##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




---

For Quarter Ended September 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
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)


36750 US 19 N., Palm Harbor, Florida
    
    
    34684(Address
of principal executive offices)
    
    
    (Zip Code)(727)
942-2000(Registrants telephone number, including area code)


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

Issuer has no common stock subject to this report.

1



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TABLE OF CONTENTS



|                                                                                               |  |  |  |  |  |  |  | 
|---------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                                                                
|CONSOLIDATED BALANCE SHEETS                                                                   
|CONSOLIDATED STATEMENTS OF OPERATIONS                                                         
|CONSOLIDATED STATEMENTS OF SHAREHOLDER'S DEFICIT                                              
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                    
|Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
|PART II -- OTHER INFORMATION                                                                  
|SIGNATURES                                                                                    
|Ex-31.1 Section 302 CEO Certification                                                         
|Ex-31.2 Section 302 CFO Certification                                                         
|Ex-32.1 Section 906 CEO Certification                                                         
|Ex-32.2 Section 906 CFO Certification                                                         



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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)

September 30,
    
    December 31,2003
    
    2002(unaudited)CURRENT ASSETS:Cash
    
    $
    139,518
    
    
    $
    Restricted cash
    
    
    2,670,865
    
    
    
    2,520,849Accounts receivable, net
    
    
    1,397,783
    
    
    
    2,069,962Other receivables
    
    
    180,373
    
    
    
    61,554Inventories and supplies
    
    
    1,362,136
    
    
    
    1,157,792Prepaid expenses and other assets
    
    
    427,684
    
    
    
    514,493Total current assets
    
    
    6,178,359
    
    
    
    6,324,650INTANGIBLES, net
    
    
    11,817,643
    
    
    
    12,463,987PROPERTY AND EQUIPMENT, net
    
    
    37,428,334
    
    
    
    38,025,063OTHER ASSETS
    
    
    5,181,886
    
    
    
    5,701,950$
    60,606,222
    
    
    $
    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

September 30,
    
    December 31,2003
    
    2002(unaudited)CURRENT LIABILITIES:Cash overdrafts
    
    $
    480,771
    
    
    $
    69,846Debt due within one year
    
    
    79,001,205
    
    
    
    79,003,552Accounts payable
    
    
    3,768,698
    
    
    
    4,973,036Accrued payroll costs
    
    
    1,150,735
    
    
    
    893,224Accrued interest
    
    
    21,451,823
    
    
    
    14,538,319Other payables and accrued expenses
    
    
    3,006,963
    
    
    
    2,721,823Deposits and deferred revenues
    
    
    2,174,310
    
    
    
    2,003,938Due to related parties
    
    
    598,013
    
    
    
    198,802Total current liabilities
    
    
    111,632,518
    
    
    
    104,402,540DEBT DUE AFTER ONE YEAR
    
    
    88,330
    
    
    
    OTHER LONG-TERM LIABILITIES
    
    
    10,265,009
    
    
    
    10,265,009LONG TERM REFURBISHMENT
    
    
    5,623,095
    
    
    
    5,548,514DEFERRED INCOME TAXES
    
    
    1,255,000
    
    
    
    1,255,000Total liabilities
    
    
    128,863,952
    
    
    
    121,471,063SHAREHOLDERS DEFICITCommon stock, $1 par, 5,000 shares
authorized, issued, and outstanding
    
    
    5,000
    
    
    
    5,0005.6% cumulative preferred stock, $1 par,
4,577,000 shares authorized, issued,
and outstanding
    
    
    4,577,000
    
    
    
    4,577,000Paid-in capital
    
    
    (8,487,323
    )
    
    
    (8,487,323
    )Shareholder receivable
    
    
    (219,784
    )
    
    
    Accumulated deficit
    
    
    (64,132,623
    )
    
    
    (55,050,090
    )Total shareholders deficit
    
    
    (68,257,730
    )
    
    
    (58,955,413
    )Total liabilities and shareholders
deficit
    
    $
    60,606,222
    
    
    $
    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 September 30,
    
    Nine months ended September 30,2003
    
    2002
    
    2003
    
    2002REVENUES:Resort facilities
    
    $
    2,015,046
    
    
    $
    1,752,027
    
    
    $
    8,628,252
    
    
    $
    10,149,089Food and beverage
    
    
    1,623,538
    
    
    
    1,675,795
    
    
    
    7,921,313
    
    
    
