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

**FORM 10-Q**

**(Mark One)**

**x****        Quarterlyreport pursuant to section 13 or 15(d) of the Securities Exchange Act of1934**

**for the quarterly period ended:June 30, 2006**

**o****        Transitionreport pursuant to section 13 or 15(d) of the Securities Exchange Act of1934**

**for the transition period from               to               **

**Commission File Number 333-120538**

**GTA-IB, LLC**(Exact name of registrant asspecified in its charter)

| **Florida**                      |   | **05-0546226**          |
|----------------------------------|--------|-------------------------|
| (State or other  jurisdiction of |   | (I.R.S. Employer        |
| incorporation or  organization)  |   | Identification  Number) |

 

**36750 US 19 N., Palm Harbor,Florida 34684**(Address of principalexecutive offices) (Zip Code)

**(727) 942-2000**(Registrant’s telephonenumber, including area code)

SECURITIES REGISTERED PURSUANT TOSECTION 12(d) OF THE ACT:

**None**

SECURITIES REGISTERED PURSUANT TOSECTION 12(g) OF THE ACT:

**None**

Indicate by check mark whetherthe 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 report(s) and (2) has been subject to such filingrequirements for the past 90 days.

Yes x  No o

Indicate by check mark whetherthe registrant is a large  acceleratedfiler, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Act.

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

Indicate by check mark whetherthe registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).

Yes o  No x

No established market exists forthe Registrant’s membership interests, so there is no market value for suchmembership interests.  There are nomembership interests held by non-affiliates as of June 30, 2006.

Issuer has no common stock subject to this report.

 

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**GTA-IB, LLC**

**FORM 10-Q**

**FOR THE SIX MONTHS ENDED JUNE 30,2006 AND 2005**

**INDEX**
| PART I. FINANCIAL INFORMATION |                                                                                                                                          |   |
|------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Item 1.                       | Financial Statements                                                                                                                          |   |   |
|                               | Condensed Combined Balance Sheets as of June 30, 2006  (unaudited) and December 31, 2005                                                 |   |   |
|                               | Condensed Combined Statements of Operations and  Member’s Deficit (unaudited) for the Three and Six Months Ended June 30, 2006  and 2005 |   |   |
|                               | Condensed Combined Statements of Cash Flows  (unaudited) for the Six Months Ended June 30, 2006 and 2005                                      |   |   |
|                               | Notes to Condensed Combined Financial Statements  (unaudited)                                                                                 |   |   |
|                               | Rental Pool Lease Operation Condensed Financial  Statements and Note                                                                          |   |   |
| Item 2.                       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                                   |   |   |
| Item 3.                       | Quantitative  and Qualitative Disclosures About Market Risk                                                                                   |   |   |
| Item 4.                       | Controls and  Procedures                                                                                                                      |   |   |
| PART II. OTHER  INFORMATION   |                                                                                                                                          |   |
| Item 1.                       | Legal Proceedings                                                                                                                             |   |   |
| Item 1.A.                     | Risk  Factors                                                                                                                                 |   |   |
| Item 2.                       | Unregistered  Sales of Equity Securities and Use of Proceeds                                                                                  |   |   |
| Item 3.                       | Defaults Upon  Senior Securities                                                                                                              |   |   |
| Item 4.                       | Submission of  Matters to a Vote of Security Holders                                                                                          |   |   |
| Item 5.                       | Other Information                                                                                                                             |   |   |
| Item 6.                       | Exhibits                                                                                                                                      |   |   |
| Signatures                         |                                                                                                                                          |   |   |

 

**Cautionary Note Regarding Forward-LookingStatements**

The following report containsforward-looking statements within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended. Forward-looking statements arestatements that predict or describe future events or trends and that do notrelate solely to historical matters. All of our projections in this quarterlyreport are forward-looking statements. You can generally identify forward-lookingstatements as statements containing the words “believe,” “expect,” “hope,” “may,“will,” “anticipate,” “intend,” “estimate,” “project,” “assume” or othersimilar expressions. Certain factors that might cause such a difference includethe following: changes in general economic conditions; including changes thatmay influence group conference and guests’ vacation plans; changes in travelpatterns; changes in consumer tastes in destinations or accommodations forgroup conferences and vacations; changes in rental pool participation by thecurrent condominium owners; settlement of the class action lawsuit involvingthe rental pool agreements; our ability to continue to operate the WestinInnisbrook Golf Resort under our management contracts; the resale ofcondominiums to owners who elect neither to participate in the rental pool norto become members of the Innisbrook Resort and Golf Club; and our relationshipwith the Westin Management Company. You should not place undue reliance on ourforward-looking statements because the matters they describe are subjectto known (and unknown) risks, uncertainties and other unpredictable factors,many of which are beyond our control. Our forward-looking statements arebased on the limited information currently available to us and speak only as ofthe date on which this report was filed with the Securities and ExchangeCommission. Our continued internet posting or subsequent distribution of thisdated report does not imply continued affirmation of the forward-lookingstatements included in it. We undertake no obligation, and we expresslydisclaim any obligation, to issue any updates to our forward-lookingstatements, even if subsequent events cause our expectations to changeregarding the matters discussed in those statements. Future events areinherently uncertain. Moreover, it is particularly difficult to predictbusiness activity levels at the Resort with any certainty. Accordingly, ourprojections in this quarterly 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.

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**GTA-IB, LLCCONDENSED COMBINED BALANCE SHEETSAS OF JUNE 30, 2006 AND DECEMBER 31, 2005(in thousands)**
| ** **                                      | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|-------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                      | ** ** | **(unaudited)**         | ** ** | ** **                  | ** ** |
| **Assets**                                      |       |                    |       |                        |       |
| Current assets                                  |       | $                       | 8,282      |                        | $          | 6,491 |   |
| Property and equipment,  net                    |       | 27,759                  |       | 28,322                      |       |
| Intangibles, net                                |       | 15,742                  |       | 16,635                      |       |
| Other assets                                    |       | 2,624                   |       | 2,647                       |       |
| **Total Assets**                                |       | $                       | 54,407     |                        | $          | 54,095 |   |
| **Liabilities**                                 |       |                    |       |                        |       |
| Current liabilities                             |       | $                       | 8,330      |                        | $          | 9,242 |   |
| Westin termination fee,  short term             |       | 5,324                   |       | —                      |       |
| Long-term debt,  less current maturities        |       | 42,820                  |       | 42,841                      |       |
| Other long term  liabilities                    |       | 5,174                   |       | 10,502                      |       |
| **Total Liabilities**                           |       | 61,648                  |       | 62,585                      |       |
| **Commitments and Contingencies**               |       |                    |       |                        |       |
| **Member’s Deficit**                       |       | (7,241                  | )          | (8,490                      | )          |
| **Total Liabilities and Member’s Deficit** |       | $                       | 54,407     |                        | $          | 54,095 |   |

 

*See accompanying notes tocondensed combined financial statements.*

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**GTA-IB, LLCCONDENSED COMBINED STATEMENTS OF OPERATIONS AND MEMBER’S DEFICITFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005(in thousands) (unaudited)**
| ** **                                  | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|---------------------------------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                  | ** ** | **2006**                                            | ** ** | **2005**                                          | ** ** | **2006** | ** ** | **2005** | ** ** |
| **Revenues**                                |       |                                                |       |                                              |       |   |   |   |   |
| Hotel                                       |       | $                                                   | 3,444      |                                              | $          | 3,452 |   | $ | 9,289 |   | $ | 8,733 |   |
| Food and  beverage                          |       | 2,686                                               |       | 2,816                                             |       | 7,818 |   | 7,060 |   |
| Golf                                        |       | 3,527                                               |       | 3,392                                             |       | 8,616 |   | 8,058 |   |
| Other                                       |       | 602                                                 |       | 1,064                                             |       | 1,549 |   | 2,354 |   |
| Total revenues                              |       | 10,259                                              |       | 10,724                                            |       | 27,272 |   | 26,205 |   |
| **Expenses**                                |       |                                                |       |                                              |       |   |   |   |   |
| Hotel                                       |       | 2,843                                               |       | 3,030                                             |       | 6,950 |   | 6,915 |   |
| Food and  beverage                          |       | 1,878                                               |       | 1,968                                             |       | 5,011 |   | 4,578 |   |
| Golf                                        |       | 1,911                                               |       | 1,823                                             |       | 3,767 |   | 3,662 |   |
| Other                                       |       | 2,540                                               |       | 2,621                                             |       | 5,377 |   | 5,143 |   |
| General and  administrative                 |       | 1,410                                               |       | 1,067                                             |       | 3,152 |   | 2,670 |   |
| Depreciation and  amortization              |       | 533                                                 |       | 537                                               |       | 1,024 |   | 1,335 |   |
| Total expenses                              |       | 11,115                                              |       | 11,046                                            |       | 25,281 |   | 24,303 |   |
| Operating income                            |       | (856                                                | )          | (322                                              | )          | 1,991 |   | 1,902 |   |
| Interest expense, net                       |       | 370                                                 |       | 375                                               |       | 743 |   | 814 |   |
| Net (loss) income                           |       | (1,226                                              | )          | (697                                              | )          | 1,248 |   | 1,088 |   |
| Member’s deficit,  beginning of period |       | (6,015                                              | )          | (2,655                                            | )          | (8,489 | ) | (4,440 | ) |
|                                        |       |                                                |       |                                              |       |   |   |   |   |
| Member’s deficit, end of period        |       | $                                                   | (7,241     | )                                                 | $          | (3,352 | ) | $ | (7,241 | ) | $ | (3,352 | ) |

 

*See accompanying notes tocondensed combined financial statements.*

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### **GTA-IB, LLCCONDENSED COMBINED STATEMENTS OF CASH FLOWS FOR THESIX MONTHS ENDED JUNE 30, 2006 AND 2005(in thousands) (unaudited)**

| ** **                                                                         | ** ** | **Six Months Ended June 30,** | ** ** |
|------------------------------------------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                                         | ** ** | **2006**                                          | ** ** | **2005** | ** ** |
| **Cash  flows from operating activities:**                                         |       |                                              |       |   |   |
| Net income                                                                         |       | $                                                 | 1,248      |   | $ | 1,088 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |                                              |       |   |   |
| Depreciation and amortization                                                      |       | 1,685                                             |       | 1,994 |   |
| Provision for bad debts                                                            |       | 279                                               |       | — |   |
| Non-cash interest                                                                  |       | 558                                               |       | 616 |   |
| Other changes in operating assets and liabilities                                  |       | 215                                               |       | (1,282 | ) |
| Net cash provided by operating activities                                          |       | 3,985                                             |       | 2,416 |   |
| **Cash  flows used in investing activities:**                                      |       |                                              |       |   |   |
| Purchases of property and equipment                                                |       | (97                                               | )          | (450 | ) |
| **Cash  flows used in financing activities:**                                      |       |                                              |       |   |   |
| Repayment of long-term debt and capital lease  obligations                         |       | (701                                              | )          | (545 | ) |
| Net increase in  cash                                                              |       | 3,187                                             |       | 1,421 |   |
| **Cash  and cash equivalents, beginning of period**                                |       | 1,519                                             |       | 1,832 |   |
| **Cash  and cash equivalents, end of period**                                      |       | $                                                 | 4,706      |   | $ | 3,253 |   |
| ** **                                                                         |       |                                              |       |   |   |
| **Supplemental  Cash Flow Information:**                                           |       |                                              |       |   |   |
| Cash paid for  interest                                                            |       | $                                                 | 192        |   | $ | 212 |   |
| **Non-cash  financing and investing activities:**                                  |       |                                              |       |   |   |
| Assets acquired through  capital leases                                            |       | $                                                 | 181        |   | $ | 416 |   |

 

*See accompanying notes tocondensed combined financial statements.*

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**GTA-IB, LLC**

**FORM 10-Q**

**NOTES TO CONDENSED COMBINEDFINANCIAL STATEMENTS**

**FOR THE THREE AND SIX MONTHSENDED JUNE 30, 2006 AND 2005**

** (unaudited)**

**1.   Innisbrook Resort Ownership and Operations**

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 Westin Innisbrook GolfResort (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 conferencefacility located 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 Host Management, Inc.,Golf Host Condominium, Inc. and Golf Host Condominium, LLC. The SettlementAgreement resolved a number of issues between the parties, including GHR’sdefault under the $79,000,000 loan made by the Operating Partnership to GHR inJune 1997. As part of the Settlement Agreement, the Company took ownershipof the Resort on July 15, 2004. In connection with the SettlementAgreement, the Company entered into a management agreement with WestinManagement Company South (“Westin”), which provides for Westin’s management ofthe Resort, and Westin and Troon Golf L.L.C. (“Troon”) entered into a facilitymanagement agreement providing for Troon’s management of the golf facilities atthe Resort.

