Inn at the Springs, Bonita Springs, Florida

On August 1, 2005, GM Hospitality, LLC was organized as a Florida limited liability company to focus on commercial hotel projects. GM Hospitality specializes in the conversion of hotels into a condominium form of real estate ownership. GM Hospitality was founded by its two owners; GATES, a construction/development company located in Naples, Florida and Alliance Hotel Group, Inc., an affiliate of Accord Real Estate Group, Inc. which is owned by Scott R. Lodde.

In November, 2005, GM Hospitality formed Brighton Hotel, LLC ("Company") and raised equity through a private placement offering. The offering was sold in reliance on an exemption from the registration requirements under the Federal Securities Act of 1933 and certain state securities laws. The plan for the project was to convert the hotel into the condominium form of real estate ownership and sell each guestroom unit to the public as separate legal parcels of real property.

The Inn at the Springs is a 106-room extended-stay hotel, built in 2001, and located at 8900 Brighton Lane, Bonita Springs, Florida, one block east of US Hwy 41 (the Tamiami Trail). The hotel was originally built as a Staybridge Suites. The franchise with Intercontinental Hotels was terminated on May 3, 2006 at which time the hotel was renamed the Inn at the Springs.

Prior to closing on the hotel, the Company raised $2,000,000 each from two separate classes of members (Class A and B Members) through a private placement offering for a total of $4,000,000. In addition, an affiliate of Gates contributed $600,000 in equity to the Company. The Company financed the balance of the acquisition price and closing costs with an acquisition loan in the amount of $4,600,000 from TIB Bank, Naples, FL and a purchase money note from the seller in the amount of $1,000,000.

To fund the renovation of the project, the Company began borrowing under a renovation loan in the amount of $2,000,000 with TIB Bank. In addition, an affiliate of Gates funded a loan to the Company in the amount of $1,600,000 to complete the first phase of the renovation plan.

The Company completed the first phase of a four-phase renovation program that began in May, 2006 following the termination of the franchise agreement with Intercontinental Hotels.

Phase 1 of the renovation program involved the renovation of the 61 guestrooms in the western wing of the hotel. The renovation was completed in October 2006. Items completed during Phase 1 included the replacement of all exterior windows, exterior painting, exterior waterproofing, upgraded interior lighting, granite countertops, guestroom painting, replacement of kitchen cabinets, crown molding, new carpet, tile, wood flooring and wallcovering, new furniture and bedding, high LCD definition televisions and new interior and exterior signage.

Phase 2 of the renovation program will involve the renovation of the main common areas of the hotel including the great room, lobby, front desk, back offices, meeting room, breakfast buffet, kitchen, fitness center and elevator.

Phase 3 of the renovation program involves the renovation of the 45 remaining guestrooms in the eastern wing of the hotel. The items to be completed in this phase are the same as those included in Phase 1.

Phase 4 of the renovation program involves the renovation of the pool area to the north of the main lobby area. Items to be completed in this phase include pool resurfacing, the addition of a spa and barbeque area, parking lot seal coating, concrete repairs and awnings.

To date, the total cost of the renovation is approximately $2,000,000. It is estimated that the costs to complete the project will be $3,500,000 for a total cost of approximately $5,500,000 or $51,886 per room. Total development costs for the project (including acquisition, soft costs, debt service and other development costs) are estimated at $15,750,000 (including financing costs and debt service).

Due to the turndown in the residential condominium market (including condominium hotels), the conversion of the hotel to the condominium hotel form of ownership was postponed and the project is being managed as an independent extended-stay hotel.