----

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|   | **UNITED                  STATES** |
|--------|------------------------------------|

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

**FORM        10-K**

**x          ANNUAL        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**

**EXCHANGE        ACT OF 1934**

**or**

**o      TRANSITION        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**

**EXCHANGE        ACT OF 1934**

**RESOURCE        AMERICA, INC.**

|  **Delaware  **                                                                                                         |                                 |  ** 72-0654145**                                            |
|----------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|-----------------------------------------------------------------------|
| (State                  or other  jurisdictionof                  incorporation or organization)                             |                                 | (I.R.S.                  EmployerIdentification                  No.) |
| **One                  Crescent Drive, Suite 203****Navy                  Yard Corporate Center****Philadelphia,                  PA** |                                 |  ** ****19112**                                             |
| (Address                  of principal executive offices)                                                                              |                                 |  (Zip                  Code)                                     |
| Registrant’s                  telephone number, including area code:  **215-546-5005**                                 |                                 |                                                                  |
| Securities                  registered pursuant to Section 12(b) of the Act:                                                           |
|                                                                                                                                   |                                 |                                                                  |   |
|                                                                                                                                   | Title                  of each class |                                                                  | Name                  of each exchange on which registered |
|                                                                                                                                   | **None**                             |                                                                  | **None** |

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**RESOURCE        AMERICA, INC. AND SUBSIDIARIES**

**INDEXTO        ANNUAL REPORT**

**ON        FORM 10-K**

|                              |                                                                                                                                                                 |   | Page   |          |
|-----------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------|
| **PART                    I**     |                                                                                                                                                                 |   |   |          |
| Item                    1:        | Business                                                                                                                                                             |   |   | 3−12    |   |
| Item                    1A:       | Risk                    Factors                                                                                                                                      |   |   | 13−18   |   |
| Item                    1B:       | Unresolved                    Staff Comments                                                                                                                         |   |   | 18            |   |
| Item                    2:        | Properties                                                                                                                                                           |   |   | 19            |   |
| Item                    3:        | Legal                    Proceedings                                                                                                                                 |   |   | 19            |   |
| Item                    4:        | Submission                    of Matters to a Vote of Security                    Holders                                                                            |   |   | 19            |   |
|                              |                                                                                                                                                                 |   |   |          |   |
| **PART                    II**    |                                                                                                                                                                 |   |   |          |   |
| Item                    5:   | Market                    for Registrant's Common Equity, Related Stockholder                    Matters andIssuer                    Purchases of Equity Securities |   |   | 20−21   |   |
| Item                    6:        | Selected                    Financial Data                                                                                                                           |   |   | 22            |   |
| Item                    7:        | Management’s                    Discussion and Analysis of Financial Condition and Results                    of Operations                                    |   |   | 23−54   |   |
| Item                    7A:       | Quantitative                    and Qualitative Disclosures About Market                    Risk                                                                     |   |   | 55−56   |   |
| Item                    8:        | Financial                    Statements and Supplementary                    Data                                                                                    |   |   | 57−111  |   |
| Item                    9:        | Changes                    in and Disagreements with Accountants on Accounting and Financial                    Disclosure                                           |   |   | 112           |   |
| Item                    9A:       | Controls                    and Procedures                                                                                                                           |   |   | 112−113 |   |
| Item                    9B:       | Other                    Information                                                                                                                                 |   |   | 114           |   |
|                              |                                                                                                                                                                 |   |   |          |   |
| **PART                    III**   |                                                                                                                                                                 |   |   |          |   |
| Item                    10:       | Directors                    and Executive Officers of the                    Registrant                                                                             |   |   | 115           |   |
| Item                    11:       | Executive                    Compensation                                                                                                                            |   |   | 115           |   |
| Item                    12:  | Security                    Ownership of Certain Beneficial Owners and                    Management andRelated                    Stockholder Matters               |   |   | 115           |   |
| Item                    13:       | Certain                    Relationships and Related                    Transactions                                                                                 |   |   | 115           |   |
| Item                    14:       | Principal                    Accounting Fees and Services                                                                                                            |   |   | 115           |   |
|                              |                                                                                                                                                                 |   |   |          |   |
| **PART                    IV**    |                                                                                                                                                                 |   |   |          |   |
| Item                    15:       | Exhibits,                    Financial Statement Schedules                                                                                                           |   |   | 116−117 |   |
|                              |                                                                                                                                                                 |   |   |          |   |
| **SIGNATURES**                    |                                                                                                                                                                 |   | 118    |          |

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**PART        I**

**ITEM        1.                      BUSINESS**

***The        following discussion contains forward-looking statements regarding events        and        financial trends which may affect our future operating results and financial        position.  Such statements are subject to risks and uncertainties that        could cause our actual results and financial position to differ materially        from        those anticipated in such statements.  For a discussion of the risks        and uncertainties to which we are subject, see Item 1A “Risk        Factors.”***

**General**

----

**Assets        Under Management**

|                                                                 |   | **As                    of September 30, 2007**           |    |   | **As                    of****September                    30, 2006** |   |    |
|----------------------------------------------------------------------|--------|-----------------------------------------------------------|---------|--------|-----------------------------------------------------------------------|--------|---------|
|                                                                 |   | Institutional                    and Individual Investors |    |   | RCC                                                                   |   |    | Company |   |   | Assets                    Held on Warehouse Facilities |   |   | Total |   |   | Total |
| Trust                  preferred securities (1)                  (4) |   | $                                                         | 5,167   |   |                                                                  | $      | − |   |   | $ | − |   |   | $ | 93 |   |   | $ | 5,260 |   |   | $ | 4,206 |   |
| Bank                  loans (1)                  (5)                 |   |                                                      | 1,853   |   |                                                                  |   | 952     |   |   |   | − |   |   |   | 301 |   |   |   | 3,106 |   |   |   | 1,926 |   |
| Asset-backed                  securities (1)                         |   |                                                      | 5,137   |   |                                                                  |   | 396     |   |   |   | − |   |   |   | − |   |   |   | 5,533 |   |   |   | 4,403 |   |
| Real                  properties (2)                                 |   |                                                      | 512     |   |                                                                  |   | − |   |   |   | − |   |   |   | − |   |   |   | 512 |   |   |   | 345 |   |
| Mortgage                  and other real estate-related loans (2)    |   |                                                      | − |   |                                                                  |   | 944     |   |   |   | 178 |   |   |   | − |   |   |   | 1,122 |   |   |   | 539 |   |
| Commercial                  finance assets (3)                       |   |                                                      | 767     |   |                                                                  |   | 83      |   |   |   | 243 |   |   |   | − |   |   |   | 1,093 |   |   |   | 613 |   |
| Private                  equity and hedge fund assets (1)            |   |                                                      | 85      |   |                                                                  |   | − |   |   |   | − |   |   |   | − |   |   |   | 85 |   |   |   | 58 |   |
|                                                                 |   | $                                                         | 13,521  |   |                                                                  | $      | 2,375   |   |   | $ | 421 |   |   | $ | 394 |   |   | $ | 16,711 |   |   | $ | 12,090 |   |

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| (1) | We                  value these assets at their amortized                  cost. |
|-----|----------------------------------------------------------------------------------|

| (2) | We                  value our managed real estate assets as the sum of: the amortized                  cost of                  our commercial real estate loans; the book value of real estate                  and other                  assets held by our real estate investment partnerships and                  tenant-in-common, or TIC, property interests; the amount of our                  outstanding legacy loan portfolio; and the book value of our interests                  in                  real estate. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | We                  value our commercial finance assets as the sum of the book value                  of the                  equipment and notes and future receivable advances financed by                  us. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | The                  trust preferred securities are being held on a warehouse line which                  is                  without recourse to us. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | The                    bank                    loans are being held on                    three separate warehouse facilities which are consolidated on                    our balance                    sheet but as to which we have only guarantor liability, to an                    aggregate                    pre-tax maximum amount of $26.8 million at September 30,                    2007.  We expect that the bank loan warehouse facilities would                    be reduced to $122.4 million and our aggregate guarantor liability                    will be                    reduced to $17.6 million pre-tax at November 30, 2007 after giving                    effect                    to the settlement of loans sold not settled ($152.7 million)                    and the                    expected closing in December 2007 of Apidos VI CLO which priced                    in                    November 2007. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                  |   | **CDOs** |    |   | **Limited                    Partnerships** |   |   | **TIC                    Property Interests** |   |   | **Other****Investment                    Funds** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|---------|--------|---------------------------------------------|--------|--------|-----------------------------------------------|--------|--------|--------------------------------------------------|--------|
| **As                  of September 30, 2007**                                                                                                                                                                                                                                                         |   |     |    |   |                                        |   |   |                                          |   |   |                                             |   |
| Financial                  fund management                                                                                                                                                                                                                                                            |   |     | 29      |   |                                        |   | 12     |                                          |   |   | −                                          |   |   |   | − |   |
| Real                  estate                                                   |   |     | 2       |   |                                        |   | 5      |                                          |   |   | 7                                                |   |   |   | 2 |   |
| Commercial                  finance                                            |   |     | − |   |                                        |   | 3      |                                          |   |   | −                                          |   |   |   | 1 |   |
|                                                                                                                                                                                                                                                                                                  |   |     | 31      |   |                                        |   | 20     |                                          |   |   | 7                                                |   |   |   | 3 |   |
| **As                  of September 30, 2006**                                                                                                                                                                                                                                                         |   |     |    |   |                                        |   |   |                                          |   |   |                                             |   |   |   |   |   |
| Financial                  fund management                                                                                                                                                                                                                                                            |   |     | 19      |   |                                        |   | 11     |                                          |   |   | −                                          |   |   |   | − |   |
| Real                  estate                                                   |   |     | 1       |   |                                        |   | 5      |                                          |   |   | 4                                                |   |   |   | − |   |
| Commercial                  finance                                            |   |     | − |   |                                        |   | 2      |                                          |   |   | −                                          |   |   |   | 1 |   |
|                                                                                                                                                                                                                                                                                                  |   |     | 20      |   |                                        |   | 18     |                                          |   |   | 4                                                |   |   |   | 1 |   |

**Commercial        Finance**

*General.  *

*                LEAF Acquisitions.  *

----

*               Merit Capital Advance.  *

**Real        Estate**

*General.  *

|   | · | the                  sponsorship and management of real estate investment partnerships                  and TIC                  programs; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  management, solely for RCC, of general investments in commercial                  real                  estate debt.  These investments may include first mortgage debt,                  whole loans, mortgage participations, subordinate notes, mezzanine                  debt                  and related commercial real estate                  securities; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  acquisition, in September 2007 of a portfolio of real estate loans                  at a                  discount from the HUD on behalf of an institutional partner, through                  a                  joint venture; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | to                  a lesser extent, the management and resolution of a legacy portfolio                  of                  real estate loans and property interests that we acquired at various                  times                  between 1991 and 1999. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Real        Estate Investment Partnerships        and TIC Programs.  *

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*Resource        Property        Manager.  *

*Distressed          Real Estate          Opportunities.  *

*Resource        Capital        Corp.  *

*Legacy        Portfolio of Loan and        Property Interests.  *

|                                                                                                                                                                                                                                                                                                                                                                                                                |   | **September                    30, 2007** |    |   | **September                    30, 2006**                            |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|--------|----------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                |   | **Portfolio                    Loans**    |    |   | **Loans                  Held Under****FIN                    46-R** |   |   | **Portfolio                    Loans** |   |   | **Loans                    Held Under****FIN                    46-R** |   |
| Number                  of                  loans                                                            |   |                                      | 7       |   |                                                                 |   | 2 |   |   |   | 7 |   |   |   | 2 |   |
| Outstanding                  loans receivable (1)                                                            |   | $                                         | 69,281  |   |                                                                 | $      | 9,937 |   |   | $ | 66,881 |   |   | $ | 9,237 |   |
| Appraised                  value of property loan (2)                                                                                                                                                                                                                                                                                                                                                               |   | $                                         | 175,350 |   |                                                                 | $      | 4,750 |   |   | $ | 136,450 |   |   | $ | 4,750 |   |
| Third                  party liens (3)                                                                       |   | $                                         | 25,097  |   |                                                                 | $      | 1,387 |   |   | $ | 25,546 |   |   | $ | 1,412 |   |
| Carried                  cost of investment (4)                                                              |   | $                                         | 27,765  |   |                                                                 | $      | 1,942 |   |   | $ | 28,739 |   |   | $ | 1,980 | (5) |
| Net                  interest in outstanding loans receivable (6)                                                                                                                                                                                                                                                                                                                                                   |   | $                                         | 44,184  |   |                                                                 | $      | 8,550 |   |   | $ | 41,335 |   |   | $ | 7,825 |   |

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| (1) | Consists                    of the original stated or face value of the obligation plus interest                    and                    the amount of the senior lien                    interest. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | We                  generally obtain appraisals on each of the properties underlying                  our                  portfolio loans at least once every three                  years. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Represents                  the amount of the senior lien                  interests. |
|-----|---------------------------------------------------------------------------------------|

| (4) | Represents                  the book cost of our investment, including subsequent advances,                  after                  accretion of discount and allocation of gains from the sale of                  a senior                  lien interest in, or borrower refinancing of, the loan, but excludes                  an                  allowance for possible losses of** **$629,000 at                  September 30, 2007 and $770,000 at September 30,                  2006. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | For                  loans held under FIN 46-R, the carried cost represents our investment                  adjusted to reflect the requirements of FIN                  46-R. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Consists                    of the amounts set forth in the line "Outstanding Loans Receivable"                    less                    amounts in the line “Third Party                    Liens.” |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Financial        Fund Management**

*General*

|   | · | Trapeza                  Capital Management, LLC, or Trapeza, a joint venture between us                  and an                  unrelated third party, which originates, structures, finances and                  manages                  investments in trust-preferred securities and senior debt securities                  of                  banks, bank holding companies, insurance companies and other financial                  companies. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Apidos                  Capital Management, LLC, or Apidos, which finances, structures                  and manages                  investments in bank loans. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Ischus                  Capital Management, LLC, or Ischus, which finances, structures                  and manages                  investments in asset-backed securities or ABS, including residential                  mortgage-backed securities, or RMBS, and commercial mortgage-backed                  securities, or CMBS. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Resource                  Europe, which finances, structures and manages investments in                  international bank loans. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Resource                  Financial Institutions Group, Inc., or RFIG, which serves as the                  general                  partner for four company-sponsored affiliated partnerships which                  invest in                  financial institutions. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*CDOs*

----

| **Sponsor/Manager**                              | **Asset                    Class**          |   | **Number                    of CDO Issuers** |                            |   | **Assets                    Under Management** |   |
|--------------------------------------------------|---------------------------------------------|--------|----------------------------------------------|---------------------------------|--------|------------------------------------------------|--------|
|                                             |                                        |   |                                         |                            |   | (in                  billions)                 |   |
| Trapeza                  (1)(2)                  | Trust                  Preferred Securities |   |                                         |  13                        |   |                                           | $      | 5.2 |   |
| Apidos                  (3)                      | Bank                  Loans                 |   |                                         |                     7 |   |                                           |   | 2.4 |   |
| Ischus                  (1)                  (4) | RMBS/CMBS/ABS                               |   |                                         |                     8 |   |                                           |   | 5.5 |   |
| Resource                  Europe                 | Bank                  Loans                 |   |                                         |                     1 |   |                                           |   | 0.4 |   |
|                                             |                                        |   |                                         |  29                        |   |                                           | $      | 13.5 |   |

----

| (1) | We                  also own a 50% interest in the general partners of the limited                  partnerships that own a portion of the equity interests in each                  of seven                  Trapeza CDO issuers and one Ischus CDO                  issuer. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Through                  Trapeza, we own a 50% interest in an entity that manages 11 of                  the Trapeza                  CDO issuers and a 33.33% interest in an entity that manages two                  of the                  Trapeza CDO issuers. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | RCC                  holds 100% of the equity interests in three of these CDO issuers                  with                  assets of $951.8 million. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | RCC                  holds 100% of the equity interests in one of these CDO issuers                  with assets                  of $395.5 million. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------|

**Resource        Capital Corp. **

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**Credit        Facilities**

*Financial        fund management – Secured warehouse credit facilities.*

*Commercial        finance - Secured revolving credit facilities*

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*Corporate        – Secured revolving credit facilities*

*Commerce        Bank, N.A., or Commerce        Bank.*

*Sovereign        Bank.*

*Other        debt − Real estate-mortgage loan*

*Other        debt − Real estate-FIN 46-R mortgage loan*

*Other        debt − Notes*

*Secured        Notes.  *

** **

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**Asset        Sourcing**

**Employees**

|                                                                                                                                                                                                                                                  |   | **Total**                  |   | **Financial                    Fund Management** |   | **Real                    Estate** |   | **Commercial                    Finance** |   | **Corporate/                    Other** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|--------------------------------------------------|--------|------------------------------------|--------|-------------------------------------------|--------|-----------------------------------------|
| **September                  30, 2007**                                                                                                                                                                                                               |   |                       |   |                                             |   |                               |   |                                      |   |                                    |
| Investment                  professionals                                                                                                                                                                                                             |   | 184                        |   | 48                                               |   | 29                                 |   | 105                                       |   |                    2               |
| Other                                         |   | 210                        |   | 21                                               |   | 16                                 |   | 135                                       |   | 38                                      |
| Total                                         |   | 394                        |   | 69                                               |   | 45                                 |   | 240                                       |   | 40                                      |
|                                                                                                                                                                                                                                                  |   |                       |   |                                             |   |                               |   |                                      |   |                                    |
| **September                  30, 2006**                                                                                                                                                                                                               |   |                       |   |                                             |   |                               |   |                                      |   |                                    |
| Investment                  professionals                                                                                                                                                                                                             |   |                    76 |   | 29                                               |   | 22                                 |   |                    24                |   |                    1               |
| Other                                         |   | 148                        |   | 18                                               |   |                    9          |   |                    93                |   | 28                                      |
| Total                                         |   | 224                        |   | 47                                               |   | 31                                 |   | 117                                       |   | 29                                      |

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**ITEM        1A.                      RISK        FACTORS**

**Risks        Related to Our Business Generally**

***Our        business depends upon our ability to sponsor and raise investor capital for        our        investment funds.***

|   | · | the                  performance of our existing funds; |
|--------|--------|---------------------------------------------------------|

|   | · | market                  acceptance of the types of funds we sponsor and market perceptions                  about                  the types of assets which we seek to acquire for our                  funds; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  availability of qualified personnel to manage our                  funds; |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | the                  availability of suitable investments in the types of loans, real                  estate,                  commercial finance assets and other assets that we seek to acquire                  for our                  funds; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  availability of financing for the acquisitions of assets, which                  may be                  constrained by current dislocations in the credit markets;                  and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | interest                  rate changes and their effect on both the assets we seek to acquire                  for                  our funds, and the amount, cost and availability of acquisition                  financing. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Interest        rate changes may reduce the value of our assets, our returns on these assets        and        our ability to generate and increase our management fee        revenues.***

***Increases        in interest rates will increase our operating costs.***

----

***Changes        in interest rates may impair the operating results of our investment funds        and        thereby impair our operating results.***

***Declines        in the market values of our investments may reduce periodic reported results,        credit availability and our ability to make        distributions.***

***If        we cannot generate sufficient cash to fund our participations in our investment        funds, our ability to maintain and increase our revenues may be        impaired.***

***Termination        of management arrangements with one or more of our investment funds could        harm        our business.***

***We        may have difficulty managing our growth which may divert resources and limit        our        ability to expand our operations successfully.***

----

***Our        business will be harmed if we are unable to locate and retain key        personnel.***

***We        are subject to substantial competition in all aspects of our        business.***

***There        are few economic barriers to entry in the asset management        business.***

**Risks        Relating to Particular Aspects of Our Financial Fund Management, Real Estate        and        Commercial Finance Operations**

***As          a result of recent conditions in the global capital markets, our ability          to          sponsor investment vehicles and increase our assets under management may          be          limited in our financial fund management subsidiary.***

----

***We          sometimes retain some portion or possibly all of the equity in the CDOs          we          sponsor.  CDO equity receives distributions from the CDO only if the          CDO generates enough income to first pay the holders of the debt securities          and          expenses.***

***We        arrange for warehouse and other short term financing for assets we accumulate        for the account of investment vehicles we sponsor.  We may guarantee        and, with respect to specified asset classes we have guaranteed some portion        of        amounts drawn on these facilities which exposes us to        loss.***

***In        some of our investment funds, a portion of our management fees may depend        upon        the performance of the fund and, as a result, our management fee income may        be        volatile.***

***Our        income from our interests in the Trapeza CDO program may be        volatile.***

----

***Real        estate loans in our portfolio are subject to higher risk of default than        conventional mortgage loans.***

***Real        estate loans in our portfolio require large lump sum payments at maturity,        increasing the risk of default.***

***The        value of our portfolio of real estate loans and property interests depends        upon        the value of the underlying real properties which may decline due to factors        beyond our control.***

***Our        portfolio of real estate loans principally consists of junior mortgage loans,        which are subject to higher default risks than senior        financing.***

***Our        real estate loan loss reserve may not be sufficient to cover future        losses.***

----

***Our        real estate loans are illiquid, and we may not be able to divest them in        response to changing economic, financial and investment        conditions.***

***Hazardous        or toxic substances on properties underlying our loans may subject us to        environmental liabilities.***

***Our        equipment leases and commercial notes may have greater risks of default than        senior secured loans.***

**ITEM        1B.  UNRESOLVED STAFF        COMMENTS**

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**ITEM        2.                      PROPERTIES**

**Philadelphia,        Pennsylvania:**

**New        York, New York:**

**Other        Locations:**

**ITEM        3.                      LEGAL        PROCEEDINGS**

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

----

**PART        II**

**ITEM          5.                      **MARKET          FOR REGISTRANT'S COMMON EQUITY, RELATED****

****            STOCKHOLDER          MATTERS          AND ISSUER PURCHASES OF EQUITY SECURITIES****

|                             |   | **As                    Reported** |   |
|----------------------------------|--------|------------------------------------|--------|
|                             |   | **High**                           |   |   | **Low** |   |
| **Fiscal                  2007** |   |                               |   |   |   |   |
| Fourth                  Quarter  |   | $                                  | 21.51  |   |   | $ | 12.28 |   |
| Third                  Quarter   |   | $                                  | 25.00  |   |   | $ | 20.56 |   |
| Second                  Quarter  |   | $                                  | 28.53  |   |   | $ | 22.38 |   |
| First                  Quarter   |   | $                                  | 27.68  |   |   | $ | 20.42 |   |
|                             |   |                               |   |   |   |   |   |   |
| **Fiscal                  2006** |   |                               |   |   |   |   |   |   |
| Fourth                  Quarter  |   | $                                  | 22.31  |   |   | $ | 17.75 |   |
| Third                  Quarter   |   | $                                  | 21.00  |   |   | $ | 17.06 |   |
| Second                  Quarter  |   | $                                  | 20.12  |   |   | $ | 15.98 |   |
| First                  Quarter   |   | $                                  | 17.92  |   |   | $ | 14.60 |   |