    9,076,147Golf
    
    
    1,717,147
    
    
    
    1,715,605
    
    
    
    8,347,857
    
    
    
    9,187,693Other
    
    
    870,351
    
    
    
    1,327,330
    
    
    
    3,264,267
    
    
    
    4,265,1356,226,082
    
    
    
    6,470,757
    
    
    
    28,161,689
    
    
    
    32,678,064COST AND OPERATION EXPENSES:Resort facilities
    
    
    1,544,593
    
    
    
    1,333,655
    
    
    
    6,788,304
    
    
    
    7,562,081Food and beverage
    
    
    1,515,733
    
    
    
    1,426,942
    
    
    
    5,817,633
    
    
    
    6,194,251Golf
    
    
    1,734,641
    
    
    
    1,440,819
    
    
    
    5,188,103
    
    
    
    4,699,426Other
    
    
    2,148,252
    
    
    
    1,910,170
    
    
    
    6,728,247
    
    
    
    6,611,544General and administrative
    
    
    763,045
    
    
    
    1,053,885
    
    
    
    2,832,666
    
    
    
    3,379,422Depreciation and amortization
    
    
    1,358,480
    
    
    
    1,311,941
    
    
    
    2,852,876
    
    
    
    2,943,4649,064,744
    
    
    
    8,477,412
    
    
    
    30,207,829
    
    
    
    31,390,188OPERATING (LOSS)/INCOME
    
    
    (2,838,662
    )
    
    
    (2,006,655
    )
    
    
    (2,046,140
    )
    
    
    1,287,876INTEREST, NET
    
    
    2,275,869
    
    
    
    2,256,235
    
    
    
    6,844,162
    
    
    
    6,862,945LOSS BEFORE PREFERRED STOCK DIVIDEND
    
    
    (5,114,531
    )
    
    
    (4,262,890
    )
    
    
    (8,890,302
    )
    
    
    (5,575,069
    )DIVIDEND REQUIREMENTS ON PREFERRED STOCK
    
    
    64,077
    
    
    
    64,077
    
    
    
    192,231
    
    
    
    192,231LOSS AVAILABLE TO COMMON SHAREHOLDER
    
    $
    (5,178,608
    )
    
    $
    (4,326,967
    )
    
    
    (9,082,533
    )
    
    $
    (5,767,300
    )


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% CumulativeCommon Stock
    
    Preferred StockPaid-In
    
    Shareholder
    
    RetainedShares
    
    Amount
    
    Shares
    
    Amount
    
    Capital
    
    Receivable
    
    DeficitBalance, December 31, 2002
    
    
    5,000
    
    
    $
    5,000
    
    
    
    4,577,000
    
    
    $
    4,577,000
    
    
    $
    (8,487,323
    )
    
    $
    0
    
    
    $
    (55,050,090
    )Shareholder receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (219,784
    )
    
    
    Loss available to common shareholder (unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,082,533
    )Balance, September 30, 2003
    
    
    5,000
    
    
    $
    5,000
    
    
    
    4,577,000
    
    
    $
    4,577,000
    
    
    $
    (8,487,323
    )
    
    $
    (219,784
    )
    
    $

(64,132,623
    ) [Additional columns below] [Continued from above table, first column(s) repeated] TotalShareholdersDeficitBalance, December 31, 2002
    
    $
    (58,955,413
    )Shareholder receivable
    
    
    (219,784
    )Loss available to common shareholder (unaudited)
    
    
    (9,082,533
    )Balance, September 30, 2003
    
    $
    (68,257,730
    )


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 NINE MONTHS ENDED SEPTEMBER 30,
(unaudited)

2003
    
    2002CASH FLOWS FROM OPERATING ACTIVITIES:(Loss)/income before dividend requirements
on preferred stock
    
    $
    (8,890,302
    )
    
    $
    (5,575,069
    )Adjustments to reconcile net income to net cash
provided by operations:Management company contribution
    
    
    
    
    
    
    (425,688
    )Depreciation and amortization
    
    
    2,241,594
    
    
    
    2,638,202Provision for bad debts
    
    
    (159,349
    )
    
    
    212,449Gain on disposal of capital lease
    
    
    (27,739
    )
    
    
    (294,822
    )Rental pool expense
    
    
    611,282
    
    
    
    305,262Changes in operating working capital
    
    
    7,265,465
    
    
    
    5,659,421Cash provided by operations
    
    
    1,040,951
    
    
    
