**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

** **

**FORM 10-Q**

**(Mark One)**

**x****        Quarterly report pursuantto section 13 or 15(d) of the Securities Exchange Act of 1934**

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

**o****        Transition report pursuantto section 13 or 15(d) of the Securities Exchange Act of 1934**

**for the transition periodfrom               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)

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

**None**

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

**None**

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

Yes x  No o

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

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

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

Yes o  No x

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

Issuer has no common stock subject to this report.

 

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**GTA-IB, LLC**

**FORM 10-Q**

**FOR THE NINE MONTHS ENDEDSEPTEMBER 30, 2006 AND 2005**

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

 

**Cautionary Note Regarding Forward-LookingStatements**

The following report containsforward-looking statements within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended. Forward-looking statements arestatements that predict or describe future events or trends and that do notrelate solely to historical matters. All of our projections in this quarterlyreport are forward-looking statements. You can generally identify forward-lookingstatements as statements containing the words “believe,” “expect,” “hope,”“may, “will,” “anticipate,” “intend,” “estimate,” “project,” “assume” or othersimilar expressions. Certain factors that might cause such a difference includethe following: changes in general economic conditions; including changes thatmay influence group conference and guests’ vacation plans; changes in travelpatterns; changes in consumer tastes in destinations or accommodations forgroup conferences and vacations; changes in rental pool participation by thecurrent condominium owners; settlement of the class action lawsuit involvingthe rental pool agreements;  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.You should not place undue reliance on our forward-looking statementsbecause the matters they describe are subject to known (and unknown) risks,uncertainties and other unpredictable factors, many of which are beyond ourcontrol. Our forward-looking statements are based on the limitedinformation currently available to us and speak only as of the date on whichthis report was filed with the Securities and Exchange Commission. Ourcontinued internet posting or subsequent distribution of this dated report doesnot imply continued affirmation of the forward-looking statementsincluded in it. We undertake no obligation, and we expressly disclaim anyobligation, to issue any updates to our forward-looking statements, evenif subsequent events cause our expectations to change regarding the mattersdiscussed in those statements. Future events are inherently uncertain.Moreover, it is particularly difficult to predict business activity levels atthe Resort with any certainty. Accordingly, our projections in this quarterlyreport are subject to particularly high uncertainty. Our projections should notbe regarded as legal promises, representations or warranties of any kindwhatsoever. Over time, our actual results, performance or achievements willlikely differ from the anticipated results, performance or achievements thatare expressed or implied by our forward-looking statements, and suchdifferences might be significant and harmful to your interests.

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**GTA-IB, LLCCONDENSED COMBINED BALANCE SHEETSAS OF SEPTEMBER 30, 2006AND DECEMBER 31, 2005(in thousands)**
| ** **                                      | ** ** | **September 30,  2006** | ** ** | **December  31,  2005** | ** ** |
|-------------------------------------------------|------------|------------------------------|------------|-----------------------------------|------------|
| ** **                                      | ** ** | **(unaudited)**              | ** ** |
| **Assets**                                      |       |                         |       |                              |       |
| Current assets                                  |       | $                            | 4,691      |                              | $          | 6,491 |   |
| Property and equipment,  net                    |       | 27,386                       |       | 28,322                            |       |
| Intangibles, net                                |       | 15,313                       |       | 16,635                            |       |
| Other assets                                    |       | 2,608                        |       | 2,647                             |       |
| **Total Assets**                                |       | $                            | 49,998     |                              | $          | 54,095 |   |
| **Liabilities**                                 |       |                         |       |                              |       |
| Current liabilities                             |       | $                            | 8,055      |                              | $          | 9,242 |   |
| Westin termination fee,  short-term             |       | 5,594                        |       | —                            |       |
| Long-term debt,  less current maturities        |       | 42,732                       |       | 42,841                            |       |
| Other long term  liabilities                    |       | 5,020                        |       | 10,502                            |       |
| **Total Liabilities**                           |       | 61,401                       |       | 62,585                            |       |
| **Commitments and Contingencies**               |       |                         |       |                              |       |
| **Member’s Deficit**                       |       | (11,403                      | )          | (8,490                            | )          |
| **Total Liabilities and Member’s Deficit** |       | $                            | 49,998     |                              | $          | 54,095 |   |

 

*See accompanying notes tocondensed combined financial statements.*

3

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** **

**GTA-IB, LLCCONDENSED COMBINED STATEMENTS OF OPERATIONS AND MEMBER’S DEFICITFOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005(in thousands) (unaudited)**
| ** **                                  | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine  Months Ended  September 30,** | ** ** |
|---------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                  | ** ** | **2006**                                             | ** ** | **2005**                                                  | ** ** | **2006** | ** ** | **2005** | ** ** |
| **Revenues**                                |       |                                                 |       |                                                      |       |   |   |   |   |
| Hotel                                       |       | $                                                    | 1,719      |                                                      | $          | 1,899 |   | $ | 11,008 |   | $ | 10,632 |   |
| Food and  beverage                          |       | 1,554                                                |       | 1,497                                                     |       | 9,372 |   | 8,557 |   |
| Golf                                        |       | 2,040                                                |       | 2,009                                                     |       | 10,656 |   | 10,067 |   |
| Other                                       |       | 587                                                  |       | 689                                                       |       | 2,136 |   | 3,043 |   |
| Total revenues                              |       | 5,900                                                |       | 6,094                                                     |       | 33,172 |   | 32,299 |   |
| **Expenses**                                |       |                                                 |       |                                                      |       |   |   |   |   |
| Hotel                                       |       | 1,979                                                |       | 2,100                                                     |       | 8,929 |   | 9,015 |   |
| Food and  beverage                          |       | 1,660                                                |       | 1,476                                                     |       | 6,671 |   | 6,054 |   |
| Golf                                        |       | 1,775                                                |       | 1,856                                                     |       | 5,542 |   | 5,518 |   |
| Other                                       |       | 2,562                                                |       | 2,255                                                     |       | 7,939 |   | 7,393 |   |
| General and  administrative                 |       | 1,017                                                |       | 1,021                                                     |       | 4,168 |   | 3,694 |   |
| Depreciation and  amortization              |       | 505                                                  |       | 575                                                       |       | 1,529 |   | 1,910 |   |
| Total expenses                              |       | 9,498                                                |       | 9,283                                                     |       | 34,778 |   | 33,584 |   |
| Operating income                            |       | (3,598                                               | )          | (3,189                                                    | )          | (1,606 | ) | (1,285 | ) |
| Interest expense, net                       |       | 565                                                  |       | 438                                                       |       | 1,308 |   | 1,254 |   |
| Net (loss) income                           |       | (4,163                                               | )          | (3,627                                                    | )          | (2,914 | ) | (2,539 | ) |
| Member’s deficit,  beginning of period |       | (7,240                                               | )          | (3,352                                                    | )          | (8,489 | ) | (4,440 | ) |
|                                        |       |                                                 |       |                                                      |       |   |   |   |   |
| Member’s deficit, end of period        |       | $                                                    | (11,403    | )                                                         | $          | (6,979 | ) | $ | (11,403 | ) | $ | (6,979 | ) |

 

*See accompanying notes tocondensed combined financial statements.*

4

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

| ** **                                                                         | ** ** | **Nine months ended  September 30,** | ** ** |
|------------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                         | ** ** | **2006**                                            | ** ** | **2005** | ** ** |
| **Cash flows from operating  activities:**                                         | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Net income                                                                         |       | $                                                   | (2,914     | ) | $ | (2,539 | ) |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |                                                |       |   |   |
| Depreciation and  amortization                                                     |       | 2,519                                               |       | 2,900 |   |
| Provision for  bad debts                                                           |       | 349                                                 |       | 33 |   |
| Non-cash  interest                                                                 |       | 1,018                                               |       | — |   |
| Other changes in  operating assets and liabilities                                 |       | (311                                                | )          | 272 |   |
| Net cash  provided by operating activities                                         |       | 661                                                 |       | 666 |   |
| **Cash flows used in investing  activities:**                                      | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Purchases of  property and equipment                                               |       | (129                                                | )          | (589 | ) |
| **Cash flows used in financing  activities:**                                      | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Repayment of  long-term debt and capital lease obligations                         |       | (1,043                                              | )          | (802 | ) |
| Additional  borrowings on existing debt                                            |       | —                                              |       | 400 |   |
| Net cash used in  financing activities.                                            |       | (1,043                                              | )          | (402 | ) |
| Net increase (decrease)  in cash                                                   |       | (511                                                | )          | (325 | ) |
| **Cash and cash equivalents,  beginning of period**                                |       | 1,519                                               |       | 1,832 |   |
| **Cash and cash equivalents, end  of period**                                      |       | $                                                   | 1,008      |   | $ | 1,507 |   |
| ** **                                                                         | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| **Supplemental Cash Flow  Information:**                                           | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Cash paid for interest                                                             |       | $                                                   | 272        |   | $ | 334 |   |
| **Non-cash financing and  investing activities:**                                  | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Assets acquired through capital leases                                             |       | $                                                   | 181        |   | $ | 416 |   |

 

*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 AND NINE MONTHSENDED SEPTEMBER 30, 2006 AND 2005**

**(unaudited)**

**1.   Innisbrook Resort Ownership and Operations**

GTA-IB, LLC (the “Company”) isowned by GTA-IB Golf Resort, LLC, which in turn is 100% owned by Golf Trust ofAmerica, L.P. (the “Operating Partnership”). Golf Trust of America, Inc.(“GTA”) indirectly owns 99.6% of the Operating Partnership. The remaining 0.4%of the Operating Partnership is owned by its one limited partner. The OperatingPartnership is GTA’s operating partnership. Golf Host Resorts, Inc.(“GHR”, “the predecessor owner” or “the former borrower”), an entity affiliatedwith Starwood Capital Group LLC, is the former owner of the Innisbrook Resortand Golf Club (the “Resort”) and the former borrower under a 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 $79,000,000 loan made by theOperating Partnership to GHR in June 1997. As part of the SettlementAgreement, the Company took ownership of the Resort on July 15, 2004. Inconnection with the Settlement Agreement, the Company entered into a managementagreement with Westin Management Company South (“Westin”), which provides forWestin’s management of the Resort, and Westin and Troon Golf L.L.C. (“Troon”)entered into a facility management agreement providing for Troon’s managementof the golf facilities at the Resort. The current status of (i) the management agreement with Westin and (ii)the facility 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 September30, 2006, the Resort has a working capital deficit of approximately$8,958,000.  This working capital deficitresulted primarily from the reclassification of the Westin termination fee andrelated deferred management fees from long term to short term obligations.  The reclassified termination fee and deferredmanagement fees total approximately $5,919,000 in the aggregate as of September30, 2006*. * See further discussion in Note 4 to theCondensed Consolidated Financial Statements referred to in Item 1 of this quarterlyreport.  Before this reclassification,the Resort had a working deficit of approximately $3,039,000.  The Resort’s member deficit at September 30,2006 is $11,403,000. The Resort reported a net loss of approximately $2,914,000for the nine months ended September 30, 2006.* *The Resort continues to experienceseasonal fluctuations in its net working capital position due to theseasonality of the golf industry in Florida. This seasonality impacts ourliquidity. In particular, there is generally more available cash during thewinter months, specifically in the first quarter. Cash generally becomes verylimited in the late summer months. Revenues generally decline at the Resortduring the summer months because the hot Florida weather makes the Resort lessappealing for group golf outings and vacation destination golfers.Additionally, 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, theResort’s only source of cash is from its profitable operations, if any. Whilethe financial performance of the Resort has shown signs of recovery since weassumed title to the Resort on July 15, 2004, current projections indicate anoperational cash flow shortfall of approximately $100,000 in the aggregate islikely to occur by December 31, 2006. Further, now that the Westin Management Agreement is terminated, we havebegun the capital improvement project of upgrading the technologicalinfrastructure of the Resort and replacing certain components which areproprietary to Westin. Our projections indicate that the replacement of thesecomponents could require us to make an investment in the range of $1.0 to $2.0million.  GTA management continues towork diligently with the Resort’s management team to identify opportunities toimprove the cash flow situation at the Resort. GTA is currently seeking a buyerfor the Resort pursuant to its stockholder-approved plan of liquidation. GTAmade intercompany advances to the Resort to support working capital needs inthe amounts of $2,000,000, $400,000, $650,000 and $600,000 in July 2004,September 2005, November 2005 and October 2006, respectively.Further, GTA funded approximately $200,000 for the beginning phase of thetechnological infrastructure capital investment in October 2006. In the eventthat the Resort is not sold, it may become necessary for the Resort toseek further cash infusion from GTA, if available, or to seek some otherform of financing or equity investment to seek to insure the Company’songoing viability through the consummation of the liquidation.  There are no assurances that GTA, or anyaffiliate, will have the ability to provide future funding to the Resort, norare there any assurances that the Company will be able to obtain financingwhich will allow the Company to remain viable. See further discussion in Note 9.

