** **

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

** **

**FORM 10-Q**

** **

**(Mark One)**
| **x**                                                                                                                                                         | ** ** | **Quarterly report pursuant to  section 13 or 15(d) of the Securities Exchange Act of 1934**  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                    | ** ** | ** **                                                                                         |
| **for the quarterly period ended: September 30,  2007**                                                                                                       |
| ** **                                                                                                                                                    | ** ** | ** **                                                                                         |
| **o**                                                                                                                                                         | ** ** | **Transition report pursuant to  section 13 or 15(d) of the Securities Exchange Act of 1934** |
| ** **                                                                                                                                                    | ** ** | ** **                                                                                         |
| **for the transition period  from          to          ** |

 

**CommissionFile Number 333-120538**

 

**GTA-IB, LLC**

(Exact name ofregistrant as specified in its charter)

 

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

 

**36750 US19 N., Palm Harbor, Florida 34684**

(Address of principal executiveoffices) (Zip Code)

 

**(727) 942-2000**

(Registrant’s telephone number,including area code)

 

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file suchreport(s), and (2) has been subject to such filing requirements for thepast 90 days.

 

Yes x  No o

 

Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, or a non-accelerated filer.See definition of “accelerated filer and large accelerated filer” in Rule 12b-2of the Exchange Act.

 

| Large Accelerated Filer  o |   | Accelerated  Filer  o |   | Non-Accelerated  Filer x |
|---------------------------------|--------|----------------------------|--------|-------------------------------|

 

Indicate by check mark whether the registrantis a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes o  No x

 

One hundred percent of the membershipinterests of the issuer are owned indirectly by Golf Trust of America, Inc.

 

** **

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**GTA-IB,LLC**

 

**FORM 10-Q**

 

**FOR THETHREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007**

 

**INDEX**

 
| PART I. FINANCIAL  INFORMATION |
|-------------------------------------|
| Item 1.                        |   | Financial Statements |   |   |
|                                |   | Condensed  Combined Balance Sheets as of September 30, 2007 (unaudited) and  December 31, 2006 |   |   |
|                                |   | Condensed Combined Statements of Operations and  Member’s Equity (Deficit) (unaudited) for the Three Months and Nine Months  Ended September 30, 2007 and 2006 |   |   |
|                                |   | Condensed Combined Statements of Cash Flows  (unaudited) for the Nine Months Ended September 30, 2007 and 2006 |   |   |
|                                |   | Notes  to Condensed Combined Financial Statements (unaudited) |   |   |
|                                |   | Innisbrook Rental Pool Lease Operation |   |   |
| 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 1A.                       |   | 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                          |   |   |   |   |

 

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**CautionaryNote Regarding Forward-Looking Statements**

 

The following report contains forward-lookingstatements within the meaning of Section 27A of the Securities Act of1933, as amended (the “Securities Act”), and Section 21E of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”). Forward-lookingstatements are statements that predict or describe future events or trends andthat do not relate solely to historical matters. All of our projections in thisQuarterly Report on Form 10-Q are forward-looking statements. You can generallyidentify forward-looking statements as statements containing the words “believe”,“expect”, “will”, “anticipate”, “intend”, “estimate”, “project”, “assume” orother similar expressions. You should not place undue reliance on ourforward-looking statements because the matters they describe are subject toknown (and unknown) risks, uncertainties and other unpredictable factors, manyof which are beyond our control. Our forward-looking statements are based onthe limited information currently available to us and speak only as of the dateon which this Quarterly Report on Form 10-Q was filed with the Securities andExchange Commission (the “SEC”). Our continued internet posting or subsequentdistribution of this dated report does not imply continued affirmation of theforward-looking statements included in it. We undertake no obligation, and weexpressly disclaim 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. Accordingly, our projections in this Quarterly Report onForm 10-Q are subject to particularly high uncertainty. Our projections shouldnot be 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. Certain factorsthat could cause such a difference are described under the caption “RiskFactors” in Part II, Item 1A of this Quarterly Report on Form 10-Q, eachof which you should review carefully.

 

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**GTA-IB,LLC**

**CONDENSEDCOMBINED BALANCE SHEETS**

**AS OFSEPTEMBER 30, 2007 AND DECEMBER 31, 2006**

**(inthousands)**

 
| ** **                                               | ** ** | **September 30,  2007** | ** ** | **December 31,  2006*** | ** ** |
|----------------------------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                                               | ** ** | **(unaudited)**              | ** ** | ** **                   | ** ** |
| ** **                                               | ** ** | ** **                   | ** ** | ** **                   | ** ** |
| **Assets**                                               |       |                         |       |                         |       |
| Cash                                                     |       | $                            | 65         |                         | $          | 5,296 |   |
| Cash in escrow                                           |       | 2,000                        |       | —                       |       |
| Due from Salamander                                      |       | 1,387                        |       | —                       |       |
| Property and equipment, net                              |       | —                       |       | 27,280                       |       |
| Intangibles, net                                         |       | —                       |       | 14,906                       |       |
| Other assets                                             |       | 115                          |       | 1,892                        |       |
| **Total Assets**                                         |       |                         | 3,567      |                         |       | 49,374 |   |
| **Liabilities**                                          |       |                         |       |                         |       |
| Current liabilities                                      |       |                         | 18         |                         |       | 9,509 |   |
| Westin termination fee, short-term                       |       | —                       |       | 5,594                        |       |
| Troon supplemental fee, short-term                       |       | —                       |       | 800                          |       |
| Long-term debt, less current maturities                  |       | —                       |       | 42,771                       |       |
| Other long term liabilities                              |       | —                       |       | 4,051                        |       |
| **Total Liabilities**                                    |       | 18                           |       | 62,725                       |       |
| **Member’s Equity(Deficit)**                        |       | 3,549                        |       | (13,351                      | )          |
| **Total Liabilities and Member’s  Equity(Deficit)** |       | $                            | 3,567      |                         | $          | 49,374 |   |

 

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***Derived from audited combined financialstatements.**

 

*See accompanyingnotes to condensed combined financial statements.*

 

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**GTA-IB,LLC**

**CONDENSEDCOMBINED STATEMENTS OF OPERATIONS AND MEMBER’S EQUITY/DEFICIT**

**FOR THETHREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 AND FOR THE NINE MONTHS ENDEDSEPTEMBER 30, 2007 AND 2006(in thousands) (unaudited)**

