##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---

For Quarter Ended June 30, 2003

Commission File no. 2-64309

GOLF HOST RESORTS, INC.




(Exact name of registrant as specified in its charter)


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

|                                                          
|----------------------------------------------------------
|36750 US 19 N., Palm Harbor, Florida               34684  
|                                                          
|(Address of principal executive offices)        (Zip Code)

|                                                    
|----------------------------------------------------
|(727) 942-2000                                      
|                                                    
|(Registrants telephone number, including area code)

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

Issuer has no common stock subject to this report.

Page 1 of 19





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TABLE OF CONTENTS



|                               |                                                                                               |  |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I - FINANCIAL INFORMATION
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                               | Item 4. Controls and Procedures                                                              
|PART II  OTHER INFORMATION   
|                               | Item 1. Legal Proceedings                                                                    
|                               | Item 2. Changes in Securities and Use of Proceeds                                            
|                               | Item 3. Defaults Upon Senior Securities                                                      
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                               | Item 5. Other Information                                                                    
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    
|302 CEO Certification         
|Ex-31.2 302 CFO Certification 
|Ex-32.1 906 CEO Certification 
|Ex-32.2 906 CFO Certification 



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##### Table of Contents



TABLE OF CONTENTS

|                               |  |  |                                                                                       |                                                       |    |    |  | 
|------------------------------ |  |  | ------------------------------------------------------------------------------------- | ----------------------------------------------------- | -- | -- |  | 
|PART I - FINANCIAL INFORMATION |  |  | 2                                                                                     |                                                      
|Item 2.                        |  |  | Managements
Discussion and Analysis of Financial Condition and Results of Operations |                                                       |    | 14 | 
|Item 3.                        |  |  | Quantitative and Qualitative Disclosures About Market Risk                            |                                                       |    | 17 | 
|Item 4.                        |  |  | Controls and Procedures                                                               |                                                       |    | 17 | 
|PART II - OTHER INFORMATION    |  |  | 18                                                                                    |                                                      
|Item 1.                        |  |  | Legal Proceedings                                                                     |                                                       |    | 18 | 
|Item 2.                        |  |  | Changes in Securities and Use of Proceeds                                             |                                                       |    | 18 | 
|Item 3.                        |  |  | Defaults Upon Senior Securities                                                       |                                                       |    | 18 | 
|Item 4.                        |  |  | Submission of Matters to a Vote of Security Holders                                   |                                                       |    | 18 | 
|Item 5.                        |  |  | Other Information                                                                     |                                                       |    | 18 | 
|Item 6.                        |  |  | Exhibits and Reports on Form 8-K                                                      |                                                       |    | 18 | 
|31.1                           |  |  |                                                                                       | Section 302 CEO Certification                         |    |    |  | 
|31.2                           |  |  |                                                                                       | Section 302 Principal Financial Officer Certification |    |    |  | 
|32.1                           |  |  |                                                                                       | Section 906 CEO Certification                         |    |    |  | 
|32.2                           |  |  |                                                                                       | Section 906 Principal Financial Officer Certification |    |    |  | 
|SIGNATURES                     |  |  |                                                                                       |                                                       | 19 |   





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##### Table of Contents






PART I - FINANCIAL INFORMATION

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

ASSETS
(Substantially all pledged)

|                            |                                   |                      |            |             |           |              |            |           |           | 
|--------------------------- | --------------------------------- | -------------------- | ---------- | ----------- | --------- | ------------ | ---------- | --------- | --------- | 
|                            |                                   |                      |            | June 30,    |           | December 31,
|                            |                                   |                      |            | 2003        |           | 2002        
|                            |                                   |                      |            |             |           |             
|                            |                                   |                      |            | (unaudited) |           |              |            |          
|CURRENT ASSETS:             |                                   |                      |            |             |           |              |            |          
|                            | Cash                              |                      | $          | 259,892     |           |              | $          |          |          
|                            | Restricted cash                   |                      |            | 2,740,377   |           |              |            | 2,520,849 |          
|                            | Accounts receivable, net          |                      |            | 1,635,328   |           |              |            | 2,069,962 |          
|                            | Other receivables                 |                      |            | 64,337      |           |              |            | 61,554    |          
|                            | Inventories and supplies          |                      |            | 1,144,731   |           |              |            | 1,157,792 |          
|                            | Prepaid expenses and other assets |                      |            | 560,240     |           |              |            | 514,493   |          
|                            |                                   |                      |            |             |           |              |            |          
|                            |                                   | Total current assets |            |             | 6,404,905 |              |            |           | 6,324,650 | 
|INTANGIBLES, net            |                                   |                      | 12,033,091 |             |           |              | 12,463,987 |          
|PROPERTY AND EQUIPMENT, net |                                   |                      | 37,638,597 |             |           |              | 38,025,063 |          
|OTHER ASSETS                |                                   |                      | 5,382,243  |             |           |              | 5,701,950  |          
|                            |                                   |                      |            |             |           |              |            |          
|                            |                                   | $                    | 61,458,836 |             |           | $            | 62,515,650 |          
|                            |                                   |                      |            |             |           |              |            |          

