UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 
 FORM
10-Q
 
 [X]  Quarterly
Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of
1934
 For the
Period Ended June 30, 2008
 
 or
 
 [
]  Transition Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 For the Transition Period From
________________to_______________.
 
 Commission
file number 000-22847
 
 AMEN Properties,
Inc.
 (Exact
Name of Registrant as Specified in Its Charter)
 
 Delaware
            54-1831588(State
      or Other Jurisdiction of
              Incorporation
      or Organization)
            (I.R.S.
      Employer
              Identification
      No.)
  303 W.
Wall Street,  Suite 2300
 Midland,
TX  79701
 (Address
of Principal Executive Offices)
 
 (432-684-3821)
 (Issuer’s
Telephone Number, Including Area Code)
 
 ________________________________________________
 (Former
Name, Former Address and Former Fiscal Year,
 if
Changed Since Last Report)
 
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter periods that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
 Yes     |   |        No   |
X  |
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes     |    |        No   |
X |
 
 Applicable
Only to Issuers Involved in Bankruptcy
 Proceedings
During the Preceding Five Years
 
 Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court.    
Yes   |   |     No   |   |
 
 Applicable
Only to Corporate Issuers
 
 State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practical date:
 Common
Stock, $ .01 Par Value: 3,774,551 shares outstanding as of August 14,
2008.
 
 Transitional
Small Business Disclosure Format (check
one):                              
          Yes   |
X
|     No   |   |
  
 INDEX
 
 PAGEPart
      I.
            FINANCIAL
      INFORMATIONItem
      1.
            Consolidated
      Financial StatementsConsolidated
      Balance Sheets at June 30, 2008 (Unaudited) and December 31, 2007(Audited)
            1Consolidated
      Statements of Operations and Comprehensive Income (Loss)—for
      the three and six months ended June 30, 2008 and 2007
      (Unaudited)
            3Consolidated
      Statements of Cash Flows— for the six months endedJune
      30, 2008 and 2007 (Unaudited)
            5Notes
      to Consolidated Financial Statements (Unaudited)
            6Item
      2.
            Management’s
      Discussion and Analysis of Financial Conditionand
      Results of Operations
            27Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            33Item
      4T.
            Controls
      and Procedures
            33Part
      II.
            OTHER
      INFORMATIONItem
      1.
            Legal
      Proceedings
            33Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            33Item
      3
            Defaults
      Upon Senior Securities
            33Item
      4
            Submission
      of Matters to a Vote of Security Holders
            33Item
      5
            Other
      Information
            33Item
      6
            Exhibits
            34Signatures
            
            37Exhibits11.             Computation
      of Earnings Per Share31.1           Certification
      of Chief Executive Officer.31.2           Certification
      of Chief Financial Officer.32.1           Certification
      of Chief Executive Officer Pursuant to 18 USC  §
      1350.32.2           Certification
      of Chief Financial Officer Pursuant to 18 USC § 1350.
 
 
 AMEN
Properties, Inc. and Subsidiaries
 CONSOLIDATED
BALANCE SHEETS
 ASSETSJune
      30,
              2008
            
            
            December
      31,
              2007(Unaudited)
            
            
            (Audited)CURRENT
      ASSETSCash
      and Cash Equivalents
            
            $
            3,495,943
            
            
            $
            1,520,852Accounts
      Receivable, net of allowance of $26,749
            
            
            1,561,783
            
            
            
            1,808,946Restricted
      Cash Equivalents
            
            
            2,197,000
            
            
            
            --Current
      Available-for-Sale Securities
            
            
            --
            
            
            
            3,680,550Other
      Current Assets
            
            
            46,358
            
            
            
            231,260Total
      Current Assets
            
            
            7,301,084
            
            
            
            7,241,608RESTRICTED
      CASH EQUIVALENTS
            
            
            --
            
            
            
            2,197,000PROPERTY
      AND EQUIPMENT
            
            
            187,987
            
            
            
            177,771OIL
      AND GAS INVESTMENTS IN SFF GROUP
            
            
            9,501,870
            
            
            
            10,022,389INVESTMENT
      IN REAL ESTATE
            
            
            2,332,026
            
            
            
            2,311,443ROYALTY
      INTERESTS
            
            
            124,837
            
            
            
            126,528LONG-TERM
      INVESTMENTS
            
            
            62,350
            
            
            
            62,350OTHER
      ASSETSGoodwill
            
            
            2,916,085
            
            
            
            2,916,085Deferred
      Costs
            
            
            6,000
            
            
            
            6,000Deposits
      and Other Assets
            
            
            455,663
            
            
            
            500,856Total
      Other Assets
            
            
            3,377,748
            
            
            
            3,422,941TOTAL
      ASSETS
            
            $
            22,887,902
            
            
            $
            25,562,030
 
 The
accompanying summary of accounting policies and footnotes are an integral part
of these consolidated financial statements.
 
 1
 
 AMEN
Properties, Inc. and Subsidiaries
 CONSOLIDATED
BALANCE SHEETS
 LIABILITIES
      AND STOCKHOLDERS’ EQUITYJune
      30,
              2008
            
            
            December
      31,
              2007(Unaudited)
            
            
            (Audited)CURRENT
      LIABILITIESAccounts
      Payable
            
            $
            961,771
            
            
            $
            796,540Accrued
      Liabilities
            
            
            1,393,373
            
            
            
            718,991Deferred
      Revenue
            
            
            112,038
            
            
            
            26,519Income
      & Franchise Taxes Payable
            
            
            112,006
            
            
            
            32,656Short-Term
      Obligations
            
            
            1,632,559
            
            
            
            698,593Short-Term
      Related-Party Obligations
            
            
            1,076,441
            
            
            
            5,510,407Current
      Portion of Long-Term Obligations
            
            
            119,890
            
            
            
            115,375Current
      Portion of Related-Party Obligations
            
            
            376,382
            
            
            
            375,286Total
      Current Liabilities
            
            
            5,784,460
            
            
            
            8,274,367OTHER
      LIABILITIESLong-Term
      Obligations, less current portionFinancial
      Institutions and Other Creditors
            
            
            669,451
            
            
            
            730,545Related-Party
      Obligations
            
            
            1,692,435
            
            
            
            1,893,540Total
      Other Liabilities
            
            
            2,361,886
            
            
            
            2,624,085COMMITMENTS
      and CONTINGENCIES
            
            
            --
            
            
            
            --STOCKHOLDERS’
      EQUITYPreferred
      Stock, $.001 par value; 5,000,000 shares authorized429,100
      Series “D” shares issued and outstanding
            
            
            429
            
            
            
            429Common
      Stock, $.01 par value; 20,000,000 shares authorized; 3,765,827 and
      3,716,1825 shares issued and outstanding at June 30, 2008 and December 31,
      2007, respectively
            
            
            38,605
            
            
            
            37,162Additional
      Paid-in Capital
            
            
            49,764,948
            
            
            
            49,445,241Accumulated
      Deficit
            
            
            (35,062,426
            )
            
            
            (35,062,245
            )Accumulated
      Other Comprehensive Income
            
            
            --
            
            
            
            242,991Total
      Stockholders’ Equity
            
            
            14,741,556
            
            
            
            14,663,578TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            22,887,902
            
            
            $
            25,562,030
  The
accompanying summary of accounting policies and footnotes are an integral part
of these consolidated financial statements.
 
 2
 
 AMEN
Properties, Inc. and Subsidiaries
 CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 (Unaudited)
 For
      the Three Months
              Ended
      June 30,
            
            
            For
      the Six Months
              Ended
      June 30,2008
            
            
            2007
            
            
            2008
            
            
            2007OPERATING
      REVENUEEnergy
      Management Fees
            
            $
            966,855
            
            
            $
            999,284
            
            
            $
            2,386,458
            
            
            $
            1,778,461Total
      Operating Revenue
            
            
            966,855
            
            
            
            999,284
            
            
            
            2,386,458
            
            
            
            1,778,461OPERATING
      EXPENSECost
      of Goods and Services
            
            
            148,723
            
            
            
            136,650
            
            
            
            321,072
            
            
            
            220,823General
      and Administrative
            
            
            819,520
            
            
            
            515,913
            
            
            
            1,619,973
            
            
            
            1,030,539Depreciation,
      Amortization and Depletion
            
            
            43,876
            
            
            
            10,621
            
            
            
            92,783
            
            
            
            20,769Corporate
      Tithing
            
            
            --
            
            
            
            62,092
            
            
            
            112,397
            
            
            
            121,383Total
      Operating Expenses
            
            
            1,012,119
            
            
            
            725,276
            
            
            
            2,146,225
            
            
            
            1,393,514INCOME
      (LOSS) FROM OPERATIONS
            
            
            (45,264
            )
            
            
            274,008
            
            
            
            240,233
            
            
            
            384,947OTHER
      INCOME (EXPENSE)Interest
      Income
            
            
            3,697
            
            
            
            44,743
            
            
            
            4,118
            
            
            
            76,619Interest
      Expense
            
            
            (186,126
            )
            
            
            (64,179
            )
            
            
            (400,977
            )
            
            
            (123,615
            )Gain
      on Liquidation of Investment
            
            
            --
            
            
            
            --
            
            
            
            534,731
            
            
            
            --Income
      from Real Estate Investment
            
            
            (6,836
            )
            
            
            39,558
            
            
            
            20,583
            
            
            
            72,719Income
      from SFF Group Investment
            
            
            566,650
            
            
            
            --
            
            
            
            846,147
            
            
            
            --Other
      Income
            
            
            20,525
            
            
            
            15,991
            
            
            
            42,839
            
            
            
            28,461Total
      Other Income
            
            
            397,910
            
            
            
            36,113
            
            
            
            1,047,441
            
            
            
            54,184INCOME
      FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY
      INTEREST
            
            
            352,646
            
            
            
            310,121
            
            
            
            1,287,674
            
            
            
            439,131INCOME
      TAXES
            
            
            (12,685
            )
            
            
            (5,444
            )
            
            
            (69,392
            )
            
            
            (14,642
            )MINORITY
      INTEREST
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            900INCOME
      FROM CONTINUING OPERATIONS
            
            
            339,961
            
            
            
            304,677
            
            
            
            1,218,282
            
            
            
            425,389INCOME
      (LOSS) FROM DISCONTINUED OPERATIONS
            
            
            (1,317,233
            )
            
            
            203,754
            
            
            
            (1,218,463
            )
            
            
            591,965NET
      INCOME (LOSS)
            
            $
            (977,272
            )
            
            $
            508,431
            
            
            $
            (181
            )
            
            $
            1,017,354Income
      from Continuing Operations per Common Share (Basic)
            
            $
            .09
            
            
            $
            .13
            
            
            $
            .32
            
            
            $
            .19Income
      from Continuing Operations per Common Share (Diluted)
            
            $
            .09
            
            
            $
            .08
            
            
            $
            .32
            
            
            $
            .11Income
      (Loss) from Discontinued Operations per Common Share
    (Basic)
            
            $
            (.35
            )
            
            $
            .09
            
            
            $
            (.32
            )
            
            $
            .26Income
      (Loss) from Discontinued Operations per Common Share
    (Diluted)
            
            $
            (.35
            )
            
            $
            .05
            
            
            $
            (.32
            )
            
            $
            .16Net
      Income (Loss) per Common Share (Basic)
            
            $
            (.26
            )
            
            $
            .22
            
            
            $
            .00
            
            
            $
            .44
  3
 
 AMEN
Properties, Inc. and Subsidiaries
 CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 (Unaudited)
 For
      the Three Months
              Ended
      June 30,
            
            
            For
      the Six Months
              Ended
      June 30,2008
            
            
            2007
            
            
            2008
            
            
            2007Net
      Income (Loss) per Common Share (Diluted)
            
            $
            (.26
            )
            
            $
            .14
            
            
            $
            .00
            
            
            $
            .27Weighted
      Average Number of Common Shares Outstanding - Basic
            
            
            3,734,936
            
            
            
            2,290,589
            
            
            
            3,749,140
            
            
            
            2,290,589Weighted
      Average Number of Common Shares Outstanding - Diluted
            
            
            3,809,004
            
            
            
            3,728,547
            
            
            
            3,826,404
            
            
            
            3,728,547OTHER
      COMPREHENSIVE INCOME (LOSS)Net
      Income (Loss)
            
            $
            (977,272
            )
            
            $
            508,431
            
            
            $
            (181
            )
            
            $
            1,017,354Unrealized
      Gain (Loss) on Investment
            
            
            0
            
            
            
            10,861
            
            
            
            0
            
            
            
            (1,298
            )Comprehensive
      Income (Loss)
            
            $
            (977,272
            )
            
            $
            519,292
            
            
            $
            (181
            )
            
            $
            1,016,056
 
 The
accompanying summary of accounting policies and footnotes are an integral part
of these consolidated financial statements.
  4
 
 AMEN
Properties, Inc. and Subsidiaries
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 Six
Months Ended June 30,
 (Unaudited)
 2008
              
              
              2007Cash
      Flows From Operating ActivitiesIncome
      From Continuing Operations:
              
              $
              1,218,282
              
              
              $
              425,389Adjustments
      to Reconcile Income From Continuing Operations to Net Cash Provided By
      Continuing OperationsDepreciation,
      Amortization and Depletion
              
              
              92,783
              
              
              
              20,769Gain
      on Liquidation of Santa Fe Energy Trust Investment
              
              
              (534,731
              )
              
              
              --Equity
      Income from Real Estate Investment
              
              
              (20,583
              )
              
              
              (72,719
              )Equity
      Income from SFF Group Investment
              
              
              (846,147
              )
              
              
              --Minority
      Interest
              
              
              --
              
              
              
              (900
              )Changes
      in Operating Assets and LiabilitiesAccounts
      Receivable
              
              
              260,208
              
              
              
