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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

 

**FORM 10-Q**

 
| **(Mark One)**                                          | ** **                                                                                               |
|---------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
|                                                    |                                                                                                     |
| **x**                                                   | **Quarterly  report pursuant to section 13 or 15(d) of the Securities Exchange  Act of 1934**  |
|                                                    |                                                                                                     |
| **for the quarterly period ended: June 30,  2008** |
| ** **                                              | ** **                                                                                               |
| **o**                                                   | **Transition  report pursuant to section 13 or 15(d) of the Securities Exchange  Act of 1934** |

 

**for the transition periodfrom       to       **

 

**Commission File Number 001-14494**

 

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**GOLFTRUST OF AMERICA, INC.**

(Exact name of Registrant as specified in itscharter)

 

| **Maryland**                    | ** ** | **33-0724736**         |
|---------------------------------|------------|------------------------|
| (State or other jurisdiction of |       | (I.R.S. Employer       |
| incorporation or organization)  |       | Identification Number) |

 

| **10 North Adger’s Wharf, Charleston, South Carolina** | ** ** | **29401**  |
|-------------------------------------------------------------|------------|------------|
| (Address of principal executive offices)                    |       | (Zip Code) |

 

**(843) 723-4653**(Registrant’s telephone number, including area code)

 

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Indicate by check mark whether the Registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorterperiod that the Registrant was required to file such report(s) and (2) hasbeen subject to such filing requirements for the past90 days. Yes x  No o.

 

Indicate by check mark whether the Registrant is a large acceleratedfiler, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See definitions of “large accelerated filer,” “accelerated filer,” and“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Checkone):

 
| Large  accelerated filer o                     |   | Accelerated  filer o         |
|------------------------------------------------|--------|-----------------------------------|
|                                           |   |                              |
| Non-accelerated  filer o                       |   | Smaller  reporting company x |
| (Do not  check if a smaller reporting company) |   |                              |

 

Indicate by check mark whether the Registrant is a shell company (asdefined in Rule 12b-2 of the Exchange Act).

 

Yes o No x

 

On August 8, 2008, there were 7,317,163 shares outstanding of theRegistrant’s common stock.

 

 

 

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**GOLF TRUST OF AMERICA, INC.Quarterly Report on Form 10-Q****For the Three and Six Months Ended June 30,2008**

 

**INDEX**

 
| **PART I. FINANCIAL INFORMATION** |                                                                                                                                             |
|----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                   |                                                                                                                                             |   |
| **Item 1.**                            | **Financial  Statements**                                                                                                                        | ** ** |
|                                   |                                                                                                                                             |   |
|                                   | Condensed Consolidated Balance Sheets (Going Concern  Basis) as of June 30, 2008 and December 31, 2007                                      | 4 |
|                                   |                                                                                                                                             |   |
|                                   | Condensed  Consolidated Statement of Operations (Going Concern Basis) for the Three and  Six Months Ended June 30, 2008                | 5 |
|                                   |                                                                                                                                             |   |
|                                   | Condensed  Consolidated Statement of Changes in Net Assets (Liquidation Basis) for the  Three and Six Months Ended June 30, 2007            | 6 |
|                                   |                                                                                                                                             |   |
|                                   | Condensed  Consolidated Statements of Cash Flows for the Six Months ended June 30,  2008 (Going Concern Basis) and 2007 (Liquidation Basis) | 7 |
|                                   |                                                                                                                                             |   |
|                                   | Notes to Condensed Consolidated Financial Statements                                                                                             | 8 |
|                                   |                                                                                                                                             |   |
| **Item 2.**                            | **Management’s  Discussion and Analysis of Financial Condition and Results of Operations**                                                  | 15 |
|                                   |                                                                                                                                             |   |
| **Item 3.**                            | **Quantitative  and Qualitative Disclosures About Market Risk**                                                                                  | 21 |
|                                   |                                                                                                                                             |   |
| **Item 4.**                            | **Controls and  Procedures**                                                                                                                     | 21 |
|                                   |                                                                                                                                             |   |
| **PART II.  OTHER INFORMATION**   | 22                                                                                                                                               |
|                                   |                                                                                                                                             |   |
| **Item 1.**                            | **Legal Proceedings**                                                                                                                            | 22 |
|                                   |                                                                                                                                             |   |
| **Item 1A.**                           | **Risk Factors**                                                                                                                                 | 22 |
|                                   |                                                                                                                                             |   |
| **Item 2.**                            | **Unregistered  Sales of Equity Securities and Use of Proceeds**                                                                                 | 22 |
|                                   |                                                                                                                                             |   |
| **Item 3.**                            | **Defaults  upon Senior Securities**                                                                                                             | 22 |
|                                   |                                                                                                                                             |   |
| **Item 4.**                            | **Submission  of Matters to a Vote of Security Holders**                                                                                         | 22 |
|                                   |                                                                                                                                             |   |
| **Item 5.**                            | **Other Information**                                                                                                                            | 22 |
|                                   |                                                                                                                                             |   |
| **Item 6.**                            | **Exhibits**                                                                                                                                     | 23 |
|                                   |                                                                                                                                             |   |
| **Signatures**                         |                                                                                                                                             | 24 |

 

**Cautionary Note Regarding Forward-LookingStatements**

 

The following report contains forward-looking statements within themeaning of Section 27A of the Securities Act of 1933, as amended (the “SecuritiesAct”), and Section 21E of the Securities Exchange Act of 1934, as amended(the “Exchange Act”). Forward-looking statements are statements that predict ordescribe future events 

 

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or trends and that do not relate solely to historical matters. All ofour forecasts in this Quarterly Report on Form 10-Q are forward-lookingstatements. You can generally identify forward-looking statements as statementscontaining the words “believe”, “expect”, “will”, “anticipate”, “intend”, “estimate”,“project”, “assume” or other similar expressions. You should not place unduereliance on our forward-looking statements because the matters they describeare subject to known (and unknown) risks, uncertainties and other unpredictablefactors, many of which are beyond our control. Our forward-looking statementsare based on the limited information currently available to us and speak onlyas of the date on which this Quarterly Report on Form 10-Q was filed withthe Securities and Exchange Commission (the “SEC”). Our continued internetposting or subsequent distribution of this dated report does not implycontinued affirmation of the forward-looking statements included in it. Weundertake no obligation, and we expressly disclaim any obligation, to issue anyupdates to our forward-looking statements, even if subsequent events cause ourexpectations to change regarding the matters discussed in those statements.Future events are inherently uncertain. Accordingly, our projections in thisQuarterly Report on Form 10-Q are subject to particularly highuncertainty. Our forecasts should not be regarded as legal promises,representations or warranties of any kind whatsoever. Over time, our actualresults, performance or achievements will likely differ from the anticipatedresults, performance or achievements that are expressed or implied by ourforward-looking statements, and such differences might be significant andharmful to our stockholders’ interests. Many important factors that could causesuch a difference are described under the caption “Risk Factors” in Part I,Item 1A of our Annual Report on Form 10-K (incorporated by reference)which you should review carefully.

 

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**CONDENSEDCONSOLIDATED BALANCE SHEETS**

**(GoingConcern Basis)**

 
| ** **                                                                                                                     | ** ** | **June 30,   2008** | ** ** | **December 31,  2007*** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------|------------|------------------------------|------------|
| ** **                                                                                                                     | ** ** | **(unaudited)**               | ** ** | ** **                   | ** ** |
| **ASSETS**                                                                                                                     | ** ** | ** **                    | ** ** | ** **                   | ** ** |
| Current assets:                                                                                                                |       |                          |       |                         |       |
| Cash and cash equivalents                                                                                                      |       | $                             | 8,661,631  |                         | $          | 7,572,152 |   |
| Escrow receivable                                                                                                              |       | —                        |       | 2,000,000                    |       |
| Receivables—net                                                                                                           |       | 453,566                       |       | 534,591                      |       |
| Note receivable – current portion                                                                                         |       | 133,334                       |       | —                       |       |
| Other current assets                                                                                                           |       | 267,942                       |       | 148,899                      |       |
| Total current assets                                                                                                           |       | 9,516,473                     |       | 10,255,642                   |       |
| Note receivable, net of current portion                                                                                        |       | 211,860                       |       | —                       |       |
| Property and equipment, net                                                                                                    |       | 5,228,874                     |       | 4,393,641                    |       |
| Total assets                                                                                                                   |       | $                             | 14,957,207 |                         | $          | 14,649,283 |   |
| **LIABILITIES**                                                                                                                | ** ** | ** **                    | ** ** | ** **                   | ** ** |
| Current liabilities:                                                                                                           |       |                          |       |                         |       |
| Accounts payable                                                                                                               |       | $                             | 266,098    |                         | $          | 266,226 |   |
| Accrued expenses and other liabilities                                                                                         |       | 132,440                       |       | 436,201                      |       |
| Long-term debt — current portion                                                                                          |       | 4,139,821                     |       | 38,183                       |       |
| Member initiation fees and other deferred  revenue – current portion                                                      |       | 383,474                       |       | 402,081                      |       |
| Total current liabilities                                                                                                      |       | 4,921,833                     |       | 1,142,691                    |       |
| Long-term debt, net of current portion                                                                                         |       | 93,596                        |       | 4,213,926                    |       |
| Member initiation fees and other deferred  revenue – net of current portion                                               |       | 778,992                       |       | 744,878                      |       |
| **Total liabilities**                                                                                                          |       | 5,794,421                     |       | 6,101,495                    |       |
| Commitments and contingencies                                                                                                  |       |                          |       |                         |       |
| 9.25% Cumulative Convertible Redeemable  Preferred stock, $.01 par value, 10,000,000 shares authorized, no shares  outstanding |       | —                        |       | —                       |       |
| **STOCKHOLDERS’ EQUITY**                                                                                                  |       |                          |       |                         |       |
| Common stock, $.01 par value, 90,000,000  shares authorized, 7,317,163 issued and outstanding                                  |       | 73,172                        |       | 73,172                       |       |
| Additional paid-in capital                                                                                                     |       | 8,729,083                     |       | 8,658,171                    |       |
| Retained earnings (accumulated deficit)                                                                                        |       | 360,531                       |       | (183,555                     | )          |
| Total stockholders’ equity                                                                                                |       | 9,162,786                     |       | 8,547,788                    |       |
| Total liabilities and stockholders’ equity                                                                                |       | $                             | 14,957,207 |                         | $          | 14,649,283 |   |