 
| ** **                                    | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine Months Ended  September 30,** | ** ** |
|-----------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                    | ** ** | **2007**                                             | ** ** | **2006**                                            | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Revenues**                                  |       |                                                 |       |                                                |       |   |   |   |   |
| Hotel                                         |       | $                                                    | 392        |                                                | $          | 1,719 |   | $ | 7,346 |   | $ | 11,008 |   |
| Food and beverage                             |       | 228                                                  |       | 1,554                                               |       | 6,420 |   | 9,372 |   |
| Golf                                          |       | 260                                                  |       | 2,040                                               |       | 8,762 |   | 10,656 |   |
| Other                                         |       | 127                                                  |       | 587                                                 |       | 1,499 |   | 2,136 |   |
| Total revenues                                |       | 1,007                                                |       | 5,900                                               |       | 24,027 |   | 33,172 |   |
| **Expenses**                                  |       |                                                 |       |                                                |       |   |   |   |   |
| Hotel                                         |       | 455                                                  |       | 1,979                                               |       | 6,033 |   | 8,929 |   |
| Food and beverage                             |       | 327                                                  |       | 1,660                                               |       | 4,826 |   | 6,671 |   |
| Golf                                          |       | 363                                                  |       | 1,775                                               |       | 4,284 |   | 5,542 |   |
| Other                                         |       | 563                                                  |       | 2,562                                               |       | 5,806 |   | 7,939 |   |
| General and administrative                    |       | 248                                                  |       | 1,017                                               |       | 2,206 |   | 4,168 |   |
| Depreciation and amortization                 |       | 75                                                   |       | 505                                                 |       | 1,177 |   | 1,529 |   |
| Total expenses                                |       | 2,031                                                |       | 9,498                                               |       | 24,332 |   | 34,778 |   |
| Operating loss                                |       | 1,024                                                |       | 3,598                                               |       | 305 |   | 1,606 |   |
| Interest expense, net                         |       | 70                                                   |       | 565                                                 |       | 564 |   | 1,308 |   |
| Other income                                  |       | —                                               |       | —                                              |       | (132 | ) | — |   |
| Gain on sale of Parcel F                      |       | (1,010                                               | )          | —                                              |       | (1,010 | ) | — |   |
| Gain on sale of Resort operations             |       | (5,225                                               | )          | —                                              |       | (5,225 | ) | — |   |
| Net income (loss)                             |       | 5,141                                                |       | (4,163                                              | )          | 5,498 |   | (2,914 | )  |
| Member’s deficit, beginning of period    |       | (12,994                                              | )          | (7,240                                              | )          | (13,351 | ) | (8,489 | ) |
| Contributed capital                           |       | 11,402                                               |       | —                                              |       | 11,402 |   | — |   |
| Member’s equity/(deficit), end of period |       | $                                                    | 3,549      |                                                | $          | (11,403 | ) | $ | 3,549 |   | $ | (11,403 | ) |

 

*Seeaccompanying notes to condensed combined financial statements.*

 

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### **GTA-IB, LLC**

### **CONDENSED COMBINEDSTATEMENTS OF CASH FLOWS FOR THE**

### **NINE MONTHS ENDEDSEPTEMBER 30, 2007 AND 2006(in thousands) (unaudited)**

 
| ** **                                                                               | ** ** | **Nine months ended  September 30,** | ** ** |
|------------------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                               | ** ** | **2007**                                            | ** ** | **2006** | ** ** |
| **Cash flows from operating activities:**                                                | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Net income (loss)                                                                        |       | $                                                   | 5,498      |   | $ | (2,914 | ) |
| Adjustments to reconcile net income(loss)  to net cash provided by operating activities: |       |                                                |       |   |   |
| Depreciation and amortization                                                            |       | 1,908                                               |       | 2,519 |   |
| Provision for bad debts                                                                  |       | —                                              |       | 349 |   |
| Gain on sale of the Resort                                                               |       | (5,225                                              | )          | — |   |
| Gain on sale of Parcel F                                                                 |       | (1,010                                              | )          | — |   |
| Discount on Westin obligation                                                            |       | (192                                                | )          | — |   |
| Non-cash interest                                                                        |       | 337                                                 |       | 1,018 |   |
| Other changes in operating assets and  liabilities                                       |       | (10,445                                             | )          | (311 | ) |
| Net cash (used in) provided by operating  activities                                     |       | (9,129                                              | )          | 661 |   |
| **Cash flows used in investing activities:**                                             | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Purchases of property and equipment                                                      |       | (327                                                | )          | (129 | ) |
| Restricted cash                                                                          |       | (2,000                                              | )          | — |   |
| Proceeds from the sale of Parcel F                                                       |       | 2,500                                               |       | — |   |
| Proceeds from the sale of assets                                                         |       | 39,352                                              |       | — |   |
| Net cash provided by (used in) investing  activities                                     |       | 39,525                                              |       | (129 | ) |
| ** **                                                                               | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| **Cash flows from financing activities:**                                                | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Repayment of debt and capital lease obligations                                          |       | (943                                                | )          | (1,043 | ) |
| Proceeds from debt                                                                       |       | 320                                                 |       | — |   |
| Distributions to parent                                                                  |       | (30,639                                             | )          | — |   |
| Net cash used in financing activities                                                    |       | (31,262                                             | )          | (1,043 | ) |
| Net increase in cash                                                                     |       | (866                                                | )          | (511 | ) |
| **Cash and cash equivalents, beginning of  period**                                      |       | 932                                                 |       | 1,519 |   |
| **Cash and cash equivalents, end of period**                                             |       | $                                                   | 66         |   | $ | 1,008 |   |
| ** **                                                                               | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| **Supplemental Cash Flow Information:**                                                  | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Cash paid for interest                                                                   |       | $                                                   | 180        |   | $ | 272 |   |
| **Non-cash  financing and investing activities:**                                        | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Assets acquired through capital leases                                                   |       | $                                                   | 498        |   | $ | 181 |   |

 

*Seeaccompanying notes to condensed combined financial statements.*

 

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**GTA-IB,LLC**

**FORM 10-Q**

**NOTES TOCONDENSED COMBINED FINANCIAL STATEMENTS**

**FOR THETHREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006**

**(inthousands) (unaudited)**

 

**1. Innisbrook Resort Ownership and Operations**

 

GTA-IB, LLC (the “Company”) is a single member limited liabilitycompany owned by GTA-IB Golf Resort, LLC, which in turn is 100 percent owned byGolf Trust of America, L.P. (the “Operating Partnership”). There is noestablished market for the Company’s membership interests. Golf Trust ofAmerica, Inc. (“GTA”) holds a 100 percent interest in the OperatingPartnership. GTA GP, Inc. is the sole general partner of the OperatingPartnership and owns a 0.2 percent interest therein. GTA LP, Inc. is alimited partner in the Operating Partnership and owns a 99.8 percentinterest therein. Golf Host Resorts, Inc. (“GHR”), an entity affiliated withStarwood Capital Group LLC, is the former owner of the Innisbrook Resort andGolf Club (the “Resort”) and the former borrower under a $79,000 participatingmortgage loan funded by the Operating Partnership. This participating mortgageloan was secured by the Resort, cash, undeveloped land at the Resort and368,365 shares of GTA’s common stock. The Resort is a 72-hole destination golfand conference facility located near Tampa, Florida.

 

The Company entered into a SettlementAgreement dated July 15, 2004 (the “Settlement Agreement”) with theOperating Partnership and GHR, Golf Hosts, Inc., Golf HostManagement, Inc., Golf Host Condominium, Inc. and Golf HostCondominium, LLC. The Settlement Agreement resolved a number of issues betweenthe parties, including GHR’s default under the participating mortgage loan madeby the Operating Partnership to GHR in June 1997. As part of theSettlement Agreement, the Company took ownership of the Resort on July 15,2004. In connection with the Settlement Agreement, the Company entered into amanagement agreement (the “Westin Management Agreement”) with Westin ManagementCompany South (“Westin”), which provided for Westin’s management of the Resort,and Westin and Troon Golf L.L.C. (“Troon”) entered into a facility managementagreement (the “Troon Management Agreement”) providing for Troon’s managementof the golf facilities at the Resort. The current status of the WestinManagement Agreement with Westin and the Troon Management Agreement with Troonare discussed further below.