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

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

LIABILITIES AND SHAREHOLDERS DEFICIT

|                            |                                                                                               |                           |            |             |             |              |            |             |             | 
|--------------------------- | --------------------------------------------------------------------------------------------- | ------------------------- | ---------- | ----------- | ----------- | ------------ | ---------- | ----------- | ----------- | 
|                            |                                                                                               |                           |            | June 30,    |             | December 31,
|                            |                                                                                               |                           |            | 2003        |             | 2002        
|                            |                                                                                               |                           |            |             |             |             
|                            |                                                                                               |                           |            | (unaudited) |             |              |            |            
|CURRENT LIABILITIES:        |                                                                                               |                           |            |             |             |              |            |            
|                            | Cash overdrafts                                                                               |                           | $          |            |             |              | $          | 69,846      |            
|                            | Debt due within one year                                                                      |                           |            | 79,000,592  |             |              |            | 79,003,552  |            
|                            | Accounts payable                                                                              |                           |            | 3,278,629   |             |              |            | 4,973,036   |            
|                            | Accrued payroll costs                                                                         |                           |            | 975,509     |             |              |            | 893,224     |            
|                            | Accrued interest                                                                              |                           |            | 19,130,230  |             |              |            | 14,538,319  |            
|                            | Other payables and accrued expenses                                                           |                           |            | 2,852,623   |             |              |            | 2,721,823   |            
|                            | Deposits and deferred revenues                                                                |                           |            | 1,549,147   |             |              |            | 2,003,938   |            
|                            | Due to related parties                                                                        |                           |            | 513,009     |             |              |            | 198,802     |            
|                            |                                                                                               |                           |            |             |             |              |            |            
|                            |                                                                                               | Total current liabilities |            |             | 107,299,739 |              |            |             | 104,402,540 | 
|DEBT DUE AFTER ONE YEAR     |                                                                                               |                           | 95,115     |             |             |              |           |            
|OTHER LONG-TERM LIABILITIES |                                                                                               |                           | 10,265,009 |             |             |              | 10,265,009 |            
|LONG TERM REFURBISHMENT     |                                                                                               |                           | 5,623,095  |             |             |              | 5,548,514  |            
|DEFERRED INCOME TAXES       |                                                                                               |                           | 1,255,000  |             |             |              | 1,255,000  |            
|                            |                                                                                               |                           |            |             |             |              |            |            
|                            |                                                                                               | Total liabilities         |            |             | 124,537,958 |              |            |             | 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  | )          
|                            | Shareholder
receivable                                                                        |                           |            | (219,784    | )           |              |            |            |            
|                            | Accumulated deficit                                                                           |                           |            | (58,954,015 | )           |              |            | (55,050,090 | )          
|                            |                                                                                               |                           |            |             |             |              |            |            
|                            | Total shareholders deficit                                                                   |                           |            | (63,079,122 | )           |              |            | (58,955,413 | )          
|                            |                                                                                               |                           |            |             |             |              |            |            
|                            | Total liabilities and shareholders
deficit                                                   |                           | $          | 61,458,836  |             |              | $          | 62,515,650  |            
|                            |                                                                                               |                           |            |             |             |              |            |            

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

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

|                                         |                               |   |                         |           |                           |   |            |           |      |   |            |           |  |   |            |           | 
|---------------------------------------- | ----------------------------- | - | ----------------------- | --------- | ------------------------- | - | ---------- | --------- | ---- | - | ---------- | --------- |  | - | ---------- | --------- | 
|                                         |                               |   | Quarters Ended June 30, |           | Six months ended June 30,
|                                         |                               |   | 2003                    |           | 2002                      |   | 2003       |           | 2002
|                                         |                               |   |                         |           |                           |   |            |           |     
|REVENUES:                                |                               |   |                         |           |                           |   |            |           |      |   |            |           |  |   |            |          
|                                         | Resort facilities             |   | $                       | 2,537,629 |                           |   | $          | 3,378,897 |      |   | $          | 6,613,206 |  |   | $          | 8,397,062 | 
|                                         | Food and beverage             |   |                         | 2,871,574 |                           |   |            | 3,806,922 |      |   |            | 6,297,775 |  |   |            | 7,400,352 | 
|                                         | Golf                          |   |                         | 2,869,517 |                           |   |            | 2,915,347 |      |   |            | 6,630,710 |  |   |            | 7,472,088 | 
|                                         | Other                         |   |                         | 1,094,184 |                           |   |            | 1,635,313 |      |   |            | 2,393,916 |  |   |            | 2,937,805 | 
|                                         |                               |   |                         |           |                           |   |            |           |      |   |            |           |  |   |            |          
|                                         |                               |   | 9,372,904               |           |                           |   | 11,736,479 |           |      |   | 21,935,607 |           |  |   | 26,207,307 |          
|                                         |                               |   |                         |           |                           |   |            |           |      |   |            |           |  |   |            |          
|COST AND OPERATION EXPENSES:             |                               |   |                         |           |                           |   |            |           |      |   |            |           |  |   |            |          
|                                         | Resort facilities             |   |                         | 2,146,932 |                           |   |            | 2,785,709 |      |   |            | 5,243,711 |  |   |            | 6,126,672 | 
|                                         | Food and beverage             |   |                         | 2,041,635 |                           |   |            | 2,374,933 |      |   |            | 4,301,900 |  |   |            | 4,767,309 | 
|                                         | Golf                          |   |                         | 1,747,929 |                           |   |            | 1,673,007 |      |   |            | 3,453,462 |  |   |            | 3,258,607 | 
|                                         | Other                         |   |                         | 2,238,575 |                           |   |            | 2,277,235 |      |   |            | 4,579,995 |  |   |            | 4,701,374 | 
|                                         | General and administrative    |   |                         | 970,086   |                           |   |            | 1,108,359 |      |   |            | 2,069,621 |  |   |            | 2,325,537 | 
|                                         | Depreciation and amortization |   |                         | 747,198   |                           |   |            | 860,448   |      |   |            | 1,494,396 |  |   |            | 1,733,277 | 
|                                         |                               |   |                         |           |                           |   |            |           |      |   |            |           |  |   |            |          
|                                         |                               |   | 9,892,355               |           |                           |   | 11,079,691 |           |      |   | 21,143,085 |           |  |   | 22,912,776 |          
|                                         |                               |   |                         |           |                           |   |            |           |      |   |            |           |  |   |            |          
|OPERATING
(LOSS)/INCOME                  |                               |   | (519,451                | )         |                           |   | 656,788    |           |      |   | 792,522    |           |  |   | 3,294,531  |          
|INTEREST, NET                            |                               |   | 2,338,834               |           |                           |   | 2,236,275  |           |      |   | 4,568,293  |           |  |   | 4,606,710  |          
|                                         |                               |   |                         |           |                           |   |            |           |      |   |            |           |  |   |            |          
|LOSS BEFORE PREFERRED STOCK DIVIDEND     |                               |   | (2,858,285              | )         |                           |   | (1,579,487 | )         |      |   | (3,775,771 | )         |  |   | (1,312,179 | )        
|DIVIDEND REQUIREMENTS ON
PREFERRED STOCK |                               |   | 64,077                  |           |                           |   | 64,077     |           |      |   | 128,154    |           |  |   | 128,154    |          
|                                         |                               |   |                         |           |                           |   |            |           |      |   |            |           |  |   |            |          
|LOSS AVAILABLE
TO COMMON SHAREHOLDER     |                               | $ | (2,922,362              | )         |                           | $ | (1,643,564 | )         |      | $ | (3,903,925 | )         |  | $ | (1,440,333 | )        
|                                         |                               |   |                         |           |                           |   |            |           |      |   |            |           |  |   |            |          

