**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

**FORM 10-K**

----

**ANNUAL REPORTANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year ended December 31, 2006Commission File No. 333-120538**

----

**GTA-IB, LLC**

| State of Organization: **FL** |   | Federal Employer Identification No. **05-0546226** |
|----------------------------------------------|--------|------------------------------------------------------------------------|

 

**36750 US 19 N., Palm Harbor, FL 34684**

Telephone Number: **(727) 942-2000**

 

----

 

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THEACT:**None**

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THEACT:**None**

----

 

Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act.

Yes o  No x

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 or 15(d)of the Act

Yes o  No x

**Note**— Checkingthe box above will not relieve any registrant required to file reports pursuantto Section 13 or 15(d) of the Exchange Act from obligations under thoseSections.

Indicate by check markwhether the Registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the Registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

Yes x  No o

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K isnot contained herein, and will not be contained, to the best of Registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendments to thisForm 10-K. ý

Indicate by check mark ifthe Registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Act.

Large accelerated filer o                    Accelerated filer o              Non-accelerated filer x

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theAct).

Yes o  No x

No established marketexists for the Registrant’s membership interests, so there is no market valuefor such membership interests. There are no membership interests held bynon-affiliates as of December 31, 2006.

Issuer has no commonstock subject to this report.

Documents incorporated byreference: Certain exhibits to GTA-IB’s prior reports on Forms 10-K, 10-Q and8-K are incorporated by reference in Part IV hereof.

The Exhibit Index begins on page 61.

 

 

----

**GTA-IB, LLCAnnual Report on Form 10-K for the Year Ended December 31, 2006TABLE OF CONTENTS**

 
| PART I                             |   |                                                                                                                |   |   |   |
|------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| ITEM 1.                            |   | BUSINESS                                                                                                            |   |   |   |
| ITEM 1A.                           |   | RISK FACTORS                                                                                                        |   |   |   |
| ITEM 1B.                           |   | UNRESOLVED STAFF  COMMENTS                                                                                          |   |   |   |
| ITEM 2.                            |   | PROPERTIES                                                                                                          |   |   |   |
| ITEM 3.                            |   | LEGAL PROCEEDINGS                                                                                                   |   |   |   |
| ITEM 4.                            |   | SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS                                                                |   |   |   |
| PART II                            |   |                                                                                                                |   |   |   |
| ITEM 5.                            |   | MARKET FOR  REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES  OF EQUITY SECURITIES |   |   |   |
| ITEM 6.                            |   | SELECTED FINANCIAL  DATA                                                                                            |   |   |   |
| ITEM 7.                            |   | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION                          |   |   |   |
| ITEM 7A.                           |   | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                         |   |   |   |
| ITEM 8.                            |   | FINANCIAL  STATEMENTS AND SUPPLEMENTARY DATA                                                                        |   |   |   |
| ITEM 9.                            |   | CHANGES IN AND  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                               |   |   |   |
| ITEM 9A.                           |   | CONTROLS AND PROCEDURES                                                                                             |   |   |   |
| ITEM 9B.                           |   | OTHER INFORMATION                                                                                                   |   |   |   |
| PART III                           |   |                                                                                                                |   |   |   |
| ITEM 10.                           |   | DIRECTORS AND  EXECUTIVE OFFICERS OF THE REGISTRANT                                                                 |   |   |   |
| ITEM 11.                           |   | EXECUTIVE  COMPENSATION                                                                                             |   |   |   |
| ITEM 12.                           |   | SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER  MATTERS                    |   |   |   |
| ITEM 13.                           |   | CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS                                                                     |   |   |   |
| ITEM 14.                           |   | PRINCIPAL  ACCOUNTING FEES AND SERVICES                                                                             |   |   |   |
| PART IV                            |   |                                                                                                                |   |   |   |
| ITEM 15.                           |   | EXHIBITS,  FINANCIAL STATEMENT SCHEDULES                                                                            |   |   |   |
| SIGNATURES  AND POWERS OF ATTORNEY |   |                                                                                                                |   |
|                               |   |                                                                                                                |   |
| EXHIBIT  INDEX                     |   |                                                                                                                |   |

 

 

 

2

----

### **Cautionary Note Regarding Forward-LookingStatements**

The following report contains forward-lookingstatements within the meaning of Section 27A of the Securities Act of 1933, asamended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-lookingstatements are statements that predict or describe future events or trends andthat do not relate solely to historical matters. All of our projections in thisannual report are forward-looking statements. You can generally identifyforward-looking statements as statements containing the words “appears,” “believe,”“expect,” “hope,” “may,” “will,” “anticipate,” “intend,” “estimate,” “project,”“assume” or other similar expressions. Certain factors that might cause such adifference include the following: changes in general economic conditions;including changes that may influence group conference and guests’ vacationplans; changes in travel patterns; changes in consumer tastes in destinationsor accommodations for group conferences and vacations; changes in Rental Poolparticipation by the current condominium owners; our ability to continue tooperate the  Innisbrook Resort and GolfClub, or the “Resort”; and the resale of condominiums to owners who electneither to participate in the Rental Pool nor to become members of the Resort.You should not place undue reliance on our forward-looking statements becausethe matters they describe are subject to known (and unknown) risks,uncertainties and other unpredictable factors, many of which are beyond ourcontrol. Our forward-looking statements are based on the limited informationcurrently available to us and speak only as of the date on which this reportwas filed with the Securities and Exchange Commission. Our continued internetposting or subsequent distribution of this dated report does not implycontinued affirmation of the forward-looking statements included in it. Weundertake no obligation, and we expressly disclaim any obligation, to issue anyupdates to our forward-looking statements, even if subsequent events cause ourexpectations to change regarding the matters discussed in those statements.Future events are inherently uncertain. Moreover, it is particularly difficultto predict business activity levels at the Resort with any certainty. Accordingly,our projections in this annual report are subject to particularly highuncertainty. Our projections should not be regarded as legal promises,representations or warranties of any kind whatsoever. Over time, our actualresults, performance or achievements will likely differ from the anticipatedresults, performance or achievements that are expressed or implied by ourforward-looking statements, and such differences might be significant andharmful to your interests.

**PART I**

**ITEM 1. BUSINESS**

### **Background**

GTA-IB, LLC, also referenced in this report as the “Company”,“us”, “we”, or “our”, is a limited liability company that was formed inDecember 2002 and currently owns the Innisbrook Resort and Golf Club inPalm Harbor, Florida. The Innisbrook Resort and Golf Club is referenced in thisreport as the Resort or Innisbrook. The Resort offers golf facilities,restaurant and conference facilities, and recreational activities includingswimming, tennis and related resort activities. We are 100% owned by GTA-IBGolf Resort, LLC, which in turn is 100% owned by Golf Trust of America, L.P.,or GTA, LP. Golf Trust of America, Inc., or GTA, owns 100% of GTA,LP.  GTA, LP has no remaining limitedpartners. GTA is in the process of liquidating all of its assets pursuant to aplan of liquidation approved by its stockholders on May 22, 2001. GTA’s plan ofliquidation contemplates the sale of the Resort, however, we can provide noassurance of the timing of a sale of the Resort or that a sale will occur.

Prior to July 16, 2004, the Resort was owned byGolf Host Resorts, Inc., or GHR, or our former borrower. As of July 16,2004, GHR was an 80% owned subsidiary of Golf Hosts, Inc., or GHI. Weentered into a Settlement Agreement and related transactions as of July 15,2004 with GHR and certain other entities relating to the settlement of a numberof issues between the parties, including GHR’s default under a $79 millionloan, or the Loan, made by our affiliate GTA, LP to GHR in June 1997. ThisSettlement Agreement is referenced in this report as the Settlement Agreement.Pursuant to the Settlement Agreement, we settled claims relating to the Loanand took ownership of the Resort. We refer to our act of taking title to theResort as the “Acquisition.”

Inconnection with the Settlement Agreement, we assumed control and operation ofthe Rental Pool Lease Operations at the Resort, or the Rental Pool. The RentalPool was operated and controlled by GHR prior to the date of the SettlementAgreement. As a result of its administration of the Rental Pool, GHR wassubject to the reporting requirements of Section 15(d) of the Exchange Actas an issuer. Upon our execution of the Settlement Agreement, we became thesuccessor issuer to GHR and became subject to the information requirements of theExchange Act and the rules and regulations promulgated thereunder.  Also, in connection with the SettlementAgreement we and GHR entered in to the Defense and Escrow Agreement whichentitles us to an interest in the sales proceeds of a parcel of undevelopedland within the Resort, known as Parcel F, which is owned by GHR.   Our interest in these proceeds was estimatedto be $2,200,000 at July 15, 2004.  Theseproceeds were pledged by GTA as collateral under a $700,000 promissory notewith Elk Funding, LLC.  On December 28,2006, pursuant to the terms of  a Loan Satisfaction and Termination of Assignmentof Defense and Escrow Agreement 

3

----

(*previously filed as Exhibit 10.29.2 to GTA’sCurrent Report on Form 8-K filed on January 4, 2007 and incorporated herein byreference*) ,  we releasedapproximately $710,000 of the Parcel F buyer’s deposit that was held in escrowto GHR in exchange for GTA’s obligations under the Elk Funding promissory notebeing deemed paid in full and satisfied, including all accrued interest.  The carrying value of our interest in Parcel Fat December 31, 2006 is $1,490,000.  Wecurrently estimate that we will receive approximately $2,900,000 in netproceeds from the sale of Parcel F when it closes.  Parcel F, LLC, the purchaser of ParcelF,  has sixty days from the final appealcourt decision on the Land Use Lawsuits (see Item 3, Legal Proceedings, forfurther discussion) to close on the purchase of Parcel F or Parcel F will bemarketed to potential new buyers.   Ifthat were to occur, the Defense and Escrow Agreement and the Parcel FDevelopment Agreement (*previously filed asExhibits 10.2 and 10.8 to our Current Report on Form 8-K and incorporatedherein by reference*) would continue to be applicable to any newpurchaser of Parcel F.

WestinManagement Company South, or Westin, managed the Resort under a long-termManagement Agreement through October 31, 2006 at which time the ManagementAgreement was terminated pursuant to the Termination and Release Agreement.   The Management Agreement provided that wewould pay to Westin, subject to the terms of the Management Agreement, atermination fee of at least $5,500,000.  As of December 31, 2006, the termination fee is approximately$5,594,000.  This fee must be paid to Westin upon the earlier of (i) asale of the Resort or (ii) March 31, 2008. In the event that we are unable to sell the Resort by March 31, 2008before this obligation becomes due, the payment of this fee could cause ussevere liquidity problems.

TroonGolf, LLC, or Troon, manages the golf facilities at the Resort pursuant to itsManagement Agreement with Westin. On November 1, 2006 as a consequence of theWestin termination, we assumed the Troon Facilities Management Agreement as asuccessor in interest to the Facilities Management Agreement between Westin andTroon.  We had until November 30, 2006 toelect to terminate the agreement with Troon. On November 30, 2006, we entered into an agreement with Troon to extendthe Facilities Management Agreement for ten-day rolling periods, beginning onDecember 1, 2006.  On February 22, 2007,we sent Troon a notice of termination. We are currently in the process of negotiating the terms and conditionsof the termination which we expect to be effective upon the conclusion of ournegotiations and the execution of a termination agreement.  We intend to manage the golf operationsinternally following the termination of the Troon management agreement.

We receive the majority of our operational revenuefrom the rental of hotel accommodations, food and beverage sales, golfoperations (primarily greens and cart fees and merchandise sales) to bothconference group and transient (individuals and families not participating in aconference) guests, and club membership initiation fees and dues.  We believe the Resort is different from manyother hotels as a result of the use of condominium units as guest roomspursuant to the Rental Pool lease agreements. When guests stay at the Resort,their hotel rooms are privately owned condominium units that are participatingin the  Rental Pool. We lease these unitsfrom the participating condominium owners and then allow guests at the Resortto rent them from us during their stays. On a year-to-year basis, approximately500 of the 938 condominium units to participate in the Rental Pool pursuant tothese lease arrangements. A percentage of room revenues that we receive aredistributed to participating condominium owners pursuant to the terms of theRental Pool lease agreements. In addition, we retain a percentage of the roomrevenues. While we do not bear the expense of certain operating and financingcosts of the rental units, we do bear all other operating expenses of theResort.

OnJanuary 21, 2005, in the interest of seeking to accelerate the sale of theResort, GTA engaged Houlihan Lokey Howard and Zukin Capital, Inc., orHoulihan Lokey, as its then exclusive financial advisor to provide financialadvisory services to it in furtherance of its stockholder-approved plan ofliquidation and the related sale of the Resort. The initial term of HoulihanLokey’s engagement was nine months which was subsequently extended on amonth-to-month basis.  Since the sale ofthe resort has  not occurred, GTAterminated its month-to-month engagement with Houlihan Lokey on June 29, 2006.The period during which Houlihan Lokey might have still been owed a transactionfee if a closing of an exit transaction were to occur under certaincircumstances expired on February 28, 2007. Since June 29, 2006, GTA has continued to seek a buyer for theResort.  As of March 26, 2007, we havenot entered in to a definitive agreement for the sale of the Resort.

**RentalPool Condominiums**

Condominium ownership is a realty subdivision in whichthe individual “lots” are deemed apartment units. Instead of owning a plot ofground, the condominium owners own the space where their condominium units arelocated. This leaves substantial properties in interest which are notindividually owned, such as the underlying land, driveways, parking lots,building foundations, exterior walls and roofs, garden areas and utility lines.These areas are termed common property or common elements. Each condominiumowner has an undivided fractional interest in the common property.

4

----

The condominium owners at the Resort have establishedan Association of Condominium Owners, or the Association, to administer andmaintain this common property and to conduct the business of the condominiumowners. In particular, the Association is responsible for maintaining insuranceon the real property, upkeep of the structures, maintenance of the grounds,electricity for the common areas, water/sewer and security services. TheAssociation assesses fees to defray these expenses and to establish necessaryreserves. An assessment, if not timely paid, may result in a lien being placedupon the unit of a delinquent condominium owner. Each condominium owner mustpay ad valorem property taxes, contents insurance, interior maintenance and tosuch other matters independent of the other unit owners. These expenses areincurred by each owner of condominium units whether or not the unitparticipates in the Rental Pool at the Resort. With respect to governing theaffairs of the Association, the participating condominium owners are accordedone vote per condominium unit owned. State statutes also impact the way inwhich the Association’s affairs are administered.

**GeneralResort Revenue Information**

The following table sets forth the percentage of theResort’s total revenues attributable to the four categories listed:

|                   | ** ** | **2006** | ** ** | **2005** | ** ** |
|-------------------|------------|----------|------------|----------|------------|
| **Revenues**      |       |     |       |     |       |
| Resort facilities |       | 32.0     | %          | 31.8     | %          |
| Food and beverage |       | 28.4     | %          | 27.6     | %          |
| Golf              |       | 33.3     | %          | 31.9     | %          |
| Other             |       | 6.3      | %          | 8.7      | %          |
| Total             |       | 100.0    | %          | 100.0    | %          |

 

The Resort hosted 569 conferences and related groupmeetings during 2006, and normally hosts more than 500 meetings per year,including social catering. The Resort hosts guests employed in a variety ofindustries, the majority of which are located in the central and eastern UnitedStates. Accordingly, we do not expect that the loss of a single conference oreven a few conferences of average size would have a significant adverse impacton our business taken as a whole.

While conference-oriented resort business is quitecompetitive, we believe that the Resort has established itself in the industryand enjoys a solid reputation within its market. The Resort received thePinnacle Award in January 2005 and January 2006 from *SuccessfulMeetings* magazine. The Resort’s major competitors, also known as ourcompetitive set, are other golf and conference-oriented resorts throughout thesoutheastern United States. We deem Preferred Amelia Plantation, Marriott DoralGolf Resort & Spa, PGA National Resort, the Renaissance World Golf VillageResort, the Belleview Biltmore Resort and the Marriott Sawgrass Resort &Spa are the major competitors who comprise our competitive set.

**Seasonality**

Thegolf industry is seasonal in nature. Fewer tee times are available in the rainyseason and the winter months. Revenues fall at the Resort during the summermonths because the hot Florida weather makes the Resort less appealing forgroup golf outings and vacation destination golfers. Additionally, unusualweather patterns such as the hurricanes experienced in Florida in 2004 and inthe southeastern United States in 2005 may reduce revenues for the Resort bynegatively impacting reservations in comparable periods (July throughSeptember) of subsequent years.

TheResort hosted in October 2003, October 2004, October 2005, and October 2006, anationally televised PGA event, the Chrysler Championship, that brought some ofthe highest profile golfers to the Resort for several days for the tournament,as well as high profile golf industry sponsors and vendors.  We will not host the Chrysler Championshipafter 2006.  On April 25, 2006, weentered into an agreement with Suncoast Charities, Inc., or Suncoast, whichprovides that Suncoast will lease the Copperhead golf course at the Resort forseven and one half days during the month of March for a PGA TOUR event known asthe PODS Championship.  Our agreementwith Suncoast provides that the tournament will occur each year in Marchbeginning in March 2007 and ending in March 2012.  The agreement also provides, among otherthings, that we will receive a base fee and that we may receive a participationfee in the event the aggregate ticket sales during any tournament year exceed115% of the greater of the 2005 tournament ticket sales or the 2006 tournamentticket sales.  We do not yet have thefinal numbers for the March 2007 tournament, however,our estimates at this timeindicate that the ticket sales did indeed exceeded the referenced threshold.

  Historically, the Resort’s revenues aregenerally the greatest during the first quarter, as guests come from thenortheast and other regions to enjoy the warm weather. The Resort uses seasonalpricing (peak, shoulder and off-peak) to maximize revenues.

5

----

**Employees**

As of December 31, 2006, the Resort hadapproximately 687 employees. Of these employees, approximately 461 are fulltime, approximately 103 are part-time and approximately 123 are casual laborerswho are engaged as needed.

**EnvironmentalMatters**

Operations at the golf courses at the Resort involvethe use and storage of various hazardous materials such as herbicides, pesticides,fertilizers, motor oils and gasoline. Under various federal, state and locallaws, ordinances and regulations, an owner or operator of real property maybecome liable for the costs of removal or remediation of certain hazardoussubstances released on or in its property. These laws often impose liabilitywithout regard to whether the owner or operator knew of, or was responsiblefor, the release of hazardous substances. The presence of these substances, orthe failure to remediate these substances properly when released, may adverselyaffect the owner’s ability to sell the real estate or to borrow using the realestate as collateral.

The FloridaDepartment of Environmental Protection, or the DEP, conducted a site inspectionat the Resort on June 24, 2003. The Resort was found to have improperlydisposed of waste paint and solvents and failed to properly store waste lampsand used oil and oil filters in properly labeled containers. The predecessorowner entered into a Consent Order wherein the DEP agreed to a reduced civilpenalty of $22,000, and allowed the predecessor owner to offset 80% of thisreduced civil penalty with credits obtained through the implementation of apollution control project and a process of ongoing self-monitoring andreporting of environmental conditions to the DEP. The DEP determined that anabove ground self-contained storage tank system at the Resort qualifies forthis credit. The Resort installed the system and, on an ongoing basis,continues to monitor the environmental conditions at the Resort and to reportthese conditions to the DEP. As part of the ongoing self-monitoring andreporting process, the Resort engaged a third party, URS Corporation todevelop a Site Assessment Report and monitor the environmental conditionsnoted in the DEP Consent Order.  This report indicates that furtherremediation may be necessary and URS Corporation has estimated the remediationcosts, if required by the DEP, to be approximately $35,000 to $40,000.  These additional estimated costs have not beenaccrued in the financial statements. The DEP has formally approved theremediation plan with slightly higher levels of excavation. URS was on propertyrecently to complete formal proposals which we anticipate will be delivered tous by March 31, 2007.  After theexcavation is finished additional testing will be completed, if tests remainfavorable this should conclude the process.

Except as discussed above, we have not been notifiedby any governmental authority of any material non-compliance, liability orother claim in connection with any of the golf courses at the Resort. At thetime of GTA, LP’s loan to GHR in 1997 relating to the Resort, its golf courseswere subjected to Phase I environmental audits (which do not involve invasiveprocedures, such as soil sampling or ground water analysis) by an independentenvironmental consultant. As a general rule, we do not update these Phase Ienvironmental audits and we have not in this case.

Based on the results of the Phase I environmentalaudits performed at or about the time of GTA, LP’s loan to GHR in 1997, at thetime of that audit we were not aware of any existing environmental liabilitiesthat we believe would harm our business, assets, results of operations orliquidity, nor were we aware of any condition that could create such aliability. We face the risk, however, that those Phase I environmental auditsmay have failed to reveal all potential environmental liabilities, that prioror adjacent owners may have created material environmental conditions not knownto us or the independent environmental consultant, and that future uses orconditions (including, without limitation, changes in applicable environmentallaws and regulations) may result in the imposition of environmental liabilityagainst us.

**GovernmentRegulation**

The Resort, like most public businesses, is subject tothe Americans with Disabilities Act of 1990. The ADA has separate compliancerequirements for “public accommodations” and “commercial facilities,” butgenerally requires public facilities such as clubhouses and recreation areas tobe accessible to people with disabilities. Compliance with the ADA requirementscould require removal of access barriers and the construction of capitalimprovements at the Resort. Noncompliance could result in imposition of finesor an award of damages to private litigants. We are responsible for compliancecosts incurred at the Resort.

**Code ofEthics**

See Part III, Item 10 for discussion of our Codeof Ethics.

**Web SiteAccess to Our Periodic SEC Reports**

We make available free of charge our annual report onForm 10-K, quarterly reports on Form 10-Q, current reports onForm 8-K and amendments to these reports filed or furnished pursuant toSection 13(a) or 15(d) of the Securities 

6

----

ExchangeAct of 1934 as soon as reasonably practicable after we electronically file suchmaterial with, or furnish it to, the Securities and Exchange Commission. Thesereports can be obtained free of charge by contacting: GTA-IB, LLC, c/o GolfTrust of America, Inc., 10 North Adger’s Wharf, Charleston, South Carolina29401. These reports are available on GTA’s website at www.golftrust.com. Thepublic may read and copy any materials that we file with the SEC at the SEC’sPublic Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The publicmay obtain information on the operation of the Public Reference Room by callingthe SEC at 1-800-SEC-0330. The SEC maintains an internet site that containsreports, proxy and information statements, and other issuers that fileelectronically with the SEC (www.sec.gov). Additional general information aboutthe Resort may be obtained on the Resort’s website atwww.golfinnisbrookresort.com.

**ITEM 1A. RISK FACTORS**

***Nowthat our Management Agreement with Westin is terminated, in addition to ourobligation to pay termination fees to Westin, we were required to find a thirdparty to manage the Resort or manage the Resort ourselves.  We have decided to manage the Resortourselves.***

 TheManagement Agreement provides that we shall pay to Westin, subject to the termsof the Management Agreement, a termination fee of at least $5,500,000   As of October 31, 2006, the termination dateof our Management Agreement with Westin, the termination fee is approximately$5,594,000  See disclosure of this obligation as accrued at December 31,2006 in note 10 to our condensed consolidated financial statements contained inPart II, Item 8 of this Annual Report.  This fee must be paid to Westin upon the earlier of (i) a sale of theResort or (ii) March 31, 2008.  In theevent that we are unable to sell the Resort by March 31, 2008 before thisobligation becomes due, the payment of this fee could cause us severe liquidityproblems.

Wehave retained substantially all of the former Westin on-site executivemanagement team at the Resort, with the exception of the positions of generalmanager and controller which we have since filled through promotions of currentResort employees.  Even with the formerWestin on-site executive management team, we cannot guarantee that we will beas successful in managing the Resort as Westin has been because we do not havethe Westin brand on the hotel and the synergies available to a global hotelchain.  In the event that we prove lesssuccessful than Westin at managing the Resort, our results of operations andfinancial condition could be adversely affected.

***Inthe event that the Resort does not provide sufficient cash flow to us, we maybe forced to reduce capital expenditures and improvements at the Resort,diminishing the value of the Rental Pool units.***

As theowner of the Resort, we will be responsible for any negative cash flowassociated with the ownership and operation of the Resort. As a result of ourassumption of these liabilities and our responsibility for any negative cashflow of the Resort, we may be exposed to liabilities and expenditures exceedingour expectations or ability to pay. In the event that cash flow from the Resortproves insufficient to fund planned improvements, the ability of the RentalPool Participants to rent their units may decline. A decline in the rentalrates that can be charged for the units or related vacancies resulting from ourinability to make necessary capital expenditures may cause the value of theRental Pool units, and the Resort, to decline.

***Wehave been unsuccessful in our attempts to sell the Resort and the terms of asale of the Resort, if any, remain uncertain.***

Wecannot guarantee that we will be able to sell the Resort on reasonable terms,if at all. Further, we cannot predict the amount of time that will be requiredto negotiate and close a sale of the Resort. In the event that GTA experiencesliquidity constraints or other financial pressures due to the protractednegotiation of the sale of the Resort, GTA may be unwilling or unable to fundthe Resort and the Rental Pool refurbishment (obligations).Even in the eventthat we successfully sell the Resort in the near term, we expect that the partywho purchases the Resort will assume responsibility for the operational costsof the Resort and the Rental Pool. We cannot guarantee the level of funding andmanagement attention that will be given to the Resort and the Rental Pool inthe event that the Resort is transferred to a new owner. In the event that we,GTA and, if applicable, the Resort’s ultimate owner do not devote sufficientmanagement resources and funding to the Resort and the Rental Pool,distributions to the Rental Pool Participants could be substantially reduced.

***If we are not ableto sell the Resort in the near term obtain some form of financing (which we arecurrently pursuing), obtain liquidity through our interest in Parcel F, orreceive additional intercompany advances from GTA or the Operating Partnership,we may experience severe liquidity problems, not be able to meet the demands ofour creditors and ultimately become subject to bankruptcy proceedings.***

7

----

Generally, our only source of cash is from theoperations of the Resort. Further, the Resort’s credit capacity islimited.  During the course of 2005, GTAfunded $1,050,000 to address our seasonal cash flow shortfalls.  In October 2006, GTA funded $600000 pursuantto the terms of the Westin Termination Agreement and an additional $120,000 inFebruary 2007 to fund operating expenses. Further, GTA funded approximately$203,000and $33,000 for the beginning phase of the technological infrastructurecapital investment in October 2006 and November 2006, respectively.  The Resort repaid to GTA the $120,000and the $33,000 advances from its cash flow from Resort operations in March2007.  While current Resort cash flowprojections for 2007 indicate that the Resort may be in a breakeven cashsituation by year-end 2007, a shortfall is anticipated by late summer to earlyfall due  to certain obligations that theResort must pay in August 2007, including obligations of approximately$1,060,000 for the quarterly rental pool distribution and $412,000 for therental pool refurbishment payment. Therefore, a cash infusion of up toapproximately  $1,000,000 in the aggregatemay be necessary to fund the short-fall. If we are unable to eithercontinue to improve our operating cash flows or otherwise obtain liquidity,then we may be unable to continue as a going concern.

If theResort experiences any cash flow shortfall going forward, we may be required toseek additional capital to fund the Resort.  In order to fund this shortfall, we may be required to seek anintercompany advance.  There are noassurances that additional intercompany advances will be available, or that wewill be successful if we attempt to negotiate funding for the Resort in lieu ofsuch an advance.  Even if we are able tomeet the expected cash shortfall, in the event that we are unable to sell theResort in the near term, we may experience additional liquidity problems andbankruptcy.

We are currentlynegotiating the terms of a three year non—revolving credit facility with aTampa community bank for approximately $1,200,000.  The proceeds of which would be used tofinance renovations at the Resort restaurants, information technologyinfrastructure upgrades and other property improvements at the Resort and tocover short-term working capital shortfalls. The three condominium units that we own at the Resort will serve ascollateral for this loan.  We are alsoseeking to obtain a revolving accounts receivable line of credit for at least$500,000.  However, there can be noassurance that the Company will enter into this loan facility or that we willbe able to obtain an accounts receivable credit line.  In the event that we are not able to obtain someform of financing or receive additional intercompany advances from GTA or theOperating Partnership to fund any cash flow shortfalls, we may experienceliquidity problems and be unable to pay our obligations to creditors and othersas they become due or upon demand.   Ifwe cannot meet our obligations to our creditors and others when they becomedue, we could ultimately become subject to bankruptcy proceedings.

***TheResort’s performance may not provide adequate resources to fund therefurbishment reimbursement to the Rental Pool Participants.***

Pursuantto the former borrower’s arrangement with many of the persons who owncondominium units at the Resort, the condominiums owned by these participatingpersons are placed in a securitized pool and rented as hotel rooms to guests ofthe Resort. We refer to this securitized pool of participating condominiums asthe Rental Pool. In addition to the current Rental Pool agreement, the formerowner of the Resort agreed with the Rental Pool participants that the former ownerof the Resort would reimburse 50% of the refurbishment costs, plus accruedinterest at 5% per annum on the unpaid balance of that portion of the unpaidrefurbishment costs which the former owner was required to reimburse. Thisamount is being reimbursed to Rental Pool Participants (or transferees of theircondominium unit(s)) over the five-year period beginning in 2005.