 

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*** Derivedfrom audited consolidated financial statements**

 

See accompanying notes to condensedconsolidated financial statements.

 

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**GOLF TRUST OF AMERICA, INC.**

**CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS**

**(GoingConcern Basis) (unaudited)**

 
| ** **                                     | ** ** | **Three Months   Ended   June 30, 2008** | ** ** | **Six Months   Ended   June 30, 2008** | ** ** |
|------------------------------------------------|------------|-------------------------------------------------------------------|------------|-----------------------------------------------------------------|------------|
| **Revenues**                                   |       |                                                              |       |                                                            |       |
| Golf operating revenue                         |       | $                                                                 | 332,772    |                                                            | $          | 514,122 |   |
| Food and beverage revenue                      |       | 214,206                                                           |       | 366,060                                                         |       |
| Membership dues and fees                       |       | 510,092                                                           |       | 1,024,406                                                       |       |
| Other club revenue                             |       | 115,829                                                           |       | 223,795                                                         |       |
| Total revenues                                 |       | 1,172,899                                                         |       | 2,128,383                                                       |       |
| **Expenses**                                   |       |                                                              |       |                                                            |       |
| Golf operating expenses                        |       | 205,000                                                           |       | 344,621                                                         |       |
| Food and beverage expenses                     |       | 168,579                                                           |       | 310,617                                                         |       |
| Other club expenses                            |       | 454,857                                                           |       | 806,637                                                         |       |
| Depreciation and amortization                  |       | 147,357                                                           |       | 293,896                                                         |       |
| General and administrative                     |       | 553,904                                                           |       | 1,412,431                                                       |       |
| Total expenses                                 |       | 1,529,697                                                         |       | 3,168,202                                                       |       |
| Operating loss                                 |       | (356,798                                                          | )          | (1,039,819                                                      | )          |
| **Other income (expense)**                     |       |                                                              |       |                                                            |       |
| Other income                                   |       | —                                                            |       | 1,641,176                                                       |       |
| Other expenses                                 |       | —                                                            |       | (6,300                                                          | )          |
| Interest income                                |       | 49,654                                                            |       | 120,070                                                         |       |
| Interest expense                               |       | (78,779                                                           | )          | (171,041                                                        | )          |
| Other income (expense), net                    |       | (29,125                                                           | )          | 1,583,905                                                       |       |
| Income (loss) before income tax provision      |       | (385,923                                                          | )          | 544,086                                                         |       |
| Income tax provision                           |       | —                                                            |       | —                                                          |       |
| **Net income (loss)**                          |       | $                                                                 | (385,923   | )                                                               | $          | 544,086 |   |
|                                           |       |                                                              |       |                                                            |       |
| (Loss) Earnings per share—basic           |       | $                                                                 | (.05       | )                                                               | $          | 0.07 |   |
| Weighted average number of shares—basic   |       | 7,317,163                                                         |       | 7,317,163                                                       |       |
|                                           |       |                                                              |       |                                                            |       |
| (Loss)Earnings per share—diluted          |       | $                                                                 | (.05       | )                                                               | $          | 0.07 |   |
| Weighted average number of shares—diluted |       | 7,317,163                                                         |       | 7,317,163                                                       |       |

 

See accompanying notes to condensedconsolidated financial statements.

 

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**GOLF TRUST OF AMERICA, INC.**

**CONDENSEDCONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (LIQUIDATION BASIS)**

**(unaudited)**

 
| ** **                                                                    | ** ** | **Three Months Ended   June 30, 2007** | ** ** | **Six Months Ended   June 30, 2007** | ** ** |
|-------------------------------------------------------------------------------|------------|-----------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                                                    | ** ** | ** **                                                      | ** ** | ** **                                                    | ** ** |
| Net assets in liquidation, beginning of  period                               |       | $                                                               | 13,360,050 |                                                          | $          | 13,865,000 |   |
| **Changes in net assets in liquidation:**                                     | ** ** | ** **                                                      | ** ** | ** **                                                    | ** ** |
| Adjustments to liquidation reserve:                                           |       |                                                            |       |                                                          |       |
| Operating income (loss)                                                       |       | (456,331                                                        | )          | 2,096,298                                                     |       |
| Net interest expense                                                          |       | (363,444                                                        | )          | (743,086                                                      | )          |
| Other expense                                                                 |       | —                                                          |       | (58,500                                                       | )          |
| Increase in reserve for estimated  liquidation costs and capital expenditures |       | (60,376                                                         | )          | (2,679,813                                                    | )          |
| **Subtotal of adjustments to liquidation  reserve**                           |       | (880,151                                                        | )          | (1,385,101                                                    | )          |
| Decrease in fair value of real estate                                         |       | (3,510,000                                                      | )          | (3,510,000                                                    | )          |
| Forgiveness of preferred stock obligation                                     |       | 2,500,000                                                       |       | 2,500,000                                                     |       |
| **Changes in net assets in liquidation**                                      |       | (1,890,151                                                      | )          | (2,395,101                                                    | )          |
| **Net assets in liquidation, end of period**                                  |       | $                                                               | 11,469,899 |                                                          | $          | 11,469,899 |   |

 

See accompanying notes to condensedconsolidated financial statements.

 

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**GOLF TRUST OF AMERICA, INC.**

**CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS**

**(unaudited)**

 
| ** **                                                                                                                                          | ** ** | **Six Months   Ended   June 30, 2008** | ** ** | **Six Months   Ended   June 30, 2007** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------|------------|-----------------------------------------------------------------|------------|
| ** **                                                                                                                                          | ** ** | **(Going Concern Basis)**                             | ** ** | **(Liquidation Basis)**                                    | ** ** |
| ** **                                                                                                                                          | ** ** | ** **                                                      | ** ** | ** **                                                      | ** ** |
| **Cash flows from operating activities:**                                                                                                           | ** ** | ** **                                                      | ** ** | ** **                                                      | ** ** |
| Changes in net assets in liquidation                                                                                                                |       |                                                            |       | $                                                               | (2,395,101 | ) |
| Net income                                                                                                                                          |       | $                                                               | 544,086    |                                                            |       |   |
| Adjustments to reconcile net income/change  in net assets in liquidation to net cash provided by (used in) operating  activities:                   |       |                                                            |       |                                                            |       |
| Increase in liquidation reserve and changes  in fair value of real estate and non-real estate assets and forgiveness of  preferred stock obligation |       |                                                            |       | 3,688,547                                                       |       |
| Stock based compensation                                                                                                                            |       | 70,912                                                          |       | —                                                          |       |
| Gain on legal settlement                                                                                                                            |       | (1,463,922                                                      | )          | —                                                          |       |
| Depreciation                                                                                                                                        |       | 293,896                                                         |       | —                                                          |       |
| Amortization of deferred revenue                                                                                                                    |       | (117,172                                                        | )          | —                                                          |       |
| Provision for bad debts, net of recoveries                                                                                                          |       | (298                                                            | )          | (55,442                                                         | )          |
| Non-cash interest expense                                                                                                                           |       | 9,701                                                           |       | 313,596                                                         |       |
| Non-cash interest income                                                                                                                            |       | (13,614                                                         | )          | —                                                          |       |
|                                                                                                                                                |       |                                                            |       |                                                            |       |
| Other changes in operating assets and  liabilities                                                                                                  |       | (218,631                                                        | )          | 852,172                                                         |       |
| Decrease in liquidation liabilities                                                                                                                 |       | —                                                          |       | (962,636                                                        | )          |
| Net cash (used in) provided by operating  activities                                                                                                |       | (895,042                                                        | )          | 1,441,136                                                       |       |
| **Cash flows from investing activities:**                                                                                                           | ** ** | ** **                                                      | ** ** | ** **                                                      | ** ** |
| Decrease in notes receivable                                                                                                                        |       | 100,000                                                         |       | —                                                          |       |
| Proceeds from escrow                                                                                                                                |       | 2,000,000                                                       |       | —                                                          |       |
| Capital expenditures                                                                                                                                |       | (96,787                                                         | )          | (274,585                                                        | )          |
| Net cash provided by (used in) investing  activities                                                                                                |       | 2,003,213                                                       |       | (274,585                                                        | )          |
| **Cash flows from financing activities:**                                                                                                           | ** ** | ** **                                                      | ** ** | ** **                                                      | ** ** |
| Proceeds from debt                                                                                                                                  |       | —                                                          |       | 320,280                                                         |       |
| Repayments on debt and capital lease  obligations                                                                                                   |       | (18,692                                                         | )          | (907,923                                                        | )          |
| Net cash used in financing activities                                                                                                               |       | (18,692                                                         | )          | (587,643                                                        | )          |
| Net increase in cash and cash equivalents                                                                                                           |       | 1,089,479                                                       |       | 578,908                                                         |       |
| Cash and cash equivalents, beginning of  period                                                                                                     |       | 7,572,152                                                       |       | 2,223,359                                                       |       |
| Cash and cash equivalents, end of period                                                                                                            |       | $                                                               | 8,661,631  |                                                            | $          | 2,802,267 |   |
| **Supplemental Disclosure of Cash Flow  Information:**                                                                                              | ** ** | ** **                                                      | ** ** | ** **                                                      | ** ** |
| Interest paid during the period                                                                                                                     |       | $                                                               | 160,755    |                                                            | $          | 315,928 |   |
| **Non-cash transactions:**                                                                                                                          | ** ** | ** **                                                      | ** ** | ** **                                                      | ** ** |
| Assets acquired through capital leases                                                                                                              |       | $                                                               | —     |                                                            | $          | 497,842 |   |
| Gain on legal settlement:                                                                                                                           |       |                                                            |       |                                                            |       |
| Note receivable                                                                                                                                     |       | $                                                               | 431,580    |                                                            | $          | — |   |
| Land and value of timber                                                                                                                            |       | $                                                               | 1,032,342  |                                                            | $          | — |   |