 

In connection with the Settlement Agreement,the Company assumed control and operation of the rental pool lease operationsat the Resort (the “Rental Pool”). The Rental Pool was operated and controlledby GHR prior to that time. On a year-to-year basis, approximately 500 of the938 condominium units at the Resort were leased by the Company from thecondominium owners and used as hotel accommodations for the Resort pursuant torental pool lease arrangements. The Company was the lessee under these rentalpool lease operation agreements. Those agreements provided that the Companywould distribute a percentage of room revenues to participating condominiumowners who permitted the Company to lease their units as hotel accommodations.

 

The Operating Partnership had previouslyentered into an agreement with GHR and the prospective purchaser of a parcel ofundeveloped land within the Resort, referred to herein as “Parcel F”. Thisagreement, referred to herein as the “Parcel F Development Agreement”, wasexecuted on March 29, 2004 and amended on August 10, 2005. TheParcel F Development Agreement includes the terms and conditions pursuantto which Parcel F may be developed, and includes restrictions on GHR, theowner of Parcel F, which are designed to avoid interference with the ongoingoperations of the Resort. The Parcel F Development Agreement also containsprovisions which the Company believes will increase the Operating Partnership’sability to better manage the Resort and the location of the access road forParcel F. Our interests in Parcel F were not transferred with the sale of theResort as described further below*.*

 

GTA announced on June 25, 2007 that the Company and certain of itsaffiliated entities entered into an Asset Purchase Agreement (the “AssetPurchase Agreement”) with Salamander Innisbrook Securities, LLC, SalamanderInnisbrook Condominium, LLC , and Salamander Innisbrook, LLC (collectively, “Salamander”)providing for the acquisition by Salamander of the business (the “Business”) ofthe Resort, certain related assets and liabilities and the Company’s equityinterest in Golf Host Securities, Inc.

 

On July 16, 2007, the sale of the Business of theResort and all of GTA-IB Golf Resort, LLC’s equity interest in Golf HostSecurities, Inc. to Salamander was completed. The purchase price receivedby the Company was approximately $35,000 in cash less a working capital purchaseprice adjustment of $2,221, plus (a) $4,000 to be used to settle certainobligations, (b) $844 for reimbursement of certain rental pool paymentsdiscussed in more detail below, (c) $316 for reimbursement of certain agreedupon capital expenditures, (d) $25 for reimbursement of expenses related toParcel G and (e) the assumption of certain liabilities. The final post-closingworking capital settlement amount, as set forth in the Asset PurchaseAgreement, is currently being negotiated. We have recorded a receivable of$1,387. At this time, based on the facts available to us, the Company believesthat this amount is a reasonable representation of the receivable that will becollected by the Company when the post-closing working capital adjustment issettled with Salamander.

 

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The Asset Purchase Agreement also provided for a$2,000 escrow for GTA’s and the Company’s indemnification liabilities to beheld, pursuant to its terms, until at least March 31, 2008.

 

As part of thesale of the Business, Salamander has assumed operation and control of theRental Pool. The Rental Pool obligated the Company to make quarterlydistributions of a percentage of room revenues to participating owners underthe Amended and Restated Innisbrook Rental Pool Master Lease Agreement, datedJanuary 1, 2004 (the “MLA”).  The MLA also entitled participating ownersto 50% reimbursement of the refurbishment costs of their units.  Inaddition to reimbursement by Salamander of such obligations since January 1,2007 in the amount of $844,498, obligations in connection with theRefurbishment Program, along with all other obligations under the MLA, were assumedby Salamander upon the closing of the Asset Purchase Agreement. Also, allcapital and operating lease obligations of the Resort were assumed bySalamander upon the closing of the Asset Purchase Agreement. The sale of theResort resulted in a gain of approximately $5,225.

 

On July 13, 2007, the Company and Troon entered into aFacilities Management Agreement Termination Agreement (the “Troon TerminationAgreement”) pursuant to which the Troon Management Agreement was terminated. TheTroon Termination Agreement also provided for the payment to Troon of $177 inaccrued and unpaid fees and reimbursable expenses and the supplemental fee of$800 contemporaneous with the sale of the Resort.

 

Also contemporaneously with the closing of the sale of the Resort, (a)all outstanding accrued and unpaid amounts were paid to Pinellas County forproperty taxes, in the approximate amount of $343, (b) the renegotiated Westintermination fee of $5,403, as described below, was paid to Westin, (c) thesupplemental fee of $800 was paid to Troon, and (d) the Patriot Bank loan wasrepaid and cancelled. With regard to the property taxes, the Company intends tocontinue to pursue the respective lawsuits to recover these amounts from thePinellas County.

 

As previouslydisclosed, the Company entered into a Defense and Escrow Agreement with GHR onJuly 15, 2004, as amended on December 28, 2006 by the First Amendment toDefense and Escrow Agreement (the “Defense Agreement”). Under the DefenseAgreement, as part of the consideration for the settlement of certain claimsrelating to GHR’s default under a $79,000 loan, the Company was entitled to aninterest in the sales proceeds of a prospective sale of a parcel of undevelopedland owned by GHR and referred to as “Parcel F” in our previous reports filedwith the Securities and Exchange Commission. On August 23, 2007, GHR closed thesale of Parcel F. The proceeds received by the Company on September 6, 2007were $2,500 in cash. Parcel F had a book value of $1,490 which resulted in again on the sale of $1,010.

 

**2. Basis of Presentation**

 

The settlement described in Note 1, *Innisbrook Resort Ownership and Operations*, above, pursuantto which the Company took title to the Resort, was accounted for using methodsconsistent with purchase accounting in accordance with Statement of FinancialAccounting Standards (“SFAS”) No. 141, Business Combinations. Accordingly,the Company, with the assistance of its then independent financial advisor,recorded the tangible and identified intangible assets of the Resort at theirrespective fair values. The long-term liabilities of the Resort were stated attheir fair value based on net present value calculations.

 

Substantially all operations for the threeand nine months ended September 30, 2007 occurred during the period July 1 toJuly 15, 2007 and January 1 to July 15, 2007, respectively, due to the factthat the sale of the Resort closed on July 16, 2007.

 

*Principles of Combination*

 

The financial statements andfootnotes reflect the combined financial results of the Company, GTA-IBCondominium, LLC and GTA-IB Management, LLC. These legal entities are allwholly owned subsidiaries of the Operating Partnership. GTA-IB Condominium, LLCheld the title to three condominium units at the Resort that participate in theRental Pool. GTA-IB Management, LLC is the entity that employed substantiallyall of the employees working at the Resort. There are no other operations ofGTA-IB Condominium, LLC and GTA-IB Management, LLC. The Company held title tothe Resort and is the entity in which all of the Resort operations wererecorded. All intercompany transactions and account balances have beeneliminated in combination.