Accordingly,we believe maintaining participation in the Rental Pool by the condominiumowners is very important to the continued economic success of the Resort. Weassumed certain existing or modified financial obligations of the formerborrower, including its responsibilities regarding the administration of thecondominium unit Rental Pool, when we took ownership of the Resort pursuant tothe Settlement Agreement. Also, as part of the Settlement Agreement, we assumedGHR’s obligation to reimburse the refurbishment expenses paid by thecondominium owners, and to pay the associated interest on that obligation.

Asowner of the Resort, we are responsible for any negative cash flow associatedwith the ownership and operation of the Resort. As a result of the assumptionof these liabilities and our responsibility for any negative cash flow, we facethe risk that our ultimate liabilities and expenditures might be greater thanwe expected. In that case, we may not have sufficient cash available for thepayment of the refurbishment expenses relating to the Rental Pool units, or wemay otherwise decide not to use our funds in this manner. If this occurs, adisagreement involving the funding for the Rental Pool may arise, and thisdisagreement could both divert our management’s attention from the operation ofthe Resort and prove costly to the parties to any such dispute.

In theevent that we sell the Resort, we expect that we will no longer be responsiblefor the Rental Pool obligations, and that the party who acquires the Resortwill determine the funding for the Rental Pool based upon its willingness andability to pay these obligations**.**We cannotguarantee that the party who acquires the Resort will provide adequate fundingfor the Resort in general or for refurbishment expenses in particular.

 

8

----

***Thenumber of Rental Pool units may decline if current owners find alternative usesof the units, thereby reducing the number of available Rental Pool units anddiminishing the value of the remaining units.***

RentalPool participants may decide that alternative uses of their condominium unitsare more attractive than participating in the Rental Pool. In particular,condominium owners may determine that it is more financially advantageous torent their units to longer-term tenants, or to live in their units rather thanpaying to live elsewhere and allowing their units to participate in the RentalPool. Any such reduction in the number of Rental Pool Participants may resultin increased pro-rata costs and reduced revenues for the remaining Rental PoolParticipants. In particular, a decrease in the number of Rental PoolParticipants will result in higher per capita costs relating to fixed coststhat are incurred in connection with the administration of the Rental Pool. Inthe event that the number of units in the Rental Pool declines below 575, ourobligation to reimburse refurbishment expenses for the units will be abateduntil the number of units in the Rental Pool is restored to 575 or higher.

***Severeweather patterns experienced by Florida during 2004 and the southeasternsection of the United States during 2005 could result in depressed bookings,adversely affecting the Resort’s results of operations and reducing proceeds tothe participants in the Rental Pool.***

Weexpect that bookings at the Resort during the late summer and early fall offuture years may be adversely affected as a result of a series of hurricanesthat affected Florida during 2004 and the southeastern section of the UnitedStates during 2005. In particular, the hurricanes that occurred during 2005 mayhave increased the awareness of potential guests, particularly those notresiding in the southeastern section of the United States, to the danger thathurricanes and tropical storms present. We expect that potential guests may bemore reluctant to book rooms in regions such as Tampa that are subject to suchweather patterns. In particular, it is possible that groups will choosealternative destinations for travel during the hurricane season. In the eventthat potential guests and groups choose alternative destinations as a result ofthese weather-related concerns, the Resort may experience lower bookings andreduced revenues, which in turn will result in reduced distributions to theRental Pool participants.

***Severeweather patterns could further intensify the seasonal nature of the results ofthe Resort.***

Thehotel industry is seasonal in nature. Our business has historically beenstronger in the winter months and weaker during the summer months of each year.In the event that we suffer from reduced bookings as a result ofhurricane-related concerns of potential guests, this effect could reduce therevenues to the Resort in the summer months of each year, increasing thedisparity between our results in the summer as compared to other months of theyear. This increased seasonality could make it more difficult for us to projectthe results of the Resort, and may result in a lower than expected percentageof the Resort’s fixed costs being offset by revenue during the summer months.

***Weare subject to all the operating risks common to the hotel industry which couldadversely affect our results of operations.***

Operatingrisks common to the Resort include:

·                  changes in general economic conditions, includingthe timing and robustness of the recovery in the United States from an economicdownturn and the prospects for improved performance in other parts of theworld;

·                  the impact of war and terrorist activity (includingthreatened terrorist activity) and heightened travel security measuresinstituted in response thereto;

·                  domestic and international political andgeopolitical conditions;

·                  decreases in the demand for transient rooms andrelated lodging services, including a reduction in business travel as a resultof general economic conditions;

·                  the impact of internet intermediaries on pricing andour increasing reliance on technology;

·                  cyclical over-building in the hotel industry whichincreases the supply of hotel rooms;

·                  changes in travel patterns;

9

----

·                  changes in operating costs, including, but notlimited to, energy, labor costs (including the impact of unionization), workers’compensation and health-care related costs, insurance and unanticipated costssuch as acts of nature and their consequences;

·                  disputes with the managers and former managers ofthe Resort which may result in litigation;

·                  the availability of capital to allow us to fundrenovations and investments at the Resort; and

·                  the financial condition of the airline industry andthe impact on air travel.

***Generaleconomic downturns, or an increase in labor or insurance costs, may negativelyimpact our results.***

Moderateor severe economic downturns or adverse conditions may negatively affect theoperations of the Resort. These conditions may be widespread or isolated to oneor more geographic regions. A tightening of the labor markets in Florida mayresult in fewer and/or less qualified applicants for job openings at theResort. Higher wages, related labor costs and the increasing cost trends in theinsurance markets may negatively impact our results as these costs increase. Ageneral economic downturn, or increase in expenditures on insurance and laborcosts, would adversely impact the operations of the Resort, potentiallyreducing funding that we provide to the Rental Pool and reducing thedistributions to the Rental Pool Participants.

***If weare unable to successfully compete for customers, it may adversely affect ouroperating results and reduce the proceeds to the Rental Pool Participants.***

Thehotel industry is highly competitive. The Resort competes for customers withother hotel and resort properties. Some of our competitors may havesubstantially greater marketing and financial resources than we do, and theymay improve their facilities, reduce their prices, or expand or improve theirmarketing programs in ways that adversely affect the Resort and our operatingresults, and reduce the distributions to the Rental Pool Participants.

***Internetreservation channels may negatively impact our bookings and results ofoperations.***

Internettravel intermediaries such as Travelocity.com®, Expedia.com® and Priceline.com®are attempting to commoditize hotel rooms by increasing the importance of priceand general indicators of quality at the expense of brand or property-specificidentification. These travel intermediaries hope that consumers will eventuallydevelop brand loyalties to their reservations system rather than to lodgingbrands. Although we expect to derive most of our business from traditionalchannels, if the amount of sales made through internet intermediaries increasessignificantly, our business and profitability may be significantly harmed, anddistributions to the Rental Pool Participants may be reduced.

***TheResort places significant reliance on technology.***

The hospitalityindustry continues to demand the use of sophisticated technology and systemsincluding technology utilized for property management, procurement, reservationsystems, operation of customer loyalty programs, distribution and guestamenities. These technologies can be expected to require refinements and thereis the risk that advanced new technologies will be introduced. There can be noassurance that as various systems and technologies become outdated or newtechnology is required we will be able to replace or introduce them as quicklyas our competition or within budgeted costs for such technology. Further, therecan be no assurance that we will achieve the benefits that may have beenanticipated from any new technology or system. Further, now that the Westin Management Agreement is terminated, we havebegun the capital improvement project of upgrading the technologicalinfrastructure of the Resort and replacing certain components which areproprietary to Westin.  Our projectionsindicate that the replacement of these components could require us to make aninvestment in the range of $1.0 to $2.0 million of which we funded $203,000 and$33,000 in October and November 2006, respectively.  Additionally, there are risks associated withtransferring the data and ensuring that there are no interruptions in theoperations of the Resort.  There are noassurances that such technological components can be identified, purchased andimplemented in a cost effective and efficient manner.

***TheResort is capital intensive, and may become uncompetitive in the event thatsufficient financing is not available.***

Forthe Resort to remain attractive and competitive, we must spend moneyperiodically to keep the properties well maintained, modernized and refurbishedsuch as the upgrading the restaurants and of the technological infrastructureat the Resort.  These expenditures resultin an ongoing need for cash. To the extent we cannot fund expenditures fromcash generated by the Resort’s operations, we must seek to obtain funds byborrowing or otherwise. We may be unable to find 

10

----

such financing on favorable terms, if at all. To theextent that we are unsuccessful in obtaining such financing, it could adverselyimpact the Resort’s results from operations and distributions to the RentalPool Participants.

Asdiscussed previously, we are currently negotiating the terms of a three yearnon-revolving credit facility with a Tampa community bank for approximately$1,200,000.  The proceeds of which wouldbe used to finance renovations at the Resort restaurants, information technologyinfrastructure upgrades and other property improvements at the Resort and tocover short-term working capital shortfalls. The three condominium units that we own at the Resort will serve ascollateral for this loan.  We are alsoseeking to obtain a revolving accounts receivable line of credit for at least$500,000.  However, there can be noassurance that we will enter into this loan facility or that we will be able toobtain an accounts receivable credit line.

***Ourinvestment in the Resort is subject to numerous risks, which could adverselyaffect our income.***

As aresult of our ownership of the Resort, we are subject to the risks thatgenerally relate to investments in real property. The investment returnsavailable from equity investments in real estate such as the Resort depends inlarge part on the amount of income earned and capital appreciation generated bythe Resort, reduced by the expenses incurred to operate it. In addition, avariety of other factors affect both income from the Resort and the Resort’sreal estate value, including governmental regulations, real estate, insurance,zoning, tax and eminent domain laws, interest rate levels and the availabilityof financing. When interest rates increase, the cost of developing, expandingor renovating real property increases and real property values may decrease asthe number of potential buyers decreases. Any of these factors could have amaterial adverse impact on our results of operations or financial condition. Ifthe Resort does not generate revenue sufficient to meet operating expenses,including debt service and capital expenditures, our income will be adverselyaffected.

***Environmentalregulations may increase the Resort’s costs, or limit our ability to develop,use or sell the Resort.***

Environmentallaws, ordinances and regulations of various federal, state, local and foreigngovernments impact our properties and could make us liable for the costs ofremoving or cleaning up hazardous or toxic substances on, under, or in propertywe currently own or operate. These laws could impose liability without regardto whether we knew of, or were responsible for, the presence of hazardous ortoxic substances. The presence of hazardous or toxic substances, or the failureto properly clean up such substances when present, could jeopardize our abilityto develop, use, sell or rent the real property or to borrow using the realproperty as collateral. If we arrange for the disposal or treatment ofhazardous or toxic wastes, we could be liable for the costs of removing orcleaning up wastes at the disposal or treatment facility, even if we neverowned or operated that facility. Other laws, ordinances and regulations couldrequire us to manage, abate or remove lead or asbestos containing materials.Certain laws, ordinances and regulations, particularly those governing themanagement or preservation of wetlands, coastal zones and threatened orendangered species, could limit our ability to develop, use, or sell theResort. Further, in the event that environmental obligations prevent us fromdeveloping, using or selling the Resort, distributions to the Rental PoolParticipants may be adversely affected either directly or as a result ofreduced funding for the marketing and operation of the Rental Pool.

***Althoughthe courts have delivered favorable rulings in the Land Use Lawsuits to whichwe are a party, in the event that the ultimate rulings in these matters areunfavorable to us, the value of Parcel F and the Resort would be adverselyaffected.***

Asdiscussed in further detail under the heading “Legal Matters” in Part I, Item 3of this report, on March 10, 2005 we filed a motion to intervene as adefendant in the lawsuit titled Innisbrook Condominium Association, Inc.,C. Frank Wreath, Meredith P. Sauer, and Mark Banning (as plaintiffs) vs.Pinellas County, Florida, Golf Host Resorts, Inc. and Innisbrook F LLC (asdefendants), Case No. 043388CI-15. This matter relates to Parcel F. InApril 2005, a subsequent lawsuit relating to this matter was filed. We arealso a defendant in this subsequent lawsuit. In this report, we refer to theMarch 2005 and the April 2005 lawsuits collectively as the Land Use Lawsuits.

OnJanuary 6, 2006, the court ruled in favor of all defendants and againstall plaintiffs as to each count in both cases. On March 8, 2006, the court formally entered its final judgment onthe record ruling in favor of the defendants on all counts and denying allclaims asserted by the plaintiffs in both cases. On April 4, 2006, theplaintiffs in the consolidated cases filed a notice of appeal.  The Appeal Court heard oral argument onFebruary 14, 2007.  The Appeal Courtaffirmed per curium, or by the whole court instead of just one judge, theCircuit Court judgment in favor of the defendants on February 28, 2007 and deniedthe plaintiff-appellants’ motion for attorneys fees.  On March 14, 2007, the plaintiff-appellantsfiled a motion requesting the Appeal Court to rehear their claims.  The Appeal Court has not yet responded tothis motion.

11

----

In theevent that the Appeal Court grants the plaintiffs request to rehear the caseand in the event that the plaintiffs then convince the Appeal Court to overturnthe February 28, 2007 ruling, we could lose all or substantially all of ourland use and development rights with respect to Parcel F. Such an unfavorableresult could adversely impact our ability to realize the benefits from theproposed development of Parcel F. In addition, if the defendants do notultimately prevail in the rehearing of the Land Use Lawsuits and a court subsequentlyapplies a similar interpretation of our rights with respect to the remainingdevelopable units at the Resort, our land use and development rights in thoseremaining units could be jeopardized, adversely effecting both our ability todevelop the Resort and the value of the Rental Pool units.

***So-calledacts of God, terrorist activity and war could adversely affect the Resort.***

TheResort’s financial and operating performance may be adversely affected byso-called acts of God, such as natural disasters, in Florida and in areas ofthe world from which we draw a large number of guests. Similarly, wars(including the potential for war), terrorist activity (including threats ofterrorist activity), political unrest and other forms of civil strife and geopoliticaluncertainty have caused in the past, and may cause in the future, our resultsto differ materially from anticipated results. The returns to participants inthe Rental Pool could be adversely impacted in the event that acts of God, waror terrorism impact the Resort’s ability to attract guests.

***Somepotential losses of the Resort are not covered by insurance.***

Wecarry comprehensive insurance coverage for general liability, property,business interruption and other risks with respect to the Resort. Our policiesoffer coverage features and insured limits that we believe are customary forsimilar types of property. Generally, our “all-risk” property policies providethat coverage is available on a per occurrence basis and that, for eachoccurrence, there is a limit as well as various sub-limits on the amount ofinsurance proceeds we can receive. In addition, there may be overall limitsunder the policies. Sub-limits exist for certain types of claims such asservice interruption, abatement, expediting costs or landscaping replacement,and the dollar amounts of these sub-limits are significantly lower than thedollar amounts of the overall coverage limit.

Inaddition, there are also other risks such as war, certain forms of terrorismsuch as nuclear, biological or chemical terrorism, acts of God such ashurricanes and earthquakes and some environmental hazards that may be deemed tofall completely outside the general coverage limits of our policies or mayeither be uninsurable or too expensive to justify insuring against.

***Ourgolf course operations at the Resort are currently managed by an outsidemanager, Troon.  On February 22, 2007, wesent Troon a notice of termination in regards to the Facilities ManagementAgreement pursuant to which Troon manages the golf operations at the Resort. Weand Troon are in the process of negotiating the terms and conditions of thetermination and we may not negotiate a sstisfactory terminationarrangement.  As a result of thetermination of Troon’s Facilities Management Agreement, the Resort’s results ofoperations could be adversely affected.***

Troon continues tomanage the golf facilities at the Resort pursuant to a Facility ManagementAgreement that we assumed upon Westin’s termination on October 31, 2006. OnFebruary 22, 2007, we sent Troon a notice of termination in regards to theFacilities Management Agreement pursuant to which Troon manages the golfoperations at the Resort. We and Troon are in the process of negotiating theterms and conditions of the termination and we may not negotiate a satisfactorytermination arrangement.   FollowingTroon’s termination, we currently intend to manage the golf operationsinternally. If we do not prove to be as successful as Troon in managing theResort’s golf operations, the Resort’s results of operations could be adverselyaffected.  Also, upon Troon’stermination, certain of the Troon employees employed at the Resort may decideto stay with Troon and leave the Resort. We face the risk that we may not be able to replace these employees withequally qualified employees with golf or Resort industry experience.

***Asustained increase in energy costs may negatively impact the Resort’s resultsby increasing its energy-related costs and by discouraging potential guestsfrom traveling and taking part in recreational activities.***

Duringthe past year, energy costs in the United States have increased substantially.Energy costs represent an increasingly larger percentage of the costs of theResort, and we expect energy costs to increase in both absolute and relativeterms in future periods. In addition, we expect that higher energy costs willnegatively affect the Resort by discouraging travel and recreationalactivities. In particular, potential guests of the Resort are less likely totravel as they bear the impact of higher energy costs either through higherairline fares or through increased gasoline prices, or a combination of both.In addition, higher energy costs may reduce the disposable income of potentialguests, making them less likely to spend money for travel and recreationalactivities. As a result of these factors, a sustained increase in energy costsmay negatively impact the Resort’s results by increasing its energy-relatedcosts and by discouraging traveling and taking part in recreational activities

12

----

**ITEM 1B. UNRESOLVED STAFF COMMENTS**

Not applicable.

**ITEM 2. PROPERTIES**

The Resort is situated on approximately 1,000 acres ofland located in the northern portion of Pinellas County, Florida, near the Gulfof Mexico. It is approximately nine miles north of Clearwater and approximately20 miles west of Tampa. There are 938 condominium units, 36 of which arestrictly residential, with the balance eligible for Rental Pool participation.Of the 902 remaining eligible units, 500, on average, participate in the RentalPool on a year-to-year basis. See additional discussion in Item 1 under thecaption “Rental Pool Condominiums.” These condominium units are leased by usfrom the condominium owners and used as hotel accommodations for the Resort. GTA-IBCondominium, LLC, which, like us, is a subsidiary of GTA-IB Golf Resort, LLC,owns three condominium units that participate in the rental pool in the samefashion as all other Rental Pool participants. Approximately 25% of the unitshave lockout master bedroom units, which allow the rental of the condominiumunit as two hotel rooms. We estimate that as a result of the potential use oflockout master bedroom units, the average of 500 units participating in theRental Pool at any one time is equivalent to approximately 600 hotel rooms. TheResort complex includes 72 holes of golf; practice ranges; three clubhouseswith retail, golf, and food and beverage outlets; three conference and exhibitbuildings; six swimming pools including a themed water attraction; a recreationcenter; a tennis/fitness facility and numerous administrative and supportstructures. These amenities are owned by us. Substantially all of the assets ofthe Resort are encumbered by the mortgage held by GTA, LP.

**ITEM 3. LEGAL PROCEEDINGS**

In the normal course of our operations, we are subjectto claims and lawsuits. We do not believe that the ultimate resolution of suchmatters will materially impair operations or have an adverse effect on ourfinancial position and results of operations.

*Land UseLawsuit*

OnMarch 10, 2005 in the Circuit Court of the Sixth Judicial Circuit, in andfor Pinellas County, Florida, Civil Division, we filed a Motion to Intervene inthe lawsuit titled Innisbrook Condominium Association, Inc., C. FrankWreath, Meredith P. Sauer, and Mark Banning, as the Plaintiffs vs. PinellasCounty, Florida, Golf Host Resorts, Inc. and Innisbrook F LLC, as theDefendants, Case No. 043388CI-15. We refer to this lawsuit as the InitialLand Use Lawsuit.

Theplaintiffs filed a multi-count complaint, or the Complaint, seeking injunctiveand declaratory relief with respect to the land use and development rights ofParcel F.  The Plaintiffs allege thatthere are no remaining development units (residential units) available to bedeveloped within the Resort property and owned by an unaffiliated third-party,GHR. On March 29, 2005, we filed a Motion to Intervene as a defendant inthe Initial Land Use Lawsuit in order to protect our property and our land useand development rights with respect to Parcel F and our property. A hearing onthe Motion to Intervene was held on April 4, 2005, after which the courtgranted our Motion to Intervene. On April 5, 2005, we joined in the filingof a Motion to Dismiss and Motion to Strike three of the seven counts of theComplaint. The court granted the Motion to Dismiss on April 26, 2005. Onthat same date, four individuals (Joseph E. Colwell, Marcia G. Colwell, Kirk E.Covert, Deborah A. Covert) and Autumn Woods Homeowner’s Association, Inc.moved to intervene in the Initial Land Use Lawsuit which the court subsequentlyallowed.

OnApril 8, 2005, a separate suit, or the Subsequent Land Use Lawsuit, wasfiled by James M. and Mary H. Luckey and Andrew J. and Aphrodite B. McAdams.That suit seeks injunctive and declaratory relief in six separate counts, allrelating to the land use and development rights of Parcel F. This suit wasconsolidated with the Initial Land Use Lawsuit on May 3, 2005. AfterMay 6, 2005 we filed a Motion to Dismiss the Subsequent Land Use Lawsuit.

TheCompany refers to the Initial Land Use Lawsuit and the Subsequent Land useLawsuit as the “Land Use Lawsuits.” The motion was heard by the court onMay 31, 2005. Since that hearing, we have filed our Answer and AffirmativeDefenses to both complaints that have been filed in the consolidated action. OnAugust 3, 2005, a case management conference was held before the judge. Atthat hearing, the court scheduled a hearing on the defense motions for summaryjudgment for August 30, 2005, and a trial starting December 12, 2005.On August 30, 2005, the judge heard extensive argument on the defensemotions for summary judgment and entered a number of rulings in the defendants’favor. In summary, the court dismissed those claims in the Initial Land Use Lawsuitand the Subsequent Land Use Lawsuit which are founded upon the theory that theproposed development is inconsistent with the Pinellas Countywide Plan andRules adopted pursuant to Chapter 73-594, Laws of Florida. The courtfurther dismissed for lack of jurisdiction those claims of the plaintiffs inthe Subsequent Land Use Lawsuit that are based on the theory that the proposeddevelopment is 

13

----

inconsistent with the Pinellas Comprehensive Plan. Thecourt entered a similar ruling on Counts I, II, VIII-XV of the ThirdAmended Complaint as to some (but not all) of the plaintiffs in the InitialLand Use Lawsuit.

Thedefendants in the Initial Land Use Lawsuit also filed a Motion to Strike thePlaintiffs’ Demand for Jury Trial. In the face of that motion, the plaintiffsdropped their jury trial demand and the court confirmed by order datedSeptember 21, 2005 that this case will not be tried by a jury. The courtthen entered an order scheduling the remaining claims for non-jury trial duringDecember 2005.

Inaddition, the plaintiffs in the Initial Land Use Lawsuit have filed a motionfor summary judgment. The court set the hearing date for the summary judgmentreview for December 7, 2005. From December 19 throughDecember 23, 2005, the court tried these consolidated cases in a non-jurytrial. At the conclusion of the evidentiary portion of the trial, the courtdeferred final argument until January 6, 2006. On that date, finalargument took place before the court at the conclusion of which the courtrendered its decision. The court ruled in favor of all defendants and againstall plaintiffs as to each count in both cases. Subsequent to the court’s oralrulings, defense counsel prepared a proposed final judgment which reflects thecourt’s factual findings and legal conclusions. On March 8, 2006, the courtformally entered its final judgment on the record ruling in favor of thedefendants on all counts and denying all claims asserted by the plaintiffs inboth Land Use Lawsuits. On March 31, 2006, the plaintiffs in the consolidatedcases filed a notice of appeal.  TheSecond District Court of Appeal heard oral argument on February 4, 2007.  The Appeal Court affirmed per curium, or bythe whole court instead of just one judge, the Circuit Court judgment in favorof the defendants on February 28, 2007 and denied the plaintiffs-appellants’motion for attorney fees.   On March 13,2007, the plaintiffs filed a motion for the Appeal Court of Appeal to reheartheir claims.   As of March 26, 2007, theAppeal Court has not yet responded to this motion.

As anintervenor in the Initial Land Use Lawsuit, we sought to obtain a ruling fromthe court which preserves and protects our property, the land use anddevelopment rights with respect to Parcel F and our property in order tomaximize the value of those rights as they relate both to Parcel F and theResort in general.  See furtherdiscussion of the Land Use Lawsuits under the heading “Risk Factors” inPart I, Item 1A of this report**.**

In theevent that the Court grants the plaintiffs request to rehear their claims andthe defendants in the Land Use Lawsuits do not prevail in the rehearing, theowner of Parcel F might lose all or substantially all of its land use anddevelopment rights with respect to Parcel F. As a result, our ability torealize the benefits from the proposed development of Parcel F, such as newclub memberships, would be adversely impacted. In addition, failure by thedefendants to prevail in the appeal of the Land Use Lawsuits could jeopardizeour land use and development rights in the remaining units that wemay have the opportunity to develop at the Resort if a court subsequentlyapplies a similar interpretation of our rights with respect to those units. Inthat instance, we might lose all or substantially all of those rights withrespect to the remaining units. As a result of a successful challenge to ourland use and development rights relating to the remaining units at the Resort,our ability to develop or sell the Resort would be adversely affected.

*Wall Springs Conservatory, Inc. Complaint*

OnJuly 13, 2006, Wall Springs Conservatory, Inc., or Wall Springs,  filed suit against GTA-IB as successor ininterest to Golf Host Resorts, Inc. in the circuit court of Pinellas County fordeclaratory relief.  On July 14, 2006, WallSprings also filed suit against us in the small claims division of the PinellasCounty Court in connection with an easement agreement.  We answered both claims, also assertingaffirmative defenses and counterclaims in each action.  We then filed a motion to transfer the smallclaims matter to Circuit Court, which was granted on September 27, 2006.  We then moved to consolidate these twocases.  Our motion to consolidate was grantedby the Circuit Court on March 1, 2007 and the parties are awaiting entry of theorder.

*PropertyTax Lawsuit*

We filed lawsuits against the property appraiser ofPinellas County Florida, or Pinellas County, to challenge the 2004, 2005 and2006 real estate assessment on the Resort property. Pinellas County filed amotion to dismiss, which was denied by the court. No trial date has been set.If Pinellas County were to prevail, management believes that there would be nomaterial adverse effect upon our financial statements, as the entire PinellasCounty assessment is fully accrued and accounted for at December 31, 2006.

**ITEM 4. SUBMISSION OF MATTERS TOA VOTE OF SECURITY HOLDERS**

Not applicable.

14

----

**PART II**

**ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**

**MarketInformation**

We are a single member limited liability company anddo not have any stock. Our membership interests are not publicly traded.

There are a total of 902 condominium units allowingRental Pool participation by their owners, of which three are owned by ouraffiliate GTA-IB Condominium, LLC. Of the units not owned by GTA-IBCondominium, LLC, 878 were sold by GHR under Registration Statements filed byGHR that were declared effective by the Securities and Exchange Commission onor before March 1, 1983. The remaining 21 units were sold via privateofferings exempt from registration with the Securities and Exchange Commission.As of December 31, 2006, approximately 850 different owners hold thecondominium units not owned by us or by our affiliates.

Those condominium units sold by GHR, which allowRental Pool participation, are deemed to be securities because of the RentalPool feature. These units are referenced in this report as Rental Poolsecurities. While the Rental Pool securities are deemed securities pursuant tothe Securities Act of 1933, as amended, there is no market for such securitiesother than the normal real estate market. As such, certain items referencedunder the heading “Risk Factors” in Part I, Item 1A of this report may have amore significant effect due to this lack of liquidity and the fact that thelease agreements governing Rental Pool participation generally provide theparticipants in the Rental Pool with an annual right to terminate theirparticipation in the pool.

Since the Rental Pool securities are real estate, nodividends have been paid or will be paid to their owners. However, the RentalPool lease agreements provide that the Rental Pool participants are entitled toa contractual distribution paid quarterly in exchange for our right to usetheir condominium units in the Rental Pool.

**EquityCompensation Plans**

We do not have any equity compensation plans.

**RecentSales of Unregistered Securities**

Not applicable.

**ITEM 6. SELECTED FINANCIAL DATA**

The following selected financial data should be readin conjunction with our consolidated financial statements and the related notesand “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” included elsewhere in this report. Historical results are notnecessarily indicative of the results to be expected in the future.  All numbers in the table and in thedisclosures that follow are presented in thousands except for the statisticaldata.

