contents~~Resorts, Inc. and Subsidiary

~~Golf~~Consolidated ~~Host~~Statements ~~Resorts,~~of ~~Inc.~~Changes ~~and~~in ~~Subsidiary~~Shareholder’s Deficit

Consolidated Statements of Operations


	$1 Par Value				5.6% Cumulative													Total
	Common Stock				Preferred Stock				Paid-in			Shareholder's			Accumulated			Shareholder's
	Shares		Amount		Shares		Amount		Capital			Receivable			Deficit			Deficit
Balance, December 31, 2001		5,000	$	5,000		4,577,000	$	4,577,000	$	(8,487,323	)	$	—		$	(45,615,549	)	$	(49,520,872	)
Shareholder’s receivable		—		—		—		—		—			—			—			—
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	)
Shareholder’s receivable		—		—		—		—		—			(223,709	)		—			(223,709	)
Net loss available to common shareholder		—		—		—		—		—			—			(11,722,529	)		(11,722,529	)

Balance, December 31, 2003		5,000	$	5,000		4,577,000	$	4,577,000	$	(8,487,323	)	$	(223,709	)	$	(66,772,619	)	$	(70,901,651	)

		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	)

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

~~The accompanying notes are an integral part of these consolidated financial statements.~~F-4

~~Table~~Golf ofHost ~~Contents~~Resorts, Inc. and Subsidiary

~~Golf~~Consolidated ~~Host~~Statements ~~Resorts,~~of ~~Inc.~~Cash ~~and Subsidiary~~Flows

Consolidated Statements of Changes in Shareholder’s Deficit


	Year ended December 31,
	2003			2002			2001
Cash flows from operating activities:
Net loss	$	(11,466,217	)	$	(9,178,229	)	$	(10,354,579	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Provision for bad debts		30,000			37,057			126,442
Depreciation and amortization		2,997,546			3,597,040			3,886,360
Provision for intangible impairment		—			—			3,000,000
Gain on disposition of capital lease		(28,552	)		(294,821	)		—
Amortization of refurbishment costs		860,111			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		31,088			(1,107,523	)		(194,037	)
Accounts receivable and other receivables		402,256			(74,811	)		3,189,054
Inventories and supplies		(190,734	)		(87,512	)		536,655
Prepaid expenses and other assets		164,332			99,469			(416,563	)
Increases (decreases) in:
Cash overdraft		(69,846	)		69,846			—
Accounts payable		(471,904	)		(1,113,573	)		(851,882	)
Accrued payroll costs		(7,693	)		120,928			(57,776	)
Accrued interest		9,212,814			9,084,962			4,636,310
Other payables and accrued expenses		(180,458	)		(53,203	)		(301,828	)
Deposits and deferred revenue		(136,612	)		(691,335	)		(766,510	)
Due to related parties		377,661			(105,938	)		1,289,103

Cash provided by operating activities		1,523,792			283,684			2,040,371

Cash flows from investing activities:
Increases in other assets		(25,268	)		(51,236	)		(25,427	)
Purchases of property and equipment		(1,225,273	)		(714,668	)		(1,526,163	)
(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		(1,250,541	)		(765,904	)		2,329,421

Cash flows from financing activities:
Repayment of existing debt		(49,542	)		(183,182	)		(3,487,386	)
Advances to GHI		(223,709	)		—			—
Repayments on line of credit		—			—			(667,141	)
Distribution to shareholder		—			—			(3,928,335	)
Contribution from shareholder		—			—			2,667,921
Increases in other long-term liabilities		—			—			1,145,151

Cash (used in) provided by financing activities		(273,251	)		(183,182	)		(4,269,790	)

Net (decrease) increase in cash		—			(665,402	)		100,002
Cash, beginning of period		—			665,402			565,400

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

Noncash financing and investing activities:
Accrual of the preferred stock dividend	$	256,312		$	256,312		$	256,312
Capital lease obligation		49,542			—			—
Forgiveness of operating deficits		—			—			5,069,677
Transfer of fixed assets to asset held for sale		—			—			281,100
Refurbishment program		1,412,233			5,548,514			—
Other information:
Interest paid in cash	$	—		$	129,151		$	7,781,358

	$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	)

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

~~The accompanying notes are an integral part of these consolidated financial statements.~~F-5

~~Table~~Golf ofHost ~~Contents~~Resorts, Inc. and Subsidiary

~~Golf~~Notes ~~Host~~to ~~Resorts~~Consolidated Financial Statements December 31, ~~Inc.~~2003 and ~~Subsidiary~~2002

~~Consolidated~~1. ~~Statements~~Organization, ofBusiness ~~Cash~~and ~~Flows~~Liquidity

				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

Golf Host Resorts, Inc. (the “Company”) is a wholly owned subsidiary of Golf Host, Inc. (“GHI”) and owns The Westin Innisbrook Golf Resort (“Innisbrook”) in Tarpon Springs, Florida and, through November 18, 2001, owned and 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. acquired the Company (the “Acquisition”). The ~~accompanying~~purchase ~~notes~~price ~~are~~was anapproximately ~~integral~~$66,333,000, ~~part~~including assumption of ~~these~~certain ~~consolidated~~liabilities. For financial ~~statements~~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.

~~F-5~~During 2000, the Company distributed 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).

~~Table~~During 2000, the previous owners were released from all continuing claims under the Acquisition and the previous owners amended and restated their mortgage note from $4,418,000 to $3,168,000. The write-down under the terms of ~~Contents~~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 ~~Resorts~~Condominium, Inc. (“GHC”), a wholly owned subsidiary of the Company, was formed on December 1, 1997. GHC’s assets consist of three Innisbrook condominiums and ~~Subsidiary~~a linen room within condominium lodge number 28. These condominiums serve as collateral for the GTA debt noted in Note 6 of the financial statements.

~~Notes~~The toaccompanying ~~Consolidated~~financial ~~Financial~~statements ~~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~~2003 of approximately $107,467,000 and ~~2001~~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

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

F-6

~~Table~~Golf ofHost ~~Contents~~Resorts, Inc. and Subsidiary

~~Golf~~Notes ~~Host~~to ~~Resorts~~Consolidated Financial Statements December 31, ~~Inc.~~2003 and ~~Subsidiary~~2002

~~Notes~~beginning towith ~~Consolidated~~October 2001, ~~Financial~~has ~~Statements~~defaulted under the terms of its debt ~~December 31~~agreement, ~~2002~~ and ~~2001~~GHI is a defendant to a class action lawsuit the basis of which relates to alleged actions by the Company (Note 9).

		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.

Management is seeking to negotiate a settlement agreement with its lender (Note 6). In addition, management has developed and implemented sales and marketing plans in an attempt 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 are temporarily funded by Westin (Note 10).

~~F-7~~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.

~~Table~~2. ofAccounting ~~Contents~~Policies

~~Golf~~Principles ~~Host~~of ~~Resorts, Inc. and Subsidiary~~Consolidation

~~Notes~~The toconsolidated ~~Consolidated~~financial ~~Financial~~statements ~~Statements~~include the accounts of Golf Host ~~December 31~~Resorts, ~~2002~~Inc. and ~~2001~~Golf Host Condominium, Inc. All significant intercompany balances and transactions are eliminated in consolidation.

~~Inventories~~Use ~~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:~~

	Estimated useful
	life in years
Land improvements	28 to 30
Buildings		40
Recreational facilities		30
Machinery and equipment	10 to 15

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.

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)Cash, ~~the~~Cash ~~Company~~Equivalents 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~~Restricted ~~is measured by a~~Cash

FThe Company considers all short-8term highly liquid investments with a purchased maturity of three months or less to be cash equivalents.

~~Table~~At December 31, 2003 and 2002, the balance in restricted cash of approximately ~~Contents~~$2,490,000 and $2,521,000, respectively, primarily represents cash restricted for capital improvements pursuant to the Company’s loan agreement with Golf Trust of America (“GTA”). Of this amount, approximately $1,304,000 and $2,274,000 at December 31, 2003 and 2002, respectively, was set aside in a capital replacement fund. The Company is using the remaining restricted cash to fund operations. The Company is required to maintain, as defined under the Westin Management Agreement (Note 10), a capital replacement fund for future capital improvements.

~~Golf~~Accounts ~~Host Resorts, Inc. and Subsidiary~~Receivable

~~Notes~~Accounts toreceivable ~~Consolidated~~represents ~~Financial~~amounts ~~Statements~~due from Resort guests and is net of allowances of approximately $30,000 and $160,000 for doubtful accounts at December 31, ~~2002~~2003 and ~~2001~~2002, respectively.