              6,218Other
      Receivables
              
              
              129,467
              
              
              
              260Other
      Assets
              
              
              (8,708
              )
              
              
              (31,991
              )Accounts
      Payable
              
              
              (94,207
              )
              
              
              (13,940
              )Accrued
      and Other Liabilities
              
              
              184,388
              
              
              
              (12,959
              )Deferred
      Revenue
              
              
              85,519
              
              
              
              187,901Net
      Cash Provided By Continuing Operations
              
              
              466,271
              
              
              
              508,028Cash
      Flows From Discontinued Operations:Cash
      Flows (Used By) Provided By Discontinued Operating
    Activities
              
              
              (150,417
              )
              
              
              547,0980Net
      Cash Provided By Operating Activities
              
              
              315,854
              
              
              
              1,055,126Cash
      Flows From Investing ActivitiesPurchases
      of Property and Equipment
              
              
              (20,412
              )
              
              
              (25,971
              )Discontinued
      Investing Purchases
              
              
              (32,423
              )
              
              
              (24,434
              )Proceeds
      from Liquidation of Santa Fe Energy Trust Investment
              
              
              3,972,290
              
              
              
              --Purchase
      of Investments
              
              
              --
              
              
              
              (1,347,425
              )Investment
      in Real Estate
              
              
              --
              
              
              
              (478,491
              )SFF
      Group Distributions
              
              
              1,366,666
              
              
              
              --Net
      Cash Provided By (Used In) Investing Activities
              
              
              5,286,121
              
              
              
              (1,876,321
              )Cash
      Flows From Financing ActivitiesRepayments
      of Notes Payable
              
              
              (3,756,588
              )
              
              
              (250,678
              )Net
      Proceeds from Exercise of Stock Options
              
              
              54,700
              
              
              
              --Net
      Proceeds from Exercise of Warrants
              
              
              75,004
              
              
              
              --Net
      Cash (Used In) Financing Activities
              
              
              (3,626,884
              )
              
              
              (250,678
              )Net
      Increase (Decrease) in Cash and Cash Equivalents
              
              
              1,975,091
              
              
              
              (1,071,873
              )Cash
      and Cash Equivalents at Beginning of Period
              
              
              1,520,852
              
              
              
              4,457,208Cash
      and Cash Equivalents at End of Period
              
              $
              3,495,943
              
              
              $
              3,385,335Cash Paid During Period
      for:Interest
              
              $
              433,633
              
              
              $
              184,639Non-Cash
      Investing and Financing Activities:Unrealized
      Gain (Loss) on Marketable Securities
              
              
              --
              
              
              
              (1,298
              )Stock
      Issued for Compensation
              
              
              191,446
              
              
              
              --Long
      Term Investment Financed with Margin Account
              
              
              --
              
              
              
              1,279,847
 The accompanying summary of accounting
policies and footnotes are an integral part of these consolidated financial
statements.
 
 5
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
  NOTE
A – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 1. Organization
 
 Company
Background
 
 ·
            The
      Company was originally incorporated as DIDAX, Inc, in January
      1997
 ·
            Until
      December 2002 the Company operated under the name Crosswalk.com; its
      primary businesses were operation of the Christian web portal crosswalk.comTM and a
      direct mail advertising service.
 ·
            During
      the last quarter of 2002, the Company sold substantially all of its assets
      with the exception of the Company’s accumulated Net Operating Loss (“NOL”)
      and changed its name to AMEN Properties,
Inc.
 ·
            A
      revised business plan was approved by the shareholders in 2002, and called
      for the Company to grow via the selective acquisition of cash-generating
      assets in three categories:
 o
            Commercial
      real estate in secondary stagnant
markets
 o
            Commercial
      real estate in out of favor growth
markets
 o
            Oil
      and gas royalties
 
 During
the time the Company operated as Crosswalk.com, it generated a Net Operating
Loss in excess of $30 million.  Provisions in the United States
Federal Tax Code dictate that a significant ownership change (in excess of 50%
in a three-year period) would eliminate the Company’s ability to use the NOL to
offset its Federal Income Tax liability.  It is the Company’s
intention to preserve its NOL, which requires funding our growth without access
to many traditional sources of capital which would result in a significant
change in ownership.
 
 Company
Organization
 
 In
initiating the 2002 business plan the Company, in October 2002, formed the
following entities:
 
 ·
            NEMA
      Properties LLC, (“NEMA”) a Nevada limited liability company 100% owned by
      AMEN
 ·
            AMEN
      Delaware LP, (the “Delaware Partnership”) a Delaware limited partnership
      owned 99% by NEMA as the sole limited partner and 1% by AMEN, as the sole
      general partner
 ·
            AMEN
      Minerals LP, (the “Minerals Partnership”) a Delaware limited partnership,
      owned 99% by NEMA as the sole limited partner and 1% by AMEN, as the sole
      general partner.
 
 On July
30, 2004, the Company formed W Power and Light LP, (the “W Power Partnership”) a
Delaware limited partnership owned 99% by NEMA as the sole limited partner and
1% by AMEN, as the sole general partner. (See Note R). On May 18, 2006, the
Company acquired 100% of Priority Power Management, Ltd. and Priority Power
Management Dallas, Ltd., (collectively the “PPM Partnership”) effective April 1,
2006.  Priority Power is owned 1% by AMEN, as the sole general
partner, and 99% by NEMA, as the sole limited Partner.
 
 Corporate
Reorganization
 
 On
December 17, 2007, the Company approved a corporate reorganization (the
"Reorganization") effective January 1, 2008. As part of the Reorganization, the
Delaware Partnership, the Minerals Partnership, the PPM Partnership, and the W
Power Partnership were each converted from limited partnerships into limited
liability companies with AMEN owning 100% of the shares and as the sole managing
member of each entity. The converted entities are:
 
 ·
            AMEN
      Delaware, LLC, (“Delaware”)
 ·
            AMEN
      Minerals, LLC, (“Minerals”)
 ·
            NEMA
      Properties, LLC , (“NEMA”)
 ·
            Priority
      Power Management, LLC (“Priority
Power”)
 ·
            W
      Power and Light, LLC, (“W Power”)
  6
 On May
31, 2008, as part of the Reorganization NEMA was converted from a Nevada Limited
Liability Company to a Texas Limited Liability Company.
 
 Standard
Reference
 
 As used
herein, the terms “Company” and “AMEN” and references to “we” and “our” refer to
all of AMEN Properties, Inc., NEMA, Delaware, the Delaware Partnership,
Minerals, the Minerals Partnership, and W Power, the W Power Partnership,
Priority Power, and the Priority Power Partnership unless the context otherwise
requires.
 
 2. Basis
of Presentation
 
 The
consolidated financial statements include the accounts of the Company and its
majority-owned/controlled subsidiaries and affiliates.  Inter-company
balances and transactions have been eliminated.
 
 Management
uses estimates and assumptions in preparing the consolidated financial
statements in accordance with accounting principles generally accepted in the
United States of America.  Those estimates and assumptions affect the
reported amounts of assets, liabilities, revenues and expenses in the
consolidated financial statements, and the disclosure of contingent assets and
liabilities.  Actual results could differ from these
estimates.
 
 3. Cash
Equivalents
 
 The
Company considers cash on hand, cash on deposit in banks, money market mutual
funds and highly liquid debt instruments purchased with a maturity of three
months or less to be a cash equivalent.
 
 4. Investments
 
 The
Company invests in U.S. government bonds and treasury notes, municipal bonds,
certificates of deposit, corporate bonds and other
securities.  Investments with original maturities greater than three
months but less than twelve months from the balance sheet date are short-term
investments.  Those investments with original maturities greater than
twelve months from the balance sheet date are long-term
investments.
 
 The
Company’s marketable securities are classified as available-for-sale as of the
balance sheet date, and are reported at fair value with unrealized gains and
losses, net of tax, recorded in stockholders’ equity.   Realized
gains or losses and permanent declines in value, if any, on available-for-sale
investments are reported in other income or expense as incurred.
 
 5. Fair
Value of Financial Instruments
 
 The
carrying value of cash and cash equivalents, investments, accounts receivable,
notes receivable, and accounts payable approximate fair value because of the
relatively short maturity of these instruments.  The fair value of the
fixed rate debt, based upon current interest rates for similar debt instruments
with similar payment terms and expected payoff dates, would be approximately
$2,842,835 as of June 30, 2008.  Disclosure about fair value of
financial instruments is based on pertinent information available to management
as of June 30, 2008.
 
 6. Accounts
Receivable
 
 Management
regularly reviews accounts receivable and estimates the necessary amounts to be
recorded as an allowance for doubtful accounts.
 
 7
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 W Power’s
unbilled revenue is accrued based on the estimated amount of unbilled power
delivered to customers using the average customer billing
rates.  Unbilled revenue also includes accruals for estimated
Transmission and Distribution Service Provider (“TDSP”) charges and monthly
service charges applicable to the estimated usage for the period. W Power’s
allowance for doubtful accounts at June 30, 2008 was $26,749.
 
 The
Company estimated the allowance for doubtful accounts related to W Power’s
billed accounts receivable to be approximately .2% percent of W Power’s retail
electricity billed revenue.  Due to the limited historical data, the
Company regularly reviews the accounts receivable and accordingly makes
adjustments in estimating the allowance for doubtful accounts.
 
 Priority
Power trade accounts receivable arise from aggregation fees and other management
services.  An allowance for doubtful accounts is provided, when
considered necessary by management, for estimated amounts not expected to be
collectible.  No allowance was provided or deemed necessary at June
30, 2008.
 
 At June
30, 2008 accounts receivable consisted of the following:
 
 Billed
      electricity receivables
              
              $
              791,974Unbilled
      electricity receivables
              
              
              339,351Billed
      Aggregation fees
              
              
              315,699Unbilled
      Aggregation fees
              
              
              124,120Allowance
      for doubtful accounts
              
              
              (26,749
              )Other
      receivables
              
              
              17,388Accounts
      receivable, net
              
              $
              1,561,783
 
 7. Other
Current Assets
 
 The
Company had a relationship with a reseller that marketed W Power’s services on a
pre-pay basis. During the third quarter 2007, the reseller’s receivable balance
grew to $300 thousand due to cash flow issues caused by billing issues and
customer turnover. The Company previously collateralized a portion of this
receivable balance and increased the allowance for doubtful accounts by $233
thousand specifically for this account. At June 30, 2008 management determined
that the likelihood of collecting the balance was remote and wrote off the
entire remaining balance. In addition, the Company expensed outstanding TDSP
obligations the Company paid on behalf of the reseller. The total expense
related to the reseller for the period was approximately $195
thousand.
 
 At June
30, 2008, Other Current Assets consisted of the following:
  Miscellaneous
      current assets and receivables
              
              
              46,358Other
      Current Assets, net
              
              $
              46,358
 
 8. Depreciation,
Amortization and Depletion
 
 Property
and equipment are stated at cost.  Depreciation is determined using
the straight-line method over the estimated useful lives ranging from three to
10 years.  Royalty acquisitions are stated at
cost.  Depletion is determined using the units-of-production method
based on the estimated oil and gas reserves.
 
 9. Impairment
of Long-Lived Assets
 
 The
Company periodically evaluates the recoverability of the carrying value of its
long-lived assets and identifiable intangibles by monitoring and evaluating
changes in circumstances that may indicate that the carrying amount of the asset
may not be recoverable.  Examples of events or changes in
circumstances that
  8
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 indicate
that the recoverability of the carrying amount of an asset should be assessed
include but are not limited to the following:  a significant decrease
in the market value of an asset, a significant change in the extent or manner in
which an asset is used or a significant physical change in an asset, a
significant adverse change in legal factors or in the business climate that
could affect the value of an asset or an adverse action or assessment by a
regulator, an accumulation of costs significantly in excess of the amount
originally expected to acquire or construct an asset, and/or a current period
operating or cash flow loss combined with a history of operating or cash flow
losses or a projection or forecast that demonstrates continuing losses
associated with an asset used for the purpose of producing revenue.
 
 The
Company considers historical performance and anticipated future results in its
evaluation of potential impairment.   Accordingly, when
indicators or impairments are present, the Company evaluates the carrying value
of these assets in reaction to the operating performance of the business and
future discounted and non-discounted cash flows expected to result from the use
of these assets.  Impairment losses are recognized when the sum of
expected future cash flows are less than the assets’ carrying
value.
 
 10. Investments
in Joint Ventures
 
 In 2006,
the Company sold a significant interest in certain real estate and contributed
its retained 18% undivided ownership interest in the real estate to an
investment.
 
 The
Company and the other selling partners, the Buyers and affiliates of the Buyers
entered into a Contribution and Assumption Agreement dated March 19, 2007 (the
“Contribution Agreement”), whereby the Company and others contributed their
remaining interests, other property interests, and cash to HPG Acquisition LLC
(“HPG”) in exchange for membership interests in HPG, all effective as of March
2, 2007.
 
 The
Company’s investment in real estate and SFF Group (see Note Q) is recorded at
cost, adjusted for its equity share of earnings, using the equity method of
accounting, and cash contributions and distributions.
 
 11. Goodwill
 
 The
Company follows the provisions of Statement of Financial Accounting Standards
(SFAS) No. 142, “Goodwill and
Other Intangible Assets”.  SFAS No. 142 requires that goodwill
and other intangible assets with investment lives no longer be
amortized.  The intangible assets are tested for impairment
annually.  If there is impairment, the amount will be expensed and the
intangible assets will be written down accordingly.
 
 12. Stock-Based
Compensation
 
 On
January 1, 2006 the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 123(R), Accounting
for Stock-Based Compensation, to account for its stock-based
compensation.In December
2004, the Financial Accounting Standards Board issued SFAS 123(R) effective for
small business issuers after December 15, 2005.  The new Statement
requires mandatory reporting of all stock-based compensation awards on a fair
value basis of accounting.  Generally, companies are required to
calculate the fair value of all stock awards and amortize that fair value as
compensation expense over the vesting period of the awards.
 