    2,519,755CASH FLOWS FROM INVESTING ACTIVITIES:Increase in other assets
    
    
    (16,637
    )
    
    
    (34,235
    )Purchases of property and equipment
    
    
    (948,979
    )
    
    
    (282,945
    )Cash used in investing activities
    
    
    (965,616
    )
    
    
    (317,180
    )CASH FLOWS FROM FINANCING ACTIVITIES:Contribution from owners
    
    
    
    
    
    
    21,239Repayment of existing debt
    
    
    (68,417
    )
    
    
    (133,645
    )Additional borrowings on existing debt
    
    
    132,600
    
    
    
    Increase/(decrease) in other long-term liabilities
    
    
    
    
    
    
    (1,940,194
    )Cash used in financing activities
    
    
    64,183
    
    
    
    (2,052,600
    )NET INCREASE IN CASH
    
    
    139,518
    
    
    
    149,975CASH, BEGINNING OF PERIOD
    
    
    
    
    
    
    665,402CASH, END OF PERIOD
    
    $
    139,518
    
    
    $
    815,377NONCASH FINANCING AND INVESTING
ACTIVITIES:The Company satisfied its preferred
stock dividend liability to GHI
through the intercompany account
    
    $
    192,231
    
    
    $
    192,231Master lease agreement refurbishment
program
    
    $
    5,623,095
    
    
    $
    3,256,120Capital
lease extension
    
    $
    49,542
    
    
    $
    


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.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Certain prior year amounts have been reclassified
within the Form 10-Q to conform with the current year presentation.
| |  | ---------------------------------------------------------------------------------------------------------------------



| |  | The accompanying consolidated balance sheet for September 30, 2003, and consolidated statements of
operations and cash flows for the periods ended September 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
$646,000 and $644,000 for the nine months ended September 30, 2003 and September 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 through September 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:
| |  | -------------------------------

September 30,
    
    December 31,2003
    
    2002Participating 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
    
    
    
    9,000,000Capital
leases ranging from 9.0% to 9.51%
    
    
    114,535
    
    
    
    28,55279,089,535
    
    
    
    79,003,552Less current maturities
    
    
    (79,001,205
    )
    
    
    (79,003,552
    )$
    88,330
    
    
    $
    




|(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 2, 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;
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



|(4) |  | CONTINGENCIES (continued)
|--- |  | -------------------------



| |  | a new trial 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 it 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 $611,000 and $305,000 for the periods ended September 30, 2003 and
September 30, 2002, respectively.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | As noted in the Companys 10K 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 solution to its default status. At the time of this publication, no definite or
final agreement has been reached.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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RENTAL POOL LEASE OPERATION

The following unaudited financial statements of the Innisbrook Rental Pool Lease
Operation (the Rental Pool) are for the quarters ended September 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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INNISBROOK RENTAL POOL LEASE OPERATION
BALANCE SHEETS

DISTRIBUTION FUND

September
30,
    
    December 31,2003
    
    2002(unaudited)ASSETSLIFE SAFETY RECEIVABLE FROM PARTICIPANTS
    
    $
    44,271
    
    
    $
    RECEIVABLE FROM GOLF HOST RESORTS, INC.
FOR DISTRIBUTION
    
    
    680,446
    
    
    
    1,790,798INTEREST RECEIVABLE FROM MAINTENANCE
ESCROW FUND
    
    
    8,314
    
    
    
    15,856$
    733,031
    
    
    $
    1,806,654LIABILITIES AND PARTICIPANTS FUND BALANCESDUE TO PARTICIPANTS FOR DISTRIBUTION
    
    $
    470,319
    
    
    $
    1,480,977DUE TO MAINTENANCE ESCROW FUND
    
    
    218,441
    
    
    
    325,677LIFE SAFETY SETTLEMENT LIABILITY
    
    
    44,271
    
    
    
    $
    733,031
    
    
    $
    1,806,654MAINTENANCE ESCROW FUNDASSETSCASH AND CASH EQUIVALENTS
    
    $
    1,888,015
    
    
    $
    4,991,956RECEIVABLE FROM DISTRIBUTION FUND
    
    
    218,441
    
    
    
    325,677CONSTRUCTION WORK IN PROGRESS
    
    
    39,421
    
    
    
    7,284CARPET CARE RECEIVABLE
    
    
    9,018
    
    
    