15

----

 
| ** **                                                 | ** ** | ** **                                                         | ** ** | ** **                                             | ** ** | ** **                                | ** ** | **Predecessor Basis(1)**                | ** ** |
|------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|--------------------------------------------------------|------------|-------------------------------------------|------------|-----------------------------------------|------------|
| ** **                                                 | ** ** | **Year ended   December 31, 2006**             | ** ** | **Year ended   December 31, 2005** | ** ** | **Period  7/16/04 to 12/31/04** | ** ** | **Period  1/1/04 to 7/15/04** | ** ** | **Year ended  December 31, 2003** | ** ** | **Year ended  December 31, 2002** | ** ** |
| ** **                                                 | ** ** | **(in thousands,  except average daily Rental Pool distribution)** | ** ** |
| **Revenue**                                                |       |                                                               |       |                                                   |       |                                      |       |                                    |       |   |   |   |   |
| Hotel                                                      |       | $                                                                  | 13,407     |                                                   | $          | 13,335                                    |       | $                                       | 4,356      |   | $ | 6,672 |   | $ | 11,786 |   | $ | 12,156 |   |
| Food and beverage                                          |       | 11,896                                                             |       | 11,557                                                 |       | 4,445                                     |       | 5,824                                   |       | ,12,102 |   | 11,336 |   |
| Golf                                                       |       | 13,925                                                             |       | 13,352                                                 |       | 4,248                                     |       | 7,334                                   |       | 11,269 |   | 11,852 |   |
| Other                                                      |       | 2,613                                                              |       | 3,637                                                  |       | 1,174                                     |       | 2,793                                   |       | 3,778 |   | 5,252 |   |
| Total revenue                                              |       | $                                                                  | 41,841     |                                                   | $          | 41,881                                    |       | $                                       | 14,223     |   | $ | 22,623 |   | $ | 38,935 |   | $ | 40,596 |   |
| **Net loss**                                               |       | $                                                                  | (4,861     | )                                                      | $          | (4,050                                    | )          | $                                       | (4,440     | ) | $ | (6,345 | ) | $ | (11,466 | ) | $ | (9,178 | ) |
| **Cash********dividends per common share/LLC Interest(2)** |       | —                                                             |       | —                                                 |       | —                                    |       | —                                  |       | — |   | — |   |
| **Average  daily Rental Pool distribution(3)**             |       | $                                                                  | 22.06      |                                                   | $          | 23.28                                     |       | $                                       | 14.71      |   | $ | 20.62 |   | $ | 18.32 |   | $ | 20.21 |   |
| **Total Rental Pool distribution, net(4)**                 |       | $                                                                  | 4,671      |                                                   | $          | 4,996                                     |       | $                                       | 1,473      |   | $ | 2,383 |   | $ | 3,932 |   | $ | 4,415 |   |
| **Total  assets**                                          |       | $                                                                  | 49,374     |                                                   | $          | 54,095                                    |       | $                                       | 55,694     |   | $ | 96,025 |   | $ | 60,933 |   | $ | 62,516 |   |
| **Long-term  obligations**                                 |       |                                                               |       |                                                   |       |                                      |       |                                    |       |   |   |   |   |
| Notes payable                                              |       | $                                                                  | 39,240     |                                                   | $          | 39,240                                    |       | $                                       | 39,240     |   | $ | 78,975 |   | $ | 78,975 |   | $ | 79,004 |   |
| Capital leases                                             |       | $                                                                  | 428        |                                                   | $          | 625                                       |       | $                                       | 612        |   | $ | 761 |   | $ | — |   | $ |   |   |
| Other obligations                                          |       | $                                                                  | 7,154      |                                                   | $          | 13,478                                    |       | $                                       | 11,489     |   | $ | 21,932 |   | $ | 18,481 |   | $ | 17,069 |   |

 

----

(1)           The predecessor basis financialstatements for the period January 1, 2004 to July 15, 2004 and theyears ended December 31, 2003 and 2002 represent the operating results ofGolf Host Resorts, Inc. The predecessor’s financial statements for 2004are included in Item 15 herein. Those financial statements include assets andliabilities at carrying values that differ from ours; therefore, directcomparisons may not be made between periods.

(2)           We have not made any distributions toour sole member and do not intend to make any distributions to our sole memberin the near term.

(3)           The average daily Rental Pooldistribution is calculated by dividing the Rental Pool distribution by thetotal available room nights.

(4)           The total Rental Pool distribution isreflected net of allowable deductions for Lessee Advisory Committee expensespursuant to the Master Lease Agreement.

**ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATION**

We were formed on December 30, 2002. We are awholly owned subsidiary of GTA-IB Golf Resort, LLC. GTA-IB Golf Resort, LLC isa wholly owned subsidiary of GTA, LP, the operating partnership of GTA. GHR, anentity affiliated with Starwood Capital Group LLC, is the former owner of theResort and the former borrower under a $79 million participating mortgageloan funded by GTA, LP in June 1997. This participating mortgage loan wassecured by the Resort, cash, certain shares of GTA’s common stock held by GHRand excess land at the Resort. The Resort is a 72-hole destination golf andconference facility, with a private club component, located near Tampa,Florida.

GHR became delinquent in its interest payments on theloan from GTA, LP in November 2001. On March 8, 2002, GTA, LPdelivered a legal notice to GHR accelerating the entire amount of GHR’sindebtedness to GTA, LP as a result of GHR’s continuing default under theparticipating mortgage loan. GTA, LP also notified Westin, the manager of theResort, that it deemed Westin to be in breach under its subordination agreementwith GTA, LP as a result of Westin’s failure to remit payment of funds to GTA,LP on behalf of GHR. The participating mortgage loan was a non-recourse loan.Accordingly, following an event of default thereunder, GTA, LP and GTA couldnot bring a legal action directly against GHR to compel payment. Rather, GTA,LP’s only recourse was to proceed against the guarantors and/or to forecloseupon GHR and the Resort’s assets, three condominiums then owned by GHR, certainshares of GTA’s common stock held by GHR and any other property of GHR that hadbeen pledged as collateral to secure GTA, LP’s loan.

We andGTA, LP entered into the Settlement Agreement dated July 15, 2004 withGHR, Golf Hosts, Inc., Golf Host Management, Inc. and Golf HostCondominium, Inc. The Settlement Agreement settled a number of issuesbetween the parties, including GHR’s default under the $79 million loanmade by GTA, LP to GHR in June 1997. As part of the Settlement Agreement,we took ownership of the Resort effective July 16, 2004. Also, inconnection with the Settlement Agreement, we entered into a managementagreement with Westin providing for Westin’s management of the Resort, andWestin and Troon entered into a facility Management Agreement providing forTroon’s management of the golf facilities at the Resort.  By mutual agreement, the Westin ManagementAgreement was terminated on October 31, 2006. On February 22, 2007, we sent Troon a notice of termination in regardsto the Facilities Management Agreement and are in the process of negotiatingthe terms and conditions.  We intend tomanage the golf operations internally following the termination of the Troonmanagement agreement.

16

----

 

GTA, LP had previously entered into an agreement withGHR and the prospective purchaser of a parcel of undeveloped land within theResort known as Parcel F. This agreement, known as the Parcel F DevelopmentAgreement, was executed on March 29, 2004 and held in escrow pendingexecution of the Settlement Agreement and consummation of related transactions.The Parcel F Development Agreement, which we and our affiliates entered into asa means to avoid interference with the operations of the Resort, sets forth theterms and conditions under which Parcel F may be developed, includingrestrictions on the owner of Parcel F in favor of us as owner of the Resort.

See a more detailed discussion of the Westin, Troonand Parcel F agreements and related recent developments under the caption “*Background*” in Item 1 of this Annual Report on Form 10-K.

**CriticalAccounting Policies**

The following accounting policies are consideredcritical by our management. These and other accounting policies require thatestimates be made based on assumptions and judgment, which affect revenues,expenses, assets, liabilities and disclosure of contingencies in our financialstatements. These estimates and assumptions are based on historical experienceand on various other factors that are believed to be reasonable under thecircumstances. However, actual results may differ from these estimates due todifferent conditions.

*Impairmentof Long-Lived Assets*

We periodically review our long-lived assets forimpairment by comparing the carrying values of the assets with their estimatedfuture undiscounted cash flows. If it is determined that an impairment loss hasoccurred, the loss is recognized during that period. The impairment loss iscalculated as the difference between asset carrying values and fair value asdetermined by discounted cash flow analysis, giving consideration to recentoperating performance and pricing trends.

The settlement was accounted for using methodsconsistent with purchase accounting in accordance with Statement of Financial AccountingStandards, or SFAS, No. 141 “Business Combinations.”  The settlement amount was allocated to thenet assets acquired, including the liabilities assumed as of July 15,2004, based upon their estimated fair values as of that date. The settlement amountwas allocated in the table below (in thousands):
| Current assets            |   | $      | 4,621  |   |
|---------------------------|--------|--------|--------|--------|
| Property &  Equipment |   | 28,850 |   |
| Intangible Assets         |   | 20,170 |   |
| Other Assets              |   | 2,454  |   |
| Total assets              |   | $      | 56,095 |   |
| Current liabilities       |   | $      | 6,219  |   |
| Long term liabilities     |   | 10,636 |   |
| Loan payable to GTA, LP   |   | 39,240 |   |
| Total liabilities         |   | $      | 56,095 |   |

 

In reviewing for impairment of our long lived assets,we review the financial performance of the Resort in the aggregate for materialvariances from our expectations of the Resort’s revenues. The Resort’sperformance remained stable since we took title to it on July 15, 2004 and,based upon bookings, this trend indicates this stabilized performance willcontinue through 2007. Therefore, there were no significant impairment lossesrelated to long-lived assets for year ended December 31, 2006.   The value of our primary long-lived asset,Parcel F, was reduced from $2,200, which was the derived value at July 15,2004, to $1,490 due to the fact that $710 of this value was transferred toGTA.  See further discussion of thedetails of this transfer in Item 1 of this Annual Report on Form 10K.   Due to the fact that the assumptions that weapplied to derive the original value of Parcel F and our other intangibleassets have not materially changed, there is no significant impairment lossreported for the year ended December 31, 2006.

*Intangibleassets*

We evaluate intangible assets for impairment annuallyor if a significant event occurs or circumstances change. Factors we considerimportant, and which could indicate impairment, include the following:(i) significant underperformance relative to historical or projectedfuture operating results; (ii) significant changes in the manner of ouruse of the acquired assets or the strategy for our overall business; and (iii) significantnegative industry or economic trends.

We place our intangible assets in the followingcategories: (i) the water contract; (ii) club memberships;(iii) the trademark and the trade name; (iv) the Rental Pool; and(v) guest bookings. The valuation of the water contract is based on theprojected annual savings associated with having this contract. The watercontract has an indefinite life. The value of the 

17

----

clubmembership is derived from our membership base. There have been no materialchanges in the number of members of our club. The valuation of the trademarkand trade name is derived from the residual revenue stream from the Resortrevenues that is attributed to the Innisbrook trade name. We attribute anindefinite life to the trademark and trade name. The valuation of the RentalPool is based on estimates of revenue derived by us from our Rental Pooloperations. The Rental Pool’s valuation is dependent on maintaining a specificnumber of units in the Rental Pool to accommodate the Resort operations. Theintangible asset recorded for the guest bookings that we assumed on July 15,2004 was fully amortized as of June 2006. There has been no material change inthe number of participating condominium units in the Rental Pool during theperiod.

During the fourth quarter of 2006, we reviewed ourintangible assets, and based on the results, we determined that no impairmentof intangible assets existed at December 31, 2006, and there have been noindicators of impairment since that date. A subsequent determination that theintangible assets are impaired, however, could have a significant adverseimpact on our results of operations or financial condition.

*RevenueRecognition*

Revenue from rooms, green fees, cart rentals, food andbeverage sales, merchandise sales, and range income are generally recognized atthe time of sale. Membership dues are recognized ratably over the applicableperiod.

The membership initiation fees at the Resort arenonrefundable and are initially recorded when received as deferred revenue andamortized over the average life of a membership which, based on historicalinformation, is deemed to be ten years for full golf memberships and five yearsfor resort, executive and tennis memberships.

**Resultsof Operations**

We****took title tothe Resort at 12:00 a.m. on July 16, 2004. As a result, the financial resultsof GHR, the predecessor owner, are included below for the periods prior toJuly 16, 2004. The predecessor owner’s results are included only forcomparative purposes. While the operations of the Resort have remainedsubstantially unchanged with respect to the manner of recording revenues andexpenses, the financial statements of the predecessor owner include assets andliabilities at carrying values that differ from the carrying values presentedin our financial statements. As a result, there can be no assurances that thecomparative information provided below is not impacted to some degree by thechange in the carrying values of the assets and liabilities between thepredecessor owner’s financial statements and our financial statements.

Utilization of the Resort facilities during the pastthree years by facility type is illustrated in the table below:

|                                              | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|----------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Available room  nights                       |       | 211,710  |       | 214,580  |       | 215,716  |       |
| Actual room  nights                          |       |     |       |     |       |     |       |
| Group                                        |       | 55,806   |       | 59,138   |       | 51,606   |       |
| Transient                                    |       | 29,706   |       | 39,281   |       | 32,858   |       |
| Total room nights                            |       | 85,512   |       | 98,419   |       | 84,464   |       |
| Average room  rate                           |       | $        | 156.78     |     | $          | 135.49   |       | $ | 130.55 |   |
| Food and  beverage covers                    |       | 398,459  |       | 406,175  |       | 379,059  |       |
| Average food  check                          |       | $        | 20.26      |     | $          | 19.40    |       | $ | 18.47 |   |
| Golf Rounds                                  |       |     |       |     |       |     |       |
| Resort guests                                |       | 70,351   |       | 79,312   |       | 70,672   |       |
| Member/guests                                |       | 38,333   |       | 39,694   |       | 37,577   |       |
| Total golf rounds                            |       | 108,684  |       | 119,006  |       | 108,249  |       |
| Total golf  revenue per golf round           |       | $        | 128.13     |     | $          | 112.20   |       | $ | 106.99 |   |
| Golf course maintenance  cost per golf round |       | $        | 35.62      |     | $          | 32.53    |       | $ | 34.81 |   |

 

18

----

 

The 2004 CombinedStatements of Loss are used as a reference for the comparative analysis ofchanges in operating results in the table below and in the discussion thatfollows (in thousands, except for statistical data):
| ** **                           | ** ** | ** **            | ** ** | ** **            | ** ** | ** **            | ** ** | ** **           | ** ** | **Period**           | ** ** |
|--------------------------------------|------------|-----------------------|------------|-----------------------|------------|-----------------------|------------|----------------------|------------|----------------------|------------|
|                                 |       |                  |       |                  |       | **Year**              |       |                 |       | **01/01/04 to** |       |
|                                 |       | **Year Ended**   |       | **Year Ended**   |       | **Ended**             |       | **Period**           |       | **07/15/04**         |       |
|                                 |       | **December 31,** |       | **December 31,** |       | **December 31,** |       | **07/16/04 to** |       | **(Predecessor**     |       |
|                                 |       | **2006**              |       | **2005**              |       | **2004**              |       | **12/31/04**         |       | **Basis)**           |       |
| Revenues                             |       |                  |       |                  |       |                  |       |                 |       |                 |       |
| Hotel                                |       | $                     | 13,407     |                  | $          | 13,335                |       | $                    | 11,028     |                 | $          | 4,356 |   | $ | 6,672 |   |
| Food and beverage                    |       | 11,896                |       | 11,557                |       | 10,269                |       | 4,445                |       | 5,824                |       |
| Golf                                 |       | 13,925                |       | 13,352                |       | 11,582                |       | 4,248                |       | 7,334                |       |
| Other                                |       | 2,613                 |       | 3,637                 |       | 3,967                 |       | 1,174                |       | 2,793                |       |
| Total revenues                       |       | 41,841                |       | 41,881                |       | 36,846                |       | 14,223               |       | 22,623               |       |
| Expenses                             |       |                  |       |                  |       |                  |       |                 |       |                 |       |
| Hotel                                |       | 11,139                |       | 11,411                |       | 9,749                 |       | 4,138                |       | 5,611                |       |
| Food and beverage                    |       | 8,742                 |       | 8,140                 |       | 7,886                 |       | 3,238                |       | 4,648                |       |
| Golf                                 |       | 7,655                 |       | 7,620                 |       | 7,423                 |       | 3,173                |       | 4,250                |       |
| Other(a)                             |       | 10,554                |       | 9,902                 |       | 9,003                 |       | 4,100                |       | 4,903                |       |
| General and  administrative expenses |       | 5,026                 |       | 4,744                 |       | 4,899                 |       | 2,096                |       | 2,803                |       |
| Depreciation and  amortization       |       | 2,036                 |       | 2,479                 |       | 2,875                 |       | 1,249                |       | 1,626                |       |
| Total expenses                       |       | 45,152                |       | 44,296                |       | 41,835                |       | 17,994               |       | 23,841               |       |
| Operating loss                       |       | (3,311                | )          | (2,415                | )          | (4,989                | )          | (3,771               | )          | (1,218               | )          |
| Interest expense, net                |       | (1,550                | )          | (1,635                | )          | (5,796                | )          | (669                 | )          | (5,127               | )          |
| Net loss                             |       | $                     | (4,861     | )                     | $          | (4,050                | )          | $                    | (10,785    | )                    | $          | (4,440 | ) | $ | (6,345 | ) |

----

(a)             Includesnet rental pool distributions of approximately $4,808, $4,996 and $3,856for  the years ended December 31, 2006,2005 and 2004, respectively.

**2006Compared to 2005**

During the year ended December31, 2006, there were 12,907, or 13.1%, fewer occupied room nights than therewere for year ended December 31, 2005. During the year ended December 31, 2006, there were 9,575 fewer transientroom nights and 3,332 fewer group room nights, resulting in a combined 12,907fewer occupied room nights as compared to the period ended December 31,2005.  In addition, to the roomnight decrease, overall density, or the number of average guests per roomnight, also decreased from 1.7 to 1.6 for the years ended December 31,2005 and 2006, respectively. We believe thedecrease in transient room nights could be attributed to the mild weather inthe winter and spring months experienced during 2006 in the northernstates.  Because the winter and springmonths were much warmer in the northern states during 2006 than in 2005, webelieve that transient guests and golf package guests were less inclined tovisit the southern states.  As describedabove, we also believe that transient room nights decreased in the latesummer/early fall months due to guest hesitancy to book rooms on the southeastcoast of Florida during the hurricane season. We also believe the decrease in group room nights was a result of our decisionto target higher revenue producing group types as opposed to certain types ofgroups that booked in the prior year and were not as profitable.  In addition, we believe that the decrease ingroup room nights was due to the fact that our sales and marketing departmenthad four vacant positions for varying periods of time between February and June2006 which hindered the sales and marketing staff’s ability to book to the samelevels as in prior periods.  The salesteam is now fully staffed and we believe that the sales productivity has begunto increase.

The decline in the occupied roomnights during the year ended December 31, 2006 was offset by improved averageroom rates and ancillary spending patterns of the Resort’s guests, coupled withincreases in catering, room service and pool food and beverage  sales. Total revenue for the Resort decreasedby $40 during the year ended December 31, 2006 than in the year ended December31, 2005. An overall increase in spending by the Resort’s guests, both for roomsand by package guests for food and beverages, offset the majority of thereduction in gross revenue that resulted from the lower number of room night inthe year ended December 31, 2006 as compared to the same period of 2005.  The average room rate increased from $135.49in 2005 to $156.78 in 2006.  Aggregatespending per room night during the year ended December 31, 2006 was $489.49, ascompared to $425.68 during the same period in 2005.   The most significant increase in revenues atthe Resort during the year ended December 31, 2006 occurred in Golf department.Revenues of that department increased by approximately $573, or 4.3%, for theyear ended December 31, 2006, as compared to the same period in 2005.  Overall food and beverage revenues increased 

19

----

by $339 or 2.9% as the food and beverage total covers(meals) decreased by 7,176.  This netdecrease in covers served was primarily attributed to the Resort’s banquets andcasual restaurants with a combined decrease of approximately 17,390 covers.Covers served in the Resort’s casual restaurants decreased by approximately9,054 covers. These banquet and restaurant reductions were offset by increasesin catering, room service and pool service with an aggregate increase of 9,674covers.  This reduction of restaurantcovers is reflective of the reduced transient and group room nights notedabove.  Food and Beverage revenue percover increased from $28.45 for the year ended December 31, 2005 to $29.85 forthe year ended December 31, 2006, or 4.9% per cover.  Golf revenue increased by approximately $573,primarily as a result of improved capture of revenue per round of golf.  Golf revenue for the year ended December 31,2006 averaged $128.13 per round, as compared to $112.20 per round for thecomparative period in 2005, while the number of rounds played decreased for theperiod.   In the aggregate, while therewere 10,323, or 8.7%, fewer golf rounds, revenues increased as a result of thecapture of higher greens fees and ancillary spending in the pro shops. The netdecrease in aggregate rounds played was attributable to 8,962 fewer roundsplayed by the Resort’s transient guests, including packages, coupled with adecrease of 1,361 rounds played by Resort members.  The number of total golf rounds played in theyear ended December 31, 2006 was 108,684, as compared to 119,006 in the sameperiod of 2005. Golf revenue does not necessarily increase or decrease exactlyin proportion to occupied room nights because golf revenue also includes memberdues and fees and day golf group fees, neither of which is directly related tooccupied room nights. Increases in total revenue due to improved spending ofthe Resort’s guests for the year ended December 31, 2006 as compared to thesame period in 2005 were offset by a decrease in Other Revenue of approximately$1,024.  Other Revenue decreasedprimarily because the Resort did not charge a resort fee for the period ofJanuary 1, 2006 through October 31, 2006.

Consistent with past periods, we continued to monitortotal operating expenses in an attempt to insure that Westin controlledexpenses and that the expenses bore a direct correlation to the room nights,food and beverage covers and golf round demand. Subsequent to the Westin termination on October 31, 2006, we havedirectly monitored and managed these expenses. Aggregate total operating expenses do not generally increase or decreaseon a one-to-one basis with total operating revenue because the Resort mustcarry a minimum fixed operating staff and other support expenses at all times.In those operating departments where the variable costs can best be managed, weseek to manage these costs consistent with room, food and beverage and golfdemand. Total Resort operating expenses, before depreciation and amortizationand excluding the Rental Pool amortization in hotel operations, increased byapproximately $1,300, or 3.1%, for the year ended December 31, 2006 as comparedto the year ended December 31, 2005. This increase of 3.1% is attributable tothe increases in overall payroll and employee benefit costs, energy andinsurance costs.

Administrative and general expenses increased fromapproximately $4,744 to approximately $5,026 for the years endedDecember 31, 2005 and 2006, respectively. This increase of $282, or 1.0%,in administrative and general expenses is primarily due to an increase ofapproximately $334 in bad debt expense resulting from three large group accountbalances that were deemed uncollectible offset by a decrease in payrollexpenses of approximately $255.  Theremaining net increase of approximately $109 represents small fluctuations in anumber of accounts.

Other expenses increased from approximately $9,902 toapproximately $10,554 for the years ended December 31, 2005 and 2006,respectively. The other expense category includes, among other departments,sales and marketing, repairs and maintenance, energy, service express (theResort’s one stop customer service center), and telecommunications. Theincrease of $652, or 6.6%, is primarily due to the following changes: (i) salesand marketing expenses increased by approximately $126, to $3,014, as a resultof additional golf and membership marketing efforts, the use of contractservices and increased payroll and travel expenses; (ii) general insurancepremiums increased by approximately $348; (iii) rising energy costs causedutility expense to increase by approximately $330, from $1,509 to $1,839; (iv)a decrease in property and sales taxes of $115; and (v) the remaining netdecrease of approximately $37 represents small fluctuations in a number ofaccounts.

The Rental Pool distribution (or that portion of roomrevenue attributable to the condominium owners) decreased as a direct result ofthe room revenue decreases noted above. The distribution for the year endedDecember 31, 2006 decreased by approximately $158 from the preceding year.The Rental Pool distributions were approximately $4,808 and $4,966 for theyears ended December 31, 2006 and 2005, respectively.

Depreciation and amortization expense, excluding theRental Pool amortization included in hotel expenses, was approximately $2,036and $2,479 for the year ended December 31, 2006 and 2005, respectively.

Interest expense, net of interestincome, was approximately $1,550, and $1,635 for the year ended December 31,2006 and 2005, respectively, and reflect amortization of the discount on (i)our Rental Pool refurbishment liability in the amount of $682, (ii) ourshort-term liability to Westin in the amount of $447and (iii) our long-termliability to Troon in the amount of $48. As previously discussed, the defaultedparticipating mortgage loan that was assumed by us from GHR, our unaffiliatedborrower, has a balance at December 31, 2006 of $39,240, and becamenon-interest bearing upon our assumption on July 15, 2004.

20

----

The net loss for the year endedDecember 31, 2006 was approximately $4,861, compared to a net loss for the yearended December 31, 2005 of approximately $4,050.

During the year ended December31, 2006, approximately $1,301 of the capital reserve funds was disbursed. Ofthose disbursed funds, $844 was used to pay lease payments on existing andadditional equipment consisting of bellman vehicles, golf carts, golf courseequipment, telephone and cable equipment and the balance was for variouscapital improvement projects and replacements throughout the Resort.

Beginning in 2003, the Rental Pool participation, asrepresented by available room nights in the chart above, has stabilized and theResort appears to be positioned to provide a minimum of 600 rental units throughthe year 2009, or approximately 216,000 available room nights in each of theupcoming years through 2009. Our management believes that the 2009 time framenoted is relevant because this is the time frame in which the condominiumowners have a contractual right to recover 50% of the refurbishment costs oftheir individual condominium units pursuant to the New Master Lease Agreement.Subsequent to 2009, the condominium owners may be less likely to remain in theRental Pool because the final refurbishment reimbursement payments will havebeen made. During the period from 1998 through 2002, available room nightsdecreased from a high of approximately 309,000 in 1998 to a low ofapproximately 211,000 in 2002. These reductions in available room nights creatednegative pressure on the ability of the Resort to book historically largergroups. As a consequence of this pressure, Westin’s sales and marketing effortsand our sales and marketing efforts subsequent to the Westin termination, wereand continue to be targeted at booking a greater number of smaller groups thatcan be accommodated, in light of the relatively limited available room nights.

The Resort utilizes the Smith Travel Research tocompare itself to our competitive set. Our competitive set is listed under theheading “Business” in this report. During the year ended December 31,2006, as in prior years, the Resort lagged behind its competitors in bothoccupancy percentages and average room rates. While our competitors’ occupancylevels decreased slightly for the year ended December 31, 2006, from 60.9%to 58.1%, or 4.6%, the Resort’s occupancy percentage decreased by 12.0%, to40.4% during the same period. Offsetting the room night reduction, the averageroom rate at the Resort increased from $135.49 to $156.78, or 15.7%, on ayear-to-year comparative basis. The average nightly room rate of ourcompetitive set for the year ended December 31, 2006 increased by $7.70,or 5.0%, to $160.61. The Resort’s net decrease in overall room nights was dueboth to a decrease in group business, which includes conferences, and transientbusiness. The increase in the average room rate was primarily attributable toroom rate increases for transient business, but the increase can also beattributed in part to certain rate increases implemented throughout the otherbusiness sectors.

**2005Compared to 2004**

During the year ended December 31, 2005, total roomnights at the Resort increased to 98,419 from 84,464 in the same period of2004. Total room nights are comprised of transient room nights and group roomnights. During the year ended December 31, 2005, the Resort saw strongertransient business which exceeded historical averages. For the year endedDecember 31, 2005, total transient room nights were 39,281, an increase of 6,423room nights, or 19.5%, from the same period in 2004. In addition, during 2005the Resort also began to see a recovery in golf package business and corporategroup booking patterns as against booking patterns for 2004. Total golfpackages sold increased by 1,493 packages, or 35.8%, from 2004 to 2005. Grouproom nights for the year ended December 31, 2005 increased by 7,532, or 14.6%,as compared to the prior year. The last minute cancellations of two largecorporate events in the first half of 2004, within the peak season, and theloss of approximately 3,148 golf rounds as a result of the unusual weatherconditions in the state of Florida in August and September of 2004, caused theResort to lose an aggregate of approximately $850in revenue, net of cancellationfees, during that year. Cancellation fees of approximately $651 relating bothto these two large events and to a number of smaller events have been includedin total revenues during the year ended December 31, 2004. During 2005,due to improved weather conditions, the Resort did not experience as manycancellations as in 2004. As a result, cancellation fees we received in 2004were $512 less than in 2004. Although the Resort experienced fewercancellations, our management believes that the Resort’s bookings in 2005 wereadversely affected as a result of the 2004 hurricane season.