 
 13. Income
and Franchise Taxes
 
 The
Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income
Taxes”.  Under this method, deferred tax assets and liabilities
are determined based on differences between the financial reporting and tax
basis of assets and liabilities, and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to
reverse.  Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.  At
June 30, 2008, no income tax expense has been incurred due to the utilization of
the Company’s net operating losses.
 
 9
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 On May
18, 2006, the Texas Governor signed into law a new Texas Franchise Tax, which
restructured the state business tax by replacing the taxable capital and earned
surplus components of the tax with a new taxable margin
component.  The new franchise tax is effective for returns due on or
after January 1, 2008. The Texas franchise tax is imposed on taxable entities
chartered, organized, or doing business in Texas.  While the State of
Texas does not classify the tax as a tax on income, the tax is considered an
income tax for purposes of SFAS No. 109 because the tax is based on a measure of
income. Texas franchise tax expense for the six months ended June 30, 2008 and
2007 was estimated to be approximately $69 thousand and $15 thousand,
respectively.
 
 14. Deferred
Revenue
 
 Deferred
revenue consists of prepaid aggregation fees.  Deferred revenue is
amortized over the life of the aggregation contract for prepaid aggregation
fees.
 
 15. Corporate
Tithing
 
 The
Company shall, to the extent permitted by law, expend from the revenues of the
Company such sums as are deemed prudent by the Board of Directors to support,
encourage, or sustain persons or entities which in the judgment of the Board of
Directors are expected to make significant efforts to propagate the Gospel of
Jesus Christ in any manner not in conflict with the Statement of
Faith.  Such expenditures may be made without regard to the tax status
or nonprofit status of the recipient.  It is expected that the
expenditures paid out under the provisions of this policy shall approximate ten
percent (10%) of the amount that would otherwise be the net profits of the
Company for the accounting period.
 
 16. Minority
Interest
 
 Minority
interest represents the interest of unit holders of TCTB, other than the
Company, in the net earnings and net equity of TCTB. In 2007, the remaining
assets of TCTB were distributed to the unit holders thereby eliminating the
minority interest balance at December 31, 2007.
 
 17. Contingently
Convertible Securities
 
 On August
31, 2007, the Company converted all classes of its Preferred Stock into
1,349,764 shares of the Company’s Common Stock as shown in the following
table:
 
 Series
            
            Number
      ofShares
            
            
            Purchase Price
            
            
            Conversion Rate
            
            
            Number
      of
              Common SharesA
            
            
            80,000
            
            
            $
            2,000,000
            
            
            $
            3.2444
            
            
            
            616,447B
            
            
            50,000
            
            
            
            500,000
            
            
            
            3.2444
            
            
            
            154,111B
            
            
            10,000
            
            
            
            100,000
            
            
            
            3.424
            
            
            
            29,206B
            
            
            20,000
            
            
            
            200,000
            
            
            
            4.000
            
            
            
            50,000C
            
            
            125,000
            
            
            
            2,000,000
            
            
            
            4.000
            
            
            
            500,000
 
 18. Revenue
Recognition
 
 The
Company’s gross revenues for aggregation and other services to our customers are
recognized upon delivery and include estimated aggregation fees and other
services delivered but not billed by the end of the period.
 
 Accrued
unbilled revenues are based on our estimates of customer usage since the date of
the last meter reading provided by the independent system operators or electric
distribution companies.  Volume estimates are based on average daily
volumes, estimated customer usage and applicable customer
  10
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 aggregation
rates.  Unbilled revenues are calculated by multiplying volume
estimates by our estimated rates by customer.  Estimated amounts are
adjusted when actual usage and rates are known and billed.
 
 The
Company records electricity sales under the accrual method and these revenues
are recognized upon delivery of electricity to the customers’
meters.  Electric services not billed by month-end are accrued based
upon estimated deliveries to customers as tracked and recorded by the Electric
Reliability Council of Texas (“ERCOT”) multiplied by the Company’s average
billing rate per kilowatt hour (“kwh”) in effect at the time (“the flow
technique”).
 
 The flow
technique of revenue calculation relies upon ERCOT settlement statements to
determine the estimated revenue for a given month.  Supply delivered
to our customers for the month, measured on a daily basis, provides the basis
for revenues. ERCOT provides net electricity delivered data in three
phases.  Initial daily settlements become available approximately 10
days after the settlement date.  Approximately 45 days after the
settlement date, a resettlement is provided to adjust the initial settlement to
the actual supply delivered based on subsequent comparison of prior forecasts to
actual meter reads processed.  A final resettlement is provided
approximately 180 days after power is delivered, marking the last routine
settlement adjustment to the power deliveries for that day.
 
 Sales
represent the total proceeds from energy sales, including pass through charges
from the TDSPs billed to the customer at cost.  Cost of goods and
services (“COGS”) include electric power purchased, sales commissions, and pass
through charges from the TDSPs in the areas serviced by the
Company.  TDSP charges are costs for metering services and maintenance
of the electric grid.  TDSP charges are determined by regulated
tariffs established by the Public Utility Commission of Texas
(“PUCT”).
 
 Bilateral
wholesale costs are incurred through contractual arrangements with wholesale
power suppliers for firm delivery of power at a fixed volume and fixed
price.  The Company is typically invoiced for these wholesale volumes
at the end of each calendar month for the volumes purchased for delivery during
the month, with payment due 10 to 20 days after the end of the
month.
 
 Balancing/ancillary
costs are based on the aggregate customer load and are determined by ERCOT
through a multiple step settlement process.  Balancing costs/revenues
are related to the differential between supply provided by the Company through
its bilateral wholesale supply and the supply required to serve the Company’s
customer load.  The Company endeavors to minimize the amount of
balancing/ancillary costs through its load forecasting and forward purchasing
programs.
 
 19. Advertising
Expense
 
 All
advertising costs are expensed when incurred.  Advertising expenses
for the six months ended June 30, 2008 and 2007 were approximately $11 thousand
and $2 thousand, respectively.
 
 20. Income
(Loss) Per Share
 
 In
accordance with provisions of SFAS No. 128, Earnings per Share, basic income per
common share is computed on the basis of the weighted-average number of common
shares outstanding during the periods. Diluted income per common share is
computed based upon the weighted-average number of common shares outstanding
plus the assumed issuance of common shares for all potentially dilutive
securities. Diluted loss per common share for the three months and six months
ended June 30, 2008 equals basic loss per common share because the effects of
potentially dilutive securities for such periods are antidilutive.
 
 21. Environmental
 
 The
Company is subject to extensive federal, state and local environmental laws and
regulations.  These laws regulate asbestos in buildings that require
the Company’s real estate investments to remove or mitigate the environmental
effects of the disposal of the asbestos at the buildings.
 
 11
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
  Environmental
costs that relate to current operations are expensed or capitalized as
appropriate.  Costs are expensed when they relate to an existing
condition caused by past operations and will not contribute to current or future
revenue generation.  Liabilities related to environmental assessments
and/or remedial efforts are accrued when property or services are provided or
can be reasonably estimated.
 
 22. New
Accounting Pronouncements
 
 In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements.  The provisions of this Statement shall
be effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years.
 
 In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115.  This Statement permits entities to choose to measure many
financial instruments and certain other items at fair value.  The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. This Statement is expected to expand the use of fair
value measurement, which is consistent with the Board’s long-term measurement
objectives for accounting for financial instruments.  The provisions
of this Statement shall be effective as of the beginning of each reporting
entity’s first fiscal year that begins after November 15, 2007; this Statement
should not be applied retrospectively to fiscal years beginning prior to the
effective date, except as permitted in paragraph 30 for early
adoption.
 
 In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS
141(R)”), which replaces FASB Statement No. 141.  SFAS 141(R)
establishes principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, any non-controlling interest in the acquiree and the
goodwill acquired.  The Statement also establishes disclosure
requirements that will enable users to evaluate the nature and financial effects
of the business combination.  SFAS 141(R) is effective for
acquisitions that occur in an entity’s fiscal year that begins after December
15, 2008.  The impact, if any, will depend on the nature and size of
business combinations that Company consummates after the effective
date.
 
 In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51 (“SFAS
160”).  SFAS 160 requires that accounting and reporting for minority
interests will be recharacterized as noncontrolling interests and classified as
a component of equity.  SFAS 160 also establishes reporting
requirements that provide sufficient disclosures that clearly identify and
distinguish between the interests of the parent and the interests of the
noncontrolling owners.  SFAS 160 applies to all entities that prepare
consolidated financial statements, except not-for-profit organizations, but will
affect only those entities that have an outstanding noncontrolling interest in
one or more subsidiaries or that deconsolidate a subsidiary.  This
statement is effective as of the beginning of an entity’s first fiscal year
beginning after December 15, 2008.
 
 Management
does not believe the new pronouncements will have a material impact on its
financial statements.
 
 23. Reclassifications
 
 Certain
reclassifications of prior period amounts have been made to conform to the June
30, 2008 presentation.
 
 NOTE
B - BUSINESS COMBINATIONS
 
 Cogdill
Enterprises
 
 12
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 On
September 11, 2007 the Company announced the acquisition of 100% of Cogdill
Enterprises, Inc. (“CEI”), effective August 31, 2007 for an aggregate
consideration of $6,000 and a obligation to pay 95% of the total revenues
actually received by the Company each month directly as a result of the
contracts originated by Trenton Cogdill for and on behalf of CEI prior to August
31, 2007. CEI provides energy consulting services to over 1,200 religious and
related organizations in Texas and the Company believes that CEI’s business will
integrate with the Company’s PPM subsidiary.
 
 
 NOTE
C – CONCENTRATIONS OF CREDIT RISK
 
 The
Company maintains cash balances at four financial institutions, which at times
may exceed federally insured limits. The Company had approximately $3.5 million
and $3 million of uninsured cash and cash equivalents at June 30, 2008 and 2007,
respectively.  The Company has not experienced any losses in such
accounts and believes that it is not exposed to any significant credit risks on
such accounts.
 
 W Power
and Priority Power’s revenues are derived principally from uncollateralized
customer electricity billings.  The concentration of credit risk in a
limited number of industries affects its overall exposure to credit risk because
customers may be similarly affected by changes in economic and other
conditions.
 
 NOTE
D – RESTRICTED CASH EQUIVALENTS
 
 On
October 18, 2005, the Company entered into a continuing agreement for commercial
and standby letters of credit (the “Letters of Credit”) with JPMorgan Chase
Bank, N.A., Houston, Texas, (“Chase”). Under the agreement Chase may, but is not
obligated to, issue one or more standby or commercial letters of credit on
behalf of W Power. The Letters of Credit are generally required in the normal
course of business operations to support the Company’s obligations to
collateralize certain obligations to electric power providers, TDSPs, and ERCOT.
Currently the Letters of Credit bear an interest rate of seven-tenths of one
percent (0.70%) payable quarterly in advance.  In order to support the
Letters of Credit, the Company, Chase and JP Morgan Securities Inc. (“JPMorgan”)
maintain a tri-party control agreement that creates a security interest in favor
of Chase in a certain Money Market Fund the Company maintains with
JPMorgan.  The Company had deposits with JPMC totaling $2,197,000
collateralizing outstanding Letters of Credit at June 30,
2008.
 
 NOTE
E – PROPERTY AND EQUIPMENT
 
 Property
and equipment, at cost, consisted of the following at June 30,
2008:
 
 Furniture,
      fixtures and equipment
              
              $
              382,368Less:  accumulated
      depreciation
              
              
              (194,381
              )$
              187,987
 Depreciation
expense for the six months ended June 30, 2008 and 2007 was approximately $29
thousand and $19 thousand, respectively.
 
 NOTE
F – INVESTMENT IN REAL ESTATE
  Effective
September 27, 2006, the Company entered into an Agreement to Distribute Assets
with and among the partners of TCTB Partners, Ltd.  Contemporaneous
with the distribution of the assets, the Company along with the General Partner
and the other Limited Partners of TCTB collectively agreed to sell and sold 75%
of their collective undivided interest in the assets.  This sale
resulted in the Company retaining an undivided interest of approximately 18% in
the assets which was subsequently contributed into HPG Acquisition,
LLC.
  13
 
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 The
Company’s Investment in real estate consisted of the following at June 30,
2008:
  Real
      estate investment
              
              $
              2,311,443Equity
      earnings
              
              
              20,583$
              2,332,026
 
 A portion
of the Company’s real estate investment and equity earnings results for 2008 are
based on the results of HPG Acquisition, LLC and its subsidiaries. HPG
Acquisition, LLC reported the following consolidated financial information at
June 30, 2008:
  Total
      Assets
              
              $
              16,806,330Total
      Liabilities
              
              
              770,684Net
      Income (for the six months ended June 30, 2008)
              
              
              181,199
 
 NOTE
G – ROYALTY INTERESTS
 
 The
Company, through its wholly-owned subsidiary Amen Minerals, LLC, currently
directly owns two separate royalty interests, one in the state of Texas and one
in the state of Oklahoma.  The total consideration paid by the Company
for the royalty interests was $162,854.  Under accounting principles
generally accepted in the United States of America, revenues and expenses are
recognized on an accrual basis.  Royalty income is generally received
one to two months following the month of production and the Company uses
estimates to accrue royalty income for the quarter ended June 30, 2008 and
2007.
 
 Depletion
expense was approximately $2 thousand for the quarters ended June 30, 2008 and
2007.  Accumulated depletion was $38 thousand and $35 thousand,
respectively.
 
 The
Company also indirectly owns working and royalty interests through its
investment in SFF Royalty, LLC and SFF Production, LLC, as discussed in Note
Q.
 