 

See accompanying notes to condensedconsolidated financial statements.

 

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**GOLF TRUST OF AMERICA, INC.**

**NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THETHREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007**

**(unaudited)**

 

**1.  Organization, Termination of the Plan ofLiquidation and Alternative Business Strategies**

 

*Organization*

 

Golf Trust ofAmerica, Inc. (the “Company”) was incorporated in Maryland on November 8,1996 as a real estate investment trust (“REIT”).  In May 2001, after consideration ofdifferent strategic alternatives, the Company approved a Plan of Liquidation(the “POL”). As a result, the Company adopted the liquidation basis ofaccounting.  Subsequent to adoption ofthe POL, the Company sold 45 of its 47 golf courses. After consideration of itscurrent strategic alternatives, the Board adopted a resolution declaring thetermination of the POL advisable and the Company’s stockholders approved suchproposal to terminate the POL on November 8, 2007. Therefore, financial statementssubsequent to this date are presented under the going concern basis as anoperating company rather than under the liquidation basis of accounting.

 

The Boardbelieves that the termination of the POL affords the Company flexibility inmaximizing value for its stockholders. Operating the Company as a going concernoutside of the POL allows the Company to pursue alternative businessstrategies, including a merger, capital stock exchange, asset acquisition orother growth initiatives. The Board is still permitted to pursue the sale ofthe Company’s final property and/or consider the liquidation of the Company inthe event that it is unable to identify and effect a viable alternative, but itwould no longer be required to do so by the terms of the POL.

 

At June 30,2008, the Company’s only remaining real estate assets are the undeveloped landobtained in the settlement of the Young Complaints (see Note 3) and the CountryClubs of Wildewood and Woodcreek Farms, or Stonehenge, which represents twoprivate golf courses operating under one club structure located in SouthCarolina. The title to Stonehenge is held by Golf Trust of America, L.P.,a Delaware limited partnership and the Company’s operating partnership.

 

*AlternativeBusiness Strategies*

 

The Board hasnot limited the types of alternative growth strategies it intends to consider.Emphasis is to be placed on areas of historical Company expertise, as well asthat of our management and board of directors. See Note 8, *Income Taxes*,regarding discussion of net operating loss carryforwards in a businesscombination.

 

To date, theCompany has not entered into a definitive agreement with another companyregarding growth initiatives or a business combination.

 

**2.  Basis of Presentation**

 

*Interim Statements*

 

The accompanying condensed consolidatedfinancial statements for the three and six months ended June 30, 2008 and2007 have been prepared in accordance with (a) accounting principlesgenerally accepted in the United States of America (“GAAP”) and (b) theinstructions to Form 10-Q and Article 10 of Regulation S-X forsmaller reporting companies. These condensed consolidated financial statementshave not been audited by a registered independent public accounting firm;however, they include adjustments (consisting of normal recurring adjustments)which are, in the judgment of management, necessary for a fair presentation ofthe financial information for such periods. However, these results are notnecessarily indicative of results for any other interim period or for the fullyear.

 

Certain information and footnote disclosuresnormally included in financial statements in accordance with GAAP have beenomitted as allowed in quarterly reports by the rules of the SEC. TheCompany’s management believes that the disclosures included in the accompanyinginterim condensed consolidated financial statements and 

 

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footnotes are adequate to make the information not misleading, but alsobelieves that these statements should be read in conjunction with the summaryof significant accounting policies and notes to the consolidated financialstatements included in our Form 10-K for the year ended December 31,2007, filed on March 31, 2008.

 

*Consolidation*

 

The condensedconsolidated financial statements include the accounts of the Company, itswholly owned subsidiaries GTA GP, Inc. and GTA LP, Inc.,and Golf Trust of America, L.P., which holds title to the golf courseproperties, and GTA-Stonehenge, LLC which manages the remaining golfproperties.

 

*Use of Estimates*

 

Management is required to make certainestimates and assumptions which affect the amounts of assets, liabilities,revenue and expenses reported.  Actual results could differ fromthese estimates and assumptions.

 

*Revenue Recognition*

 

Revenues fromgolf operations, food and beverage and merchandise sales are recognized at thetime of sale or when the service is provided. Revenues from membership dues arebilled monthly and recognized in the period earned. The monthly dues areexpected to cover the cost of providing future membership services. Prepaiddues are recognized as income over the prepayment period.

 

*MembershipInitiation Fees*

 

Certainmemberships previously sold at Stonehenge have initiation fees totalingapproximately $1,326,000 that are refundable (without interest) based onspecific conditions, generally upon conclusion of a thirty-year requiredmembership term, as defined in the Club Membership Manual. These refundableinitiation fees may be refundable prior to the expiration of the thirty-yearterm under specific membership replacement conditions. The estimated presentvalue of these potential refunds is approximately $339,000, which is recordedas an accrued liability at June 30, 2008 and accretes over the members’remaining average contractual term using an interest rate of approximately10.5%. The accretion is included in interest expense.

 

An initiationfee is required to be paid on all memberships at Stonehenge. The majority ofour membership fees are not refundable and are deferred and recognized over theaverage expected life of an active membership. Membership initiation fees aredeferred and recognized as revenue on a straight-line basis over the averageexpected life of an active membership, which based on historical information isdeemed to be an average nine years for all membership categories.

 

*Stock basedcompensation*

 

Compensationexpense is determined by reference to the fair market value of an award on thedate of grant and is amortized on a straight-line basis over the vesting periodin accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123(R),*Share-Based Payment*.

 

*Earningsper Share*

 

Earnings percommon share are presented under two formats: basic earnings per common shareand diluted earnings per common share. Earnings per share are computed bydividing net income (after deducting any dividends on preferred stock) by theweighted average number of common shares outstanding during the year. Dilutedearnings (loss) per common share are computed by dividing net earnings (loss)by the weighted-average number of common shares outstanding during the period,including potentially dilutive shares such as options and warrants to purchaseshares of common stock at various amounts per share. For the three months endedJune 30, 2008, the loss per share was the same for basic and diluted sincethe effect of the options would have been anti-dilutive due to the fact thatthere was a loss for this period.  Forthe six months ended, June 30, 2008, the diluted earnings per share wasthe same as basic earnings per share. Since there were no options in the money for that period, the effects ofthe options would have been anti-dilutive.

 

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*LiquidationBasis—For the three and six months ended March 31, 2007*

 

The Company adoptedthe liquidation basis of accounting upon the stockholder approval of its POL onMay 22, 2001. From that date forward through and until November 8,2007, all assets and liabilities had been stated at their estimated fair valueand estimated settlement amounts. The estimated fair value had been determinedusing available market information and valuation methodologies deemedappropriate; therefore, these estimates were subject to revision with changesin market values. The Company was required to estimate and accrue the costsassociated with implementing and completing the plan of liquidation. Theseamounts varied significantly due to, among other things, the timing andrealized proceeds from golf course sales, the costs of retaining personnel andothers to oversee the liquidation, including the costs of insurance, the timingand amounts associated with discharging known and contingent liabilities,transaction costs related to any sales and the costs associated with cessationof the Company’s operations.