**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.

*Interim Statements*

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

7

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

**3.   Property and Equipment**

Property and equipment consistsof the following:
| ** **                     | ** ** | **September 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|--------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                     | ** ** | **(in thousands)**      | ** ** |
| ** **                     | ** ** | **(unaudited)**              | ** ** | ** **                  | ** ** |
| Land                           |       | $                            | 1,968      |                        | $          | 1,968 |   |
| Buildings                      |       | 14,722                       |       | 14,722                      |       |
| Golf course  improvements      |       | 7,529                        |       | 7,533                       |       |
| Machinery and  equipment       |       | 6,471                        |       | 6,230                       |       |
|                           |       | 30,690                       |       | 30,453                      |       |
| Less accumulated  depreciation |       | (3,304                       | )          | (2,131                      | )          |
|                           |       | $                            | 27,386     |                        | $          | 28,322 |   |

 

At September 30, 2006, machineryand equipment includes certain equipment with a net book value of $1,503,000recorded under capital leases. Depreciation expense amounted to approximately$405,000 and $383,000 for the three months ended September 30, 2006 and 2005,respectively.  Depreciation expenseamounted to $1,198,000 and $1,139,000 for the nine months ended September 30,2006 and 2005, 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**        | ** ** | **September  30,  2006** | ** ** | **December 31,  2005** | ** ** |
|--------------------------------|------------|-------------------------------------|------------|------------------------------------|------------|-----------------------------|------------|
| ** **                     | ** ** | ** **                          | ** ** | **(in thousands)**            | ** ** |
| ** **                     | ** ** | ** **                          | ** ** | **(unaudited)**                    | ** ** | ** **                  | ** ** |
| Water Contract                 |       | None  since renewable in perpetuity |       | $                                  | 2,300      |                        | $          | 2,300 |   |
| Rental Pool                    |       | 89.5  months                        |       | 9,870                              |       | 9,870                       |       |
| Guest Bookings                 |       | Less  than 24 months                |       | 1,100                              |       | 1,100                       |       |
| Club Memberships               |       | 144  months                         |       | 4,400                              |       | 4,400                       |       |
| Trade Name                     |       | None  since renewable in perpetuity |       | 2,500                              |       | 2,500                       |       |
|                           |       |                                |       | 20,170                             |       | 20,170                      |       |
| Less accumulated  amortization |       |                                |       | (4,857                             | )          | (3,535                      |       |
|                           |       |                                |       | $                                  | 15,313     |                        | $          | 16,635 |   |

 

Amortization expense amounted toapproximately $430,000 and $521,000 for the three months ended September 30,2006 and 2005, respectively, and $1,322,000 and $1,762,000 for the nine monthsended September 30, 2006 and 2005, respectively. ** **Of these amounts, approximately$331,000 and $331,000 in the three months ended September 30, 2006 and 2005,respectively, $991,000 and $991,000 in the nine months ended September 30, 2006and 2005, respectively, are included in hotel expenses and are not included indepreciation and amortization in the Condensed Consolidated Statements ofOperations. Anticipated amortization expense for the next five years andthereafter is set forth in the table below:

| Year                                 | ** ** | **Principal   (in thousands)** | ** ** |
|--------------------------------------|------------|------------------------------------------|------------|
| October 1  through December 31, 2006 |       | $                                        | 415        |   |
| 2007                                 |       | 1,688                                    |       |
| 2008                                 |       | 1,688                                    |       |
| 2009                                 |       | 1,688                                    |       |
| 2010                                 |       | 1,688                                    |       |
| Thereafter                           |       | 3,346                                    |       |
| Total                                |       | $                                        | 10,513     |   |

 

8

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Other assets include theCompany’s interest in the net proceeds from a third-party’s sale ofParcel F.  The Company’s share ofthe proceeds, to be received by the predecessor owner from the sale of ParcelF, are estimated to be $2,200,000, but could be substantially less in the eventof a sale thereof. See further details in Note 1.  Also included in other assets are certaindesign fees for the refurbishment program of $212,000 as of September 30, 2006and $236,000 as of December 31, 2005. The Company has a contractual rightunder Rental Pool lease agreements to be reimbursed for these design fees bythe Rental Pool participants.  This reimbursementis received in the form of a deduction from the quarterly Rental Poolrefurbishment payments.

**5.   Current Liabilities**

Current liabilities consist ofthe following:
| ** **                                  | ** ** | **September 30,  2006** | ** ** | **December  31,  2005** | ** ** |
|---------------------------------------------|------------|-------------------------|------------|-----------------------------------|------------|
| ** **                                  | ** ** | **(in thousands)** | ** ** |
| ** **                                  | ** ** | **(unaudited)**         | ** ** | ** **                        | ** ** |
| Accounts payable                            |       | $                       | 1,732      |                              | $          | 2,008 |   |
| Accrued payroll  costs                      |       | 1,060                   |       | 1,554                             |       |
| Other payables  and accrued expenses        |       | 1,286                   |       | 1,833                             |       |
| Deposits and  deferred revenue              |       | 1,987                   |       | 2,438                             |       |
| Deferred  management fees                   |       | 325                     |       | —                            |       |
| Current portion  of capital leases          |       | 336                     |       | 336                               |       |
| Current portion  of refurbishment liability |       | 1,329                   |       | 1,073                             |       |
|                                        |       | $                       | 8,055      |                              | $          | 9,242 |   |

 

*Westin Termination Fee*

The July 15, 2004 management agreement that the Company executedwith Westin (the “Management Agreement”) provides for the payment of atermination fee to Westin, subject to the terms and conditions of thatagreement. If not earlier terminated, the Management Agreement would haveexpired on December 31, 2017.  TheCompany’s obligation to pay termination fees, which is included in short-termliabilities on the balance sheet, was recorded at its net present value onJuly 16, 2004 of $4,631,000 (calculated at a discount rate of 7%).Amortization of the discount was to be charged to interest expense ratably overthe period through December 31, 2006. The amortization charged to interestexpense was $88,000 for the three months ended September 30, 2006 and the threemonths ended September 30, 2005 and $264,000 for nine months ended September30, 2006 and the nine months ended September 30, 2005. By mutual agreement, on September 28,2006, the Company, the Operator and the Company’s parent, as guarantor, entereda Termination and Release Agreement (the “Termination Agreement”), pursuant towhich the Company and the Operator agreed to terminate the Management Agreementas of October 31, 2006 (the “Termination Date”).  In addition to thetermination of the Management Agreement, the Termination Agreement providesthat (i) on or prior to October 3, 2006, the Company will deposit $600,000 inthe Resort’s operating account to be used in part to pay to the Operatorcertain fees and charges accrued under the Management Agreement and which areexpected to approximate this amount; (ii) on or prior to the earlier of March31, 2008, or sale of the Resort by the Company, the Company will pay to theOperator the termination fee provided under Section 4.4.2 of the ManagementAgreement calculated as of the Termination Date, estimated at $5,594,000; and(iii) the Operator will permit the Company to continue to access the Operator’s“SAP” accounting system for the operation of the Resort for a period of threemonths after the Termination Date for a total charge of $6,000.  TheCompany plans to independently manage the Resort as of the Termination Date.   The Company has until November 30, 2006 todecide whether to assume or terminate the management agreement with Troon forTroon to continue to manage the golf facilities of the Resort.  Since theManagement Agreement was terminated as of October 31, 2006, the termination feeliability was adjusted to its expected settlement value of $5,594,000.  Additional amortization of approximately$183,000 was charged to interest expense at September 30, 2006.  As of September 30, 2006 and December 31,2005, the carrying value of this liability is $5,594,000 and $5,147,000,respectively.  The termination fee underthe Management Agreement was reflected as a long-term obligation as of December31, 2005, but was reclassified as a short-term obligation as of June 30,2006.  

*Deferred Management Fees*

                Asof September 30, 2006 and December 31, 2005, the Company recorded deferredmanagement fees of $325,000 and $204,000, respectively.  These fees were reflected as a long-termliability as of December 31, 2005, but were reclassified to a short-termliability as of June 30, 2006.  See Note9 for further discussion.

**6.   Long-Term Debt**

The Company’s long-term debtconsists of the following:
| ** **                                                                                        | ** ** | **September 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                                                                                        | ** ** | **(in thousands)**      | ** ** |
| ** **                                                                                        | ** ** | **(unaudited)**              | ** ** | ** **                  | ** ** |
| Non-interest  bearing mortgage note due to the Operating Partnership, maturing in  June 2027 |       | $                            | 39,240     |                        | $          | 39,240 |   |
| Advances from the  operating partnership, net                                                     |       | 2,976                        |       | 2,976                       |       |
| Capital leases less  current portion                                                              |       | 516                          |       | 625                         |       |
|                                                                                              |       | $                            | 42,732     |                        | $          | 42,841 |   |

** **

9

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**7.   Other Long-Term Liabilities**

*Master Lease RefurbishmentObligation*

On July 16, 2004, the Company recorded a liabilityof $4,532,000 for the refurbishment program pursuant to the master leaseagreement, or MLA, of the Rental Pool. This liability represented the Company’s obligation to pay to thevarious participants in the Rental Pool an amount equal to 50% of the cost torefurbish their respective units, and was recorded at the then net presentvalue (calculated at a discount rate of 15%) of the total principal payments of$7,273,000.  Principal and interestpayments are due quarterly over the repayment period of the program, beginningwith the first quarter of 2005 and ending with the fourth quarter of 2009.Interest on this liability accrues at a rate of 5% and is paid quarterly.Amortization of the discount is charged to interest expense ratably over theperiod from January 1, 2005 through December 31, 2009.

In addition, the Company agreedto provide a refurbishment reimbursement to the respective condominium ownersfor units placed into the Rental Pool during 2005.  The owners of these units will be paid 25% oftheir refurbishment investment, with interest at 2.5% per annum.  The owners of these units currently receiveinterest and will receive principal payments beginning in 2008 and ending in2012 for total principal payments of approximately $92,000.

The amortization charged tointerest expense was $179,000 for the three months ended September 30, 2006 and$177,000 for the three months ended September 30, 2005. The amortizationcharged to interest expense was $536,000 and $592,000 for the nine months endedSeptember 30, 2006 and 2005, respectively. ** **The net present value of thisliability is $4,377,000 and $4,646,000 as of September 30, 2006 andDecember 31, 2005, respectively, of which $1,329,000 and $1,000,000,respectively, is included in current liabilities (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 undiscountedprincipal payments on the MLA refurbishment program are as follows:

| Year                                                        | ** ** | **Amount  (in thousands)** | ** ** |
|-------------------------------------------------------------|------------|---------------------------------|------------|
| October 1 – December 31, 2006 |       | $                               | 266        |   |
| 2007                                                        |       | 1,417                           |       |
| 2008                                                        |       | 1,781                           |       |
| 2009                                                        |       | 2,140                           |       |
| 2010                                                        |       | 19                              |       |
| Thereafter                                                  |       | 50                              |       |
| **Total**                                                   |       | $                               | 5,673      |   |

 

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

*Troon Supplemental Fee*

A July 15, 2004 facility management agreement executed by Westinand Troon provides for the payment by the Company to Troon of a supplementalfee, subject to the terms and conditions of that facility management agreement,of $800,000. If not earlier terminated, the facility management agreement willexpire in July 15, 2009. The Company’s obligations to Troon were recordedat their net present value on July 16, 2004. The net present value on thatdate was $682,000 (calculated at a discount rate of 7%). Amortization of thediscount is charged to interest expense ratably over the period throughDecember 31, 2006. The amortization charged to interest expense for threemonths ended September 30, 2006 and 2005 was $12,000.  The amortization charged to interest expensefor the nine months ended September 30, 2006 and 2005 was $36,000.  As of September 30, 2006 and December 31,2005, the net present value of this liability was $788,000 and $752,000,respectively.   The Company has until November 30, 2006 to decide whetherto assume or terminate the management agreement with Troon for Troon tocontinue to manage the golf facilities of the Resort. 

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*Other*

As of September 30, 2006 and December 31, 2005, theCompany recorded deferred revenue from member initiation fees of $1,184,000 and$825,000, respectively.

The Company’s Other Long-TermLiabilities consists of the following:
| ** **                                    | ** ** | **September 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|-----------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                                    | ** ** | **(in thousands)**      | ** ** |
| ** **                                    | ** ** | **(unaudited)**              | ** ** | ** **                  | ** ** |
| Rental pool  refurbishment                    |       | $                            | 3,048      |                        | $          | 3,574 |   |
| Troon  supplemental fee                       |       | 788                          |       | 752                         |       |
| Deferred  membership initiation fees and dues |       | 1,184                        |       | 825                         |       |
| Westin  termination fee, long-term            |       | —                       |       | 5,147                       |       |
| Westin deferred  management fees, long-term   |       | —                       |       | 204                         |       |
|                                          |       | $                            | 5,020      |                        | $          | 10,502 |   |

 

**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 $41,000 and $44,000 for the three months ended September 30, 2006and 2005, respectively, and $147,000 and $142,000 for the nine months endedSeptember 30, 2006 and 2005, respectively.