 NOTE
H – GAIN ON LIQUIDATION OF SANTA FE ENERGY TRUST INVESTMENT
 
 On
February 29, 2008, the trustees of the Santa Fe Energy Trust made a distribution
of the net proceeds from the sale of the Trust’s assets.  The Company,
as a unit-holder in the Trust, received a portion of this distribution. In
addition, in 2007 the Company stripped $2,778,300 of U.S. Treasury Bonds from
its units in the Trust. These stripped Treasury Bonds were sold on January 1,
2008.
 
 The
Company recognized the following gains from the liquidation of these
assets:
 
 Santa
      Fe Energy Trust Units, at cost
                
                $
                659,259Cash
      proceeds from Trust distribution
                
                
                1,189,823Gain
      on liquidation of Santa Fe Energy Trust units
                
                
                530,564U.S.
      Treasury Bonds, at cost
                
                
                2,778,300Cash
      proceeds from sale of assets
                
                
                2,782,467Gain
      on liquidation of U.S. Treasury Bonds
                
                
                4,167Total
      gain on liquidation of Santa Fe Trust Investment
                
                $
                534,731
 
 NOTE
I – ACCRUED LIABILITIES
 
 Accrued
liabilities consisted of the following at June 30, 2008:
 
 14
 
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 
 Accrued
      TDSP charges
                  
                  $
                  73,458Accrued
      sales tax
                  
                  
                  137,853Accrued
      corporate tithing
                  
                  
                  178,045Accrued
      officer bonuses
                  
                  
                  117,343Accrued
      contract settlement cost for W Power (See Note R)
                  
                  
                  800,000Other
      liabilities
                  
                  
                  86,674$
                  1,393,373
 NOTE
J – INCOME TAXES
 
 There was
no income tax expense or benefit to report for the six months ended June 30,
2008 and 2007.  As of June 30, 2008, the Company has net operating
loss carry-forwards totaling approximately $28 million for federal income tax
purposes expiring in 2012 through 2027.
 
 On May
18, 2006, the Texas Governor signed into law a new Texas Franchise Tax, which
restructured the state business tax by replacing the taxable capital and earned
surplus components of the tax with a new taxable margin
component.  The new franchise tax is effective for returns due on or
after January 1, 2008.  While the State of Texas does not classify the
tax as a tax on income, the tax is considered an income tax for purposes of FASB
Statement No. 109, Accounting for Income Taxes, because the tax is based on a
measure of income. The Company’s franchise tax liability at June 30, 2008 and
2007 was approximately $112 thousand and $0, respectively.
 
 NOTE
K – OPERATING SEGMENTS
 
 The
Company’s business activities are mainly comprised of two reportable segments:
energy management and real estate operations.
 
 The
provision of energy management services is primarily conducted through Priority
Power.
 
 The
commercial real estate portfolio consists of the Company’s investment in a real
estate joint venture (see note F), consisting of an ownership of approximately
18% in two office properties located in Midland, Texas comprising an aggregate
of approximately 428,560 square feet of gross leasable area.
 
 Retail
electricity operations were previously included as an operating segment. They
are now included as part of discontinued operations. (See Note R).
 
 Each
segment’s accounting policies are the same as those described in the summary of
significant accounting policies and the following tables reflect totals for the
quarters ended June 30, 2008 and 2007, respectively.
 
 Three Months Ended June 30,
2008:
  Real
      Estate
              Operations
            
            
            Energy
              Management
              Services
            
            
            Other
      and
              Corporate
            
            
            Discontinued
              Operations
            
            
            Inter-Company
              Transaction
              Eliminations
            
            
            Consolidated
              TotalRevenues
      from external customers
            
            $
            --
            
            
            $
            966,855
            
            
            $
            --
            
            
            $
            3,086,682
            
            
            $
            --
            
            
            $
            4,053,537Revenues
      from other operating segments
            
            $
            --
            
            
            $
            932
            
            
            $
            --
            
            
            $
            --
            
            
            $
            (932
            )
            
            $
            --Depreciation,
      amortization and depletion
            
            $
            --
            
            
            $
            39,461
            
            
            $
            4,415
            
            
            $
            7,182
            
            
            $
            --
            
            
            $
            51,058Interest
      expense
            
            $
            --
            
            
            $
            2,839
            
            
            $
            183,287
            
            
            $
            3,926
            
            
            $
            --
            
            
            $
            190,052Segment
      net income (loss)
            
            $
            (12,054
            )
            
            $
            195,667
            
            
            $
            185,011
            
            
            $
            (1,317,233
            )
            
            $
            (28,663
            )
            
            $
            (977,272
            )Segment
      assets
            
            $
            2,358,025
            
            
            $
            1,792,474
            
            
            $
            19,427,567
            
            
            $
            4,380,029
            
            
            $
            (5,070,193
            )
            
            $
            22,887,902Goodwill
            
            $
            --
            
            
            $
            --
            
            
            $
            2,916,085
            
            
            $
            --
            
            
            $
            --
            
            
            $
            2,916,085Expenditures
      for segment assets
            
            $
            --
            
            
            $
            11,528
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --
            
            
            $
            11,528
 
 15
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 Six Months Ended June 30,
2008:
  Real
      Estate
              Operations
            
            
            Energy
              Management
              Services
            
            
            Other
      and
              Corporate
            
            
            Discontinued
              Operations
            
            
            Inter-Company
              Transaction
              Eliminations
            
            
            Consolidated
              TotalRevenues
      from external customers
            
            $
            --
            
            
            $
            2,386,458
            
            
            $
            --
            
            
            $
            5,464,465
            
            
            $
            --
            
            
            $
            7,850,923Revenues
      from other operating segments
            
            $
            --
            
            
            $
            3,406
            
            
            $
            --
            
            
            $
            --
            
            
            $
            (3,406
            )
            
            $
            --Depreciation,
      amortization and depletion
            
            $
            --
            
            
            $
            83,751
            
            
            $
            9,032
            
            
            $
            13,784
            
            
            $
            --
            
            
            $
            106,657Interest
      expense
            
            $
            --
            
            
            $
            6,139
            
            
            $
            394,838
            
            
            $
            7,841
            
            
            $
            --
            
            
            $
            408,818Segment
      net income (loss)
            
            $
            8,873
            
            
            $
            904,028
            
            
            $
            372,695
            
            
            $
            (1,218,463
            )
            
            $
            (67,314
            )
            
            $
            (181
            )Segment
      assets
            
            $
            2,358,025
            
            
            $
            1,792,474
            
            
            $
            19,427,567
            
            
            $
            4,380,029
            
            
            $
            (5,070,193
            )
            
            $
            22,887,902Goodwill
            
            $
            --
            
            
            $
            --
            
            
            $
            2,916,085
            
            
            $
            --
            
            
            $
            --
            
            
            $
            2,916,085Expenditures
      for segment assets
            
            $
            --
            
            
            $
            18,376
            
            
            $
            3,330
            
            
            $
            32,423
            
            
            $
            --
            
            
            $
            54,129
  Three Months Ended June,
2007:
  Real
      Estate
              Operations
            
            
            Energy
              Management
              Services
            
            
            Other
      and
              Corporate
            
            
            Discontinued
              Operations
            
            
            Inter-Company
              Transaction
              Eliminations
            
            
            Consolidated
              TotalRevenues
      from external customers
            
            $
            --
            
            
            $
            999,284
            
            
            $
            --
            
            
            $
            2,652,774
            
            
            $
            --
            
            
            $
            3,652,058Revenues
      from other operating segments
            
            $
            --
            
            
            $
            7,576
            
            
            $
            --
            
            
            $
            --
            
            
            $
            (7,576
            )
            
            $
            --Depreciation,
      amortization and depletion
            
            $
            --
            
            
            $
            6,742
            
            
            $
            3,879
            
            
            $
            4,790
            
            
            $
            --
            
            
            $
            15,411Interest
      expense
            
            $
            --
            
            
            $
            --
            
            
            $
            64,179
            
            
            $
            3,865
            
            
            $
            --
            
            
            $
            68,044Segment
      net income (loss)
            
            $
            42,262
            
            
            $
            622,816
            
            
            $
            (334,709
            )
            
            $
            203,754
            
            
            $
            (25,692
            )
            
            $
            508,431Segment
      assets
            
            $
            2,359,396
            
            
            $
            1,490,965
            
            
            $
            6,796,912
            
            
            $
            5,117,852
            
            
            $
            29,097
            
            
            $
            15,794,222Goodwill
            
            $
            --
            
            
            $
            --
            
            
            $
            2,916,085
            
            
            $
            --
            
            
            $
            --
            
            
            $
            2,916,085Expenditures
      for segment assets
            
            $
            --
            
            
            $
            1,846
            
            
            $
            1,552,466
            
            
            $
            24,434
            
            
            $
            --
            
            
            $
            1,578,746
 
 16
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 Six Months Ended June,
2007:
  Real
      Estate
              Operations
            
            
            Energy
              Management
              Services
            
            
            Other
      and
              Corporate
            
            
            Discontinued
              Operations
            
            
            Inter-Company
              Transaction
              Eliminations
            
            
            Consolidated
              TotalRevenues
      from external customers
            
            $
            
            
            
            $
            1,778,461
            
            
            $
            --
            
            
            $
            4,974,230
            
            
            $
            --
            
            
            $
            6,752,691Revenues
      from other operating segments
            
            $
            --
            
            
            $
            13,660
            
            
            $
            --
            
            
            $
            --
            
            
            $
            (13,660
            )
            
            $
            --Depreciation,
      amortization and depletion
            
            $
            --
            
            
            $
            12,731
            
            
            $
            8,038
            
            
            $
            8,751
            
            
            $
            --
            
            
            $
            29,520Interest
      expense
            
            $
            --
            
            
            $
            0
            
            
            $
            123,615
            
            
            $
            7,815
            
            
            $
            --
            
            
            $
            131,430Segment
      net income (loss)
            
            $
            81,270
            
            
            $
            1,025,696
            
            
            $
            (656,148
            )
            
            $
            591,965
            
            
            $
            (25,429
            )
            
            $
            1,017,354Segment
      assets
            
            $
            2,359,396
            
            
            $
            1,490,965
            
            
            $
            6,796,912
            
            
            $
            5,117,852
            
            
            $
            29,097
            
            
            $
            15,794,222Goodwill
            
            $
            --
            
            
            $
            --
            
            
            
            2,916,085
            
            
            
            --
            
            
            $
            --
            
            
            $
            2,916,085Expenditures
      for segment assets
            
            $
            --
            
            
            $
            16,297
            
            
            $
            1,556,853
            
            
            $
            24,434
            
            
            $
            --
            
            
            $
            1,597,584
  NOTE
L – LONG-TERM OBLIGATIONS
 
 NEMA
entered into twenty-two promissory notes (the “NEMA Notes”) on May 18, 2006,
effective April 1, 2006 totaling $3,230,051 to purchase 100% ownership interest
in Priority Power Management, Ltd, a Texas limited partnership, and Priority
Power Management Dallas, Ltd, a Texas limited partnership (see note
B).  The notes are due in quarterly installments of $142,985 beginning
on September 30, 2006 with a final maturity of December 31, 2013.  The
term notes bear interest at a fixed rate per annum of 7.75%.
 
 PPM
entered into an agreement effective August 31, 2007 to purchase 100% ownership
interest in Cogdill Enterprises, Inc. As part of the agreement PPM is obligated
to pay 95% of the total revenues actually received by PPM each month directly as
a result of the contracts originated by Trenton Cogdill for and on behalf of the
Company prior to August 31, 2007. The estimated net present value of the
expected future obligation under the Cogdill agreement is classified as a
long-term obligation, less the current portion (the “Cogdill
Note”).
 
 Long-term
obligations consisted of the following at June 30, 2008:
 
 NEMA
      Notes
            
            $
            2,541,478Cogdill
      Note
            
            
            316,6802,858,158Less:
      Related Party Portion
            
            
            (2,068,817
            )Less:
      Current Portion
            
            
            (119,890
            )$
            669,451
  17
 
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 Related
party portion of long-term obligations consisted of the following at June 30,
2008:
 
 NEMA
      Notes
            
            $
            1,752,137Cogdill
      Note
            
            
            316,6802,068,817Less:
      Current Portion
            
            
            (376,382
            )$
            1,692,435
  Annual
maturities of long-term obligations at June 30, 2008 are as
follows:
  2008
            
            $
            119,8902009
            
            
            129,4552010
            
            
            139,7832011
            
            
            150,9352012
            
            
            162,9772013
      and thereafter
            
            
            86,301$
            789,341
 
 Annual
maturities of related party portion of long-term obligations at June 30, 2008
are as follows:
 
 2008
            
            $
            376,3822009
            
            
            365,3642010
            
            
            371,2672011
            
            
            382,6802012
            
            
            381,5562013
      and thereafter
            
            
            191,568$
            2,068,817
 
 NOTE
M – RELATED PARTY TRANSACTIONS
 
 Sale
of Preferred C and Issuance of Warrants
 
 The
Company closed the sale and issuance of 125,000 shares of Series C Preferred
Stock and 250,000 Warrants pursuant to a Purchase Agreement, as amended by the
Second Amendment on March 1, 2005 between the Company and certain accredited
investors, including the Company’s President and Chief Operating Officer, Jon M.
Morgan, the Company's Chief Executive Officer, Eric Oliver and Bruce Edgington,
one of the Company’s Directors.
 
 The
following table reflects the Series C issuance to the Company’s officers and
directors.
 