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

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

|                                     |  |              |       |                 |  |         |       |          |  |               |           |         |  |         |           |  |  |   |            |   |  |   |             |   |  |   |             |  
|------------------------------------ |  | ------------ | ----- | --------------- |  | ------- | ----- | -------- |  | ------------- | --------- | ------- |  | ------- | --------- |  |  | - | ---------- | - |  | - | ----------- | - |  | - | ----------- | -
|                                     |  | $1 Par Value |       | 5.6% Cumulative |  |         |       |          |  |               |           |         |  | Total  
|                                     |  | Common Stock |       | Preferred Stock |  | Paid-In |       | Retained |  | Shareholders
|                                     |  | Shares       |       | Amount          |  | Shares  |       | Amount   |  | Capital       |           | Deficit |  | Deficit
|                                     |  |              |       |                 |  |         |       |          |  |               |           |         |  |        
|Balance, December 31, 2002           |  |              | 5,000 |                 |  | $       | 5,000 |          |  |               | 4,577,000 |         |  | $       | 4,577,000 |  |  | $ | (8,487,323 | ) |  | $ | (55,050,090 | ) |  | $ | (58,955,413 | )
|                                     |  |              |       |                 |  |         |       |          |  |               |           |         |  |         |           |  |  |   |            |   |  |   |             |   |  |   |             |  
|Loss
available to common shareholder |  |              |      |                 |  |         |      |          |  |               |          |         |  |         |          |  |  |   |           |   |  |   | (3,903,925  | ) |  |   | (3,903,925  | )
|                                     |  |              |       |                 |  |         |       |          |  |               |           |         |  |         |           |  |  |   |            |   |  |   |             |   |  |   |            
|Balance, June 30, 2003
(unaudited)   |  |              | 5,000 |                 |  | $       | 5,000 |          |  |               | 4,577,000 |         |  | $       | 4,577,000 |  |  | $ | (8,487,323 | ) |  | $ | (59,173,799 | ) |  | $ | (63,079,122 | )
|                                     |  |              |       |                 |  |         |       |          |  |               |           |         |  |         |           |  |  |   |            |   |  |   |             |   |  |   |            

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

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GOLF HOST RESORTS, INC. AND SUBSIDIARY
(a wholly owned subsidiary of Golf Hosts, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(unaudited)

|                                                                                                     |                                                                         |                                      |           |            |           |      |           |            |            |  
|---------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ------------------------------------ | --------- | ---------- | --------- | ---- | --------- | ---------- | ---------- | -
|                                                                                                     |                                                                         |                                      |           | 2003       |           | 2002
|                                                                                                     |                                                                         |                                      |           |            |           |     
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                |                                                                         |                                      |           |            |           |      |           |           
|                                                                                                     | (Loss)/income before dividend requirements
on preferred stock           |                                      | $         | (3,775,771 | )         |      | $         | (1,312,179 | )         
|                                                                                                     | Adjustments to reconcile net income to net cash
provided by operations: |                                      |           |            |           |      |           |            |           
|                                                                                                     |                                                                         | Depreciation and amortization        |           |            | 1,494,396 |      |           |            | 1,733,277  |  
|                                                                                                     |                                                                         | Provision for bad debts              |           |            | (75,520   | )    |           |            | 181,869    |  
|                                                                                                     |                                                                         | Gain on disposal of capital lease    |           |            | (27,739   | )    |           |            | (294,822   | )
|                                                                                                     |                                                                         | Rental pool expense                  |           |            | 390,919   |      |           |            | 203,508    |  
|                                                                                                     |                                                                         | Changes in operating working capital |           |            | 2,807,375 |      |           |            | 4,118,337  |  
|                                                                                                     |                                                                         |                                      |           |            |           |      |           |           
|                                                                                                     |                                                                         | Cash provided by operations          |           |            | 813,660   |      |           |            | 4,629,990  |  
|                                                                                                     |                                                                         |                                      |           |            |           |      |           |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                |                                                                         |                                      |           |            |           |      |           |           
|                                                                                                     | Increase in other assets                                                |                                      |           | 3,369      |           |      |           | (21,794    | )         
|                                                                                                     | Purchases of property and equipment                                     |                                      |           | (627,492   | )         |      |           | (200,904   | )         
|                                                                                                     |                                                                         |                                      |           |            |           |      |           |           
|                                                                                                     |                                                                         | Cash used in investing activities    |           |            | (624,123  | )    |           |            | (222,698   | )
|                                                                                                     |                                                                         |                                      |           |            |           |      |           |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                |                                                                         |                                      |           |            |           |      |           |           
|                                                                                                     | Contribution from owners                                                |                                      |           |           |           |      |           | 21,239     |           
|                                                                                                     | Repayment of existing debt                                              |                                      |           | (62,245    | )         |      |           | (91,970    | )         
|                                                                                                     | Additional borrowings on existing debt                                  |                                      |           | 132,600    |           |      |           |           |           
|                                                                                                     | Decreases in other long-term liabilities                                |                                      |           |           |           |      |           | (3,190,194 | )         
|                                                                                                     |                                                                         |                                      |           |            |           |      |           |           
|                                                                                                     |                                                                         | Cash used in financing activities    |           |            | 70,355    |      |           |            | (3,260,925 | )
|                                                                                                     |                                                                         |                                      |           |            |           |      |           |           
|NET INCREASE IN CASH                                                                                 |                                                                         |                                      | 259,892   |            |           |      | 1,146,367 |           
|CASH, BEGINNING OF PERIOD                                                                            |                                                                         |                                      |          |            |           |      | 665,402   |           
|                                                                                                     |                                                                         |                                      |           |            |           |      |           |           
|CASH, END OF PERIOD                                                                                  |                                                                         | $                                    | 259,892   |            |           | $    | 1,811,769 |           
|                                                                                                     |                                                                         |                                      |           |            |           |      |           |           
|NONCASH FINANCING AND INVESTING
ACTIVITIES:                                                          |                                                                         |                                      |           |            |           |      |           |           
|The Company satisfied its preferred
stock dividend liability to GHI
through the intercompany account |                                                                         | $                                    | 128,154   |            |           | $    | 128,154   |           
|                                                                                                     |                                                                         |                                      |           |            |           |      |           |           
|Master lease agreement refurbishment
program                                                         |                                                                         | $                                    | 5,877,702 |            |           | $    | 3,256,120 |           
|                                                                                                     |                                                                         |                                      |           |            |           |      |           |           