**Securities        Authorized for Issuance under Equity Compensation Plans**

|                                                                                   | (a)                                                                                                                                           | (b)                                                                                                          | (c)                                                                                                                                                                                          |
|----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Plan                  category                                                         | Number                  of securities to be issued upon exercise of outstanding                  options,warrants                  and rights | Weighted-average                  exercise price of outstanding options,warrants                  and rights | Number                  of securities remaining available for future issuance under equity                  compensation plans excluding securities reflected in column                  (a) |
| Equity                  compensation plansapproved                  by securityholders | 3,661,969                                                                                                                                     | $     7.69                                                                          | 1,209,048                                                                                                                                                                                    |

----

**Issuer        Purchases of Equity Securities**

| **Period**                                                                                                                                                                                                                                                                                                                                    |   | **Total                    Number of Shares Purchased** |    |   | **Average                    Price Paid per Share** |   |    | **Total                  Number of Shares Purchased as Part of****Publicly                  Announced****Plans                  or****Programs                    (2)** |   |   | **Maximum                  Number****(or                  Approximate****Dollar                    Value) of Shares that May Yet be Purchased Under the Plans or                    Programs                    (1)** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|---------|--------|-----------------------------------------------------|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| July                  1 to July 31,                  2007                                               |   |                                                    | − |   |                                                | $      | − |                                                                                                                                                                    |   |   | −                                                                                                                                                                                                               |   |   | $ | 50,000,000 |   |
| August                  1 to August 31, 2007                                                                                                                                                                                                                                                                                                  |   |                                                    | 83,000  |   |                                                | $      | 15.89   |                                                                                                                                                                    |   |   | 83,000                                                                                                                                                                                                                |   |   | $ | 48,681,525 |   |
| September                  1 to September 30, 2007                                                                                                                                                                                                                                                                                            |   |                                                    | 88,475  |   |                                                | $      | 14.30   |                                                                                                                                                                    |   |   | 88,475                                                                                                                                                                                                                |   |   | $ | 47,416,279 |   |
| Total                                                                                                                  |   |                                                    | 171,475 |   |                                                |   |    |                                                                                                                                                                    |   |   | 171,475                                                                                                                                                                                                               |   |   |   |   |   |

----

| (1) | On                  July 26, 2007, the Board of Directors approved a new share repurchase                  program under which we may buy up to $50.0 million of our outstanding                  common stock from time to time in open market purchases or through                  privately negotiated transactions.  The new repurchase program                  replaced a prior $50.0 million repurchase program that had been                  approved                  by the Board on September 31, 2004. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | As                  of September 30, 2007, we had repurchased an aggregate of 171,475                  shares                  at a total cost of $2.6 million under the new repurchase program,                  at an                  average cost of $15.07 per share.  Under the prior program,                  which was terminated upon approval of the new repurchase program,                  we                  acquired an aggregate of 1,221,139 shares at a total cost of approximately                  $22.6 million, at an average cost of $18.52 per                  share. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Performance        Graph**

**Comparison        of Five Year Cumulative Total Return***

----

| * | Total                  return for each of the last five fiscal years ending September                  30.  Assumes $100 was invested on October 1, 2002 in our common                  stock or in the indicated index and that cash dividends were reinvested                  as                  received.  The price of our common stock was adjusted for the                  spin-off of Atlas America common stock to our stockholders on June                  30,                  2005. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM        6.                      SELECTED        FINANCIAL DATA**

|                                                                                                                                                   |   | **As                    of and for the Years Ended September 30,** |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------|
|                                                                                                                                                   |   | **2007**                                                           |    |   | **2006** |   |   | **2005** |   |   | **2004** |   |   | **2003** |   |
|                                                                                                                                                   |   | (in                  thousands, except per share data)             |    |
| **Statement                  of operations data:**                                                                                                     |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                                                                                                               |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |
|    Financial                  fund management                                                                                           |   | $                                                                  | 64,151  |   |   | $ | 31,308 |   |   | $ | 15,944 |   |   | $ | 7,585 |   |   | $ | 1,444 |   |
| Commercial                  finance                                                                                                                    |   |                                                               | 40,692  |   |   |   | 23,840 |   |   |   | 13,381 |   |   |   | 7,135 |   |   |   | 4,071 |   |
| Real                  estate                                                                                                                           |   |                                                               | 22,987  |   |   |   | 23,076 |   |   |   | 17,791 |   |   |   | 10,519 |   |   |   | 13,331 |   |
| Total                  revenues                                                                                                                        |   | $                                                                  | 127,830 |   |   | $ | 78,224 |   |   | $ | 47,116 |   |   | $ | 25,239 |   |   | $ | 18,846 |   |
| Income                  (loss) from continuing operations beforecumulative                  effect of change in                  accounting principles |   | $                                                                  | 5,800   |   |   | $ | 17,282 |   |   | $ | 5,388 |   |   | $ | 1,610 |   |   | $ | (3,556 | ) |
| (Loss)                  income from discontinued operations,net                  of tax                                                                |   |                                                               | (1,446  | ) |   |   | 1,231 |   |   |   | 11,070 |   |   |   | 16,799 |   |   |   | 14,522 |   |
| Cumulative                  effect of change in accountingprinciples,                  net of                  tax                                     |   |                                                               | − |   |   |   | 1,357 |   |   |   | − |   |   |   | − |   |   |   | (13,881 | ) |
| Net                  income (loss)                                                                                                                     |   | $                                                                  | 4,354   |   |   | $ | 19,870 |   |   | $ | 16,458 |   |   | $ | 18,409 |   |   | $ | (2,915 | ) |
|                                                                                                                                                   |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Basic                  earnings (loss) per common share:**                                                                                           |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing                  operations                                                                                                                 |   | $                                                                  | 0.33    |   |   | $ | 0.98 |   |   | $ | 0.30 |   |   | $ | 0.09 |   |   | $ | (0.21 | ) |
| Discontinued                  operations                                                                                                               |   |                                                               | (0.08   | ) |   |   | 0.07 |   |   |   | 0.63 |   |   |   | 0.97 |   |   |   | 0.85 |   |
| Cumulative                  effect of change in accounting principles                                                                                  |   |                                                               | − |   |   |   | 0.08 |   |   |   | − |   |   |   | − |   |   |   | (0.81 | ) |
| Net                  income (loss)                                                                                                                     |   | $                                                                  | 0.25    |   |   | $ | 1.13 |   |   | $ | 0.93 |   |   | $ | 1.06 |   |   | $ | (0.17 | ) |
| **Diluted                  earnings (loss) per common share:**                                                                                         |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing                  operations                                                                                                                 |   | $                                                                  | 0.30    |   |   | $ | 0.90 |   |   | $ | 0.28 |   |   | $ | 0.09 |   |   | $ | (0.21 | ) |
| Discontinued                  operations                                                                                                               |   |                                                               | (0.07   | ) |   |   | 0.07 |   |   |   | 0.58 |   |   |   | 0.92 |   |   |   | 0.83 |   |
| Cumulative                  effect of change in accounting principles                                                                                  |   |                                                               | − |   |   |   | 0.07 |   |   |   | − |   |   |   | − |   |   |   | (0.79 | ) |
| Net                  income (loss)                                                                                                                     |   | $                                                                  | 0.23    |   |   | $ | 1.04 |   |   | $ | 0.86 |   |   | $ | 1.01 |   |   | $ | (0.17 | ) |
| **Cash                  dividends per common share**                                                                                                   |   | $                                                                  | 0.27    |   |   | $ | 0.24 |   |   | $ | 0.20 |   |   | $ | 0.17 |   |   | $ | 0.13 |   |
| **Balance                  sheet data:**                                                                                                               |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  assets                                                                                                                          |   | $                                                                  | 969,676 |   |   | $ | 416,753 |   |   | $ | 459,035 |   |   | $ | 740,386 |   |   | $ | 670,744 |   |
| Borrowings                                                                                                                                             |   | $                                                                  | 706,372 |   |   | $ | 172,238 |   |   | $ | 147,302 |   |   | $ | 43,694 |   |   | $ | 146,761 |   |
| Stockholders’                  equity                                                                                                            |   | $                                                                  | 183,900 |   |   | $ | 193,062 |   |   | $ | 187,136 |   |   | $ | 257,915 |   |   | $ | 227,454 |   |

----

**ITEM        7.                                MANAGEMENT'S        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION **
**AND        RESULTS OF OPERATIONS**

**Overview**

|   | · | a                  $7.6 million charge, net of tax, to reflect the other-than-temporary                  impairment of certain investments, primarily equity investments                  in a                  portfolio of asset-backed securities managed by                  us; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $2.6 million charge, net of tax, to reflect losses from the sale                  of loans                  held for investment taken in order to reduce exposure to corporate                  bank                  loans, principally in Europe; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  charge of $2.9 million, net of tax, related to a European real                  estate                  investment fund that did not close due to the unfavorable market                  conditions. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Assets        Under Management**

|   | · | an                  increase in the financial fund management assets we manage on behalf                  of                  individual and institutional investors and RCC, both in the United                  States                  and in Europe; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                  increase in real estate assets managed on behalf of RCC and limited                  partnerships and TIC property interests that we sponsor;                  and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                  increase in commercial finance assets managed on behalf of the                  limited                  partnerships we sponsor, and RCC. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                       |   | **As                    of September 30,** |   |   | **Increase** |   |
|--------------------------------------------|--------|--------------------------------------------|--------|--------|--------------|--------|
|                                       |   | **2007**                                   |   |   | **2006**     |   |   | **Amount** |   |   | **Percentage** |   |
| Financial                  fund management |   | $                                          | 13,984 |   |         | $      | 10,593 |   |   | $ | 3,391 |   |   |   | 32% |   |
| Real                  estate               |   |                                       | 1,634  |   |         |   | 884 |   |   |   | 750 |   |   |   | 85% |   |
| Commercial                  finance        |   |                                       | 1,093  |   |         |   | 613 |   |   |   | 480 |   |   |   | 78% |   |
|                                       |   | $                                          | 16,711 |   |         | $      | 12,090 |   |   | $ | 4,621 |   |   |   | 38% |   |

|                                                |   | **CDOs** |                              |   | **Limited                      Partnerships** |   |                        | **TIC                      Property Interests** |   |   | **Other                      Investment Funds** |   |
|-----------------------------------------------------|--------|----------|-----------------------------------|--------|-----------------------------------------------|--------|-----------------------------|-------------------------------------------------|--------|--------|-------------------------------------------------|--------|
| **As                    of September 30, 2007 (1)** |   |     |                              |   |                                          |   |                        |                                            |   |   |                                            |   |
| Financial                    fund management        |   |     | 29                                |   |                                          |   | 12                          |                                            |   |   | −                                         |   |   |   | − |   |
| Real                    estate                      |   |     |                      2       |   |                                          |   |                      5 |                                            |   |   | 7                                               |   |   |   | 2 |   |
| Commercial                    finance               |   |     |                      − |   |                                          |   |                      3 |                                            |   |   | −                                         |   |   |   | 1 |   |
|                                                |   |     | 31                                |   |                                          |   | 20                          |                                            |   |   | 7                                               |   |   |   | 3 |   |
| **As                    of September 30, 2006 (1)** |   |     |                              |   |                                          |   |                        |                                            |   |   |                                            |   |   |   |   |   |
| Financial                    fund management        |   |     | 19                                |   |                                          |   | 11                          |                                            |   |   | −                                         |   |   |   | − |   |
| Real                    estate                      |   |     |                      1       |   |                                          |   |                      5 |                                            |   |   | 4                                               |   |   |   | − |   |
| Commercial                    finance               |   |     |                      − |   |                                          |   |                      2 |                                            |   |   | −                                         |   |   |   | 1 |   |
|                                                |   |     | 20                                |   |                                          |   | 18                          |                                            |   |   | 4                                               |   |   |   | 1 |   |

----

| (1) | All                    of our operating segments manage assets on behalf of                    RCC. |
|-----|-----------------------------------------------------------------------------------------------------|

----

|                                                                          |   | **Years                    Ended September 30,** |    |
|-------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                          |   | **2007**                                         |    |   | **2006** |   |   | **2005** |   |
| Fund                  management revenues (1)                                 |   | $                                                | 64,552  |   |   | $ | 41,043 |   |   | $ | 21,434 |   |
| Finance                  and rental revenues (2)                              |   |                                             | 48,981  |   |   |   | 22,156 |   |   |   | 12,624 |   |
| RCC                  management fees                                          |   |                                             | 7,048   |   |   |   | 4,320 |   |   |   | 1,839 |   |
| Gain                  on resolution of loans and other property interests (3) |   |                                             | 2,993   |   |   |   | 4,691 |   |   |   | 8,213 |   |
| Net                  gain (loss) from sale of TIC property interests (4)      |   |                                             | 119     |   |   |   | 1,363 |   |   |   | (97 | ) |
| Other                  (5)                                                    |   |                                             | 4,137   |   |   |   | 4,651 |   |   |   | 3,103 |   |
|                                                                          |   | $                                                | 127,830 |   |   | $ | 78,224 |   |   | $ | 47,116 |   |

----

| (1) | Includes                  fees from each of our financial fund management, real estate and                  commercial finance operations and our share of the income or loss                  from                  limited and general partnership interests we own in our financial                  fund                  management and real estate                  operations. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes                  interest income on bank loans from our financial fund management                  operations, interest and accreted discount income from our real                  estate                  operations, interest and rental income from our commercial finance                  operations and revenues from certain real estate                  assets. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes                  the resolution of loans we hold in our real estate                  segment. |
|-----|--------------------------------------------------------------------------------------------------------|

| (4) | Reflects                  net gains (losses) recognized by our real estate segment on the                  sale of                  TIC interests to outside investors. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Includes                  the equity compensation earned in connection with the formation                  of RCC and                  the disposition of leases and loans as well as other charges in                  our                  commercial finance operations. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Results        of Operations: Commercial Finance**

----

|                                        |   | **September                    30,** |   |
|---------------------------------------------|--------|--------------------------------------|--------|
|                                        |   | **2007**                             |   |   | **2006** |   |
| LEAF                  Financial Corporation |   | $                                    | 243    |   |   | $ | 109 |   |
| LEAF                  Fund I                |   |                                 | 89     |   |   |   | 87 |   |
| LEAF                  Fund II               |   |                                 | 361    |   |   |   | 315 |   |
| LEAF                  Fund III              |   |                                 | 306    |   |   |   | − |   |
| Merrill                  Lynch              |   |                                 | 11     |   |   |   | 10 |   |
| RCC                                         |   |                                 | 83     |   |   |   | 92 |   |
|                                        |   | $                                    | 1,093  |   |   | $ | 613 |   |

|                                                       |   | **Years                    Ended September 30,** |   |
|------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                       |   | **2007**                                         |   |   | **2006** |   |   | **2005** |   |
| Revenues                  (1):                             |   |                                             |   |   |   |   |   |   |   |
| Finance                  revenues -                  LEAF  |   | $                                                | 16,343 |   |   | $ | 9,006 |   |   | $ | 4,970 |   |
| Finance                  revenues -                  Merit |   |                                             | 516    |   |   |   | − |   |   |   | − |   |
| Acquisition                  fees                          |   |                                             | 10,484 |   |   |   | 5,788 |   |   |   | 4,316 |   |
| Fund                  management                  fees     |   |                                             | 11,403 |   |   |   | 7,707 |   |   |   | 3,403 |   |
| Other                                                      |   |                                             | 1,946  |   |   |   | 1,339 |   |   |   | 692 |   |
|                                                       |   | $                                                | 40,692 |   |   | $ | 23,840 |   |   | $ | 13,381 |   |
| Costs                  and expenses:                       |   |                                             |   |   |   |   |   |   |   |   |   |   |
| LEAF                  costs and                  expenses  |   | $                                                | 17,915 |   |   | $ | 14,443 |   |   | $ | 8,884 |   |
| Merit                  costs and                  expenses |   |                                             | 1,766  |   |   |   | − |   |   |   | − |   |
|                                                       |   | $                                                | 19,681 |   |   | $ | 14,443 |   |   | $ | 8,884 |   |

----

| (1) | Total                  revenues include (i) RCC servicing and origination fees of $1,187,                  $1,607                  and $247 for fiscal years 2007, 2006, and 2005,                  respectively. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Revenues        − Fiscal 2007 Compared to Fiscal 2006***

|   | · | a                  $7.9 million (87%) increase in commercial finance revenues due                  to the                  growth in lease originations and our decision to hold more direct                  financing leases and notes on our balance sheet.  We increased our                  commercial finance assets by $134.0 million to $243.0 million at                  September                  30, 2007 and increased our lease originations $355.6 million (84%),                  including $268.0 million from PCB; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $4.7 million (81%) increase in asset acquisition fees resulting                  from the                  increase in leases sold.  Sales of leases increased by $323.3                  million to $577.6 million for fiscal 2007, principally related                  to the PCB                  leases and notes acquired by our investment                  partnerships; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $3.7 million (48%) increase in fund management fees resulting from                  an                  increase in assets under management to $1.1 billion at September                  30, 2007                  from $612.7 million at September 30, 2006;                  and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $607,000 (45%) increase in other income, reflecting gains on dispositions                  which may vary significantly from period to                  period. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Costs        and Expenses − Fiscal 2007 Compared to Fiscal 2006***

***Revenues        − Fiscal 2006 Compared to Fiscal 2005***

|   | · | a                  $4.0 million increase in finance revenues primarily due to an increase                  of                  $172.8 million in lease and note originations and the increase                  in our                  revolving credit facility which allowed us to hold more finance                  assets on                  our balance sheet; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $4.3 million increase in fund management fees directly related                  to our                  increase in assets under management;                  and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.5 million increase in asset acquisition fees.  Our increase                  in lease originations supported our increased sales to our affiliated                  partnerships, RCC and Merrill Lynch for which we receive acquisition                  fees. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Costs        and Expenses − Fiscal 2006 Compared to Fiscal 2005***

|   | · | a                  $3.9 million increase in wages and benefits.  Our full-time                  employees increased to 117 as of September 30, 2006 from 81 as                  of                  September 30, 2005 to support the expansion of our operations;                  and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.6 million increase in general and administrative expenses principally                  due to the following: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $710,000 increase in professional fees directly related to the                  overall                  expansion of our operations; |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $410,000 increase in rent due to the relocation of LEAF to its                  new                  headquarters in November 2005; and |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $307,000 increase in travel and entertainment expenses resulting                  from the                  expansion of our business development                  activities. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Results        of Operations:  Real Estate**

|   | · | commercial                  real estate debt, principally A notes, whole loans, mortgage                  participations, B notes, mezzanine debt and related commercial                  real estate                  securities; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | real                  estate investment limited partnerships, limited liability companies                  and                  TIC property interests; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | real                  estate loans, owned assets and ventures, known collectively as                  our legacy                  portfolio; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  portfolio of real estate loans, acquired at a discount from the                  U.S.                  Department of Housing and Urban Development, or                  HUD. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **September                    30,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **2007**                             |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | (in                  millions)       |   |
| **Assets                  under management:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                 |   |   |   |   |
| Commercial                  real estate                  debt                                                                                            |   | $                                    | 948    |   |   | $ | 440 |   |
| Real                  estate investment                  entities                                                                                        |   |                                 | 512    |   |   |   | 345 |   |
| Legacy                  portfolio                                                                                                                        |   |                                 | 99     |   |   |   | 99 |   |
| HUD                  portfolio                                                                                                                           |   |                                 | 75     |   |   |   | − |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                                    | 1,634  |   |   | $ | 884 |   |

|   | · | the                  continued development of our commercial real estate debt platform;                  and |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | growth                  in our real estate business through the sponsorship of real estate                  investment partnerships and the sponsorship of TIC property                  interests. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                     |   | **Years                    Ended September 30,** |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                                                     |   | **2007**                                         |   |   | **2006** |   |   | **2005** |   |
| Revenues:                                                                                                                |   |                                             |   |   |   |   |   |   |   |
| Fee                  income from sponsorship of                  partnerships and TICproperty                  interests |   | $                                                | 6,904  |   |   | $ | 8,681 |   |   | $ | 3,217 |   |
| REIT                  management fees from                  RCC                                                          |   |                                             | 5,051  |   |   |   | 1,077 |   |   |   | 473 |   |
| FIN                  46-R revenues and rental                  property income                                           |   |                                             | 4,700  |   |   |   | 4,720 |   |   |   | 5,375 |   |
| Property                  management                  fees                                                               |   |                                             | 1,462  |   |   |   | 2,248 |   |   |   | 1,184 |   |
| Interest,                  including accreted                  loan discount                                             |   |                                             | 1,221  |   |   |   | 1,128 |   |   |   | 1,535 |   |
| Gain                  on resolution of loans and                  other property interests                               |   |                                             | 2,993  |   |   |   | 4,691 |   |   |   | 8,213 |   |
| Equity                  in income (loss) of                  unconsolidated entities                                     |   |                                             | 537    |   |   |   | (832 | ) |   |   | (2,109 | ) |
| Net                  gain (loss) on sale of TIC                  property interests                                      |   |                                             | 119    |   |   |   | 1,363 |   |   |   | (97 | ) |
|                                                                                                                     |   | $                                                | 22,987 |   |   | $ | 23,076 |   |   | $ | 17,791 |   |
|                                                                                                                     |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Cost                  and expenses:                                                                                      |   |                                             |   |   |   |   |   |   |   |   |   |   |
| General                  and administrative                  expenses                                                    |   | $                                                | 9,978  |   |   | $ | 8,549 |   |   | $ | 5,712 |   |
| FIN                  46-R operating and rental                  property expenses                                        |   |                                             | 3,212  |   |   |   | 2,973 |   |   |   | 4,191 |   |
|                                                                                                                     |   | $                                                | 13,190 |   |   | $ | 11,522 |   |   | $ | 9,903 |   |

