**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: March 31, 2007**                                                                                                                                                                        |
| ** **                                                                                                                                                                                                                 |       |                                                                                               |
| **o**                                                                                                                                                                                                                      | ** ** | **Transition report pursuant to section 13 or  15(d) of the Securities Exchange Act of 1934** |
| ** **                                                                                                                                                                                                                 | ** ** | ** **                                                                                         |
| **for the  transition period  from               to               ** |

 

**Commission File Number 333-120538**

**GTA-IB, LLC**

(Exact name of registrant as specified 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 principal executive offices) (ZipCode)

**(727) 942-2000**

(Registrant’s telephone number, including areacode)

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 accelerated filer, an accelerated filer, or anon-accelerated filer.  See definition of“accelerated filer and large accelerated filer” in Rule 12b-2 of the ExchangeAct.
| 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

One hundred percent of themembership interests of the issuer are owned indirectly by Golf Trust ofAmerica, Inc.

 

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**GTA-IB, LLC**

**FORM 10-Q**

**FOR THE THREE MONTHS ENDED MARCH31, 2007**

**INDEX**
| PART I. FINANCIAL INFORMATION |                                                                                                                                   |   |
|------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|--------|
| Item 1.                       | Financial Statements                                                                                                                   |   |   |
|                               | Condensed  Combined Balance Sheets as of March 31, 2007 (unaudited) and  December 31, 2006                                        |   |   |
|                               | Condensed  Combined Statements of Operations and Member’s Deficit (unaudited) for the  Three Months Ended March 31, 2007 and 2006 |   |   |
|                               | Condensed  Combined Statements of Cash Flows (unaudited) for the Three Months Ended  March 31, 2007 and 2006                           |   |   |
|                               | 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 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                         |                                                                                                                                   |   |   |

 

**Cautionary Note Regarding Forward-LookingStatements**

The following report contains forward-looking statements withinthe meaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”). Forward-looking statements are statements that predict or describefuture events or trends and that do not relate solely to historical matters.All of our projections in this quarterly report are forward-lookingstatements. You can generally identify forward-looking statements asstatements containing the words “believe,” “expect,” “hope,” “may, “will,” “anticipate,”“intend,” “estimate,” “project,” “assume” or other similar expressions. Noassurance can be given that actual results or events will not differ materiallyfrom those projected, estimated, assumed or anticipated in any forward-lookingstatements. Certain factors that might cause such a difference include thefollowing: changes in general economic conditions, including changes that mayinfluence 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;  the resaleof condominiums to owners who elect neither to participate in the rental poolnor to become members of the Innisbrook Resort and Golf Club, or the Resort,and the risks outlined under the caption “Item 1A. Risk Factors” in our AnnualReport on Form 10-K for the fiscal year ended December 31, 2006 and anysubsequent Quarterly Reports on Form 10-Q. 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 Securitiesand Exchange Commission. 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 we expressly 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. 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 MARCH 31, 2007 AND DECEMBER 31, 2006(in thousands)**
| ** **                                      | ** ** | **March 31,  2007** | ** ** | **December  31,  2006*** | ** ** |
|-------------------------------------------------|------------|--------------------------|------------|------------------------------------|------------|
| ** **                                      | ** ** | **(unaudited)**          | ** ** | ** **                         | ** ** |
| ** **                                      | ** ** | ** **               | ** ** | ** **                         | ** ** |
| **Assets**                                      |       |                     |       |                               |       |
| Current assets                                  |       | $                        | 8,369      |                               | $          | 5,296 |   |
| Property and  equipment, net                    |       | 27,470                   |       | 27,280                             |       |
| Intangibles, net                                |       | 14,484                   |       | 14,906                             |       |
| Other assets                                    |       | 1,886                    |       | 1,892                              |       |
| **Total Assets**                                |       | $                        | 52,209     |                               | $          | 49,374 |   |
| **Liabilities**                                 |       |                     |       |                               |       |
| Current  liabilities                            |       | $                        | 10,510     |                               | $          | 9,509 |   |
| Westin  termination fee, short-term             |       | 5,594                    |       | 5,594                              |       |
| Troon  termination fee, short-term              |       | 800                      |       | 800                                |       |
| Long-term  debt, less current maturities        |       | 43,054                   |       | 42,771                             |       |
| Other long term  liabilities                    |       | 3,851                    |       | 4,051                              |       |
| **Total Liabilities**                           |       | 63,809                   |       | 62,725                             |       |
| **Member’s Deficit**                       |       | (11,600                  | )          | (13,351                            | )          |
| **Total Liabilities and Member’s Deficit** |       | $                        | 52,209     |                               | $          | 49,374 |   |

 

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***Derivedfrom audited combined financial statements.**

*See accompanying notes tocondensed combined financial statements.*

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**GTA-IB, LLCCONDENSED COMBINED STATEMENTS OF OPERATIONS AND MEMBER’S DEFICITFOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006(in thousands) (unaudited)**
| ** **                                  | ** ** | **Three Months Ended  March 31,** | ** ** |
|---------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                  | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| **Revenues**                                |       |                                             |       |   |   |
| Hotel                                       |       | $                                                | 4,601      |   | $ | 5,845 |   |
| Food and  beverage                          |       | 3,987                                            |       | 5,132 |   |
| Golf                                        |       | 5,034                                            |       | 5,089 |   |
| Other                                       |       | 744                                              |       | 946 |   |
| Total revenues                              |       | 14,366                                           |       | 17,012 |   |
| **Expenses**                                |       |                                             |       |   |   |
| Hotel                                       |       | 3,363                                            |       | 4,107 |   |
| Food and  beverage                          |       | 2,632                                            |       | 3,133 |   |
| Golf                                        |       | 2,013                                            |       | 1,856 |   |
| Other                                       |       | 2,632                                            |       | 2,895 |   |
| General and  administrative                 |       | 1,120                                            |       | 1,682 |   |
| Depreciation and  amortization              |       | 536                                              |       | 491 |   |
| Total expenses                              |       | 12,296                                           |       | 14,164 |   |
| Operating income                            |       | 2,070                                            |       | 2,848 |   |
| Interest expense, net                       |       | 260                                              |       | 373 |   |
| Other expense                               |       | 59                                               |       | — |   |
| Net income                                  |       | 1,751                                            |       | 2,475 |   |
| Member’s deficit,  beginning of period |       | (13,351                                          | )          | (8,489 | ) |
|                                        |       |                                             |       |   |   |
| Member’s deficit, end of period        |       | $                                                | (11,600    | ) | $ | (6,014 | ) |

 

*See accompanying notes tocondensed combined financial statements.*

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### **GTA-IB,LLCCONDENSED COMBINED STATEMENTS OF CASH FLOWS FOR THETHREE MONTHS ENDED MARCH  31, 2007 AND2006(in thousands) (unaudited)**

| ** **                                                                         | ** ** | **Three months ended  March 31,** | ** ** |
|------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                         | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| **Cash flows from operating  activities:**                                         | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Net income                                                                         |       | $                                                | 1,751      |   | $ | 2,475 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |                                             |       |   |   |
| Depreciation and  amortization                                                     |       | 866                                              |       | 821 |   |
| Provision for  bad debts                                                           |       | 38                                               |       | 164 |   |
| Non-cash  interest                                                                 |       | 161                                              |       | 279 |   |
| Other changes in  operating assets and liabilities                                 |       | (1,194                                           | )          | (689 | ) |
| Net cash  provided by operating activities                                         |       | 1,622                                            |       | 3,050 |   |
| **Cash flows used in investing  activities:**                                      | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Purchases of  property and equipment                                               |       | (136                                             | )          | (20 | ) |
| **Cash flows from financing  activities:**                                         | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Repayment of  long-term debt and capital lease obligations                         |       | (448                                             | )          | (304 | ) |
| Net increase in cash                                                               |       | 1,038                                            |       | 2,726 |   |
| **Cash and cash equivalents,  beginning of period**                                |       | 932                                              |       | 1,519 |   |
| **Cash and cash equivalents, end  of period**                                      |       | $                                                | 1,970      |   | $ | 4,245 |   |
| ** **                                                                         | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| **Supplemental Cash Flow  Information:**                                           | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Cash paid for interest                                                             |       | $                                                | 98         |   | $ | 98 |   |
| **Non-cash financing and  investing activities:**                                  | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Assets acquired through capital leases                                             |       | $                                                | 498        |   | $ | — |   |

 

*See accompanying notes tocondensed combined financial statements.*

5

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**GTA-IB, LLC**

**FORM 10-Q**

**NOTES TO CONDENSED COMBINEDFINANCIAL STATEMENTS**

**FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**

**(in thousands) (unaudited)**

**1.   Innisbrook Resort Ownership and Operations**

GTA-IB, LLC (the “Company”) is asingle member limited liability company owned by GTA-IB Golf Resort, LLC, whichin turn is 100% owned by Golf Trust of America, L.P. (the “OperatingPartnership”). There is no established market for the Company’s membershipinterests. Golf Trust of America, Inc. (“GTA”) holds a100 percent interest in the Operating Partnership. GTA GP, Inc. is thesole general partner of the Operating Partnership and owns a 0.2 percentinterest therein. GTA LP, Inc. is a limited partner in the operatingpartnership and owns a 99.8 percent interest therein. Golf Host Resorts, Inc. (“GHR”, “thepredecessor owner” or “the former borrower”), an entity affiliated withStarwood Capital Group LLC, is the former owner of the Innisbrook Resort andGolf Club (the “Resort”) and the former borrower under a $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 aSettlement Agreement dated July 15, 2004 (the “Settlement Agreement”) withthe Operating Partnership and GHR, Golf Hosts, Inc., Golf HostManagement, Inc., Golf Host Condominium, Inc. and Golf HostCondominium, LLC. The Settlement Agreement resolved a number of issues betweenthe parties, including GHR’s default under the 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 “Management Agreement”) with Westin ManagementCompany South (“Westin”), which provides for Westin’s management of the Resort,and Westin and Troon Golf L.L.C. (“Troon”) entered into a facility managementagreement (the “Facility Management Agreement”) providing for Troon’s managementof the golf facilities at the Resort. The current status of the Management Agreement with Westin and theFacility Management Agreement with Troon are discussed below.