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

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



|(1) |  | BASIS OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The financial statements for December 31, 2002 were prepared assuming the Company will continue as a
going concern. As discussed in the notes to consolidated financial statements on Form 10-K dated
December 31, 2002, the Company has suffered recurring losses from operations, has negative working capital
and has a shareholders deficit. These issues raise substantial doubt about the Companys ability to continue
as a going concern. Managements plans in regard to these matters are also discussed in the footnotes.
Additionally, as described in Note 6 of the notes to consolidated financial statements on Form 10-K, the
Company has defaulted under the terms of its debt agreement and Golf Host, Inc. (the Companys parent
company) is a defendant to a class action lawsuit. These financial statements do not include any adjustments
that might result from the outcome of the uncertainties.
|   
|    |  | These financial statements and related notes are presented for interim periods in accordance with the
requirements of Form 10-Q and, consequently, do not include all disclosures normally provided in the
Companys Annual Report on Form 10-K. Accordingly, these financial statements and related notes
should be read in conjunction with the Companys Annual Report on Form 10-K for the year ended
December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | The accompanying consolidated balance sheet for June 30, 2003, and consolidated statements of
operations and cash flows for the periods ended June 30, 2003 and 2002, are unaudited but reflect all
adjustments which are, in the opinion of management, necessary for a fair presentation of the results for
the interim periods presented. All such adjustments are of a normal recurring nature.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | The Companys business is seasonal. Therefore, the results of operations for the interim periods shown in
this report are not necessarily indicative of results to be expected for the fiscal years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|2)  |  | INTANGIBLE ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | The Company recorded at closing in 1997, a resort intangible asset of approximately $30,400,000. This
intangible related to the purchase of the Innisbrook Resort, which contained an existing rental pool agreement
and a recently executed management agreement with Westin Hotels. The intangible is being amortized over
twenty years on a straight-line basis. Amortization expense for all intangible assets was approximately
$431,000 and $383,000 for the six months ended June 30, 2003 and June 30, 2002, respectively.                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    | 

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



|2)  |  | INTANGIBLE ASSETS                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | During 2002 and as of June 30, 2003, the Company reviewed the carrying value of the intangible asset and
determined that further impairment had not occurred. Advance booking and rental pool participation have
stabilized from a historical perspective, and pro-forma cash flows, based upon advance bookings indicate that
no further deterioration in the carrying value needs to be recognized.
|   
|(3) |  | DEBT                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | Debt consists of the following:                                                                                                                                                                                                                                                                                                                                                                      

|                                                                                     |  |          |             |              |  |   |             |  
|------------------------------------------------------------------------------------ |  | -------- | ----------- | ------------ |  | - | ----------- | -
|                                                                                     |  | June 30, |             | December 31,
|                                                                                     |  | 2003     |             | 2002        
|                                                                                     |  |          |             |             
|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 2007 (in default) |  |          | 9,000,000   |              |  |   | 9,000,000   |  
|Capital leases ranging from 1.89% to 17.37%                                          |  |          | 120,707     |              |  |   | 28,552      |  
|                                                                                     |  |          |             |              |  |   |             |  
|                                                                                     |  |          | 79,095,707  |              |  |   | 79,003,552  |  
|Less current maturities                                                              |  |          | (79,000,592 | )            |  |   | (79,003,552 | )
|                                                                                     |  |          |             |              |  |   |             |  
|                                                                                     |  | $        | 95,115      |              |  | $ |            |  
|                                                                                     |  |          |             |              |  |   |             |  



|(4) |  | CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Golf Hosts, Inc., the
Companys parent, was 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. By order dated April 3, 2003, the
Company was substituted in place of Golf Hosts, Inc. as the defendant
in the lawsuit. 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 restriction of golf course
access to persons who are either condominium owners, members, their accompanied guests, or guests of
the resort and a restriction of the total number of club memberships. 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 has been postponed by the Court; a new trial

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##### Table of Contents



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



|(4) |  | CONTINGENCIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | date has not yet been set. In July 2003, the lawsuit class was de-certified leaving approximately
80 plaintiffs in the lawsuit. Plaintiffs have filed a notice of
appeal regarding the
de-certification decision. 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. The Company believes Golf Hosts, Inc. has
successful defenses based upon consultations with legal counsel and intends to vigorously defend
this action.
|   
|    |  | The Company has recorded a
liability and related asset in the approximate amount of $5,623,000,
in recognition of the Master Lease Agreement refurbishment reimbursement program. The liability
will be settled in accordance with the terms of the agreement and the asset will be amortized on a
straight line basis beginning in 2002 and ending December 31,
2009. Amortization expense for the asset was approximately $391,000
and $204,000 for the periods ended June 30, 2003 and June 30, 2002,
respectively.                                                                              
|   
|    |  | As noted in the Company's 10-K
filed as of December 31, 2002, the Company has defaulted on its
primary mortgage with Golf Trust of America ("GTA"). The Company is
engaged in negotiations with "GTA" and is seeking a resolution to its
current default status. As of the time of this publication, no
definite or final agreement has been reached.                                                                                                                                                                                                                                               

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##### Table of Contents



RENTAL POOL LEASE OPERATION

The following unaudited financial statements of the Innisbrook Rental Pool Lease
Operation (the Rental Pool) are for the quarters ended June 30, 2003 and 2002.

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

The Innisbrook Rental Pool Operation is party to lease agreements with an affiliated
entity, whose ability to continue as a going concern is in substantial doubt.
The operation of the Rental Pool is more fully discussed in Form 10-K, for the
fiscal year ended December 31, 2002 (file No. 2-64309).