 

*Recent Accounting Pronouncements*

 

During February 2007, the FASB Boardissued SFAS No. 159, “The Fair Value Option for Financial Assets andFinancial Liabilities” (“SFAS 159”). This statement permits entities tochoose to measure many financial instruments and certain other items at fairvalue. SFAS 159 is effective for fiscal years beginning after November 15,2007. The adoption of this standard had no effect on the Company’s consolidatedfinancial condition or results of operations.

 

During December 2007, the FASB issuedSFAS No. 160, “Noncontrolling Interests in Consolidated FinancialStatements an amendment of ARB No. 51” (“SFAS 160”). This statementestablishes accounting and reporting standards for noncontrolling interests insubsidiaries and for the deconsolidation of subsidiaries and clarifies that anoncontrolling interest in a subsidiary is an ownership interest in theconsolidated entity that should be reported as equity in the consolidatedfinancial statements. This Statement also requires expanded disclosures thatclearly identify and distinguish between the interests of the parent owners andthe interests of the noncontrolling owners of a subsidiary. SFAS 160 iseffective for fiscal years beginning on or after December 15, 2008. Theadoption of this standard is expected to have no effect on the Company’sconsolidated financial condition or results of operations.

 

During December 2007, the FASB issuedSFAS No. 141 (Revised 2007), “Business Combinations” (“SFAS 141(Revised 2007)”). While this statement retains the fundamental requirement ofSFAS 141 that the acquisition method of accounting (which SFAS 141called the purchase method) be used for all business combinations,SFAS 141 (Revised 2007) now establishes the principles and requirementsfor how an acquirer in a business combination: recognizes and measures in itsfinancial statements the identifiable assets acquired, the liabilities assumed,and any noncontrolling interests in the acquiree; recognizes and measures thegoodwill acquired in the business combination or the gain from a bargainpurchase; and determines what information should be disclosed in the financialstatements to enable the users of the financial statements to evaluate thenature and financial effects of the business combination. For the Company,SFAS 141 (Revised 2007) is effective for business combinations for whichthe acquisition date is after December 31, 2008.

 

In September 2006, the FASB issued SFAS No. 157,“Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 providesguidance for using fair value to measure financial assets and liabilities. Thisstatement clarifies the principle that fair value should be based on theassumptions that market participants would use when pricing the asset orliability. SFAS No. 157 establishes a fair value hierarchy, giving thehighest priority to quoted prices in active markets and the lowest priority tounobservable data. SFAS No. 157 applies whenever other standards requireassets or liabilities to be measured at fair value. This statement is effectivein fiscal years beginning after November 15, 2007. The adoption of thisstandard has not had an effect on the Company’s consolidated financialcondition or results of operations.

 

In February 2008,the FASB issued FASB Staff Position No. 157-2, *EffectiveDate of FASB Statement No. 157* (“FSP No. 157-2”), topartially defer SFAS 157.  FSP No. 157-2defers the effective date of SFAS 157 for non-financial assets andnon-financial liabilities, except those that are recognized or disclosed at fairvalue in the financial statements on a recurring basis (at least annually), tofiscal years, and interim periods within those fiscal 

 

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years, beginning after November 15,2008.  The Company is currentlyevaluating the impact of adopting the provisions of FSP N. 157-2.

 

**3. Property and Equipment**

 

Property andequipment consists of the following:

 
| ** **                    | ** ** | **June 30,  2008** | ** ** | **December 31,  2007** | ** ** |
|-------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| Land at Stonehenge            |       | $                       | 356,860    |                        | $          | 356,860 |   |
| Other land                    |       | 1,032,342               |       | —-                     |       |
| Buildings                     |       | 1,578,777               |       | 1,520,284                   |       |
| Golf course improvements      |       | 2,363,473               |       | 2,347,724                   |       |
| Machinery and equipment       |       | 276,830                 |       | 254,285                     |       |
|                          |       | 5,608,282               |       | 4,479,153                   |       |
| Less accumulated depreciation |       | (379,408                | )          | (85,512                     | )          |
|                          |       | $                       | 5,228,874  |                        | $          | 4,393,641 |   |

 

At June 30,2008, machinery and equipment includes certain equipment with a net book valueof approximately $126,000 recorded under a capital lease or other financing arrangement.Depreciation expense amounted to approximately $147,000 and $294,000 for thethree and six months ended June 30, 2008, respectively.  Other land includes the estimated fair valueof 118.67 acres of undeveloped land in Charleston County, South Carolina (whichthe Company obtained title to on March 5, 2008 in the final settlement ofcertain litigation which involved one of our former Board members and was knownas the Young Complaints) of approximately $1,032,000.

 

**4.  Receivables**

 

*Escrowreceivable*

 

The escrowreceivable of $2,000,000 at December 31, 2007, is an amount due from thebuyer of the Resort which was received by the Company on April 3, 2008plus accrued interest of approximately $31,000.

 

*Receivables-net*

 

TheReceivables—net consists of member receivables at Stonehenge and interestreceivable on the escrow discussed above.

 

*Notereceivable*

 

The Notereceivable of approximately $345,000 ($133,000 current portion, $212,000 longterm portion) represents the net present value of a note receivable from Mr. LarryD. Young and the other plaintiffs in the Young litigation received as a resultof a settlement agreement executed on January 31, 2008.  The promissory note is in the principalamount of approximately $3,877,000, which outstanding balance will beconsidered satisfied in full upon timely remittance of the $500,000 in totalscheduled payments.  The scheduledpayments are $100,000 due on May 31, 2008 (which was received asscheduled) followed by a payment of approximately $133,000 due on January 1stof 2009, 2010 and 2011.

 

**5.  Debt and Lease Obligations**

 
| ** **                   | ** ** | **June 30,   2008** | ** ** | **December 30,   2007** | ** ** |
|------------------------------|------------|-------------------------------|------------|-----------------------------------|------------|
| ** **                   | ** ** | **(unaudited)**               | ** ** | ** **                        | ** ** |
| Revolving line of credit     |       | $                             | 4,100,000  |                              | $          | 4,100,000 |   |
| Capital lease obligations    |       | 47,621                        |       | 55,197                            |       |
| Installment credit agreement |       | 76,443                        |       | 86,712                            |       |
| Non-revolving loan           |       | 9,353                         |       | 10,200                            |       |
| Total                        |       | 4,233,417                     |       | 4,252,109                         |       |
| Less current portion         |       | (4,139,821                    | )          | (38,183                           | )          |
| Long-term portion            |       | $                             | 93,596     |                              | $          | 4,213,926 |   |

 

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*RevolvingLine of Credit*

 

GTA-Stonehenge, LLC,or GTA-SH, has a $4,200,000 revolving credit line with Textron FinancialCorporation (“Textron”), which matures on March 18, 2009. This loan iscollateralized by a security interest in Stonehenge. The interest rate is theprime rate in effect on the first business day of the month plus 1.75% perannum paid monthly resulting in an effective rate of 6.75% at June 30,2008. The related security agreement contains events of default provisions thatinclude, among others, non-payment of principal, interest or fees, violation ofcovenants, inaccuracy of representations and warranties, cross defaults,bankruptcy and insolvency proceedings, termination, dissolution or liquidationof GTA-SH, or the Operating Partnership, failure to cure the loss of certainlicenses, permits or contracts, curtailment of utilities or services atStonehenge and material judgments. In the event of the occurrence of an event ofdefault, Textron is entitled to, among other things, accelerate all obligationsof the Borrower under the aforesaid loan documents and sell certain of theBorrower’s assets, namely Stonehenge and related assets, to satisfy theBorrower’s obligations. This loan requires that the operations at Stonehengefor the immediately preceding twelve month period be sufficient to meet a debtservice coverage ratio, as defined in the mortgage, of at least 1.20, asmeasured monthly. At June 30, 2008, GTA-SH did not meet the debt servicecoverage ratio (in part due to increased efforts to improve the playing qualityof the golf courses by investing significantly in additional beautification,repair and maintenance projects, as well as attendant labor costs, related tothe golf courses, but which do not qualify for capitalization accountingtreatment).

 

In light ofthe fact that the GTA-SH has consistently met its financial obligationsthroughout the term of the loan, Textron waived said covenant violation as of December 31,2007 and for 2008 subject to re-evaluation at December 31, 2008.

 

*Other*

 

The Companyentered in to various other loan and capital lease obligations that havepayment terms ranging from approximately $200 to $2,000 per month and interestrates of 6.5% to 9.0%.

 

**6.  Stock Options and Awards**

 

*EmployeeStock Options 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.

 

The Company’s2007 Stock Option Plan, which is stockholder approved, permits the grant ofshare options and shares to its employees for up to 700,000 shares of commonstock. The Company believes that such awards better align the interests of itsemployees with those of its stockholders. Option awards are generally grantedwith an exercise price equal to the market price of the Company’s stock at thedate of grant; those option awards generally vest ratably over three years andhave three to five year contractual terms from the vesting date.  Any options issued to employees who aresubsequently terminated do not expire early as a result of termination butexpire pursuant to their contractual terms at issuance. Certain option andshare awards provide for accelerated vesting if there is a change in control(as defined in the Stock Option Plan).