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 purchaser ofa parcel of undeveloped land within the Resort which is known as Parcel F.This agreement, known as the Parcel F Development Agreement, was executedon March 29, 2004 and amended on August 10, 2005 to add the Company as a party.The Parcel F Development Agreement provides for the terms and conditionsunder which Parcel F may be developed, and includes restrictions on GHR,the owner of Parcel F, which are designed to avoid interference with theongoing operations of the Resort.  TheParcel F Development Agreement also contains provisions which the Companybelieves will increase the Operating Partnership’s ability to better manage thelocation of the 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.

#### *GoingConcern*

As of June 30,2006, the Company has a working capital deficit of approximately$5,372,000.  This working capital deficitresulted primarily from the reclassification of the Westin termination fee andrelated deferred management fees from long term to short term obligations.  The reclassified termination fee and deferredmanagement fees aggregated approximately $5,628,000 at June 30, 2006.  See Note 9 for further discussion of thisreclassification.  The Company reportednet income of approximately $1,248,000 for the six months ended June 30,2006.  The Company continues toexperience seasonal

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fluctuations inits net working capital position. During 2004, GTA advanced $2,000,000 tothe Company for working capital. During 2005, GTA advanced an additional $1,050,000 to the Company. The proceeds ofthese loans have been utilized by Westin to support operational expenses of theResort. Generally, the Company’s only source of cash is from profitableoperations of the Resort. While the financial performance of the Resort hasshown signs of recovery since the Company assumed title to the Resort on July15, 2004, current projections provided by Westin indicate an operational cashflow shortfall of up to approximately $750,000 is likely to occur at some pointin the fourth quarter of 2006.  Further,the Resort’s credit capacity is limited. GTA is currently seeking a buyer forthe Resort, pursuant to the stockholder-approved plan of liquidation. In theevent that the Resort is not sold, it may become necessary for the Resortto seek further cash infusion from GTA, if available, or to seek some otherform of re-capitalization to seek to insure the Company’s ongoingviability. GTA is currently in the process of liquidation. There are noassurances that GTA, or any affiliate, will have the ability to provide futurefunding to the Resort, nor are there any assurances that the Company will beable to complete a recapitalization which will allow the Company to remainviable.

**2.   Basis of Presentation**

The settlement described inNote 1 above, pursuant to which the Company took title to the Resort, wasaccounted for using methods consistent with purchase accounting in accordancewith Statement of Financial Accounting Standards (“SFAS”) No. 141,Business Combinations. Accordingly, the Company, with the assistance of itsindependent financial advisor, recorded the tangible and identified intangibleassets of the Resort at their respective fair values. The long-term liabilitiesof the Resort were stated at their fair value based on net present valuecalculations.

*Principles of Combination*

The financial statements andfootnotes reflect the combined financial results of the Company, GTA-IB Condominium,LLC and GTA-IB Management, LLC. These legal entities are all wholly ownedsubsidiaries of the Operating Partnership, GTA-IB Condominium, LLC holds thetitle to three condominium units at the Resort that participate in the RentalPool.  GTA-IB Management, LLC is theentity that employs substantially all of the employees working at the Resort.There are no other operations of GTA-IB Condominium, LLC and GTA-IB Management,LLC. The Company holds title to the Resort and is the entity in which all of theResort operations are recorded. All intercompany transactions and accountbalances have been eliminated in combination.

*Interim Statements*

The accompanying condensedcombined financial statements have been prepared in accordance with(i) accounting principles generally accepted in the United States ofAmerica (“GAAP”) and (ii) the instructions to Form 10-Q andArticle 10 of Regulation S-X. These financial statements have notbeen audited by an independent registered accounting firm, however, theyinclude adjustments (consisting of normal recurring adjustments) which are, inthe judgment of management, necessary for a fair presentation of financialcondition, results of operations and cash flows for the interim periodspresented. However, these results are not necessarily indicative of results forany other interim period or for the full year. In particular, it is importantto note that the Company’s business is seasonal.

Certain information and footnotedisclosures normally included in financial statements in accordance with GAAPhave been omitted as allowed in quarterly reports by the rules of theSecurities and Exchange Commission. Management believes that the disclosuresincluded in the accompanying interim financial statements and footnotes areadequate to make the information not misleading, but also believes that thesestatements should be read in conjunction with the summary of significantaccounting policies and notes to the combined financial statements included inthe Company’s Annual Report on Form 10-K for the year endedDecember 31, 2005.

**3.   Property and Equipment**

Property and equipment consistsof the following:
|                                | ** ** | **June 30, 2006** | ** ** | **December 31, 2005** | ** ** |
|--------------------------------|------------|-----------------------------|------------|---------------------------------|------------|
| ** **                     | ** ** | **(in thousands)**     | ** ** |
| ** **                     | ** ** | **(unaudited)**             | ** ** | ** **                      | ** ** |
| Land                           |       | $                           | 1,968      |                            | $          | 1,968 |   |
| Buildings                      |       | 14,722                      |       | 14,722                          |       |
| Golf course  improvements      |       | 7,529                       |       | 7,533                           |       |
| Machinery and  equipment       |       | 6,439                       |       | 6,230                           |       |
|                           |       | 30,658                      |       | 30,453                          |       |
| Less accumulated  depreciation |       | (2,899                      | )          | (2,131                          | )          |
|                           |       | $                           | 27,759     |                            | $          | 28,322 |   |

 

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At June 30, 2006, machinery andequipment includes certain equipment with a net book value of $1,503,000recorded under capital leases. Depreciation expense amounted to approximately$400,000 and $349,000 for the three months ended June 30, 2006 and 2005,respectively.  Depreciation expenseamounted to $792,000 and $753,000 for the six months ended June 30, 2006 and2005, respectively.

**4.   Intangibles and Other Assets**

Intangible assets represent thevalue of the following that existed at July 15, 2004: (i) the trademarkand tradename of “Innisbrook”; (ii) the Rental Pool; (iii) the guest roombookings; (iv) the club memberships; and (v) the water contract that providesirrigation water for the golf courses at no charge (up to certain specifiedlimits). The intangible assets are being amortized over the specific term orbenefit period of each related contract.
| Intangible Assets         | ** ** | **Amortization Period**        | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|--------------------------------|------------|-------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                     | ** ** | ** **                          | ** ** | **(in thousands)** | ** ** |
| ** **                     | ** ** | ** **                          | ** ** | **(unaudited)**         | ** ** | ** **                  | ** ** |
| 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 |       |                                |       | (4,428                  | )          | (3,535                      | )          |
|                           |       |                                |       | $                       | 15,742     |                        | $          | 16,635 |   |

 

Amortization expense amounted toapproximately $464,000 and $518,000 for the three months ended June 30, 2006and 2005, respectively, and $893,000 and $1,241,000 for the six months endedJune 30, 2006 and 2005, respectively. ** **Of these amounts, approximately$330,000 in the three months ended June 30, 2006 and the three months endedJune 30, 2005 and $660,000 in the six months ended June 30, 2006 and and thesix months ended June 30, 2005, are included in hotel expenses and are notincluded in depreciation and amortization in the Condensed ConsoldiatedStatements of Operations. Anticipated amortization expense for the next fiveyears and thereafter is set forth in the table below:

| Year                              | ** ** | **Principal (in thousands)** | ** ** |
|-----------------------------------|------------|----------------------------------------|------------|
| July 1 through  December 31, 2006 |       | $                                      | 844        |   |
| 2007                              |       | 1,688                                  |       |
| 2008                              |       | 1,688                                  |       |
| 2009                              |       | 1,688                                  |       |
| 2010                              |       | 1,688                                  |       |
| Thereafter                        |       | 3,346                                  |       |
| Total                             |       | $                                      | 10,942     |   |

 

Other assets include the Company’sinterest in the net proceeds from any sale of Parcel F.  The Company’s share of the proceeds, to bereceived by the predecessor owner from the sale of Parcel F, are estimated tobe $2,200,000, but could be substantially less in the event of a sale thereof.See also Note 1.  Also included in otherassets are certain design fees for the refurbishment program of $219,000 as ofJune 30, 2006 and $236,000 as of December 31, 2005. The Company has acontractual right under Rental Pool lease agreements to be reimbursed for thesedesign fees by the Rental Pool participants. This reimbursement is received in the form of a deduction from thequarterly Rental Pool refurbishment payments.

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**5.   Current Liabilities**

Current liabilities consist ofthe following:
|                                             | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|---------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                  | ** ** | **(in thousands)** | ** ** |
| ** **                                  | ** ** | **(unaudited)**         | ** ** | ** **                  | ** ** |
| Accounts payable                            |       | $                       | 1,401      |                        | $          | 2,008 |   |
| Accrued payroll  costs                      |       | 1,335                   |       | 1,554                       |       |
| Other payables  and accrued expenses        |       | 1,754                   |       | 1,833                       |       |
| Deposits and  deferred revenue              |       | 1,958                   |       | 2,438                       |       |
| Deferred  management fees                   |       | 304                     |       | —                      |       |
| Current portion  of capital leases          |       | 329                     |       | 336                         |       |
| Current portion  of refurbishment liability |       | 1,249                   |       | 1,073                       |       |
|                                        |       | $                       | 8,330      |                        | $          | 9,242 |   |

 

*Westin Termination Fee*

The July 15, 2004 managementagreement that the Company executed with Westin (the “Management Agreement”)provides for the payment of a termination fee to Westin, subject to the termsand conditions of that agreement. If not earlier terminated, the ManagementAgreement will expire on December 31, 2017. The termination fee is reduced$365 for each day that elapses from the effective date until the terminationdate; provided, however, that the termination fee shall not be reduced to lessthan $5,500,000. The Company’s obligation to pay termination fees, which isincluded in other long-term liabilities on the balance sheet, was recorded atits net present value on July 16, 2004 of $4,631,000 (calculated at adiscount rate of 7%). Amortization of the discount is charged to interestexpense ratably over the period through December 31, 2006. Theamortization charged to interest expense was $88,000 for the three months endedJune 30, 2006 and the three months ended June 30, 2005 and $176,000 for sixmonths ended June 30, 2006 and the six months ended June 30, 2005. ** **As of June 30, 2006and December 31, 2005, the net present value of this liability was $5,324,000and $5,147,000, respectively.  Thetermination fee under the Management Agreement was reflected as long-termobligation as of December 31, 2005, but was reclassified as a short-termobligation as of June 30, 2006.  See Note9 for further discussion.

*Deferred Management Fees*

As of June 30, 2006 and December 31, 2005, the Companyrecorded deferred management fees of $304,000 and $204,000, respectively.  These fees were reflected as a long-termliability as of December 31, 2005, but were reclassified to a short-termliability as of June 30, 2006.  See Note9 for further discussion.

**6.   Long-Term Debt**

The Company’s long-term debtconsists of the following:
|                                                                                                   | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                                                                        | ** ** | **(in thousands)** | ** ** |
| ** **                                                                                        | ** ** | **(unaudited)**         | ** ** | ** **                  | ** ** |
| Non-interest  bearing mortgage note due to the Operating Partnership, maturing in  June 2027 |       | $                       | 39,240     |                        | $          | 39,240 |   |
| Advances from  the Operating Partnership, net                                                     |       | 2,976                   |       | 2,976                       |       |
| Capital leases  less current portion                                                              |       | 604                     |       | 625                         |       |
|                                                                                              |       | $                       | 42,820     |                        | $          | 42,841 |   |

 

**7.   Other Long-Term Liabilities**

*Master Lease RefurbishmentObligation*

On July 16, 2004, the Company recorded a liabilityof $4,532,000 for the refurbishment program pursuant to the master leaseagreement, or MLA, of the Rental Pool. This liability represented the Company’s obligation to pay to thevarious participants in the Rental Pool an amount equal to 50% of the cost torefurbish their respective units, and was recorded at the then net presentvalue (calculated at a discount rate of 15%) of the total principal payments of$7,273,000.  Principal and

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interest payments are due quarterly over the repayment period of theprogram, beginning with the first quarter of 2005 and ending with the fourthquarter of 2009. Interest on this liability accrues at a rate of 5% and is paidquarterly. Amortization of the discount is charged to interest expense ratablyover the period from January 1, 2005 through December 31, 2009.