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 commonly known as Parcel F.This agreement, commonly known as the Parcel F Development Agreement, wasexecuted on March 29, 2004 and amended on August 10, 2005 to add theCompany as a party. The Parcel F Development Agreement includes the termsand conditions pursuant to which Parcel F may be developed, and includesrestrictions on GHR, the owner of Parcel F, which are designed to avoidinterference with the ongoing operations of the Resort.  The Parcel F Development Agreement alsocontains provisions which the Company believes will increase the OperatingPartnership’s ability to better manage the location of the access road forParcel F.

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

6

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#### *Going Concern*

As of March 31, 2007, the Resort has a working capitaldeficit of approximately $8,535.  Thisworking capital deficit resulted primarily from the reclassification of theWestin termination fee and related deferred management fees combined with thereclassification of the Troon supplemental fee, from long-term to short-termobligations.  The reclassified Westintermination fee and Troon supplemental fee total approximately $5,594 and $800payable to Westin and Troon, respectively, as of March 31, 2007*. *Before thisreclassification, the Resort had a working capital deficit of approximately$2,141.  The Resort’s member deficit atMarch 31, 2007 is $11,600. The Resort reported a net income of approximately$1,751 for the three months ended March 31, 2007.* *The Resort continues to experienceseasonal fluctuations in its net working capital position due to theseasonality of the golf industry in Florida. This seasonality impacts ourliquidity. In particular, there is generally more available cash during thewinter months, specifically in the first quarter. Cash generally becomes verylimited in the late summer months. Revenues generally decline at the Resortduring the summer months because the hot Florida weather makes the Resort lessappealing for group golf outings and vacation destination golfers.Additionally, unusual weather patterns, such as the hurricanes experienced inFlorida in 2004 and those that affected the southeast coast in 2005, negativelyimpacted revenues for the Resort in the late summer-early fall season of 2005and 2006 as groups and guests were hesitant to book reservations on thesoutheast coast during the hurricane season. Weather-related concernsmay continue to negatively impact reservations in comparable periods(July through September) of subsequent years. The Resort uses seasonalpricing (peak, shoulder and off-peak) to maximize revenues.

Generally, the Resort’s only source of cash is fromits profitable operations, if any.  TheCompany is currently involved in the capital improvement project of upgradingthe technological infrastructure of the Resort and replacing certain componentswhich were proprietary to Westin. Our projections indicate that the replacementof these components could require us to make an investment in the range of$1,500 to $2,000.  GTA managementcontinues to work diligently with the Resort’s management team to identifyopportunities to improve the cash flow at the Resort. Although GTA is currentlyseeking a buyer for the Resort pursuant to its stockholder-approved plan ofliquidation, no binding contract for thesale of the Resort has been executed.  GTAmade intercompany advances to the Resort to support working capital needs inthe amounts of $2,000, $400, $650, $600 and $120 in July 2004,September 2005, November 2005, October 2006 and February 2007,respectively. Further, GTA fundedapproximately $203 and $33 for the beginning phase of the technologicalinfrastructure capital investment in October 2006 and November 2006,respectively, and entered into a related lease for an investment ofapproximately $468 in January 2007.  The proceeds of these advances have beenfully expended to support the Resort’s operational expense and existingobligations. The Resort repaid to GTA the $120 and the $33 advances fromResort operational cashflow in March 2007. While current Resort cash flow projections for 2007 indicate wemay be in a breakeven cash situation by year-end December 31, 2007, ashortfall is anticipated by late summer to early fall 2007.  This shortfall is expected primarily due tocertain obligations that the Resort must pay in August and November 2007,including obligations of approximately $1,060 and $728, respectively, for thequarterly rental pool distributions and $412 in both August and November 2007for the rental pool refurbishment payments. Therefore, a cash infusion of up toapproximately $1,000 in the aggregate may be necessary to fund the shortfall..  It may be necessary to draw againstits non-revolving credit facility (see Note 8) or to receive a cash infusionfrom GTA in order to fund the short-fall.

**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 itsthen independent financial advisor, recorded the tangible and identifiedintangible assets of the Resort at their respective fair values. The long-termliabilities of the Resort were stated at their fair value based on net presentvalue calculations.

*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, LLCholds the title to three condominium units at the Resort that participate inthe Rental Pool.  GTA-IB Management, LLCis the entity that employs substantially all of the employees working at theResort. There are no other operations of GTA-IB Condominium, LLC and GTA-IBManagement, LLC. The Company holds title to the Resort and is the entity inwhich all of the Resort operations are recorded. All intercompany transactionsand account balances have been eliminated in combination.

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*Interim Statements*

The accompanying condensed combinedfinancial statements have been prepared in accordance with (i) accountingprinciples generally accepted in the United States of America (“GAAP”) and(ii) the instructions to Form 10-Q and Article 10 ofRegulation S-X. These financial statements have not been audited by anindependent registered accounting firm; however, they include adjustments(consisting of normal recurring adjustments) which are, in the judgment ofmanagement, necessary for a fair presentation of financial condition, resultsof operations and cash flows for the interim periods presented. However, theseresults are not necessarily indicative of results for any other interim periodor for the full year. In particular, it is important to note that the Company’sbusiness 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 fiscal year endedDecember 31, 2006.

**3.   Property and Equipment**

Property and equipment consistsof the following:
| ** **                     | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|--------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                     | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| ** **                     | ** ** | **(in thousands)**  | ** ** |
| ** **                     | ** ** | ** **               | ** ** | ** **                  | ** ** |
| Land                           |       | $                        | 1,968      |                        | $          | 1,968 |   |
| Buildings                      |       | 14,734                   |       | 14,734                      |       |
| Golf course  improvements      |       | 7,556                    |       | 7,552                       |       |
| Machinery and equipment        |       | 7,290                    |       | 6,761                       |       |
| Construction in process        |       | 101                      |       | —                      |       |
|                           |       | 31,649                   |       | 31,015                      |       |
| Less accumulated  depreciation |       | (4,179                   | )          | (3,735                      | )          |
|                           |       | $                        | 27,470     |                        | $          | 27,280 |   |

 

At March 31, 2007, machinery andequipment includes certain equipment with a net book value of $1,203 recordedunder capital leases. Depreciation expense amounted to approximately $444 and$392 for the three months ended March 31, 2007 and 2006, respectively.

**4.   Intangibles and Other Assets**

Intangible assets represent thevalue of the following as of July 15, 2004: (i) the water contract thatprovides irrigation water for the golf courses at no charge (up to certainspecified limits); (ii) the Rental Pool; (iii) the guest room bookings; (iv)the club memberships; and (v) the trademark and tradename of “Innisbrook.”  The intangible assets are being amortizedover the specific term or benefit period of each related contract.
| **Intangible Assets**     | ** ** | **Amortization Period**        | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|--------------------------------|------------|-------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                     | ** ** | ** **                          | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| ** **                     | ** ** | ** **                          | ** ** | **(in thousands)**  | ** ** |
| ** **                     | ** ** | ** **                          | ** ** | ** **               | ** ** | ** **                  | ** ** |
| Water  Contract                |       | None since renewable in  perpetuity |       | $                        | 2,300      |                        | $          | 2,300 |   |
| Rental  Pool                   |       | 89.5 months                         |       | 9,870                    |       | 9,870                       |       |
| Guest  Bookings                |       | Less than 24 months                 |       | 1,100                    |       | 1,100                       |       |
| Club  Memberships              |       | 144 months                          |       | 4,400                    |       | 4,400                       |       |
| Trade  Name                    |       | None since renewable in  perpetuity |       | 2,500                    |       | 2,500                       |       |
|                           |       |                                |       | 20,170                   |       | 20,170                      |       |
| Less  accumulated amortization |       |                                |       | (5,686                   | )          | (5,264                      | )          |
|                           |       |                                |       | $                        | 14,484     |                        | $          | 14,906 |   |

 

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Amortization expense amounted toapproximately $422 and $429 for the three months ended March 31, 2007 and 2006,respectively. ** **Ofthese amounts, approximately $330 for both the three months ended March 31,2007 and 2006, respectively, are included in hotel expenses and are notincluded in depreciation and amortization in the Condensed Combined Statementsof Operations. Anticipated amortization expense for the next five years andthereafter is set forth in the table below:

| Year                               | ** ** | **Principal **                  | ** ** |
|------------------------------------|------------|--------------------------------------|------------|
| ** **                         | ** ** | **(in thousands)  (unaudited)** | ** ** |
| April 1 through  December 31, 2007 |       | 1,266                                |       |
| 2008                               |       | 1,688                                |       |
| 2009                               |       | 1,688                                |       |
| 2010                               |       | 1,688                                |       |
| 2011                               |       | 1,688                                |       |
| Thereafter                         |       | 1,666                                |       |
| Total                              |       | $                                    | 9,684      |   |
|                                    |            |                                      |            |  |

 

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

|                                | ** ** | **(in thousands)**  | ** ** |
|--------------------------------|------------|--------------------------|------------|
| **Other Assets**          | ** ** | **March 31,  2007** | ** ** | **December  31, 2006** | ** ** |
| ** **                     | ** ** | **(unaudited)**          | ** ** | ** ** | ** ** |
| ** **                     | ** ** | ** **               | ** ** | ** ** | ** ** |
| Parcel F proceeds  (estimated) |       | $                        | 1,490      |   | $ | 1,490 |   |
| Refurbishment design  fees     |       | 188                      |       | 201 |   |
| Utility deposits               |       | 156                      |       | 155 |   |
| Club initiation fess           |       | 52                       |       | 44 |   |
| Other                          |       | —                   |       | 2 |   |
| Total                          |       | $                        | 1,886      |   | $ | 1,892 |   |