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 longF-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.

~~Table~~Golf ofHost ~~Contents~~Resorts, Inc. and Subsidiary

~~Golf~~Notes ~~Host~~to ~~Resorts~~Consolidated Financial Statements December 31, ~~Inc.~~2003 and ~~Subsidiary~~2002

~~Notes~~Inventories ~~to Consolidated Financial Statements December 31, 2002~~ and ~~2001~~Supplies

3.The ~~Property~~Company records inventories and ~~Equipment~~supplies ~~Property~~at ~~and~~the ~~equipment~~lower ~~consists~~ of ~~the~~cost, ~~following:~~on a first-in, first-out basis, or market.

	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

Assets Held for Sale

		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

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.

~~F-10~~Property and Equipment

~~Table~~Property and equipment are stated at cost, less accumulated depreciation and amortization. Costs of ~~Contents~~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.

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

Notes to Consolidated Financial Statements December 31, 2002 and 2001


		Estimated useful
		life in years
Land improvements		28 to 30
Buildings		40
Recreational facilities		30
Machinery and equipment		10 to 15

		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:

Other Assets

	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

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 reimburse 50% of the costs incurred by individual condominium owners for the completion of the refurbishment program. The Company is amortizing the refurbishment program costs on a straight-line basis through 2009, the term of the revised MLA.

6.Long-Lived ~~Line of Credit and Notes Payable~~Assets

			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

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 to be held and used for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of

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-8

~~Table~~Golf ofHost ~~Contents~~Resorts, Inc. and Subsidiary

~~Golf~~Notes ~~Host~~to ~~Resorts~~Consolidated Financial Statements December 31, ~~Inc.~~2003 and ~~Subsidiary~~2002

~~Notes~~an asset may not be recoverable. Recoverability of assets to ~~Consolidated~~be ~~Financial~~held ~~Statements~~and used is measured by a ~~December 31~~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, ~~2002~~the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed fair value. The Company has performed an evaluation of the long-term resort assets and ~~2001~~related intangibles. Based upon that analysis, gross cash flows exceed the carrying value of property and equipment and the related intangibles. However, the fair value is significantly less than the carrying value of collateralized debt and past due interest.

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 Parent Company’s ~~Acquisition~~Allocations 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 theAdvances

~~F-12~~The Company reimburses GHI for administrative and other expenses based on estimated time and expenses incurred. Amounts charged were approximately $384,000, $384,000 and $293,000, for the years ended December 31, 2003, 2002 and 2001, respectively. The Company also receives cash advances from GHI to fund cash flow shortages. At December 31, 2003 and 2002, $1,212,000 and $793,000, respectively, were payable to GHI for cash advances and other expenses.

~~Table of Contents~~Shareholder’s Receivable

~~Golf~~At December 31, ~~Host Resorts~~2003, ~~Inc~~shareholder’s receivable represents expenses funded by the Company on behalf of GHI for the Class Action Lawsuit (Note 9). There are no formal terms for repayment and ~~Subsidiary~~the obligation is non-interest bearing.

~~Notes to Consolidated Financial Statements~~Preferred ~~December 31, 2002 and 2001~~Stock

		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.

At December 31, 2003 and 2002, the Company had 4,577,000 shares of $1 par value, 5.6% cumulative preferred stock. The annual dividend requirement on the preferred stock of approximately $256,000 has been recorded as a charge against accumulated deficit as the Company has no paid-in capital. At December 31, 2003 and 2002, cumulative dividends in arrears of approximately $1,573,000 (or approximately $0.34 per share) and $1,317,000 (or approximately $0.29 per share), respectively, are included in due to related parties in the accompanying balance sheets.

~~F-13~~Revenue

~~Table~~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 ~~Contents~~approximately $4,656,000, $4,475,000 and $6,322,000 for the years ended December 31, 2003 2002 and 2001, respectively, to the rental pool participants.

~~Golf Host Resorts~~Interest Expense, ~~Inc. and Subsidiary~~Net

~~Notes~~The Company’s cash management policy is to ~~Consolidated~~utilize ~~Financial~~cash ~~Statements~~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 $11,900, $43,000 and $35,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

			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	)

Employee Benefit Plans

8.GHI ~~Tamarron’s~~maintains ~~Results~~a ofdefined ~~Operations~~contribution ~~The~~Employee ~~Company~~Thrift ~~assumed~~and ~~responsibility~~Investment ~~for~~Plan ~~the Net Income~~ (~~Loss~~the “Plan”), aswhich ~~defined,~~provides ofretirement ~~Tamarron~~benefits ~~under~~for ~~the~~all ~~terms~~eligible ofemployees ~~the~~who have ~~lease~~elected ~~agreement~~to ~~between~~participate. ~~the~~Employees ~~Company~~must ~~and~~fulfill ~~Golf~~a ~~Host~~90-day ~~II,~~service requirement ~~Inc~~to be eligible., ~~for~~The ~~the~~Company ~~period~~currently matches one half of ~~lease~~the first ~~inception~~6% ~~through~~of ~~November~~an ~~18,~~employee’s ~~2001~~contribution. ~~The~~Company ~~net~~contributions ~~loss~~approximated $167,000, is$173,000 ~~included~~and in$209,000, ~~loss~~for onthe ~~assets~~years ~~held~~ended ~~for~~December 31, ~~sale~~2003, 2002 and ~~leased~~2001, ~~asset~~respectively, inand ~~the~~are ~~statement~~fully ~~of operations:~~funded.

		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	)

Recent Accounting Pronouncements

OnIn November 19 2002, ~~2001,~~the GHFinancial ~~II,~~Accounting anStandards ~~affiliated~~Board ~~company~~(the “FASB”) issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and ~~lessor~~Disclosure ofRequirements ~~Tamarron~~for Guarantees, ~~sold~~Including ~~Tamarron~~Indirect toGuarantees anof ~~unrelated~~Indebtedness ~~entity~~of Others.” AFIN ~~portion~~No. 45 ofelaborates on the ~~proceeds~~disclosures ~~were~~to ~~used~~be made toby ~~settle~~a ~~the~~guarantor ~~remaining~~in ~~balance~~its ~~due~~annual financial statements about its obligations under ~~the~~certain ~~$5,000,000~~guarantees ~~mortgage~~that ~~note~~it ~~from~~has ~~the~~issued. ~~previous~~FIN No. 45 ~~owners~~requires ~~(Note~~a 6)guarantor to recognize, ~~which~~at ~~has~~the ~~been~~inception ~~accounted~~of a guarantee, a liability for asthe afair ~~capital~~value ~~contribution~~of tothe obligations undertaken in issuing the ~~Company~~guarantee. InThe ~~conjunction~~disclosure ~~with~~provisions ~~the~~of ~~sale~~FIN No. 45 were effective for financial statements for periods ending after December 15, 2002. Additionally, the ~~accumulation~~recognition of a ~~operating~~guarantor’s ~~deficits~~obligation ~~not~~was ~~funded~~to bybe ~~the~~applied ~~Company~~on ~~was~~a ~~forgiven~~prospective basis byto GHguarantees IIissued after December 31, 2002. The ~~unfunded~~adoption of ~~accumulated~~the ~~operating~~disclosure ~~deficits~~and ~~totaled~~recognition ~~$5,070,000~~provisions ~~and~~of ~~were~~FIN ~~recorded~~No. 45 ashad no aneffect ~~adjustment~~on tothe ~~paid-in-capital~~Company’s consolidated financial statements.

FIn January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities.” In December 2003, the FASB issued FIN No. 46 (Revised) (“FIN 46-14R”) to address certain FIN No. 46 implementation issues and clarify the application of Accounting Research Bulletin (“ARB”) No. 51, “Consolidated Financial Statements for companies that have interests in entities that are Variable Interest Entities (“VIE”),” as defined under FIN No. 46. According to this interpretation, if a company has an interest in a VIE and is at risk for a majority of the VIE’s expected losses or receives a majority of the VIE’s expected gains it shall consolidate the VIE. This interpretation is effective no later than the end of the reporting period ending after March 15, 2004. The adoption of the provisions of this interpretation is not expected to have an effect on the Company’s consolidated financial statements.

~~Table~~In April 2003, the FASB issued FAS No. 149, “Amendments of Statement 133 ~~Contents~~on Derivative Instruments and Hedging Activities.” FAS No. 149 amends and clarifies accounting for derivative instruments embedded in other contracts and for hedging activities under FAS No. 133. FAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of the provisions of FAS No. 149 had no effect on the Company’s consolidated financial statements.