In addition, the Company agreedto provide refurbishment reimbursement for units placed into the Rental Pool atany time after January 1, 2005, but before December 31, 2005.  The owners of these units will be paid 25% oftheir investment in the refurbishment, with interest at 2.5% per annum.  The owners of these units currently receiveinterest and will receive principal payments beginning in 2008 and ending whenthey are paid in full in 2012.

The amortization charged tointerest expense was $180,000 or the three months ended June 30, 2006 and thethree months ended June 30, 2005. The amortization charged to interest expensewas $357,000 and $415,000 for the six months ended June 30, 2006 and 2005,respectively. ** **Thenet present value of this liability is $4,464,000 and $4,647,000 as of June 30,2006 and December 31, 2005, respectively, of which $1,249,000 and  $1,073,000, respectively, is included incurrent liabilities (see Note 5).

The corresponding benefit fromthe MLA refurbishment program was included in the valuation of the rental poolintangible asset which is being amortized over the term of the current masterlease agreement that expires in 2011. Minimum undiscounted principal paymentson the MLA refurbishment program are as follows:

| Year                                                         | ** ** | **Amount  (in thousands)**                                                  | ** ** |
|--------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| **July 1 – December 31, 2006** | ** ** | **$            532** | ** ** |
| 2007                                                         |       | 1,417                                                                            |       |
| 2008                                                         |       | 1,781                                                                            |       |
| 2009                                                         |       | 2,140                                                                            |       |
| 2010                                                         |       | 18                                                                               |       |
| Thereafter                                                   |       | 50                                                                               |       |
| **Total**                                                    |       | $                                                                                | 5,938      |   |
|                                                              |            |                                                                                  |            |  |

 

Ourobligations 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 period from 2005 through 2009, the owner orsuccessor owner forfeits any unpaid installments at the time the unit isremoved from the Rental Pool.

*Troon Supplemental Fee*

A July 15, 2004 facilitymanagement agreement executed by Westin and Troon provides for the payment bythe Company to Troon of a supplemental fee, subject to the terms and conditionsof that facility management agreement, of $800,000. If not earlier terminated,the facility management agreement will expire in July 15, 2009. TheCompany’s obligations to Troon were recorded at their net present value onJuly 16, 2004. The net present value on that date was $682,000 (calculatedat a discount rate of 7%). Amortization of the discount is charged to interestexpense ratably over the period through December 31, 2006. Theamortization charged to interest expense for three months ended June 30, 2006and 2005 was $12,000.  The amortizationcharged to interest expense for the six months ended June 30, 2006 and 2005 was$24,000.  As of June 30, 2006 andDecember 31, 2005, the net present value of this liability was $776,000 and$752,000, respectively.

*Other*

As of June 30, 2006 and December31, 2005, the Company recorded deferred revenue from member initiation fees of$1,183,000 and $825,000, respectively.

**8.  Commitments and Contingencies**

*Employee Benefit Plans*

The Company maintains a definedcontribution Employee Thrift and Investment Plan, which provides retirementbenefits for all eligible employees, including employees of GTA-IB Operations,LLC, who have elected to participate. Employees must fulfill a 90-day servicerequirement to be eligible to participate in this plan. The Company currentlymatches

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one half of the first 6% of the contributions of eachemployee  The Company made contributionsof approximately $43,000 and $51,000 for the three months ended June 30, 2006and 2005, respectively, and $106,000 and $98,000 for the six months ended June30, 2006 and 2005, respectively.

*Westin Management Company Southand Troon Golf L.L.C.*

The Management Agreement betweenthe Company and Westin provides that Westin will manage the Resort for a feeequal to 2.2% of the Resort’s gross revenue. Contemporaneously with the signingof the Management Agreement, Westin entered into a management contract withTroon providing that Troon will manage the golf facilities of the Resort for afee payable by the Company which shall equal 2% of the Resort’s gross golfrevenue.  The Company pays monthlymanagement fees to Westin and Troon. Westin and Troon also have a contractualright to earn supplemental fees based on financial performance. The ManagementAgreement between the Company and Westin will terminate on December 31, 2017,unless it is earlier terminated pursuant to its terms (see Note 9). Troon’scontract with Westin will terminate on July 15, 2009, unless it is earlierterminated pursuant to its terms.

For the three and six monthsended June 30, 2006 and 2005, the payments made to Westin and Troon under theirrespective management agreements are reflected in the table below:
| ** ** | ** ** | **Three months ended June 30,** | ** ** | **Six months ended June 30,** | ** ** |
|------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** ** | ** ** | **(in thousands) (unaudited)**            | ** ** |
| ** ** | ** ** | **2006**                                            | ** ** | **2005**                                          | ** ** | **2006** | ** ** | **2005** | ** ** |
| Westin     |       | $                                                   | 231        |                                              | $          | 231 |   | $ | 595 |   | $ | 559 |   |
| Troon      |       | 70                                                  |       | 68                                                |       | 172 |   | 161 |   |
| Total      |       | $                                                   | 301        |                                              | $          | 299 |   | $ | 767 |   | $ | 720 |   |

 

*Land Use Lawsuit*

OnMarch 10, 2005, the Company filed a Motion to Intervene in the suit titledInnisbrook Condominium Association, Inc., C. Frank Wreath, Meredith P.Sauer, and Mark Banning, Plaintiffs vs. Pinellas County, Florida, Golf HostResorts, Inc. and Innisbrook F LLC, Defendants, Case No. 043388CI-15.This motion was filed in the Circuit Court of the Sixth Judicial Circuit, inand for Pinellas County, Florida, Civil Division.  In this report, the Company refers to thismatter as the “Initial Land Use Lawsuit.” The plaintiffs in the Initial LandUse Lawsuit have filed a multi-count complaint seeking injunctive anddeclaratory relief with respect to the land use and development rights of atract of land known as Parcel F. Parcel F is a parcel of land locatedwithin the Resort and owned by GHR. The plaintiffs allege that there are noremaining development units (residential units) available to be developedwithin the Resort property. On March 29, 2005, the Company filed a Motionto Intervene as a defendant in the Initial Land Use Lawsuit in order to protectits property, and its land use and development rights with respect toParcel F and its property. A hearing on the Motion to Intervene was heldon April 4, 2005, after which the court granted the Company’s Motion toIntervene. On April 5, 2005, the Company joined in the filing of a Motionto Dismiss and Motion to Strike three of the seven counts of the plaintiffs’complaint. 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 WoodsHomeowner’s Association, Inc. moved to intervene in the Initial Land UseLawsuit. The court has not ruled on that motion. On April 8, 2005, aseparate suit was filed by James M. and Mary H. Luckey andAndrew J. and Aphrodite B. McAdams against Pinellas County, apolitical subdivision of the State of Florida, Golf Host Resorts, Inc., aforeign corporation and Bayfair Innisbrook, LLC, a Florida limited liabilitycorporation. In this report the Company refers to this matter as the “SubsequentLand Use Lawsuit.”  The Company refers toInitial Land Use Lawsuit and the Subsequent Land Use Lawsuit as the “Land UseLawsuits.”  The Subsequent Land UseLawsuit 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 the Company has filed its Motion to Dismiss the SubsequentLand Use Lawsuit. The motion was heard by the court on May 31, 2005. Sincethat hearing, the Company has filed an Answer and Affirmative Defenses to bothcomplaints that have been filed in the consolidated action. On August 3,2005, a case management conference was held before the judge who is nowpresiding over this case. At that hearing, the court scheduled a hearing on thedefense motions for summary judgment for August 30, 2005, and a trialstarting on December 12, 2005. On August 30, 2005, the judge heardextensive argument on the defense motions for summary judgment and entered anumber of rulings in the defendants’ favor. In summary, the court dismissedthose claims in the Land Use Lawsuits which are founded upon the theory thatthe proposed 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 proposed developmentis inconsistent with the Pinellas Comprehensive Plan. The court entered asimilar ruling on certain counts of the Third Amended Complaint as to some, butnot all, of the Plaintiffs in the Initial Land Use Lawsuit.

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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 would 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.

FromDecember 19 through December 23, 2005, the court tried these consolidated casesin a non-jury trial. At the conclusion of the evidentiary portion of the trial,the court deferred final argument until Friday, January 6, 2006. On that date,the court heard final arguments and rendered its decision. The court ruled infavor of all defendants and against all plaintiffs as to each count in bothLand Use Lawsuits. On March 8, 2006, the court formally entered its finaljudgment on the record ruling in favor of the defendants on all counts anddenying all claims asserted by the plaintiffs in both Land Use Lawsuits. OnMarch 31, 2006, the plaintiffs in the consolidated cases filed a notice ofappeal.

*Property Tax Lawsuit*

The Company filed a lawsuitagainst the property appraiser of Pinellas County Florida, or Pinellas Countyto challenge the 2004 and 2005 real estate assessment on the Resort property.Pinellas County filed a motion to dismiss, which was denied by the court. Notrial date has been set. If Pinellas County were to prevail, managementbelieves that there would be no material adverse effect upon our financialstatements, as the entire Pinellas County assessment is fully accrued andaccounted for at June 30, 2006.

**9.   Subsequent Events**

On July 10, 2006, theCompany received from Westin, in accordance with the Management Agreement, asecond notice of default.   In accordance with the Management Agreement,Westin previously had sent to the Company a first notice of default.  The Company refers to this notice, togetherwith the notice delivered by Westin on July 10, as the Westin Notices.

The Westin Noticesrelate to the Company’s alleged failure to provide certain requested funding tothe Resort.  The Westin Notices alleged,among other things, that if the Company failed to cure the default by August 1,2006, then Westin would have the right to (i) terminate the Management Agreementon not less than five (5) days notice and (ii) pursue available remediesfollowing an event of default.  The Company has contested, and continuesto contest, the defaults that Westin claims that the Company has committed,including the defaults alleged by Westin in the Westin Notices.  Moreover,the Company believes that if a third party determines that the Company or OurParent has not complied with all of its respective obligations under theManagement Agreement, it is in part because of Westin’s non-compliance with itsobligations thereunder.

The Management Agreementprovides that the Company shall pay to Westin, subject to the terms of theManagement Agreement, a termination fee. The Management Agreement provides thatthe termination fee shall be reduced by $365 per day for each day elapsed fromthe effective date of the Management Agreement until the termination date;provided, however, that the termination fee shall not be reduced below$5,500,000.  The Company has not received from Westin a notice oftermination of the Management Agreement. The parties have mutually agreed upona process to seek to negotiate a resolution of each party’s respectiveclaims.  See note 5 regarding thecarrying value of the Westin termination fee obligation as of June 30,2006.  As of August 16, 2006, thetermination fee that would be due is $5,622,000.