 

**5.   Current Liabilities**

Current liabilities consist ofthe following:
| ** **                                  | ** ** | **March 31, 2007** | ** ** | **December  31,  2006** | ** ** |
|---------------------------------------------|------------|------------------------------|------------|-----------------------------------|------------|
| ** **                                  | ** ** | **(unaudited)**              | ** ** | ** **                        | ** ** |
| ** **                                  | ** ** | **(in thousands)**      | ** ** |
| ** **                                  | ** ** | ** **                   | ** ** | ** **                        | ** ** |
| Accounts payable                            |       | $                            | 3,196      |                              | $          | 2,584 |   |
| Accrued payroll costs                       |       | 1,042                        |       | 1,182                             |       |
| Other payables and  accrued expenses        |       | 2,315                        |       | 1,763                             |       |
| Deposits and deferred  revenue              |       | 2,010                        |       | 2,212                             |       |
| Current portion of  capital leases          |       | 435                          |       | 344                               |       |
| Current portion of  refurbishment liability |       | 1,512                        |       | 1,424                             |       |
| Subtotal current liabilities                |       | 10,510                       |       | 9,509                             |       |
| Troon supplemental fee                      |       | 800                          |       | 800                               |       |
| Westin termination fee                      |       | 5,594                        |       | 5,594                             |       |
| Total current liabilities                   |       | $                            | 16,904     |                              | $          | 15,903 |   |

 

9

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

The ManagementAgreement between the Company and Westin provided that Westin will manage theResort for a fee equal to 2.2% of the Resort’s gross revenue. Contemporaneouslywith the signing of the Management Agreement in July 2004, Westin entered intoa management contract with Troon pursuant to which Troon was to manage the golffacilities of the Resort for a fee payable by the Company equal to 2% of theResort’s gross golf revenue.  The Companypaid monthly management fees to Westin and Troon. By mutual agreement, onSeptember 28, 2006, the Company, Westin and GTA, as guarantor, entered aTermination and Release Agreement (the “Termination Agreement”), pursuant towhich the Company, GTA, and Westin agreed to terminate the Management Agreementas of October 31, 2006 (the “Termination Date”).  In addition to thetermination of the Management Agreement, the Termination Agreement providedthat (i) on or prior to October 3, 2006, the Company or GTA would deposit $600in the Resort’s operating account (which GTA did) to be used in part to pay toWestin certain unpaid fees and charges which have accrued under the ManagementAgreement,  (ii) on or prior to theearlier of March 31, 2008, or any sale of the Resort by the Company and GTA,the Company will pay to Westin the termination fee of approximately $5,594, and(iii) Westin will permit the Company and GTA to continue to access Westin’s “SAP”accounting system for the operation of the Resort until March 31, 2007 (whichthey have) for a total charge of $6.  Subsequent to the termination of theWestin management contract, the Company and GTA have been managing the Resortoperations internally.

*TroonSupplemental Fee*

TheJuly 15, 2004 Facility Management Agreement between Westin and Troon,which the Company assumed as a result of the Westin termination, provides for thepayment of a supplemental fee to Troon, subject to the terms and conditions setforth in that agreement, of $800.  TheCompany had until November 30, 2006 to decide whether to assume or terminatethe management agreement with Troon for Troon to continue to manage the golffacilities of the Resort.   The Companyand Troon agreed to extend the Facilities Management Agreement for ten-dayincremental periods subsequent to November 30, 2006.   On February 22, 2007, the Company sent Troona notice of termination in regards to the Facilities Management Agreement.  The Company and Troon continue to negotiatethe post-termination rights of the respective parties including the amount,timing and payment of the Supplemental Fee. The Company intends to manage the golf operations internally followingthe termination of the Troon management agreement.

 See Note 8, *Commitmentsand Contingencies,*for further discussion.

**6.   Long-Term Debt**

The Company’s long-term debtconsists of the following:
| ** **                                                                                        | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                                                        | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| ** **                                                                                        | ** ** | **(in thousands)**  | ** ** |
| ** **                                                                                        | ** ** | ** **               | ** ** | ** **                  | ** ** |
| Non-interest  bearing mortgage note due to the Operating Partnership, maturing in  June 2027 |       | $                        | 39,240     |                        | $          | 39,240 |   |
| Advances from the  operating partnership, net                                                     |       | 3,069                    |       | 3,103                       |       |
| Long-term portion of  capital leases                                                              |       | 745                      |       | 428                         |       |
|                                                                                              |       | $                        | 43,054     |                        | $          | 42,771 |   |

 

*Leases*

The Company leases equipment under capital andoperating leases.  Future minimum leasepayments under leases in excess of one year are as follows:
| ** **                         | ** ** | **Capital** | ** ** | **Operating** | ** ** |
|------------------------------------|------------|-------------|------------|---------------|------------|
| April 1 through  December 31, 2007 |       | $           | 393        |          | $          | 213 |   |
| 2008                               |       | 465         |       | 195           |       |
| 2009                               |       | 238         |       | —        |       |
| 2010                               |       | 126         |       | —        |       |
| Thereafter                         |       | 155         |       | —        |       |
| Total                              |       | 1,377       |       | $             | 408        |   |
| Less amount  representing interest |       | (197        | )          |          |       |
| Total                              |       | 1,180       |       |          |       |
| Less current portion               |       | 435         |       |          |       |
| Long-term portion                  |       | $           | 745        |          |       |   |

 

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**7.****              OtherLong-Term Liabilities**

The Company’s Other Long-TermLiabilities consist of the following:
| ** **                                    | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                    | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| ** **                                    | ** ** | **(in thousands)**  | ** ** |
| ** **                                    | ** ** | ** **               | ** ** | ** **                  | ** ** |
| Master lease  refurbishment obligation        |       | $                        | 2,544      |                        | $          | 2,830 |   |
| Deferred membership  initiation fees and dues |       | 1,307                    |       | 1,221                       |       |
|                                          |       | $                        | 3,851      |                        | $          | 4,051 |   |

 

*Master Lease RefurbishmentObligation*

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

In addition, the Company agreedto provide a refurbishment reimbursement to the respective condominium ownersfor units placed into the Rental Pool during 2005.  The owners of these units will be paid 25% oftheir refurbishment investment, with interest at 2.5% per annum.  The owners of these units currently receiveinterest and will receive principal payments beginning in 2008 and ending in2012 for total principal payments of approximately $108.

The amortization charged tointerest expense was $161 and $178 for the three months ended March 31, 2007and 2006, respectively. ** **The net present value of thisliability is $4,056 and $4,254 as of March 31, 2007 and December 31, 2006,respectively, of which $1,512 and $1,424, respectively, is included in currentliabilities (see Note 5).

The corresponding benefit to theResort from the MLA refurbishment program was included in the valuation of therental pool intangible asset which is being amortized over the term of thecurrent master lease agreement that expires in 2011. Minimum undiscountedunpaid principal payments on the MLA refurbishment program at March 31, 2007are as follows:

| Year                                   | ** ** | **Amount**              | ** ** |
|----------------------------------------|------------|-------------------------|------------|
| ** **                             | ** ** | **(in thousands)** | ** ** |
| April 1 through  December 31, 2007     |       | $                       | 1,065      |   |
| 2008                                   |       | 1,786                   |       |
| 2009                                   |       | 2,147                   |       |
| 2010                                   |       | 22                      |       |
| Thereafter                             |       | 60                      |       |
| Total  undiscounted principal payments |       | 5,080                   |       |
| Less: net  present value discount      |       | (1,024                  | )          |
| Total                                  |       | $                       | 4,056      |   |

 

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Our obligation toreimburse the Rental Pool participants for their refurbishment expenses iscontingent on the units remaining in the Rental Pool from the time of theirrefurbishment through 2009. If the unit does not remain in the Rental Poolduring the reimbursement periods discussed above, the owner or successor ownerwill forfeit any unpaid installments at the time the unit is removed from theRental Pool.

**8.  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 one half of the first 6% of the contributions of each employee  The Company made contributions ofapproximately $49 and $63 for the three months ended March 31, 2007 and 2006,respectively.

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

See Note 5 for discussion of the Westin termination feeobligation and the Troon supplemental fee obligation.

For the three months ended March31, 2007 and 2006, the management fees incurred under the Westin and Troonmanagement agreements are reflected in the table below:

|            | ** ** | **Three months ended March 31,** | ** ** |
|------------|------------|------------------------------------------------------|------------|
| ** ** | ** ** | **2007**                                             | ** ** | **2006** | ** ** |
| ** ** | ** ** | **(in thousands) (unaudited)**             | ** ** |
| Westin     |       | $                                                    | —     |   | $ | 364 |   |
| Troon      |       | 101                                                  |       | 102 |   |
| Total      |       | $                                                    | 101        |   | $ | 466 |   |

 

*Land Use Lawsuit*

On March 29,2005, the Company filed a Motion to Intervene in the suit titled *Innisbrook Condominium Association, Inc., C. Frank Wreath,Meredith P. Sauer, and Mark Banning, Plaintiffs vs. Pinellas County, Florida,Golf Host Resorts, Inc. and Innisbrook F LLC, Defendants*, CaseNo. 043388CI-15. This motion was filed in the Circuit Court of the SixthJudicial Circuit, in and for Pinellas County, Florida, Civil Division and wasgranted by the Circuit Court.  In thisreport, the Company refers to this matter as the “Initial Land Use Lawsuit.”   The plaintiffs in the Initial Land UseLawsuit have filed a multi-count complaint seeking injunctive and declaratoryrelief with respect to the land use and development rights of a tract of landcommonly known as Parcel F, a parcel of land located within the Resort andowned by GHR. The Company filed the Motion to Intervene as a defendant in theInitial Land Use Lawsuit in order to protect its property and its land use anddevelopment rights with respect to Parcel F.  On April 26, 2005, Joseph E.Colwell, Marcia G. Colwell, Kirk E. Covert, and Deborah A.Covert and the Autumn Woods Homeowner’s Association, Inc. moved tointervene in the Initial Land Use Lawsuit, which the Court subsequentlyallowed.  On April 8, 2005, aseparate suit was filed by James M. and Mary H. Luckey, andAndrew J. and Aphrodite B. McAdams, against Pinellas County, GHR andBayfair Innisbrook, LLC seeking injunctive and declaratory relief relating tothe land use and development rights of Parcel F.  This suit was consolidated with the InitialLand Use Lawsuit.  In this report, theCompany refers to this matter as the “Subsequent Land Use Lawsuit” and to theInitial Land Use Lawsuit and the Subsequent Land Use Lawsuit as the “Land UseLawsuits.”  