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##### Table of Contents



INNISBROOK RENTAL POOL LEASE OPERATION
BALANCE SHEETS

DISTRIBUTION FUND

|                                                         |                                             |                                             |           |             |  |              |           |  |  | 
|-------------------------------------------------------- | ------------------------------------------- | ------------------------------------------- | --------- | ----------- |  | ------------ | --------- |  |  | 
|                                                         |                                             |                                             |           | June 30,    |  |              |           | 
|                                                         |                                             |                                             |           | 2003        |  | December 31,
|                                                         |                                             |                                             |           | (unaudited) |  | 2002        
|                                                         |                                             |                                             |           |             |  |             
|                                                         | ASSETS                                      |                                             |           |             |  |              |           |  | 
|LIFE SAFETY RECEIVABLE FROM PARTICIPANTS                 |                                             | $                                           | 66,407    |             |  | $            |          | 
|RECEIVABLE FROM GOLF HOST RESORTS, INC.
FOR DISTRIBUTION |                                             |                                             | 846,233   |             |  |              | 1,790,798 | 
|INTEREST RECEIVABLE FROM MAINTENANCE
ESCROW FUND         |                                             |                                             | 14,068    |             |  |              | 15,856    | 
|                                                         |                                             |                                             |           |             |  |              |           | 
|                                                         |                                             | $                                           | 926,708   |             |  | $            | 1,806,654 | 
|                                                         |                                             |                                             |           |             |  |              |           | 
|                                                         | LIABILITIES AND PARTICIPANTS FUND BALANCES |                                             |           |             |  |              |           |  | 
|DUE TO PARTICIPANTS FOR DISTRIBUTION                     |                                             | $                                           | 622,555   |             |  | $            | 1,480,977 | 
|DUE TO MAINTENANCE ESCROW FUND                           |                                             |                                             | 237,746   |             |  |              | 325,677   | 
|LIFE SAFETY SETTLEMENT LIABILITY                         |                                             |                                             | 66,407    |             |  |              |          | 
|                                                         |                                             |                                             |           |             |  |              |           | 
|                                                         |                                             | $                                           | 926,708   |             |  | $            | 1,806,654 | 
|                                                         |                                             |                                             |           |             |  |              |           | 
|                                                         |                                             |                                             |           |             |  |              |           |  |  | 
|MAINTENANCE ESCROW FUND                                 
|                                                         |                                             |                                             |           |             |  |              |           |  |  | 
|                                                         | ASSETS                                      |                                             |           |             |  |              |           |  | 
|CASH AND CASH EQUIVALENTS                                |                                             | $                                           | 3,486,445 |             |  | $            | 4,991,956 | 
|RECEIVABLE FROM DISTRIBUTION FUND                        |                                             |                                             | 237,746   |             |  |              | 325,677   | 
|CONSTRUCTION WORK IN PROGRESS                            |                                             |                                             |          |             |  |              | 7,284     | 
|CARPET CARE RECEIVABLE                                   |                                             |                                             | 12,110    |             |  |              | 23,576    | 
|INTEREST RECEIVABLE                                      |                                             |                                             | 16,944    |             |  |              | 9,012     | 
|                                                         |                                             |                                             |           |             |  |              |           | 
|                                                         |                                             | $                                           | 3,753,245 |             |  | $            | 5,357,505 | 
|                                                         |                                             |                                             |           |             |  |              |           | 
|                                                         |                                             | LIABILITIES AND PARTICIPANTS FUND BALANCES |           |             |  |              |           |  |  | 
|ACCOUNTS PAYABLE                                         |                                             | $                                           | 659,190   |             |  | $            | 2,820     | 
|INTEREST PAYABLE TO DISTRIBUTION FUND                    |                                             |                                             | 14,068    |             |  |              | 15,856    | 
|PARTICIPANTS FUND BALANCES - ESCROW A                   |                                             |                                             | 1,634,853 |             |  |              | 1,366,611 | 
|PARTICIPANTS FUND BALANCES - ESCROW B                   |                                             |                                             | 1,445,134 |             |  |              | 3,972,218 | 
|                                                         |                                             |                                             |           |             |  |              |           | 
|                                                         |                                             | $                                           | 3,753,245 |             |  | $            | 5,357,505 | 
|                                                         |                                             |                                             |           |             |  |              |           | 

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

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##### Table of Contents



STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED JUNE 30, 2003 AND 2002

DISTRIBUTION FUND
(Unaudited)