Participation in the Rental Pool during the yearsended December 31, 2005 and 2004 resulted in available room nights ofapproximately 215,000 and 216,000, respectively. Actual utilization or sales ofroom nights increased by 13,955, or 16.5%, for the year ended December 31,2005 as compared to the previous year. We believe that this increase wasrelated to the increased confidence from corporate meeting planners in our propertyresulting from the resolution of the mortgage default via the SettlementAgreement coupled with general improvements in the hospitality and destinationresort business. With the stigma of the mortgage default removed, we reviewedand amended the Resort’s marketing plan with Westin and, as a result, revisedthat plan to focus more on selling memberships and more effectively marketingthe golf package business than on volume selling of corporate hotel rooms.These changes were implemented primarily to establish a stable source ofmembership dues, and to improve the capture of the most profitable businessavailable to the Resort. Because these changes in the marketing programappeared to be producing positive results, we continued to utilize the programsgoing forward. The 

21

----

mostprofitable departments of the Resort, in order of highest to lowest, are (i)the golf department, (ii) food and beverage and (iii) rooms, net of rentattributable to Rental Pool participants (calculated by subtracting Hoteloperating expenses of $11,411 from gross Hotel revenue of $13,335). Operatingprofit for the golf department was 42.9% and 35.9%, respectively, for 2005 and2004. Because the maintenance costs of our four golf courses are primarilyfixed, the majority of each incremental revenue dollar in this department flowsdirectly to the Resort’s gross operating profit. Food and beverage, or F&B,profit was approximately 29.6% and 23.2%, respectively for 2005 and 2004,respectively. The year over year increase in F&B revenue was primarily dueto the increase in group banquet revenue resulting from an increase incorporate group bookings. Corporate groups typically have the highest F&Bcontribution. Operating profit for the rooms department after payments pursuantto the Rental Pool sharing arrangement with the condominium owners for 2005 and2004 was 14.4% and 11.6% for the years ended December 31, 2005 and 2004,respectively.

During the year ended December 31, 2005, as inprior years, the Resort lagged behind its competitors in both occupancypercentages and average room rates. While our competitors’ occupancy levelsincreased slightly for the year ended December 31, 2005, from 58.9% to60.9%, the Resort’s occupancy percentage increased by 6.7%, to 45.9% during thesame period. Further, the average room rate at the Resort increased from$130.55 to $135.49, or 3.8%, on a year-to-year comparative basis. The averagenightly room rate of our competitive set for the year ended December 31,2005 increased by $9.59, or 6.7%, to $153.08. The Resort’s net increase inoverall room nights was due both to an increase in group business, whichincludes conferences, and transient business. The increase in the average roomrate was primarily attributable to room rate increases for transient business,but the increase can also be attributed in part to certain rate increasesimplemented throughout the other business sectors.

Although the Resort did not experience any significantor direct exposure to tropical storms or hurricanes during 2005, we believe the2004 hurricane season negatively impacted the booking of room nights in 2005.When storms directly impact the Resort, loss of conference room nights andtransient business is generally replaced as guests seeking shelter from thestorm fill rooms that otherwise would be vacant due to those cancellations. Weoffer a discounted room night to coastal residents who are required to evacuatetheir homes. To date, these discounted rates have not had a material impactupon the average room rate of the Resort in any given year. Total group roomnights increased in 2005 by 7,532, from 51,606 room nights in 2004 to a totalof 59,138 room nights in 2005. The average room rate for group business of theResort increased $5.34, or 4.2%, from $128.46 for the year ended December 31,2004 to $133.80 for the year ended December 31, 2005. We believe that thisincrease resulted from increased meeting planner confidence and marketabilityof the Resort. To complement this increase, the transient room nights increasedby 19.5%, from 32,858 in 2004 to 39,281 in 2005. We believe that this increaseresulted from increased marketing to this segment, the focus on golf packagebusiness and the replacement of group room nights with transient room nights.The average room rate within the transient sector, however, increased by $9.10,to $135.82 per room night, for the year ended December 31, 2005. Asdescribed above, the room rate was impacted by the weather and competitivepressure, as the travel and leisure sector of the economy was rebounding andhotels were competing to recover losses experienced during the economicdownturn experienced from 2001 through 2003. During the fourth quarter of 2003,the Resort entered into an agreement with an outside provider to develop a newweb site, which we believe also contributed to the 2004 and 2005 growth in thetransient business. The growth in this segment, coupled with growth in thegroup sector, appears to be continuing in 2006 based upon recent salescontracts that have been executed for bookings in future periods.

While room nights increased, overall density, or thenumber of average guests per room night, also increased from 1.6 to 1.7 for theyears ended December 31, 2004 and 2005, respectively. In addition, totalF&B covers (number of individual meals served) increased by 7.2%, from379,059 to 406,175, on a comparative basis due to the change in the mix ofbusiness from group to transient coupled with increased overall density. Ingeneral, groups are more likely to purchase the banquet services rather thandining nightly in one of the Resort’s restaurants. As a consequence of theapproximately 14.6% increase in group room nights from 2004 to 2005, groupbanquet business also increased. Banquet covers sold were 165,189 and 158,353for the two years ended December 31, 2005 and 2004, respectively. OverallF&B revenue was up approximately $1,288, or 12.5%, during 2005 as comparedto 2004. The F&B departmental profit increased by approximately $1,034, or43.4%, due to the increased revenue of the department and higher volume ofcovers sold. The preparation and cost of sales for banquet meals costs is lessthan the cost to produce meals in the Resort’s restaurants.

The golf department was the most profitable departmentof the Resort. For the year ended December 31, 2005, total golf revenueincreased by approximately $1,770 as golf rounds increased by 10,757. Theoperating profit of the golf department increased by approximately $1,573 in2005 as compared to 2004.

Administrative and general expenses decreased fromapproximately $4,899 to approximately $4,744 for the years endedDecember 31, 2004 and 2005, respectively. This decrease of $155, or 3.3%,in administrative and general expenses is primarily due to a decrease ofapproximately $65 in the provision for bad debt expense, a decrease in theoperating costs of GTA’s on-site office of approximately $235, a decrease inResort legal fees of approximately $56 and an approximately $100 

22

----

decreaseresulting from small fluctuations in a number of accounts. These decreasingexpenses were offset by an increase in management fees of approximately $301resulting from an increase in aggregate revenues coupled with the change in themanagement fee calculation to include golf revenues pursuant to our managementagreement with Westin. The decrease in the operating costs of GTA’s on-siteoffice resulted from reduced payroll costs of approximately $22, anapproximately $180 reduction in legal fees related to the property tax lawsuitand a reduction of other GTA on-site expenses of $33

Other expenses increased from approximately $9,003 toapproximately $9,902 for the years ended December 31, 2004 and 2005,respectively. The increase of $899, or 10.0%, is primarily due to the followingchanges: (i) sales and marketing expenses increased by approximately $94,to $2,889, as a result of additional golf and membership marketing efforts;(ii) real property taxes increased by approximately $69; (iii) generalinsurance premiums increased by approximately $104; (iv) rising energy costscaused utility expense to increase by approximately $255, from $1,254 to$1,509; and (v) management incentives increased by approximately $311 due tothe improved performance of the Resort. The remaining net increase ofapproximately $66 represents small fluctuations in a number of accounts.

The Rental Pool distribution (or that portion of roomrevenue attributable to the condominium owners) increased as a direct result ofthe room revenue increases noted above. The distribution for the year endedDecember 31, 2005 increased by approximately $911 from the preceding year.The Rental Pool distributions were approximately $4,966 and $4,055, for theyears ended December 31, 2005 and 2004, respectively.

Interest, net decreased by approximately $4,161 yearover year primarily due to the discontinuation of the interest accrual on theResort’s participating mortgage effective with the closing of the negotiatedsettlement. The mortgage note between us and GTA, LP is non-interest bearing.This mortgage interest savings resulted in a decrease of approximately $4,941offset by the rental pool refurbishment liability accretion and interestexpense which increased approximately $758 coupled with an increase in interestexpense on capital leases of approximately $14 and an $8 decrease in interestincome primarily due to reduced interest earned on our deposit with theelectric company, which was formerly covered by a bond. Beginning in 2004, theelectric company required that the Resort maintain a minimum deposit with theelectric company.

**LegalEntity Structure**

The financial statements and footnotes reflect thecombined financial results of us, GTA-IB Condominium, LLC and GTA-IBManagement, LLC. These legal entities are all wholly owned subsidiaries ofGTA-IB Golf Resort, LLC. GTA-IB Golf Resort, LLC is a wholly owned subsidiaryof GTA, LP. GTA owns approximately 100% of GTA, LP through its wholly ownedcorporate subsidiaries, GTA GP, Inc. and GTA LP, Inc. GTA-IBCondominium, LLC holds the title to three condominium units that participate inthe Rental Pool of GTA-IB, LLC. GTA-IB Management, LLC is the entity thatemploys substantially all of the employees at the Resort. There are no otheroperations of GTA-IB Condominium, LLC and GTA-IB Management, LLC. We hold titleto the Resort and are the entity in which all of the Resort’s operations arerecorded for accounting purposes. All inter-company transactions and accountbalances have been eliminated in combination.

**IncomeTax Status**

We are a single-member limited liability company,wholly owned by GTA-IB Golf Resort, LLC. GTA-IB Golf Resort, LLC is a whollyowned subsidiary of GTA, LP, the operating partnership of GTA. GTA owns 100% ofGTA, LP through its wholly owned subsidiaries, GTA GP, Inc. and GTALP, Inc. The limited liability companies in the chart above are allsingle-member limited liability companies. GTA-IB Condominium, LLC and GTA-IBManagement, LLC are also wholly owned by GTA-IB Golf Resort, LLC.

23

----

We have not elected to be taxed as a corporation. As aresult, our owner is responsible for income taxes on our operating income.Therefore, no provision or liability for federal or state income taxes has beenincluded in our financial statements presented in this report.

Our predecessor elected to be taxed as a QualifiedSubchapter S Subsidiary. As a result of this election, no provision for incometaxes was included in our predecessor’s financial statements for any federal,state or local taxes since any income (or loss) was passed through to ourpredecessor’s shareholder.

**OtherMatters**

*NewContract for Annual PGA TOUR Event*

OnApril 25, 2006, we entered into an agreement with Suncoast Charities, Inc., orSuncoast, which provides that Suncoast will lease the Copperhead golf course atthe Resort for seven and one half days during the month of March for a PGA TOURevent.  Our agreement with Suncoastprovides that the tournament will occur each year in March beginning in March2007 and ending in March 2012.  Theagreement also provides, among other things, that we will receive a base feeand that we may receive a participation fee in the event the aggregate ticketsales during any tournament year exceed 115% of the greater of the 2005tournament ticket sales or the 2006 tournament ticket sales.  In February 2007, Suncoast Charities,Inc.   announced that PODS (Portable OnDemand Storage) would be the sponsor for the years 2007 through 2012.

*Termination of Westin ManagementAgreement*

OnSeptember 28, 2006 we signed a Termination and Release Agreement with Westinwhereby the Westin Management Agreement terminated on October 31, 2006.  The Termination Agreement provides that weshall pay to Westin, subject to the terms of the Management Agreement, atermination fee.  As of October 31, 2006,the termination fee that would be due is approximately $5,594 and is now fixedat this amount.   Pursuant to theTermination Agreement, the termination fee is due and payable upon the earlierof a sale of the Resort or March 31, 2008.

OnNovember 1, 2006 as a consequence of the Westin termination, we assumed theTroon Facilities Management Agreement as a successor in interest to theFacilities Management Agreement between Westin and Troon.  On November 30, 2006, we entered into anagreement with Troon to extend the facilities management agreement by ten-dayrolling periods, beginning on December 1, 2006.   On February 22, 2007, we sent Troon a noticeof termination in regards to the Facilities Management Agreement. We and Troonare in the process of negotiating the terms and conditions of the terminationwhich we expect to be effective upon the conclusion of our negotiations and theexecution of a termination agreement. We intend to manage the golf operationsinternally following the termination of the Troon management agreement.

Seefurther discussion under the caption “*Background*” inItem 1 of this Annual Report on Form 10-K.

*Automatic Hotel Charges*

On April 29,2005, Westin’s parent, Starwood Hotels & Resorts Worldwide, Inc.,or Starwood, entered into an Assurance of Voluntary Compliance with the Stateof Florida Office of the Attorney General, or the Assurance. The Assuranceprovided, among other things, that for a period of two years Starwood would notcharge certain undisclosed automatic fees to guests at certain hotels that areowned or managed by Starwood, including the Resort, and that the State ofFlorida Office of the Attorney General would release Starwood hotel owners,managed properties and franchisees from certain claims and liabilities relatingto these undisclosed automatic fees. On August 9, 2005, in a matterrelated to the Assurance, the Company executed a settlement electionform which formalized our agreement to participate in Starwood’snegotiated Automatic Hotel Charges Settlement (the “Settlement”). TheSettlement settles certain class action lawsuits filed by privateplaintiffs against Starwood alleging that Starwood charged certain undisclosedautomatic fees to its guests, including guests at the Resort.  Chargingadditional automatic fees is customary in the hospitality industry, and thefees reimburse the properties for certain costs such as, coffee in the rooms,newspapers, shoe shine and internet access.  In addition to Starwood,several other hospitality industry competitors agreed to settlements with theState of Florida.  As part of the Starwood Settlement, Starwood had theoption of no longer charging undisclosed automatic fees, or, to disclose thefees in advertising materials, on its web site and through the roomreservations process.  Starwood elected to no longer charge the automaticfees in Florida.   Based upon information known to management at thistime, the Resort’s participation in the Settlement has not had a materialadverse impact on our financial results, largely due to our ability to mitigatethe loss of these automatic fees through increasing the average room rate,implementing certain golf service fees and renegotiating certain revenuesharing items with the participants in the Rental Pool.

 

24

----

 

As a result of thetermination of the Westin Management Agreement, the Resort was released fromthe Settlement and as a consequence, has renegotiated certain revenue sharingitems with the Rental Pool.  The renegotiated Rental Pool agreement grantsthe Resort the right to reinstitute the automatic charges.  The Resort haselected to reinstitute the automatic charges, effective November 1, 2006, anddiscloses these charges in its advertising materials, on its web site andduring the room reservation process.  The reinstitution of these automatichotel charges is not expected to have a material impact upon the Resortsfinancial results.

**Liquidity and Capital Resources**

The accompanying financial statements have beenprepared based on the assumption that we will continue as a going concern. Asof December 31, 2006, we have working capital deficit of approximately$10,607 primarily due to the fact that the Westin Termination Fee of $5,594 andthe Troon Supplemental Fee of $800 are classified as current liabilities. Wereported a net loss of approximately $4,861 during the year endedDecember 31, 2006. These conditions raise substantial doubt about ourability to continue as a going concern. We continue to experience seasonalfluctuations in our net working capital position. Seasonality impacts ourliquidity. Typically we have more available cash during the winter months,specifically in the first quarter, while we have very limited cash in the latesummer months. In July 2004, after we took possession of the Resort’soperational assets, GTA, LP advanced us $2,000, to support the working capitalrequirements of the Resort. During  2005,GTA funded $1,050 to address our seasonal cash flow shortfalls.  In October 2006, GTA funded an additional$600 pursuant to the terms of the Westin Termination Agreement and anadditional $120 in February 2007 to fund operating expenses.  Further,GTA funded approximately $203 and $33 for the beginning phase of thetechnological infrastructure capital investment in October 2006 and November2006, respectively.  The proceeds ofthese advances have been fully expended to support the Resort’s operationalexpense and existing obligations. The Resort repaid to GTA the $120 andthe $33 advances from Resort operational cashflow in March 2007.  While current Resort cash flow projections for2007 indicate we may be in a breakeven cash situation by year-end 2007, ashortfall is anticipated in late summer to early fall due to certainobligations that the Resort must pay in August 2007, including obligations ofapproximately $1,060 for the quarterly rental pool distribution and $412 forthe rental pool refurbishment payment. Therefore, a cash infusion of up to$1,000, in the aggregate may be necessary to fund the short-fall. If weare unable to either continue to improve our operating cash flows or otherwiseobtain liquidity, then we may be unable to continue as a going concern.

The predecessor owner had a revolving credit linesecured by the Resort’s accounts receivable; however, this credit line wasterminated when the predecessor defaulted on the mortgage with GTA, LP.  It may become necessary to seek furthercash infusion from GTA, LP, to seek an accounts receivable revolving creditline (which we are currently pursuing) or to seek some other form offinancing (which we are currently pursuing) to insure our ongoing viability.

We arecurrently negotiating the terms of a three year non—revolving credit facilitywith a Tampa community bank for approximately $1,200.  The proceeds of which would be used tofinance renovations at the Resort restaurants, information technologyinfrastructure upgrades and other property improvements at the Resort and tocover short-term working capital shortfalls. The three condominium units that the Company owns at the Resort willserve as collateral for this loan.  Weare also seeking to obtain a revolving accounts receivable line of credit forat least $500.  However, there can be noassurance that we will enter into this loan facility or that we will be able toobtain an accounts receivable credit line.

**EnvironmentalMatters**

See discussion under thecaption “*Environmental Matters*” in Item 1 of thisAnnual Report on Form 10-K.

**OffBalance Sheet Arrangements**

As of December 31, 2006, we have nounconsolidated subsidiaries.

We do not have any relationships with unconsolidatedentities or unconsolidated financial partnerships of the type often referencedas structured finance or special purpose entities, i.e., unconsolidatedentities established for the purpose of facilitating off-balance sheetarrangements or other contractually narrow or limited purposes. Further, wehave not guaranteed any obligations of unconsolidated entities nor do we haveany commitment or intent to provide additional funding to any such entities.Accordingly, we believe we are not materially exposed to any market, credit,liquidity or financing risk that could arise if we had engaged in suchrelationships.

25

----

**ContractualObligations and Contingent Liabilities**

We had the following contractual obligations as ofDecember 31, 2006:
| ** **                                                                              | ** ** | **Payments Due by Period (in thousands)** | ** ** |
|-----------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|
| **Contractual Obligations**                                                        | ** ** | **Total**                                                          | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **3-5 years** | ** ** | **More than 5  Years** | ** ** |
| Master lease  agreement with the condominium owners participating in the Rental Pool(1) |       | $                                                                  | 5,433      |   | $ | 1,424 |   | $ | 3,940 |   | $ | 42 |   | $ | 27 |   |
| Management  agreements(2)                                                               |       | 5,594                                                              |       | 5,594 |   | — |   | — |   | — |   |
| Troon  supplemental fee(2)                                                              |       | 800                                                                |       | 800 |   | — |   | — |   | — |   |
| Mortgage Note  payable to Golf Trust of America, L.P.(3)                                |       | 39,240                                                             |       | — |   | — |   | — |   | 39,240 |   |
| Operating and  capital leases(4)                                                        |       | 1,319                                                              |       | 667 |   | 650 |   | 2 |   | — |   |
| Troon management  and other fees (2)                                                    |       | 163                                                                |       | 163 |   | —- |   | —- |   | —- |   |
| Service  agreements and other(4)                                                        |       | 4,836                                                              |       | 1,721 |   | 2,278 |   | 837 |   | — |   |
| Working capital  advances from Golf Trust of America, L.P., net(5)                      |       | 3,103                                                              |       | — |   | 3,103 |   | — |   | — |   |
| Total of the Resort’s  obligations                                                 |       | $                                                                  | 60,488     |   | $ | 10,369 |   | $ | 9,971 |   | $ | 881 |   | $ | 39,267 |   |

----

Interest is reflected, asapplicable, in the commitments and obligations listed above. There are no openpurchase orders which individually exceed $25.

(1)           The Master Lease Agreement between usand the Rental Pool participants, or NMLA, as amended and restated onJanuary 1, 2004, provides that participating condominium owners will bereimbursed by us for 50% of the amount of funds the individual owner invests inthe refurbishment program, as defined in the NMLA, plus interest accruing at arate of 5% per annum. In addition, for units entering the Rental Pool during2005, we have agreed to reimburse those unit owners for up to 25% of theirrefurbishment costs plus interest at 2.5% per annum on the unpaid balance. Ourobligation to make the reimbursement payments during the period from 2005through 2012 is contingent upon a minimum unit participation in the Rental Poolbeing maintained. This minimum unit participation is defined and tested on a quarterlybasis. Our projected obligation as presented in the table above recognizesreimbursement costs and interest payable to the owners, assuming that theparticipants meet the minimum threshold and a minimum of 575 units areparticipating in the Rental Pool on a continuing quarterly basis at all times.See Note 10 to our Financial Statements for further discussion of ourreimbursement obligations.

(2)           Pursuant to the TerminationAgreement, the Westin termination fee of approximately $5,594 is due at theearlier of the sale of the Resort or March 31, 2008.  This amount is included in the “Less than 1year” column due to the fact that we are currently seeking a buyer for theResort although as of March 26, 2007, no binding contract for the sale of theResort has been executed.

Westin, as manager of the Resort, entered into amanagement agreement with Troon which provides for Troon to manage golfoperations at the Resort. The agreement expires on July 15, 2009 and includesan option in our favor to extend the term of the agreement for an additionalfive years. Our obligations under the contract include a management fee basedon a percentage of golf revenue. The agreement obligates us to pay Troon a basemanagement fee equal to 2% of golf operating revenue. Included in the tableabove are cost estimates through the term of the lease based upon the 2007budget for the Resort. Pursuant to the Troon management contract, a minimumsupplemental fee of approximately $800 is due upon either the expiration of thecontract or its early termination. ***On February 22, 2007, we sentTroon Golf LLC, or Troon, a notice of termination in regards to the FacilitiesManagement Agreement pursuant to which Troon manages the golf operations at theResort. We and Troon are in the process of negotiating the terms and conditionsof the termination which we expect to be effective upon the conclusion of ournegotiations and the execution of a termination agreement. ***We intend to manage thegolf operations internally following the termination of the Troon managementagreement.

(3)           The mortgage note between GTA, LP andus is non-interest bearing and matures on June 19, 2027.

(4)           We are a party to multiple agreementswith miscellaneous service providers for, among other services, waste removal,uniform cleaning and replacement, armored car services, indoors plantmaintenance and pest control. These services and contracts are individuallyimmaterial and, therefore, are included in the aggregate and identified asother miscellaneous operational agreements in the table above.

(5)           The working capital advances betweenour parent and us are non-interest bearing. Our parent has agreed not torequest or demand payment prior to January 2008 at which point we mayextend the date to request or demand payment.

26

----

**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK**

We do not have significant market risk with respect toforeign currency exchanges or other market rates. Our participating mortgagedebt is non-interest bearing effective July 16, 2004, so we do not haveinterest rate risk with respect to that mortgage. We are not at risk forcommodity price changes.

**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARYDATA**

See Financial Statements and Supplementary Datastarting on page 32.

**ITEM 9. CHANGES IN AND DISAGREEMENTS WITHACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

None.

**ITEM 9A. CONTROLS AND PROCEDURES**

We maintain disclosure controls and procedures thatare designed to ensure that information required to be disclosed in ourExchange Act reports is recorded, processed, summarized and reported within thetime periods specified in the SEC’s rules and forms, and that suchinformation is accumulated and communicated to our management, including ourChief Executive Officer and our Chief Financial Officer, as appropriate, toallow timely decisions regarding required disclosure. Our management assessesthe costs and benefits of such controls and procedures based upon theprevailing facts and circumstances, including management’s reasonable judgmentof such facts. As we neither controlled nor managed the Resort prior toJuly 15, 2004, our disclosure controls and procedures with respect to suchpersons and entities were necessarily more limited than those we maintain withrespect to our own corporate operations. On July 15, 2004, we took titleto the Resort; however, despite the fact that our amended management agreementwith Westin provided us with heightened control and access to information, wedid not directly assemble the financial information for the Resort (although wehave taken steps that we deem to be reasonable under the circumstances to seekto verify such financial information) and consequently, our disclosure controlsand procedures with respect to the Resort, while strengthened, were necessarilymore limited than those we maintain with respect to our own corporateoperations. Since July 15, 2004, we have focused upon integratingoperations at the Resort into our disclosure controls and procedures andinternal control procedures. In particular, those controls and procedures havebeen updated to account for the challenges presented by the increased size andscope of our operations now that we own the Resort.  Effective January 1, 2007, we implemented anew general ledger accounting software package, or GL software, at the Resortto replace the former GL software of which the majority of the financialreports were proprietary to Westin.  Ournew GL software, know as Aptech, was used at the Resort prior to July 15, 2004when Westin required that the Resort adopt their GL software so the accountingstaff is familiar with the process and procedures in operating the new GLsoftware.  We do not currently believethat the change in the GL software will materially change our control overfinancial reporting or our disclosure controls and procedures.

The integration of a new business of significant sizeand scope of operations increases the risk that conditions may have beenintroduced that we did not anticipate in our design of our systems of control.Any pre-existing deficiencies in the predecessor owner’s financial systems,processes and related internal controls increase the risk that the historicalunaudited financial statements of the Resort’s operations and cash flows whichthe predecessor owner has provided to us may not be accurate. We have outof necessity placed a certain amount of reliance on the historical financialinformation and reports of the Resort’s predecessor owner for the periods priorto July 16, 2004, and relied on the information provided by Westin asmanager of the Resort until October 31, 2006. The integration process and thevaluation procedures carried out by us in connection with taking title to theResort prevented the Company from filing the pro-forma and related financialinformation related to the Resort within the timeframes specified under SECrules. We have implemented some and continue to work towards implementingvarious initiatives intended to continue to improve our internal controls andprocedures and disclosure controls and procedures, especially to address thesystems and personnel issues raised in the course of taking title to the Resortand assuming management of the Resort.

As of December 31, 2006, we carried out anevaluation, under the supervision and with the participation of our management,including our Chief Executive Officer, Vice President and Principal AccountingOfficer, of the effectiveness of the design and operation of our disclosurecontrols and procedures pursuant to Exchange Act Rule 13a-14. Managementconcluded that as of December 31, 2006 our disclosure controls andprocedures are effective in timely alerting them to material informationrelating to us (including our consolidated subsidiaries) required to beincluded in our Exchange Act reports. Except as described above, there havebeen no significant changes in our internal controls or in other factors whichcould significantly affect internal controls subsequent to the date we carriedout our evaluation.

27

----

There has been no change in our internal controls overfinancial reporting during our most recent fiscal quarter that has materiallyaffected, or is reasonably likely to materially affect, our internal controlsover financial reporting.

**ITEM 9B. OTHER INFORMATION**

***Termination of Westin Management Agreement***

On July 15, 2004,we entered in to a Management Agreement with Westin.  The ManagementAgreement provided, among other things, that Westin would manage theResort.  By mutual agreement, on September 28, 2006, we entered in to aTermination and Release Agreement (the “Termination Agreement”) with Westinpursuant to which we and Westin agreed to terminate the Management Agreement asof October 31, 2006 (the “Termination Date”).  In addition to thetermination of the Management Agreement, the Termination Agreement providesthat (i) on or prior to October 3, 2006, we or GTA shall deposit $600 in theResort’s operating account (which we did) to be used in part to pay to Westin certain fees and charges accruedunder the Management Agreement and which are expected to approximate thisamount; (ii) on or prior to the earlier of March 31, 2008, or sale of theResort by us, we will pay to Westin the termination fee provided under Section4.4.2 of the Management Agreement calculated as of the Termination Date, estimatedat $5,600; and (iii) Westin shall permit us to continue to access Westin’s “SAP”accounting system (which they have) for the operation of the Resort until March31, 2007 for a total charge of $6,000.  Theowner plans to independently manage the Resort as of the Termination Date andno longer use the Westin brand or their reservation system.

The foregoingsummary of the material terms of the terminated Management Agreement does notpurport to be complete and is qualified in its entirety by reference to theManagement Agreement, which is filed as Exhibit 10.4 to our Current Report onForm 8-K filed on July 29, 2004, and the Termination Agreement, which is filedas Exhibit 10.13 to our current report on Form 8-K filed October 3, 2006.

***Amendmentof Parcel F Defense and Escrow Agreement***

On December 28,2006, we together with GTA and GTA, LP entered into a First Amendment toDefense and Escrow Agreement (the “Amendment”) with GHR and the EscrowAgent.  The Amendment, among other things, amends the distributions from asale of Parcel F under the Defense and Escrow Agreement to reduce thedistributions to us by $10and to reduce the distributions to GTA, LP by$700.  The Amendment also provides that, in the event that the purchaserof Parcel F (“Parcel F, LLC”) receives a return of its earnest moneydeposit pursuant to an Amended and Restated Agreement for the Sale and Purchaseof Real Property - Parcel F between GHR and Parcel F, LLC, datedJune 29, 2004 (as amended), the GHR shall receive an offsetting payment ofthe lesser of $200, or the amount of earnest money returned to Parcel F,LLC.  The Defense and Escrow Agreement was included as Exhibit 10.2to GTA’s Current Report on Form 8-K which was filed on July 29, 2004.