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FromDecember 19 through December 23, 2005, the Court tried theseconsolidated cases in a non-jury trial. On March 8, 2006, the Court ruled infavor 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 percurium the Circuit Court judgment in favor of the defendants on February 28,2007 and denied the plaintiffs-appellants’ motion for attorney fees.   On March 13, 2007, the plaintiffs filed amotion for the Appeal Court to rehear their claims.   As of May 9, 2007, the Appeal Court has notyet responded to this motion.

*Property Tax Lawsuit*

We filed lawsuitsagainst the property appraiser of Pinellas County Florida to challenge the2004, 2005 and 2006 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 March31, 2007.

*Wall Springs Conservatory, Inc.Complaint*

On July 13, 2006, Wall Springs Conservatory, Inc., orWall Springs,  filed suit against theCompany as successor in interest to GHR in the circuit court of Pinellas Countyfor declaratory relief.  On July 14,2006, Wall Springs also filed suit against us in the small claims division ofthe Pinellas County Court in connection with an easement agreement.  The Company answered both claims, alsoasserting affirmative defenses and counterclaims in each action.  The Company then filed a motion to transferthe small claims matter to Circuit Court, which was granted on September 27,2006.  The Company then moved toconsolidate these two cases.  Our motionto consolidate was granted by the Circuit Court on March 1, 2007.  At this time, the Company is unable to assessthe likely outcome of this litigation.

*Environmental Remediation*

The FloridaDepartment of Environmental Protection, or the DEP, conducted a site inspectionat the Resort on June 24, 2003. The Resort was found to have improperlydisposed of waste paint and solvents and failed to properly store waste lampsand used oil and oil filters in properly labeled containers. The predecessorowner entered into a Consent Order wherein the DEP agreed to a reduced civilpenalty of $22, and allowed the predecessor owner to offset 80% of this reducedcivil penalty with credits obtained through the implementation of a pollutioncontrol project and a process of ongoing self-monitoring and reporting ofenvironmental conditions to the DEP. The DEP determined that an above groundself-contained storage tank system at the Resort qualifies for this credit. TheResort installed the system and, on an ongoing basis, continues to monitor theenvironmental conditions at the Resort and to report these conditions to theDEP. As part of the ongoing self-monitoring and reporting process, the Resortengaged a third party, URS Corporation, to develop a Site AssessmentReport and monitor the environmental conditions noted in the DEP ConsentOrder.  The final formal proposal from URS was received on April 6, 2007and was subsequently approved by the DEP. The estimated cost in the proposal for the remediation was approximately$59.  URS began the remediation work onMay 8, 2007.  This amount was accrued asof March 31, 2007.  After the excavationis finished, additional testing will be completed. If tests remain favorable,this should conclude the process.  

**8.****              Subsequent Events**

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 a principal amount of  $1,200 (the “Loan”).  The Loan is secured by a first prioritymortgage on three wholly-owned condominium units located at the Resort.  On theClosing Date, the Company borrowed, pursuant to the Loan Agreement,approximately $20 to pay the closing costs related to the Loan.  Subjectto compliance with the Loan Agreement, the Company has the right to draw downthe remainder of the principal amount available under the Loan Agreement overtime 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.

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The Loan bears interest at thefloating Wall Street Journal Prime rate (currently 8.25%) and provides forinterest only payments through December 31, 2007.  Beginning with themonthly payment due on January 31, 2008, the Loan Agreement requires principaland interest payments based on a twenty year amortization schedule.  Thereis no prepayment penalty for early repayment.  Any balance of the Loanwhich remains unpaid on April 10, 2010 must be repaid in full on that date. Ifan event of default occurs, then the obligation may be accelerated and theprincipal and any interest on the Loan shall be due and payable in full. The lender shall also have additional remedies in law and equity upon an eventof default. An event of default is defined in the Loan Agreement to generallyinclude, among other events, (i) a payment default, (ii) a failure by theCompany to comply with the terms of the loan agreement, (iii) any false statementor misrepresentation in any loan-related document by the Company, (iv)dissolution of the Company, (v) any defect in collateralization or foreclosureproceedings involving the Company, (vi) a material adverse change in theCompany’s financial condition, or (vii) if the lender believes that theprospect of repayment of the loan is impaired or otherwise in good faithbelieves itself insecure.

Among other terms, the LoanAgreement contains 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.

As of May 9, 2007, the only draw against this Loan wasfor the loan closing costs of approximately $20.

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**INNISBROOK RENTAL POOLLEASE OPERATIONCONDENSED BALANCE SHEETSAS OF MARCH 31, 2007 AND DECEMBER 31, 2006(in thousands)**
| ** **                                                              | ** ** | **March 31,  2007** | ** ** | **December 31,  2006*** | ** ** |
|-------------------------------------------------------------------------|------------|--------------------------|------------|------------------------------|------------|
| ** **                                                              | ** ** | **(unaudited)**          | ** ** | ** **                   | ** ** |
| ** **                                                              | ** ** | ** **               | ** ** | ** **                   | ** ** |
| **DISTRIBUTION FUND**                                                   | ** ** | ** **               | ** ** | ** **                   | ** ** |
| **Assets**                                                              |       |                     |       |                         |       |
| Receivable from GTA-IB, LLC for distribution                            |       | $                        | 1,637      |                         | $          | 845 |   |
| Interest receivable from maintenance escrow fund                        |       | 27                       |       | 27                           |       |
| **Total assets**                                                        |       | $                        | 1,664      |                         | $          | 872 |   |
| **Liabilities**                                                         |       |                     |       |                         |       |
| Due to Rental Pool participants for distribution                        |       | $                        | 1,361      |                         | $          | 660 |   |
| Due to maintenance escrow fund                                          |       | 303                      |       | 212                          |       |
| **Total liabilities**                                                   |       | $                        | 1,664      |                         | $          | 872 |   |
| **MAINTENANCE ESCROW FUND**                                             | ** ** | ** **               | ** ** | ** **                   | ** ** |
| **Assets**                                                              |       |                     |       |                         |       |
| Cash and cash equivalents                                               |       | $                        | 187        |                         | $          | 234 |   |
| Short-term investments                                                  |       | 1,900                    |       | 1,900                        |       |
| Receivable from distribution fund                                       |       | 303                      |       | 211                          |       |
| Inventory                                                               |       | —                   |       | 25                           |       |
| Interest receivable                                                     |       | 30                       |       | 35                           |       |
| **Total assets**                                                        |       | $                        | 2,420      |                         | $          | 2,405 |   |
| **Liabilities  and participants’ fund balances**                   |       |                     |       |                         |       |
| Accounts payable                                                        |       | $                        | 11         |                         | $          | 21 |   |
| Interest payable to distribution fund                                   |       | 27                       |       | 26                           |       |
| Carpet care reserve                                                     |       | 82                       |       | 75                           |       |
| Rental Pool participants’ fund balances                            |       | 2,300                    |       | 2,283                        |       |
| **Total  liabilities and Rental Pool participants’ fund balances** |       | $                        | 2,420      |                         | $          | 2,405 |   |

 

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***Derived from audited combined financialstatements.**