~~Golf Host Resorts, Inc. and Subsidiary~~F-9

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

Golf Host Resorts, Inc. and Subsidiary

~~F-15~~Notes to Consolidated Financial Statements December 31, 2003 and 2002

~~Table~~In May 2003, the FASB issued FAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of ~~Contents~~Both Liabilities and Equity.” FAS No. 150 clarifies the accounting for certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in statements of financial position. Previously, many of those financial instruments were classified as equity. FAS No. 150 was effective for financial instruments entered into or modified after May 31, 2003, and otherwise was effective at the beginning of the first reporting period beginning after June 15, 2003. The adoption of the provisions of FAS No. 150 did not have a material effect on the Company’s consolidated financial statements.

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

~~Notes~~Certain toprior ~~Consolidated~~year ~~Financial~~balances ~~Statements December 31,~~have ~~2002~~been ~~and~~reclassified ~~2001~~to conform to the current year presentation.

		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

3. Property and Equipment

~~F-16~~Property and equipment consists of the following:


	December 31,
	2003			2002
Land and land improvements	$	6,513,584		$	6,432,158
Buildings		12,397,352			12,299,872
Golf courses and recreational facilities		18,606,014			18,635,580
Machinery and equipment		12,100,569			11,480,190
Construction in progress		110,211			240,945

		49,727,730			49,088,745
Less accumulated depreciation		(12,563,606	)		(11,063,682	)

	$	37,164,124		$	38,025,063

~~Golf~~Construction ~~Host~~in ~~Resorts,~~progress ~~Inc~~(“CIP”) consists of costs incurred while constructing Resort amenities. The construction projects that were underway during the year ended December 31, 2003 were short term in nature and ~~Subsidiary~~did not qualify for the capitalization of interest. During the year ended December 31, 2002, approximately $29,000 of interest was capitalized to CIP.

~~Notes~~Depreciation expense toof ~~Consolidated~~approximately ~~Financial~~$2,136,000, ~~Statements~~$2,737,000 and $2,833,000 was recorded for the years ended December 31, 2003, 2002 and 2001, respectively.

~~defined,~~The isCompany leases ~~less~~equipment ~~than~~under ~~the Minimum Annual Payment, as defined, for the~~ operating ~~year,~~leases. ~~then~~Lease ~~Westin~~expense ~~will~~amounted ~~fund a non-interest bearing advance~~ to ~~Innisbrook for the shortage up to~~ $2399,~~500~~200,~~000,~~ ~~with the advance being repayable when the Company has Available Cash, as defined. As of December 31, 2002 and 2001,~~ $10344,~~265~~400,~~000~~ and $9341,~~015,000~~500 ~~had~~for ~~been advanced to~~ the ~~Company~~years ~~and are included in other long-term liabilities. Amounts payable to Westin of $1,750,000 and $4,880,000 at~~ ended December 31, 2003, 2002 and 2001, respectively,. ~~include~~Future ~~management~~minimum lease ~~fees~~payments ~~and~~under ~~certain~~operating ~~cost~~leases ~~reimbursements and are included~~ in ~~other~~excess ~~payables~~of ~~and~~one ~~accrued~~year ~~expenses~~are ~~at December 31, 2002 and 2001, respectively.~~as follows:

F-17


2004	$	421,400
2005		543,700
2006		319,800
2007		291,200
2008		244,500
Thereafter		122,200

	$	1,942,800

~~Table~~4. ofIntangible ~~Contents~~Assets

~~Report~~Resulting from the Acquisition, a Resort intangible of ~~Independent~~approximately $30,400,000, ~~Certified~~relating ~~Public~~to ~~Accountants~~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 $861,000, $860,000 and $1,053,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

ToDuring ~~Golf~~the ~~Host~~year ~~Resorts~~ended December 31, ~~Inc~~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 ~~Lessors~~results of operations and the number of participants in the rental ~~Innisbrook~~pool. ~~Rental~~Due ~~Pool~~to ~~Lease~~these ~~Operation~~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.

InDuring ~~our opinion~~2001, the ~~accompanying~~Company ~~balance~~continued ~~sheets~~to ~~and~~experience ~~the~~significant ~~related~~declines ~~statements of operations and of changes~~ in ~~participants’ fund balance present fairly, in all~~ ~~material~~business ~~respects,~~associated ~~the~~both ~~financial~~with ~~position~~its ofcorporate ~~the~~and ~~Innisbrook~~transient ~~Rental~~customers. ~~Pool Lease~~Advance ~~Operation~~bookings atfor ~~December 31,~~ 2002 and ~~2001,~~subsequent ~~and the results of its operations and the changes in participants’ fund balance for each of the three~~ years incontinued ~~the period~~to ~~ended~~lag ~~December 31,~~behind ~~2002 in conformity with accounting principles generally accepted in~~ the ~~United States of America. These financial statements are the responsibility of the rental pool~~Company’s ~~operators; our responsibility is to~~ ~~express~~historical anresults ~~opinion~~and onfrom ~~these~~all ~~financial~~indications, ~~statements~~did ~~based~~not onappear ~~our audits. We~~to ~~conducted~~indicate ~~our~~a ~~audits of these statements in accordance with auditing standards~~significant ~~generally~~reversal ~~accepted in the United States~~ of ~~America, which require~~ that wetrend ~~plan and~~in ~~perform~~ the ~~audit~~foreseeable ~~to obtain reasonable assurance about whether the financial statements are free of material misstatement~~future. AnAs ~~audit includes examining, on~~ a ~~test basis~~result, ~~evidence supporting~~ the ~~amounts and disclosures in~~Company ~~the~~again ~~financial~~had ~~statements,~~to ~~assessing~~evaluate ~~the~~its ~~accounting~~carrying ~~principles~~value ~~used~~of ~~and significant estimates made by management, and evaluating~~ the ~~overall~~intangible ~~financial statement presentation~~asset. WePro ~~believe that our audits provide a reasonable basis~~forma ~~for~~cash ~~our~~flow ~~opinion.~~estimates

~~As discussed in Note 1 of the notes to financial statements, the Innisbrook~~F-10 ~~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.~~

~~F-18~~Golf Host Resorts, Inc. and Subsidiary

~~Table~~Notes ofto ~~Contents~~Consolidated Financial Statements December 31, 2003 and 2002

~~Innisbrook~~were ~~Rental~~developed ~~Pool~~based ~~Lease~~upon ~~Operation~~expected business levels, which indicated that further impairment of the intangible had occurred. Consequently, the Company recognized an additional $3,000,000 impairment of the intangible asset during 2001.

~~Balance~~During ~~Sheets~~the —years ~~Distribution~~ended ~~Fund~~December 31, 2003 and 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 2003.

		DECEMBER 31,
		2002		2001
Assets
	Receivable from Golf Host Resorts, Inc. for distribution	$	727,891	$	948,703
	Interest receivable from Maintenance Escrow Fund		12,929		17,408
		$	740,820	$	966,111
Liabilities and Participants’ Fund Balance
	Due to participants for distribution	$	544,636	$	763,301
	Due to Maintenance Escrow Fund		196,184		202,810
		$	740,820	$	966,111

5. Other Payables and Accrued Expenses

~~The~~Other ~~accompanying~~payables ~~notes~~and ~~are~~accrued anexpenses ~~integral~~consists ~~part~~ of ~~these~~the ~~financial statements.~~following:

F-19


	December 31,
	2003		2002
Rental pool lease distribution	$	1,040,282	$	727,891
Taxes, other than income taxes		1,173,129		1,507,970
Other		327,954		485,962

	$	2,541,365	$	2,721,823

~~Table~~6. Line of ~~Contents~~Credit and Notes Payable

Innisbrook Rental Pool Lease Operation


	December 31,
	2003			2002
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

		78,975,000			79,003,552
Less current maturities		(78,975,000	)		(79,003,552	)

	$	—		$	—

~~Balance~~Concurrent ~~Sheets~~with —the ~~Maintenance~~Acquisition, ~~Escrow~~the ~~Fund~~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 collateralized by substantially all assets other than the Company’s accounts receivable and approximately 38 acres of undeveloped land.