----

***Revenues        − Fiscal 2007 Compared to Fiscal 2006***

|   | · | a                  $1.8 million decrease in fee income related to the lower volume                  of TIC                  program activity.  We closed $18.3 million in TIC investments in                  fiscal 2007 compared to $44.1 million in fiscal                  2006; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $4.0 million increase in management fees from RCC reflecting an                  increase                  of $508.0 million in the commercial real estate debt assets we                  managed to                  $948.0 million at September 30,                  2007; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $786,000 decrease in property management fees, including a $405,000                  discount recorded in connection with property management fees we                  expect to                  receive in the future; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.7 million decrease in gain on property resolutions, principally                  related                  to the partial sales of a real estate venture.  During 2007 and                  2006, we sold 15% and 20% of our interests for $2.9 million and                  $4.0                  million, respectively, and recorded gains of $2.7 million and $4.5                  million, respectively, from those                  sales; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.4 million increase in equity income due to the reallocation                  of                  partnership income from this real estate venture;                  and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.2 decrease in net gains on sale of TIC property interests due                  to the                  lower volume of TIC program                  activity. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Costs        and Expenses − Fiscal 2007 Compared to Fiscal 2006***

***Revenues        − Fiscal 2006 Compared to Fiscal 2005***

|   | · | a                  $5.5 million increase in fee income related to the purchase and                  third                  party financing of properties through the sponsorship of real estate                  investment partnerships and TIC property                  interests; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $604,000 increase in management fees from RCC, reflecting an increase                  of                  $352.8 million in commercial real estate debt assets we managed                  to $440.0                  million at September 30, 2006; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $655,000 decrease in FIN 46-R revenues and rental property income,                  reflecting our foreclosure on a hotel property in fiscal 2005 on                  which we                  included two months of operating                  income. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.1 million increase in management fees from the additional properties                  acquired by our investment funds subsequent to September 30,                  2005; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $407,000 decrease in interest and accreted discount income resulting                  from                  the cessation of accretion on one loan offset by the interest accrued                  on                  three new loans acquired during fiscal 2006 as a result of asset                  resolutions; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $3.5 million decrease in gains on resolutions of loans and other                  property                  interests.  In fiscal 2006, we received $4.0 million plus a                  $200,000 note receivable from the sale of 19.99% of our 50% interest                  in a                  real estate venture, resulting in a gain of $4.2                  million.  Additionally, we resolved one loan with a book value                  of $2.5 million, recognizing a gain of $82,000.  During fiscal                  2005, a partnership in which we had owned a 50% equity interest                  (a 30%                  interest in fiscal 2006) refinanced its mortgage.  We received                  net proceeds from the refinancing of $13.6 million, which was $6.3                  million                  in excess of the recorded value of our interest.  We recognized                  the $6.3 million as a gain.  In addition, during fiscal 2005, we                  foreclosed on a loan that was classified as a FIN 46-R                  asset.  In connection with the foreclosure, we acquired a note                  payable for $540,000 that was recorded as a FIN 46-R liability                  in the                  amount of $1.6 million; as a result, we recognized a gain of $1.0                  million.  We also recognized an aggregate gain of $792,000 on                  the sale of two investments in our real estate investment partnerships                  during fiscal year 2005; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | a                  $1.3 million decrease in our share of the operating losses of our                  unconsolidated real estate investments accounted for on the equity                  method                  due principally to a prepayment penalty on the refinancing of an                  investment property recorded in fiscal 2005;                  and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.4 million increase in net gains (including $1.7 million of previously                  recorded losses) recognized on our sale of TIC property interests                  in                  fiscal 2006.  There were no sales of TIC property interests in                  fiscal 2005. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Costs        and Expenses – Fiscal 2006 Compared to Fiscal 2005***

|   | · | a                  $2.8 million increase in general and administrative expenses primarily                  due                  to the following: |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $2.1 million increase in wages and benefits as a result of the                  addition of                  personnel primarily to support the development of our debt management                  platform and the combined growth of our investment partnerships                  and TIC                  programs; and |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $757,000 net increase in commission expense and offering and                  organizational reimbursements due to the higher level of sales                  of real                  estate investment programs. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.2 million decrease in FIN 46-R operating expenses primarily                  related to                  the foreclosed hotel property and the resulting additional two                  months of                  operating expenses in fiscal 2005. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Results        of Operations:  Financial Fund Management**

|   | · | Trapeza                  Capital Management, LLC, or Trapeza, a joint venture between us                  and an                  unrelated third party, which originates, structures, finances and                  manages                  investments in trust preferred securities and senior debt securities                  of                  banks, bank holding companies, insurance companies and other financial                  companies. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Apidos                  Capital Management, LLC, or Apidos, which invests in, finances,                  structures                  and manages investments in bank                  loans. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Ischus                  Capital Management, LLC, or Ischus, which invests in, finances,                  structures                  and manages investments in asset-backed securities or ABS, including                  residential mortgage-backed securities, or RMBS, and commercial                  mortgage-backed securities, or                  CMBS. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Resource                  Europe, which invests in, finances, structures and manages investments                  in                  international bank loans. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Resource                  Financial Institutions Group, Inc., or RFIG, which serves as the                  general                  partner for four company-sponsored affiliated partnerships which                  invest in                  financial institutions. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                  |   | **As                    of September 30, 2007**                   |   |
|-------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|                                                  |   | **Institutional                  and****Individual****Investors** |   |   | **RCC** |   |   | **Assets                    Held on Warehouse Facilities** |   |   | **Total                    by Type** |   |
| Trapeza                                               |   | $                                                                 | 5,167  |   |   | $ | − |   |   | $ | 93 |   |   | $ | 5,260 |   |
| Apidos                                                |   |                                                              | 1,438  |   |   |   | 952 |   |   |   | 212 |   |   |   | 2,602 |   |
| Ischus                                                |   |                                                              | 5,137  |   |   |   | 396 |   |   |   | − |   |   |   | 5,533 |   |
| Resource                  Europe                      |   |                                                              | 415    |   |   |   | − |   |   |   | 89 |   |   |   | 504 |   |
| Other                  company-sponsored partnerships |   |                                                              | 85     |   |   |   | − |   |   |   | − |   |   |   | 85 |   |
|                                                  |   | $                                                                 | 12,242 |   |   | $ | 1,348 |   |   | $ | 394 |   |   | $ | 13,984 |   |

|                                                  |   | **As                    of September 30, 2006**                   |    |
|-------------------------------------------------------|--------|-------------------------------------------------------------------|---------|
|                                                  |   | **Institutional                  and****Individual****Investors** |    |   | **RCC** |   |   | **Assets                    Held on Warehouse Facilities** |   |   | **Total                    by Type** |   |
| Trapeza                                               |   | $                                                                 | 3,538   |   |   | $ | − |   |   | $ | 668 |   |   | $ | 4,206 |   |
| Apidos                                                |   |                                                              | 687     |   |   |   | 615 |   |   |   | 533 |   |   |   | 1,835 |   |
| Ischus                                                |   |                                                              | 2,675   |   |   |   | 1,160 |   |   |   | 568 |   |   |   | 4,403 |   |
| Resource                  Europe                      |   |                                                              | − |   |   |   | − |   |   |   | 91 |   |   |   | 91 |   |
| Other                  company-sponsored partnerships |   |                                                              | 58      |   |   |   | − |   |   |   | − |   |   |   | 58 |   |
|                                                  |   | $                                                                 | 6,958   |   |   | $ | 1,775 |   |   | $ | 1,860 |   |   | $ | 10,593 |   |

|   | · | *Collateral                  management fees*− we receive fees for managing the assets held by CDOs                  we sponsor.  These fees vary by CDO, with our annual fee ranging                  between 0.08% and 0.75% of the aggregate principal balance of the                  collateral securities owned by the CDO issuers;                  and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Administration                  fees*− we receive fees for managing the assets held by partnerships                  sponsored by us and for managing their general                  operations.  These fees vary by limited partnership, with our                  annual fee ranging between 0.75% and 2.00% of the partnership capital                  balance. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Trapeza***

----

***Apidos***

***Ischus***

***Resource        Europe***

----

***Company−Sponsored        Partnerships***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **Years                    Ended September 30,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **2007**                                         |   |   | **2006** |   |   | **2005** |   |
| Revenues:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                             |   |   |   |   |   |   |   |
| Fund                  management                  fees                                                                                               |   | $                                                | 23,036 |   |   | $ | 9,213 |   |   | $ | 4,260 |   |
| Interest                  income on                  loans                                                                                           |   |                                             | 26,201 |   |   |   | 7,302 |   |   |   | 744 |   |
| Limited                  and general partner                  interests                                                                              |   |                                             | 4,223  |   |   |   | 5,404 |   |   |   | 4,825 |   |
| RCC                  management fee and equity                  compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                             | 2,726  |   |   |   | 5,518 |   |   |   | 3,205 |   |
| Earnings                  on unconsolidated                  CDOs                                                                                    |   |                                             | 2,649  |   |   |   | 737 |   |   |   | 161 |   |
| Earnings                  of Structured Finance                  Fund partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                             | 2,043  |   |   |   | 2,218 |   |   |   | 2,177 |   |
| Due                  diligence and placement                  fees                                                                                   |   |                                             | 1,901  |   |   |   | − |   |   |   | − |   |
| Other                                                                                                                                                |   |                                             | 1,372  |   |   |   | 916 |   |   |   | 572 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                                                | 64,151 |   |   | $ | 31,308 |   |   | $ | 15,944 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Costs                  and expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                             |   |   |   |   |   |   |   |   |   |   |
| General                  and administrative                  expenses                                                                                |   | $                                                | 19,333 |   |   | $ | 10,442 |   |   | $ | 8,087 |   |
| Equity                  compensation                  expense                                                                                        |   |                                             | 1,861  |   |   |   | 1,650 |   |   |   | 757 |   |
| Expenses                  of Structured Finance                  Fund partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                             | 70     |   |   |   | 7 |   |   |   | 266 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                                                | 21,264 |   |   | $ | 12,099 |   |   | $ | 9,110 |   |

***Revenues        − Fiscal 2007 Compared to Fiscal 2006***

|   | · | a                  $13.8 million increase in fund management fees, primarily from                  the                  following: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $12.1 million increase in collateral management fees principally                  as a                  result of the completion of nine new CDOs in fiscal 2007 coupled                  with a                  full year of collateral management fees for seven previously completed                  CDOs; |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $1.7 million increase in portfolio management fees received in                  connection                  with the formation of Trapeza CDO XI and Trapeza CDO XII during                  fiscal                  2007.  No such fees were received during fiscal 2006;                  and |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $425,000 increase in management fees from our five company-sponsored                  unconsolidated partnerships, principally as a result of 12 full                  months of                  management fees for two of the                  partnerships; |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $580,000 increase in our equity share of the expenses for Trapeza                  Capital                  Management LLC and Trapeza Management Group                  LLC. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | an                  $18.9 million increase in interest income on loans held for investment                  resulting from the consolidation in our financial statements of                  three                  Apidos and two Resource Europe CDO issuers during fiscal 2007 as                  compared                  to four Apidos CDO issuers and one Resource Europe CDO issuer during                  fiscal 2006 while they accumulate assets through separate warehouse                  facilities.  In May 2007, we closed Apidos Cinco CDO and our                  first European CDO, Resource Europe I, and repaid all outstanding                  borrowings under their respective warehouse facilities.  The                  weighted average loan balances of CDO issuers we consolidated for                  fiscal                  2007 and 2006 were $368.4 million and $101.8 million, respectively,                  at                  weighted average interest rates of 7.04% and 6.98%,                  respectively; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.2 million decrease in revenues from our limited and general                  partner                  interests, primarily from the                  following: |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $1.7 million decrease in net unrealized appreciation in the book                  value of                  the partnership securities and swap agreements to reflect current                  market                  value; offset in part by |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $520,000 increase from our share of the operating results of                  unconsolidated partnerships we have                  sponsored. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $2.8 million decrease in RCC management fees and equity compensation,                  reflecting a $1.2 million decrease in management fees primarily                  as a                  result of the sale of RCC’s agency RMBS portfolio in January and October                  2006 and a $1.6 million decrease in equity                  compensation; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.9 million increase in our earnings in unconsolidated CDOs as                  a result                  of our investments in seven new CDO issuers and an increase in                  earnings                  from investments in six previously sponsored CDO                  issuers; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.9 million increase in due diligence and placement fees, primarily                  from                  the following: |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | $1.3                  million earned in due diligence and placement fees in connection                  with the                  origination of $310.0 million for six REIT trust preferred security                  transactions.  We do not expect to earn similar fees in the                  future due to market conditions;                  and |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | $575,000                  earned in placement fees in connection with the origination of                  $225.0                  million for five Trapeza trust preferred security                  transactions. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $456,000 increase in other revenue, primarily a $300,000 gain on                  the sale                  of a security during fiscal 2007.  No such gain occurred during                  fiscal 2006. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Costs        and Expenses − Fiscal 2007 Compared to Fiscal 2006***

|   | · | a                  $8.9 million increase in general and administrative expenses, primarily                  from the following: |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $6.4 million increase in wages and benefits as a result of the                  addition of                  personnel in response to the growth in our assets under                  management; |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $1.6 million increase in other operating expenses, primarily from                  insurance costs, rent and other general and administrative expenses                  related to the addition of                  personnel; |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $297,000 decrease in reimbursed expenses from our Trapeza, Apidos                  and                  Ischus operations, which vary depending on the terms of the transaction;                  and |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $567,000 decrease in reimbursed RCC operating                  expenses. |
|--------|---|---------------------------------------------------------------------------------------------|

|   | · | a                  $211,000 increase in equity compensation expense related to restricted                  shares and options of RCC that were issued to RCM and subsequently                  transferred to members of                  management. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Revenues        – Fiscal 2006 Compared to Fiscal 2005***

|   | · | a                  $5.0 million increase in fund management fees, primarily from the                  following: |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $4.8 million increase in collateral management fees principally                  as a                  result of the completion of eight new CDOs coupled with a full                  year of                  collateral management fees for two previously completed                  CDOs; |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $1.1 million increase in management fees as a result of four                  company-sponsored unconsolidated partnerships that commenced operations                  between June 2005 and February                  2006. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $205,000 increase in our share of the expenses for Trapeza Capital                  Management LLC and Trapeza Management Group                  LLC; |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $335,000 decrease in reimbursed expenses.  Fiscal 2005 included                  a reimbursement received in connection with the formation of Trapeza                  CDO                  VII.  No such expense reimbursements were received in fiscal                  2006; and |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $379,000 decrease related to a fee paid in connection with the                  assignment                  of securities on a related warehouse facility during fiscal                  2005.  No such fees were earned during fiscal                  2006; |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $6.6 million increase in interest income on loans held for investment                  resulting from the consolidation of our financial statements of                  four                  Apidos issuers and one Resource Europe CDO issuer during fiscal                  2006 as                  compared to one Apidos issuer in fiscal 2005 while they accumulate                  assets                  through separate warehouse facilities.  In December 2005 and                  September 2006, we closed Apidos CDO II and Apidos CDO IV, respectively,                  and repaid all outstanding borrowings under their respective warehouse                  facilities.  The weighted average loan balances of CDO issuers                  we consolidate for fiscal 2007 and 2006 were $101.8 million and                  $12.6                  million, respectively, (weighted average interest rates of 6.98%                  and                  5.99%, respectively); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $579,000 increase in revenues from our limited and general partner                  interests, primarily from the                  following: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $1.2 million increase from our share of the operating results of                  unconsolidated partnerships we have sponsored; offset in part                  by |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $644,000 decrease in net unrealized appreciation in the book value                  of the                  partnership securities and swap agreements to reflect current market                  value; |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $2.3 million increase in RCC management fees and equity compensation,                  reflecting a $1.8 million increase in management fees and a $557,000                  increase in equity compensation; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $576,000 increase in our earnings in unconsolidated CDOs primarily                  as a                  result of our investment in six new CDO issuers;                  and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $344,000 increase in other revenue resulting primarily from the                  increase                  in interest income on ABS resulting from the interest spread earned                  on                  assets accumulating with a third party through a warehouse facility                  based                  on the terms of the warehousing                  agreement. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Costs        and Expenses – Fiscal 2006 Compared to Fiscal 2005***

|   | · | a                  $2.4 million increase in general and administrative expenses, primarily                  from the following: |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $4.7 million increase in wages and benefits as a result of the                  addition of                  personnel in response to the growth in our assets under                  management; |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $1.2 million increase in other operating expenses, including insurance,                  rent allocations and other expenses related to the additional personnel;                  and |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                    $551,000 increase in financial software programs and publications                    as a                    result of the growth of our assets under                    management. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | - | a                  $2.6 million increase in reimbursed expenses from our Trapeza,                  Apidos and                  Ischus operations, which vary depending on the terms of the                  transaction; |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $1.1 million decrease in RCC start-up costs, which commenced operations                  in                  the second quarter of fiscal 2005;                  and |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $300,000 decrease in professional and recruiting fees principally                  due to                  the expiration of a consulting                  agreement. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $893,000 increase in equity compensation expense related to restricted                  shares and options of RCC that were held by RCM which were transferred                  to                  members of management; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $259,000 decrease in expenses of consolidated partnerships, primarily                  professional fees.  There were no such expenses in fiscal                  2006. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Results        of Operations: Other Costs and Expenses and Other Income        (Expense)**

***Fiscal        2007 Compared to Fiscal 2006***

|   | · | a                  $2.0 million increase in wages and benefits due principally to                  the                  following: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | - | $731,000                  increase in the amount of compensation expense for vesting of restricted                  stock awards given to employees in both fiscal 2007 and                  2006; |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | $1.3                  million increase in wages and benefits due to increased headcount                  to                  service our expanding asset management                  operations. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                       |   | **Years                    Ended September 30,** |   |
|--------------------------------------------|--------|--------------------------------------------------|--------|
|                                       |   | **2007**                                         |   |   | **2006** |   |   | **2005** |   |
| Financial                  fund management |   | $                                                | 19,485 |   |   | $ | 5,318 |   |   | $ | 443 |   |
| Commercial                  finance        |   |                                             | 11,796 |   |   |   | 4,430 |   |   |   | 2,081 |   |
| Real                  estate               |   |                                             | 1,040  |   |   |   | 245 |   |   |   | 251 |   |
| Other                                      |   |                                             | 1,245  |   |   |   | 126 |   |   |   | 36 |   |
|                                       |   | $                                                | 33,566 |   |   | $ | 10,119 |   |   | $ | 2,811 |   |

----

|                                                     |   | **Years                    Ended September 30,** |   |
|----------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                     |   | **2007**                                         |   |   | **2006** |   |   | **2005** |   |
| **Financial                  fund management**           |   |                                             |   |   |   |   |   |   |   |
| Average                  borrowings                      |   | $                                                | 366.1  |   |   | $ | 100.3 |   |   | $ | 12.6 |   |
| Average                  interest                  rates |   |                                             | 5.3%   |   |   |   |   5.2% |   |   |   |                       3.6% |   |
|                                                     |   |                                             |   |   |   |   |   |   |   |   |   |   |
| **Commercial                  finance**                  |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Average                  borrowings                      |   | $                                                | 172.1  |   |   | $ | 60.6 |   |   | $ | 25.7 |   |
| Average                  interest                  rates |   |                                             | 6.9%   |   |   |   | 7.0% |   |   |   |                       5.7% |   |

|                                                   |   | **Years                    Ended September 30,** |   |
|--------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                   |   | **2007**                                         |   |   | **2006** |   |   | **2005** |   |
| SFF                  partnerships                      |   | $                                                | 1,473  |   |   | $ | 1,624 |   |   | $ | 1,403 |   |
| Commercial                  finance minority ownership |   |                                             | 530    |   |   |   | 117 |   |   |   | − |   |
| Warehouse                  providers                   |   |                                             | 139    |   |   |   | 34 |   |   |   | − |   |
|                                                   |   | $                                                | 2,142  |   |   | $ | 1,775 |   |   | $ | 1,403 |   |

|   | · | In                  connection with the substantial volatility and reduction in liquidity                  in                  the global credit markets which commenced in July 2007, we recorded                  $22.4                  million of fourth quarter fiscal 2007 charges,                  including: |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                  $12.6 million charge for the other–than-temporary impairment of certain of                  our investments in CDOs, primarily those with investments in real                  estate                  ABS and CMBS, and trust preferred securities of a subprime lender                  and a                  subprime investor reflecting the general market decline in real                  estate                  mortgage-backed investments; |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | $5.0                  million of realized losses from the sale of loans held for investment,                  principally in Europe.  The sales reduced our exposure to                  corporate bank loans; and |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                    $4.8 million write-off of reimbursable costs related to a European                    real                    estate fund that we sponsored and did not close due to market                    conditions. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | a                  $1.2 million decrease in other income.  In fiscal 2002, we                  charged operations $1.0 million, which was the amount of our maximum                  exposure relating to the settlement of a lawsuit.  One of the                  insurance carriers refused to participate in the settlement.  In                  the second quarter of fiscal 2006, we prevailed in our action against                  the                  carrier, received a $200,000 reimbursement and reversed the $1.0                  million                  accrual. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $2.9 million increase in gains from the sale of our investment                  in shares                  of TBBK common stock.  In fiscal 2007, we recorded a gain of                  $3.5 million from the sale of 240,000 shares compared to a gain                  of                  $668,000 from the sale of 50,000 shares of TBBK in fiscal 2006;                  and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $451,000 increase in dividends earned on shares of RCC common stock                  we                  hold. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

*Corporation Application for Tentative Refund*

***Fiscal        2006 Compared to Fiscal 2005***

|   | · | a                  $1.1 million increase in stock-based compensation expense due to                  our                  implementation of Statement of Financial Accounting Standards,                  or SFAS,                  123-R, “Accounting for Stock-Based Compensation,” as revised, resulting in                  a change in our method of recognizing share-based compensation                  expense.  Specifically, we now record compensation expense for                  our employee stock options.  Had we expensed employee stock                  options for fiscal 2005, we estimate that share-based compensation                  expense                  would have increased by $3.2 million.  For additional                  information, see Note 2 to our consolidated financial statements;                  and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $308,000 increase in accounting and auditing fees in conjunction                  with our                  expanded operations. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | in                  fiscal 2002, we charged operations $1.0 million, which was the                  amount of                  our maximum exposure relating to the settlement of a lawsuit, in                  which one                  of our insurance carriers refused to participate.  We thereafter                  filed an action seeking recovery on our policy with that                  carrier.  In the second quarter of fiscal 2006,  we                  prevailed in our action against the carrier, received a $200,000                  reimbursement and reversed the $1.0 million                  accrual; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | during                  fiscal 2006, we recorded a gain of $668,000 from the sale of 50,000                  shares                  of The Bancorp, Inc; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we                  recorded $2.7 million and $213,000 of dividends received from RCC                  in                  fiscal 2006 and 2005, respectively.  RCC was formed by us in                  March 2005; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | in                  the first quarter of fiscal 2005, we received a $1.4 million settlement                  on                  a claim against one of our directors’ and officers’ liability insurance                  carriers; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | during                  fiscal 2005, we recorded gains totaling $1.5 million from the sale                  of the                  remaining RAIT Investment Trust, or RAIT, shares that we                  held. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Discontinued        Operations**