    23,576INTEREST RECEIVABLE
    
    
    13,519
    
    
    
    9,012$
    2,168,414
    
    
    $
    5,357,505LIABILITIES AND PARTICIPANTS FUND BALANCESACCOUNTS PAYABLE
    
    $
    108,387
    
    
    $
    2,820CONSTRUCTION RETAINAGE
    
    
    4,302
    
    
    
    INTEREST PAYABLE TO DISTRIBUTION FUND
    
    
    8,314
    
    
    
    15,856PARTICIPANTS FUND BALANCES  ESCROW A
    
    
    1,601,935
    
    
    
    1,366,611PARTICIPANTS FUND BALANCES  ESCROW B
    
    
    445,476
    
    
    
    3,972,218$
    2,168,414
    
    
    $
    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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STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2003 AND 2002

DISTRIBUTION FUND
(unaudited)

Current quarter
    
    Year-to-Date2003
    
    2002
    
    2003
    
    2002GROSS REVENUES
    
    $
    1,965,259
    
    
    $
    1,728,450
    
    
    $
    8,463,294
    
    
    $
    9,981,870DEDUCTIONS:Agents commissions
    
    
    56,349
    
    
    
    47,699
    
    
    
    316,817
    
    
    
    420,815Credit card fees
    
    
    45,388
    
    
    
    40,776
    
    
    
    199,308
    
    
    
    236,282Audit fees
    
    
    5,387
    
    
    
    3,813
    
    
    
    16,161
    
    
    
    12,187Uncollectable room rents
    
    
    
    
    
    
    2,295
    
    
    
    2,119
    
    
    
    26,666Linen replacements
    
    
    28,655
    
    
    
    17,351
    
    
    
    102,852
    
    
    
    126,379Rental pool complimentary fees
    
    
    824
    
    
    
    2,413
    
    
    
    2,453
    
    
    
    4,233136,603
    
    
    
    114,347
    
    
    
    639,710
    
    
    
    826,562ADJUSTED GROSS REVENUES
    
    
    1,828,656
    
    
    
    1,614,103
    
    
    
    7,823,584
    
    
    
    9,155,308MANAGEMENT FEE
    
    
    (1,096,909
    )
    
    
    (967,743
    )
    
    
    (4,692,888
    )
    
    
    (5,488,598
    )GROSS INCOME DISTRIBUTION
    
    
    731,747
    
    
    
    646,360
    
    
    
    3,130,696
    
    
    
    3,666,710ADJUSTMENTS TO GROSS INCOME
DISTRIBUTION:Management fee
    
    
    (172
    )
    
    
    (417
    )
    
    
    (747
    )
    
    
    (2,705
    )Marketing fee
    
    
    (94
    )
    
    
    (228
    )
    
    
    (407
    )
    
    
    (1,476
    )General pooled expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,355
    )Miscellaneous pooled expense
    
    
    
    
    
    
    (49
    )
    
    
    (45
    )
    
    
    (218
    )Corporate complimentary occupancy fees
    
    
    6,526
    
    
    
    7,705
    
    
    
    14,328
    
    
    
    16,422Interest (Paragraph 3.1 (3))
    
    
    (3,183
    )
    
    
    (3,183
    )
    
    
    (9,549
    )
    
    
    (9,549
    )Gtd MLA guaranteed payment
    
    
    
    
    
    
    
    
    
    
    1,592
    
    
    
    Occupancy fees
    
    
    (242,777
    )
    
    
    (223,879
    )
    
    
    (814,308
    )
    
    
    (914,830
    )Advisory Committee expenses
    
    
    (47,068
    )
    
    
    (50,641
    )
    
    
    (148,605
    )
    
    
    (154,406
    )Life-safety reimbursement
    
    
    (22,135
    )
    
    
    
    
    
    
    (156,962
    )
    
    
    NET INCOME DISTRIBUTION
    
    
    422,844
    
    
    
    375,668
    
    
    
    2,015,993
    
    
    
    2,587,593ADJUSTMENTS TO NET INCOME DISTRIBUTION:Occupancy fees
    
    
    242,777
    
    
    
    223,879
    
    
    
    814,308
    
    
    
    914,830Hospitality suite fees
    
    
    370
    
    
    
    1,216
    
    
    
    4,234
    
    
    
    4,234Westin Associate room fees
    
    
    14,455
    
    
    
    22,393
    
    
    
    53,899
    
    
    