		December 31,
		2002		2001
Assets
	Cash and cash equivalents	$	1,266,304	$	1,242,415
	Short-term investments		1,990,000		1,330,000
	Construction in progress		7,774		—
	Receivable from Distribution Fund		196,184		202,810
	Carpet care receivable		21,162		13,692
	Interest receivable		21,110		13,925
		$	3,502,534	$	2,802,842
Liabilities and Participants’ Fund Balance
	Accounts payable	$	3,902	$	58,976
	Construction retainage		41,422		—
	Interest payable to Distribution Fund		12,929		17,408
	Participants’ fund balance		3,444,281		2,726,458
		$	3,502,534	$	2,802,842

The note payable agreement stipulates that Additional Collateral is to be released when the ratio of the Innisbrook Resorts Net Operating Income equals or exceeds a coverage ratio to Debt

~~The accompanying notes are an integral part of these financial statements.~~F-11

~~Table~~Golf ofHost ~~Contents~~Resorts, Inc. and Subsidiary

~~Innisbrook~~Notes ~~Rental~~to ~~Pool~~Consolidated ~~Lease~~Financial ~~Operation~~Statements December 31, 2003 and 2002

~~Statements~~Service, as defined. The coverage ratio was not met for the three years ended December 31, 2003. The agreement defines un-pledged GTA shares and/or the proceeds of ~~Operations~~the —sale ~~Distribution~~of ~~Fund~~these shares as Additional Collateral.

		For the year ended December 31,
		2002			2001			2000
Gross revenues		$	11,956,378		$	15,835,503		$	18,551,171
Deductions:
	Agents’ commissions		493,479			680,868			898,800
	Credit card fees		282,947			184,577			124,314
	Audit fees		16,000			14,500			13,000
	Uncollectible room rents		26,666			—			—
	Linen replacement		150,214			—			—
	Rental Pool complimentary fees		4,914			—			—
			974,220			879,945			1,036,114
Adjusted gross revenues			10,982,158			14,955,558			17,515,057
Management fee			(6,584,394	)		(7,453,477	)		(8,727,226	)
Gross income distribution			4,397,764			7,502,081			8,787,831
Adjustments to gross income distribution:
	Management fee		(2,889	)		(824,353	)		(962,083	)
	Marketing fee		(1,577	)		(449,648	)		(524,772	)
	General pooled expenses		(12,355	)		—			—
	Miscellaneous pooled expenses		(236	)		(61,930	)		(73,619	)
	Corporate complimentary occupancy fees		20,158			39,372			49,264
	Interest		145,803			—			—
	Westin Associate room fees		73,549			92,150			77,678
	Occupancy fees		(1,132,811	)		(1,382,734	)		(1,628,544	)
	Advisory Committee expenses		(211,178	)		(181,065	)		(38,806	)
Net income distribution			3,276,228			4,733,873			5,686,949
Adjustments to net income distribution:
	Occupancy fees		1,132,811			1,382,734			1,628,544
	Hospitality suite fees		5,776			—			217
	Greens fees		—			8,023			8,596
	Additional participation credits		—			2,730			2,910
Amount available for distribution to participants		$	4,414,815		$	6,127,360		$	7,327,216

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, 2003.

~~The~~Principal ~~accompanying~~on ~~notes~~the ~~are~~GTA annote ~~integral~~payable ~~part~~is due at maturity on June 23, 2027. Upon expiration or earlier termination of ~~these~~the ~~financial~~participating ~~statements~~mortgage note, GTA has the option to purchase Innisbrook at fair market value.

~~F-21~~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%, 11.94% and 11.37% for the years ended December 31, 2003, 2002 and 2001, respectively) and continuing each year through 2002. As of December 31, 2003, the Company has drawn the full $9,000,000 available under this facility.

~~Table~~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 ~~Contents~~the total outstanding principal and interest amounts.

As of April 2004, 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 and linen room located at the Innisbrook ~~Rental~~Resort, ~~Pool~~the ~~Lease~~acquired ~~Operation~~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 a lawsuit known as 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 will 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 Settlement Agreement, and could initiate foreclosure proceedings and pursue its other remedies at any time.

~~Statements of Changes in Participants’ Fund Balance — Distribution Fund~~F-12

		For the year ended December 31,
		2002			2001			2000
Balance, beginning of year		$	—		$	—		$	—
Additions:
	Amounts available for distribution to participants		4,414,815			6,127,360			7,327,216
	Interest earned from Maintenance Escrow Fund		69,950			87,635			207,604
Reductions:
	Amounts withheld for Maintenance Escrow Fund		(1,029,963	)		(1,233,501	)		(1,450,443	)
	Amounts accrued or paid to participants		(3,454,802	)		(4,981,494	)		(6,084,377	)
Balance, end of year		$	—		$	—		$	—

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

~~F-22~~Notes to Consolidated Financial Statements December 31, 2003 and 2002

~~Table~~The Company incurred interest expense of ~~Contents~~approximately $9,121,000, $9,120,000 and $9,070,000 on the GTA note payable during the years ended December 31, 2003, 2002 and 2001, of which $23,751,000 and $14,538,000 was payable at December 31, 2003 and 2002, respectively. Accrued interest is classified as current as a result of the default on the GTA loan and the effective interest method discussed above.

~~Innisbrook~~As ~~Rental~~a ~~Pool~~condition ~~Lease~~under ~~Operation~~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.

~~Statements~~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 ~~Changes~~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 for the year ended December 31, 2001. This note was paid in ~~Participants’~~full ~~Fund~~on ~~Balance~~November 19, —2001, ~~Maintenance~~commensurate ~~Escrow~~with ~~Fund~~the sale of the Tamarron property (Note 8).

		For the year ended December 31,
		2002			2001			2000
Balance, beginning of year		$	2,726,458		$	1,929,901		$	7,021,346
Additions:
	Amounts withheld from occupancy fees		1,029,963			1,233,501			1,450,443
	Interest earned		69,950			87,635			207,604
	Other cost reimbursement		—			397,412			—
	Charges to participants to establish or restore escrow balances		5,646,865			313,553			424,020
Reductions:
	Maintenance charges		(654,261	)		(545,432	)		(635,188	)
	Refurbishment costs		(4,527,523	)		—			(5,523,364	)
	Carpet care reserve deposit		(53,603	)		(20,842	)		(73,831	)
	Interest accrued or paid to Distribution Fund		(69,950	)		(87,635	)		(207,604	)
	Refunds to participants due under Lease Agreements		(723,619	)		(581,635	)		(733,525	)
Balance, end of year		$	3,444,280		$	2,726,458		$	1,929,901

7. Income Taxes

~~The~~On ~~accompanying~~April 17, ~~notes~~1998, ~~are~~the Company filed an ~~integral~~election ~~part~~with the Internal Revenue Service to change its tax status to a Qualified Subchapter S Subsidiary effective February 3, 1998. As a result of ~~these~~this election, no provision for income taxes has been included in the accompanying consolidated financial statements for any federal, state or local taxes since any income (loss) is passed through to its shareholder. 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.

FNo 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 carry-23forwards.


	December 31,
	2003			2002
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	)

~~Innisbrook Rental Pool Lease Operation~~F-13

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 and amended and restated effective January 1, 2000, 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 ALAs expire at the end of each calendar year, and the MLA and GMLA remain in effect through December 31, 2001 and December 31, 2011, respectively.
		Effective January 1, 2002, the Company replaced the MLA, which expired on December 31, 2001, with a new Master Lease Agreement (“NMLA”). 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 the actual unit refurbishment costs, plus interest at 5% of the 50% of the refurbishment costs, beginning in 2002, so long as the minimum participation threshold as defined, is maintained. The MLA, GMLA, NMLA and ALAs are referred to collectively as the “Agreements.”
		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 has experienced recurring net losses and working capital deficiencies, which create substantial doubt about GHR’s ability to continue as a going concern. The continuation and success of the Rental Pool is contingent upon the continuation of operations of Innisbrook. Items related to the continuation of Innisbrook as a going concern include such issues as: the ultimate resolution of the Class Action Lawsuit of Golf Hosts, Inc. (“GHI”), GHR’s parent company, wherein the plaintiffs have alleged breaches of contract and are seeking a declaratory judgment stating the plaintiffs are entitled to participate in the Rental Pool if one exists, a limitation of the total number of Club memberships and a restriction of golf course access to members, guest of members, resort guests or guests of resort guests, the acquisition of condominium units which do not participate in the Rental Pool or through a sale are removed from the Rental Pool, owners of units opting to live in their units, owners renting their units outside of the Rental Pool, and general economic conditions related to the destination resort industry.

8. Tamarron’s Results of Operations

~~F-24~~The Company assumed responsibility for the Net loss, as defined, of Tamarron under the terms of the lease agreement between the Company and GH II, 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	)

~~Innisbrook~~On November 19, ~~Rental~~2001, ~~Pool~~GH II, ~~Lease~~an ~~Operation~~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.