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

The Management Agreement between the Company and Westin provides that Westinwill manage the Resort for a fee equal to 2.2% of the Resort’s gross revenue.Contemporaneously with the signing of the Management Agreement in July 2004,Westin entered into a management contract with Troon pursuant to which Troonwill manage the golf facilities of the Resort for a fee payable by the Companywhich shall equal 2% of the Resort’s gross golf revenue.  The Company pays monthly management fees toWestin and Troon. Westin and Troon also have a contractual right to earnsupplemental fees based on financial performance. The ManagementAgreement with Westin has a termination date of December 31, 2017,however, by mutual agreement, onSeptember 28, 2006, the Company, Westin and the Company’s parent, or “GTA”, asguarantor, entered a Termination and Release Agreement (the “TerminationAgreement”), pursuant to which the Company, GTA, and Westin agreed to terminatethe Management Agreement as of October 31, 2006 (the “Termination Date”). In addition to the termination of the Management Agreement, the TerminationAgreement provides that (i) on or prior to October 3, 2006, the Company or GTAwill deposit $600,000 in the Resort’s operating account to be used in part topay to Westin certain unpaid fees and charges which have accrued under theManagement Agreement and which are expected to approximate this amount, (ii) onor prior to the earlier of March 31, 2008, or any sale of the Resort by theCompany and GTA, the Company will pay to Westin the termination fee providedunder Section 4.4.2 of the Management Agreement calculated as of theTermination Date, approximately $5,594,000, and (iii) Westin will permit theCompany and GTA to continue to access Westin’s “SAP” accounting system for theoperation of the Resort for a period of three months after the Termination Datefor a total charge of $6,000.  The Company and GTA plan to independentlymanage the Resort as of the Termination Date.  The Company and GTA have until November 30, 2006 to decide whether toassume or terminate the management agreement with Troon for Troon to continueto manage the golf facilities of the Resort.  

For the three and nine monthsended September 30, 2006 and 2005, the payments made to Westin and Troon undertheir respective management agreements are reflected in the table below:
| ** ** | ** ** | **Three months ended September 30,** | ** ** | **Nine months ended September 30,** | ** ** |
|------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** ** | ** ** | **(in thousands) (unaudited)**                 | ** ** |
| ** ** | ** ** | **2006**                                                 | ** ** | **2005**                                                | ** ** | **2006** | ** ** | **2005** | ** ** |
| Westin     |       | $                                                        | 127        |                                                    | $          | 144 |   | $ | 722 |   | $ | 703 |   |
| Troon      |       | 41                                                       |       | 40                                                      |       | 213 |   | 201 |   |
| Total      |       | $                                                        | 168        |                                                    | $          | 184 |   | $ | 935 |   | $ | 904 |   |

 

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*Land Use Lawsuit*

On March 10,2005, the Company filed a Motion to Intervene in the suit titled InnisbrookCondominium Association, Inc., C. Frank Wreath, Meredith P. Sauer, andMark Banning, Plaintiffs vs. Pinellas County, Florida, Golf HostResorts, Inc. and Innisbrook F LLC, Defendants, Case No. 043388CI-15.This motion was filed in the Circuit Court of the Sixth Judicial Circuit, inand for Pinellas County, Florida, Civil Division.  In this report, the Company refers to thismatter as the “Initial Land Use Lawsuit.” 

Theplaintiffs in the Initial Land Use Lawsuit have filed a multi-count complaintseeking injunctive and declaratory relief with respect to the land use anddevelopment rights of a tract of land commonly known as Parcel F.Parcel F is a parcel of land located within the Resort and owned by anunaffiliated third-party, GHR. The plaintiffs allege that there are noremaining development units (residential units) available to be developedwithin the Resort property. On March 29, 2005, the Company filed a Motion toIntervene as a defendant in the Initial Land Use Lawsuit in order to protectits property and its land use and development rights with respect toParcel F and its property. A hearing on the Motion to Intervene was heldon April 4, 2005, after which the court granted the Company’s Motion toIntervene. On April 5, 2005, the Company joined in the filing of a Motionto Dismiss and Motion to Strike three of the seven counts of the plaintiffs’complaint. The court granted the Motion to Dismiss on April 26, 2005. On thatsame date, four individuals (Joseph E. Colwell, Marcia G. Colwell,Kirk E. Covert, and Deborah A. Covert) and Autumn Woods Homeowner’sAssociation, Inc. moved to intervene in the Initial Land Use Lawsuit whichthe court subsequently allowed.

OnApril 8, 2005, a separate suit was filed by James M. and Mary H.Luckey, and Andrew J. and Aphrodite B. McAdams, against PinellasCounty, a political subdivision of the State of Florida, Golf HostResorts, Inc., a foreign corporation and Bayfair Innisbrook, LLC, aFlorida limited liability corporation. In this report the Company refers tothis matter as the “Subsequent Land Use Lawsuit.”  

TheCompany refers to Initial Land Use Lawsuit and the Subsequent Land Use Lawsuitas the “Land Use Lawsuits.”  TheSubsequent Land Use Lawsuit seeks injunctive and declaratory relief in sixseparate counts, all relating to the land use and development rights ofParcel F. This suit was consolidated with the Initial Land Use Lawsuit onMay 3, 2005. After May 6, 2005 the Company has filed its Motion toDismiss the Subsequent Land Use Lawsuit. The motion was heard by the court onMay 31, 2005. Since that hearing, the Company has filed an Answer andAffirmative Defenses to both complaints that have been filed in the consolidatedaction. On August 3, 2005, a case management conference was held beforethe judge who is now presiding over this case. At that hearing, the courtscheduled a hearing on the defense motions for summary judgment forAugust 30, 2005, and a trial starting on December 12, 2005. OnAugust 30, 2005, the judge heard extensive argument on the defense motionsfor summary judgment and entered a number of rulings in the defendants’ favor.In summary, the court dismissed those claims in the Land Use Lawsuits which arefounded upon the theory that the proposed development is inconsistent with thePinellas Countywide Plan and Rules adopted pursuant to Chapter 73-594,Laws of Florida. The court further dismissed for lack of jurisdiction thoseclaims of the plaintiffs’ in the Subsequent Land Use Lawsuit that are based onthe theory that the proposed development is inconsistent with the PinellasComprehensive Plan. The court entered a similar ruling on certain counts of theThird Amended Complaint as to some, but not all, of the plaintiffs in theInitial Land Use Lawsuit.

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

Inaddition, the plaintiffs in the Initial Land Use Lawsuit have filed a motionfor summary judgment. The court set the hearing date for the summary judgmentreview for December 7, 2005.

FromDecember 19 through December 23, 2005, the court tried these consolidated casesin a non-jury trial. At the conclusion of the evidentiary portion of the trial,the court deferred final argument until Friday, January 6, 2006. On that date, 

12

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the court heard final arguments and rendered itsdecision. The court ruled in favor of all defendants and against all plaintiffsas to each count in both Land Use Lawsuits. On March 8, 2006, the courtformally entered its final judgment on the record ruling in favor of thedefendants on all counts and denying all claims asserted by the plaintiffs inboth Land Use Lawsuits. On March 31, 2006, the plaintiffs in the consolidatedcases filed a notice of appeal.  Sincethe filing of that notice, the plaintiffs/appellants have filed their initialappellate brief and the defendants/appellees, including GTA-IB, LLC, have filedtheir answer brief.  The plaintiffs/appellantswill have an opportunity to file a reply brief to defendants/appellees’ answerbrief.  As of November 11, 2006, no suchreply brief has been filed.  

*Property Tax Lawsuit*

The Company filed a lawsuitagainst the property appraiser of Pinellas County Florida, or Pinellas County,to challenge the 2004 and 2005 real estate assessment of the Resort property.Pinellas County filed a motion to dismiss the Company’s action, which wasdenied by the court. As of November 11, 2006, no trial date has been set. IfPinellas County were to prevail, the Company believes that there would be nomaterial adverse effect upon our financial statements, as the entire PinellasCounty assessment is fully accrued and accounted for at September 30, 2006.

**9.   Subsequent Events**

In October 2006, GTA funded the Company $600,000 forworking capital needs in connection with the terms of the Termination Agreementwith Westin.  See note 8 for furtherdiscussion. Also, in October 2006, GTA funded the Company a total of $200,000to begin the capital project of upgrading the Resort’s technologicalinfrastructure.

                On October 30, 2006, theCompany’s parent received and agreed to the terms of a non-binding confirmationof interest letter from an industry lender in which the lender proposes toprovide a loan on the Resort with an anticipated closing date on or aboutDecember 15, 2006.  The proposed use ofthese funds would be to, among other things, (i) repay the Company’s parent’sseries A preferred shareholder, (ii) fund certain capital projects at theResort, and (iii) cover certain working capital needs at the Resort.  Advancing this confirmation of interest tothe next step which would be in the form of a commitment letter is subject tocertain requirements that must be to the lender’s satisfaction which includebut are not limited to title insurance, property insurance, survey, appraisaland market studies, water supply review and engineering and environmentalreports. 