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**INNISBROOK RENTAL POOLLEASE OPERATIONCONDENSED BALANCE SHEETSAS OF JUNE 30, 2006 AND DECEMBER 31, 2005(in thousands)**
|                                                             | ** ** | **June 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|-------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                                  | ** ** | **(unaudited)**         | ** ** | ** **                  | ** ** |
| **DISTRIBUTION FUND**                                       |       |                    |       |                        |       |
| **Assets**                                                  |       |                    |       |                        |       |
| Receivable from GTA-IB, LLC for distribution                |       | $                       | 1,203      |                        | $          | 918 |   |
| Interest receivable from maintenance escrow fund            |       | 23                      |       | 17                          |       |
| **Total assets**                                            |       | $                       | 1,226      |                        | $          | 935 |   |
| **Liabilities**                                             |       |                    |       |                        |       |
| Due to participants for distribution                        |       | $                       | 922        |                        | $          | 688 |   |
| Due to maintenance escrow fund                              |       | 304                     |       | 247                         |       |
| **Total liabilities**                                       |       | $                       | 1,226      |                        | $          | 935 |   |
| **MAINTENANCE ESCROW FUND**                                 |       |                    |       |                        |       |
| **Assets**                                                  |       |                    |       |                        |       |
| Cash and cash equivalents                                   |       | $                       | 273        |                        | $          | 202 |   |
| Short-term investments                                      |       | 1,805                   |       | 1,595                       |       |
| Receivable from distribution fund                           |       | 304                     |       | 247                         |       |
| Inventory                                                   |       | 1                       |       | —                      |       |
| Interest receivable                                         |       | 18                      |       | 18                          |       |
| **Total assets**                                            |       | $                       | 2,401      |                        | $          | 2,062 |   |
| **Liabilities  and participants’ fund balances**       |       |                    |       |                        |       |
| Accounts payable                                            |       | $                       | 15         |                        | $          | 9 |   |
| Construction retainage                                      |       | 5                       |       | 6                           |       |
| Interest payable to distribution fund                       |       | 23                      |       | 17                          |       |
| Carpet care reserve                                         |       | 78                      |       | 55                          |       |
| Participants’ fund balances                            |       | 2,280                   |       | 1,975                       |       |
| **Total  liabilities and participants’ fund balances** |       | $                       | 2,401      |                        | $          | 2,062 |   |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOL LEASEOPERATIONCONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS’ DISTRIBUTION FUND BALANCESFOR THREE AND SIX ENDED JUNE 30, 2006 AND 2005(in thousands) (unaudited)**
|                                                               | ** ** | **Three months  ended June 30,** | ** ** | **Six months  ended June 30,** | ** ** |
|---------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                    | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| **DISTRIBUTION FUND**                                         | ** ** | ** **                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Balance,  beginning of period                                 |       | $                                               | —     |                                          | $          | — |   | $ | — |   | $ | — |   |
| Additions:                                                    |       |                                            |       |                                          |       |   |   |   |   |
| Amounts available for distribution                            |       | 1,203                                           |       | 1,237                                         |       | 3,247 |   | 3,135 |   |
| Interest received or receivable from Maintenance  Escrow Fund |       | 23                                              |       | 15                                            |       | 41 |   | 23 |   |
| Reductions:                                                   |       |                                            |       |                                          |       |   |   |   |   |
| Amounts withheld for Maintenance Escrow Fund                  |       | (304                                            | )          | (377                                          | )          | (706 | ) | (793 | ) |
| Distribution accrued or paid to participants                  |       | (922                                            | )          | (875                                          | )          | (2,582 | ) | (2,365 | ) |
| Balance, end of period                                        |       | $                                               | —     |                                          | $          | — |   | $ | — |   | $ | — |   |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOL LEASEOPERATIONCONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS’ ESCROW FUND BALANCESFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005(in thousands) (unaudited)**
|                                                                  | ** ** | **Three months  ended June 30,** | ** ** | **Six months  ended June 30,** | ** ** |
|------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                       | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| **MAINTENANCE ESCROW FUND**                                      | ** ** | ** **                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Balance,  beginning of period                                    |       | $                                               | 2,222      |                                          | $          | 2,197 |   | $ | 1,975 |   | $ | 1,998 |   |
| Additions:                                                       |       |                                            |       |                                          |       |   |   |   |   |
| Amounts withheld from occupancy fees                             |       | 304                                             |       | 377                                           |       | 706 |   | 793 |   |
| Interest earned                                                  |       | 23                                              |       | 15                                            |       | 41 |   | 23 |   |
| Charges to participants to establish or restore  escrow balances |       | 135                                             |       | 134                                           |       | 310 |   | 203 |   |
| Reductions:                                                      |       |                                            |       |                                          |       |   |   |   |   |
| Maintenance charges                                              |       | (303                                            | )          | (299                                          | )          | (518 | ) | (514 | ) |
| Carpet care reserve deposit                                      |       | (15                                             | )          | (16                                           | )          | (35 | ) | (39 | ) |
| Interest accrued or paid to Distribution Fund                    |       | (23                                             | )          | (15                                           | )          | (41 | ) | (23 | ) |
| Refunds to participants pursuant to the Master Lease  Agreements |       | (63                                             | )          | (55                                           | )          | (158 | ) | (103 | ) |
| Balance, end of period                                           |       | $                                               | 2,280      |                                          | $          | 2,338 |   | $ | 2,280 |   | $ | 2,338 |   |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOL LEASEOPERATIONCONDENSED STATEMENTS OF OPERATIONSFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005(in thousands) (unaudited)**
|                                             | ** ** | **Three months  ended June 30,** | ** ** | **Six months  ended June 30,** | ** ** |
|---------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                  | ** ** | **2006**                                        | ** ** | **2005**                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| **DISTRIBUTION FUND**                       | ** ** | ** **                                      | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** |
| Gross revenue                               |       | $                                               | 3,372      |                                          | $          | 3,382 |   | $ | 9,127 |   | $ | 8,579 |   |
| Deductions:                                 |       |                                            |       |                                          |       |   |   |   |   |
| Agents’ commissions                    |       | 132                                             |       | 119                                           |       | 427 |   | 403 |   |
| Resort fees                                 |       | 120                                             |       | —                                        |       | 231 |   | — |   |
| Credit card fees                            |       | 78                                              |       | 78                                            |       | 210 |   | 197 |   |
| Professional fees                           |       | 6                                               |       | 7                                             |       | 12 |   | 13 |   |
| Uncollectible room rents.                   |       | 36                                              |       | 1                                             |       | 36 |   | 1 |   |
| Linen replacements                          |       | 15                                              |       | 76                                            |       | 90 |   | 128 |   |
| Rental pool complimentary fees              |       | 1                                               |       | 1                                             |       | 1 |   | 2 |   |
|                                        |       | 388                                             |       | 282                                           |       | 1,007 |   | 744 |   |
| Adjusted gross  revenue                     |       | 2,984                                           |       | 3,100                                         |       | 8,120 |   | 7,835 |   |
| Amount retained  by lessee                  |       | (1,790                                          | )          | (1,860                                        | )          | (4,872 | ) | (4,701 | ) |
| Gross income  distribution                  |       | 1,194                                           |       | 1,240                                         |       | 3,248 |   | 3,134 |   |
| Adjustments to  gross income distribution:  |       |                                            |       |                                          |       |   |   |   |   |
| General pooled expense                      |       | (4                                              | )          | (1                                            | )          | (6 | ) | (1 | ) |
| Corporate complimentary occupancy fees      |       | 7                                               |       | 5                                             |       | 13 |   | 12 |   |
| Interest                                    |       | (3                                              | )          | (3                                            | )          | (6 | ) | (6 | ) |
| Occupancy fees                              |       | (338                                            | )          | (401                                          | )          | (785 | ) | (864 | ) |
| Advisory committee expenses                 |       | (44                                             | )          | (52                                           | )          | (97 | ) | (100 | ) |
| Net income  distribution                    |       | 812                                             |       | 788                                           |       | 2,367 |   | 2,175 |   |
| Adjustments to  net income distribution:    |       |                                            |       |                                          |       |   |   |   |   |
| Occupancy fees                              |       | 338                                             |       | 401                                           |       | 785 |   | 864 |   |
| Hospitality suite fees                      |       | 1                                               |       | 4                                             |       | 1 |   | 4 |   |
| Westin Associate room fees                  |       | 52                                              |       | 44                                            |       | 94 |   | 92 |   |
| Available for  distribution to participants |       | $                                               | 1,203      |                                          | $          | 1,237 |   | $ | 3,247 |   | $ | 3,135 |   |
|                                             |            |                                                 |            |                                               |            |  |  |  |  |  |  |  |  |  |  |  |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOL LEASEOPERATION**

**NOTES TO CONDENSED FINANCIALSTATEMENTS**

**FOR THE THREE AND SIX MONTHSENDED JUNE 30, 2006 AND 2005**

**(in thousands) (unaudited)**

**1.             Rental Pool Lease Operations**

**Organizationand Operations**

GTA-IB, LLC (the “Company”) is asingle member limited liability company, wholly owned by GTA-IB Golf Resort,LLC. GTA-IB Golf Resort, LLC is itself a wholly owned subsidiary of Golf Trustof America, L.P. (the “Operating Partnership”). There is no established marketfor the Company’s membership interests. The preceding condensed financialstatements of the Rental Pool Lease Operations (the “Rental Pool”) at theWestin Innisbrook Golf Resort (the “Resort”) are for the periods ended June 30,2006 and 2005.  The Rental Pool consistsof condominiums at the Resort which are provided as resort accommodations bytheir owners.

Historically,the predecessor owner and the Company have offered several different programsto the condominium owners who are eligible to participate in the Rental Pool(the “Rental Pool Participants”). Effective January 1, 2002, GHR offered a newMaster Lease Agreement (“NMLA”) which permitted all Rental Pool Participantsthe opportunity to convert to the NMLA from any prior agreement they wereparticipating in at that time.  Inaddition, the NMLA provides that on an annual basis each Rental PoolParticipant may elect to participate in the Rental Pool for the following yearby signing an Annual Lease Agreement (“ALA”). Any Rental Pool Participant whodoes not sign the ALA, is not permitted to participate in the Rental Pool forthe following year.  Under the NMLA, 40%of the Adjusted Gross Revenues, as defined, are distributed to the Rental PoolParticipants and the remaining 60% to the Company.

TheRental Pool condensed financial statements consist of the Distribution Fund andthe Escrow Fund.

TheDistribution Fund accounts for the sharing of the participants portion ofAdjusted Gross Revenues in accordance with the NMLA.

TheMaintenance Escrow Fund accounts for amounts set aside in accordance with theNMLA for the ongoing maintenance of the condominium units participating in theRental Pool.

TheCondensed Statements of Operations reflects Rental Pool Participants’ earningsas a result of participating in the Rental Pool. In accordance with the NMLA,the Company and the Rental Pool Participants share Adjusted GrossRevenues.  Adjusted Gross Revenues aredefined in the NMLA as gross room revenues of the units participating in theRental Pool, less certain defined costs.

Inaddition, the predecessor owner has agreed, under the terms of the NMLA, toreimburse the Rental Pool Participants who were participating in the NMLA anamount up to 50% of the actual unit refurbishment costs, plus interest at arate of 5% per annum on such amounts, beginning in 2002.  The obligation to reimburse the refurbishmentcosts and pay interest thereon applies only if certain minimum participationthresholds are maintained. The Company assumed the obligations of thepredecessor owner under the NMLA and the ALA, or the Agreements.

**MaintenanceEscrow Fund Accounts**

TheNMLA generally provides that 90% of the occupancy fees earned by each RentalPool Participant are deposited in that Rental Pool Participant’s MaintenanceEscrow Fund account. This account provides funds for payment of amounts thatare due from Rental Pool Participants under the Agreements for maintenance andrefurbishment services. Should a Rental Pool Participant’s balance fall belowthat necessary to provide adequate funds for maintenance and replacements, theRental Pool Participant is required to restore the escrow balance to a definedminimum level. The NMLA requires that specific fund balances must bemaintained, by unit type, size and age of refurbishment, as defined in theapplicable Agreement. Under the NMLA, a percentage of the occupancy fees aredeposited into the carpet care reserve in the Maintenance Escrow Fund.  The portion of the Maintenance Escrow Fundrepresenting the carpet care reserve is expected to be used to pay the expenseof carpet cleaning for all Rental Pool Participants. This percentage isestimated to provide the amount necessary to fund carpet cleaning expenses andmay be adjusted annually. The amounts expended for carpet care wereapproximately $36,000, $37,000 and $35,000 for the years ended for 2005, 2004and 2003, respectively.

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TheLessors’ Advisory Committee, subject to the restrictions contained in theAgreements, invests the Maintenance Escrow Fund on behalf of the Rental PoolParticipants. The Lessors’ Advisory Committee consists of nine Rental PoolParticipants who are elected to advise the Resort’s owner on Rental Poolmatters and to negotiate amendments to the lease agreement/ALA/NMLA. Incomeearned on the investments of the Maintenance Escrow Fund is allocatedproportionately to the respective Maintenance Escrow Fund accounts of theRental Pool Participants and paid quarterly through the Distribution Fund. AtJune 30, 2006, the Maintenance Escrow Fund held certificates of deposit of$1,805,000 with maturity terms ranging from three months to twelve months andbearing interest at rates from 4.1% to 5.25%.  At June 30, 2005, the Maintenance Escrow Fund held certificates ofdeposit of $1,520,000 with maturity terms ranging from three months to twelvemonths and bearing interest at rates from 1.8% to 3.45. At June 30, 2006 and2005, the cost of these investments approximates fair value.