In connection with the execution of the Amendment, GTA and Elk Fundingentered into the Loan Satisfaction Agreement which provided, among otherthings, that when GHR receives $710 (which occurred on or about December 28,2006)  pursuant to the terms of theAmendment (i) GTA’s obligations to Elk Funding under Note A shall be deemed tobe paid in full and satisfied, (ii) the loan documents between GTA and ElkFunding shall be deemed terminated and neither party shall  have any further obligations under such documentsand (iii) the Assignment of Defense and Escrow Agreement and the securityinterest created by such agreement shall be deemed terminated.  Asfurther consideration for the satisfaction of Note A, GTA consented to theextension of the closing deadline pursuant to the Second Amendment to theAmended and Restated Agreement for Sale and Purchase of Real Property — ParcelF between GHR and Parcel F, LLC. Elk Fundingalso consented to the Amendment as part of the Loan SatisfactionAgreement.  Note A, made in the principal amount of $700, was secured bythe Assignment of Defense and Escrow Agreement between GTA and ElkFunding.  Note A, Note B (which was previously repaid by GTA) and the loanagreement relating to both notes were included as Exhibit 10.7 to GTA’s CurrentReport Form 8-K which was filed on July 29, 2004.

The Amendment wasincluded as Exhibit 10.2.2 to our Current Report on Form 8-K filed onJanuary 4, 2007.  The description of the Amendment and the LoanSatisfaction Agreement are qualified in their entirety by the contents thereof.

On December 28,2006, Note A was deemed satisfied, the obligations of the parties under therelated loan documents were deemed terminated, and the Assignment of Defenseand Escrow Agreement and the security interest created by such agreement weredeemed terminated.

28

----

**PART III**

**ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THEREGISTRANT**

Set forth below is information about the members ofour Audit Committee and our executive officers. Due to the fact that we are alimited liability company, we are sole member managed by Golf Trust of America,Limited Partnership through its general partner GTA GP, Inc.

Messrs. Jones, Reams, Wax, Loeb and Toor aremembers of our Audit Committee and directors of GTA. Each is deemed to be anindependent director of GTA pursuant to the rules of the American StockExchange. Their terms as members of our Audit Committee track their respectiveterms as directors of GTA, unless they are removed by our sole member prior tothe expiration of their respective terms. Messrs. Jones, Reams and Wax wereappointed to our Audit Committee in 2004 and Messrs. Loeb and Toor wereappointed to our Audit Committee in 2006.

 
|                           | ** ** | ** ** | ** ** | ** **                                                                                    | ** ** | **Current**                      |
|---------------------------|------------|------------|------------|-----------------------------------------------------------------------------------------------|------------|----------------------------------|
| ** **                | ** ** | ** ** | ** ** | ** **                                                                                    | ** ** | **Term on GTA’s** |
| ** **                | ** ** | ** ** | ** ** | ** **                                                                                    | ** ** | **Board of Directors** |
| **Name**                  | ** ** | **Age**    | ** ** | **Position**                                                                                  | ** ** | **Expires**                      |
| W. Bradley Blair, II |       | 63         |       | Chief Executive Officer  and President; Director (GTA and GTA GP Inc.)         |       | 2008                             |
|                      |       |       |       |                                                                                          |       |                             |
| R. Keith Wilt             |       | 54         |       | Vice President                                                                                |       | N/A                              |
|                      |       |       |       |                                                                                          |       |                             |
| Scott D. Peters(1)        |       | 49         |       | Chief Financial Officer, Senior Vice President and  Secretary; Director (GTA and GTA GP Inc.) |       | (1)                              |
|                      |       |       |       |                                                                                          |       |                             |
| Tracy S. Clifford(2)      |       | 38         |       | Principal Accounting Officer, Controller and  Secretary (GTA and GTA GP Inc.)                 |       | N/A                              |
|                      |       |       |       |                                                                                          |       |                             |
| Raymond V. Jones          |       | 59         |       | Audit Committee Member and Director (GTA)                                                     |       | 2008                             |
|                      |       |       |       |                                                                                          |       |                             |
| Fred W. Reams             |       | 64         |       | Audit Committee Member and Director (GTA)                                                     |       | 2009                             |
|                      |       |       |       |                                                                                          |       |                             |
| Edward L. Wax             |       | 70         |       | Audit Committee Member and Director (GTA)                                                     |       | 2009                             |
|                      |       |       |       |                                                                                          |       |                             |
| Jan H. Loeb               |       | 48         |       | Audit Committee Member and Director (GTA)                                                     |       | 2009                             |
|                      |       |       |       |                                                                                          |       |                             |
| Nauman S. Toor            |       | 38         |       | Audit Committee Member and Director (GTA)                                                     |       | 2007                             |

----

(1)             Resigned all positions effectiveFebruary 5, 2007.

(2)             Formerly the Controller for GTA,appointed Principal Accounting Officer of GTA on February 6, 2007 and Secretaryof GTA on February 20, 2007.

**BiographicalInformation**

*W. Bradley Blair, II* is ourChief Executive Officer and President. He has been one of our officers since2002. He is also the Chief Executive Officer, President and Chairman of GTA’sBoard of Directors. He has been an officer of GTA since its initial publicoffering in 1997 and has served as our Chief Executive Officer and Presidentsince 2002. * *Mr. Blairhas served as a member of the Board of Directors of NNN Healthcare/OfficeREIT, Inc. since September 2006. From 1993 until GTA’s initial public offering in February 1997,Mr. Blair served as Executive Vice President, Chief Operating Officer andGeneral Counsel for The Legends Group. As an officer of The Legends Group,Mr. Blair was responsible for all aspects of operations, includingacquisitions, development and marketing. From 1978 to 1993, Mr. Blair wasthe managing partner at Blair Conaway Bograd & Martin, P.A., a lawfirm specializing in real estate, finance, taxation and acquisitions.Mr. Blair earned a Bachelor of Science degree in Business from IndianaUniversity and a Juris Doctorate degree from the University of North Carolinaat Chapel Hill Law School.

*R. Keith Wilt* is our VicePresident, and has served as our officer since July 16, 2004. He has heldthat position since we assumed control of the Resort, pursuant to theSettlement Agreement entered into on July 16, 2004 with GHR. FromAugust 1999 through July 15, 2004, Mr. Wilt served as the VicePresident and Treasurer of GHR. From March 1997 through 

29

----

July 1999,Mr. Wilt served as the Chief Financial Officer of The Suncoast Companies,a design/build real estate developer in St. Petersburg, Florida. From 1991though 1997, Mr. Wilt acted as an independent financial and systems consultantto a number of real estate development companies in the Tampa Bay area. From1986 to 1991, Mr. Wilt was a Director of Information Services for TECOEnergy, Inc. in Tampa, Florida. From 1975 to 1986, Mr. Wilt was theAssistant Treasurer and Corporate Tax Manager of Golf Host, Inc., theparent company of GHR. Mr. Wilt earned a Bachelors of Science degree inAccounting and Finance from Florida State University in 1975.

*Scott D. Peters* was our ChiefFinancial Officer and Secretary until his resignation on February 5, 2007. Hewas been one of our officers since 2002. He is also the Chief FinancialOfficer, Secretary and a member of GTA’s Board of Directors. He has been anofficer of GTA since its initial public offering in 1997 and has served as ourChief Financial Officer and Secretary since 2002. Mr. Peters has been aboard member of GTA since late 1999. In September 2004, Mr. Petersaccepted a position as the Executive Vice President, Chief Financial Officerand a member of the board of managers at Triple Net Properties in Santa Ana,California. Mr. Peters had also served as President and Chief ExecutiveOfficer of G REIT, Inc. since December 2005, having served as thatcompany’s Executive Vice President and Chief Financial Officer sinceSeptember 2004, and he has served as Chief Executive Officer and Chairmanof the Board of NNN Healthcare/Office REIT, Inc. sinceSeptember 2006. From 1992 through 1996, Mr. Peters was the SeniorVice President and Chief Financial Officer of Pacific Holding Company/LSR inLos Angeles, developer of a master-planned residential community and countryclub, from September 1992 to June 1996, and Senior Vice President andChief Financial Officer of Castle & Cooke Properties, Inc., areal estate development subsidiary of Dole Food Company, fromFebruary 1988 to August 1992. Mr. Peters received a Bachelor ofArts degree in Accounting and Finance from Kent State University.

*Tracy S.Clifford* was appointed GTA’s Principal Accounting Officer andSecretary upon the resignation of Scott D. Peters, GTA’s Senior Vice President,Secretary and Chief Financial Officer, on February 5, 2007.  Ms. Clifford has been GTA’s Controller sinceSeptember 1999.  Prior to her employmentwith GTA in September 1999, Ms. Clifford was the Accounting Manager for UnitedHealthcare of Georgia, Inc. from May 1995 through February 1999 and FinanceDirector from March 1999 until  September1999.  From June 1993 through April 1995,Mrs. Clifford was employed by North Broward Hospital District in FortLauderdale, Florida initially as Senior Accountant (June 1993 through January1994) and subsequently as Accounting Manager (February 1994 through April1995).  Mrs. Clifford is a CertifiedPublic Accountant and worked as an auditor with Deloitte & Touche in Miami,Florida from 1991 to 1993.  She receiveda Bachelor of Science Degree in Accounting from the College of Charleston and aMasters Degree in Business Administration from Georgia State University.

*Raymond V. Jones* has been amember of our Audit Committee since 2004. Mr. Jones also serves as amember of GTA’s Board of Directors. From 1984 to 1994 he was Managing Partnerof Summit Properties Limited Partnership before it went public in 1994. From1994 until retiring in March 1998, Mr. Jones was the Executive VicePresident of Summit Properties Inc. Summit was a publicly traded REITlisted on the New York Stock Exchange and was one of the largest developers andoperators of luxury garden multifamily apartment communities in theSoutheastern United States. While at Summit, Mr. Jones oversaw thedevelopment of 26 communities comprising nearly 6,500 apartment homes inGeorgia, North Carolina, South Carolina and Ohio. Prior to 1984, Mr. Jonesserved as General Operations Manager for both the Charlotte and Houston divisionsof Ryan Homes, Inc. Mr. Jones earned a Bachelor of Arts degree inPolitical Science from George Washington University.

*Fred W. Reams*has been a member of our Audit Committee since 2004.Mr. Reams also serves as a member of GTA’s Board of Directors. From 1981until his retirement on March 31, 2004, Mr. Reams served as theChairman or President and Chief Investment Officer of Reams Asset ManagementCompany, LLC, an independent private investment firm which he co-founded. From1967 to 1981, Mr. Reams was employed in various investment managementpositions with the First National Bank of Michigan, Irwin Management Company,and Cummins, Inc. In addition, Mr. Reams served as President of theboard of directors of the Otter Creek Golf Course from 1981 through 2003.Mr. Reams holds a Bachelor of Arts degree and a Master of Arts degree inEconomics from Western Michigan University.

*Edward L. Wax*has been a member of our Audit Committee since 2004.Mr. Wax also serves as a member of GTA’s Board of Directors. Mr. Waxis currently Chairman Emeritus of Saatchi & Saatchi, a worldwideadvertising and ideas company. From 1992 until his appointment to his currentposition in 1997, Mr. Wax served as Chairman and Chief Executive Officerof Saatchi & Saatchi. Mr. Wax had been responsible at Saatchi forthe operations of 143 offices in 87 countries. Mr. Wax’s employment bySaatchi & Saatchi began in 1982. Mr. Wax was formerly Chairman ofThe American Association of Advertising Agencies as well as a director of boththe Ad Council and the Advertising Educational Foundation. Mr. Wax alsoserves on the board of directors of Dollar Thrifty Automotive Group.Mr. Wax holds a Bachelor of Science degree in Chemical Engineering fromNortheastern University and a Masters in Business Administration degree fromthe Wharton Graduate School of Business.

30

----

*Jan H. Loeb*has been a member ofour Audit Committee since November 2006. Mr. Loeb is currently a portfoliomanager for Amtrust Capital Management, Inc., a position he has held sinceFebruary 2005. From February 2004 through January 2005,Mr. Loeb was a portfolio manager for Chesapeake Partners. FromJanuary 2002 through December 2004, Mr. Loeb was a ManagingDirector of Jefferies & Company, Inc., an investment banking firmwhich is based in New York City. From 1994 through 2001, Mr. Loeb was aManaging Director of Dresdner Kleinwort and Wasserstein, Inc., aninvestment banking firm based in New York City which was formerly known asWasserstein Perella & Co., Inc. Mr. Loeb also serves on theboard of directors of American Pacific Corporation, a chemical and aerospacecorporation and serves on the boards of numerous charitable organizations.Mr. Loeb holds a B.B.A. degree from Bernard M. Baruch College.

*Nauman S. Toor*has been a memberof our Audit Committee since November 2006*. *Mr. Toor has served as a ManagingDirector of Jefferies & Company, Inc., an investment banking firmwhich is based in New York City, since April 2001.  As of December 31, 2006, Mr. Toor left Jefferiesto form his own registered investment advisory firm.  Mr. Toor started his career ininvestment banking with Kidder Peabody & Company in New York in 1990and joined Jefferies & Company, Inc.’s investment banking groupin 1994. Mr. Toor holds a Bachelor of Arts degree in economics from OhioWesleyan University and a Masters in Business Administration from HarvardBusiness School.

**Committees**

***Audit***Committee.***  ***Theboard of directors has established an audit committee to oversee our financialreporting process on behalf of the board of directors. Mr. Jones is thechairman of our audit committee. Our audit committee consists ofMessrs. Wax, Reams, Jones, Toor and Loeb each of whom is independent underthe rules of the Amex. Each member of our audit committee also meets thecriteria for independence set forth in Rule 10A-3(b)(1) under theExchange Act of 1934, as amended. None of the members of our audit committee hasparticipated in the preparation of our financial statements or those of oursubsidiaries during the past three years, and all are able to read andunderstand fundamental financial statements. Our audit committee’s role is toselect the independent public accountants, to review with the independentpublic accountants the plans and results of the audit engagement, to approveprofessional services provided by the independent public accountants, to reviewthe independence of the independent public accountants, to consider the rangeof audit and non-audit fees and to review the adequacy of our company’sinternal accounting controls. Our management has the primary responsibility forthe financial statements and the reporting process including the systems of internalcontrols. In fulfilling its oversight responsibilities, our audit committeereviewed the audited financial statements with management including adiscussion of the quality, not just the acceptability, of the accountingprinciples, the reasonableness of significant judgments, and the clarity ofdisclosures in the financial statements. Our audit committee reviewed with theindependent auditors, who are responsible for expressing an opinion on theconformity of those audited financial statements with accounting principlesgenerally accepted in the United States of America, their judgments as to thequality, not just the acceptability, of our accounting principles and suchother matters as are required to be discussed with our audit committee undergenerally accepted auditing standards. While financially literate under theapplicable rules of the Amex, the members of our audit committee are notcurrently professionally engaged in the practices of accounting or auditing andare not all experts in the fields of accounting or auditing, including inrespect of auditor independence. Members of our audit committee rely withoutindependent verification on the information provided to them and on therepresentations made by management and our auditors, BDO Seidman, LLP.Accordingly, our audit committee’s oversight does not provide an independentbasis to determine that management has maintained appropriate accounting andfinancial reporting principles or appropriate internal controls and proceduresdesigned to assure compliance with accounting standards and applicable laws andregulations. Our audit committee’s reviews, considerations and discussions donot provide assurance that BDO Seidman’s audit of our financial statements wascarried out in accordance with generally accepted auditing standards, that thefinancial statements are presented in accordance with accounting principlesgenerally accepted in the United States of America or that our publicaccountants are in fact “independent.” Our audit committee operates pursuant toa written amended and restated charter approved by our board of directors.

*Audit Committee FinancialExpert.**  *Our “auditcommittee financial expert,” as defined by the rules of the Securities andExchange Commission, is Mr. Fred W. Reams. Mr. Reams qualifiesas an independent director pursuant to the standards of the American StockExchange. In addition:

(i)                                     Mr. Reams,who is an audit committee financial expert, will not be deemed *expert* for any purpose, including without limitation forpurposes of section 11 of the Securities Act of 1933(15 U.S.C. 77k), as a result of being designated or identified as anaudit committee financial expert.

(ii)                                  Thedesignation or identification of Mr. Reams as an audit committee financialexpert does not impose on him any duties, obligations or liability that aregreater than the duties, obligations and liability imposed on such person as amember of our audit committee and board of directors in the absence of suchdesignation or identification.

31

----

(iii)                               The designation oridentification of Mr. Reams as an audit committee financial expert doesnot affect the duties, obligations or liability of any other member of ouraudit committee or board of directors.

***Other Committees.***Wemay, from time to time, form other committees as circumstances warrant. Noadditional committees existed or were formed in the year endedDecember 31, 2006.

**Directorsand Officers Insurance**

GTA maintains directors and officers liabilityinsurance that insures our officers, managers and committee members from claimsarising out of an alleged wrongful act by such persons while acting asexecutive officers, managers or committee members of our company, and itinsures our company to the extent that we have indemnified our officers,managers and committee members for such loss.

**Indemnification**

Our organizational documents provide that we shallindemnify our officers, committee members and managers against certainliabilities to the fullest extent permitted under applicable law. Ourorganizational documents also provide that our officers, committee members andmanagers shall be exculpated from monetary damages to us to the fullest extentpermitted under applicable law.

**Code ofEthics**

We have adopted the Code of Ethics of GTA. This Codeof Ethics applies to our principal executive officer, our principal financialofficer, our principal accounting officer, and our controller, as well as allof our officers and other employees. GTA’s Code of Ethics is filed asExhibit 14.1 to its Annual Report on Form 10-K, filed onMarch 30, 2004. You may also obtain a free copy of our Code of Ethicsby writing to our attention at 10 N. Adger’s Wharf, Charleston, South Carolina,29401.

Until its termination on October 31, 2006, ourmanagement agreement with Westin provided that substantially all of theemployees of the Resort are our employees, but were managed by Westin. As aresult of this arrangement, we did not have direct control over theseemployees. Each employee at the Resort was subject to the Worldwide Code ofBusiness Conduct and Ethics of Westin’s parent, Starwood Hotels &Resorts Worldwide, Inc, or Starwood. The text of Starwood’s code of conductmay be found on Starwood’s website. You may also obtain, withoutcharge, a printed copy of the Starwood Code of Ethics by writing to ourattention at 10 N. Adger’s Wharf, Charleston, South Carolina, 29401

32

----

 

.**ITEM 11. EXECUTIVECOMPENSATION**

**CompensationDiscussion and Analysis**

We donot have a compensation committee.  Thecompensation program for the one officer that we pay (our other officers arepaid by our parent, GTA) is discretionary and is designed and implemented bythe Chief Executive Officer of our parent, W. Bradley Blair.

*Compensation Objectives***.***  *Theobjectives of our compensation structure are to:

1.                                       retain(to the extent necessary) and reward experienced, highly motivated officer(s)who are capable of effectively managing the on-site responsibilities of theongoing corporate operations of the Resort through to a sale of the Resort orlonger term strategic plan; and

2.                                       rewardand encourage officer activity that results in enhanced performance results ofthe Resort and/or our company.

*Elements of Compensation.**   E*ach element of compensation is designed to rewarddifferent performance goals, yet have the components work together to satisfythe ultimate goal of enhancing stockholder value in the context of the plan ofliquidation. The elements of principal officer compensation are:

1.                                       *Base salary*.  Basesalaries for our officer(s) are established based on their performance of theirbasic job description and through the performance of assigned responsibilities;

2.                                       *Cash bonuses. *Cashbonuses reward the officer(s) for commendable performance of specially designatedtasks or outstanding performance of assigned responsibilities pertaining to thesale of the Resort or real estate opportunities exceeding Mr. Blair’sexpectations.  These bonuses arediscretionary and are not awarded based on a formula or a specific time frame.

3.                                       *Defined contribution plan*. We have a 401(k) savings/retirement plan, which permits our eligibleemployees to defer up to 80% of their annual compensation, subject to certainlimitations imposed by the Internal Revenue Code.  The employees’ elective deferrals areimmediately vested and nonforfeitable upon contribution to the 401(k)plan.  We current offer a discretionarycontribution matching policy of up to 50% of the first 6% invested by theemployee.

4.                                       *Other elements.*  We contributeapproximately 70% towards the cost of our officer(s)’ and their spouses’ andchildrens’ health, dental and optical insurance.  We also provide to our officer(s) at our solecost life insurance coverage.

We are a single member limited liability company anddo not have any stock. Our membership interests are not publicly traded;therefore, all required tables related to stock awards of options and grantshave been omitted.  We also do not have apension plan or a board of directors; therefore, required tables for theseitems are omitted as well.

**SummaryCompensation Table**

Thefollowing tables set forth the remuneration paid, distributed or accrued by usduring the years ended December 31, 2006, 2005 and 2004 to our executiveofficers.
|                                    | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **         | ** ** | **Change in** | ** ** | ** **       | ** ** | ** ** | ** ** |
|------------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|--------------------|------------|--------------------|------------|------------------|------------|------------|------------|
| ** **                         |       |       |       |       |       |       |       |       |       |       |       | ** **         |       | **Pension Value**  |       |             |       |       |       |
| ** **                         |       |       |       |       |       |       |       |       |       |       |       | ** **         |       | **and**            |       |             |       |       |       |
| ** **                         |       |       |       |       |       |       |       |       |       |       |       | ** **         |       | **Nonqualified**   |       |             |       |       |       |
|                               |       |       |       |       |       |       |       |       |       |       |       | **Non-Equity**     |       | **Deferred**       |       |             |       |       |       |
|                               |       |       |       |       |       |       |       | **Stock**  |       | **Option** |       | **Incentive Plan** |       | **Compensation**   |       | **All Other**    |       |       |       |
|                               |       |       |       | **Salary** |       | **Bonus**  |       | **Awards** |       | **Awards** |       | **Compensation**   |       | **Earnings**       |       | **Compensation** |       | **Total**  |       |
| **Name and  Principal Position**   |       | **Year**   |       | **($)**    |       | **($)**    |       | **($)**    |       | **($)**    |       | **($)**            |       | **($)**            |       | **($)**          |       | **($)**    |       |
| W. Bradley Blair, II(1)            |       | 2006       |       | $          | 3⁄4     |       | $          | 3⁄4     |       | $          | 3⁄4     |               | $          | 3⁄4             |       | $                | 3⁄4     |       | $          | 3⁄4 |   | $ | 3⁄4 |   | $ | 3⁄4 |   |
| Chief Executive Officer and        |       | 2005       |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | 3⁄4           |       | 3⁄4     |       |
| Chairman of the Board              |       | 2004       |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | 3⁄4           |       | 3⁄4     |       |
| Scott D. Peters  (1)               |       | 2006       |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | 3⁄4           |       | 3⁄4     |       |
| Chief Financial Officer, Senior    |       | 2005       |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | 3⁄4           |       | 3⁄4     |       |
| Vice President and Secretary       |       | 2004       |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | 3⁄4           |       | 3⁄4     |       |
| Tracy S. Clifford (1)              |       | 2006       |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | 3⁄4           |       | 3⁄4     |       |
| Principal Accounting Officer  |       | 2005       |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | 3⁄4           |       | 3⁄4     |       |
| and Secretary                      |       | 2004       |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | 3⁄4           |       | 3⁄4     |       |
| R. Keith Wilt (2)                  |       | 2006       |       | 110,841    |       | 15,000     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | $                | 106,049    | (2)(3)     | 231,890    |   |
| Vice President                     |       | 2005       |       | 99,034     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | 20,541           |       | 119,575    |       |
|                               |       | 2004       |       | 43,542     |       | 10,000     |       | 3⁄4     |       | 3⁄4     |       | 3⁄4             |       | 3⁄4             |       | 8,973            |       | 62,515     |       |
|                                    |            |            |            |            |            |            |            |            |            |            |            |                    |            |                    |            |                  |            |            |            |  |  |  |  |  |  |  |  |

----

(1)             Messrs. Blair and Peters andMs. Clifford are not compensated directly by us for services as our executiveofficers; however, they receive compensation from GTA for service as itsexecutive officers. In his capacity as President and Chief Executive Officer ofGTA, total annual compensation of approximately $247,000 $232,000 and$1,492,000 for the years ended December 31, 2006, 2005 and 2004,respectively, was paid or accrued to Mr. Blair. In his capacity as ChiefFinancial Officer, Secretary and Vice President of GTA, total annualcompensation of approximately $171,000, $80,000 and $494,000 for the yearsended December 31, 2006, 2005 and 2004, respectively, was paid or accruedto Mr. Peters.   In her capacity asController of GTA, total annual compensation of approximately $157,000,$110,000 and $107,000 for the years ended December 31, 2006, 2005 and 2004,respectively was paid or accrued to Ms. Clifford.

33

----

(2)             Mr. Wilt was the VicePresident, Treasurer and Principal Financial Officer of GHR, and he ispresently our Vice President. Mr. Wilt received total compensation of$52,000 from GHR during the period from January 1, 2004 throughJuly 15, 2004.  Mr. Wilt alsohas a severance agreement with GTA to which we are not a party. Pursuant to thisseverance arrangement, Mr. Wilt will receive a benefit worth approximately$83,000 in connection with the sale of the Resort.

(3)             Includes annual health and lifeinsurance premiums and 401K contributions of $23,549 and $20,541 for the yearsended December 31, 2006 and 2005, respectively, and $8,973 for the period July16, 2004 to December 31, 2004 paid by us on behalf of Mr. Wilt.

We do not grant options or similar rights to ourofficers, and we do not have any equity compensation plans. In addition, we arenot parties to employment agreements with our officers, but Messrs. Blairand Peters have employment agreements with GTA which are discussed in detail inGTA’s filings with the SEC.

We do not compensate our Audit Committee members forservice in this capacity. GTA pays its independent directors(Messrs. Jones, Reams, Wax, Loeb and Toor) fees for their services asdirectors. GTA’s independent directors receive annual compensation of $10,000plus a fee of $1,000 for attendance at each meeting of the board of directorsof GTA (whether in person or telephonically), and $500 for attending each GTAcommittee meeting. GTA directors who are not independent directors are not paidany director fees. GTA reimburses the members of its Board of Directors fortheir reasonable and documented out-of-pocket travel expenses.

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIALOWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

We arewholly owned by GTA-IB Golf Resort, LLC, which is wholly owned by GTA, LP. GTAhas sole voting and dispositive power over our interests through GTA, LP. GTAand GTA, LP are located at 10 North Adger’s Wharf, Charleston, South Carolina29401.

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS**

(a)                                  Transactionswith Management and Others

None.

(b)                                 CertainBusiness Relationships

Mr. Blair and Ms.Clifford are executive officers of our parent, GTA. Mr. Peters was an executiveofficer of our parent until his resignation effective February 5, 2007.  We owe GTA’s subsidiary, GTA, LP,$39 million pursuant to a promissory note and loan agreement relating tothe Resort.

(c)                                  Indebtednessof Management

None.

34

----

(d)                                 Transactionswith Promoters

Not applicable.

**ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES**

BDO Seidman, LLP served as our independent registeredaccounting firm for the years ended December 31, 2006 and 2005.

The following fees were incurred for BDO Seidman, LLP’sservices related to our years ended December 31, 2006 and 2005.

Audit Fees: approximately $167,000 and $246,000 forthe fiscal years ended December 31, 2006 and 2005 for professionalservices rendered for the audit of our annual financial statements, review ofthe financials statements included in our Quarterly Reports on Form 10-Qand services that are normally provided by the auditors in connection withstatutory filings or engagements for those fiscal years.

Audit-Related Fees: None.

Tax Fees: None.

All other fees: None.

Our Audit Committee is required to pre-approve theaudit and non-audit services performed by the independent auditor for us inorder to assure that the provision of such services do not impair the auditor’sindependence. Prior to the beginning of our fiscal year, our audit committeetypically pre-approves certain general audit and non-audit services up tospecified cost levels. Any audit or non-audit services that are not generallypre-approved in this manner require specific pre-approval by our auditcommittee. While our audit committee may delegate pre-approval authorityto one or more of its members, the member or members to whom such authority isdelegated must report any pre-approval decisions to our audit committee at itsnext scheduled meeting. Our audit committee does not delegate itsresponsibilities to pre-approve services performed by the independent auditorto management.

All of the services described in Items9(e)(2) through 9(e)(4) of Schedule 14A were approved by ourAudit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01of Regulation S-X.

**PART IV**

**ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES**

FinancialStatements and Schedules

The financial statements and exhibits filed aspart of this annual report on Form 10-K are listed on pages 32and 63, and are incorporated herein by reference.