13

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** **

**INNISBROOK RENTAL POOLLEASE OPERATIONCONDENSED BALANCE SHEETSAS OF SEPTEMBER 30, 2006 AND DECEMBER 31, 2005(in thousands)**
| ** **                                                              | ** ** | **September 30,  2006** | ** ** | **December 31,  2005** | ** ** |
|-------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                                                              | ** ** | **(unaudited)**              | ** ** | ** **                  | ** ** |
| **DISTRIBUTION  FUND**                                                  | ** ** | ** **                   | ** ** | ** **                  | ** ** |
| **Assets**                                                              |       |                         |       |                        |       |
| Receivable from  GTA-IB, LLC for distribution                           |       | $                            | 578        |                        | $          | 918 |   |
| Interest  receivable from maintenance escrow fund                       |       | 25                           |       | 17                          |       |
| **Total  assets**                                                       |       | $                            | 603        |                        | $          | 935 |   |
| **Liabilities**                                                         |       |                         |       |                        |       |
| Due to Rental  Pool participants for distribution                       |       | $                            | 412        |                        | $          | 688 |   |
| Due to  maintenance escrow fund                                         |       | 191                          |       | 247                         |       |
| **Total  liabilities**                                                  |       | $                            | 603        |                        | $          | 935 |   |
| **MAINTENANCE  ESCROW FUND**                                            | ** ** | ** **                   | ** ** | ** **                  | ** ** |
| **Assets**                                                              |       |                         |       |                        |       |
| Cash and cash  equivalents                                              |       | $                            | 224        |                        | $          | 202 |   |
| Short-term  investments                                                 |       | 1,900                        |       | 1,595                       |       |
| Receivable from  distribution fund                                      |       | 191                          |       | 247                         |       |
| Inventory                                                               |       | 25                           |       | —                      |       |
| Interest  receivable                                                    |       | 25                           |       | 18                          |       |
| **Total  assets**                                                       |       | $                            | 2,365      |                        | $          | 2,062 |   |
| **Liabilities and participants’  fund balances**                   |       |                         |       |                        |       |
| Accounts payable                                                        |       | $                            | 10         |                        | $          | 9 |   |
| Construction  retainage                                                 |       | —                       |       | 6                           |       |
| Interest payable  to distribution fund                                  |       | 25                           |       | 17                          |       |
| Carpet care  reserve                                                    |       | 74                           |       | 55                          |       |
| Rental Pool  participants’ fund balances                           |       | 2,256                        |       | 1,975                       |       |
| **Total liabilities and Rental  Pool participants’ fund balances** |       | $                            | 2,365      |                        | $          | 2,062 |   |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOLLEASE OPERATIONCONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS’ DISTRIBUTION FUND BALANCESFOR THREE AND NINE ENDED SEPTEMBER 30, 2006 AND 2005(in thousands) (unaudited)**
| ** **                                                    | ** ** | **Three months  ended September 30,** | ** ** | **Nine months  ended September  30,** | ** ** |
|---------------------------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                    | ** ** | **2006**                                             | ** ** | **2005**                                                  | ** ** | **2006** | ** ** | **2005** | ** ** |
| **DISTRIBUTION  FUND**                                        | ** ** | ** **                                           | ** ** | ** **                                                | ** ** | ** ** | ** ** | ** ** | ** ** |
| Balance, beginning of  period                                 |       | $                                                    | —     |                                                      | $          | — |   | $ | — |   | $ | — |   |
| Additions:                                                    |       |                                                 |       |                                                      |       |   |   |   |   |
| Amounts  available for distribution                           |       | 578                                                  |       | 669                                                       |       | 3,825 |   | 3,804 |   |
| Interest  received or receivable from Maintenance Escrow Fund |       | 25                                                   |       | 16                                                        |       | 67 |   | 39 |   |
| Reductions:                                                   |       |                                                 |       |                                                      |       |   |   |   |   |
| Amounts withheld  for Maintenance Escrow Fund                 |       | (191                                                 | )          | (231                                                      | )          | (897 | ) | (1,008 | ) |
| Distribution  accrued or paid to Rental Pool participants     |       | (412                                                 | )          | (454                                                      | )          | (2,995 | ) | (2,835 | ) |
| Balance, end of period                                        |       | $                                                    | —     |                                                      | $          | — |   | $ | — |   | $ | — |   |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOLLEASE OPERATIONCONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS’ ESCROW FUND BALANCESFOR THE THREE AND NINEMONTHS ENDED SEPTEMBER 30, 2006 AND 2005(in thousands) (unaudited)**
| ** **                                                                   | ** ** | **Three months  ended September  30,** | ** ** | **Nine months  ended September  30,** | ** ** |
|------------------------------------------------------------------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                                   | ** ** | **2006**                                                   | ** ** | **2005**                                                  | ** ** | **2006** | ** ** | **2005** | ** ** |
| **MAINTENANCE ESCROW FUND**                                                  | ** ** | ** **                                                 | ** ** | ** **                                                | ** ** | ** ** | ** ** | ** ** | ** ** |
| Balance,  beginning of period                                                |       | $                                                          | 2,280      |                                                      | $          | 2,323 |   | $ | 1,975 |   | $ | 1,951 |   |
| Additions:                                                                   |       |                                                       |       |                                                      |       |   |   |   |   |
| Amounts withheld from occupancy fees                                         |       | 191                                                        |       | 231                                                       |       | 897 |   | 1,008 |   |
| Interest earned                                                              |       | 25                                                         |       | 16                                                        |       | 66 |   | 39 |   |
| Charges to Rental Pool participants to establish or  restore escrow balances |       | 54                                                         |       | 89                                                        |       | 364 |   | 339 |   |
| Reductions:                                                                  |       |                                                       |       |                                                      |       |   |   |   |   |
| Maintenance charges                                                          |       | (213                                                       | )          | (489                                                      | )          | (731 | ) | (1,004 | ) |
| Carpet care reserve deposit                                                  |       | (9                                                         | )          | (10                                                       | )          | (44 | ) | (49 | ) |
| Interest accrued or paid to Distribution Fund                                |       | (25                                                        | )          | (16                                                       | )          | (66 | ) | (39 | ) |
| Refunds to Rental Pool participants pursuant to the  Master Lease Agreements |       | (47                                                        | )          | (70                                                       | )          | (205 | ) | (171 | ) |
| Balance, end of period                                                       |       | $                                                          | 2,256      |                                                      | $          | 2,074 |   | $ | 2,256 |   | $ | 2,074 |   |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOLLEASE OPERATIONCONDENSED STATEMENTS OF OPERATIONSFOR THE THREE AND NINEMONTHS ENDED SEPTEMBER 30, 2006 AND 2005(in thousands) (unaudited)**
| ** **                                  | ** ** | **Three months  ended September 30,** | ** ** | **Nine months  ended September 30,** | ** ** |
|---------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                  | ** ** | **2006**                                             | ** ** | **2005**                                            | ** ** | **2006** | ** ** | **2005** | ** ** |
| **DISTRIBUTION FUND**                       | ** ** | ** **                                           | ** ** | ** **                                          | ** ** | ** ** | ** ** | ** ** | ** ** |
| Gross revenue                               |       | $                                                    | 1,627      |                                                | $          | 1,840 |   | $ | 10,754 |   | $ | 10,419 |   |
| Deductions:                                 |       |                                                 |       |                                                |       |   |   |   |   |
| Agents’ commissions                    |       | 45                                                   |       | 60                                                  |       | 472 |   | 463 |   |
| Resort fees                                 |       | 51                                                   |       | —                                              |       | 282 |   | — |   |
| Credit card fees                            |       | 39                                                   |       | 43                                                  |       | 248 |   | 240 |   |
| Professional fees                           |       | 6                                                    |       | 6                                                   |       | 19 |   | 19 |   |
| Uncollectible room rents                    |       | 2                                                    |       | 18                                                  |       | 38 |   | 20 |   |
| Linen replacements                          |       | 16                                                   |       | 19                                                  |       | 106 |   | 146 |   |
| Rental pool complimentary fees              |       | 1                                                    |       | 1                                                   |       | 2 |   | 3 |   |
|                                        |       | 160                                                  |       | 147                                                 |       | 1,167 |   | 891 |   |
| Adjusted gross  revenue                     |       | 1,467                                                |       | 1,693                                               |       | 9,587 |   | 9,528 |   |
| Amount retained  by lessee                  |       | (880                                                 | )          | (1,016                                              | )          | (5,752 | ) | (5,717 | ) |
| Gross income  distribution                  |       | 587                                                  |       | 677                                                 |       | 3,835 |   | 3,811 |   |
| Adjustments to  gross income distribution:  |       |                                                 |       |                                                |       |   |   |   |   |
| General pooled expense                      |       | (2                                                   | )          | (2                                                  | )          | (9 | ) | (2 | ) |
| Corporate complimentary occupancy fees      |       | 7                                                    |       | 5                                                   |       | 20 |   | 16 |   |
| Interest                                    |       | (3                                                   | )          | (3                                                  | )          | (9 | ) | (9 | ) |
| Occupancy fees                              |       | (212                                                 | )          | (257                                                | )          | (996 | ) | (1,120 | ) |
| Advisory committee expenses                 |       | (46                                                  | )          | (53                                                 | )          | (143 | ) | (153 | ) |
| Net income  distribution                    |       | 331                                                  |       | 367                                                 |       | 2,698 |   | 2,543 |   |
| Adjustments to  net income distribution:    |       |                                                 |       |                                                |       |   |   |   |   |
| Occupancy fees                              |       | 212                                                  |       | 257                                                 |       | 996 |   | 1,120 |   |
| Hospitality suite fees                      |       | —                                               |       | 1                                                   |       | 2 |   | 5 |   |
| Westin Associate room fees                  |       | 34                                                   |       | 44                                                  |       | 129 |   | 136 |   |
| Available for  distribution to participants |       | $                                                    | 577        |                                                | $          | 669 |   | $ | 3,825 |   | $ | 3,804 |   |

 

*See accompanying notes to thesecondensed financial statements.*

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**INNISBROOK RENTAL POOLLEASE OPERATION**

**NOTES TO CONDENSED FINANCIALSTATEMENTS**

**FOR THE THREE AND NINE MONTHSENDED SEPTEMBER 30, 2006 AND 2005**

**(in thousands) (unaudited)**

**1.             Rental Pool Lease Operations**

**Organizationand Operations**

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

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

TheRental Pool condensed financial statements consist of the Distribution Fund andthe 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, the predecessor owner to us agreed in the NMLA to reimburse theRental Pool participants who were participating in the NMLA an amount up to 50%of the actual unit refurbishment costs, plus interest at a rate of 5% per annumon such amounts, beginning in 2002.  Fornewly refurbished units entering the Rental Pool during 2005, the Companyagreed to reimburse the Rental Pool Participants who were participating in theNMLA an amount up to 25% of the actual unit refurbishment costs, plus interestat a rate of 2.5% per annum, beginning in 2005. The obligation to reimburse the refurbishment costs and pay interestthereon applies only if certain minimum participation thresholds aremaintained. The Company assumed the obligations of the predecessor owner underthe NMLA and the ALA, or, collectively, the Agreements.

**MaintenanceEscrow Fund Accounts**

TheNMLA generally provides that 90% of the occupancy fees earned by each RentalPool participant are deposited in that Rental Pool Participant’s MaintenanceEscrow Fund account. This account provides funds for payment of amounts thatare due from Rental Pool participants under the Agreements for maintenance andrefurbishment services for or related to their condominium unit(s). In theevent that a Rental Pool participant’s balance falls below that necessary toprovide adequate funds for maintenance and replacements, the Rental Poolparticipant is required to restore the escrow balance to a defined 

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minimum level. TheNMLA requires that specific fund balances must be maintained, by unit type,size and age of refurbishment, as defined in the applicable Agreement. Underthe NMLA, a percentage of the occupancy fees are deposited into the carpet carereserve in the Maintenance Escrow Fund. The portion of the Maintenance Escrow Fund representing the carpet carereserve is expected to be used to pay the expense of carpet cleaning for allRental Pool Participants. This percentage is estimated to provide the amountnecessary to fund carpet cleaning expenses and may be adjusted annually. Theamounts expended for carpet care were approximately $36,000, $37,000 and$35,000 for the years ended 2005, 2004 and 2003, respectively.

TheLessors’ Advisory Committee, subject to the restrictions contained in theAgreements, invests the Maintenance Escrow Fund on behalf of the Rental PoolParticipants. The Lessors’ Advisory Committee consists of nine Rental PoolParticipants who are elected to advise the Company on Rental Pool matters andto negotiate amendments to the lease agreement, the ALA, and the NMLA. Incomeearned on the investments of the Maintenance Escrow Fund is allocatedproportionately to the respective Maintenance Escrow Fund accounts of theRental Pool Participants and paid quarterly through the Distribution Fund. AtSeptember 30, 2006, the Maintenance Escrow Fund held certificates of deposit of$1,900,000 with maturity terms ranging from three months to twelve months andbearing interest at rates from 4.5% to 5.25% per annum.   At September 30, 2005, the MaintenanceEscrow Fund held certificates of deposit of $1,690,000 with maturity termsranging from six months to twelve months and bearing interest at rates from2.55% to 3.9%, per annum.  At September30, 2006 and 2005, the cost of these investments approximates fair value.

**Going Concern**

Thecontinuation and success of the Rental Pool is contingent upon the continuationof the operations of the Resort. In turn, the success of the Resort’soperations is contingent upon the continued participation of condominium ownersin the Rental Pool. The Company had losses from operations of approximately$3,598,000 and $1,606,000 for the three and nine months ended September 30,2006, respectively; and, the impact of seasonality on the Resort’s operationsand the projections from the Resort’s manager of the Resort’s cash flow throughthe end of 2006 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 infusion from the Operating Partnership, if available, or to seeksome other form of re-capitalization to seek to insure the Company’songoing viability. GTA is currently in the process of liquidation. There are noassurances that GTA, the Operating Partnership, or any other affiliate willhave the ability to provide future funding to the Resort, nor are there anyassurances that the Company will be able to obtain financing which will allowthe Company to remain viable through the consummation of the liquidation.

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

We were formed onDecember 30, 2002 as a wholly-owned subsidiary of GTA-IB GolfResort, LLC, or Our Parent.  Our Parentis in turn a wholly-owned subsidiary of Golf Trust of America, L.P., orthe Operating Partnership.  The OperatingPartnership is the operating partnership of Golf Trust of America, Inc., or GTA.Golf Host Resorts, Inc., or GHR, is the former unaffiliated owner of theResort and the former borrower who defaulted under a $79 millionparticipating mortgage loan funded by the Operating Partnership inJune 1997.

We, the Operating Partnership,and one of the Operating Partnership’s subsidiaries entered into a SettlementAgreement dated July 15, 2004, or the Settlement Agreement, with GHR, GolfHosts, Inc., Golf Host Management, Inc. and Golf HostCondominium, Inc. The Settlement Agreement resolved a number of issuesbetween the parties, including GHR’s default under the $79 million loanmade by the Operating Partnership to GHR in June 1997. As part of theSettlement Agreement, we took ownership of the Westin Innisbrook Golf Resort,or the Resort, effective at the close of business on July 15, 2004. Also,in connection with the Settlement Agreement, we entered into a managementagreement with Westin Management Company South, or Westin, providing forWestin’s management of the Resort which was terminated on October 31,2006.  In addition, Westin and Troon GolfL.L.C., or Troon, entered into a facility management agreement setting forththe terms of Troon’s management of the golf facilities at the Resort.  See further discussion in Note 5 tothe Condensed Consolidated Financial Statements referred to in Item 1 of thisquarterly report.  

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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 which Parcel Fmay be developed and includes restrictions on GHR, as the owner ofParcel F, which are designed to avoid interference with the operations ofthe 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 forParcel F.