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOLLEASE OPERATIONCONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS’ DISTRIBUTION FUND BALANCESFOR THREE MONTHS ENDED MARCH 31, 2007 AND 2006(in thousands) (unaudited)**
| ** **                                                    | ** ** | **Three months  ended March 31,** | ** ** |
|---------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                    | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| **DISTRIBUTION FUND**                                         | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Balance,  beginning of period                                 |       | $                                                | —     |   | $ | — |   |
| Additions:                                                    |       |                                             |       |   |   |
| Amounts available for distribution                            |       | 1,637                                            |       | 2,044 |   |
| Interest received or receivable from Maintenance  Escrow Fund |       | 27                                               |       | 18 |   |
| Reductions:                                                   |       |                                             |       |   |   |
| Amounts withheld for Maintenance Escrow Fund                  |       | (303                                             | )          | (401 | ) |
| Distribution accrued or paid to Rental Pool  participants     |       | (1,361                                           | )          | (1,661 | ) |
| Balance, end of period                                        |       | $                                                | —     |   | $ | — |   |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOLLEASE OPERATIONCONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS’ MAINTENANCE ESCROW FUNDBALANCESFOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006(in thousands) (unaudited)**
| ** **                                                                   | ** ** | **Three months  ended March 31,** | ** ** |
|------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                   | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| **MAINTENANCE ESCROW FUND**                                                  | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Balance, beginning  of period                                                |       | $                                                | 2,283      |   | $ | 1,975 |   |
| Additions:                                                                   |       |                                             |       |   |   |
| Amounts withheld from occupancy fees                                         |       | 303                                              |       | 401 |   |
| Interest earned                                                              |       | 27                                               |       | 18 |   |
| Charges to Rental Pool participants to establish or  restore escrow balances |       | 45                                               |       | 175 |   |
| Reductions:                                                                  |       |                                             |       |   |   |
| Maintenance charges                                                          |       | (297                                             | )          | (216 | ) |
| Carpet care reserve deposit                                                  |       | (14                                              | )          | (20 | ) |
| Interest accrued or paid to Distribution Fund                                |       | (27                                              | )          | (18 | ) |
| Refunds to Rental Pool participants pursuant to the  Master Lease Agreements |       | (20                                              | )          | (93 | ) |
| Balance, end of period                                                       |       | $                                                | 2,300      |   | $ | 2,222 |   |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOLLEASE OPERATIONCONDENSED STATEMENTS OF OPERATIONSFOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006(in thousands) (unaudited)**
| ** **                                  | ** ** | **Three months  ended March 31,** | ** ** |
|---------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                  | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| **DISTRIBUTION FUND**                       | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Gross revenue                               |       | $                                                | 4,550      |   | $ | 5,755 |   |
| Deductions:                                 |       |                                             |       |   |   |
| Agents’ commissions                    |       | 203                                              |       | 294 |   |
| Resort fees                                 |       | —                                           |       | 112 |   |
| Credit card fees                            |       | 104                                              |       | 132 |   |
| Professional fees                           |       | 6                                                |       | 6 |   |
| Uncollectible room rents                    |       | 1                                                |       | — |   |
| Linen replacements                          |       | 34                                               |       | 74 |   |
| Rental pool complimentary fees              |       | —                                           |       | 1 |   |
|                                        |       | 348                                              |       | 619 |   |
| Adjusted gross  revenue                     |       | 4,202                                            |       | 5,136 |   |
| Amount retained  by lessee                  |       | (2,521                                           | )          | (3,081 | ) |
| Gross income  distribution                  |       | 1,681                                            |       | 2,055 |   |
| Adjustments to  gross income distribution:  |       |                                             |       |   |   |
| General pooled expense                      |       | (2                                               | )          | (2 | ) |
| Corporate complimentary occupancy fees      |       | 6                                                |       | 6 |   |
| Interest                                    |       | (3                                               | )          | (3 | ) |
| Occupancy fees                              |       | (337                                             | )          | (446 | ) |
| Advisory committee expenses                 |       | (57                                              | )          | (54 | ) |
| Net income  distribution                    |       | 1,288                                            |       | 1,556 |   |
| Adjustments to  net income distribution:    |       |                                             |       |   |   |
| Occupancy fees                              |       | 337                                              |       | 446 |   |
| Hospitality suite fees                      |       | 2                                                |       | — |   |
| Westin Associate room fees                  |       | 10                                               |       | 42 |   |
| Available for  distribution to participants |       | $                                                | 1,637      |   | $ | 2,044 |   |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOLLEASE OPERATION**

**NOTES TO CONDENSED FINANCIALSTATEMENTS**

**FOR THE THREE MONTHS ENDED MARCH31, 2007 AND 2006**

**(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. (“GTA” or the “Operating Partnership”). There is noestablished market for the Company’s membership interests. The precedingcondensed financial statements of the Rental Pool Lease Operations (the “RentalPool”) at the Innisbrook Resort and Golf Club (the “Resort”) are for theperiods ended March 31, 2007 and 2006. The Rental Pool consists of condominiums at the Resort which are leasedby the Company from their owners and used as hotel accommodations for theResort.

Historically,the predecessor owner, Golf Host Resorts, Inc. (“GHR”), and the Company haveoffered several different programs to the condominium owners who are eligibleto participate in the Rental Pool (the “Rental Pool Participants”). EffectiveJanuary 1, 2002, GHR offered a new Master Lease Agreement (“NMLA”) whichpermitted all Rental Pool Participants the opportunity to convert to the NMLAfrom any prior agreement they were participating in at that time.  In addition, the NMLA provides that on anannual basis each Rental Pool Participant may elect to participate in theRental Pool for the following year by signing an Annual Lease Agreement (“ALA”).Any Rental Pool Participant who does not sign the ALA is not permitted toparticipate in the Rental Pool for the following year.  Under the NMLA, 40% of the Adjusted GrossRevenues, as defined in the NMLA, are distributed to the Rental PoolParticipants and the remaining 60% is retained by the Company.

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

TheDistribution Fund accounts for the sharing of the Rental Pool Participants’portion of Adjusted 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 from the units participating in theRental Pool, less certain defined costs.

Inaddition, GHR agreed in the NMLA to reimburse the Rental Pool Participants whowere participating in the NMLA an amount up to 50% of the actual unitrefurbishment costs, plus interest at a rate of 5% per annum on such amounts,beginning in 2002.  For newly refurbishedunits entering the Rental Pool during 2005, the Company agreed to reimburse theRental Pool Participants who were participating in the NMLA an amount up to 25%of the actual unit refurbishment costs, plus interest at a rate of 2.5% perannum, beginning in 2005.  The obligationto reimburse the refurbishment costs and pay interest thereon applies only ifcertain minimum participation thresholds are maintained. The Company assumedthe obligations of GHR under the NMLA and the ALA, or, collectively, theAgreements.

**MaintenanceEscrow Fund Accounts**

TheNMLA generally provides that 90% of the occupancy fees earned by each RentalPool Participant are ultimately deposited in that Rental Pool Participant’sMaintenance Escrow Fund account. This account provides funds for payment ofamounts 

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that are due fromRental Pool Participants under the Agreements for maintenance and refurbishmentservices for or related to their condominium unit(s). In the event that aRental Pool Participant’s balance falls below that necessary to provideadequate funds for maintenance and replacements, the Rental Pool Participant isrequired to restore the escrow balance to a defined minimum level. The NMLArequires that specific fund balances must be maintained, by unit type, size andage of refurbishment, as defined in the applicable Agreement. Under the NMLA, apercentage of the occupancy fees are deposited into the carpet care reserve inthe Maintenance Escrow Fund.  The portionof the Maintenance Escrow Fund representing the carpet care reserve is expectedto be used to pay the expense of carpet cleaning for all Rental PoolParticipants. This percentage is estimated to provide the amount necessary tofund carpet cleaning expenses and may be adjusted annually. The amountsexpended for carpet care were approximately $7 and $2 for the three monthsended March 31, 2007 and 2006, respectively.

The Lessors’ Advisory Committee, subject to therestrictions contained in the Agreements, invests the Maintenance Escrow Fundon behalf of the Rental Pool Participants. The Lessors’ Advisory Committeeconsists of nine Rental Pool Participants who are elected to advise the Companyon Rental Pool matters and to negotiate amendments to the lease agreement, theALA, and the NMLA. Income earned on the investments of the Maintenance EscrowFund is allocated proportionately to the respective Maintenance Escrow Fundaccounts of the Rental Pool Participants and paid quarterly through theDistribution Fund.   At March 31, 2007and December 31, 2006, the Maintenance Escrow Fund held certificates of depositof $1,900 with maturity terms ranging from three months to twelve months andbearing interest at rates from 4.5% to 5.2%, per annum.  At March 31, 2007 and  December 31, 2006, the carrying value ofthese investments approximates fair value.

**Going Concern**

The continuation and success of the Rental Pool iscontingent upon the continuation of the operations of the Resort. In turn, thesuccess of the Resort’s operations is contingent upon the continuedparticipation of condominium owners in the Rental Pool. The Company had incomefrom operations of approximately $1,751 and $2,475 for the three months endedMarch 31, 2007 and 2006, respectively; however, the impact of seasonality onthe Resort’s operations and the projections of the Resort’s cash flow throughthe end of 2007 raise substantial doubt about the Company’s ability to continueas a going concern. Items related to the continuation of the Resort as a goingconcern include such issues as:  the saleof condominium units which do not participate in the Rental Pool or through asale are removed from the Rental Pool; owners of units opting to live in theirunits; owners renting their units outside of the Rental Pool; and generaleconomic conditions related to the destination resort industry.  The Operating Partnership’s parent, GolfTrust of America, Inc., or GTA, is currently seeking a buyer for the Resortpursuant to the stockholder-approved plan of liquidation. In the event that theResort is not sold, it may become necessary for the Company to seekfurther cash infusions from the Operating Partnership, if available, or to seeksome other form of re-capitalization to seek to insure the Company’songoing viability.  As part of thateffort, the Company entered into a non-revolving loan agreement with a localbank to borrow up to the principal amount of $1,200, as more fully described in Note 9, *SubsequentEvents*, to the Condensed Combined Financial Statements of GTA-IB,LLC above.  However, further funding is needed to ensure the long-term financialviability of the Resort.  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 obtain additional financing which will allow the Company toremain viable through the consummation of the liquidation.

**ITEM 2. Management’sDiscussion and Analysis of Financial Condition and Results of Operations**

We were formed onDecember 30, 2002 as a wholly-owned subsidiary of GTA-IB GolfResort, LLC, which in turn is a wholly-owned subsidiary of Golf Trust ofAmerica, L.P., or the Operating Partnership. The Operating Partnership is the operating partnership of Golf Trust ofAmerica, Inc., or GTA. Golf Host Resorts, Inc., or GHR, is the formerunaffiliated owner of the Resort and the former borrower who defaulted under a$79,000  participating mortgage loan funded by the Operating Partnershipin June 1997.