~~Notes to Financial Statements~~F-14

~~F-25~~Golf Host Resorts, Inc. and Subsidiary

~~Table~~Notes ofto ~~Contents~~Consolidated Financial Statements December 31, 2003 and 2002

~~Innisbrook~~9. ~~Rental~~Commitments ~~Pool~~and ~~Lease Operation~~Contingencies

~~Notes~~ Rental toPool ~~Financial Statements~~Distribution

~~represent~~The ~~total~~Company ~~room~~offered, ~~revenues~~effective ~~earned from the rental of condominiums by Westin employees passed through to the Rental Pool. Owners who purchased units prior to~~ January 1, ~~1991~~1998 and ~~who~~amended ~~participate~~and inrestated effective ~~the~~January 1, 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 132000, ~~1972.~~a ~~Greens~~separate ~~fees~~Guaranteed ~~and Additional Participation Credits are requirements of agreements other than the current Agreements; these amounts are included in Adjustments to Net Income~~ Distribution ofMaster ~~the~~Lease Agreement ~~Rental~~(“GMLA”) ~~Pool as this treatment is consistent with the method utilized by GHR~~ to ~~pay~~Innisbrook ~~such amounts to the applicable Participants~~participants. ~~Maintenance~~Among ~~Escrow~~other ~~Fund Accounts The MLA~~things, ~~GMLA and NMLA provide that 75%, 90% and 90%, respectively, of~~ the ~~Occupancy Fees earned by each Participant are deposited in the Participant’s Maintenance Escrow Fund account. This account~~ GMLA provides ~~funds~~ for ~~payment~~an ofequal ~~amounts~~sharing ~~that~~between ~~are due from Participants under~~ the Company ~~Agreements for maintenance~~ and ~~refurbishment~~Innisbrook ~~services.~~participants ~~Under~~of ~~the~~Adjusted ~~MLA~~Gross Revenues, ~~when~~and ~~the~~includes as ~~balance~~deductions offrom the ~~Participant’s~~Gross ~~Maintenance~~Income ~~Escrow~~Distribution, ~~Fund~~as ~~account exceeds 75% of the~~ defined ~~furniture replacement value~~, ~~the~~a ~~excess is refunded to the Participant upon their election~~5.5% Management ~~Should~~Fee ~~a Participant’s balance fall below that necessary to provide adequate funds for maintenance~~ and ~~replacements,~~a ~~the~~3% ~~Participant~~Marketing ~~is required to restore the escrow balance to an adequate level~~Fee. The ~~GMLA~~Company ~~provides~~also ~~for~~guaranteed anthat distributions ~~Occupancy~~would ~~Fee~~not ~~deposit~~be ~~into~~less ~~the~~than ~~Participant’s~~an ~~Maintenance~~amount ~~Escrow~~which ~~Fund~~approximates ~~account until~~ the ~~balance~~1996 Gross inIncome ~~the~~Distribution ~~account~~on ~~equals~~an ~~the~~individual ~~total~~unit ~~anticipated charges for maintenance~~basis, ~~repair~~as ~~and~~prorated ~~refurbishing~~based ofupon Weighted ~~the~~Days ~~condominium.~~Pool ~~The NMLA provides for specific fund balances to be maintained~~Participation, ~~by unit type, size and age of refurbishment,~~ as defined ~~in the Agreement~~. ~~Under~~For the ~~MLA,~~year ~~GMLA~~ended ~~and NMLA~~December 31, ~~a percentage of the Occupancy Fees are deposited into the carpet care reserve in the Maintenance Escrow Fund~~2003, ~~which bears~~ the ~~expenses~~Company ofwas ~~carpet~~obligated ~~cleaning for all Participants. This percentage is estimated~~ to ~~provide~~pay the ~~amount~~GMLA ~~necessary~~participants toless ~~fund carpet cleaning expenses and may be adjusted annually. The amounts expended for carpet care were~~ than $611,000, ~~$45,000~~ and ~~$56,000~~the obligation for ~~2002, 2001 and 2000, respectively. For~~ the ~~years~~year ~~2002~~ended ~~and~~December ~~2001~~31, ~~these~~2002 ~~expenditures~~was less ~~were~~than ~~in excess of the carpet care reserve by~~ $211,~~000~~600. ~~and~~No ~~$14,000,~~amounts ~~respectively.~~were ~~GHR~~required ~~invests~~to asbe ~~directed~~paid byunder the ~~Lessors’~~guarantee ~~Advisory~~for ~~Committee~~ the ~~maintenance~~year ended ~~escrow~~December 31, ~~funds~~2001 ~~on behalf of the Participants~~ and ~~in compliance with restrictions in the Agreements~~2000. The ~~Lessors’~~GMLA ~~Advisory~~has ~~Committee~~a ~~consists~~non-cancelable ofterm ~~nine~~through 2011 ~~Participants~~with ~~elected~~an toannual ~~advise~~rental ~~GHR~~pool inparticipation ~~Rental~~election ~~Pool~~by ~~matters.~~individual ~~Income earned on these investments is allocated proportionately to Participants’ Maintenance Escrow Fund accounts and paid quarterly through the Distribution Fund~~unit owners. ~~Included~~As inof ~~cash and cash equivalents at~~ December 31, ~~2002 are certificates of deposit of $190,000, maturing between January~~ 2003 ~~and February 2003~~, ~~and~~one ~~bearing~~unit ~~interest~~owner atactively ~~rates~~participated ~~from 1.2% to 1.7%. Included~~ in ~~short-term~~the rental ~~investments~~pool atpursuant ~~December 31, 2002 are certificates of deposit of $1,900,000, maturing between January 2003 and September 2003, and bearing interest at rates from 1.35%~~ to ~~2.7%, with~~ the ~~remainder held in a money market account~~GMLA. ~~Included in cash and~~

FA 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 $ 314,000 and $159,000 was incurred under this agreement for the years ended December 31, 2003 and 2002, respectively. 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-26action lawsuit described below, any rental pool participant who elected to participate in the class action lawsuit, 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, 2003 is approximately $6,961,000 and is included in long-term refurbishments on the consolidated balance sheet. The corresponding asset is included in other assets and is being amortized on a straight-line basis over the period from the time each phase of the refurbishment is placed in service through the completion of payment in 2009. The amortization expense for the years ended December 31, 2003 and 2002 is approximately $860,000 and $ 407,000, respectively, and is included in resort facilities expense.

~~Table of Contents~~F-15

~~Notes~~Golf toHost ~~Financial~~Resorts, ~~Statements~~Inc. and Subsidiary

~~cash~~Notes ~~equivalents at December 31, 2001 are certificates of deposit of $380,000, maturing between January 2002 and March 2002, and bearing interest at rates from 2.0%~~ to ~~2.75%.~~Consolidated ~~Included~~Financial ~~in short-term investments at~~ Statements December 31, ~~2001~~2003 ~~are certificates of deposit of $1,330,000, maturing between January 2002~~ and ~~September~~ 2002, and bearing interest at rates from 2.3% to 4.3%, with the remainder held in a money market account. At December 31, 2002 and 2001, cost of these investments approximates fair value. 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 scheduled for completion not later than December 31, 2004. 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 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 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 accrue 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 NMLA 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

~~F-27~~Legal

~~Table~~The Company, in the normal course of ~~Contents~~operations, is subject to claims and lawsuits. The Company does not believe that the ultimate resolution of such matters will materially impair operations or have an adverse effect on the Company’s financial position and results of operations.

~~Innisbrook~~GHI was named as a defendant in a consolidated class action lawsuit (the “Class Action Lawsuit”) whereby the plaintiffs allege breaches of contract, including breaches in connection with the Rental Pool Master Lease Agreement. ~~Operation~~The plaintiffs are seeking damages and 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 court had postponed the previously scheduled trial date of February 3, 2003; a new trial date has not yet been set. As of December 31, 2003, the court decertified the class and denied the plaintiffs’ subsequent motion to permit additional owners to intervene in the lawsuit. In addition, the plaintiffs filed a complaint seeking to “pierce the corporate veil”. The court dismissed the veil piercing complaint with prejudice. The plaintiffs appealed the decertification of the class; the denial to intervene and the veil piercing dismissal to the Florida Court of Appeals, Second District. The Court of Appeals has affirmed the lower court’s decertification of the class and has affirmed the lower court’s dismissal with prejudice of the veil piercing case. No decision on the intervention appeal has been made. 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. However, the Company believes GHI has successful defenses based upon consultations with legal counsel, and intends to vigorously defend this action.