 Number
      of
              Preferred
      C
              Shares
            
            
            Common
      Stock
              Equivalent
            
            
            Preferred
      C
              Voting
              Equivalent
            
            
            Purchase
              PriceEric
      Oliver
            
            
            14,063
            
            
            
            56,252
            
            
            
            52,877
            
            
            $
            225,008Jon
      M. Morgan
            
            
            14,062
            
            
            
            56,248
            
            
            
            52,873
            
            
            
            224,992Bruce
      Edgington
            
            
            3,125
            
            
            
            12,500
            
            
            
            11,750
            
            
            
            50,000Total
            
            
            31,250
            
            
            
            125,000
            
            
            
            117,500
            
            
            $
            500,000
 
 18
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 The
following table reflects the issuance of Warrants to the Company’s Officers and
Directors.
 
 Number
      of
              Warrants
            
            
            Common Stock
              EquivalentEric
      Oliver
            
            
            28,126
            
            
            
            28,126Jon
      M. Morgan
            
            
            28,124
            
            
            
            28,124Bruce
      Edgington
            
            
            6,250
            
            
            
            6,250Total
            
            
            62,500
            
            
            
            62,500
 
 On May
18, 2006, Jon M. Morgan and Bruce Edgington exercised their outstanding warrants
(described above) for a total exercise price of $112,496 and $25,000,
respectively.  Mr. Morgan received 28,124 shares of common stock and
Mr. Edgington received 6,250 shares of common stock upon the exercise of their
stock warrants.
 
 On August
31, 2007, classes A, B & C of Preferred Stock were converted into Common
Stock of the Company, as described in Note A17.  As a part of this
conversion, Eric Oliver, Jon Morgan and Bruce Edgington received shares of
Common Stock in the amounts shown in the table above.  Additionally,
Mr. Oliver received an additional 9,375 shares of common stock upon exercise of
warrants with a strike price of $4 per share.  Mr. Oliver exercised
his remaining warrants on March 1, 2008, for which he received an additional
18,751 shares at a price of $4 per share.
 
 Purchase
of Cogdill Enterprises
 
 On
September 11, 2007 the Company announced the acquisition of 100% of Cogdill
Enterprises, Inc. (“CEI”), effective August 31, 2007 for an aggregate
consideration of $6,000 and a obligation to pay 95% of the total revenues
actually received by the Company each month directly as a result of the
contracts originated by Trenton Cogdill for and on behalf of the CEI prior to
the August 31, 2007. Trenton Cogdill is now an employee of Priority
Power.  Assuming the acquisition of CEI occurred on January 1, 2006,
its operating results would not have been material to the Company’s operating
results for the years ended December 31, 2007 and 2006.
 
 The
following table reflects the portion of the Company’s long-term debt payable to
related parties as of June 30, 2008:
 
 TotalEric
      Oliver,  Chairman of the Board
            
            $
            9,797Jon
      M. Morgan , CEO
            
            
            437,623Padraig
      Ennis, VP of Priority Power
            
            
            67,434John
      Bick, Managing Principal of Priority Power
            
            
            174,724Trenton
      Cogdill, Priority Power
            
            
            206,4235%
      Shareholders
            
            
            796,434Total
            
            $
            1,692,435
 
 Issuance
of Options
  19
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 During
2008, certain members of the Company’s Board of Directors were issued stock
options under the Company’s 1998 Stock Option Plan (See Note O).
  Sale
of Preferred D and Issuance of Warrants
 
 The
Company issued Preferred D stock, promissory notes and warrants to finance its
investment in SFF Royalty and SFF Production, as described in Note
Q.  Certain of the Company’s Directors participated in this
transaction as shown below:
 
 Director
            
            #
      Shares
              Preferred
      D
              Purchased
            
            
            Preferred
      D
              Purchase
              Price
            
            
            Promissory
              Note
      Amount
            
            
            #
      Warrants
              Received
              @$6.02
              Strike
      PriceEric
      Oliver
            
            
            164,376
            
            
            $
            1,643,760
            
            
            $
            1,037,741
            
            
            
            172,382Bruce
      Edgington
            
            
            6,130
            
            
            
            61,300
            
            
            
            38,700
            
            
            
            6,429
 
 Stub
Financing
  In order
to secure the cash required for the Company’s contribution to SFF Royalty and
SFF Production on December 17, 2007, stub financing was arranged via the
execution of two promissory notes with SoftVest, LP, a related party, totaling
$3.5 million.  These notes were due and payable on December 31, 2007
and carry an annual interest rate of 8.5%. The balance was paid on March 13,
2008.
  NOTE
N – COMMITMENTS AND CONTINGENCIES
 
 Legal
Proceedings
 
 The
Company is subject to claims and lawsuits which arise primarily in the ordinary
course of business.  It is the opinion of management that the
disposition or ultimate resolution of such claims and lawsuits will not have a
material adverse effect on the consolidated financial position of the
Company.
 
 Power
Purchase Contracts
 
 The
Company maintains certain contracts to purchase electricity that provide for
future capacity payments. Expected annual future capacity payments under
existing agreements were estimated as follows as of June 30, 2008:
 
 2008
            
            
            1,685,7182009
            
            
            693,424$
            2,379,142
 
 At the
end of the second quarter, as part of the discontinuation of operations at W
Power, the Company developed a plan to settle the Company’s outstanding
contracts dated after July 2008. The estimated cost of settling these future
obligations is approximately $500 thousand. This amount is included in an $800
thousand charge relating to discontinuation of operations at W Power. (See
Notes R and S).
  NOTE
O – STOCK OPTION PLAN
  20
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 Since the
inception of the Company, various options have been granted by the Board of
Directors to founders, directors, employees, consultants and ministry partners.
In February 1997, the Company authorized 67,100 additional shares of common
stock to underlie additional options reserved for key employees and for future
compensation to members of the Board of Directors.  The Board of
Directors also adopted and the Stockholders approved, the 1997 Stock Option Plan
(“1997 Plan”), which provides for the granting of either qualified or
non-qualified options to purchase an aggregate of up to 514,484 shares of common
stock, inclusive of the 67,100 shares mentioned above, and any and all options
or warrants granted in prior years by the Company.  As of June 30,
2008, all options available under the 1997 Plan have been granted: 75,079
options have been exercised, and 78,510 options are outstanding which are fully
vested and range in price from $3.50 to $61.36.
 
 The 1998
Stock Option Plan (“1998 Plan”) was approved by the Board of Directors in April
1998, with approved amendment in May 2000.  The 1998 Plan gives the
Company the authority to issue 300,000 options to purchase AMEN common
stock.  If any stock options granted under the 1998 Plan terminate,
expire or are canceled, new stock options may thereafter be granted covering
such shares.  In addition, any shares purchased under the 1998 Plan
subsequently repurchased by the Company, if management elects, pursuant to the
terms hereof may again be granted under the 1998 Plan.  The shares
issued upon exercise of stock options under the 1998 Plan may, in whole or in
part, be either authorized but unissued shares, or issued shares reacquired by
the Company.  As of June 30, 2008, 4,859 options have been exercised
and 151,453 options are outstanding and are fully vested and range in price from
$1.98 to $45.50.
 
 During
the three months ended June 30, 2008 the Company issued 3,620 options to the
following members of the Board of Directors as compensation for their service to
the Company:
 
 
 Director
            
            Issuance
      Date
            
            #
      Options Issued
            
            
            Strike
      PriceBruce
      Edgington
            
            6/30/08
            
            
            988
            
            
            $
            9.00Earl
      Gjelde
            
            6/30/08
            
            
            769
            
            
            
            9.00Randy
      Nicholson
            
            6/30/08
            
            
            875
            
            
            
            9.00Don
      Blake
            
            6/30/08
            
            
            988
            
            
            
            9.00Total
            
            
            
            
            3,620
 
 The fair
value of each option is estimated on the date of grant using the Black-Scholes
option-pricing model.
 
 The table
below summarizes the stock option activity for the quarter ended June 30,
2008:
 
 
 Options
      Outstanding
            
            Options
              Outstanding
            
            
            Weighted
              Average
      PriceOutstanding
      December 31, 2007
            
            
            238,843
            
            
            $
            10.57Options
      exercised
            
            
            (12,500
            )
            
            
            4.376Options
      forfeited
            
            
            -
            
            
            
            -Options
      issued
            
            
            3,620
            
            
            
            9.00Outstanding
      June 30, 2008
            
            
            229,963
            
            
            $
            10.88
 
 21
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 At June
30, 2008 the 229,963 outstanding options are fully vested and
exercisable.  They range in price from $1.98 to $61.36 and have a
weighted average contractual maturity of 4.7 years.  The weighted
average grant date fair value for equity options issued during the three months
ended June 30, 2008 was $3.89 per share. Stock options issued after 2006 are
expensed based on the fair value of the options at the grant dates consistent
with the method of accounting under SFAS No. 123. The total expensed for the
three months ended June 30, 2008 was $14,094.
 
 NOTE
P – STOCKHOLDERS’ EQUITY
 
 Warrant
Exercises
 
 Eric
Oliver, Chairman of the Company, exercised his remaining warrants issued in
connection with the Preferred C issuance (see Note M) on March 1, 2008, for
which he received 18,751 shares at a price of $4 per share.
 
 Option
Exercises
 
 12,500
options were exercised on June 9, 2008 at a strike price of $4.376 per share for
total proceeds of $54,700.
 
 Conversion
of Preferred A, B & C and Warrant Exercises
 
 On August
31, 2007, the Company converted all classes of its Preferred Stock into
1,349,764 shares of the Company’s Common Stock as shown in the following
table:
 
 Series
            
            Number
      of
              Shares
            
            
            Purchase Price
            
            
            Conversion Rate
            
            
            Number
      of
              Common SharesA
            
            
            80,000
            
            
            $
            2,000,000
            
            
            $
            3.2444
            
            
            
            616,447B
            
            
            50,000
            
            
            
            500,000
            
            
            
            3.2444
            
            
            
            154,111B
            
            
            10,000
            
            
            
            100,000
            
            
            
            3.424
            
            
            
            29,206B
            
            
            20,000
            
            
            
            200,000
            
            
            
            4.000
            
            
            
            50,000C
            
            
            125,000
            
            
            
            2,000,000
            
            
            
            4.000
            
            
            
            500,000
 
 Also on
August 31, 2007, the Company issued 55,210 shares of common stock upon the
exercise of stock warrants with a strike price of $4.
 
 Stock
Issuances as Employee Compensation
 
 Pursuant
to their employment agreements, certain of the Company’s employees receive
common stock as payment for bonuses or a portion of their
salary.  6,208 shares of common stock were issued as employee
compensation during the three months ended June 30, 2008.
 
 Issuance
of Preferred D Stock
 
 As
described in Note Q, the Company issued 429,100 shares of Class D Preferred
Stock on December 17, 2007 for total proceeds of $4,291,000 to finance the
Company’s investment in SFF Royalty and SFF Production.  Below is a
summary of the significant characteristics of the Preferred D:
 
 ·
            Pays
      a coupon of 8.5% annually.
 ·
            Has
      limited voting rights.
 ·
            Is
      not convertible into common stock.
 ·
            Is
      redeemable upon demand by the
Company.
 
 22
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 Certain
of the Company’s Directors purchased Preferred D Stock as described in Note
M.
 
 NOTE
Q – INVESTMENT IN SFF GROUP
 
 On
December 17, 2007, the Company invested $7.6 million in SFF Royalty, LLC (“SFF
Royalty”) and $2.4 million in SFF Production (“SFF Production”) in exchange for
a one-third ownership interest in each entity.  Also on December 17,
2007, SFF Royalty and SFF Production acquired the following properties from
Santa Fe Energy Trust (the “Trust”) and Devon Energy Production Company, LP
(“Devon”):
 
 Acquired
      from the Trust
            
            Acquired
      from DevonAcquiring Entity
            
            Description
            
            
            Purchase
      Amount
            
            Description
            
            
            Purchase
      Amount
            
            
            Total
      PurchaseSFF
      Royalty
            
            Net
      profits interests in royalty interests owned by Devon
            
            $
            21,077,688
            
            Royalty
      interests subject to Trust’s net profits interests
            
            $
            2,254,662
            
            $
            23,332,350SFF
      Production
            
            Net
      profits interests in working interests owned by Devon
            
            
            6,072,125
            
            Working
      interests subject to Trust’s net profits interests
            
            
            649,531
            
            
            6,721,656Totals
            
            
            
            $
            27,149,813
            
            
            
            $
            2,904,193
            
            $
            30,054,006
 
 To secure
the $10 million required for the investments in SFF Royalty and SFF Production,
the Company issued Preferred Stock and short-term promissory notes and secured
stub financing.
 
 Class
D Preferred Stock
 
 429,100
shares of Class D Preferred Stock (“Preferred D”) were issued at a share price
of $10 for total proceeds of $4,291,000.  Below is a summary of the
significant characteristics of the Preferred D:
 
 ·
            Pays
      a coupon of 8.5% annually.
 ·
            Has
      limited voting rights.
 ·
            Is
      not convertible into common stock.
 ·
            Is
      redeemable upon demand by the
Company.
 
 Promissory
Notes
 
 The
Company also signed promissory notes with the recipients of the Preferred D
totaling $2,709,000.  Below is a summary of the significant
characteristics of the promissory notes:
 
 ·
            Due
      and payable on June 30, 2009.
 ·
            Interest
      rate of Prime plus 1%. (6.00% at June 30,
2008).
 
 The
holders of the promissory notes were issued warrants to purchase a total of
450,000 shares of the Company’s common stock at a strike price of $6.02 per
share.  These warrants expire on June 30, 2009 and the proceeds from
their issuance will be used to retire the related promissory notes. No value has
been assigned to these warrants as shareholder approval is required before the
warrants can be exercised.
 
 Certain
of the Company’s Directors participated in this transaction and received shares
of Preferred D stock, promissory notes and warrants, as described in Note
M.
 
