**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

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**FORM 10-K**

**FORANNUAL AND TRANSITION REPORTS PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

| **(Mark One)**                                                                                                                                               |   | ** **                                                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|
| **x**                                                                                                                                                        |   | **Annual report pursuant to Section 13  or 15(d) of the Securities Exchange Act of 1934**           |
| **for the fiscal year ended December 31, 2006**                                                                                                         |
| **o**                                                                                                                                                        |   | **Transition report pursuant to  Section 13 or 15(d) of the Securities Exchange  Act of 1934** |
| **for the transition period from                    to** |

 

**Commission file number: 001-14494.**

**GolfTrust of America, Inc.**(Exactname of registrant as specified in its charter)

| **Maryland**                                          |   | **33-0724736**                           |
|-------------------------------------------------------|--------|------------------------------------------|
| (State or Other  Jurisdiction of Incorporation)       |   | (I.R.S. Employer  Identification Number) |
| **10 North Adger’s Wharf  Charleston, SC 29401** |   | **(843) 723-4653**                       |
| (Address of  principal executive offices) (Zip Code)  |   | (Telephone number)                       |

 

Securities registered pursuant toSection 12(b) of the Act:

| **Title of each class**                                                      |   | **Name of  each exchange on which registered**        |
|------------------------------------------------------------------------------|--------|-------------------------------------------------------|
| **Common  Stock, par value$0.01 per share  Preferred Stock Purchase Rights** |   | **American  Stock Exchange  American Stock Exchange** |

 

Securities registered pursuant to Section 12(g) ofthe Act: None

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes o  No x

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) ofthe Act. Yes o  No x

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and(2) has been subject to such filing requirements for the past90 days. Yes x  No o

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K is not contained herein, andwill not be contained, to the best of registrant’s knowledge, in definitiveproxy or information statements incorporated by reference in Part III ofthis Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2of the Exchange Act. (Check one):

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

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Act). Yes o  No x

On March 26, 2007, the registrant Golf Trust ofAmerica, Inc., or GTA, had 7,317,163 shares of its common stockoutstanding. On June 30, 2006, which was the last business day of GTA’smost recently completed second fiscal quarter, GTA’s public float wasapproximately $6,476,326 (based on 7,276,771 shares of common stock then heldby non-affiliates and a closing price that day of $0.89 per share of commonstock on the American Stock Exchange). These public float calculations excludeshares held on the stated dates by GTA’s officers, directors and 10% or greaterstockholders. (Exclusion from these public float calculations does not implyaffiliate status for any other purpose.)

Documents Incorporated By Reference: Certain exhibitsto GTA’s prior reports on Forms 10-K, 10-Q and 8-K,Registration Statements of Employee Stock Purchase Plan and Employee StockOption Plans on Forms S-8 (nos. 333-46659 and 333-46657), andRegistration Statements on Form S-11 (nos. 333-15965 and 333-36847)are incorporated by reference in Part IV hereof.

The Exhibit Index begins on page 114.

 

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**GOLFTRUST OF AMERICA, INC.Annual Report on Form 10-K for the Year Ended December 31, 2006TABLE OF CONTENTS**
| PART I                         |   | 1                                                                                                                                          |
|-------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|
| ITEM  1.                            |   | BUSINESS                                                                                                                                   |   | 1 |
| ITEM  1A.                           |   | RISK FACTORS                                                                                                                               |   | 15 |
| ITEM 1B.                            |   | UNRESOLVED STAFF  COMMENTS                                                                                                                 |   | 30 |
| ITEM  2.                            |   | PROPERTIES                                                                                                                                 |   | 31 |
| ITEM  3.                            |   | LEGAL PROCEEDINGS                                                                                                                          |   | 32 |
| ITEM 4.                             |   | SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                       |   | 37 |
| PART II                        |   | 37                                                                                                                                         |
| ITEM 5.                             |   | MARKET FOR  REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES  OF EQUITY SECURITIES                        |   | 37 |
| ITEM 6.                             |   | SELECTED FINANCIAL  DATA                                                                                                                   |   | 39 |
| ITEM 7.                             |   | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION                                                 |   | 41 |
| ITEM 7A.                            |   | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK               |   | 61 |
| ITEM 8.                             |   | FINANCIAL  STATEMENTS AND SUPPLEMENTARY DATA                                                                                               |   | 61 |
| ITEM 9.                             |   | CHANGES IN AND  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                                      |   | 61 |
| ITEM 9A.                            |   | CONTROLS AND  PROCEDURES                                                                                                                   |   | 61 |
| ITEM 9B.                            |   | OTHER INFORMATION                                                                                                                          |   | 62 |
| PART III                       |   | 66                                                                                                                                         |
| ITEM 10.                            |   | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                                                                         |   | 66 |
| ITEM 11.                            |   | EXECUTIVE  COMPENSATION                                                                                                                    |   | 71 |
| ITEM 12.                            |   | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND  MANAGEMENT AND RELATED STOCKHOLDER MATTERS                                            |   | 82 |
| ITEM 13.                            |   | CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS                                                                                            |   | 84 |
| ITEM 14.                            |   | PRINCIPAL ACCOUNTING FEES AND SERVICES                                                                                                     |   | 84 |
| PART IV                        |   | 85                                                                                                                                         |
| ITEM 15.                            |   | EXHIBITS,  FINANCIAL STATEMENT SCHEDULES                                                                                                   |   | 85 |
| SCHEDULES                           |   | 112                                                                                                                                        |
| SIGNATURES AND  POWERS OF ATTORNEY  |   | 113                                                                                                                                        |
| Note: (to be  attached as Exhibits) |   |                                                                                                                                       |
| EXHIBIT  INDEX                      |   | 114                                                                                                                                        |

 

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**Cautionary NoteRegarding Forward-Looking Statements**

*The followingreport contains forward-looking statements within the meaning of Section 27Aof the Securities Act and Section 21E of the Exchange Act. Forward-lookingstatements are statements that predict or describe future events or trends andthat do not relate solely to historical matters. All of our projections in thisannual report are forward-looking statements, including our projectionsregarding the amount and timing of liquidating distributions. You can generallyidentify forward-looking statements as statements containing the words “believe,”“expect,” “will,” “anticipate,” “intend,” “estimate,” “project,” “assume” orother similar expressions. You should not place undue reliance on our forward-lookingstatements because the matters they describe are subject to known (and unknown)risks, uncertainties and other unpredictable factors, many of which are beyondour control. Our forward-looking statements are based on the limitedinformation currently available to our company and speak only as of the date onwhich this report was filed with the Securities Exchange Commission, or SEC.Our continued internet posting or subsequent distribution of this dated annualreport does not imply continued affirmation of the forward-lookingstatements included in it. We undertake no obligation, and we expresslydisclaim any obligation, to issue any updates to our forward-lookingstatements, even if subsequent events cause our expectations to changeregarding the matters discussed in those statements. Future events areinherently uncertain. Moreover, it is particularly difficult to predict when wewill complete our plan of liquidation, which is substantially dependent onbusiness activity levels at the Innisbrook Resort and Golf Club, or theResort,  and the ultimate sale thereof.Accordingly, our projections in this annual report, particularly as they maypertain to the Resort and the completion of our plan of liquidation, are subjectto particularly high uncertainty. Our projections should not be regarded aslegal promises, representations or warranties of any kind whatsoever. Overtime, our actual results, performance or achievements will likely differ fromthe anticipated results, performance or achievements that are expressed orimplied by our forward-looking statements, and such difference might besignificant and harmful to our stockholders’ interests. Many important factorsthat could cause such a difference are described under the caption “RiskFactors,” in Item 1A of this annual report, which you should review carefully.*

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**PART I**

**ITEM 1. BUSINESS**

**Significant Eventssince the filing of our last Quarterly Report**

Significant eventsoccurring since November 14, 2006 (the filing date of our Form 10–Qfor the third quarter of 2006) include:

·       OnNovember 17, 2006, at the annual meeting of our stockholders, two newdirectors were elected to our Board of Directs, Mr. Jan H. Loeb and Mr. NaumanToor. See further discussion below in Part II, Item 9B and Part III,Item 10 of this annual report.

·       On December 28, 2006, we, togetherwith our operating partnership, Golf Trust of America, L.P. (“GTA, LP”) andwholly owned subsidiary GTA-IB, LLC (“GTA-IB”) entered into a First Amendmentto Defense and Escrow Agreement (the “Amendment”) with Golf Host Resorts, LLC(formerly Golf Host Resorts, Inc.), (“GHR”) and Chicago Title InsuranceCompany (the “Escrow Agent”). The Amendment, among other things, amends thedistributions from a sale of Parcel F, a tract of undeveloped land locatedwithin the Resort, under the Defense and Escrow Agreement to reduce thedistributions to us from the purchaser by $710,000.  The original Defense and Escrow Agreement wasincluded as Exhibit 10.2 to our Current Report on Form 8-Kwhich was filed on July 29, 2004.

In connection with the execution of the Amendment, we enteredinto a Loan Satisfaction and Termination of Assignment of Defense and EscrowAgreement (the “Loan Satisfaction Agreement”) with Elk Funding, LLC (“ElkFunding”) which provided, among other things, that (i) GHR shall receive$710,000 pursuant to the terms of the Amendment (which occurred on or about December 28,2006) (ii) our obligations to Elk Funding under Note A shall be deemed tobe paid in full and satisfied, including all accrued interest, (iii) theloan documents between us and Elk Funding shall be deemed terminated andneither party shall have further obligations under such documents, and (iv) theAssignment of Defense and Escrow Agreement and the security interest created bysuch agreement shall be deemed terminated. The First Amendment to Defense andEscrow Agreement by and between us, GTA, LP, GTA-IB, GHR and Escrow Agentand  the Loan Satisfaction andTermination of Assignment of Defense and Escrow Agreement between us and ElkFunding, LLC were included as Exhibit 10.24.2 and Exhibit 10.29.2,respectively, to our Current Report on Form 8-K which was filed on January 4,2007, and are incorporated herein by reference. The description of theAmendment and the Loan Satisfaction Agreement are qualified in their entiretyby the contents thereof. Note A, Note B (which was previously repaid by us) andthe loan agreement relating to both notes were included as Exhibit 10.7 tothe Company’s Current Report Form 8-K which was filed on July 29,2004.

See a detaileddiscussion below in Part II, Item 9B of this annual report.

·       OnDecember 28, 2006, GHR and Parcel F, LLC, the purchaser of Parcel F,entered into the Second Amendment to the Amended and Restated Agreement for theSale and Purchase of Real Property—Parcel F between GHR and Parcel F, LLC, towhich we are not a party, but such amendment eliminated seller financing andcertain reductions from the purchase price related to the number of permittedcondominium units to be built on Parcel F and resulted in a write-up of theestimated fair value of our interest in Parcel F of approximately $1,410,000 to$2,900,000.  Parcel F, LLC has sixty daysfrom the final appeal court decision on the Land Use Lawsuits (see relateddiscussion in the third bullet below) to close on the purchase of Parcel F orParcel F will be marketed to potential new buyers.  If that were to occur, the terms of AmendedDefense and Escrow Agreement and the Parcel F Development Agreement wouldcontinue to be applicable to the purchase contract of any new buyer of ParcelF. Upon the closing of the sale of Parcel F, we currently expect to receiveproceeds of approximately $2,900,000.

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·       OnFebruary 4, 2007, Mr. Scott D. Peters notified us that, due topersonal reasons related to his obligations and commitments to anotheremployer, he was resigning as Chief Financial Officer, Senior Vice President,Secretary, and Director of our company, effective February 5, 2007.Mr. Peters’ remaining milestone payment, pursuant to his existingemployment agreement, of approximately $83,000, plus accrued interest, remainsdue and payable by us to him. On February 6, 2007,  Ms. Tracy S. Clifford, formerly ourController, was appointed Principal Accounting Officer and on February 20,2007, Ms. Clifford was appointed our Secretary. See further discussionbelow in Part II, Item 9B of this annual report.

·       OnFebruary 22, 2007, we sent Troon Golf LLC, or Troon, a notice oftermination in regards to the Facilities Management Agreement pursuant to whichTroon manages the golf operations at the Resort. We and Troon are in theprocess of negotiating the terms and conditions of the termination which weexpect to be effective upon the conclusion of our negotiations and theexecution of a termination agreement. The Company intends to manage the golfoperations internally following the termination of the Troon managementagreement.

·       OnFebruary 28, 2007, the Second District Court of Appeal affirmed percurium, or by the whole court instead of just one judge, the Circuit Courtjudgment in favor of us, the defendants in the Land Use Lawsuits and denied theplaintiffs-appellants’ motion for attorney fees.  On March 14, 2007, theplaintiffs-appellants filed a motion requesting that the Appeal Court reheartheir claims. The Court has not yet responded to this motion. If the Courtrejects the plaintiffs’ request to rehear their claims, then the buyer ofParcel F must close on the purchase of Parcel F within sixty days or GHR willseek a new buyer. If the sale of Parcel F closes, our estimate of the netproceeds that we will receive pursuant to the Amendment shall be approximately$2,900,000 as noted above. See further discussion below in Item 3 of thisannual report under the caption “Land Use Lawsuits” and in Item 1A of thisannual report under the caption “Risk Factors.”

·       Inthe Young lawsuits, a hearing on the GTA Defendants’ motion for summaryjudgment to attempt to eliminate the plaintiffs’ civil conspiracy claim againstthe GTA Defendants was held on November 8, 2006. The judge took the matterunder advisement and on March 1, 2007, the U.S. District Court granted theGTA Defendant’s Motion for Summary Judgment (as to the plaintiffs’ claims). Asof March 26, 2007, the plaintiffs have no remaining claims against any ofthe GTA Defendants.  See furtherdiscussion under Item 3, Legal Proceedings of this annual report..

·       Theconclusion of our negotiations with AEW, which will allow us to repurchase allof AEW’s series A preferred stock plus accrued dividends for a price of $20million or less, is pending evidence or confirmation of an executed saleagreement for the Resort that will demonstrate our ability to close on thetransaction to repurchase all of the series A preferred stock. As a result ofour assumption that these negotiations will lead to an executed agreement, wehave not recorded in our net assets a liability for the accrual of preferreddividends payable for the quarter beginning July 1, 2001 or for subsequentquarters. In the event that either, we are unable to reach an agreement withAEW, or we are unable to exercise any repurchase right and close the repurchaseunder any agreement that we may reach with AEW, we may be required to pay AEWall or a portion of the preferred dividends for which we have not recorded aliability (approximately $12,522,000 from July 1, 2001 through December 31,2006, plus $625,000 per quarter for preferred dividends accruing from January 1,2007 through the date that we are able to redeem AEW’s series A preferredstock), reducing our liquidating distributions to holders of our common stock. Seefurther discussion below under the caption “Risk Factors,” in Item 1A of thisannual report and in Notes 11 and 15 to the Consolidated Financial Statementsreferred to in Item 8 of this annual report.

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·       See discussion below underthe caption “*Current Strategic Choices*” for asummary of our historical and ongoing efforts to liquidate all of our assetsand wind up the company and the choices we are currently considering.

**General Descriptionof our Business**

We were originally formed to capitalize upon consolidationopportunities in the ownership of upscale golf courses throughout the UnitedStates. Golf Trust of America, Inc., referenced in this report as GTA, wasincorporated in Maryland on November 8, 1996. Our interests in our golfcourses are held through Golf Trust of America, L.P., a Delaware limitedpartnership that we control, and, in one instance, through a wholly-ownedsubsidiary of Golf Trust of America, L.P. We refer to this partnership and itssubsidiaries as our operating partnership. In this annual report, the term “company,”“we” or “us” generally includes GTA, the operating partnership and all of oursubsidiaries.

We had no significant operations prior to our initialpublic offering of common stock in February 1997. From 1997 through 1999,we acquired interests in 47 golf courses, including a security interest in thefour golf courses at the Innisbrook Resort and Golf Club, or the Resort, whichis located near Tampa, Florida. The Resort served as collateral for a$79 million participating mortgage loan that our operating partnershipmade to Golf Host Resorts, Inc., the owner of the Resort from the date ofour mortgage loan until we acquired ownership of the Resort through anegotiated settlement on July 15, 2004.

As described in more detail below, on May 22,2001 our stockholders approved a plan for our complete liquidation and eventualdissolution. Accordingly, we are engaging in an ongoing liquidation of ourassets. At this time, we can provide no assurance as to when we will completethis plan of liquidation.

In this annual report, we generally refer to golfcourse properties in terms of 18-hole equivalents. Therefore, one 27-holegolf course property would be counted as 1.5 golf courses.

Our executive offices arelocated at 10 North Adger’s Wharf, Charleston, South Carolina 29401 and ourtelephone number is (843) 723-GOLF (4653).

**Plan of Liquidation**

On February 25, 2001, our board of directorsadopted, and on May 22, 2001 the holders of our common and preferred stockapproved, a plan of liquidation for our company. The plan of liquidationcontemplates the sale of all of our assets and the payment of, or provisionfor, our liabilities and expenses, and authorizes us to establish a reserve tofund our contingent liabilities. The plan of liquidation gives our board ofdirectors the power to sell any and all of our assets without further approvalby our stockholders. However, the plan of liquidation constrains our ability toenter into sale agreements that provide for gross proceeds below the low end ofthe range of gross proceeds that our management estimated would be receivedfrom the sale of such assets absent a fairness opinion, an appraisal or otherevidence satisfactory to our board of directors that the proposed sale is inthe best interest of the company and our stockholders. As required by generallyaccepted accounting principles, or GAAP, we adopted the liquidation basis ofaccounting for all accounting periods beginning on or after May 22, 2001.

Our board’s decision toadopt the plan of liquidation followed a lengthy process in which our board andmanagement reviewed different strategic alternatives with the goal ofmaximizing stockholder value subject to further approval of our stockholders.Our board of directors will continue to monitor and evaluate all of our options(including an entity sale, recapitalization, joint venture or sale of theremaining assets as a whole) from time to time in its efforts to preservestockholder value or to further implement the plan of liquidation**.**We continue to negotiate with prospective buyers of theResort and our remaining golf course assets. As of the filing date of thisannual report, we have not entered into definitive agreements for 

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the saleof either the Resort or Stonehenge.  Seefurther discussion below under the caption, “*CurrentStrategic Choices*.”

**Loss of REIT Status**

We initially qualified as a real estate investmenttrust, or a REIT, but we lost our REIT status in 2002. Under the InternalRevenue Code, or the Code, once REIT status is lost, it generally may not beregained for the following four years. Accordingly, we will be subject tofederal income tax on any net taxable income we earn (or net taxable gain werealize) throughout the remainder of our liquidation.

During 2006, ouroperations resulted in a loss for income tax purposes. Therefore, no income taxwill be due on our 2006 operating revenues or our proceeds from 2006 golfcourse asset sales. Additionally, based on our current projections and theavailability of our net operating loss carry-forwards, we do notanticipate that we will incur any federal income tax liability throughout ourliquidation, at least unless or until we convert into a liquidating trust, asdiscussed in Item 1A below under the caption “Plan of Liquidation—Potential Useof a Liquidating Trust Related Income Tax Risks to Our Stockholders.” However,these projections are based on current estimates and assumptions about thefuture progress of our liquidation. Our actual results and tax liability couldvary materially from our projections. As a result, we could generate positivetaxable income in future taxable years, which would likely cause us to incurfederal and state income tax liabilities. Any tax liabilities will reduce theamount of cash available for liquidating distributions to our commonstockholders.

**The OperatingPartnership and our Subsidiaries**

We originally acquired a number of golf courses ascontributions to our operating partnership in exchange for partnership equityin the form of units of limited partnership interests, called operatingpartnership, or OP, units. In those cases, prior owners of those golf coursesbecame limited partners in our operating partnership.

We were originally structured as an “UPREIT,” which isa structure in which a public REIT acts as general partner of an operatingpartnership. We have retained that corporate structure even though GTA is nolonger a REIT. Accordingly, we conduct all material business through ouroperating partnership; for example, when we raised capital through equityofferings we contributed the net proceeds to our operating partnership.Pursuant to our UPREIT structure, shares of our common stock are the closeeconomic equivalent of OP units in the operating partnership. GTA, through itssubsidiaries, holds one OP unit for each of its outstanding shares of thecommon stock, and GTA’s sole source of income is distributions from theoperating partnership on these OP units (and reimbursement of itsadministrative costs from the operating partnership pursuant to the operatingpartnership agreement).

GTA has two wholly-owned corporate subsidiaries,GTA GP, Inc. and GTA LP, Inc., each of which is a Marylandcorporation. These subsidiaries exist to hold GTA’s general and limitedpartnership interests in our operating partnership. The board of directors ofeach subsidiary is comprised of the executive officers of GTA. The operatingpartnership was formed in Delaware in November 1996. We also have a numberof wholly-owned subsidiaries, typically limited liability companies, whichwere established to manage the operations of the golf courses after terminationof the lessees’ leasehold interest therein. One such subsidiary, GTA-IB, LLC,holds title to the Resort.

Our operating partnership,through its subsidiaries, is the legal owner of our golf courses and theResort. GTA GP, Inc. is the sole general partner of the operatingpartnership and GTA LP, Inc. is a limited partner of the operatingpartnership. As of March 26, 2007, GTA held 100% of the common interest inthe operating partnership, through its wholly-owned subsidiaries. GTAalso owns all of the series A preferred interests in the operatingpartnership through its subsidiary, GTA LP, Inc.

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**The Resort**

We were the lender under an original principal balance$79 million non-recourse loan. That loan was secured by a first mortgageon the Resort. The mortgage did not include the privately owned condominiumunits at the Resort. The Resort, located near Tampa, Florida, is a destinationgolf resort that includes four high-end golf courses and adjacent condominiumand conference facilities. Our operating partnership originated this loan in June 1997.Golf Host Resorts, Inc., referenced in this report as our former borroweror GHR, owned the Resort (other than the condominium units) and entered into anarrangement with many of the parties who own condominium units at the Resort.Under this arrangement, the condominiums owned by these participating personsare placed in a securitized pool and rented as hotel rooms to guests of the Resort.There are no separate hotel rooms. This group of condominiums is referred to inthis report as the “Rental Pool.” Approximately 27% of the 485 participatingRental Pool condominium units have internal lockout doors, which allow therental of the condominium unit as two hotel rooms. As a result of these lockoutmaster bedroom units, the 485 participating condominium units represent a totalof 614 hotel rooms that may potentially participate in the Resort’s RentalPool. Accordingly, maintaining condominium owner participation in the RentalPool is critical to the continued economic success of the Resort.

Our former borrower became delinquent in its paymentsof interest in late 2001. From the time of our former borrower’s default until July 15,2004, we sought to resolve complex open issues in furtherance of a negotiatedforeclosure or settlement with our former borrower to mitigate further negativeimpact to the Resort. On July 15, 2004, we entered into a SettlementAgreement with our former borrower, and Westin, Troon and other parties, andobtained fee simple title to the Resort real property and personal property(including all accounts) and took over all operations at the Resort through ournewly-formed subsidiary, GTA-IB, LLC. The Settlement Agreement and otherdocuments executed concurrently with our assumption of the title and operationsof the Resort were included as exhibits 10.1 to 10.8 to our current report on Form 8-Kfiled July 29, 2004.

As a result of the settlement, the financial resultsof GTA-IB, LLC, our subsidiary that holds title to the Resort, are consolidatedin our financial statements.

Our former borrower alsoentered into an agreement with Troon, which provided that Troon would managethe golf courses, and an amended management agreement, or Management Agreement,with Westin Management Company South, or Westin, which provided that Westinwould manage the condominium unit Rental Pool and the conference facilities. Aspreviously disclosed in our Form 10-Q for the third quarter of 2006filed on November 14, 2006, by mutual agreement, on September 28,2006, we, as guarantor, our subsidiary, GTA-IB, LLC, as owner, and Westinentered a Termination and Release Agreement (the “Termination Agreement”),pursuant to which we and Westin agreed to terminate the Management Agreement asof October 31, 2006 (the “Termination Date”). In addition to thetermination of the Management Agreement, the Termination Agreement providesthat (i) on or prior to October 3, 2006, we were obligated to deposit(and did deposit) $600,000 in the Resort’s operating account to be used in partto pay to Westin certain fees and charges accrued under the ManagementAgreement which are expected to approximate this amount, (ii) on or priorto the earlier of March 31, 2008, or any sale of the Resort by us, we willpay to Westin the termination fee provided under Section 4.4.2 of theManagement Agreement calculated as of the Termination Date, estimated at$5,600,000, and (iii) Westin will permit us to continue to access Westin’s“SAP” accounting system for the operation of the Resort until March 31,2007 for a total charge of $6,000. We have implemented a new accounting systemeffective January 1, 2007. We have been independently managing the Resortsince the Termination Date and currently plan to continue to do so until thesale of the Resort.  See discussionregarding the current status of the Troon agreement above under the caption, “SignificantEvents since the filing of our last Quarterly Report.”

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**Rental Pool**

Inaddition to the current Rental Pool agreement dated January 1, 2002, GHRagreed with the condominium owners association that GHR would reimburse 50% ofthe refurbishment costs invested in the condominium units by the condominiumowners plus interest on those costs accrued at 5% per annum. This amount willbe reimbursed to participating condominium owners, or transferees who receive acondominium unit from a participating owner, over the five-year periodbeginning in 2005 as reflected in the table below. The full reimbursementattributable to each unit is contingent on the unit remaining in the RentalPool from the date of the refurbishment of such unit through 2009. If the unitdoes not remain in the pool during the reimbursement period of 2005 through2009, the owner or successor owner forfeits any unpaid installments at the timethe unit is removed from the pool. In the event that the number of units in theRental Pool declines below 575, our obligation to reimburse refurbishmentexpenses for the units will abate until such time as the number of units in theRental Pool is again 575 or more. The refurbishment of 617 Rental Pool unitswas completed as of September 30, 2003. In addition, GTA IB agreed to provide refurbishment reimbursement for unitsplaced into the rental pool during 2005 at a level of 25% of the applicablecondominium owner’s investment in the refurbishment. We refer to this programas Phase 5. Interest on the Phase 5 liability is accrued at a rate of 2.5% perannum and paid quarterly. Principal payments for Phase 5 begin in the firstquarter of 2008 and will be paid quarterly through the fourth quarter of 2012.As of March 26, 2007, 614 units were participating in the Rental Pool.Minimum undiscounted principal and interest payments on the refurbishmentprogram are as follows:

| ** **  | ** ** | **Principal**           | ** ** | **Interest**            | ** ** |
|-------------|------------|-------------------------|------------|-------------------------|------------|
| ** **  | ** ** | **(in thousands)** | ** ** | **(in thousands)** | ** ** |
| 2007        |       |                    | 1,424      |                    |       |   | 234 |   |   |
| 2008        |       |                    | 1,790      |                    |       |   | 154 |   |   |
| 2009        |       |                    | 2,150      |                    |       |   | 55 |   |   |
| 2010.       |       |                    | 18         |                    |       |   | 1 |   |   |
| Thereafter. |       |                    | 51         |                    |       |   | 1 |   |   |
| **Total**   | ** ** | ** **              | **$**      | **5,433**               |       | ** ** | ** ** | **$** | **445** |   |   |
|             |            |                         |            |                         |            |  |  |  |  |  |  |

 

**Estimated Value**

In our prior filings with the Securities ExchangeCommission we stated that our assessment of the Resort’s fair value mightdecline at some future date, based on facts and circumstances prevailing atthat time, and that the Resort might be written-down in future periods.

Our net investment in oursubsidiary of GTA-IB, LLC was recorded at $39.24 million at the date ofacquisition; however, the net investment has been reduced in the normal courseof operations by a cumulative net operating loss so that the carrying value was$38.821 million at December 31, 2005, prior to the year-end write-down.Based on market indications of interest obtained in the Resort sales processthen managed by Houlihan Lokey, our then financial advisor, the combined estimatedfair value of the Resort’s resale value as a going concern and our interest inParcel F at December 31, 2005 was $36.4 million. Therefore, we recorded awrite-down of $2.421 million at December 31, 2005. As previously notedabove under the caption ““Significant Events since the filing of our lastQuarterly Report,” the estimated fair value of our interest in Parcel F waswritten up by $1,410,000. The estimated fair value of our interest in Parcel Fis now $2,900,000 (previously Parcel F was carried at gross fair value of$2,200,000 less collateralized debt of approximately $800,000 including accruedinterest). The adjusted proceeds that we now expect to receive upon the closingof a sale of Parcel F are $2,900,000 and the collateralized debt in the form ofthe Elk Funding note payable has been satisfied and terminated. SeePart II, Item 9B for further discussion. We believe the estimated fair value of the Resort remains at $35.0million. Thus, this results in a combined estimated carrying value of heResort’s resale value as a going concern and our interest in Parcel F atDecember 31, 2006 of $37.9 million. We face the risk that our efforts topreserve the 

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value ofthe Resort might be unsuccessful and, therefore, that we might ultimately sellour interest in the Resort for less than our current estimates of its fairvalue. Finally, it is possible that at some future date our assessment of theResort’s fair value may change, and the asset may again be written-down. Seefurther discussion of the risks that we face relating to the Resort under theheading “Risk Factors.”

**Letters of Intentand Purchase Agreements**

As of March 26, 2007, while negotiations for thesale of the Resort are ongoing with potential purchasers,, we have not enteredinto definitive agreements for the sale of either the Resort or Stonehenge. Wecan provide no assurances as to whether or when we may enter any suchagreements or whether we can sell our assets at our estimates of fair value.

For further discussion ofthe current status of the sale of the Resort, see discussion below under thecaption “Current Strategic Choices”**and in Item 1A of this annual report under the caption**“Risk Factors.”

**Current StrategicChoices**

On January 21, 2005, in the interest of seekingto accelerate the completion of our liquidation, we engaged Houlihan LokeyHoward and Zukin Capital, Inc., or Houlihan Lokey, as our then exclusivefinancial advisor to provide financial advisory services to us in furtheranceof our stockholder-approved plan of liquidation. Our liquidation may occurthrough the sale of our assets, a merger or otherwise in order to allow it tomaximize value to our stockholders. In addition,  we may pursue financing or equityinvestment in furtherance of the plan of liquidation. In this annual report, werefer to the type of transaction discussed in the prior two sentences as anexit transaction. The initial term of Houlihan Lokey’s engagement was ninemonths which was subsequently extended on a month-to-month basis . Since anexit transaction had not occurred, we terminated our month-to-month engagementwith Houlihan Lokey on June 29, 2006. The period during which HoulihanLokey might have still been owed a transaction fee if a closing of an exittransaction were to occur under certain circumstances expired on February 28,2007.

The terms of our series A preferred stock and ouragreements with AEW prohibit us from making any further distributions to commonstockholders until the series A preferred stock is redeemed in full. Afterour series A preferred stock has been redeemed in full, we anticipatemaking one or more liquidating distributions to the holders of our commonstock. However, we can provide no assurance that the net proceeds of our assetdispositions will be sufficient to redeem our series A preferred stockwhether or not we sell the Resort.

For a period of time during the early stage of theHoulihan Lokey engagement, our board of directors also formed a SpecialCommittee comprised of all three of its then three independent directors toconsider certain matters relating to the liquidation and financial advisorservices in evaluating an exit transaction. We continue to negotiate withprospective buyers of the Resort and believe we are currently faced with thestrategic choices outlined below. As of the filing date of this annual report,we have not entered into a definitive agreement for the sale of the Resort andcan provide no assurance when or if we will.

Since we adopted the plan of liquidation in May 2001,we believe we have made significant progress in liquidating our assets. We havesuccessfully closed on the sale of 32.0 of the 34.0 properties that we ownedleaving the Innisbrook Resort and Golf Club and the Country Clubs of Wildewoodand Woodcreek still remaining in our portfolio. Over the years, we have hadnumerous parties approach us either directly or through our then financialadvisors, Bank of America and Houlihan Lokey, expressing an interest inpurchasing the Resort. However, after substantial efforts to sell the Resort(including, engaging with third parties in negotiating various types ofpurchase and sale agreements, property tours, due diligence, negotiations withAEW, among other efforts), only a single transaction led to an executedpurchase and sale agreement. That purchase and sale agreement was executed onor about October 25, 2005 and was subsequently terminated. In our view,other prospective buyers declined to proceed because of the 

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complexity of the asset orour preferred price; and we declined to proceed with a number of prospectivebuyers because of their unwillingness to meet our pricing expectations orbecause of our concerns regarding their financeability or credibility issues,among other problems.

Moreover, since we adopted the Plan of Liquidation, anumber of events have occurred, including, the following; we took title to theResort from our borrower in July 2004; the Westin Management Agreement wasterminated on October 31, 2006; we are currently negotiating terms toterminate the Troon Management Agreement; and we have sought to reposition theResort as an independently owned and operated resort and golf club based uponthe foregoing.

We are currently negotiating various letters of intentand purchase and sale agreements with various parties. Additionally, we arecurrently seeking to execute a purchase and sale agreement and close atransaction by June 30, 2007, however, we can provide no assurance thatour objectives will be met in this regard or at all. Moreover, we can provideno assurance that if we enter a purchase and sale agreement with respect to theResort that it will be at a price equal to our estimate of fair value.

We believe it has been difficult to sell the Resortfor a variety of reasons, including among others, the instability of the formerowner and the market’s perception of such instability on the Resort as aviable, well-run operating business. However, absent the constraints of aManagement Agreement, we believe the Resort is slowly re-establishing theInnisbrook brand that was very successful prior to the first managementagreement with Hilton in 1993 . The Resort just hosted in early March 2007the PGA PODS Championship and when coupled with the national telecast of theevent for four days was, we believe generally perceived as a great success forthe Resort’s reputation. We believe the Resort is currently positioned to gainback marketshare that it has lost over the years. Golf package revenue growthcontinues to be strong with group meeting revenue growth a longer and slowerprocess. However, in order to achieve faster growth from group meeting revenue,we believe a spa must be constructed at the Resort. We believe this investment,along with other more minor capital improvement and deferred maintenanceprojects, would help to return the Resort and the Innisbrook brand to itshistorical  national recognition andsuccess.. These projects require capital which because of the Resort’s troubledpast and our prolonged plan of liquidation is not available internally.

If we are unable to execute a satisfactory purchaseand sale agreement for the Resort and to achieve a transaction structure thatallows us to meet our obligations to AEW, our Board may consider alternativesto the Plan of Liquidation. Those alternatives will all require approval by ourstockholders through a new proxy statement. The alternatives may include, amongothers, a recapitalization of the Company or a joint venture of the Resort. Thegoal of a recapitalization or joint venture would be to first payoff AEW at anacceptable discounted amount and, secondly, to invest in significant capitalimprovements at the Resort which could potentially realize recovery of some ofthe historical Resort value over a reasonable period of time. If approved bythe stockholders, we could not assure the outcome of these alternatives or theprobability or timing of completing any such a transaction.

Our board is currently considering the advantages anddisadvantages of establishing a finite timeline to execute a purchase and saleagreement with a qualified buyer and requiring a non-refundable deposit by aspecified date (i.e., April 30, 2007) or if that is not achieved theResort will be taken off the market and a new proxy statement submitted to ourstockholders for approval. We do not believe that we can continue to entertainindications of interest from buyers if our stockholders elect to pursue arecapitalization or joint venture because we will need to focus our efforts onthe success of the return on investment for the parties to such a transactionand not be diverted by indications of interest that may likely not result in anexecuted purchase and sale agreement. If a firm timeline is established, thiswill also inform the current interested parties that we must all moveexpeditiously to an end result instead of continued prolonged negotiations thattax our limited resources.

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Our board has currently taken this matter underadvisement and is studying the advantages and disadvantages of this proposedstrategy. Until that decision is formally proposed and voted on, we willcontinue to seek to sell the Resort but only for a price we deem in the bestinterest of our stockholders. We will also seek to obtain short-term workingcapital to manage any shortfall in operating costs and minimum capital replacementand improvement needs that may occur in this process. See additional discussionin Item 1A of this annual report under the caption “Risk Factors.”

Additionally, see thediscussion below under the caption “Potential use of a Liquidating Trust; RelatedIncome Tax Risks to our Stockholders” which will be relevant if our remainingassets are transferred to a liquidating trust.

**Annual Updates tothe Projected Range of Liquidating Distributions**

The projections described in our prior filings wereforward-looking statements at the time made, subject to this report’sintroductory cautionary note and the risk factors included in Part I, Item1A.

**Original2001 and 2002 Ranges.****  **Atthe time we prepared our proxy statement dated April 6, 2001 wherein wesolicited stockholders’ approval for the plan of liquidation, managementprovided an estimate of the range of total liquidation distributions to holdersof our common stock that would be made if our stockholders approved the plan ofliquidation. Our management also included in our proxy statement an estimate ofthe number of months that would elapse prior to our complete liquidation. Wewill not restate this historical information in this annual report.

**NoNew Range of Liquidating Distributions.****  **We have recorded the value of our golf courses andthe Resort (discussed in detail in an earlier section titled “*Estimated Value/Amount of Write-Down*”), at our current bestestimates of fair value. While we are not providing a new range of liquidationdistributions, based on the fact that we now have title to the Resort and arecontinuing to pursue our stockholder-approved plan of liquidation, wehave accrued the projected costs, including corporate overhead and specificliquidation costs of severance, financial advisors and other professional fees,and other miscellaneous wind-down costs, expected to be incurred during theprojected period required to complete the liquidation of our remaining assets.See the discussion above under the caption “*Significant Events sincethe filing of our last Quarterly Report*” regarding the potentialimpact on any liquidating distributions of the unaccrued dividends on AEW’sseries A preferred stock.

The liquidation value of our net assets at December 31,2006 is discussed in further detail below. However, we can make no assurancesthat our remaining assets will be sold in accordance with the timelinecontemplated nor as to the accuracy of our projections of their operatingperformance. Our current projections are based upon an exit transaction closingon or before June 30, 2007. We can make no assurances that AEW willcontinue to negotiate regarding a purchase option in the event that an exittransaction has not closed by June 30, 2007, or that it will allow us toredeem its preferred stock for $20 million if the cash consideration that wereceive for any sale of  the Resort ismore than $35 million.

We will continue to refrain from making anyadjustments (positive or negative) to any earlier reported range ofdistributions or proposing a new range due to uncertainty of the above namedfactors; however, we will adjust the accruals for liquidation expenses and willreview for impairment the fair value of the Resort and golf course assets fromtime to time based on new information and revised projections as they becomeavailable. For example, in our quarterly report of the third quarter of 2004,we wrote down the value of the Resort to $39.24 million based on the studyof its valuation that was undertaken as part of the process of allocating itspurchase price among the categories on our balance sheet as of the date of theSettlement Agreement. In addition, as of December 31, 2005, based onmarket indications of interest, we recorded an additional write-down of $2.421million.

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Any of these estimates might prove to be incorrect inmaterially adverse ways. In the event that those estimates prove incorrect, ouractual liquidating distributions may be lower, or even materially lower, thanour projections. We currently expect liquidating distributions to the holdersof our common stock to begin after the sale of the Resort. We are currentlycontemplating a sale in the second quarter of 2007, but the sale may be delayedor not occur at all. No assurances can be made that a sale of our company, theResort or any of our other assets will be made within the contemplatedtimeframe.

All of the projections described above are forward-lookingstatements subject to the cautionary note and the risk factors listed inPart I, Item 1A. The projections are based on numerous estimates andlimiting assumptions, including those listed above, any or all of which mightprove to be incorrect in materially adverse ways. None of the projections arebased on any appraisals of any of our assets, except the fair value of theResort which was based on a commissioned asset study subsequently updated forequipment purchases and retirements since that date. The actual amount of ourliquidating distributions could be lower than our historical and currentprojections, and the actual timing of our liquidating distributions could belater than our historical and current projections. Except as may be required byapplicable law, we have no current intention to produce any further updates toour projected range of liquidating distributions. In the future, the mere factthat we have not updated our historical projections does not indicate that wecontinue to endorse those historical projections or that they have not declinedfurther; in fact, we believe the historical projections may be more favorablethan the current facts. All projections are inexact and subject to numerousrisks and uncertainties. Accordingly, you should not place undue reliance onthe assumptions or historical projections above. Important factors that couldcause such variances are discussed in Item 1A.

The net assets of$13,865,000 at December 31, 2006 would equate to a net asset value pershare of approximately $1.92. This $1.92 estimate of net asset value per shareincludes projections of costs and expenses, described above, expected to beincurred during the period required to complete the plan of liquidation, thatis, until we sell our remaining two assets, including the Resort. Theseprojections could change materially based on the timing of any anticipatedsale, the performance of the underlying assets, and change in the underlyingassumptions of the cash flow amount projected. The $1.92 estimate is derived bydividing the net assets of $13,865,000 by the number of shares of common stockand common operating partnership units outstanding (7,317,000 less 85,000)after consideration of those shares that will be cancelled prior to thedistribution of the net assets, which total 85,000 shares of common stockpledged to us as security for the payment and performance of the obligationsand liabilities of the pledgor under a common stock redemption agreementexecuted concurrently with the sale of Royal New Kent and Stonehouse in 2001.This redemption agreement provides in part that this security will be tenderedto us if and when the total amount of liquidating distributions paid to ourholders of common stock pursuant to the plan of liquidation is less than $10.74per share.

**Revolving Line ofCredit**

See discussion of ourrevolving line of credit below in Item 7 under the caption “Liquidity andCapital Resources” and in Note 8 to the Consolidated Financial Statementsreferred to in Item 8 of this annual report.

**Conditions in theGolf Resort Industry**

Our efforts to sell ourremaining golf course properties (the Resort and Stonehenge) continues to provechallenging due primarily to the fact that the rebound of the United Stateseconomy has not had the robust impact on the private golf club or destinationgolf resort industry that has been evident in other industries such asresidential real estate in 2006 which was growing at a healthy pace. The lackof corporate buyers in the golf industry, and the fact the market is oversaturated with golf courses for sale (the number of golf courses for sale hasincreased significantly since our plan of liquidation was approved creating 

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greaterdownward pressure on pricing). While both the travel and golf industriescontinue to experience modest increases in inventory utilization and feesduring 2006, the southeastern destination golf resort industry which includesthe Resort, is still in the recovery phase that was compounded by the abovenormal number of hurricanes that ravaged the coast of Florida and the easternUnited States in 2004 and 2005, and general challenges inherent in the travelprocess. While new golf course openings continue to slow, the supply of golfcourses still exceeds demand (demand has remained relatively static over thelast thirty-six months). This imbalance creates negative pressure on golfrounds and the rates we are able to charge for initiation fees, greens fees andmembership dues. A mitigating factor is that in certain markets, golf coursesare being closed and sold for alternative uses, thus reducing the supply ofgolf properties; however, this will only have a marginal, stabilizing, impacton the industry doesn’t positively impact the geographical areas of ourremaining properties. In addition, increased interest rates have made golfcourse acquisition and construction financing less appealing and combined withthe state of the industry, has forced many of the traditional lenders to exitthe golf lending industry. As a result of these factors, we believe ourbusiness, and our ability to execute our plan of liquidation continues to benegatively impacted.

**Golf CourseDispositions**

FromJanuary 1, 2004 through March 26, 2007, we disposed of the followinggolf courses:
| Property                                                              | ** ** | ** **    | ** ** | **City and State** | ** ** | **Total Consideration** | ** ** | **18-Hole  Equivalent** | ** ** | **Closing  Date** | ** ** |
|-----------------------------------------------------------------------|------------|---------------|------------|------------------------------|------------|------------------------------|------------|-------------------------|------------|-------------------|------------|
| 2004                                                                  |       |          |       |                         |       |                         |       |                    |       |              |       |   |   |
| Wekiva Golf Club                                                      |       | Longwood,  FL |       |                         | $          | 2,475,000                    |       |                    |       | 1.0               |       |   | 8/26/04 |   |
| Black Bear Golf Club                                                  |       | Eustis,  FL   |       |                         | 1,550,000  |                         |       |                    | 1.0        |              |       | 9/24/04 |   |
| 2004 sub-total                                                        |       |          |       |                         | 4,025,000  |                         |       |                    | 2.0        |              |       |   |   |
| 2005—no sales                                                    |       |          |       |                         |       |                         |       |                    |       |              |       |   |   |
| 2006                                                                  |       |          |       |                         |       |                         |       |                    |       |              |       |   |   |
| Tierra Del Sol                                                        |       | Belen,  NM    |       |                         | 2,125,000  |                         |       |                    | 1.0        |              |       | 5/8/06 |   |
| January 1, 2007 -  March 26, 2007—no closed sales |       |          |       |                         |       |                         |       |                    |       |              |       |   |   |
| Grand Total                                                           |       |          |       |                         | $6,150,000 |                         |       |                    | 3.0        |              |       |   |   |
|                                                                       |            |               |            |                              |            |                              |            |                         |            |                   |            |  |  |  |  |  |

 

**Our Remaining GolfCourse Assets**

As ofMarch 26, 2007, we hold interests in six golf courses (or two assets), allof which are owned by us in fee simple. These six golf courses are located atthe following two properties:
| Property                                    | ** ** | ** **       | ** ** | **Location** | ** ** | **18-Hole  Equivalent** | ** ** |
|---------------------------------------------|------------|------------------|------------|--------------|------------|-------------------------|------------|
| Innisbrook Resort                           |       | Palm  Harbor, FL |       |         | 4          |                    |       |
| Stonehenge  (Wildewood and Woodcreek Farms) |       | Columbia,  SC    |       |         | 2          |                    |       |
|                                        |       |             |       |         | 6          |                    |       |

 

**Potential use of aLiquidating Trust; Related Income Tax Risks to our Stockholders**

If our preferred stock is redeemed or our preferredstockholder consents, we may decide to convert our company into a liquidatingtrust. Historically, the SEC has allowed liquidating trusts to enjoy relaxedreporting requirements. For example, the SEC traditionally allows liquidatingtrusts to include unaudited financial statements in their annual reports anddoes not require such trusts to file any further proxy statements or quarterlyreports. Such treatment could result in substantial legal and auditing feesavings for us. In addition, if we convert to a liquidating trust we mightrealize additional general and administrative cost savings in several areasincluding certain insurance costs, and printing and reporting 

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costs of a public company.However, we would lose the benefit of our net operating loss carry-forwards.Our conversion into a liquidating trust most likely would be accomplished bycontributing all of our assets to a newly-formed trust and thendistributing shares of beneficial interest in the trust to holders of ourcommon stock and to any remaining holders of our common OP units. Followingthat distribution, all shares of our common stock would be cancelled and intheir place our stockholders would receive shares of beneficial interest in theliquidating trust in proportion to their prior stock holdings. It is ourintention that any such liquidating trust would qualify either as a grantortrust or as a partnership for tax purposes.

The shares of beneficial interest would be similar toshares of common stock except that they would not be traded on any exchange,they would not be represented by any certificates and they would not betransferable (except by will, intestate succession or operation of law). As aresult, you would not be able to sell your interest in our liquidating trust.We expect that if we decide to convert into a liquidating trust, we will make apublic announcement indicating, among other things, the date on which theconversion is expected to occur, the identity (if known at such time) of one ormore trustees who will oversee the trust’s sale of our remaining assets and thedistribution of the remaining cash and net proceeds, and a summary of therights of holders of beneficial interests in the liquidating trust. We expect,but cannot guarantee, that such notice will precede any transfer to aliquidating trust by approximately 30 days. We hope to be able to providea public announcement to provide our stockholders with an opportunity to seekto sell their shares of stock on the market rather than receive shares ofbeneficial interest in the trust. Although shares of beneficial interest wouldnot be transferable, their holders would have the right to receive any and allfurther liquidating distributions funded by the proceeds from the ultimatesales of our remaining assets. Conversion into a liquidating trust is expresslyauthorized by the plan of liquidation.

For tax purposes, the creation of the liquidatingtrust should be treated as a distribution of our remaining assets to ourstockholders, followed by a contribution of the same assets to the liquidatingtrust by our stockholders. As a result, we will recognize gain or loss inherentin any such assets measured by the fair market value of the assets at the timeof the transfer to the liquidating trust, with any gains offset by availablenet operating loss carry-forwards. In addition, stockholders wouldrecognize gain to the extent the stockholders’ share of the cash and of thefair market value of the assets received by the liquidating trust was greaterthan the stockholder’s basis in his stock, notwithstanding that the stockholderwould not contemporaneously (or ever) receive a distribution of cash or anyother assets with which to satisfy the resulting tax liability.

In addition, it is possible that the fair market valueof the assets received by the liquidating trust, as estimated for purposes ofdetermining the extent of the stockholder’s gain at the time interests in theliquidating trust are distributed to the stockholders, will exceed the cash orfair market value of property ultimately received by the liquidating trust uponits sale of the assets. In such cases the stockholder would recognize a loss ina taxable year subsequent to the taxable year in which the gain was recognized,which loss might be limited under the Code.

If we do not distribute our interest in the Resort toa liquidating trust and, instead, continue to operate as a regular corporationuntil all of our assets are sold, we would recognize losses (or gains) upon oursale of the Resort and our other assets for federal income tax purposes.However, we would be unable to pass those tax losses (and our other assets) onto our stockholders, which could result in valuable tax losses being lost. Bycontrast, a liquidating trust is a pass-through entity for tax purposes and anylosses (or gains) we experience as a liquidating trust generally will flowthrough to the holders of beneficial interests in the trust.