We and the Operating Partnershipentered into a Settlement Agreement, dated July 15, 2004, with GHR, GolfHosts, Inc., Golf Host Management, Inc., Golf HostCondominium, Inc. and Golf Host Condominium, LLC (the “SettlementAgreement”). The Settlement Agreement resolved a number of issues between theparties, including GHR’s default under the $79,000  loan made by theOperating Partnership to GHR in June 1997. As part of the SettlementAgreement, we took

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ownership of the Westin Innisbrook Golf Resort, sincerenamed the Innisbrook Resort and Golf Club (the “Resort”), effective at theclose of business on July 15, 2004. Also, in connection with theSettlement Agreement, we entered into a management agreement with WestinManagement Company South (“Westin”) providing for Westin’s management of theResort, which was terminated on October 31, 2006.  In addition, Westin and Troon Golf L.L.C. (“Troon”)  entered into a Facility Management Agreementsetting forth the terms of Troon’s management of the golf facilities at theResort (the “Facilities Management Agreement”). See further discussion in Note 5 to the Condensed CombinedFinancial Statements referred to in Item 1 of this Quarterly Report on Form10-Q.  

The Operating Partnership hadpreviously entered into an agreement with GHR and the prospective purchaser ofa parcel of undeveloped land within the Resort, commonly known asParcel F. This agreement, commonly known as the Parcel F DevelopmentAgreement, was executed on March 29, 2004 and amended on August 10, 2005to add us as a party.  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, which are designed to avoid interference with the operationsof the Resort.  The Parcel F DevelopmentAgreement also contains provisions which we believe will increase the OperatingPartnership’s ability to better manage the location of the access road for ParcelF.  See Part II, Item 1. LegalProceedings, below, for more information.

**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, condominium accommodations andfood and beverage dining and catering options to business meeting or grouptravelers, transient guests who play golf, guests who purchase golf packagesand guests who bring their families to the Resort. As a destination golfresort, the Resort’s performance is sensitive to weather conditions andseasonality. 

The Resort had lower realizedrevenue and fewer room nights during the three months ended March 31, 2007 thanduring the corresponding period in 2006. The decrease in realized revenue isdirectly attributable to the reduction in aggregate room nights, describedbelow, for both the group and transient market sectors.  The decrease in aggregate room nights in thegroup sector was primarily due to 3,000 room nights that booked in the firstquarter of 2006 that the Resort chose to decline for the first quarter of 2007because it was not profitable business for the Resort.  The balance of the variance was due to groupsthat are on a regional rotation for their respective meetings.  The Resort was not able to replace these roomnights with other group bookings.  Underthe Westin Management Agreement which terminated on October 31, 2006, theResort had access to the Westin Global Sales Office (the “GSO”), which providedgroup booking leads to the Resort.  Sincethe group booking window is typically six to eighteen months out, the Resortwas negatively impacted by the loss of the leads historically provided by the GSOwhich were not able to be replicated by other lead sources in the short windowof time between the termination of the Westin Management Agreement on October31, 2006 and the peak season of 2007, January through April. Since thetermination of the Westin Management Agreement, the Resort management teamshave made efforts to replicate the GSO lead source with other independent leadsources but the impact of these efforts will not necessarily be realized in theshort-term.    

Transient room nights were also downdue to the loss of the Westin central reservations unit and other transientbooking sources and the benefit of an international marketing campaign that wasavailable when the Resort was under the Westin international hotel chain flag.  As we continue to establish Innisbrook as anindependent brand and gain exposure in the internet booking arena, we believewe will realize less of a variance in the room nights in the transientsector.  The Resort did realize an increasein the average daily room rate of approximately $13.20 from targeting a moreprofitable type of guest, which helped mitigate some of the revenue lost due tothe reduction in room nights and golf rounds.  

During the three months endedMarch 31, 2007, each of these market segments at the Resort produced a greateraggregate spending level per room night as compared to the three months endedMarch 31, 2006.  While overall roomnights and golf rounds decreased 26.6% and 7.5%, respectively, during the firstthree months of 2007 as compared to the same period in 2006, overall grossrevenue per room night increased by $80.25 to $615.62 from $535.37 while grossgolf revenue per round played increased by $9.72 to $150.00 from $140.28.  The fluctuation in gross revenue is discussedin further detail below.

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The following table showsutilization of the Resort facilities broken down by department, results ofoperations and selected Rental Pool statistical data during the three monthperiods ended March 31, 2007 and March 31, 2006.  This information is shown in thousands,except for statistical data such as the utilization data in the table below:
|                                        | ** ** | **Three Months Ended March 31,** | ** ** |
|----------------------------------------|------------|------------------------------------------------------|------------|
| ** **                             | ** ** | **2007**                                             | ** ** | **2006** | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** |
| **Utilization  of Resort facilities:** | ** ** | ** **                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Available room  nights                 |       | 51,107                                               |       | 51,067 |   | 40 |   | 0.1 | % |
| Actual room  nights                    |       |                                                 |       |   |   |   |   |   |   |
| Group                                  |       | 16,284                                               |       | 23,093 |   | (6,809 | ) | (29.5 | )% |
| Transient                              |       | 7,052                                                |       | 8,683 |   | (1,631 | ) | (18.8 | )% |
| Total room nights                      |       | 23,336                                               |       | 31,776 |   | (8,440 | ) | (26.6 | )% |
| Food and  beverage meals               |       | 105,333                                              |       | 158,709 |   | (53,376 | ) | (33.6 | )% |
| Golf rounds                            |       |                                                 |       |   |   |   |   |   |   |
| Resort guests                          |       | 20,840                                               |       | 23,421 |   | (2,581 | ) | (11.0 | )% |
| Member/guests                          |       | 12,721                                               |       | 12,858 |   | (137 | ) | (1.1 | )% |
| Total golf rounds                      |       | 33,561                                               |       | 36,279 |   | (2,718 | ) | (7.5 | )% |
| Gross revenue per room  night          |       | $                                                    | 615.62     |   | $ | 535.37 |   | $ | 80.25 |   | 15.0 | % |
|                                        |            |                                                      |            |  |  |  |  |  |  |  |  |  |

 
|                                             | ** ** | **Three Months Ended March 31,** | ** ** |
|---------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                  | ** ** | **2007**                                             | ** ** | **2006** | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** |
| **Results  of operations (in thousands):**  | ** ** | ** **                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenues                                    |       |                                                 |       |   |   |   |   |   |   |
| Hotel                                       |       | $                                                    | 4,601      |   | $ | 5,845 |   | $ | (1,244 | ) | (21.3 | )% |
| Food and beverage                           |       | 3,987                                                |       | 5,132 |   | (1,145 | ) | (22.3 | )% |
| Golf                                        |       | 5,034                                                |       | 5,089 |   | (55 | ) | (1.1 | )% |
| Other                                       |       | 744                                                  |       | 946 |   | (202 | ) | (21.4 | )% |
| Total revenues                              |       | 14,366                                               |       | 17,012 |   | (2,646 | ) | (15.6 | )% |
| Expenses                                    |       |                                                 |       |   |   |   |   |   |   |
| Hotel                                       |       | 3,363                                                |       | 4,107 |   | (744 | ) | (18.1 | )% |
| Food and beverage                           |       | 2,632                                                |       | 3,133 |   | (501 | ) | (16.0 | )% |
| Golf                                        |       | 2,013                                                |       | 1,856 |   | 157 |   | 8.5 | % |
| Other                                       |       | 2,632                                                |       | 2,895 |   | (263 | ) | (9.1 | )% |
| General and administrative                  |       | 1,120                                                |       | 1,682 |   | (562 | ) | (33.4 | )% |
| Depreciation and amortization               |       | 536                                                  |       | 491 |   | 45 |   | 9.2 | % |
| Total expenses                              |       | 12,296                                               |       | 14,164 |   | (1,868 | ) | (13.2 | )% |
| Operating income                            |       | 2,070                                                |       | 2,848 |   | (778 | ) | (27.3 | )% |
| Other expense                               |       | 59                                                   |       | — |   | 59 |   | 100 | % |
| Interest  expense, net                      |       | 260                                                  |       | 373 |   | (113 | ) | (30.3 | )% |
| Net income                                  |       | $                                                    | 1,751      |   | $ | 2,475 |   | $ | (724 | ) | (29.3 | )% |
| ** **                                  | ** ** | ** **                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Selected  Rental Pool statistical data:** | ** ** | ** **                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Average daily  distribution                 |       | $                                                    | 32.04      |   | $ | 40.03 |   | $ | (7.99 | ) | (20.0 | )% |
| Average room  rate                          |       | $                                                    | 197.15     |   | $ | 183.95 |   | $ | 13.20 |   | 7.2 | % |
| Occupancy  percentage                       |       | 45.7                                                 | %          | 62.2 | % | (16.5 | ) | (26.6 | )% |
| Average number of  available units          |       | 568                                                  |       | 567 |   | 1 |   | (0.0 | )% |

 

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***Three months ended March 31, 2007 and 2006.***

During the three months endedMarch 31, 2007, there were 8,440, or 26.6%, fewer occupied room nights ascompared to the three months ended March 31, 2006.  There were 1,631 fewer transient room nightsand 6,809 less group room nights during the three months ended March 31, 2007as compared to the three months ended March 31, 2006.  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 are room nights which arebooked and do not correlate to a meeting or convention at the Resort.  Transient room nights are often booked within30 days or less from the date of the visit, while group room nights aretypically booked no less than 120 days in advance of the date of a visit.  Larger groups typically book 16 to18 months in advance of a stay. Transient room nights are often booked as part of golf packages andInternet bookings, among others. Management believes that the decrease in the room nights, as describedin the introductory paragraph above, is attributed to the change in lead andreservation channels from the Westin central reservation unit and theirinternational marketing campaign and other sources available through Westin toindependent lead and reservation channels. This type of change takes time to establish the Innisbrook name as anindependent brand and gain appropriate exposure in the Internet and Mediamarket separate from the Westin identity. Also, the Resort staff has to learn how to maximize the reservationchannels available to it as an independent property.