 23
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 Stub
Financing
 
 In order
to secure the cash required for the Company’s contribution to SFF Royalty and
SFF Production on December 17, 2007, stub financing was arranged via the
execution of two promissory notes with SoftVest, LP totaling $3.5 million. These
notes were due and payable on December 31, 2007 and carry an annual interest
rate of 8.5%. The balance was paid on March 13, 2008.
 
 As
discussed in Note M, Mr. Eric Oliver, the Company’s Chairman of the Board, is
the Managing Partner of SoftVest, LP.
 
 The
Company’s Investment in SFF Group consisted of the following at June 30,
2008:
 
 Oil
      and Gas Investment in SFF Group
            
            $
            10,000,000Equity
      earnings
            
            
            868,536Distributions
            
            
            (1,366,666
            )$
            9,501,870
 
 SFF
Royalty reported the following consolidated financial information at June 30,
2008:
 
 SFF RoyaltyTotal
      Assets
            
            $
            20,775,064Total
      Liabilities
            
            
            151,054Net
      Income (for the six months ended June 30, 2008)
            
            
            371,202
 
 SFF
Production reported the following consolidated financial information at June 30,
2008:
 
 SFF ProductionTotal
      Assets
            
            $
            8,930,076Total
      Liabilities
            
            
            1,048,480Net
      Income (for the six months ended June 30, 2008)
            
            
            2,167,238
 
 NOTE
R – DISCONTINUED OPERATIONS
 
 Businesses
to be Disposed of Other than by Sale
 
 On June
25, 2008 the Company approved a plan to discontinue the operations of W Power.
Management recommended this plan to the Board based on significant adverse
changes in the business climate of the Texas retail electricity market. These
conditions have been exacerbated in recent months by the heightened volatility
in commodity costs. The Company’s plan calls for settling W Power’s existing
supply contracts and transferring its customers and their contracts to another
retail electricity provider.
 
 As a
result of this plan all retail electric provider (“REP”) operations will be
eliminated from the Company’s ongoing operations and the Company will not have
any significant continuing involvement in the REP business. Given the current
conditions in the Texas retail power market the Company does not believe there
is a market to sell W Power and, as such, does not have an active program to
locate a buyer of the business. The Company will not dispose of W Power’s assets
or liabilities by sale.
 
 24
 AMEN
Properties, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 June
30, 2008
 (Unaudited)
 Currently
the Company estimates settlement costs related to the disposal of this unit will
be approximately $800 thousand and has recorded an expense and liability for
that amount. This value was determined based on the Company’s estimate of the
mark-to-market liquidation cost for its forward power contracts, retail power
contracts, and other associated disposal costs. In addition, the company
expensed an additional $400 thousand related to changes in estimated unbilled
revenue as the result of an increase of 1% in W Power’s allowance for line-loss.
Line-loss is energy waste resulting from the transmission of electrical energy
across power lines. These losses occur due to the conversion of electricity to
heat and electromagnetic energy. A small amount of loss occurs even in the most
efficiently engineered systems.
 
 In
accordance with SFAS No. 144, the Company has included W Power in discontinued
operations and recognized the loss associated with disposal in income (loss)
from continuing operations.
 
 The
following is a summary of historical financial information about W Power for the
six months ended June 30:
 
 2008
            
            
            2007Revenue
            
            $
            5,371,053
            
            
            
            4,974,230Income
      (Loss) before income taxes
            
            
            (1,186,355
            )
            
            
            705,104Income
      taxes
            
            
            -
            
            
            
            -Income
      (Loss) from discontinued operations
            
            $
            (1,186,355
            )
            
            
            705,104
 
 No income
tax benefit is provided as a result of the Company’s net operating loss carry
forward.
 
 Subsequent
to the end of the quarter the Company entered into agreements to liquidate its
supply contacts and transfer its existing customer base. (See Note
S).
 
 SFAS No.
144 requires the assets and liabilities of a disposal group classified as “held
for sale” to be presented separately in the asset and liability sections of a
Company’s consolidated balance sheet. As the Company has not approved a plan to
sell the W Power’s assets and does not have an active program to locate a buyer
of the business, the assets and liabilities of the segment are consolidated with
the Company’s other balances. The following summarizes the assets and
liabilities associated with W Power at June 30, 2008:
 
 AssetsCash
      and Cash Equivalents
            
            $
            916,368Accounts
      Receivable (net of allowance of $26,749)
            
            
            1,121,964Restricted
      Cash Equivalents
            
            
            2,197,000Other
      Current Assets
            
            
            36,203Total
      Current Assets
            
            
            4,271,535Property
      and Equipment
            
            
            69,624Deposits
      and Others Assets
            
            
            38,870Total
      Non Current Assets
            
            
            108,494Total
      Assets
            
            $
            4,380,029LiabilitiesAccounts
      Payable
            
            $
            868,321
 
 25
 Accrued
      Liabilities
            
            
            1,075,759Total
      Current Liabilities
            
            
            1,944,080Total
      Liabilities
            
            $
            1,944,080
 
 Businesses
Held for Sale
 
 In the
first quarter of 2008, the Company adopted a plan to sell its online electricity
brokering business, ChooseEnergy.com.  Its primary business, as
previously described, is to provide competitive electricity pricing alternatives
for residential and small commercial electricity consumers.  The
Company completed the sale of ChooseEnergy.com subsequent to the end of the
quarter.
 
 In
accordance with SFAS No. 144, the Company has reflected the operating results as
discontinued operations in the consolidated statements of operations for all
periods presented. There are no capitalized assets or depreciation expenses to
be reflected on the consolidated balance sheet as held for sale.
 
 The
following is a summary of historical financial information about
ChooseEnergy.com for the six months ended June 30:
 2008
            
            
            2007Revenue
            
            $
            92,962
            
            
            
            72,783Loss
      before income taxes
            
            
            (32,108
            )
            
            
            (113,138
            )Income
      taxes
            
            
            -
            
            
            
            -Loss
      from discontinued operations
            
            $
            (32,108
            )
            
            
            (113,138
            )
 
 No income
tax benefit is provided as a result of the Company’s net operating loss carry
forward.
 
 SFAS No.
144 requires the assets and liabilities of a disposal group classified as “held
for sale” to be presented separately in the asset and liability sections of a
Company’s consolidated balance sheet. ChooseEnergy.com has no material
long-lived assets or associated disposal group items to be classified as “held
for sale” on the presented balance sheets.
 
 NOTE
S – SUBSEQUENT EVENTS
 
 On July
9, 2008 W Power liquidated all of its forward positions in fixed price and
floating price forward energy contracts dated after July 2008.  The
liquidation mark-to-market expense was approximately $500 thousand.
 
 On July
16, 2008, W Power entered into an asset purchase agreement with Green Mountain
Energy Company (“Green Mountain”) whereby Green Mountain purchased all but a few
of the retail electricity customer agreements of W Power.  This
agreement was executed as part of the plan to discontinue the operations of W
Power  (See Note R).
 
 Under the
terms of the agreement, the parties transferred the acquired residential and
commercial customers to Green Mountain.  W Power’s few remaining
customers are being transitioned to other retail providers.  At
closing, W Power paid a mark-to-market payment to Green Mountain of $190,762 for
the purpose of covering the expected excess energy-related costs that Green
Mountain will incur to provide electricity service to certain fixed price
customers for the term of those customer agreements.
  26
 ITEM
2.  Management’s Discussion and Analysis or Plan of
Operation
 
 The
following discussion and analysis should be read in conjunction with the
Company’s unaudited consolidated financial statements and related footnotes
presented in Item 1 and the Company’s December 31, 2007 Form
10-KSB.
 
 Overview
 
 AMEN
Properties, Inc. (the “Company”) is in the business of acquiring profitable,
cash-generating businesses with proven track records and the ability to create
sustained value.  The Company is a holding company and conducts its
business through the following subsidiaries:
 
 ·
            AMEN
      Delaware, LLC (“Delaware”) – real estate
  investments
 ·
            AMEN
      Minerals, LLC (“Minerals”) – oil and gas royalties, other
      investments
 ·
            W
      Power & Light, LLC (“W Power”) – retail electricity provider in the
      State of Texas
 ·
            Priority
      Power Management, LLC. (“Priority Power”) – energy management, consulting
      and aggregation
 
 Application
of Critical Accounting Policies
 
 Our
discussion and analysis of financial condition and results of operations is
based on our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, and
contingencies as of the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. We evaluate our
assumptions and estimates on an ongoing basis. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. These estimates form the basis for making
judgments about the carrying values of assets and liabilities where that
information is available from other sources. Certain estimates are particularly
sensitive due to their significance to the financial statements. Actual results
may differ significantly from management's estimates.
 
 We
believe that the most significant accounting policies that involve the use of
estimates and assumptions as to future uncertainties and, therefore, may result
in actual amounts that differ from estimates are the following:
 
 -
Impairments,
 
 -
Business combinations,
 
 - Revenue
recognition,
 
 - Gain
recognition on sale of real estate assets,
 
 -
Consolidation of variable interest entities,
 
 -
Allowance for doubtful accounts and
 
 - Stock
options
 
 Impairments
 
 Real
estate and leasehold improvements are classified as long-lived assets held for
sale or long-lived assets to be held and used. In accordance with SFAS No. 144,
we record assets held for sale at the lower of carrying value or sales price
less costs to sell. For assets classified as held and used, these assets are
tested for recoverability when events or changes in circumstances indicate that
the estimated carrying amount may not be recoverable. An impairment loss is
recognized when expected undiscounted future cash flows from a Property is less
than the carrying value of the Property. Our estimates of cash flows of the
Properties requires us to make assumptions related to future rental rates,
occupancies, operating expenses, the ability of the properties’ tenants to
perform pursuant to their lease obligations and proceeds to be generated from
the eventual sale of our investment in the Properties. Any changes in estimated
future cash flows due to changes in our plans or views of market and economic
conditions could result in recognition of additional impairment
losses.
 
 If events
or circumstances indicate that the fair value of an investment accounted for
using the equity method has declined below its carrying value and we consider
the decline to be "other than temporary," the investment is written down to fair
value and an impairment loss is recognized. The evaluation of impairment for an
investment would be based on a number of factors, including financial condition
and operating results for the investment, inability to remain in compliance with
provisions of any related debt
  27
 agreements,
and recognition of impairments by other investors. Impairment recognition would
negatively impact the recorded value of our investment and reduce net
income.
 
 Business
Combinations
 
 We
allocate the purchase price of acquired businesses to tangible and identified
intangible assets acquired based on their fair values in accordance with SFAS
No. 141, "Business
Combinations." We initially record the allocation based on a preliminary
purchase price allocation with adjustments recorded within one year of the
acquisition.
 
 In making
estimates of fair value for purposes of allocating purchase price, management
utilizes sources, including, but not limited to, independent value consulting
services, independent appraisals that may be obtained in connection with
financing the respective business, and other market data. Management also
considers information obtained about each business as a result of its
pre-acquisition due diligence in estimating the fair value of the tangible and
intangible assets acquired.
 
 The
aggregate value of the tangible assets acquired is measured based on the sum of
(i) the value of the property and (ii) the present value of the amortized
in-place tenant improvement allowances over the remaining term of each lease.
Management's estimates of the value of the property are made using models
similar to those used by independent appraisers. Factors considered by
management in its analysis include an estimate of carrying costs such as real
estate taxes, insurance, and other operating expenses and estimates of lost
rentals during the expected lease-up period assuming current market conditions.
The value of the property is then allocated among building, land, site
improvements, and equipment. The value of tenant improvements is separately
estimated due to the different depreciable lives.
 
 The
aggregate value of intangible assets acquired is measured based on the
difference between (i) the purchase price and (ii) the value of the tangible
assets acquired as defined above. This value is then allocated among
above-market and below-market in-place lease values, costs to execute similar
leases (including leasing commissions, legal expenses and other related
expenses), in-place lease values and customer relationship values.
 
 Above-market
and below-market in-place lease values for acquired properties are calculated
based on the present value (using a market interest rate which reflects the
risks associated with the leases acquired) of the difference between (i) the
contractual amounts to be paid pursuant to the in-place leases and (ii)
management's estimate of fair market lease rates for the corresponding in-place
leases, measured over a period equal to the remaining non-cancelable term of the
lease for above-market leases and the initial term plus the term of the
below-market fixed rate renewal option, if any, for below-market leases. We
perform this analysis on a lease by lease basis. The capitalized above-market
lease values are amortized as a reduction to rental income over the remaining
non-cancelable terms of the respective leases. The capitalized below-market
lease values are amortized as an increase to rental income over the initial term
plus the term of the below-market fixed rate renewal option, if any, of the
respective leases.
 
 Management
estimates costs to execute leases similar to those acquired at the property at
acquisition based on current market conditions. These costs are recorded based
on the present value of the amortized in-place leasing costs on a lease by lease
basis over the remaining term of each lease.
 
 The
in-place lease values and customer relationship values are based on management's
evaluation of the specific characteristics of each customer's lease and our
overall relationship with that respective customer.  Characteristics
considered by management in allocating these values include the nature and
extent of our existing business relationships with the customer, growth
prospects for developing new business with the customer, the customer's credit
quality, and the expectation of lease renewals, among other factors. The
in-place lease value and customer relationship value are both amortized to
expense over the initial term of the respective leases and projected renewal
periods, but in no event does the amortization period for the intangible assets
exceed the remaining depreciable life of the building.
 
 Should a
tenant terminate its lease, the unamortized portion of the in-place lease value
and the customer relationship value and above-market and below-market lease
values would be charged to expense.
 
 Revenue
Recognition
 
 The
Company records electricity sales under the accrual method and these revenues
are recognized upon delivery of electricity to the customers’
meters.  Electric services not billed by month-end are accrued based
upon estimated deliveries to customers as tracked and recorded by the Electric
Reliability Council of Texas (“ERCOT”) multiplied by the Company’s average
billing rate per kilowatt hour (“kwh”) in effect at the time.
 