Since we are no longer a REIT, we could be subject toincome tax on any recognized gains. However, as of December 31, 2006, webelieve we have sufficient net operating loss carryovers to offset anyrecognized gains. If we were to recognize taxable gains in a year beforeconsideration of net operating loss carryovers, we could be subject toalternative minimum tax. Generally, for tax years ending after 

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December 31, 2002,the use of net operating loss carryovers to reduce alternative minimum taxableincome is limited to 90% of alternative minimum taxable income. Therefore, taxat a rate of 20% could be imposed on our alternative minimum taxable incomethat cannot be reduced by net operating loss carryovers. If a liquidating trustis formed, our net operating loss carryovers will disappear and, therefore,will not be available to reduce any subsequent gains recognized within thetrust. However, the trust (or owner thereof) should have a tax basis equal tothe fair market value of the assets at the date the liquidating trust isformed. Any gain recognized by the trust would be the result of eitherappreciation in the value of the assets during the time that they are owned bythe trust, or an initial underestimation of the fair market value of the assetsat the time the trust is formed.

We have been reviewing theadvantages and disadvantages of contributing our remaining assets into aliquidating trust. Our board will continue to review the timing and merits ofsuch strategy in light of progress in our negotiations to sell the Resort andother relevant factors.

**Managed Properties**

In 2004, we managed Wekiva and Black Bear until theirrespective sale dates of August 26, 2004 and September 24, 2004.

In 2006, we managed Tierra Del Sol until its sale dateof May 8, 2006.

As of March 26, 2007, we continue to manage theCountry Club at Wildewood and the Country Club Woodcreek Farms (collectivelyknown as Stonehenge).

As previously explained,Westin managed the Resort pursuant to a Management Agreement which wasterminated by mutual agreement on October 31, 2006.  As of that date, we are managing the Resortinternally.

**FinancialInformation About Industry Segments**

See the ConsolidatedFinancial Statements and notes thereto referred to in Item 8 of this annualreport for the financial information required to be included in response tothis Item.

**Employees**

At March 26, 2007, our corporate office had fourfull-time employees (including our chief executive officer and our principalaccounting officer) and one part-time employee. To the extent practical, wewill continue to reduce or terminate time commitments and related salaries andwages as our remaining assets are sold. In particular, while our chiefexecutive officer is presently a full time employee, we have reached anagreement with him that provides that his time commitment will be reduced inexchange for a corresponding reduction in his wages and salary. In addition, asof March 26, 2007,  Stonehenge hadapproximately 43 full-time employees and 48 part-time employees, in theaggregate, of which some are seasonal. We are the co-employer of both the staffat the corporate office and the employees at Stonehenge as we lease theirservices from an independent employee leasing company and, therefore, serve asco-employer. At the Resort, which is owned by us through a subsidiary, weemploy approximately 461 full-time employees, 103 part-time employees and 123casual labor employees, of which some are seasonal.

**EnvironmentalMatters**

Operations at our golf courses involve the use andstorage of various hazardous materials such as herbicides, pesticides,fertilizers, motor oils and gasoline. Under various federal, state and locallaws, ordinances and regulations, an owner or operator of real property maybecome liable for the costs of removal or remediation of certain hazardoussubstances released on or in its property. These laws often 

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impose liability withoutregard to whether the owner or operator knew of, or was responsible for, therelease of hazardous substances. The presence of these substances, or thefailure to remediate these substances properly when released, may adverselyaffect the owner’s ability to sell the real estate or to borrow using the realestate as collateral.

The Florida Department of Environmental Protection, orthe DEP, conducted a site inspection at the Resort on June 24, 2003. TheResort was found to have improperly disposed of waste paint and solvents andfailed to properly store waste lamps and used oil and oil filters in properlylabeled containers. The predecessor owner entered into a Consent Order whereinthe DEP agreed to reduce the civil penalty to $22,000, and to allow 80% of thereduced civil penalty to be offset with credits obtained through theimplementation of a pollution control project and a process of ongoingself-monitoring and reporting of environmental conditions to the DEP. The DEPdetermined that an above ground self-contained storage tank system at theResort qualifies for this credit. The Resort installed the system and, on anongoing basis, continues to monitor the environmental conditions and reportthese conditions to the DEP. As part of the ongoing self-monitoring andreporting process, the Resort engaged a third party, URS Corporation, todevelop a Site Assessment Report and monitor the environmental conditionsnoted in the DEP Consent Order. This report indicates that further remediationmay be necessary and URS Corporation has estimated the remediation costs, ifrequired by the DEP, to be approximately $35,000 to $40,000. Theseadditional estimated costs have not been accrued in the operating results ofthe Resort. The DEP has formally approved the remediation plan with slightlyhigher levels of excavation. URS was on property recently to complete formalproposals which we anticipate will be delivered to us by March 31, 2007. Afterthe excavation is finished additional testing will be completed, if testsremain favorable this should conclude the process.

Except as discussed above, we have not been notifiedby any governmental authority of any material non-compliance, liability orother claim in connection with any of our golf courses. At the time of ourvarious acquisitions, all of our golf courses were subjected to Phase Ienvironmental audits (which do not involve invasive procedures, such as soilsampling or ground water analysis) by an independent environmental consultant.As a general rule, we do not update these Phase I environmental audits.

Based on the results ofthe Phase I environmental audits performed at or about the time of ouracquisitions and the Resort loan to GHR in 1997, we were not aware of anyexisting environmental liabilities that we believe would harm our business,assets, results of operations or liquidity, nor were we aware of any condition thatcould create such a liability. We face the risk, however, that those Phase Ienvironmental audits may have failed to reveal all potential environmentalliabilities, that prior or adjacent owners may have created materialenvironmental conditions not known to us or the independent environmentalconsultant, that future uses or conditions (including, without limitation,changes in applicable environmental laws and regulations) may result in theimposition of environmental liability, or that indemnitors may not meet theirobligations to us in the event of a claim against us.

**GovernmentRegulation**

Our golf courses, likemost public businesses, are subject to the Americans with Disabilities Act of1990, or the ADA. The ADA has separate compliance requirements for “publicaccommodations” and “commercial facilities,” but generally requires publicfacilities such as clubhouses and recreation areas to be accessible to peoplewith disabilities. Compliance with the ADA requirements could require removalof access barriers and the construction of capital improvements at our golfcourses. Noncompliance could result in imposition of fines or an award ofdamages to private litigants. We are responsible for related costs incurred atthe Resort and golf courses to comply with ADA requirements.

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**Competition**

Our Resort faces competition for corporate groupbusiness and transient guests both from resorts owned by others and located inthe same geographic areas and from resorts located in other geographic areaswith a similar climate. Increases in the number and quality of golf resortsthat cater to corporate and group business have had a material adverse effecton the revenues of the Resort and, thus, on our ability to generate positivenet cash flows. The Resort has been working, and has already been successful onsome fronts, to apply new marketing strategies to broaden the Resort’s scope sothat the Resort’s core business is not reliant on corporate group business.

Stonehenge is subject tocompetition for players and members from golf courses owned by others andlocated in the same geographic area. Despite this competition, Stonehenge hasbeen able to maintain a stable membership base.

**Seasonality**

See Item 1A in this annualreport for a discussion of golf course seasonality.

**Foreign Operations**

We do not engage in anyforeign operations or derive any revenue directly from foreign sources.

**Code of Ethics**

We have adopted a Code of Ethics that applies to ourprincipal executive officer and our principal accounting officer, as well as toall of our directors, and our other officers and employees. Our Code of Ethicsis filed with the SEC as Exhibit 14.1 to our Form 10-K for theyear ended December 31, 2003. Any waivers of the Code of Ethics fordirectors or executive officers must be approved by our board of directors anddisclosed in a Form 8-K filed with the SEC within five days of thewaiver.

Prior to the terminationof the Westin Management Agreement on October 31, 2006, the Resortemployees were subject to the Worldwide Code of Business Conduct and Ethics ofWestin’s parent, Starwood Hotels & Resorts Worldwide, Inc.

**Web Site Access toour Periodic SEC Reports**

Our primary Internet address is www.golftrust.com. Wemake our periodic SEC Reports (Forms 10-Q and Forms 10-K),current reports (Form 8-K) and beneficial ownership reports(Forms 3, 4 and 5) available free of charge through our Web site (byhyperlink to the SEC’s Web site) as soon as reasonably practicable after theyare filed electronically with the SEC. We may from time to time provideimportant disclosures to investors by posting them in the news releases sectionof our Web site, as allowed by SEC rules. These disclosures may includeamendments to and waivers either of our Code of Ethics.

Materials we file with theSEC may be read and copied at the SEC’s Public Reference Room at450 Fifth Street, N.W., Washington, D.C. 20549. Information on theoperation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.The SEC also maintains an Internet Web site at www.sec.gov that containsreports, proxy and information statements, and other information regarding ourcompany that we file electronically with the SEC.

**ITEM 1A. RISKFACTORS**

**Risks that mightDelay or Reduce our Liquidating Distributions**

We have recorded the valueof the Resort and our remaining golf courses and liabilities at our bestestimates of fair value as of March 26, 2007; however, we can provide noassurance that these estimates 

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reflectthe actual current market value for the applicable courses. As a result of ourinability to provide any assurance regarding the estimates of the fair value ofour assets, including the probability of negotiating and closing a sale of theResort, at the present time, we do not believe that we are able to reliablyproject the amount of the total liquidating distributions we will make to theholders of our common stock over the remainder of the liquidation period andthe amounts may be significantly less than our earlier projections.Further, while we have provided in this Report estimated adjustments to netassets in liquidation based upon the sale of the Resort for approximately $35.0million and our interest in Parcel F for approximately $2.9 million, there canbe no assurances that (i) we will be able to close a sale of the Resortfor a price that will allow us to realize the estimated proceeds for theResort, if at all or, (ii) that the owner of Parcel F will be able toclose on a sale of Parcel F for the current contracted purchase price allowingus to realize our interest in the proceeds from the sale of Parcel F. Further,in the event that we are unsuccessful in negotiating the terms of a newagreement which will allow us to repurchase all of AEW’s series A preferredstock for a price of $20,000,000 or less, or if we negotiate such an agreementand are unable to repurchase AEW’s preferred stock for any reason, the assetsavailable for distribution to the holders of our common stock, and the ultimateliquidating distributions to the holders of our common stock, will be reducedby the amount of any accrued dividends through the date that we redeem AEW’sshares. Even if we are able to successfully negotiate an agreement with AEWwhich would allow us to repurchase AEW’s preferred stock at a price thatexcludes dividends on the preferred stock, we may either be unable to sell theResort at a time or under conditions which do not permit us to exercise ouroption. As a result of these factors, the estimated adjustments to net assetsin liquidation provided in this report may prove incorrect and theamounts, if any, that we ultimately distribute as liquidating distributionsmay be significantly less than estimated.

***Now that our Management Agreement with Westin isterminated, in addition to our obligation to pay termination fees to Westin, wewere required to find a third party to manage the Resort or manage the Resortourselves. We decided to manage the Resort ourselves.***

The Management Agreement provides that we shall pay toWestin, subject to the terms of the Management Agreement termination fee of atleast $5,500,000. As of October 31, 2006, the termination date of ourManagement Agreement with Westin, the termination fee is approximately$5,594,000. See disclosure of this obligation as accrued at December 31,2006 in Note 10 to our consolidated financial statements contained in Part II,Item 8 of this Annual Report.  This feemust be paid to Westin upon the earlier of (i) a sale of the Resort or (ii) March 31,2008. In the event that we are unable to sell the Resort by March 31, 2008before this obligation becomes due, the payment of this fee could cause ussevere liquidity problems.

We have retainedsubstantially all of the former Westin on-site executive management team at theResort, with the exception of the positions of general manager and controllerwhich we have since filled through promotions of current Resort employees. Evenwith the former Westin on-site executive management team, we cannot guaranteethat we will be as successful in managing the Resort as Westin has been becausewe do not have the Westin brand on the hotel and the synergies available to aglobal hotel chain. In the event that we prove less successful than Westin atmanaging the Resort, our results of operations and financial condition could beadversely affected.

***If we are not able to sell the Resort and our otherremaining golf property in a timely manner, obtain liquidity with respect toour interest in Parcel F, or obtain some form of additional financing, wemay experience severe liquidity problems, not be able to meet the demandsof our creditors, and ultimately become subject to involuntary bankruptcyproceedings.***

In the event that we are unable to sell the Resort andour other remaining golf property as planned, realize proceeds from our interestin Parcel F, or obtain some form of additional financing, we may be 

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unable to pay ourobligations as they become due or upon demand. In addition, our ability to payour obligations may be compromised if either of (i) our chiefexecutive officer requires payment of outstanding performance milestonepayments owed by us to him or (ii) our counsel demands payment before weare able to realize net cash proceeds from asset sales or financing sufficientto discharge those obligations. As of March 26, 2007, we owedapproximately $1,647,000 and $107,000 in milestone payments plus accruedinterest to our chief executive officer and to our former chief financialofficer, respectively. We also owe a substantial sum in legal fees(approximately $3,101,000), including fees incurred in connection with thenegotiation of agreements providing for the sale of the Resort.

Further, given that the Resort’s only source of cashis from operations of the Resort, and that the operational cash flow capacityof the Resort will likely not permit the Resort to maintain positive cash flowthrough-out 2007, we may be required to seek to provide additional capitalto the Resort. We made intercompany advances to the Resort to support workingcapital needs in the amounts of $2,000,000, $400,000, $650,000, $600,000 and$120,000 in July 2004, September 2005, November 2005, October 2006 and February2007 respectively. We also funded approximately $203,000 and $33,000 for thebeginning phase of the technological infrastructure capital investment in October2006 and November 2006, respectively. The $120,000 and the $33,000 funded in February2007 and November 2006, respectively, were repaid to us from Resortoperations in early March 2007. While current Resort cash flow projections for2007 indicate that the Resort may be in a breakeven cash situation by year-end,a shortfall is anticipated by late summer to early fall due to certainobligations that the Resort must pay in August 2007, including obligations ofapproximately $1,060,000 for the quarterly rental pool distribution and$412,000 for the rental pool refurbishment payment. Therefore, a cash infusionof up to approximately $1,000,000 in the aggregate may be necessary tofund the short-fall. If we are unable to either improve the Resort’s operatingcash flows or otherwise obtain liquidity, then the Resort may be unable tocontinue as a going concern. Further, the Resort’s credit capacity is limited.There are no assurances that additional intercompany advances will not benecessary prior to the consummation of a sale of the Resort. In the event thatwe must advance additional capital to fund operations at the Resort or ourother operations, we may be required to seek financing (which we arecurrently pursuing) or raise further capital in order to meet our obligationswhen they come due. Further, we may also be required to use proceeds fromthe sale of our other assets to fund our operations and the operations of theResort. There is no assurance that we will be able to obtain liquidity through (i) additionalfinancing, (ii) our interest in a potential near term sale of Parcel F byits owner, or (iii) raise further capital or that we will have sufficientproceeds from assets sales from which to draw, any funding that we receive will not contain restrictive covenants orother onerous terms. Additionally, we expect that the cash flow that we receivefrom the net operating income of the Stonehenge golf courses, if any, will notbe substantial.

We are currently negotiating the terms of a three yearnon-revolving credit facility with a Tampa community bank for approximately$1,200,000. The proceeds of which would be used to finance renovations at theResort restaurants, information technology infrastructure upgrades and otherproperty improvements  at the Resort andto cover short-term working capital shortfalls. The three condominium unitsthat we own at the Resort will serve as collateral for this loan. We are alsoseeking to obtain a revolving accounts receivable line of credit for at least$500,000. However, there can be no assurance that the Company will enter intothis loan facility or that we will be able to obtain an accounts receivablecredit line.

In the event we are notable to sell our remaining assets within a reasonable period of time and forreasonable amounts, obtain liquidity with respect to our interest in Parcel F,or close on the  additional financingdiscussed above, or if our expenses exceed our estimates, wemay experience severe liquidity problems and not be able to meet our financialobligations to our creditors. If we cannot meet our obligations to ourcreditors, we could ultimately become subject to bankruptcy proceedings.

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***Our estimate of the Resort’s fair value, as recordedon our books for accounting purposes, is based on forward-looking estimateswhich are subject to change. We might sell the Resort for an amount less thanour current estimate of its fair value, which could significantly reduce ourliquidating distributions to holders of our common stock.***

We do not believewe are able at this time to project the amount of the total liquidatingdistributions we will make to the holders of our common stock over theremainder of the liquidating period. The factors giving rise to thisuncertainty include, without limitation, the following:

·       improvementin the financial performance of the Resort that we have observed since we tooktitle in July 2004 may not continue;

·       ourSettlement Agreement with our former borrower and related agreements that weentered with Westin may prove less successful than anticipated, and theperformance of the parties to the Settlement Agreement may fall short ofour expectations;

·       historicaluncertainty surrounding the future of the Resort and as of October 31,2006, the absence of Westin as manager of the Resort may createuncertainty for corporate meeting planners contracting for large corporategroups, and any such uncertainty may be used as a competitive advantageagainst us by our competitors when marketing their hotels against the Resort;and

·       uncertaintyabout our ability to close the transactions contemplated in any asset purchaseagreement we may execute and the transactions costs therewith.

As a result of the foregoing, at the present time wewill refrain from either making any adjustments (positive or negative) to anyearlier reported range of distributions or proposing a new range. We may,however, be able to do so in future periods in the event that the quality andreliability of all information necessary to make estimates of cash flow and,correspondingly, value become more reliable. You should not assume that theliquidating distributions have not declined, perhaps in material amounts, fromthe historical projections we provided in earlier filings.

Our efforts to preservethe value of the Resort until we are able to consummate its sale may beunsuccessful, and we might ultimately sell our interest in the Resort forsignificantly less than our last estimate of its fair value. Accordingly, ourassessment of the Resort’s fair value may change at some future date,perhaps in a material adverse manner, based on facts and circumstances at thattime, and the Resort’s value may again be written-down.

***The conclusion of the Company’s negotiations with AEWwhich will allow us to repurchase all of AEW’s series A preferred stock plusaccrued dividends for a price of $20 million or less is pending evidence orconfirmation to AEW of a sale to demonstrate our ability to close on thetransaction to repurchase all of the series A preferred stock from AEW. As aresult of our assumption that these negotiations will lead to an executedagreement, we have not recorded in our net assets a liability for the accrualof preferred dividends payable for the quarter beginning July 1, 2001 orfor  subsequent quarters. We can provideno assurance, however, that a final agreement will be executed with AEW.Further, even if we successfully execute such an agreement with AEW, we may beunable to negotiate a financing arrangement through our existing lenderrelationships or otherwise procure sufficient funding to permit us to exercisethat repurchase right and close the repurchase prior to its expiration. In theevent that either we are unable to reach an agreement with AEW, or we areunable to exercise any repurchase right and close the repurchase under anyagreement we may reach with AEW, we may be required to pay AEW all or a portionof the preferred dividends for which we have not recorded a liability, reducingour liquidating distributions to holders of our common stock.***

On April 12, 2006, we executed an OptionAgreement with AEW, the holder of all of our series A preferred stock, in whichAEW granted us an option to purchase, on or before June 30, 2006, the800,000 shares of our series A preferred stock held by AEW, including,without limitation, all of AEW’s 

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rights to due and unpaidprincipal, accrued and unpaid dividends and liquidation preferences. Theexercise price of this option was approximately $20 million, and excludeddividends that would accrue to the series A preferred stock pursuant toexisting contractual obligations. As previously reported, this option expiredby its terms on June 30, 2006.

The conclusion of our negotiations with AEW which willallow us to repurchase all of AEW’s series A preferred stock plus accrueddividends for a price of $20 million or less is pending evidence orconfirmation of a sale to demonstrate our ability to close on the transactionto repurchase all of the series A preferred stock.

As a result of our assumption that these negotiationswill lead to an executed agreement, we have not recorded in our net assets forthe year ended December 31, 2006 either (i) a liability of$12,522,000 for the accrual of quarterly preferred dividends for the periodJuly 1, 2001 to December 31, 2006 or (ii) additional dividendaccruals of $625,000 for each subsequent quarter through the date that the exittransaction is ultimately consummated and liquidation payments are made toAEW.  Absent either an agreement by athird party to assume all or a portion of our accrued preferred dividendobligation or an agreement by AEW to forgive all or a portion of our preferreddividend obligations, (neither of which have occurred), we will berequired to accrue, and ultimately pay in liquidating distributions to AEW, thesepreferred dividends. Any preferred dividends which we are required to pay toAEW ultimately would reduce the net assets available to stockholders inliquidation and correspondingly the estimated liquidation distribution percommon share. As of December 31, 2006, if we were required to pay AEWaccrued dividends through that date, our liquidating distributions would bereduced by $1.73 per common share or OP unit of the Operating Partnershipoutstanding on that date.

At the present time, wehave not executed a binding agreement with AEW. There are no assurances that wewill successfully execute such an agreement with AEW, or that the terms of anyagreement that we may execute with AEW will not be more onerous to us than wecurrently anticipate. Further, even if we are able to execute an agreement withAEW which permits us to repurchase the series A preferred stock at $20 millionor less, we may be unable to negotiate a financing arrangement through ourexisting lender relationships or otherwise procure sufficient funding to permitus to exercise that repurchase right and close the repurchase prior to itsexpiration. In the event that we execute an agreement with AEW and we areunable to repurchase AEW’s series A preferred stock in accordance with the termsof that agreement, in addition to the requirement that we pay accrued dividendsto AEW, we expect that agreement also would subject us to penalties or grantAEW additional rights with respect to us and our remaining assets which will beprejudicial to us and our assets.

***We cannot guarantee that we will be able to enter intoa binding agreement for the sale or other disposition of the Resort.***

In connection with ourefforts to sell the Resort, we intend to negotiate and execute a binding assetpurchase agreement. Thereafter, any closing pursuant to an executed assetpurchase agreement will be conditioned upon, among other things, considerationand approval of the transaction by the Special Committee of our Board and thereceipt of a satisfactory fairness opinion. We cannot assure you that we willenter into an asset purchase agreement for the Resort or, if we do so, that allconditions to closing will be satisfied and the Resort will be sold. Further,the price that we receive if we sell the Resort might be less than the thenapplicable carrying value of the Resort on our financial statements.Significant legal and other costs and expenses will be incurred in connectionwith the negotiation of any sale of the Resort, and these costs and expenseswill further reduce the liquidating distributions that we make to the holdersof our common stock.

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***We took ownership of the Resort on July 16, 2004pursuant to a global Settlement Agreement providing for the assumption ofcertain existing or modified financial obligations of our former borrower. Weare now responsible for any negative cash flow of the Resort. If the amount ofassumed liabilities and expenditures with respect to the Resort exceed ourexpectations, our liquidating distributions to common stockholders could bereduced.***

On July 15, 2004, we entered a SettlementAgreement with our former borrower relating to our June 1997 $79.0 millionloan to our former borrower. This loan was secured by a mortgage on the Resortwe made to an unaffiliated borrower. As part of the Settlement Agreement, weassumed certain financial obligations of the borrower, such as refurbishmentexpenses paid by the condominium owners, a modified termination rights fee andoutstanding golf facility management fees payable to Troon. As the owner of theResort, we are responsible for any negative cash flow associated with itsownership and operation of the Resort. As a result of the assumption of theseliabilities and our responsibility for any negative cash flow, we face the riskthat our ultimate liabilities and expenditures might be greater than expected.In that case, our cash available for distribution and the ultimate amount ofour liquidating distributions to the holders of our common stock could be lessthan our expectations. In 2005, we funded $1,050,000 and in 2006, we funded$600,000 to address seasonal cash flow shortfalls plus we funded approximately$203,000 and $33,000 for the beginning phase of the technologicalinfrastructure capital investment in October 2006 and November 2006, respectively.  In February 2007, we funded approximately$120,000 for a temporary operating cash shortfall which was subsequently repaidin early March 2007 along with the $33,000 originally advanced in November 2006.We expect that additional intercompany advances of up to $1,000,000 in theaggregate might be required by late summer to early fall to address timingissues related to the refurbishment payments due in May and August.

Although the revenues ofthe Resort have increased since we took title to it, we can provide noassurance that the Resort’s future performance will continue to showimprovement. If we do not continue to improve the Resort’s financialperformance, our recovery with respect to this asset might be significantlydelayed or fail. A delay in our recovery of the Resort might reduce the netproceeds that we ultimately receive upon a sale of the Resort to less than ourcurrent estimate of the Resort’s fair value (approximately $37.9 millionincluding our interest in certain real estate), and we may be forced to usefunds that otherwise might be distributed to our stockholders, if any, to fundcash shortages of the Resort, causing our liquidating distributions to holdersof our common stock to be substantially reduced. Our estimate of the Resort’sfair value, as recorded on our books for accounting purposes, is based onforward-looking estimates which may be materially optimistic and subject toadverse change. We can provide no assurance of success under the SettlementAgreement, or the future success of the Resort.

***Stockholderlitigation related to the plan of liquidation could result in substantial costsand distract our management.***

Extraordinary corporateactions, such as our plan of liquidation, often lead to securitiesclass action lawsuits and derivative litigation being filed againstcompanies such as ours. We became involved in this type of litigation inconnection with our plan of liquidation (and the transactions associated withit) in a legal action we refer to as the *Crossley* litigation.During the second quarter of 2003, the *Crossley* claimwas dismissed with prejudice on our motion for summary judgment. Accordingly,the lawsuit was dismissed and the plaintiff will not be allowed to refile theclaim, although the plaintiff could appeal the dismissal. We subsequentlyentered into a non-monetary settlement with the plaintiff whereby the plaintiffagreed not to appeal the dismissal and we agreed not to seek reimbursement ofour legal costs from the plaintiff. Even though the *Crossley*litigation has been dismissed, we face the risk that other claims might bebrought against us. Any such litigation would likely be expensive and, even ifwe ultimately prevail, the process would divert management’s attention fromimplementing the plan of liquidation and otherwise operating our business. Ifwe do not prevail in any such litigation, we might be liable for damages. It isnot possible to predict the amount of such potential damages, if any, but theymight be significant. Any damage liability 

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wouldreduce our cash available for distribution and the ultimate amount of ourliquidating distributions to holders of our common stock.

***If we are unable toretain at least one of our key executives and sufficient staff members tocomplete the plan of liquidation in a reasonably expeditious manner, ourliquidating distributions might be delayed or reduced.***

Our ability to consummate sales transactions for ourother interests in golf courses depend to a large extent upon the experienceand ability of our president and chief executive officer, W. Bradley Blair, IIand his experience and familiarity with our assets, our counter-parties and themarket for golf course sales. We believe that a loss of Mr. Blair’sservices could materially harm our ability to complete the plan of liquidationin a reasonably expeditious manner and our prospects of selling our assets atthe best potential prices.

The potential resignation of Mr. Blair poses arelatively greater risk at this time in light of the fact that Mr. Peters,our Senior Vice President and Chief Financial Officer and Secretary resignedeffective February 5, 2007. If Mr. Blair were to resign, we wouldlikely seek to hire a replacement for Mr. Blair. The cost that we incur toreplace Mr. Blair would likely depend upon our determination of theexperience and skills that must be possessed by his replacement in light of ourfinancial condition, our assets remaining to be liquidated, and the complexityof any issues bearing on us and the liquidation at that time.

Our ability to completethe plan of liquidation in a timely manner as soon as reasonably practicablealso depends on our ability to retain our key non-executive employees, inparticular our principal accounting officer. Those employees may seekother employment rather than remaining with us throughout the process ofliquidation, even though they generally would lose their eligibility forseverance payments by resigning. If we are unable to retain enough qualifiedstaff to complete our plan of liquidation in a reasonably expeditious manner,liquidating distributions might be delayed or reduced.

***If we are unable toconsummate a sale of the Resort or our other remaining golf courses at ourrevised estimates of their respective values, our liquidating distributions mightbe delayed or reduced.***

In addition to the four golf courses at the Resort, wehave one other property (or two eighteen-hole equivalent golf courses). Incalculating our projected liquidating distributions, we assumed that we wouldbe able to find buyers for the Resort and our other remaining property atpurchase prices equal to our estimates of their respective fair market values.However, our estimates of the sales prices of the Resort and our otherremaining property may exceed the prices we eventually receive. At December 31,2005, we recorded a $2.421 million write-down in the value of the Resort to$35.0 million (excluding our interest in Parcel F) based on market indicationsof interest. Should we not be able to execute a purchase and sale agreementwith a buyer at our current carrying value, we might be required to lower our asking price for the Resort and ourother remaining property below our estimate of their fair value. If we are notable to find new buyers for these assets in a reasonably expeditious manner, orif we have overestimated the sales prices we will ultimately receive, ourliquidating distributions to the holders of our common stock will besignificantly delayed or reduced.

At the present time, we donot believe we are able to reliably project the amount of the total liquidatingdistributions we will make to the holders of our common stock over theremainder of the liquidation period. Accordingly, you should not rely on thevaluations or ranges earlier provided as representative of our current views onthe subject.

***If we are unable torealize the value of a promissory note taken as part of any purchaseprice, our liquidating distributions might be reduced.***

In some golf course sales,we may agree to receive promissory notes from the buyer as a portion ofthe purchase price. Promissory notes are often illiquid. If we are not able tosell the promissory note without a 

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greatdiscount, or in the case of a short-term note, if we hold it to maturity andthe maker ultimately defaults, our liquidating distributions might be reduced. Wecurrently do not have any outstanding notes receivable.

***Decreases in golfcourse values caused by economic recession and/or additional terrorist activitymight reduce the amount for which we can sell our assets.***

The value of ourinterests in golf courses might be reduced, and substantially so, by a numberof factors that are beyond our control, including the following:

·       adversechanges in the economy, prolonged recession and/or additional terroristactivity against the United States or our allies, or other war-time activitiesmight increase public pessimism and decrease travel and leisure spending,thereby reducing golf course operators’ revenues (particularlydestination-resort golf course revenues) and diminishing the resale value ofthe affected golf courses;

·       increasedcompetition, including, without limitation, increasing numbers of golf coursesbeing offered for sale in our markets or nationwide;

·       continuingimbalance in supply and demand in the golf course industry; and

·       changesin real estate tax rates and other operating expenses.

Any reduction in the valueof our golf courses would make it more difficult for us to sell our assets forthe amounts and within the time-frames that we have estimated. Reductions inthe amounts that we receive when we sell our assets could decrease or delay ourpayment of liquidating distributions to our stockholders, perhaps in substantialways.

***If our liquidationcosts or unpaid liabilities are greater than we expect, our liquidatingdistributions might be delayed or reduced, potentially in a substantial manner.***

Before making the finalliquidating distribution to the holders of our common stock, we will need topay all of our transaction costs pertaining to the liquidation and all validclaims of our creditors, which we expect will be substantial. Our boardmay also decide to acquire one or more additional insurance policies coveringunknown or contingent claims against us, including, without limitation,additional directors’ and officers’ liability insurance, for which we would payan additional premium based upon market prices prevailing at the time of anysuch purchase. In addition, if we form a liquidating trust, we expectto have additional expenses in connection with the formation thereof andfor such for items such as insurance for the trustees. We have estimated suchtransaction costs in calculating the amount of our projected liquidatingdistributions. To the extent that we have underestimated costs and expenses incalculating our historical projections, our actual aggregate liquidatingdistributions will be lower than we have historically projected, and perhaps bysubstantial amounts.

***The holder of ourseries A preferred stock might exercise its right to appoint two directorsto our board of directors, which might result in decisions that prejudice theeconomic interests of our common stockholders in favor of our preferred stockholders.***

We entered into a votingagreement with the holder of our series A preferred stock, AEW, pursuant towhich the holder agreed to vote in favor of our plan of liquidation. The votingagreement provided that if we failed to redeem our series A preferredstock by May 22, 2003, the holder of the series A preferred stock would beentitled to require us to redeem the series A preferred stock. We received sucha demand from the holder of our series A preferred stock on May 23, 2003;however, we do not have cash available to redeem the holder of our series Apreferred stock. Our default in making a timely redemption payment gives theholder of our series A preferred stock the right under the voting agreement toappoint two new 

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directorsto our board. Our series A preferred stock charter also gives the holder of ourseries A preferred stock the right to elect two new directors if and whendividends on its series A preferred stock are in arrears for more than sixquarters. We have not paid a quarterly dividend since the dividend paid for thesecond quarter of 2001. These director election rights are not cumulative,which means that the holder of our series A preferred stock may elect two,but not four, new directors. The current holder of our series A preferredstock, AEW, informed us previously that it does not currently intend toexercise its director election rights. However, it might decide to exercisesuch right at any time in the future. The appointment of such directors to ourboard might reduce the efficiency of our board’s decision-making or result indecisions that prejudice the economic interests of the holders of our commonstock in favor of the holder of our series A preferred stock.

***Distributing interests in a liquidating trustmay cause you to recognize gain prior to the receipt of cash.***

As we contemplate the sale of our remaining assets andthe wind-up of the Company, as contemplated by our plan of liquidation, wemay elect to contribute our remaining assets and liabilities to aliquidating trust. Our stockholders would receive interests in the liquidatingtrust, our corporate existence would terminate and our shares would no longertrade publicly. The plan of liquidation prohibits us from contributing ourassets to a liquidating trust unless and until our series A preferred stock hasbeen redeemed in full or until such time as it consents to such a contribution.

For tax purposes, the creation of the liquidatingtrust should be treated as a distribution of our remaining assets to ourstockholders, followed by a contribution of the same assets to the liquidatingtrust by our stockholders. As a result, we will recognize gain or loss inherentin any such assets, with any gains offset by available net operating losscarry-overs (discussed above). In addition, a stockholder would recognize gainto the extent his share of the cash and the fair market value of any assetsreceived by the liquidating trust was greater than the stockholder’s basis inhis stock, notwithstanding that the stockholder would not contemporaneouslyreceive a distribution of cash or any other assets with which to satisfy theresulting tax liability, and would not be able to transfer its interests in theliquidating trust.

In addition, it is possible that the fair market valueof the assets received by the liquidating trust, as estimated for purposes ofdetermining the extent of the stockholder’s gain at the time interests in theliquidating trust are distributed to the stockholders, will exceed the cash orfair market value of property ultimately received by the liquidating trust uponits sale of the assets, in which case the stockholder may not receive adistribution of cash or other assets with which to satisfy any tax liabilityresulting from the contribution of the assets to the liquidating trust. In thiscase, the stockholder would recognize a loss in a taxable year subsequent tothe taxable year in which the gain was recognized, which loss might be limitedunder the tax code.

If we do not distributeour assets to a liquidating trust and, instead, continue to operate as aregular corporation until all of our assets are sold, we would recognize gainsor losses upon the sale of assets for federal income tax purposes. Since we areno longer a REIT, we could be subject to income tax on any recognized gains. Ifwe were to recognize taxable gains in a year before consideration of netoperating loss carryovers, we could be subject to alternative minimum tax.Generally, for tax years ending after December 31, 2002, the use of netoperating loss carryovers to reduce alternative minimum taxable income islimited to 90% of alternative minimum taxable income. Therefore, tax at a rateof 20% could be imposed on our alternative minimum taxable income that cannotbe reduced by net operating loss carryovers. If a liquidating trust is formed,our net operating loss carryovers will not be available to reduce any gainsrecognized within the trust. However, the trust will have a tax basis equal tothe fair market value of its assets at the date the liquidating trust isformed. Any gain recognized by the trust would thus be the result of eitherappreciation in the value of the assets during the time that they are owned bythe trust, or an initial underestimation of the fair market value of the assetsat the time the trust is formed.

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***Our common stockmay be de-listed from American Stock Exchange, which would make it moredifficult for investors to sell their shares.***

Currently, our common stock trades on the AmericanStock Exchange, or Amex. We cannot assure you that we will be able to maintainour listing on Amex or any other established trading market. Among otherthings, Amex has considerable discretion with respect to listing standards,which include qualitative and quantitative criteria, some of which are beyondour control. Further, in the event that we form a liquidating trust, weexpect that we would de-list from the Amex.

We cannot assure you thatwe will be able to maintain our listing on Amex, or predict the degree to whichan involuntary delisting would harm our business and the value of yourinvestment. If our common stock were to be de-listed from Amex, either as aresult of voluntarily action by us or by Amex because we no longer meet theAmex listing standards, it could severely limit the liquidity of the commonstock and your ability to sell our securities in the secondary market.

***We and oursubsidiary, GTA-IB LLC, expect to incur significant compliance costs relatingto the Exchange Act and Sarbanes-Oxley Act.***

We and our subsidiary, GTA-IB, LLC, are required tocomply with the reporting requirements of the Exchange Act as they apply tonon-accelerated filers. As such, both entities must timely file QuarterlyReports on Form 10-Q, Annual Reports on Form 10-K andCurrent Reports on Form 8-K, among other actions. Further, recentlyenacted and proposed laws, regulations and standards relating to corporategovernance and disclosure requirements applicable to public companies,including the Sarbanes-Oxley Act and new SEC regulations have increased the costsof corporate governance, reporting and disclosure practices which are nowrequired of us and of GTA-IB. We were formed prior to the enactment of thesenew corporate governance standards, and as a result, we did not have allnecessary procedures and policies in place at the time of their enactment. Ourefforts to comply with applicable laws and regulations, including requirementsof the Exchange Act and the Sarbanes-Oxley Act, are expected to involvesignificant, and potentially increasing, costs. Costs incurred in complyingwith these regulations may reduce the amount of cash available forliquidating distributions.

The Sarbanes-Oxley Act andrelated laws, rules and regulations create legal bases for administrativeenforcement, civil and criminal proceedings against us in case ofnon-compliance, thereby increasing our risk of liability and potentialsanctions. Costs incurred in defending against any such actions or proceedings,and any liability or sanctions incurred in connection with such actions orproceedings, could negatively affect the amount of cash available forliquidating distributions.

**Risks Relating tothe Resort**

***In the event thatthe Resort does not provide sufficient cash flow to us, we may be forcedto reduce capital expenditures and improvements at the Resort, diminishing thevalue of the Resort.***

As the owner of theResort, we are responsible for any negative cash flow associated with itsoperation. As a result of our assumption of these liabilities and ourresponsibility for any negative cash flow of the Resort, we may be exposedto liabilities and expenditures exceeding our expectations or ability to pay.In the event cash flow is insufficient to fund planned improvements, ourability to rent the units in the Rental Pool may decline. A decline in therental rates that can be charged for the units or related vacancies resultingfrom our inability to make necessary capital expenditures may cause the valueof the Rental Pool units, and the Resort, to decline.

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***The Resort’sperformance may not provide adequate resources to fund the refurbishmentreimbursement to the Rental Pool participants.***

Pursuant to GHR’s arrangement with many of the personswho own condominium units at the Resort, the condominiums owned by theseparticipating persons are placed in a securitized pool and rented as hotelrooms to guests of the Resort. We refer to this securitized pool ofparticipating condominiums as the Rental Pool. In addition to the currentRental Pool agreement, GHR agreed with the Association that GHR would reimburse50% of the refurbishment costs, plus accrued interest at 5% per annum on theunpaid balance of that portion of the unpaid refurbishment costs which we arerequired to reimburse. This amount will be reimbursed to participatingcondominium owners (or transferees of their condominium unit(s)) over thefive-year period beginning in 2005. The reimbursement is contingent on theunits remaining in the Rental Pool from the time of their refurbishment through2009. If the unit does not remain in the Rental Pool during the reimbursementperiod from 2005 through 2009, the owner or successor owner forfeits any unpaidinstallments at the time the unit is removed from the Rental Pool. In addition,GTA IB agreed to provide refurbishment reimbursement for units placed into therental pool during 2005 at a level of 25% of the applicable condominium owner’sinvestment in the refurbishment. We refer to this program as Phase 5. Intereston the Phase 5 liability is accrued at a rate of 2.5% per annum and paidquarterly. Principal payments for Phase 5 begin in the first quarter of 2008and will be paid quarterly through the fourth quarter of 2012. Thereimbursement is contingent on the units remaining in the Rental Pool from thetime of their refurbishment through 2012. If the unit does not remain in theRental Pool during the reimbursement period from 2005 through 2012, the owneror successor owner forfeits any unpaid installments at the time the unit isremoved from the Rental Pool. As of March 26, 2007, 614 units wereparticipating in the Rental Pool.

Accordingly, maintaining condominium ownerparticipation in the Rental Pool is very important to the continued economicsuccess of the Resort. We assumed certain existing or modified financialobligations of GHR, including its responsibilities regarding the administrationof the condominium unit Rental Pool, when we took ownership of the Resortpursuant to the Settlement Agreement. Also as part of the SettlementAgreement, we assumed GHR’s obligation to reimburse the refurbishment expensespaid by the condominium owners.

As owner of the Resort, weare responsible for any negative cash flow associated with the ownership andoperation of the Resort. As a result of the assumption of these liabilities andour responsibility for any negative cash flow, we face the risk that ourultimate liabilities and expenditures might be greater than we expected. Inthat case, we may not have sufficient cash available for the payment ofthe refurbishment expenses relating to the Rental Pool units, or wemay otherwise decide not to use our funds in this manner. If this occurs,a disagreement involving the funding for the Rental Pool may arise, andthis disagreement could both divert our management’s attention from theoperation of the Resort and prove costly to the parties to any such dispute.

***The number of Rental Pool units may decline ifcurrent owners find alternative uses of the units more attractive thanparticipating in the Rental Pool, reducing the number of available Rental Poolunits and diminishing the value of the remaining units.***

Participants in the RentalPool may decide that alternative uses of their condominium units are moreattractive than participating in the Rental Pool. In particular, condominiumowners may determine that it is more financially advantageous to renttheir 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 participants in the Rental Poolmay result in increased pro-rata costs and reduced revenues for theremaining Rental Pool participants. In particular, a decrease in the number ofparticipants in the Rental Pool will result in higher per capita costs relatingto fixed costs that are incurred in connection with the administration of theRental Pool. In the event that the number of units in the 

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RentalPool declines below 575, our obligation to reimburse refurbishment expenses forthe units will be abated until the number of units in the Rental Pool isrestored to 575 or higher. As of March 26, 2007, the number of unitsparticipating in the Rental Pool is 614.

***Severe weatherpatterns experienced by Florida during 2004 and the southeastern portion of theUnited States during 2005 could result in depressed bookings, adverselyaffecting the Resort’s results of operations and reducing proceeds to theparticipants in the Rental Pool.***

We expect that bookings atthe Resort during the late summer and early fall of future years may beadversely affected as a result of a series of hurricanes that affectedFlorida during 2004 and the southeastern portion of the United States during2005. Our management detected such an adverse effect in 2005. In particular,the hurricane and tropical storm weather that occurred during 2004 and 2005may have increased the awareness of potential guests, particularly thosenot residing in the southeastern portion of the United States, to the dangerthat hurricanes and tropical storms are present. We expect that potentialguests may be more reluctant to book rooms in regions 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 bookingsand reduced revenues, which in turn will result in reduced distributions to theRental Pool participants.

***Severe weatherpatterns could further intensify the seasonal nature of the results of theResort.***

The hotel industry iscyclical in nature. Our business has historically been weaker during the thirdquarter of each year. In the event that we suffer from reduced bookings as aresult of hurricane-related concerns of potential guests, this effect couldreduce the revenues to the Resort in the third quarter of each year, increasingthe disparity between our results in the third quarter as compared to otherquarters. This increased cyclicality could make it more difficult for us toproject the results of the Resort, and may result in a lower than expectedpercentage of the Resort’s fixed costs being offset by revenue during the thirdquarter.

***We are subject toall the operating risks common to the hotel industry which could adverselyaffect our results of operations.***

Operating riskscommon to the Resort include:

·                    changesin general economic conditions, including the timing and robustness of therecovery in the United States from an economic downturn and the prospects forimproved performance in other parts of the world;

·                    theimpact of war and terrorist activity (including threatened terrorist activity)and heightened travel security measures instituted in response thereto;

·                    domesticand international political and geopolitical conditions;

·                    decreasesin the demand for transient rooms and related lodging services, including areduction in business travel as a result of general economic conditions;

·                    theimpact of internet intermediaries on pricing and our increasing reliance ontechnology;

·                    cyclicalover-building in the hotel industry which increases the supply of hotel rooms;

·                    changesin travel patterns;

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·                    changesin operating costs, including, but not limited to, energy, labor costs(including the impact of unionization), workers’ compensation and health-carerelated costs, insurance and unanticipated costs such as acts of nature andtheir consequences;

·                    disputeswith the managers and former managers of the Resort which may result inlitigation;

·                    theavailability of capital to allow us to fund renovations and investments at theResort; and

·                    the financialcondition of the airline industry and the impact on air travel.

***General economicdownturns, or an increase in labor or insurance costs, may negativelyimpact our results.***

Moderate or severeeconomic downturns or adverse conditions may negatively affect theoperations of the Resort. These conditions may be widespread or isolatedto one or more geographic regions. A tightening of the labor markets in Floridamay result in fewer and/or less qualified applicants for job openings atthe Resort. Higher wages, related labor costs and the increasing cost trends inthe insurance markets may negatively impact our results as these costsincrease. A general economic downturn, or increase in expenditures on insuranceand labor costs, would adversely impact the operations of the Resort,potentially reducing funding that we provide to the Rental Pool and negativelyimpacting our results.

***If we are unable tosuccessfully compete for customers, it may adversely affect our operatingresults.***

The hotel industry ishighly competitive. The Resort competes for customers with other hotel andresort properties. Some of our competitors may have substantially greatermarketing and financial resources than we do, and they may improve theirfacilities, reduce their prices, or expand or improve their marketing programsin ways that adversely affect the Resort and our operating results.

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

Internet travelintermediaries such as Travelocity.com®, Expedia.com® andPriceline.com® are attempting to commoditize hotel rooms byincreasing the importance of price and general indicators of quality at theexpense of brand or property-specific identification. These travelintermediaries hope that consumers will eventually develop brand loyalties totheir reservations system rather than to lodging brands. Although we expect toderive most of our business from traditional channels, if the amount of salesmade through internet intermediaries increases significantly, our business andprofitability may be significantly harmed.

***The Resort placessignificant reliance on technology.***

The hospitality industrycontinues to demand the use of sophisticated technology and systems includingtechnology utilized for property management, procurement, reservation systems,operation of customer loyalty programs, distribution and guest amenities. Thesetechnologies can be expected to require refinements and there is the risk thatadvanced new technologies will be introduced. There can be no assurance that asvarious systems and technologies become outdated or new technology is requiredwe will be able to replace or introduce them as quickly as our competition orwithin budgeted costs for such technology. Further, there can be no assurancethat we will achieve the benefits that may have been anticipated from anynew technology or system. Now that the Westin Management Agreement isterminated, we have begun the capital improvement project of upgrading thetechnological infrastructure of the Resort and replacing certain componentswhich are proprietary to Westin.  Ourprojections indicate that the replacement of these components could require usto make an investment in the range of $1.0 to $2.0 million of which we funded$203,000 and $33,000 in October 2006 and November 2006, respectively.Additionally, there are risks associated with transferring the data andensuring that there are no 

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interruptionsin the operations of the Resort. There are no assurances that suchtechnological components can be identified, purchased and implemented in a costeffective and efficient manner.

***The Resort is capitalintensive, and may become uncompetitive in the event that sufficientfinancing is not available.***

For the Resort to remain attractive and competitive,we must spend money periodically to keep the properties well maintained,modernized and refurbished. These expenditures result in an ongoing need forcash. From time to time, it may also be necessary to undertake materialcapital expenditure projects at the Resort such as the upgrading of thetechnological infrastructure at the Resort. To the extent we cannot fundexpenditures from cash generated by the Resort’s operations, we must seek toobtain funds by borrowing or otherwise. We may be unable to find suchfinancing on favorable terms, if at all. To the extent that we are unsuccessfulin obtaining such financing, it could adversely impact the Resort’s resultsfrom operations.

As discussed previously,we are currently negotiating the terms of a three year non—revolving creditfacility with a Tampa community bank for approximately $1,200,000. The proceedsof which would be used to finance renovations at the Resort restaurants,information technology infrastructure upgrades and other propertyimprovements  at the Resort and to covershort-term working capital shortfalls. The three condominium units that we ownat the Resort will serve as collateral for this loan. We are also seeking toobtain a revolving accounts receivable line of credit for at least $500,000. However,there can be no assurance that the Company will enter into this loan facilityor that we will be able to obtain an accounts receivable credit line.

***Our investment inthe Resort is subject to numerous risks, which could adversely affect ourincome.***

As a result of ourownership of the Resort, we are subject to the risks that generally relate toinvestments in real property. The investment returns available from equityinvestments in real estate such as the Resort depends in large part on theamount of income earned and capital appreciation generated by the Resort,reduced by the expenses incurred to operate it. In addition, a variety of otherfactors affect both income from the Resort and the Resort’s real estate value,including governmental regulations, real estate, insurance, zoning, tax andeminent domain laws, interest rate levels and the availability of financing.When interest rates increase, the cost of developing, expanding or renovatingreal property increases and real property values may decrease as thenumber 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 todevelop, use or sell the Resort.***

Environmental laws,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 

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eventthat environmental obligations prevent us from developing, using or selling theResort, distributions that we are able to pay to the holders of our stock couldbe reduced.

***Although the courtshave recently delivered favorable rulings in the Land Use Lawsuits to which weare a party, in the event that the ultimate rulings in these matters areunfavorable to us, the value of Parcel F and the Resort would be adverselyeffected.***

As discussed in further detail under the heading “LegalProceedings” in Part I Item 3 of this report, on March 10, 2005 wefiled a motion to intervene as a defendant in the lawsuit styled InnisbrookCondominium Association, Inc., C. Frank Wreath, Meredith P. Sauer, andMark Banning (as plaintiffs) vs. Pinellas County, Florida, Golf Host Resorts, Inc.and Innisbrook F LLC (as defendants), Case No. 043388CI-15. Thismatter relates to a tract of land within the Resort known as Parcel F. In April 2005,a subsequent lawsuit relating to this matter was filed. We are also a defendantin this subsequent lawsuit. In this report, we refer to the March 2005 andthe April 2005 lawsuits collectively as the Land Use Lawsuits.