 

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*Interim Statements*

 

The accompanying condensed combined financialstatements have been prepared in accordance with (a) accounting principlesgenerally accepted in the United States of America (“GAAP”), and (b) theinstructions to Form 10-Q and Article 10 of Regulation S-X.These financial statements have not been audited by an independent registeredaccounting firm; however, they include adjustments (consisting of normalrecurring adjustments) which are, in the judgment of management, necessary fora fair presentation of financial condition, results of operations and cashflows for the interim periods presented. However, these results are notnecessarily indicative of results for any other interim period or for the fullyear. In particular, it is important to note that the Company’s business isseasonal.

 

Certain information and footnote disclosuresnormally included in financial statements in accordance with GAAP have beenomitted as allowed in quarterly reports by the rules of the SEC. Managementbelieves that the disclosures included in the accompanying interim financialstatements and footnotes are adequate to make the information not misleading,but also believes that these statements should be read in conjunction with thesummary of significant accounting policies and notes to the combined financialstatements included in our Form 10-K for the fiscal year endedDecember 31, 2006, filed on April 2, 2007.

 

**3. Property and Equipment**

 

Property and equipment consists of thefollowing:

 
| ** **                    | ** ** | **September 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|-------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                    | ** ** | **(unaudited)**              | ** ** | ** **                  | ** ** |
| ** **                    | ** ** | **(in thousands)**      | ** ** |
| ** **                    | ** ** | ** **                   | ** ** | ** **                  | ** ** |
| Land                          |       | —                       |       | $                           | 1,968      |   |
| Buildings                     |       | —                       |       | 14,734                      |       |
| Golf course improvements      |       | —                       |       | 7,552                       |       |
| Machinery and equipment       |       | —                       |       | 6,761                       |       |
| Construction in process       |       | —                       |       | —                      |       |
|                          |       |                         |       | 31,015                      |       |
| Less accumulated depreciation |       | —                       |       | (3,735                      | )          |
|                          |       | —                       |       | $                           | 27,280     |   |

 

Depreciation expense amounted toapproximately $75 and $405 for the three months ended September 30, 2007 and2006, respectively. Depreciation expense amounted to $993 and $1,198 for thenine months ended September 30, 2007 and 2006, respectively.

 

**4. Intangibles and Other Assets**

 

Intangible assets represent the value of thefollowing as of July 15, 2004: (a) the water contract that providesirrigation water for the golf courses at no charge (up to certain specifiedlimits), (b) the Rental Pool, (c) the guest room bookings, (d) the clubmemberships, and (e) the trademark and tradename of “Innisbrook”. Theintangible assets are being amortized over the specific term or benefit periodof each related contract.

 
| **Intangible Assets**    | ** ** | **Amortization Period**                               | ** ** | **September 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|-------------------------------|------------|------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                    | ** ** | ** **                                                 | ** ** | **(unaudited)**              | ** ** | ** **                  | ** ** |
| ** **                    | ** ** | ** **                                                 | ** ** | **(in thousands)**      | ** ** |
|                          |       |                                                       |       |                         |       |                        |       |
| Rental Pool                   |       | 89.5 months  (through December 31, 2011)                   |       | —                       |       | $                           | 9,870      |   |
| Guest Bookings                |       | Less than 24  months (fully amortized as of June 30, 2007) |       | —                       |       | 1,100                       |       |
| Club Memberships              |       | 144 months                                                 |       | —                       |       | 4,400                       |       |
| Water Contract                |       | None since  renewable in perpetuity                        |       | —                       |       | 2,300                       |       |
| Trade Name                    |       | None since  renewable in perpetuity                        |       | —                       |       | 2,500                       |       |
|                          |       |                                                       |       |                         |       | 20,170                      |       |
| Less accumulated amortization |       |                                                       |       | —                       |       | (5,264                      | )          |
|                          |       |                                                       |       | —                       |       | $                           | 14,906     |   |

 

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Amortization expense amounted toapproximately $70 and $430 for the three months ended September 30, 2007 and2006, respectively. Amortization expense amounted to approximately $914 and$1,322 for the nine months ended September 30 2006, respectively. Of theseamounts, approximately $55 and $331 for the three months ended September 30,2007 and 2006, respectively, and $718 and $991 for the nine months endedSeptember 30, 2007 and 2006, respectively, are included in hotel expenses andare not included in depreciation and amortization in the Condensed CombinedStatements of Operations.

 

Other assets include the Company’s interestin the net proceeds from the sale of Parcel F. The value of our primaryother asset, Parcel F, was reduced from $2,200, which was the derived value atJuly 15, 2004, to $1,490 due to the fact that $710 of this value wastransferred to GTA pursuant to the terms of the amended agreement with theowner of Parcel F. Also included in other assets are certain design fees forthe refurbishment program, utility deposits and club member initiation fees.The Company had a contractual right to be reimbursed for these design fees bythe Rental Pool participants in the form of a deduction from the quarterlyRental Pool refurbishment payments. Utility deposits remained on account andwill be refunded to the Company now that the Resort has been sold. The clubinitiation fees are paid by the club members quarterly, but in no event greaterthat two years from the date of membership activation. The amount of initiationfees listed below represent the payments due greater than one year from therespective balance sheet dates.

 

| ** **                    | ** ** | **(in thousands)**      | ** ** |
|-------------------------------|------------|------------------------------|------------|
| **Other Assets**         | ** ** | **September 30,  2007** | ** ** | **December 31,  2006** | ** ** |
| ** **                    | ** ** | **(unaudited)**              | ** ** | ** ** | ** ** |
| ** **                    | ** ** | ** **                   | ** ** | ** ** | ** ** |
| Parcel F proceeds (estimated) |       | $                            | —     |   | $ | 1,490 |   |
| Deferred interest costs, net  |       | —                       |       | — |   |
| Refurbishment design fees     |       | —                       |       | 201 |   |
| Utility deposits              |       | 115                          |       | 155 |   |
| Club initiation fess          |       | —                       |       | 44 |   |
| Other                         |       | —                       |       | 2 |   |
| Total                         |       | $                            | 115        |   | $ | 1,892 |   |

 

The receivable from Salamander of approximately $1,387 represents theestimated amount the Company expects to receive related to final settlement ofthe working capital purchase price adjustment paid at the closing of the saleof the Resort pursuant to the terms of the Asset Purchase Agreement. The finalworking capital settlement amount is currently being negotiated and is subjectto change based on the final outcome of these negotiations.