**Going Concern**

Thecontinuation and success of the Rental Pool is contingent upon the continuationof the operations of the Resort. In turn, the success of Resort’s operations iscontingent upon the continued participation of condominium owners in the RentalPool. The Company had (loss)/income from operations of approximately$(1,226,000) and $1,248,000 for the three and six months ended June 30, 2006,respectively; however,  the impact ofseasonality on the Resort’s operations and the projections from the Resort’smanager of the Resort’s cash flow through the end of 2006 raise substantialdoubt about the Company’s ability to continue as a going concern. Items relatedto the continuation of the Resort as a going concern include such issuesas:  the sale of condominium units whichdo not participate in the Rental Pool or through a sale are removed from theRental Pool, owners of units opting to live in their units, owners rentingtheir units outside of the Rental Pool, and general economic conditions relatedto the destination resort industry.  TheOperating Partnership’s parent, Golf Trust of America, Inc., or GTA, iscurrently seeking a buyer for the Resort pursuant to the stockholder-approvedplan of liquidation. In the event that the Resort is not sold, itmay become necessary for the Company to seek further cash infusion fromthe Operating Partnership, if available, or to seek some other form ofre-capitalization to seek to insure the Company’s ongoing viability. GTA iscurrently in the process of liquidation. There are no assurances that GTA, theOperating Partnership, or any other affiliate will have the ability to providefuture funding to the Resort, nor are there any assurances that the Companywill be able to complete a recapitalization which will allow the Company toremain viable.

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

We were formed onDecember 30, 2002 as a wholly-owned subsidiary of GTA-IB GolfResort, LLC, or Our Parent.  Our Parentis in turn is a wholly-owned subsidiary of Golf Trust of America, L.P.,or the Operating Partnership.  TheOperating Partnership is the operating partnership of Golf Trust of America,Inc., or GTA. Golf Host Resorts, Inc., or GHR, is the former owner of theResort and the former borrower under a $79 million participating mortgageloan funded by the Operating Partnership in June 1997.

We, the Operating Partnership,and one of the Operating Partnership’s subsidiaries entered into a SettlementAgreement dated July 15, 2004, or the Settlement Agreement, with GHR, GolfHosts, Inc., Golf Host Management, Inc. and Golf HostCondominium, Inc. The Settlement Agreement resolved a number of issuesbetween the parties, including GHR’s default under the $79 million loanmade by the Operating Partnership to GHR in June 1997. As part of theSettlement Agreement, we took ownership of the Westin Innisbrook Golf Resort,or the Resort, effective at the close of business on July 15, 2004. Also,in connection with the Settlement Agreement, we entered into a managementagreement with Westin Management Company South, or Westin, providing for Westin’smanagement of the Resort.  In addition,Westin and Troon Golf L.L.C., or Troon, entered into a facility managementagreement setting forth the terms of Troon’s management of the golf facilitiesat the Resort.

The Operating Partnership hadpreviously entered into an agreement with GHR and the prospective purchaser ofa parcel of undeveloped land within the Resort, known as Parcel F. Thisagreement, known as the Parcel F Development Agreement, was executed onMarch 29, 2004 and amended on August 10, 2005 to add us as a party.  The Parcel F Development Agreement setsforth the terms and conditions under which Parcel F may be developed andincludes restrictions on GHR, as the owner of Parcel F, which are designedto avoid interference with the operations of the Resort.  The Parcel F Development Agreement alsocontains provisions which we believe will increase the Operating Partnership’sability to better manage the location of the access road for Parcel F.

**Results of Operations**

*Forward Looking Statements*

This report contains forward-lookingstatements within the meaning of Section 27A of the Securities Act of1933, as amended, and Section 21E of the Securities Exchange Act of 1934,as amended, or the Exchange Act. Forward-looking statements arestatements that predict or describe future events or trends and that do notrelate solely to historical matters. All of our projections in this quarterlyreport are forward-looking statements. You can generally identify forward-lookingstatements as statements containing the words “believe,” “expect,” “hope,” “may,”“will,” “anticipate,” “intend,” “estimate,” “project,” “assume” or othersimilar expressions. Certain factors that might cause such a difference includethe following: changes in general economic conditions, including changes thatmay influence group conferences and guests’ vacation plans, changes in travelpatterns, changes in consumer tastes in destinations or accommodations forgroup conferences and vacations, our ability to continue to operate the Resortunder our management contracts or independently, changes in Rental Poolparticipation by the current condominium owners, settlement of the class actionlawsuit involving the Rental Pool agreements, the resale of condominiums toowners who elect neither to participate in the Rental Pool nor to become clubmembers and our relationship with Westin. You should not place undue relianceon our forward-looking statements because the matters they describe aresubject to known (and unknown) risks, uncertainties and other unpredictablefactors, many of which are beyond our control. Our forward-lookingstatements are based on the limited information currently available to us andspeak only as of the date on which this report was filed with the SEC. Ourcontinued internet posting or subsequent distribution of this dated report doesnot imply continued affirmation of the forward-looking statementsincluded in it. We undertake no obligation, and we expressly disclaim anyobligation, to issue any updates to our forward-looking statements, evenif subsequent events cause our expectations to change regarding the mattersdiscussed in those statements. Future events are inherently uncertain.Moreover, it is particularly difficult to predict business activity levels atthe Resort with any certainty. Accordingly, our projections in this quarterlyreport are subject to particularly high uncertainty. Our projections should notbe regarded as legal promises, representations or warranties of any kindwhatsoever. Over time, our actual results, performance or achievements willlikely differ from the anticipated results, performance or achievements thatare expressed or implied by our forward-looking statements, and suchdifferences might be significant and harmful to your interests.

***Results of operations***

Because the Resort is adestination golf resort, we believe it appeals to a different market than themarket to which stand-alone hotels located in downtown metropolitan areaswould appeal. The Resort provides recreation, food and beverages to 

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business meeting or group travelers, transient guests whoplay golf, guests who purchase golf packages and guests who bring theirfamilies to the Resort. As a destination golf resort, the Resort’s performanceis sensitive to weather conditions and seasonality. The Resort had higherrealized revenue and fewer room nights during the first six months of 2006 thanduring the corresponding period in 2005. We believe that the increase inrealized revenue resulted when continuing sales and marketing efforts directedtowards attracting group and transient guests and a continued focus on sales ofgolf packages and golf memberships at the Resort, offset the revenue lost dueto the reduction in room nights.  Duringthe six months ended June 30, 2006, each of these market segments produced agreater aggregate spending level per room night as compared to the six monthsended June 30, 2005.  While overall roomnights and golf rounds were down 10.9% and 7.2%, respectively, during the firstsix months of 2006 as compared to the same period of 2005, overall grossrevenue per room night increased by $70.86 to $494.11.  The fluctuation is discussed in furtherdetail below.

The following table showsutilization of the Resort facilities broken into facility type, results ofoperations and selected Rental Pool statistical data during the three and sixmonth period ended June 30, 2006 and June 30, 2005:
| ** **                             | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|----------------------------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                             | ** ** | **2006**                                            | ** ** | **2005**                                          | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** | **2006** | ** ** | **2005** | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** |
| **Utilization  of Resort facilities:** |       |                                                |       |                                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Available room  nights                 |       | 53,108                                              |       | 54,489                                            |       | (1,381 | ) | (2.5 | )% | 104,175 |   | 106,647 |   | (2,472 | ) | (2.3 | )% |
| Actual room  nights                    |       |                                                |       |                                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Group                                  |       | 14,768                                              |       | 16,640                                            |       | (1,872 | ) | (11.3 | )% | 37,861 |   | 37,769 |   | 92 |   | 0.2 | % |
| Transient                              |       | 8,650                                               |       | 11,779                                            |       | (3,129 | ) | (26.6 | )% | 17,333 |   | 24,147 |   | (6,814 | ) | (28.2 | )% |
| Total room nights                      |       | 23,418                                              |       | 28,419                                            |       | (5,001 | ) | (17.6 | )% | 55,194 |   | 61,916 |   | (6,722 | ) | (10.9 | )% |
| Food and  beverage meals               |       | 96,548                                              |       | 107,630                                           |       | (11,082 | ) | (10.3 | )% | 255,257 |   | 250,647 |   | 4,610 |   | 1.8 | % |
| Golf rounds                            |       |                                                |       |                                              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Resort guests                          |       | 20,290                                              |       | 24,023                                            |       | (3,733 | ) | (15.5 | )% | 43,711 |   | 49,396 |   | (5,685 | ) | (11.5 | )% |
| Member/guests                          |       | 8,711                                               |       | 9,363                                             |       | (652 | ) | (6.9 | )% | 21,569 |   | 20,945 |   | 624 |   | 2.9 | % |
| Total golf  rounds                     |       | 29,001                                              |       | 33,386                                            |       | (4,385 | ) | (13.1 | )% | 65,280 |   | 70,341 |   | (5,061 | ) | (7.2 | )% |

 

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| ** **                                  | ** ** | **Three Months Ended June 30** | ** ** | **Six Months Ended June 30** | ** ** |
|---------------------------------------------|------------|----------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                  | ** ** | **2006**                                           | ** ** | **2005**                                         | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** | **2006** | ** ** | **2005** | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** |
| **Results  of operations (in thousands):**  |       |                                               |       |                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                    |       |                                               |       |                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Hotel                                       |       | $                                                  | 3,444      |                                             | $          | 3,452 |   | $ | (8 | ) | (.2 | )% | $ | 9,289 |   | $ | 8,733 |   | $ | 556 |   | 6.4 | % |
| Food and beverage                           |       | 2,686                                              |       | 2,816                                            |       | (130 | ) | (4.6 | )% | 7,818 |   | 7,060 |   | 758 |   | 10.7 | % |
| Golf                                        |       | 3,527                                              |       | 3,392                                            |       | 135 |   | 4.0 | % | 8,616 |   | 8,058 |   | 558 |   | 6.9 | % |
| Other                                       |       | 602                                                |       | 1,064                                            |       | (462 | ) | (43.4 | )% | 1,549 |   | 2,354 |   | (805 | ) | (34.2 | )% |
| Total revenues                              |       | 10,259                                             |       | 10,724                                           |       | (465 | ) | (4.3 | )% | 27,272 |   | 26,205 |   | 1,067 |   | 4.1 | % |
| Expenses                                    |       |                                               |       |                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Hotel                                       |       | 2,843                                              |       | 3,030                                            |       | (187 | ) | (6.2 | )% | 6,950 |   | 6,915 |   | 35 |   | .5 | % |
| Food and beverage                           |       | 1,878                                              |       | 1,968                                            |       | (90 | ) | (4.6 | )% | 5,011 |   | 4,578 |   | 433 |   | 9.5 | % |
| Golf                                        |       | 1,911                                              |       | 1,823                                            |       | 88 |   | 4.8 | % | 3,767 |   | 3,662 |   | 105 |   | 2.9 | % |
| Other                                       |       | 2,540                                              |       | 2,621                                            |       | (81 | ) | (3.1 | )% | 5,377 |   | 5,143 |   | 234 |   | 4.5 | % |
| General and administrative                  |       | 1,410                                              |       | 1,067                                            |       | 343 |   | 32.1 | % | 3,152 |   | 2,670 |   | 482 |   | 18.0 | % |
| Depreciation and amortization               |       | 533                                                |       | 537                                              |       | (4 | ) | (.7 | )% | 1,024 |   | 1,335 |   | (311 | ) | (23.3 | )% |
| Total expenses                              |       | 11,115                                             |       | 11,046                                           |       | 69 |   | .6 | % | 25,281 |   | 24,303 |   | 978 |   | 4.0 | % |
| Operating income                            |       | (856                                               | )          | (322                                             | )          | (534 | ) | (165.8 | ) | 1,991 |   | 1,902 |   | 89 |   | 4.7 | % |
| Interest  expense, net                      |       | 370                                                |       | 375                                              |       | (5 | ) | (1.3 | ) | 743 |   | 814 |   | (71 | ) | (8.7 | )% |
| Net (loss)  income                          |       | $                                                  | (1,226     | )                                                | $          | (697 | ) | $ | (529 | ) | (75.9 | )% | $ | 1,248 |   | $ | 1,088 |   | $ | 160 |   | 14.7 | % |
| ** **                                  | ** ** | ** **                                         | ** ** | ** **                                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Selected  Rental Pool statistical data:** |       |                                               |       |                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Average daily  distribution                 |       | $                                                  | 22.65      |                                             | $          | 22.70 |   | $ | (.05 | ) | (0.2 | )% | $ | 31.17 |   | $ | 29.40 |   | $ | 1.77 |   | 6.0 | % |
| Average room  rate                          |       | $                                                  | 147.04     |                                             | $          | 121.46 |   | $ | 25.58 |   | 21.1 | % | $ | 168.29 |   | $ | 141.04 |   | $ | 27.25 |   | 19.3 | % |
| Occupancy  percentage                       |       | 44.1                                               | %          | 52.2                                             | %          | (8.10 | )% |   |   | 53.0 | % | 58.1 | % | (5.1 | )% |   |   |
| Average number of  available units          |       | 584                                                |       | 589                                              |       | (5 | ) | (.8 | )% | 576 |   | 589 |   | (13 | ) | (2.2 | )% |