On January 6, 2006, the court ruled in favor ofall defendants and against all plaintiffs as to each count in both cases. Whilewe believe that the January 6, 2006 ruling is a favorable result for usand for the other defendants, the plaintiffs in the Land Use Lawsuits have theright to appeal or otherwise challenge that ruling. On March 8, 2006, thecourt formally entered its final judgment on the record ruling in favor of thedefendants on all counts and denying all claims asserted by the plaintiffs inboth cases. On March 31, 2006, the plaintiffs in the consolidated casesfiled a notice of appeal. On April 4, 2006, the plaintiffs in theconsolidated cases filed a notice of appeal. The Second District Court ofAppeal head oral argument on February 14, 2007. The Appeal Court affirmedthe Circuit Court judgment in favor of the Defendants on February 28, 2007and denied the plaintiff-appellants’ motion for attorneys fees. On March 14,2007, the plaintiff-appellants filed a motion requesting the Appeal Court torehear their claims. The Appeal Court has not yet responded to this motion.

In the event that theAppeal Court grants the plaintiffs request to rehear the case and in the eventthat the  plaintiffs then convince theAppeal Court to overturn the February 28, 2007 ruling, we could lose allor substantially all of our land use and development rights with respect toParcel F. Such an unfavorable result could adversely impact our ability torealize the benefits from the proposed development of Parcel F. In addition, ifthe defendants do not ultimately prevail in the rehearing of 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, adverselyeffecting both our ability to develop the Resort and the value of the RentalPool units.

***So-called acts ofGod, terrorist activity and war could adversely affect the Resort.***

The Resort’s financial andoperating performance may be adversely affected by so-called acts of God,such as natural disasters, in Florida and in areas of the world from which wedraw a large number of guests. Similarly, wars (including the potential forwar), terrorist activity (including threats of terrorist activity), politicalunrest and other forms of civil strife and geopolitical uncertainty have causedin the past, and may cause in the future, our results to differ materiallyfrom anticipated results. The returns to participants in the Rental Pool couldbe adversely impacted in the event that acts of God, war or terrorism impactthe Resort’s ability to attract guests.

***Some potentiallosses of the Resort are not covered by insurance.***

We carry comprehensive insurance coverage for generalliability, property, business interruption and other risks with respect to theResort. Our policies offer coverage features and insured limits that we believeare customary for similar types of property. Generally, our “all-risk” propertypolicies provide that 

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coverage is available on aper occurrence basis and that, for each occurrence, there is a limit as well asvarious sub-limits on the amount of insurance proceeds we can receive. Inaddition, there may be overall limits under the policies. Sub-limits existfor certain types of claims such as service interruption, abatement, expeditingcosts or landscaping replacement, and the dollar amounts of these sub-limitsare significantly lower than the dollar amounts of the overall coverage limit.

In addition, there arealso other risks such as war, certain forms of terrorism such as nuclear,biological or chemical terrorism, acts of God such as hurricanes andearthquakes and some environmental hazards that may be deemed to fallcompletely outside the general coverage limits of our policies or may eitherbe uninsurable or too expensive to justify insuring against.

***Our golf courseoperations at the Resort are currently managed by an outside manager, Troon. OnFebruary 22, 2007, we sent Troon a notice of termination in regards to theFacilities Management Agreement pursuant to which Troon manages the golfoperations at the Resort. We and Troon are in the process of negotiating theterms and conditions of the termination which we expect to be effective uponthe conclusion of our negotiations and the execution of a termination agreement.As a result of the termination of Troon’s Facilities Management Agreement,  the Resort’s results of operations could beadversely affected.***

Troon continues to managethe golf facilities at the Resort pursuant to a facility management agreementthat we assumed upon Westin’s termination on October 31, 2006. On February 22,2007, we sent Troon a notice of termination in regards to the FacilitiesManagement Agreement pursuant to which Troon manages the golf operations at theResort. We and Troon are in the process of negotiating the terms and conditionsof the termination which we expect to be effective upon the conclusion of ournegotiations and the execution of a termination agreement.  Following Troon’s termination, we currentlyintend to manage the golf operations internally. If we do not prove to be assuccessful as Troon in managing the Resort’s golf operations, the Resort’sresults of operations could be adversely affected. Also, upon Troon’stermination, certain of the Troon employees employed at the Resort may decideto stay with Troon and leave the Resort. We face the risk that we may not beable to replace these employees with equally qualified employees with golf orResort industry experience.

***A sustainedincrease in energy costs may negatively impact the Resort’s results byincreasing its energy-related costs and by discouraging potential guests fromtraveling and taking part in recreational activities.***

During the past year,energy costs in the United States have increased substantially. Energy costsrepresent an increasingly larger percentage of the costs of the Resort, and weexpect energy costs to increase in both absolute and relative terms in futureperiods. In addition, we expect that higher energy costs will negatively affectthe Resort by discouraging travel and recreational activities. In particular,potential guests of the Resort are less likely to travel as they bear theaffects of higher energy costs as either higher airline fares or in anincreased cost per gallon of gasoline. In addition, higher energy costsmay reduce the disposable income of potential guests, making them lesslikely to spend money for travel and recreational activities. As a result ofthese factors, a sustained increase in energy costs may negatively impactthe Resort’s results by increasing its energy-related costs and by discouragingtraveling and taking part in recreational activities.

**ITEM 1B. UNRESOLVEDSTAFF COMMENTS**

**None.**

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**ITEM 2. PROPERTIES**

The golf coursesremaining in our portfolio include those recognized below:

·                    InnisbrookResort and Golf Club: Home of Copperhead, site of The PGA TOUR’S PODSChampionship; “Top 100 Courses You Can Play,” *GolfMagazine*, 2004 and 2006; “Top 75 Golf Resorts,” *Golf Digest*,October 2004. The Copperhead Course ranked 5th inFlorida’s Favorite 100 by Florida Golf News, December 2003; Winner of *Successful Meetings’* prestigious Pinnacle Award, January 2005and 2006; Winner of *Golf Magazine’s*2005 and 2006 Silver Medal Resort Award announced in March of each yearand the Corporate and Incentive Travel 2006 Award of Excellence.

·                    CountryClub at Woodcreek Farms, “Best Courses By State,” 19th in South Carolina, *Golf Digest*, 2000.

As of March 26, 2007, our golf courses includefour resort courses and two private country club courses. Resort courses aredaily fee golf courses that attract a significant percentage of players fromoutside the immediate area in which the golf course is located and generate asignificant amount of revenue from golf vacation packages. Private countryclubs are generally closed to the public and derive revenues principally frommembership dues, initiation fees, transfer fees, golf cart rentals, guest fees,food and beverage operations and merchandise sales. Initiation fees andmembership dues at private country clubs are determined according to theparticular market segment in which the club operates. Revenue and cash flows ofprivate country clubs generally are more stable and predictable than those ofpublic courses because the receipt of membership dues generally is independentof the level of course utilization.

Four of our golf courses are located near Tampa,Florida at the Resort, a destination golf resort that includes one of thelargest hotel and conference facilities in Florida.

We own a fee simple interest in each of our golfcourses. As of March 26, 2007, the two Stonehenge golf courses are pledgedas collateral under our credit line with Textron Financial Corporation*.*

Information regarding eachof the golf courses owned by us as of March 26, 2007 is set forth on thefollowing pages. In connection with our ongoing plan of liquidation, we areactively seeking buyers for all of our remaining golf courses.

**Resort Courses**

As of March 26,2007, we own the resort courses listed below:

| **Golf Course Name**   | ** ** | ** **                | ** ** | **City and State** | ** ** | **No. of  Holes** | ** ** | **Yardage** | ** ** | **Year  Opened** | ** ** |
|----------------------------------|------------|---------------------------|------------|------------------------------|------------|------------------------|------------|-------------|------------|------------------|------------|
| Innisbrook Resort and  Golf Club |       |                      |       |                         |       |                   |       |        |       |             |       |   |   |   |   |
| Copperhead Course                |       | Palm Harbor, FL |       |                         | 18         |                   |       |        | 7,087      |             |       |   | 1972 |   |   |
| Island Course                    |       | Palm Harbor, FL           |       |                         | 18         |                   |       |        | 6,999      |             |       |   | 1970 |   |   |
| Highlands North                  |       | Palm Harbor, FL           |       |                         | 18         |                   |       |        | 6,245      |             |       |   | 1971 |   |   |
| Highlands  South(1)              |       | Palm Harbor, FL           |       |                         | 18         |                   |       |        | 6,450      |             |       |   | 1977 |   |   |

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(1)          Nine holes of this golfcourse were constructed and opened in 1998.

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**Private ClubCourses**

As ofMarch 26, 2007, we own interests in the private club courses listed below:

| **Golf Course Name** | ** ** | ** **        | ** ** | **City and State** | ** ** | **No. of  Holes** | ** ** | **Yardage** | ** ** | **Year  Opened** | ** ** |
|--------------------------------|------------|-------------------|------------|------------------------------|------------|------------------------|------------|-------------|------------|------------------|------------|
| Stonehenge Golf Courses        |       |              |       |                         |       |                   |       |        |       |             |       |   |   |   |   |
| Wildewood                      |       | Columbia, SC |       |                         | 18         |                   |       |        | 6,751      |             |       |   | 1974 |   |   |
| Woodcreek Farms                |       | Columbia, SC      |       |                         | 18         |                   |       |        | 7,002      |             |       |   | 1997 |   |   |

 

**ITEM3. LEGAL PROCEEDINGS**

We are currently involvedin, or within the past year we concluded, as applicable, the following materiallegal proceedings:

***Young Complaints***

On March 22, 2004, a lawsuit was filed (and wasserved on our agent for service of process on March 25, 2004) in the U.S.District Court for the District of South Carolina, Florence Division, by one ofour prior directors, Larry D. Young (together with Danny L. Young, Kyle N. Young,the Young Family Irrevocable Trust and The Legends Group, Ltd.), againstour independent auditors, BDO Seidman, LLP (together with three former BDOpartners), or the BDO Defendants, and us (together with our executiveofficers).

The complaint alleges that the BDO Defendants engagedin professional malpractice, misrepresentation, breach of fiduciary duty andfraud by counseling plaintiffs to participate in a type of tax sheltertransaction, allegedly held illegal by the Internal Revenue Service. The complainthas seven counts, the last of which applies to all defendants (the first sixapply only to BDO and its partners). The seventh count alleges that weconspired with BDO to convince Mr. Young that he would realize a largeprojected tax gain in order to induce Mr. Young (and the other plaintiffs)to enter into the failed tax shelter transaction. The plaintiffs are seekingdamages of at least $3.7 million, together with legal expenses and othercosts.

Defendants BDO Seidman,LLP (together with three former BDO partners) filed a motion to compelarbitration and dismiss the complaint, and we and our executive officers, asdefendants, filed a motion to stay, and for extension of time in which toanswer or otherwise respond to plaintiffs’ complaint. The plaintiffs filedmemoranda opposing the aforementioned motions. A hearing on these motions washeld in Florence, South Carolina on October 19, 2004. At the conclusion ofthat hearing, the judge indicated that the former motion would be taken underadvisement, while the GTA Defendants’ motion would be granted in part anddenied in part. As a result, the court declined to stay the litigation pendingthe outcome of the arbitration, but granted the motion extending time andgiving the GTA Defendants additional time to serve their answer. On November 4,2004, we filed our answer and counterclaims (nine counterclaims against some orall of the plaintiff parties). On January 21, 2005, the magistrate judgeissued a report and recommendation, recommending that the BDO Defendant’sMotion to Compel Arbitration be granted, and that the claims pending againstthe BDO Defendants be stayed pending arbitration. On February 14, 2005,the District Judge accepted the magistrate’s report and recommendation, andgranted the BDO Defendants’ Motion to Compel Arbitration, staying the claimspending against the BDO Defendants (which we understand have since beensettled). The plaintiffs and the GTA Defendants later agreed upon a proposedschedule for their part of the litigation, which was jointlysubmitted to the court on March 11, 2005, and thereafter accepted andentered as an Order on or about April 19, 2005. The scheduling Order wasentered, and the parties conducted discovery until on or about August 2,2005 when the parties agreed to informally stay all activity in this litigationto pursue the possibility of a settlement. No settlement was reached. While wewere willing to enter into a settlement with the plaintiffs in which the 

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plaintiffsdismiss their claims in exchange for our dismissal of our counterclaims, wecontinued to meet our deadlines and litigate this case vigorously. To that end,before the deadline for doing so, we filed and served our motion for summaryjudgment as to the plaintiffs’ claims on December 23, 2005. The plaintiffsdid not file any dispositive motion within the time permitted, either withrespect to their own claims or to our counterclaims, nor did the plaintiffstimely file any written response to the motion for summary judgment. Insteadthey filed a motion to re-open discovery and for leave to file a late responseto the motion for summary judgment by the GTA defendants. On March 21,2006, at a hearing held on the plaintiffs’ motion, the court denied theplaintiffs’ motion to re-open discovery, with the exception that limiteddiscovery was allowed until June 19, 2006 only on the question of thedamages sought by the GTA defendants in their counterclaims against theplaintiffs. The court allowed the plaintiffs to file a late response to themotion for summary judgment, which the plaintiffs did on March 31, 2006. TheGTA Defendants filed a reply thereto. On July 7, 2006, the plaintiff movedfor summary judgment on the GTA Defendants’ counterclaims, to which the GTADefendants responded with a motion to strike on grounds of gross untimeliness. TheCourt decided not to dismiss the complaint on Rule 12 grounds, butrequested that the December 22, 2005 motions be refiled, and granted theplaintiffs leave to refile by December 31, 2005, as a motion on the Rule 56summary judgment grounds to facilitate the Court’s consideration of the motion.The GTA Defendants filed an amended motion for summary judgment on August 10,2006; the plaintiffs filed a response on August 28, 2006; and the GTADefendants filed a response thereto. The motion to strike was heard by theMagistrate Judge on October 12, 2006. On November 6, 2006, the judgeentered an Order granting the GTA Defendants’ motion to strike the plaintiffs’late motion for summary judgment and as a result plaintiffs’ motion for summaryjudgment as to GTA Defendants counterclaims failed. A hearing on the GTADefendants’ motion for summary judgment to attempt to eliminate the plaintiffs’civil conspiracy claim against the GTA Defendants was held on November 8,2006. The judge took the matter under advisement and on March 1, 2007, theU.S. District Court granted the GTA Defendant’s Motion for Summary Judgment (asto the plaintiffs’ claims). As of March 26, 2007, the plaintiffs have noremaining claims against any of the GTA Defendants. As a result of the Court’saction on November 6, 2006, all of GTA Defendants’ counterclaims againstPlaintiffs remain. The trial date for the GTA Defendants’ counterclaims againstthe plaintiffs has not been set but is expected to occur in 2007. At this time,the Company is unable to assess the likely outcome of this litigation**.**

***Stonehenge (Country Club at Wildewood and Country Clubat Woodcreek Farms)***

On April 22, 2002, wefiled an action entitled *Golf Trust of America,L.P. and GTA Stonehenge, LLC v. Lyndell Lewis Young and Stonehenge GolfDevelopment, LLC* in the Court of Common Pleas for Richland County.We had asserted causes of action against the defendant for breach of contract,fraud and unfair trade practices. We were seeking damages of approximately$172,000, which represents prepaid dues that were not disclosed by thedefendants. A counterclaim for payment under a consulting agreement, along withclaims for payment of operating/maintenance and insurance expenses was filed bythe defendant against us on June 20, 2002; our reply was filed on July 22,2002 denying the claims and, alternatively, seeking a set-off or recoupmentagainst the defendant’s alleged claim for the amount of our claim against thedefendant. The Court dismissed the case on May 28, 2003. On March 15,2005, we took action to restore the case. The Court of Common Pleas forRichland County has ordered the case restored to the roster. A written orderwill be issued once it is agreed between counsels. As of March 26, 2007,the trial date has not yet been set.

***Land Use Lawsuits***

On March 10, 2005 in the Circuit Court of theSixth Judicial Circuit, in and for Pinellas County, Florida, Civil Division, wefiled a Motion to Intervene in the lawsuit titled Innisbrook CondominiumAssociation, Inc., C. Frank Wreath, Meredith P. Sauer, and Mark Banning,as the Plaintiffs vs. Pinellas 

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County, Florida, Golf HostResorts, Inc. and Innisbrook F LLC, as the Defendants, Case No. 043388CI-15.We refer to this lawsuit as the Initial Land Use Lawsuit.

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

On April 8, 2005, a separate suit, or theSubsequent Land Use Lawsuit, was filed by James M. and Mary H. Luckey andAndrew J. and Aphrodite B. McAdams. That suit seeks injunctive and declaratoryrelief in six separate counts, all relating to the land use and developmentrights of Parcel F. This suit was consolidated with the Initial Land UseLawsuit on May 3, 2005. After May 6, 2005 we filed a Motion toDismiss the Subsequent Land Use Lawsuit.

The Company refers to the Initial Land Use Lawsuit andthe Subsequent Land use Lawsuit as the “Land Use Lawsuits.” The motion washeard by the court on May 31, 2005. Since that hearing, we have filed ourAnswer and Affirmative Defenses to both complaints that have been filed in theconsolidated action. On August 3, 2005, a case management conference washeld before the judge who is now presiding over this case. At that hearing, thecourt scheduled a hearing on the defense motions for summary judgment for August 30,2005, and a trial starting December 12, 2005. On August 30, 2005, thejudge heard 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 Counts I, II,VIII-XV of the Third Amended Complaint as to some (but not all) of theplaintiffs in the Initial Land Use Lawsuit.

The defendants in the Initial Land Use Lawsuit alsofiled a Motion to Strike the Plaintiffs’ Demand for Jury Trial. In the face ofthat motion, the plaintiffs dropped their jury trial demand and the courtconfirmed by order dated September 21, 2005 that this case will not betried by a jury. The court then entered an order scheduling the remainingclaims for non-jury trial during December 2005.

In addition, the plaintiffs in the Initial Land UseLawsuit have filed a motion for summary judgment. The court set the hearingdate for the summary judgment review for December 7, 2005. From December 19through December 23, 2005, the court tried these consolidated cases in anon-jury trial. At the conclusion of the evidentiary portion of the trial, thecourt deferred final argument until Friday, January 6, 2006. On that date,final argument took place before the court at the conclusion of which the courtrendered its decision. The court ruled in favor of all defendants and againstall plaintiffs as to each count in both cases. Subsequent to the court’s oralrulings, defense counsel prepared a proposed final judgment which reflects thecourt’s factual findings and legal conclusions. On March 8, 2006, thecourt formally 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 theconsolidated cases filed a notice of appeal. The Second District Court ofAppeal heard oral argument 

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on February 4, 2007. TheAppeal Court affirmed the Circuit Court judgment in favor of the defendants on February 28,2007 and denied the plaintiffs-appellants’ motion for attorney fees. On March 13,2007, the plaintiffs filed a motion for the Appeal Court to rehear their claims.As of March 26, 2007, the Appeal Court has not yet responded to thismotion.

As an intervenor in the Initial Land Use Lawsuit, wesought to obtain a ruling from the court which preserves and protects ourproperty, the land use and development rights with respect to Parcel F and ourproperty in order to maximize the value of those rights as they relate both toParcel F and the Resort in general. We have referred to these two matters asthe Land Use Lawsuits. See further discussion of the Land Use Lawsuits underthe heading “Risk Factors” in Part I, Item 1A of this report**.**

In the event that theCourt grants the plaintiffs request to rehear their claims and the defendantsin the Land Use Lawsuits do not prevail in the rehearing, the owner of Parcel Fmight lose all or substantially all of its land use and development rights withrespect to Parcel F. As a result, we might experience reduced club membershipsat the Resort, and our ability to realize the benefits from proposeddevelopment of Parcel F would be adversely impacted. In addition, failure bythe defendants to prevail in the Land Use Lawsuits could jeopardize our landuse and development rights in the remaining units that we may have theopportunity to develop at the Resort if a court subsequently applies a similarinterpretation of our rights with respect to those units. In that instance, wemight lose all or substantially all of those rights with respect to theremaining units. As a result of a successful challenge to our land use anddevelopment rights relating to the remaining units at the Resort, our abilityto develop the Resort would be adversely affected.

***Wall Springs Conservatory, Inc. Complaint***

On July 13, 2006,Wall Springs Conservatory, Inc., or Wall Springs, filed suit againstGTA-IB as successor in interest to Golf Host Resorts, Inc. in the circuitcourt of Pinellas County for declaratory relief. On July 14, 2006, WallSprings also filed suit against us in the small claims division of the PinellasCounty Court in connection with an easement agreement. We answered both claims,also asserting affirmative defenses and counterclaims in each action. We thenfiled a motion to transfer the small claims matter to Circuit Court, which wasgranted on September 27, 2006. We then moved to consolidate these twocases. Our motion to consolidate was granted by the Circuit Court on March 1,2007 and the parties are awaiting entry of the order.

***Property Tax Lawsuit***

On December 10, 2004,our indirect subsidiary, GTA-IB, LLC filed a lawsuit against the propertyappraiser of Pinellas County Florida, or Pinellas County, to challenge the 2004and 2005 real estate assessment of the Resort property. Pinellas County filed amotion to dismiss the Company’s complaint for the 2004 tax year case, which wasdenied by the court. On December 11, 2006, we filed a complaint challengingthe 2006 real estate tax assessments. As of March 26, 2007, no trial datehas been set for any of the three cases. If Pinellas County were to prevail,there would be no material adverse effect upon our financial statements, as theassessment is fully accrued and accounted for in our books and records.

***Lake Ozark Industries, Inc. and Everett HoldingCompany, Inc. v. Golf Trust of America, et al.***

This is an actioninitiated in the Circuit Court of Miller County, Missouri, by a contractor,Lake Ozark Construction Industries, Inc., or LOCI, and its assertedassignee of lien and account rights, Everett Holding Company, Inc., in theFall of 1999 against numerous defendants, including Golf Trust of America, L.P.Plaintiffs assert LOCI performed construction services on, or that benefited,the property of various defendants, including Golf Trust of America, L.P. Sofar as the action concerns Golf Trust of America, L.P., plaintiffs seek toforeclose a mechanic’s lien upon property formerly owned by Golf Trust of America,

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L.P. Thelien is for the principal amount of approximately $1,276,000, plus interest at10% per annum and attorney fees. Plaintiffs calculate interest to May 20,1999, just prior to the lien filing, to be approximately $151,000 and interestthereafter to be $354 per day. In March 2002 the Court orally granted amotion for summary judgment filed by Golf Trust of America, L.P., ruling thatplaintiffs’ claimed lien does not comply with requirements of the Missourimechanic’s lien statute and is invalid. The court entered its written ordergranting Golf Trust of America, L.P.’s motion for summary judgment in April 2002.Since not all claims involved in this lawsuit were disposed of by that ruling,Plaintiffs’ time to appeal this ruling did not begin to run. In November 2003the court entered a final judgment, and plaintiffs appealed the ruling in favorof Golf Trust of America, L.P. to the Missouri Court of Appeals. The briefs inthe appeal were filed and the case was argued to the court of appeals on October 19,2004. On November 9, 2004, we filed with the Court of Appeals a Motion toFile Supplemental Brief, along with a copy of a Supplemental Brief. Followingbriefing and oral argument, the Court of Appeals on April 5, 2005 reversedthe Circuit Court judgment in favor of us and remanded the case to the CircuitCourt for further proceedings. On April 20, 2005, we filed with the Courtof Appeals a motion for rehearing and an alternative application to transferthe case to the Missouri Supreme Court. The Court of Appeals denied this motionand the transfer application on May 31, 2005. On May 31, 2005, theCourt of Appeals also filed a modified Opinion, which again reversed theCircuit Court judgment in favor of us and remanded the case to the CircuitCourt for further proceedings. On June 15, 2005, we filed with theMissouri Supreme Court an application to transfer the case to that court. On August 30,2005, the Missouri Supreme Court denied the application for transfer. The casewas returned to the Circuit Court for trial on plaintiffs’ claim that LOCIperformed construction services on, or that benefited, the property of variousdefendants, including us. As of March 26, 2007, the trial date has not yetbeen set. At this time, we are unable to assess the likely outcome of thislitigation.

**Routine Litigation**

In addition to litigationbetween a lessor (such as our operating partnership) and our former lessees(and their affiliates), owners and operators of golf courses are subject to avariety of legal proceedings arising in the ordinary course of operating a golfcourse, including proceedings relating to personal injury and property damage.We have in the past been, and expect to continue in the future to be, subjectto proceedings relating to personal injury and property damage. Suchproceedings are generally brought against the operator of a golf course, butmay also be brought against the owner of the golf course. Since we are noweither the operator or owner of our remaining golf courses, we maintain insuranceto defend against certain of these actions.

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**ITEM 4. SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS**

Ourannual meeting of stockholders was held on November 17, 2006. The onlymatters voted upon at the meeting was the election of two directors to serveuntil our 2009 annual meeting of stockholders and the election of one directorto serve until our 2007 annual meeting of stockholders. Our stockholders votedto re-elect Messrs. Fred W. Reams and Edward L. Wax and voted to elect anew director, Mr. Jan H. Loeb, to our board of directors all to serveuntil our 2009 annual meeting of stockholders. Mr. Nauman S. Toor waselected as a new director on our board of directors to serve until our 2007annual meeting of stockholders. At this time our board of directors has decidednot to fill the vacancy resulting from the resignation of our former SeniorVice President and Chief Financial Officer, Mr. Scott Peters, from theboard of directors which was effective February 5, 2007. The votes werecast as follows:

| **Director**            | ** ** | ** ** | ** ** | **Shares Cast For** | ** ** | **Authority  Withheld** | ** ** |
|-------------------------|------------|------------|------------|-------------------------------|------------|-------------------------|------------|
| Mr. Fred R.  Reams |       |       | 6,324,250  |                          |       |                    | 541,670    |   |   |
| Mr. Edward  L. Wax |       |       | 6,339,799  |                          |       |                    | 526,121    |   |   |
| Mr. Jan H.  Loeb.  |       |       | 6,734,622  |                          |       |                    | 131,298    |   |   |
| Mr. Nauman S. Toor |       |       | 6,758,912  |                          |       |                    | 103,926    |   |   |

 

There were no broker non-votes.

Inaddition to the re-elected director above, the following directors willcontinue in office:

| **Name**                            | ** ** | ** ** | ** ** | **Term  Expires** | ** ** |
|-------------------------------------|------------|------------|------------|-------------------|------------|
| Mr. Raymond  V. Jones          |       |       | 2008       |              |       |
| Mr. W. Bradley  Blair, II |       |       | 2008       |              |       |

 

**Deadlines forSubmitting Stockholder Proposals for our 2007 Annual Meeting**

It is our presentintention to amend our Bylaws to change the date of our 2007 annual meetingfrom the fourth Thursday in May to some date later in 2007.  At such time as our Board of Directors amendsour Bylaws to state the date of our 2007 annual meeting, we will timely file aCurrent Report on Form 8-K notifying the public of such date.

**PART II**

**ITEM 5.**      MARKETFOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASESOF EQUITY SECURITIES

**Market Information**

Our common stock is listed on the American StockExchange under the symbol “GTA.” Since our inception, we completed twounderwritten public offerings.

On March 26, 2007, the most recent practicabledate prior to the filing of this annual report, the closing price of our commonstock as reported on the American Stock Exchange was $1.84 per share.

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Thefollowing table sets forth, for the fiscal quarters indicated, the high and lowintra-day sales prices per share of our common stock as quoted on the AmericanStock Exchange and the dividends declared per share in respect of such quarter:

| ** **                                   | ** ** | **Price range of  common shares** | ** ** | **Dividends per**                                  | ** ** |
|----------------------------------------------|------------|--------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                   | ** ** | **   High   **     | ** ** | **    Low    ** | ** ** | **common share** | ** ** |
| **2005:**                                    |       |                                             |       |                                                    |       |   |   |   |   |   |   |   |   |
| First Quarter                                |       |                                             | 2.19       |                                                    |       |   | 1.81 |   |   |   | — |   |   |
| Second Quarter                               |       |                                             | 1.89       |                                                    |       |   | 1.25 |   |   |   | — |   |   |
| Third Quarter                                |       |                                             | 1.74       |                                                    |       |   | 1.36 |   |   |   | — |   |   |
| Fourth Quarter                               |       |                                             | 2.19       |                                                    |       |   | 1.27 |   |   |   | — |   |   |
| **2006:**                                    |       |                                             |       |                                                    |       |   |   |   |   |   |   |   |   |
| First Quarter                                |       |                                             | 1.50       |                                                    |       |   | 1.25 |   |   |   | — |   |   |
| Second Quarter                               |       |                                             | 1.40       |                                                    |       |   | .75 |   |   |   | — |   |   |
| Third Quarter                                |       |                                             | .92        |                                                    |       |   | .42 |   |   |   | — |   |   |
| Fourth Quarter                               |       |                                             | 1.56       |                                                    |       |   | .68 |   |   |   | — |   |   |
| **2007:**                                    |       |                                             |       |                                                    |       |   |   |   |   |   |   |   |   |
| First Quarter  (through March 26, 2007) |       |                                             | 1.87       |                                                    |       |   | 1.44 |   |   |   | — |   |   |

 

**Stockholder and OPUnitholder Information**

On March 26, 2007, we had 7,317,163 shares ofcommon stock outstanding. As of March 26, 2007, those shares were held ofrecord by 72 registered holders and by an estimated 1,369 beneficial owners. OnMarch 26, 2007, we had outstanding 800,000 shares of our series Apreferred stock, all of which were held of record by a single holder.

As a result of our UPREITstructure, our subsidiaries hold one OP unit in our operating partnership foreach of our outstanding shares of common and preferred stock. On March 26,2007, we did not have any common or preferred OP units outstanding (excludingthe preferred OP units held by our operating partnership). See furtherdiscussion below under the caption “*Recent Sales ofUnregistered Securities*.”

**Dividends**

In connection with the approval of the plan ofliquidation, we agreed with the holder of our preferred stock that we will notpay any further dividends on our common stock without its consent until we haveredeemed its preferred stock, and until we have made distributions that we maybe required to make to avoid the payment of taxes resulting from the sale ofour golf courses. As a result, we do not expect to pay any further dividends toour common stockholders until we have redeemed our preferred stock.

We did not make anydistributions for the year ended December 31, 2006.

**Recent Sales ofUnregistered Securities**

Under our operatingpartnership agreement, each of the limited partners (other than GTA LP, Inc.),generally had the right to tender OP units for redemption by the operatingpartnership. In that case, we have the option of either exchanging OP units forshares of our common stock, on a one-for-one basis, or of buying back the OPunits for an equivalent amount of cash, based on the then-current market priceof our common stock. On August 23,2006, pursuant to a mutually negotiated termination of pledge and securityagreement, the Company accepted a discounted payoff of $2.0 million for thenote receivable originally taken in connection with the sale of Eagle Ridge on January 30,2003. Pursuant to the terms of the termination of pledge and security agreement,the Company redeemed 35,794 shares of the Company’s common stock that werepledged to the Company by the borrower pursuant to the note receivable. The 

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shares were redeemed at the ten day trailing averageprice of $0.493 for a total redemption value of approximately $18,000. Asof August 23, 2006, we no longer have any limited partners.

**SecuritiesAuthorized for Issuance under Equity Compensation Plans**

See Item 12 in this annualreport for a discussion of securities authorized for issuance under our equitycompensation plans.

**ITEM 6. SELECTEDFINANCIAL DATA**

The consolidated selected financial data set forthbelow presents the consolidated financial results of GTA, our operatingpartnership and our subsidiaries and should be read in conjunction with “Management’sDiscussion and Analysis of Financial Condition and Results of Operations,” andour Consolidated Financial Statements and the related notes, included in thisannual report.

The consolidated statements of changes in our netassets set forth below for the three years ended December 31, 2006 and theconsolidated statements of our net assets as of December 31, 2006 and2005, are derived from and qualified by reference to our audited financialstatements included in this annual report.

The consolidated statement of our net assets set forthbelow as of December 31, 2004, 2003 and 2002, are derived from andqualified by reference to our audited financial statements that are notincluded in this annual report.

Our historical results are not necessarily indicativeof results for any future period.

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Theinformation on changes in our net assets since our adoption of the liquidationbasis of accounting on May 22, 2001 is presented in the table below in aformat consistent with our financial statements under Item 15 of this annualreport on Form 10-K. The following table presents summarizedconsolidated financial information including operating results and cash flowson the liquidation bases, as applicable, for the respective periods.

| ** **                                                                           | ** ** | **Statement of Changes in Net Assets  Liquidation Basis** | ** ** |
|--------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|
| ** **                                                                           | ** ** | **2006(1)**                                                                             | ** ** | **2005(1)** | ** ** | **2004(1)** | ** ** | **2003** | ** ** | **2002** | ** ** |
| Net Assets in  Liquidation, beginning of period                                      |       | $                                                                                       | 13,782     |   | $ | 15,045 |   | $ | 27,283 |   | $ | 48,903 |   | $ | 60,939 |   |
| **Changes  in net assets in liquidation:**                                           |       |                                                                                    |       |   |   |   |   |   |   |   |   |
| Adjustments to  liquidation reserve:                                                 |       |                                                                                    |       |   |   |   |   |   |   |   |   |
| Operating (loss) income                                                              |       | (448                                                                                    | )          | 712 |   | (2,855 | ) | (1,682 | ) | 3,936 |   |
| Net interest expense                                                                 |       | (1,386                                                                                  | )          | (1,274 | ) | (652 | ) | (1,113 | ) | (4,938 | ) |
| Increase in reserve for estimated liquidation costs  and capital expenditures        |       | (50                                                                                     | )          | (3,090 | ) | (2,730 | ) | (17 | ) | (3,892 | ) |
| Subtotal of adjustments to liquidation reserve                                       |       | (1,884                                                                                  | )          | (3,652 | ) | (6,237 | ) | (2,812 | ) | (4,894 | ) |
| Increase(decrease) in fair value of real estate  assets                              |       | 374                                                                                     |       | (2,421 | ) | (4,668 | ) | (16,172 | ) | (4,265 | ) |
| Increase (decrease) in fair value of non-real  estate assets                         |       | 1,410                                                                                   |       | — |   | (112 | ) | (497 | ) | (400 | ) |
| Decrease in fair value of other obligations                                          |       | 201                                                                                     |       | — |   | — |   | — |   | — |   |
| Subtotal of adjustments to liquidation reserve and  decrease in fair value of assets |       | 101                                                                                     |       | (6,073 | ) | (11,017 | ) | (19,481 | ) | (9,559 | ) |
| Preferred dividends reversal (accrual)                                               |       | —                                                                                  |       | 4,914 |   | — |   | (2,139 | ) | (1,850 | ) |
| Value of common stock and operating partnership  units redeemed                      |       | (18                                                                                     | )          | (104 | ) | (1,221 | ) | — |   | (627 | ) |
| **Total Changes in Net Assets in Liquidation**                                       | ** ** | **83**                                                                                  | ** ** | **(1,263** | **)** | **(12,238** | **)** | **(21,620** | **)** | **(12,036** | **)** |
| **Net Assets in Liquidation, end of period**                                         | ** ** | **$**                                                                                   | **13,865** | ** ** | **$** | **13,782** | ** ** | **$** | **15,045** | ** ** | **$** | **27,283** | ** ** | **$** | **48,903** | ** ** |
| **Consolidated  Cash Flow Information**                                              |       |                                                                                    |       |   |   |   |   |   |   |   |   |
| Net cash used in  changes in net assets in liquidation and operating activities      |       | $                                                                                       | (2,759     | ) | $ | (1,519 | ) | $ | (4,720 | ) | $ | (6,105 | ) | $ | (4,553 | ) |
| Net cash provided by (used in) investing activities                                  |       | $                                                                                       | 3,558      |   | $ | (525 | ) | $ | 5,276 |   | $ | 67,719 |   | $ | 24,247 |   |
| Net cash provided  by (used in) financing activities                                 |       | $                                                                                       | (1,397     | ) | $ | 947 |   | $ | 2,762 |   | $ | (69,003 | ) | $ | (26,466 | ) |

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(1)          Incorporatesthe operations of GTA-IB, LLC and affiliaztes effective July 16, 2004.

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| ** **                                                   | ** ** | **Liquidation Basis  December 31,** | ** ** |
|--------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                   | ** ** | **2006**                                      | ** ** | **2005** | ** ** | **2004(1)** | ** ** | **2003** | ** ** | **2002** | ** ** |
| **Consolidated Statement of Net  Assets Information**        |       |                                          |       |   |   |   |   |   |   |   |   |
| Cash, receivables & other                           |       | $                                             | 10,486     |   | $ | 13,225 |   | $ | 13,335 |   | $ | 4,506 |   | $ | 12,793 |   |
| Real estate and mortgage note receivable—held for  sale |       | 55,592                                        |       | 56,506 |   | 57,827 |   | 57,042 |   | 143,963 |   |
| Total assets                                                 |       | 66,078                                        |       | 69,731 |   | 71,162 |   | 61,548 |   | 156,756 |   |
| Mortgages and notes payable                                  |       | 4,100                                         |       | 4,869 |   | 2,818 |   | — |   | 69,003 |   |
| Total liabilities                                            |       | 32,213                                        |       | 35,949 |   | 36,117 |   | 14,265 |   | 87,853 |   |
| Preferred stock                                              |       | 20,000                                        |       | 20,000 |   | 20,000 |   | 20,000 |   | 20,000 |   |
| Total liabilities and preferred stock                        |       | 52,213                                        |       | 55,949 |   | 56,117 |   | 34,265 |   | 107,853 |   |
| Net assets  available in liquidation                         |       | $                                             | 13,865     |   | $ | 13,782 |   | $ | 15,045 |   | $ | 27,283 |   | $ | 48,903 |   |

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(1)          OnJuly 15, 2004, we entered into a Settlement Agreement with our formerborrower and certain of our respective affiliates and took control of theResort through GTA-IB, LLC. The settlement was accounted for using methodsconsistent with purchase accounting in accordance with Statement of FinancialAccounting Standards (“SFAS”) No. 141 “Business Combinations.” Thesettlement amount was allocated to the net assets acquired, including theliabilities assumed as of July 15, 2004, based upon their estimated fairvalues as of that date.

**ITEM 7.**      MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

*The followingdescription of our financial condition and results of operations should be readin conjunction with our Consolidated Financial Statements appearing elsewherein this annual report.*

*The following report contains forward-lookingstatements within the meaning of Section 27A of the Securities Act and Section 21Eof the Exchange Act. Forward-looking statements are statements thatpredict or describe future events or trends and that do not relate solely tohistorical matters. All of our projections in this annual report are forward-lookingstatements, including our projections regarding the amount and timing ofliquidating distributions. You can generally identify forward-lookingstatements as statements containing the words “believe,” “expect,” “will,” “anticipate,”“intend,” “estimate,” “project,” “assume” or other similar expressions. Youshould not place undue reliance on our forward-looking statements becausethe matters they describe are subject to known (and unknown) risks,uncertainties and other unpredictable factors, many of which are beyond ourcontrol. Our forward-looking statements are based on the limitedinformation currently available to our company and speak only as of the date onwhich this report was filed with the Securities Exchange Commission, or SEC.Our continued internet posting or subsequent distribution of this dated annualreport does not imply continued affirmation of the forward-lookingstatements included in it. We undertake no obligation, and we expresslydisclaim any obligation, to issue any updates to our forward-lookingstatements, even if subsequent events cause our expectations to changeregarding the matters discussed in those statements. Future events areinherently uncertain. Moreover, it is particularly difficult to predict when wewill complete our plan of liquidation, which is substantially dependent onbusiness activity levels at the Innisbrook Resort and Golf Club, or the Resort,and the ultimate sale thereof. Accordingly, our projections in this annualreport, particularly as they may pertain to the Resort and the completion ofour plan of liquidation, are subject to particularly high uncertainty. Ourprojections should not be regarded as legal promises, representations orwarranties of any kind whatsoever. Over time, our actual results, performanceor achievements will likely differ from the anticipated results, performance orachievements that are expressed or implied by our forward-lookingstatements, and such difference might be significant and harmful to ourstockholders’ interests. Many important*

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*factors that could cause such a difference aredescribed under the caption “Risk Factors,” in Item 1A of this annual report,which you should review carefully.*

**Overview ofLiquidation Basis of Accounting**

We adopted the liquidation basis of accounting for allperiods subsequent to May 22, 2001, the date on which our stockholdersapproved our plan of liquidation. Accordingly, on May 22, 2001, our assetswere adjusted to their estimated fair value and our liabilities, includingestimated costs associated with implementing the plan of liquidation, wereadjusted to their estimated settlement amounts. The minority interest in ouroperating partnership was reclassified to net assets because the holders ofcommon limited partnership units, which we call OP units, do not havepreferential distribution rights over the common stockholders.

Real estate held for sale includes the Resort, whichis owned by us and was managed by Westin until October 31, 2006 andmanaged by us subsequent to that date, and two additional golf courses(commonly known as Stonehenge) that we own and manage. At the time that we tooktitle to the Resort, its valuation was based on management’s estimates afterconsidering an asset study prepared by third-party experts in July 2004that included a then estimate of the market value of the Resort’s real estateand an estimate of the fair value of the Resort’s identified contractual andnon-contractual but identifiable intangible assets. We updated the estimatedfair market value in continued use of the Resort’s furniture, fixtures andequipment, or FF&E, from the value obtained in July 2003 by givingconsideration to new FF&E purchased since July 2003 instead ofretaining a third party expert for this purpose. The estimates of the fairmarket value of each of these asset groups are based on facts and circumstancesknown to us at this time. We believe this is a reasonable approach. We havereceived recent indications of interest from the marketplace regarding theResort. Therefore, at December 31, 2006, the valuation of the Resort andStonehenge are based on indications of interest from the marketplace, certainassumptions by management specifically applicable to each property and on theproperty value ranges.

A net positiveadjustment of $83,000 is included in the December 31, 2006 consolidatedstatement of changes in net assets (liquidation basis) to reflect thefollowing:

·       ouraggregate consolidated net operating loss and net interest expense of$1,834,000;

·       again of $374,000 on the sale of certain golf course assets, namely Tierra DelSol;

·       anincrease of $1,410,000 in the carrying value of our interest in Parcel F;

·       anet increase of approximately $50,000 in the accrual for estimated liquidationexpenses (See table below under the caption “*Reserve forEstimated Costs During the Period of Liquidation*”);

·       adecrease of $201,000 in the carrying value of other obligations, namely thegain of $122,000 realized on the assignment of certain Parcel F proceeds inexchange for the termination of the Elk Funding note payable together with adecrease of $79,000 in the estimated settlement amount of the Westintermination fee liability; and

·       theredemption of the 35,794 operating partnership units in connection with therepayment of the Eagle Ridge note receivable for approximately $18,000. Seefurther discussion below in this item under the caption “*Changes inNet Assets in Liquidation.”*

There were no other adjustments as a result of ourapplying the liquidation basis of accounting for the twelve months ended December 31,2006; however, due to the continued uncertainty of the sales environment forour remaining properties and the time that it will take to liquidate ourremaining assets and wrap-up the operations of our company as well as thefinancial performance of our assets during this time, these accruals aresubject to change based on changes in the current facts and circumstances andunderlying assumptions.

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*EstimatedLiquidation Value of the Resort.*

Based on market indications of interest in the salesprocess, at December 31, 2005 we recorded a write-down to the carryingvalue of the Resort of $2.421 million to $36.4 million, including ourinterest in Parcel F. As of December 31, 2006, we recorded an increase inthe carrying value of our interest in Parcel F of approximately $1,410,000 toreflect the estimated financial benefit to us of a contract amendment executedbetween GHR and the purchaser of Parcel F. The carrying value of the Resort ,including our interest in Parcel F, is $37.9 million as of December 31,2006.. See further discussion in this annual report on Form 10-K inItem 1 under the caption “Estimated Value/Amount of Write Down”**and in Item 1A under the caption**“RiskFactors.”

See discussion of thetotal value of our net assets at December 31, 2006 and the estimated netasset value per share in Item 1 of this annual report under the caption “No NewRange of Liquidating Distributions.”

**The Resort**

*Status of the Saleof the Resort*

We continue to market theResort and its operations for sale. As of the date of this report, a definitiveagreement for the purchase of the Resort has not been executed. See further discussion relating to the salesprocess of the Resort in Part I, Item 1 of this annual report onForm 10-K under the captions “*Current Strategic Choices*” and “*Estimated Value/Amount ofWrite-Down*”**and in Item 1Aunder the caption**“*RiskFactors.*”

**Application ofCritical Accounting Policies**

*Real Estate—Heldfor Sale*

*Generally.*   Priorto the adoption of the liquidation basis of accounting on May 23, 2001, wecarried property and equipment at the lower of cost or fair value (except forthe golf courses acquired from Legends Golf, which were carried at the priorbasis of Legends Golf). Cost included purchase price, closing costs and otherdirect costs associated with the purchase. Real estate held for sale includesthe Resort and its four golf courses and the two golf courses (one property)that we own and manage. Our most significant estimate is the estimated$37.9 million fair value of the Resort and our interest in Parcel F, whichwas determined as described under Item 1 under the caption “EstimatedValue/Amount of Write-Down” The valuation of our other property is based onestimates of sales values based on indications of interest from themarketplace, certain assumptions by management specifically applicable to eachproperty, and on the property value ranges.

*Liquidation Basisof Accounting*

As a result of our board of directors’ adoption of aplan of liquidation and its approval by our stockholders, we adopted theliquidation basis of accounting as required by applicable accountingprinciples. Our discussion and analysis of our financial condition and resultsof operations is based on our financial statements which have been prepared inaccordance with generally accepted accounting principles in the United Statesof America. The preparation of these financial statements requires us to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements. We base our estimates on historical experience andother various assumptions that we believe to be reasonable under thecircumstances. Actual values realized for assets and settlement of liabilitiesmay differ materially from the amounts estimated.

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Under the liquidation basis of accounting, we arerequired to estimate and record the costs associated with executing the plan ofliquidation as a liability. These amounts can vary significantly due to, amongother things, the timing and realized proceeds from asset sales, the costs ofretaining personnel, the costs of insurance, the timing and amounts associatedwith discharging known and contingent liabilities and the costs associated withcessation of our operations. These costs are estimates and are expected to bepaid out over the liquidation period. Since we have taken title to the Resort,we have more information with which to make projections of certain liquidationcosts expected to be incurred during the projected period required to completethe liquidation (i.e., a sale of our company or substantially all of the assetsof our company or other exit transaction by June 30, 2007 and the transferof our remaining assets and liabilities to a liquidating trust byDecember 31, 2007). See further detail of the specific liquidationaccruals in the discussion of our net assets under the caption “Overview ofLiquidation Basis of Accounting” above. These accruals will be adjusted fromtime to time as projections and assumptions change.

*Reserve forEstimated Costs During the Period of Liquidation*

Under the liquidation basis of accounting, the Companyis required to estimate and accrue the costs associated with implementing andcompleting the Plan of Liquidation. These amounts can vary significantly dueto, among other things, the timing and realized proceeds from sales of assets,the costs of retaining personnel and others to oversee the liquidation, thecost of insurance, the timing and amounts associated with discharging known andcontingent liabilities and the costs associated with cessation of the Company’soperations. As a result, the Company has accrued the projected costs, includingcorporate overhead through and specific liquidation costs of severance,professional fees, and other miscellaneous wind-down costs, expected to beincurred during the projected period required to complete the liquidation of theCompany’s remaining assets. Also, the Company has currently considered in theliquidation accrual its corporate overhead through December 31, 2007 andthe projected combined operating results of Stonehenge through September 30,2007 and the Resort through June 30, 2007, the anticipated holding periodsof these properties. Stonehenge’s operations have historically been profitable;therefore, cash flow from its operations have historically been used to supportcorporate overhead. These projections could change materially based on thetiming of any such anticipated sales, the performance of the underlying assetsand changes in the underlying assumptions of the cash flow amounts projected.These accruals will be adjusted from time to time as projections and assumptionschange.

The change in our reservefor estimated liquidation costs for the year ended December 31, 2006 issummarized in Note 2 to the Consolidated Financial Statements referred to inItem 8 in this annual report on Form 10-K. The net increase in theliquidation reserve of approximately $50,000 was due to an increase in thereserve for professional fees of $540,000 plus the net aggregate of otherpayments, transfers, adjustments and accruals totaling $110,000 offset by areversal of the accrual for financial advisor fees of $600,000.

*Revenue Recognition*

Subsequent to our January 30, 2003 sale of theEagle Ridge Inn & Resort, we do not have any remaining performingparticipating leases. Prior to that time, under the performing participatingleases, we recognized rental revenue on an accrual basis over the term of thelease. Prior to our borrower’s default under the participating mortgage, werecognized interest income ratably over the term of the loan.

With respect to the golf courses that we are currentlymanaging, revenue from green fees, cart rentals, food and beverage sales,merchandise sales, and range income are generally recognized at the time ofsale. Membership dues are recognized ratably over the applicable period.