 Total revenue for the Resort was $2,646 lessduring the three months ended March 31, 2007 than in the same period of 2006.An overall increase in spending by the Resort’s guests, both for rooms (improvedaverage room rates) and by package guests for food and beverages, helped tomitigate the reduction in gross revenue that resulted from the lower number ofroom nights and decreases in banquet and catering sales in three months endedMarch 31, 2007 as compared to same period of 2006.  During the same periods, the average roomrate increased from $183.95 in 2006 to $197.15 in 2007.  Gross revenue per room night during the threemonths ended March 31, 2007 was $615.62, as compared to $535.37 for the same periodin 2006.  

The most significant decrease inrevenues at the Resort during the three months ended March 31, 2007 occurred inthe Hotel department. Revenues attributable to that category for the threemonths ended March 31, 2007 decreased by approximately $1,244, or 21.3%, ascompared to the same period in 2006. Hotel revenue decreased primarily becauseof the decrease in aggregate room nights noted above.  Food and Beverage revenues decreased byapproximately $1,145, or 22.3%, as a result of 53,376, or 33.6%, fewer meals being served, also referred to as covers,as compared to the three months ended March 31, 2006.   This aggregate decrease in covers served wasprimarily attributable to the Resort’s banquets, catering and room service,with a combined decrease of approximately 46,870 covers. Covers attributed tothe Resort’s casual restaurants and pool service decreased by approximately6,506. While the aggregate number of covers decreased, revenue per coverincreased from $32.34 to $37.85.  Thecombination of decreased number of covers and increased revenue per coverproduced the $1,145 negative variance for the three months ended  March 31, 2007 as compared to the threemonths ended March 31, 2006.  

Golf revenue decreased byapproximately $55, primarily as a result of 2,718 fewer rounds of golf playedduring the three months ended March 31, 2007 as compared to the same period in2006.  Management believes thatapproximately 1,200 of that reduction in rounds for the quarter resulted fromthe fact that the PGA tournament was moved from October, during which it has been held annually since 2001, to Marchbeginning in 2007.  As a consequence ofthe Copperhead course being used by the PGA for the tournament, the Resort wasunable to sell its golf packages during the week of the March tournament.  Gross golf revenue for the quarter endedMarch 31, 2007 averaged $150.00 per round, as compared to $140.28 per round forthe same period in 2006.  The netdecrease in aggregate rounds played was attributed to 2,581 fewer rounds playedby the Resort’s transient guests, including packages, coupled with an aggregatedecrease of 137 rounds played by Resort members.  The number of total golf rounds played in thethree months ended March 31, 2007 was 33,561, compared to 36,279 rounds playedin the same period of 2006. 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, we continued to monitortotal operating expenses in an attempt to ensure that we control expenses andthat the expenses bear a direct correlation to the room nights, food andbeverage covers and golf round demand. Aggregate total operating expenses donot generally 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 

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in hotel operations,decreased by approximately $1,913, or 14.0%, for the three months ended March31, 2007 as compared to the same period in 2006.  This decrease is primarily attributable tothe decrease in room nights and food and beverage covers discussed above. 

Depreciation and amortization expense, excluding theRental Pool amortization included in hotel expenses, was approximately $536 and$491 for the three months ended March 31, 2007 and 2006, respectively.

Interest expense, net of interestincome, was approximately $260 and $373 for the three months ended March 31,2007 and 2006, respectively, and reflects amortization of the discount of ourRental Pool refurbishment liability in the amount of $161 and the interestportion of lease payments amounting to approximately $21.  The defaulted participating mortgage loanthat was assumed by us from GHR, our unaffiliated borrower, has an outstandingbalance at March 31, 2007 of $39,240 and became non-interest bearing upon ourassumption on July 15, 2004.

Other expense of $59 in the threemonths ended March 31, 2007 represents the accrual of the environmentalremediation costs as more fully discussed in Note 8 to the CondensedCombined Financial Statements referred to in Item 1 of this Quarterly Report onForm 10-Q.  

The net income for the threemonths ended March 31, 2007 was approximately $1,751, compared to a net incomefor the three months ended March 31, 2006 of approximately $2,475.

During the three months endedMarch 31, 2007, approximately $358 was disbursed for capital projects. Of thosedisbursed funds, $222 was used to pay lease payments on existing and additionalequipment consisting of bellman vehicles, golf cart leases, golf courseequipment leases, telephone equipment leases and cable leases and the balancewas for various capital improvement projects and replacements throughout theResort.

**OtherMatters**

On April 25, 2006, we entered into an agreementwith Suncoast Charities, Inc., or Suncoast, which provides that Suncoastwill lease the Copperhead golf course at the Resort for seven and one half daysduring the month of March for a PGA TOUR event known as the PODSChampionship. Our agreement with Suncoast provides that the tournament willoccur each year in March beginning in March 2007 and ending inMarch 2012. The agreement also provides, among other things, that we willreceive a base fee and that we may receive a participation fee in the event ifthe aggregate ticket sales during any tournament year exceed 115% of thegreater of the 2005 tournament ticket sales or the 2006 tournament ticketsales. We do not yet have the final numbers for the March 2007 tournamentfrom Suncoast but our estimates indicate that the ticket sales exceeded thereferenced threshold.

OnSeptember 28, 2006 we signed a Termination and Release Agreement with Westinwhereby the Westin management agreement terminated on October 31, 2006.  The Termination and Release Agreementprovides that we pay to Westin, subject to the terms of the managementagreement, a termination fee.  Thetermination fee is now fixed at $5,594 and is due and payable upon the earlierof a sale of the Resort or March 31, 2008.

**Contractual Obligations, Contingent Liabilities and Commitments**

The following table summarizesour contractual obligations at March 31, 2007, 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:

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| ** **                                                                           | ** ** | **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 |       | $                                                                     | 5,080      |   | $ | 1,065 |   | $ | 3,934 |   | $ | 49 |   | $ | 32 |   |
| Westin termination  fee(2)                                                           |       | 5,594                                                                 |       | 5,594 |   | — |   | — |   | — |   |
| Troon  supplemental fee (3)                                                          |       | 800                                                                   |       | 800 |   | — |   | — |   | — |   |
| Troon management  fee                                                                |       | 233                                                                   |       | 233 |   |   |   |   |   |   |   |
| Mortgage Note  payable to the Operating Partnership                                  |       | 39,240                                                                |       | — |   | — |   | — |   | 39,240 |   |
| Operating and  capital leases                                                        |       | 1,631                                                                 |       | 607 |   | 898 |   | 126 |   | — |   |
| Service  agreements and other                                                        |       | 4,733                                                                 |       | 1,293 |   | 2,439 |   | 1,001 |   | — |   |
| Working capital  advances from the Operating Partnership, net                        |       | 3,103                                                                 |       | — |   | — |   | — |   | 3,103 |   |
| Total of the Resort’s  obligations                                              |       | $                                                                     | 60,414     |   | $ | 9,592 |   | $ | 7,271 |   | $ | 1,176 |   | $ | 42,375 |   |

 

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(1)             Interestis reflected, as applicable, in the commitments and obligations listed above.

(2)             Pursuant to the terms of the Termination andRelease Agreement, the Westin termination fee of approximately $5,594 isdue at the earlier of the date of a sale of the Resort or March 31, 2008.   This amount is included in the “Less than 1year” column due to the fact that we are currently seeking a buyer for theResort,  although as of May 9, 2007, nobinding contract for the sale of the Resort has been executed.

(3)             On February 22, 2007, we sent Troon a noticeof termination in regards to the Facilities Management Agreement pursuant towhich Troon manages the golf operations at the Resort. We and Troon continue tonegotiate the post termination rights of the respective parties including theamount, timing and payment of the supplemental fee.  We intend to manage the golf operationsinternally following the termination of the Troon Facilities ManagementAgreement.  Pursuant to the existingFacilities Management Agreement, the supplemental fee is due upon sale of theresort or July 15, 2009, whichever occurs first.  For purposes of this schedule, the Troonsupplemental fee is reflected in the “Less than 1 year” column due to the factthat we are currently seeking a buyer for the Resort, although as of May 9,2007, no binding contract for the sale of the Resort has been executed.

Please refer to “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations—Contractual Obligations,Contingent Liabilities and Commitments” in our Form 10-K for the yearended December 31, 2006, filed on April 2, 2007, for a description of ourcontractual obligations.

**Liquidity and Capital Resources**

Theaccompanying financial statements have been prepared based on the assumptionthat we will continue as a going concern. As of March 31, 2007, the Resort has a working capital deficit ofapproximately $8,535 primarily due to the fact that the Westin termination feeof $5,594 and the Troon supplemental fee of $800 are classified as currentliabilities. See further discussion in Note 5 to the Condensed CombinedFinancial Statements referred to in Part I, Item 1 of this Quarterly Report onForm 10-Q.  Before this reclassification,the Resort had a working capital deficit of approximately $2,141.  The Resort’s member deficit at March 31, 2007is $11,600. The Resort reported net income of approximately $1,751 for thethree  months ended March 31, 2007.  Since the first three months of the year isthe Resort’s highest season, there is still substantial doubt about our abilityto continue as a going concern and will depend on the strength of the bookingsthroughout the remainder of 2007.  TheResort continues to experience seasonal fluctuations in its net working capitalposition due to the seasonality of the golf industry in Florida. Thisseasonality impacts our liquidity. In particular, there is generally moreavailable cash during the winter months, specifically in the first quarter.Cash generally becomes very limited in the late summer months. Revenues declineat the Resort during the summer months because the hot Florida weather makesthe Resort less appealing for group golf outings and vacation destinationgolfers. Additionally, unusual weather patterns, such as the hurricanesexperienced in Florida in 2004 and those that affected the east coast in 2005,negatively impacted revenues for the Resort in the late summer-early fallseason of 2005 and 2006 as groups and guests were hesitant to book reservationson the East Coast during the hurricane season. Weather-related concernsmay continue to negatively impact reservations in comparable periods(July through September) of 2007 and subsequent years. The Resort usesseasonal pricing (peak, shoulder and off-peak) to maximize revenues. 