 

**5. Current Liabilities**

 

Current liabilities consist of the following:

 
| ** **                                 | ** ** | **September 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|--------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                                 | ** ** | **(unaudited)**              | ** ** | ** **                  | ** ** |
| ** **                                 | ** ** | **(in thousands)**      | ** ** |
| ** **                                 | ** ** | ** **                   | ** ** | ** **                  | ** ** |
| Accounts payable                           |       | $                            | —     |                        | $          | 2,584 |   |
| Accrued payroll costs                      |       | —                       |       | 1,182                       |       |
| Other payables and accrued expenses        |       | 18                           |       | 1,763                       |       |
| Deposits and deferred revenue              |       | —                       |       | 2,212                       |       |
| Patriot Bank debt                          |       | —                       |       | —                      |       |
| Current portion of capital leases          |       | —                       |       | 344                         |       |
| Current portion of refurbishment liability |       | —                       |       | 1,424                       |       |
| Subtotal current liabilities               |       | 18                           |       | 9,509                       |       |
| Troon supplemental fee                     |       | —                       |       | 800                         |       |
| Westin termination fee                     |       | —                       |       | 5,594                       |       |
| Total current liabilities                  |       | $                            | 18         |                        | $          | 15,903 |   |

 

On April 10, 2007, the Company and certain of itsaffiliates entered into a Business Loan Agreement (the “Loan Agreement”) withPatriot Bank, a community bank, to borrow, on a non-revolving basis, up to aprincipal amount of $1,200 (the “Loan”). The Loan was secured by a firstpriority mortgage on three wholly-owned condominium units located at the Resort.On April 12, 2007, the Company borrowed,pursuant to the Loan Agreement, approximately $20 to pay the closing

 

10

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costs related to the Loan. Subject to compliance with the Loan Agreement, the Company had the right todraw down the remainder of the principal amount available under the LoanAgreement over time to finance renovations of the Company’s restaurants, informationtechnology infrastructure upgrades at the Resort, other property improvementsat the Resort and short-term working capital shortfalls of the Company or theResort.

 

The Loan bore interest at thefloating Wall Street Journal Prime rate and provided for interest only paymentsthrough December 31, 2007.  Beginning with the monthly payment due onJanuary 31, 2008, the Loan Agreement required principal and interest paymentsbased on a twenty year amortization schedule.  There was no prepaymentpenalty for early repayment.

 

Among other terms, the LoanAgreement contained representations, warranties and covenants of the Companywith respect to matters such as ownership of the condominium units serving ascollateral, the future delivery of reports to the lender, the absence ofdefaults by the Company under other agreements and compliance with applicablelaws and government regulations.

 

The amount outstanding against the loan as of July 15,2007 was approximately $320 and was paid contemporaneous with the closing ofthe sale of the Resort.

 

*Westin Management Company South and Troon Golf L.L.C.*

 

The Westin Management Agreement between the Companyand Westin provided that Westin would manage the Resort for a fee equal to 2.2%of the Resort’s gross revenue. Contemporaneously with the signing of the WestinManagement Agreement in July 2004, Westin entered into a management contractwith Troon pursuant to which Troon was to manage the golf facilities of theResort for a fee payable by the Company equal to 2% of the Resort’s gross golfrevenue. The Company paid monthly management fees to Westin and Troon. Bymutual agreement, on September 28, 2006, the Company, Westin and GTA, asguarantor, entered into a Termination and Release Agreement (the “WestinTermination Agreement”), pursuant to which the Company, GTA and Westin agreedto terminate the Westin Management Agreement as of October 31, 2006.  Inaddition to the termination of the Westin Management Agreement, the WestinTermination Agreement provided that (a) on or prior to October 3, 2006, theCompany or GTA would deposit $600 in the Resort’s operating account (which GTAdid) to be used in part to pay to Westin certain unpaid fees and charges which hadaccrued under the Westin Management Agreement, (b) on or prior to the earlierof March 31, 2008, or any sale of the Resort by the Company and GTA, theCompany would pay to Westin the termination fee of approximately $5,594, and(c) Westin would permit the Company and GTA to continue to access Westin’s “SAP”accounting system for the operation of the Resort until March 31, 2007 (whichthey did) for a total charge of $6. The Company and Westin agreed to reduce thetermination fee to approximately $5,403, contingent upon the closing of thesale of the Resort, as described in the Company’s Form 8-K filing dated June29, 2007. Subsequent to the termination of the Westin Management Agreement, theCompany and GTA had been managing the Resort operations internally. The Westintermination fee obligation was paid by the Company contemporaneous with theclosing of the sale of the Resort.

 

*Troon Supplemental Fee*

 

The July 15, 2004 Troon Management Agreementbetween Westin and Troon, which the Company assumed as a result of the Westintermination, provided for the payment of a supplemental fee to Troon, subjectto the terms and conditions set forth in that agreement, of $800. The Companyhad until November 30, 2006 to decide whether to assume or terminate themanagement agreement with Troon for Troon to continue to manage the golf facilitiesof the Resort. The Company and Troon agreed to extend the Troon ManagementAgreement for ten-day incremental periods subsequent to November 30, 2006. OnFebruary 22, 2007, the Company sent Troon a notice of termination regarding theTroon Management Agreement. This obligation was paid by the Companycontemporaneous with the closing of the sale of the Resort.

 

11

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**6.****              Long-Term Debt**

 

The Company’s long-term debt consists of thefollowing:

 
| ** **                                                                                       | ** ** | **September 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                                                                                       | ** ** | **(unaudited)**              | ** ** | ** **                  | ** ** |
| ** **                                                                                       | ** ** | **(in thousands)**      | ** ** |
| ** **                                                                                       | ** ** | ** **                   | ** ** | ** **                  | ** ** |
| Non-interest bearing mortgage note due to  the Operating Partnership, maturing in June 2027 |       | $                            | —     |                        | $          | 39,240 |   |
| Advances from the operating partnership,  net                                                    |       | —                       |       | 3,103                       |       |
| Long-term portion of capital leases                                                              |       | —                       |       | 428                         |       |
|                                                                                             |       | $                            | —     |                        | $          | 42,771 |   |

 

The lease obligations were assumed by Salamander. Themortgage note and the advances from the operating partnership were paid orotherwise contributed to members’ equity contemporaneous with the sale of theResort.

 

**7.****              Other Long-TermLiabilities**

 

The Company’s Other Long-Term Liabilitiesconsist of the following:

 
| ** **                                                      | ** ** | **September 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                                                      | ** ** | **(unaudited)**              | ** ** | ** **                  | ** ** |
| ** **                                                      | ** ** | **(in thousands)**      | ** ** |
| ** **                                                      | ** ** | ** **                   | ** ** | ** **                  | ** ** |
| Master lease refurbishment obligation –  long term portion |       | —                       |       | $                           | 2,830      |   |
| Deferred membership initiation fees and  dues                   |       | —                       |       | 1,221                       |       |
|                                                            |       | —                       |       | $                           | 4,051      |   |

 

*Master Lease Refurbishment Obligation*

 

On July 16, 2004, the Company recorded aliability of $4,532 for the refurbishment program (the “Refurbishment Program”)pursuant to the master lease agreement (“MLA”) of the Rental Pool. Thisliability represented the Company’s obligation to pay to the variousparticipants in the Rental Pool an amount equal to 50% of the cost to refurbishtheir respective units, and was recorded at the then net present value(calculated at a discount rate of 15%) of the total principal payments of$7,273. Principal and interest payments were due quarterly over the repaymentperiod of the program, beginning with the first quarter of 2005 and ending withthe fourth quarter of 2009. Interest on this liability accrued at a rate of 5%and was paid quarterly. Amortization of the discount was to be charged tointerest expense ratably over the period from January 1, 2005 through December31, 2009.