    61,838Interest
    
    
    
    
    
    
    
    
    
    
    2,890
    
    
    
    AMOUNT AVAILABLE FOR DISTRIBUTION
TO PARTICIPANTS
    
    $
    680,446
    
    
    $
    623,156
    
    
    $
    2,891,324
    
    
    $
    3,568,495Average daily distribution
    
    $
    12.17
    
    
    $
    11.53
    
    
    $
    17.93
    
    
    $
    22.61Average room rate
    
    $
    102.89
    
    
    $
    94.31
    
    
    $
    131.34
    
    
    $
    134.94Occupied room nights
    
    
    19,101
    
    
    
    18,326
    
    
    
    64,440
    
    
    
    73,970Available room nights
    
    
    55,927
    
    
    
    54,040
    
    
    
    161,213
    
    
    
    157,815Occupancy percentage
    
    
    34.2
    %
    
    
    33.9
    %
    
    
    40.0
    %
    
    
    46.9
    %Average number of available units
    
    
    608
    
    
    
    587
    
    
    
    591
    
    
    
    578


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 12Table of Contents

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

DISTRIBUTION FUND
(unaudited)

Current Quarter
    
    Year-to-date2003
    
    2002
    
    2003
    
    2002BALANCE, beginning of period
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    ADDITIONS:Amount available for distribution
    
    
    680,446
    
    
    
    623,156
    
    
    
    2,891,324
    
    
    
    3,568,495Interest received or receivable from
Maintenance Escrow Fund
    
    
    8,314
    
    
    
    19,303
    
    
    
    33,354
    
    
    
    57,021REDUCTIONS:Amounts withheld for Maintenance Escrow Fund
    
    
    (218,441
    )
    
    
    (211,923
    )
    
    
    (733,409
    )
    
    
    (833,779
    )Amounts accrued or paid to participants
    
    
    (470,319
    )
    
    
    (430,536
    )
    
    
    (2,191,269
    )
    
    
    (2,791,737
    )BALANCE, end of period
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    MAINTENANCE ESCROW FUNDBALANCE, beginning of period
    
    $
    3,079,987
    
    
    $
    4,943,836
    
    
    $
    3,444,280
    
    
    $
    2,726,458ADDITIONS:Amounts withheld from occupancy fees
    
    
    218,441
    
    
    
    211,923
    
    
    
    733,409
    
    
    
    833,779Interest earned
    
    
    8,314
    
    
    
    19,303
    
    
    
    33,354
    
    
    
    57,021Charges to participants to establish
or restore escrow balances
    
    
    35,032
    
    
    
    74,749
    
    
    
    1,823,283
    
    
    
    4,565,917REDUCTIONS:Maintenance charges
    
    
    (232,585
    )
    
    
    (163,948
    )
    
    
    (671,400
    )
    
    
    (452,259
    )Refurbishment Phase II
    
    
    (1,000,928
    )
    
    
    (1,310,243
    )
    
    
    (3,012,953
    )
    
    
    (3,281,652
    )Carpet care reserve deposit
    
    
    (14,562
    )
    
    
    (11,774
    )
    
    
    (43,138
    )
    
    
    (42,704
    )Interest accrued or paid to Distribution Fund
    
    
    (8,314
    )
    
    
    (19,303
    )
    
    
    (33,354
    )
    
    
    (57,021
    )Refunds to participants as prescribed by
the master lease agreements
    
    
    (37,974
    )
    
    
    (108,881
    )
    
    
    (226,070
    )
    
    
    (713,877
    )BALANCE, end of period
    
    $
    2,047,411
    
    
    $
    3,635,662
    
    
    $
    2,047,411
    
    
    $
    3,635,662


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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GOLF HOST RESORTS, INC.

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

Quarter ended September 30, 2003

During the third 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 4.2% greater than the same three-month period for the prior year.
Total room nights were 773 greater for the period ended September 30, 2003
compared to the three months ended September 30, 2002. Group room nights were
up 1,933 while transient rooms decreased by 1,160 room nights, as compared to
the same period last year. Total revenue per room night decreased by 7.7% or
$27.10 as compared to the prior year. Gross revenue per room night for the
three months ended September 30, 2003 was $325.96 as compared to $353.05 for
the three months ended September 30, 2002. Despite increases in
room nights, the decrease in total revenue per room night resulted in net decrease
in gross revenue of approximately $245,000 or 3.8%.