***Three months ended June 30, 2006 and 2005.***

During the three months endedJune 30, 2006, there were 5,001, or 17.6%, fewer occupied room nights ascompared to the three months ended June 30, 2005.  There were 3,129 fewer transient room nightsand 1,872 less group room nights during the three months ended June 30, 2006 ascompared to the three months ended June 30, 2005.  Group room nights consist of conference roomnights, or room nights which are booked and correlate to a meeting orconvention at the Resort, and transient room nights, which are room nightswhich are booked and do not correlate to a meeting or convention at theResort.  Transient room nights are oftenbooked 24 hours or less from the date of the visit, while group roomnights are typically booked no less than 120 days in advance of the dateof a visit.  Larger groups typically book16 to 18 months in advance of a stay. Transient room nights are often booked as part of golf packages andInternet bookings, among others, but during the first three months of June 30,2005, a significant number of transient rooms were attributable to theactualization of golf packages at the Resort. Management believes that transient room nights were lower in the threemonths ended June 30, 2006 than in the corresponding period in 2005, due primarilyto warmer weather conditions in the northern states during the period.  In particular, the spring months were muchwarmer in the northern states during the three months ended June 30, 2006 thanin the corresponding period of 2005, and as a result we believe transientguests and golf package guests were less motivated to visit the southernstates.  This, in turn, resulted in adecline in the transient business in the three months ended June 30, 2006.

The effect of the decline inoccupied room nights on revenues during the three months ended June 30, 2006was mitigated by improved average room rates and ancillary spending patterns ofthe guests, coupled with increases in banquet and catering sales. Total revenuefor the Resort was $465,000 less during the three months ended June 30, 2006than in the same period of 2005. An overall increase in spending by the Resort’sguests, both for rooms and by package guests for food and beverages, helped tomitigate the reduction in gross revenue that resulted from the lower number ofroom nights in three months 

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ended June 30, 2006 as compared to same period of2005.  During the same periods, theaverage room rate increased from $121.46 in 2005 to $147.06 in 2006.  Aggregate spending per room night during thethree months ended June 30, 2006 was $438.08, as compared to $377.35 for thesame period in 2005.   The mostsignificant decrease in revenues at the Resort during the three months endedJune 30 2006 occurred in the Other department. Revenues attributable to thatcategory for the three months ended June 30, 2006 decreased by approximately$462,000, or 43.4%, as compared to the same period in 2005. Other Revenuedecreased primarily because the Resort no longer charges a resort fee.  Food and Beverage revenues decreased byapproximately $130,000 or 4.6% as a result of 11,082 or 10.3% fewer meals(covers) served as compared to the three months ended June 30, 2005.   This aggregate decrease in covers served wasprimarily attributable to the Resort’s banquets, catering and room service,with a combined decrease of approximately 8,762 covers. Covers attributed tothe Resort’s casual restaurants and pool service also decreased byapproximately 2,320. Although the aggregate number of covers decreased, revenueper cover increased by $1.64, or from $26.17 to $27.81.  The combination of decreased number of coversand increased revenue per cover produced the $130,000 negative variance for theperiod ended June 30, 2006 versus June 30, 2005.  Golf revenue increased by approximately$135,000, primarily as a result of improved capture of revenue per round ofgolf.  Golf revenue for the quarter endedJune 30, 2006 averaged $121.62 per round, as compared to $101.60 per round forthe comparative period in 2005.  Althoughin the aggregate golf rounds were down by 4,385, golf revenues were higher as aresult of the capture of increased greens fees and ancillary spending in thepro shops. The net decrease in aggregate rounds played was attributed to 3,733fewer rounds played by the Resort’s transient guests, including packages, coupledwith an aggregate decrease of 652 rounds played by Resort members.  The number of total golf rounds played in thethree months ended June 30, 2006 was 29,001, compared to 33,386 rounds playedin the same period of 2005. Golf revenue does not necessarily increase ordecrease exactly in proportion to occupied room nights because golf revenuealso includes member dues and fees and day golf group fees, neither of which isdirectly related to occupied room nights.

Consistent with past periods, wecontinue to monitor total operating expenses in an attempt to insure that theWestin controls expenses and that the expenses bear a direct correlation to theroom nights, food and beverage covers and golf round demand. Aggregate totaloperating expenses do not generally increase or decrease on a one-to-one basiswith total operating revenue because the Resort must carry a minimum fixedoperating staff and other support expenses at all times. In those operatingdepartments where the variable costs can best be managed, we manage these costsconsistent with room, food and beverage and golf demand. Total Resort operatingexpenses, before depreciation and amortization and excluding the Rental Poolamortization in hotel operations, increased by approximately $73,000, or 0.7%,for the three months ended June 30, 2006 as compared to the correspondingperiod in the prior year.

Depreciation and amortizationexpense, excluding the Rental Pool amortization included in hotel expenses, wasapproximately $533,000 and $537,000 for the three months ended June 30, 2006and 2005, respectively.

Interest expense, net of interestincome, was approximately $370,000 and $375,000 for the three months ended June30, 2006 and 2005, respectively, and reflects amortization of the discount of(i) our Rental Pool refurbishment liability, (ii) our long-term liability toWestin and (iii) our long-term liability to Troon. The participating mortgageloan that was assumed by us from GHR was amended to adjust the outstandingbalance to $39,240,000. That note is non-interest bearing.

The net loss for the three monthsended June 30, 2006 was approximately $1,226,000, compared to a net loss forthe three months ended June 30, 2005 of approximately $697,000.

During the three months endedJune 30, 2006, approximately $292,000 of the capital reserve funds weredisbursed. Of those disbursed funds, $212,000 was used to pay lease payments onexisting and additional equipment consisting of bellman vehicles, golf cartleases, golf course equipment leases, telephone equipment leases and cableleases and the balance was for various capital improvement projects andreplacements throughout the Resort.

***Six months ended June 30, 2006 and 2005.***

During the six months ended June30, 2006, there were 6,722, or 10.9%, fewer occupied room nights than therewere for the six months ended June 30, 2005. During the six months ended June 30, 2006, there were 6,814 fewertransient room nights and 92 greater group room nights, resulting in anaggregate of 6,722 fewer occupied room nights as compared to the same period ofthe prior year. The decrease in transient room nights could be attributed tothe mild weather in the winter and spring months experienced during 2006 in thenorthern states.  Because the winter andspring months were much warmer in the northern states during 2006 than in 2005,we believe that transient guests and golf package guests were less inclined tovisit the southern states.  We believethat this, in turn, resulted in reduced transient business during the sixmonths ended June 30, 2006.

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The decline in the occupied roomnights during the six months ended June 30, 2006 was offset by improved averageroom rates and ancillary spending patterns of the Resort’s guests, coupled withincreases in banquet and catering sales. Total revenue for the Resort was$1,067,000 greater during the six months ended June 30, 2006 than in the sixmonths ended June 30, 2005. An overall increase in spending by the Resort’sguests, both for rooms and by package guests for food and beverages, offset thereduction in gross revenue that resulted from the lower number of room night inthe six months ended June 30, 2006 as compared to the same period of 2005.  The average room rate increased from $141.04in 2005 to $168.29 in 2006.  Aggregatespending per room night during the six months ended June 30, 2006 was $494.11,as compared to $423.30 during the same period in 2005.   The most significant increase in revenues atthe Resort during the six months ended June 30, 2006 occurred in the Food andBeverage department. Revenues of that department increased by approximately$758,000, or 10.7%, for the six months ended June 30, 2006, as compared to thesame period in 2005.  Overall food andbeverage revenues increased as the food and beverage total covers (meals)increased by 4,610.  This net increase incovers served was primarily attributed to the Resort’s banquets, catering, roomservice and pool service with a combined increase of approximately 9,149covers. Covers attributed to the Resort’s casual restaurants decreased byapproximately 4,539 covers. This reduction of restaurant covers is reflectiveof the reduced transient room nights noted above.  Food and Beverage revenue per cover increasedfrom $28.17 during the six months ended June 30, 2005 to $30.63 for the sixmonths ended June 30, 2006, or 8.7% per cover. Golf revenue increased by approximately $558,000, primarily as a resultof improved capture of revenue per round of golf.  Golf revenue for the six months ended June30, 2006 averaged $131.99 per round, as compared to $114.56 per round for thecomparative period in 2005, while the number of rounds played decreased for theperiod.   In the aggregate, while therewere 5,061, or 7.2%, fewer golf rounds, revenues were higher 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 5,686 fewer roundsplayed by the Resort’s transient guests, including packages, offset by an increaseof 625 rounds played by Resort members. The number of total golf rounds played in the six months ended June 30,2006 was 65,280, as compared to 70,341 in the same period of 2005. Golf revenuedoes not necessarily increase or decrease exactly in proportion to occupiedroom nights because golf revenue also includes member dues and fees and daygolf group fees, neither of which is directly related to occupied room nights.Increases in total revenue due to improved spending of the Resort’s guests inthe six months ended June 30, 2006 as compared to the same period in 2005 wereoffset by a decrease in Other Revenue of approximately $805,000.  Other Revenue decreased primarily because theResort no longer charges a resort fee.

Consistent with past periods, wecontinue to monitor total operating expenses in an attempt to insure that theWestin controls expenses and that the expenses bear a direct correlation to theroom nights, food and beverage covers and golf round demand.  Aggregate total operating expenses do notgenerally increase or decrease on a one-to-one basis with total operatingrevenue because the Resort must carry a minimum fixed operating staff and othersupport expenses at all times. In those operating departments where thevariable costs can best be managed, we manage these costs consistent with room,food and beverage and golf demand. Total Resort operating expenses, beforedepreciation and amortization and excluding the Rental Pool amortization inhotel operations, increased by approximately $1,289,000, or 5.0%, for the sixmonth period ended June 30, 2006 as compared to the corresponding period in theprior year. This increase of 5.0% is primarily attributable to the increase intotal operating revenue of approximately 4.1% during the six-monthcomparative period.

Depreciation and amortizationexpense, excluding the Rental Pool amortization included in hotel expenses, wasapproximately $1,024,000 and $1,335,000 for the six months ended June 30, 2006and 2005, respectively.

Interest expense, net of interestincome, was approximately $743,000, and $814,000 for the six months ended June30, 2006 and 2005, respectively, and reflect amortization of the discount on(i) our Rental Pool refurbishment liability, (ii) our long-term liability toWestin and (iii) our long-term liability to Troon**.**  The participating mortgage loan that wasassumed by us from GHR was amended to adjust the outstanding balance to$39,240,000. That note is now non-interest bearing.

The net income for the six monthsended June 30, 2006 was approximately $1,248,000, compared to a net income forthe six months ended June 30, 2005 of approximately $1,088,000.

During the six months ended June30, 2006, approximately $518,000 of the capital reserve funds were disbursed.Of those disbursed funds, $418,000 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.

**OtherMatters**

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 

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PGA TOUR event.  Our agreement with Suncoast provides that thetournament will occur each year in March beginning in March 2007 and ending inMarch 2012.  The agreement also provides,among other things, that we will receive a base fee and that we may receive aparticipation fee in the event the aggregate ticket sales during any tournamentyear exceed 115% of the greater of the 2005 tournament ticket sales or the 2006tournament ticket sales.

On July 10, 2006, wereceived from Westin, in accordance with the Management Agreement, a secondnotice of default.   In accordance with the Management Agreement, Westinpreviously had sent to us a first notice of default.  We refer to this notice, together with thenotice delivered by Westin on July 10, as the Westin Notices.