*Spin-off        of Atlas America*

*Resolution        of Real Estate Assets Held for Sale*

|                                          |   | **Years                    Ending September 30,** |    |
|-----------------------------------------------|--------|---------------------------------------------------|---------|
|                                          |   | **2007**                                          |    |   | **2006** |   |   | **2005** |   |
| Balance,                  beginning of period |   |                                              | 1       |   |   |   | 6 |   |   |   | 4 |   |
| Net                  additions                |   |                                              | − |   |   |   | 1 |   |   |   | 3 |   |
| Resolved                                      |   |                                              | (1      | ) |   |   | (6 | ) |   |   | (1 | ) |
| Balance,                  end of period       |   |                                              | − |   |   |   | 1 |   |   |   | 6 |   |

|                                                                                    |   | **Years                    Ended September 30,** |   |
|-----------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                    |   | **2007**                                         |   |   | **2006** |   |   | **2005** |   |
| Operating                  (loss) income (period                  prior to disposition) |   | $                                                | (2,095 | ) |   | $ | 2,674 |   |   | $ | 3,609 |   |
| Write-downs                  to expected sales                  value                   |   |                                             | (374   | ) |   |   | (431 | ) |   |   | (2,303 | ) |
| Gain                  (loss) on                  disposal                               |   |                                             | 45     |   |   |   | (452 | ) |   |   | (9,396 | ) |
| Income                  tax benefit                  (provision)                        |   |                                             | 848    |   |   |   | (591 | ) |   |   | 2,875 |   |
| Discontinued                  (loss) income, net                  of tax                |   | $                                                | (1,576 | ) |   | $ | 1,200 |   |   | $ | (5,215 | ) |

**Cumulative        Effect of Change in Accounting Principle**

----

**Liquidity        and Capital Resources**

*General.*

|                                                                       |   | **Years                    Ended September 30,** |    |
|----------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                       |   | **2007**                                         |    |   | **2006** |   |   | **2005** |   |
| Used                  in operating activities of continuing operations     |   | $                                                | (49,826 | ) |   | $ | (37,454 | ) |   | $ | (21,471 | ) |
| Used                  in investing activities of continuing operations     |   |                                             | (48,480 | ) |   |   | (36,523 | ) |   |   | (23,801 | ) |
| Provided                  by financing activities of continuing operations |   |                                             | 76,586  |   |   |   | 46,128 |   |   |   | 12,152 |   |
| (Used                  in) provided by discontinued operations             |   |                                             | (1,278  | ) |   |   | 38,943 |   |   |   | 23,566 |   |
| Net                  cash retained by entities previously consolidated     |   |                                             | − |   |   |   | (3,825 | ) |   |   | − |   |
|                                                                       |   | $                                                | (22,998 | ) |   | $ | 7,269 |   |   | $ | (9,554 | ) |

***Fiscal        2007 Compared to Fiscal 2006***

*Cash        Flows from Operating        Activities*
** **

*               Cash Flows from Investing Activities.*
** **

|   | · | $20.7                  million cash paid to acquire the leasing assets of PCB in June                  2007;                  and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $24.6 million decrease in proceeds received from the sale of real                  estate                  properties, principally a $21.7 million decrease in proceeds from                  the sale                  of TIC property interests to                  investors; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.3 million increase in capital                  expenditures. |
|--------|--------|------------------------------------------------------------------------------------|

|   | · | a                  $23.6 million decrease in purchases of real estate and other investments,                  reflecting a $12.1 million decrease in investments in real estate,                  primarily TIC properties, and the prior year purchase of $13.5                  million                  worth of RCC stock (900,000 shares at $15.00 per share);                  and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                  $11.0 million decrease in use of cash related to other                  assets. |
|--------|--------|-----------------------------------------------------------------------------------------------------|

----

*Cash        Flows from Financing        Activities.  *

|   | · | a                  $27.2 million increase in our borrowings, net of repayments, reflecting                  primarily the additional net borrowings to fund the purchase of                  additional                  loans by our financial fund management segment and the expansion                  of LEAF’s                  operations, including its acquisition of the commercial finance                  assets of                  PCB; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $9.3 million decrease in the shares repurchased as part of our                  Board-approved stock repurchase program.  We repurchased 288,975                  shares of treasury stock at a cost of $5.4 million in fiscal 2007                  as                  compared to 850,559 shares at a cost of $14.6 million during fiscal                  2006; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.9 million increase in tax benefits from the exercise of employee                  stock                  options; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.1 million increase in proceeds received from the exercise of                  employee                  stock options. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $7.1 million increase in restricted cash balances related to escrow                  deposits maintained on CDO and commercial finance warehouse                  facilities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $1.3 million increase in cash distributions, including amounts                  paid to the                  minority holders of certain of our structured finance partnerships                  and                  dividends paid to our shareholders;                  and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  $611,000 paid to acquire certain equity conversion rights from                  our partner                  in the Merit joint venture. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Cash        Retained by Entities        Previously Consolidated.*

*Cash        Flows from Discontinued        Operations.*

***Fiscal        2006 Compared to Fiscal 2005***

*Cash        Flows from Operating Activities*
** **

|   | · | a                  $50.5 million increase in our commercial finance investments, reflecting                  the continued expansion of that segment; offset in part                  by |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $13.3 million increase in cash provided primarily from operating                  assets                  and liabilities; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $14.8 million increase in net income generated by our continuing                  operations, as adjusted for non-cash items; includes a $9.8 million                  decrease in income from discontinued operations, reflecting the                  nine                  months of operations of Atlas America included in fiscal                  2005. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Cash        Flows from Investing Activities.*
** **

*Cash        Flows from Financing Activities.  *

|   | · | an                  increase in our borrowings, net of repayments, of $60.6 million                  which                  principally involved the $45.4 million of additional net borrowings                  to                  fund our increased investments in our commercial finance operations,                  and                  $12.5 million in proceeds from the first mortgage we secured on                  a                  foreclosed hotel property; offset in part                  by |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $9.5 million increase in repurchases of our common stock as part                  of our                  Board-approved stock repurchase                  program; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $5.7 million decrease in proceeds from the exercise of employee                  stock                  options, principally by the employees of Atlas America in conjunction                  with                  the spin-off of that subsidiary in June 2005;                  and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  $2.3 million decrease in tax benefits related to the decrease in                  option                  exercises. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

*Cash        Retained by Entities Previously Consolidated.*

*Cash        Flows from Discontinued Operations.*

**Capital        Requirements**

**Dividends**

----

**Contractual        Obligations and Other Commercial Commitments**

|                                                                                                                                                                                                                                                                                                                                                                      |   |      |    |   | **Payments                  Due By Period**                 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|---------|--------|-------------------------------------------------------------|--------|
| **Contractual                  obligations:**                                                                                                                                                                                                                                                                                                                             |   | **Total** |    |   | **Less                  than****1                    Year** |   |   | **1                  – 3****Years** |   |   | **4                  – 5****Years** |   |   | **After                  5****Years** |   |
| Other                  debt (1)                                                                                      |   | $         | 15,576  |   |                                                        | $      | 833 |   |   | $ | 1,770 |   |   | $ | 12,497 |   |   | $ | 476 |   |
| Capital                  lease obligations (1)                                                                       |   |      | 120     |   |                                                        |   | 38 |   |   |   | 82 |   |   |   | − |   |   |   | − |   |
| Secured                  credit facilities (1)                  (2)                                                  |   |      | 251,137 |   |                                                        |   | 148,275 |   |   |   | 102,862 |   |   |   | - |   |   |   | - |   |
| Operating                  lease                  obligations                                                        |   |      | 16,820  |   |                                                        |   | 3,043 |   |   |   | 4,693 |   |   |   | 2,553 |   |   |   | 6,531 |   |
| Other                  long-term                  liabilities                                                        |   |      | 445     |   |                                                        |   | 281 |   |   |   | 164 |   |   |   | - |   |   |   | - |   |
| Total                  contractual                  obligations                                                      |   | $         | 284,098 |   |                                                        | $      | 152,470 |   |   | $ | 109,571 |   |   | $ | 15,050 |   |   | $ | 7,007 |   |

----

| (1) | Not                  included in the table above are estimated interest payments calculated                  at                  rates in effect at September 30, 2007; Less than 1 year:  $35.9                  million; 1-3 years:  $10.4 million; 4-5 years:  $1.6                  million; and after 5 years:                  $34,000. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Excludes                  $439.5 million related to credit facilities that upon the execution                  of the                  CDO transactions will not have to be repaid by us.  Included in                  the guarantees in the following table is our first loss exposure                  on these                  credit facilities. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                  |   |      |    |   | **Amount                    of Commitment Expiration Per Period** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|---------|--------|-------------------------------------------------------------------|--------|
| **Other                    commercial commitments:**                                                                                                                                                                                                                                                                                                                  |   | **Total** |    |   | **Less                    than****1                      Year**   |   |   | **1                    – 3****Years** |   |   | **4                    – 5****Years** |   |   | **After                    5****Years** |   |
| Guarantees                                                                                                       |   | $         | 31,462  |   |                                                              | $      | 31,462 |   |   | $ | − |   |   | $ | - |   |   | $ | - |   |
| Standby                    letters of                    credit                                                  |   |      | 246     |   |                                                              |   | 246 |   |   |   | − |   |   |   | - |   |   |   | - |   |
| Other                    commercial commitments                                                                                                                                                                                                                                                                                                                       |   |      | 571,212 |   |                                                              |   | 77,080 |   |   |   | 108,703 |   |   |   | 7,695 |   |   |   | 377,734 |   |
| Total                    commercial commitments                                                                                                                                                                                                                                                                                                                       |   | $         | 602,920 |   |                                                              | $      | 108,788 |   |   | $ | 108,703 |   |   | $ | 7,695 |   |   | $ | 377,734 |   |

----

**Critical      Accounting Policies**

----

**Revenue      Recognition – Fee Income**

*RCC      Management Fees*

|   | · | a                monthly base management fee equal to 1/12th of the amount of RCC’s equity,                as defined by the Management Agreement, multiplied by 1.50%; incentive                compensation based on the products of (i) 25% of the dollar amount                by                which, (A) RCC’s net income per common share (before non-cash equity                compensation expense and incentive compensation) for a quarter (based                on                the weighted average number of shares outstanding) exceeds, (B) an                amount                equal to (1) the weighted average share price of shares of common                stock in                the offerings of RCC, multiplied by (2) the greater of (a) 2.00%                or (b)                0.50% plus one-fourth of the ten year treasury rate (as defined in                the                Management Agreement for such quarter), multiplied by (ii) the weighted                average number of common shares outstanding for the                quarter.  The calculation may be adjusted for one time events                due to changes in GAAP as well as other non-cash charges upon approval                of                the independent directors of RCC;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | out-of-pocket                expenses and certain other costs incurred by us associated with RCC                and                its operations. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

*Financial      Fund Management Fees*

----

*Real      Estate Fees*

*Commercial      Finance Fees*

*Other      Revenues*

*Employee      stock options*

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **Year                Ended September 30,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **2005**                                    |   |
| Net                income                                                                                                                                              |   | $                                           | 16,458 |   |
| Stock-based                employee compensation determined under the fair value-based method,                net of                tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                        | (3,244 | ) |
| Pro                forma net                income                                                                                                                     |   | $                                           | 13,214 |   |
| Basic                earnings per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                        |   |   |
| As                reported                                                                                                                                                            |   | $                                           | 0.93   |   |
| Pro                forma                                                                                                                                                              |   | $                                           | 0.75   |   |
| Diluted                earnings per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                        |   |   |
| As                reported                                                                                                                                                            |   | $                                           | 0.86   |   |
| Pro                forma                                                                                                                                                              |   | $                                           | 0.69   |   |

*Restricted      common stock*

**Loans**

*Loans      Held for Investment and Loans Sold, Not Settled*

*Interest      Income on Loans*

----

*Allowance      for Loan Losses*

*Loans      Purchased at a Discount*

----

**Investments      in Commercial Finance**

*Notes      Receivable*

*Direct      Financing Leases*

*Operating      Leases*

*Merchant      Future Receivables*

*Allowance      for Lease and Note and Merchant Future Receivable Losses*

----

**Investment      Securities Available-for-Sale**

----

**Recently      Issued Financial Accounting Standards**

*purchase      method*

----

* *

----

----

**ITEM      7A.                      QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**General**

**Commercial      Finance**

**Real      Estate**

*Portfolio      Loans and Related Senior      Liens.*

|   | · | the                loans are subject to forbearance or other agreements that require                all of                the operating cash flow from the properties underlying the loans,                after                debt service on senior lien interests, to be paid to us and therefore                are                not currently being paid based on the stated interest rates of the                loans; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                senior lien interests ahead of our interests are at fixed rates and                are                not subject to interest rate fluctuation that would affect payments                to us;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | each                loan has significant accrued and unpaid interest and other charges                outstanding to which cash flow from the underlying property would                be                applied even if cash flows were to exceed the interest due, as originally                underwritten. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*FIN      46-R Loan.*

----

**Financial      Fund Management**

**Other**

----

**ITEM      8.                      FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA**

**[THE      REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]**

----

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**RESOURCE      AMERICA, INC.**

**/s/      GRANT THORNTON LLP**

----

**RESOURCE      AMERICA, INC.**

**CONSOLIDATED      BALANCE SHEETS**

|                                                                                                                                                                                                                                                                 |   | **September                  30,** |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|----------|
|                                                                                                                                                                                                                                                                 |   | **2007**                           |     |   | **2006** |   |
| **ASSETS**                                                                                                                                                                                                                                                           |   |                               |     |   |   |   |
| Cash                                                                                                                                                                                                                                                                 |   | $                                  | 14,624   |   |   | $ | 37,622 |   |
| Restricted                cash                                                                                                                                                                                                                                       |   |                               | 19,340   |   |   |   | 8,103 |   |
| Receivables                                                                                                                                                                                                                                                          |   |                               | 21,255   |   |   |   | 2,312 |   |
| Receivables                from managed                entities                                                                                                                                                                                                      |   |                               | 20,177   |   |   |   | 8,795 |   |
| Loans                sold, not                settled                                                                                                                                                                                                                |   |                               | 152,706  |   |   |   | − |   |
| Loans                held for investment,                net                                                                                                                                                                                                         |   |                               | 285,928  |   |   |   | 69,314 |   |
| Investments                in commercial                finance, net                                                                                                                                                                                                 |   |                               | 243,391  |   |   |   | 108,850 |   |
| Investments                in real estate,                net                                                                                                                                                                                                        |   |                               | 49,041   |   |   |   | 50,104 |   |
| Investment                securities                available-for-sale                                                                                                                                                                                               |   |                               | 51,777   |   |   |   | 64,857 |   |
| Investments                in unconsolidated                entities                                                                                                                                                                                                 |   |                               | 36,777   |   |   |   | 26,626 |   |
| Property                and equipment,                net                                                                                                                                                                                                            |   |                               | 12,286   |   |   |   | 9,525 |   |
| Deferred                income                taxes                                                                                                                                                                                                                  |   |                               | 30,995   |   |   |   | 6,408 |   |
| Goodwill                                                                                                                                                                                                                                                             |   |                               | 7,941    |   |   |   | − |   |
| Intangible                assets,                net                                                                                                                                                                                                                 |   |                               | 4,774    |   |   |   | 95 |   |
| Other                assets                                                                                                                                                                                                                                          |   |                               | 18,664   |   |   |   | 24,142 |   |
| Total                assets                                                                                                                                                                                                                                          |   | $                                  | 969,676  |   |   | $ | 416,753 |   |
|                                                                                                                                                                                                                                                                 |   |                               |     |   |   |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                                        |   |                               |     |   |   |   |   |   |
| Accounts                payable, accrued                expenses and other liabilities                                                                                                                                                                               |   | $                                  | 60,546   |   |   | $ | 29,526 |   |
| Payables                to managed                entities                                                                                                                                                                                                           |   |                               | 1,163    |   |   |   | 1,579 |   |
| Borrowings                                                                                                                                                                                                                                                           |   |                               | 706,372  |   |   |   | 172,238 |   |
| Deferred                income tax                liabilities                                                                                                                                                                                                        |   |                               | 11,124   |   |   |   | 10,746 |   |
| Minority                interests                                                                                                                                                                                                                                    |   |                               | 6,571    |   |   |   | 9,602 |   |
| Total                liabilities                                                                                                                                                                                                                                     |   |                               | 785,776  |   |   |   | 223,691 |   |
|                                                                                                                                                                                                                                                                 |   |                               |     |   |   |   |   |   |
| Commitments                and                contingencies                                                                                                                                                                                                          |   |                               | −  |   |   |   | − |   |
|                                                                                                                                                                                                                                                                 |   |                               |     |   |   |   |   |   |
| Stockholders’                equity:                                                                                                                                                                                                                           |   |                               |     |   |   |   |   |   |
| Preferred                stock, $1.00 par                value, 1,000,000 shares authorized;none                outstanding                                                                                                                                          |   |                               | -        |   |   |   | - |   |
| Common                stock, $.01 par value,                49,000,000 shares authorized; 26,986,975and                26,485,227 shares issued,                respectively (including unvestedrestricted                stock of 199,708 and 83,519, respectively) |   |                               | 268      |   |   |   | 264 |   |
| Additional                paid-in                capital                                                                                                                                                                                                             |   |                               | 264,747  |   |   |   | 259,882 |   |
| Retained                earnings                                                                                                                                                                                                                                     |   |                               | 25,724   |   |   |   | 25,464 |   |
| Treasury                stock, at cost;                9,369,960 and 9,110,290 shares, respectively                                                                                                                                                                  |   |                               | (102,014 | ) |   |   | (96,960 | ) |
| ESOP                loan                receivable                                                                                                                                                                                                                   |   |                               | (223     | ) |   |   | (465 | ) |
| Accumulated                other comprehensive                (loss) income                                                                                                                                                                                          |   |                               | (4,602   | ) |   |   | 4,877 |   |
| Total                stockholders’                equity                                                                                                                                                                                                       |   |                               | 183,900  |   |   |   | 193,062 |   |
|                                                                                                                                                                                                                                                                 |   | $                                  | 969,676  |   |   | $ | 416,753 |   |

----

**RESOURCE      AMERICA, INC.**

**CONSOLIDATED      STATEMENTS OF INCOME**

|                                                                                                                                                        |   | **Years                  Ended September 30,** |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                                                                                        |   | **2007**                                       |    |   | **2006** |   |   | **2005** |   |
| **REVENUES**                                                                                                                                                |   |                                           |    |   |   |   |   |   |   |
| Financial                fund management                                                                                                                    |   | $                                              | 64,151  |   |   | $ | 31,308 |   |   | $ | 15,944 |   |
| Commercial                finance                                                                                                                           |   |                                           | 40,692  |   |   |   | 23,840 |   |   |   | 13,381 |   |
| Real                estate                                                                                                                                  |   |                                           | 22,987  |   |   |   | 23,076 |   |   |   | 17,791 |   |
|                                                                                                                                                        |   |                                           | 127,830 |   |   |   | 78,224 |   |   |   | 47,116 |   |
| **COSTS                AND EXPENSES**                                                                                                                       |   |                                           |    |   |   |   |   |   |   |   |   |   |
| Financial                fund management                                                                                                                    |   |                                           | 21,264  |   |   |   | 12,099 |   |   |   | 9,110 |   |
| Commercial                finance                                                                                                                           |   |                                           | 19,681  |   |   |   | 14,443 |   |   |   | 8,884 |   |
| Real                estate                                                                                                                                  |   |                                           | 13,190  |   |   |   | 11,522 |   |   |   | 9,903 |   |
| General                and administrative                                                                                                                   |   |                                           | 12,104  |   |   |   | 9,838 |   |   |   | 8,367 |   |
| Depreciation                and amortization                                                                                                                |   |                                           | 2,924   |   |   |   | 3,064 |   |   |   | 2,209 |   |
|                                                                                                                                                        |   |                                           | 69,163  |   |   |   | 50,966 |   |   |   | 38,473 |   |
| **OPERATING                INCOME**                                                                                                                         |   |                                           | 58,667  |   |   |   | 27,258 |   |   |   | 8,643 |   |
| **OTHER                (EXPENSE) INCOME**                                                                                                                   |   |                                           |    |   |   |   |   |   |   |   |   |   |
| Interest                expense                                                                                                                             |   |                                           | (33,566 | ) |   |   | (10,119 | ) |   |   | (2,811 | ) |
| Minority                interests                                                                                                                           |   |                                           | (2,142  | ) |   |   | (1,775 | ) |   |   | (1,403 | ) |
| Other                (loss) income, net                                                                                                                     |   |                                           | (14,395 | ) |   |   | 5,154 |   |   |   | 4,550 |   |
|                                                                                                                                                        |   |                                           | (50,103 | ) |   |   | (6,740 | ) |   |   | 336 |   |
| Income                from continuing operations before income taxesand                cumulative effect of a                change in accounting principle |   |                                           | 8,564   |   |   |   | 20,518 |   |   |   | 8,979 |   |
| Provision                for income taxes                                                                                                                   |   |                                           | 2,764   |   |   |   | 3,236 |   |   |   | 3,591 |   |
| Income                from continuing operations before cumulative effectof                a change in accounting                principle                  |   |                                           | 5,800   |   |   |   | 17,282 |   |   |   | 5,388 |   |
| (Loss)                income from discontinued operations, net of tax                                                                                       |   |                                           | (1,446  | ) |   |   | 1,231 |   |   |   | 11,070 |   |
| Cumulative                effect of a change in accounting principle, net of tax                                                                            |   |                                           | − |   |   |   | 1,357 |   |   |   | − |   |
| **NET                INCOME**                                                                                                                               |   | $                                              | 4,354   |   |   | $ | 19,870 |   |   | $ | 16,458 |   |
| **Basic                earnings per common share:**                                                                                                         |   |                                           |    |   |   |   |   |   |   |   |   |   |
| Continuing                operations                                                                                                                        |   | $                                              | 0.33    |   |   | $ | 0.98 |   |   | $ | 0.30 |   |
| Discontinued                operations                                                                                                                      |   |                                           | (0.08   | ) |   |   | 0.07 |   |   |   | 0.63 |   |
| Cumulative                effect of accounting change                                                                                                       |   |                                           | − |   |   |   | 0.08 |   |   |   | − |   |
| Net                income                                                                                                                                   |   | $                                              | 0.25    |   |   | $ | 1.13 |   |   | $ | 0.93 |   |
| Weighted                average shares outstanding                                                                                                          |   |                                           | 17,467  |   |   |   | 17,627 |   |   |   | 17,696 |   |
| **Diluted                earnings per common share:**                                                                                                       |   |                                           |    |   |   |   |   |   |   |   |   |   |
| Continuing                operations                                                                                                                        |   | $                                              | 0.30    |   |   | $ | 0.90 |   |   | $ | 0.28 |   |
| Discontinued                operations                                                                                                                      |   |                                           | (0.07   | ) |   |   | 0.07 |   |   |   | 0.58 |   |
| Cumulative                effect of accounting change                                                                                                       |   |                                           | − |   |   |   | 0.07 |   |   |   | − |   |
| Net                income                                                                                                                                   |   | $                                              | 0.23    |   |   | $ | 1.04 |   |   | $ | 0.86 |   |
| Weighted                average shares outstanding                                                                                                          |   |                                           | 19,085  |   |   |   | 19,121 |   |   |   | 19,204 |   |
|                                                                                                                                                        |   |                                           |    |   |   |   |   |   |   |   |   |   |
| **Dividends                declared per common share**                                                                                                      |   | $                                              | 0.27    |   |   | $ | 0.24 |   |   | $ | 0.20 |   |