|                                                  |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |          |  
|------------------------------------------------- | -------------------------------------- | - | --------------- | -------- | ------------ | - | ---------- | -------- | ---- | - | ---------- | -------- | - | - | ---------- | -------- | -
|                                                  |                                        |   | Current quarter |          | Year-to-Date
|                                                  |                                        |   |                 |          |             
|                                                  |                                        |   | 2003            |          | 2002         |   | 2003       |          | 2002
|                                                  |                                        |   |                 |          |              |   |            |          |     
|                                                  |                                        |   |                 |          |              |   |            |          |      |   |            |          |  
|GROSS REVENUES                                    |                                        | $ | 2,485,774       |          |              | $ | 3,325,678  |          |      | $ | 6,498,035  |          |   | $ | 8,253,420  |         
|                                                  |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |         
|DEDUCTIONS:                                       |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |         
|                                                  | Agents commissions                    |   |                 | 82,033   |              |   |            | 178,326  |      |   |            | 260,468  |   |   |            | 373,116  |  
|                                                  | Credit card fees                       |   |                 | 58,723   |              |   |            | 79,187   |      |   |            | 153,920  |   |   |            | 195,506  |  
|                                                  | Audit fees                             |   |                 | 5,387    |              |   |            | 3,813    |      |   |            | 10,774   |   |   |            | 8,375    |  
|                                                  | Uncollectable room rents               |   |                 |         |              |   |            | 8,239    |      |   |            | 2,119    |   |   |            | 24,371   |  
|                                                  | Linen replacements                     |   |                 | 21,290   |              |   |            | 66,107   |      |   |            | 74,197   |   |   |            | 109,028  |  
|                                                  | Rental pool complimentary fees         |   |                 | 654      |              |   |            | 1,025    |      |   |            | 1,629    |   |   |            | 1,820    |  
|                                                  |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |         
|                                                  |                                        |   | 168,087         |          |              |   | 336,697    |          |      |   | 503,107    |          |   |   | 712,216    |         
|                                                  |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |         
|ADJUSTED GROSS REVENUES                           |                                        |   | 2,317,687       |          |              |   | 2,988,981  |          |      |   | 5,994,928  |          |   |   | 7,541,204  |         
|MANAGEMENT FEE                                    |                                        |   | (1,390,231      | )        |              |   | (1,791,923 | )        |      |   | (3,595,979 | )        |   |   | (4,520,854 | )       
|                                                  |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |         
|GROSS INCOME DISTRIBUTION                         |                                        |   | 927,456         |          |              |   | 1,197,058  |          |      |   | 2,398,949  |          |   |   | 3,020,350  |         
|ADJUSTMENTS TO GROSS INCOME
DISTRIBUTION:         |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |         
|                                                  | Management fee                         |   |                 | (223     | )            |   |            | (876     | )    |   |            | (575     | ) |   |            | (2,288   | )
|                                                  | Marketing fee                          |   |                 | (121     | )            |   |            | (478     | )    |   |            | (313     | ) |   |            | (1,248   | )
|                                                  | General pooled expense                 |   |                 |         |              |   |            | (12,355  | )    |   |            |         |   |   |            | (12,355  | )
|                                                  | Miscellaneous pooled expense           |   |                 | (21      | )            |   |            | (77      | )    |   |            | (45      | ) |   |            | (169     | )
|                                                  | Corporate complimentary occupancy fees |   |                 | 5,040    |              |   |            | 4,899    |      |   |            | 7,802    |   |   |            | 8,717    |  
|                                                  | Interest (Paragraph 3.1 (3))           |   |                 | (3,183   | )            |   |            | (3,183   | )    |   |            | (6,366   | ) |   |            | (6,366   | )
|                                                  | Gtd MLA guaranteed payment             |   |                 |         |              |   |            |         |      |   |            | 1,592    |   |   |            |         |  
|                                                  | Occupancy fees                         |   |                 | (264,162 | )            |   |            | (329,087 | )    |   |            | (571,531 | ) |   |            | (690,951 | )
|                                                  | Advisory Committee expenses            |   |                 | (54,143  | )            |   |            | (48,314  | )    |   |            | (101,537 | ) |   |            | (103,765 | )
|                                                  | Life-safety reimbursement              |   |                 | (46,284  | )            |   |            |         |      |   |            | (134,827 | ) |   |            |         |  
|                                                  |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |         
|NET INCOME DISTRIBUTION                           |                                        |   | 564,359         |          |              |   | 807,587    |          |      |   | 1,593,149  |          |   |   | 2,211,925  |         
|ADJUSTMENTS TO NET INCOME DISTRIBUTION:           |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |         
|                                                  | Occupancy fees                         |   |                 | 264,162  |              |   |            | 329,087  |      |   |            | 571,531  |   |   |            | 690,951  |  
|                                                  | Hospitality suite fees                 |   |                 | 2,424    |              |   |            | 1,157    |      |   |            | 3,864    |   |   |            | 3,019    |  
|                                                  | Westin Associate room fees             |   |                 | 15,288   |              |   |            | 16,709   |      |   |            | 39,444   |   |   |            | 39,445   |  
|                                                  | Interest                               |   |                 |         |              |   |            |         |      |   |            | 2,890    |   |   |            |         |  
|                                                  |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |         
|AMOUNT AVAILABLE FOR DISTRIBUTION
TO PARTICIPANTS |                                        | $ | 846,233         |          |              | $ | 1,154,540  |          |      | $ | 2,210,878  |          |   | $ | 2,945,340  |         
|                                                  |                                        |   |                 |          |              |   |            |          |      |   |            |          |   |   |            |         
|Average daily distribution                        |                                        | $ | 15.85           |          |              | $ | 21.76      |          |      | $ | 21.00      |          |   | $ | 28.38      |         
|Average room rate                                 |                                        | $ | 119.74          |          |              | $ | 125.61     |          |      | $ | 143.32     |          |   | $ | 148.33     |         
|Occupied room nights                              |                                        |   | 20,760          |          |              |   | 26,476     |          |      |   | 45,339     |          |   |   | 55,642     |         
|Available room nights                             |                                        |   | 53,379          |          |              |   | 53,068     |          |      |   | 105,286    |          |   |   | 103,775    |         
|Occupancy percentage                              |                                        |   | 38.9            | %        |              |   | 49.9       | %        |      |   | 43.1       | %        |   |   | 53.6       | %       
|Average number of available units                 |                                        |   | 587             |          |              |   | 583        |          |      |   | 582        |          |   |   | 573        |         

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

Page 12



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##### Table of Contents



INNISBROOK RENTAL POOL LEASE OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS FUND BALANCES
FOR THE QUARTERS ENDED JUNE 30, 2003 AND 2002

DISTRIBUTION FUND
(Unaudited)

|                             |                                                                      |   |           |                 |   |              |           |           |   |      |           |            |   |   |           |            |   | 
|---------------------------- | -------------------------------------------------------------------- | - | --------- | --------------- | - | ------------ | --------- | --------- | - | ---- | --------- | ---------- | - | - | --------- | ---------- | - | 
|                             |                                                                      |   |           | Current Quarter |   | Year-to-date
|                             |                                                                      |   |           | 2003            |   | 2002         |           | 2003      |   | 2002
|                             |                                                                      |   |           |                 |   |              |           |           |   |     
|                             |                                                                      |   |           |                 |   |              |           |           |   |      |           |            |   |  
|BALANCE, beginning of period |                                                                      | $ |          |                 |   | $            |          |           |   | $    |          |            |   | $ |          |           
|ADDITIONS:                   |                                                                      |   |           |                 |   |              |           |           |   |      |           |            |   |   |           |           
|                             | Amount available for distribution                                    |   |           | 846,233         |   |              |           | 1,154,542 |   |      |           | 2,210,878  |   |   |           | 2,945,340  |  
|                             | Interest received or receivable from
Maintenance Escrow Fund         |   |           | 14,068          |   |              |           | 21,862    |   |      |           | 25,040     |   |   |           | 37,718     |  
|REDUCTIONS:                  |                                                                      |   |           |                 |   |              |           |           |   |      |           |            |   |   |           |           
|                             | Amounts withheld for Maintenance Escrow Fund                         |   |           | (237,746        | ) |              |           | (296,179  | ) |      |           | (514,698   | ) |   |           | (621,856   | )
|                             | Amounts accrued or paid to participants                              |   |           | (622,555        | ) |              |           | (880,225  | ) |      |           | (1,721,220 | ) |   |           | (2,361,202 | )
|                             |                                                                      |   |           |                 |   |              |           |           |   |      |           |            |   |   |           |           
|BALANCE, end of period       |                                                                      | $ |          |                 |   | $            |          |           |   |      |          |            |   | $ |          |           
|                             |                                                                      |   |           |                 |   |              |           |           |   |      |           |            |   |   |           |           
|                            
|MAINTENANCE ESCROW FUND     
|                            
|BALANCE, beginning of period |                                                                      | $ | 4,568,662 |                 |   | $            | 5,338,829 |           |   | $    | 3,444,280 |            |   | $ | 2,726,458 |           
|ADDITIONS:                   |                                                                      |   |           |                 |   |              |           |           |   |      |           |            |   |   |           |           
|                             | Amounts withheld from occupancy fees                                 |   |           | 237,746         |   |              |           | 296,179   |   |      |           | 514,698    |   |   |           | 621,856    |  
|                             | Interest earned                                                      |   |           | 14,068          |   |              |           | 21,862    |   |      |           | 25,040     |   |   |           | 37,718     |  
|                             | Charges to participants to establish
or restore escrow balances      |   |           | 249,203         |   |              |           | 314,934   |   |      |           | 1,788,251  |   |   |           | 4,491,168  |  
|REDUCTIONS:                  |                                                                      |   |           |                 |   |              |           |           |   |      |           |            |   |   |           |           
|                             | Maintenance charges                                                  |   |           | (188,829        | ) |              |           | (115,573  | ) |      |           | (438,815   | ) |   |           | (288,311   | )
|                             | Refurbishment Phase II                                               |   |           | (1,611,768      | ) |              |           | (818,942  | ) |      |           | (2,012,025 | ) |   |           | (1,971,409 | )
|                             | Carpet care reserve deposit                                          |   |           | (13,208         | ) |              |           | (16,455   | ) |      |           | (28,576    | ) |   |           | (30,930    | )
|                             | Interest accrued or paid to Distribution Fund                        |   |           | (14,068         | ) |              |           | (21,862   | ) |      |           | (25,040    | ) |   |           | (37,718    | )
|                             | Refunds to participants as prescribed by
the master lease agreements |   |           | (161,819        | ) |              |           | (55,136   | ) |      |           | (188,096   | ) |   |           | (604,996   | )
|                             |                                                                      |   |           |                 |   |              |           |           |   |      |           |            |   |   |           |           
|BALANCE, end of period       |                                                                      | $ | 3,079,987 |                 |   | $            | 4,943,836 |           |   | $    | 3,079,717 |            |   | $ | 4,943,836 |           
|                             |                                                                      |   |           |                 |   |              |           |           |   |      |           |            |   |   |           |           