The Westin Noticesrelate to our alleged failure to provide certain requested funding to theResort.  The Westin Notices alleged,among other things, that if we failed to cure the default by August 1, 2006,then Westin would have the right to (i) terminate the Management Agreement onnot less than five (5) days notice and (ii) pursue available remedies followingan event of default.  We have contested, and continue to contest, thedefaults that Westin claims that we have committed, including the defaultsalleged by Westin in the Westin Notices.  Moreover, we believe that if athird party determines that we or Our Parent have not complied with all of ourrespective obligations under the Management Agreement, it is in part because ofWestin’s non-compliance with its obligations there under.

The Management Agreementprovides that we shall pay to Westin, subject to the terms of the ManagementAgreement, a termination fee. The Management Agreement provides that thetermination fee shall be reduced by $365 per day for each day elapsed from the effectivedate of the Management Agreement until the termination date; provided, however,that the termination fee shall not be reduced below $5,500,000.  As ofAugust 16, 2006, the termination fee that would be due  approximately $5,622,000. We have not receivedfrom Westin a notice of termination of the Management Agreement. The partieshave mutually agreed upon a process to seek to negotiate a resolution of eachparty’s respective claims.

**Contractual Obligations,Contingent Liabilities and Commitments**

The following table summarizesour contractual obligations at June 30, 2006, and the effect such obligationsare expected to have on our liquidity and cash flow (or upon our successors ininterest under the applicable contracts, if the contracts are not terminated)in future periods:
| ** **                                                                           | ** ** | **Payments Due by Period (in thousands)(1)** | ** ** |
|--------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|
| **Contractual Obligations**                                                     | ** ** | **Total**                                                             | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **More than 5  years** | ** ** |
| Master lease  agreement with the condominium owners participating in the Rental Pool |       | $                                                                     | 6,464      |   | $ | 1,059 |   | $ | 5,337 |   | $ | 41 |   | $ | 27 |   |
| Management  agreements(2)                                                            |       | 20,685                                                                |       | 7,400 |   | 5,585 |   | 3,300 |   | 4,400 |   |
| Troon  supplemental fee                                                              |       | 800                                                                   |       | — |   | — |   | — |   | 800 |   |
| Mortgage Note  payable to The Operating Partnership                                  |       | 39,240                                                                |       | — |   | — |   | — |   | 39,240 |   |
| Operating and  capital leases                                                        |       | 1,619                                                                 |       | 344 |   | 1,273 |   | 2 |   | — |   |
| Service  agreements and other                                                        |       | 2,212                                                                 |       | 629 |   | 1,528 |   | 55 |   | — |   |
| Working capital  advances from The Operating Partnership, net                        |       | 2,976                                                                 |       | — |   | 2,976 |   | — |   | — |   |
| Total of the Resort’s  obligations                                              |       | $                                                                     | 73,996     |   | $ | 9,432 |   | $ | 16,699 |   | $ | 3,398 |   | $ | 44,467 |   |

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(1)  Interest isreflected, as applicable, in the commitments and obligations listed above.

(2)  If our management agreement with Westin isterminated prior to its expiration date of December 31, 2017, atermination fee of will be due at termination in lieu of fees otherwise payableto Westin pursuant to that management agreement (see Note 9).  As of August 16, 2006, the termination feethat would be due  approximately $5,622which is included in the “Less than 1 year” column.

Please refer to “Management’sDiscussion and Analysis of Financial Condition and Results ofOperations—Contractual Obligations, Contingent Liabilities and Commitments” inour Form 10-K for the year ended December 31, 2005, filed on April17, 2006, for a description of our contractual obligations.

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**Liquidity and Capital Resources**

As of June 30, 2006, we had aworking capital deficit of approximately $5,372,000.  A significant portion of this working capitaldeficit resulted when we reclassified the Westin termination fee and relateddeferred management fees of approximately $5,628,000 in the aggregate from longterm obligations to short term obligations.   See further discussion of this reclassification in Part II, Item 5 ofthis report.  At June 30, 2006, we had amember deficit of $7,241,000.  Wecontinue to experience seasonal fluctuations in our net working capitalposition. Seasonality impacts our liquidity because there is more cashavailable to us during the winter months, specifically in the first quarter,than is available during the late summer months when cash becomes very limited.We received intercompany advances from the Operating Partnership to supportworking capital needs in the amounts of $2,000,000, $400,000 and $650,000 inJuly 2004, September 2005 and November 2005, respectively.  The net proceeds of these loans have beenfully expended by Westin to support the operations of the Resort. Generally,our only source of cash is from any profitable operations of the Resort.   Further, the Resort’s credit capacity islimited.

While the financialperformance of the Resort is showing signs of recovery since we assumed titleto the Resort on July 15, 2004, current projections provided by Westin indicatethat an operational cash flow shortfall of approximately $750,000 in theaggregate is likely to occur at some point in the fourth quarter of 2006 thatmay require us to seek a further intercompany advance from the OperatingPartnership.   As discussed in Note 9 tothe Condensed Consolidated Financial Statements referred to in Item 1 of thisquarterly report and below in Part II, Item IA of this Quarterly Report underthe caption *“Risk Factors,”* Westin has alleged thatwe are in default under the Management Agreement, in part due to the failure byus and the Operating Partnership to provide advances that Westin claims arenecessary to support the financial needs of the Resort. If or when the WestinManagement Agreement terminates, we would be required to replace certaincomponents of the technological infrastructure of the Resort which areproprietary to Westin.  Our projectionsindicate that this required investment could be in the range of $1.0 to $2.0million. There can be no assurances as to the availability, timing or amount ofany intercompany advances.  Further, wecannot guarantee that we will be able to find an alternative source of fundingor borrow to support the Resort if the Operating Partnership does not providean intercompany advance, and we do not believe that Westin will provide suchfunding.

**Item 3. Quantitative AndQualitative Disclosures About Market Risk**

We do not have significant market risk with respect toforeign currency exchanges or other market rates. Our debt to the OperatingPartnership is non-interest bearing and, accordingly, fluctuations in interestrates are not expected to affect financial results.

**Item 4. Controls And Procedures**

We maintain disclosure controls and procedures that aredesigned to ensure that information required to be disclosed in our ExchangeAct reports is recorded, processed, summarized and reported within the timeperiods specified in the SEC’s rules and forms, and that such information isaccumulated and communicated to our management, including our Chief ExecutiveOfficer and our Chief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure. Our management assesses the costs andbenefits of such controls and procedures based upon the prevailing facts andcircumstances, including management’s reasonable judgment of such facts. As weneither controlled nor managed the Resort prior to July 16, 2004, ourdisclosure controls and procedures with respect to the Resort and its employeesare necessarily more limited than those that GHR maintains with respect to itsown corporate operations. Despite the fact that we took title to the Resort atclose of business on July 15, 2004 and our amended management agreementwith Westin provides us with heightened control and access to information, wedo 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, remain necessarilymore limited than those we maintain with respect to our own corporateoperations. Since taking title to the Resort, 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.

The integration of a new business of significant size andscope of operations increases the risk that conditions may have been introducedthat we did not anticipate in our design of our systems of control. Anypre-existing deficiencies in GHR’s financial systems, processes and relatedinternal controls increase the risk that the historical unaudited financialstatements of the Resort’s operations and cash flows which GHR has provided tous may not be accurate. We have out of necessity placed a certain amount ofreliance on the historical financial information and reports of the Resort’spredecessor owner for the periods prior to July 16, 2004, and continue torely on the information provided by Westin as manager of the Resort.

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As of June 30, 2006, we carried out an evaluation, underthe supervision and with the participation of our management, including ourChief Executive Officer and our Chief Financial Officer, of the effectivenessof the design and operation of our disclosure controls and procedures pursuantto Exchange Act Rule 15d-15. With the assistance of Westin, our ChiefExecutive Officer and our Chief Financial Officer concluded that as of June 30,2006 our disclosure controls and procedures are effective in timely alertingthem to material information relating to us (including our consolidatedsubsidiaries) required to be included in our Exchange Act reports. 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.

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.

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**PART II—OTHERINFORMATION**

**Item 1. Legal Proceedings**

*Land Use Lawsuits*

OnMarch 10, 2005, we filed a Motion to Intervene in the suit titledInnisbrook Condominium Association, Inc., C. Frank Wreath, Meredith P.Sauer, and Mark Banning, Plaintiffs vs. Pinellas County, Florida, Golf HostResorts, Inc. and Innisbrook F LLC, Defendants, Case No. 043388CI-15.This motion was filed in the Circuit Court of the Sixth Judicial Circuit, inand for Pinellas County, Florida, Civil Division.  In this report, we refer to this matter asthe “Initial Land Use Lawsuit.” The plaintiffs in the Initial Land Use Lawsuithave filed a multi-count complaint seeking injunctive and declaratory reliefwith respect to the land use and development rights of a tract of land known asParcel F. Parcel F is a parcel of land located within the Resort andowned by GHR. The plaintiffs allege that there are no remaining developmentunits (residential units) available to be developed within the Resort property.On March 29, 2005, we filed a Motion to Intervene as a defendant in theInitial Land Use Lawsuit in order to protect our property, and our land use anddevelopment 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 theplaintiffs’ complaint. The court granted the Motion to Dismiss onApril 26, 2005. On that 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 theInitial Land Use Lawsuit. The court has not ruled on that motion. OnApril 8, 2005, a separate suit was filed by James M. and Mary H.Luckey and Andrew J. and Aphrodite B. McAdams against PinellasCounty, a political subdivision of the State of Florida, Golf HostResorts, Inc., a foreign corporation and Bayfair Innisbrook, LLC, aFlorida limited liability corporation. In this report we refer to this matteras the “Subsequent Land Use Lawsuit.” The Subsequent Land Use Lawsuit seeks injunctive and declaratory reliefin six separate counts, all relating to the land use and development rights ofParcel F. This suit was consolidated with the Initial Land Use Lawsuit onMay 3, 2005. After May 6, 2005 we have filed our Motion to Dismissthe Subsequent Land Use Lawsuit. The motion was heard by the court onMay 31, 2005. Since that hearing, we have filed an 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 whois now presiding over this case. At that hearing, the court scheduled a hearingon the defense motions for summary judgment for August 30, 2005, and atrial starting on December 12, 2005. On August 30, 2005, the judgeheard extensive argument on the defense motions for summary judgment andentered a number of rulings in the defendants’ favor. In summary, the courtdismissed those claims in the Initial Land Use Lawsuit and the Subsequent LandUse Lawsuit which are founded upon the theory that the proposed development isinconsistent with the Pinellas Countywide Plan and Rules adopted pursuant toChapter 73-594, Laws of Florida. The court further dismissed for lack ofjurisdiction those claims of the plaintiffs’ in the Subsequent Land Use Lawsuitthat are based on the theory that the proposed development is inconsistent withthe Pinellas Comprehensive Plan. The court entered a similar ruling on certaincounts of the Third Amended Complaint as to some, but not all, of thePlaintiffs in the Initial Land 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 would 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.

As anintervenor in the Initial Land Use Lawsuit, we will seek to obtain a rulingfrom the court which preserves and protects our property, and our 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 refer to these two matters as the “Land Use Lawsuits.”  See further discussion of the Land UseLawsuits under the heading “Risk Factors” in Part II, Item 1A of thisreport.

FromDecember 19 through December 23, 2005, the court tried these consolidated casesin a non-jury trial. At the conclusion of the evidentiary portion of the trial,the court deferred final argument until Friday, January 6, 2006. On that date,the court heard final arguments and rendered its decision. The court ruled infavor of all defendants and against all plaintiffs as to each count in bothLand Use Lawsuits. On March 8, 2006, the court formally entered its finaljudgment on the record ruling in favor of the defendants on all counts anddenying all claims asserted by the plaintiffs in both Land Use Lawsuits. OnMarch 31, 2006, the plaintiffs in the consolidated cases filed a notice ofappeal.

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*Property Tax Lawsuit*

We filed a lawsuit against theproperty appraiser of Pinellas County Florida, or Pinellas County to challengethe 2004 and 2005 real estate assessment on the Resort property. PinellasCounty filed a motion to dismiss, which was denied by the court. No trial datehas been set. If Pinellas County were to prevail, management believes thatthere would be no material adverse effect upon our financial statements, as theentire Pinellas County assessment is fully accrued and accounted for at June30, 2006.