----

**RESOURCE      AMERICA, INC.**

**CONSOLIDATED      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**

**YEARS      ENDED SEPTEMBER 30, 2007, 2006 AND 2005**

|                                                                                                                                                                                               |       |    |           |   |         |   |         |    |   |           |     |   | **Accumulated**                    |   |    |                    |   |   |                               |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------|----------------|--------|--------------|--------|--------------|---------|--------|----------------|----------|--------|------------------------------------|--------|---------|-------------------------|--------|--------|------------------------------------|--------|
|                                                                                                                                                                                               |       |    | **Additional** |   |         |   |         |    |   | **ESOP**       |     |   | **Other**                          |   |    | **Total**               |   |   |                               |   |
|                                                                                                                                                                                               | **Common** |    | **Paid-In**    |   | **Retained** |   | **Treasury** |    |   | **Loan**       |     |   | **Comprehensive**                  |   |    | **Stockholders’** |   |   | **Comprehensive**                  |   |
|                                                                                                                                                                                               | **Stock**  |    | **Capital**    |   | **Earnings** |   | **Stock**    |    |   | **Receivable** |     |   | **Income                  (Loss)** |   |    | **Equity**              |   |   | **Income                  (Loss)** |   |
| Balance,                September 30, 2004                                                                                                                                                         | $          | 255     |           | $      | 247,865      |   | $            | 90,164  |   | $              | (77,667  | )      |                               | $      | (1,127  | )                       |   | $      | (1,575                             | )      |   | $ | 257,915 |   |   |   |   |
| Net                income                                                                                                                                                                          |       | − |           |   | −      |   |         | 16,458  |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 16,458 |   |   | $ | 16,458 |   |
| Treasury                shares issued                                                                                                                                                              |       | − |           |   | 144          |   |         | − |   |           | 290      |   |                               |   | − |                    |   |   | −                            |   |   |   | 434 |   |   |   |   |   |
| Issuance                of common shares                                                                                                                                                           |       | 9       |           |   | 7,493        |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 7,502 |   |   |   |   |   |
| Tax                benefit from exercise of                 stock options                                                                                                                     |       | − |           |   | 2,517        |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 2,517 |   |   |   |   |   |
| Purchase                of treasury shares                                                                                                                                                         |       | − |           |   | −      |   |         | − |   |           | (5,179   | )      |                               |   | − |                    |   |   | −                            |   |   |   | (5,179 | ) |   |   |   |   |
| Other                comprehensive income                                                                                                                                                          |       | − |           |   | −      |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | 1,762                              |   |   |   | 1,762 |   |   |   | 1,762 |   |
| Cash                dividends                                                                                                                                                                      |       | − |           |   | −      |   |         | (3,533  | )      |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | (3,533 | ) |   |   |   |   |
| Distribution                of shares of                   Atlas America, Inc.                                                                                                           |       | − |           |   | −      |   |         | (93,244 | )      |           | −  |   |                               |   | − |                    |   |   | 1,865                              |   |   |   | (91,379 | ) |   |   |   |   |
| Repayment                of ESOP loan                                                                                                                                                              |       | − |           |   | −      |   |         | − |   |           | −  |   |                               |   | 639     |                    |   |   | −                            |   |   |   | 639 |   |   |   |   |   |
| Balance,                September 30, 2005                                                                                                                                                         |       | 264     |           |   | 258,019      |   |         | 9,845   |   |           | (82,556  | )      |                               |   | (488    | )                       |   |   | 2,052                              |   |   |   | 187,136 |   |   | $ | 18,220 |   |
| Net                income                                                                                                                                                                          |       | − |           |   | −      |   |         | 19,870  |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 19,870 |   |   | $ | 19,870 |   |
| Treasury                shares issued                                                                                                                                                              |       | − |           |   | 297          |   |         | − |   |           | 238      |   |                               |   | − |                    |   |   | −                            |   |   |   | 535 |   |   |   |   |   |
| Stock-based                compensation                                                                                                                                                            |       | − |           |   | 1,137        |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 1,137 |   |   |   |   |   |
| Issuance                of restricted                   common stock                                                                                                                     |       | − |           |   | 305          |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 305 |   |   |   |   |   |
| Issuance                of common shares                                                                                                                                                           |       | − |           |   | 133          |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 133 |   |   |   |   |   |
| Tax                benefit from exercise of                   stock options                                                                                                              |       | − |           |   | 231          |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 231 |   |   |   |   |   |
| Purchase                of treasury shares                                                                                                                                                         |       | − |           |   | −      |   |         | − |   |           | (14,642  | )      |                               |   | − |                    |   |   | −                            |   |   |   | (14,642 | ) |   |   |   |   |
| Minority                interest created upon                   the conversion                of notes                                                                                   |       | − |           |   | (240         | )      |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | (240 | ) |   |   |   |   |
| Other                comprehensive income                                                                                                                                                          |       | − |           |   | −      |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | 2,825                              |   |   |   | 2,825 |   |   |   | 2,825 |   |
| Cash                dividends                                                                                                                                                                      |       | − |           |   | −      |   |         | (4,251  | )      |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | (4,251 | ) |   |   |   |   |
| Repayment                of ESOP loan                                                                                                                                                              |       | − |           |   | −      |   |         | − |   |           | −  |   |                               |   | 23      |                    |   |   | −                            |   |   |   | 23 |   |   |   |   |   |
| Balance,                September 30, 2006                                                                                                                                                         |       | 264     |           |   | 259,882      |   |         | 25,464  |   |           | (96,960  | )      |                               |   | (465    | )                       |   |   | 4,877                              |   |   |   | 193,062 |   |   | $ | 22,695 |   |
| Cumulative                effect adjustment                  under SAB                108                                                                                           |       | − |           |   | −      |   |         | 676     |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 676 |   |   |   |   |   |
| Restated                balance,                   October 1, 2006                                                                                                                       |       | 264     |           |   | 259,882      |   |         | 26,140  |   |           | (96,960  | )      |                               |   | (465    | )                       |   |   | 4,877                              |   |   |   | 193,738 |   |   |   |   |   |
| Net                income                                                                                                                                                                          |       | − |           |   | −      |   |         | 4,354   |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 4,354 |   |   | $ | 4,354 |   |
| Treasury                shares issued                                                                                                                                                              |       | − |           |   | 443          |   |         | − |   |           | 314      |   |                               |   | − |                    |   |   | −                            |   |   |   | 757 |   |   |   |   |   |
| Stock-based                compensation                                                                                                                                                            |       | − |           |   | 934          |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 934 |   |   |   |   |   |
| Restricted                stock awards                                                                                                                                                             |       | − |           |   | 1,004        |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 1,004 |   |   |   |   |   |
| Issuance                of common shares                                                                                                                                                           |       | 4       |           |   | 1,222        |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 1,226 |   |   |   |   |   |
| Tax                benefit from exercise of                  stock options                                                                                                               |       | − |           |   | 2,090        |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | 2,090 |   |   |   |   |   |
| Purchase                of treasury shares                                                                                                                                                         |       | − |           |   | −      |   |         | − |   |           | (5,368   | )      |                               |   | − |                    |   |   | −                            |   |   |   | (5,368 | ) |   |   |   |   |
| Cash                dividends                                                                                                                                                                      |       | − |           |   | −      |   |         | (4,770  | )      |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | (4,770 | ) |   |   |   |   |
| Other                comprehensive (loss)                                                                                                                                                          |       | − |           |   | −      |   |         | − |   |           | −  |   |                               |   | − |                    |   |   | (9,479                             | )      |   |   | (9,479 | ) |   |   | (9,479 | ) |
| Settlement                of equity                   conversion feature                  underlying a                subsidiary’s                   debt |       | − |           |   | (611         | )      |         | − |   |           | −  |   |                               |   | − |                    |   |   | −                            |   |   |   | (611 | ) |   |   |   |   |
| Repayment                of ESOP loan                                                                                                                                                              |       | − |           |   | (217         | )      |         | − |   |           | −  |   |                               |   | 242     |                    |   |   | −                            |   |   |   | 25 |   |   |   |   |   |
| Balance,                September 30, 2007                                                                                                                                                         | $          | 268     |           | $      | 264,747      |   | $            | 25,724  |   | $              | (102,014 | )      |                               | $      | (223    | )                       |   | $      | (4,602                             | )      |   | $ | 183,900 |   |   | $ | (5,125 | ) |

----

**RESOURCE      AMERICA, INC.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                   |   | **Years                  Ended September 30,** |     |
|------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|----------|
|                                                                                                                   |   | **2007**                                       |     |   | **2006** |   |   | **2005** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                                                               |   |                                           |     |   |   |   |   |   |   |
| Net                income                                                                                              |   | $                                              | 4,354    |   |   | $ | 19,870 |   |   | $ | 16,458 |   |
| Adjustments                to reconcile net income to net cash used in  operating                activities: |   |                                           |     |   |   |   |   |   |   |   |   |   |
| Cumulative                effect of a change in                accounting principle, net of tax                        |   |                                           | −  |   |   |   | (1,357 | ) |   |   | − |   |
| Impairment                charge on CDO                investments                                                     |   |                                           | 12,580   |   |   |   | − |   |   |   | − |   |
| Depreciation                and                amortization                                                            |   |                                           | 3,699    |   |   |   | 3,180 |   |   |   | 2,247 |   |
| Equity                in earnings of                unconsolidated entities                                            |   |                                           | (15,022  | ) |   |   | (8,747 | ) |   |   | (7,807 | ) |
| Minority                interests                                                                                      |   |                                           | 2,142    |   |   |   | 1,775 |   |   |   | 1,403 |   |
| Distributions                from                unconsolidated entities                                               |   |                                           | 16,212   |   |   |   | 12,570 |   |   |   | 13,899 |   |
| Loss                (income) from discontinued                operations                                               |   |                                           | 1,446    |   |   |   | (1,231 | ) |   |   | (11,070 | ) |
| Losses                on sales of                loans                                                                 |   |                                           | 5,025    |   |   |   | − |   |   |   | − |   |
| Gains                on sales of investment                securities available-for-sale                               |   |                                           | (3,533   | ) |   |   | (668 | ) |   |   | (1,544 | ) |
| Gains                on sales of                assets                                                                 |   |                                           | (3,974   | ) |   |   | (7,715 | ) |   |   | (7,781 | ) |
| Deferred                income tax (benefit)                provision                                                  |   |                                           | (14,487  | ) |   |   | (3,120 | ) |   |   | 3,591 |   |
| Non-cash                compensation on                long-term incentive plans                                       |   |                                           | 2,695    |   |   |   | 1,739 |   |   |   | 1,251 |   |
| Non-cash                compensation                issued                                                             |   |                                           | 1,861    |   |   |   | 2,396 |   |   |   | − |   |
| Non-cash                compensation                received                                                           |   |                                           | (1,404   | ) |   |   | (1,844 | ) |   |   | (1,839 | ) |
| Increase                in commercial finance investments                                                              |   |                                           | (67,210  | ) |   |   | (68,376 | ) |   |   | (17,886 | ) |
| Changes                in operating assets and liabilities                                                             |   |                                           | 5,790    |   |   |   | 14,074 |   |   |   | (12,393 | ) |
| **Net                cash used in operating activities of continuing                operations**                       |   |                                           | (49,826  | ) |   |   | (37,454 | ) |   |   | (21,471 | ) |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                                                               |   |                                           |     |   |   |   |   |   |   |   |   |   |
| Capital                expenditures                                                                                    |   |                                           | (5,441   | ) |   |   | (4,141 | ) |   |   | (2,414 | ) |
| Payments                received on real estate loans and real estate                                                  |   |                                           | 17,501   |   |   |   | 42,058 |   |   |   | 7,417 |   |
| Investments                in real estate                                                                              |   |                                           | (20,917  | ) |   |   | (33,004 | ) |   |   | (16,753 | ) |
| Return                of capital from investments in unconsolidated entities                                           |   |                                           | −  |   |   |   | − |   |   |   | 9,390 |   |
| Purchase                of investments                                                                                 |   |                                           | (23,225  | ) |   |   | (34,820 | ) |   |   | (26,800 | ) |
| Proceeds                from sale of investments                                                                       |   |                                           | 7,172    |   |   |   | 7,205 |   |   |   | 5,038 |   |
| Net                cash paid for acquisition                                                                           |   |                                           | (20,708  | ) |   |   | − |   |   |   | − |   |
| (Increase)                decrease in other assets                                                                     |   |                                           | (2,862   | ) |   |   | (13,821 | ) |   |   | 321 |   |
| **Net                cash used in investing activities of continuing                operations**                       |   |                                           | (48,480  | ) |   |   | (36,523 | ) |   |   | (23,801 | ) |
| **CASH                FLOWS FROM FINANCING ACTIVITIES:**                                                               |   |                                           |     |   |   |   |   |   |   |   |   |   |
| Increase                in borrowings                                                                                  |   |                                           | 745,598  |   |   |   | 570,448 |   |   |   | 267,643 |   |
| Principal                payments on borrowings                                                                        |   |                                           | (649,055 | ) |   |   | (501,088 | ) |   |   | (258,865 | ) |
| Investor                contributions to financial fund management investments                                         |   |                                           | −  |   |   |   | − |   |   |   | 10,410 |   |
| Dividends                paid                                                                                          |   |                                           | (4,770   | ) |   |   | (4,251 | ) |   |   | (3,533 | ) |
| Distributions                paid to minority interest holders                                                         |   |                                           | (2,368   | ) |   |   | (1,600 | ) |   |   | − |   |
| Increase                in restricted cash                                                                             |   |                                           | (10,156  | ) |   |   | (3,103 | ) |   |   | (5,000 | ) |
| Proceeds                from issuance of stock                                                                         |   |                                           | 1,226    |   |   |   | 133 |   |   |   | 5,819 |   |
| Purchase                of treasury stock                                                                              |   |                                           | (5,368   | ) |   |   | (14,642 | ) |   |   | (5,179 | ) |
| Tax                benefit from exercise of stock options                                                              |   |                                           | 2,090    |   |   |   | 231 |   |   |   | 2,517 |   |
| Other                                                                                                                  |   |                                           | (611     | ) |   |   | − |   |   |   | (1,660 | ) |
| **Net                cash provided by financing activities of continuing                operations**                   |   |                                           | 76,586   |   |   |   | 46,128 |   |   |   | 12,152 |   |
| **CASH                FLOWS FROM DISCONTINUED OPERATIONS:**                                                            |   |                                           |     |   |   |   |   |   |   |   |   |   |
| Operating                activities                                                                                    |   |                                           | (133     | ) |   |   | 1,771 |   |   |   | 23,566 |   |
| Investing                activities                                                                                    |   |                                           | −  |   |   |   | 37,172 |   |   |   | − |   |
| Financing                activities                                                                                    |   |                                           | (1,145   | ) |   |   | − |   |   |   | − |   |
| **Net                cash (used in) provided by discontinued                operations**                               |   |                                           | (1,278   | ) |   |   | 38,943 |   |   |   | 23,566 |   |
| **Net                cash retained by entities previously consolidated**                                               |   |                                           | −  |   |   |   | (3,825 | ) |   |   | − |   |
| **(Decrease)                increase in cash**                                                                         |   |                                           | (22,998  | ) |   |   | 7,269 |   |   |   | (9,554 | ) |
| **Cash                at beginning of period**                                                                         |   |                                           | 37,622   |   |   |   | 30,353 |   |   |   | 39,907 |   |
| **Cash                at end of period**                                                                               |   | $                                              | 14,624   |   |   | $ | 37,622 |   |   | $ | 30,353 |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER      30, 2007**

**NOTE      1 - NATURE OF OPERATIONS**

|   | · | trust                preferred securities of banks, bank holding companies, insurance                companies                and other financial companies                (“Trapeza”); |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | bank                loans (“Apidos”); |
|--------|--------|---------------------------------------------------|

|   | · | asset-backed                securities (“ABS”) including residential mortgage-backed securities                (“RMBS”) and commercial mortgage-backed securities (“CMBS”)                (“Ischus”); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | international                bank loans (“Resource Europe”); and |
|--------|--------|------------------------------------------------------------------------------|

|   | · | private                equity investments. |
|--------|--------|--------------------------------------------|

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      1 - NATURE OF OPERATIONS − (Continued)**

*Atlas      America Spin-off*

|   | · | information                technology and data processing; |
|--------|--------|------------------------------------------------------------|

|   | · | real                estate management; and |
|--------|--------|--------------------------------------------|

|   | · | other                general administrative functions. |
|--------|--------|--------------------------------------------------------|

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Principles      of Consolidation**

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Principles      of Consolidation − (Continued)**

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Principles      of Consolidation − (Continued)**

**Investments      in Unconsolidated Entities**

*Financial      Fund Management*

*Real      Estate*

*Commercial      Finance*

**Use      of Estimates**

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Reclassifications**

**Concentration      of Credit Risk**

**Restricted      Cash**

**Foreign      Currency Translation**

**Revenue      Recognition – Fee Income**

*RCC      Management Fees*

|   | · | a                monthly base management fee equal to 1/12th of the amount of RCC’s equity,                as defined by the Management Agreement, multiplied by 1.50%; incentive                compensation based on the products of (i) 25% of the dollar amount                by                which, (A) RCC’s net income per common share (before non-cash equity                compensation expense and incentive compensation) for a quarter (based                on                the weighted average number of shares outstanding) exceeds, (B) an                amount                equal to (1) the weighted average share price of shares of common                stock in                the offerings of RCC, multiplied by (2) the greater of (a) 2.00%                or (b)                0.50% plus one-fourth of the ten year treasury rate (as defined in                the                Management Agreement for such quarter), multiplied by (ii) the weighted                average number of common shares outstanding for the                quarter.  The calculation may be adjusted for one time events                due to changes in GAAP as well as other non-cash charges upon approval                of                the independent directors of RCC;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | out-of-pocket                expenses and certain other costs incurred by the Company associated                with                RCC and its operations. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Revenue      Recognition – Fee Income − **
*RCC Management Fees −(Continued)*

*Financial      Fund Management Fees*

*Real      Estate Fees*

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Revenue      Recognition – Fee Income − **
*Real Estate Fees −(Continued)*

*Commercial      Finance Fees*

*Other      Revenues*

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Stock-Based      Compensation**

*Employee      stock options*

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **Year                Ended September 30,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **2005**                                    |   |
| Net                income                                                                                                                                              |   | $                                           | 16,458 |   |
| Stock-based                employee compensation determined under the fair value-based method,                net of                tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                        | (3,244 | ) |
| Pro                forma net                income                                                                                                                     |   | $                                           | 13,214 |   |
| Basic                earnings per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                        |   |   |
| As                reported                                                                                                                                                            |   | $                                           | 0.93   |   |
| Pro                forma                                                                                                                                                              |   | $                                           | 0.75   |   |
| Diluted                earnings per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                        |   |   |
| As                reported                                                                                                                                                            |   | $                                           | 0.86   |   |
| Pro                forma                                                                                                                                                              |   | $                                           | 0.69   |   |

*Restricted      common stock*

**Loans**

*Loans      Held for Investment and Loans Sold, Not Settled*

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Loans      − **
*Loans Held for Investment and Loans Sold, Not Settled*
*−(Continued)*

*Interest      Income on Loans*

*Allowance      for Loan Losses*

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Loans      − **
*Allowance for Loan Losses − (Continued)*

*Loans      Purchased at a Discount*

**Investments      in Commercial Finance**

*Notes      Receivable*

*Direct      Financing Leases*

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Investments      in Commercial Finance − (Continued)**

*Operating      Leases*

*Merchant      Future Receivables*

*Allowance      for Possible Lease and Note and Merchant Future Receivable      Losses*

**Investment      Securities Available-for-Sale**

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Investment      Securities Available-for-Sale − (Continued)**

**Derivative        Instruments**

**Property        and Equipment**

**Impairment      of Long-Lived Assets**

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Goodwill      and Other Intangible Assets**

**Accounting      for Income Taxes**

**Recently      Issued Financial Accounting Standards**

*purchase method*

----

**RESOURCE        AMERICA, INC.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER        30, 2007**

**NOTE        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Recently        Issued Financial Accounting Standards − (Continued)**