 

35

----

**INDEX TOFINANCIAL STATEMENTS**
|                                                                                                                                                                                                                                                                                                         | ** ** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|
| **Financial  Statements of GTA-IB, LLC and Golf Host Resorts, Inc. and  Subsidiary—Predecessor Financial Statements**                                                                                                                                                                         |       |       |
| Report  of Independent Registered Public Accounting Firm—BDO Seidman, LLP                                                                                                                                                                                                                          |       |       |
| Report  of Independent Registered Public Accounting Firm—BDO Seidman, LLP                                                                                                                                                                                                                          |       |       |
| Combined  Balance Sheets as of December 31, 2006 and December 31, 2005                                                                                                                                                                                                                        |       |       |
| Combined  Statements of Loss and Changes in Member’s Deficit for the year ended  December 31, 2006 and for the year ended December 31, 2005                                                                                                                                              |       |       |
| Combined  Statement of Cash Flows for the year ended December 31, 2006, the year  ended December 31, 2005 and the Period July 16, 2004 to  December 31, 2004, and Consolidated Statements of Cash Flows  (Predecessor Basis) for the Period January 1, 2004 to July 15,  2004. |       |       |
| Notes to Combined/Consolidated Financial Statements                                                                                                                                                                                                                                                     |       |       |
| **Introduction  to Financial Statements of the Rental Pool Lease Operation—Historical Summary**                                                                                                                                                                                                    |       |       |
| **Financial  Statements of the Rental Pool Lease Operation**                                                                                                                                                                                                                                            |       |       |
| Report of Independent Registered Public Accounting  Firm—BDO Seidman, LLP                                                                                                                                                                                                                          |       |       |
|                                                                                                                                                                                                                                                                                                    |       |       |
| Balance Sheet—Distribution Fund as of  December 31, 2006 and 2005                                                                                                                                                                                                                             |       |       |
| Balance Sheet—Maintenance Escrow Fund as of  December 31, 2006 and 2005                                                                                                                                                                                                                       |       |       |
| Statements of Operations—Distribution Fund for the  years ended December 31, 2006, 2005 and 2004                                                                                                                                                                                              |       |       |
| Statements of Changes in Participants’ Fund  Balances—Distribution fund for the years ended December 31, 2006, 2005  and 2004                                                                                                                                                            |       |       |
| Statements of Changes in Participants’ Fund  Balances—Maintenance Escrow Fund for the years ended December 31, 2006,  2005 and 2004                                                                                                                                                      |       |       |
| Notes to Financial Statements                                                                                                                                                                                                                                                                           |       |       |

 

36

----

**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To theSole Member and Sole Manager ofGTA-IB, LLC

We have audited the accompanying combined balancesheets of GTA-IB, LLC and affiliates (a wholly owned subsidiary of Golf Trustof America, Inc., collectively “the Company”) as of December 31, 2006and 2005, and the related combined statements of operations, changes in member’sdeficit and cash flows for the years ended December 31, 2006  and 2005 and for the period fromJuly 16, 2004 (inception) to December 31, 2004. These financialstatements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based onour audits.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement. The Company is not required to have, nor were we engagedto perform, an audit of its internal control over financial reporting. Ouraudit included consideration of internal control over financial reporting as abasis for designing audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express nosuch opinion. An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements, assessingthe accounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believethat our audits provide a reasonable basis for our opinion.

As described in Note 1 to the financialstatements, on July 16, 2004, GTA-IB, LLC took possession of the propertypursuant to an agreement in settlement of a loan made by Golf Trust ofAmerica, Inc.

In our opinion, the combined financial statementsreferred to above present fairly, in all material respects, the financialposition of GTA-IB, LLC and affiliates at December 31, 2006 and 2005, andthe results of their operations and their cash flows for the years endedDecember 31, 2006 and 2005 and the period from July 16, 2004(inception) to December 31, 2004, in conformity with accounting principlesgenerally accepted in the United States of America.

The accompanying combined financial statements havebeen prepared assuming that the Company will continue as a going concern. Asdiscussed in Note 2 to the financial statements, the Company has suffereda loss from operations for the period from July 16, 2004 (inception) toDecember 31, 2006, and at December 31, 2006 had deficiencies inworking capital and equity that raise substantial doubt about its ability tocontinue as a going concern. Management’s plans in regard to these matters arealso described in Note 2. The financial statements do not include anyadjustments that might result from the outcome of this uncertainty.
|                                           |   | /s/ BDO Seidman, LLP |
|-------------------------------------------|--------|----------------------|
| Charlotte, North Carolina  March 30, 2007 |   | BDO Seidman, LLP     |

 

37

----

**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To theStockholder and Board of DirectorsGolf Host Resorts, Inc.

We have audited the consolidated statements ofoperations, changes in accumulated deficit and cash flows for the period fromJanuary 1, 2004 to July 15, 2004 of Golf Host Resorts, Inc. andSubsidiary. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement. The Company is not required to have, nor were we engagedto perform, an audit of its internal control over financial reporting. Ouraudit included consideration of internal control over financial reporting as abasis for designing audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express nosuch opinion. An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements, assessingthe accounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referredto above present fairly, in all material respects, the results of Golf HostResorts, Inc. and Subsidiary’s operations and their cash flows for theperiod from January 1, 2004 to July 15, 2004 in conformity withaccounting principles generally accepted in the United States of America.

The accompanying consolidated financial statementshave been prepared assuming that the Company will continue as a going concern.As discussed in Note 2 to the financial statements, the Company hassuffered a loss from operations for the period from January 1, 2004 toJuly 15, 2004 and has a shareholder’s deficit that raises substantialdoubt about its ability to continue as a going concern. The financialstatements do not include any adjustments that might result from the outcome ofthis uncertainty.
|                                                |   | /s/ BDO Seidman, LLP |
|------------------------------------------------|--------|----------------------|
| Charlotte, North Carolina  March 24, 2005 |   | BDO Seidman, LLP     |

 

38

----

**GTA-IB,LLC****COMBINED BALANCE SHEETS****AS OF DECEMBER 31, 2006 AND 2005****(in thousands)**
| ** **                                         | ** ** | **December 31,** | ** ** |
|----------------------------------------------------|------------|-----------------------|------------|
| ** **                                         | ** ** | **2006**              | ** ** | **2005** | ** ** |
| **Assets**                                         |       |                  |       |   |   |
| Current assets:                                    |       |                  |       |   |   |
| Cash                                               |       | $                     | 932        |   | $ | 1,519 |   |
| Accounts  receivable trade, net                    |       | 2,115                 |       | 2,812 |   |
| Other  receivables                                 |       | 354                   |       | 247 |   |
| Inventories and  supplies                          |       | 1,329                 |       | 1,381 |   |
| Prepaid expenses  and other                        |       | 566                   |       | 532 |   |
| Total current  assets                              |       | 5,296                 |       | 6,491 |   |
| Intangibles, net                                   |       | 14,906                |       | 16,635 |   |
| Property and equipment,  net                       |       | 27,280                |       | 28,322 |   |
| Other assets                                       |       | 1,892                 |       | 2,647 |   |
| **Total assets**                                   |       | $                     | 49,374     |   | $ | 54,095 |   |
| ** **                                         |       |                  |       |   |   |
| **Liabilities**                                    |       |                  |       |   |   |
| Current liabilities:                               |       |                  |       |   |   |
| Accounts payable                                   |       | $                     | 2,584      |   | $ | 2,008 |   |
| Accrued payroll  costs                             |       | 1,182                 |       | 1,554 |   |
| Other payables  and accrued expenses               |       | 1,763                 |       | 1,833 |   |
| Deposits                                           |       | 2,212                 |       | 2,438 |   |
| Troon  supplemental fee                            |       | 800                   |       | 752 |   |
| Westin  termination fee                            |       | 5,594                 |       | 5,147 |   |
| Current portion  of long-term refurbishment        |       | 1,424                 |       | 1,073 |   |
| Current portion  of capital lease obligations      |       | 344                   |       | 336 |   |
| Total current  liabilities                         |       | 15,903                |       | 15,141 |   |
| Due to parent                                      |       | 42,343                |       | 42,216 |   |
| Deferred revenue                                   |       | 1,221                 |       | 825 |   |
| Deferred management  fees                          |       | —                |       | 204 |   |
| Refurbishment  obligation, net of current portion  |       | 2,830                 |       | 3,574 |   |
| Capital lease obligations,  net of current portion |       | 428                   |       | 625 |   |
| Other long term  liabilities                       |       | —                |       | — |   |
| **Total liabilities**                              |       | 62,725                |       | 62,585 |   |
| **Commitments and contingencies**                  |       |                  |       |   |   |
| **Member’s deficit**                          |       | (13,351               | )          | (8,490 | ) |
| **Total liabilities and member’s deficit**    |       | $                     | 49,374     |   | $ | 54,095 |   |

 

See notes to combined/consolidated financialstatements.

39

----

**GTA-IB,LLC****COMBINED STATEMENTS OF LOSS AND CHANGES IN MEMBER’SDEFICIT****FOR THE YEARS ENDED DECEMBER 31, 2006AND  2005, AND FOR THE PERIODJULY 16, 2004(INCEPTION) TO DECEMBER 31, 2004 AND CONSOLIDATED STATEMENTS OF LOSS ANDCHANGES INACCUMULATED DEFICIT (PREDECESSOR BASIS) FOR THE PERIOD JANUARY 1, 2004 TOJULY 15, 2004****(in thousands)**
| ** **                                          | ** ** | **For the year ended  December 31,** | ** ** | **For the period,** | ** ** |
|-----------------------------------------------------|------------|----------------------------------------------------------|------------|-------------------------------|------------|
| ** **                                          | ** ** | **2006**                                                 | ** ** | **2005**                      | ** ** | **7/16/04 to  12/31/04** | ** ** | **1/1/04 to  7/15/04** | ** ** |
| Revenues                                            |       |                                                     |       |                          |       |   |   |   |   |
| Hotel                                               |       | $                                                        | 13,407     |                          | $          | 13,335 |   | $ | 4,356 |   | $ | 6,672 |   |
| Food and  beverage                                  |       | 11,896                                                   |       | 11,557                        |       | 4,445 |   | 5,824 |   |
| Golf                                                |       | 13,925                                                   |       | 13,352                        |       | 4,248 |   | 7,334 |   |
| Other                                               |       | 2,613                                                    |       | 3,637                         |       | 1,174 |   | 2,793 |   |
| Total revenues                                      |       | 41,841                                                   |       | 41,881                        |       | 14,223 |   | 22,623 |   |
| Expenses                                            |       |                                                     |       |                          |       |   |   |   |   |
| Hotel                                               |       | 11,139                                                   |       | 11,411                        |       | 4,138 |   | 5,611 |   |
| Food and  beverage                                  |       | 8,742                                                    |       | 8,140                         |       | 3,238 |   | 4,648 |   |
| Golf                                                |       | 7,655                                                    |       | 7,620                         |       | 3,173 |   | 4,250 |   |
| Other                                               |       | 10,554                                                   |       | 9,902                         |       | 4,100 |   | 4,903 |   |
| General and  administrative                         |       | 5,026                                                    |       | 4,744                         |       | 2,096 |   | 2,803 |   |
| Depreciation and  amortization                      |       | 2,036                                                    |       | 2,479                         |       | 1,249 |   | 1,626 |   |
| Total expenses                                      |       | 45,152                                                   |       | 44,296                        |       | 17,994 |   | 23,841 |   |
| Operating loss                                      |       | (3,311                                                   | )          | (2,415                        | )          | (3,771 | ) | (1,218 | ) |
| Interest  expense, net                              |       | (1,550                                                   | )          | (1,635                        | )          | (669 | ) | (5,127 | ) |
| Net loss                                            |       | (4,861                                                   | )          | (4,050                        | )          | (4,440 | ) | (6,345 | ) |
| Dividend requirements  on preferred stock           |       | —                                                   |       | —                        |       | — |   | (139 | ) |
| Net loss attributable  to common stockholder/member |       | (4,861                                                   | )          | (4,050                        | )          | (4,440 | ) | (6,484 | ) |
| Deficit, beginning of  period                       |       | (8,490                                                   | )          | (4,440                        | )          | — |   | (66,772 | ) |
| Deficit, end of period                              |       | $                                                        | (13,351    | )                             | $          | (8,490 | ) | $ | (4,440 | ) | $ | (73,256 | ) |

 

See notes to combined/consolidated financialstatements.

40

----

**GTA-IB,LLC****COMBINED STATEMENTS OF CASH FLOWS****FOR THE YEARS ENDED DECEMBER 31, 2006 AND2005 AND****FOR THE PERIOD JULY 16, 2004 (INCEPTION) TODECEMBER 31, 2004, AND****CONSOLIDATED STATEMENTS OF CASH FLOWS (PREDECESSORBASIS)****FOR THE PERIOD JANUARY 1, 2004 TOJULY 15, 2004****(in thousands)**
| ** **                                                                                 | ** ** | **For the year ended  December 31,** | ** ** | **For the period,** | ** ** |
|--------------------------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|-------------------------------|------------|
| ** **                                                                                 | ** ** | **2006**                                                 | ** ** | **2005**                      | ** ** | **7/16/04 to  12/31/04** | ** ** | **1/01/04 to  07/15/04** | ** ** |
| **Cash flows from operating  activities:**                                                 |       |                                                     |       |                          |       |   |   |   |   |
| Net loss                                                                                   |       | $                                                        | (4,861     | )                             | $          | (4,050 | ) | $ | (4,440 | ) | $ | (6,345 | ) |
| Adjustments to  reconcile net loss to net cash provided by (used in) operating activities: |       |                                                     |       |                          |       |   |   |   |   |
| Depreciation and  amortization                                                             |       | 3,357                                                    |       | 3,801                         |       | 1,868 |   | 1,626 |   |
| Provision for  bad debts                                                                   |       | 363                                                      |       | 29                            |       | 40 |   | 54 |   |
| Loss on disposal  of property and equipment                                                |       | —                                                   |       | 10                            |       | — |   | — |   |
| Amortization of  refurbishment costs                                                       |       | —                                                   |       |                          |       | — |   | 586 |   |
| Non-cash  interest incurred on certain long term obligations                               |       | 1,177                                                    |       | 1,169                         |       | 433 |   | — |   |
| Changes in  operating assets and liabilities:                                              |       |                                                     |       |                          |       |   |   |   |   |
| Decreases  (increases) in:                                                                 |       |                                                     |       |                          |       |   |   |   |   |
| Restricted cash                                                                            |       | —                                                   |       |                          |       | — |   | (1,001 | ) |
| Accounts  receivable and other receivables                                                 |       | 227                                                      |       | (1,191                        | )          | (445 | ) | 154 |   |
| Inventories and  supplies                                                                  |       | 52                                                       |       | (229                          | )          | (231 | ) | 266 |   |
| Prepaid expenses  and other                                                                |       | 11                                                       |       | (25                           | )          | (55 | ) | (178 | ) |
| Increases  (decreases) in:                                                                 |       |                                                     |       |                          |       |   |   |   |   |
| Cash overdraft                                                                             |       |                                                     |       | —                        |       | — |   | 2,120 |   |
| Accounts payable  and deferred management fees                                             |       | 373                                                      |       | (757                          | )          | 426 |   | (1,411 | ) |
| Accrued payroll  costs                                                                     |       | (372                                                     | )          | 407                           |       | 411 |   | (239 | ) |
| Accrued interest                                                                           |       | (12                                                      | )          | (7                            | )          | 91 |   | 5,454 |   |
| Other payables  and accrued expenses                                                       |       | (58                                                      | )          | 214                           |       | (574 | ) | (782 | ) |
| Deposits and  deferred revenue                                                             |       | 170                                                      |       | 1,014                         |       | 1,202 |   | (780 | ) |
| Due to related  parties                                                                    |       | —                                                   |       | —                        |       | — |   | 1,400 |   |
| Cash provided by  (used in) operating activities                                           |       | 427                                                      |       | 385                           |       | (1,274 | ) | 924 |   |
| **Cash flows provided (used in)  investing activities:**                                   |       |                                                     |       |                          |       |   |   |   |   |
| Cash acquired in  Settlement                                                               |       | —                                                   |       | —                        |       | 1,705 |   | — |   |
| Purchases of  property and equipment                                                       |       | (454                                                     | )          | (695                          | )          | (439 | ) | (924 | ) |
| Net cash provided by  (used in) investing activities                                       |       | (454                                                     | )          | (695                          | )          | 1,266 |   | (924 | ) |
| **Cash flows from financing  activities:**                                                 |       |                                                     |       |                          |       |   |   |   |   |
| Payments on debt  and capital lease obligations                                            |       | (1,397                                                   | )          | (1,053                        | )          | (160 | ) | — |   |
| Borrowings from  parent                                                                    |       | 837                                                      |       | 1,050                         |       | 2,000 |   | — |   |
| Net cash  provided by (used in) financing activities                                       |       | (560                                                     | )          | (3                            | )          | 1,840 |   | — |   |
| Net increase (decrease)  in cash                                                           |       | (587                                                     | )          | (313                          | )          | 1,832 |   | — |   |
|                                                                                       |       |                                                     |       |                          |       |   |   |   |   |
| Cash on hand,  beginning of period                                                         |       | 1,519                                                    |       | 1,832                         |       |   |   | — |   |
| Cash and cash  equivalents, end of period                                                  |       | $                                                        | 932        |                          | $          | 1,519 |   | $ | 1,832 |   | $ | — |   |
| **Supplemental disclosures:**                                                              |       |                                                     |       |                          |       |   |   |   |   |
| Interest paid                                                                              |       | $                                                        | 360        |                          | $          | 480 |   | $ | 389 |   | $ | 212 |   |
| Equipment  acquired under capital leases                                                   |       | 137                                                      |       | 414                           |       | 67 |   | 972 |   |
| Satisfaction of  preferred stock dividend requirement through the intercompany account     |       | —                                                   |       | —                        |       |   |   | 139 |   |

 

See notes to combined/consolidated financialstatements.

41

----

**GTA-IB, LLC**

**NOTES TO COMBINED FINANCIAL STATEMENTS**

**(dollar amounts in thousands)**

**1.Innisbrook Resort Change in Ownership and Business**

GTA-IB, LLC (the “Company”) isowned by GTA-IB Golf Resort, LLC, which in turn is 100% owned by Golf Trust ofAmerica, L.P. (the “Operating Partnership”). Golf Trust of America, Inc. (“GTA”)indirectly owns 99.6% of the Operating Partnership. The remaining 0.4% of theOperating Partnership is owned by its one limited partner. The OperatingPartnership is GTA’s operating partnership. Golf Host Resorts, Inc. (“GHR”,“the predecessor owner” or “the former borrower”), an entity affiliated withStarwood Capital Group LLC, is the former owner of the Innisbrook Resort andGolf Club (the “Resort”) and the former borrower under a participating mortgageloan funded by the Operating Partnership. This participating mortgage loan wassecured by the Resort, cash, undeveloped land at the Resort and 368,365 sharesof GTA’s common stock. The Resort is a 72-hole destination golf and conference facilitylocated near Tampa, Florida.

The Company entered into aSettlement Agreement dated July 15, 2004 (the “Settlement Agreement”) withthe Operating Partnership and GHR, Golf Hosts, Inc., Golf HostManagement, Inc., Golf Host Condominium, Inc. and Golf HostCondominium, LLC. The Settlement Agreement resolved a number of issues betweenthe parties, including GHR’s default under the $79 loan made by the OperatingPartnership to GHR in June 1997. As part of the Settlement Agreement, theCompany took ownership of the Resort on July 15, 2004. In connection withthe Settlement Agreement, the Company entered into a management agreement withWestin Management Company South (“Westin”), which provides for Westin’smanagement of the Resort, and Westin and Troon Golf L.L.C. (“Troon”) enteredinto a facility management agreement providing for Troon’s management of thegolf facilities at the Resort.  Thecurrent status of (i) the management agreement with Westin and (ii) thefacility management agreement with Troon are discussed in Notes 10 and 12below.  In connection with the SettlementAgreement, the Company assumed control and operation of the Rental Pool LeaseOperations at the Resort (the “Rental Pool”). The Rental Pool was operated and controlled by GHR prior to that time.On a year-to-year basis, approximately 500 of the 938 condominium units at theResort are leased by the Company from the condominium owners and used as hotelaccommodations for the Resort pursuant to rental pool lease arrangements. TheCompany is the lessee under these rental pool lease operation agreements.  Those agreements provide that the Companywill distribute a percentage of room revenues to participating condominiumowners who permit the Company to lease their units as hotel accommodations.

The Operating Partnership hadpreviously entered into an agreement with GHR and the prospective purchaserof  Parcel F. This agreement,commonly known as the Parcel F Development Agreement, was executed on March 29,2004 and amended on August 10, 2005 to add the Company as a party. TheParcel F Development Agreement includes the terms and conditions pursuantto which Parcel F may be developed, and includes restrictions on GHR, theowner of Parcel F, which are designed to avoid interference with the ongoingoperations of the Resort.  The Parcel FDevelopment Agreement also contains provisions which the Company believes willincrease the Operating Partnership’s ability to better manage the location ofthe access road for Parcel F.

GTA is presently in the processof liquidating pursuant to a plan of liquidation approved by its stockholderson May 22, 2001.

The settlement described above,pursuant to which the Company took title to the Resort, was accounted for usingmethods consistent with purchase accounting in accordance with Statement ofFinancial Accounting Standards (“SFAS”) No. 141, Business Combinations.Accordingly, the Company, with the assistance of its then independent financialadvisor, recorded the tangible and identified intangible assets of the Resortat their respective fair values. The long-term liabilities of the Resort werestated at their fair value based on net present value calculations. SeeNote 5 for further discussion.  Thesettlement amount was allocated to the assets acquired, including theliabilities accrued as of July 15, 2004, based upon their estimated fair valuesas of that as indicated below:

 
| Current assets          |   | $      | 4,621  |   |
|-------------------------|--------|--------|--------|--------|
| Property and  Equipment |   | 28,850 |   |
| Intangible  assets      |   | 20,170 |   |
| Other assets            |   | 2,454  |   |
| Total assets            |   | $      | 56,095 |   |
| Current  liabilities    |   | $      | 6,219  |   |
| Long-term  liabilities  |   | 10,636 |   |
| Due to GTA              |   | 39,240 |   |
| Total liabilities       |   | $      | 56,095 |   |

 

42

----

**PredecessorOwner -  Organization and Business**

As stated above GHR, a wholly owned subsidiary of GolfHosts, Inc. (“GHI”) was the predecessor owner of the Resort.

Golf Host Condominium, Inc. (“GHC”), a whollyowned subsidiary of GHR, was formed on December 1, 1997. GHC’s assetsconsisted of three Innisbrook condominiums and a linen room withincondominium lodge number 28.

**2. GoingConcern**

As of December,2006, the Resort has a working capital deficit of approximately $10,607.  This working capital deficit resultedprimarily from the reclassification of the Westin termination fee of $5,594 andthe Troon supplemental fee of $800 from long term to short termobligations.   Before thisreclassification, the Resort had a working capital deficit of approximately$4,213.  The Resort’s member deficit atDecember 31, 2006 is approximately $13,351. The Resort reported a net loss ofapproximately $4,861 for the year ended December 31, 2006.* *The Resort continues to experienceseasonal fluctuations in its net working capital position due to theseasonality of the golf industry in Florida. This seasonality impacts ourliquidity. In particular, there is generally more available cash during thewinter months, specifically in the first quarter. Cash generally becomes verylimited in the late summer months. Revenues generally decline at the Resortduring the summer months because the hot Florida weather makes the Resort lessappealing for group golf outings and vacation destination golfers.Additionally, tropical storm weather patterns, such as the hurricanesexperienced in Florida in 2004 and those that affected the southeast coast in2005, negatively impacted revenues for the Resort in the late summer-early fallseason of 2005 and 2006 as groups and guests were hesitant to book reservationson the southeast coast during the hurricane season. Weather-related concernsmay continue to negatively impact reservations in comparable periods(July through September) of subsequent years. The Resort uses seasonalpricing (peak, shoulder and off-peak) to maximize revenues. Generally, theResort’s only source of cash is from its operations, if any. While certainsteps have been taken in an effort to improve the long-term financialperformance of the Resort since we assumed title to the Resort on July 15,2004, current projections indicate an operational cash flow shortfall of up to$1,000 in the aggregate is likely to occur by late summer/early fall 2007.  Further, now that the Westin ManagementAgreement is terminated, we have begun the capital improvement project ofupgrading the technological infrastructure of the Resort and replacing certaincomponents which were proprietary to Westin. Our projections indicate that thereplacement of these components could require us to make an investment in therange of $1.0 to $2.0 million.  GTAmanagement continues to work diligently with the Resort’s management team toidentify opportunities to improve the cash flow situation at the Resort. GTA iscurrently seeking a buyer for the Resort pursuant to its stockholder-approvedplan of liquidation. GTA made intercompany advances to the Resort to supportworking capital needs in the amounts of $2,000, $400, $650, $600 and $120 inJuly 2004, September 2005, November 2005, October 2006 andFebruary 2007, respectively. Further, GTA funded approximately $203 and $33 forthe beginning phase of the technological infrastructure capital investment inOctober 2006 and November 2006, respectively. The $33 funded in November 2006 and the $120 funded in February 2007 wasrepaid to GTA by the Company in March 2007. In the event that the Resort is notsold, it may become necessary for the Resort to seek further cash infusionfrom GTA, if available, or to seek some other form of financing (which weare currently pursuing) or equity investment to seek to insure the Company’songoing viability through the consummation of the liquidation.  There are no assurances that GTA, or anyaffiliate, will have the ability to provide future funding to the Resort, norare there any assurances that the Company will be able to obtain financingwhich will allow the Company to remain viable.

**3.Summary of Significant Accounting Policies**

**Principlesof Combination**

The financial statements andfootnotes reflect the combined financial results of the Company, GTA-IBCondominium, LLC and GTA-IB Management, LLC. These legal entities are allwholly owned subsidiaries of the Operating Partnership, GTA-IB Condominium, LLCholds the title to three condominium units at the Resort that participate inthe Rental Pool.  GTA-IB Management, LLCis the entity that employs substantially all of the employees working at theResort. There are no other operations of GTA-IB Condominium, LLC and GTA-IBManagement, LLC. The Company holds title to the Resort and is the entity inwhich all of the Resort operations are recorded. All intercompany transactionsand account balances have been eliminated in combination.

The predecessor owner’s consolidated financialstatements include the accounts of Golf Host Resorts, Inc. and Golf HostCondominium, Inc.All significant intercompany account transactions and accountbalances have been eliminated in consolidation.

43

----

**Concentrationof Credit Risk**

Financial instruments that potentially subject theCompany to concentrations of credit risk consist principally of cashequivalents, accounts receivable, investments and notes payable. The Companyplaces its temporary cash with high credit quality principal institutions. TheCompany performs periodic credit evaluations of its customers’ financialcondition and generally does not require collateral. Although due dates ofreceivables vary based on contract terms, credit losses have been withinmanagement’s estimates in determining the level of allowance for doubtfulaccounts. Overall financial strategies are reviewed periodically.

The following methods and assumptions were used by theCompany in estimating its fair value disclosures for financial instruments:

•                    Accounts receivable and accounts payable: Due totheir short term nature, the carrying amounts reported in the balance sheet foraccounts receivable and accounts payable approximate their fair value. TheCompany provides for any losses through its allowance for doubtful accounts.

•                    Long-term obligations: The carrying amount of theCompany’s refurbishment obligations, capital leases and long-term liabilitiesapproximate their fair value because they have been recorded at their net presentvalues considering relevant risk factors.

**TradeAccounts Receivable**

Trade accounts receivable represents amounts due fromResort guests and is net of allowances of approximately $16 and $10 fordoubtful accounts at December 31, 2006 and 2005, respectively. Groups witha recent prior direct billing positive history with the Resort are grantedcredit for billing. If a group has not been to the Resort within the past twoyears, an updated credit evaluation is conducted. The Company requires adeposit of approximately 25% of the total estimated contracted revenue.Additional deposits may be required depending on the outcome of the creditevaluation. Terms are negotiable by group contract but invoices are typicallydue 30 days from the receipt of invoice.

Westin, while manager, and the Company’s managementreview accounts receivable monthly to determine if any receivables areuncollectible. Any receivable considered to be uncollectible is included in theallowance for doubtful accounts. After all attempts to collect the receivablehave failed, the receivable is written off against the allowance. The provisionfor doubtful accounts and the write-off net of recoveries for the respectiveperiods are illustrated in the table below.

 
| ** **                      | ** ** | ** **                                   | ** ** | ** **                                   | ** ** | ** **                            | ** ** | **Predecessor  Basis**              | ** ** |
|---------------------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                      | ** ** | **Year ended  December 31,  2006** | ** ** | **Year ended  December 31,  2005** | ** ** | **Period  7/16/04 to  12/31/04** | ** ** | **Period  1/1/04  to 7/15/04** | ** ** |
| Provision for  bad debt expense |       | $                                            | 363        |                                         | $          | 29                                    |       | $                                   | 40         |   | $ | 54 |   |
|                            |       |                                         |       |                                         |       |                                  |       |                                |       |
| Write-offs net of  recoveries   |       | $                                            | 357        |                                         | $          | 79                                    |       | $                                   | 59         |   | $ | 4 |   |

 

**Inventoriesand Supplies**

Inventories and supplies are recorded at the lower ofcost, on a first-in, first-out basis, or market.