~~Notes~~10. toWestin ~~Financial Statements~~Agreements

~~amount~~Westin ~~equal~~became tomanager ~~50%~~ of ~~such~~Innisbrook ~~excess.~~effective ~~Participants~~July 15, ~~withdrawing~~1997, ~~from the Rental Pool~~ for ~~any reason, other than~~ a ~~sale,~~20-year term ~~before~~unless ~~the~~terminated ~~obligation~~earlier toas ~~GHR~~provided ~~had~~for ~~been~~in ~~fully repaid were required to immediately pay their proportionate share of~~ the ~~unpaid balance~~agreement. InWestin receives ~~l996~~annual ~~and~~management ~~1995~~fees, ~~repayment~~based ~~requirements~~on ofrevenues ~~$362,593 and $150,036, respectively, resulted, yielding a balance~~ of $1Innisbrook,~~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~~certain cost ~~was terminated~~reimbursements. ~~Therefore,~~Westin’s ~~effective with the July 15, 1997 change in~~ management, ~~the~~fee ~~obligation~~amounted ~~of the Rental Pool~~ to ~~continue to make reimbursements ceased. The former shareholders of GHR retained all notes receivable~~$576, ~~including the amount due from the Rental Pool~~000, ~~and have disputed the termination and initiated a lawsuit. As of December 31, 2002, GHR is holding approximately~~ $~~226~~584,000 and in escrow as potential payment to the former shareholders pending resolution of this matter. On December 26, 2002, the parties to the lawsuit reached a settlement agreement, which provides for a cash settlement of $~~420~~716,000 ~~plus~~for ~~interest. The settlement payment will be funded by~~ the ~~escrow~~years ~~funds~~ended ~~held by GHR at~~ December 31, ~~2002~~2003, 2002 and ~~the Rental Pool Participants will fund the remainder during 2003~~2001, respectively.

~~F-28~~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 $ 2,403,000, $2,125,000 and $1,845,000 for the years ended December 31, 2003, 2002 and 2001, respectively, and an additional $ 1,665,000, $862,000 and $366,000 is required to be segregated at December 31, 2003, 2002 and 2001, respectively. At December 31, 2003 and 2002, the capital replacement fund had a balance of approximately $1,304,000 and $1,394,000, respectively, and is included in restricted cash in the accompanying consolidated balance sheets.

~~Table~~In April 1998, the Company signed an agreement, under which Westin will provide 50% of ~~Contents~~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

~~Report of Independent Certified Public Accountants~~F-16

InGolf ~~our~~Host ~~opinion~~Resorts, 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 Tamarron Rental Pool Lease Operation at November 18, 2001, and the results of its operations and the changes in participants’ fund balance for the 322 day period ended November 18, 2001 and the year 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~~Subsidiary ~~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.

AsNotes ~~discussed~~to inConsolidated ~~Note~~Financial ~~1, the Sheraton Tamarron Resort was sold on November~~Statements 19December 31, ~~2001~~2003 toand ~~an unaffiliated entity who assumed all responsibility under the~~2002 ~~Tamarron Rental Pool Lease Operation.~~

~~/s/~~December 31, ~~PricewaterhouseCoopers~~2002, ~~LLP~~Westin and the Company agreed that the amount ~~Tampa~~due under the agreement was approximately $426,000. ~~Florida~~This amount was offset ~~September~~against unpaid management fees and reimbursable expenses due Westin under the management agreement and is included in other income for the year ended December 1331, 2002. At December 31, 2003, there are no amounts due under the agreement.

FAdditionally, under the terms of the Innisbrook management agreement, Westin guaranteed a minimum cash flow to Innisbrook. The agreement provided 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-29interest 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, 2003 and 2002, $10,265,000 and $10,265,000 had been advanced to the Company and are included in other long-term liabilities.

~~Table~~Amounts payable to Westin of ~~Contents~~$1,134,000 and $1,750,000 at December 31, 2003 and 2002, respectively, include management fees and certain cost reimbursements and are included in accounts payables at December 31, 2003 and 2002, respectively.

~~Tamarron Rental Pool Lease Operation~~F-17

		November 18,
		2001
Assets
	Cash	$	1,000
	Receivable from Golf Host Resorts, Inc. for distribution		39,828
	Interest receivable from Maintenance Escrow Fund		235
		$	41,063
Liabilities and Participants’ Fund Balance
	Due to participants for distribution	$	42
	Due to Maintenance Escrow Fund		41,021
		$	41,063

Report of Independent Certified Public Accountants

~~The~~To ~~accompanying~~Golf ~~notes~~Host ~~are~~Resorts, anInc. ~~integral~~and ~~part~~the Lessors of ~~these~~the Innisbrook ~~consolidated~~Rental ~~financial~~Pool ~~statements.~~Lease Operation

~~F-30~~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, 2003 and 2002, 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, 2003 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.

~~Table~~As discussed in Note 1 of ~~Contents~~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.

~~Tamarron~~/s/ ~~Rental~~PricewaterhouseCoopers, ~~Pool~~LLP Tampa, ~~Lease Operation~~Florida March 30, 2004

~~Balance Sheets — Maintenance Escrow Fund~~F-18

			November 18,
			2001
Assets
	Cash and cash equivalents		$	200,869
	Due from Distribution Fund			41,021
	Inventory:
		Linen		51,900
		Materials and supplies		13,090
	Deposits			4,467
			$	311,347
Liabilities and Participants’ Fund Balance
	Accounts payable		$	259
	Interest payable to Distribution Fund			235
	Participants’ fund balance			310,853
			$	311,347

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

~~F-31~~Balance Sheets — Distribution Fund


	December 31,
	2003		2002
Assets
Receivable from Golf Host Resorts, Inc. for distribution	$	1,040,282	$	727,891
Interest receivable from Maintenance Escrow Fund		6,489		12,929

	$	1,046,771	$	740,820

Liabilities and Participants’ Fund Balance
Due to participants for distribution	$	788,162	$	544,636
Due to Maintenance Escrow Fund		258,609		196,184

	$	1,046,771	$	740,820

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

~~Statements of Operations — Distribution Fund~~F-19

		For the 322 day				For the
		period ended				year ended
		November 18,			December 31,
		2001				2000
Gross revenues		$	2,629,193			$	3,098,682
Deductions:
	Agents’ commissions		64,569				78,378
	Sales and marketing expenses		197,189				232,401
	Audit fees		11,501				13,000
			273,259				323,779
Adjusted gross revenues			2,355,934				2,774,903
Management fee			(1,299,441	)			(1,458,618	)
Gross income distribution			1,056,493				1,316,285
Adjustments to gross income distribution:
	Corporate complimentary occupancy fees		3,494				3,794
	Occupancy fees		(348,874	)			(311,856	)
	Designated items		(76,919	)			(44,827	)
	Advisory Committee expenses		(10,497	)			(6,044	)
Pooled income			623,697				957,352
Adjustments to pooled income:
	Occupancy fees		348,874				311,856
Amounts available for distribution to participants		$	972,571			$	1,269,208

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

~~F-32~~Balance Sheets — Maintenance Escrow Fund


	December 31,
	2003		2002
Assets
Cash and cash equivalents	$	246,192	$	1,266,304
Short-term investments		1,330,000		1,990,000
Construction in progress		535		7,774
Receivable from Distribution Fund		258,609		196,184
Carpet care receivable		—		21,162
Interest receivable		15,858		21,110

	$	1,851,194	$	3,502,534

Liabilities and Participants’ Fund Balance
Accounts payable	$	43,590	$	3,902
Construction retainage		5,389		41,422
Interest payable to Distribution Fund		6,489		12,929
Carpet care payable		4,137		—
Participants’ fund balance		1,791,589		3,444,281

	$	1,851,194	$	3,502,534

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

~~Statements of Changes in Participants’ Fund Balance — Distribution Fund~~F-20

		For the 322 day				For the
		period ended				year ended
		November 18,			December 31,
		2001				2000
Balance, beginning of year		$	—			$	—
Additions:
	Amounts available for distribution to participants		972,571				1,269,209
	Interest earned from Maintenance Escrow Fund		3,092				4,364
Reductions:
	Amounts withheld for Maintenance Escrow Fund		(174,437	)			(155,935	)
	Amounts accrued or paid to participants		(801,226	)			(1,117,638	)
Balance, end of year		$	—			$	—