----

**RESOURCE        AMERICA, INC.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER        30, 2007**

**NOTE        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(Continued)**

**Recently        Issued Financial Accounting Standards − (Continued)**

* *

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      3 – SUPPLEMENTAL CASH FLOW INFORMATION**

|                                                                                                              |   | **Years                    Ended September 30,** |      |
|-------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|-----------|
|                                                                                                              |   | **2007**                                         |      |   | **2006** |   |   | **2005** |   |
| **Cash                  paid during the years for:**                                                              |   |                                             |      |   |   |   |   |   |   |
| Interest                                                                                                          |   | $                                                | 18,929    |   |   | $ | 12,294 |   |   | $ | 2,952 |   |
| Income                  taxes                                                                                     |   | $                                                | 3,251     |   |   | $ | 6,106 |   |   | $ | 10,836 |   |
| **Non-cash                  activities include the following:**                                                   |   |                                             |      |   |   |   |   |   |   |   |   |   |
| Conversion                  of notes (see Note 4):                                                                |   |                                             |      |   |   |   |   |   |   |   |   |   |
| Increase                  in minority                  interest                                                   |   | $                                                | −   |   |   | $ | 240 |   |   | $ | − |   |
| Net                  reduction of                  equity                                                         |   | $                                                | −   |   |   | $ | 205 |   |   | $ | − |   |
| Transfer                  of loans held for investment (see Note 5):                                              |   |                                             |      |   |   |   |   |   |   |   |   |   |
| Reduction                  of loans held for                  investment                                          |   | $                                                | 418,801   |   |   | $ | 541,060 |   |   | $ | − |   |
| Termination                  of associated                  warehouse credit facilities                           |   | $                                                | 418,284   |   |   | $ | 538,557 |   |   | $ | − |   |
| Activity                  on secured warehouse facilities related to loans held forinvestment:                    |   |                                             |      |   |   |   |   |   |   |   |   |   |
| Purchase                  of                  loans                                                               |   | $                                                | 1,085,863 |   |   | $ | 546,303 |   |   | $ | 103,771 |   |
| Borrowings                  to fund                  purchases                                                    |   | $                                                | 788,527   |   |   | $ | 510,434 |   |   | $ | 97,550 |   |
| Proceeds                  from sale of                  loans                                                     |   | $                                                | 280,970   |   |   | $ | 24,812 |   |   | $ | 1,501 |   |
| Principal                  payments on                  loans                                                     |   | $                                                | 60,896    |   |   | $ | 8,805 |   |   | $ | 4,520 |   |
| Use                  of funds held in escrow for                  purchases of loans                              |   | $                                                | 3,000     |   |   | $ | − |   |   | $ | − |   |
| (Losses)                  gains on sale of                  loans                                                 |   | $                                                | (5,025    | ) |   | $ | 28 |   |   | $ | − |   |
| Sales                  of loans not                  settled                                                      |   | $                                                | 152,706   |   |   | $ | − |   |   | $ | − |   |
| Distribution                  of shares of Atlas America to shareholders                                          |   | $                                                | −   |   |   | $ | − |   |   | $ | 91,379 |   |
| Real                  estate received in exchange for notes upon foreclosure on                  loans            |   | $                                                | −   |   |   | $ | − |   |   | $ | 11,011 |   |
| Receipt                  of notes upon resolution of real estate investments and aFIN                  46-R asset |   | $                                                | −   |   |   | $ | 5,135 |   |   | $ | 2,240 |   |
| Distribution                  of RCC stock-based awards                                                           |   | $                                                | −   |   |   | $ | 5,621 |   |   | $ | − |   |
| Acquisition                  of leasing division of Pacific Capital Bank (see                  Note 6):           |   |                                             |      |   |   |   |   |   |   |   |   |   |
| Commercial                  finance assets                  acquired                                              |   | $                                                | 67,816    |   |   | $ | − |   |   | $ | − |   |
| Purchase                  of intangible                  assets                                                   |   | $                                                | 4,810     |   |   | $ | − |   |   | $ | − |   |
| Goodwill                  acquired                                                                                |   | $                                                | 7,941     |   |   | $ | − |   |   | $ | − |   |
| Debt                  incurred for                  acquisition                                                   |   | $                                                | 59,800    |   |   | $ | − |   |   | $ | − |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      4 – EARNINGS (LOSS) PER SHARE**

|                                                                                     |   | **Years                  Ended September 30,** |    |
|------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                     |   | **2007**                                       |    |   | **2006** |   |   | **2005** |   |
| **Earnings                − Basic**                                                |   |                                           |    |   |   |   |   |   |   |
| Continuing                operations                                                     |   | $                                              | 5,800   |   |   | $ | 17,282 |   |   | $ | 5,388 |   |
| Discontinued                operations                                                   |   |                                           | (1,446  | ) |   |   | 1,231 |   |   |   | 11,070 |   |
| Cumulative                effect of accounting change (1)                                |   |                                           | − |   |   |   | 1,357 |   |   |   | − |   |
| Net                income                                                                |   | $                                              | 4,354   |   |   | $ | 19,870 |   |   | $ | 16,458 |   |
|                                                                                     |   |                                           |    |   |   |   |   |   |   |   |   |   |
| **Earnings                − Diluted**                                              |   |                                           |    |   |   |   |   |   |   |   |   |   |
| Continuing                operations                                                     |   | $                                              | 5,800   |   |   | $ | 17,282 |   |   | $ | 5,388 |   |
| Minority                interest from the assumed conversion of notes                (2) |   |                                           | − |   |   |   | (35 | ) |   |   | (29 | ) |
| Income                from continuing operations, as adjusted                            |   |                                           | 5,800   |   |   |   | 17,247 |   |   |   | 5,359 |   |
| Discontinued                operations                                                   |   |                                           | (1,446  | ) |   |   | 1,231 |   |   |   | 11,070 |   |
| Cumulative                effect of accounting change (1)                                |   |                                           | − |   |   |   | 1,357 |   |   |   | − |   |
| Net                income                                                                |   | $                                              | 4,354   |   |   | $ | 19,835 |   |   | $ | 16,429 |   |
|                                                                                     |   |                                           |    |   |   |   |   |   |   |   |   |   |
| **Shares**** **(3)                                                                  |   |                                           |    |   |   |   |   |   |   |   |   |   |
| Basic                shares outstanding                                                  |   |                                           | 17,467  |   |   |   | 17,627 |   |   |   | 17,696 |   |
| Dilutive                effect of stock option and award plans                           |   |                                           | 1,618   |   |   |   | 1,494 |   |   |   | 1,508 |   |
| Dilutive                shares outstanding                                               |   |                                           | 19,085  |   |   |   | 19,121 |   |   |   | 19,204 |   |

----

| (1) | The                Company recorded a cumulative adjustment for the elimination of the                one-quarter delay in reporting its equity in earnings of the Trapeza                entities (see Note 2). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The                Company had outstanding convertible notes payable in the amount of                $11,500                to two executive officers of LEAF.  These notes were converted                (at the election of the executives) into 11.5% of LEAF’s common stock on                February 1, 2006.  The Diluted EPS computation reflects the                assumed conversion of the notes as of the beginning of the periods                presented through the conversion date and the related minority interest                expense, net of tax, as a reduction of income from continuing                operations. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | As                of September 30, 2007, options to purchase 527,250 shares were outstanding                but were excluded from the computation of Diluted EPS, as their effect                would have been antidilutive.  The exercise prices on those                options ranged from $16.66 to $27.84.  As of September 30, 2006,                there were 30,000 antidilutive options with an exercise price of                $21.09.  As of September 30, 2005, all outstanding options were                dilutive. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**NOTE      5 − LOANS HELD FOR INVESTMENT AND LOANS SOLD, NOT SETTLED**

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      5 − LOANS HELD FOR INVESTMENT AND LOANS SOLD, NOT SETTLED −(Continued)**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **September                  30,** |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **2007**                           |    |   | **2006** |   |
| Principal                                                                                                                                             |   | $                                  | 284,906 |   |   | $ | 69,312 |   |
| Unamortized                premium                                                                                                                    |   |                               | 1,160   |   |   |   | 18 |   |
| Unamortized                discount                                                                                                                   |   |                               | (138    | ) |   |   | (16 | ) |
| Loans                held for investment,                net                                                                                          |   | $                                  | 285,928 |   |   | $ | 69,314 |   |

**NOTE      6 – INVESTMENTS IN COMMERCIAL FINANCE**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **September                  30,** |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **2007**                           |    |   | **2006** |   |
| Direct                financing leases,                net                                                                                                                                                          |   | $                                  | 44,100  |   |   | $ | 32,275 |   |
| Notes                receivable                                                                                                                                                                                     |   |                               | 192,262 |   |   |   | 74,864 |   |
| Assets                subject to operating leases, net of accumulated depreciation                of$7                and                $46                                                                                       |   |                               | 250     |   |   |   | 1,711 |   |
| Merchant                future receivables,                net                                                                                                                                                      |   |                               | 6,779   |   |   |   | − |   |
| Investments                in commercial finance,                net                                                                                                                                                               |   | $                                  | 243,391 |   |   | $ | 108,850 |   |

|                                                                      |   | **September                  30,** |   |
|---------------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                      |   | **2007**                           |   |   | **2006** |   |
| Total                future minimum lease payments receivables            |   | $                                  | 50,196 |   |   | $ | 37,398 |   |
| Initial                direct costs, net of amortization                  |   |                               | 658    |   |   |   | 598 |   |
| Unguaranteed                residuals                                     |   |                               | 442    |   |   |   | 362 |   |
| Unearned                income                                            |   |                               | (7,196 | ) |   |   | (6,083 | ) |
| Investments                in direct financing                leases, net |   | $                                  | 44,100 |   |   | $ | 32,275 |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      6 – INVESTMENTS IN COMMERCIAL FINANCE − (Continued)**

|       |   | **Direct                Financing****Leases** |   |   | **Notes****Receivable** |   |    | **Operating****Leases                  (1)** |   |
|------------|--------|-----------------------------------------------|--------|--------|-------------------------|--------|---------|----------------------------------------------|--------|
| 2008       |   | $                                             | 14,444 |   |                    | $      | 82,506  |                                         |   | $ | 75 |   |
| 2009       |   |                                          | 12,982 |   |                    |   | 35,647  |                                         |   |   | 74 |   |
| 2010       |   |                                          | 10,678 |   |                    |   | 26,885  |                                         |   |   | 64 |   |
| 2011       |   |                                          | 7,338  |   |                    |   | 17,885  |                                         |   |   | 26 |   |
| 2012       |   |                                          | 3,236  |   |                    |   | 8,240   |                                         |   |   | − |   |
| Thereafter |   |                                          | 1,518  |   |                    |   | 21,099  |                                         |   |   | − |   |
|       |   | $                                             | 50,196 |   |                    | $      | 192,262 |                                         |   | $ | 239 |   |

----

| (1) | Operating                lease amounts as shown are net of the residual value, if any, at                the end                of the lease term. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|

| Merchant                future receivables       |   | $      | 6,899 |   |
|-------------------------------------------------------|--------|--------|-------|--------|
| Allowance                for losses              |   |   | (120  | )      |
| Merchant                future receivables, net  |   | $      | 6,779 |   |

| Balance,                October 1, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $      | − |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
| Provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 229     |   |
| Write-offs                                                                                                  |   |   | (109    | )      |
| Balance,                September 30, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $      | 120     |   |

*Acquisition      of Leasing Division of Pacific Capital Bank*

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      6 – INVESTMENTS IN COMMERCIAL FINANCE − (Continued)**

*Acquisition      of Leasing Division of Pacific Capital Bank − (Continued)*

|                                                                                  |   | **                                           Amount** |    |
|---------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
| Leases                and notes                                        |   | $                                                                                                                                                                                  | 67,816  |   |
| Goodwill,                customer lists, business platform and other intangibles      |   |                                                                                                                                                                               | 12,701  |   |
| Acquired                by LEAF                                                       |   |                                                                                                                                                                               | 80,517  |   |
| Leases                and notes acquired by LEAF’s investment partnerships      |   |                                                                                                                                                                               | 201,665 |   |
| Total                purchase price, including                acquisition costs  |   | $                                                                                                                                                                                  | 282,182 |   |

**NOTE      7 – INVESTMENTS IN REAL ESTATE**

|                                                                                      |   | **September                  30,** |   |
|-------------------------------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                                      |   | **2007**                           |   |   | **2006** |   |
| Real                estate loans:                                               |   |                               |   |   |   |   |
| Balance,                beginning of                period                      |   | $                                  | 28,739 |   |   | $ | 25,923 |   |
| New                loans                                                             |   |                               | 1,597  |   |   |   | 5,109 |   |
| Additions                to existing                loans                            |   |                               | 42     |   |   |   | 2,310 |   |
| Collection                of                principal                           |   |                               | (3,373 | ) |   |   | (5,068 | ) |
| Other                                                                                |   |                               | 760    |   |   |   | 465 |   |
| Allowance                for loan                losses                              |   |                               | (629   | ) |   |   | (770 | ) |
| Balance,                end of                period                                      |   |                               | 27,136 |   |   |   | 27,969 |   |
| Real                estate:                                                               |   |                               |   |   |   |   |   |   |
| Ventures                                                                                  |   |                               | 9,769  |   |   |   | 9,519 |   |
| Owned,                net of accumulated                depreciation of $2,125 and $1,736 |   |                               | 12,136 |   |   |   | 12,616 |   |
| Total                real estate                                                          |   |                               | 21,905 |   |   |   | 22,135 |   |
| Investments                in real estate,                net                             |   | $                                  | 49,041 |   |   | $ | 50,104 |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      7 – INVESTMENTS IN REAL ESTATE − (Continued)**

|                                        |   | **Years                    Ended September 30,** |    |
|---------------------------------------------|--------|--------------------------------------------------|---------|
|                                        |   | **2007**                                         |    |   | **2006** |   |   | **2005** |   |
| Balance,                  beginning of year |   | $                                                | 770     |   |   | $ | 770 |   |   | $ | 770 |   |
| Provision                                   |   |                                             | − |   |   |   | − |   |   |   | − |   |
| Write-offs                                  |   |                                             | (141    | ) |   |   | − |   |   |   | − |   |
| Balance,                  end of year       |   | $                                                | 629     |   |   | $ | 770 |   |   | $ | 770 |   |

**NOTE      8 − INVESTMENT SECURITIES AVAILABLE-FOR-SALE**

|                                                                                                                           |   | **September                  30,** |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                                                                           |   | **2007**                           |   |   | **2006** |   |
| RCC                stock, including unrealized losses of $7,344 and net unrealized                gains                of $879 |   | $                                  | 22,099 |   |   | $ | 29,588 |   |
| TBBK                stock, including net unrealized gains of $1,010 and $5,696                                                 |   |                               | 2,184  |   |   |   | 9,132 |   |
| CDO                securities, including                net unrealized losses of $7,543 and $1,471                             |   |                               | 27,494 |   |   |   | 26,137 |   |
| Total                investment securities                available-for-sale                                                   |   | $                                  | 51,777 |   |   | $ | 64,857 |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      8 − INVESTMENT SECURITIES AVAILABLE-FOR-SALE − (Continued)**

*Unrealized      Losses*

|                                                                  |   | **Cost                  or Amortized Cost** |   |   | **Unrealized                  Gains** |   |   | **Unrealized                  Losses** |   |   | **Estimated                  Fair Value** |   |
|-----------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|---------------------------------------|--------|--------|----------------------------------------|--------|--------|-------------------------------------------|--------|
| September                30, 2007       |   | $                                           | 35,037 |   |                                  | $      | 26     |                                   |   | $      | (7,569                                    | )      |   | $ | 27,494 |   |
| September                30, 2006            |   | $                                           | 27,608 |   |                                  | $      | 89     |                                   |   | $      | (1,560                                    | )      |   | $ | 26,137 |   |

|                                                                        |   | **Estimated****Fair                  Value** |   |   | **Less                than****12                  Months** |   |   | **Estimated****Fair                  Value** |   |   | **More                  than 12 Months** |   |
|-----------------------------------------------------------------------------|--------|----------------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|------------------------------------------|--------|
| September                30, 2007        |   | $                                            | 39,291 |   |                                                       | $      | (9,656 | )                                            |   | $      | 6,700                                    |   |   | $ | (5,246 | ) |
| September                30, 2006                  |   | $                                            | 13,383 |   |                                                       | $      | (735   | )                                            |   | $      | 5,517                                    |   |   | $ | (825 | ) |

*Realized      Losses*

**NOTE      9 − INVESTMENTS IN UNCONSOLIDATED ENTITIES**

|                                                                       |   | **September                  30,** |   | **Range                of Combined** |
|----------------------------------------------------------------------------|--------|------------------------------------|--------|--------------------------------------|
|                                                                       |   | **2007**                           |   |                                 | **2006** |   | **Partnership                  Interests** |
| Trapeza                entities                                            |   | $                                  | 16,190 |                                 |   | $ | 15,007 |   | 13%                to 50% |
| Financial                fund management partnerships                      |   |                               | 7,185  |                                 |   |   | 5,772 |   | 5%                to 10% |
| Real                estate investment partnerships                         |   |                               | 7,926  |                                 |   |   | 3,927 |   | 5%                to 10% |
| Commercial                finance investment partnerships                  |   |                               | 2,109  |                                 |   |   | 1,353 |   | 1%                to 5% |
| TIC                property interests (1)                                  |   |                               | 3,367  |                                 |   |   | 567 |   | N/A |
| Total                investments in                unconsolidated entities |   | $                                  | 36,777 |                                 |   | $ | 26,626 |   |   |

----

| (1) | The                Company held an interest in                one TIC property at September 30, 2007 and another TIC property at                September 30, 2006. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      9 − INVESTMENTS IN UNCONSOLIDATED ENTITIES − (Continued)**

|                                               |   | **Years                  Ended September 30,** |   |
|----------------------------------------------------|--------|------------------------------------------------|--------|
|                                               |   | **2007**                                       |   |   | **2006** |   |   | **2005** |   |
| **Trapeza                Capital Management, LLC** |   |                                           |   |   |   |   |   |   |   |
| Management                fees                     |   | $                                              | 13,160 |   |   | $ | 6,810 |   |   | $ | 5,432 |   |
| Operating                expenses                  |   |                                           | (2,876 | ) |   |   | (1,746 | ) |   |   | (1,151 | ) |
| Other                expenses                      |   |                                           | (29    | ) |   |   | (170 | ) |   |   | (356 | ) |
| Net                income                          |   | $                                              | 10,255 |   |   | $ | 4,894 |   |   | $ | 3,925 |   |

|                                             |   | **Years                  Ended September 30,** |   |
|--------------------------------------------------|--------|------------------------------------------------|--------|
|                                             |   | **2007**                                       |   |   | **2006** |   |   | **2005** |   |
| **Trapeza                Management Group, LLC** |   |                                           |   |   |   |   |   |   |   |
| Management                fees                   |   | $                                              | 2,717  |   |   | $ | 2,724 |   |   | $ | 2,342 |   |
| Operating                expenses                |   |                                           | (213   | ) |   |   | (255 | ) |   |   | (243 | ) |
| Other                expenses                    |   |                                           | (28    | ) |   |   | (69 | ) |   |   | 909 |   |
| Net                income                        |   | $                                              | 2,476  |   |   | $ | 2,400 |   |   | $ | 3,008 |   |

**NOTE      10 − PROPERTY AND EQUIPMENT**

|                                                      | **Estimated**                     |   | **September                  30,** |   |
|-----------------------------------------------------------|-----------------------------------|--------|------------------------------------|--------|
|                                                      | **Useful                  Lives** |   | **2007**                           |   |   | **2006** |   |
| Leasehold                improvements                     | 1-15                years         |   | $                                  | 4,420  |   |   | $ | 2,894 |   |
| Real                estate assets − FIN 46-R        | 40                years           |   |                               | 3,900  |   |   |   | 3,900 |   |
| Furniture                and equipment                    | 3-10                years         |   |                               | 9,438  |   |   |   | 6,262 |   |
|                                                      |                              |   |                               | 17,758 |   |   |   | 13,056 |   |
| Accumulated                depreciation and amortization  |                              |   |                               | (5,472 | ) |   |   | (3,531 | ) |
| Property                and equipment,                net |                              |   | $                                  | 12,286 |   |   | $ | 9,525 |   |

**NOTE      11 − INTANGIBLE ASSETS**

|                                                 |                                        |   | **September                  30,** |   |
|------------------------------------------------------|---------------------------------------------|--------|------------------------------------|--------|
|                                                 | **Estimated                  Useful Lives** |   | **2007**                           |   |   | **2006** |   |
| Customer                lists                        | 10                years                     |   | $                                  | 4,760  |   |   | $ | − |   |
| Other                intangibles                     | 7 years                                |   |                               | 332    |   |   |   | 332 |   |
|                                                 |                                        |   |                               | 5,092  |   |   |   | 332 |   |
| Accumulated                amortization              |                                        |   |                               | (318   | ) |   |   | (237 | ) |
| Intangible                assets,                net |                                        |   | $                                  | 4,774  |   |   | $ | 95 |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      11 − INTANGIBLE ASSETS − (Continued)**

| 2008                 |   | $      | 446   |   |
|------------------------------------------|--------|--------|-------|--------|
| 2009                 |   |   | 681   |   |
| 2010            |   |   | 797   |   |
| 2011       |   |   | 825   |   |
| 2012       |   |   | 688   |   |
| Thereafter                     |   |   | 1,337 |   |
|                                     |   | $      | 4,774 |   |

**NOTE      12 – BORROWINGS**

|                                                                                                                                    |   | **As                  of September 30,** |    |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|---------|
|                                                                                                                                    |   | **2007**                                 |    |   | **2006** |   |
|                                                                                                                                    |   | **Amount                  of Facility**  |    |   | **Balance** |   |   | **Balance** |   |
|                                                                                                                                    |   | (in                millions)             |    |   | (in                thousands) |   |   | (in                thousands) |   |
| Financial                fund management - Secured warehouse credit facilitiesconsolidated                under FIN                46-R |   | $                                        | 300.0   |   |   | $ | 50,626 |   |   | $ | − |   |
|                                                                                                                                    |   |                                     | 570.9   |   |   |   | 223,549 |   |   |   | − |   |
|                                                                                                                                    |   |                                     | 400.0   |   |   |   | 165,364 |   |   |   | 2,900 |   |
|                                                                                                                                    |   |                                     | − |   |   |   | − |   |   |   | 66,397 |   |
|                                                                                                                                    |   | $                                        | 1,270.9 |   |   |   | 439,539 |   |   |   | 69,297 |   |
|                                                                                                                                    |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Commercial                finance - Secured revolving credit facilities                                                                 |   | $                                        | 100.0   |   |   |   | − |   |   |   | − |   |
|                                                                                                                                    |   |                                     | 150.0   |   |   |   | 83,900 |   |   |   | 86,400 |   |
|                                                                                                                                    |   |                                     | 250.0   |   |   |   | 137,637 |   |   |   | − |   |
|                                                                                                                                    |   | $                                        | 500.0   |   |   |   | 221,537 |   |   |   | 86,400 |   |
|                                                                                                                                    |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Corporate                – Secured revolving credit facilities                                                                    |   | $                                        | 75.0    |   |   |   | 29,600 |   |   |   | − |   |
|                                                                                                                                    |   |                                     | 14.0    |   |   |   | − |   |   |   | − |   |
|                                                                                                                                    |   | $                                        | 89.0    |   |   |   | 29,600 |   |   |   | − |   |
|                                                                                                                                    |   |                                     |    |   |   |   |   |   |   |   |   |   |
| Other                debt                                                                                                               |   |                                     |    |   |   |   | 15,696 |   |   |   | 16,541 |   |
| Total                borrowings                outstanding                                                                              |   |                                     |    |   |   | $ | 706,372 |   |   | $ | 172,238 |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      12 – BORROWINGS − (Continued)**