Certain membership initiation fees at these golfcourses are refundable based on specific conditions. The estimated presentvalue of the potential refunds at Wildewood and Woodcreek Farms over theoriginal 30-year required membership term, as defined in the ClubMembership Manual, recorded as an 

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accrued liability on ourbooks at December 31, 2006 is valued at $125,000. Additionally, certaininitiation fees may be refundable prior to the expiration of the 30-yearterm under specific membership replacement conditions. There is no liabilityrecorded to reflect our contingent refund obligation due to the fact that fournew members have to join in the specific membership category for a resignedmember to receive a refund. A refund issued under these specific circumstanceswould be considered a reduction of membership revenue for that period. Allinitiation fees received are initially recorded as deferred revenue andamortized over the average life of a membership which, based on historicalinformation, is deemed to be nine years.

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

Upon approval by ourstockholders of the plan of liquidation on May 22, 2001, we adopted theliquidation basis of accounting for periods beginning after May 22, 2001.The changes in Net Assets in Liquidation for Golf Trust of America, excludingthe Resort and Golf Host Securities, are discussed below. Consistent with thepresentation of the liquidation basis financial statements in Item 15 of thisannual report on From 10-K, we provide a discussion of changes in netassets rather than a discussion of our operating results. The results ofoperations for the Resort are discussed separately below under the caption “GTA-IB,LLC—Results of operations for the years ended December 31, 2006, 2005 and2004.” The following discussion should be read in conjunction with the “SelectedFinancial Data” and our consolidated financial statements and notes theretoappearing elsewhere in this Form 10-K.

**Changes in NetAssets in Liquidation**

**January 1,2006 to December 31, 2006**

For the year ended December 31, 2006, net assetsin liquidation decreased by approximately $83,000. This decrease resulted from (a) anincrease in the carrying value of Tierra Del Sol to reflect the estimated gainon the sale of Tierra Del Sol of approximately $340,000 plus (b) theadditional gain realized upon the actual closing of the sale of Tierra Del Solof approximately $34,000, (c) the increase in the carrying value of ourinterest in Parcel F of approximately $1,410,000 to reflect the estimatedfinancial benefit to us of a contract amendment executed between GHR and thepurchaser of Parcel F, (d) the decrease in the estimated settlement amountof the Westin termination fee liability of approximately $79,000, (e) thediscount realized in the assignment and termination of the Elk Funding notepayable of approximately $122,000, (f) the reversal of the accrual forfinancial advisor fees of approximately $600,000 due to the expiration of thetail period and related fee obligations of the Houlihan Lokey engagement offsetby (g) the redemption of the 35,794 operating partnership units forapproximately $18,000, and an increase in the provision for  (h) capital expenditures ofapproximately $69,000, (i) accounting and tax fees of approximately $285,000,(j) corporate operating costs of approximately $625,000, (k) directorsand officers insurance premiums of approximately $240,000, and (l) legalfees of approximately $1,265,000 to be incurred in (A) the negotiation ofan asset purchase agreement and contemplated consummation of the sale of theResort, (B) litigating the proceedings to which we are currently a partyand (C) the administrative conclusion of our plan of liquidation. Seefurther discussion of certain of these items below.

Of these changes to ournet assets in liquidation during the year ended December 31, 2006discussed above, $1,372,000 represents changes that occurred during the threemonths ended December 31, 2006. The changes in the current quarter weremade up of (a) the increase in the carrying value of our interest inParcel F of approximately $1,410,000, (b) the discount realized in theassignment and termination of the Elk Funding note payable of approximately$122,000, (c) the reversal of the accrual for financial advisor fees of approximately$600,000, offset by an increase in the provision for  (d) accounting and tax fees of 

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approximately$170,000, (e) legal fees of approximately $350,000, and (f) directorsand officers insurance premiums of approximately $240,000.

*Further details ofthe changes to our net assets in liquidation*

Tierra Del Sol was sold on May 8, 2006. Theproceeds that we received in excess of our carrying value of Tierra Del Sol of$1,500,000 amounted to approximately $374,000.

As previously noted above, as of December 31,2006, we recorded an increase in the carrying value of our interest in Parcel Fof approximately $1,410,000 to reflect the estimated financial benefit to us ofa contract amendment executed between GHR and the purchaser of Parcel F. Seefurther discussion in this annual report on Form 10-K in Item 1under the caption “Significant Events Since the filing of our last QuarterlyReport.”

In connection with the Settlement Agreement, ElkFunding, L.L.C. provided a $2 million loan to us, in the form of twopromissory notes. Pursuant to our agreement with Elk Funding, L.L.C. theseloans were used to fund the Resort’s current working capital needs. PromissoryNote A is a non-recourse loan for $700,000, which is collateralized by asecurity interest in the proceeds from the future sale of Parcel F. Interesthas been accruing on this unpaid balance at a rate of prime plus 1% until theclosing of the sale of Parcel F, at which time the principal and accruedinterest would have been due. However, the Elk Funding loan and Promissory NoteA were deemed satisfied and terminated on December 28, 2006. Accruedinterest on this note of approximately $122,000 as of December 28, 2006was forgiven. For further discussion regarding the satisfaction and terminationof the Elk Funding loan, see Part I, Item 1 under the caption “SignificantEvents since the filing of our last Quarterly Report” and also Part II,Item 9B.

See a detailed discussion of our engagement ofHoulihan Lokey, our then financial advisor, in Item 1 of this annual report on Form 10-Kunder the caption “*Current Strategic Choices*.”  Since an exit transaction had not occurred byJune 2006, we terminated our month-to-month engagement with HoulihanLokey, on June 29, 2006. The period during which Houlihan Lokey might havestill been owed a transaction fee if a closing of an exit transaction were tooccur under certain circumstances expired on February 28, 2007. As aresult, we reversed our accrual for a transaction fee of approximately$600,000.

On August 23, 2006, pursuant to a mutuallynegotiated termination of a pledge and security agreement, we accepted adiscounted payoff of $2.0 million for a note receivable originally received byus from the buyer of Eagle Ridge on January 30, 2003. In connection withthe termination of the pledge and security agreement, we redeemed 35,794 sharesof our common stock that were pledged to us by the borrower pursuant to thenote receivable. The shares were redeemed at the ten day trailing average priceof $0.493 for a total redemption value of approximately $18,000. See furtherdiscussion in Note 5 to the Consolidated Financial Statements referred to inItem 1 of this quarterly report.

The increase in ourprovision for liquidation costs is primarily due to the prolonged timeline tocomplete our plan of liquidation.

**January 1,2005 to December 31, 2005**

Net Assets in Liquidation decreased by $1,263,000during the period from January 1, 2005 to December 31, 2005.Operating loss, including the net loss from our properties, primarily theResort, including interest expense on corporate and property specific debt, was$562,000. We did not close on the sale of any properties in 2005; therefore, wedid not have any realized losses from the sale of assets. The estimated fairvalue on the remaining properties held for sale decreased $2,421,000 whichrepresented the write-down on the Resort at December 31, 2005.Approximately $4,914,000 in accrued preferred dividends were reversed pursuantto a letter agreement executed with our preferred shareholder on April 12,2006 as described above under the caption “Status of the Sale of the Resort.”The reserve for estimated liquidation 

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costs and projectedcapital expenditures increased approximately $3,090,000 due to the increase inthe time period that we anticipate will be needed to wind down the business andthe associated costs assuming that our financial advisor is successful incompleting an exit transaction in the second quarter of 2006.

On March 30, 2005, weextended the term of the amended employment agreement of Scott D. Peters, ourchief financial officer, from March 31, 2005 to March 31, 2006. Inconnection with the amendment of our employment agreement with Mr. Peters,Mr. Peters agreed to assign to us 55,625 shares of our common stock thatwere pledged to us by Mr. Peters pursuant to his February 26, 2001non-recourse Master Promissory Note. In exchange for the assignment of those55,625 shares, we agreed to forgive approximately $461,000 that Mr. Petersowed to us pursuant to that Master Promissory Note. This resulted in a changein net assets in liquidation of approximately $104,000 due to the cancellationof this note receivable from Mr. Peters in favor of us. This note wascarried at $99,000 when it was cancelled on March 30, 2005. This note wascancelled in exchange for the assignment to us of 55,625 shares of our commonstock. These shares were valued at approximately $104,000 based on the ten-daytrailing closing stock price on March 30, 2005 and cancelled as of thatdate.

**Liquidity and CapitalResources**

Our only source of cash flow is a distribution of netoperating income from the one remaining golf property that we own and manageand cash flow from the operations of the Resort, if any. We discuss the Resort’scash position below. As a result of our need for liquidity, on March 18,2004 we entered into a loan agreement and related mortgage with TextronFinancial Corporation, or Textron, for a revolving line of credit. On August 4,2005, we executed loan documents with Textron to amend the terms of theexisting revolving loan. Pursuant to this amendment, the maximum permissibleoutstanding loan amount was increased from $2,100,000 to $4,200,000. Theinterest rate pursuant to the amended Textron loan documents continues to bethe prime rate plus 1.75% per annum, paid monthly. The amendment extended theterm of the loan from March 18, 2006 to March 18, 2009. This loan iscollateralized by a security interest in our golf courses collectively known asStonehenge. The loan requires that the operations at Stonehenge for theimmediately preceding twelve month period must be sufficient to meet a monthlydebt service coverage ratio, as defined in the mortgage, of at least 1.20.  At December 31, 2006, we were incompliance with the debt service coverage ratio covenant and we currentlyexpect to be in compliance going forward.

Subject to certain conditions, a buyer of Stonehengemay assume this loan pursuant to the loan assumption provisions in theamendment. We paid a one-time commitment fee to Textron of $42,000, whichrepresents 2% of the new funds approved to obtain the increase in this creditline. In addition, we will pay to Textron a fee of 0.25% per annum of theunused balance of the available line. As of the date of this report, we havedrawn down a total of $4,100,000 on the line of credit. Subject to oursatisfaction of the applicable terms, conditions and covenants of this loan,there is $100,000 available that could be drawn under this loan.

As of December 31, 2006, the Resort has a workingcapital deficit of approximately $10,607,000. This working capital deficitresulted primarily from the reclassification of the Westin termination fee andthe Troon supplemental fee from long term to short term obligations. Thereclassified termination and supplemental fees are approximately $5,594,000 and$800,000, respectively, as of December 31, 2006.  See further discussion in Note 10 to theConsolidated Financial Statements referred to in Item 8 of this annual reporton Form 10-K. Before this reclassification, the Resort had a workingdeficit of approximately $4,213,000. The Resort’s member deficit at December 31,2006 is $11,403,000. The Resort reported a net loss of approximately $4,861,000for the year ended December 31, 2006. The Resort continues to experienceseasonal fluctuations in its net working capital position due to theseasonality of the golf industry in Florida. This seasonality impacts ourliquidity. In particular, there is generally more available cash during thewinter months, specifically in the first quarter. Cash generally becomes verylimited in the 

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late summer months.Revenues generally decline at the Resort during the summer months because thehot Florida weather makes the Resort less appealing for group golf outings andvacation destination golfers. Additionally, unusual weather patterns, such asthe hurricanes experienced in Florida in 2004 and those that affected thesoutheast coast in 2005, negatively impacted revenues for the Resort in thelate summer-early fall season of 2005 and 2006 as groups and guests werehesitant to book reservations on the southeast coast during the hurricaneseason. Weather-related concerns may continue to negatively impactreservations in comparable periods (July through September) of subsequentyears. The Resort uses seasonal pricing (peak, shoulder and off-peak) tomaximize revenues. Generally, the Resort’s only source of cash is from itsoperations, if any. While certain steps have been taken in an effort to improvethe long-term financial performance of the Resort since we assumed title to theResort on July 15, 2004, as discussed in further detail below under thecaption “GTA-IB, LLC—Results of operations for the years ended December 31,2006, 2005 and 2004,” current Resort cash flow projections for 2007 indicatethat although the Resort may be in a breakeven cash situation by year-end,a shortfall is anticipated by late summer to early fall 2007. This shortfall isexpected primarily due to certain obligations that the Resort must pay in August 2007,including obligations of approximately $1,060,000 for the quarterly rental pooldistribution and approximately $412,000 for the rental pool refurbishmentpayment. Therefore, a cash infusion of up to approximately $1,000,000 in theaggregate may be necessary to fund the short-fall. Further, now that theWestin Management Agreement is terminated, we have begun the capitalimprovement project of upgrading the technological infrastructure of the Resortand replacing certain components which are proprietary to Westin. Ourprojections indicate that the replacement of these components could require usto make an investment in the range of $1.0 to $2.0 million. We continue to workdiligently with the Resort’s management team to identify opportunities tocontinue to strengthen the cash flow situation at the Resort. Further, wecontinue to seek a buyer for the Resort. We made intercompany advances to theResort to support working capital needs in the amounts of $2,000,000, $400,000,$650,000 and $600,000 in July 2004, September 2005, November 2005and October 2006, respectively. We made an additional intercompany advanceto the Resort of $120,000 in February 2007. Further, we fundedapproximately $203,000 and $33,000 for the beginning phase of the technologicalinfrastructure capital investment in October 2006 and November 2006,respectively. The $120,000 advance and the $33,000 in capital funding wasrepaid in March 2007. In the event that we must advance additional capitalto fund operations at the Resort or our other operations, we may experiencesevere liquidity problems.

In the event that we are unable to sell our remainingassets as contemplated, we may be unable to pay our obligations as they becomedue. In addition, our ability to pay our obligations as they become due wouldbe compromised if our chief executive officer requires payment of outstandingperformance milestone payments owed by us to him before we are able to realizenet cash proceeds from asset sales sufficient to repay him. As of December 31,2006, we owed our two most senior executive officers a total of approximately$1,754,000 in milestone payments and accrued interest on such milestonepayments. We also owed approximately $3,101,000 in legal fees which areincluded in our estimate of the costs to be incurred prior to our liquidation.We expect to incur additional fees and costs in connection with closing thesales of our two remaining assets. Our ability to pay our obligations as theybecome due will depend on cash flow from the Resort, and forbearance by oursenior executive officers and our counsel with respect to sums that we owe tothem. In the event that we experience lower revenues, or higher costs, withrespect to the Resort, we may need to seek to find alternative funding in orderto pay our obligations. Further, should our senior executive officers or ourcounsel require payment of funds owed to them, we may need to find alternativefunding in order to pay our obligations. This funding, if available, may not beoffered on reasonable terms.

We are currently negotiating the terms of  a three year non-revolving credit facilitywith a Tampa community bank  forapproximately $1,200,000. The proceeds of which would be used to financerenovations at the Resort restaurants, information technology infrastructureupgrades and other property 

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improvements  at the Resort and to cover short-term workingcapital shortfalls. The three condominium units that we own at the Resort willserve as collateral for this loan. We are also seeking to obtain a revolvingaccounts receivable line of credit for at least $500,000. However, there can beno assurance that the Company will enter into this loan facility or that wewill be able to obtain an accounts receivable credit line.

We could realize liquidity through our interest in theproceeds from the sale of Parcel F. The anticipated timeline to realize theproceeds from our interest in the sale proceeds of Parcel F is currentlydependent on the decision of the Second District Court of Appeals as to whetheror not the Court will rehear the plaintiffs’ claims in the Land Use Lawsuitsand the Parcel F purchaser’s commitment to close. (See detailed discussion ofthe Land Use Lawsuits in Part I, Item 3 of this annual report on Form 10-K.)  If the Court rejects the plaintiffs’ requestto rehear their claims, then the buyer of Parcel F must close on the purchaseof Parcel F within sixty days or GHR will seek a new buyer. In that event, thefair value of our interest in Parcel F could potentially be adjusted based onany increase or decrease in the Parcel F sales price in any subsequentagreement with a new buyer for the purchase of Parcel F.  We do not currently believe that the salesprice to a new buyer would be lower than the sales price in the sale agreementwith the current contracted buyer.

See discussion of ourobligations to the holder of our preferred stock in Note 11 to theConsolidated Financial Statements referred to in Item 8 of this annual reporton Form 10-K.

*Years ended December 31,2006 and 2005*

Cash flow used in operating activities for the yearended December 31, 2006 was $2,759,000, compared to cash flow used inoperating activities for the year ended December 31, 2005 of $1,519,000.The primary components of the cash fluctuations in operating activities wereliquidation liability payments and adjustments and working capital changes. Theincrease in the cash flow used in operating activities for the year ended December 31,2006 was primarily due to less favorable operating results of the Resort forthe year ended December 31, 2006 compared to the prior year ended December 31,2005. This increase was offset to some degree by a decrease in liquidationliability payments year over year primarily due primarily to a decrease inpayments made for legal and other professional fees incurred in connection withour plan of liquidation.

We made $454,000 in capital expenditures at the Resortand $92,000 at the other golf courses that we owned and managed during the yearended December 31, 2006, as compared to $695,000 at the Resort and$111,000 at the other golf courses in the year ended December 31, 2005. Inaddition, our investing activities in 2006 provided $1,037,000 from the sale ofone of our golf courses and we collected $3,067,000 in repayments onoutstanding notes receivable.

Payments on capital leasesat the Resort were approximately $321,000 and $331,000 for the years ended December 31,2006 and 2005, respectively. Payments under the Resort refurbishment obligationwere $1,076,000 and $722,000 for the years ended December 31, 2006 and2005, respectively.

*Years ended December 31,2005 and 2004*

Cash flow used in operating activities for the yearended December 31, 2005 was $1,519,000, compared to cash flow used inoperating activities for the year ended December 31, 2004 of $4,720,000.The primary components of the cash fluctuations in operating activities wereliquidation liability payments and adjustments and working capital changes. Thedecrease in the cash flow used in operating activities for the year ended December 31,2005 was primarily due to an improvement in the operating results of the Resortfor the year ended December 31, 2005 compared to July 16, 2004 to December 31,2004, the portion of 2004 during which we owned the Resort. Liquidationliability payments also decreased year over year primarily due to thenon-recurring closing costs that were paid related to the Settlement Agreement 

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to assume ownership of theResort in July 2004, a decrease in the insurance premium payments maderelated to the renewal of our directors and officers insurance policy, offsetby an increase in payments made for legal and other professional fees incurredin connection with our plan of liquidation.

We made $695,000 in capital expenditures at the Resortand $111,000 at the other golf courses that we owned and managed during theyear ended December 31, 2005, as compared to $439,000 at the Resort and$33,000 at the other golf courses in the year ended December 31, 2004. Inaddition, our investing activities in 2005 provided $281,000 in cash frompayment of a note receivable originally taken in connection with thetermination of participating leases. In the year ended December 31, 2004,we received $3,984,000 in cash flow from the sale of two golf courses (one soldin August and one sold in September). We also acquired $1,764,000 in cashwhen we acquired the Resort in July 2004.

During the year ended December 31,2005, we drew $2,000,000 against our revolving line of credit compared to drawsof $2,100,000 in the year ended December 31, 2004. The funds drawn againstthe line of credit were used for working capital needs in both 2005 and 2004and, in 2004, the funds were also used to pay closing costs related to theexecuted Settlement Agreement in July 2004. In 2004, we also received$2,000,000 in proceeds from a note payable to Elk Funding, LLC which was usedas a cash infusion for the Resort for its immediate working capital needs atthe time that we took title to the Resort. Subsequently, we repaid $1,300,000(less a discount of $122,000) plus accrued interest of this $2,000,000 notepayable from the sales proceeds of certain golf course assets. Payments oncapital leases at the Resort were approximately $331,000 and $160,000 for theyears ended December 31, 2005 and 2004, respectively. Additionally, in2005, we made payments under the Resort refurbishment obligation of $722,000.

**Off Balance SheetArrangements**

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

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

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**ContractualObligations, Contingent Liabilities and Commitments**

Thefollowing table summarizes our contractual obligations at December 31,2006, and the effect such obligations are expected to have on our liquidity andcash flow (or upon our successors in interest under the applicable contracts,if the contracts are not terminated) in future periods:

| ** **                                                                                                                           | ** ** | **Payments Due by Period (in thousands)** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|
| **Contractual Obligation**                                                                                                      | ** ** | ** **                                                         | ** ** | **Total** | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **More than  5 years** | ** ** |
| Employment  Agreements and Employment Security Agreements                                                                            |       | $                                                                  | 2,194      |   |   | $ | 1,759 |   |   | $ | 435 |   |   | $ | — |   |   |   | $ | — |   |   |
| Series A  Preferred Stock and accrued dividends(1)                                                                              |       | 20,000                                                             |       |   | 20,000 |   |   | — |   |   | — |   |   |   | — |   |   |
| Textron revolving  line of credit                                                                                                    |       | 5,228                                                              |       |   | 410 |   |   | 4,818 |   |   | — |   |   |   | — |   |   |
| Operating lease  agreements at the managed golf courses                                                                         |       | 186                                                                |       |   | 137 |   |   | 49 |   |   | — |   |   |   | — |   |   |
| Advertising,  service, equipment maintenance and other contracts and software license and  support agreements at the managed courses |       | 2                                                                  |       |   | 2 |   |   | — |   |   | — |   |   |   |   |   |   |
| Lease agreements  for GTA corporate office                                                                                           |       | 5                                                                  |       |   | 5 |   |   | — |   |   | — |   |   |   | — |   |   |
| Subtotal of our  obligations excluding those of the Resort                                                                           |       | $                                                                  | 27,615     |   |   | $ | 22,313 |   |   | $ | 5,302 |   |   | $ | — |   |   |   | $ | — |   |   |
| Master lease  agreement (with the condominium owners)                                                                           |       | $                                                                  | 5,433      |   |   | $ | 1,424 |   |   | $ | 3,940 |   |   | $ | 42 |   |   |   | $ | 27 |   |   |
| Troon management  fee                                                                                                                |       | 163                                                                |       |   | 163 |   |   |   |   |   |   |   |   |   |   |   |   |
| Westin  termination fee                                                                                                              |       | 5,594                                                              |       |   | 5,594 |   |   | — |   |   | — |   |   |   | — |   |   |
| Troon  supplemental fee                                                                                                              |       | 800                                                                |       |   | 800 |   |   | — |   |   | — |   |   |   | — |   |   |
| Operating and  capital leases                                                                                                        |       | 1,319                                                              |       |   | 667 |   |   | 650 |   |   | 2 |   |   |   | — |   |   |
| Service  agreements and other                                                                                                        |       | 4,836                                                              |       |   | 1,721 |   |   | 2,278 |   |   | 837 |   |   |   | — |   |   |
| Subtotal of the  Resort’s obligations                                                                                           |       | $                                                                  | 18,145     |   |   | $ | 10,369 |   |   | $ | 6,868 |   |   | $ | 881 |   |   |   | $ | 27 |   |   |
| Total of our  consolidated obligations                                                                                               |       | $                                                                  | 45,760     |   |   | $ | 32,682 |   |   | $ | 12,170 |   |   | $ | 881 |   |   |   | $ | 27 |   |   |
|                                                                                                                                      |            |                                                                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)          The series APreferred stock is reflected in the “Less than 1 year” column of this tableabove due to the fact that this obligation is expected to be paid upon the saleof the Resort. See further discussion below under the caption “Series APreferred Stock.”.

Each type of contractual obligation listed in thetable is discussed in more detail below. Interest is reflected, as applicable,in the commitments and obligations listed above.

***EmploymentAgreements.******  ***Underthe existing amended and restated employment agreements, performance milestonepayments aggregating approximately $2,526,000 were paid to our executives uponour repayment of our obligations under our secured credit facility led by Bankof America, N.A. Pursuant to the fourth amended and restated employmentagreement of Mr. Peters, our chief financial officer, which becameeffective August 29, 2003, the performance milestone bonus amount,remaining to be paid is $82,615, plus accrued interest, to Mr. Peters.Commencing October 1, 2003, interest began accruing on the unpaid portionof Mr. Peters’ remaining earned milestone payment at 5% per annum. Suchpayments will be made in due course; no outstanding conditions to this paymentexist. We also owe Mr. Blair $1,233,907 in milestone payments plus accruedinterest. The accrued interest and estimated employer taxes on these milestonestotals approximately $443,000 as of December 31, 2006. In addition, wehave severance obligations to other employees aggregating approximately$435,000 which have been provided for in the liquidation accruals.

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***Textron RevolvingLine of Credit.******  ***OnMarch 18, 2004, we entered into a loan agreement and related mortgage withTextron Financial for a revolving line of credit. On August 4, 2005, weexecuted loan documents with Textron to amend our existing revolving loan withTextron. Pursuant to this amendment, the maximum permissible outstanding loanamount was increased from $2,100,000 to $4,200,000, and the term of the loanwas extended from March 18, 2006 until March 18, 2009. This loan iscollateralized by a security interest in our golf courses collectively known asStonehenge. In certain instances, the loan may be assumed by a buyer ofStonehenge pursuant to assumption provisions in this loan amendment. Theinterest rate under the revolving loan is prime rate (8.25% at December 31,2006) plus 1.75% per annum, paid monthly.

***Operating andCapital Lease Agreements.******  ***Inthe normal course of operating the golf courses that we manage and in theResort operations, we and/or our subsidiaries have entered into operating leaseagreements to lease golf course maintenance equipment, golf course vehicles,golf carts, and office equipment at the managed courses. The terms of theseleases range from twelve to sixty months.

***Advertising,service, equipment maintenance and other contracts and software license andsupport agreements at the managed courses.***   In the normalcourse of operating Stonehenge, we have entered into contracts for servicessuch as advertising, waste management, equipment maintenance and softwaresupport. The terms of these contracts range from 12 to 24 months and incertain cases include annual renewal options.

***Lease agreementsfor GTA corporate office.******  ***Thisrepresents the office space lease for our corporate office.

***Master LeaseAgreement.******  ***Ourindirect subsidiary, GTA-IB, LLC, is contractually obligated to reimburse theowners of condominium units at the Resort who participate in the Rental Poolfor 50% of the refurbishment costs invested in the Rental Pool units by theowners. In addition to the cost reimbursements, GTA-IB, LLC has agreed to paythe owners interest on the balance at 5% through 2009. In addition, GTA-IBagreed to provide refurbishment reimbursement for units placed into the rentalpool during 2005 at a level of 25% of the applicable condominium owner’sinvestment in the refurbishment. We refer to this program as Phase 5. Intereston the Phase 5 liability is accrued at a rate of 2.5% per annum and paidquarterly. Principal payments for Phase 5 begin in the first quarter of 2008and will be paid quarterly through the fourth quarter of 2012. The interest isincluded in the amounts in the table above.

***ManagementAgreements with Westin and Troon.***   Weentered into the management agreement with Westin on July 15, 2004, tomanage the Resort for a fee of 2.2% of gross revenues. Contemporaneously withthe signing of that agreement, Westin entered into a management contract withTroon to manage the golf facilities of the Resort for a fee of 2% of gross golfrevenue. These management fees are paid by the Resort. The agreements alsoprovide for the opportunity to earn supplemental fees based on financialperformance. The Westin management agreement was terminated by mutual agreementeffective October 31, 2006.   On February 22,2007, we sent Troon Golf LLC, or Troon, a notice of termination in regards tothe Facilities Management Agreement pursuant to which Troon manages the golfoperations at the Resort. We and Troon are in the process of negotiating theterms and conditions of the termination which we expect to be effective uponthe conclusion of our negotiations and the execution of a terminationagreement. We intend to manage the golf operations internally following thetermination of the Troon management agreement.

***Westin TerminationFee.***   Pursuant to theterms of the Termination Agreement, the Westin termination fee of approximately$5,594,000 is due at the earlier of the date of a sale of the Resort or March 31,2008.  This amount is included in the “Lessthan 1 year” column due to the fact that we are currently seeking a buyer forthe Resort, although as of March 26, 2007, no binding contract for thesale of the Resort has been executed.

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***Troon SupplementalFee.******  ***Thefacility management agreement that Westin executed with Troon effective July 15,2004, and we assumed on October 31, 2006, provides that we shall pay toTroon, subject to the terms and conditions set-forth in that agreement, asupplemental fee of $800,000 which is due upon either the expiration of thecontract on July 15, 2009 or its early termination. See further discussionregarding the current status of the Troon agreement in the note above captioned“*Management Agreements with Westin and Troon*.”

***Service Agreements and Other.******  ***In the normal course ofoperating the Resort, we are a party to multiple agreements with miscellaneousservice providers for, among other services, waste removal,uniform cleaning and replacement, armored car services, indoors plantmaintenance and pest control. These services and contracts are individuallyimmaterial and, therefore, are included in the aggregate.

**Commitments**

***Series A Cumulative Convertible RedeemablePreferred Stock.******  ***Fora detailed discussion of our obligations to the holder of our preferred stocksee the following sections of this annual report on Form 10-K, (i) Note11 to the Consolidated Financial Statements referred to in Item 8, (ii) Part I,Item 1 under the caption “*Significant Events sincethe filing of our last Quarterly Report*,” and (iii) Part I,Item 1A under the caption “*Risk Factors*.”

**GTA-IB, LLC—Resultsof operations for the years ended December 31, 2006, 2005 and 2004**

***The table below is provided to illustrate thesignificance of the Resort’s operations in our consolidated financial results.***

| ** **                                                 | ** ** | **Year ended December 31, 2006** | ** ** |
|------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                 | ** ** | **GTA and its  Other  Courses**            | ** ** | **Resort** | ** ** | **Golf  Host  Securities** | ** ** | **GTA  Consolidated** | ** ** |
| Revenue                                                    |       |                                                 | $          | 3,809 |   |   | $ | 41,857 |   |   | $ | 320 |   |   |   | $ | 45,986 |   |   |
| Expenses                                                   |       |                                                 | (4,297     | ) |   | (41,804 | )(a) |   | (333 | ) |   |   | (46,434 | ) |   |
| Interest, net                                              |       |                                                 | (325       | ) |   | (982 | )(b) |   | — |   |   |   | (1,307 | ) |   |
| Loss before adjustment  to liquidation basis of accounting |       |                                                 | $          | (813 | ) |   | $ | (929 | ) |   | $ | (13 | ) |   |   | $ | (1,755 | ) |   |

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(a)           The Resort resultsexclude depreciation and amortization expense of approximately $3,357,000pursuant to liquidation basis of accounting.

(b)          TheResort results include a reduction in non-cash interest of approximately$79,000 which represents a discount of a fixed amount of $365/day from theWestin obligation pursuant to the management agreement.

**Results of Operations**

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

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Utilizationof the Resort facilities during the past three years by facility type isillustrated in the table below:

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

 

The2004 Combined Statements of Loss are used as a reference for the comparativeanalysis of changes in operating results in the table below (in thousands) andin the Resort comparative discussion that follows (in thousands, except forstatistical data):

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

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(a)           Includesnet rental pool distributions of approximately $4,808,000, 4,996,000, and$3,856,000 for the years ended December 31, 2006, 2005, and 2004, respectively.

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**2006 Compared to2005**

During the year ended December 31, 2006, therewere 12,907, or 13.1%, fewer occupied room nights than there were for yearended December 31, 2005. During the year ended December 31, 2006,there were 9,575 fewer transient room nights and 3,332 fewer group room nights,resulting in a combined 12,907 fewer occupied room nights as compared to theperiod ended December 31, 2005. In addition, to the room night decrease,overall density, or the number of average guests per room night, also decreasedfrom 1.7 to 1.6 for the years ended December 31, 2005 and 2006,respectively. We believe the decrease in transient room nights could beattributed to the mild weather in the winter and spring months experiencedduring 2006 in the northern states. Because the winter and spring months weremuch warmer in the northern states during 2006 than in 2005, we believe thattransient guests and golf package guests were less inclined to visit thesouthern states. As described above, we also believe that transient room nightsdecreased in the late summer/early fall months due to guest hesitancy to bookrooms on the southeast coast of Florida during the hurricane season.   We also believe the decrease in group roomnights was a result of our decision to target higher revenue producing grouptypes as opposed to certain types of groups that booked in the prior year andwere not as profitable. In addition, we believe that the decrease in group roomnights was due to the fact that our sales and marketing department had fourvacant positions for varying periods of time between February andJune 2006 which hindered the sales and marketing staff’s ability to bookto the same levels as in prior periods. The sales team is now fully staffed andwe believe that the sales productivity has begun to increase.

The decline in the occupied room nights during theyear ended December 31, 2006 was offset by improved average room rates andancillary spending patterns of the Resort’s guests, coupled with increases incatering, room service and pool food and beverage  sales. Total revenue for the Resort decreasedby $40 during the year ended December 31, 2006 compared to the year ended December 31,2005. An overall increase in spending by the Resort’s guests, both for roomsand by package guests for food and beverages, offset the majority of thereduction in gross revenue that resulted from the lower number of room night inthe year ended December 31, 2006 as compared to the same period of 2005. Theaverage room rate increased from $135.49 in 2005 to $156.78 in 2006. Aggregatespending per room night during the year ended December 31, 2006 was$489.49, as compared to $425.69 during the same period in 2005.  The most significant increase in revenues atthe Resort during the year ended December 31, 2006 occurred in Golfdepartment. Revenues of that department increased by approximately $573, or4.3%, for the year ended December 31, 2006, as compared to the same periodin 2005. Overall food and beverage revenues increased by $339 or 2.9% as the foodand beverage total covers (meals) decreased by 7,176. This net decrease incovers served was primarily attributed to the Resort’s banquets and casualrestaurants with a combined decrease of approximately 17,390 covers. Coversserved in the Resort’s casual restaurants decreased by approximately 9,054covers. These banquet and restaurant reductions were offset buy increases incatering, room service and pool service with an aggregate increase of 9,674covers. This reduction of restaurant covers is reflective of the reducedtransient and group room nights noted above. Food and Beverage revenue percover increased from $28.45 for the year ended December 31, 2005 to $29.85for the year ended December 31, 2006, or 4.9% per cover. Golf revenueincreased by approximately $573, primarily as a result of improved capture ofrevenue per round of golf. Golf revenue for the year ended December 31,2006 averaged $128.13 per round, as compared to $112.20 per round for thecomparative period in 2005, while the number of rounds played decreased for theperiod.  In the aggregate, while therewere 10,323, or 8.7%, fewer golf rounds, revenues increased as a result of thecapture of higher greens fees and ancillary spending in the pro shops. The netdecrease in aggregate rounds played was attributable to 8,962 fewer roundsplayed by the Resort’s transient guests, including packages, coupled with adecrease of 1,361 rounds played by Resort members. The number of total golfrounds played in the year ended December 31, 2006 was 108,684, as comparedto 119,006 in the same period of 2005. Golf revenue does not necessarilyincrease or decrease exactly in proportion to occupied room nights because golfrevenue also includes member dues and fees and day golf group fees, neither ofwhich is directly related to 

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occupied room nights.Increases in total revenue due to improved spending of the Resort’s guests forthe year ended December 31, 2006 as compared to the same period in 2005were offset by a decrease in Other Revenue of approximately $1,024. OtherRevenue decreased primarily because the Resort did not charge a resort fee forthe period of January 1, 2006 through October 31, 2006.

Consistent with past periods, we continued to monitortotal operating expenses in an attempt to insure that Westin controlledexpenses and that the expenses bore a direct correlation to the room nights,food and beverage covers and golf round demand. Subsequent to the Westintermination on October 31, 2006, we have directly monitored and managedthese expenses. Aggregate total operating expenses do not generally increase ordecrease on a one-to-one basis with total operating revenue because the Resortmust carry a minimum fixed operating staff and other support expenses at alltimes. In those operating departments where the variable costs can best bemanaged, we seek to manage these costs consistent with room, food and beverageand golf demand. Total Resort operating expenses, before depreciation andamortization and excluding the Rental Pool amortization in hotel operations,increased by approximately $1,300, or 3.1%, for the year ended December 31,2006 as compared to the year ended December 31, 2005. This increase of3.1% is attributable to the increases in overall payroll and employee benefitcosts, energy and insurance costs.

Administrative and general expenses increased fromapproximately $4,744 to approximately $5,026 for the years ended December 31,2005 and 2006, respectively. This increase of $282, or 1.0%, in administrativeand general expenses is primarily due to an increase of approximately $334 inbad debt expense resulting from three large group account balances that weredeemed uncollectible, offset by a decrease in payroll expenses of approximately$255. The remaining net increase of approximately $109 represents smallfluctuations in a number of accounts.

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

The Rental Pool distribution (or that portion of roomrevenue attributable to the condominium owners) included in other expensesdecreased as a direct result of the room revenue decreases noted above. Thedistribution for the year ended December 31, 2006 decreased byapproximately $158 from the preceding year. The Rental Pool distributions wereapproximately $4,808 and $4,966 for the years ended December 31, 2006 and2005, respectively.

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

Interest expense, net of interest income, wasapproximately $1,550, and $1,635 for the year ended December 31, 2006 and2005, respectively, and reflect amortization of the discount on (i) ourRental Pool refurbishment liability in the amount of $682, (ii) ourshort-term liability to Westin in the amount of $447 and (iii) ourshort-term liability to Troon in the amount of $48. As previously discussed,the defaulted participating mortgage loan that was assumed by us from GHR, ourunaffiliated borrower, has a balance at December 31, 2006 of $39,240, andbecame non-interest bearing upon our assumption on July 15, 2004.

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

During the year ended December 31, 2006,approximately $1,301 of the capital reserve funds was disbursed. Of thosedisbursed funds, $844 was used to pay lease payments on existing and additionalequipment consisting of bellman vehicles, golf carts, golf course equipment,telephone and cable equipment and the balance was for various capital improvementprojects and replacements throughout the Resort.

Beginning in 2003, the Rental Pool participation, asrepresented by available room nights in the chart above, has stabilized and theResort appears to be positioned to provide a minimum of 600 rental unitsthrough the year 2009, or approximately 216 available room nights in each ofthe upcoming years through 2009. Our management believes that the 2009 timeframe noted is relevant because this is the time frame in which the condominiumowners have a contractual right to recover 50% of the refurbishment costs oftheir individual condominium units pursuant to the New Master Lease Agreement.Subsequent to 2009, the condominium owners may be less likely to remain in theRental Pool because the final refurbishment reimbursement payments will havebeen made. During the period from 1998 through 2002, available room nightsdecreased from a high of approximately 309 in 1998 to a low of approximately211 in 2002. These reductions in available room nights created negativepressure on the ability of the Resort to book historically larger groups. As aconsequence of this pressure, Westin’s sales and marketing efforts and oursales and marketing efforts subsequent to the Westin termination, were andcontinue to be targeted at booking a greater number of smaller groups that canbe accommodated, in light of the relatively limited available room nights.

The Resort utilizes theSmith Travel Research to compare itself to our competitive set. Our competitiveset is listed under the heading “Business” in this report. During the yearended December 31, 2006, as in prior years, the Resort lagged behind itscompetitors in both occupancy percentages and average room rates. While ourcompetitors’ occupancy levels decreased slightly for the year ended December 31,2006, from 60.9% to 58.1%, or 4.6%, the Resort’s occupancy percentage decreasedby 12.0%, to 40.4% during the same period. Offsetting the room night reduction,the average room rate at the Resort increased from $135.49 to $156.78, or15.7%, on a year-to-year comparative basis. The average nightly room rate ofour competitive set for the year ended December 31, 2006 increased by$7.70, or 5.0%, to $160.61. The Resort’s net decrease in overall room nightswas due both to a decrease in group business, which includes conferences, andtransient business. The increase in the average room rate was primarilyattributable to room rate increases for transient business, but the increasecan also be attributed in part to certain rate increases implemented throughoutthe other business sectors.

**2005 Compared to2004**

During the year ended December 31, 2005, totalroom nights at the Resort increased to 98,419 from 84,464 in the same period of2004. Total room nights are comprised of transient room nights and group roomnights. During the year ended December 31, 2005, the Resort saw strongertransient business which exceeded historical averages. For the year ended December 31,2005, total transient room nights were 39,281, an increase of 6,423 room nights,or 19.5%, from the same period in 2004. In addition, during 2005 the Resortalso began to see a recovery in golf package business and corporate groupbooking patterns compared to booking patterns for 2004. Total golf packagessold increased by 1,493 packages, or 35.8%, from 2004 to 2005. Group roomnights for the year ended December 31, 2005 increased by 7,532, or 14.6%,as compared to the prior year. The last minute cancellations of two largecorporate events in the first half of 2004, within the peak season, and theloss of approximately 3,148 golf rounds as a result of the unusual weatherconditions in the state of Florida in August and September of 2004,caused the Resort to lose an aggregate of approximately $850 in revenue, net ofcancellation fees, during that year. Cancellation fees of approximately $651relating both to these two large events and to a number of smaller events havebeen 

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included in total revenuesduring the year ended December 31, 2004. During 2005, due to improvedweather conditions, the Resort did not experience as many cancellations as in2004. As a result, cancellation fees we received in 2004 were $512 less than in2004. Although the Resort experienced fewer cancellations, our managementbelieves that the Resort’s bookings in 2005 were adversely affected as a resultof the 2004 hurricane season.

Participation in the Rental Pool during the yearsended December 31, 2005 and 2004 resulted in available room nights ofapproximately 215 and 216, respectively. Actual utilization or sales of roomnights increased by 13,955, or 16.5%, for the year ended December 31, 2005as compared to the previous year. We believe that this increase was related tothe increased confidence from corporate meeting planners in our propertyresulting from the resolution of the mortgage default via the SettlementAgreement coupled with general improvements in the hospitality and destinationresort business. With the stigma of the mortgage default removed, we reviewedand amended the Resort’s marketing plan with Westin and, as a result, revisedthat plan to focus more on selling memberships and more effectively marketingthe golf package business than on volume selling of corporate hotel rooms.These changes were implemented primarily to establish a stable source ofmembership dues, and to improve the capture of the most profitable businessavailable to the Resort. Because these changes in the marketing programappeared to be producing positive results, we continued to utilize the programsgoing forward. The most profitable departments of the Resort, in order ofhighest to lowest, are (i) the golf department, (ii) food andbeverage and (iii) rooms, net of rent attributable to Rental Poolparticipants (calculated by subtracting Hotel operating expenses of $11,411from gross Hotel revenue of $13,335). Operating profit for the golf departmentwas 42.9% and 35.9%, respectively, for 2005 and 2004. Because the maintenancecosts of our four golf courses are primarily fixed, the majority of eachincremental revenue dollar in this department flows directly to the Resort’sgross operating profit. Food and beverage, or F&B, profit was approximately29.6% and 23.2%, respectively for 2005 and 2004, respectively. The year overyear increase in F&B revenue was primarily due to the increase in groupbanquet revenue resulting from an increase in corporate group bookings.Corporate groups typically have the highest F&B contribution. Operatingprofit for the rooms department after payments pursuant to the Rental Poolsharing arrangement with the condominium owners for 2005 and 2004 was 14.4% and11.6% for the years ended December 31, 2005 and 2004, respectively.

During the year ended December 31, 2005, as inprior years, the Resort lagged behind its competitors in both occupancy percentagesand average room rates. While our competitors’ occupancy levels increasedslightly for the year ended December 31, 2005, from 58.9% to 60.9%, theResort’s occupancy percentage increased by 6.7%, to 45.9% during the sameperiod. Further, the average room rate at the Resort increased from $130.55 to$135.49, or 3.8%, on a year-to-year comparative basis. The average nightly roomrate of our competitive set for the year ended December 31, 2005 increasedby $9.59, or 6.7%, to $153.08. The Resort’s net increase in overall room nightswas due both to an increase in group business, which includes conferences, andtransient business. The increase in the average room rate was primarilyattributable to room rate increases for transient business, but the increasecan also be attributed in part to certain rate increases implemented throughoutthe other business sectors.

The Resort did not experience any significant ordirect exposure to tropical storms or hurricanes during 2005, we believe the2004 hurricane season negatively impacted the booking of room nights in 2005.When storms directly impact the Resort, loss of conference room nights andtransient business is generally replaced as guests seeking shelter from thestorm fill rooms that otherwise would be vacant due to those cancellations. Weoffer a discounted room night to coastal residents who are required to evacuatetheir homes. To date, these discounted rates have not had a material impactupon the average room rate of the Resort in any given year. Total group roomnights increased in 2005 by 7,532, from 51,606 room nights in 2004 to a totalof 59,138 room nights in 2005. The average room rate for group business of theResort increased $5.34, or 4.2%, from $128.46 for the year ended December 31,2004 to $133.80 for the year 

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ended December 31,2005. We believe that this increase resulted from increased meeting plannerconfidence and marketability of the Resort. To complement this increase, thetransient room nights increased by 19.5%, from 32,858 in 2004 to 39,281 in2005. We believe that this increase resulted from increased marketing to thissegment, the focus on golf package business and the replacement of group roomnights with transient room nights. The average room rate within the transientsector, however, increased by $9.10, to $135.82 per room night, for the yearended December 31, 2005. As described above, the room rate was impacted bythe weather and competitive pressure, as the travel and leisure sector of theeconomy was rebounding and hotels were competing to recover losses experiencedduring the economic downturn experienced from 2001 through 2003. During thefourth quarter of 2003, the Resort entered into an agreement with an outsideprovider to develop a new web site, which we believe also contributed to the2004 and 2005 growth in the transient business. The growth in this segment,coupled with growth in the group sector, appears to be continuing in 2006 basedupon recent sales contracts that have been executed for bookings in futureperiods.

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

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

Administrative and general expenses decreased fromapproximately $4,899 to approximately $4,744 for the years ended December 31,2004 and 2005, respectively. This decrease of $155, or 3.3%, in administrativeand general expenses is primarily due to a decrease of approximately $65 in theprovision for bad debt expense, a decrease in the operating costs of GTA’son-site office of approximately $235, a decrease in Resort legal fees ofapproximately $56 and an approximately $100 decrease resulting from smallfluctuations in a number of accounts. These decreasing expenses were offset byan increase in management fees of approximately $301 resulting from an increasein aggregate revenues coupled with the change in the management fee calculationto include golf revenues pursuant to our management agreement with Westin. Thedecrease in the operating costs of GTA’s on-site office resulted from reducedpayroll costs of approximately $22, an approximately $180 reduction in legalfees related to the property tax lawsuit and a reduction of other GTA on-siteexpenses of $33.

Other expenses increased from approximately $9,003 toapproximately $9,902 for the years ended December 31, 2004 and 2005,respectively. The increase of $899, or 10.0%, is primarily due to the followingchanges: (i) sales and marketing expenses increased by approximately $94,to $2,889, as a result of additional golf and membership marketing efforts; (ii) realproperty taxes increased by approximately $69; (iii) general insurancepremiums increased by approximately $104; (iv) rising energy costs causedutility expense to increase by approximately $255, from $1,254 to $1,509; and (v) managementincentives increased by approximately $311 due to the improved performance ofthe Resort. The remaining net increase of approximately $66 represents smallfluctuations in a number of accounts.

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The Rental Pool distribution (or that portion of roomrevenue attributable to the condominium owners) included in other expensesincreased as a direct result of the room revenue increases noted above. Thedistribution for the year ended December 31, 2005 increased byapproximately $911 from the preceding year. The Rental Pool distributions wereapproximately $4,966 and $4,055 for the years ended December 31, 2005 and2004, respectively.

Interest, net decreased byapproximately $4,161 year over year primarily due to the discontinuationof the interest accrual on the Resort’s participating mortgage effective withthe closing of the negotiated settlement. The mortgage note between us and GTA,LP is non-interest bearing. This mortgage interest savings resulted in adecrease of approximately $4,941 offset by the rental pool refurbishmentliability accretion and interest expense which increased approximately $758coupled with an increase in interest expense on capital leases of approximately$14 and an $8 decrease in interest income primarily due to reduced interestearned on our deposit with the electric company, which was formerly covered bya bond. Beginning in 2004, the electric company required that the Resortmaintain a minimum deposit with the electric company.

**Inflation**

We believe that inflationdoes not pose a material risk to us. Our main source of cash flow, golf coursedispositions, is not particularly vulnerable to inflation because we can adjustour asking prices if supply/demand factors support an interest in theparticular golf course. Our main financial obligation, redemption of theSeries A preferred stock, accrues at a fixed rate.  Our golf course fees at the Resort andStonehenge are relatively flexible and can be increased, subject to constraintsimposed by competition and, in some cases, patrons’ yearly membership dues andfees.

**Seasonality**

The golf industry is seasonal in nature. Revenuesgenerally decline at the Resort during the summer months because the hotFlorida weather makes the Resort less appealing for group golf outings andvacation destination golfers. Additionally, we believe that unusual weatherpatterns, such as the tropical storm weather and hurricanes experienced inFlorida in 2004 and 2005,  reduced revenues for the Resort in the periodfrom late summer through early fall in 2006 and could possibly do so in futureyears by negatively impacting reservations in comparable periods.

The Resort hosted in October 2003,October 2004, October 2005, and October 2006, a nationallytelevised PGA event, the Chrysler Championship, that brought some of thehighest profile golfers to the Resort for several days for the tournament, aswell as high profile golf industry sponsors and vendors. We do not expect tohost the Chrysler Championship after 2006. On April 25, 2006, we enteredinto an agreement with Suncoast Charities, Inc., or Suncoast, whichprovides that Suncoast will lease the Copperhead golf course at the Resort forseven and one half days during the month of March for a PGA TOUR event knownas the PODS Championship. Our agreement with Suncoast provides that thetournament will occur each year in March beginning in March 2007 andending in March 2012. The agreement also provides, among other things,that we will receive a base fee and that we may receive a participation fee inthe event the aggregate ticket sales during any tournament year exceed 115% ofthe greater of the 2005 tournament ticket sales or the 2006 tournament ticketsales. We do not yet have the final numbers for the March 2007 tournamentbut our estimates indicate that the ticket sales did indeed exceed thereferenced threshold.