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

~~F-33~~Statements of Operations — Distribution Fund


	For the years ended December 31,
		2003			2002			2001

Gross revenues	$	11,590,540		$	11,956,378		$	15,835,503

Deductions:
Agents’ commissions		478,603			493,479			680,868
Credit card fees		278,906			282,947			184,577
Audit fees		28,150			16,000			14,500
Uncollectible room rents		2,119			26,666			—
Linen Replacement		130,122			150,214			—
Rental Pool complimentary fees		4,428			4,914			—

		922,328			974,220			879,945

Adjusted gross revenues		10,668,212			10,982,158			14,955,558
Management fee		(6,399,246	)		(6,584,394	)		(7,453,477	)

Gross income distribution		4,268,966			4,397,764			7,502,081
Adjustments to gross income distribution:
Management fee		(1,006	)		(2,889	)		(824,353	)
Marketing fee		(548	)		(1,577	)		(449,648	)
General pooled expenses		(9,439	)		(12,355	)		—
Miscellaneous pooled expenses		(45	)		(236	)		(61,930	)
Corporate complimentary occupancy fees		18,418			20,158			39,372
GMLA guaranteed payment		2,008			—			—
Interest income/(expense)		(12,732	)		145,803			—
Westin Associate room fees		67,080			73,549			92,150
Occupancy fees		(1,101,651	)		(1,132,811	)		(1,382,734	)
Advisory Committee expenses		(209,755	)		(211,178	)		(181,065	)
Life-safety settlement		(201,233	)		—			—

Net income distribution		2,820,063			3,276,228			4,733,873
Adjustments to net income distribution:
Occupancy fees		1,101,651			1,132,811			1,382,734
Hospitality suite fees		7,002			5,776			—
Life-safety interest		2,890			—			—
Greens fees		—			—			8,023
Additional participation credits		—			—			2,730

Amount available for distribution to participants	$	3,931,606		$	4,414,815		$	6,127,360

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

~~Statements of Changes in Participants’ Fund Balance — Maintenance Escrow Fund~~F-21

		For the 322 day				For the
		period ended				year ended
		November 18,			December 31,
		2001				2000
Balance, beginning of year		$	174,714			$	188,338
Additions:
	Amounts withheld from occupancy fees		174,437				155,935
	Interest earned		3,092				4,364
	Reimbursement of designated items		76,920				44,827
	Charges to participants to establish or restore escrow balances		156,305				230,778
Reductions:
	Maintenance and inventory charges		(164,467	)			(366,945	)
	Refurbishing charges		—				—
	Interest accrued or paid to Distribution Fund		(3,092	)			(4,364	)
	Designated items		(76,919	)			(44,827	)
	Refunds to participants as prescribed by Master Lease Agreement		(30,137	)			(33,392	)
Balance, end of year		$	310,853			$	174,714

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

~~F-34~~Statements of Changes in Participants’ Fund Balance — Distribution Fund


	For the years ended December 31,
	2003			2002			2001
Balance, beginning of year	$	—		$	—		$	—
Additions:
Amounts available for distribution to participants		3,931,606			4,414,815			6,127,360
Interest earned from Maintenance Escrow Fund		39,843			69,950			87,635
Reductions:
Amounts withheld for Maintenance Escrow Fund		(992,018	)		(1,029,963	)		(1,233,501	)
Amounts accrued or paid to participants		(2,979,431	)		(3,454,802	)		(4,981,494	)

Balance, end of year	$	—		$	—		$	—

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

~~Notes to Financial Statements~~F-22

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”) had entered into Annual Rental Pool Lease Agreements (“ALAs”) and a Master Lease Agreement (“MLA”), which defined 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 GHI. On November 19, 2001, GH II sold Tamarron to a third-party who assumed responsibility under the Agreements. 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.

~~F-35~~Innisbrook Rental Pool Lease Operation

~~Table~~Statements of ~~Contents~~Changes in Participants’ Fund Balance — Maintenance Escrow Fund

Tamarron Rental Pool Lease Operation


	For the years ended December 31,
	2003			2002			2001
Balance, beginning of year	$	3,444,280		$	2,726,458		$	1,929,901
Additions:
Amounts withheld from occupancy fees		992,018			1,029,963			1,233,501
Interest earned		39,843			69,950			87,635
Other cost reimbursement		—			—			397,412
Charges to participants to establish or restore escrow balances		1,972,633			5,646,865			313,553
Reductions:
Maintenance charges		(841,340	)		(654,261	)		(545,432	)
Refurbishment costs		(3,415,429	)		(4,527,523	)		—
Carpet care reserve deposit		(60,378	)		(53,603	)		(20,842	)
Interest accrued or paid to Distribution Fund		(39,843	)		(69,950	)		(87,635	)
Refunds to participants due under Lease Agreements		(300,195	)		(723,619	)		(581,635	)

Balance, end of year	$	1,791,589		$	3,444,280		$	2,726,458

~~Notes~~The toaccompanying ~~Financial~~notes ~~Statements~~are an integral part of these financial statements.

		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.
		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 that are due from the Participants 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 November 18, 2001 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 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 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 $50,000 at November 18, 2001. Linen amortization is computed on the straight-line method over an estimated useful life of 24 months.

F-23

Name / Position

Five-Year Principal Occupation

Vice President and Treasurer
(Chief Financial Officer)

Resorts, Inc. (August 1999 – Present) Chief Financial Officer, The Suncoast Companies (March 1997 – August 1999)

Robert Geimer
Vice President and Secretary

Sr. Vice President, Starwood Asset Management (April 1998 – present)

~~Table~~Innisbrook ofRental ~~Contents~~Pool Lease Operation

~~Tamarron~~Notes ~~Rental~~to ~~Pool~~Financial ~~Lease Operation~~Statements

~~Notes~~1. toRental ~~Financial~~Pool ~~Statements~~Lease Operation and Rental Pool Lease Agreements

~~Materials~~Organization 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.Operations

~~F-37~~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 and amended and restated MLA effective January 1, 2000, 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 ALAs expire at the end of each calendar year, and the MLA and GMLA remain in effect through December 31, 2001 and December 31, 2011, respectively.

Effective January 1, 2002, the Company and the participants replaced the MLA, which expired on December 31, 2001, with a new Master Lease Agreement (“NMLA”). 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 the actual unit refurbishment costs, plus interest at 5% of the 50% of the refurbishment costs, beginning in 2002, so long as the minimum participation threshold as defined, is maintained. The MLA, GMLA, NMLA and ALAs are referred to collectively as the “Agreements.”

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 has experienced recurring net losses and working capital deficiencies, which create substantial doubt about GHR’s ability to continue as a going concern. The continuation and success of the Rental Pool is contingent upon the continuation of operations of Innisbrook. In turn, the success of the Innisbrook operations is contingent upon the continued participation of condominium owners in the rental pool. Items related to the continuation of Innisbrook as a going concern include such issues as: the ultimate resolution of the lawsuit know as the Class Action Lawsuit of Golf Hosts, Inc. (“GHI”), GHR’s parent company, wherein the plaintiffs have alleged breaches of contract and are seeking a declaratory judgment stating the plaintiffs are entitled to participate in the Rental Pool if one exists, a limitation of the total number of Club memberships and a restriction of golf course access to members, guest of members, resort guests or guests of resort guests, the sale of condominium units which do not participate in the Rental Pool or through a sale are removed from the Rental Pool, owners of units opting to live in their units, owners renting their units outside of the Rental Pool, and general economic conditions related to the destination resort industry.

F-24

Innisbrook Rental Pool Lease Operation

Notes to Financial Statements

Computation and Allocation of Earnings

Under the MLA, which expired on December 31, 2001, Participants and GHR shared Adjusted Gross Revenues in accordance with the terms of the Agreement. Adjusted Gross Revenues consist of revenues earned from the rental of condominiums, net of agents’ commissions, credit card 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 adjustments, is allocated proportionately to Participants, based on the Participation Factor as defined in the Agreement.

Under the GMLA, Participants and GHR shared equally in Adjusted Gross Revenues, while GHR received 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 guaranteed Rent (Net Income Distribution plus Occupancy and Hospitality Suite Fees) would not be less than an amount, which approximates the 1996 Gross Income Distribution on an individual per unit basis, as prorated based upon Unit Weighted Days Pool Participation, as defined. In 1996, the distribution was $21.67. In 2003, the Unit Weighted Days distribution was $18.32, and the amount the Company was obligated to pay the GMLA participants for the year ended December 31, 2003 was less than $1,000. In 2002, the Unit Weighted Days distribution was $20.02, and the amount the Company is obligated to pay the GMLA participants was less than $1,600. In 2001, no amount was paid under the guarantee, as the Average Daily Distribution was $25.73. The GMLA also guarantees that it cannot be terminated before its expiration date and includes a provision for an annual election to participate. At December 31, 2003, there was one participant in the GMLA. As of January 1, 2004, there are no longer any condominium owners participating under the GMLA agreement.