 The flow
technique of revenue calculation relies upon ERCOT settlement statements to
determine the estimated revenue for a given month.  Supply delivered
to our customers for the month, measured on a daily basis, provides the basis
for revenues. ERCOT provides net electricity delivered data in three
frames.  Initial daily settlements become available approximately 17
days after the day being settled.  Approximately 45 days after the day
being settled, a resettlement is provided to adjust the initial settlement
to
  28
 the
actual supply delivered based on subsequent comparison of prior forecasts to
actual meter reads processed.  A final resettlement is provided
approximately 180 days after power is delivered, marking the last routine
settlement adjustment to the power deliveries for that day. Sales represent the
total proceeds from energy sales, including pass through charges from the TDSPs
billed to the customer at cost.  Cost of goods and services (“COGS”)
include electric power purchased, sales commissions, and pass through charges
from the TDSPs in the areas serviced by the Company.  TDSP charges are
costs for metering services and maintenance of the electric
grid.  TDSP charges are determined by regulated tariffs established by
the Public Utility Commission of Texas (“PUCT”).
 
 Bilateral
wholesale costs are incurred through contractual arrangements with wholesale
power suppliers for firm delivery of power at a fixed volume and fixed
price.  The Company is typically invoiced for these wholesale volumes
at the end of each calendar month for the volumes purchased for delivery during
the month, with payment due 10 to 20 days after the end of the
month.
 
 Balancing/ancillary
costs are based on the aggregate customer load and are determined by ERCOT
through a multiple step settlement process.  Balancing costs/revenues
are related to the differential between supply provided by the Company through
its bilateral wholesale supply and the supply required to serve the Company’s
customer load.  The Company endeavors to minimize the amount of
balancing/ancillary costs through its load forecasting and forward purchasing
programs.
 
 The
Company’s gross revenues for energy management services provided to our
customers are recognized upon delivery and include estimated aggregation fees
and other services delivered but not billed by the end of the
period.
 
 Accrued
unbilled aggregation revenues are based on our estimates of customer electricity
usage since the date of the last meter reading provided by the independent
system operators or electric distribution companies.  Volume estimates
are based on average daily volumes, estimated customer usage and applicable
customer aggregation rates.  Unbilled aggregation revenues are
calculated by multiplying volume estimates by our estimated rates by
customer.  Estimated amounts are adjusted when actual usage and rates
are known and billed.
 
 Leases
with tenants are accounted for as operating leases.  Minimum annual
rentals are recognized on a straight-line basis over the terms of the respective
leases.
 
 Gain
Recognition on Sale of Real Estate Assets
 
 We
perform evaluations of each real estate sale to determine if full gain
recognition is appropriate in accordance with SFAS No. 66, "Accounting for Sales
of Real Estate". The application of SFAS No. 66 can be complex and requires us
to make assumptions including an assessment of whether the risks and rewards of
ownership have been transferred, the extent of the purchaser's investment in the
property being sold, whether our receivables, if any, related to the sale are
collectible and are subject to subordination, and the degree of our continuing
involvement with the real estate asset after the sale. If full gain recognition
is not appropriate, we account for the sale under an appropriate deferral
method.
 
 Consolidation
of Variable Interest Entities
 
 We
perform evaluations of each of our investment partnerships, real estate
partnerships and joint ventures to determine if the associated entities
constitute a Variable Interest Entity, or VIE, as defined under Interpretations
46 and 46R, "Consolidation of Variable Interest Entities," or FIN 46 and 46R,
respectively. In general, a VIE is an entity that has (i) an insufficient amount
of equity for the entity to carry on its principal operations, without
additional subordinated financial support from other parties, (ii) a group of
equity owners that are unable to make decisions about the entity's activities,
or (iii) equity that does not absorb the entity's losses or receive the benefits
of the entity. If any one of these characteristics is present, the entity is
subject to FIN 46R's variable interest consolidation model.
 
 Quantifying
the variability of VIEs is complex and subjective, requiring consideration and
estimates of a significant number of possible future outcomes as well as the
probability of each outcome occurring. The results of each possible outcome are
allocated to the parties holding interests in the VIE and, based on the
allocation, a calculation is performed to determine which party, if any, has a
majority of the potential negative outcomes (expected losses) or a majority of
the potential positive outcomes (expected residual returns). That party, if any,
is the VIE's primary beneficiary and is required to consolidate the VIE.
Calculating expected losses and expected residual returns requires modeling
potential future results of the entity, assigning probabilities to each
potential outcome, and allocating those potential outcomes to the VIE's interest
holders. If our estimates of possible outcomes and probabilities are incorrect,
it could result in the inappropriate consolidation or deconsolidation of the
VIE.
 
 For
entities that do not constitute VIEs, we consider other GAAP, as required,
determining (i) consolidation of the entity if our ownership interests comprise
a majority of its outstanding voting stock or otherwise control the entity, or
(ii) application of the equity method of accounting if we do not have direct or
indirect control of the entity, with the initial investment carried at costs and
subsequently adjusted for our share of net income or less and cash contributions
and distributions to and from these entities.
 
 29
 Allowance
for Doubtful Accounts
 
 Our
accounts receivable balance is reduced by an allowance for amounts that may
become uncollectible in the future. Our receivable balance is composed primarily
of billed and unbilled customer retail electricity usage flowed for a given
period and billed and unbilled customer management fees based on electricity
usage flowed for a given period.  The allowance for doubtful accounts
is reviewed at least quarterly for adequacy by reviewing such factors as the
credit quality of our customers, any delinquency in payment, historical trends
and current economic conditions. If the assumptions regarding our ability to
collect accounts receivable prove incorrect, we could experience write-offs in
excess of the allowance for doubtful accounts, which would result in a decrease
in net income.  The Company estimated the allowance for doubtful
accounts related to W Power’s billed account receivables to be approximately
0.2% percent of W Power’s retail electricity billed revenue for the period ended
June 30, 2008.  Due to the limited historical data, the Company
regularly reviews the accounts receivable and accordingly makes adjustments in
estimating the allowance for doubtful accounts. At June 30, 2008, W Power had a
total allowance for doubtful accounts of $27 thousand. Priority Power’s trade
accounts receivable arise from aggregation fees and other management
services.  An allowance for uncollectible accounts receivable is
provided for amounts not expected to be collectible. As of June 30, 2008 the
Company considers Priority Power’s accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required.
 
 Stock
Options
 
 The
Company accounts for its stock-based compensation in accordance with SFAS No.
123R, Accounting for
Stock-Based Compensation.In December 2004, the Financial
Accounting Standards Board issued SFAS 123(R) effective for small business
issuers after December 15, 2005.  The new Statement requires mandatory
reporting of all stock-based compensation awards on a fair value basis of
accounting.  Generally, companies are required to calculate the fair
value of all stock awards and amortize that fair value as compensation expense
over the vesting period of the awards.
 
 Results
of Operations
 
 Overview
 
 Three
      Months Ended June 30,
            
            
            Six
      Months Ended June 30,2008
            
            
            2007
            
            
            2008
            
            
            2007Income
      from Continuing Operations
            
            $
            339,961
            
            
            $
            304,677
            
            
            $
            1,218,282
            
            
            $
            425,389Per
      Share Income from Continuing Operations
            
            
            0.09
            
            
            
            0.13
            
            
            
            0.32
            
            
            
            0.19Income
      (Loss) from Discontinued Operations
            
            
            (1,317,233
            )
            
            
            203,754
            
            
            
            (1,218,463
            )
            
            
            591,965Per
      Share Income (Loss) from Discontinued Ops
            
            
            (0.35
            )
            
            
            0.09
            
            
            
            (0.32
            )
            
            
            0.26Net
      Income (Loss)
            
            
            (977,272
            )
            
            
            508,431
            
            
            
            (181
            )
            
            
            1,017,354Per
      Share Net Income (Loss)
            
            
            (0.26
            )
            
            
            0.22
            
            
            
            0.00
            
            
            
            0.44
 
 2Q08 vs.
2Q07
 
 ·
            The
      change in 2nd
      quarter earnings from continuing operations from 2007 to 2008 was caused
      primarily by increased investment income from the Company’s investment in
      the SFF Group offset by a decrease in Priority Power’s income as discussed
      below.
 ·
            Priority
      Power generated approximately $196 thousand in income for the quarter
      ended June 30, 2008 as compared to approximately $623 thousand for the
      same quarter in 2007. The reduction in income is primarily attributable to
      increased payroll expenses resulting from the addition of sales
      people.
 ·
            W
      Power incurred a loss of approximately $1.3 million for the quarter ended
      June 30, 2008 as compared to income of approximately $204 thousand for the
      same quarter in 2007. The sharp decrease in earnings at W Power was caused
      primarily by an $800 thousand charge related to the discontinuation of
      retail electric operations and adjustments in line loss estimates. (See
      Note R).
 
 In the
second quarter of 2008 W Power and Light experienced a significant adverse
impact from price escalation in wholesale electricity and natural gas prices.
Management determined that the escalation is likely to continue
throughout
  30
 the
coming months. Additionally, the Company recognized significant changes in the
ERCOT electricity spot market driven both by high natural gas prices and a
fundamental shift in energy and capacity availability across Texas.
 
 After
noting these structural market changes, and assessing their impact on W Power’s
retail electricity business unit, management presented a plan to the Board of
Directors to discontinue all retail electricity power operations. Recognizing
the significant opportunities for business development, acquisitions, and growth
in other areas of the Corporation, in addition to the large capital requirements
to grow REP operations, the Board of Directors approved the plan to discontinue
operations on June 25. The estimated expenses of winding down retail energy
operations led to an $800 thousand charge in the current quarter.
 
 Revenues
 
 ·
            The
      Company’s consolidated revenues, after reclassifying W Power to
      discontinued operations, were approximately $967 thousand for the quarter
      ended June 30, 2008, compared to $999 thousand for the same quarter in
      2007.   This slight reduction in revenue was caused by the
      loss of one of Priority Power’s large
customers.
 
 Operating
Expenses
 
 ·
            Total
      operating expenses for the quarter ended June 30, 2008 and 2007 were $1.0
      million and $725 thousand, respectively; this increase was primarily
      attributable to growth in general & administrative expenses as
      described below.
 ·
            For
      the quarter ended June 30, 2008 general and administrative costs increased
      approximately $300 thousand versus the same quarter in
      2007.  This increase is primarily associated with growth in the
      Priority Power sales force.
 
 Other (expense)
income
 
 For the
quarter ended June 30, 2008 as compared to the same quarter in 2007 the Company
experienced an increase of approximately $360 thousand in other
income.  This increase was caused by the following
factors:
 
 ·
            Earnings
      from the Company’s investment in the SFF Group of approximately $567
      thousand.
 ·
            An
      increase of approximately $122 thousand in interest expense, primarily
      related to acquisition related
debt.
 
 1H08 vs.
1H07
 
 ·
            The
      change in earnings from continuing operations from 2007 to 2008 was caused
      primarily by earnings from the Company’s investment in the SFF Group as
      well as recognition in 2008 of a $535 thousand gain from the final
      distribution paid to the Company as a unit-holder in the Santa Fe Energy
      Trust.
 ·
            Priority
      Power generated approximately $904 thousand in net income for the six
      months ended June 30, 2008 as compared to a net income of approximately $1
      million for the six months ended June 30, 2007. The reduction in income is
      primarily attributable to increased payroll expenses resulting from the
      addition of sales people.
 ·
            W
      Power incurred a loss of approximately $1.19 million for the six months
      ended June 30, 2008 as compared to net income of approximately $705
      thousand for the six months ended June 30, 2007. The sharp decrease in
      earnings at W Power was caused primarily by an $800 thousand charge
      related to the discontinuation of retail electric operations and
      adjustments in line loss estimates. (See Note
  R).
 
 Revenues
 
 ·
            The
      Company’s consolidated revenues, after reclassifying W Power to
      discontinued operations, were approximately $2.4 million for the six
      months ended June 30, 2008, compared to $1.8 million for the six months
      ended June, 2007. This change is primarily due to an increase in
      aggregation fee revenue and $300 thousand earned as part of a power plant
      development contract recognized in the first
  quarter.
 
 Operating
Expenses
 
 ·
            Total
      operating expenses for the six months ended June 30, 2008 and 2007 were
      $2.1 million and $1.4 million, respectively; this increase was primarily
      attributable to growth in general & administrative expenses as
      described below.
  31
 ·
            For
      the six months ended June 30, 2008 general and administrative costs
      increased approximately $600 thousand versus the six months ended June 30,
      2007.  This increase is primarily associated with growth in the
      Priority Power sales force and corporate governance costs such as Sarbanes
      Oxley compliance.
 
 Other (expense)
income
 
 For the
six months ended June 30, 2008 as compared to the six months ended June 30, 2007
the Company experienced an increase of approximately $993 thousand in other
income.  This increase was caused by the following
factors:
 
 ·
            The
      final distribution made to the Company as a unit-holder in the Santa Fe
      Energy Trust, which resulted in a gain of approximately $535
      thousand.
 ·
            Earnings
      from the Company’s investment in the SFF Group of approximately $846
      thousand.
 ·
            The
      Company also had an increase of approximately $277 thousand in interest
      expense, primarily related to acquisition related
  debt.
 
 Book Value per
Share
 
 The
primary metric that the Company’s management uses when making operating and
investment decisions is Book Value per Share (“BVPS”).  BVPS is
calculated as Total Shareholder Equity divided by the Fully Diluted Number of
Shares Outstanding as of the measurement date.  Management’s belief is
that if the Company consistently delivers increases in BVPS, it will maximize
value to the shareholder over the long term.  As of June 30, 2008 the
Company’s BVPS is $3.93 compared to $2.59 at June 30, 2007.
 