**Results of Operations**

*Forward Looking Statements*

The following report containsforward-looking statements within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended. Forward-looking statements arestatements that predict or describe future events or trends and that do notrelate solely to historical matters. All of our projections in this quarterlyreport are forward-looking statements. You can generally identify forward-lookingstatements as statements containing the words “believe,” “expect,” “hope,”“may, “will,” “anticipate,” “intend,” “estimate,” “project,” “assume” or othersimilar expressions. Certain factors that might cause such a difference includethe following: changes in general economic conditions; including changes thatmay influence group conference and guests’ vacation plans; changes in travelpatterns; changes in consumer tastes in destinations or accommodations forgroup conferences and vacations; changes in rental pool participation by thecurrent condominium owners; settlement of the class action lawsuit involvingthe rental pool agreements;  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.You should not place undue reliance on our forward-looking statementsbecause the matters they describe are subject to known (and unknown) risks,uncertainties and other unpredictable factors, many of which are beyond ourcontrol. Our forward-looking statements are based on the limitedinformation currently available to us and speak only as of the date on which thisreport was filed with the Securities and Exchange Commission. Our continuedinternet posting or subsequent distribution of this dated report does not implycontinued affirmation of the forward-looking statements included in it.We undertake no obligation, and we expressly disclaim any obligation, to issueany updates to our forward-looking statements, even if subsequent eventscause our expectations to change regarding the matters discussed in thosestatements. Future events are inherently uncertain. Moreover, it isparticularly difficult to predict business activity levels at the Resort withany certainty. Accordingly, our projections in this quarterly report aresubject to particularly high uncertainty. Our projections should not beregarded as legal promises, representations or warranties of any kindwhatsoever. Over time, our actual results, performance or achievements willlikely differ from the anticipated results, performance or achievements thatare expressed or implied by our forward-looking statements, and suchdifferences might be significant and harmful to your interests.

***Results of operations***

Because the Resort is adestination golf resort, we believe it appeals to a different market than themarket to which stand-alone hotels located in downtown metropolitan areaswould appeal. The Resort provides recreation, food and beverages to businessmeeting or group travelers, transient guests who play golf, guests who purchasegolf packages and guests who bring their families to the Resort. As a destinationgolf resort, the Resort’s performance is sensitive to weather conditions andseasonality. The Resort had higher realized revenue and fewer room nightsduring the nine months ended September 30, 2006 than during the correspondingperiod in 2005. We believe that the increase in realized revenue is attributedto the continued focus sales and marketing efforts directed towards attractinggroup and transient guests and a continued focus on sales of golf packages andgolf memberships at the Resort.  The increasein the average daily rate that was realized from targeting a more profitabletype of guest offset the revenue lost due to the reduction in room nights andgolf rounds.  During the nine months ended September 30, 2006,each of these market segments at the Resort produced a greater aggregatespending level per room night as compared to the nine months ended September30, 2005.  While overall room nights andgolf rounds decreased 12.3% and 7.9%, respectively, during the first ninemonths of 2006 as compared to the same period of 2005, overall gross revenueper room night increased by $69.71 to $476.62 from $406.91 while gross golfrevenue per round played increased by $16.47 to $126.89 from $110.42.  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 and ninemonth period ended September 30, 2006 and September 30, 2005:
| ** **                             | ** ** | **Three Months Ended September 30,** | ** ** | **Nine Months Ended September 30,** | ** ** |
|----------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                             | ** ** | **2006**                                                 | ** ** | **2005**                                                | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** | **2006** | ** ** | **2005** | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** |
| **Utilization  of Resort facilities:** | ** ** | ** **                                               | ** ** | ** **                                              | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Available room  nights                 |       | 55,196                                                   |       | 55,343                                                  |       | (147 | ) | (0.3 | )% | 159,371 |   | 161,990 |   | (2,619 | ) | (1.6 | )% |
| Actual room  nights                    |       |                                                     |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Group                                  |       | 7,816                                                    |       | 9,156                                                   |       | (1,340 | ) | (14.6 | )% | 45,677 |   | 46,925 |   | (1,248 | ) | (2.7 | )% |
| Transient                              |       | 6,588                                                    |       | 8,328                                                   |       | (1,740 | ) | (20.9 | )% | 23,921 |   | 32,475 |   | (8,554 | ) | (26.3 | )% |
| Total room nights                      |       | 14,404                                                   |       | 17,484                                                  |       | (3,080 | ) | (17.6 | )% | 69,598 |   | 79,400 |   | (9,802 | ) | (12.3 | )% |
| Food and beverage  meals               |       | 66,687                                                   |       | 64,411                                                  |       | 2,276 |   | 3.5 | % | 321,944 |   | 315,058 |   | 6,886 |   | 2.2 | % |
| Golf rounds                            |       |                                                     |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Resort guests                          |       | 12,266                                                   |       | 13,585                                                  |       | (1,319 | ) | (9.7 | )% | 55,977 |   | 62,981 |   | (7,004 | ) | (11.1 | )% |
| Member/guests                          |       | 6,433                                                    |       | 7,250                                                   |       | (817 | ) | (11.3 | )% | 28,002 |   | 28,195 |   | (193 | ) | (0.3 | )% |
| Total golf rounds                      |       | 18,699                                                   |       | 20,835                                                  |       | (2,136 | ) | (10.3 | )% | 83,979 |   | 91,176 |   | (7,197 | ) | (7.9 | )% |

 
| ** **                                  | ** ** | **Three Months Ended September 30** | ** ** | **Nine Months Ended September 30** | ** ** |
|---------------------------------------------|------------|---------------------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **                                  | ** ** | **2006**                                                | ** ** | **2005**                                               | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** | **2006** | ** ** | **2005** | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** |
| **Results  of operations (in thousands):**  | ** ** | ** **                                              | ** ** | ** **                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenues                                    |       |                                                    |       |                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Hotel                                       |       | $                                                       | 1,719      |                                                   | $          | 1,899 |   | $ | (180 | ) | (9.5 | )% | $ | 11,008 |   | $ | 10,632 |   | $ | 376 |   | 3.5 | % |
| Food and beverage                           |       | 1,554                                                   |       | 1,497                                                  |       | 57 |   | 3.8 | % | 9,372 |   | 8,557 |   | 815 |   | 9.5 | % |
| Golf                                        |       | 2,040                                                   |       | 2,009                                                  |       | 31 |   | 1.5 | % | 10,656 |   | 10,067 |   | 589 |   | 5.9 | % |
| Other                                       |       | 587                                                     |       | 689                                                    |       | (102 | ) | (14.8 | )% | 2,136 |   | 3,043 |   | (907 | ) | (29.8 | )% |
| Total revenues                              |       | 5,900                                                   |       | 6,094                                                  |       | (194 | ) | (3.2 | )% | 33,172 |   | 32,299 |   | 873 |   | 2.7 | % |
| Expenses                                    |       |                                                    |       |                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Hotel                                       |       | 1,979                                                   |       | 2,100                                                  |       | (121 | ) | (5.8 | )% | 8,929 |   | 9,015 |   | (86 | ) | (0.9 | )% |
| Food and beverage                           |       | 1,660                                                   |       | 1,476                                                  |       | 184 |   | 12.5 | % | 6,671 |   | 6,054 |   | 617 |   | 10.2 | % |
| Golf                                        |       | 1,775                                                   |       | 1,856                                                  |       | (81 | ) | (4.4 | )% | 5,542 |   | 5,518 |   | 24 |   | 0.4 | % |
| Other                                       |       | 2,562                                                   |       | 2,255                                                  |       | 307 |   | 13.7 | % | 7,939 |   | 7,393 |   | 546 |   | 7.4 | % |
| General and administrative                  |       | 1,017                                                   |       | 1,021                                                  |       | (4 | ) | 0.0 | % | 4,168 |   | 3,694 |   | 474 |   | 12.8 | % |
| Depreciation and amortization               |       | 505                                                     |       | 575                                                    |       | (70 | ) | (12.2 | )% | 1,529 |   | 1,910 |   | (381 | ) | (19.9 | )% |
| Total expenses                              |       | 9,498                                                   |       | 9,283                                                  |       | 215 |   | 2.4 | % | 34,778 |   | 33,584 |   | 1,194 |   | 3.6 | % |
| Operating loss                              |       | (3,598                                                  | )          | (3,189                                                 | )          | (409 | ) | (12.9 | )% | (1,606 | ) | (1,285 | ) | (321 | ) | (25.0 | )% |
| Interest expense,  net                      |       | 565                                                     |       | 438                                                    |       | (127 | ) | (29.0 | )% | 1,308 |   | 1,254 |   | (54 | ) | (4.3 | )% |
| Net loss                                    |       | $                                                       | (4,163     | )                                                      | $          | (3,627 | ) | $ | (536 | ) | (14.8 | )% | $ | (2,914 | ) | $ | (2,539 | ) | $ | (375 | ) | (14.8 | )% |
| ** **                                  | ** ** | ** **                                              | ** ** | ** **                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Selected  Rental Pool statistical data:** | ** ** | ** **                                              | ** ** | ** **                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Average daily  distribution                 |       | $                                                       | 10.46      |                                                   | $          | 12.08 |   | $ | (1.62 | ) | (13.4 | )% | $ | 24.00 |   | $ | 23.48 |   | $ | 52 |   | 2.2 | % |
| Average room rate                           |       | $                                                       | 119.33     |                                                   | $          | 108.64 |   | $ | 10.69 |   | 9.8 | % | $ | 158.16 |   | $ | 133.91 |   | $ | 24.25 |   | 18.1 | % |
| Occupancy  percentage                       |       | 26.1                                                    | %          | 31.6                                                   | %          | (5.5 | )% |   |   | 43.7 | % | 49.0 | % | (5.3 | )% |   |   |
| Average number of  available units          |       | 607                                                     |       | 602                                                    |       | (5 | ) | (.8 | )% | 584 |   | 591 |   | (7 | ) | (1.2 | )% |

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

During the three months endedSeptember 30, 2006, there were 3,080, or 17.6%, fewer occupied room nights ascompared to the three months ended September 30, 2005.  There were 1,740 fewer transient room nightsand 1,340 less group room nights during the three months ended September 30,2006 as compared to the three months ended September 30, 2005.  Group room nights consist of conference roomnights, or room nights which are booked and correlate to a meeting or conventionat the Resort, and transient room nights, which are room nights which arebooked and do not correlate to a meeting or convention at the Resort.  Transient room nights are often booked24 hours 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 avisit.  Larger groups typically book 16to 18 months in advance of a stay. Transient room nights are often booked as part of golf packages andInternet bookings, among others, but during the first three months of September30, 2005, a significant number of transient rooms were attributable to theactualization of golf packages at the Resort. Management believes that transient room nights were lower in the threemonths ended September 30, 2006 than in the corresponding period in 2005 due toguests hesitancy to book rooms on the south east coast of Florida during thehurricane season based on the tropical activity during the hurricane seasonmonths of the past two years.  

The effect of the decline inoccupied room nights on revenues during the three months ended September 30,2006 was mitigated by improved average room rates and ancillary spendingpatterns of the guests, coupled with increases in banquet and catering sales.Total revenue for the Resort was $194,000 less during the three months endedSeptember 30, 2006 than in the same period of 2005. An overall increase inspending by the Resort’s guests, both for rooms and by package guests for foodand beverages, helped to mitigate the reduction in gross revenue that resultedfrom the lower number of room nights in three months ended September 30, 2006as compared to same period of 2005. During the same periods, the average room rate increased from $108.64 in2005 to $119.33 in 2006.  Aggregatespending per room night during the three months ended September 30, 2006 was$409.61, as compared to $348.89 for the same period in 2005.  The most significant decrease in revenues atthe Resort during the three months ended September 30 2006 occurred in theOther department. Revenues attributable to that category for the three monthsended September 30, 2006 decreased by approximately $102,000, or 14.8%, ascompared to the same period in 2005. Other Revenue decreased primarily becausethe Resort no longer charges a resort fee. Food and Beverage revenues increased by approximately $57,000, or 3.8%,as a result of 2,276, or 3.5%, greater meals served, or covers, as compared tothe three months ended September 30, 2005.  This aggregate increase in covers served was primarily attributable tothe Resort’s banquets, catering and room service, with a combined increase ofapproximately 1,590 covers. Covers attributed to the Resort’s casualrestaurants and pool service increased by approximately 686. While theaggregate number of covers increased, revenue per cover increased from $23.23to $23.31.  The combination of increasednumber of covers and increased revenue per cover produced the $57,000 positivevariance for the period ended September 30, 2006 versus September 30,2005.  Golf revenue increased byapproximately $31,000, primarily as a result of improved capture of revenue perround of golf.  Golf revenue for thequarter ended September 30, 2006 averaged $109.10 per round, as compared to$96.45 per round for the comparative period in 2005.  Although in the aggregate golf roundsdecreased by 2,136, golf revenues increased as a result of the capture ofincreased greens fees and ancillary spending in the pro shops. The net decreasein aggregate rounds played was attributed to 1,319 fewer rounds played by theResort’s transient guests, including packages, coupled with an aggregatedecrease of 817 rounds played by Resort members.  The number of total golf rounds played in thethree months ended September 30, 2006 was 18,699, compared to 20,835 roundsplayed in the same period of 2005. Golf revenue does not necessarily increaseor decrease 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 pastperiods, we continued to monitor total operating expenses in an attempt toinsure that Westin controlled expenses and that the expenses bore a directcorrelation to the room nights, food and beverage covers and golf round demand.Aggregate total operating expenses do not generally increase or decrease on aone-to-one basis with total operating revenue because the Resort must carry aminimum fixed operating staff and other support expenses at all times. In thoseoperating departments where the variable costs can best be managed, we managethese costs consistent with room, food and beverage and golf demand. TotalResort operating expenses, before depreciation and amortization and excludingthe Rental Pool amortization in hotel operations, increased by approximately$285,000, or 3.3%, for the three months ended September 30, 2006 as compared tothe corresponding period in the prior year. This increase, in part, can be attributed to an increase of approximately$593,000, or 286%, in the Resort’s annual property insurance premiums, whichrenewed July 15, 2006, due to the tropical activity impacting Florida in thepast two years although the Resort has been fortunate and not suffered anysignificant losses due to this activity. We were told by our brokers that increases of this magnitude weredictated by the insurance industry due to the catastrophic losses experiencedin coastal areas in the recent past and were not property specific so ourpremiums increase could not be mitigated by the Resort’s lack of losses inprior periods.  Property and generalinsurance expense for the three months ended September 30, 2006 increased$197,000 when compared to the same period of the prior year.  