Historically, revenuesincrease in the fourth quarter; however, revenues are generally the greatestduring the first quarter as guests arrive from the northeast and other regionsto enjoy the warm weather at the Resort. The Resort uses seasonal pricing(peak, shoulder and off-peak) to maximize revenues. The 

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effectsof seasonality at our golf courses can be partially offset at daily-fee golfcourses by varying greens fees based on changes in demand.

**ITEM 7A. QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

We have not entered intoany transactions using derivative financial instruments. We are subject tomarket risk associated with changes in interest rates applicable to therevolving line of credit that we obtained on March 18, 2004, and amendedon August 4, 2005. At March 26, 2007, the total outstanding debtsubject to interest rate exposure is $4,100,000. A 25 basis point movement inthe interest rate on the floating rate debt would result in an approximate$10,250 annualized increase or decrease in interest expense and cash flows (seeNote 8 to our Consolidated Financial Statements for additional debtinformation). For the year ended December 31, 2006, a 25 basis pointmovement would have resulted in a $12,000 annualized increase or decrease ininterest expense and cash flows. We have not entered into any transactionsusing foreign currency or derivative commodity instruments; therefore, we do notface any foreign currency exchange rate risk or commodity price risk.

**ITEM 8. FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA**

The financial statementsand supplementary data required by Regulation S-X are included in thisannual report commencing on page 73.

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

None.

**ITEM 9A. CONTROLSAND PROCEDURES.**

We maintain disclosure controls and procedures thatare designed to ensure that information required to be disclosed in ourExchange Act reports is recorded, processed, summarized and reported within thetime periods specified in the SEC’s rules and forms, and that suchinformation is accumulated and communicated to our management, including ourChief Executive Officer, our Chief Financial Officer (until his resignationeffective February 7, 2007) and our Principal Accounting Officer, asappropriate, to allow timely decisions regarding required disclosure. Ourmanagement assesses the costs and benefits of such controls and proceduresbased upon the prevailing facts and circumstances, including management’sreasonable judgment of such facts. As we neither controlled nor managed theResort prior to July 16, 2004, our disclosure controls and procedures withrespect to the manager and the Resort were necessarily more limited than thosewe maintained with respect to our own corporate operations. At the close ofbusiness on July 15, 2004, we took title to the Resort; however, despitethe fact that our Management Agreement with Westin provides us with heightenedcontrol and access to information, prior to the termination of the ManagementAgreement on October 31, 2006, we did not directly assemble the financialinformation for the Resort although we have taken steps that we deem to bereasonable under the circumstances to seek to verify such financialinformation. Consequently, until the termination of the Management Agreement onOctober 31, 2006, our disclosure controls and procedures with respect tothe Resort, while strengthened as a relative matter, remained necessarily morelimited than those we maintained with respect to our own corporate operations.Since taking title to the Resort and most recently, assuming the management ofthe Resort, we have focused upon integrating operations at the Resort into ourdisclosure controls and procedures and internal control procedures. Inparticular, those controls and procedures have been updated to account for thechallenges presented by the increased size and scope of our operations now thatwe own the Resort. Effective January 1, 2007, we implemented a new generalledger accounting software package, or GL software, at the Resort to replacethe former GL software of which the majority of the financial reports wereproprietary to Westin. Our new GL software, known as Aptech, was used at the 

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Resort prior toJuly 15, 2004 when Westin required that the Resort adopt their GL softwareso the accounting staff is familiar with the process and procedures inoperating the new GL software. We do not currently believe that the change inthe GL software will materially change our controls over financial reporting orour disclosure controls and procedures.

The integration of a business much larger in size andscope of operations increases the risk that conditions may have beenintroduced that we did not anticipate in our design of our systems of control.Any pre-existing deficiencies in the predecessor owner’s financial systems,processes and related internal controls increase the risk that the historicalunaudited financial statements of the Resort’s operations and cash flows whichthe predecessor owner has provided to us may not be accurate. We have ofnecessity placed a certain amount reliance on the historical financialinformation and reports of the Resort’s predecessor owner for the periods priorto July 16, 2004 and continued to rely on the information provided byWestin as manager of the Resort until October 31, 2006.

As of December 31, 2006, we carried out anevaluation, under the supervision and with the participation of our management,including our chief executive officer and our principal accounting officer, ofthe effectiveness of the design and operation of our disclosure controls andprocedures pursuant to Exchange Act Rule 13a-15. Subject to the limitationsmentioned above, our chief executive officer and our principal accountingofficer concluded that as of December 31, 2006, our disclosure controlsand procedures are effective in timely alerting them to material informationrelating to us (including our consolidated subsidiaries) required to beincluded in our Exchange Act reports.

There has been no changein our internal control over financial reporting during our most recent fiscalquarter that has materially affected, or is reasonably likely to materiallyaffect, our internal control over financial reporting.

**ITEM 9B. OTHERINFORMATION**

See earlier discussion ofthe matters below under the caption “*Significant Events sincethe filing of our last Quarterly Report*,” in Part I, Item I ofthis Annual Report on Form 10-K.

***Termination of Westin Management Agreement***

On July 15, 2004, GTA-IB, LLC (the “owner”) entered into a Management Agreement (the“Management Agreement”) with Westin Hotel Management L.P., successor ininterest to Westin Management Company South (“Westin”). The ManagementAgreement provided, among other things, that Westin would manage the Resort. Bymutual agreement, on September 28, 2006, we, the owner, and Westin, asguarantor, entered into a Termination and Release Agreement (the “TerminationAgreement”), pursuant to which the owner and Westin agreed to terminate theManagement Agreement as of October 31, 2006 (the “Termination Date”). Inaddition to the termination of the Management Agreement, the TerminationAgreement provides that (i) on or prior to October 3, 2006, the ownershall deposit $600,000 in the Resort’s operating account (which we did)  to be used in part to pay to Westin certainfees and charges accrued under the Management Agreement and which are expectedto approximate this amount; (ii) on or prior to the earlier ofMarch 31, 2008, or sale of the Resort by the owner, the owner will pay toWestin the termination fee provided under Section 4.4.2 of the ManagementAgreement calculated as of the Termination Date, estimated at $5,600,000; and(iii) Westin shall permit the owner to continue to access Westin’s “SAP”accounting system (which they have) for the operation of the Resort for aperiod of three months after the Termination Date for a total charge of $6,000.The owner plans to independently manage the Resort as of the Termination Dateand no longer use the Westin brand or their reservation system.

The foregoing summary ofthe material terms of the terminated Management Agreement does not purport tobe complete and is qualified in its entirety by reference to the ManagementAgreement, which 

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is filedas Exhibit 10.4 to our Current Report on Form 8-K filed on July 29,2004, and the Termination Agreement, which is filed as Exhibit 10.39 toour Current Report on Form 8-K filed on October 3, 2006.

***Amendment of Scott Peters’ Employment Agreement***

On September 29, 2006, we executed a letter (the “LetterAmendment”) with Scott D. Peters, our Chief Financial Officer and Secretary,extending the fixed Date of Termination of the Modified Schedule of Mr. Peter’semployment pursuant to the Fourth Amended and Restated Employment Agreementbetween Mr. Peters and us (the  “EmploymentAgreement”) from September 30, 2006 to April 30, 2007. As a result ofthe Letter Agreement, Mr. Peter’s employment will be terminated at April 30,2007, unless earlier terminated by us or by Mr. Peters for Good Cause (asdefined in the Employment Agreement) as applicable. The Employment Agreementremains in full force and effect, except as expressly modified or amended bythe Letter Amendment.

The Letter Agreement also provides that we shall payto Mr. Peters the remaining $82,615 balance of the performance milestonedescribed in Section 4.A.(a) of the Employment Agreement, plusaccrued interest, no later than April 30, 2007 or the earlier terminationof his employment pursuant to Section 5.A. of the Employment Agreement.

A copy of the LetterAmendment is included as Exhibit 10.33.3 to our Current Report on Form 8-K,filed on October 2, 2006, and is incorporated herein by reference. Theforegoing description of the Letter Amendment is qualified in its entirety bythe contents of the Letter Amendment.

***Nomination of Messrs. Loeb and Toor***

On October 9, 2006, we issued a press releaseannouncing that on October 5, 2006, that we had entered into a Letter Agreement (‘the “Letter Agreement”)with Jan H. Loeb and Nauman S. Toor (collectively, the “Director Candidates”)under which, among other things, we agreed (i) to increase the number ofmembers of our board of directors to seven, consisting of three Class Idirectors, the term of which expires at the 2006 Annual Meeting, two Class IIdirectors, the term of which expires at the 2008 Annual Meeting and two Class IIIdirectors, the term of which expires at the 2007 Annual Meeting; (ii) toinclude (and recommend the candidacy of) Mr. Loeb in the board ofdirectors’ slate of three nominees for potential election as Class Idirectors at the 2006 Annual Meeting and provide Mr. Loeb withsubstantially the same assistance that we provide the other board candidates,with respect to such election, and (iii) to nominate (and recommend thecandidacy of) Mr. Toor as the only candidate for potential election as anadditional Class III director of our company at the 2006 Annual Meeting tofill the vacancy created by the increase in the number of Class IIIdirectors from one to two (and to serve for a term expiring at the 2007 AnnualMeeting) and, for purposes of our proxy solicitation, provide Mr. Toorwith substantially the same assistance that we provide the other boardcandidates.

Pursuant to the terms of  the Letter Agreement,the Board Candidates shall not, and each will not authorize or knowingly permithis affiliates and associates to, (i) solicit proxies or engage in a proxycontest with respect to the election of directors or any other proposal to beconsidered at the 2006 Annual Meeting on November 17, 2006 or present anyproposal for consideration at such annual meeting of stockholders, or (ii) encourageany other person or entity to solicit proxies or engage in a proxy contest withrespect to the election of directors or any other proposal to be considered atthe 2006 Annual Meeting or present any other proposal for consideration at the2006 Annual Meeting. In the Letter Agreement, Mr. Loeb also withdrew inits entirety his letter dated August 23, 2006 which provided notice to theCompany of Mr. Loeb’s intention to nominate Messrs. Loeb and Toor forelection as directors at the 2006 Annual Meeting (in lieu of Messrs. Reamand Wax) and to introduce at the 2006 Annual Meeting certain other matterspertaining to declassifying our board of directors. The Board Candidates alsoagreed in the Letter Agreement that they and their affiliates would immediatelycease all efforts, direct or indirect, in 

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furtherance of Mr. Loeb’sproposals and any related solicitation, and any other action to obtain orinfluence control of us, and shall not vote, deliver or otherwise use anyproxies heretofore obtained in connection with Mr. Loeb’s proposals.

In addition, the BoardCandidates each acknowledged in the Letter Agreement that our stockholders havepreviously approved and adopted  the Plan of Liquidation, and that ourboard of directors intends to conduct our company’s operations in a mannerconsistent with the Plan of Liquidation, unless or until our board of directorsand its stockholders approve otherwise. The Board Candidates also agreed to actin a manner consistent with and in furtherance of the Plan of Liquidation asapproved by our stockholders, unless or until our board of directors and itsstockholders approve otherwise. The Letter Agreement provides that despite therestrictions described above, any of our directors may propose to our board ofdirectors for its preliminary consideration (subject to approval by the ourstockholders) a modification to the Plan of Liquidation.

***Amendment of Parcel F Defense and Escrow Agreement***

On December 28, 2006, we together with GTA, LPand GTA-IB entered into a First Amendment to Defense and Escrow Agreement (the “Amendment”)with GHR and the Escrow Agent. The Amendment, among other things, amends thedistributions from a sale of Parcel F under the Defense and Escrow Agreement toreduce the distributions to us by $710,000. The Amendment also provides that,in the event that the purchaser of Parcel F (“Parcel F, LLC”) receives areturn of its earnest money deposit pursuant to an Amended and RestatedAgreement for the Sale and Purchase of Real Property - Parcel F betweenGHR and Parcel F, LLC, dated June 29, 2004 (as amended), the GHRshall receive an offsetting payment of the lesser of $200,000, or the amount ofearnest money returned to Parcel F, LLC. The Defense and Escrow Agreementwas included as Exhibit 10.2 to our Current Report on Form 8-Kwhich was filed on July 29, 2004.

In connection with the execution of the Amendment,that we and Elk Funding entered into the Loan Satisfaction Agreement whichprovided, among other things, that when GHR receives $710,000 (which occurredon or about December 28, 2006) pursuant to the terms of the Amendment (i) ourobligations to Elk Funding under Note A shall be deemed to be paid in full andsatisfied, (ii) the loan documents between the us and Elk Funding shall bedeemed terminated and neither party shall have further obligations under suchdocuments and (iii) the Assignment of Defense and Escrow Agreement and thesecurity interest created by such agreement shall be deemed terminated. Asfurther consideration for the satisfaction of Note A, we consented to theextension of the closing deadline pursuant to the Second Amendment to theAmended and Restated Agreement for Sale and Purchase of Real Property—Parcel Fbetween GHR and Parcel F, LLC. Elk Funding also consented to the Amendment aspart of the Loan Satisfaction Agreement. Note A, made in the principal amountof $700,000, was secured by the Assignment of Defense and Escrow Agreementbetween us and Elk Funding. Note A, Note B (which was previously repaid by us)and the loan agreement relating to both notes were included as Exhibit 10.7to our Current Report Form 8-K which was filed on July 29,2004.

The Amendment and the Loan Satisfaction Agreement wereincluded as *Exhibit 10.24.2*and *Exhibit 10.29.2*, respectively, to our Current Reporton Form 8-K filed on January 4, 2007. The description of theAmendment and the Loan Satisfaction Agreement are qualified in their entiretyby the contents thereof.

On December 28, 2006, Note A was deemedsatisfied, the obligations of the parties under the related loan documents weredeemed terminated, and the Assignment of Defense and Escrow Agreement and thesecurity interest created by such agreement were deemed terminated.

Further, on December 28,2006, GHR and Parcel F, LLC, the purchaser of Parcel F, entered into the SecondAmendment to the Amended and Restated Agreement for the Sale and Purchase ofReal 

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Property—ParcelF between GHR and Parcel F, LLC, to which we are not a party, but suchamendment eliminated seller financing and certain reductions from the purchaseprice related to the number of permitted condominium units to be built onParcel F and resulted in a write-up of the estimated fair value of our interestin Parcel F of approximately $1,410,000 to $2,900,000.  Parcel F, LLC has sixty days from the finalappeal court decision on the Land Use Lawsuits (see related discussion insecond bullet below) to close on the purchase of Parcel F or Parcel F will bemarketed to potential new buyers.  Ifthat were to occur, the terms of Amended Defense and Escrow Agreement and theParcel F Development Agreement would continue to be applicable to the purchasecontract of any new buyer of Parcel F. Upon the closing of the sale of ParcelF, we currently expect to receive proceeds of approximately $2,900,000.

***Resignation of Director and Chief Financial Officer***

On February 4, 2007, Scott D. Peters notified usthat, due to personal reasons related to his obligations and commitments toanother employer, he is resigning as our Chief Financial Officer, Senior VicePresident, Secretary and Director effective February 5, 2007.  Consequently, Mr. Peters’ existingemployment agreement, which was due to expire by its terms on April 30,2007, was terminated effective February 5, 2007. Mr. Peters’remaining milestone payment, pursuant to his existing employment agreement, ofapproximately $83,000, plus accrued interest, remains due and payable by us tohim. Mr. Peters has been our Chief Financial Officer since 1997 and hasserved as a director since late 1999.  Atthis time, our Board will not fill the Board seat that Mr. Peters isvacating.

On February 6, 2007, our Controller, Tracy S.Clifford, age 38, was appointed Principal Accounting Officer. Ms. Cliffordis a certified public accountant and holds a masters degree in businessadministration from Georgia State University. Ms. Clifford has served asour Controller since October 1999. At this time, there were no changes to Ms. Clifford’scompensation as a result of this appointment.

The two most recent eventsabove are also briefly described under the heading “Significant Events sincethe filing of our last Quarterly Report in Item 1 and each will also bedescribed in detail in Part II, Item 5 of our Quarterly Report on Form 10-Qfor the quarter ended March 31, 2007.

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**PART III**

**ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**

We are managed by a board of directors composed ofseven members. At our annual meeting on November 17, 2006,  we added two new independent directors to thethree directors, who at all times have comprised a majority of the board, areindependent of our management and receive no compensation, directly orindirectly, from our company other than for their services as directors. Werefer to these five persons as our independent directors. The board alsoincludes W. Bradley Blair II, who is our Chief Executive Officer andPresident, and, until his resignation effective February 5, 2007,Scott D. Peters, who was our Chief Financial Officer, Senior VicePresident and Secretary. Subject to severance/milestone compensation rightsunder their amended employment agreements, officers serve at the pleasure ofthe board of directors.

In 2006, the board met twenty-three times; our auditcommittee met seven times; our compensation committee met two times; ournominating committee met one time; and our independent committee met one time.Each of the directors either attended or participated by telephone in at least75% of the total number of meetings of the board of directors and of thecommittees of the board of which he was a member.

Setforth below is information about our directors and executive officers:

| **Name**                        | ** ** | ** ** | ** ** | **Age** | ** ** | **Position**                                                                | ** ** | **Year  Elected  to  Board** | ** ** | **Current  Term  Expires** | ** ** |
|---------------------------------|------------|------------|------------|---------|------------|-----------------------------------------------------------------------------|------------|------------------------------|------------|----------------------------|------------|
| W. Bradley  Blair, II      |       |       | 63         |    |       | Chief  Executive Officer, President and  Chairman of the Board of Directors |       |                         | 1997       |                       |       |   | 2008 |   |   |
| Scott D.  Peters(4)             |       |       | 49         |    |       | Chief  Financial Office, Senior Vice  President, Secretary and Director     |       |                         | 1999       |                       |       |   | — |   |   |
| Tracy S.  Clifford(4)           |       |       | 38         |    |       | Principal  Accounting Officer  and Secretary                                |       |                         | —     |                       |       |   | — |   |   |
| Raymond V.  Jones(1)(2)(3) |       |       | 59         |    |       | Independent  Director                                                       |       |                         | 1997       |                       |       |   | 2008 |   |   |
| Fred W.  Reams(1)(2)(3)         |       |       | 64         |    |       | Independent  Director                                                       |       |                         | 1997       |                       |       |   | 2009 |   |   |
| Edward L.  Wax(1)(2)(3)         |       |       | 70         |    |       | Independent  Director                                                       |       |                         | 1997       |                       |       |   | 2009 |   |   |
| Jan H.  Loeb(1)(2)(3)           |       |       | 48         |    |       | Independent  Director                                                       |       |                         | 2006       |                       |       |   | 2009 |   |   |
| Nauman S. Toor(1)(2)(3).        |       |       | 38         |    |       | Independent Director                                                        |       |                         | 2006       |                       |       |   | 2007 |   |   |

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(1)          Nominating committeemember

(2)          Audit committee member

(3)          Compensation committeemember

(4)          Mr. Petersresigned all positions effective February 5, 2007. At this time, our Boardwill not fill the Board seat that Mr. Peters vacated. Ms. Cliffordwas appoint Principal Accounting Officer on February 6, 2007 and Secretaryon February 20, 2007.

**BiographicalInformation**

*W. Bradley Blair, II* isour Chief Executive Officer, President, and Chairman of our board of directors.He has been our Chief Executive Officer, President and Chairman since ourinitial public offering in 1997. Mr. Blair has served as a member of theBoard of Directors of NNN Healthcare/Office REIT, Inc. since September 2006.From 1993 until our initial public offering in February 1997, Mr. Blairserved as Executive Vice President, Chief Operating Officer and General Counselfor The Legends Group, a golf 

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course developer andowner. As an officer of The Legends Group, Mr. Blair was responsible forall aspects of operations, including acquisitions, development and marketing.From 1978 to 1993, Mr. Blair was the managing partner at Blair ConawayBograd & Martin, P.A., a law firm specializing in real estate,finance, taxation and acquisitions. Mr. Blair earned a Bachelor of Sciencedegree in Business from Indiana University and a Juris Doctorate degree fromthe University of North Carolina at Chapel Hill Law School.

*Scott D. Peters* is our ChiefFinancial Officer, Senior Vice President and Secretary. He has been one of ourofficers since our initial public offering in 1997. Mr. Peters has beenone of our directors since late 1999. In September 2004, Mr. Petersaccepted a position as the Executive Vice President, Chief Financial Officerand a member of the board of managers at Triple Net Properties in Santa Ana,California. Mr. Peters has also served as President and Chief ExecutiveOfficer of G REIT, Inc. since December 2005, having served as thatcompany’s Executive Vice President and Chief Financial Officer since September 2004,and he has served as Chief Executive Officer and Chairman of the Board of NNNHealthcare/Office REIT, Inc. since September 2006. From 1992 through1996, Mr. Peters was the Senior Vice President and Chief Financial Officerof Pacific Holding Company/LSR in Los Angeles, developer of a master-plannedresidential community and country club, from September 1992 to June 1996,and Senior Vice President and Chief Financial Officer of Castle &Cooke Properties, Inc., a real estate development subsidiary of Dole FoodCompany, from February 1988 to August 1992. Mr. Peters receiveda Bachelor of Arts degree in Accounting and Finance from Kent State University.

*Tracy S. Clifford* was appointedour Principal Accounting Officer and Secretary upon the resignation of Scott D.Peters, our Senior Vice President, Secretary and Chief Financial Officer, on February 5,2007. Ms. Clifford has been our Controller since September 1999. Priorto her employment with us in September 1999, Ms. Clifford was theAccounting Manager for United Healthcare of Georgia, Inc. from May 1995through February 1999 and Finance Director from March 1999 until  September 1999. From June 1993through April 1995, Mrs. Clifford was employed by North BrowardHospital District in Fort Lauderdale, Florida initially as Senior Accountant (June 1993through January 1994) and subsequently as Accounting Manager (February 1994through April 1995). Ms. Clifford is a Certified Public Accountantand worked as an auditor with Deloitte & Touch in Miami, Florida from1991 to 1993. She received a Bachelor of Science Degree in Accounting from theCollege of Charleston and a Masters Degree in Business Administration fromGeorgia State University.

*Raymond V. Jones* is anindependent director under the rules of the American Stock Exchange. From1984 to 1994 he was Managing Partner of Summit Properties Limited Partnershipbefore it went public in 1994. From 1994 until retiring in March 1998, Mr. Joneswas the Executive Vice President of Summit Properties Inc. Summit was apublicly traded REIT listed on the New York Stock Exchange and was one of thelargest developers and operators of luxury garden multifamily apartmentcommunities in the Southeastern United States. While at Summit, Mr. Jonesoversaw the development of 26 communities comprising nearly 6,500 apartmenthomes in Georgia, North Carolina, South Carolina and Ohio. Prior to 1984, Mr. Jonesserved as General Operations Manager for both the Charlotte and Houstondivisions of Ryan Homes, Inc. Mr. Jones earned a Bachelor of Artsdegree in Political Science from George Washington University.

*Fred W. Reams* is an independentdirector under the rules of the American Stock Exchange. From 1981 untilhis retirement on March 31, 2004, Mr. Reams served as the Chairman orPresident and Chief Investment Officer of Reams Asset Management Company, LLC,an independent private investment firm which he co-founded. From 1967 to 1981, Mr. Reamswas employed in various investment management positions with the First NationalBank of Michigan, Irwin Management Company, and Cummins, Inc. In addition,Mr. Reams served as President of the board of directors of the Otter CreekGolf Course from 1981 through 2003. Mr. Reams holds a Bachelor of Artsdegree and a Master of Arts degree in Economics from Western MichiganUniversity.

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*Edward L. Wax* is an independentdirector under the rules of the American Stock Exchange. Mr. Wax iscurrently Chairman Emeritus of Saatchi & Saatchi, a worldwideadvertising and ideas company. From 1992 until his appointment to his currentposition in 1997, Mr. Wax served as Chairman and Chief Executive Officerof Saatchi & Saatchi. Mr. Wax had been responsible at Saatchi forthe operations of 143 offices in 87 countries. Mr. Wax’s employment bySaatchi & Saatchi began in 1982. Mr. Wax was formerly Chairman ofThe American Association of Advertising Agencies as well as a director of boththe Ad Council and the Advertising Educational Foundation. Mr. Wax alsoserves on the board of directors of Dollar Thrifty Automotive Group.Mr. Wax holds a Bachelor of Science degree in Chemical Engineering fromNortheastern University and a Masters in Business Administration degree fromthe Wharton Graduate School of Business.

*Jan H. Loeb* is an independentdirector under the rules of the American Stock Exchange. Mr. Loeb, thelargest stockholder of GTA, is currently a portfolio manager for AmtrustCapital Management, Inc., a position he has held since February 2005.From February 2004 through January 2005, Mr. Loeb was aportfolio manager for Chesapeake Partners. From January 2002 throughDecember 2004, Mr. Loeb was a Managing Director ofJefferies & Company, Inc., an investment banking firm which isbased in New York City. From 1994 through 2001, Mr. Loeb was a ManagingDirector of Dresdner Kleinwort and Wasserstein, Inc., an investmentbanking firm based in New York City which was formerly known as WassersteinPerella & Co., Inc. Mr. Loeb also serves on the board ofdirectors of American Pacific Corporation, a chemical and aerospace corporationand serves on the boards of numerous charitable organizations. Mr. Loebholds a B.B.A. degree from Bernard M. Baruch College.

*Nauman S.Toor* is an independent director under the rules of theAmex. Mr. Toor has served as a Managing Director of Jefferies &Company, Inc., an investment banking firm which is based in New York City,since April 2001. As of December 31, 2006, 2007, Mr. Toorrecently left Jefferies to form his own registered investment advisory firm.Mr. Toor started his career in investment banking with KidderPeabody & Company in New York in 1990 and joined Jefferies &Company, Inc.’s investment banking group in 1994. Mr. Toor holds aBachelor of Arts degree in economics from Ohio Wesleyan University and aMasters in Business Administration from Harvard Business School.

**Committees**

***Audit Committee.******  ***The board of directors hasestablished an audit committee to oversee our financial reporting process onbehalf of the board of directors. Mr. Jones is the chairman of our auditcommittee. Our audit committee consists of Messrs. Wax, Reams, Jones, Toorand Loeb each of whom is independent under the rules of the American StockExchange (“Amex”). Each member of our audit committee also meets the criteriafor independence set forth in Rule 10A-3(b)(1) under theExchange Act of 1934, as amended. None of the members of our audit committeehas participated in the preparation of our financial statements or those of oursubsidiaries during the past three years, and all are able to read andunderstand fundamental financial statements. Our audit committee’s role is toselect the independent public accountants, to review with the independentpublic accountants the plans and results of the audit engagement, to approveprofessional services provided by the independent public accountants, to reviewthe independence of the independent public accountants, to consider the rangeof audit and non-audit fees and to review the adequacy of our company’sinternal accounting controls. Our management has the primary responsibility forthe financial statements and the reporting process including the systems ofinternal controls. In fulfilling its oversight responsibilities, our auditcommittee reviewed the audited financial statements with management including adiscussion of the quality, not just the acceptability, of the accountingprinciples, the reasonableness of significant judgments, and the clarity ofdisclosures in the financial statements. Our audit committee reviewed with theindependent auditors, who are responsible for expressing an opinion on the conformityof those audited financial statements with accounting principles generallyaccepted in the United States of America, their judgments as to the quality,not just 

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the acceptability, of ouraccounting principles and such other matters as are required to be discussedwith our audit committee under generally accepted auditing standards. Whilefinancially literate under the applicable rules of the Amex, the membersof our audit committee are not currently professionally engaged in thepractices of accounting or auditing and are not all experts in the fields ofaccounting or auditing, including in respect of auditor independence. Membersof our audit committee rely without independent verification on the informationprovided to them and on the representations made by management and ourauditors, BDO Seidman, LLP. Accordingly, our audit committee’s oversight doesnot provide an independent basis to determine that management has maintainedappropriate accounting and financial reporting principles or appropriate internalcontrols and procedures designed to assure compliance with accounting standardsand applicable laws and regulations. Our audit committee’s reviews,considerations and discussions do not provide assurance that BDO Seidman’saudit of our financial statements was carried out in accordance with generallyaccepted auditing standards, that the financial statements are presented inaccordance with accounting principles generally accepted in the United Statesof America or that our public accountants are in fact “independent.” Our auditcommittee operates pursuant to a written amended and restated charter approvedby our board of directors.

*Audit Committee FinancialExpert.*   Our“audit committee financial expert,” as defined by the rules of theSecurities and Exchange Commission, is Mr. Fred W. Reams.Mr. Reams qualifies as an independent director pursuant to the standardsof the American Stock Exchange. In addition:

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

(ii)        The designation oridentification of Mr. Reams as an audit committee financial expert doesnot impose on him any duties, obligations or liability that are greater thanthe duties, obligations and liability imposed on such person as a member of ouraudit committee and board of directors in the absence of such designation oridentification.

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

***Compensation Committee.******  ***The board of directors hasestablished a compensation committee to determine compensation, includinggranting awards under our stock incentive plans, for our officers. However, wedo not intend to make any further option awards to our executives or to anyother person. The compensation committee consists of Messrs. Wax, Reams,Jones, Toor and Loeb each of whom is independent under the rules of theAmex. The chairman of the compensation committee is Mr. Wax.

***NominatingCommittee.******  ***Theboard of directors has established a nominating committee to nominateindividuals for election to the board of directors. The nominating committeeconsists of Messrs. Wax, Reams, Jones, Toor and Loeb each of whom isindependent under the rules of the Amex. The chairman of the nominatingcommittee is Mr. Reams. The nominating committee does not have a charter.

***Other Committees.******  ***The board of directors may,from time to time, form other committees as circumstances warrant. Anyadditional committees will have authority and responsibility as may bedelegated by the board of directors, to the extent permitted by Maryland law.During 2001, the board had two such committees, the strategic alternativesworking committee, comprised of Messrs. Blair and Wax, which was createdto work with our financial advisor, and an independent committee, composed ofthe four independent directors, which was created to review and make arecommendation regarding the Legends transaction and agreement. During 2003 and2004, these two committees did not meet. In December 2004, a specialcommittee was created comprised of our three independent directors. This 

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special committee wascreated to assess and make recommendations regarding appropriate courses ofaction to pursue in connection with completing our plan of liquidation. Thisspecial committee did not meet during 2006, eleven times during 2005, and did notmeet during 2004. However, in December 2006, the five independentdirectors, known as the independent committee, met one time to discuss matters concerning our preferred shareholder.

*Criteriafor Board Membership.**  *In selectingcandidates for appointment or re-election to our board of directors, ournominating committee considers the appropriate balance of experience, skillsand characteristics required of our board of directors, and seeks to insurethat at least a majority of our directors are independent under the rules ofthe Amex, that members of our audit committee meet the financial literacy andsophistication requirements under the rules of the Amex and that at leastone of them qualifies as an “audit committee financial expert” under the rules ofthe Securities and Exchange Commission. Nominees for director are selected onthe basis of their depth and breadth of experience, integrity, leadership,ability to make sound business judgments, ability to read and understand basicfinancial statements, understanding of our business environment, andwillingness to devote adequate time to board duties. Other factors consideredin evaluating nominees for director include whether the nominee will complementour board’s existing strengths, with particular emphasis placed on skillsrelating to our expected activities, including the efficient completion of ourliquidation.

**Directors andOfficers Insurance**

We maintain directors andofficers liability insurance. Directors and officers liability insuranceinsures our officers and directors from claims arising out of an allegedwrongful act by such persons while acting as directors and officers of ourcompany, and it insures our company to the extent that we have indemnified thedirectors and officers for such loss.

**Indemnification**

Our charter provides thatwe shall indemnify our officers and directors against certain liabilities tothe fullest extent permitted under applicable law. The charter also providesthat our directors and officers shall be exculpated from monetary damages to usto the fullest extent permitted under applicable law.

**Section 16(a) BeneficialOwnership Reporting Compliance**

Section 16(a) of the Securities Exchange Actof 1934 requires our officers and directors, and persons who own more than 10%of our common stock, to file initial reports of ownership and changes inownership with the Securities and Exchange Commission and American StockExchange. Officers, directors and stockholders owning more than 10% of our commonstock are required by SEC regulations to furnish us with copies of all reportsfiled pursuant to Section 16(a).

Based solely on review ofcopies of any Section 16(a) reports filed by or on behalf of ourofficers and directors or written representations that no such reports wererequired, we believe that during 2005 all of our officers and directors andstockholders owning greater than 10% of our common stock complied with allapplicable Section 16(a) filing requirements.

**Code of Ethics**

We have a written Code ofEthics that applies to our chief executive officer and senior financialofficers, including our chief financial officer and controller. The Code ofEthics being available on our website, www.golftrust.com, and we will provide acopy of the Code of Ethics, without charge, upon written request to InvestorRelations, 10 N. Adger’s Wharf, Charleston SC 29401. If we change our Code ofEthics in any material respect or waive any provision of the Code of Ethics forany of our officers to whom it applies, we expect to provide the public withnotice of any such change or waiver by publishing an 

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appropriatedescription of such event on our website or by other appropriate means asrequired or permitted under applicable rules of the SEC. We do notcurrently expect to make any such waivers.

**ITEM 11.EXECUTIVE COMPENSATION**

**Compensation Discussion and Analysis**

*CompensationObjectives**.****  *We referto our chief executive officer as our principal executive officer. Our chieffinancial officer and principal accounting officer was Mr. Scott D. Petersuntil February 5, 2007, the effective date of his resignation. Ms. TracyS. Clifford, formerly our controller, was appointed our Principal AccountingOfficer on February 6, 2007. The objectives of our compensation programsare to:

1.                retain (to theextent necessary) and reward experienced, highly motivated principal officerswho are capable of effectively leading the liquidation of our company pursuantto the plan of liquidation; and

2.                reward andencourage principal officer activity that results in enhanced value for ourstockholders pursuant to the plan of liquidation.

*Elementsof Compensation.**  *Each element ofcompensation is designed to reward different performance goals, yet have thecomponents work together to satisfy the ultimate goal of enhancing stockholdervalue in the context of the plan of liquidation. The elements of principalofficer compensation are:

1.                *Base salary*.   Base salaries for our principal officersare established based on their performance of their basic job description andthrough the performance of assigned responsibilities. (See specific discussionregarding the base salary of our principal executive officer below); and

2.                *Cash bonuses.  *Cash bonuses reward the principalofficers for commendable performance of specially designated tasks oroutstanding performance of assigned responsibilities pertaining to the plan ofliquidation exceeding the compensation committee’s expectations. These bonusesare discretionary and are not awarded based on a formula or a specific timeframe other than the milestone bonuses that are paid pursuant to the terms ofthe employment agreements for our principal executive officer, W. Bradley Blair, IIand former principal accounting officer, Scott D. Peters. (See furtherdiscussion below.)

3.                *Defined contribution plan*.   We have a 401(k) savings/retirementplan, which permits our eligible employees to defer up to 12% of their annualcompensation, subject to certain limitations imposed by the Internal RevenueCode. The employees’ elective deferrals are immediately vested andnonforfeitable upon contribution to the 401(k) plan. We discontinued ourdiscretionary contribution matching policy in July of 2001.

4.                *Other elements.  *We provide at our sole cost to eachprincipal officer and their spouse and children health, dental and opticalinsurance. We also provide at our sole cost to each principal officer life anddisability insurance. Our principal executive officer also receives anautomobile allowance as disclosed in the footnotes to the Summary CompensationTable.

*BaseSalary.*   Based upon the assumption that areduction in his duties would occur as the plan of liquidation progressed underMr. Blair’s amended and restated employment agreement, effective April 1,2004, Mr. Blair’s base salary was reduced 25%, then effective January 1,2005, his base salary was reduced an additional 25%. Subsequent to that date,the only change in Mr. Blair’s base salary was an inflationary adjustmenton January 1, 2006 based on the consumer price index pursuant to the termsof his amended employment agreement.

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*Cash Bonuses.*   Pursuantto the amended and restated employment agreements, the Mr. Blair’s and Mr. Peters’right to performance bonuses and stock based awards terminated upon stockholderapproval of the plan of liquidation. Instead, the amended and restatedemployment agreements provided for a retention bonus, which was paid when ourboard adopted the plan of liquidation, and two performance milestones to bepaid if and when the remaining milestones were met. As described below, bothmilestones were met in mid-2003. The performance milestones are asfollows:

·       stockholderapproval of the plan of liquidation (occurred on May 22, 2001);

·       continuedemployment of Messrs. Blair and Peters with us for 12 monthsfollowing board approval of the plan of liquidation (Mr. Peters resignedeffective February 5, 2007); and

·       repaymentof all of our debt (occurred on June 19, 2003).

Our implementation of the plan of liquidation is stillongoing. Both milestone bonus payments became payable on June 19, 2003,the date on which all of our bank debt was repaid. We have made a portion ofthe milestone payments and we expect to pay the remainder in due course.

Following the disposition of our Sandpiper property inJune of 2003 and the corresponding reduction in demands on Mr. Peters’time, the compensation committee and Mr. Peters agreed upon a reduced timecommitment and a reduced salary arrangement. Accordingly, a further amended andrestated employment agreement with Mr. Peters was executed on August 29,2003. Under this amended and restated employment agreement, Mr. Peters wasexpected to devote a substantially reduced number of hours per calendar quarterto our Company. Correspondingly, we paid him a salary of $12,000 per quarter.To the extent that we required more of Mr. Peters’ time, we paid him on anhourly basis, up to a capped amount per diem. This arrangement was extended bymutual agreement until April 30, 2007; however, Mr. Peters resignedprior to its termination effective February 5, 2007 due to his commitmentsto another employer. The balance of Mr. Peters’ remaining milestonepayment of $82,615 plus accrued interest and remains due and payable by us.

In anticipation of the reduction of our asset base,the conclusion of the Innisbrook Resort and Golf Club settlement negotiations,our assumption of the ownership of the Innisbrook Resort and Golf Club and theassumption that there would be a corresponding reduction in demands on Mr. Blair’stime, this compensation committee negotiated a reduced time commitment and areduced salary arrangement, as noted above under the caption “Base Salary”  with Mr. Blair. Accordingly, a furtheramended and restated employment agreement with Mr. Blair was executed on March 22,2004. Under this amended and restated employment agreement, Mr. Blair wasexpected to devote a reduced number of hours per calendar quarter to our Company.Correspondingly, we agreed to pay him an annual salary (plus an annualinflationary adjustment based on the consumer price index) of $286,241 for 2004(effective April 1, 2004), $190,827 for 2005 and $190,827 for eachsubsequent year.

On February 9, 2001, in connection with our planof liquidation we entered into a “stay” arrangement with Tracy S. Cliffordwhich provided for fifteen months of severance equivalent to her then annualsalary and health benefits upon a change of control created by our Board ofDirectors’ adoption of our plan of liquidation. This arrangement was amended onJanuary 1, 2005 to extend the severance term from fifteen to eighteenmonths. Ms. Clifford’s base salary was not adjusted upon her appointmentas our principal accounting officer. Ms. Clifford is not subject to anyother employment agreements.

Because Mr. Blair’sright to receive his milestone performance bonus is vested and payable, we facethe risk that he might resign, even though the plan of liquidation has not yetbeen completed. The resignation or incapacitation of Mr. Blair poses arelatively greater risk at this time in light of Mr. Peters’ resignation.If Mr. Blair were to resign, we would be required to hire a replacement. Ourcost to hire a replacement would likely depend upon the experience and skillsrequired of such an individual in light of our financial condition, our assetsremaining to be liquidated, and the complexity of any issues bearing on 

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us andour liquidation at that time.  Thiscompensation committee will from time to time evaluate the means of retainingour remaining principal executive and the three remaining corporate employees,including our principal accounting officer.

**SummaryCompensation Table**

As of March 26,2007, we currently have two executive officers, Mr. Blair and Ms. Cliffordand one executive officer of our material subsidiary, GTA-IB LLC, Mr. R. KeithWilt. The following table sets forth 2006, 2005 and 2004 annual and long-termcompensation to our executive officers:

| Name and  Principal Position | ** ** | ** ** | ** ** | **Year** | ** ** | **Salary  ($)** | ** ** | **Bonus ($)  (11)** | ** ** | **Stock  Awards  ($)** | ** ** | **Option  Awards  ($)** | ** ** | **Non-Equity  Incentive Plan  Compensation  ($)** | ** ** | **Nonqualified  Deferred  Compensation  Earnings ($)** | ** ** | **All Other  Compensation  ($)** | ** ** | **Total ($)** | ** ** |
|----------------------------------------|------------|------------|------------|----------|------------|-----------------|------------|--------------------------|------------|------------------------|------------|-------------------------|------------|--------------------------------------------------------|------------|-------------------------------------------------------------|------------|---------------------------------------|------------|--------------------|------------|
| W. Bradley Blair, II                   |       | 2006       |       | $        | 201,971    |            |       | $                        | —     |                   |       |                    | $          | —                                                 |       |                                                        |       | $                                     | —     |               |       |   | $ | — |   |   |   | $ | — |   |   |   | $  | 44,566 | (1) |   | $ | 246,537 |   |
| Chief Executive Officer                |       | 2005       |       | 190,827  |       |            | —     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 41,208 | (2) |   | 232,035 |   |
| and Chairman of the Board              |       | 2004       |       | 310,094  |       |            | —     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 1,182,318 | (3)(4) |   | 1,492,412 |   |
| Scott D. Peters(9)                     |       | 2006       |       | 48,286   |       |            | —     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 122,575 | (4)(5) |   | 170,861 |   |
| Chief Financial Officer,               |       | 2005       |       | 48,297   |       |            | —     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 31,626 | (6) |   | 79,923 |   |
| Senior Vice President and Secretary    |       | 2004       |       | 95,400   |       |            | —     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 398,708 | (4)(7) |   | 494,108 |   |
| Tracy S. Clifford(9)                   |       | 2006       |       | 110,233  |       |            | 25,000     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 21,297 | (8) |   | 156,530 |   |
| Principal Accounting                   |       | 2005       |       | 110,173  |       |            | —     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 90,329 | (8)(11) |   | 200,502 |   |
| Officer and Secretary                  |       | 2004       |       | 107,417  |       |            | —     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 15,247 | (8) |   | 122,664 |   |
| R. Keith Wilt                          |       | 2006       |       | 110,841  |       |            | 15,000     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 106,049 | (10)(13) |   | 231,890 |   |
| Vice President of                      |       | 2005       |       | 99,034   |       |            | —     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 20,541 | (13) |   | 119,575 |   |
| GTA-IB, LLC, a material subsidiary     |       | 2004       |       | 43,542   |       |            | 10,000     |                     |       |                   | —     |                    |       |                                                   | —     |                                                        |       |                                  | —     |               |       |   | — |   |   |   | 8,973 | (13) |   | 62,515 |   |
|                                        |            |            |            |          |            |                 |            |                          |            |                        |            |                         |            |                                                        |            |                                                             |            |                                       |            |                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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           (1) Includes anannual car allowance of $12,000 and annual health and life insurance premiumsand other reimbursements of $32,566 paid by us on behalf of Mr. Blair.

           (2) Includes anannual car allowance of $12,000 and annual health and life insurance premiumsand other reimbursements of $29,208 paid by us on behalf of Mr. Blair.

           (3) Includes anannual car allowance of $12,000, annual health and life insurance premiums andother reimbursements of $20,318 paid by us on behalf of Mr. Blair andindebtedness of $1,150,000, plus accrued interest, that we canceled on March 22,2004 as discussed below under the caption “Indebtedness of Management.”

           (4) We entered into written employment agreements with W.Bradley Blair, II and Scott D. Peters at the time of our initial publicoffering. On February 25, 2001, in connection with our plan ofliquidation, those employment agreements were amended and restated as discussedunder the caption “Employment Agreements.” Those employment agreements, asamended and restated, provide for payment to Messrs. Blair and Peters ofbonuses upon the achievement of certain milestones. Performance milestone bonusamounts, which include accrued interest, were paid to Scott D. Peters in 2004and 2006 as follows: (i) $191,649 to Mr. Peters on August 27,2004;  (ii) $191,794 to Mr. Peterson September 27, 2004; and (iii) $104,927 to Mr. Peters on September 29,2006. The amounts remaining to be paid by us are $1,233,907, plus accruedinterest, to Mr. Blair, and $82,615, plus accrued interest, to Mr. Peters.All conditions to payment of the amounts remaining to be paid to Messrs. Blairand Peters have been satisfied, and we reiterate that such payments will bemade in due course without offset or any deduction. On October 1, 2003,interest began to accrue on the unpaid portion of Mr. Peters’ remainingearned milestone payment at 5% per annum. This interest continues to accrue.

           (5) Includesannual health and life insurance premiums of $17,648 paid by us on behalf of Mr. Peters.

           (6) Includeshourly compensation of $15,305 and annual health and life insurance premiums of$16,321 paid by us on behalf of or to Mr. Peters. The fourth amended andrestated employment agreement for Mr. Peters, as amended, provides forquarterly compensation of $12,000 plus additional compensation at a rate of$150 per hour for hours worked in excess of eighty hours per quarter.

           (7) Includesannual health and life insurance premiums of $15,265 paid by us on behalf of Mr. Peters.

           (8) Includesannual health and life insurance premiums of $21,297, $18,900, $15,247 for theyears ended December 31, 2006, 2005 and 2004, respectively, paid by us onbehalf of Ms. Clifford.

           (9) Mr. Petersresigned as our Chief Financial Officer, Senior Vice President and Secretaryeffective February 5, 2007. Ms. Clifford was appointed PrincipalAccounting Officer effective February 6, 2007 and was appointed Secretaryon February 20, 2007.

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      (10) Includesaccrued severance of $82,500 pursuant to the terms of a stay arrangement withMr. Wilt dated March 31, 2006, in connection with our plan of liquidation.This stay arrangement provides for a severance payment to Mr. Wiltequivalent to nine months of his then current annual salary upon thetermination of his employment following a sale of the Resort. Also, includesannual health and life insurance premiums and 401K contributions of $23,549paid by us on behalf of Mr. Wilt.

      (11) Includes anincrease in accrued severance of $71,429 to reflect a salary increase effectiveJanuary 1, 2005 and the change in the severance term from fifteen to eighteenmonths pursuant to the terms of the amended stay arrangement, with Tracy S.Clifford. On February 9, 2001, in connection with our plan of liquidationwe entered into a stay arrangement with Tracy S. Clifford which provided forfifteen months of severance equivalent to her then annual salary and healthbenefits upon a change of control created by our Board of Directors’ adoptionof our plan of liquidation. This stay arrangement was amended on January 1,2005 to extend the severance term from fifteen to eighteen months.

      (12) Bonuses arediscretionary and are not calculated or paid according to a formula or specifictime-frame or schedule.

      (13) Includesannual health and life insurance premiums and 401K contributions of $23,549 and$20,541 for the years ended December 31, 2006 and 2005, respectively, and$8,973 for the period July 16, 2004 to December 31, 2004 paid by uson behalf of Mr. Wilt.

**Indebtedness ofManagement**

Pursuant to the terms of our then executive officers’amended and restated employment agreements dated as of February 25, 2001,we made non-recourse loans of $1,595,000 to our executive officers ($1,150,000to Mr. Blair and $445,000 to Mr. Peters) for the payment of personalincome taxes arising from the acceleration of their restricted stock grants andthe forgiveness of their outstanding debt to us as of such date. These loanswere evidenced by promissory notes from the executives and secured by theirtotal holdings at that time of 199,415 shares (143,790 of which were owned byMr. Blair and 55,625 of which were owned by Mr. Peters) of our commonstock valued at $8 per share at the time of the issuance of these loans. Theoutstanding balance of these loans at June 30, 2002, principal andinterest, was $1,655,000. For the years ended December 31, 2004 and 2003,we recorded an allowance for doubtful accounts against this receivable in theaggregate amounts of $112,000 and $497,000, respectively, which approximatedthe difference in the pledged value of $8 per share and the computed valuebased on the net assets in liquidation at December 31, 2004 and 2003,respectively.

As a result of the letter agreement that we enteredinto with Mr. Blair on March 22, 2004, Mr. Blair agreed to,among other things, irrevocably assign to us the shares of our common stockwhich secure the above-mentioned $1,150,000 non-recourse loan previously madeto Mr. Blair in exchange for our agreement to cancel such loan.

As a result of the letteragreement that we entered into with Mr. Peters on March 30, 2005,Mr. Peters agreed to, among other things, irrevocably assign to us theshares of our common stock which secure the above-mentioned $445,000non-recourse loan previously made to Mr. Peters in exchange for ouragreement to cancel such loan.

**Grants ofPlan-Based Awards**

No grants of plan basedawards have been made to our named officers so the Grants of Plan-Based Awardstable has been omitted.