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

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##### Table of Contents



GOLF HOST RESORTS, INC.




Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Quarter ended June 30, 2003

During the second quarter of 2003, The Companys results of operations
continued to reflect the downward trend in the hospitality industry and the
destination golf resort segment of that industry. Occupancy percentages at the
Innisbrook resort were 21.6% less than the same three-month period for the
prior year. Total room nights were down 5,716 for the period ended June 30,
2003 and compared to the three months ended June 30, 2002. Group room nights
were down 6,064 while transient rooms increased by 348 room nights, as compared
to the same period last year. Total revenue per room night increased by 12.1%
or $67.07 over the prior year. Gross revenue per room night for the three
months ended June 30, 2003 was $623.20 as compared to $556.13 for the three
months ended June 30, 2002. These net reductions in room nights coupled with
the increase in room night spending levels produced a net decrease in gross
revenue of approximately $2,364,000 or 20.1%.

All expenses have been managed to
respond to the reduced demand in the market place, excluding the
day-to-day maintenance costs of the four golf courses. Operating
expenses, exclusive of depreciation and amortization, decreased
approximately $1,074,000 or 11%. Depreciation and amortization also
decreased by approximately $113,000 or 13.2%.

The decrease in revenue combined with the decreases in operating expenses and
depreciation and amortization noted above, produced a net reduction
in the comparative three month operating income of approximately $1,176,000.
Operating income, before interest expense and preferred dividend requirements,
was a loss of approximately $519,000 versus income of approximately $657,000
for the three months ended June 30, 2003 and June 30, 2002, respectively.

Interest expense, net of interest income, reflects the continued accrual of the
Companys GTA interest obligations. Total interest expense increased by
approximately $103,000 or 4.6%. This increase was the result of
effective interest rate changes.

Capital expenditure reserves in the amount of approximately $603,000 were
set-aside during the quarter ended June 30, 2003. Of this amount,
approximately $101,000 was used to fund capital lease payments on operating
assets such as golf carts, golf grounds equipment and computer equipment while
$73,000 was used to replace and repair the conference center and
clubhouse HVAC, roofing systems and miscellaneous deferred maintenance projects. The balance
is being held in reserve to fund the new telephone switch and golf course
equipment, both of which will be installed and or delivered before the end of
the year 2003.

Six months ended June 30, 2003

During the six months ended June 30, 2003, The Companys results of operations
continued to reflect the downward trend in the hospitality industry and the
destination golf resort segment of that industry as noted above. Occupancy
percentages at the Innisbrook resort were 18.5% less than the same six-month
period for the prior year. Total room nights were down 10,303 for the period
ended June 30, 2003 as compared to the six months ended June 30, 2002. Group
and transient room nights were down 8,911 and 1,392 room nights respectively,
as compared to the same period last year. Total revenue per room night
increased by $37.97 or 6.1% over the prior year. Gross revenue per room night
for the six months ended June 30, 2003 was $659.14 as compared to $621.17 for
the six months ended June 30, 2002. These reductions in room nights coupled
with the increase in room night spending levels produced a net decrease in
gross revenue of approximately $4,272,000 or 16.3%.

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GOLF HOST RESORTS, INC.



|Item 2. |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations
(Continued)
|------- |  | -------------------------------------------------------------------------------------------------

Due to managements reducing operating
expenses in response to reduced demand, operating expenses, exclusive of
depreciation and amortization, decreased approximately $1,531,000 or
7.2%. Depreciation and amortization also declined
by approximately $239,000 or 13.8%.

The decrease in revenue combined with the decreases in operating expenses and
depreciation and amortization noted above, produced a net reduction
in the comparative six month operating income of approximately $2,502,000. Operating
income, before interest expense and preferred dividend requirements, was
approximately $793,000 versus income of approximately $3,295,000 for the six
months ended June 30, 2003 and June 30, 2002, respectively.

Interest expense, net of interest
income, reflects change in the effective interest rates related to
the GTA interest obligations. Total interest expense decreased by
approximately $38,000 or 0.8%.

Capital expenditure reserves in the amount of approximately $1,212,000 were
set-aside during the six months ended June 30, 2003. Of this amount,
approximately $479,000 was used to fund capital lease payments on operating
assets such as golf carts, golf grounds equipment and computer equipment while
$200,000 was used to replace and repair the conference center and
clubhouse HVAC, roofing systems and miscellaneous deferred maintenance projects. The
balance is being held in reserve to fund the new telephone switch and golf
course equipment, both of which will be installed and or delivered before the
end of the year 2003.