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Depreciation and amortization expense, excluding theRental Pool amortization included in hotel expenses, was approximately $505,000and $575,000 for the three months ended September 30, 2006 and 2005,respectively.

Interest expense, net of interestincome, was approximately $565,000 and $438,000 for the three months endedSeptember 30, 2006 and 2005, respectively, and reflects amortization of thediscount of (i) our Rental Pool refurbishment liability in the amount of$179,000, (ii) our short-term liability to Westin in the amount of $271,000 and(iii) our long-term liability to Troon in the amount of $12,000. The defaultedparticipating mortgage loan that was assumed by us from GHR, our unaffiliatedborrower, and has an outstanding balance at September 30, 2006 of $39,240,000became non-interest bearing upon our assumption on July 15, 2004.

The net loss for the three monthsended September 30, 2006 was approximately $4,163,000, compared to a net lossfor the three months ended September 30, 2005 of approximately $3,627,000.

During the three months endedSeptember 30, 2006, approximately $240,000 of the capital reserve funds wasdisbursed. Of those disbursed funds, $208,000 was used to pay lease payments onexisting and additional equipment consisting of bellman vehicles, golf cartleases, golf course equipment leases, telephone equipment leases and cableleases and the balance was for various capital improvement projects andreplacements throughout the Resort.

***Nine months ended September 30,2006 and 2005.***

During the nine months endedSeptember 30, 2006, there were 9,802, or 12.3%, fewer occupied room nights thanthere were for the nine months ended September 30, 2005.  During the nine months ended September 30,2006, there were 8,554 fewer transient room nights and 1,248 fewer group roomnights, resulting in a combined 9,802 fewer occupied room nights as compared tothe same period of the prior year.  Webelieve the decrease in transient room nights could be attributed to the mildweather in the winter and spring months experienced during 2006 in the northernstates.  Because the winter and springmonths were much warmer in the northern states during 2006 than in 2005, webelieve that transient guests and golf package guests were less inclined tovisit the southern states.  As describedabove, we also believe that transient room nights decreased in the latesummer/early fall months due to guest hesitancy to book rooms on the southeastcoast of Florida during the hurricane season.   We believe the decrease in group room nights was a result of ourdecision to target higher revenue producing group type as opposed to certaintypes of groups that booked in the prior year and were not as profitable.  We also believe that the drop in group roomnights was due to the fact that our sales and marketing department had fourvacant positions for varying periods of time between February and June 2006which hindered the sales and marketing staff’s ability to book to the samelevels as in prior periods.  The salesteam is now fully staffed and we believe that the sales productivity has begunto increase.  

The decline in the occupied roomnights during the nine months ended September 30, 2006 was offset by improvedaverage room rates and ancillary spending patterns of the Resort’s guests,coupled with increases in banquet and catering sales. Total revenue for theResort increased by $873,000 during the nine months ended September 30, 2006than in the nine months ended September 30, 2005. An overall increase inspending by the Resort’s guests, both for rooms and by package guests for foodand beverages, offset the reduction in gross revenue that resulted from thelower number of room night in the nine months ended September 30, 2006 ascompared to the same period of 2005.  Theaverage room rate increased from $133.91 in 2005 to $158.16 in 2006.  Aggregate spending per room night during thenine months ended September 30, 2006 was $476.62, as compared to $406.91 duringthe same period in 2005.   The mostsignificant increase in revenues at the Resort during the nine months endedSeptember 30, 2006 occurred in the Food and Beverage department. Revenues ofthat department increased by approximately $815,000, or 9.5%, for the ninemonths ended September 30, 2006, as compared to the same period in 2005.  Overall food and beverage revenues increasedas the food and beverage total covers (meals) increased by 6,886.  This net increase in covers served wasprimarily attributed to the Resort’s banquets, catering, room service and poolservice with a combined increase of approximately 12,513 covers. Coversattributed to the Resort’s casual restaurants decreased by approximately 5,627covers. This reduction of restaurant covers is reflective of the reducedtransient room nights noted above.  Foodand Beverage revenue per cover increased from $27.16 during the nine monthsended September 30, 2005 to $29.11 for the nine months ended September 30,2006, or 7.2% per cover.  Golf revenueincreased by approximately $589,000, primarily as a result of improved captureof revenue per round of golf.  Golfrevenue for the nine months ended September 30, 2006 averaged $126.89 perround, as compared to $110.42 per round for the comparative period in 2005,while the number of rounds played decreased for the period.   In the aggregate, while there were 7,197, or7.9%, fewer golf rounds, revenues increased as a result of the capture ofhigher greens fees and ancillary spending in the pro shops. The net decrease inaggregate rounds played was 

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attributable to 7,004 fewer rounds played by the Resort’stransient guests, including packages, coupled with a decrease of 193 roundsplayed by Resort members.  The number oftotal golf rounds played in the nine months ended September 30, 2006 was83,979, as compared to 91,176 in the same period of 2005. Golf revenue does notnecessarily increase or decrease exactly in proportion to occupied room nightsbecause golf revenue also includes member dues and fees and day golf groupfees, neither of which is directly related to occupied room nights. Increasesin total revenue due to improved spending of the Resort’s guests in the ninemonths ended September 30, 2006 as compared to the same period in 2005 wereoffset by a decrease in Other Revenue of approximately $907,000.  Other Revenue decreased primarily because theResort no longer charges a resort fee.

Consistent with past periods, we continued to monitortotal operating expenses in an attempt to insure that Westin controlledexpenses and that the expenses bore a direct correlation to the room nights,food and beverage covers and golf round demand. Aggregate total operating expenses do not generally increase or decreaseon a one-to-one basis with total operating revenue because the Resort mustcarry a minimum fixed operating staff and other support expenses at all times.In those operating departments where the variable costs can best be managed, weseek to manage these costs consistent with room, food and beverage and golfdemand. Total Resort operating expenses, before depreciation and amortizationand excluding the Rental Pool amortization in hotel operations, increased byapproximately $1,575,000, or 5.0%, for the nine month period ended September30, 2006 as compared to the corresponding period in the prior year. Thisincrease of 5.0% is correlated to the increase in total operating revenue ofapproximately 2.7% as certain direct expenses increase/decrease based on thebusiness levels at the Resort and are not fixed.  Also, as discussed above in the three monthcomparison, insurance expense increased significantly upon renewal of ourannual policies on July 15, 2006 resulting in an increase for the nine monthsended September 30, 2006 of $210,000 when compared to the same period of theprior year.  

Depreciation and amortization expense, excluding theRental Pool amortization included in hotel expenses, was approximately$1,529,000 and $1,910,000 for the nine months ended September 30, 2006 and2005, respectively.

Interest expense, net of interestincome, was approximately $1,308,000, and $1,254,000 for the nine months endedSeptember 30, 2006 and 2005, respectively, and reflect amortization of thediscount on (i) our Rental Pool refurbishment liability in the amount of$536,000, (ii) our short-term liability to Westin in the amount of $447,000 and(iii) our long-term liability to Troon in the amount of $36,000. As previouslydiscussed, the defaulted participating mortgage loan that was assumed by usfrom GHR, our unaffiliated borrower, and has a balance at September 30, 2006 of$39,240,000, became non-interest bearing upon our assumption on July 15, 2004.

The net loss for the nine monthsended September 30, 2006 was approximately $2,914,000, compared to a net lossfor the nine months ended September 30, 2005 of approximately $2,539,000.

During the nine months endedSeptember 30, 2006, approximately $758,000 of the capital reserve funds wasdisbursed. Of those disbursed funds, $626,000 was used to pay lease payments onexisting and additional equipment consisting of bellman vehicles, golf carts, golfcourse equipment, telephone and cable equipment and the balance was for variouscapital improvement projects and replacements throughout the Resort.

**OtherMatters**

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

On September 28, 2006 we signed aTermination and Release Agreement with Westin whereby the Westin ManagementAgreement terminates on October 31, 2006. The Termination Agreement provides that we shall pay to Westin, subjectto the terms of the Management Agreement, a termination fee.  As of October 31, 2006, the termination feethat would be due is approximately $5,594,000 and is now fixed at thisamount.   Pursuant to the TerminationAgreement, the termination fee is due and payable upon the earlier of a sale ofthe Resort or March 31, 2008.

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**Contractual Obligations,Contingent Liabilities and Commitments**

The following table summarizesour contractual obligations at September 30, 2006, and the effect suchobligations are expected to have on our liquidity and cash flow (or upon oursuccessors in interest under the applicable contracts, if the contracts are notterminated) in future periods:
| ** **                                                                           | ** ** | **Payments Due by Period (in thousands)(1)** | ** ** |
|--------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|
| **Contractual Obligations**                                                     | ** ** | **Total**                                                             | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **More than 5  years** | ** ** |
| Master lease  agreement with the condominium owners participating in the Rental Pool |       | $                                                                     | 5,673      |   | $ | 1,329 |   | $ | 3,740 |   | $ | 549 |   | $ | 55 |   |
| Management  agreements(2)                                                            |       | 6,362                                                                 |       | 5,914 |   | 414 |   | 34 |   | — |   |
| Troon  supplemental fee                                                              |       | 800                                                                   |       | — |   | — |   | — |   | 800 |   |
| Mortgage Note  payable to The Operating Partnership                                  |       | 39,240                                                                |       | — |   | — |   | — |   | 39,240 |   |
| Operating and  capital leases                                                        |       | 1,447                                                                 |       | 667 |   | 763 |   | 17 |   | — |   |
| Service  agreements and other                                                        |       | 5,954                                                                 |       | 1,739 |   | 2,889 |   | 721 |   | 605 |   |
| Working capital  advances from The Operating Partnership, net                        |       | 2,976                                                                 |       | — |   | 2,976 |   | — |   | — |   |
| Total of the Resort’s  obligations                                              |       | $                                                                     | 62,452     |   | $ | 9,649 |   | $ | 10,782 |   | $ | 1,321 |   | $ | 40,700 |   |

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

(2)    Pursuant to the terms of the Termination Agreement, theWestin termination fee of approximately $5,594,000 is due at the earlier of thedate 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 and although as of November 11, 2006, no binding contract for the saleof 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, 2005, filed on April 17, 2006, for a description of ourcontractual obligations.

**Liquidity and Capital Resources**

As of September 30, 2006, the Resort has a workingcapital deficit of approximately $8,958,000. This working capital deficit resulted primarily from thereclassification of the Westin termination fee and related deferred managementfees from long term to short-term obligations. The reclassified termination fee and deferred management fees totalapproximately $5,919,000 in the aggregate as of September 30, 2006.   See further discussion in Note 4 to theCondensed Consolidated Financial Statements referred to in Item 1 of thisquarterly report.  Before thisreclassification, the Resort had a working deficit of approximately$3,039,000.  The Resort’s member deficitat September 30, 2006 is $11,403,000. The Resort reported a net loss ofapproximately $2,914,000 for the nine months ended September 30, 2006.  The Resort continues to experience seasonalfluctuations in its net working capital position due to the seasonality of thegolf industry in Florida. This seasonality impacts our liquidity. Inparticular, there is generally more available cash during the winter months,specifically in the first quarter. Cash generally becomes very limited in thelate summer months. Revenues decline at the Resort during the summer monthsbecause the hot Florida weather makes the Resort less appealing for group golfoutings and vacation destination golfers. Additionally, unusual weatherpatterns, such as the hurricanes experienced in Florida in 2004 and those thataffected the east coast in 2005, negatively impacted revenues for the Resort inthe late summer-early fall season of 2005 and 2006 as groups and guests werehesitant to book reservations on the East Coast during the hurricane season.Weather-related concerns may continue to negatively impact reservations incomparable periods (July through September) of subsequent years. TheResort uses seasonal pricing (peak, shoulder and off-peak) to maximizerevenues. Generally, the Resort’s only source of cash is from its profitableoperations, if any. 