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**Outstanding EquityAwards at Fiscal Year-End**

Thefollowing table sets forth information concerning the outstanding equity awardsof each of the named executive officers as of December 31, 2006. The valueof unexercised in-the-money options at December 29, 2006 (the lastbusiness day of the year) is based on a value of $1.47 per share, the priorclosing price of our common stock on the Amex on December 29, 2006.

| ** **                | ** ** | **Option Awards**                                                                | ** ** | **Stock Awards**                                                                | ** ** |                                                                                                      |
|---------------------------|------------|---------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------|
| **Name**                  | ** ** | **Number of  Securities  Underlying  Unexercised  Options  (#)  Exercisable(1)** | ** ** | **Number of  Securities  Underlying  Unexercised  Options  (#)  Unexercisable** | ** ** | **Equity  Incentive  Plan Awards:  Number of  Underlying  Unexercised  Unearned  Options  (#)** | ** ** | **Option  Exercise  Price  ($)** | ** ** | **Option  Expiration  Date** | ** ** | **Number of  Shares or  Units of  Stock That  Have Not  Vested  (#)** | ** ** | **Market  Value of  Shares or  Units of  Stock That  have Not  Vested  ($)** | ** ** | **Equity  Incentive  Plan  Awards:  Number of  Unearned  Shares,  Units or  Other  Rights That  Have Not  Vested  (#)** | ** ** | **Equity  Incentive  Plan  Awards:  Number of  Unearned  Shares,  Units or  Other  Rights That  Have Not  Vested  ($)** | ** ** |   |
| W. Bradley Blair, II |       |                                                                                  | 150,000    |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 21.00 |   |   |   | 02/05/07 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
|                           |       |                                                                                  | 90,000     |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 24.875 |   |   |   | 02/05/07 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
|                           |       |                                                                                  | 160,000    |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 25.75 |   |   |   | 05/17/07 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
|                           |       |                                                                                  | 155,000    |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 25.06 |   |   |   | 11/11/08 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
|                           |       |                                                                                  | 85,000     |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 17.25 |   |   |   | 01/30/10 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Scott D. Peters           |       |                                                                                  | 40,000     |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 21.00 |   |   |   | 02/05/07 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
|                      |       |                                                                                  | 20,000     |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 24.875 |   |   |   | 02/05/07 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
|                      |       |                                                                                  | 80,000     |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 25.75 |   |   |   | 05/17/07 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
|                      |       |                                                                                  | 85,000     |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 25.06 |   |   |   | 02/05/08 | (2) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
|                      |       |                                                                                  | 60,000     |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 17.25 |   |   |   | 02/05/08 | (2) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Tracy S. Clifford         |       |                                                                                  | 20,000     |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | $ | 16.75 |   |   |   | 12/27/09 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| R. Keith Wilt             |       |                                                                                  | —     |                                                                                 |       |                                                                                                      | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |

 

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(1)                The vesting of all of the granted stock optionsaccelerated when our plan of liquidation was approved by our shareholders onMay 22, 2001.

(2)                Scott D. Peters served as our ChiefFinancial Officer, Senior Vice President, and Secretary from 1997 until his resignationeffective February 5, 2007. All of Mr. Peters’ outstanding optionsexpire one-year from the date of his resignation if they have not previouslyexpired pursuant to their original expiration date at the time of issuance.

**Option Exercisesand Stock Vested in 2006**

Thefollowing table shows that there were no option exercises and no stock vestedduring the fiscal year ended December 31, 2006 by any of our executiveofficers.

| ** **                 | ** ** | **Option Awards** | ** ** | **Stock Awards**                                       | ** ** |
|----------------------------|------------|------------------------|------------|-------------------------------------------------------------|------------|
| **Name**                   | ** ** | ** **             | ** ** | **Number of  Shares  Acquired  on Exercise  (#)** | ** ** | **Value  Realized on  Exercise  ($)** | ** ** | **Number of  Shares  Acquired on  Vesting  (#)** | ** ** | **Value  Realized on  Vesting  ($)** | ** ** |
| W. Bradley  Blair, II |       |                   | —     |                                                        |       |   | $ | — |   |   |   | — |   |   |   | $ | — |   |   |
| Scott D. Peters            |       |                   | —     |                                                        |       |   | $ | — |   |   |   | — |   |   |   | $ | — |   |   |
| Tracy S. Clifford          |       |                   | —     |                                                        |       |   | $ | — |   |   |   | — |   |   |   | $ | — |   |   |
| R. Keith Wilt              |       |                   | —     |                                                        |       |   | $ | — |   |   |   | — |   |   |   | $ | — |   |   |
|                            |            |                        |            |                                                             |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**NarrativeDisclosure to Summary Compensation Table and Grants of Plan-Based Awards Table**

We entered into written employment agreements withW. Bradley Blair, II and Scott D. Peters at the time of ourinitial public offering. Both agreements were since amended and restated. Theamended and restated employment agreement of Mr. Blair was included as anexhibit to our current report on Form 8-K filed March 12, 2001.Mr. Blair’s employment agreement was amended further by that certainletter agreement included as exhibit 10.16.3 to our annual report on Form 10-Kfiled March 31, 2004. The employment agreement of Mr. Peters that wasin effect on the date of his resignation was included as an 

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exhibit to our currentreport on Form 8-K, filed October 9, 2003. Mr. Peters’semployment agreement was amended further by certain letter agreements which wehave filed with the Securities and Exchange Commission. The most recent ofthese letter agreements was executed on September 30, 2006 and included asan exhibit to the Report on Form 8-K that we filed on October 2,2006. Mr. Peter’s current employment agreement, as amended, was to expirepursuant to its terms on April 30, 2007; however, he resigned for personalreasons effective February 5, 2007. The employment agreements of Messrs. Blairand Peters, as amended through September 30, 2006, include the followingprovisions:

*Salary.**  *The amendedemployment agreement for Mr. Blair previously provided for an annual basesalary of $360,000, with automatic annual cost of living increases based on theincrease, if any, in the consumer price index. We entered into a letteragreement with Mr. Blair on March 22, 2004 which provides for Mr. Blairto receive a reduced base salary from us as of April 1, 2004 in exchangefor a corresponding reduction in the amount of time he is required to devote tous. As a result, effective April 1, 2004, Mr. Blair’s annual salarywas adjusted to $286,241, or seventy-five percent of his current base salary of$381,654 for 2004. Effective January 1, 2005, Mr. Blair’s annual basesalary was further reduced to $190,827.

The fourth amended and restated employment agreementfor Mr. Peters, as amended, provided for quarterly compensation of $12,000plus additional compensation at a rate of $150 per hour for hours worked inexcess of eighty hours per quarter. Commencing October 1, 2003, interestis accruing on the unpaid portion of Mr. Peters’ remaining earnedmilestone payment at 5% per annum.

*Bonuses.**  *Under theemployment agreements, as amended in 2001, the eligibility of our namedexecutive officers for normal performance bonuses and stock based awardsterminated upon the approval of the plan of liquidation by our stockholders.Upon such approval of the plan of liquidation, the applicable amendedemployment contracts provided for (i) retention bonuses and forgiveness ofindebtedness and (ii) performance milestone bonuses, each as describedbelow:

·       *Retention Bonuses and Forgiveness of Indebtedness.*   The retention bonuses were designedto recognize services rendered by the named executive officers (including,without limitation, services rendered in assisting in the creation of the planof liquidation, negotiating the agreements with Legends and our Series Apreferred stock holder, and seeking to achieve resolutions of various issueswith our lenders). Pursuant to their amended and restated employmentagreements, Messrs. Blair and Peters received retention bonuses of$1,233,907 and $660,921, respectively, on February 25, 2001. In addition,in recognition of their services and pursuant to their amended and restatedemployment agreements, their options and restricted stock awards immediatelyvested in full at that time. All of the options that became fully vested are atthe present time “out of the money.” Pursuant to the terms of the namedexecutive officers’ existing promissory notes, which were not modified, thedebt owed to us by the named executive officers, or $2,163,738 for Mr. Blairand $683,118 for Mr. Peters, was automatically forgiven upon board ofdirectors adoption of the plan of liquidation on February 25, 2001.

·       *Performance Milestone Bonuses*.   As a result of our achievement of all milestones set forthbelow, Messrs. Blair and Peters have earned and are entitled to payment ofthe additional cash performance milestone bonuses shown below:

| ** **                                                                                                                                                | ** ** | **Bonus Payment*** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|
| **Performance Milestone**                                                                                                                            | ** ** | ** **              | ** ** | **Blair** | ** ** | **Peters** | ** ** |
| Stockholder  approval of plan of liquidation and repayment of all our debt**                                                                              |       | $                       | 1,645,210  |   | $ | 881,228 |   |
| Later of  (a) repayment of all our debt** and (b) February 25, 2002,  i.e., 12 months after board approval of the plan of liquidation |       | $                       | 1,233,907  |   | $ | 660,921 |   |
|                                                                                                                                                           |            |                         |            |  |  |  |  |  |  |

 

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*                    Plus interestfrom the date of stockholder approval of the plan of liquidation.

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**             Including debt of ouroperating partnership, but excluding routine trade creditor debt not yet dueand excluding debt that we have agreed to keep outstanding for the benefit oflimited partners.

Performance milestone bonus amounts, which includeaccrued interest, were paid to our named executives as follows: (i) $1,815,523to Mr. Blair on June 19, 2003; (ii) $972,453 to Mr. Peterson June 19,2003; (iii) $184,227 to Mr. Peters on September 30,2003; (iv) $191,649 to Mr. Peters on August 27, 2004; (v) $191,794to Mr. Peters on September 27, 2004; and (vi) $104,927 to Mr. Peterson September 29, 2006. The amounts remaining to be paid by us are$1,233,907, plus accrued interest, to Mr. Blair and $82,615, plus accruedinterest, to Mr. Peters. All conditions to payment of the amountsremaining to be paid to Messrs. Blair and Peters have been satisfied, andwe reiterate that such payments will be made in due course.

*Term.**  *Pursuant to Mr. Blair’samended and restated employment agreement, our board has the right, upon45 days notice, to terminate him without good reason and without anyobligation to pay further severance payments following the date on which thefinal milestone payment is made. Prior to such time, if we terminate Mr. Blairwithout “good reason” or if he resigns for “good cause” we would be required tomake additional payments to him pursuant to his amended and restated employmentagreement. We would have “good reason” to terminate a named executive officer’semployment if he engaged in gross negligence, willful misconduct, fraud ormaterial breach of his employment agreement. Each named executive officer wouldhave “good cause” to resign in the event of any material reduction in hiscompensation or benefits, material breach or material default by us under theapplicable employment agreement or following a change in control of us. Theadditional payment at this point in time would be an amount equivalent to the earnedbut unpaid performance milestone bonus set forth above.

The fourth amended and restated employment agreementfor Mr. Peters, had a fixed termination date of April 30, 2007,unless such date was extended by an additional amendment. This employment agreementalso provided both us and Mr. Peters with earlier termination rights incertain circumstances. Mr. Peters exercised his early termination rightsand resigned effective February 5, 2007 for personal reasons.

*Extensionof Non-Recourse Tax Loans Secured by Stock.**  *Upon eachnon-cash benefit payment (*i.e. *, debtforgiveness and stock award acceleration) occurring concurrently with our board’sadoption of the plan of liquidation, our named executive officers incurred taxliability, but were unable to fund such liability by selling our common stockbecause of federal securities law restrictions and other concerns. Pursuant totheir amended and restated employment agreements, we extended to each namedexecutive officer a non-recourse loan in the amount necessary to cover suchpersonal income tax liability. On the date it was made, each loan was securedby a number of shares of our stock with a then-current market value equal tothe amount of the loan. Interest accrued at the applicable federal rate and wasadded to principal. Any distributions on the pledged shares prior to maturitywere applied to loan service. Each named executive officer had the right, priorto maturity, if the loan was then over-secured, to sell the pledged stock onthe open market, provided that the proceeds are first applied to outstandingprincipal and interest on the loan.

As a result of the letter agreement that we enteredinto with Mr. Blair on March 22, 2004, Mr. Blair agreed toirrevocably assign to us the shares of our common stock which secure theabove-mentioned non-recourse loan previously made to Mr. Blair inthe amount of $1,150,320 in exchange for our cancellation of such loan.

As a result of the letter agreement that we enteredinto with Mr. Peters on March 30, 2005, Mr. Peters agreed toirrevocably assign to us the shares of our common stock which secure theabove-mentioned non-recourse loan previously made to Mr. Peters inthe amount of $444,996 in exchange for our cancellation of such loan.

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We entered into a revised stay arrangement with TracyS. Clifford on February 9, 2001, in connection with our plan ofliquidation. This stay arrangement as amended on January 1, 2005, providesfor a severance payment to Ms. Clifford equivalent to eighteen months ofher then current annual salary and health benefits upon a change of controlcreated by our Board of Directors’ adoption of our plan of liquidation.

We entered into a stayarrangement with R. Keith Wilt on March 31, 2006, in connection with ourplan of liquidation. This stay arrangement provides for a severance payment to Mr. Wiltequivalent to nine months of his then current annual salary upon thetermination of his employment following a sale of the Resort.

**Covenants Not toCompete**

In Mr. Blair’s applicable amended and restatedemployment agreement, he has agreed not to engage in any competitivebusinesses. He also agreed not to compete directly with us or in a businesssimilar to ours during his employment. However, Mr. Blair may continue toinvest in certain residential real estate developments and resort operations.

Under Mr. Peters’amended and restated employment agreement, he was required to devotesubstantially all of his full working time to our business only through September 30,2003. However, while he remains employed by us, and for one year after histermination or resignation, Mr. Peters may not:

·       competedirectly with us in a similar business;

·       competedirectly or indirectly with us, our subsidiaries, partners, potential golfcourse buyers, potential buyers (and/or their affiliates), potential buyers ofour preferred stock or debt (or any of their affiliates) with respect to anyacquisition or development of any real estate project undertaken or beingconsidered by any of such parties at any time during Mr. Peters’employment with us;

·       lendor allow his name or reputation to be used by or in connection with anybusiness competitive with our company, our subsidiaries and/or partners; or

·       intentionallyinterfere with, disrupt or attempt to disrupt the relationship, contractual orotherwise, between our company or our subsidiaries and/or partners, and anylessee, tenant, supplier, contractor, lender, employee or governmental agencyor authority.

Notwithstanding the abovelimitations, Mr. Peters may be employed by a business that competes withus so long as he does not have direct or indirect responsibility for anyinteraction with, or analysis of, our company and is wholly screened-off fromsuch interaction and analysis by the competitive business.

**Change of ControlAgreements**

Mr.  Blair’s amended and restated employment agreement provides that hewill have “good cause” to resign upon a change of control and, in that case,all of his stock options and restricted stock would vest in full and he wouldbe entitled to severance payments, minus the previously paid retention bonusand any milestone payments in connection with the plan of liquidation describedabove. The amended and restated employment agreements of our named executiveofficers provide that if any payment by or on behalf of our company or ouroperating partnership to either executive qualifies as an excess parachutepayment under the tax code, we shall make additional payments in cash to theexecutive (so called gross-up payments) so that the executive is put in thesame after-tax position as he would have been had no excise tax been imposed bythe tax code.

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**Pension Benefits**

We donot have any pension benefits.

| **Name**                   | ** ** | ** ** | ** ** | **Plan Name** | ** ** | **Number of  Years  Credited  Service  (#)** | ** ** | **Present Value  of  Accumulated  Benefit** | ** ** | **Payments  During Last  Fiscal Year  ($)** | ** ** |
|----------------------------|------------|------------|------------|--------------------|------------|---------------------------------------------------|------------|--------------------------------------------------|------------|-------------------------------------------------------|------------|
| W. Bradley  Blair, II |       |       | —     |               |       |                                              | —     |                                             |       |                                                  | $          | — |   |   |   | $ | — |   |   |
| Scott D. Peters            |       |       | —     |               |       |                                              | —     |                                             |       |                                                  | $          | — |   |   |   | $ | — |   |   |
| Tracy S. Clifford          |       |       | —     |               |       |                                              | —     |                                             |       |                                                  | $          | — |   |   |   | $ | — |   |   |
| R. Keith Wilt              |       |       | —     |               |       |                                              | —     |                                             |       |                                                  | $          | — |   |   |   | $ | — |   |   |

 

**Non Qualified Deferred Compensation**

| **Name**                   | ** ** | ** ** | ** ** | **Executive  Contributions  in Last FY  ($)** | ** ** | **Registrant  Contributions  in Last FY  ($)** | ** ** | **Aggregate  Earnings  in Last FY  ($)** | ** ** | **Aggregate  Withdrawals /  Distributions  ($)** | ** ** | **Option  Expiration  Date** | ** ** |
|----------------------------|------------|------------|------------|---------------------------------------------------------|------------|----------------------------------------------------------|------------|----------------------------------------------------|------------|-------------------------------------------------------|------------|------------------------------|------------|
| W. Bradley  Blair, II |       |       | —     |                                                    |       |                                                     | —     |                                               |       |                                                  | —     |                         |       |   | — |   |   |   | — |   |   |
| Scott D. Peters            |       |       | —     |                                                    |       |                                                     | —     |                                               |       |                                                  | —     |                         |       |   | — |   |   |   | — |   |   |
| Tracy S. Clifford          |       |       | —     |                                                    |       |                                                     | —     |                                               |       |                                                  | —     |                         |       |   | — |   |   |   | — |   |   |
| R. Keith Wilt              |       |       | —     |                                                    |       |                                                     | —     |                                               |       |                                                  | —     |                         |       |   | — |   |   |   | — |   |   |

 

**Compensation ofDirectors**

We pay our independent directors fees for theirservices as directors. Independent directors receive annual compensation of$10,000, plus a fee of $1,000 for attendance at each meeting of the board ofdirectors (whether in person or telephonically), and $500 for attending eachcommittee meeting. Directors who are not independent directors are not paid anydirector fees. We reimburse directors for their reasonable and documentedout-of-pocket travel expenses. Under our non-employee directors’ stock optionplan, at the time of our initial public offering and on the first fouranniversaries of our initial public offering, our three independent directorsat that time received automatic annual grants of options to purchase5,000 shares of our common stock at the stock’s fair market value on thedate of grant. All grants to our independent directors were fully vested on thegrant date and expire ten years from the date of grant. Upon the February 2001grant, the shares available under our non-employee directors’ stock option planwere exhausted and no options have been granted to our independent directorssince that time.

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**Directorswho are also our officers are not separately compensated for their service asdirectors. Our non-employee directors earned the following aggregate amounts ofcompensation for 2006.**

| Name and Principal Position(1)    | ** ** | ** ** | ** ** | **Fees  Earned  or Paid  in Cash  ($)** | ** ** | **Stock  Awards  ($)** | ** ** | **Option  Awards  ($)** | ** ** | **Non-Equity  Incentive Plan  Compensation  ($)** | ** ** | **Change in  Pension Value  and  Nonqualified  Deferred  Compensation  Earnings  ($)** | ** ** | **All Other  Compensation  ($)** | ** ** | **Total  ($)** | ** ** |
|--------------------------------------------------|------------|------------|------------|---------------------------------------------------|------------|------------------------|------------|-------------------------|------------|--------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|----------------|------------|
| Edward L. Wax(3),                                |       |       | $          | 36,500                                            |       |                   |       | $                       | —     |                                                   |       |                                                                                             | $          | —                                |       |           |       | $ | — |   |   |   | $ | — |   |   |   | $ | — |   |   | $ | 36,500 |   |
| Director and Chairman of Compensation  Committee |       |       |       |                                              |       |                   |       |                    |       |                                                   |       |                                                                                             |       |                                  |       |           |       |   |   |   |   |   |   |   |   |   |   |
| Raymond V. Jones(3),                             |       |       | $          | 35,500                                            |       |                   |       | $                       | —     |                                                   |       |                                                                                             | $          | —                                |       |           |       | $ | — |   |   |   | $ | — |   |   |   | $ | — |   |   | $ | 35,500 |   |
| Director  and Chairman of Audit Committee        |       |       |       |                                              |       |                   |       |                    |       |                                                   |       |                                                                                             |       |                                  |       |           |       |   |   |   |   |   |   |   |   |   |   |
| Fred W. Reams(3),                                |       |       | $          | 35,500                                            |       |                   |       | $                       | —     |                                                   |       |                                                                                             | $          | —                                |       |           |       | $ | — |   |   |   | $ | — |   |   |   | $ | — |   |   | $ | 35,500 |   |
| Director and Financial Expert                    |       |       |       |                                              |       |                   |       |                    |       |                                                   |       |                                                                                             |       |                                  |       |           |       |   |   |   |   |   |   |   |   |   |   |
| Jan H. Loeb, Director (2)                        |       |       | $          | 4,750                                             |       |                   |       | $                       | —     |                                                   |       |                                                                                             | $          | —                                |       |           |       | $ | — |   |   |   | $ | — |   |   |   | $ | 17,822 | (4) |   | $ | 22,572 |   |
| Nauman S. Toor, Director (2)                     |       |       | $          | 4,250                                             |       |                   |       | $                       | —     |                                                   |       |                                                                                             | $          | —                                |       |           |       | $ | — |   |   |   | $ | — |   |   |   | $ | — |   |   | $ | 4,250 |   |

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(1)             W. Bradley Blair, II, the Company’sExecutive Chairman of the Board and the Company’s President and Chief ExecutiveOfficer and Scott D. Peters, the Company’s Senior Vice President, ChiefFinancial Officer and Secretary (until February 5, 2007), are not includedin this table as they are employees of the Company and thus receive nocompensation for their services as directors. The compensation received by Messrs. Blairand Peters as employees of the Company are shown in the Summary CompensationTable.

(2)             Jan H. Loeb and Nauman S. Toor joined ourBoard of Directors as of November 17, 2006.

(3)             These directors own 25,000 shares ofcommon stock issuable upon exercise of vested options, including:

·        5,000 vested shares at $21.00 issued on2/6/97 and expiring on 2/5/07

·        5,000 vested shares at $29.00 issued on2/6/98 and expiring on 2/5/08

·        5,000 vested shares at $24.50 issued on2/6/99 and expiring on 2/5/09

·        5,000 vested shares at $17.938 issued on2/6/00 and expiring on 2/5/10

·        5,000 vested shares at $7.85 issued on 2/6/01 andexpiring on 2/5/11

(4)             The Other Compensation to Mr. Loeb isfor reimbursement of his legal fees incurred in his proxy bid to be elected to ourBoard of Directors.

**Compensation Committee Interlocks and InsiderParticipation**

During fiscal year 2006,our compensation committee members were Messrs. Reams, Jones and Wax untilNovember 17, 2006 when Messrs. Loeb and Toor joined them on thiscommittee upon their election to our Board of Directors. During fiscal year2006, our compensation committee was comprised solely of directors who areindependent under the rules of the American Stock Exchange.

None of the members of ourcompensation committee is presently or was at any time since our formation ourofficer, our employee or an officer or employee of any of our subsidiaries.None of our executive officers serves as a member of the board of directors orcompensation committee of any entity that has one or more executive officersserving as a member of our compensation committee. None of the members of ourcompensation committee requires Item. 404 disclosure.

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**Report of theCompensation Committee on Executive Compensation**

*The information contained in this report shall not bedeemed to be “soliciting material” or “filed” or incorporated by reference infuture filings with the Securities and Exchange Commission, or subject to theliabilities of Section 18 of the Exchange Act, except to the extent thatwe specifically incorporate it by reference into a document filed under theSecurities Act or the Exchange Act. The following report describes ourexecutive officers’ compensation for the 2006 fiscal year, including thechanges to the executives’ compensation arrangements implemented in connectionwith the plan of liquidation.*

**CompensationCommittee Report**

*The informationcontained in this report shall not be deemed to be “soliciting material” or “filed”or incorporated by reference in future filings with the Securities and ExchangeCommission, or subject to the liabilities of Section 18 of the ExchangeAct, except to the extent that we specifically incorporate it by reference intoa document filed under the Securities Act or the Exchange Act. The followingreport describes our executive officers’ compensation for the 2006 fiscal year,including the changes to the executives’ compensation arrangements implementedin connection with the plan of liquidation.*

*Ourcompensation committee has reviewed and discussed the Compensation Discussionand Analysis required by Item 402(b) of Regulation S-K with management. Basedupon the review and the discussions referred to in the preceding sentence, theCompensation Committee recommended that the disclosure under the headingCompensation Discussion and Analysis be included in our annual report on Form 10-K.*

The Compensation Committee

Edward L. WaxFred W. ReamsRaymond V. JonesJan LoebNauman S. Toor

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**ITEM 12.**         SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS

Thefollowing table describes, as of March 26, 2007, the beneficial ownershipof common stock and common OP units held by (i) each of our directors andnominees, (ii) each of our executive officers, (iii) all of ourdirectors and executive officers as a group and (iv) each person known tous to be the beneficial owner of 5% or more of our outstanding common stock. OPunits represent limited partnership interests in Golf Trust of America, L.P.,our operating partnership, and are convertible into shares of our common stockon a one-for-one basis. This table shows beneficial ownership in accordancewith the rules of the Securities and Exchange Commission to includesecurities that a named person has the right to acquire within 60 days.Each person named in the table has sole voting and investment/disposition powerwith respect to all of the shares of common stock or OP units shown as beneficiallyowned by such person, except as otherwise set forth in the notes to the table.Unless otherwise noted, the address of each person in the table is c/o GolfTrust of America, Inc., 10 North Adger’s Wharf, Charleston, South Carolina29401.

| ** **                                                           | ** ** | **Common Stock** | ** ** |
|----------------------------------------------------------------------|------------|-----------------------|------------|
| **Name of Beneficial Owner**                          | ** ** | ** **            | ** ** | **Number of shares  of Common Stock** | ** ** | **Percentage  of Class(1)** | ** ** |
| W. Bradley  Blair, II(2)                                        |       |                  | 437,642    |   |   |   | 5.67 | % |   |
| Scott D.  Peters(3)                                                  |       |                  | 225,000    |   |   |   | 2.98 | % |   |
| Raymond V.  Jones(4)                                                 |       |                  | 21,000     |   |   |   | * |   |   |
| Tracy S. Clifford                                                    |       |                  | —     |   |   |   | — |   |   |
| Fred W. Reams(4)                                                     |       |                  | 20,000     |   |   |   | * |   |   |
| Edward L. Wax(4)                                                     |       |                  | 21,250     |   |   |   | * |   |   |
| Jan H. Loeb (5)                                                      |       |                  | 844,100    |   |   |   | 11.54 | % |   |
| AEW Capital  Management, L.P.(6)                                     |       |                  | 761,904    |   |   |   | 9.43 | % |   |
| Jay Gottlieb(7)                                                      |       |                  | 666,300    |   |   |   | 9.11 | % |   |
| Merrill Lynch,  Pierce, Fenner & Smith, Inc.(8)        |       |                  | 370,000    |   |   |   | 5.06 | % |   |
| Directors, director  nominees and officers as a group (7 persons)(9) |       |                  | 1,568,992  |   |   |   | 19.61 | % |   |
|                                                                      |            |                       |            |  |  |  |  |  |  |  |  |

----

*                    Less than 1%

(1)          Based on 7,317,163common shares outstanding. In accordance with the rules of the Securitiesand Exchange Commission, each person’s percentage interest is calculated bydividing such person’s beneficially owned common shares by the sum of the totalnumber of common shares outstanding plus the number of currently unissuedcommon shares such person has the right to acquire (including upon exercise ofvested options and upon conversion of preferred stock, but excluding uponconversion of the separately shown OP units) within 60 days of March 26,2007.

(2)          Mr. Blair’sbeneficial ownership includes options to purchase 400,000 shares of commonstock, all of which have vested and are exercisable as of March 26, 2007.None of these options were in the money as of March 26, 2007.

(3)          Mr. Peters’beneficial ownership includes options to purchase 225,000 shares of commonstock, all of which have vested and are exercisable as of March 26, 2007.None of these options were in the money as of March 26, 2007.

(4)          Includes options topurchase 20,000 shares of our common stock all of which are vested and areexercisable as of March 26, 2007. None of these options were in the moneyas of March 26, 2007.

(5)          Mr. Loeb’s businessaddress is 10451 Mill Run Circle, Owings Mills, Maryland 21117. Mr. Loebreports that he has sole power to vote or to direct the vote of 806,100 shares,shared power to vote or to direct the vote of 38,000 shares, sole power todispose or to direct the disposition of 806,100 shares 

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and shared power todispose or to direct the disposition of 38,000 shares. Information about Mr. Loebis included in reliance on the Schedule 13D/A filed with the SEC on October 13,2006.

(6)          Amounts shown for AEWCapital Management, L.P. include 800,000 shares of our company’s Series Aconvertible cumulative preferred stock held by its affiliate AEW TargetedSecurities Fund, L.P., which shares are convertible into an aggregate of761,904 shares of our company’s common stock. AEW Capital Management, L.P.reports that it has the sole power to vote or direct the vote of 761,904 sharesand the sole power to dispose of or direct the disposition of761,904 shares. The address for these entities is c/o AEW CapitalManagement, Inc., World Trade Center East, Two Seaport Lane, Boston, MA02210. Information about AEW Capital Management, L.P. is included inreliance on its Schedule 13D filed with the SEC on May 13, 2005.

(7)          Mr. Gottlieb’sbusiness address is 27 Misty Brook Lane, New Fairfield, Connecticut 06812.Mr. Gottlieb reports that he has sole power to vote or to direct the voteof 666,300 shares, shared power to vote or to direct the vote of 666,300shares, sole power to dispose or to direct the disposition of 666,300 sharesand shared power to dispose or to direct the disposition of 666,300 shares.Information about Mr. Gottlieb is included in reliance on theSchedule 13G/A filed with the SEC on December 1, 2006.

(8)          Merrill Lynch Pierce,Fenner & Smith, Inc.’s address is 4 World Financial Center, NewYork, NY 10080. Merrill Lynch Pierce, Fenner & Smith, Inc.’sreports that it has sole power to vote or to direct the vote of 370,000 shares,shared power to vote or to direct the vote of 0 shares, sole power to disposeor to direct the disposition of 370,000 shares and shared power to dispose orto direct the disposition of 0 shares. Information about Merrill Lynch Pierce,Fenner & Smith, Inc. is included in reliance on theSchedule 13G filed with the SEC on February 13, 2006.

(9)          Includesoptions to purchase 1,000,000 shares of common stock, all of which have vestedand are exercisable as of Marcy 26, 2007. None of these options were in themoney as of March 26, 2007.

**SecuritiesAuthorized for Issuance under Equity Compensation Plans**

The following tablepresents summary information about our equity compensation plans, including ourstock option plans and any individual stock option arrangements not arisingunder any plan. We submitted all of our stock option plans for stockholders’approval. The table presents the following data on our plans as of the close ofbusiness on December 31, 2006:

·       theaggregate number of shares of our common stock subject to outstanding stock options;

·       theweighted-average exercise price of those outstanding stock options; and

·       thenumber of shares that remain available for future option grants.

For additional informationregarding our stock option plans and the accounting effects of our stock-basedcompensation, please see Note 11 of our Notes to Financial Statements.

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**EquityCompensation Plan Information**

| **Plan Category**                                      | ** ** | ** ** | ** ** | **Number of securities to  be issued upon exercise  of outstanding options,  warrants and rights** | ** ** | **Weighted-average  exercise price of  outstanding options,  warrants and rights** | ** ** | **Number of securities  remaining available for  future issuance under  equity compensation  plans (excluding  securities reflected  in column (a))** | ** ** |
|-------------------------------------------------------------|------------|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                                  | ** ** | **(a)**    | ** ** | **(b)**                                                                                                                                              | ** ** | **(c)**                                                                                                     | ** ** |
| Equity  compensation plans approved by security holders     |       |       | 1,062,500  |                                                                                                                                                 |       |                                                                                                        | $          | 22.69                                                                                                                                                                                                        |       |   |   | 19,968 |   |   |
| Equity  compensation plans not approved by security holders |       |       | —     |                                                                                                                                                 |       |                                                                                                        | —     |                                                                                                                                                                                                         |       |   | — |   |   |
| Total                                                       |       |       | 1,062,500  |                                                                                                                                                 |       |                                                                                                        | $          | 22.69                                                                                                                                                                                                        |       |   |   | — |   |   |

 

Our employee stockpurchase plan terminated as of the stockholders’ approval of the plan of liquidationon May 22, 2001.

**ITEM 13.**         CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS

None.

**ITEM 14.**         PRINCIPALACCOUNTING FEES AND SERVICES

Thefollowing table shows the fees paid or accrued by us for audit and otherservices provided by BDO Seidman, LLP for fiscal years 2006 and 2005. 

| ** **             | ** ** | **2006** | ** ** | **2005** | ** ** |
|------------------------|------------|----------|------------|----------|------------|
| Audit Fees(1)          |       | $        | 349,114    |     | $          | 411,178 |   |
| Audit-Related  Fees(2) |       | 12,050   |       | 16,000   |       |
| Tax Fees(3)            |       | 36,319   |       | 52,738   |       |
| All Other Fees         |       | —   |       | —   |       |
| Total                  |       | $        | 379,498    |     | $          | 479,916 |   |

----

(1)          Audit fees representfees for professional services provided in connection with the audit of ourfinancial statements and review of our quarterly financial statements and auditservices provided in connection with other statutory or regulatory filings. For2006 and 2005, the total audit fees include $167,376 and $246,012,respectively, in fees incurred for the audit of our wholly-ownedsubsidiary, GTA-IB, LLC, the entity that owns the Resort.

(2)          Audit-related feesconsisted primarily of accounting consultations related to the Resort.

(3)          For fiscal 2006 and2005, respectively, tax fees principally included tax compliance fees of $33,566and $44,511, and tax advice and tax planning fees of $-0- and $8,227.

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

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All of the servicesdescribed in Items 9(e)(2) through 9(e)(4) of Schedule 14A wereapproved by our audit committee pursuant to paragraph c(7)(i)(C) of Rule 2-01of Regulation S-X.

**PART IV**

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

**FinancialStatements and Schedules**

The financial statementsand schedules filed as part of this annual report on Form 10-K arelisted on page 81, which is incorporated herein by reference.

**Exhibits**

The exhibits filed as part of this annual report on Form 10-Kare listed in the Exhibit Index, which is incorporated herein byreference.

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**INDEXTO FINANCIAL STATEMENTS**

|                                                                                                              | ** ** | **Page** | ** ** |
|--------------------------------------------------------------------------------------------------------------|------------|----------|------------|
| **Liquidation Basis Financial  Statements of Golf Trust of America, Inc.**                              |       |     |       |   |   |
| Report of  Independent Registered Public Accounting Firm                                                     |       |     | 87         |   |   |
| Consolidated  Statements of Net Assets as of December 31, 2006 and 2005                                 |       |     | 88         |   |   |
| Consolidated  Statements of Changes in Net Assets for the Years Ended December 31,  2006, 2005 and 2004 |       |     | 89         |   |   |
| Consolidated  Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and  2004            |       |     | 90         |   |   |
| Notes to  Consolidated Financial Statements                                                                  |       |     | 91         |   |   |
| **Consolidated Financial  Statement Schedule**                                                               |       |     |       |   |   |
| Report of  Independent Registered Public Accounting Firm on Financial Statement Schedule                     |       |     | 111        |   |   |
| Schedule III—Real Estate and  Accumulated Depreciation                                                  |       |     | 112        |   |   |

 

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**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Directors and StockholdersGolf Trust of America, Inc.

We have audited the accompanying consolidatedstatements of net assets (liquidation basis) of Golf Trust of America, Inc.and subsidiaries as of December 31, 2006 and 2005, and the relatedconsolidated statements of changes in net assets and cash flows (liquidationbasis) for the years ended December 31, 2006, 2005 and 2004. Thesefinancial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based onour audits.

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

In ouropinion, the consolidated financial statements referred to above presentfairly, in all material respects, the net assets (liquidation basis) of GolfTrust of America, Inc. and subsidiaries at December 31, 2006 and2005, and the changes in their net assets and cash flows for the years ended December 31,2006, 2005 and 2004 (liquidation basis), in conformity with accountingprinciples generally accepted in the United States of America applied on theliquidation basis.
| Charlotte, North Carolina | BDO Seidman, LLP |
|---------------------------|------------------|
| March 30, 2007       |             |

 

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**GOLF TRUST OF AMERICA, INC.CONSOLIDATED STATEMENTS OF NET ASSETS AS OF DECEMBER 31, 2006 AND 2005(LIQUIDATION BASIS)(in thousands)**

| ** **                                                                                                                                     | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                     | ** ** | **2006**              | ** ** | **2005** | ** ** |
| **ASSETS**                                                                                                                                     |       |                  |       |   |   |
| Real estate—held  for sale                                                                                                                |       | $                     | 55,592     |   | $ | 56,506 |   |
| Cash and cash  equivalents                                                                                                                     |       | 2,224                 |       | 2,822 |   |
| Receivables—net                                                                                                                           |       | 2,892                 |       | 5,806 |   |
| Other assets                                                                                                                                   |       | 5,370                 |       | 4,597 |   |
| Total assets                                                                                                                                   |       | 66,078                |       | 69,731 |   |
| **LIABILITIES**                                                                                                                                |       |                  |       |   |   |
| Debt                                                                                                                                           |       | 4,872                 |       | 5,830 |   |
| Accounts payable  and other liabilities                                                                                                        |       | 13,408                |       | 13,080 |   |
| Other obligations                                                                                                                              |       | 10,648                |       | 11,120 |   |
| Reserve for  estimated costs during the period of liquidation                                                                                  |       | 3,285                 |       | 5,919 |   |
| Total liabilities                                                                                                                              |       | 32,213                |       | 35,949 |   |
| Commitments and  Contingencies                                                                                                                 |       |                  |       |   |   |
| 9.25% Cumulative  Convertible Redeemable Preferred stock, $.01 par value, 10,000,000 shares  authorized, 800,000 shares issued and outstanding |       | 20,000                |       | 20,000 |   |
| Total liabilities and preferred stock                                                                                                          |       | 52,213                |       | 55,949 |   |
| **NET  ASSETS IN LIQUIDATION** (available to holders of common stock  and OP unit holders)                                                     |       | $                     | 13,865     |   | $ | 13,782 |   |

 

See accompanying notes to consolidated financial statements.

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**GOLF TRUST OF AMERICA, INC.CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSFOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004(in thousands)**

| ** **                                                                           | ** ** | **Liquidation Basis** | ** ** |
|--------------------------------------------------------------------------------------|------------|----------------------------|------------|
| ** **                                                                           | ** ** | **2006**                   | ** ** | **2005** | ** ** | **2004** | ** ** |
| Net Assets in  Liquidation, beginning of year                                        |       | $                          | 13,782     |   | $ | 15,045 |   | $ | 27,283 |   |
| **Changes in net assets in  liquidation:**                                           |       |                       |       |   |   |   |   |
| Adjustments to  liquidation reserve:                                                 |       |                       |       |   |   |   |   |
| Operating (loss) income                                                              |       | (448                       | )          | 712 |   | (2,855 | ) |
| Net interest expense                                                                 |       | (1,386                     | )          | (1,274 | ) | (652 | ) |
| Increase in reserve for estimated liquidation costs  and capital expenditures        |       | (50                        | )          | (3,090 | ) | (2,730 | ) |
| Subtotal of  adjustments to liquidation reserve                                      |       | (1,884                     | )          | (3,652 | ) | (6,237 | ) |
| Increase  (decrease) in fair value of the real estate assets                         |       | 374                        |       | (2,421 | ) | (4,668 | ) |
| Increase  (decrease) in fair value of other assets                                   |       | 1,410                      |       | — |   | (112 | ) |
| Decrease in the  fair value of other obligations                                     |       | 201                        |       | — |   | — |   |
| Subtotal of  adjustments to liquidation reserve and decrease in fair value of assets |       | 101                        |       | (6,073 | ) | (11,017 | ) |
| Preferred  dividend reversal                                                         |       | —                     |       | 4,914 |   | — |   |
| Value of operating  partnership units redeemed in sale of golf courses               |       | (18                        | )          | (104 | ) | (1,221 | ) |
| **Changes  in Net Assets in Liquidation**                                            | ** ** | **83**                     | ** ** | **(1,263** | **)** | **(12,238** | **)** |
| **Net Assets in Liquidation, end  of year**                                          | ** ** | **$**                      | **13,865** | ** ** | **$** | **13,782** | ** ** | **$** | **15,045** | ** ** |

 

See accompanying notes to consolidated financial statements.

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**GOLF TRUST OFAMERICA, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (LIQUIDATION BASIS)(in thousands)**

| ** **                                                                                                                                                                       | ** ** | **Year Ended December 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                                                                                                                       | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** | ** ** |
| **Cash flows from changes in net  assets in liquidation and operating activities:**                                                                                              |       |                                       |       |   |   |   |   |
| Change in net  assets in liquidation                                                                                                                                             |       | $                                          | 83         |   | $ | (1,263 | ) | $ | (12,238 | ) |
| Adjustments to reconcile  change in net assets in liquidation to net cash used in operating activities,  net of effects of Resort assets and liabilities acquired in settlement: |       |                                       |       |   |   |   |   |
| (Decrease)increase in liquidation reserve and  adjustments in the fair value of real estate and non-real estate  assets                                                     |       | (1,777                                     | )          | 5,511 |   | 7,510 |   |
| Cancellation value of common stock and OP units                                                                                                                                  |       | 18                                         |       | 104 |   | 1,221 |   |
| Preferred dividend reversal                                                                                                                                                      |       | —                                     |       | (4,914 | ) | — |   |
| Non-cash interest incurred on other  obligations                                                                                                                                 |       | 749                                        |       | 764 |   | 433 |   |
| Loss on disposal of fixed asset                                                                                                                                                  |       | —                                     |       | 10 |   | — |   |
| Provision for bad debts                                                                                                                                                          |       | 372                                        |       | 48 |   | 7 |   |
| Forgiveness of interest on debt                                                                                                                                                  |       | (122                                       | )          |   |   |   |   |
| (Increase)decrease in receivables and other assets                                                                                                                               |       | 198                                        |       | (1,405 | ) | (672 | ) |
| Increase in accounts payable and other liabilities                                                                                                                               |       | 13                                         |       | 2,558 |   | 1,560 |   |
| Decrease in liquidation liabilities, net of  insurance reimbursements                                                                                                            |       | (2,293                                     | )          | (2,932 | ) | (2,541 | ) |
| Net cash used in changes in net assets in  liquidation and operating activities                                                                                                  |       | (2,759                                     | )          | (1,519 | ) | (4,720 | ) |
| **Cash  flows from investing activities:**                                                                                                                                       |       |                                       |       |   |   |   |   |
| Resort and golf course improvements                                                                                                                                              |       | (546                                       | )          | (806 | ) | (472 | ) |
| Net proceeds from golf course dispositions                                                                                                                                       |       | 1,037                                      |       | — |   | 3,984 |   |
| Cash acquired in Resort settlement                                                                                                                                               |       | —                                     |       | — |   | 1,764 |   |
| Decrease in notes receivable                                                                                                                                                     |       | 3,067                                      |       | 281 |   | — |   |
| Net cash provided  by(used in) investing activities                                                                                                                              |       | 3,558                                      |       | (525 | ) | 5,276 |   |
| **Net  cash flows from financing activities:**                                                                                                                                   |       |                                       |       |   |   |   |   |
| Borrowings on debt                                                                                                                                                               |       | —                                     |       | 2,000 |   | 4,100 |   |
| Repayments on debt and capital lease obligations                                                                                                                                 |       | (1,397                                     | )          | (1,053 | ) | (1,338 | ) |
| Net cash (used  in) provided by financing activities                                                                                                                             |       | (1,397                                     | )          | 947 |   | 2,762 |   |
| Net (decrease)  increase in cash and cash equivalents                                                                                                                            |       | (598                                       | )          | (1,097 | ) | 3,318 |   |
| Cash and cash  equivalents, beginning of year                                                                                                                                    |       | 2,822                                      |       | 3,919 |   | 601 |   |
| Cash and cash  equivalents, end of year                                                                                                                                          |       | $                                          | 2,224      |   | $ | 2,822 |   | $ | 3,919 |   |
| **Supplemental Disclosure of Cash Flow Information**                                                                                                                             |       |                                       |       |   |   |   |   |
| Interest paid  during the period                                                                                                                                                 |       | $                                          | 805        |   | $ | 695 |   | $ | 146 |   |
| **Non-cash  investing and financing activities:**                                                                                                                                |       |                                       |       |   |   |   |   |
| Cancellation of  note receivable                                                                                                                                                 |       | $                                          | —     |   | $ | 99 |   | $ | 547 |   |
| Satisfaction of  debt through assignment of certain assets                                                                                                                       |       | $                                          | 710        |   | — |   | — |   |
| Equipment  acquired under capital leases                                                                                                                                         |       | $                                          | 137        |   | $ | 414 |   | $ | 67 |   |
| Resort assets  acquired and liabilities assumed in settlement were:                                                                                                              |       |                                       |       |   |   |   |   |
| Total assets                                                                                                                                                                     |       |                                       |       |   |   | $ | 56,095 |   |
| Less liabilities                                                                                                                                                                 |       |                                       |       |   |   | (16,855 | ) |
| Net settlement amount                                                                                                                                                            |       |                                       |       |   |   | $ | 39,240 |   |

 

See accompanying notes to consolidated financial statements.

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**GOLF TRUST OFAMERICA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**1.**   Planof Liquidation and the Participating Mortgage

On February 25, 2001 our board of directorsadopted, and on May 22, 2001 our common and preferred stockholdersapproved, a plan of liquidation for us. The plan of liquidation contemplatesthe sale of all of our assets and the payment of, or provision for, ourliabilities and expenses, and authorizes us to establish a reserve to fund ourcontingent liabilities. As of March 26, 2007, we had sold 41 of the 47(eighteen-hole equivalent) golf courses in which we once held interestspursuant to the plan of liquidation.

In March 2002, as a result of the conditions inthe golf industry at that time, we retained an independent financial advisor,Houlihan Lokey, to advise us on strategic alternatives available to us infurtherance of our efforts to seek to enhance stockholder value under our planof liquidation. In connection with this engagement, Houlihan Lokey reviewed: (i) ourcorporate strategy; (ii) various possible strategic alternatives availableto us with a view towards determining the best approach of maximizingstockholder value in the context of our existing plan of liquidation; and (iii) otherstrategic alternatives independent of the plan of liquidation. Followingreceipt of Houlihan Lokey’s report on March 15, 2002, and afterconsideration of other relevant facts and circumstances then available to us,our board of directors unanimously voted to proceed with our plan ofliquidation without modification. In February 2003, we, at the directionof our board, again engaged Houlihan Lokey to assist us in updating ourprojected range of liquidating distributions in light of the actual sale priceswe had obtained during the prior year and other relevant factors. Followingreceipt of Houlihan Lokey’s updated report on March 18, 2003, and afterconsideration of other relevant facts and circumstances then available to us,our board of directors unanimously reaffirmed its decision to proceed with ourplan of liquidation without modification. As a result, we valued theparticipating mortgage on our balance sheet based on our estimate of the resalevalue of the Resort at the conclusion of the holding period.

During 1997, our operating partnership closed andfunded an aggregate $78.95 million participating mortgage to Golf HostResorts, Inc. (“GHR”), an entity affiliated with Starwood Capital GroupLLC. The participating loan was secured by the Innisbrook Resort and Golf Club(the “Resort”), a 72-hole destination golf and conference facilitylocated near Tampa, Florida. GHR became delinquent in its payments of interestin late 2001 following the terrorist attacks of September 11, 2001. Uponthe default, we began seeking a negotiated foreclosure or settlement with ourformer borrower.

At June 30, 2003, we carried the participatingmortgage on our books at $60.0 million, based on the assumption that wewould take ownership of the Resort, that the Resort’s operations would begin torecover in 2004 and that by the end of the 2005 holding period the Resort wouldhave realized a modest recovery generally in line with historical results(among other assumptions). At September 30, 2003, we wrote down the valueof the participating mortgage from a value of $60.0 million to$44.24 million.

On July 15, 2004, we entered into a SettlementAgreement (the “Settlement Agreement”) with GTA—IB, LLC (“GTA—IB”), our formerborrower (Golf Host Resorts, Inc., or “GHR”), Golf Hosts, Inc., GolfHost Management, Inc., Golf Host Condominium, Inc. and Golf HostCondominium, LLC, and took control of the Resort. As part of the process ofallocating the settlement amount (as derived from our valuation of the Resort,the “Settlement Amount”) of the Resort and related entities acquired, we had toreevaluate our carrying value of the Resort at June 30, 2004 to determineif it was representative of the Resort’s fair value as a business enterprise.After we received and reviewed the 2005 budget from Westin Management CompanySouth, or Westin, the Resort manager, and attended the 2005 budget reviewmeeting with Westin and Troon Golf LLC, or Troon, the Resort golf operationsmanager, we determined that while the budget did reflect that the Resort wasexpected to realize a modest recovery from the depressed performance of 2003and 2004 (attributed in part to two significant group cancellations and thehurricane weather in Florida), the Resort is burdened by several significantliabilities which will 

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decrease the net proceedsavailable for our stockholders upon the sale of the Resort. Based on a reviewof the facts and circumstances at this time, we determined that a write-down of$5.0 million in the value of the Resort to $39.24 million wasnecessary to appropriately reflect our estimate of the net proceeds availableto stockholders upon a sale of the Resort.

The Company’s former borrower also entered into anagreement with Troon, which provided that Troon would manage the golf courses,and an amended management agreement, or Management Agreement, with WestinManagement Company South, or Westin, which provided that Westin would managethe condominium unit Rental Pool and the conference facilities.

The Company had previously entered into an agreementwith the former borrower and the prospective purchaser of a parcel ofundeveloped land within the Resort known as Parcel F. This agreement, known asthe Parcel F Development Agreement, was executed on March 29, 2004 andheld in escrow pending the closing of the transactions contemplated by theSettlement Agreement. The Parcel F Development Agreement provides for the termsand conditions under which Parcel F may be developed including restrictions toavoid interference with the operations of the Resort. The Company also enteredinto an agreement, known as the Defense and Escrow Agreement, with its formerborrower that outlined the distribution allocation of the proceeds from thesale of Parcel F.