*Financial      fund management - Secured warehouse credit facilities*

|   | · | In                July 2007, a $300.0 million facility was opened with affiliates of                Morgan                Stanley Bank (“Morgan Stanley”) and expires on January                16,** **2008.  The associated CDO is                anticipated to close in fiscal 2008.  The interest rate is LIBOR                plus 75 basis points.  The facility provides for a guarantee by                the Company as well as an escrow deposit (see Note 19).  Average                borrowings in fiscal 2007 were $3.0 million at an average interest                rate of                6.1%. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                January 2007, a EUR 400.0 million facility (approximately $570.9                million                at September 30, 2007) was opened with Morgan Stanley.  The                facility expires on January 11, 2008.  The associated CDO is                anticipated to close in fiscal 2008.  The interest rate is                European LIBOR plus 75 basis points.  The facility provides for                a guarantee by the Company as well as an escrow deposit (see Note                19).  Average borrowings in fiscal 2007 were $108.0 million at                an average interest rate of 5.0%. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                August 2006, a $400.0 million facility was opened with affiliates of                Credit Suisse Securities (USA) LLC (“Credit Suisse”).  The                associated CDO is scheduled to close in December 2007.  The                interest rate is LIBOR plus 62.5 basis points.  The facility                provides for a guarantee by the Company as well as an escrow deposit                (see                Note 19).  Average borrowings in fiscal 2007 were $138.5 million                at an average interest rate of 6.0%.  Average borrowings in                fiscal 2006 were $134,000 at an average interest rate of                6.0%. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                EUR 300.0 million facility opened June 2006 with affiliates of Credit                Suisse International was terminated in May 2007.  The interest                rate was at European LIBOR plus 65 basis points.  Average                borrowings for fiscal 2007 were $114.2 million at an average interest                rate                of 4.5%.  Average borrowings for fiscal 2006 were $7.1 million                at an average rate of 3.5%.  The balance outstanding at September 30,                2006 was $66.4 million; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $350.0 million facility opened May 2005 with Credit Suisse First                Boston                was terminated in December 2005.  Average borrowings for fiscal                2006 were $35.5 million at an average interest rate of                4.0%; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $290.0 million facility with J.P. Morgan opened March 2006 was transferred                to and assumed by an unrelated third party in July 2006, including                $59.1                million of outstanding borrowings.  Average borrowings for                fiscal 2006 were $8.0 million at an average interest rate of                5.8%; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $350.0 million facility with affiliates of Credit Suisse opened December                2006 was transferred and assumed by RCC in January 2007, including                $149.3                million of outstanding borrowings.  The escrow deposit was                returned with interest to the Company. Average borrowings in fiscal                2007                were $2.4 million at an average interest rate of 6.0%;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $250.0 million facility with Morgan Stanley opened March 2006 was                terminated in September 2006.  Average borrowings for fiscal                2006 were $49.5 million at an average interest rate of                6.2%. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      12 – BORROWINGS − (Continued)**

*Commercial      finance - Secured revolving credit facilities*

*Commercial      finance – Terminated Secured revolving credit facilities*

|   | · | Merit                was formed in March 2007 as a joint venture between LEAF and a financial                institution to provide capital advances to small companies based                on future                credit card receipts.  The partner provided Merit a $1.5 million                convertible subordinated 15% note (convertible into a 50% ownership                interest in Merit) and a $30.0 million line of credit.  The note                was repaid and terminated by mutual agreement of the parties and                the $2.2                million of outstanding borrowings on the line of credit were repaid                and                the facility was terminated.  In September 2007, in connection                with the termination agreement, outstanding interest and fees due                the                lender were settled and the lender was issued warrants to acquire                30% of                Merit.  Merit paid $720,000 in connection with this settlement,                of which $611,000 was allocated to the settlement of the equity conversion                feature and is reflected in the statement of changes in stockholders’                equity at September 30, 2007.  Interest on the line was charged                at a rate of LIBOR plus 8.5%.  Weighted average borrowings in                fiscal 2007 were $172,000 at an effective interest rate of 13.1%,                exclusive of origination and unused fees of                $94,000. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Two                secured commercial finance revolving credit facilities were repaid                and                terminated in July 2006 with the proceeds from the $150.0 million                National                City Bank facility.  Weighted average borrowings on these                facilities in fiscal 2006 were $60.6 million, at a weighted average                interest rate of 7.0%. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      12 – BORROWINGS − (Continued)**

*Corporate      – Secured revolving credit facilities*

*     Commerce      Bank, N.A.*

*Sovereign      Bank.  *

*Other      debt − Real estate-mortgage loan*

*Other      debt − Real estate-FIN 46-R mortgage loan*

*Other      debt − Notes*

*Secured      Notes.  *

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      12 – BORROWINGS −* *(Continued)**

*Other      debt − Notes − (Continued)*

** **

*Debt      repayments*

| 2008                                                        |   | $      | 149,146 | (1)    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
| 2009                                                        |   |   | 33,383  |   |
| 2010                                                        |   |   | 71,331  |   |
| 2011                                                        |   |   | 12,290  |   |
| 2012                                                        |   |   | 207     |   |
| Thereafter                                                  |   |   | 476     |   |
|                                                                                                                                                                                                                                                                                                             |   | $      | 266,833 |   |

----

| (1) | Excludes                $439.5 million related to borrowings under financial fund management                secured warehouse credit facilities that are anticipated to be transferred                to the CDO issuers upon the closing of the associated CDOs and will                not                have to be repaid by the Company (see Note                19). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Covenants*

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      13 – COMPREHENSIVE INCOME (LOSS)**

|                                                                                                                                                                         |   | **Years                  Ended September 30,** |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                                                                                                         |   | **2007**                                       |    |   | **2006** |   |   | **2005** |   |
| Net                income                                                                                                                                                    |   | $                                              | 4,354   |   |   | $ | 19,870 |   |   | $ | 16,458 |   |
| Other                comprehensive income (loss):                                                                                                                            |   |                                           |    |   |   |   |   |   |   |   |   |   |
| Unrealized                (losses) gains on                investment securitiesavailable-for-sale,                net of tax                of $(11,908), $2,003 and $1,368 |   |                                           | (14,027 | ) |   |   | 3,225 |   |   |   | 2,001 |   |
| Less:                reclassification for                losses (gains) realized in net income,net                of tax of $4,431, $255 and                $618             |   |                                           | 4,612   |   |   |   | (400 | ) |   |   | (927 | ) |
|                                                                                                                                                                         |   |                                           | (9,415  | ) |   |   | 2,825 |   |   |   | 1,074 |   |
| Minimum                pension liability                adjustment, net of tax of $(245), $0and                $0                                                            |   |                                           | (256    | ) |   |   | − |   |   |   | − |   |
| Unrealized                gains (losses) on                hedging contracts, net of tax of$(703),                $0 and                $122                                 |   |                                           | (732    | ) |   |   | − |   |   |   | 227 |   |
| Add:                reclassification for                losses realized in net income,net                of tax of $0, $0 and                $248                            |   |                                           | − |   |   |   | − |   |   |   | 461 |   |
| Foreign                currency translation                gain                                                                                                              |   |                                           | 924     |   |   |   | − |   |   |   | − |   |
| Comprehensive                income (loss)                                                                                                                                   |   | $                                              | (5,125  | ) |   | $ | 22,695 |   |   | $ | 18,220 |   |

**NOTE      14 - DERIVATIVES**

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      15 - INCOME TAXES**

|                                                   |   | **Years                    Ended September 30,** |    |
|--------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                   |   | **2007**                                         |    |   | **2006** |   |   | **2005** |   |
| Provision                  (benefit) for income taxes: |   |                                             |    |   |   |   |   |   |   |
| Current:                                               |   |                                             |    |   |   |   |   |   |   |
| Federal                                                |   | $                                                | 10,947  |   |   | $ | 5,238 |   |   | $ | - |   |
| State                                                  |   |                                             | 6,304   |   |   |   | 1,118 |   |   |   | - |   |
|                      Deferred           |   |                                             | (14,487 | ) |   |   | (3,120 | ) |   |   | 3,591 |   |
| Income                  tax provision                  |   | $                                                | 2,764   |   |   | $ | 3,236 |   |   | $ | 3,591 |   |

|                                                                           |   | **Years                  Ended September 30,** |                                 |
|--------------------------------------------------------------------------------|--------|------------------------------------------------|--------------------------------------|
|                                                                           |   | **2007**                                       |                                 |   | **2006** |   |   | **2005** |   |
| Statutory                tax rate                          |   |                                           | 35%                                  |   |   |   | 35% |   |   |   | 35%   |   |
| State                and local taxes, net of federal benefit    |   |                                           |                  5    |   |   |   | 5 |   |   |   | 7    |   |
| Valuation                allowance for deferred tax assets                     |   |                                           | (13)                       |   |   |   | (17)   |   |   |   | (4)     |   |
| Non-deductible                compensation                           |   |                                           | 5                               |   |   |   | 1 |   |   |   | 1    |   |
| Stock                option expense                                       |   |                                           | 6                               |   |   |   | 1 |   |   |   | −    |   |
| Deferred                tax asset for net operating losses                |   |                                           | (4)                        |   |   |   | (6) |   |   |   | −    |   |
| Other                items                                                     |   |                                           | (2)                             |   |   |   | (3) |   |   |   | 1   |   |
|                                                                           |   |                                           | 32%                                  |   |   |   | 16% |   |   |   | 40% |   |

|                                                                      |   | **September                  30,** |    |
|---------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                      |   | **2007**                           |    |   | **2006** |   |
| Deferred                tax assets related to:                            |   |                               |    |   |   |   |
| Provision                for possible                losses               |   | $                                  | 13,215  |   |   | $ | 191 |   |
| Foreign,                state and local loss                carryforwards |   |                               | 8,985   |   |   |   | 7,693 |   |
| Employee                stock                options                      |   |                               | 3,920   |   |   |   | − |   |
| Unrealized                loss on                investments              |   |                               | 5,310   |   |   |   | − |   |
| Gross                deferred tax                assets                   |   |                               | 31,430  |   |   |   | 7,884 |   |
| Less:  valuation                allowance                       |   |                               | (435    | ) |   |   | (1,476 | ) |
| Total                deferred tax                assets                   |   |                               | 30,995  |   |   |   | 6,408 |   |
|                                                                      |   |                               |    |   |   |   |   |   |
| Deferred                tax liabilities related to:                       |   |                               |    |   |   |   |   |   |
| Investments                in partnership                interests        |   |                               | (9,787  | ) |   |   | (3,035 | ) |
| Accrued                expenses                                           |   |                               | (609    | ) |   |   | (2,282 | ) |
| Property                and equipment basis                differences    |   |                               | (552    | ) |   |   | (828 | ) |
| Investments                in real estate                assets           |   |                               | (176    | ) |   |   | (1,485 | ) |
| Unrealized                gain on                investments              |   |                               | − |   |   |   | (3,116 | ) |
| Total                deferred tax                liabilities              |   |                               | (11,124 | ) |   |   | (10,746 | ) |
| Net                deferred tax asset (liability)                         |   | $                                  | 19,871  |   |   | $ | (4,338 | ) |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      15 - INCOME TAXES − (Continued)**

*Corporation Application for Tentative Refund*

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      16 - BENEFIT PLANS**

*Employee      Stock      Plans.  *

|                                               |   | **Years                  Ended September 30,** |                                               |
|----------------------------------------------------|--------|------------------------------------------------|----------------------------------------------------|
|                                               |   | **2007**                                       |                                               |   | **2006** |   |   | **2005** |   |
| Fair                value of stock options granted |   | $                                              | 10.50                                              |   |   | $ |  9.20 |   |   | $ |                        6.83 |   |
| Expected                life (years)               |   |                                           |                  6.3                          |   |   |   | 6.3 |   |   |   |                   8.0 |   |
| Expected                stock volatility           |   |                                           |                    30.1%            |   |   |   | 27.8% |   |   |   | 28.0% |   |
| Risk-free                interest rate             |   |                                           |                      4.9% |   |   |   |                  4.0% |   |   |   | 4.3% |   |
| Dividend                yield                      |   |                                           |                     1.8%       |   |   |   |                  1.2% |   |   |   | 1.1% |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      16 - BENEFIT PLANS − (Continued)**

*Restricted      common      stock.  *

|                                                                     |   |       |      |   | **Weighted** |   |   | **Weighted**    |   |   |          |   |
|--------------------------------------------------------------------------|--------|------------|-----------|--------|--------------|--------|--------|-----------------|--------|--------|---------------|--------|
|                                                                     |   |       |      |   | **Average**  |   |   | **Average**     |   |   | **Aggregate** |   |
|                                                                     |   |       |      |   | **Exercise** |   |   | **Contractual** |   |   | **Intrinsic** |   |
| **Stock                  Options Outstanding**                           |   | **Shares** |      |   | **Price**    |   |   | **Life**        |   |   | **Value**     |   |
| Balance                  – beginning of year                       |   |       | 3,641,096 |   |         | $      | 7.77   |            |   |   |          |   |   |   |
| Granted                                                                  |   |       | 57,500    |   |         | $      | 25.33  |            |   |   |          |   |   |   |
| Exercised                                                                |   |       | (363,835  | )      |         | $      | 3.36   |            |   |   |          |   |   |   |
| Forfeited                                                                |   |       | (18,000   | )      |         | $      | 19.86  |            |   |   |          |   |   |   |
| Balance                  -                  end of                  year |   |       | 3,316,761 |   |         | $      | 8.49   |            |   | $      | 4.78          |   |   | $ | 25,348,000 |   |
|                                                                     |   |       |      |   |         |   |   |            |   |   |          |   |   |   |   |   |
| Exercisable,                  at end of year                             |   |       | 3,018,891 |   |         | $      | 7.55   |            |   |   |          |   |   |   |   |   |
| Available                  for grant                                     |   |       | 1,098,019 | (1)    |         |   |   |            |   |   |          |   |   |   |   |   |

----

| (1)   | Adjusted                  for (a) an increase of 1,000,000 shares authorized by shareholders                  at the                  2007 Annual Meeting; and (b) reduced for other equity awards shares                  that                  have been granted under the 2005                  Plan. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      16 - BENEFIT PLANS − (Continued)**

|                                                                             |   | **Shares** |     |   | **Weighted                  Average Grant Date****Fair                  Value** |   |
|----------------------------------------------------------------------------------|--------|------------|----------|--------|---------------------------------------------------------------------------------|--------|
| **Nonvested                Stock Options**                                       |   |       |     |   |                                                                            |   |
| Outstanding                – October 1, 2006      |   |       | 374,554  |   |                                                                            | $      | 7.37 |   |
| Granted                                                 |   |       | 57,500   |   |                                                                            | $      | 10.28 |   |
| Vested                                                       |   |       | (116,184 | )      |                                                                            | $      | 7.06 |   |
| Forfeited                                                                   |   |       | (18,000  | )      |                                                                            | $      | 13.83 |   |
| Outstanding                – September 30, 2007                       |   |       | 297,870  |   |                                                                            | $      | 7.70 |   |
| **Nonvested                Restricted Stock**                                    |   |       |     |   |                                                                            |   |   |   |
| Outstanding                – October 1, 2006                     |   |       | 83,519   |   |                                                                            | $      | 17.27 |   |
| Granted                                                                     |   |       | 137,446  |   |                                                                            | $      | 25.69 |   |
| Vested                                                                      |   |       | (20,873  | )      |                                                                            | $      | 17.27 |   |
| Forfeited                 |   |       | (384     | )      |                                                                            | $      | 25.99 |   |
| Outstanding                – September 30, 2007             |   |       | 199,708  |   |                                                                            | $      | 22.50 |   |

*Performance–Based      Awards.*

*Deferred      Stock and Deferred      Compensation*
* P*
*lans.  *

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      16 - BENEFIT PLANS − (Continued)**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **Shares** |    |   | **Weighted                  Average Grant Date****Fair                  Value** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|---------|--------|---------------------------------------------------------------------------------|--------|
| Units                outstanding – October 1,                2006                                                                                                           |   |       | 140,684 |   |                                                                            | $      | 6.14 |   |
| Granted                                                                                                                                                                                          |   |       | 4,816   |   |                                                                            | $      | 23.34 |   |
| Shares                issued upon                termination                                                                                                                                     |   |       | − |   |                                                                            | $      | − |   |
| Forfeited                                                                                                                                                                                        |   |       | − |   |                                                                            | $      | − |   |
| Units                outstanding - September                30,                2007                                                                                          |   |       | 145,500 |   |                                                                            | $      | 6.71 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |       |    |   |                                                                            |   |   |   |
| Vested                units                                                                                                                                                       |   |       | 138,240 |   |                                                                            | $      | 6.16 |   |
| Units                available for                grant                                                                                                                           |   |       | 111,026 |   |                                                                            |   |   |   |

| **Nonvested                  Director Units**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **Shares** |    |   | **Weighted                    Average Grant Date****Fair                    Value** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|---------|--------|-------------------------------------------------------------------------------------|--------|
| Outstanding                  – October 1,                  2006                                                                                                             |   |       | 5,495   |   |                                                                                | $      | 18.01 |   |
| Granted                                                                                                                                                                                          |   |       | 4,816   |   |                                                                                | $      | 23.33 |   |
| Vested                                                                                                                                                                                           |   |       | (3,051  | )      |                                                                                | $      | 21.12 |   |
| Forfeited                                                                                                                                                                                        |   |       | − |   |                                                                                | $      | − |   |
| Outstanding                  - September                  30,                  2007                                                                                          |   |       | 7,260   |   |                                                                                | $      | 21.06 |   |

*Employee      Stock Ownership      Plan.*

*     Investment      Savings      Plan.*
** $**

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      16 - BENEFIT PLANS − (Continued)**

*Supplemental      Employment Retirement      Plan.*

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **Years                  Ended September 30,** |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **2007**                                       |    |   | **2006** |   |   | **2005** |   |
| Interest                cost                                                                                                                      |   | $                                              | 518     |   |   | $ | 535 |   |   | $ | 582 |   |
| Expected                return on plan                assets                                                                                      |   |                                           | (210    | ) |   |   | (151 | ) |   |   | (124 | ) |
| Amortization                of net                loss                                                                                            |   |                                           | − |   |   |   | − |   |   |   | 37 |   |
| Net                cost                                                                                                                                     |   | $                                              | 308     |   |   | $ | 384 |   |   | $ | 495 |   |

|                                                               |   | **September                  30,** |   |
|--------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                               |   | **2007**                           |   |   | **2006** |   |
| Projected                benefit obligation, beginning of year     |   | $                                  | 6,895  |   |   | $ | 7,112 |   |
| Interest                cost                                       |   |                               | 518    |   |   |   | 535 |   |
| Actuarial                loss                                      |   |                               | 74     |   |   |   | 86 |   |
| Benefit                payments                                    |   |                               | (838   | ) |   |   | (838 | ) |
| Projected                benefit obligation, end of year           |   | $                                  | 6,649  |   |   | $ | 6,895 |   |
|                                                               |   |                               |   |   |   |   |   |   |
| Fair                value of plan assets, beginning of year        |   | $                                  | 3,501  |   |   | $ | 2,511 |   |
| Actual                return (loss) on plan                assets  |   |                               | (347   | ) |   |   | 990 |   |
| Fair                value of plan assets, end of year              |   | $                                  | 3,154  |   |   | $ | 3,501 |   |
|                                                               |   |                               |   |   |   |   |   |   |
| Unfunded                status                                     |   | $                                  | (3,495 | ) |   | $ | (3,394 | ) |
| Unrecognized                net actuarial (gain) loss              |   |                               | 501    |   |   |   | (129 | ) |
| Net                accrued cost                                    |   | $                                  | (2,994 | ) |   | $ | (3,523 | ) |
|                                                               |   |                               |   |   |   |   |   |   |
| Amounts                recognized in the balance sheet consist of: |   |                               |   |   |   |   |   |   |
| Accrued                benefit                liability            |   | $                                  | (3,495 | ) |   | $ | (3,523 | ) |
| Accumulated                other comprehensive                loss |   |                               | 256    |   |   |   | − |   |
| Deferred                income tax                asset            |   |                               | 245    |   |   |   | − |   |
| Net                amount                recognized                |   | $                                  | (2,994 | ) |   | $ | (3,523 | ) |

| 2008       |   | $ | 825,286   |   |
|------------|--------|---|-----------|--------|
| 2009       |   | $ | 800,021   |   |
| 2010       |   | $ | 773,084   |   |
| 2011       |   | $ | 744,458   |   |
| 2012       |   | $ | 714,091   |   |
| Thereafter |   | $ | 1,803,861 |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      17 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS**

|                                                                                              |   | **September                  30,** |    |
|---------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                                              |   | **2007**                           |    |   | **2006** |   |
| **Receivables                from managed entities and related parties:**                         |   |                               |    |   |   |   |
| Commercial                finance investment                partnerships                          |   | $                                  | 9,229   |   |   | $ | 3,938 |   |
| Financial                fund management                entities                                  |   |                               | 5,341   |   |   |   | 2,064 |   |
| Real                estate investment                partnerships and TIC property interests, net |   |                               | 3,439   |   |   |   | 952 |   |
| RCC                                                                                               |   |                               | 2,034   |   |   |   | 1,409 |   |
| Other                                                                                             |   |                               | 134     |   |   |   | 432 |   |
| Receivables                from managed                entities and related parties, net          |   | $                                  | 20,177  |   |   | $ | 8,795 |   |
| **Payables                due to managed entities and related parties:**                          |   |                               |    |   |   |   |   |   |
| Real                estate investment                partnerships and TIC property interests      |   | $                                  | 1,163   |   |   | $ | 1,325 |   |
| Other                                                                                             |   |                               | − |   |   |   | 254 |   |
| Payables                to managed entities                and related parties                    |   | $                                  | 1,163   |   |   | $ | 1,579 |   |

|                                                                                                                                   |   | **Years                  Ended September 30,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                                                                                   |   | **2007**                                       |   |   | **2006** |   |   | **2005** |   |
| **Financial                Fund Management -** fees from managed entities                                                              |   | $                                              | 12,318 |   |   | $ | 8,726 |   |   | $ | 6,385 |   |
| **Real                Estate** - fees from investment partnerships andTIC                property                interests   |   |                                           | 9,216  |   |   |   | 11,452 |   |   |   | 3,554 |   |
| **Commercial                finance** - fees from investment partnerships                                                              |   |                                           | 17,048 |   |   |   | 5,816 |   |   |   | 2,871 |   |
| **RCC:**                                                                                                                               |   |                                           |   |   |   |   |   |   |   |   |   |   |
| Management,                incentive and                servicing fees                                                            |   |                                           | 8,963  |   |   |   | 8,203 |   |   |   | 3,925 |   |
| Reimbursement                of expenses from                RCC                                                                  |   |                                           | 1,938  |   |   |   | 718 |   |   |   | 631 |   |
| Dividends                received                                                                                                 |   |                                           | 3,173  |   |   |   | 2,722 |   |   |   | 213 |   |
| **Atlas                America** - reimbursement of net costs and expenses                                                             |   |                                           | 1,114  |   |   |   | 1,303 |   |   |   | 1,015 |   |
| **Anthem                Securities:**                                                                                                  |   |                                           |   |   |   |   |   |   |   |   |   |   |
| Payment                of operating                expenses                                                                            |   |                                           | (826   | ) |   |   | (1,166 | ) |   |   | (270 | ) |
| Reimbursement                of costs and                expenses                                                            |   |                                           | 688    |   |   |   | 2,906 |   |   |   | 653 |   |
| **1845                Walnut Associates Ltd. -**payment of rent andoperating                expenses                              |   |                                           | (492   | ) |   |   | (450 | ) |   |   | (420 | ) |
| **9                Henmar LLC -**payment of broker/consulting fees                                                                     |   |                                           | (455   | ) |   |   | (479 | ) |   |   | (438 | ) |
| **Ledgewood                P.C. –**payment of legal services                                                                |   |                                           | (521   | ) |   |   | (472 | ) |   |   | (1,012 | ) |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      17 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS −(Continued)**