While the financial performance of the Resort has shownsigns of recovery since we assumed title to the Resort on July 15, 2004,current projections indicate an operational cash flow shortfall ofapproximately $100,000 in the aggregate is likely to occur by December 31,2006.  Further, now that the WestinManagement Agreement is terminated, we have begun the capital improvementproject of upgrading the technological infrastructure of the Resort andreplacing certain components which are proprietary to Westin.  Our projections indicate that the replacementof these components could require us to make an investment in the range of $1.0to $2.0 million.  We continue to workdiligently to identify opportunities to improve the cash flow situation at theResort. Further, our parent continues to seek a buyer for the Resort. Ourparent made intercompany advances to the Resort to support working capitalneeds in the amounts of $2,000,000, $400,000, $650,000 and $600,000 inJuly 2004, September 2005, November 2005 and October 2006,respectively, which have been fully expended. Further, GTA 

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fundedapproximately $200,000 for the beginning phase of the technologicalinfrastructure capital investment in October 2006. There can be no assurancesas to the availability, timing or amount of any intercompany advances.  Further, we cannot guarantee that we will beable to find an alternative source of funding or borrow to support the Resortif the Operating Partnership does not provide an intercompany advance.

On October 30, 2006, our parent received and agreed tothe terms of a non-binding confirmation of interest letter from an industrylender in which the lender proposes to provide a loan on the Resort with ananticipated closing date on or about December 15, 2006.  The proposed use of these funds would be to,among other things, (i) repay our parent’s series A preferred shareholder, (ii)fund certain capital projects at the Resort, and (iii) cover certain workingcapital needs at the Resort.  Advancingthis confirmation of interest to the next step which would be in the form of acommitment letter is subject to certain requirements that must be to thelender’s satisfaction which include but are not limited to title insurance,property insurance, survey, appraisal and market studies, water supply reviewand engineering and environmental reports.   

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

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

**Item 4. Controls And Procedures**

We maintain disclosure controls and procedures that aredesigned to ensure that information required to be disclosed in our ExchangeAct reports is recorded, processed, summarized and reported within the timeperiods specified in the SEC’s rules and forms, and that such information isaccumulated and communicated to our management, including our Chief ExecutiveOfficer and our Chief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure. Our management assesses the costs andbenefits of such controls and procedures based upon the prevailing facts andcircumstances, including management’s reasonable judgment of such facts. As weneither controlled nor managed the Resort prior to July 16, 2004, webelieve our disclosure controls and procedures with respect to the Resort andits employees are more limited than those that GHR maintains with respect toits own corporate operations. Despite the fact that we took title to the Resortat close of business on July 15, 2004 and our amended management agreementwith Westin dated as of July 15, 2004 provides us with heightened control andaccess to information, we do not directly assemble the financial informationfor the Resort (although we have taken steps that we deem to be reasonableunder the circumstances to seek to verify such financial information) andconsequently, our disclosure controls and procedures with respect to theResort, while strengthened, remain more limited than those we maintain withrespect to GTA’s corporate operations. Since taking title to the Resort, wehave focused upon integrating operations at the Resort into GTA’s disclosurecontrols and procedures and internal control procedures. In particular, thosecontrols and procedures have been updated to account for the challengespresented by the increased size and scope of our operations now that we own theResort.

The integration of a new business of significant size andscope of operations increases the risk that conditions may have been introducedthat we did not anticipate in our design of our systems of control. Anypre-existing deficiencies in GHR’s financial systems, processes and relatedinternal controls increase the risk that the historical unaudited financialstatements of the Resort’s operations and cash flows which GHR has provided tous may not be accurate. We have out of necessity placed a certain amount ofreliance on the historical financial information and reports of the Resort’sunaffiliated predecessor owner for the periods prior to July 16, 2004, andcontinue to rely on the information provided by Westin as manager of theResort.  The Management Agreementterminated on October 31, 2006.

As of September 30, 2006, we carried out an evaluation,under the supervision and with the participation of our management, includingour Chief Executive Officer and our Chief Financial Officer, of theeffectiveness of the design and operation of our disclosure controls andprocedures pursuant to Exchange Act Rule 15d-15. With the assistance ofWestin, our Chief Executive Officer and our Chief Financial Officer concludedthat as of September 30, 2006 our disclosure controls and procedures areeffective in timely alerting them to material information relating to us(including our consolidated subsidiaries) required to be included in ourExchange Act reports. There have been no significant changes in our internalcontrols or in other factors which could significantly affect internal controlssubsequent to the date we carried out our evaluation.

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

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**PART II—OTHERINFORMATION**

**Item 1. Legal Proceedings**

*Land Use Lawsuits*

OnMarch 10, 2005, we filed a Motion to Intervene in the suit titledInnisbrook Condominium Association, Inc., C. Frank Wreath, Meredith P.Sauer, and Mark Banning, Plaintiffs vs. Pinellas County, Florida, Golf HostResorts, Inc. and Innisbrook F LLC, Defendants, Case No. 043388CI-15.This motion was filed in the Circuit Court of the Sixth Judicial Circuit, inand for Pinellas County, Florida, Civil Division.  In this report, we refer to this matter asthe “Initial Land Use Lawsuit.” 

Theplaintiffs in the Initial Land Use Lawsuit have filed a multi-count complaintseeking injunctive and declaratory relief with respect to the land use anddevelopment rights of a tract of land commonly known as Parcel F.Parcel F is a parcel of land located within the Resort and owned by anunaffiliated third-party, GHR. The plaintiffs allege that there are noremaining development units (residential units) available to be developedwithin the Resort property. On March 29, 2005, we filed a Motion toIntervene as a defendant in the Initial Land Use Lawsuit in order to protectour property and our land use and development rights with respect toParcel F and our property. A hearing on the Motion to Intervene was heldon April 4, 2005, after which the court granted our Motion to Intervene.On April 5, 2005, we joined in the filing of a Motion to Dismiss andMotion to Strike three of the seven counts of the plaintiffs’ complaint. Thecourt granted the Motion to Dismiss on April 26, 2005. On that same date,four individuals (Joseph E. Colwell, Marcia G. Colwell, Kirk E.Covert, and Deborah A. Covert) and Autumn Woods Homeowner’sAssociation, Inc. moved to intervene in the Initial Land Use Lawsuit whichthe court subsequently allowed.

OnApril 8, 2005, a separate suit was filed by James M. and Mary H.Luckey and Andrew J. and Aphrodite B. McAdams, against PinellasCounty, a political subdivision of the State of Florida, Golf HostResorts, Inc., a foreign corporation and Bayfair Innisbrook, LLC, aFlorida limited liability corporation. In this report we refer to this matteras the “Subsequent Land Use Lawsuit.”  

TheSubsequent Land Use Lawsuit seeks injunctive and declaratory relief in sixseparate counts, all relating to the land use and development rights ofParcel F. This suit was consolidated with the Initial Land Use Lawsuit onMay 3, 2005. After May 6, 2005 we have filed our Motion to Dismissthe Subsequent Land Use Lawsuit. The motion was heard by the court on May 31,2005. Since that hearing, we have filed an Answer and Affirmative Defenses toboth complaints that have been filed in the consolidated action. OnAugust 3, 2005, a case management conference was held before the judge whois now presiding over this case. At that hearing, the court scheduled a hearingon the defense motions for summary judgment for August 30, 2005, and atrial starting on December 12, 2005. On August 30, 2005, the judgeheard extensive argument on the defense motions for summary judgment andentered a number of rulings in the defendants’ favor. In summary, the courtdismissed those claims in the Initial Land Use Lawsuit and the Subsequent LandUse Lawsuit which are founded upon the theory that the proposed development isinconsistent with the Pinellas Countywide Plan and Rules adopted pursuant toChapter 73-594, Laws of Florida. The court further dismissed for lack ofjurisdiction those claims of the plaintiffs’ in the Subsequent Land Use Lawsuitthat are based on the theory that the proposed development is inconsistent withthe Pinellas Comprehensive Plan. The court entered a similar ruling on certaincounts of the Third Amended Complaint as to some, but not all, of theplaintiffs in the Initial Land Use Lawsuit.

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

Inaddition, the plaintiffs in the Initial Land Use Lawsuit have filed a motionfor summary judgment. The court set the hearing date for the summary judgmentreview for December 7, 2005.

As anintervenor in the Initial Land Use Lawsuit, we will seek to obtain a rulingfrom the court which preserves and protects our property, and our land use anddevelopment rights with respect to Parcel F and our property, in order tomaximize the value of those rights as they relate both to Parcel F and theResort in general. We refer to these two matters as the “Land UseLawsuits.”  See further discussion of theLand Use Lawsuits under the heading “Risk Factors” in Part II,Item 1A of this report.

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FromDecember 19 through December 23, 2005, the court tried these consolidated casesin a non-jury trial. At the conclusion of the evidentiary portion of the trial,the court deferred final argument until Friday, January 6, 2006. On that date,the court heard final arguments and rendered its decision. The court ruled infavor of all defendants and against all plaintiffs as to each count in bothLand Use Lawsuits. On March 8, 2006, the court formally entered its finaljudgment on the record ruling in favor of the defendants on all counts anddenying all claims asserted by the plaintiffs in both Land Use Lawsuits. OnMarch 31, 2006, the plaintiffs in the consolidated cases filed a notice ofappeal.  Since the filing of that notice,the plaintiffs/appellants have filed their initial appellate brief and thedefendants/appellees, including GTA-IB, LLC have filed their answer brief.  The plaintiffs/appellants will have anopportunity to file a reply brief to defendants/appellees’ answer brief.  As of November 11, 2006, no such reply briefwas filed.  

*Property Tax Lawsuit*

We filed a lawsuit against theproperty appraiser of Pinellas County Florida, or Pinellas County to challengethe 2004 and 2005 real estate assessment of the Resort property. PinellasCounty filed a motion to dismiss our action, which was denied by the court. Asof November 11, 2006, no trial date has been set. If Pinellas County were toprevail, we do not believe that there would be any material adverse effect uponour financial statements, as the entire Pinellas County assessment is fullyaccrued and accounted for at June 30, 2006.

**Item 1A. Risk Factors**

***Now that our Management Agreementwith Westin is terminated, in addition to our obligation to pay terminationfees to Westin, we were required to find a third party to manage the Resort ormanage the Resort ourselves.  We havedecided to manage the Resort ourselves.***

 The Management Agreement provides that we shall pay to Westin, subject to theterms of the Management Agreement termination fee of at least $5,500,000.   As of October 31, 2006, the termination dateof our Management Agreement with Westin, the termination fee is approximately$5,594,000.  See disclosure of this obligation as accrued at September 30,2006 in note 4 to our condensed consolidated financial statements contained inPart 1, Item 1 of this Quarterly Report.  This fee must be paid to Westin upon the earlier of (i) a sale of theResort or (ii) March 31, 2008.  In theevent that we are unable to sell the Resort by March 31, 2008 before thisobligation becomes due, the payment of this fee could cause us severe liquidityproblems.

Wehave retained substantially all of the former Westin executive management teamat the Resort, with the exception of the positions of general manager andcontroller, although we have a contract arrangement with Westin that allows usto retain the former Resort general manager, a Westin employee, at ourdiscretion through January 31, 2007. Even with the experienced former Westin executive management team, wecannot guarantee that we will be as successful in managing the Resort as Westinhas been because we do not have the Westin brand on the hotel and the synergiesavailable to a global hotel chain. Further, the successor Resort general manager, whenever that individualis named, may not be as successful at managing the Resort as the former Westingeneral manager. In the event that we prove less successful than Westin or ifwe are unable to hire a general manager that is as skilled and qualified as theformer Westin general manager, our results of operations and financialcondition could be adversely affected.

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

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

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

Wecannot guarantee that we will be able to sell the Resort on reasonable terms,if at all. Further, we cannot predict the amount of time that will be requiredto negotiate and close a sale of the Resort. In the event that GTA experiencesliquidity constraints or other financial pressures due to the protracted negotiationof the sale of the Resort, GTA may be 

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unwilling orunable to fund the Resort and the Rental Pool refurbishment. Even in the eventthat we successfully sell the Resort in the near term, we expect that the partywho purchases the Resort will assume responsibility for the operational costsof the Resort and the Rental Pool. We cannot guarantee the level of funding andmanagement attention that will be given to the Resort and the Rental Pool inthe event that the Resort is transferred to a new owner. In the event that we,GTA and, if applicable, the Resort’s ultimate owner do not devote sufficientmanagement resources and funding to the Resort and the Rental Pool,distributions to the Rental Pool Participants could be substantially reduced.