As a result of the settlement, the financial resultsof GTA-IB, our wholly owned subsidiary that now holds title to the Resort, areconsolidated in the Company’s financial statements commencing July 16,2004. GTA-IB recorded its interest in Parcel F at approximately $2,200,000 on July 16,2004. See further discussion below regarding an increase in the estimated proceedsof the Company’s interest in Parcel F.

Thesettlement was accounted for using methods consistent with purchase accountingin accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141“Business Combinations.” The settlement amount was allocated to the net assetsacquired, including the liabilities assumed as of July 15, 2004, basedupon their estimated fair values as of that date. The settlement amount wasallocated (in thousands) as follows:

| Total assets          |   | $          | 56,095,000 |   |
|-----------------------|--------|------------|------------|--------|
| Total liabilities     |   | 16,855,000 |       |
| Net settlement amount |   | $          | 39,240,000 |   |

 

Operationsof the acquired Resort and related entity (Golf Host Securities) are includedin the consolidated financial statements from the date of settlement. Thefollowing sets forth pro forma consolidated financial information as if thesettlement had taken place at the beginning of the earliest period presented(in thousands).

| ** **     | ** ** | **2004** | ** ** |
|----------------|------------|----------|------------|
| Revenues       |       | $        | 42,315,000 |   |
| Operating loss |       | $        | (3,479,000 | ) |

 

On January 21, 2005, we engaged Houlihan Lokey asour then financial advisor for an initial term of nine months to providefinancial advisory services to us in furtherance of our stockholder-approvedplan of liquidation. Our liquidation may occur through the sale of our assets,merger or otherwise in order to allow us to maximize value to our stockholders.In addition, subject to appropriate approvals, we may pursue arecapitalization. At the end of the initial term, if the Special Committee wasactively considering a specific proposed transaction, or a specific proposedtransaction is in the process of being consummated, then the initial term shallbe automatically extended on a month-to-month basis until the earlier to occurof either the consummation of that transaction or termination or failurethereof. The engagement was extended on a month-to-month basis until June 29,2006. Since an exit transaction had not occurred by June 29, 2006, 

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the Company terminated theengagement with Houlihan Lokey. The tail period following the termination ofthe engagement during which Houlihan Lokey might still have been due atransaction fee expired on February 28, 2007; therefore, no obligation forfinancial advisor fees currently exists. The Company continues to market theResort for sale.

The net investment in theCompany’s subsidiary, GTA-IB, LLC, that was recorded at $39.24 million at thedate of acquisition had been reduced in the normal course of operations by acumulative net operating loss to a carrying value of $38.821 million at December 31,2005, prior to the year-end write-down. Based on market indications of interestobtained in the Resort sales process, the combined estimate of the Resort’sresale value as a going concern and the Company’s interest in Parcel F at December 31,2005 was $36.4 million. Therefore, the Company recorded a write-down to thecarrying value of the business of the Resort of $2.421 million at December 31,2005. Pursuant to the terms of an amendment to the purchase and sale agreementbetween GHR and the purchaser of Parcel F executed in December 2006 whicheliminated certain purchase price reductions, the Company wrote up theestimated fair value of its interest in Parcel F by approximately $1,410,000resulting in an adjusted combined estimate of the Resort’s resale value of$37.9 million as of December 31, 2006. The Company faces the risk that ourefforts to preserve the value of the Resort might be unsuccessful and,therefore, that we might ultimately sell our interest in the Resort for lessthan our current estimates of its fair value. Finally, it is possible that atsome future date our assessment of the Resort’s fair value may change, and theasset may be written-down further.

**2.**   Organizationand Basis of Presentation

We were incorporated in Maryland on November 8,1996. We were originally formed to be a real estate investment trust, or REIT,however, as of fiscal year 2002 we no longer have our REIT status as a resultof our repossession and operation of golf courses following the default oftheir original third-party lessees. On January 30, 2003, we sold ourlast property that was under a participating lease. As of March 26, 2007,we own two properties which represent six golf courses. The Resort (4.0 golfcourses) was managed by Westin Management South until October 31, 2006when the Westin Management Agreement was terminated by mutual agreement and theCompany assumed management of the Resort. The four golf courses at the Resortare managed by Troon. The Company and Troon have a ten-day rolling right from November 30, 2006 to terminate thefacility management agreement pursuant to which Troon manages the golffacilities of the Resort.  See Note 15 *Subsequent Events* for further discussion.

Prior to July 15,2004, the Resort served as collateral for a 30-year participatingmortgage wherein the Company was the lender. Upon the execution of theSettlement Agreement with the Company’s former borrower on July 15, 2004,the Company obtained ownership of the Resort. The Company presently holds itstwo properties (6.0 golf courses) in fee simple. The six golf courses arelocated in Florida (4) and South Carolina (2). Title to the Company’s golfcourses, except in the case of the Resort, is generally held by Golf Trust ofAmerica, L.P., a Delaware limited partnership. The Company refers to Golf Trustof America, L.P. as its “operating partnership” or “OP” and the Company refersto the operating partnership and ourselves (together with all subsidiaries)collectively as “we,” “us” or the “Company.” The title to the Resort is held byGTA-IB, LLC, a wholly owned subsidiary of Golf Trust of America, L.P. Throughthe Company’s wholly owned subsidiaries GTA GP, Inc. (“GTA GP”) and GTA LP, Inc.(“GTA LP”), the Company holds a 100 percent interest in our operatingpartnership as of December 31, 2006. GTA GP is the sole general partner ofour operating partnership and owns a 0.2 percent interest therein. GTA LPis a limited partner in the operating partnership and owns a 99.8 percentinterest therein. These percentages give effect to all outstanding preferred OPunits on an as-converted basis. No OP units remain outstanding as of December 31,2006.

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*Adjustments toLiquidation Basis of Accounting*

As a result of our board of directors’ adoption of ourplan of liquidation and approval of that plan by our stockholders, we adoptedthe liquidation basis of accounting for all periods subsequent to May 22,2001. Accordingly, on May 22, 2001, our assets were adjusted to theirestimated fair value and our liabilities, including estimated costs associatedwith implementing the plan of liquidation, were adjusted to their estimatedsettlement amounts. The valuation of real estate held for sale as of December 31,2006 is based on estimates of sales values based on indications of interestfrom the marketplace, certain assumptions by management specifically applicableto each property, and on the property value ranges. The valuation of our otherassets and liabilities under the liquidation basis of accounting are based onour management’s estimates as of December 31, 2006.

The changes in net assetsin liquidation of approximately $83,000 for the year ended December 31,2006 is comprised of (a) an increase in the carrying value of Tierra DelSol to reflect the estimated gain on the sale of Tierra Del Sol ofapproximately $340,000 plus (b) the additional gain realized upon theactual closing of the sale of Tierra Del Sol of approximately $34,000, (c) theincrease in the carrying value of our interest in Parcel F of approximately$1,410,000 to reflect the estimated financial benefit to us of a contractamendment executed between GHR and the purchaser of Parcel F, (d) thedecrease in the estimated settlement amount of the Westin termination feeliability of approximately $79,000, (e) the discount realized in theassignment and termination of the Elk Funding note payable of approximately$122,000, (f) the reversal of the accrual for financial advisor fees ofapproximately $600,000 due to the expiration of the tail period and related feeobligations of the Houlihan Lokey engagement offset by (g) the redemptionof the 35,794 operating partnership units discussed above for approximately$18,000, and an increase in the provision for (h) capital expenditures of approximately $69,000, (i) accountingand tax fees of approximately $285,000, (j) corporate operating costs ofapproximately $625,000, (k) directors and officers insurance premiums ofapproximately $240,000, and (l) legal fees of approximately $1,265,000 tobe incurred in (A) the negotiation of an asset purchase agreement andcontemplated consummation of the sale of the Resort, (B) litigating theproceedings to which we are currently a party and (C) the administrativeconclusion of our plan of liquidation.

*Reserve forEstimated Costs During the Period of Liquidation*

Under the liquidation basis of accounting, the Companyis required to estimate and accrue the costs associated with implementing andcompleting the plan of liquidation. These amounts can vary significantly dueto, among other things, the timing and realized proceeds from golf coursesales, the costs of retaining personnel and others to oversee the liquidation,including the costs of insurance, the timing and amounts associated withdischarging known and contingent liabilities and the costs associated withcessation of our operations. These costs are estimates and are expected to bepaid out over the liquidation period. Since the Company obtained title to theResort and are seeking to pursue an exit transaction, the Company has moreinformation with which to make projections of certain liquidation costsexpected to be incurred during the projected period required to complete theliquidation (i.e., exit transaction to be closed by June 30, 2007 and thecorporate wind-up to be concluded by September 30, 2007). As a result, theCompany has accrued the projected costs, including corporate overhead andspecific liquidation costs of severance, financial advisors and otherprofessional fees, and other miscellaneous wind-down costs, expected to beincurred during the projected period required to complete the liquidation ofour remaining assets as contemplated. The Company has been in negotiations withAEW, the holder of all of the Company’s series A preferred stock, regarding theterms of a new agreement which will allow the Company to repurchase all of AEW’sseries A preferred stock for a price of $20 million or less. As a result of theCompany’s assumption that these negotiations will lead to an executed agreement, the Company has notrecorded in its net assets for the year ended December 31, 2006 either (i) aliability of $12,522,000 for the accrual of preferred dividends payable for theperiod beginning July 1, 2001 to December 31, 2006 or 

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(ii) additionaldividend accruals of $625,000 for each subsequent quarter through the date thatthe exit transaction is ultimately consummated and liquidation payments aremade to AEW. Further, the carrying amount of the preferred stock remains at $20million on the Company’s statement of net assets, consistent with theredemption amount in the prior letter agreement with AEW. In the event thateither the Company is unable to reach an agreement with AEW, or the Company isunable to exercise any repurchase right and close the repurchase under anyagreement the Company may reach with AEW, the Company may be required to payAEW all or a portion of the preferred dividends for which the Company has notrecorded a liability, reducing its liquidating distributions to holders of itscommon stock. These preferred dividends would reduce the net assets availableto stockholders in liquidation, and, correspondingly, the estimated liquidationdistribution per share. These projections could change materially based on thetiming of any anticipated sale, the performance of the underlying assets, andchange in the underlying assumptions of the cash flow amount projected. Theseaccruals will be adjusted from time to time as projections and assumptionschange.

Thefollowing is a summary of the changes in the Reserve for Estimated Costs Duringthe Period of Liquidation:

| ** **              | ** ** | **December 31,  2005** | ** ** | **Transfers and  Payments** | ** ** | **Operating  Income(Loss) and  Interest** | ** ** | **Adjustments** | ** ** | **December 31,  2006** | ** ** |
|-------------------------|------------|-----------------------------|------------|----------------------------------|------------|------------------------------------------------|------------|-----------------|------------|-----------------------------|------------|
| Severance               |       |                        | $          | 1,847,000                        |       |                                           | $          | (99,000         | )          |                        | $          | — |   |   | $ | — |   |   | $ | 1,748,000 |   |   |
| Professional fees       |       |                        | 1,565,000  |                             |       | (1,865,000                                     | )          |            | —     |                        |       | 1,550,000 |   |   | 1,250,000 |   |   |
| Financial advisor  fees |       |                        | 911,000    |                             |       | (14,000                                        | )          |            | —     |                        |       | (600,000 | ) |   | 297,000 |   |   |
| Capital  expenditures   |       |                        | 26,000     |                             |       | (93,000                                        | )          |            | —     |                        |       | 114,000 |   |   | 47,000 |   |   |
| Other                   |       |                        | 1,570,000  |                             |       | (614,000                                       | )          |            | (1,833,000 | )                           |       | 820,000 |   |   | (57,000 | ) |   |
| Total                   |       |                        | $          | 5,919,000                        |       |                                           | $          | (2,685,000      | )          |                        | $          | (1,833,000 | ) |   | $ | 1,884,000 |   |   | $ | 3,285,000 |   |   |

 

Included in the accrued severance amounts above areperformance milestone payments due to our executives pursuant to their amendedand restated employment agreements. The accrued interest is reflected inaccounts payable and other liabilities instead of the liquidation reserve.Performance milestone payments aggregating approximately $1,754,000 plusaccrued interest will be paid in due course, however, there are no remainingconditions to such payment. Any severance payments otherwise payable by usunder the amended and restated employment agreements will be reduced by theamount of all earlier performance milestone payments.

Sincethe Company is presenting liquidation basis financial statements that onlyreflect the changes in net assets in liquidation, the operating results of theCompany are summarized and reflected in the table below:

| ** **                                                      | ** ** | **For years ended December 31,** | ** ** |
|-----------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                      | ** ** | **2006**                                             | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                                      | ** ** | **(in thousands)**                              | ** ** |
| Revenues                                                        |       |                                                 |       |   |   |   |   |
| Revenue from managed golf course and Resort operations          |       | $                                                    | 45,986     |   | $ | 46,513 |   | $ | 19,992 |   |
| Expenses                                                        |       |                                                 |       |   |   |   |   |
| General and administrative                                      |       | 976                                                  |       | 1,127 |   | 1,543 |   |
| Direct expenses from managed golf course and Resort  operations |       | 45,458                                               |       | 44,674 |   | 21,304 |   |
| Expenses                                                        |       | 46,434                                               |       | 45,801 |   | 22,847 |   |
| Operating (loss)income                                          |       | $                                                    | (448       | ) | $ | 712 |   | $ | (2,855 | ) |

 

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**3.**   Summary ofSignificant Accounting Policies

*Principles of Consolidation*

The accompanyingconsolidated financial statements include the accounts of GTA LP, Inc.,our operating partnership and their wholly-owned subsidiaries. Allsignificant intercompany transactions and balances have been eliminated inconsolidation.

*Cash Equivalents*

We consider all highlyliquid debt instruments with an original maturity of three months or less to becash equivalents.

*Fair Value—Liquidation Basis*

We adopted the liquidationbasis of accounting upon the stockholder approval of our plan of liquidation onMay 22, 2001. From this date forward, all assets and liabilities have beenstated at their estimated fair value and estimated settlement amounts. Theestimated fair value has been determined using available market information andappropriate valuation methodologies. However, considerable judgment is requiredin interpreting market data to develop the estimates of fair value.Accordingly, the estimates presented herein are not necessarily indicative ofthe amounts that we could realize in a current market exchange. The use ofdifferent market assumptions and/or estimation methodologies may have amaterial effect on the estimated fair value amounts.

*Cash Risk Concentration*

We have cash and cashequivalents in a financial institution which is insured by the Federal DepositInsurance Corporation, or FDIC, for amounts up to $100,000 per institution. At December 31,2006 and 2005, we had amounts in excess of FDIC limits. We limit our risk byplacing our cash and cash equivalents in a high quality financial institution.

*Property and Equipment*

Substantially all of ourlong-lived assets have been deemed to be held for sale and, therefore,depreciation expense has not been recorded since September 30, 2000.

*Accounts Receivable*

Accounts receivablerepresents amounts due from Resort guests and golf course members and is net ofallowances of approximately $26,000 and $15,000 for doubtful accounts at December 31,2006 and 2005, respectively. Groups with prior direct bill positive historywith the Resort are granted credit for billing. With respect to extendingcredit to Resort groups, if a group has not been to the Resort within the pasttwo years, an updated credit evaluation is conducted. The Resort requires adeposit of approximately 25% of the total estimated contracted revenue.Additional deposits may be required depending on the outcome of the creditevaluation. Terms are negotiable by group contract but are typically30 days from receipt of bill.

Management reviewsaccounts receivable monthly to determine if any receivables are uncollectible.Any receivable considered to be uncollectible is included in the allowance fordoubtful accounts. After all attempts to collect the receivable have failed,the receivable is written off against the allowance.

*Revenue Recognition*

With respect to the golfcourses that we are currently managing, revenue from green fees, cart rentals,food and beverage sales, merchandise sales, and range income are generallyrecognized at the time of sale. Membership dues are recognized ratably over theapplicable period. All initiation fees received are initially 

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recordedas deferred revenue and amortized over the average life of a membership which,based on historical information, is deemed to be (i) ten years for full golfmemberships at the Resort and five years for resort, executive and tennismemberships at the Resort and (ii) nine years for all categories ofmemberships at Stonehenge.

Group cancellation feesare computed at the time of the cancellation pursuant to the terms of therespective contract and recorded as deferred revenue. When the cancellationfees are received, they are then recognized as revenue.

*Leases*

Leases which transfersubstantially all of the benefits and risks of ownership of property areclassified as capital leases. Assets and liabilities are recorded at amountsequal to the present value of the minimum lease payments at the beginning ofthe lease term. Interest expense relating to the lease liabilities is recordedto affect constant rates of interest over the terms of the leases.

Leases which do nottransfer substantially all of the benefits and risks of ownership of propertyare classified as operating leases, and the related rentals are charged toexpense as incurred.

*Income Taxes*

We provide for incometaxes using the asset and liability method. Deferred tax assets or liabilitiesat the end of each period are determined using the enacted tax rates. Incometax expense will increase or decrease in the same period in which a change intax rates is enacted. We record a valuation allowance against deferred taxassets when the weight of available evidence indicates it is more likely thannot that the deferred tax asset will not be realized at its initially recordedvalue.

*Use of estimates*

The preparation offinancial statements, in conformity with accounting principles generallyaccepted in the United States of America, requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates.

*Advertising*

The Company expensesadvertising costs as incurred. Total advertising costs were $1,173,000,$998,000, and $409,000 for the years ended December 31, 2006, 2005, and2004, respectively.

**4.**   Dispositions

GolfCourse Dispositions since January 1, 2004 through December 31, 2006were as follows:

| **Property**           | ** ** | ** **    | ** ** | **City and State** | ** ** | **Total  Consideration** | ** ** | **18-Hole  Equivalent** | ** ** | **Closing  Date** | ** ** |
|------------------------|------------|---------------|------------|------------------------------|------------|--------------------------|------------|-------------------------|------------|-------------------|------------|
| **2004**               |       |          |       |                         |       |                     |       |                    |       |              |       |   |   |
| Wekiva Golf Club       |       | Longwood,  FL |       |                         | $          | 2,475,000                |       |                    |       | 1.0               |       |   | 8/26/04 |   |
| Black Bear Golf Club   |       | Eustis,  FL   |       |                         | 1,550,000  |                     |       |                    | 1.0        |              |       | 9/24/04 |   |
| 2004 sub-total         |       |          |       |                         | 4,025,000  |                     |       |                    | 2.0        |              |       |   |   |
| **2005—no sales** |       |          |       |                         |       |                     |       |                    |       |              |       |   |   |
| **2006**               |       |          |       |                         |       |                     |       |                    |       |              |       |   |   |
| Tierra Del Sol         |       | Belen,  NM    |       |                         | 2,125,000  |                     |       |                    | 1.0        |              |       | 5/8/06 |   |
| Grand Total            |       |          |       |                         | $          | 6,150,000                |       |                    |       | 3.0               |       |   |   |   |

 

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**5.**   OperatingLeases

Inconnection with the assumption of operations at the various golf courses, theCompany assumes related operating leases on golf carts, maintenance equipmentand vehicles. These lease agreements expire at various dates through December 2008.The Company also leases its corporate facilities under an operating agreementthat expired in June 2006 and has been a month-to-month lease since itsexpiration. Total lease expense, excluding the lease expense for golf coursessold prior to December 31, 2006, was approximately $502,000, $586,000, and$432,000 for the years ended December 31, 2006, 2005 and 2004respectively. Future minimum lease commitments under non-cancelable operatingleases at December 31, 2006 are as follows:

| **Year** | ** ** | ** ** | ** ** | **Amount** | ** ** |
|----------|------------|------------|------------|------------|------------|
| 2007     |       | 409,000    |       |
| 2008     |       | 247,000    |       |
| Total    |       | $          | 656,000    |       |
|          |            |            |            |            |            |  |

 

**6.**   Commitmentsand Contingencies

*Land Use Lawsuits*

On March 10, 2005 inthe Circuit Court of the Sixth Judicial Circuit, in and for Pinellas County,Florida, Civil Division, we filed a Motion to Intervene in the lawsuit titledInnisbrook Condominium Association, Inc., C. Frank Wreath, Meredith P.Sauer, and Mark Banning, Plaintiffs (the “Plaintiffs”) vs. Pinellas County,Florida, Golf Host Resorts, Inc. and Innisbrook F LLC, Defendants (the “Defendants”),Case No. 043388CI-15. We refer to this lawsuit as the Initial LandUse Lawsuit. The Plaintiffs filed a multi-count complaint, or theComplaint, seeking injunctive and declaratory relief with respect to the landuse and development rights of a tract of land within the Resort known as ParcelF. The Plaintiffs allege that there were no remaining development units(residential units) available to be developed within the Resort property. On March 29,2005, we filed a Motion to Intervene as a defendant in the Initial Land UseLawsuit in order to protect our property, and our land use and developmentrights with respect to Parcel F and our property. A hearing on the Motion toIntervene was held on April 4, 2005, after which the court granted ourMotion to Intervene. On January 6, 2006, the court ruled in favor of alldefendants and against all plaintiffs as to each count in both cases.Subsequent to the court’s oral rulings, defense counsel prepared a proposedfinal judgment which reflects the court’s factual findings and legalconclusions. 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. On April 4,2006, the plaintiffs in the consolidated cases filed a notice of appeal. SeeNote 15, *Subsequent Events*, for a recent update.

***Wall Springs Conservatory, Inc. Complaint***

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

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***Lake Ozark Industries, Inc. and Everett HoldingCompany, Inc. v. Golf Trust of America, et al.***

This is an action initiatedin the Circuit Court of Miller County, Missouri, by a contractor, Lake OzarkConstruction Industries, Inc., or LOCI, and its asserted assignee of lienand account rights, Everett Holding Company, Inc., in the Fall of 1999against numerous defendants, including Golf Trust of America, L.P. Plaintiffsassert LOCI performed construction services on, or that benefited, the propertyof various defendants, including Golf Trust of America, L.P. So far as theaction concerns Golf Trust of America, L.P., plaintiffs seek to foreclose amechanic’s lien upon property formerly owned by Golf Trust of America, L.P. Thelien is for the principal amount of approximately $1,276,000, plus interest at10% per annum and attorney fees. Plaintiffs calculate interest to May 20,1999, just prior to the lien filing, to be approximately $151,000 and interestthereafter to be $354 per day. In April 2002 the Court granted the motionfor summary judgment filed by the Company ruling that the plaintiffs’ claimedlien does not comply with requirements of the Missouri mechanic’s lien statuteand is invalid. Since not all claims involved in this lawsuit were disposed ofby that ruling, Plaintiffs’ time to appeal this ruling did not begin to run. InNovember 2003 the court entered a final judgment, and plaintiffs appealedthe ruling in favor of the Company to the Missouri Court of Appeals. On November 9,2004, the Company filed with the Court of Appeals a Motion to File SupplementalBrief, along with a copy of a Supplemental Brief. On April 5, 2005 theCourt of Appeals reversed the Circuit Court judgment in favor of the Companyand remanded the case to the Circuit Court for further proceedings. On April 20,2005, the Company filed with the Court of Appeals a motion for rehearing and analternative application to transfer the case to the Missouri Supreme Court. TheCourt of Appeals denied this motion and the transfer application on May 31,2005. On May 31, 2005, the Court of Appeals also filed modified Opinion,which again reversed the Circuit Court judgment in favor of the Company andremanded the case to the Circuit Court for further proceedings. On June 15,2005, the Company filed with the Missouri Supreme Court an application totransfer the case to that court. On August 30, 2005, the Missouri SupremeCourt denied the application for transfer. The case was returned to the CircuitCourt for trial on plaintiffs’ claim that LOCI performed construction serviceson, or that benefited, the property of various defendants, including theCompany. A trial date has not yet been set. At this time, the Company is unableto assess the likely outcome of this litigation.

***Ordinary Course Litigation***

Owners and operators ofgolf courses are subject to a variety of legal proceedings arising in theordinary course of operating a golf course, including proceedings relating topersonal injury and property damage. Since we are now the operator of ourremaining golf courses we maintain insurance for these purposes. We are notcurrently subject to any material claims of this type.

***Westin and Troon Management Fees***

The July 15, 2004Management Agreement between the Company’s subsidiary, GTA-IB, LLC, or “GTA-IB,”and Westin provided that Westin would manage the Resort for a fee equal to 2.2%of gross revenue of the Resort. Contemporaneously with the signing of this newManagement Agreement, Westin and GTA-IB, for the limited purposes described inthe Management Agreement, entered into a separate agreement with Troon whichprovided that Troon shall manage the golf facilities of the Resort for a fee,payable by GTA-IB, equal to 2% of gross golf revenue. These agreements alsoprovided for the opportunity for Westin and Troon to earn supplemental feesbased on financial performance metrics. The Management Agreement with Westin hada termination date of December 31, 2017, however, by mutual agreement, on September 28,2006, the Company, Westin and GTA-IB entered a Termination and ReleaseAgreement (the “Termination Agreement”), pursuant to which the Company, GTA-IB,and Westin agreed to terminate the Management Agreement as of October 31,2006 (the “Termination Date”). In addition to the termination of the ManagementAgreement, the Termination Agreement provides that (i) on or prior to October 3,2006, the Company will deposit $600,000 in the Resort’s 

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operatingaccount (which the Company did)  to beused in part to pay to Westin certain unpaid fees and charges which haveaccrued under the Management Agreement and which are expected to approximatethis amount, (ii) on or prior to the earlier of March 31, 2008, orany sale of the Resort by the Company, the Company will pay to Westin thetermination fee provided under Section 4.4.2 of the Management Agreementcalculated as of the Termination Date, approximately $5,594,000, and (iii) Westinwill permit the Company and GTA-IB to continue to access Westin’s “SAP”accounting system for the operation of the Resort for a period of three monthsafter the Termination Date for a total charge of $6,000. The Company and GTA-IBplan to independently manage the Resort as of the Termination Date.  The Company and Troon have a ten-day rollingright from November 30, 2006 to terminate the facility managementagreement between the Company and Troon pursuant to which Troon manages thegolf facilities of the Resort. See Note 15, *Subsequent Events*,for further discussion.

***Refundable Initiation Fees***

Certain membership initiation fees at the Country Clubat Wildewood and Woodcreek (collectively known as Stonehenge) are refundablebased on specific conditions. The estimated present value of the potentialrefunds over the thirty-year required membership term, as defined in the ClubMembership Manual, is recorded as an accrued liability on our books at December 31,2006 and is valued at $125,000. Additionally, certain initiation fees may berefundable prior to the expiration of the thirty-year term under specificmembership replacement conditions. There is no liability recorded to considerthe refundability of refunds issued under these conditions due to the fact thatfour new members have to join in the specific membership category for aresigned member to receive a refund. A refund issued under these specificcircumstances would be considered a reduction of membership revenue for thatperiod. All new initiation fees received are initially recorded as deferredrevenue and amortized over the average life of a membership which, based onhistorical information, is deemed to be nine years.

**7.**   Receivables—Net

Receivables—netconsists of the following:

| ** **                              | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** |
|-----------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Note receivable  taken in sale of asset |       |                            | $          | —                          |       |   |   | $ | 2,326,000 |   |   |
| Other  miscellaneous receivables        |       |                            | 2,892,000  |                            |       |   | 3,480,000 |   |   |
| Total                                   |       |                            | $          | 2,892,000                       |       |   |   | $ | 5,806,000 |   |   |

 

As of December 31, 2005,  the note receivable represents the$2.5 million note the Company received from the buyer of the Eagle RidgeInn & Resort and any accrued interest on that note, less a discountreserve of $200,000 (*i.e.*, in theevent that the borrower has not caused any uncured event of default to occurunder the note up to its maturity date of February 1, 2007, the borrowershall have the right to reduce its payment obligations under the note by$200,000 plus any interest paid on that sum during the term of the note uponborrower’s payment of the balance of the note, subject to certain prepaymentprohibitions). On August 23, 2006,pursuant to a mutually negotiated termination of pledge and security agreement,the Company accepted a discounted payoff of $2.0 million for the notereceivable originally taken in connection with the sale of Eagle Ridge onJanuary 30, 2003. Pursuant to the terms of the termination of pledge andsecurity agreement, the Company redeemed 35,794 shares of the Company’s commonstock that were pledged to the Company by the borrower pursuant to the notereceivable. The shares were redeemed at the ten day trailing average price of$0.493 for a total redemption value of approximately $18,000. The remainingdiscount of approximately $236,000 ($300,000 net of deferred interest income ofapproximately $64,000) was recorded against the reserve for estimated costsduring liquidation and is reflected in the other liquidation expense transfersand payments totaling approximately $614,000 for year ending December 31,2006. See Note 3.

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The other miscellaneousreceivables at December 31, 2006 include approximately $2,892,000 ofmember, trade and other miscellaneous receivables of our managed golf courses,the Resort and its related entity Golf Host Securities, as compared to theother miscellaneous receivables at December 31, 2005, which includeapproximately $3,480,000 of member, trade and other miscellaneous receivablesof our managed golf courses, the Resort and its related entity Golf HostSecurities.

**8.**   Debt

| ** **                 | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** |
|----------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Revolving line of  credit  |       |                            | $          | 4,100,000                       |       |   |   | $ | 4,100,000 |   |   |
| Note payable               |       |                            | —     |                            |       |   | 769,000 |   |   |
| Capital lease  obligations |       |                            | 772,000    |                            |       |   | 961,000 |   |   |
| Total                      |       |                            | $          | 4,872,000                       |       |   |   | $ | 5,830,000 |   |   |

 

*Revolving Line ofCredit*

On March 18, 2004, the Company entered into aloan agreement and related mortgage with Textron Financial Corporation, orTextron, for a revolving line of credit with a maximum permissible outstandingloan amount of $2,100,000. On August 4, 2005, the line was increased to$4,200,000 and the term was extended to March 18, 2009. This loan iscollateralized by a security interest in the Company’s golf courses inColumbia, South Carolina, located at the Country Club at Wildewood and theCountry Club at Woodcreek, collectively known as Stonehenge. The interest rateis the prime rate plus 1.75% per annum paid monthly. This loan requires thatthe operations at Stonehenge for the immediately preceding twelve month periodbe sufficient to meet a debt service coverage ratio, as defined in the mortgageof at least 1.20, as measured monthly. At September 30, 2006, the Companydid not meet the debt service coverage ratio (in part due to the start-up costsof a new full-service fine dining restaurant that opened at Stonehenge on September 15,2006); however, due to the fact that the Company has consistently paid ourinterest obligations throughout the term of the loan, Textron waived thecovenant violation subject to re-evaluation at December 31, 2006. TheCompany was in compliance with the debt service coverage ratio covenant at December 31,2006.

In certain instances, the loan may be assumed bya buyer of Stonehenge pursuant to assumption provisions in this loan amendment.The interest rate continues to be the prime rate (8.25% per annum at September 30,2006) plus 1.75% per annum, paid monthly. The Company paid a one-timecommitment fee to Textron of $42,000 to obtain the increase in this credit line.In addition, the Company will pay to Textron a fee of 0.25% per annum of theunused balance of this line of credit.

In connection with theexecution of the Textron loan amendment, the Company, through its subsidiariesStonehenge LLC and Golf Trust of America, L.P., collectively the Borrower,entered into a Notice of Future Advance, Note, Mortgage and Loan ModificationAgreement with Textron, or the Amended Mortgage, modifying the March 2004Mortgage, Security Agreement and Fixture Filing (as modified by the AmendedMortgage, the “Security Agreement”). The Security Agreement contains events ofdefault provisions that include, among others, non-payment of principal,interest or fees, violation of covenants, inaccuracy of representations andwarranties, cross defaults, bankruptcy and insolvency proceedings, termination,dissolution or liquidation of Stonehenge LLC of Golf Trust of America, L.P.,failure to cure the loss of certain licenses, permits or contracts, curtailmentof utilities or services at Stonehenge, and material judgments. In the event ofthe occurrence of an event of default, Textron is entitled to, among otherthings, accelerate all obligations of the Borrower under the aforesaid loandocuments and sell certain of the Borrower’s assets, namely the Wildewood andWoodcreek golf courses and related assets, to satisfy the Borrower’sobligations.

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*Note Payable*

In connection with theSettlement Agreement, Elk Funding, L.L.C., or Elk Funding, provided a$2,000,000 loan to the Company in the form of two promissory notes, knownas Promissory Note A and Promissory Note B. Promissory Note B wasrepaid pursuant to it terms in September 2004 and Promissory Note A wassatisfied in December 2006 as discussed below. Pursuant to the Company’sagreement with Elk Funding, these loans were to fund the Resort’s currentworking capital needs. Promissory Note A was a non-recourse loan in theoriginal principal amount of $700,000, and the Company’s obligations under thatnote were collateralized by a security interest in the Company’s portion of thenet proceeds from the ultimate sale of Parcel F. Interest accrued on the unpaidbalance of Promissory Note A at a rate of prime plus 1%. On December 28,2006, the Company entered into the First Amendment to the Defense and EscrowAgreement related to Parcel F. Pursuant to the terms of this Amendment, theCompany assigned its right to $710,000 of the deposit proceeds from thepurchaser of Parcel F to Elk Funding to satisfy Promissory Note A. As a resultElk Funding executed a Loan SatisfactionAgreement and Promissory Note A was cancelled. The Company realized a gain ofapproximately $122,000 on this transaction in accrued interest that wasforgiven. This gain is reflected in the statements of changes in net assets asa decrease in the fair value of other obligations.

*Capital LeaseObligations*

At December 31,2006, we had capital lease agreements for certain golf course and relatedequipment. These lease agreements expire at various dates through 2008.

| ** **                         | ** ** | **Capital** | ** ** |
|------------------------------------|------------|-------------|------------|
| 2007                               |       | $           | 401,000    |   |
| 2008                               |       | 341,000     |       |
| 2009                               |       | 114,000     |       |
| 2010                               |       | 2,000       |       |
| Total                              |       | 858,000     |       |
| Less amount  representing interest |       | (86,000     | )          |
| Total                              |       | 772,000     |       |
|                                    |            |             |            |  |

 

**9.**   AccountsPayable and Other Liabilities

Accountspayable and other liabilities consist of the following:

| ** **                     | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** |
|--------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Accounts payable               |       |                            | $          | 5,904,000                       |       |   |   | $ | 5,208,000 |   |   |
| Accrued payroll                |       |                            | 1,250,000  |                            |       |   | 1,701,000 |   |   |
| Accrued expenses               |       |                            | 2,151,000  |                            |       |   | 2,201,000 |   |   |
| Deferred revenue  and deposits |       |                            | 4,103,000  |                            |       |   | 3,970,000 |   |   |
| Total                          |       |                            | $          | 13,408,000                      |       |   |   | $ | 13,080,000 |   |   |

 

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**10.**   Investmentin Subsidiary

Certaincondensed balance sheet information of the Resort as of December 31, 2006and 2005, adjusted for the liquidation basis of accounting, is provided below.

| ** **                                                                                                | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Assets                                                                                                    |       |                            |       |                            |       |   |   |   |   |
| Current assets                                                                                            |       |                            | $          | 5,296,000                       |       |   |   | $ | 6,491,000 |   |   |
| Real estate and Resort assets                                                                             |       |                            | 51,212,000 |                            |       |   | 50,626,000 |   |   |
| Other assets                                                                                              |       |                            | 3,302,000  |                            |       |   | 2,647,000 |   |   |
| Total assets                                                                                              |       |                            | 59,810,000 |                            |       |   | 59,764,000 |   |   |
| Liabilities                                                                                               |       |                            |       |                            |       |   |   |   |   |
| Accounts payable and accrued expenses                                                                     |       |                            | 8,961,000  |                            |       |   | 8,862,000 |   |   |
| Long term refurbishment                                                                                   |       |                            | 4,254,000  |                            |       |   | 4,647,000 |   |   |
| Capital lease obligations                                                                                 |       |                            | 772,000    |                            |       |   | 961,000 |   |   |
| Westin termination fee                                                                                    |       |                            | 5,594,000  |                            |       |   | 5,673,000 |   |   |
| Troon supplemental fee                                                                                    |       |                            | 800,000    |                            |       |   | 800,000 |   |   |
| Note payable collateralized by Resort assets (Note 8)                                                |       |                            | —     |                            |       |   | 769,000 |   |   |
| Reserve/adjustment for projected operating results  through the contemplated holding period (Note 2) |       |                            | (900,000   | )                               |       |   | (824,000 | ) |   |
| Total liabilities                                                                                         |       |                            | 19,481,000 |                            |       |   | 20,888,000 |   |   |
| Net investment in  subsidiary                                                                             |       |                            | 40,329,000 |                            |       |   | 38,876,000 |   |   |
| Write-down to estimated value                                                                             |       |                            | (2,421,000 | )                               |       |   | (2,421,000 | ) |   |
| Net investment in  subsidiary adjusted for write-down                                                     |       |                            | $          | 37,908,000                      |       |   |   | $ | 36,455,000 |   |   |

 

*Master LeaseRefurbishment Obligation*

In connection with the Company taking control of theResort from its unaffiliated borrower effective July 16, 2004, the Companyrecorded a liability to recognize its obligations under the Master LeaseAgreement, or MLA, refurbishment program. This program entitles condominiumowners who participate in the Rental Pool to 50% reimbursement of therefurbishment costs of their unit subject to the terms and conditions of theMLA. Interest on this liability is accrued at a rate of 5% and is paidquarterly. Principal payments began in the first quarter of 2005 and will bepaid quarterly through the fourth quarter of 2009. In addition, the Company’ssubsidiary, GTA IB, LLC, agreed to provide refurbishment reimbursement forunits placed into the rental pool during 2005 at a level of 25% of theapplicable condominium owner’s investment in the refurbishment. The Companyrefers to this program as Phase 5. Interest on the Phase 5 liability is accruedat a rate of 2.5% per annum and paid quarterly. Principal payments for Phase 5begin in the first quarter of 2008 and will be paid quarterly through thefourth quarter of 2012. As of December 31, 2006, the Company estimates thesettlement value of this liability upon sale of the Resort to be $4,254,000.

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Minimumprincipal payments on the refurbishment program at the Resort are as follows: 

| **Year**   | ** ** | ** ** | ** ** | **Amount  (in thousands)** | ** ** |
|------------|------------|------------|------------|---------------------------------|------------|
| 2007       |       |       | $          | 1,424,000                       |       |   |
| 2008       |       |       | 1,790,000  |                            |       |
| 2009       |       |       | 2,150,000  |                            |       |
| Thereafter |       |       | 69,000     |                            |       |
| **Total**  |       |       | $          | 5,433,000                       |       |   |

 

*Westin TerminationFee*

The Management Agreementthat the Company executed with Westin on July 15, 2004 provides that theCompany shall pay to Westin, subject to the terms and conditions set forth inthat agreement, a termination fee of not less than $5,500,000. The estimatedsettlement value of this liability upon sale of the Resort is approximately$5,594,000 as of December 31, 2006. The termination fee is due the earlierof a sale of the Resort or March 31, 2008. See Note 6 regarding thetermination of the Management Agreement.

*Troon SupplementalFee*

The facility managementagreement that Westin executed with Troon was effective as of July 15,2004. That agreement provides that the Company shall pay to Troon, subject tothe terms and conditions set forth in that agreement, a supplemental fee of$800,000 for outstanding management fees originally payable to Troon prior to July 15,2004. See Notes 4 and 14 for further discussion regarding the facilitymanagement agreement.

**11.**   PreferredStock

*Series ACumulative Convertible Redeemable Preferred Stock*

On April 2, 1999, the Company completed aregistered offering of 800,000 shares of 9.25% Series A CumulativeConvertible Preferred Stock, par value $0.01 per share, or series Apreferred stock, at a price of $25.00 per share. All shares of this series Apreferred stock were sold to AEW Targeted Securities Fund, L.P., or AEW. Theseries A preferred stock is convertible, in whole or in part, at theoption of the holder at any time into the Company’s common stock at an implicitconversion price of $26.25 per share of common stock, subject to adjustment incertain circumstances. The Company contributed the net proceeds to the Company’soperating partnership in exchange for 800,000 series A preferred OP unitswith analogous terms.

Aggregate series A preferred stock dividendsaccrued until July 20, 2003 at a rate of $462,500 per quarter. Effective July 21,2003, the rate increased to $625,000 per quarter (see further discussion ofthis increase below). As of December 31, 2006, the Company had not paid21quarters of series A preferred stock dividends (including the dividendotherwise payable in respect of the quarter ended December 31, 2006).Under the Company’s series A charter document, because the Company has atleast six quarters of unpaid Series A preferred stock dividends, theholder of the series A preferred stock, AEW or its transferee, has theright to elect two additional directors to the Company’s board of directorswhose terms as directors would continue until the Company fully pays allaccrued but unpaid series A dividends. This right went in to effect at theCompany’s annual meeting that was held on November 17,2003 and althoughAEW has not exercised this right, it may do so in the future in accordancewith the terms of the Company’s series A charter and the voting agreement.

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On February 22, 2001, the Company entered into avoting agreement with AEW, which continues to hold all shares of theseries A preferred stock. That agreement required AEW to vote in favor ofthe plan of liquidation and required the Company to redeem all of the shares ofseries A preferred stock (for $25 per share plus dividends accrued andunpaid thereon through the date of the final redemption payment) promptly afterthe Company determines in good faith that it has received sufficient netproceeds from the disposition of the Company’s assets and/or operations toredeem all of the series A preferred stock without violating any legal orcontractual obligations.

Moreover, under the Company’s voting agreement withAEW, since the Company did not fully redeem the series A preferred stockby May 22, 2003, AEW or its transferee had the right to require theCompany to redeem the series A preferred stock in full within 60 daysthereafter, which right AEW exercised. Since the Company defaulted on thatobligation, from July 21, 2003 until the series A preferred stock isredeemed, the stated dividend rate of the series A preferred stockincreased from 9.25% to 12.50% per annum (equivalent to a quarterly dividend of$625,000). Although the Company is permitted to continue to accrue suchdividends without paying the same on a current basis, the dividends must bepaid in full prior to any distribution to the Company’s common stockholders(but after payment of all obligations to the Company’s creditors), which willreduce the Company’s cash available for liquidating distributions to commonstockholders.

On May 6, 2005, the Company executed an optionagreement with AEW which granted the Company the right to repurchase all800,000 shares of the Company’s series A preferred stock held by AEW at afixed price.  AEW and the Company haveentered into a series of agreements granting the Company the right torepurchase AEW’s series A preferred stock, each of which has expired by itsterms. In particular, on April 12, 2006, the Company entered into a newoption agreement with AEW. In this option agreement (now expired), AEW grantedthe Company the option, exercisable by the Company in its sole discretion, topurchase, on or before June 30, 2006, all 800,000 shares of the Company’sseries A preferred stock held by AEW, including, without limitation, allof AEW’s rights to Liquidation Preferences (as defined in the Company’sArticles Supplementary, including, without limitation, Liquidation Preferencesin respect of any accrued and unpaid dividends) payable in respect of suchshares as of the Company’s exercise of the option for a price of $20,000,000.The option to repurchase AEW’s series A preferred stock was only exercisable inthe event that the business of the Resort is purchased for cash considerationof no more than $35 million. This option agreement expired on June 30,2006 pursuant to its terms.

The conclusion of the Company’s negotiations with AEWwhich will allow the Company to repurchase all of AEW’s series A preferredstock plus accrued dividends for a price of $20 million or less is pendingevidence or confirmation that the Company has secured adequate financing todemonstrate its ability to close on the transaction to repurchase all of theseries A preferred stock.

As a result of the Company’s assumption that thesenegotiations will lead to an executed agreement, the Company has not recordedin its net assets for the year ended December 31, 2006 either (i) aliability of $12,522,000 for the accrual of quarterly preferred dividends forthe period July 1, 2001 to December 31, 2006 or (ii) additionaldividend accruals of $625,000 for each subsequent quarter through the date thatthe exit transaction is ultimately consummated and liquidation payments aremade to AEW.  Further, the carryingamount of the preferred shares remains at $20 million on the accompanyingstatement of net assets; however, absent either an agreement by a third partyto assume all or a portion of the Company’s accrued preferred dividendobligation or an agreement by AEW to forgive all or a portion of the Company’spreferred dividend obligations, (neither of which have occurred), the Companywill be required to accrue, and ultimately pay in liquidatingdistributions to AEW, these preferred dividends. Any preferred dividends whichthe Company is required to pay to AEW ultimately would reduce the net assetsavailable to stockholders in liquidation and correspondingly the estimatedliquidation distribution per common share. If the Company were required to payto AEW dividends accrued through December 31, 2006, the 

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Company’s liquidatingdistributions would be reduced by $1.73 per common share or OP unit of theOperating Partnership outstanding on that date.

At the present time, theCompany has not executed a binding agreement with AEW. There can be noassurances that the Company will successfully execute such an agreement withAEW, or that the terms of any agreement that the Company may execute with AEWwill not be more onerous to the Company than management currently anticipates. Further,even if the Company is able to execute an agreement with AEW which permits theCompany to repurchase the series A preferred stock at $20 million or less, theCompany may be unable to negotiate a financing arrangement through its existinglender relationships or otherwise procure sufficient funding to permit it toexercise that repurchase right and close the repurchase prior to its expiration.In the event that the Company executes an agreement with AEW and it is unableto repurchase AEW’s series A preferred stock in accordance with the terms ofthat agreement, in addition to the requirement that the Company pay accrueddividends to AEW, the Company expects that the agreement also would subject theCompany to penalties or grant AEW additional rights with respect to the Companyand its remaining assets which will be prejudicial to the Company and itsassets.

**12.**   StockOptions and Awards

**Employee StockOptions and Awards**

Thecompensation committee of the board of directors determines compensation,including stock options and awards. Options are generally awarded with theexercise price equal to the market price at the date of grant and becameexercisable in three to five years. The company has several stock option/awardplans as listed below. All issued options and restricted stock automaticallyvested on May 22, 2001, the approval of our plan of liquidation by ourstockholders.

| **Name of Stock Option/Award Plans** | ** ** | ** ** | ** ** | **Shares  Issued** | ** ** | **Shares  Available  To Issue** | ** ** |
|----------------------------------------------------------|------------|------------|------------|--------------------|------------|--------------------------------------|------------|
| 1997 Stock  Incentive Plan                               |       | 500,000    |       |               | —     |                                 |       |
| 1997 Non-employee  Director’s Plan                  |       | 100,000    |       |               | —     |                                 |       |
| New 1997 Plan                                            |       | 582,032    |       |               | 17,968     |                                 |       |
| 1998 Plan                                                |       | 498,000    |       |               | 2,000      |                                 |       |

 

Compensation expense isdetermined by reference to the market value on the date of grant and isamortized on a straight-line basis over the vesting period. In December 2004, the Financial Accounting Standards Board (“FASB”)issued Statement of Financial Accounting Standards (“SFAS”) No. 123(R),Share-Based Payment, which was effective for interim and annual reportingperiods beginning after December 15, 2006. SFAS No. 123(R) establishesstandards for the accounting for transactions in which an entity exchanges itsequity instruments for goods or services. It also addresses transactions inwhich an entity incurs liabilities in exchange for goods or services that arebased on the fair value of the entity’s equity instruments or that may besettled by the issuance of those equity instruments. Since there were nooutstanding unvested options at any time during 2006, and the Company does notanticipate issuing additional shares under these plans, the adoption of thisStatement did not have a material impacton the consolidated financial statements of the Company and is not expected tohave a material impact unless the Company grants share-based payment awards inthe future.