 

*Stock Option Plan Transactions*

 

On January 18,2008, 50,000 option shares were granted from the 2007 Stock Option Plan to theCompany’s CFO, Tracy S. Clifford, and on January 23, 2008, 160,000 optionshares were granted from the 2007 Stock Option Plan to the four independentmembers of the Company’s Board (40,000 to each member).  The estimated grant-date fair value of theseoptions was $0.84 and $0.80 per share, respectively. The exercise price is$1.90 and $1.82, respectively, the closing American Stock Exchange price on therespective grant date, as specified 

 

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by the Compensation Committee.Stock option expense for the three and six months ended June 30, 2008, wasapproximately $34,000 and $71,000, respectively, related to these issuedoptions and the 275,000 options shares issued to our CEO on December 14,2007.

 

The fair valueof each option award is estimated on the date of grant using the Black Sholesoption valuation model. Expected volatility is based on the historicalvolatility of the Company’s stock and was estimated at 53.80%. The risk-freerate for periods within the contractual life of the option is based on the U.S.Treasury bill rate in effect at the time of grant which was approximately 2.86%on January 18, 2008 and 2.64% on January 23, 2008. The expected termin years is an average of four years. The total outstanding unvested options atJune 30, 2008  is 485,000.  At June 30, 2008, there wasapproximately $370,000 of total unrecognized compensation expense related tononvested-share-based compensation arrangements granted under the 2007 StockOption Plan that will be amortized over the period ending January 23,2011.  At June 30, 2008, theseoptions had no intrinsic value.

 

Pursuant tothe respective option plans, except the 1997 Non-Employee Director’s Plan andthe 2007 Stock Option Plan , any options issued to employees who aresubsequently terminated expire ninety days following his/her termination if notexercised. The options issued under the 1997 Non-Employee Director’s Plan areexercisable until their original expiration date.  As of June 30, 2008, there are 60,000options outstanding under the 1997 Non-Employee Director’s Plan, 25,000 optionsoutstanding under the 1997 General Plan and 5,000 outstanding under the 1997Officers Plan.

 

During thethree months ended June 30, 2008, there was no option activity.  During the six months ended June 30,2008, no options were exercised and 260,000 options expired.

 

**7. Other Income**

 

For the three months ended June 30,2008, the Company did not recognize any other income; however, for the sixmonths ended June 30, 2008, the Company recognized approximately$1,641,000 in other income.  This otherincome was primarily due to the recognition of a gain from the settlement ofcertain litigation formerly known as the Young Complaints.  In connection with the settlement, a notereceivable that was recorded at its estimated net present value at that time ofapproximately $432,000 (see Note 4) and undeveloped land that was recorded atits estimated fair value of $1,032,000 (see Note 3).  Further, the Company recognized approximately$177,000 in income from the resolution of the property tax lawsuit related tothe Resort.

 

**8.  Income Taxes**

 

As of June 30,2008 and December 31, 2007, the Company has approximately $84.3 millionand $84.8 million of federal income tax net operating loss carryforwards(NOLs) which may be utilized to offset taxable income generated in future yearswhich are included in deferred income tax assets for the respectiveperiods.  The Company recorded avaluation allowance for these carryforwards. The Company had pre-tax income of approximately $544,000 for the sixmonths ended June 30, 2008 and a decrease of approximately $2,400,000 innet assets in liquidation for the six months ended June 30, 2007.  Since the Company had net income for the sixmonths ended June 30, 2008, the net operating loss carryforward wasreduced accordingly.    These netoperating losses expire at various dates beginning with the 2021 tax year andending with the 2026 tax year.  It ispossible that some or all of these NOLs could be utilized by the survivingcorporation in a business combination and could make the Company a moreattractive potential business partner. However, the use of NOLs is subject tonumerous rules and regulations, including limitations resulting from amore than 50% change in ownership, which can substantially reduce the amount ofNOLs that are ultimately available to offset income in subsequent years. Achange in ownership coupled with a sale of the remaining golf courses couldresult in an effective loss of the Company’s NOLs In addition, should anownership change of control be deemed to have occurred, the Company may belimited by industry or line of business in its ability to successfully utilizeexisting NOLs.

 

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**9.  Commitments and Contingencies**

 

*Barter Transactions*

 

Included in the accompanying condensed consolidated statement ofoperations are non-monetary transactions arising from the trading of the leaseof the Woodcreek Farms clubhouse, cart storage facility, tennis/swim buildingand golf proshop facilities from the developer of the Woodcreek subdivision inexchange for our daily management, operating and staffing of suchfacilities.   Barter revenues andexpenses are recorded at the estimated fair market value of the lease of suchfacilities.  Barter revenue and expensefor the three and six months ended June 30, 2008, totaled approximately$80,500 and $161,000, respectively, from which the net impact on the financialresults was zero.

 

*Legal Proceedings*

 

*Lake OzarkIndustries, Inc. and Everett Holding Company, Inc. v. Golf Trust ofAmerica, et al.*

 

The titledaction was brought in the Circuit Court of Miller County, Missouri, by acontractor, Lake Ozark Construction Industries, Inc. (“LOCI”) and itsasserted assignee of lien and account rights, Everett Holding Company, Inc.,in the fall of 1999 against numerous defendants, including the OperatingPartnership. Plaintiffs assert LOCI performed construction services on, or thatLOCI benefited, the property of various defendants, including the OperatingPartnership. With respect to the Operating Partnership, plaintiffs seek toforeclose a mechanic’s lien upon property formerly owned by it. The lien is forthe principal amount of approximately $1,276,000, plus interest at 10% perannum 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. The Court entered a written order granting theOperating Partnership’s Motion for Summary Judgment in April 2002 and afinal judgment in November 2003. Plaintiffs appealed the ruling to theMissouri Court of Appeals. 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 May 31, 2005, the Court of Appeals fileda modified Opinion, which again reversed the Circuit Court judgment in favor ofus and remanded the case to the Circuit Court for further proceedings. On March 12,2008, a case management conference was held. The presiding judge set September 30,2008, as deadline for completing discovery and scheduled another conference forOctober 8, 2008, at which time it is anticipated that the case will be setfor trial. At this time, the Company is unable to assess the likely outcome ofthis litigation.

 

*PropertyTax Lawsuit*

 

GTA-IB, LLChad filed lawsuits against the property appraiser of Pinellas County, Floridato challenge the 2004, 2005 and 2006 real estate assessment on the Resortproperty. Pinellas County filed a motion to dismiss, which was denied by thecourt. In January 2008, the Company settled the lawsuits with the PinellasCounty Property Appraiser and Tax Collector for all years. As a result of thesettlement, the Company received reductions in the 2004 and 2005 assessmentsand agreed to dismiss its 2006 lawsuit. Based on the reductions in assessedvalue, the Company to received a total refund of approximately $177,000 ofwhich $117,000 was received on or about February 25, 2008 and the balanceof approximately $60,000 was received on May 13, 2008. The case is nowclosed.

 

*OrdinaryCourse Litigation*

 

Owners andoperators of golf courses are subject to a variety of legal proceedings arisingin the ordinary course of operating a golf course, including proceedingsrelating to personal injury and property damage. The Company maintainsinsurance for these purposes, subject to deductibles and exclusions deemedreasonable by the Company. The Company is not currently subject to any materialclaims of this type.

 

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**ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

**Overview**

 

Golf Trust of America, Inc. wasincorporated in Maryland on November 8, 1996. We have been engaged in aliquidation of our assets pursuant to a plan of liquidation approved by ourstockholders. However, as previously announced and described more fully below,we are currently considering additional strategic options to maximizestockholder value. We were originally formed to be a REIT; however, as offiscal year 2002 we no longer have our REIT status as a result of ourrepossession and operation of certain golf courses following the default oftheir original third-party lessees. As of August 8, 2008, our onlyremaining real estate assets are the undeveloped land obtained in thesettlement of certain litigation formerly known as the Young Complaints and theCountry Clubs of Wildewood and Woodcreek Farms, or Stonehenge,  representing two private golf coursesoperating under one club structure located in South Carolina. The OperatingPartnership holds title to Stonehenge. Through our wholly owned subsidiaries,GTA GP, Inc. and GTA LP, Inc., we held 100 percent of theinterests in the Operating Partnership as of August 8, 2008. GTA GP, Inc.is the sole general partner of the Operating Partnership and owns a0.2 percent interest therein. GTA LP, Inc. is the sole limitedpartner in the operating partnership and owns a 99.8 percent interesttherein.

 

**Termination of the Plan of Liquidation**

 

The Board adopted a resolution declaring thetermination of the Plan of Liquidation, or the “POL”, advisable and the Company’sstockholders approved such proposal to terminate the POL on November 8,2007. Therefore, financial statements subsequent to this date are presentedunder the going concern basis as an operating company rather than under theliquidation basis of accounting.