Under the NMLA, which became effective January 1, 2002, Participants and GHR share Adjusted Gross Revenues in accordance with the terms of the agreement. Adjusted Gross Revenues are defined as Gross Revenues less agent’s commissions, audit fees, occupancy fees when the unit is used by GHR for non-rental purposes, linen replacements and credit card fees. GHR receives a management fee of 60% of Adjusted Gross Revenues. Each Participant receives a fixed occupancy fee, based upon apartment size, for each day of unit specific occupancy. After allocation of occupancy fees and the payment of general rental pool expenses, the balance is allocated proportionally to the Participants, based on the Participation Factor as defined in the Agreement. The Agreement also provides for GHR to reimburse 50% of the refurbishment costs on each unit associated with the current refurbishment program. Rental pool participants also receive interest calculated as 5% of the unpaid refurbishment costs. Interest was payable beginning in 2002, and is conditional upon the continued participation of the unit in the rental pool and as long as the minimum aggregate participation threshold, as defined, is maintained. Principal repayments are to begin in 2005 and continue through 2009. Should GHR 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. The net interest earned during the years ended December 31, 2003 and 2002 was approximately $314,000 and

F-25

Innisbrook Rental Pool Lease Operation

Notes to Financial Statements

$146,000 respectively. Interest earned on the refurbishment program is paid directly to participants and is not recorded in the Rental Pool financial statements for the years ended December 31, 2003 and December 31, 2002.

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 the rental of condominiums by Westin employees passed through to the Rental Pool.

Owners who purchased units prior to January 1, 1991 and who 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 13, 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, GMLA and NMLA provide that 75%, 90% and 90%, 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 that 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. The NMLA provides for specific fund balances to be maintained, by unit type, size and age of refurbishment, as defined in the Agreement.

Under the MLA, GMLA and NMLA, a percentage of the Occupancy Fees are deposited into the carpet care reserve in the Maintenance Escrow Fund, which bears 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 approximately $35,000, $61,000, and $45,000 for 2003, 2002, and 2001, respectively. For the years 2002 and 2001, these expenditures were in excess of the carpet care reserve by $21,000 and $14,000, respectively. For the year ended December 31, 2003 the expenditures did not exceed the reserve.

The Lessors’ Advisory Committee invests the maintenance escrow funds on behalf of the Participants and in compliance with restrictions in the Agreements. The Lessors’ Advisory Committee consists of nine Participants elected to advise GHR in Rental Pool matters and negotiate amendments to the lease agreements. 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

F-26

Innisbrook Rental Pool Lease Operation

Notes to Financial Statements

December 31, 2003 are certificates of deposit of $1,330,000, maturing between January 2004 and May 2004, and bearing interest at rates from 1.20% to 1.85%. Included in cash and cash equivalents at December 31, 2002 are certificates of deposit of $1,900,000, maturing between January 2003 and February 2003, and bearing interest at rates from 1.2% to 1.7%. At December 31, 2003 and 2002, cost of these investments approximates fair value.

Construction in progress and refurbishment includes costs incurred in conjunction with the condominium refurbishment project authorized by the Participants of the Rental Pool. The third and final phase of the refurbishment project was completed in September of 2003.

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 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 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 accrue 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 NMLA 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

F-27

Innisbrook Rental Pool Lease Operation

Notes to Financial Statements

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 with the July 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 and initiated a lawsuit. As of December 31, 2002, GHR was holding approximately $226,000 in escrow as potential payment to the former shareholders pending resolution of this matter. On December 26, 2002, the parties to the lawsuit reached a settlement agreement, which provides for a cash settlement of $420,000 plus interest. The settlement payment was funded by escrow funds held by GHR at December 31, 2002, and the Rental Pool Participants funded the remainder from 2003 distributions. Contemporaneously with the December 31, 2003 rental pool distribution on February 15, 2004, final payment of the settlement agreement was made.

F-28

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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

In our opinion, the accompanying balance sheet and the related statements of operations and of changes in participants’ fund balance present fairly, in all material respects, the financial position of the Tamarron Rental Pool Lease Operation at November 18, 2001, and the results of its operations and the changes in participants’ fund balance for the 322 day period ending November 18, 2001 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 audit provides a reasonable basis for our opinion.

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

/s/ PricewaterhouseCoopers, L.L.P.
Tampa, Florida
September 13, 2002

F-29

TAMARRON RENTAL POOL LEASE OPERATION

BALANCE SHEET — DISTRIBUTION FUND


	November 18,
	2001
Assets
Cash	$	1,000
Receivable from Golf Host Resorts, Inc. for distribution		39,828
Interest receivable from Maintenance Escrow Fund		235

	$	41,063

Liabilities and Participants’ Fund Balance
Due to participants for distribution	$	42
Due to Maintenance Escrow Fund		41,021

	$	41,063

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

F-30

TAMARRON RENTAL POOL LEASE OPERATION

BALANCE SHEET — MAINTENANCE ESCROW FUND


	November 18,
	2001
Assets
Cash and cash equivalents	$	200,869
Due from Distribution Fund		41,021
Inventory:
Linen		51,900
Materials and supplies		13,090
Deposits		4,467

	$	311,347

Liabilities and Participants’ Fund Balance
Accounts payable	$	259
Interest payable to Distribution Fund		235
Participants’ fund balance		310,853

	$	311,347

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

F-31

TAMARRON RENTAL POOL LEASE OPERATION

STATEMENT OF OPERATIONS — DISTRIBUTION FUND


	For the 322 day
	period ended
	November 18,
	2001

Gross revenues	$	2,629,193

Deductions:
Agents’ commissions		64,569
Sales and marketing expenses		197,189
Audit fees		11,501

		273,259

Adjusted gross revenues		2,355,934
Management fee		(1,299,441	)

Gross income distribution		1,056,493

Adjustments to gross income distributions:
Corporate complimentary occupancy fees		3,494
Occupancy fees		(348,874	)
Designated items		(76,919	)
Advisory Committee expenses		(10,497	)

Pooled income		623,697

Adjustments to polled income:
Occupancy fees		348,874

Net income distribution	$	972,571

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

F-32

TAMARRON RENTAL POOL LEASE OPERATION

STATEMENT OF CHANGES IN PARTICIPANTS’ FUND BALANCE — DISTRIBUTION FUND


	For the 322 day
	period ended
	November 18,
	2001

Balance, beginning of year	$	—
Additions:
Amounts available for distribution		972,571
Interest earned from Maintenance Escrow Fund		3,092
Reductions:
Amounts withheld for Maintenance Escrow Fund	$	(174,437	)
Amounts accrued or paid to participants		(801,226	)

Balance, end of year	$	—

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

F-33

TAMARRON RENTAL POOL LEASE OPERATION

STATEMENT OF CHANGES IN PARTICIPANTS’ FUND BALANCE — MAINTENANCE ESCROW FUND


	For the 322 day
	period ended
	November 18,
	2001

Balance, beginning of year	$	174,714
Addition:
Amounts withheld from occupancy fees		174,437
Interest earned		3,092
Reimbursement of designated items		76,920
Charges to participants to establish or restore escrow balances		156,305
Reductions:
Maintenance and inventory charges		(164,467	)
Refurbishing charges		—
Interest accrued or paid to Distribution Fund		(3,092	)
Designated items		(76,919	)
Refunds to participants as prescribed by Master Lease Agreement		(30,137	)

Balance, end of year	$	310,853

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

F-34

Tamarron Rental Pool Lease Operation

Notes to Financial Statements

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 sheet primarily reflects 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 GHI. On November 18, 2001, GH II sold Tamarron to a third-party who assumed responsibility under the Agreements. 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.

F-35

Tamarron Rental Pool Lease Operation

Notes to Financial Statements


	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.

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. The 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 November 18, 2001 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

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 $50,000 at November 18, 2001. Linen amortization is computed on the straight-line method over an estimated useful life of 24 months.

F-36

Tamarron Rental Pool Lease Operation

Notes to Financial Statements


	Materials and supplies inventories consist primarily of minor apartment furnishings and appliances carried at cost, determined on a first-in, first-out basis. The cost of such items, not considered Designated Items, are charged to Participants’ individual Maintenance Escrow Fund accounts based on actual usage.

F-37

Filing Compare · GOLF HOST RESORTS INC