 

In addition, the Company agreed to provide arefurbishment reimbursement to the respective condominium owners for unitsplaced into the Rental Pool during 2005. The owners of these units were to bepaid 25% of their refurbishment investment, with interest at 2.5% per annum. Theowners of these units received interest and would have received principalpayments beginning in 2008 and ending in 2012 for total principal payments ofapproximately $108.

 

The amortization charged to interest expensewas $24 and $179 for  the three monthsended September 30, 2007 and 2006, respectively. Amortization expense chargedto interest expense was $338 and $536 for the nine months ended September 30,2007 and 2006. The net present value of this liability is $3,879 and $4,254 asof July 15, 2007 and December 31, 2006, respectively, of which $1,424 wasincluded in current liabilities at December 31, 2006. Salamander assumed thisobligation contemporaneous with the closing of the sale of the Resort.

 

**8. Commitments and Contingencies**

 

*Property Tax Lawsuit*

 

The Company has filed lawsuits against the property appraiser ofPinellas County, Florida to challenge the 2004, 2005 and 2006 real estateassessment on the Resort property. Pinellas County filed a motion to dismiss,which was denied by the court. Discovery is in process and no trial date hasbeen set. If Pinellas County were to prevail, management believes that 

 

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there would be no material adverse effect upon our financial statements,as the entire Pinellas County assessment was fully accrued at June 30, 2007 andpaid contemporaneous with the sale of the Resort. See Note 9, *Subsequent Events*, for further discussion.

 

*Wall Springs Conservatory, Inc. Complaint*

 

On July 13, 2006, Wall Springs Conservatory, Inc. (“WallSprings”) filed suit against the Company, as successor in interest to GHR, inthe circuit court of Pinellas County for declaratory relief regardinginterpretation of certain contractual language defining which party has theauthority to assign and allocate club memberships. Wall Springs is thedeveloper of the Highlands of Innisbrook, a single family residential communityadjacent to the Resort. The agreement with GHR included a provision for thesale of up to 52 discounted full golf memberships of the Resort. The Companyand the developer are in disagreement as to which party has the right tocontrol the ultimate assignment of the 52 memberships. On July 14, 2006, WallSprings also filed suit against us in the small claims division of the PinellasCounty Court in connection with an easement agreement. The Company answeredboth claims, also asserting affirmative defenses and counterclaims in eachaction. The Company then filed a motion to transfer the small claims matter toCircuit Court, which was granted on September 27, 2006. The Company then movedto consolidate these two cases. Our motion to consolidate was granted by theCircuit Court on March 1, 2007. The parties have begun the discovery process,but no trial date has been set by the Court. The Company is currentlyevaluating its alternatives regarding these claims given the fact that it nolonger owns the Resort. At this time, the Company is unable to assess thelikely outcome of this litigation.

 

***Land Use Lawsuits***

*** ***

On March 10, 2005, the Company filed a Motion to Intervene in thesuit titled *Innisbrook Condominium Association, Inc., C.Frank Wreath, Meredith P. Sauer, and Mark Banning, Plaintiffs vs. PinellasCounty, Florida, Golf Host Resorts, Inc. and Innisbrook F LLC, Defendants*,Case No. 043388CI-15. This motion was filed in the Circuit Court of theSixth Judicial Circuit, in and for Pinellas County, Florida, Civil Division andwas granted by the Circuit Court. 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 ofParcel F, which is owned by GHR. The Company filed the Motion to Interveneas a defendant in the Initial Land Use Lawsuit in order to protect its propertyand its land use and development rights with respect to Parcel F. OnApril 26, 2005, Joseph E. Colwell, Marcia G. Colwell,Kirk E. Covert, Deborah A. Covert and the Autumn Woods Homeowner’sAssociation, Inc. moved to intervene in the Initial Land Use Lawsuit,which the Court subsequently allowed. On April 8, 2005, a separate suitwas filed by James M. and Mary H. Luckey, and Andrew J. andAphrodite B. McAdams, against Pinellas County, GHR and Bayfair Innisbrook,LLC seeking injunctive and declaratory relief relating to the land use anddevelopment rights of Parcel F. This suit was consolidated with theInitial Land Use Lawsuit. In this report, the Company refers to this matter asthe “Subsequent Land Use Lawsuit” and to the Initial Land Use Lawsuit and theSubsequent Land Use Lawsuit as the “Land Use Lawsuits”.

 

From December 19 through December 23, 2005, the Court triedthese consolidated cases in a non-jury trial. On March 8, 2006, the Court ruledin favor of the defendants on all counts and denied all claims asserted by theplaintiffs in both Land Use Lawsuits. On March 31, 2006, the plaintiffs in theconsolidated cases filed a notice of appeal to the Second District Court ofAppeal. The Appeal Court affirmed per curium the Circuit Court judgment infavor of the defendants on February 28, 2007 and denied theplaintiffs-appellants’ motion for attorney fees. On March 13, 2007, theplaintiffs filed a motion for the Appeal Court to rehear their claims. On June12, 2007, the Second District Court of Appeal denied the plaintiffs motion forrehearing. On September 11, 2007, Plaintiffs/Petitioners James M. Luckey, MaryLuckey, Marc Banning, Andrew McAdams, Aphrodite McAdams, Kirk Covert, DeborahCovert, Marcia Colwell and Joseph Colwell filed a Petition for Writ ofCertiorari in the Supreme Court of the United States. On September 19, 2007,all of the respondents, including GTA-IB, LLC, filed a Waiver with the SupremeCourt of the United States informing the Court that the respondents did notintend to file a response to the Petition for Writ of Certiorari unless one isrequested by the Court. The respondents’ decision to file a waiver was based onthe collective judgment of all defense counsel of record that the Petitioners’Petition for Writ of Certiorari is meritless and has virtually no chance ofsuccess in their collective opinion. A further reason was the fact that if theSupreme Court of the United States does indicate that it may entertain thePetition, it will request a response at which time GTA-IB, LLC and the otherrespondents will have an opportunity to file our responses. At this time, theCompany is unable to assess the likely outcome of this litigation.

 

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**INNISBROOKRENTAL POOL LEASE OPERATION**

 

All rental pool agreements, including the Master Lease Agreement, weresold to Salamander as part of the Resort business operations on July 16,2007.  Partial period financial statements for the Rental Pool and itsDistribution and Maintenance Funds for the period July 1 to July 15, 2007 andJanuary 1 to July 15, 2007 would not be meaningful given the fact that thedistributions are calculated and paid quarterly and, thus, were not providedherein.

 

#### **ITEM 2. Management’s Discussion andAnalysis of Financial Condition and Results of Operations**

####  

We were formed on December 30, 2002 as awholly-owned subsidiary of GTA-IB Golf Resort, LLC, which in turn is a wholly-ownedsubsidiary of the Operating Partnership. GHR is the former unaffiliated ownerof the Resort and the former borrower who defaulted under a$79,000 participating mortgage loan funded by the Operating Partnership inJune 1997.