 

The Board believes that the termination ofthe POL affords the Company flexibility in maximizing value for itsstockholders. Operating the Company as a going concern outside of the POLallows the Company to pursue alternative business strategies, including amerger, capital stock exchange, asset acquisition or other growth initiative.The Board is still permitted to pursue the sale of the Company’s final propertyand/or consider the liquidation of the Company in the event that it is unableto identify and affect a viable alternative, but it would no longer be requiredto do so by the terms of the POL.

 

Subsequent to the termination of the POL, wehave continued to own and operate Stonehenge which has approximately 960members. Concurrently, we have placed renewed emphasis on initiatives to resumecorporate growth in an effort to create value for stockholders. We are seekingto grow within areas of historical expertise and areas that management considersto be of logical interest, but will also evaluate acquisitions or businesscombinations in unallied industries.

 

There can be no assurance that the Companywill successfully consummate a viable alternative growth strategy. The Companyhas limited financial and management capacity, will be competing withorganizations possessing far greater resources, and is subject to specificindustry and macro economic factors, many of which may prove outside of theCompany’s control or sphere of influence.

 

**Executive Summary**

 

We reported a net loss of approximately$386,000 ($0.05 per basic share) and net income of approximately $544,000($0.07 per basic share) for the three and six months ended June 30, 2008,respectively.  Due to the fact that wewere under the liquidation basis of accounting for the three and six monthsended June 30, 2007, the two periods are not meaningful for comparisonpurposes; however, a comparison of the operating results for just Stonehengewhich is comparable for these periods is provided below under the heading *Results of Operations*. The net loss for the three months ended June 30, 2008 is primarilydue to the fact that the operations of Stonehenge did not realize sufficientnet income to cover the public company operating costs of the Corporate officeand we did not realize any “other income” in the three months ended June 30,2008.  The net income for the six monthsended June 30, 2008 of approximately $544,000 was primarily due to therecognition of a gain from the settlement of certain litigation 

 

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formerly known as the YoungComplaints.    In connection with thesettlement, a note receivable that was recorded at its estimated net presentvalue on the date of the settlement of approximately $432,000 and undevelopedland that was recorded at its estimated fair value of approximately $1,032,000..  Further, the Company recognizedapproximately $177,000 in income from the resolution of the property taxlawsuit related to the Innisbrook Resort and Golf Club, or the Resort, which weowned until it was sold on July 16, 2007.

 

For the three months ended June 30,2008, operating expenses for the Company totaled approximately $1,530,000consisting of approximately (i) $147,000 in depreciation expense, (ii) $308,000in operating expenses of the Corporate office and (iii) $1,075,000 inoperating expenses of Stonehenge.  TheCorporate office expenses primarily consisted of approximately (i) $8,000  in tax, audit and accounting consulting fees,(ii) $116,000 in salary and benefits, (iii) $22,000 in legal fees, (iv) $44,000in insurance, (v) $5,000 in settlement fees and expenses related certainclaims now resolved, (vi) $37,000 in stock option expense, (vii) $40,000for shareholder related expenses such as shareholder transfer agent fees, boardfees and printing costs for SEC required reports, and (viii) $36,000 inother fees and operating expenses such as rent and utilities, travel and othermiscellaneous operating expenses.

 

For the six months ended June 30, 2008,operating expenses for the Company totaled approximately $3,168,000 consistingof approximately (i) $294,000 in depreciation expense, (ii) $931,000in operating expenses of the Corporate office and (iii) $1,943,000 inoperating expenses of Stonehenge.  TheCorporate office expenses primarily consisted of approximately (i) $183,000in tax, audit and accounting consulting fees, (ii) $263,000 in salary andbenefits,(iii) $77,000 in legal fees, (iv) $97,000 in insurance, (v) $41,000in settlement fees and expenses related certain claims now resolved, (vi) $71,000in stock option expense, (vii) $89,000 for shareholder related expensessuch as the annual American Stock Exchange fee, shareholder transfer agentfees, board fees and printing costs for SEC required reports, and (viii) $110,000in other fees and operating expenses such as rent and utilities, certain annualtaxes and fees and other miscellaneous operating expenses.

 

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**Results of Operations for the Three and SixMonths Ended June 30, 2008 and 2007**

 

Stonehenge’s operating results which areincluded in our unaudited condensed consolidated financial results are providedin the table below.

 
| ** **                                   | ** ** | **For the three months ended  June 30,** | ** ** | **Change  Favorable /** | ** ** |
|----------------------------------------------|------------|-------------------------------------------------------------------|------------|------------------------------|------------|
| **Stonehenge**                               | ** ** | **2008**                                                          | ** ** | **2007**                     | ** ** | **(Unfavorable)** | ** ** |
| ** **                                   | ** ** | **(unaudited)**                                                   | ** ** | ** **                   | ** ** | ** ** | ** ** |
| **Revenues**                                 | ** ** | ** **                                                        | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Golf operating revenue                       |       | $                                                                 | 332,815    |                         | $          | 328,771 |   | $ | 4,044 |   | 1 | % |
| Food and beverage revenue                    |       | 214,207                                                           |       | 190,413                      |       | 23,794 |   | 12 | % |
| Membership dues and fees revenue             |       | 510,049                                                           |       | 483,468                      |       | 26,581 |   | 5 | % |
| Other club revenue                           |       | 115,829                                                           |       | 4,584                        |       | 111,245 |   | 2427 | % |
| Operating revenue                            |       | 1,172,900                                                         |       | 1,007,236                    |       | 165,664 |   | 16 | % |
| **Expenses**                                 |       |                                                              |       |                         |       |   |   |   |   |
| Golf operating expenses                      |       | 205,000                                                           |       | 159,159                      |       | (45,481 | ) | (29 | )% |
| Food and beverage expenses                   |       | 168,579                                                           |       | 207,567                      |       | 38,988 |   | 19 | % |
| Other club expenses                          |       | 454,843                                                           |       | 377,235                      |       | (77,608 | ) | (21 | )% |
| General and administrative expenses          |       | 246,241                                                           |       | 220,793                      |       | (25,448 | ) | (12 | )% |
| Total expenses                               |       | 1,074,663                                                         |       | 964,754                      |       | (109,910 | ) | (11 | )% |
| Operating income                             |       | 98,237                                                            |       | 42,482                       |       | 55,754 |   | 131 | % |
| **Other income (expense)**                   |       |                                                              |       |                         |       |   |   |   |   |
| Interest income                              |       | 404                                                               |       | —                       |       | (404 | ) | 100 | % |
| Interest expense                             |       | (7,610                                                            | )          | —                       |       | (7,610 | ) | (100 | )% |
| Other expense, net                           |       | (7,206                                                            | )          | —                       |       | (7,206 | ) | (100 | )% |
| **Pre-tax income exclusive of depreciation** |       | $                                                                 | 91,031     |                         | $          | 42,482 |   | $ | 48,548 |   | 114 | % |

 
| ** **                                   | ** ** | **For the six months ended  June 30,** | ** ** | **Change  Favorable /** | ** ** |
|----------------------------------------------|------------|-----------------------------------------------------------------|------------|------------------------------|------------|
| **Stonehenge**                               | ** ** | **2008**                                                        | ** ** | **2007**                     | ** ** | **(Unfavorable)** | ** ** |
| ** **                                   | ** ** | **(unaudited)**                                                 | ** ** | ** **                   | ** ** | ** ** | ** ** |
| **Revenues**                                 | ** ** | ** **                                                      | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Golf operating revenue                       |       | $                                                               | 514,165    |                         | $          | 481,491 |   | $ | 32,674 |   | 7 | % |
| Food and beverage revenue                    |       | 366,060                                                         |       | 355,726                      |       | 10,334 |   | 3 | % |
| Membership dues and fees revenue             |       | 1,024,363                                                       |       | 951,742                      |       | 72,621 |   | 8 | % |
| Other club revenue                           |       | 223,795                                                         |       | 27,796                       |       | 195,999 |   | 705 | % |
| Operating revenue                            |       | 2,128,383                                                       |       | 1,816,755                    |       | 311,629 |   | 17 | % |
| **Expenses**                                 |       |                                                            |       |                         |       |   |   |   |   |
| Golf operating expenses                      |       | 344,621                                                         |       | 305,516                      |       | (39,105 | ) | (13 | )% |
| Food and beverage expenses                   |       | 310,617                                                         |       | 379,744                      |       | 69,127 |   | 18 | % |
| Other club expenses                          |       | 806,623                                                         |       | 722,259                      |       | (84,364 | ) | (12 | )% |
| General and administrative expenses          |       | 481,648                                                         |       | 432,639                      |       | (49,009 | ) | (11 | )% |
| Total expenses                               |       | 1,943,509                                                       |       | 1,840,158                    |       | (103,351 | ) | (18 | )% |
| Operating income (loss)                      |       | 184,875                                                         |       | (23,403                      | )          | 208,278 |   | (890 | )% |
| **Other income (expense)**                   |       |                                                            |       |                         |       |   |   |   |   |
| Interest income                              |       | 1,322                                                           |       | —                       |       | 1,322 |   | 100 | % |
| Interest expense                             |       | (15,414                                                         | )          | —                       |       | (15,414 | ) | (100 | )% |
| Other expense, net                           |       | (14,092                                                         | )          | —                       |       | (14,092 | ) | (100 | )% |
| **Pre-tax income exclusive of depreciation** |       | $                                                               | 170,783    |                         | $          | (23,403 | ) | $ | 194,186 |   | 830 | % |

 

Note: We operated under the liquidation basisof accounting for the three and six months ended June 30, 2007; therefore,depreciation expense of approximately $147,000 and $293,000 for the three andsix months ended June 30, 2008, respectively, was excluded from the analysisabove for comparability purposes.