 Analysis
of Cash Flows
 
 Operating
Activities
 
 During
the first half of 2008, net cash provided by operating activities was
approximately $316 thousand.  This was driven by a number of
factors:
 
 -­
            A
      decrease of $432 thousand in accounts receivable and other receivables,
      due to a decrease in unbilled power at W Power, a decrease in retail
      electric billing, a write down of W Power receivable accounts, and
      increased collections at Priority
Power.
 -­
            Earnings
      of $846 thousand from the Company’s investment in SFF
    Group.
 
 The
Company does not expect its investment in SFF Group to generate significant
accounting income due to the depletion expense that will be incurred; however,
regular cash distributions are expected as discussed in the Investing Activities
section below.
 
 Investing
Activities
 
 For the
first half of 2008, the net cash provided by investing activities was
approximately $5.3 million.  This was driven by two primary
activities:
 
 -­
            Liquidation
      of the Company’s available-for-sale securities related to units held in
      the Santa Fe Energy Trust.
 -­
            Distributions
      totaling $1.367 million from the SFF
Group.
 
 Based on
current commodity prices and production volumes, the Company expects to receive
regular cash distributions from SFF Group of approximately $500 – 800 thousand
per quarter.
 
 Financing
Activities
 
 Net cash
used in financing activities for the first half of 2008 was approximately $3.6
million.  This is primarily related to repayment of notes for the
purchase of Priority Power (the “NEMA” notes – See Note L) and stub financing
related to the purchase of an interest in the SFF Group (See Note
Q).
 
 Currently,
the Company has a net operating tax loss (“NOL”) carry forward in excess of $28
million.  This NOL is mainly related to the Company’s operations prior
to the Company presenting the 2002 business plan to shareholders.  The
Company believes that the utilization, without limitation, of the Company’s NOL
will be determined by the ability of management to limit the issue of new equity
due to IRC Section 382 restrictions.
 
 32
 ITEM
3. Quantitative and Qualitative Disclosures About Market Risk
 
 Item 6,
“Management’s Discussion and Analysis or Plan of Operation” of the Company’s
Annual Report on Form 10-KSB for the year ended December 31, 2007, contains a
detailed discussion of our risk factors under the subheading “Risk Factors”.
There are no material changes in our risk factors as previously described in our
Annual Report on Form 10-KSB for the year ended December 31, 2007.
 
 ITEM
4T. Controls and Procedures
 
 The
Company's management is responsible for establishing and maintaining adequate
internal control over financial reporting. The Company uses a risk-based
business process activity approach for its assessment of internal control. This
approach is based on the framework provided by the Committee of Sponsoring
Organizations (“COSO”) of the Treadway Commission.
 
 The
Company documents its assessment of internal controls over financial reporting
to allow for internal review and to facilitate evaluation of the adequacy of
management's documentation. The documentation includes the
following:
 
 •
            The
      design of controls over all relevant assertions related to all significant
      accounts and disclosures in the financial
  statements;
 •
            Information
      about how significant transactions are initiated, authorized, recorded,
      processed, and reported;
 •
            Sufficient
      information about the flow of transactions to identify the points at which
      material misstatements due to error of fraud could
  occur;
 •
            Controls
      designed to prevent or detect fraud, including who performs the controls
      and the related segregation of
duties;
 •
            Controls
      over the period-end financial reporting
process;
 •
            Controls
      over the safeguarding of assets;
and
 •
            The
      results of management's testing and
evaluation.
 
 The
Company's management believes it maintains an adequate and effective system of
controls over financial reporting.
 
 There
have not been any changes in the Company’s disclosure controls and procedures
during the period covered by this report that have materially affected, or are
reasonably likely to materially affect, the Company’s disclosure controls and
procedures over financial reporting.
 
 The
Company’s annual report for December 31, 2007 did not include an attestation
report of the company's registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject to
attestation by the company's registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
company to provide only management's report in its annual report.
 
 PART
II OTHER INFORMATION
 
 ITEM
1.  Legal Proceedings
 
 None to
report.
 
 ITEM
2.  Unregistered Sales of Equity Securities and Use of
Proceeds.
 
 None to
report.
 
 ITEM
3.  Defaults Upon Senior Securities
 
 None to
report.
 
 ITEM
4. Submission of Matters to a Vote of Security Holders
 
 None to
report.
 
 ITEM
5.  Other Information
 
 The
Company is currently unable to complete a required Form 8-K disclosure
containing pro forma financial statement data related to its acquisition of
assets from the Santa Fe Energy Trust (“Trust”) and Devon Energy Production
Company (“Devon”). The Company is waiting on the completion and filing of 2006
and 2007 audited financial statements for the Santa Fe Energy Trust, an
unaffiliated third party.  The Company will provide the required
financial statements as soon as possible after receiving the necessary financial
statements from Santa Fe Energy Trust.
 
 33
 ITEM
6.  Exhibits
 
 EXHIBIT
 NUMBER                  DESCRIPTION
 
 3.1+
            Certificate
      of Incorporation and Certificates of Amendments thereto of DIDAX
      INC.
 
 3.1(a)+
            Certificate
      of Correction regarding Certificate of
  Incorporation
 
 3.1(b)**
            Certificate
      of Amendment thereto of DIDAX INC.
 
 3.2+++
            Certificate
      of Amendment thereto of Crosswalk.com,
Inc.
 
 3.3+
            Bylaws
      and amendments thereto of the
Company
 
 3.6***
            Certificate
      of Amendment of Certificate of Incorporation dated May 26,
      2004
 
 3.7
            Certificate
      of Designation of Rights and Preferences of the Series D Preferred Stock
      of Amen Properties, Inc. (Incorporated by reference to the Company’s
      Report on Form 8-K filed with the Securities and Exchange Commission on
      December 17, 2007)
 
 4.1
            Form
      of Warrant (Incorporated by reference to the Company’s Report on Form 8-K
      filed with the Securities and Exchange Commission on December 17,
      2007)
 
 10.1+
            Form
      of Stock Option Agreement
 
 10.2+
            1997
      Stock Option Plan
 
 10.3*
            1997
      Stock Option Plan, as amended April 6,
1998
 
 10.4*
            1998
      Stock Option Plan
 
 10.5**
            1998
      Stock Option Plan, as amended February 26,
1999
 
 10.6##
            1998
      Stock Option Plan, as amended March 3,
2000
 
 10.7//
            Lease
      Agreement between TCTB Partners, Ltd. and Bank of America, N.A. dated
      September 30, 2003.
 
 10.8//
            Lease
      Agreement between TCTB Partners, Ltd. and Pioneer Natural Resources USA,
      Inc. dated April 4, 2000.
 
 10.9###
            Employment
      and Noncompetition Agreement between the Company and Kevin Yung dated as
      of July 1, 2004
 
 10.10@
            Loan
      Agreement between Amen Properties, Inc. and Western National
      Bank
 
 10.11@
            Western
      National Bank Revolving Line of Credit
Note
 
 10.12
            Employment
      Agreement between Priority Power Management, Ltd and John Bick
      (Incorporated by reference to the Company’s Report on Form 8-K filed with
      the Securities and Exchange Commission on June 1,
  2006).
 
 10.13
            Employment
      Agreement between Priority Power Management, Ltd and Padraig Ennis
      (Incorporated by reference to the Company’s Report on Form 8-K filed with
      the Securities and Exchange Commission on June 1,
  2006).
 
 10.14
            Securities
      Purchase Agreement among Amen Properties, Inc. and NEMA Properties, LLC,
      Priority Power Management, Ltd. and Priority Power Management Dallas, Ltd.
      and their respective partners dated as of May 18, 2006, including the
      forms of promissory note and assignment delivered at closing (incorporated
      by reference to the Company’s Form 8-K Current Report filed on May 24,
      2006).
 34
 10.15
            Agreement
      to Distribute Assets among TCTB Partners, Ltd and its partners dated as of
      September 27, 2006 (Incorporated by reference to the Company’s Report on
      Form 8-K filed with the Securities and Exchange Commission on October 5,
      2006)
 
 10.16
            Purchase
      Agreement between TCTB Partners, Ltd as nominee for certain partners of
      TCTB Partners, Ltd and Hampshire Plaza Garage, LLC and S.E.S. Investments,
      Ltd. dated as of September 29, 2006 (Incorporated by reference to the
      Company’s Report on Form 8-K filed with the Securities and Exchange
      Commission on October 5, 2006)
 
 10.17
            Management
      Agreement between the Company and TCTB Management Group, LLC. dated as of
      September 29, 2006 (Incorporated by reference to the Company’s Report on
      Form 8-K filed with the Securities and Exchange Commission on October 5,
      2006)
 
 10.18
            Amendment
      to Employment Agreement of Kevin Yung dated December 5, 2006 (Incorporated
      by reference to the Company’s Definitive Proxy Statement on Form 14A filed
      with the Securities and Exchange Commission on April 20,
    2007)
 
 10.19
            Amendment
      to Employment Agreement of John Bick dated June 1, 2006 (Incorporated by
      reference to the Company’s Definitive Proxy Statement on Form 14A filed
      with the Securities and Exchange Commission on April 20,
    2007)
 
 10.20
            Amendment
      to Employment Agreement of Padraig Ennis dated June 1, 2006 (Incorporated
      by reference to the Company’s Definitive Proxy Statement on Form 14A filed
      with the Securities and Exchange Commission on April 20,
    2007)
 
 10.21
            Employment
      Agreement of Kris Oliver, dated July 30, 2007 (Incorporated by reference
      to the Company’s Report on Form 8-K filed with the Securities and Exchange
      Commission on July 30, 2007)
 
 10.22
            Purchase
      Agreement between Amen Properties, Inc. and Bank of New York
      Trust  Company,  N. A., the  trustee of
      Santa Fe Energy Trust, dated as of November 8, 2007 (Incorporated by
      reference to the Company’s Report on Form 8-K filed with the Securities
      and Exchange Commission on November 8,
2007)
 
 10.23
            Purchase
      Agreement between Amen Properties, Inc. and Devon Energy Production
      Company, L.P. dated as of November 8, 2007 (Incorporated by reference to
      the Company’s Report on Form 8-K filed with the Securities and Exchange
      Commission on November 8, 2007)
 
 10.24
            Amendment
      to Purchase Agreement between Amen Properties, Inc. and Bank of New York
      Trust  Company,  N. A., the  trustee of
      Santa Fe Energy Trust, dated as of November 8, 2007 (Incorporated by
      reference to the Company’s Report on Form 8-K filed with the Securities
      and Exchange Commission on December 178,
2007)
 
 10.25
            Amendment
      to Purchase Agreement between Amen Properties, Inc. and Devon Energy
      Production Company, L.P. dated as of November 8, 2007 (Incorporated by
      reference to the Company’s Report on Form 8-K filed with the Securities
      and Exchange Commission on December 17,
2007)
 
 10.26
            SFF
      Royalty, LLC Operating Agreement (Incorporated by reference to the
      Company’s Report on Form 8-K filed with the Securities and Exchange
      Commission on December 17, 2007)
 
 10.27
            SFF
      Production, LLC Operating Agreement (Incorporated by reference to the
      Company’s Report on Form 8-K filed with the Securities and Exchange
      Commission on December 17, 2007)
 
 10.28
            Securities
      Purchase and Note Agreement (Incorporated by reference to the Company’s
      Report on Form 8-K filed with the Securities and Exchange Commission on
      December 17, 2007)
 
 10.29
            Amen
      Properties Promissory Note to SoftVest, LP (Incorporated by reference to
      the Company’s Report on Form 8-K filed with the Securities and Exchange
      Commission on December 17, 2007)
 
 11
            Statement
      of computation of earnings per
share
 
 21.1
            Subsidiaries
      of the Company
 
 23.1
            Consent
      of Independent Registered Public Accounting Firm (filed
      herewith)
 
 31.1
            Certification
      of Chief Executive Officer.
 
 35
 31.2
            Certification
      of Chief Financial Officer.
 
 32.1
            Certification
      of Chief Executive Officer Pursuant to 18 USC
  §1350.
 
 32.2
            Certification
      of Chief Financial Officer Pursuant to 18 USC
  §1350.
 
 +++
            Filed
      as an Appendix to the Company’s Proxy Statement on Schedule 14-A filed
      with the Securities and Exchange Commission on January 13,
      2003.
 
 *
            Incorporated
      by reference to the Company’s Registration Statement Post Effective
      Amendment No. 1 to Form SB-2 declared effective by the Securities and
      Exchange Commission on July 2, 1998, SEC File No.
  333-25937
 
 **
            Incorporated
      by reference to the Company’s Annual Report on Form 10-K filed with the
      Securities and Exchange Commission on March 30,
  2000.
 
 ***
            Incorporated
      by reference to the Company’s Report on Form 8-K filed with the Securities
      and Exchange Commission on June 10,
2004.
 
 ## Filed
as an Appendix to the Company’s Proxy Statement on Schedule 14-A filed with the
Securities and Exchange Commission on March 30, 2000.
 
 ###
            Incorporated
      by reference to the Company's Report on Form 8-K filed with the Securities
      and Exchange Commission on August 13,
2004
 
 //
            Incorporated
      by reference to the Company’s Annual Report on Form 10-K filed with the
      Securities and Exchange Commission on March 24,
  2003.
 
 @
            Incorporated
      by reference to the Company's Report on Form 8-K filed with the Securities
      and Exchange Commission on March 4,
2005.
  36
  SIGNATURES
 
 In
accordance with the requirements of Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 
 AMEN
      Properties, Inc.August
      14, 2008
            By:
      /s/ Jon
Morgan
              Jon
      Morgan,
              Chief
      Executive OfficerAugust
      14, 2008
            By:
      /s/ Kris
      Oliver
              Kris
      Oliver,
              Chief
      Financial Officer and Secretary
  37