 

We and the Operating Partnership entered intoa Settlement Agreement, dated July 15, 2004, with GHR, GolfHosts, Inc., Golf Host Management, Inc., Golf HostCondominium, Inc. and Golf Host Condominium, LLC. The Settlement Agreementresolved a number of issues between the parties, including GHR’s default underthe $79,000 loan made by the Operating Partnership to GHR inJune 1997. As part of the Settlement Agreement, we took ownership of theResort effective at the close of business on July 15, 2004. Also, inconnection with the Settlement Agreement, we entered into the Westin ManagementAgreement providing for Westin’s management of the Resort, which was terminatedon October 31, 2006. In addition, Westin and Troon entered into the TroonManagement Agreement setting forth the terms of Troon’s management of the golffacilities at the Resort. The Troon Management Agreement was terminated on July13, 2007 in connection with the sale of the Resort.

 

On July 16, 2007, GTA, the Company, the OperatingPartnership, GTA-IB Golf Resort, LLC, GTA-IB Condominium, LLC and GTA-IBManagement, LLC completed the sale of the Business of the Resort and all ofGTA-IB Golf Resort, LLC’s equity interest in Golf Host Securities, Inc. toSalamander pursuant to the Asset Purchase Agreement dated June 25, 2007. Thepurchase price received by the Company was approximately $35,000 in cash less aworking capital purchase price adjustment of $2,221, plus (a) $4,000 to be usedto settle certain obligations, (b) $844 for reimbursement of certain rentalpool payments discussed in more detail below, (c) $316 for reimbursement ofcertain agreed upon capital expenditures, (d) $25 for reimbursement of expensesrelated to Parcel G and (e) the assumption of certain liabilities. The finalpost-closing working capital settlement amount, as set forth in the AssetPurchase Agreement, is currently being negotiated. We have recorded areceivable of $1,387. At this time, based on the facts available to us, theCompany believes that this amount is a reasonable representation of thereceivable that will be collected by the Company when the post-closing workingcapital adjustment is settled with Salamander. The Asset Purchase Agreementalso provided for a $2,000 escrow deposit for GTA’s and the Company’sindemnification liabilities to be held, pursuant to its terms, until at leastMarch 31, 2008.

 

As part of thesale of the Business, Salamander has assumed operation and control of theRental Pool.  The Rental Pool obligated the Company to make quarterlydistributions of a percentage of room revenues to participating owners underthe MLA.  The MLA also entitled participating owners to 50% reimbursementof the refurbishment costs of their units.  In addition to reimbursementby Salamander of such obligations since January 1, 2007 in the amount of$844,498, obligations in connection with the Refurbishment Program, along withall other obligations under the MLA, were assumed by Salamander upon theclosing of the Asset Purchase Agreement. Also, all capital and operating leaseobligations of the Resort were assumed by Salamander upon the closing of theAsset Purchase Agreement.

 

The Operating Partnership had previouslyentered into an agreement with GHR and the prospective purchaser ofParcel F. The Parcel F Development Agreement was executed onMarch 29, 2004 and amended on August 10, 2005. The Parcel FDevelopment Agreement sets forth the terms and conditions pursuant to whichParcel F may be developed and includes restrictions on GHR, as the ownerof Parcel F, as well as the subsequent owner of Parcel F, which are designed toavoid interference with the operations of the Resort. The Parcel F DevelopmentAgreement also contains provisions which we believe will increase the OperatingPartnership’s ability to better manage the Resort and the location of theaccess road for Parcel F. We also entered into a Defense and Escrow Agreementwith GHR on July 15, 2004, as amended, which entitled us to receive a portionof the sales proceeds in the event Parcel F was sold. Our interests in Parcel Fwere not transferred with the sale of the Resort described above. On August 23,2007, GHR closed the sale of Parcel F and we received sales proceeds of $2,500on September 6, 2007 pursuant to the Defense and Escrow Agreement.

 

14

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**Results ofOperations**

 

The operation and management of the Resort and the Rental Poolconstituted substantially all of our operations. In connection with the sale ofthe Resort on July 16, 2007, we paid (a) all outstanding accrued and unpaidamounts to Pinellas County, Florida for property taxes, in the approximateamount of $343, (b) the renegotiated Westin termination fee of $5,403, (c) thesupplemental fee of $800 to Troon, and (d) all amounts outstanding under thePatriot Bank loan. Other than the two-week period prior to the sale of theResort, we had no substantive operations in the third quarter of 2007 and, as aresult, a detailed description of results of operations and any comparison withprior periods is not meaningful since prior periods reflect substantiveoperations and a significantly different business than existed in the thirdquarter of 2007.

 

We will continue to monitor our contractual obligations, which areprimarily associated with the sale of the Resort, and any pending or futurelitigation, including our continued efforts to recover the property tax amountsfrom Pinellas County.

 

**Liquidity andCapital Resources**

** **

We do not anticipate any future liquidityneeds as substantially all of our operations have ceased.

 

**ITEM 3. Quantitative And QualitativeDisclosures About Market Risk**

 

We do not have significant market risk with respect to foreign currencyexchanges or other market rates. Since our debt to Patriot Bank was paid offcontemporaneous with the closing of the sale of the Resort, we no longer haveany interest rate risk.

 

**ITEM 4. Controls And Procedures**

 

We maintain disclosure controls andprocedures that are designed to ensure that information required to bedisclosed in our Exchange Act reports is recorded, processed, summarized andreported within the time periods specified in the SEC’s rules and forms,and that such information is accumulated and communicated to our management,including our Chief Executive Officer and our Principal Accounting Officer, asappropriate, to allow timely decisions regarding required disclosure. Ourmanagement assesses the costs and benefits of such controls and proceduresbased upon the prevailing facts and circumstances, including management’sreasonable judgment of such facts. Our amended management agreement with Westinprovided us with heightened control and access to information; however, priorto October 31, 2006 when we terminated the Westin Management Agreement, we didnot directly assemble the financial information for the Resort (although wehave taken steps that we deem to be reasonable under the circumstances to seekto verify such financial information) and consequently, our disclosure controlsand procedures with respect to the Resort, while strengthened, were necessarilymore limited than those we maintain with respect to our own corporateoperations.

 

As of September 30, 2007, we carried out anevaluation, under the supervision and with the participation of our management,including our Chief Executive Officer and Principal Accounting Officer, of theeffectiveness of the design and operation of our disclosure controls andprocedures (as defined in Exchange Act Rule 13a-15(e)). Managementconcluded that as of September 30, 2007, our disclosure controls and proceduresare effective in timely alerting them to material information relating to us(including our consolidated subsidiaries) required to be included in ourExchange Act reports.

 

There has been no change in our internalcontrol over financial reporting during our most recent fiscal quarter that hasmaterially affected, or is reasonably likely to materially affect, our internalcontrol over financial reporting.

 

15

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**PART II—OTHERINFORMATION**

 

**ITEM 1. Legal Proceedings**

 

In the normal course of our operations, weare subject to claims and lawsuits. We do not believe that the ultimateresolution of such matters will materially impair operations or have an adverseeffect on our financial position and results of operations.