**Propertyand Equipment**

Property and equipment are stated at cost, lessaccumulated depreciation and amortization. Costs of maintenance and repairs ofproperty and equipment used in operations are charged to expense as incurred,while renewals and betterments are capitalized. When property and equipment arereplaced, retired or otherwise disposed of, the costs are deducted from theasset and accumulated depreciation accounts. Gains or losses on sales orretirements of equipment are recorded in operating income.

44

----

Depreciation is recorded using the straight-linemethod. Estimates of useful lives used in computing annual depreciation are asfollows:

 
| ** **                            | ** ** | ** **                                             | ** ** | **Estimated useful life in  years** |
|---------------------------------------|------------|--------------------------------------------------------|------------|-------------------------------------|
| **Category**                          | ** ** | **Estimated useful life in years** | ** ** | **(Predecessor Basis)**             |
| Land  improvements                    |       | 28 to 30                                               |       | 28 to 30                            |
| Buildings                             |       | 40                                                     |       | 40                                  |
| Recreational  facilities              |       | 30                                                     |       | 30                                  |
| Machinery and  equipment              |       | 3 to 10                                                |       | 10 to 15                            |
| Assets recorded  under capital leases |       | 3 to 4                                                 |       | 3 to 4                              |

**Impairmentof Long-Lived Assets**

The Company periodically reviews its long-lived assetsfor impairment by comparing the carrying values of the assets with theirestimated future undiscounted cash flows. If it is determined that animpairment loss has occurred, the loss is recognized during that period. Theimpairment loss is calculated as the difference between asset carrying valuesand fair value as determined by prices of similar items and other valuationtechniques (discounted cash flow analysis), giving consideration to recentoperating performance and pricing trends. There were no significant impairmentlosses related to long-lived assets for the years ended December 31, 2006,2005 and 2004. A subsequent determination that the property, plant andequipment assets are impaired, however, could have a significant adverse impacton the Company’s results of operations or financial condition.

**Intangibleassets**

The Company evaluates intangible assets for impairmentannually or if a significant event occurs or circumstances change. Factors theCompany considers important, which could indicate impairment, include thefollowing: (1) significant under-performance relative to historical orprojected future operating results; (2) significant changes in the mannerof the Company’s use of the acquired assets or the strategy for the Company’soverall business; and (3) significant negative industry or economictrends. During the fourth quarter of 2006, the Company completed its annualintangible impairment assessment, and based on the results, the Companydetermined that no impairment of intangible existed at December 31, 2006,and there have been no indicators of impairment since that date. A subsequentdetermination that these assets are impaired, however; could have a significantadverse impact on the Company’s results of operations or financial condition.

**Advertising**

Advertising costs areexpensed as incurred. Advertising costs for the respective periods were asfollows:
| ** **            | ** ** | ** **                                         | ** ** | ** **                                         | ** ** | ** **                                | ** ** | **Predecessor Basis**              | ** ** |
|-----------------------|------------|----------------------------------------------------|------------|----------------------------------------------------|------------|-------------------------------------------|------------|-----------------------------------------|------------|
| ** **            | ** ** | **Year  ended  December 31,  2006** | ** ** | **Year  ended  December 31,  2005** | ** ** | **Period 7/16/04 to  12/31/04** | ** ** | **Period 1/1/04  to 7/15/04** | ** ** |
| Advertising  expenses |       | $                                                  | 1,173      |                                               | $          | 998                                       |       | $                                       | 409        |   | $ | 655 |   |
|                       |            |                                                    |            |                                                    |            |                                           |            |                                         |            |  |  |  |  |

**Leases**

Leases, which transfer substantially all of thebenefits and risks of ownership of property, are classified as capital leases.Assets and liabilities are recorded at amounts equal to the present value ofthe minimum lease payments at the beginning of the lease term. Interest expenserelating to the lease liabilities is recorded to affect constant rates ofinterest over the terms of the leases.

Leases, which do not transfer substantially all of thebenefits and risks of ownership of property, are classified as operatingleases, and the related rentals are charged to expense as incurred.

**PredecessorOwner - Parent Company Allocations and Advances**

GHR reimbursed GHI for administrative and otherexpenses based on estimated time and expenses incurred. Amounts charged wereapproximately $341 for the period January 1, 2004 to July 15, 2004.GHR also received cash advances from GHI to fund cash flow shortages.

**Revenueand Rental Pool Distributions**

Revenue from Resort operations is recognized as therelated service is performed. Revenue from Resort operations includes revenuefrom rooms, food and beverage, golf and other minor operating departments.Rooms revenue includes rental revenues generated from condominium units ownedby third parties participating in the Rental Pool lease operations. If theserental units were owned by the Company, normal costs associated with ownershipsuch as depreciation, interest, real estate taxes and maintenance would havebeen incurred. (See Note 10 for distributions to rental pool participants).

45

----

The membership initiation fees at the Resort arenonrefundable and are initially recorded when received as deferred revenue andamortized over the average life of a membership which, based on historicalinformation, is deemed to be ten years for full golf memberships and five yearsfor resort, executive and tennis memberships.

**PredecessorOwner - Interest Expense, Net**

The Company’s cash management policy is to utilizecash resources to minimize net interest expense, through either temporary cashinvestments or reductions in existing interest-bearing obligations.Accordingly, temporary cash investments and interest income vary from period toperiod. Interest expense is net of interest income of approximately $16 for theperiod January 1, 2004 to July 15, 2004.

**Use ofEstimates**

Preparation of these combined/consolidated financialstatements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptions,which affect reported amounts of assets and liabilities, disclosure of contingentassets and liabilities at the date of the combined/consolidated financialstatements, and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates.

**Reclassifications**

Certain reclassifications have been made to prior yearamounts to conform to the current year presentation.

**4.Property and Equipment**

Property and equipment as of December 31, 2006and 2005 consists of the following:
| ** **                                      | ** ** | **December 31,** | ** ** |
|-------------------------------------------------|------------|-----------------------|------------|
| **Category**                                    | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Land                                            |       | $                     | 1,968      |   | $ | 1,968 |   |
| Buildings                                       |       | 14,734                |       | 14,722 |   |
| Golf course  improvements                       |       | 7,552                 |       | 7,533 |   |
| Machinery and  equipment                        |       | 6,761                 |       | 6,230 |   |
|                                            |       | 31,015                |       | 30,453 |   |
| Less accumulated  depreciation and amortization |       | (3,735                | )          | (2,131 | ) |
|                                            |       | $                     | 27,280     |   | $ | 28,322 |   |

 

Included in machinery and equipment is certainequipment including golf course maintenance equipment, vehicles andtelecommunications equipment that are recorded under capital leases and thathave a net book value at December 31, 2006 and 2005 of approximately $793and $1,006, respectively. Depreciation expense of approximately $1,628, $1,528,$1,307 and $606 was recorded for the years ended December 31, 2006 and 2005,the period from January 1 to July 15, 2004, and  the period from July 16 toDecember 31, 2004, respectively.

**5. Intangiblesand Other Assets**

Intangible assets represent the value of the followingcontractual relationships that existed at July 15, 2004: the trademark andtrade name of “Innisbrook;” the Rental Pool; the guest room bookings; theclub memberships; and the water contract that provides irrigation water for thegolf courses at no charge up to certain specified levels. The intangible assetsare being amortized over the specific term or benefit period of each relatedcontract.
| ** **                     | ** ** | ** **                          | ** ** | **December 31,** | ** ** |
|--------------------------------|------------|-------------------------------------|------------|-----------------------|------------|
| **Intangible Assets**     | ** ** | **Amortization Period**        | ** ** | **2006**              | ** ** | **2005** | ** ** |
| ** **                     | ** ** | ** **                          | ** ** | ** **            | ** ** | ** ** | ** ** |
| Water  Contract                |       | None since  renewable in perpetuity |       | $                     | 2,300      |   | $ | 2,300 |   |
| Rental  Pool                   |       | 89.5 months                         |       | 9,870                 |       | 9,870 |   |
| Guest  Bookings                |       | Less than 24  months                |       | 1,100                 |       | 1,100 |   |
| Club  Memberships              |       | 144 months                          |       | 4,400                 |       | 4,400 |   |
| Trade  Name                    |       | None since  renewable in perpetuity |       | 2,500                 |       | 2,500 |   |
|                           |       |                                |       | 20,170                |       | 20,170 |   |
| Less  accumulated amortization |       |                                |       | (5,264                | )          | (3,535 | ) |
|                           |       |                                |       | $                     | 14,906     |   | $ | 16,635 |   |

 

46

----

Amortization expense amounted to approximately $1,729for the year ended December 31, 2006, $2,273 for the year ended December 31,2005 and $1,262 for the period from July 16, 2004 to December 31, 2004.Amortization for the predecessor owner was approximately $467 for the periodJanuary 1, 2004 to July 15, 2004. Of these amounts, approximately $1,321, $1,321and $619  for the year ended December 31,2006, 2005 and the period July 16, 2004 to December 31, 2004, respectively, areincluded in hotel expenses and are not included in depreciation andamortization in the Statements of Operations. The intangible assets of thepredecessor owner consisted of the Rental Pool refurbishment asset and themanagement agreement between Westin and the predecessor owner, which wasamortized over twenty years on a straight-line basis.

Anticipated amortization expense for the next fiveyears and thereafter is illustrated in the table below:

 

| Year       | ** ** | **Principal** | ** ** |
|------------|------------|---------------|------------|
| 2007       |       | $             | 1,688      |   |
| 2008       |       | 1,688         |       |
| 2009       |       | 1,688         |       |
| 2010       |       | 1,688         |       |
| 2011       |       | 1,688         |       |
| Thereafter |       | 1,666         |       |
| Total      |       | $             | 10,106     |   |

 

Other assets include the Company’s interest in the netproceeds from the sale of Parcel F, a parcel of land located within theResort.  The value of our primarylong-lived asset, Parcel F, was reduced from $2,200, which was the derivedvalue at July 15, 2004, to $1,490 due to the fact that $710 of this value wastransferred to GTA pursuant to the terms of the an amended agreement with theowner of Parcel F.  Also included inother assets are certain design fees for the refurbishment program, utilitydeposits and club member initiation fees. The Company has a contractual rightto be reimbursed for these design fees by the Rental Pool participants in theform of a deduction from the quarterly Rental Pool refurbishment payments.  Utility deposits remain on account and arerefundable to the Company upon sale of the Resort.  The club initiation fees are paid by the clubmembers quarterly, but in no event greater that two years from the date ofmembership activation.  The amount ofinitiation fees listed below represent the payments due greater than one yearfrom the respective balance sheet dates.

 

|                                | ** ** | **December 31,** | ** ** |
|--------------------------------|------------|-----------------------|------------|
| **Other Assets**          | ** ** | **2006**              | ** ** | **2005** | ** ** |
| ** **                     | ** ** | ** **            | ** ** | ** ** | ** ** |
| Parcel F  proceeds (estimated) |       | $                     | 1,490      |   | $ | 2,200 |   |
| Refurbishment  design fees     |       | 201                   |       | 236 |   |
| Utility deposits               |       | 155                   |       | 155 |   |
| Club initiation  fess          |       | 44                    |       | 56 |   |
| Other                          |       | 2                     |       | — |   |
| Total                          |       | $                     | 1,892      |   | $ | 2,647 |   |

 

**6. OtherPayables and Accrued Expenses**

Other payables and accrued expenses consist of thefollowing:

 

|                                              | ** ** | **December 31,** | ** ** |
|----------------------------------------------|------------|-----------------------|------------|
| ** **                                   | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Rental pool  lease distribution payable      |       | $                     | 831        |   | $ | 962 |   |
| Taxes, other  than income taxes              |       | 731                   |       | 638 |   |
| Accrued interest  on refurbishment liability |       | 72                    |       | 84 |   |
| Accrued audit  fees                          |       | 30                    |       | 50 |   |
| Other                                        |       | 99                    |       | 99 |   |
|                                         |       | $                     | 1,793      |   | $ | 1,833 |   |

 

47

----

**7. Due toRelated Parties and Other Long-Term Liabilities**

Due to related parties:

|                                                                              | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                   | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Maturing on June  19, 2027, non-interest bearing mortgage note due to parent |       | $                     | 39,240     |   | $ | 39,240 |   |
| Advances from  the Company’s parent, net                                |       | 3,103                 |       | 2,976 |   |
|                                                                         |       | $                     | 42,343     |   | $ | 42,216 |   |

TheCompany’s parent has agreed that it will not request or demand repayment of theadvances it has made to the Company prior to January 1, 2008.

*MasterLease Refurbishment Obligation*

On July 16, 2004, the Company recorded a liabilityof $4,532 for the refurbishment program pursuant to the master lease agreement,or MLA, of the Rental Pool.  Thisliability represented the Company’s obligation to pay to the variousparticipants in the Rental Pool an amount equal to 50% of the cost to refurbishtheir respective units, and was recorded at the then net present value(calculated at a discount rate of 15%) of the total principal payments of$7,273.  Principal and interest paymentsare due quarterly over the repayment period of the program, beginning with thefirst quarter of 2005 and ending with the fourth quarter of 2009. Interest onthis liability accrues at a rate of 5% and is paid quarterly. Amortization ofthe discount is charged to interest expense ratably over the period fromJanuary 1, 2005 through December 31, 2009.

In addition, the Company agreedto provide a refurbishment reimbursement to the respective condominium ownersfor units placed into the Rental Pool during 2005.  The owners of these units will be paid 25% oftheir refurbishment investment, with interest at 2.5% per annum.  The owners of these units currently receiveinterest and will receive principal payments beginning in 2008 and ending in2012 for total principal payments of approximately $92.

The amortization charged to interest expense for theyears ended December 31, 2006 and 2005 and the period from July 16, 2004 toDecember 31, 2004 was $682,  $768 and$248, respectively. The amortization expense for the period January 1,2004 to July 15, 2004 was $585, and is included in Resort facilitiesexpense. The net present value of this liability as of December 31, 2006and 2005 is $4,254 and $4,647, respectively,of which $1,424 and $1,073, respectively, is included in current liabilities.

The corresponding benefit to theResort from the MLA refurbishment program was included in the valuation of therental pool intangible asset which is being amortized over the term of thecurrent master lease agreement that expires in 2011. Minimum undiscountedprincipal payments on the MLA refurbishment program are as follows:

 

| Year                             | ** ** | **Principal** | ** ** |
|----------------------------------|------------|---------------|------------|
| 2007                             |       | $             | 1,424      |   |
| 2008                             |       | 1,790         |       |
| 2009                             |       | 2,150         |       |
| Thereafter                       |       | 69            |       |
|                             |       | $             | 5,433      |   |
| Less net present  value discount |       | (1,179        | )          |
| Total                            |       | $             | 4,254      |   |

 

Ourobligation to reimburse the Rental Pool Participants for their refurbishmentexpenses is contingent on the units remaining in the Rental Pool from the timeof their refurbishment through 2009. If the unit does not remain in the RentalPool during the reimbursement periods discussed above, the owner or successor ownerwill forfeit any unpaid installments at the time the unit is removed from theRental Pool.

**8. Lineof Credit and Notes Payable — Predecessor Owner**

GTA, LP was the lender under a note payable to GHR inthe amount of $78,975. The note payable had two components: a $69,975participating mortgage note and a $9,000 credit facility. The note payable wasguaranteed by GHI and collateralized by substantially all assets other than theResort’s accounts receivable and approximately 38 acres of undeveloped land. Theparticipating mortgage note was used to finance GHR’s acquisition of the Resortand its purchase of GTA stock.

 

48

----

GHR incurred interest expense of approximately $4,940on the GTA, LP note payable during the period January 1, 2004 toJuly 15, 2004.

GHR was informed by GTA on November 29, 2001 thatGHR was in default on the $78,975 note payable arising from GHR’s failure topay the October 2001 interest payment and all subsequent principal andinterest payments, which have not been made. GTA, LP asserted its right toaccelerate payment of the total outstanding principal and interest amounts.

GHR sought to negotiate a Settlement Agreement withGTA, LP. Effective July 15, 2004, GHR and GTA, LP entered into a SettlementAgreement that transferred to the Company the Resort property, threecondominium units and linen room located at the Resort, the interest in GTAstock acquired by GHR and operations held by the parent of GHR, and all rights,title and interests of GHR under existing contracts and agreements. Inaddition, GHR provided a limited indemnity to defend and hold harmless GTA (andits affiliates) from and against any and all costs, liabilities, claims,losses, judgments or damages arising out of or in connection with a lawsuitknown as the Class Action Lawsuit, as well as liabilities accruing on or beforethe closing date relating to employee benefits and liabilities for contracts oragreements not disclosed by GHR to GTA. In return, GTA, LP delivered to GHR aduly executed release.

**9. Leases**

The Company leases equipment under capital andoperating leases. Lease expense was approximately $287 for the year endedDecember 31, 2006, $302 for the year ended December 31, 2005,  $111 for the period July 16, 2004 to December31, 2004, and $257 for the period January 1, 2004 to July 15, 2004. Futureminimum lease payments under leases in excess of one year are as follows:
| ** **                         | ** ** | **Capital** | ** ** | **Operating** | ** ** |
|------------------------------------|------------|-------------|------------|---------------|------------|
| 2007                               |       | $           | 401        |          | $          | 266 |   |
| 2008                               |       | 341         |       | 195           |       |
| 2009                               |       | 114         |       | —        |       |
| 2010                               |       | 2           |       | —        |       |
| Total                              |       | 858         |       | $             | 461        |   |
| Less amount  representing interest |       | (86         | )          |          |       |
| Total                              |       | 772         |       |          |       |
| Less current portion               |       | 344         |       |          |       |
| Long-term portion                  |       | $           | 428        |          |       |   |

 

**10.Commitments and Contingencies**

*Claimsand Lawsuits*

The Company is subject to claims and lawsuits in thenormal course of operations. Management does not believe that the ultimateresolution of such matters will materially impair operations or have an adverseeffect on the Company’s financial position and results of operations.

*EmployeeBenefit Plans*

The Company maintains a defined contribution EmployeeThrift and Investment Plan, which provides retirement benefits for all eligibleemployees, including employees of GTA-IB Operations, LLC, who have elected toparticipate. Employees must fulfill a 90-day service requirement to be eligibleto participate in this plan. The Company currently matches one half of thefirst 6% of the contributions of each employee. The Company made matching contributions of approximately $185 and $183for the years ended December 31, 2006 and 2005, respectively and $77 for theperiod ended July 16 to December 31, 2004. The predecessor owner made matchingcontributions of approximately $94 for the period January 1, 2004 toJuly 15, 2004.

*WestinManagement Company South and Troon Golf L.L.C.*

The Management Agreement between the Company and Westin provided thatWestin will manage the Resort for a fee equal to 2.2% of the Resort’s grossrevenue. Contemporaneously with the signing of the management agreement in July2004, Westin entered into a management contract with Troon pursuant to whichTroon was to manage the golf facilities of the Resort for a fee payable by theCompany which equaled 2% of the Resort’s gross golf revenue.  The Company paid monthly management fees toWestin and Troon. By mutual agreement, on September 28, 2006, theCompany, Westin and the Company’s parent, or “GTA”, as guarantor, entered aTermination and Release Agreement (the “Termination Agreement”), pursuant towhich the Company, GTA, and Westin agreed to terminate the Management Agreementas of October 31, 2006 (the “Termination Date”).  In addition to thetermination of the Management Agreement, the Termination Agreement providedthat (i) on or prior to October 3, 2006, the Company or GTA would deposit $600in the Resort’s operating account 

49

----

(which GTA did) to be used in part to pay to Westincertain unpaid fees and charges which have accrued under the ManagementAgreement,  (ii) on or prior to theearlier of March 31, 2008, or any sale of the Resort by the Company and GTA,the Company will pay to Westin the termination fee of approximately $5,594, and(iii) Westin will permit the Company and GTA to continue to access Westin’s “SAP”accounting system for the operation of the Resort until March 31, 2007 (whichthey have) for a total charge of $6.  Subsequent to the termination of theWestin management contract, the Company and GTA have been managing the Resortoperations internally.   The amortizationcharged to interest expense for the year ended December 31, 2006 and to theyear ended December 31, 2005 is $447 and $353, respectively.

*TroonSupplemental Fee*

The July 15,2004 facility management agreement between Westin and Troon, which the Companyassumed as a result of the Westin termination, provides for the payment of asupplemental fee to Troon, subject to the terms and conditions set forth inthat agreement, of $800. If not earlierterminated, the facility management agreement will expire in July 15,2009.  The obligation, which isincluded in other long-term liabilities on the balance sheet, was recorded atits net present value on July 16, 2004. The net present value on that datewas $682 (calculated at a discount rate of 7%). Amortization of the discount is charged to interest expense ratably overthe period through December 31, 2006. The amortization charged to interestexpense for the yearsended December 31, 2006 and 2005 is $48 and $48respectively and $248 for the period from July 16, 2004 to December 31, 2004.The net present value of this liability as of December 31, 2006 and 2005is $800 and $752, respectively.  TheCompany had until November 30, 2006 to decide whether to assume or terminatethe management agreement with Troon for Troon to continue to manage the golffacilities of the Resort.   The Companyand Troon agreed to extend the facilities management agreement for ten dayincremental periods subsequent to November 30, 2006.  See Note 12, *SubsequentEvents*, for further discussion.

SeeNote 12 for further discussion regarding the status of the Troon managementcontract.

The payments made to Westin and Troon under theirrespective management agreements are reflected in the table below:
| ** **         | ** ** | ** **                                   | ** ** | ** **                                   | ** ** | ** **                            | ** ** | **Predecessor Basis**          | ** ** |
|--------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **         | ** ** | **Year ended  December 31,  2006** | ** ** | **Year ended  December 31,  2005** | ** ** | **Period  7/16/04  to 12/31/04** | ** ** | **Period  1/1/04 to  7/15/04** | ** ** |
| Payments made  to: |       |                                         |       |                                         |       |                                  |       |                                |       |
| Westin             |       | $                                            | 784        |                                         | $          | 912                                   |       | $                                   | 316        |   | $ | 320 |   |
| Troon              |       | 279                                          |       | 267                                          |       | 81                                    |       | 161                                 |       |
| Total              |       | $                                            | 1,063      |                                         | $          | 1,179                                 |       | $                                   | 397        |   | $ | 481 |   |

 

.

**RentalPool Operations**

Historically, GHR and the Company as GHR’s successor,have offered several different Rental Pool programs to the condominium owners.Effective January 1, 2002, GHR offered a new Master Lease Agreement (“NMLA”)which permitted all Rental Pool participants the opportunity to convert to thenew agreement. Each condominium owner may elect to participate in either theNMLA or continue with a prior agreement. If an owner elected to participate inthe NMLA, the owner is prohibited from returning to the any previous agreement.Effective January 1, 2003, all but one Rental Pool participant elected toconvert to the NMLA. As of January 1, 2004, all condominium ownersparticipating in the rental pool are participating pursuant to the NMLA. TheNMLA provides for Adjusted Gross Revenues, as defined, to be divided 40% to theInnisbrook Rental Pool participants and 60% to GTA-IB, LLC. In addition,GTA-IB, LLC has agreed, as part of the NMLA, to reimburse Rental Poolparticipants in the NMLA for up to 50% of actual unit refurbishment costsbeginning in 2005 through 2009, so long as the Rental Pool participationthreshold, as defined, is maintained (see Note 7). In addition, for any unitrefurbished and placed in the Rental Pool operation during 2005, the Companymust reimburse the owner for 25% of the refurbishment costs plus interest at2.5% per annum. Should the Company elect to terminate the NMLA before itsexpiration in 2011, all unpaid balances of refurbishment costs and relatedinterest would be due and payable to the Participants. Distributions to theRental Pool participants of approximately $4,808 and $4,966 for the years endedDecember 31, 2006 and 2005, respectively, $1,556 for the period July 16, 2004 to December 31, 2004, and $2,499 forthe period January 1, 2004 to July 15, 2004 are included in Other expenses onour financial statements.

50

----

*Land UseLawsuit*

OnMarch 10, 2005 in the Circuit Court of the Sixth Judicial Circuit, in andfor Pinellas County, Florida, Civil Division, the Company filed a Motion toIntervene in the suit titled Innisbrook Condominium Association, Inc., C.Frank Wreath, Meredith P. Sauer, and Mark Banning, Plaintiffs (the “Plaintiffs”)vs. Pinellas County, Florida, Golf Host Resorts, Inc. and Innisbrook FLLC, Defendants (the “Defendants”), Case No. 043388CI-15 (the “InitialLand Use Lawsuit”). The Plaintiffs have filed a multi-count complaint seekinginjunctive and declaratory relief with respect to the land use and developmentrights of a tract of undeveloped land located within the Resort commonly knownas Parcel F. The Plaintiffs allege that there are no remaining developmentunits (residential units) available to be developed within the Resort property.On March 29, 2005, the Company filed a Motion to Intervene as a defendantin the Initial Land Use Lawsuit in order to protect the Company’s property, andthe Company’s land use and development rights with respect to Parcel F andits property. The court ruled in favor of all Defendants and against allPlaintiffs as to each count in both cases. Subsequent to the court’s oralrulings, defense counsel prepared a proposed final judgment which reflects thecourt’s factual findings and legal conclusions. On March 8, 2006, the courtformally entered its final judgment on the record ruling in favor of thedefendants on all counts and denying all claims asserted by the plaintiffs inboth cases. On March 31, 2006, the plaintiffs in the consolidated cases filed anotice of appeal. The Second District Court of Appeal heard oral argument onFebruary 4, 2007.  The Appeal Courtaffirmed the Circuit Court judgment in favor of the defendants on February 28,2007 and denied the plaintiffs-appellants’ motion for attorney fees.   On March 13, 2007, the plaintiffs filed amotion for the Appeal Court to rehear their claims.   As of March 26, 2007, the Appeal Court hasnot yet responded to this motion.

As anintervenor in the Initial Land Use Lawsuit, we sought to obtain a ruling fromthe court which preserves and protects our property, the land use anddevelopment rights with respect to Parcel F and our property in order tomaximize the value of those rights as they relate both to Parcel F and theResort in general. We have referred to these two matters as the Land UseLawsuits. See further discussion of the Land Use Lawsuits under the heading “RiskFactors” in Part I, Item 1A of this report**.**

In the event that the Court grants the plaintiffsrequest to rehear their claims and the defendants in the Land Use Lawsuits donot prevail in the rehearing, the owner of Parcel F might lose all orsubstantially all of its land use and development rights with respect to ParcelF. As a result, we might experience reduced club memberships at the Resort, andour ability to realize the benefits from proposed development of Parcel F wouldbe adversely impacted. In addition, failure by the defendants to prevail in theLand Use Lawsuits could jeopardize our land use and development rights in theremaining units that we may have the opportunity to develop at the Resortif a court subsequently applies a similar interpretation of our rights withrespect to those units. In that instance, we might lose all or substantiallyall of those rights with respect to the remaining units. As a result of asuccessful challenge to our land use and development rights relating to theremaining units at the Resort, our ability to develop the Resort would beadversely affected.

*PropertyTax Lawsuit*

OnDecember 10, 2004, the Company filed a lawsuit against the propertyappraiser of Pinellas County Florida, or Pinellas County, to challenge the 2004and 2005 real estate assessment of the Resort property. Pinellas County filed amotion to dismiss the Company’s complaint for the 2004 tax year case, which wasdenied by the court. On December 11, 2006, the Company filed a complaintchallenging the 2006 real estate tax assessments.  No trial date has been set for any of thethree cases. If Pinellas County were to prevail, there would be no materialadverse effect upon our financial statements, as the assessment is fully accruedand accounted for in our books and records.

**11.Income Taxes**

The Company is a single-member limited liabilitycompany, wholly owned by GTA-IB Golf Resorts, LLC. GTA-IB Golf Resorts, LLC isa wholly owned subsidiary of GTA, LP. The Company has not elected to be taxedas a corporation; therefore, the Company’s owner is responsible for incometaxes on the Company’s accompanying operating income. Therefore, no provisionor liability for federal or state income taxes has been included in thefinancial statements. If the Company had been taxed as a C corporation,the Company would have recognized deferred income tax assets resulting fromoperating losses and differences in the carrying amounts of assets andliabilities recorded for financial reporting purposes versus income taxpurposes, and a corresponding valuation allowance of an equal amount.