All expenses have been managed to respond to the reduced demand in the market
place, including the day-to-day maintenance costs of the four golf courses.
Operating expenses, exclusive of depreciation and amortization, increased
approximately $541,000 or 7.6%. Depreciation and amortization also increased
by approximately $47,000 or 3.6%.

The decrease in revenue combined with the increases in operating expenses and
depreciation and amortization noted above, produced a net reduction in the
comparative three month operating income of approximately $832,000. Operating
income, before interest expense and preferred dividend requirements, was a loss
of approximately $2,839,000 versus a loss of approximately $2,007,000 for the
three months ended September 30, 2003 and September 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 $20,000 or 1%. This increase was the result of effective
interest rate changes on the GTA mortgage.

Capital expenditure reserves in the amount of approximately $603,000 were
set-aside during the quarter ended September 30, 2003. Of this amount,
approximately $184,000 was used to fund capital lease payments on operating
assets such as golf carts, golf grounds equipment and computer equipment while
$239,000 was used to replace and repair the conference center and clubhouse
HVAC, clubhouse roofing, systems and miscellaneous deferred maintenance
projects. The balance is being held in reserve to fund the new telephone
switch and additional golf course equipment, both of which will be installed
and or delivered before the end of the first quarter of 2004.

Nine months ended September 30, 2003

During the nine months ended September 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 12.9% less than the same
nine-month period for the prior year. Total room nights were down 9,530 for the
period ended September 30, 2003 as compared to the nine months ended September
30, 2002. Group and transient room nights were down 6,978 and 2,552 room
nights respectively, as compared to the same period last

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GOLF HOST RESORTS, INC.

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

year. Total revenue per room night decreased by $4.75 or 1.1% over the prior
year. Gross revenue per room night for the nine months ended September 30,
2003 was $437.02 as compared to $441.77 for the nine months ended September 30,
2002. These reductions in room nights coupled with the decrease in room night
spending levels produced a net decrease in gross revenue of approximately
$4,516,000 or 13.8%.

Due to managements reducing operating expenses in response to reduced demands,
operating expenses, exclusive of depreciation and amortization, decrease
approximately $1,092,000 or 3.8%. Depreciation and amortization
decreased by
approximately $90,000 or 3.1%.

The decrease in revenue combined with the decreases in operating expenses and
increase in depreciation and amortization noted above, produced a net reduction
in the comparative nine month operating income of approximately $3,334,000.
Operating income, before interest expense and preferred dividend requirements,
was a loss of approximately $2,046,000 versus income of approximately
$1,288,000 for the nine months ended September 30, 2003 and September 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 $19,000 or .3%.

Capital expenditure reserves in the amount of approximately $1,808,000 were
set-aside during the nine months ended September 30, 2003. Of this amount,
approximately $663,000 was used to fund capital lease payments on operating
assets such as golf carts, golf grounds equipment and computer equipment while
$439,000 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 are expected be installed and or delivered
before the end of the first quarter of 2004.

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 $105,454,000. This is a reduction of approximately $7,376,000 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 November 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.

During October 2003, Westin Hotel Company, the manager of the Innisbrook
Resort, provided ownership with updated net cash flow projections for the
fourth quarter of 2003 and for the year 2004. Due to continuing softness in
the general economy and specifically the destination resort industry, these net
cash flow projections are significantly less favorable than
previously projected for these periods, and will result in
operating deficits for such periods.

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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##### Table of Contents



GOLF HOST RESORTS, INC.

Item 3.
    
    Quantitative and Qualitative Disclosures About Market RiskThe 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 ProceduresWithin 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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##### Table of Contents






PART II  OTHER INFORMATION

Item 1.
    
    Legal ProceedingsGolf 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 a 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 in 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
it has successful defenses based upon consultations with legal counsel and intends to
vigorously defend this action.Item 2.
    
    Changes in Securities and Use of ProceedsNot applicable.Item 3.
    
    Defaults Upon Senior SecuritiesNot applicableItem 4.
    
    Submission of Matters to a Vote of Security HoldersNot applicableItem 5.
    
    Other InformationPursuant 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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##### Table of Contents






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:
    
    November 24, 2003
    
    By: /s/ Merrick KleemanMerrick Kleeman
PresidentDate:
    
    November 24, 2003
    
    By: /s/ R. Keith WiltR. Keith Wilt
Vice President and Treasurer
(Principal Financial Officer)


Page 19