***If we are not ableto sell the Resort, obtain some form of financing or receive additionalintercompany advances from GTA or the Operating Partnership by the end  of 2006, we may experience severe liquidityproblems, not be able to meet the demands of our creditors and ultimatelybecome subject to involuntary bankruptcy proceedings.***

Generally, our only source of cash is the profitableoperations of the Resort. Further, the Resort’s credit capacity islimited.  During the course of 2005, GTAfunded $1,050,000 to address our seasonal cash flow shortfalls.  In October 2006, GTA funded an additional$600,000 pursuant to the terms of the Westin Termination Agreement.  Further, GTA funded approximately $200,000 for thebeginning phase of the technological infrastructure capital investment inOctober 2006.  While the financialperformance of the Resort has shown signs of recovery since we assumed title tothe Resort on July 15, 2004, current projections provided by Westin indicatethat an operational cash flow shortfall, in addition to the $600,000 funded inOctober 2006, of approximately $100,000 in the aggregate is likely to occur inthe fourth quarter of 2006.  If theResort experiences the currently projected cash flow shortfall, we may berequired to seek additional capital to fund the Resort.   In order to fund this shortfall, we may berequired to seek an intercompany advance. There are no assurances that additional intercompany advances will beavailable, or that we will be successful if we attempt to negotiate funding forthe Resort in lieu of such an advance. Even if we are able to meet the expected cash shortfall, in the eventthat we are unable to sell the Resort in the near term, we may experienceadditional liquidity problems.

In the event that we are not able to obtain some formof financing or receive additional intercompany advances from GTA or theOperating Partnership to fund any cash flow shortfalls, we may experienceliquidity problems and be unable to pay our obligations to creditors and othersas they become due or upon demand.   Ifwe cannot meet our obligations to our creditors and others when they becomedue, we could ultimately become subject to bankruptcy proceedings.

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

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

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

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

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

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

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

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

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

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

Thehotel industry is cyclical in nature. Our business has historically been weakerduring the third quarter of each year. In the event that we suffer from reducedbookings as a result of hurricane-related concerns of potential guests, thiseffect could reduce the revenues to the Resort in the third quarter of eachyear, increasing the disparity between our results in the third quarter ascompared to other quarters. This increased cyclicality could make it moredifficult for us to project the results of the Resort, and may result in alower than expected percentage of the Resort’s fixed costs being offset byrevenue during the third quarter.

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

Operatingrisks common to the Resort include:

·                  changes in general economic conditions, includingthe timing and robustness of the apparent recovery in the United States fromthe recent economic downturn and the prospects for improved performance inother parts of the world;

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

·                  domestic and international political andgeopolitical conditions;

·                  decreases in the demand for transient rooms and relatedlodging services, including a reduction in business travel as a result ofgeneral economic conditions;

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

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

·                  changes in travel patterns;

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

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

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

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

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

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

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

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

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

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

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

The hospitalityindustry continues to demand the use of sophisticated technology and systemsincluding technology utilized for property management, procurement, reservationsystems, operation of customer loyalty programs, distribution and guestamenities. These technologies can be expected to require refinements and thereis the risk that advanced new technologies will be introduced. There can be noassurance that as various systems and technologies become outdated or newtechnology is required we will be able to replace or introduce them as quicklyas our competition or within budgeted costs for such technology. Further, therecan be no assurance that we will achieve the benefits that may have beenanticipated from any new technology or system. Further, now that the Westin Management Agreement is terminated, we havebegun the capital improvement project of upgrading the technologicalinfrastructure of the Resort and replacing certain components which areproprietary to Westin.  Our projectionsindicate that the replacement of these components could require us to make aninvestment in the range of $1.0 to $2.0 million of which we funded $200,000 inOctober 2006.  Additionally, there arerisks associated with transferring the data and ensuring that there are nointerruptions in the operations of the Resort. There are no assurances that such technological components can beidentified, purchased and implemented in a cost effective and efficient manner.

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

Forthe Resort to remain attractive and competitive, we must spend moneyperiodically to keep the properties well maintained, modernized and refurbishedsuch as the upgrading of the technological infrastructure at the Resort.  These expenditures result in an ongoing needfor cash. To the extent we cannot fund expenditures from cash generated by theResort’s operations, we must seek to obtain funds by borrowing or otherwise. Wemay be unable to find such financing on favorable terms, if at all. To theextent that we are unsuccessful in obtaining such financing, it could adverselyimpact the Resort’s results from operations and distributions to the RentalPool Participants.

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

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

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

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

***Althoughthe courts have  delivered favorablerulings in the Land Use Lawsuits to which we are a party, in the event that theultimate rulings in these matters are unfavorable to us, the value of Parcel Fand the Resort would be adversely affected.***

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

OnJanuary 6, 2006, the court ruled in favor of all defendants and against allplaintiffs as to each count in both cases. While we believe that the January 6,2006 ruling is a favorable result for us and for the other defendants, theplaintiffs in the Land Use Lawsuits filed an appeal of that ruling on March 31,2006.  Since the filing of that notice,the plaintiffs/appellants have filed their initial appellate brief and thedefendants/appellees, including GTA-IB, LLC have filed their answer brief.  The plaintiffs/appellants will have anopportunity to file a reply brief to defendants/appellees’ answer brief.  As of November 11, 2006, no such reply brief wasfiled.  

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In theevent that the plaintiffs convince a court to overturn the January 6, 2006ruling, we could lose all or substantially all of our land use and developmentrights with respect to Parcel F. Such an unfavorable result could also cause usto experience reduced club memberships at the Resort and could adversely impactour ability to realize the benefits from the proposed development of Parcel F.In addition, if the defendants do not ultimately prevail in the Land UseLawsuits and a court subsequently applies a similar interpretation of ourrights with respect to the remaining developable units at the Resort, our landuse and development rights in those remaining units could be jeopardized,adversely effecting both our ability to develop the Resort and the value of theRental Pool units.

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

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

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

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

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

***Our golf course operations at the Resort are currentlydependent upon an outside manager, and if this manager is less successful thanexpected, the Resort’s results of operations could be adversely affected,potentially in a material way.  We haveuntil November 30, 2006 to decide whether to assume or terminate the managementagreement with Troon for Troon to continue to manage the golf facilities of theResort.   If we elect to terminate thisoutside manager, the Resort’s results of operations could be adverselyaffected. ***

Troon continues tomanage the golf facilities at the Resort pursuant to a facility managementagreement with us. In the event that this third party manager fails toperform under its facility management agreement as expected, or in theevent it defaults on its obligations to us, the Resort’s results of operationscould be adversely affected, potentially in a material way.  Wehave until November 30, 2006 to decide whether to assume or terminate themanagement agreement with Troon for Troon to continue to manage the golffacilities of the Resort.  If we elect toterminate this outside manager, the Resort’s results of operations could beadversely affected. 

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

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

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**Riskfactors relating to GTA and GTA’s Operating Partnership**

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

**Item 2.Unregistered Sales of 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**

On September 28, 2006 we signed a Termination and ReleaseAgreement with Westin whereby the Westin Management Agreement will beterminated on October 31, 2006. pursuant to the Management Agreement.  The Management Agreement provides thatwe shall pay to Westin, subject to the terms of the Management Agreement, amaximum termination fee. The Management Agreement provides that the terminationfee shall be reduced by $365 per day for each day elapsed from the effectivedate of the Management Agreement until the termination date; provided, however,that the termination fee shall not be reduced below $5,500,000.  As of thetermination date of October 31, 2006, the termination fee that would be duewould be approximately $5,594,000.   TheTermination and Release Agreement also provides for the payment of theTermination Fee upon the earlier of a sale of the Resort or March 31, 2008.

**Item 6. Exhibits**

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**EXHIBIT INDEX**
| Exhibit No. | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                 | ** ** |
|------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| 3.1              |       | Articles  of Organization of GTA-IB, LLC(1)                                                                                                                                                                                                                                                                                                                                                     |       |
| 3.2              |       | Amended  and Restated Operating Agreement of GTA-IB, LLC(1)                                                                                                                                                                                                                                                                                                                                     |       |
| 10.1             |       | Settlement  Agreement dated July 15, 2004 by and among Golf Trust of America, L.P.,  GTA-IB, LLC, Golf Host Resorts, Inc., Golf Hosts, Inc., Golf Host Management,  Inc., Golf Host Condominium, Inc. and Golf Host Condominium, LLC(2)                                                                                                                                                    |       |
| 10.2             |       | Defense  and Escrow Agreement dated July 15, 2004 by and among Golf Host Resorts,  Inc., GTA-IB, LLC, Golf Trust of America, L.P., Golf Trust of America, Inc.  and Chicago Title Insurance Company(2)                                                                                                                                                                                     |       |
| 10.3             |       | Operational  Benefits Agreement dated July 15, 2004 by and among Golf Host Resorts,  Inc., Golf Hosts, Inc., GTA-IB, LLC, and Golf Trust of America, L.P.(2)                                                                                                                                                                                                                               |       |
| 10.4             |       | Management  Agreement dated July 15, 2004 by and between Westin Management Company  South and GTA-IB, LLC(2)                                                                                                                                                                                                                                                                               |       |
| 10.5             |       | Assignment,  Consent, Subordination and Nondisturbance Agreement dated July 15, 2004  by and among GTA-IB, LLC, Golf Trust of America, L.P. and Westin Management  Company South(2)                                                                                                                                                                                                        |       |
| 10.6             |       | Facility  Management Agreement dated July 15, 2004 by and between Troon Golf  L.L.C. and Westin Management Company South(2)                                                                                                                                                                                                                                                                |       |
| 10.7             |       | Loan  Agreement dated July 15, 2004 by and between Golf Trust of America, L.P.  and Elk Funding, L.L.C. and related Notes A and B(2)                                                                                                                                                                                                                                                       |       |
| 10.8.1           |       | Parcel F  Development Agreement dated March 29, 2004 by and among Golf Hosts  Resorts, Inc., Golf Trust of America, L.P. and Parcel F, LLC, formerly  known as Innisbrook F, LLC, formerly known as Bayfair Innisbrook, L.L.C.(2)                                                                                                                                                |       |
| 10.8.2           |       | First  Amendment to Parcel F Development Agreement by and among Golf Hosts  Resorts, Inc., Golf Trust of America, L.P. and Parcel F, LLC (formerly  known as Innisbrook F, LLC)(3)                                                                                                                                                                                                    |       |
| 10.8.3           |       | Second  Amendment to Parcel F Development Agreement by and among Golf Hosts  Resorts, LLC (formerly known as Golf Host Resorts, Inc.), Golf Trust of  America, L.P., GTA-IB, LLC and Parcel F, LLC (formerly known as  Innisbrook F, LLC)(3)                                                                                                                                     |       |
| 10.9             |       | Amendment  to Loan Agreement between GTA-IB, LLC and Golf Trust of America, L.P.(1)                                                                                                                                                                                                                                                                                                             |       |
| 10.10            |       | Loan  Agreement dated June 20, 1997 between Golf Host Resorts, Inc. and Golf  Trust of America, L.P.(1)                                                                                                                                                                                                                                                                                    |       |
| 10.11            |       | Promissory  Note issued by GTA-IB, LLC to Golf Trust of America, L.P.(1)                                                                                                                                                                                                                                                                                                                        |       |
| 10.12            | *          | Asset  Purchase Agreement by and between Golf Trust of America, Inc., Golf Trust of  America, L.P., GTA-IB, LLC, GTA-IB Golf Resort, LLC, GTA-IB  Condominium, LLC, GTA-IB Management, LLC and CMI Financial Network, LLC  dated October 27, 2005 (Previously filed as Exhibit 10.12 to our  Quarterly Report on Form 10-Q, filed November 14, 1005 and incorporated  herein by reference) |       |
| 10.13            |       | Termination  and Release Agreement by and between Golf Trust of America, Inc.,  GTA-IB, LLC, and Westin Hotel Management L.P., as successor in interest to  Westin Management Company South, dated September 28, 2006 (previously filed  as Exhibit 10.13 to our company’s Current Report on Form 8-K filed  October 3, 2006 and incorporated herein by reference).         |       |
| 31.1             | **         | Certification  of the Registrant’s President and Chief Executive Officer pursuant to  Section 302 of Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                       |       |
| 31.2             | **         | Certification  of the Registrant’s Chief Financial Officer pursuant to Section 302 of  the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                 |       |
| 32.1             | **         | Certifications  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                  |       |
| 99.1             | **         | Risk Factors of Golf  Trust of America, Inc.                                                                                                                                                                                                                                                                                                                                                    |       |

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

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

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

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

**             Filed asan exhibit hereto.

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**SIGNATURES**

Pursuant to the requirements ofthe Securities Exchange Act of 1934, the Registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.
|                          | **GTA-IB, LLC, registrant** | ** **                            |
|--------------------------|-----------------------------|---------------------------------------|
|                     | ** **                  | ** **                            | ** ** |
|                     | ** **                  | ** **                            | ** ** |
| Date: November  14, 2006 |                        | /s/ W. Bradley Blair, II              |   |
|                     |                        | W. Bradley Blair, II             |   |
|                     |                        | President and Chief Executive Officer |   |
|                     |                        |                                  |   |
| Date: November  14, 2006 |                        | /s/ Scott D. Peters                   |   |
|                     |                        | Scott D. Peters                       |   |
|                     |                        | Secretary and Chief Financial Officer |   |

 

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