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Generally, the Resort’s only source of cash is fromits operations.  Further, now that theWestin Management Agreement is terminated, we are currently involved in thecapital improvement project of upgrading the technological infrastructure of theResort and replacing certain components which were proprietary to Westin. Ourprojections indicate that the replacement of these components could require usto make an investment in the range of $1,500 to $2,000.  GTA management continues to work diligentlywith the Resort’s management team to identify opportunities to improve the cashflow situation at the Resort. Although GTA is currently seeking a buyer for theResort pursuant to its stockholder-approved plan of liquidation, no bindingcontract for the sale of the Resort has yet been executed. GTA madeintercompany advances to the Resort to support working capital needs in theamounts of $2,000, $400, $650 , $600 and $120 in July 2004,September 2005, November 2005, October 2006, and February 2007, respectively.Further, GTA funded approximately $203 and$33 for the beginning phase of the technological infrastructure capitalinvestment in October 2006 and November 2006, respectively, and enteredinto a related lease for an investment of approximately $468 in January 2007.  Theproceeds of these advances have been fully expended to support the Resort’soperational expense and existing obligations. The Resort repaid to GTAthe $120  and the $33 advances fromResort operational cashflow in March 2007. While current Resort cash flow projections for 2007 indicate wemay be in a breakeven cash situation by year end December 31, 2007, ashortfall is anticipated in by late summer to early fall due to certainobligations that the Resort must pay in August and November 2007, includingobligations of approximately $1,060 and $728, respectively, for the quarterlyrental pool distributions and $412 in both August and November 2007 for therental pool refurbishment payments. Therefore, a cash infusion of up to approximately$1,000 may be necessary to fund the shortfall. It may be necessary to draw against its non-revolving credit facility(discussed below) or to receive a cash infusion from GTA in order to fund theshortfall. 

On April 10, 2007, we and certain of our affiliatesentered into a Business Loan Agreement (the “Loan Agreement”) with PatriotBank, a community bank, to borrow, on a non-revolving basis, up to theprincipal amount of  $1,200.  The Loan is secured by a first prioritymortgage on three wholly-owned condominium units located at the Resort.  On theClosing Date, we borrowed, pursuant to the Loan Agreement, approximately $20 topay the closing costs related to the Loan.  Subject to compliance with theLoan Agreement, we have the right to draw down the remainder of the principalamount available under the Loan Agreement over time to finance renovations ofthe Resort’s restaurants, upgrades of the Resort’s information technologyinfrastructure, and other Resort improvements or short-term working capitalshortfalls.  See furtherdiscussion in Note 9 to the Condensed Combined Financial Statements referred toin Part I, Item 1 of this Quarterly Report on Form 10-Q.  Further, theCompany continues to seek additional funding sources to manage its seasonalcash flow needs.   If we areunable to either continue to improve our operating cash flows or otherwiseobtain more long-term liquidity, then we may be unable to continue as agoing concern.

**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.  As of May 9, 2007, we currently only have $20outstanding under the Loan Agreement with Patriot Bank.

**ITEM 4. Controls And Procedures**

We maintain disclosure controls and procedures thatare designed to ensure that information required to be disclosed in ourExchange Act reports is recorded, processed, summarized and reported within thetime periods specified in the SEC’s rules and forms, and that suchinformation is accumulated and communicated to our management, including ourChief Executive Officer and our Chief Financial Officer, as appropriate, toallow timely decisions regarding required disclosure. Our management assessesthe costs and benefits of such controls and procedures based upon theprevailing facts and circumstances, including management’s reasonable judgmentof such facts. As we neither controlled nor managed the Resort prior toJuly 15, 2004, our disclosure controls and procedures with respect to suchpersons and entities were necessarily more limited than those we maintain withrespect to our own corporate operations. On July 15, 2004, we took titleto the Resort; however, despite the fact that our amended management agreementwith Westin provided us with heightened control and access to information, wedid not directly assemble the financial information for the Resort (although wehave taken steps that we deem to be reasonable under the circumstances to seekto verify such financial information) and consequently, our disclosure controlsand procedures with respect to the Resort, while strengthened, were necessarilymore limited than those we maintain with respect to our own corporateoperations. Since July 15, 2004, we have focused upon integratingoperations 

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at theResort into our disclosure controls and procedures and internal controlprocedures. In particular, those controls and procedures have been updated toaccount for the challenges presented by the increased size and scope of ouroperations now that we own the Resort. Effective January 1, 2007, we implemented a new general ledgeraccounting software package, or GL software, at the Resort to replace theformer GL software of which the majority of the financial reports wereproprietary to Westin.  Our new GLsoftware, know as Aptech, was used at the Resort prior to July 15, 2004 whenWestin required that the Resort adopt their GL software.   As a result, the accounting staff isgenerally familiar with the process and procedures in operating the new GLsoftware.  We do not currently believethat the change in the GL software has materially changed or will materiallychange our internal control over financial reporting or our disclosure controlsand procedures.

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

As of March 31, 2007, we carried out an evaluation,under the supervision and with the participation of our management, includingour 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 March 31, 2007, our disclosure controls and procedures areeffective in timely alerting them to material information relating to us (includingour consolidated subsidiaries) required to be included in our Exchange Actreports. 

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

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**PART II—OTHERINFORMATION**

**ITEM 1. Legal Proceedings**

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

*Land UseLawsuit*

On March 29,2005, the Company filed a Motion to Intervene in the suit titled *Innisbrook Condominium Association, Inc., C. Frank Wreath,Meredith P. Sauer, and Mark Banning, Plaintiffs vs. Pinellas County, Florida,Golf Host Resorts, Inc. and Innisbrook F LLC, Defendants*, CaseNo. 043388CI-15. This motion was filed in the Circuit Court of the SixthJudicial Circuit, in and for Pinellas County, Florida, Civil Division and wasgranted by the Circuit Court.  In thisreport, the Company refers to this matter as the “Initial Land Use Lawsuit.”   The plaintiffs in the Initial Land UseLawsuit have filed a multi-count complaint seeking injunctive and declaratoryrelief with respect to the land use and development rights of a tract of landcommonly known as Parcel F, a parcel of land located within the Resort andowned by GHR. The Company filed the Motion to Intervene as a defendant in theInitial Land Use Lawsuit in order to protect its property and its land use anddevelopment rights with respect to Parcel F.  On April 26, 2005, Joseph E.Colwell, Marcia G. Colwell, Kirk E. Covert, and Deborah A.Covert and the Autumn Woods Homeowner’s Association, Inc. moved tointervene in the Initial Land Use Lawsuit, which the Court subsequentlyallowed.  On April 8, 2005, aseparate suit was filed by James M. and Mary H. Luckey, and Andrew J.and Aphrodite B. McAdams, against Pinellas County, GHR and BayfairInnisbrook, LLC seeking injunctive and declaratory relief relating to the landuse and development rights of Parcel F. This suit was consolidated with the Initial Land Use Lawsuit.  In this report, the Company refers to thismatter as the “Subsequent Land Use Lawsuit” and to the Initial Land Use Lawsuitand the Subsequent Land Use Lawsuit as the “Land Use Lawsuits.”  

FromDecember 19 through December 23, 2005, the Court tried theseconsolidated cases in a non-jury trial. On March 8, 2006, the Court ruled infavor 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 percurium the Circuit Court judgment in favor of the defendants on February 28,2007 and denied the plaintiffs-appellants’ motion for attorney fees.   On March 13, 2007, the plaintiffs filed amotion for the Appeal Court to rehear their claims.   As of May 9, 2007, the Appeal Court has notyet responded to this motion.

*Wall Springs Conservatory, Inc.Complaint*

OnJuly 13, 2006, Wall Springs Conservatory, Inc., or “Wall Springs,”  filed suit against the Company as successorin interest to GHR in the circuit court of Pinellas County for declaratoryrelief.  On July 14, 2006, Wall Springsalso filed suit against us in the small claims division of the Pinellas CountyCourt in connection with an easement agreement. We answered both claims, also asserting affirmative defenses andcounterclaims in each action.  We thenfiled a motion to transfer the small claims matter to Circuit Court, which wasgranted on September 27, 2006.  We thenmoved to consolidate these two cases. Our motion to consolidate was granted by the Circuit Court on March 1,2007.

*PropertyTax Lawsuit*

We filed lawsuits against the property appraiser ofPinellas County Florida, or Pinellas County, to challenge the 2004, 2005 and2006 real estate assessment on the Resort property. Pinellas County filed amotion to dismiss, which was denied by the court. No trial date has been set.If Pinellas County were to prevail, management believes that there would be nomaterial adverse effect upon our financial statements, as the entire PinellasCounty assessment is fully accrued and accounted for at March 31, 2007.

**Item 1A. Risk Factors**

There has been nomaterial changes in the risk factors disclosed in Part II, Item 1A “RiskFactors” in our Annual Report on Form 10-K for the fiscal year ended December31, 2006 filed on April 2, 2007.

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

Not applicable.

**Item 3. Defaults Upon SeniorSecurities**

Not applicable.

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

Not applicable.

**Item 5. Other Information**

Not applicable.

**Item 6. Exhibits**

**EXHIBIT INDEX**
| Exhibit No. | ** ** | **Description**                                                                                                                               |
|------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
| 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                                                                |

 

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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** |
|---------------------|-----------------|
|                | ** **      | ** ** |
|                | ** **      | ** ** |
| Date: May 15,  2007 |            | /s/ W. Bradley Blair, II |
|                |            | W. Bradley Blair, II |
|                |            | President and Chief Executive Officer |
|                |            |   |
| Date: May 15,  2007 |            | /s/ Tracy S. Clifford |
|                |            | Tracy S. Clifford |
|                |            | Secretary and Principal Accounting |
|                |            | Officer |

 

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