**Item 1A. Risk Factors**

***In the event that our Management Agreement with Westin is terminated,in addition to our obligation to pay termination fees to Westin, we will berequired to find a third party to manage the Resort or manage the Resortourselves.***

While we continue tocontest Westin’s allegations that we have defaulted on our obligations underthe Management Agreement, Westin’s delivery to us of Westin Notices increasesthe likelihood that Westin may terminate the Management Agreement in the nearterm in accordance with its terms.  The Management Agreement provides thatwe shall pay to Westin, subject to the terms of the Management Agreement, atermination fee. The Management Agreement provides that the termination feeshall be reduced by $365 per day for each day elapsed from the effective dateof the Management Agreement until the termination date; provided, however, thatthe termination fee shall not be reduced below $5,500,000.  As of August16, 2006, the termination fee that would be due approximately $5,622,000.  Whilewe have not received a notice of termination of the Management Agreement fromWestin and are seeking to negotiate a successful resolution of our respectiveclaims, our relationship with Westin may be terminated in the near term.

In addition to anytermination fees and deferred management fees which we may be required to payto Westin pursuant to the Management Agreement, we may be forced to either finda new manager for the Resort or manage the Resort ourselves.  Further, itis possible that Westin will terminate the Management Agreement on five daysnotice, in which case we will need to make immediate provision for themanagement of the Resort. ** **Whetherwe manage the Resort or hire a third party to manage it, there is a substantiallikelihood that the new manager will experience a learning curve related tomanaging the daily operations at the Resort.   We cannot guaranteethat a new manager will be as successful in managing the Resort as Westin hasbeen. In addition, a third party manager may fail to perform or default on itsobligations to us.  In the event that a new manager of the Resort provesless successful than Westin, or defaults in its obligations to us, our resultsof operations and financial 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. Even in the event that wesuccessfully sell the Resort in the near term, we expect that the party whopurchases the Resort will assume responsibility for the operational costs ofthe 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.

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***If we are not ableto sell the Resort, obtain some form of financing or receive additionalintercompany advances from GTA or the Operating Partnership before the end ofthe summer in 2006, we may experience severe liquidity problems, not be able tomeet the demands of our creditors and ultimately become subject to bankruptcyproceedings.***

Generally, our only source of cash is the profitableoperations of the Resort. Further, the Resort’s credit capacity islimited.  During the course of 2005, theOperating Partnership funded $1,050,000 to address our seasonal cash flowshortfalls.  We expect that additionalfunding will be required during 2006.

While the financial performance of the Resort hasshown signs of recovery since we assumed title to the Resort on July 15, 2004,current projections provided by Westin indicate that an operational cash flowshortfall of approximately $750,000 in the aggregate is likely to occur by atsome point in the fourth quarter of 2006. If the Resort experiences the currently projected cash flow shortfall,we may be required to seek additional capital to fund the Resort.   In order to fund this shortfall, we may berequired to seek an intercompany advance. There are no assurances that additional intercompany advances will beavailable, or that we will be successful if we attempt to negotiate funding forthe Resort in lieu of such an advance. Even if we are able to meet the expected cash shortfall this summer, inthe event that we are unable to sell the Resort in the near term, we mayexperience additional liquidity problems.

In the event that we are not able to obtain some formof 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.

While we continue to contest Westin’s allegations thatwe have defaulted in our obligations under the Management Agreement, Westin’sdelivery to us of Westin Notices increases the likelihood that Westin mayterminate the Management Agreement in the near term in accordance with itsterms.  While we have not received a notice of termination from Westin ofthe Management Agreement and are seeking to negotiate a successful resolution ofour respective claims, our relationship with Westin may be terminated in thenear term either as a result action by Westin or us.  In that event, wemay be required to pay a termination fee to Westin of not less than $5,500,000along with any deferred management fees. Asof August 16, 2006, the termination fee that would be due  approximately $5,622,000.  We do not have sufficient fundingavailable to make these payments absent a concurrent sale of the Resort, so ifthese payments become due prior to the sale of the Resort, we would be forcedto seek third party funding or to otherwise gain liquidity.

***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 formerowner of the Resort would reimburse 50% of the refurbishment costs, plusaccrued interest at 5% per annum on the unpaid balance of that portion of theunpaid refurbishment costs which the former owner was required to reimburse.This amount is being reimbursed to Rental Pool Participants (or transferees oftheir condominium unit(s)) over the five-year period beginning in 2005.

Accordingly,maintaining participation in the Rental Pool by the condominium owners is veryimportant to the continued economic success of the Resort. We assumed certainexisting or modified financial obligations of the former borrower, includingits responsibilities regarding the administration of the condominium unitRental Pool, when we took ownership of the Resort pursuant to the SettlementAgreement. Also as part of the Settlement Agreement, we assumed GHR’sobligation to reimburse the refurbishment expenses paid by the condominiumowners, 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.

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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 funding forthe Resort in general or for refurbishment expenses in particular.

***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.

***Recentsevere weather patterns could further intensify the seasonal nature of theresults of the Resort.***

Thehotel industry is cyclical in nature. Our business has historically been weakerduring the third quarter of each year. In the event that we suffer from reducedbookings during the third quarter as a result of hurricane-related concerns ofpotential guests, this effect could reduce the revenues to the Resort in thethird quarter of each year, increasing the disparity between our results in thethird quarter as compared to other quarters. This increased cyclicality couldmake it more difficult for us to project the results of the Resort, and mayresult in a lower than expected percentage of the Resort’s fixed costs beingoffset by revenue during the third quarter.

***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 apparent recovery in the United States fromthe recent economic downturn and the prospects for improved performance inother parts of the world;

·                  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;

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·                  changes in travel patterns;

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

·                  disputes with the managers of the Resort which mayresult 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.

***General economic downturns, or an increase in labor or insurance costs,may negatively impact 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 traditional channels,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. If or when the Westin Management Agreement terminates, we would berequired to replace certain components of the technological infrastructure ofthe Resort which are proprietary to Westin. Our projections indicate that this required investment could be in therange of $1.0 to $2.0 million. Additionally, there are risks associated with transferring the data andensuring that there are no interruptions in the operations of the Resort.  There are no assurances that suchtechnological components can be identified, purchased and implemented in a costeffective 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 resplacement of the technological infrastructure at the Resort ifor when the Westin Management Agreement is terminated.  These expenditures result in an ongoing needfor cash. To the extent we cannot fund expenditures from cash generated by theResort’s operations, we must seek to obtain funds by borrowing or otherwise. Wemay be unable to find such financing on favorable terms, if at all. To the extentthat we are unsuccessful in obtaining such financing, it could adversely impactthe Resort’s results from operations and distributions to the Rental PoolParticipants.

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***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 recently delivered favorable rulings in the Land Use Lawsuitsto which we are a party, in the event that the ultimate rulings in thesematters are unfavorable to us, the value of Parcel F and the Resort would beadversely effected.***

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 styled 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 a tract of landwithin the Resort known as Parcel F. In April 2005, a subsequent lawsuitrelating to this matter was filed. We are also a defendant in this subsequentlawsuit. In this report, we refer to the March 2005 and the April 2005 lawsuitscollectively as the Land Use Lawsuits.

OnJanuary 6, 2006, the court ruled in favor of all defendants and against allplaintiffs as to each count in both cases. While we believe that the January 6,2006 ruling is a favorable result for us and for the other defendants, theplaintiffs in the Land Use Lawsuits filed an appeal of that ruling on March 31,2006.

In theevent that the plaintiffs convince a court to overturn the January 6, 2006ruling, we could lose all or substantially all of our land use and developmentrights with respect to Parcel F. Such an unfavorable result could also cause usto experience reduced club memberships at the Resort and could adversely impactour ability to realize the benefits from the proposed development of Parcel F.In addition, if the defendants do not ultimately prevail in the Land UseLawsuits and a court subsequently applies a similar interpretation of our rightswith respect to the remaining developable units at the Resort, our land use anddevelopment rights in those remaining units could be jeopardized, adverselyeffecting both our ability to develop the Resort and the value of the RentalPool 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 andgeopolitical uncertainty have caused in the past, and may cause in the future,our results to differ materially from anticipated results. The returns toparticipants in the Rental Pool could be adversely impacted in the event thatacts of God, war or terrorism impact the Resort’s ability to attract guests.

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***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 the dollaramounts 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.

***Ouroperations at the Resort are dependent upon outside managers, and if thosemanagers are less successful than expected, the Resort’s results of operationsand the proceeds available for distribution to the Rental Pool participantswill be adversely affected, potentially in a material way.***

Westinmanages the daily operations of the Resort pursuant to our management agreementwith Westin, and Troon manages the golf facilities at the Resort pursuant torelated contractual commitments with Westin. In the event that these thirdparty managers fail to perform under their respective contracts as expected, orin the event that they default on their obligations, the Resort’s results ofoperations and proceeds available for distribution to the Rental Poolparticipants will be adversely affected, potentially in a material way.

***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 as either through higherairline fares or through increased gasoline prices. In addition, higher energycosts may reduce the disposable income of potential guests, making them lesslikely to spend money for travel and recreational activities. As a result ofthese factors, a sustained increase in energy costs may negatively impact theResort’s results by increasing its energy-related costs and by discouragingtraveling and taking part in recreational activities.

**Riskfactors relating to GTA and GTA’s operating partnership**

Ourparent is a subsidiary of GTA’s operating partnership. GTA files public reportsunder the Exchange Act. Due to our relationship with GTA, including ourdependence upon GTA and the Operating Partnership for funding that we mayrequire, we believe that GTA’s risk factors are relevant to our sole member andto the Rental Pool Participants. A copy of the risk factors contained in GTA’sForm 10-Q for the quarter ended June 30, 2006 are filed as Exhibit 99.1hereto. You should note that certain of GTA’s risk factors, particularly thosespecific to GTA’s liquidating distributions, are not relevant to you unless youare a holder of GTA’s common stock; however, such risk factors are informativein that they may indicate certain factors or events that may impact GTA andreduce GTA’s willingness or ability to provide funding to the Resort and theRental Pool units.

**Item 2. Unregistered Salesof Equity Securities and Use of Proceeds**

Not applicable.

**Item 3. Defaults Upon SeniorSecurities**

Not applicable.

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

Not applicable.

**Item 5. Other Information**

On July 10, 2006, wereceived from Westin, in accordance with the Management Agreement, a secondnotice of default.   In accordance with the Management Agreement, Westinpreviously had sent to us a first notice of default.  We refer to this notice, together with thenotice delivered by Westin on July 10, as the Westin Notices.

The Westin Noticesrelate to our alleged failure to provide certain requested funding to theResort.  The Westin Notices alleged,among other things, that if we failed to cure the default by August 1, 2006,then Westin would have the right to (i) terminate the Management Agreement onnot less than five (5) days notice and (ii) pursue available remedies followingan event of default.  We have contested, and continue to contest, thedefaults that Westin claims that we have committed, including the defaultsalleged by Westin in the Westin Notices.  Moreover, we believe that if athird party determines that we or Our Parent have not complied with all of ourrespective obligations under the Management Agreement, it is in part because ofWestin’s non-compliance with its obligations thereunder.

The Management Agreementprovides that we shall pay to Westin, subject to the terms of the ManagementAgreement, a maximum termination fee. The Management Agreement provides thatthe termination fee shall be reduced by $365 per day for each day elapsed fromthe effective date of the Management Agreement until the termination date;provided, however, that the termination fee shall not be reduced below$5,500,000.  As of August 16, 2006, the termination fee that would be duewould be approximately $5,622,000.  Wehave not received from Westin a notice of termination of the ManagementAgreement.  The parties have mutually agreedupon a process to seek to negotiate a resolution of each party’s respectiveclaims.

**Item 6. Exhibits**

**EXHIBIT INDEX**
| 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) |

 

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| 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 (Previously filed  as Exhibit 10.12 to our Quarterly Report on Form 10-Q, filed November 14,  1005 and incorporated herein by reference) |
| 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.                                                                                                                                                                                                                                                                                                                                                    |

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(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.

 

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**SIGNATURES**

Pursuant to the requirements ofthe Securities Exchange Act of 1934, the Registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.
|                       | **GTA-IB, LLC, registrant**            | ** ** |
|-----------------------|----------------------------------------|------------|
|                  | ** **                             |
|                  | ** **                             |
| Date: August 21, 2006 | /s/ W. Bradley  Blair, II              |       |
|                  | W. Bradley  Blair, II             |
|                  | President and  Chief Executive Officer |
|                  |                                   |       |
| Date: August 21, 2006 | /s/ Scott D.  Peters                   |       |
|                  | Scott D. Peters                        |
|                  | Secretary and  Chief Financial Officer |
|                       |                                        |            |  |  |

 

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