The following information may contain forward-looking statements within the
meaning of Section 27A of the Securities Act, and Section 21E of the Exchange
Act. Such statements may be identified by the inclusion of terms such as
believe, expect, hope or may. Although the Company believes that such
forward-looking statements are based upon sound and reasonable assumptions,
given the circumstances in which the statements are made, the actual results
could differ significantly from those described in the forward-looking
statements.

Certain factors that might cause such a difference include the following:
changes in general economic conditions that may influence group conferences and
guests vacations plans; changes in travel patterns; changes in consumer tastes
in destinations or accommodations for group conferences and vacations; 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.

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GOLF HOST RESORTS, INC.



|Item 2. |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations
(Continued)
|------- |  | -------------------------------------------------------------------------------------------------

Liquidity and Capital Resources

The Companys working capital position has decreased to a deficit of
approximately $107,300,000. This is a reduction of approximately
$9,222,000 in
working capital from the December 31, 2002 deficit of approximately
$98,078,000.

The Company continues to experience seasonal fluctuations in its net working
capital position. These fluctuations have been managed in the past through the
utilization of an accounts receivable revolving credit line. Effective May 23,
2002, the revolving credit line with Wells Fargo Business Credit was terminated
by Wells Fargo as a result of the Companys default on the participating
mortgage with Golf Trust of America (GTA).

The Company was informed by GTA on November 29, 2001 that the Company is in
default on the $78,975,000 mortgage and accrued interest, arising from the
Companys failure to pay the October 2001 interest and all subsequent monthly
installments. GTA has asserted its right to accelerate payment of the total
outstanding principal and interest amounts.

As of August 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 Innisbrook resort property, three condominium units
located at the resort, the Companys ownership interests in GTA stock, and all
rights, title and interests of the Company under existing contracts and
agreements. In addition, the Company would provide limited indemnity to defend
and hold harmless GTA (and its affiliates) from and against any and all costs,
liabilities, claims, losses, judgments or damages arising out of or in
connection with the Class Action Lawsuit, as well as liabilities accruing on or
before the closing date relating to employee benefits and liabilities for
contracts or agreements not disclosed by the Company to GTA. In return, it is
anticipated that GTA would deliver to the Company a duly executed release. No
Settlement Agreement has yet been signed and no terms are definite. Neither
GTA nor any of its affiliates are under any obligation to execute the
Settlement Agreement and GTA could initiate foreclosure proceedings or pursue
any other legal remedies available to it at any time.

As described in Note 4 of the notes to consolidated financial statements on the
Companys Form 10-K for December 31, 2002, management had determined that due
to declining demand in the hotel golf resort business and related rental pool
participation, which led to declines in operating results, impairment of the
intangible asset had occurred. At December 31, 2000, an impairment charge of
$7,441,000 was recorded. As a result of the continued decline in destination
golf resort business during 2001 and the events of September 11, 2001, the
Company had determined that further impairment had occurred and consequently
recorded an additional $3,000,000 impairment charge during the quarter ended
September 30, 2001. No further impairment has been recognized subsequent to
the period ended September 30, 2001.

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GOLF HOST RESORTS, INC.









|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|        |  | The Registrant does not have significant market risk with respect to foreign currency exchanges or
other market rates. The Registrants debt has a fixed contractual interest rate through the year
2027 and, accordingly, fluctuations in interest rates are not expected to affect financial results.                                                                                                                                                                                                                                                                                                                                                                                     
|       
|Item 4. |  | Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       
|        |  | Within the 90 days prior to the date of this report, the Registrants management, including the Chief
Executive Officer, the Principal Financial Officer and the Registrants agent (Westin North American
Management Company), carried out an evaluation of the effectiveness of the design and operation of
the disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon the
evaluation, the Registrants Chief Executive Officer and the Principal Financial Officer concluded that
the Registrants disclosure controls and procedures are effective in timely alerting them to material
information to be included in the Registrants periodic SEC filings.
|       
|        |  | There have been no significant changes in the Registrants internal controls or in other factors that
could significantly affect internal controls subsequent to the date the Chief Executive Officer and the
Principal Financial Officer carried out this evaluation.                                                                                                                                                                                                                                                                                                                                                                                                                      

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PART II - OTHER INFORMATION






|Item 1. |  | Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|        |  | Golf Hosts, Inc., the
Companys parent, was 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 Lease Agreement. By order dated April 3, 2003, the Company
was substituted in place of Golf Hosts, Inc. as the defendant in the
lawsuit. 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 golf course access
to persons who are either condominium owners, members, their accompanied guest, or guests of the resort
and a limitation of the total number of Club memberships. 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 has been postponed by the Court; a new trial date has
not yet been set. In July 2003, the lawsuit was de-certified leaving approximately 80 plaintiffs in the
lawsuit. Plaintiffs have filed a notice of appeal regarding the de-certification decision. 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 Golf Hosts, Inc. has successful defenses based upon consultations with legal counsel and
intends to vigorously defend this action.






|Item 2. |  | Changes in Securities and Use of Proceeds
|------- |  | -----------------------------------------
|       
|        |  | Not applicable.                          






|Item 3. |  | Defaults Upon Senior Securities
|------- |  | -------------------------------
|       
|        |  | Not applicable                 






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






|Item 5. |  | Other Information                                                                                                                                                                                        
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|        |  | Pursuant to an agreement with the SEC staff, included in the 10-Q filing are unaudited financial statements
of the Innisbrook Rental Pool Lease Operation for the quarters ended March 31, 2003 and 2002.






|Item 6. |  | Exhibits and Reports on Form 8-K                          
|------- |  | ----------------------------------------------------------
|       
|        |  | (a) The following exhibits are included in this Form 10-Q:



| |  | 31.1 President Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.                  
| |  | -----------------------------------------------------------------------------------------------------
|
| |  | 31.2 Principal Financial Officer Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
|
| |  | 32.1 President Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                  
|
| |  | 32.2 Principal Financial Officer Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
|
| |  | (b) The Registrant did not file Form 8-K during the three months ended March 31, 2003.               

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SIGNATURES



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

GOLF HOST RESORTS, INC.

|                      |  |                              
|--------------------- |  | -----------------------------
|Date: August 14, 2003 |  | By: /s/ Merrick Kleeman      
|                      |  |                              
|                      |  | Merrick Kleeman              
|                      |  | President                    
|                      |  |                              
|Date: August 14, 2003 |  | By: /s/ R. Keith Wilt        
|                      |  |                              
|                      |  | R. Keith Wilt                
|                      |  | Vice President and Treasurer 
|                      |  | (Principal Financial Officer)

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