*Stock Option PlanTransactions*

Nooption shares were granted to employees or exercised in 2006, 2005 or 2004. Mr. Blair’sand Mr. Peters’ unvested options accelerated upon board approval of theplan of liquidation on February 25, 2001 (as provided in their employmentcontracts). All unvested options previously granted to other 

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employees accelerated upon stockholder approval of theplan of liquidation on May 22, 2001 (as provided in section 6.2 ofthe New 1997 Employee Stock Option Plan and the 1998 Employee Stock OptionPlan). 

| **Option Shares**                 | ** ** | ** ** | ** ** | **Shares(1)** | ** ** | **Weighted Average  Exercise Price** | ** ** |
|----------------------------------------|------------|------------|------------|---------------|------------|------------------------------------------------|------------|
| Outstanding at  December 31, 2005 |       | 1,062,500  |       |          | $          | 22.69                                          |       |   |
| Granted                                |       | —     |       |          | —     |                                           |       |
| Exercised                              |       | —     |       |          | —     |                                           |       |
| Expired and/or  canceled               |       | —     |       |          | —     |                                           |       |
| Outstanding at  December 31, 2006 |       | 1,062,500  |       |          | $          | 22.69                                          |       |   |

----

(1)          As of December 31,2006, these options had no intrinsic value.

| ** **                                 | ** ** | **Options Outstanding** | ** ** | ** **                           | ** ** | ** **            | ** ** | ** **                   | ** ** |
|--------------------------------------------|------------|------------------------------|------------|--------------------------------------|------------|-----------------------|------------|------------------------------|------------|
| ** **                                 | ** ** | ** **                   | ** ** | **Remaining  Contractual Life** | ** ** | **Average  Exercise** | ** ** | **Options Exercisable** | ** ** |
| **Range of Exercise Price** | ** ** | ** **                   | ** ** | **Shares**                           | ** ** | **(years)**           | ** ** | **Price**                    | ** ** | **Shares** | ** ** | **Price** | ** ** |
| $7.85                                      |       | 20,000                       |       |                                 | 5.1        |                  |       |                         | $          | 7.85 |   |   | 20,000 |   | $ | 7.85 |   |
| $16-$19                                    |       | 197,500                      |       |                                 | 4.1        |                  |       |                         | 17.27      |   |   | 197,500 |   | 17.37 |   |
| $21                                        |       | 210,000                      |       |                                 | 1.1        |                  |       |                         | 21.00      |   |   | 210,000 |   | 21.00 |   |
| $24-$26                                    |       | 615,000                      |       |                                 | 1.9        |                  |       |                         | 25.28      |   |   | 615,000 |   | 25.28 |   |
| $29                                        |       | 20,000                       |       |                                 | 2.1        |                  |       |                         | 29.00      |   |   | 20,000 |   | 29.00 |   |
|                                       |       | 1,062,500                    |       |                                 |       |                  |       |                         |       |   |   | 1,062,500 |   |   |   |
|                                            |            |                              |            |                                      |            |                       |            |                              |            |  |  |  |  |  |  |  |  |  |  |

 

**13.**   Quarterlyfinancial Information (Unaudited)

Summarizedquarterly financial data is as follows (in thousands):

| ** **                                                                                           | ** ** | **Quarter Ended**       | ** ** |
|------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|
| **2006**                                                                                             | ** ** | ** **                   | ** ** | **March 31** | ** ** | **June 30** | ** ** | **September 30** | ** ** | **December 31** | ** ** |
| ** **                                                                                           | ** ** | **(Liquidation Basis)** | ** ** |
| Net Assets in  Liquidation, beginning of period                                                      |       |                         | $          | 13,782 |   |   | $ | 13,432 |   |   | $ | 13,432 |   |   |   | $ | 12,493 |   |   |
| Changes in net assets in  liquidation:                                                               |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating (Loss) Income                                                                              |       |                         | 3,498      |   |   | 22 |   |   | (2,966 | ) |   |   | (1,002 | ) |   |
| Net interest expense                                                                                 |       |                         | (318       | ) |   | (330 | ) |   | (376 | ) |   |   | (362 | ) |   |
| (Increase) decrease in reserve for estimated  liquidation costs and capital expenditures             |       |                         | (3,870     | ) |   | 274 |   |   | 2,342 |   |   |   | 1,204 |   |   |
| Subtotal of adjustments to liquidation reserve                                                       |       |                         | (690       | ) |   | (34 | ) |   | (1,000 | ) |   |   | (160 | ) |   |
| Decrease in the fair value of other obligations                                                      |       |                         | —     |   |   | — |   |   | 79 |   |   |   | 122 |   |   |
| Increase in the fair value of other assets                                                           |       |                         | —     |   |   | — |   |   | — |   |   |   | 1,410 |   |   |
| Increase in fair value of the real estate assets                                                     |       |                         | 340        |   |   | 34 |   |   | — |   |   |   | — |   |   |
| Subtotal of adjustments to liquidation reserve and  decrease in fair value of the real estate assets |       |                         | (350       | ) |   | — |   |   | (921 | ) |   |   | 1,372 |   |   |
| Value of common stock and operating partnership  units redeemed                                      |       |                         | —     |   |   | — |   |   | (18 | ) |   |   | — |   |   |
| Total of Changes  in Net Assets in Liquidation                                                       |       |                         | (350       | ) |   | — |   |   | (939 | ) |   |   | 1,372 |   |   |
| Total Net Assets in  Liquidation, end of period                                                      |       |                         | $          | 13,432 |   |   | $ | 13,432 |   |   | $ | 12,493 |   |   |   | $ | 13,865 |   |   |
|                                                                                                      |            |                              |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

 

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| ** **                                                                                           | ** ** | **Quarter Ended**       | ** ** |
|------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|
| **2005**                                                                                             | ** ** | ** **                   | ** ** | **March 31** | ** ** | **June 30** | ** ** | **September 30** | ** ** | **December 31** | ** ** |
| ** **                                                                                           | ** ** | **(Liquidation Basis)** | ** ** |
| Net Assets in  Liquidation, beginning of period                                                      |       |                         | $          | 15,045 |   |   | $ | 14,941 |   |   | $ | 14,532 |   |   |   | $ | 13,654 |   |   |
| Changes in net  assets in liquidation:                                                               |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating (Loss) Income                                                                              |       |                         | 3,147      |   |   | 473 |   |   | (2,464 | ) |   |   | (444 | ) |   |
| Net interest income (expense)                                                                        |       |                         | (343       | ) |   | (284 | ) |   | (361 | ) |   |   | (286 | ) |   |
| (Increase) decrease in reserve for estimated  liquidation costs and capital expenditures             |       |                         | (2,804     | ) |   | (598 | ) |   | 1,947 |   |   |   | (1,635 | ) |   |
| Subtotal of adjustments to liquidation reserve                                                       |       |                         | —     |   |   | (409 | ) |   | (878 | ) |   |   | (2,365 | ) |   |
| Decrease in fair value of the real estate assets                                                     |       |                         | —     |   |   | — |   |   | — |   |   |   | (2,421 | ) |   |
| Subtotal of adjustments to liquidation reserve and  decrease in fair value of the real estate assets |       |                         | —     |   |   | (409 | ) |   | (878 | ) |   |   | (4,786 | ) |   |
| Preferred dividend reversal                                                                          |       |                         | —     |   |   | — |   |   | — |   |   |   | 4,914 | (1) |   |
| Value of common stock redeemed                                                                       |       |                         | (104       | ) |   | — |   |   | — |   |   |   | — |   |   |
| Total of Changes  in Net Assets in Liquidation                                                       |       |                         | (104       | ) |   | (409 | ) |   | (878 | ) |   |   | 128 |   |   |
| Total Net Assets in  Liquidation, end of period                                                      |       |                         | $          | 14,941 |   |   | $ | 14,532 |   |   | $ | 13,654 |   |   |   | $ | 13,782 |   |   |
|                                                                                                      |            |                              |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)          Reversalof accrual of dividends pursuant to the AEW letter agreement. See Note 15 “SubsequentEvents” for further discussion.

**14.**   IncomeTaxes

The Company initially qualified as a real estateinvestment trust, commonly called a REIT, but the Company lost its REIT statusin 2002. Under the tax code, once REIT status is lost, it generally may not beregained for the following four years. Accordingly, the Company will be subjectto federal income tax on any net taxable income it earns (or net taxable gainit realizes) throughout the remainder of its liquidation.

During  2004, 2005 and 2006 the Company’s operationsresulted in a net operating loss for income tax purposes. Therefore, no incometax will be due on its 2006, 2005 or 2004 operating revenues or its proceedsfrom 2004 and 2006 property sales. The Company did not have any property salesin 2005. Additionally, based on the Company’s current projections and theavailability of its net operating loss carryovers, the Company does notanticipate that it will incur any federal income tax liability throughout itsliquidation period. The Company’s actual results and tax liability could varymaterially from its estimates. As a result, the Company could generate positivetaxable income in future taxable years, which would likely cause the Company toincur federal and state income tax liabilities. Any tax liabilities will reducethe amount of cash available for liquidating distributions. Deferred income taxassets (liabilities) as of December 31, 2006 and 2005 are as follows:

| ** **                                               | ** ** | **December 31,** | ** ** |
|----------------------------------------------------------|------------|-----------------------|------------|
| ** **                                               | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Differences in  the carrying value of golf course assets |       | $                     | (3,205,000 | ) | $ | (1,299,000 | ) |
| Liquidation  liability                                   |       | 1,236,000             |       | 2,217,000 |   |
| Federal and state  net operating loss carryforwards      |       | 30,037,000            |       | 26,660,000 |   |
| Capital loss  carryover                                  |       | 16,960,000            |       | 16,878,000 |   |
| Contingent  refurbishment                                |       | 1,601,000             |       | 1,740,000 |   |
| Other liabilities                                        |       | —                |       | 327,000 |   |
| Intangible assets                                        |       | (2,743,000            | )          | (2,344,000 | ) |
| Other                                                    |       | 794,000               |       | 594,000 |   |
| Sub-total                                                |       | 44,680,000            |       | 44,773,000 |   |
| Valuation  Allowance                                     |       | (44,680,000           | )          | (44,773,000 | ) |
| Total net deferred tax  assets                           |       | $                     | —     |   | $ | — |   |

 

108

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Included in deferred tax assets as of December 31,2006 above are federal and state net operating losses of $82,655,000 and$70,120,000, respectively. These net operating losses expire at various datesbeginning with the 2021 tax year and ending with the 2026 tax year.

Also included in deferred tax assets above is acapital loss carryover of $45,071,000, which expires in 2009.

Theprovision for federal and state income taxes for the years ended December 31,2006, 2005 and 2004 is made up of the following components:

| ** **                     | ** ** | **2006** | ** ** | **2005**   | ** ** | **2004**   | ** ** |
|--------------------------------|------------|----------|------------|------------|------------|------------|------------|
| Deferred Income  Tax Benefit   |       |     |       |       |       |       |       |
| State                          |       | $        | (54,000    | )          | $          | 349,000    |       | $ | 596,000 |   |
| Federal                        |       | (39,000  | )          | 2,043,000  |       | 3,309,000  |       |
| Sub-total                      |       | (93,000  | )          | 2,392,000  |       | 3,905,000  |       |
| Change in  Valuation Allowance |       | 93,000   |       | (2,392,000 | )          | (3,905,000 | )          |
| Total                          |       | $        | —     |       | $          | —     |       | $ | — |   |

 

Utilization of the deferred tax asset of $44,680,000calculated above, is dependent on future taxable profits. Based on our currentestimates through the remainder of our liquidation period, we do not anticipategenerating future profits from which to benefit from the calculated deferredtax asset; accordingly, a valuation allowance for the entire amount has beenrecorded.

The effective income tax rate is different from thefederal statutory rate for the years ended December 31, 2006 and 2005 forthe following reasons:

Thestatutory rate reconciling percentages for 2006 are initiated primarily as aresult of the nominal amount of pretax income to which the reconciling itemsare being compared. The state income expense for 2006 is higher than in prioryears due to an adjustment of state net operating loss carryovers. The “Other”reconciling amount for 2006 is the result of an adjustment to the net fixedasset tax basis that did not have a corresponding impact on the net operatingloss carryover.

| ** **                                                | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|-----------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Expected taxes at  statutory rates                        |       | 34.0     | %          | (34.0    | )%         | (34.0    | )%         |
| State income tax  benefit, net of federal income tax rate |       | 35.3     | %          | (3.6     | )%         | (3.6     | )%         |
| Other                                                     |       | 21.6     | %          | (1.8     | )%         | —   |       |
| Nondeductible  meals and entertainment expenses           |       | 1.2      | %          | —   |       | —   |       |
| Change in  Valuation allowance                            |       | (92.1    | )%         | 39.4     | %          | 37.6     | %          |
| Total                                                     |       | 0.0      | %          | 0.0      | %          | 0.0      | %          |

 

In June 2006, theFASB issued FASB Interpretation No. (FIN) 48, “Accounting for Uncertaintyin Income Taxes,” which clarifies the accounting for uncertainty in incometaxes recognized in financial statements in accordance with SFAS No. 109, “Accountingfor Income Taxes.” FIN 48 prescribes a recognition threshold and measurementattribute for the financial statement recognition and measurement of a taxposition taken or expected to be taken in a tax return. FIN 48 requires that werecognize in our financial statements, the impact of a tax position, if thatposition is more likely than not of being sustained on audit, based on thetechnical merits of the position. The provisions of FIN 48 also provide guidanceon derecognition, classification, interest and penalties, accounting in interimperiods, and disclosure. The provisions of FIN 48 are effective beginning January 1,2007, with the cumulative effect of the change in accounting principle recordedas an adjustment to the opening balance of retained earnings. We estimate thatthe adoption of this standard will not have a material impact on the openingbalance of retained earnings for 2007 and will have no impact to our cashflows.

109

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**15.**   SubsequentEvents

*Land Use Lawsuits*

The Second District Courtof Appeal head oral argument on February 14, 2007. The Appeal Courtaffirmed per curium, or by the whole court instead of just one judge, theCircuit Court judgment in favor of the Defendants on February 28, 2007 anddenied the plaintiff-appellants’ motion for attorneys fees. On March 14,2007, the plaintiff-appellants filed a motion requesting the Appeal Court  to rehear their claims. The Appeal Court hasnot yet responded to this motion. See Note 6 for further discussion.

*Termination ofFacility Management Agreement with Troon*

On February 22, 2007,the Company sent Troon a notice of termination in regards to the FacilitiesManagement Agreement pursuant to which Troon manages the golf operations at theResort. The Company and Troon are in the process of negotiating the terms andconditions of the termination which the Company expects to be effective uponthe conclusion of the negotiations and the execution of a terminationagreement. The Company intends to manage the golf operations internallyfollowing the termination of the Troon management agreement.

*Financing*

The Company is currentlynegotiating the terms of  a three yearnon-revolving credit facility with a Tampa community bank  for approximately $1,200,000. The proceeds ofwhich would be used to finance renovations at the Resort restaurants,information technology infrastructure upgrades and other propertyimprovements  at the Resort and to covershort-term working capital shortfalls. The three condominium units that theCompany owns at the Resort will serve as collateral for this loan. The Companyis also seeking to obtain a revolving accounts receivable line of credit for atleast $500,000. However, there can be no assurance that the Company will enterinto this loan facility or that we will be able to obtain an accountsreceivable credit line.

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**REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMON FINANCIAL STATEMENT SCHEDULE**

To the Directors and StockholdersGolf Trust of America, Inc.

The audits referred to in our report dated March 30,2007 relating to the consolidated financial statements of Golf Trust of America, Inc.and subsidiaries, which are contained in Item 8 of this Form 10-K,included the audit of the following Real Estate and Accumulated Depreciationfinancial statement schedule as of December 31, 2006. This financialstatement schedule is the responsibility of the Company’s management. Ourresponsibility is to express an opinion on this financial statement schedulebased upon our audit.

In ouropinion such financial statement schedule presents fairly, in all materialrespects, the information set forth therein.
|                           | /s/ BDO SEIDMAN, LLP |
|---------------------------|----------------------|
| Charlotte, North Carolina | BDO Seidman, LLP     |
| March 30, 2007       |                 |

 

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**Schedule IIIGolf Trust of AmericaReal Estate and Accumulated DepreciationDecember 31, 2006(in thousands)**

| ** **            | ** ** | ** ** | ** **       | **Initial Cost** | ** ** | **Cost   Capitalized  Subsequent   to Acquisition** | ** **                               | **Gross Amounts of Which  Carried at End of period** | ** **   | ** ** | ** **          | ** ** | ** **   | ** ** | ** ** | **Life on Which  Depreciation  in Latest** | ** **                               |
|-----------------------|------------|------------|------------------|------------------|------------|--------------------------------------------------------------------|------------------------------------------|-----------------------------------------------------------------------------------------|--------------|------------|---------------------|------------|--------------|------------|------------|-----------------------------------------------------------|------------------------------------------|
| **Property/Location** | ** ** | ** ** | **Encumbrances** | ** **       | **Land**   | ** **                                                         | **Building &  Improve-  ments** | ** **                                                                              | **Other(3)** | ** ** | **Improve-  ments** | ** ** | **Other(1)** | ** ** | **Land**   | ** **                                                | **Building &  Improve-  ments** | ** ** | **Other(1)(3)** | ** ** | **Total** | ** ** | **Accumulated  Depreciation(2)** | ** ** | **Date of  Construction** | ** ** | **Date   Acquired** | ** ** | **Statement of  Operation is  Completed(2)** | ** ** |
|                       |            |            |                  |                  |            |                                                                    |                                          |                                                                                         |              |            |                     |            |              |            |            |                                                           |                                          |  |  |  |  |  |  |  |  |  |  |  |  |  |

| Wildewood Country Club and Country Club at Woodcreek  Farm—Columbia, SC |   |   | —        |   |   | 1,392        |   |   | 9,135         |   |   |   | —        |   |   |   | 573          |   |   |   | —        |   |   | 1,392        |   |   | 9,708         |   |   |   | —        |   |   | 11,100        |   |   | 1,839        |   |   | 1974      |   | 12/19/1997 |   | 3-30  years |   |
|-----------------------------------------------------------------------------------|--------|--------|---------------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------|---------------|--------|--------|--------|--------------|--------|--------|--------|---------------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------|---------------|--------|--------|---------------|--------|--------|--------------|--------|--------|-----------|--------|------------|--------|-------------|--------|
| Innisbrook Golf Resort (the “Resort”)—Palm Harbor, FL              |   |   | —        |   |   | 1,968        |   |   | 26,882        |   |   |   | 20,170        |   |   |   | 2,165        |   |   |   | —        |   |   | 1,968        |   |   | 29,047        |   |   |   | 20,170        |   |   | 51,185        |   |   | —       |   |   | 1970-1987 |   | 7/15/2004  |   | N/A         |   |
| Improvement reclass to  liquidation accrual                                       |   |   | —        |   |   | —       |   |   | —        |   |   |   | —        |   |   |   | (301         | )      |   |   | —        |   |   | —       |   |   | —        |   |   |   | (301          | )      |   | (301          | )      |   | —       |   |   |      |   |       |   |        |   |
| Asset write-downs                                                                 |   |   | —        |   |   | —       |   |   | —        |   |   |   | —        |   |   |   | —       |   |   |   | (4,553        | )      |   | —       |   |   | —        |   |   |   | (4,553        | )      |   | (4,553        | )      |   | —       |   |   |      |   |       |   |        |   |
| Total                                                                             |   |   | $ — |   |   | $ 3,360 |   |   | $ 36,017 |   |   |   | $ 20,170 |   |   |   | $ 2,437 |   |   |   | $ (4,553 | )      |   | $ 3,360 |   |   | $ 38,755 |   |   |   | $ 15,316 |   |   | $ 57,431 |   |   | $ 1,839 |   |   |      |   |       |   |        |   |
|                                                                              |   |   |          |   |   |         |   |   |          |   |   |   |          |   |   |   |         |   |   |   |          |   |   |         |   |   |          |   |   |   |          |   |   |          |   |   |         |   |   |      |   |       |   |        |   |

----

(1)              The balance of the Valuation Reserve,which was recorded to adjust golf course assets to estimated fair value, isapproximately $4,553,000 at December 31, 2006.

(2)              Depreciation expense has not been recordedsince the fourth quarter of 2000 because subsequently all assets were deemed tobe assets held for sale.

(3)              The balance of intangible assets acquiredin the acquisition of the Resort on July 15, 2004 is approximately$20,170,000 at December 31, 2006.

| Balance at beginning of period                         |   | $ 58,632 |   |
|--------------------------------------------------------|--------|---------------|--------|
| Additions  during period:                              |   |          |   |
| Acquisitions through foreclosure                       |   | —        |   |
| Other acquisitions                                     |   | —        |   |
| Improvements, etc.                                     |   | 698           |   |
| Other                                                  |   | —        |   |
| Deductions  during period:                             |   |          |   |
| Cost of real estate sold—net of valuation reserve |   | (1,787        | )      |
| Disposals of equipment                                 |   | (20           | )      |
| Redemption of collateral                               |   | —        |   |
| Asset write downs                                      |   | —        |   |
| Improvements included in Liquidation Accrual           |   | (92           | )      |
| Other                                                  |   | —        |   |
| Balance at close  of period                            |   | $ 57,431 |   |

 

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**SIGNATURES ANDPOWERS OF ATTORNEY**

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the Registrant has duly caused this Report to be signed on itsbehalf by the undersigned, thereunto duly authorized, in the City ofCharleston, State of South Carolina, on March 30, 2007.
|        | **GOLF TRUST OF AMERICA, INC.** |
|--------|---------------------------------|
|   | By:                             | /s/ W. BRADLEY BLAIR, II |
|   |                            | W. Bradley Blair, II |
|   | * *                        | *Chief Executive Officer* |

 

Each of the undersigned officers and directors of GolfTrust of America, Inc. does hereby constitute and appoint W. Bradley Blair, IIand Tracy S. Clifford, and each of them individually, his true and lawfulattorneys-in-fact and agents, each with full power of substitution andre-substitution, for him and in his name, place and stead, in any and allcapacities, to sign any and all amendments to this report, and to file thesame, with exhibits thereto, and other documents in connection therewith, withthe Securities and Exchange Commission, granting unto said attorneys-in-factand agents, and each of them, full power and authority to do and perform eachand every act and thing requisite or necessary to be done in and about thepremises, as fully to all intents and purposes as he might or could do inperson, hereby, ratifying and confirming all that each of saidattorneys-in-fact and agents, or his substitute or substitutes, may lawfully door cause to be done by virtue hereof.

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed below by the following persons in the capacities and on the datesindicated:

|                                | **Signature** | ** **                                                            | ** ** | ** **          | **Title** | ** ** | ** ** | ** ** | **Date** | ** ** |
|--------------------------------|---------------|-----------------------------------------------------------------------|------------|---------------------|-----------|------------|------------|------------|----------|------------|
| /s/ W. BRADLEY  BLAIR, II |          | Chief Executive  Officer (Principal                                   |       | March 30, 2007 |
| W.  Bradley Blair, II     |          | Executive  Officer), President and Chairman of the Board of Directors |       |                |
| /s/ TRACY S.  CLIFFORD         |          | Principal  Accounting Officer, Secretary                              |       | March 30, 2007 |
| Tracy  S. Clifford             |          | and Controller                                                        |       |                |
| /s/ RAYMOND V.  JONES          |          | Director                                                              |       | March 30, 2007 |
| Raymond  V. Jones              |          |                                                                  |       |                |
| /s/ FRED W.  REAMS             |          | Director                                                              |       | March 30, 2007 |
| Fred  W. Reams                 |          |                                                                  |       |                |
| /s/ JAN H.  LOEB               |          | Director                                                              |       | March 30, 2007 |
| Jan  H. Loeb                   |          |                                                                  |       |                |
| /s/ NAUMAN S.  TOOR            |          | Director                                                              |       | March 30, 2007 |
| Nauman  S. Toor                |          |                                                                  |       |                |
| /s/ EDWARD L.  WAX             |          | Director                                                              |       | March 30, 2007 |
| Edward L. Wax                  |          |                                                                  |       |                |

 

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**EXHIBIT INDEX**

Pursuant to Item 601(a)(2) ofRegulation S-K, this exhibit index immediately precedes the exhibits.

Thefollowing exhibits are part of this Annual Report on Form 10-K forfiscal year 2006 (and are numbered in accordance with Item 601 of Regulation S-K).Items marked with an asterisk (*) are filed with this annual report.
| No.   | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                            |
|-------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1   |       | Plan of Liquidation and Dissolution of Golf Trust of  America, Inc., as approved by stockholders on May 22, 2001 and as  currently in effect (previously filed as Exhibit 2.1 to our company’s  Current Report on Form 8-K, filed May 30, 2001, and  incorporated herein by reference).                                                                                                      |
| 3.1.1 |       | Articles of Amendment  and Restatement of Golf Trust of America, Inc., as filed with the State  Department of Assessments and Taxation of Maryland on January 31, 1997,  (previously filed as Exhibit 3.1A to our company’s Registration  Statement on Form S-11 (Commission File No. 333-15965)  Amendment No. 2 (filed January 30, 1997) and incorporated herein by  reference). |
| 3.1.2 |       | Articles of Amendment of  Golf Trust of America, Inc., as filed with the State Department of  Assessments and Taxation of Maryland on June 9, 1998 (previously filed  as Exhibit 3.2B to our company’s Quarterly Report on Form 10-Q,  filed August 14, 1998 and incorporated herein by reference).                                                                                          |
| 3.1.3 |       | Articles of Amendment of  Golf Trust of America, Inc. dated May 22, 2001, as filed with the  State Department of Assessments and Taxation of Maryland on May 25, 2001  (previously filed as Exhibit 3.1 to our company’s Current Report on  Form 8-K, filed May 30, 2001, and incorporated herein by  reference).                                                                       |
| 3.2.1 |       | Articles Supplementary  of Golf Trust of America, Inc. relating to the Series A Preferred  Stock, as filed with the State Department of Assessments and Taxation of the  State of Maryland on April 2, 1999 (previously filed as Exhibit 3.1  to our company’s Current Report on Form 8-K, filed April 13,  1999, and incorporated herein by reference).                                |
| 3.2.2 |       | Articles Supplementary  of Golf Trust of America, Inc. relating to the Series B Junior  Participating Preferred Stock, as filed with the State Department of  Assessments and Taxation of the State of Maryland on August 27, 1999  (previously filed as Exhibit 3.1 to our company’s Current Report on  Form 8-K, filed August 30, 1999, and incorporated herein by  reference).       |
| 3.3.1 |       | Bylaws of Golf Trust of  America, Inc., as amended and restated by the Board of Directors on  February 16, 1998 (previously filed as Exhibit 3.2 to our company’s  Quarterly Report on Form 10-Q, filed May 15, 1998 and  incorporated herein by reference).                                                                                                                                 |
| 3.3.2 |       | Bylaws of Golf Trust of  America, Inc., as amended and restated by the Board of Directors on  March 27, 2001 (previously filed as Exhibit 3.3 to our company’s  Quarterly Report on Form 10-Q, filed May 15, 2001 and  incorporated herein by reference).                                                                                                                                    |
| 3.3.3 |       | Bylaws of Golf Trust of  America, Inc., as amended and restated by the Board of Directors on  August 20, 2001 and as currently in effect (except for the provision  amended by the following exhibit 3.3.4) (previously filed as  Exhibit 3.3 to our company’s Current Report on Form 8-K,  filed August 30, 2001 and incorporated herein by reference).                                |

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| 3.3.4      |   | Bylaws Amendment of Golf  Trust of America, Inc., as adopted by the Board of Directors on  February 9, 2004 (previously filed as Exhibit 3.3.4 to our  company’s Annual Report on Form 10-K, filed March 30, 2004  and incorporated herein by reference).                                                                                              |
|------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.3.5      |   | Bylaws Amendment of Golf  Trust of America, Inc., as adopted by the Board of Directors on  January 5, 2005 and as currently in effect (previously filed as  Exhibit 3.3.4 to our company’s Current Report on Form 8-K,  filed January 10, 2005 and incorporated herein by reference).                                                                  |
| 3.3.6      |   | Bylaws Amendment of Golf  Trust of America, Inc., as adopted by the Board of Directors on  March 8, 2006 and as currently in effect (previously filed as  Exhibit 3.2 to our company’s Current Report on Form 8-K,  filed March 13, 2006 and incorporated herein by reference).                                                                        |
| 4.1        |   | Form of Share  Certificate for Golf Trust of America, Inc. Common Stock (previously  filed as Exhibit 4.3 to our company’s Current Report on Form 8-K,  filed August 30, 1999, and incorporated herein by reference).                                                                                                                                  |
| 4.2        |   | Form of Share  Certificate for Golf Trust of America, Inc. Series A Preferred  Stock (previously filed as Exhibit 3.2 to our company’s Current Report  on Form 8-K, filed April 13, 1999, and incorporated herein by  reference).                                                                                                                 |
| 4.3        |   | Shareholder Rights  Agreement, by and between Golf Trust of America, Inc. and ChaseMellon  Shareholder Services, L.L.C., as rights agent, dated August 24, 1999  (previously filed as Exhibit 4.1 to our company’s Current Report on  Form 8-K, filed August 30, 1999, and incorporated herein by  reference).                                         |
| 4.4†  |   | Voting Agreement,  between Golf Trust of America, Inc. and the holder of all of its  outstanding shares of Series A Preferred Stock, AEW Targeted Securities  Fund, L.P., dated February 22, 2001 (previously filed as  Exhibit 4.2 to our company’s Current Report on Form 8-K,  filed March 12, 2001, and incorporated herein by reference).    |
| 4.5        |   | Voting Agreement, by and  among Golf Trust of America, Inc., Golf Trust of America, L.P., GTA  GP, Inc. and the holders of operating partnership units named therein,  dated as of February 14, 2001 (previously filed as Exhibit 4.3 to our  company’s Current Report on Form 8-K, filed March 12, 2001,  and incorporated herein by reference). |
| 10.1.1     |   | First Amended and  Restated Agreement of Limited Partnership (the “Partnership Agreement”) of  Golf Trust of America, L.P., dated February 12, 1997 (previously filed  as Exhibit 10.1 to our company’s Annual Report on Form 10-K,  filed March 31, 1997, and incorporated herein by reference).                                                 |
| 10.1.2     |   | First Amendment to the  Partnership Agreement of Golf Trust of America, L.P., dated as of  February 1, 1998 (previously filed as Exhibit 10.1.2 to our  company’s Annual Report on Form 10-K, filed March 31, 1998,  and incorporated herein by reference).                                                                                                 |
| 10.1.3     |   | Second Amendment and  Consent to the Partnership Agreement of Golf Trust of America, L.P., as  amended, dated as of February 14, 2001 (previously filed as  Exhibit 10.3 to our company’s Current Report on Form 8-K,  filed March 12, 2001, and incorporated herein by reference).                                                                         |
| 10.1.4**** |   | Exhibit A to the  Partnership Agreement (Schedule of Partnership Interests) of Golf Trust  of America, L.P., as revised through March 26, 2007.                                                                                                                                                                                                                       |

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| 10.1.5 |   | Designation of  Class B Common OP units of Golf Trust of America, L.P., dated  February 1, 1998, which has been added as the first entry in  Exhibit D to the Partnership Agreement (included within the First  Amendment to the Partnership Agreement, which was previously filed as  Exhibit 10.1.2 to our company’s Annual Report on Form 10-K,  filed March 31, 1998, and incorporated herein by reference).                                                                                                                                                                                                                |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1.6 |   | Designation of  Series A Preferred OP units of Golf Trust of America, L.P., dated  April 2, 1999, which has been added to Exhibit D to the Partnership  Agreement (previously filed as Exhibit 10.3 to our company’s Current  Report on Form 8-K, filed April 13, 1999, and incorporated  herein by reference).                                                                                                                                                                                                                                                                                                                 |
| 10.1.7 |   | Designation of  Series B Preferred OP units of Golf Trust of America, L.P., dated  May 11, 1999, which has been added to Exhibit D to the Partnership  Agreement (previously filed as Exhibit 10.1.6 to our company’s Annual  Report on Form 10-K, filed March 30, 2000, and incorporated  herein by reference).                                                                                                                                                                                                                                                                                                                |
| 10.1.8 |   | Designation of  Series C Preferred OP units of Golf Trust of America, L.P., dated  July 28, 1999, which has been added to Exhibit D to the Partnership  Agreement (previously filed as Exhibit 10.1.7 to our company’s Annual  Report on Form 10-K, filed March 30, 2000, and incorporated  herein by reference).                                                                                                                                                                                                                                                                                                               |
| 10.2.1 |   | Credit Agreement, dated  as of June 20, 1997, by and among Golf Trust of America, L.P., as  Borrower, Golf Trust of America, Inc., GTA GP, Inc. and GTA  LP, Inc., as Guarantors, the Lenders referred to therein, and  NationsBank N.A., as Agent (previously filed as Exhibit 10.1 to our  company’s Current Report on Form 8-K, dated June 20, 1997 and  filed August 12, 1997, and incorporated herein by reference).                                                                                                                                                                                             |
| 10.2.2 |   | Amended and Restated  Credit Agreement, dated as of July 8, 1998, by and among Golf Trust of  America, L.P., as Borrower, Golf Trust of America, Inc., GTA  GP, Inc. and GTA LP, Inc., as Guarantors, the Lenders referred to  therein, and NationsBank N.A., as Agent (previously filed as  Exhibit 10.2.2 to our company’s Amended Annual Report on Form 10-K/A,  filed April 1, 1999, and incorporated herein by reference).                                                                                                                                                                                            |
| 10.2.3 |   | Amended and Restated  Credit Agreement, dated as of March 31, 1999, by and among Golf Trust of  America, L.P., as Borrower, Golf Trust of America, Inc., GTA  GP, Inc. and GTA LP, Inc., as Guarantors, the Lenders referred to  therein, NationsBank, N.A., as Administrative Agent, First Union National  Bank as Syndication Agent, and BankBoston, N.A., as Documentation Agent  (previously filed as Exhibit 10.2.3 to our company’s Annual Report on  Form 10-K, filed March 30, 2000, and incorporated herein by  reference).                                                                                       |
| 10.2.4 |   | Second Amended and  Restated Credit Agreement, dated as of July 25, 2001, by and among Golf  Trust of America, L.P., as Borrower, Golf Trust of America, Inc., GTA  GP, Inc., GTA LP, Inc., Sandpiper-Golf Trust, LLC, GTA Tierra Del  Sol, LLC, and GTA Osage, LLC, as Guarantors, the Lenders referred to therein,  and Bank of America, N.A., as Administrative Agent, First Union National  Bank, as Syndication Agent, and Fleet National Bank, as Documentation Agent  (previously filed as Exhibit 10.1 to our company’s Current Report on  Form 8-K, filed August 1, 2001, and incorporated herein by  reference). |
| 10.3   |   | Credit Agreement, dated  as of March 31, 1999, by and among Golf Trust of America, L.P., as  Borrower, Golf Trust of America, Inc., GTA GP, Inc. and GTA  LP, Inc., as Guarantors, the Lenders referred to therein, and  NationsBank, N.A., as Administrative Agent for the Lenders (previously filed  as Exhibit 10.3 to our company’s Annual Report on Form 10-K,  filed March 30, 2000, and incorporated herein by reference).                                                                                                                                                                                          |

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| 10.4   |   | Loan Agreement (the  “participating mortgage”), dated as of June 20, 1997, by and between  Golf Host Resorts, Inc., as Borrower, and Golf Trust of America, L.P.,  as Lender (previously filed as Exhibit 10.2 to our company’s Current  Report on Form 8-K, dated June 20, 1997 and filed  August 12, 1997, and incorporated herein by reference). |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.5   |   | Form of  Participating Lease Agreement (previously filed as Exhibit 10.2 to our  company’s Registration Statement on Form S-11, filed  January 15, 1997, and incorporated herein by reference).                                                                                                                                                                         |
| 10.6+  |   | 1997 Non-Employee  Directors’ Plan of Golf Trust of America, Inc. (previously filed as  Exhibit 10.7 to our company’s Registration Statement on Form S-11  (Commission File No. 333-15965) Amendment No. 1 (filed  January 15, 1997) and incorporated herein by reference).                                                                              |
| 10.7+  |   | 1997 Stock Incentive  Plan (the “Original 1997 Plan”) of Golf Trust of America, Inc.  (previously filed as Exhibit 10.6 to our company’s Registration  Statement on Form S-11 (Commission File No. 333-15965)  Amendment No. 1 (filed January 15, 1997) and incorporated herein by  reference).                                                     |
| 10.8+  |   | 1997 Stock-Based  Incentive Plan of Golf Trust of America, Inc. (the “New 1997 Plan”)  (previously filed as Exhibit 10.3 to our company’s Quarterly Report on  Form 10-Q (Commission File No. 000-22091), filed  August 15, 1997, and incorporated herein by reference).                                                                                 |
| 10.9+  |   | Form of  Nonqualified Stock Option Agreement for use under the New 1997 Plan  (previously filed as Exhibit 10.4 to our company’s Quarterly Report on  Form 10-Q (Commission File No. 000-22091), filed  August 15, 1997, and incorporated herein by reference).                                                                                                    |
| 10.10+ |   | Form of Employee  Incentive Stock Option Agreement for use under the New 1997 Plan (previously  filed as Exhibit 10.5 to our company’s Quarterly Report on Form 10-Q  (Commission File No. 000-22091), filed August 15, 1997, and incorporated  herein by reference).                                                                                              |
| 10.11+ |   | General Provisions  Applicable to Restricted Stock Awards Granted Under the New 1997 Plan  (previously filed as Exhibit 10.14 to our company’s Registration  Statement on Form S-11 (Commission File No. 333-36847),  dated September 30, 1997 and filed as of October 1, 1997, and  incorporated herein by reference).                                            |
| 10.12+ |   | Form of Restricted  Stock Award Agreement for use under the New 1997 Plan (previously filed as  Exhibit 10.15 to our company’s Registration Statement on Form S-11  (Commission File No. 333-36847), dated September 30, 1997 and  filed as of October 1, 1997, and incorporated herein by reference).                                                        |
| 10.13+ |   | 1998 Stock-Based  Incentive Plan of Golf Trust of America, Inc. (previously filed as  Exhibit A to our company’s definitive proxy statement, dated  April 1, 1999 and filed March 29, 1999, and incorporated herein by  reference).                                                                                                                                     |
| 10.14+ |   | Employee Stock Purchase  Plan of Golf Trust of America, Inc. (previously filed as  Exhibit 4.1 to our company’s Registration Statement on Form S-8  (Commission File No. 333-46659), filed February 20, 1998, and  incorporated herein by reference).                                                                                                              |

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| 10.15+   |   | Subscription Agreement  for use with the Employee Stock Purchase Plan (previously filed as  Exhibit 4.2 to our company’s Registration Statement on Form S-8  (Commission File No. 333-46659), filed February 20, 1998, and  incorporated herein by reference).                                                                                                                                                                               |
|----------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.16.1+ |   | First Amended and  Restated Employment Agreement between Golf Trust of America, Inc. and  W. Bradley Blair, II, dated November 7, 1999 (previously filed  as Exhibit 10.15 to our company’s Annual Report on Form 10-K,  filed March 30, 2000, and incorporated herein by reference).                                                                                                                                         |
| 10.16.2+ |   | Second Amended and  Restated Employment Agreement between Golf Trust of America, Inc. and  W. Bradley Blair, II, dated as of February 25, 2001  (previously filed as Exhibit 10.4 to our company’s Current Report on  Form 8-K, filed March 12, 2001, and incorporated herein by  reference).                                                                                                                                 |
| 10.16.3+ |   | Letter Agreement to the  Second Amended and Restated Employment Agreement between Golf Trust of  America, Inc. and W. Bradley Blair, II, dated as of  March 22, 2004 (previously filed as Exhibit 10.16.3 to our  company’s Annual Report on Form 10-K filed March 30, 2004,  and incorporated herein by reference).                                                                                                          |
| 10.17.1+ |   | Second Amended and  Restated Employment Agreement between Golf Trust of America, Inc. and  Scott D. Peters, dated November 7, 1999 (previously filed as  Exhibit 10.16 to our company’s Annual Report on Form 10-K,  filed March 30, 2000, and incorporated herein by reference).                                                                                                                                                  |
| 10.17.2+ |   | Third Amended and  Restated Employment Agreement between Golf Trust of America, Inc. and  Scott D. Peters, dated as of February 25, 2001 (previously filed as  Exhibit 10.5 to our company’s Current Report on Form 8-K,  filed March 12, 2001, and incorporated herein by reference).                                                                                                                                             |
| 10.17.3+ |   | Fourth Amended and  Restated Employment Agreement and related General Release between Golf Trust  of America, Inc. and Scott D. Peters, dated as of August 29,  2003 (previously filed as Exhibits 10.1 and 10.2 to our company’s  Current Report on Form 8-K, filed October 9, 2003, and  incorporated herein by reference).                                                                                                      |
| 10.18    |   | Stock Purchase  Agreement, dated April 2, 1999, by and among Golf Trust of  America, Inc., Golf Trust of America, L.P., GTA GP, Inc., GTA  LP, Inc. and AEW Targeted Securities Fund, L.P. (previously filed as  Exhibit 10.1 to our company’s Current Report on Form 8-K,  filed April 13, 1999, and incorporated herein by reference).                                                                                      |
| 10.19    |   | Registration Rights  Agreement, dated April 2, 1999, by and between Golf Trust of  America, Inc. and AEW Targeted Securities Fund, L.P. (previously filed  as Exhibit 10.2 to our company’s Current Report on Form 8-K,  filed April 13, 1999, and incorporated herein by reference).                                                                                                                                                   |
| 10.20.1  |   | Purchase and Sale  Agreement, between Golf Trust of America, L.P., as seller, and Legends Golf  Holding, LLC, as buyer, dated as of February 14, 2001 (previously filed  as Exhibit 10.1 to our company’s Current Report on Form 8-K,  filed August 14, 2001, and incorporated herein by reference).                                                                                                                                         |
| 10.20.2  |   | First Amendment to  Purchase Agreement, Fifth Amendment to Lease Agreement (Bonaventure Golf  Club) and Settlement Agreement by and among Golf Trust of America, L.P.,  Legends Golf Holding, LLC, Legends at Bonaventure, Inc., Larry Young and  Danny Young, dated as of July 30, 2001 (previously filed as  Exhibit 10.2 to our company’s Current Report on Form 8-K,  filed August 14, 2001, and incorporated herein by reference). |

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| 10.21   |   | Confidentiality and  Standstill Letter Agreement between Golf Trust of America, Inc. and The  Legends Group, dated as of February 14, 2001 (previously filed as  Exhibit 10.2 to our company’s Current Report on Form 8-K,  filed March 12, 2001, and incorporated herein by reference).                                                                                                          |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.22.1 |   | Loan Agreement, dated as  of March 18, 2004, by and among GTA—Stonehenge, LLC, as Borrower, Golf  Trust of America, L.P., as Guarantor, and Textron Financial Corporation as  the Lender (previously filed as Exhibit 10.22.1 to our company’s Annual  Report on Form 10-K filed March 30, 2004, and incorporated  herein by reference).                                                          |
| 10.22.2 |   | Mortgage Security  Agreement and Fixture Filing, dated as of March 18, 2004, from Golf  Trust of America, L.P. in favor of Textron Financial Corporation (previously  filed as Exhibit 10.22.2 to our company’s Annual Report on Form 10-K  filed March 30, 2004, and incorporated herein by reference).                                                                                               |
| 10.22.3 |   | Amended and Restated  Loan Agreement, dated as of August 4, 2005, by and among GTA—Stonehenge,  LLC, as Borrower, Golf Trust of America, L.P., as Guarantor, and Textron  Financial Corporation as the Lender (previously filed as Exhibit 10.22.3  to our company’s Current Report on Form 8-K, filed August 9,  2005, and incorporated herein by reference).                                    |
| 10.22.4 |   | Notice of Future  Advances, Note Mortgage, Security Agreement, and Fixture Filing, dated as of  August 4, 2005, from Golf Trust of America, L.P. in favor of Textron  Financial Corporation (previously filed as Exhibit 10.22.4 to our  company’s Current Report on Form 8-K, filed August 9, 2005,  and incorporated herein by reference).                                                           |
| 10.23   |   | 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 (previously filed as Exhibit 10.1 to our company’s  Current Report on Form 8-K, filed July 29, 2004, and  incorporated herein by reference). |
| 10.24   |   | 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 (previously filed as Exhibit 10.2 to  our company’s Current Report on Form 8-K, filed July 29,  2004, and incorporated herein by reference).                                             |
| 10.24.2 |   | First Amendment to  Defense and Escrow Agreement dated December 28, 2006 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 (previously filed  as Exhibit 10.24.2 to our company’s Current Report on Form 8-K,  filed January 4, 2007, and incorporated herein by reference).                 |
| 10.25   |   | 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.  (previously filed as Exhibit 10.3 to our company’s Current Report on  Form 8-K, filed July 29, 2004, and incorporated herein by  reference).                                                                                      |
| 10.26   |   | Management Agreement  dated July 15, 2004 by and between Westin Management Company South and  GTA-IB, LLC (previously filed as Exhibit 10.4 to our company’s Current  Report on Form 8-K, filed July 29, 2004, and incorporated  herein by reference).                                                                                                                                                 |

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| 10.27    |   | 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 (previously filed as Exhibit 10.5 to our company’s Current Report  on Form 8-K, filed July 29, 2004, and incorporated herein by  reference).                                                                       |
|----------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.28    |   | Facility Management  Agreement dated July 15, 2004 by and among Troon Golf L.L.C., Westin  Management Company South and GTA-IB, LLC (previously filed as  Exhibit 10.6 to our company’s Current Report on Form 8-K,  filed July 29, 2004, and incorporated herein by reference).                                                                                                                    |
| 10.29    |   | 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 (previously filed as  Exhibit 10.7 to our company’s Current Report on Form 8-K,  filed July 29, 2004, and incorporated herein by reference).                                                                                                                      |
| 10.29.2  |   | Loan Satisfaction and  Termination of Assignment of Defense and Escrow Agreement dated  December 28, 2006 by and between Golf Trust of America, L.P. and Elk  Funding, L.L.C. (previously filed as Exhibit 10.29.2 to our company’s  Current Report on Form 8-K, January 4, 2007, and incorporated  herein by reference).                                                                           |
| 10.30.1  |   | 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. (previously filed as Exhibit 10.1 to our company’s Current Report  on Form 8-K, filed July 29, 2004, and incorporated herein by  reference).         |
| 10.30.2  |   | 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) (previously filed as Exhibit 10.30.2 to our  company’s Quarterly Report on Form 10-Q, filed August 15,  2005, and incorporated herein by reference).                                                           |
| 10.30.3  |   | 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)  (previously filed as Exhibit 10.30.3 to our company’s Quarterly Report  on Form 10-Q, filed August 15, 2005, and incorporated herein  by reference). |
| 10.31    |   | Amendment to Loan  Agreement between GTA-IB, LLC and Golf Trust of America, L.P. (previously  filed as Exhibit 10.31 to our company’s Quarterly Report on Form 10-Q,  filed November 22, 2004, and incorporated herein by reference).                                                                                                                                                                    |
| 10.32    |   | Promissory Note issued  by GTA-IB, LLC to Golf Trust of America, L.P. (previously filed as  Exhibit 10.32 to our company’s Quarterly Report on Form 10-Q,  filed November 22, 2004, and incorporated herein by reference).                                                                                                                                                                               |
| 10.33.1+ |   | Letter Agreement, dated  as of March 30, 2005, amending the fourth amended and restated  employment agreement of Scott Peters (previously filed as Exhibit 10.33  to our company’s Annual Report on Form 10-K, filed March 30,  2005, and incorporated herein by reference.                                                                                                                         |
| 10.33.2+ |   | Letter Agreement, dated  as of March 31, 2006, amending the fourth amended and restated  employment agreement of Scott Peters (previously filed as  Exhibit 10.35 to our company’s Current Report on Form 8-K,  filed April 6, 2006, and incorporated herein by reference).                                                                                                                    |

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| 10.33.3+ |   | Letter Agreement, dated  as of September 29, 2006, amending the fourth amended and restated  employment agreement of Scott Peters (previously filed as  Exhibit 10.33.3 to our company’s Current Report on Form 8-K,  filed October 2, 2006, and incorporated herein by reference).                                                                                                                   |
|----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.34*   |   | Letter Agreement, dated  March 24, 2005, between our company and AEW Targeted Securities Fund,  L.P. (previously filed as Exhibit 10.34 to our company’s Annual Report  on Form 10-K filed March 30, 2005, and incorporated herein by  reference).                                                                                                                                                         |
| 10.35*   |   | Option Agreement, dated  May 6, 2005, between our company and AEW Targeted Securities Fund, L.P.  (previously filed as Exhibit 10.35 to our company’s Current Report on  Form 8-K filed May 9, 2005).                                                                                                                                                                                                      |
| 10.36*   |   | Letter Agreement, dated  November 11, 2005, between our company and AEW Targeted Securities Fund,  L.P. (previously filed as Exhibit 10.37 to our company’s Quarterly  Report on Form 10-Q filed November 14, 2005, and incorporated  herein by reference).                                                                                                                                                |
| 10.37**  |   | Option Agreement, dated  April 12, 2006, between our company and AEW Targeted Securities Fund,  L.P. (previously filed as Exhibit 10.37 to our company’s Annual Report  on Form 10-K filed April 17, 2006, and incorporated herein by  reference).                                                                                                                                                         |
| 10.38*** |   | 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 10.36 to our company’s Quarterly Report on  Form 10-Q filed November 14, 2005, and incorporated herein by  reference). |
| 10.39    |   | 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 10.39 to our company’s Current Report on Form 8-K  filed October 3, 2006 and incorporated herein by reference).                                   |
| 10.40    |   | Letter Agreement by and  between Golf Trust of America, Inc. and Messers. Jan H. Loeb and Nauman  S. Toor, collectively, the “Director Candidates,” dated October 5, 2006  (previously filed as Exhibit 10.40 to our company’s Current Report on Form 8-K  filed October 3, 2006 and incorporated herein by reference).                                                                     |
| 14.1     |   | Code of Ethics, adopted  by the Board of Directors of Golf Trust of America, Inc. on  February 9, 2004 (previously filed as Exhibit 14.1 to our company’s  Annual Report on Form 10-K, filed March 30, 2004, and  incorporated herein by reference).                                                                                                                                                  |
| 21.1**** |   | List of Subsidiaries of  Golf Trust of America, Inc.                                                                                                                                                                                                                                                                                                                                                                           |
| 23.1**** |   | Consent of BDO Seidman,  LLP                                                                                                                                                                                                                                                                                                                                                                                                        |
| 24.1**** |   | Powers of Attorney  (included under the caption “Signatures”)                                                                                                                                                                                                                                                                                                                                                             |
| 31.1**** |   | Certification of  W. Bradley Blair II pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                    |
| 31.2**** |   | Certification of Tracy  S. Clifford pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                 |
| 32.1**** |   | Certifications under  Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                           |

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| 99.1 |   | Charter of the Audit  Committee of the Board of Directors of Golf Trust of America, Inc.  (previously filed as Appendix A to our company’s definitive proxy  statement on Schedule 14A, filed October 15, 2001, and incorporated  herein by reference). |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*                          Thisagreement expired pursuant to its terms on November 30, 2005.

**                   Thisagreement was terminated pursuant to its terms on June 30, 2006.

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

****     Filedherewith

†                          Portionsof this exhibit have been omitted pursuant to a request for confidentialtreatment.

+                      Denotesa management contract or compensatory plan.

 

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