 

*Wall SpringsConservatory, Inc. Complaint*

 

On July 13, 2006, Wall Springs filed suit against theCompany, as successor in interest to GHR, in the circuit court of PinellasCounty for declaratory relief regarding the allocation of certain full golfmemberships at the Resort. On July 14, 2006, Wall Springs also filed suitagainst us in the small claims division of the Pinellas County Court inconnection with an easement agreement. We answered both claims, also assertingaffirmative defenses and counterclaims in each action. We then filed a motionto transfer the small claims matter to Circuit Court, which was granted onSeptember 27, 2006. We then moved to consolidate these two cases. Our motion toconsolidate was granted by the Circuit Court on March 1, 2007. The parties havebegun the discovery process, but no trial date has been set by the Court. Theparties have begun the discovery process, but no trial date has been set by theCourt. The Company is currently evaluating its alternatives regarding theseclaims given the fact that it no longer owns the Resort. At this time, theCompany is unable to assess the likely outcome of this litigation.

 

*Property Tax Lawsuit*

 

We filed lawsuits against the property appraiser of Pinellas County,Florida to challenge the 2004, 2005 and 2006 real estate assessment on theResort property. Pinellas County filed a motion to dismiss, which was denied bythe court. No trial date has been set. If Pinellas County were to prevail,management believes that there would be no material adverse effect upon ourfinancial statements, as the entire Pinellas County assessment was fullyaccrued at June 30, 2007 and was paid concurrent with the sale of the Resort onJuly 16, 2007. If the Company were to prevail, the Company could possibly beawarded a reimbursement of a portion of these contested property taxes but theCompany is unable to assess the outcome of this claim at this time.

 

***Land Use Lawsuits***

*** ***

On March 10, 2005, the Company filed a Motion to Intervene in thesuit titled *Innisbrook Condominium Association, Inc., C.Frank Wreath, Meredith P. Sauer, and Mark Banning, Plaintiffs vs. PinellasCounty, Florida, Golf Host Resorts, Inc. and Innisbrook F LLC, Defendants*,Case No. 043388CI-15. This motion was filed in the Circuit Court of theSixth Judicial Circuit, in and for Pinellas County, Florida, Civil Division andwas granted by the Circuit Court. 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 ofParcel F, which is owned by GHR. The Company filed the Motion to Interveneas a defendant in the Initial Land Use Lawsuit in order to protect its propertyand its land use and development rights with respect to Parcel F. OnApril 26, 2005, Joseph E. Colwell, Marcia G. Colwell,Kirk E. Covert, Deborah A. Covert and the Autumn Woods Homeowner’sAssociation, Inc. moved to intervene in the Initial Land Use Lawsuit,which the Court subsequently allowed. On April 8, 2005, a separate suitwas filed by James M. and Mary H. Luckey, and Andrew J. andAphrodite B. McAdams, against Pinellas County, GHR and Bayfair Innisbrook,LLC seeking injunctive and declaratory relief relating to the land use anddevelopment rights of Parcel F. This suit was consolidated with theInitial Land Use Lawsuit. In this report, the Company refers to this matter asthe “Subsequent Land Use Lawsuit” and to the Initial Land Use Lawsuit and theSubsequent Land Use Lawsuit as the “Land Use Lawsuits”.

 

From December 19 through December 23, 2005, the Court triedthese consolidated cases in a non-jury trial. On March 8, 2006, the Court ruledin favor of the defendants on all counts and denied all claims asserted by theplaintiffs in both Land Use Lawsuits. On March 31, 2006, the plaintiffs in theconsolidated cases filed a notice of appeal to the Second District Court ofAppeal. The Appeal Court affirmed per curium the Circuit Court judgment infavor of the defendants on February 28, 2007 and denied theplaintiffs-appellants’ motion for attorney fees. On March 13, 2007, theplaintiffs filed a motion for the Appeal Court to rehear their claims. On June12, 2007, the Second District Court of Appeal denied the plaintiffs motion forrehearing. On September 11, 2007, Plaintiffs/Petitioners James M. Luckey, MaryLuckey, Marc Banning, Andrew McAdams, Aphrodite McAdams, Kirk Covert, DeborahCovert, Marcia Colwell and Joseph Colwell filed a Petition for Writ ofCertiorari in the Supreme Court of the United States. On September 19, 2007,all of the respondents,

 

16

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including GTA-IB, LLC, filed a Waiver with the Supreme Court of theUnited States informing the Court that the respondents did not intend to file aresponse to the Petition for Writ of Certiorari unless one is requested by theCourt. The respondents’ decision to file a waiver was based on the collectivejudgment of all defense counsel of record that the Petitioners’ Petition forWrit of Certiorari is meritless and has virtually no chance of success in theircollective opinion. A further reason was the fact that if the Supreme Court ofthe United States does indicate that it may entertain the Petition, it willrequest a response at which time GTA-IB, LLC and the other respondents willhave an opportunity to file our responses. At this time, we are unable toassess the likely outcome of this litigation.

 

**Item 1A. Risk Factors**

 

Due to the sale of the Resort, including thetransfer of the operation, control and financial obligations of the RentalPool, and the contemporaneous payment of (a) all outstanding property taxamounts to Pinellas County, Florida, (b) the Westin termination fee, (c) theTroon supplemental fee, and (d) all outstanding debt under the Patriot Bankloan, the risk factors previously disclosed in our Form 10-K for thefiscal year ended December 31, 2006, filed on April 2, 2007, are no longerapplicable to our current circumstances. As a wholly owned subsidiary withlimited assets and operations, our remaining risks primarily relate to ouroutstanding contractual obligations, mainly in connection with the sale of theResort, and liability in the event of any claims or lawsuits (see Part II, Item1, Legal Proceedings, of this Quarterly Report on Form 10-Q).

 

**Item 2. Unregistered Sales of EquitySecurities and Use of Proceeds**

 

Not applicable.

 

**Item 3. Defaults Upon Senior Securities**

 

Not applicable.

 

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

 

Not applicable.

 

**Item 5. Other Information**

 

Not applicable.

 

**Item 6. Exhibits**

 

**EXHIBIT INDEX**

 
| Exhibit No. | ** ** | **Description**                                                                                                                                                   |
|-------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1        |       | Certification of the  registrant’s Chief Executive Officer pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.                                  |
|        |       |                                                                                                                                                              |
| 31.2        |       | Certification of the  registrant’s Principal Accounting Officer pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.                             |
|        |       |                                                                                                                                                              |
| 32.1        |       | Certification of the  registrant’s Chief Executive Officer and Principal Accounting Officer  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

 

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**SIGNATURES**

 

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

 
|                        | ** ** | **GTA-IB, LLC**                             |
|------------------------|------------|---------------------------------------------|
|                   |       |                                        |
|                   |       |                                        |
| Date: November 7, 2007 |       | /s/ W. Bradley Blair,  II                   |
|                   |       | W. Bradley  Blair, II                  |
|                   |       | Chief Executive Officer  and President      |
|                   |       |                                        |
| Date: November 7, 2007 |       | /s/ Tracy S. Clifford                       |
|                   |       | Tracy S. Clifford                           |
|                   |       | Principal Accounting  Officer and Secretary |

 

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