 

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For the three months ended June 30,2008, operating revenue increased by approximately $166,000 (16%) and expensesincreased by approximately $110,000 (11%) resulting in an increase in pre-taxincome of approximately $49,000 (114%) over the same period in the prior year.The revenue increase was due to an increase in member dues and fees ofapproximately $26,000 (5%) and in food and beverage revenue which increasedapproximately $24,000 (12%).  Included inother club revenue is approximately $80,000 in barter transaction revenue whichrepresents the fair value related to the management services we provide for theWoodcreek Farms amenities as contemplated in the use and access agreement withthe developer of the Woodcreek Farms subdivision.  The remaining increase in Other club revenue,after consideration of the barter transaction, is due to the fact thatapproximately $30,000 in refundable initiation fees were issued in the threemonths ended June 30, 2007 and no such refunds were issued in the threemonths ended June 30, 2008.  Thecumulative net increase in operating revenues in the other departments wasapproximately $5,000.  The increase inmember dues and fees revenue was attributed to a growth in membership ofapproximately twenty new members in the three months ended June 30, 2008coupled with a 10% increase in dues that was implemented in August 2007and the implementation of a food minimum as part of the dues in October 2006.  While there were also approximatelytwenty-one member resignations during this period, the net impact of theadditions and resignations of members during the three months ended June 30,2008 was positive impact to revenue due to the fact that the members thatresigned were in membership types that had a lower dues and initiation feestructure than the new members that have joined in membership types with moreprivileges and are at higher dues and initiation fee levels.  The increase in food and beverage revenue wasattributed to an increase in banquet sales for the Woodcreek Clubhouse in May 2008when compared to the same period in the prior year.

 

Club operating expenses increasedapproximately $110,000 (11%), over prior year. This increase was primarilyattributed to approximately $80,000 in barter transaction expenses included inOther club expenses which offsets the barter transaction revenue describedabove and an increase in golf operating expenses of approximately $45,000(29%).  The increase in golf operatingexpenses was due to the cost of sales related to higher merchandise sales inthis period compared to the prior year as well as higher labor costs from anincreased focus on service levels for the membership and an increase inoverhead costs related to additional range expenses.  Food and beverage expenses decreasedapproximately $39,000 (19%) compared to the same period in the prior year dueto more cost efficient buying practices, a focus on controlling labor costs andimproving margins on cost of goods sold.  General and administrative expenses increased approximately $25,000(12%) primarily due to an increase in property taxes of approximately $10,000(28%) coupled with an increase in the utilities, health insurance, employertaxes and other overhead expenses from the increased number of employees forthe Woodcreek Farms Clubhouse and restaurant that opened in September 2006.  Other departments had a combined net decreasein operating expenses of approximately $1,000.

 

For the six months ended June 30, 2008,operating revenue increased by approximately $312,000 (17%) and expensesincreased by approximately $103,000 (18%) resulting in an increase in pre-taxincome of approximately $194,000 (830%) over the same period in the prior year.Included in Other club revenue is approximately $161,000 in barter transactionrevenue which represents the fair market value related to the managementservices we provide for the Woodcreek Farms amenities as contemplated in theuse and access agreement with the developer of the Woodcreek Farmssubdivision.  Operating revenue increasedin all categories compared to the same period in the prior year with the mostsignificant increase, disregarding the barter transaction revenue, occurring inmember dues and fees which increased approximately $73,000 (8%).   The increase in member dues and fees revenuewas attributed to a growth in membership of approximately thirty-nine newmembers in the six months ended June 30, 2008 coupled with a 10% increasein dues that was implemented in August 2007 and the implementation of afood minimum as part of the dues in October 2006.  The increase in golf operating revenue ofapproximately $33,000 (7%) was attributed to an increase of approximately 500golf rounds, higher greens and care fees and increased merchandise salescompared to the same period in the prior year. The remaining increase in Other club revenue, after consideration of thebarter transaction, is due to the fact that approximately $30,000 in refundableinitiation fees were issued in the six months ended June 30, 2007 and nosuch refunds were issued in the six months ended June 30, 2008.  The increase in food and beverage revenue ofapproximately $10,000 (3%) was attributed to an increase in banquet sales forthe Woodcreek Clubhouse in the six months ended June 30, 2008 whencompared to the same period in the prior year. Other departments had a combinednet increase in operating expenses of approximately $5,000.

 

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Club operating expenses increasedapproximately $103,000 (18%), over prior year. This increase was primarily inother club expenses which increased approximately $84,000.  This increase was primarily attributed to theapproximately $161,000 in barter transaction expenses which offset the bartertransaction revenue described above. This increase in Other club expenses was offset by a decrease inoperating expenses primarily in the maintenance department which decreasedapproximately $64,000 (11%). This savings was realized due to a revised winteragronomic plan that was implemented in the first quarter which reduced laborcosts, fertilizer and chemical cost. The increase in golf operating expenses ofapproximately $39,000 (13% was due to the cost of sales resulting from highermerchandise sales in this period compared to the prior year as well as higherlabor costs from an increased focus on service levels for the membership and anincrease in overhead costs related to additional range expenses. Food andbeverage expenses decreased approximately $69,000 (18%) compared to the sameperiod in the prior year due to more cost efficient buying practices, a focuson controlling labor costs and improving margins on cost of goods sold.   Other departments had a combined netdecrease in operating expenses of approximately $13,000 (2%). General andadministrative expenses increased approximately $49,000 (11%) primarily due toan increase in property taxes of approximately $19,000 (28%) coupled with anincrease in the utilities, health insurance, employer taxes and other overheadexpenses from the increased number of employees for the Woodcreek FarmsClubhouse and restaurant that opened in September 2006.

 

*Employee Stock Options and Awards*

 

On January 18, 2008, 50,000 optionshares were granted from the 2007 Stock Option Plan to the Company’s CFO, TracyS. Clifford, and on January 23, 2008, 160,000 option shares were grantedfrom the 2007 Stock Option Plan to the four independent members of the Company’sBoard (40,000 to each member).  Theestimated grant-date fair value of these options was approximately $0.84 and$0.80 per share, respectively. The exercise price is $1.90 and $1.82,respectively, the closing American Stock Exchange price on the respective grantdate, as specified by the Compensation Committee. Stock option expense ofapproximately $34,000 was recorded related to these issued options and the275,000 options shares issued to our CEO on December 14, 2007.

 

The fair value of each option award isestimated on the date of grant using the Black Sholes option valuation model.Expected volatility is based on the historical volatility of the Company’sstock and was estimated at 53.80%. The risk-free rate for periods within thecontractual life of the option is based on the U.S. Treasury bill rate ineffect at the time of grant which was approximately 2.86% at January 18,2008 and 2.64% at January 23, 2008. The expected term in years is anaverage of four years. Any options issued to employees who are subsequentlyterminated do not expire early as a result of termination but expire pursuantto their contractual terms at issuance. The total outstanding unvested optionsat June 30, 2008 is 485,000. At June 30, 2008, there wasapproximately $370,000 of total unrecognized compensation expense related tononvested-share-based compensation arrangements granted under the 2007 StockOption Plan that will be amortized over the period ending January 23,2011.  At June 30, 2008, theseoptions had no intrinsic value.

 

Pursuant tothe respective option plans, except the 1997 Non-Employee Director’s Plan andthe 2007 Stock Option Plan, any options issued to employees who aresubsequently terminated expire ninety days following his/her termination if notexercised. The options issued under the 1997 Non-Employee Director’s Plan areexercisable until their original expiration date.  During the three months ended June 30,2008, no options were exercised and no options expired.  During the six months ended June 30,2008, no options were exercised and 260,000 options expired. As of June 30,2008, there are 60,000 options outstanding under the 1997 Non-Employee Director’sPlan, 25,000 options outstanding under the 1997 General Plan and 5,000outstanding under the 1997 Officers Plan.

 

**Income Taxes**

 

The Company had a pre-tax loss ofapproximately $386,000 and pre-tax income of approximately $544,000 for thethree and six months ended June 30, 2008, respectively, and a decrease ofapproximately $1,890,000 and $2,395,000 in net assets in liquidation for thethree and six months ended June 30, 2007, respectively.  Included in deferred income tax assets as of June 30,2008 and December 31, 2007 are Federal and state operating losscarryforwards of approximately $84 million and $85 million, respectively.  The Company recorded a valuation allowancefor these carryforwards.  These netoperating losses expire at various dates beginning with the 2021 tax year andending with the 2026 tax year.