51

----

**PredecessorOwner — Income Taxes**

On April 17, 1998, GHR filed an election with theInternal Revenue Service to change its tax status to a Qualified Subchapter SSubsidiary effective February 3, 1998. As a result of this election, noprovision for income taxes has been included in the predecessor owner’saccompanying consolidated financial statements for any federal, state or localtaxes since any income (loss) is passed through to its shareholder.

**12.Subsequent Events**

*Termination of Facility Management Agreement withTroon*

OnFebruary 22, 2007, the Company and GTA sent Troon a notice of termination inregard to the Facilities Management Agreement pursuant to which Troon managesthe golf operations at the Resort. The Company, GTA and Troon are in theprocess of negotiating the terms and conditions of the termination which theparties expect to be effective upon the conclusion of the respectivenegotiations and the execution of a termination agreement.  The Company intends to manage the golfoperations internally following the termination of the Troon managementagreement.

***Land Use Lawsuits***

TheSecond District Court of Appeal head oral argument on February 14, 2007.  The Appeal Court affirmed per curium, or bythe whole court instead of just one judge, the Circuit Court judgment in favorof the Defendants on February 28, 2007 and denied the plaintiff-appellants’motion for attorneys fees.  On March 14,2007, the plaintiff-appellants filed motion requesting the Appeal Court  to rehear their claims.  The Appeal Court has not yet responded tothis motion.  See Note 10 for furtherdiscussion.

*Financing*

TheCompany is currently negotiating the terms of a three year non-revolving  creditfacility with a Tampa community bank  forapproximately $1,200.  The proceeds ofwhich would be used to finance renovations at the Resort restaurants,information technology infrastructure upgrades and other propertyimprovements  at the Resort and to covershort-term working capital shortfalls. The three condominium units that the Company owns at the Resort willserve as collateral for this loan.  TheCompany is also seeking to obtain a revolving accounts receivable line ofcredit for at least $500.  However, therecan be no assurance that the Company will enter into this loan facility or thatthe Company will be able to obtain an accounts receivable credit line.

52

----

**RENTALPOOL LEASE OPERATION—HISTORICAL SUMMARY**

The following financial statements of the InnisbrookRental Pool Lease Operation (the “Rental Pool”) are for the years endedDecember 31, 2006, 2005 and 2004.

The operation of the Rental Pool is tied closely tothe Resort operations. The Rental Pool Master Lease Agreements provide for aquarterly distribution of a percentage of the Company’s room revenues toparticipating condominium owners (“Participants”), as defined in the agreements(see Note 1 of the Rental Pool Lease Operation financial statements). Becausethe Rental Pool participants share in a percentage of the Company’s roomrevenues, the condominium units allowing Rental Pool participation are deemedto be securities. However, there is no market for such securities other thanthe normal real estate market. Since the security is real estate, no dividendshave been paid or will be paid.

The Company is filing this report as the “successorissuer” to GHR pursuant to Rule 15d-5 promulgated under the Exchange Act,as described in the Form 8-K that the Company filed on November 12,2004.

The Company is a single-member limited liabilitycompany, wholly owned by GTA-IB Golf Resorts, LLC which is a wholly ownedsubsidiary of Golf Trust of America, L.P. There is no established market forthe Company’s membership interests.

GHR had historically experienced recurring net lossesand working capital deficiencies, which from time to time created substantialdoubt about the former owner’s ability to continue as a going concern. TheCompany assumed GHR’s obligations under the Agreements in connection with theSettlement Agreement. As a result, the Company expects to experience some ofthe same operational challenges experienced by GHR during the Resort’s recoveryfrom the recently experienced economic downturn in the lodging industry. Thecontinuation and success of the Rental Pool is contingent upon the continuationof operations of the Resort. In turn, the success of the Resort operations iscontingent upon the continued participation of Participants in the Rental Pool.Items related to the continuation of the Resort as a going concern include suchissues as: the sale of condominium units which do not participate in the RentalPool or through a sale are removed from the Rental Pool, owners of units optingto live in their units, owners renting their units outside of the Rental Pool,and general economic conditions related to the destination resort industry.

 

53

----

**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To theManagers of GTA-IB, LLC andthe Lessors of the Innisbrook Rental Pool Lease Operation

We have audited the accompanying balance sheets of theInnisbrook Rental Pool Operation (“Rental Pool”) as of December 31, 2006and 2005, and the related statements of operations and changes in participants’fund balances for the years ended December 31, 2006, 2005 and 2004. Thesefinancial statements are the responsibility of the Rental Pool’s management.Our responsibility is to express an opinion on these financial statements basedon our audits.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement. The Rental Pool is not required to have, nor were weengaged to perform, an audit of its internal control over financial reporting.Our audit included consideration of internal control over financial reportingas a basis for designing audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Rental Pool’s internal control over financial reporting.Accordingly, we express no such opinion. An audit also includes examining, on atest basis, evidence supporting the amounts and disclosures in the financialstatements, assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for ouropinion.

In our opinion, the financial statements referred toabove present fairly, in all material respects, the financial position of theInnisbrook Rental Pool Operation at December 31, 2006 and 2005, and theresults of its operations and changes in the participants’ fund balance foreach of the three years in the period ended December 31, 2006, in conformitywith accounting principles generally accepted in the United States of America.

The accompanying financial statements have beenprepared assuming that the Rental Pool will continue as a going concern. Asdiscussed in Note 1 to the financial statements, the Rental Pool is partyto lease agreements with an affiliated entity, whose ability to continue as agoing concern is in doubt. The financial statements do not include anyadjustments that might result from the outcome of this uncertainty.

 
| March 30, 2007            |   | /s/ BDO Seidman, LLP |
|---------------------------|--------|----------------------|
| Charlotte, North Carolina |   | BDO Seidman, LLP     |

54

----

 

 

**Innisbrook Rental Pool Lease Operation**

**BalanceSheets—Distribution Fund**

|                                                        | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------|------------|-----------------------|------------|
| ** **                                             | ** ** | **2006**              | ** ** | **2005** | ** ** |
| **Assets**                                             |       |                  |       |   |   |
| Receivable from  GTA-IB, LLC for distribution          |       | $                     | 845,449    |   | $ | 918,324 |   |
| Interest  receivable from maintenance escrow fund      |       | 26,541                |       | 17,201 |   |
| Total assets                                           |       | $                     | 871,990    |   | $ | 935,525 |   |
|                                                   |       |                  |       |   |   |
| **Liabilities and participants’  fund balance**   |       |                  |       |   |   |
| Due to  participants for distribution                  |       | $                     | 660,155    |   | $ | 688,483 |   |
| Due to  maintenance escrow fund                        |       | 211,835               |       | 247,042 |   |
| Total liabilities and participants’ fund balances |       | $                     | 871,990    |   | $ | 935,525 |   |

 

See notes to financial statements.

55

----

**Innisbrook Rental Pool Lease Operation**

**BalanceSheets—Maintenance Escrow Fund**

|                                                        | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------|------------|-----------------------|------------|
| ** **                                             | ** ** | **2006**              | ** ** | **2005** | ** ** |
| **Assets**                                             |       |                  |       |   |   |
| Cash                                                   |       | $                     | 234,274    |   | $ | 201,555 |   |
| Certificates of deposit                                |       | 1,900,000             |       | 1,595,000 |   |
| Receivable from  distribution fund                     |       | 211,835               |       | 247,042 |   |
| Supplies inventory                                     |       | 24,560                |       | 867 |   |
| Interest receivable                                    |       | 34,552                |       | 17,767 |   |
| Total assets                                           |       | $                     | 2,405,221  |   | $ | 2,062,231 |   |
|                                                   |       |                  |       |   |   |
| **Liabilities and participants’  fund balances**  |       |                  |       |   |   |
| Accounts payable                                       |       | $                     | 20,844     |   | $ | 9,163 |   |
| Construction retainage                                 |       | —                |       | 6,048 |   |
| Interest payable to  distribution fund                 |       | 26,541                |       | 17,201 |   |
| Total liabilities                                      |       | 47,385                |       | 32,412 |   |
| Carpet care reserve                                    |       | 74,891                |       | 54,424 |   |
| Participants’ fund  balances                      |       | 2,282,945             |       | 1,975,395 |   |
| Total liabilities and participants’ fund balances |       | $                     | 2,405,221  |   | $ | 2,062,231 |   |

 

See notes to financial statements.

56

----

**Innisbrook Rental Pool Lease Operation**

**Statementsof Operations—Distribution Fund**

|                                                        | ** ** | **For the years ended December 31,** | ** ** |
|--------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                             | ** ** | **2006**                                                      | ** ** | **2005** | ** ** | **2004** | ** ** |
| Gross revenues                                         |       | $                                                             | 13,089,070 |   | $ | 13,071,774 |   | $ | 10,658,131 |   |
| Deductions:                                            |       |                                                          |       |   |   |   |   |
| Agents’  commissions                              |       | 528,254                                                       |       | 598,321 |   | 440,552 |   |
| Credit card fees                                       |       | 302,460                                                       |       | 309,696 |   | 251,418 |   |
| Resort fees                                            |       | 303,955                                                       |       | 89,773 |   | — |   |
| Audit fees                                             |       | 25,000                                                        |       | 25,000 |   | 25,000 |   |
| Uncollectible  room rents                              |       | 41,609                                                        |       | 28,253 |   | 18,602 |   |
| Linen  replacement                                     |       | 133,946                                                       |       | 153,081 |   | 153,892 |   |
| Rental pool  complimentary fees                        |       | 2,411                                                         |       | 4,947 |   | 5,734 |   |
|                                                   |       | 1,337,635                                                     |       | 1,209,071 |   | 895,198 |   |
| Net revenues                                           |       | 11,751,435                                                    |       | 11,862,703 |   | 9,762,933 |   |
| Management fee                                         |       | (7,050,860                                                    | )          | (7,117,622 | ) | (5,857,759 | ) |
| Income available for  distribution                     |       | 4,700,575                                                     |       | 4,745,081 |   | 3,905,174 |   |
| Adjustments to income  available for distribution:     |       |                                                          |       |   |   |   |   |
| General pooled  expenses, net of reimbursements        |       | (9,883                                                        | )          | (3,275 | ) | 1,632 |   |
| Corporate  complimentary occupancy fees                |       | 29,558                                                        |       | 21,177 |   | 22,601 |   |
| Interest  income/(expense)                             |       | (12,099                                                       | )          | (12,177 | ) | (12,732 | ) |
| Westin associate  room fees                            |       | 143,668                                                       |       | 161,749 |   | 129,164 |   |
| Occupancy fees                                         |       | (1,231,804                                                    | )          | (1,394,757 | ) | (1,089,288 | ) |
| Advisory  committee expenses                           |       | (186,305                                                      | )          | (199,478 | ) | (196,083 | ) |
| Net income available  for distribution                 |       | 3,433,710                                                     |       | 3,318,320 |   | 2,760,468 |   |
| Adjustments to net  income available for distribution: |       |                                                          |       |   |   |   |   |
| Occupancy fees                                         |       | 1,231,804                                                     |       | 1,394,757 |   | 1,089,288 |   |
| Life safety  interest                                  |       | —                                                        |       | — |   | — |   |
| Hospitality  suite fees                                |       | 4,559                                                         |       | 8,989 |   | 6,192 |   |
| Amount available for distribution to participants      |       | $                                                             | 4,670,073  |   | $ | 4,722,066 |   | $ | 3,855,948 |   |

 

See notes to financial statements.

57

----

**Innisbrook Rental Pool Lease Operation**

**Statementof Changes in Participants’ Fund Balance—Distribution Fund**

|                                                     | ** ** | **For the years ended December 31,** | ** ** |
|-----------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                          | ** ** | **2006**                                                      | ** ** | **2005** | ** ** | **2004** | ** ** |
| Balance, beginning of  year                         |       | $                                                             | —     |   | $ | — |   | $ | — |   |
| Additions:                                          |       |                                                          |       |   |   |   |   |
| Amounts  available for distribution to participants |       | 4,670,073                                                     |       | 4,722,066 |   | 3,855,948 |   |
| Interest earned  from maintenance escrow fund       |       | 93,316                                                        |       | 56,603 |   | 22,382 |   |
| Reductions:                                         |       |                                                          |       |   |   |   |   |
| Amounts withheld  for maintenance escrow fund       |       | (1,108,627                                                    | )          | (1,255,285 | ) | (993,385 | ) |
| Amounts accrued  or paid to participants            |       | (3,654,762                                                    | )          | (3,523,384 | ) | (2,884,945 | ) |
| Balance, end of year                                |       | $                                                             | —     |   | $ | — |   | $ | — |   |

 

See notes to financial statements.

58

----

**Innisbrook Rental Pool Lease Operation**

**Statementsof Changes in Participants’ Fund Balances—Maintenance Escrow Fund**

|                                                                  | ** ** | **For the years ended December 31,** | ** ** |
|------------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                                       | ** ** | **2006**                                                      | ** ** | **2005** | ** ** | **2004** | ** ** |
| Balance, beginning of  year                                      |       | $                                                             | 1,975,395  |   | $ | 1,998,147 |   | $ | 1,791,589 |   |
| Additions                                                        |       |                                                          |       |   |   |   |   |
| Amounts withheld  from occupancy fees                            |       | 1,108,627                                                     |       | 1,255,285 |   | 993,385 |   |
| Interest earned                                                  |       | 93,316                                                        |       | 56,603 |   | 22,382 |   |
| Charges to  participants to establish or restore escrow balances |       | 380,961                                                       |       | 379,531 |   | 374,322 |   |
| Reductions:                                                      |       |                                                          |       |   |   |   |   |
| Maintenance  charges                                             |       | (910,670                                                      | )          | (1,391,284 | ) | (890,878 | ) |
| Carpet care  reserve deposit                                     |       | (55,452                                                       | )          | (60,417 | ) | (63,235 | ) |
| Interest accrued  or paid to distribution fund                   |       | (93,316                                                       | )          | (56,603 | ) | (22,382 | ) |
| Refunds to  participants due under lease agreements              |       | (215,916                                                      | )          | (205,867 | ) | (207,036 | ) |
| Balance, end of year                                             |       | $                                                             | 2,282,945  |   | $ | 1,975,395 |   | $ | 1,998,147 |   |

 

See notes to financial statements.

59

----

**Innisbrook Rental Pool Lease Operation**

**Notes to Financial Statements**

(in thousands)

**1.****                                      RentalPool Lease Operation and Rental Pool Lease Agreements**

**Organizationand Operations**

The Innisbrook Rental Pool Lease Operation (the “RentalPool”) consists of condominiums at the Innisbrook Resort (“Resort”), which are provided as resortaccommodations by their owners.

Historically, GHR and the GTA-IB, LLC have offered severaldifferent Rental Pool programs to the condominium owners. Effective January 1,2002, GHR offered a new Master Lease Agreement (“NMLA”) which permitted allRental Pool participants the opportunity to convert to the new agreement. Eachcondominium owner may elect to participate in either the NMLA or a prioragreement. The only existing prior agreement that an owner may elect toparticipate in is the Guaranteed Master Lease Agreement (“GMLA”) dated January1, 1998. As of January 1, 2004, there are no longer any condominium ownersparticipating under the GMLA agreement. If an owner elected to participate inthe NMLA, the owner is prohibited from returning to the any previous agreement.Effective January 1, 2003, all but one Rental Pool participants elected toconvert to the NMLA. In addition as part of the MLA process, each owner on anannual basis may elect to participate in the rental pool for the following yearby signing an Annual Lease Agreement (“ALA”). The NMLA provides for AdjustedGross Revenues, as defined, to be divided 40% to the Innisbrook Rental Poolparticipants and 60% to the Resort.

The Rental Pool consists of the Distribution Fund andthe Maintenance Escrow Fund. The Distribution Fund’s balance sheets primarilyreflect amounts receivable from the Company for the Rental Pool distributionpayable to Participants and amounts due to the Maintenance Escrow Fund. Theoperations of the Distribution Fund reflect Participants’ earnings in theRental Pool. The Maintenance Escrow Fund reflects the accounting for certainescrowed assets of the Participants and, therefore, has no operations. Itconsists primarily of amounts escrowed by Participants or due from theDistribution Fund to meet escrow requirements, fund the carpet care reserve andmaintain the interior of the unit.

The continuation and success of the Rental Pool iscontingent upon the continuation of operations of the Resort. In turn, thesuccess of Resort operations is contingent upon the continued participation ofcondominium owners in the Rental Pool. The Company incurred a loss fromoperations for the year ended December 31, 2006 of approximately $4,861and at December 31, 2006 had deficiencies in working capital and equity of$10,607 and $13,351, respectively, that raise substantial doubt about theCompany’s ability to continue as a going concern. Items related to thecontinuation of the Resort as a going concern include such issues as:  the sale of condominium units which do notparticipate in the Rental Pool or through a sale are removed from the RentalPool, owners of units opting to live in their units, owners renting their unitsoutside of the Rental Pool, and general economic conditions related to thedestination resort industry.

Under the NMLA, the Resort pays the owner a fee equalto 40% of the Adjusted Gross Revenues in accordance with the terms of theagreement. Adjusted Gross Revenues are defined as Gross Revenues less agent’scommissions, audit fees, occupancy fees when the unit is used by the Resortowner for non-rental purposes, linen replacements and credit card fees. EachParticipant receives a fixed occupancy fee, based upon apartment size, for eachday of unit specific occupancy. After allocation of occupancy fees and thepayment of general Rental Pool expenses, the balance is allocatedproportionally to the Participants, based on the Participation Factor asdefined in the Agreement.

Corporate complimentary occupancy fees are rental feespaid by the Resort owner to the Participants for complimentary rooms unrelatedto Rental Pool operations. Westin Associate Room Fees represent total roomrevenues earned from the rental of condominiums by Westin employees passedthrough to the Rental Pool.

In addition, the predecessor Resort owner has agreed,as part of the NMLA, to reimburse Rental Pool participants in the NMLA for upto 50% of the actual unit refurbishment costs, plus interest at a rate of 5%per annum on the 50% of the refurbishment costs, beginning in 2002, so long asthe minimum participation threshold as defined, is maintained. The NMLA andALAs are referred to collectively as the “Agreements.” The Company assumed theobligations of GHR under the Agreements.

In addition, the Company agreed to provide arefurbishment reimbursement to the respective condominium owners for unitsplaced into the Renal Pool during 2005. The owners of these units will be paid 25% of their refurbishmentinvestment, with interest at 2.5% per annum. The owners of these units currently receive interest and will receiveprincipal payments beginning in 2008 and ending in 2012 for total principalpayments of approximately $92.

60

----

**MaintenanceEscrow Fund Accounts**

The NMLA provides that 90% of the Occupancy Feesearned by each Participant are deposited in the Participant’s MaintenanceEscrow Fund account. This account provides funds for payment of amounts thatare due from Participants under the Agreements for maintenance andrefurbishment services. Should a Participant’s balance fall below thatnecessary to provide adequate funds for maintenance and replacements, theParticipant is required to restore the escrow balance to a defined minimumlevel. The NMLA provides for specific fund balances to be maintained, by unittype, size and age of refurbishment, as defined in the Agreement. Under theNMLA, a percentage of the Occupancy Fees are deposited into the carpet carereserve in the Maintenance Escrow Fund, which bears the expenses of carpetcleaning for all Participants. This percentage is estimated to provide theamount necessary to fund carpet cleaning expenses and may be adjusted annually.The amounts expended for carpet care were approximately $35, $36 and $37 forthe years ended for 2006, 2005 and 2004, respectively.

The Lessors’ Advisory Committee invests themaintenance escrow funds on behalf of the Participants and in compliance withrestrictions in the Agreements. The Lessors’ Advisory Committee consists ofnine Participants elected to advise the Resort owner in Rental Pool matters andnegotiate amendments to the lease agreement. Income earned on these investmentsis allocated proportionately to Participants’ Maintenance Escrow Fund accountsand paid quarterly through the Distribution Fund. At December 31, 2006 and2005, the Maintenance Escrow Fund held certificates of deposit of $1,900 and$1,595, respectively, with maturity terms ranging from six months to twelvemonths and bearing interest at rates from 4.5% to 5.25%.  At December 31, 2006 and 2005, the costof these investments approximates fair value.

**2.****                                      Summaryof Significant Accounting Policies**

**Basis ofAccounting**

The accounting records of the funds are maintained onthe accrual basis of accounting.

**Cash andCash Equivalents**

The Rental Pool considers all short-term highly liquidinvestments with a purchased maturity of three months or less to be cashequivalents.

**Use ofEstimates**

Preparation of these financial statements inconformity with accounting principles generally accepted in the United Statesof America requires management to make estimates and assumptions which affectreported amounts of assets and liabilities and disclosure of contingent assetsand liabilities at the date of the financial statements and the reportedrevenues and expenses during the reporting period. Actual results could differfrom those estimates.

**IncomeTaxes**

No federal or state taxes have been reflected in theaccompanying financial statements as the tax effect of fund activities accrueto the participants and sole member of the Company.

**3.****                                      AffiliateOwned Condominiums**

GTA-IB Condominium, LLC, a wholly owned subsidiary ofGTA-IB Golf Resort, LLC, owns three condominiums which were acquired from GHR.Its condominiums participated in the Rental Pool under the NMLA in the samemanner as all others.

 

61

----

 

**SIGNATURES**

**GTA-IB, LLC**
|        |   |   | By:    | /s/W. Bradley Blair, II |   |   |
|--------|--------|--------|--------|-------------------------|--------|--------|
|   |   |   |   | W.Bradley Blair, II     |   |   |
|   |   |   |   | Chief Executive Officer |   |   |

 

Each of the undersigned officers of GTA-IB, LLC andeach of the directors of GTA GP, Inc., the general partner of Golf Trust ofAmerica, L.P., the sole manager of GTA-IB Golf Resort, LLC, the sole manager ofGTA-IB, LLC does hereby constitute and appoint W. Bradley Blair, II and TracyS. Clifford, and each of them individually, his true and lawfulattorneys-in-fact and agents, each with full power of substitution andre-substitution, for him and in his name, place and stead, in any and allcapacities, to sign any and all amendments to this report, and to file thesame, with exhibits thereto, and other documents in connection therewith, withthe Securities Exchange Commission, granting unto said attorneys-in-fact andagents, and each of them, full power and authority to do and perform each andevery act and thing requisite or necessary to be done in and about the premises,as fully to all intents and purposes as he might or could do in person, hereby,ratifying and confirming all that each of said attorneys-in-fact and agents, orhis substitute or substitutes, may lawfully do or cause to be done by virtuehereof.

Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed below by the followingpersons in the capacities and on the dates indicated:

 
| Signature  | ** **           | ** ** | **Title**                                                | ** ** | **Date**       |
|------------|----------------------|------------|----------------------------------------------------------|------------|----------------|
| ** ** | ** **           | ** ** | ** **                                               | ** ** | ** **     |
| /s/        | W. Bradley Blair, II |       | President, Chief Executive Officer (Principal  Executive |       |           |
|       | W. Bradley Blair, II |       | Officer) and Director (GTA GP, Inc.)                     |       | March 30, 2007 |
|       |                 |       |                                                     |       |           |
| /s/        | Tracy S. Clifford    |       | Principal Accounting Officer and Secretary               |       |           |
|       | Tracy S. Clifford    |       | (GTA GP, Inc.)                                           |       | March 30, 2007 |
|       |                 |       |                                                     |       |           |
|            |                      |            |                                                          |            |                |  |

 

**Supplemental Information to be Furnished WithReports Filed Pursuant to Section 15(d) of the Act by Registrants WhichHave Not Registered Securities Pursuant to Section 12 of the Act**

No annual report, proxy statement, form of proxy orproxy soliciting material has been sent to GTA-IB, LLC’s security holders.

 

62

----

**EXHIBITINDEX**

 
| Exhibit No. | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                         |
|-------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1         |       | Articles of Organization of GTA-IB, LLC(1)                                                                                                                                                                                                                                                                                                                                              |
| 3.2         |       | Amended and Restated Operating Agreement of GTA-IB,  LLC(1)                                                                                                                                                                                                                                                                                                                             |
| 10.1        |       | Settlement Agreement dated July 15, 2004 by and  among Golf Trust of America, L.P., GTA-IB, LLC, Golf Host Resorts, Inc., Golf  Hosts, Inc., Golf Host Management, Inc., Golf Host Condominium, Inc. and Golf  Host Condominium, LLC(2)                                                                                                                                            |
| 10.2        |       | Defense and Escrow Agreement dated July 15,  2004 by and among Golf Host Resorts, Inc., GTA-IB, LLC, Golf Trust of  America, L.P., Golf Trust of America, Inc. and Chicago Title Insurance  Company(2)                                                                                                                                                                             |
| 10.3        |       | Operational Benefits Agreement dated July 15,  2004 by and among Golf Host Resorts, Inc., Golf Hosts, Inc., GTA-IB, LLC, and  Golf Trust of America, L.P.(2)                                                                                                                                                                                                                       |
| 10.4        |       | Management Agreement dated July 15, 2004 by and  between Westin Management Company South and GTA-IB, LLC(2)                                                                                                                                                                                                                                                                        |
| 10.5        |       | Assignment, Consent, Subordination and  Nondisturbance Agreement dated July 15, 2004 by and among GTA-IB, LLC,  Golf Trust of America, L.P. and Westin Management Company South(2)                                                                                                                                                                                                 |
| 10.6        |       | Facility Management Agreement dated July 15,  2004 by and between Troon Golf L.L.C. and Westin Management Company South(2)                                                                                                                                                                                                                                                         |
| 10.7        |       | Loan Agreement dated July 15, 2004 by and  between Golf Trust of America, L.P. and Elk Funding, L.L.C. and related Notes  A and B(2)                                                                                                                                                                                                                                               |
| 10.8.1      |       | Parcel F Development Agreement dated  March 29, 2004 by and among Golf Hosts Resorts, Inc., Golf Trust of  America, L.P. and Parcel F, LLC, formerly known as Innisbrook F, LLC,  formerly known as Bayfair Innisbrook, L.L.C.(2)                                                                                                                                        |
| 10.8.2      |       | First Amendment to Parcel F Development  Agreement by and among Golf Hosts Resorts, Inc., Golf Trust of America, L.P.  and Parcel F, LLC (formerly known as Innisbrook F, LLC)(3)                                                                                                                                                                                             |
| 10.8.3      |       | Second Amendment to Parcel F Development  Agreement by and among Golf Hosts Resorts, LLC (formerly known as Golf Host  Resorts, Inc.), Golf Trust of America, L.P., GTA-IB, LLC and Parcel F,  LLC (formerly known as Innisbrook F, LLC)(3)                                                                                                                              |
| 10.9        |       | Amendment to Loan Agreement between GTA-IB, LLC and  Golf Trust of America, L.P.(1)                                                                                                                                                                                                                                                                                                     |
| 10.10       |       | Loan Agreement dated June 20, 1997 between Golf  Host Resorts, Inc. and Golf Trust of America, L.P.(1)                                                                                                                                                                                                                                                                             |
| 10.11       |       | Promissory Note issued by GTA-IB, LLC to Golf Trust  of America, L.P.(1)                                                                                                                                                                                                                                                                                                                |
| 10.12*      |       | Asset Purchase Agreement by and between Golf Trust  of America, Inc., Golf Trust of America, L.P., GTA-IB, LLC, GTA-IB  Golf Resort, LLC, GTA-IB Condominium, LLC, GTA-IB Management, LLC  and CMI Financial Network, LLC dated October 27, 2005                                                                                                                                   |
| 10.13       |       | Termination and Release Agreement by and between  Golf Trust of America, Inc., GTA-IB, LLC, and Westin Hotel Management  L.P., as successor in interest to Westin Management Company South, dated  September 28, 2006 (previously filed as Exhibit 10.13 to our company’s  Current Report on Form 8-K filed October 3, 2006 and incorporated herein  by reference). |
| 24.1**      |       | Powers of Attorney                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1**      |       | Certification of the Registrant’s President and  Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of  2002                                                                                                                                                                                                                                               |
| 31.2**      |       | Certification of the Registrant’s Chief Financial  Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                          |
| 32.1**      |       | Certifications pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                          |
| 99.1**      |       | Risk Factors of Golf Trust of America, Inc.                                                                                                                                                                                                                                                                                                                                             |

(1)           Previously filed as Exhibits (sameExhibit numbers as referenced above) to our Quarterly Report on Form 10-Q,filed on November 23, 2004, and incorporated herein by reference.

(2)           Previously filed asExhibits 10.1 through 10.8 to our Current Report on Form 8-K, filedNovember 16, 2004, and incorporated herein by reference.

(3)           Previously filed asExhibits 10.8.2 and 10.8.3 to our Quarterly Report on Form 10-Q,filed August 15, 2005, and incorporated herein by reference.

*                                         Thisagreement was terminated pursuant to its terms on November 23, 2005.

**                                  Filedas an exhibit hereto.

 

63

----