 

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**Liquidity and Capital Resources**

 

Currently, our only sources of cash flow arefrom the operations of Stonehenge and interest income from our invested cashbalances. GTA Stonehenge, LLC has a $4,200,000 revolving credit line withTextron Financial Corporation (“Textron”), which matures on March 18,2009. This loan is collateralized by a security interest in Stonehenge. Theinterest rate is the prime rate plus 1.75% per annum paid monthly. This loanrequires that the operations at Stonehenge for the immediately preceding twelvemonth period be sufficient to meet a debt service coverage ratio, as defined inthe mortgage, of at least 1.20, as measured monthly. At June 30, 2008, theCompany did not meet the debt service coverage ratio (in part due to increasedefforts to improve the playing quality of the golf courses by investingsignificantly in additional beautification, repair and maintenance projects, aswell as attendant labor costs, related to the golf courses, but which do notqualify for capitalization accounting treatment). In light of the fact that theCompany has consistently met its financial obligations throughout the term ofthe loan, as of December 31, 2007 Textron waived the debt service covenantviolations for 2008 subject to re-evaluation at December 31, 2008.

 

At June 30, 2008, our cash balance isapproximately $8,662,000. We received the escrowed funds from the Resort salein the amount of $2,000,000 plus accrued interest of approximately $31,000 on April 3,2008. Additionally, the promissory note that was executed in the settlement ofthe Young Complaints has scheduled payments as follows: (a) $100,000principal due and paid on May 31, 2008; (b) approximately $133,000principal due on January 1, 2009; (c) approximately $133,000principal due on January 1, 2010; (d) approximately $134,000principal due on January 1, 2011. In the event these installments are notreceived timely, the note provides for an additional installment ofapproximately $3,377,000 principal, plus interest. Also, the Board is currentlyassessing future plans for the land that we obtained title to in the settlementof the Young Complaints (approximately 118 acres of undeveloped land inCharleston County, South Carolina), which could provide additional liquidity.

 

Stonehenge has historically possessedsufficient liquidity to cover its operations. Stonehenge has also covered theTextron debt service for the first quarter of 2008 and is expected to cover theTextron debt service for the fiscal year ended December 31, 2008.Management is focused on several membership initiatives to grow the membershipat Stonehenge, which it anticipates will increase revenues and enhance cashflow. Management is currently anticipating capital expenditures in 2008 atStonehenge of approximately $100,000 (of which approximately $83,000 wasexpended during the six months ended June 30, 2008) which will be fundedby cash flow from Stonehenge operations. The technological infrastructure atthe Company’s corporate office was updated during the second quarter at a costof approximately $12,000 which was funded from existing cash balances. Wecurrently intend to pay corporate overhead in 2008 from current cash balances.Several cost reduction initiatives have been implemented at corporateheadquarters to reduce operating expenses including reduction of professionalfees which have decreased since we are no longer under the POL, reduction ofBoard fees, consolidation of office space, reduction of staff, and eliminationof certain services. However, the corporate overhead expense for 2008 may beimpacted if we are successful in completing an acquisition or other growthinitiative.

 

The Company believes that it possessesadequate liquidity and capital resources to conduct its operations. In theevent that the Company pursues an acquisition or other strategic alternativerequiring significant capital investment, it is anticipated that funding willbe provided by cash on hand, equity issuance, debt issuance, commercial creditfacilities, or a combination of the aforementioned.

 

**Off Balance Sheet Arrangements**

 

As of June 30, 2008, we have no offbalance sheet arrangements that have or are reasonably likely to have a currentor future material effect on our financial condition, revenues, expenses, resultsof operations, liquidity, capital expenditures or capital resources.

 

**Contractual Obligations, ContingentLiabilities and Commitments**

 

There have not been any material changes fromthe contractual obligations, contingent liabilities and commitments previouslydisclosed in our 2007 annual report for fiscal year ended December 31,2007.  Please refer to “Management’sDiscussion and Analysis of Financial Condition and Results ofOperations—Contractual 

 

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Obligations, ContingentLiabilities and Commitments” in our Form 10-K for the year ended December 31,2007, filed on March 31, 2008, for a description of our contractualobligations.

 

**Inflation**

 

Inflation has not had a significant impact onus. As operating costs and expenses increase, we generally attempt to offsetthe adverse effects of increased costs by increasing prices in line withindustry standards. However, we are subject to the risks that our costs ofoperations will increase and we will be unable to offset those increasesthrough increased dues and fees without adversely affecting demand. In additionto inflation, factors that could cause operating costs to rise include, amongother things, increased labor costs, lease payments at our leased facilities,energy costs and property taxes.

 

**Seasonality**

 

Since Stonehenge is a private membershipclub, the monthly member dues are the same throughout the year; however, swimand tennis revenues and expenses are higher in the summer months.

 

**ITEM 3. QUANTITATIVE AND QUALITATIVEDISCLOSURES 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 the$4,100,000 outstanding under our revolving line of credit.  As of June 30, 2008, a 25 basis pointmovement would have resulted in a $10,000 annualized increase or decrease ininterest expense and cash flows.

 

We have not entered intoany transactions using foreign currency or derivative commodity instruments;therefore, we do not face any foreign currency exchange rate risk or commodityprice risk.

 

Reference is made to Note 5, Debt, to theCondensed Consolidated Financial Statements in Item 1 for additional debtinformation.

 

**ITEM 4. CONTROLS AND PROCEDURES**

 

We maintain disclosure controls andprocedures that are designed to ensure that information required to bedisclosed in our Exchange Act reports is recorded, processed, summarized andreported within the time periods specified in the SEC’s rules and forms,and that such information is accumulated and communicated to our management,including our Chief Executive Officer and our Chief Financial 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 of June 30, 2008, we evaluated, underthe supervision and with the participation of our management, including ourChief Executive Officer and Chief Financial Officer, the effectiveness of thedesign and operation of our disclosure controls and procedures (as defined inExchange Act Rule 13a-15(e)). Management concluded that as of June 30,2008, our disclosure controls and procedures are effective in timely alertingthem to material information relating to us (including our consolidated subsidiaries)required to be included in our Exchange Act reports.

 

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

 

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**PART II.OTHER INFORMATION**

 

**ITEM 1. LEGAL PROCEEDINGS**

 

We are currently involved in, or prior to thefiling of this Quarterly Report we have concluded, the following legalproceedings:

 

***Lake Ozark Industries, Inc. and EverettHolding Company, Inc. v. Golf Trust of America, et al.***

 

The titled action was brought in the CircuitCourt of Miller County, Missouri by LOCI, and its asserted assignee of lien andaccount rights, Everett Holding Company, Inc., in the fall of 1999 againstnumerous defendants, including the Operating Partnership. Plaintiffs assertLOCI performed construction services on, or that benefited, the property ofvarious defendants, including the Operating Partnership. With respect to theOperating Partnership, plaintiffs seek to foreclose a mechanic’s lien uponproperty formerly owned by the Operating Partnership. The lien is for theprincipal amount of approximately $1,276,000, plus interest at 10% per annumand attorney fees. Plaintiffs calculate interest to May 20, 1999, justprior to the lien filing, to be approximately $151,000 and interest thereafterto be $354 per day. The Court entered a written order granting the OperatingPartnership’s Motion for Summary Judgment in April 2002 and a finaljudgment in November 2003. Plaintiffs appealed the ruling to the MissouriCourt of Appeals. The Court of Appeals on April 5, 2005 reversed theCircuit Court judgment in favor of us and remanded the case to the CircuitCourt for further proceedings. On May 31, 2005, the Court of Appeals fileda modified Opinion, which again reversed the Circuit Court judgment in favor ofus and remanded the case to the Circuit Court for further proceedings. On March 12,2008, a case management conference was held. The presiding judge set September 30,2008, as deadline for completing discovery and scheduled another conference forOctober 8, 2008, at which time it is anticipated that the case will be setfor trial. At this time, the Company is unable to assess the likely outcome ofthis litigation.

 

***RoutineLitigation***

** **

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. We have in the past been, and expect tocontinue in the future to be, subject to proceedings relating to personalinjury and property damage. Such proceedings are generally brought against theoperator of a golf course, but may also be brought against the owner ofthe golf course. We maintain insurance to defend against certain of theseactions.

 

**ITEM 1A. RISK FACTORS**

 

Not applicable.

 

**ITEM 2. UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS**

 

None.

 

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

 

None.

 

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS**

 

No matters were submitted to a vote ofsecurity holders during the three months ended June 30, 2008.

 

**ITEM 5. OTHER INFORMATION**

 

None.

 

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**ITEM 6. EXHIBITS**

 

**EXHIBITINDEX**

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

 

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**SIGNATURES**

 

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

 
|                            | ** ** | **GOLF TRUST OF  AMERICA, INC.**    |
|----------------------------|------------|------------------------------------------|
| ** **                 | ** ** | ** **                               |
| Date: August 8,  2008 | By:        | /s/ Michael C.  Pearce              |
|                       |       | Michael C. Pearce                        |
| * *                   | * *   | *Chief Executive Officer and  President* |
| * *                   | * *   | * *                                 |
| Date: August 8,  2008 | By:        | /s/ Tracy S.  Clifford              |
|                       |       | Tracy S. Clifford                        |
| * *                   | * *   | *Chief Financial Officer and  Secretary* |

 

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