*Relationship      with      RCC.  *

|   | · | unsatisfactory                performance; and/or |
|--------|--------|---------------------------------------------------|

|   | · | unfair                compensation payable to the Company and fair compensation cannot                be agreed                upon between two-thirds of the independent directors of RCC and the                Company. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Relationship      with 1845 Walnut Associates Ltd.*

*Relationship      with Certain      Directors, Officers, Employees and Other Related      Parties.*

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      17 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS −(Continued)**

*Relationship      with Retirement      Trusts.  *

*             Relationship with Ledgewood P.C.*

*Relationship      with Atlas      America.  *

*Relationship      with Anthem      Securities.  *

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      17 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS −(Continued)**

*Relationship      with 9 Henmar LLC (“9      Henmar”).  *

*Relationship      with The Bancorp,      Inc.  *

*Relationship      with RAIT Investment      Trust (“RAIT”) (NYSE: RAS).*

*             Relationship with Brandywine Construction & Management, Inc. *

*     Transactions      between LEAF and      RCC.  *

*Relationship      with      Lienholder*

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      18 − OTHER (LOSS) INCOME, NET**

|                                                                                  |   | **Years                  Ended September 30,** |    |
|---------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                  |   | **2007**                                       |    |   | **2006** |   |   | **2005** |   |
| **Other                expenses (1):**                                                |   |                                           |    |   |   |   |   |   |   |
| Impairment                charge on CDO                investments                    |   | $                                              | (12,580 | ) |   | $ | − |   |   | $ | − |   |
| Loss                on sale of                loans                                   |   |                                           | (5,025  | ) |   |   | − |   |   |   | − |   |
| Write-off                of European real                estate investment fund costs |   |                                           | (4,775  | ) |   |   | − |   |   |   | − |   |
|                                                                                  |   |                                           | (22,380 | ) |   |   | − |   |   |   | − |   |
| **Other                income:**                                                      |   |                                           |    |   |   |   |   |   |   |   |   |   |
| Gain                on sale of TBBK                shares                             |   |                                           | 3,533   |   |   |   | 668 |   |   |   | − |   |
| RCC                dividend                income                                     |   |                                           | 3,173   |   |   |   | 2,722 |   |   |   | 213 |   |
| Litigation                settlements                                                 |   |                                           | − |   |   |   | 1,188 | (2) |   |   | 1,400 | (3) |
| Gain                on sale of RAIT                shares                             |   |                                           | − |   |   |   | − |   |   |   | 1,544 |   |
| Interest                income                                                        |   |                                           | 761     |   |   |   | 534 |   |   |   | 871 |   |
| Other                income,                net                                       |   |                                           | 518     |   |   |   | 42 |   |   |   | 522 |   |
|                                                                                  |   |                                           | 7,985   |   |   |   | 5,154 |   |   |   | 4,550 |   |
| Other                (loss) income,                net                                |   | $                                              | (14,395 | ) |   | $ | 5,154 |   |   | $ | 4,550 |   |

----

| (1) | In                connection with the substantial volatility and reduction in liquidity                in                global credit markets which commenced in July 2007, the Company in                the                fourth quarter of fiscal 2007                recorded: |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                $12.6 million charge reflecting the other–than-temporary impairment of                certain of the Company’s investments in CDOs, primarily those with                investments in real estate ABS and CMBS, and trust preferred securities                of                a subprime lender and a subprime                investor; |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                loss of $5.0 million from the sale of corporate loans held for investment,                principally in Europe.  The sales reduced the Company’s exposure                to corporate bank loans; and |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | a                $4.8 million write-off of costs that were to be reimbursed by a European                real estate investment fund the Company was sponsoring and which                was not                closed due to market conditions. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | In                fiscal 2002, the Company had charged operations $1.0 million for                the                amount of its maximum exposure relating to the settlement of a                lawsuit.  One of the Company’s insurance carriers refused to                participate in the settlement.  The Company thereafter filed an                action seeking recovery on its policy with that carrier.  In the                second quarter of fiscal 2006, the Company prevailed in its action                against                the carrier, received a $200,000 cost reimbursement and accordingly,                reversed the $1.0 million accrual. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The                Company settled an action filed in the U.S. District Court for the                District of Oregon by the former chairman of TRM Corporation and                his                children.  The Company’s Chairman and a former director and                officer also had been named as defendants.  The plaintiffs'                claims were for breach of contract and fraud.  The Company                recorded a charge of $1.2 million, including related legal fees,                in fiscal                2003.  The Company subsequently filed an action against one of                its directors’ and officers’ liability insurance carriers in connection                with this settlement and recovered $1.4 million in fiscal                2005. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS -      (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      19 - COMMITMENTS AND CONTINGENCIES**

| 2008       |   | $      | 3,043  |   |
|------------|--------|--------|--------|--------|
| 2009       |   |   | 2,768  |   |
| 2010       |   |   | 1,925  |   |
| 2011       |   |   | 1,264  |   |
| 2012       |   |   | 1,289  |   |
| Thereafter |   |   | 6,531  |   |
|       |   | $      | 16,820 |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS -      (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      19 - COMMITMENTS AND CONTINGENCIES − (Continued)**

**NOTE      20 – FAIR VALUE OF FINANCIAL INSTRUMENTS**

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS -      (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      20 – FAIR VALUE OF FINANCIAL INSTRUMENTS − (Continued)**

|                                     |   | **September                  30, 2007** |    |   | **September                  30, 2006**   |   |
|------------------------------------------|--------|-----------------------------------------|---------|--------|-------------------------------------------|--------|
|                                     |   | **Carrying                  Amount**    |    |   | **Estimated                  Fair Value** |   |   | **Carrying                  Amount** |   |   | **Estimated                  Fair Value** |   |
| **Assets**                               |   |                                    |    |   |                                      |   |   |   |   |   |   |   |
| Loans                held for investment |   | $                                       | 285,928 |   |                                      | $      | 272,613 |   |   | $ | 69,314 |   |   | $ | 69,532 |   |
|                                     |   |                                    |    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| **Borrowings(1)**                        |   |                                    |    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Secured                warehouse debt    |   | $                                       | 439,539 |   |                                      | $      | 439,539 |   |   | $ | 69,297 |   |   | $ | 69,297 |   |
| Real                estate debt          |   |                                    | 13,768  |   |                                      |   | 13,768 |   |   |   | 14,028 |   |   |   | 14,028 |   |
| Commercial                finance debt   |   |                                    | 221,537 |   |                                      |   | 221,537 |   |   |   | 86,400 |   |   |   | 86,400 |   |
| Other                debt                |   |                                    | 31,528  |   |                                      |   | 31,528 |   |   |   | 2,513 |   |   |   | 2,513 |   |
|                                     |   | $                                       | 706,372 |   |                                      | $      | 706,372 |   |   | $ | 172,238 |   |   | $ | 172,238 |   |

----

| (1) | The                carrying value of the Company’s floating rate debt approximates its fair                value because of the short-term maturity of these instruments and                the                variable interest rates in the debt agreements.  The carrying                value of the Company’s fixed rate debt approximates its fair value due to                its recent issuance. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**NOTE 21 – DISCONTINUED      OPERATIONS**

*     Energy.  *

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **Years                  Ended September 30,** |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **2006**                                       |    |   | **2005** |   |
| Income                from discontinued operations before                taxes                                                                                                         |   | $                                              | − |   |   | $ | 31,451 |   |
| Loss                on                disposal                                                                                                                                         |   |                                           | (73     | ) |   |   | (2,652 | ) |
| Benefit                (provision) for income                taxes                                                                                                                     |   |                                           | 26      |   |   |   | (12,322 | ) |
| (Loss)                income from discontinued operations, net of                tax                                                                                                   |   | $                                              | (47     | ) |   | $ | 16,477 |   |

*Real      Estate.  *

|                                                                   |   | **Years                  Ended September 30,** |   |
|------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                   |   | **2007**                                       |   |   | **2006** |   |   | **2005** |   |
| (Loss)                income from discontinued operations before taxes |   | $                                              | (2,095 | ) |   | $ | 2,674 |   |   | $ | 1,306 |   |
| Loss                on disposal, net                                   |   |                                           | (329   | ) |   |   | (883 | ) |   |   | (9,396 | ) |
| Benefit                (provision) for income taxes                    |   |                                           | 848    |   |   |   | (591 | ) |   |   | 2,875 |   |
| (Loss)                income from discontinued operations, net of tax  |   | $                                              | (1,576 | ) |   | $ | 1,200 |   |   | $ | (5,215 | ) |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS -      (Continued)**

**SEPTEMBER      30, 2007**

**NOTE 21 – DISCONTINUED OPERATIONS -        (Continued)**

*Other.  *

|                                                                  |   | **Years                  Ended September 30,** |    |
|-----------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                  |   | **2007**                                       |    |   | **2006** |   |   | **2005** |   |
| Income                from discontinued operations before taxes       |   | $                                              | − |   |   | $ | − |   |   | $ | 40 |   |
| Gain                (loss) on disposal                                |   |                                           | 200     |   |   |   | 120 |   |   |   | (336 | ) |
| (Provision)                benefit for income taxes                   |   |                                           | (70     | ) |   |   | (42 | ) |   |   | 104 |   |
| Income                (loss) from discontinued operations, net of tax |   | $                                              | 130     |   |   | $ | 78 |   |   | $ | (192 | ) |

*      Total.  *

|                                                                   |   | **Years                  Ended September 30,** |   |
|------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                   |   | **2007**                                       |   |   | **2006** |   |   | **2005** |   |
| (Loss)                income from discontinued operations before taxes |   | $                                              | (2,095 | ) |   | $ | 2,674 |   |   | $ | 32,797 |   |
| Loss                on disposal                                        |   |                                           | (129   | ) |   |   | (836 | ) |   |   | (12,384 | ) |
| Benefit                (provision) for income taxes                    |   |                                           | 778    |   |   |   | (607 | ) |   |   | (9,343 | ) |
| (Loss)                income from discontinued operations, net of tax  |   | $                                              | (1,446 | ) |   | $ | 1,231 |   |   | $ | 11,070 |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS -      (Continued)**

**SEPTEMBER      30, 2007**

**NOTE      22 - OPERATING      SEGMENTS**

|                                                                                                                    |   | **Financial                  fund management** |    |   | **Commercial                  finance** |   |    | **Real                  estate** |   |   | **All                  other (1)** |   |   | **Total** |    |
|-------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|--------|-----------------------------------------|--------|---------|----------------------------------|--------|--------|------------------------------------|--------|--------|-----------|---------|
| **Year                  Ended September 30, 2007**                                                                      |   |                                           |    |   |                                    |   |    |                             |   |   |                               |   |   |      |    |
| Revenues                from external customers                                                                         |   | $                                              | 49,284  |   |                                    | $      | 40,716  |                             |   | $      | 22,808                             |   |   | $         | − |   |   | $ | 112,808 |   |
| Equity                in earnings (losses) of unconsolidated entities                                                   |   |                                           | 14,867  |   |                                    |   | (24     | )                                |   |   | 179                                |   |   |      | − |   |   |   | 15,022 |   |
| Total                revenues                                                                                           |   |                                           | 64,151  |   |                                    |   | 40,692  |                             |   |   | 22,987                             |   |   |      | − |   |   |   | 127,830 |   |
| Segment                operating expenses                                                                               |   |                                           | (21,264 | )      |                                    |   | (19,681 | )                                |   |   | (13,190                            | )      |   |      | − |   |   |   | (54,135 | ) |
| Depreciation                and amortization                                                                            |   |                                           | (103    | )      |                                    |   | (1,243  | )                                |   |   | (692                               | )      |   |      | (886    | ) |   |   | (2,924 | ) |
| Interest                expense                                                                                         |   |                                           | (19,485 | )      |                                    |   | (11,796 | )                                |   |   | (1,040                             | )      |   |      | (1,245  | ) |   |   | (33,566 | ) |
| Other                expense, net (2)                                                                                   |   |                                           | (18,652 | )      |                                    |   | (180    | )                                |   |   | 166                                |   |   |      | (7,833  | ) |   |   | (26,499 | ) |
| Minority                interests                                                                                       |   |                                           | (1,612  | )      |                                    |   | (530    | )                                |   |   | −                            |   |   |      | − |   |   |   | (2,142 | ) |
| Income                (loss) before intercompanyinterest                expense and income                taxes         |   |                                           | 3,035   |   |                                    |   | 7,262   |                             |   |   | 8,231                              |   |   |      | (9,964  | ) |   |   | 8,564 |   |
| Intercompany                interest expense                                                                            |   |                                           | (6,082  | )      |                                    |   | (2,769  | )                                |   |   | −                            |   |   |      | 8,851   |   |   |   | − |   |
| (Loss)                income from continuing                operationsbefore                income                taxes |   | $                                              | (3,047  | )      |                                    | $      | 4,493   |                             |   | $      | 8,231                              |   |   | $         | (1,113  | ) |   | $ | 8,564 |   |
| **Year                  Ended September 30, 2006**                                                                      |   |                                           |    |   |                                    |   |    |                             |   |   |                               |   |   |      |    |   |   |   |   |   |
| Revenues                from external customers                                                                         |   | $                                              | 20,039  |   |                                    | $      | 23,824  |                             |   | $      | 25,614                             |   |   | $         | − |   |   | $ | 69,477 |   |
| Equity                in earnings of unconsolidated entities                                                            |   |                                           | 11,269  |   |                                    |   | 16      |                             |   |   | (2,538                             | )      |   |      | − |   |   |   | 8,747 |   |
| Total                revenues                                                                                           |   |                                           | 31,308  |   |                                    |   | 23,840  |                             |   |   | 23,076                             |   |   |      | − |   |   |   | 78,224 |   |
| Segment                operating expenses                                                                               |   |                                           | (12,099 | )      |                                    |   | (14,443 | )                                |   |   | (11,522                            | )      |   |      | − |   |   |   | (38,064 | ) |
| Depreciation                and amortization                                                                            |   |                                           | (30     | )      |                                    |   | (1,749  | )                                |   |   | (612                               | )      |   |      | (673    | ) |   |   | (3,064 | ) |
| Interest                expense                                                                                         |   |                                           | (5,318  | )      |                                    |   | (4,430  | )                                |   |   | (245                               | )      |   |      | (126    | ) |   |   | (10,119 | ) |
| Other                expense, net (2)                                                                                   |   |                                           | (1,904  | )      |                                    |   | (371    | )                                |   |   | (214                               | )      |   |      | (2,195  | ) |   |   | (4,684 | ) |
| Minority                interests                                                                                       |   |                                           | (1,658  | )      |                                    |   | (117    | )                                |   |   | −                            |   |   |      | − |   |   |   | (1,775 | ) |
| Income                (loss) before intercompanyinterest                expense and income                taxes         |   |                                           | 10,299  |   |                                    |   | 2,730   |                             |   |   | 10,483                             |   |   |      | (2,994  | ) |   |   | 20,518 |   |
| Intercompany                interest expense                                                                            |   |                                           | (3,815  | )      |                                    |   | (1,634  | )                                |   |   | (480                               | )      |   |      | 5,929   |   |   |   | − |   |
| Income                from continuing                operationsbefore                income                taxes        |   | $                                              | 6,484   |   |                                    | $      | 1,096   |                             |   | $      | 10,003                             |   |   | $         | 2,935   |   |   | $ | 20,518 |   |
| **Year                  Ended September 30, 2005**                                                                      |   |                                           |    |   |                                    |   |    |                             |   |   |                               |   |   |      |    |   |   |   |   |   |
| Revenues                from external customers                                                                         |   | $                                              | 5,879   |   |                                    | $      | 13,433  |                             |   | $      | 19,997                             |   |   | $         | − |   |   | $ | 39,309 |   |
| Equity                in earnings (losses) ofunconsolidated                entities                                     |   |                                           | 10,065  |   |                                    |   | (52     | )                                |   |   | (2,206                             | )      |   |      | − |   |   |   | 7,807 |   |
| Total                revenues                                                                                           |   |                                           | 15,944  |   |                                    |   | 13,381  |                             |   |   | 17,791                             |   |   |      | − |   |   |   | 47,116 |   |
| Segment                operating expenses                                                                               |   |                                           | (9,110  | )      |                                    |   | (8,884  | )                                |   |   | (9,903                             | )      |   |      | − |   |   |   | (27,897 | ) |
| Depreciation                and amortization                                                                            |   |                                           | (66     | )      |                                    |   | (1,262  | )                                |   |   | (629                               | )      |   |      | (252    | ) |   |   | (2,209 | ) |
| Interest                expense                                                                                         |   |                                           | (443    | )      |                                    |   | (2,081  | )                                |   |   | (251                               | )      |   |      | (36     | ) |   |   | (2,811 | ) |
| Other                expense, net (2)                                                                                   |   |                                           | (2,446  | )      |                                    |   | (226    | )                                |   |   | (354                               | )      |   |      | (791    | ) |   |   | (3,817 | ) |
| Minority                interests                                                                                       |   |                                           | (1,403  | )      |                                    |   | − |                             |   |   | −                            |   |   |      | − |   |   |   | (1,403 | ) |
| Income                (loss) before intercompanyinterest                expense and income                taxes         |   |                                           | 2,476   |   |                                    |   | 928     |                             |   |   | 6,654                              |   |   |      | (1,079  | ) |   |   | 8,979 |   |
| Intercompany                interest expense                                                                            |   |                                           | − |   |                                    |   | (1,007  | )                                |   |   | (96                                | )      |   |      | 1,103   |   |   |   | − |   |
| Income                (loss) from continuing                operationsbefore                income                taxes |   | $                                              | 2,476   |   |                                    | $      | (79     | )                                |   | $      | 6,558                              |   |   | $         | 24      |   |   | $ | 8,979 |   |

----

**RESOURCE      AMERICA, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS -      (Continued)**

**SEPTEMBER      30, 2005**

**NOTE      22 - OPERATING      SEGMENTS − (Continued)**

|                                                                                                                                                                                                                                                                                                                               |   | **Financial                    fund management** |    |   | **Commercial                    finance** |   |    | **Real                    estate** |   |   | **All                    other (1)** |   |   | **Total** |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|--------|-------------------------------------------|--------|---------|------------------------------------|--------|--------|--------------------------------------|--------|--------|-----------|---------|
| **Segment                    assets**                                                                                                                                                                                                                                                                                              |   |                                             |    |   |                                      |   |    |                               |   |   |                                 |   |   |      |    |
| September                  30,                  2007                                              |   | $                                                | 560,512 |   |                                      | $      | 284,025 |                               |   | $      | 144,790                              |   |   | $         | (19,651 | ) |   | $ | 969,676 |   |
| September                  30,                  2006                                              |   | $                                                | 168,248 |   |                                      | $      | 127,235 |                               |   | $      | 144,718                              |   |   | $         | (23,448 | ) |   | $ | 416,753 |   |
| September                  30,                  2005                                              |   | $                                                | 127,957 |   |                                      | $      | 56,535  |                               |   | $      | 214,833                              |   |   | $         | 59,710  |   |   | $ | 459,035 |   |

----

| (1)   | Includes                  general corporate expenses and assets not allocable to any particular                  segment. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

| (2)   | In                    accordance with Company policy, certain corporate overhead expenses                    are                    allocated to the operating segments based on assets under management,                    which may be effected by, but not limited to, various market                    conditions.  Accordingly, the Company recorded no allocations of                    corporate overhead during the fourth quarter of fiscal                    2007. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*              *

*       Geographic        Information.  *

*Major        Customer.*

----

**RESOURCE        AMERICA, INC.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS -        (Continued)**

**SEPTEMBER        30, 2007**

**NOTE        23 – QUARTERLY RESULTS (Unaudited)**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **December                  31**                       |   |   | **March                  31** |   |   | **June                  30** |   |   | **September                  30** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|--------|-------------------------------|--------|--------|------------------------------|--------|--------|-----------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | (in                  thousands, except per share data) |   |
| **Year                    ended September 30, 2007**                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                   |   |   |                          |   |   |                         |   |   |                              |   |
| Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                                                      | 24,040 |   |                          | $      | 31,602 |                         |   | $      | 38,910                            |   |   | $ | 33,278 |   |
| Operating                  income                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                                                      | 9,301  |   |                          | $      | 14,973 |                         |   | $      | 19,344                            |   |   | $ | 15,049 |   |
| Income                  (loss) from continuing operations beforecumulative                  effect of a change in                  accounting principle                                                                                                                                                                                                                                                                                                                     |   | $                                                      | 4,468  |   |                          | $      | 5,420  |                         |   | $      | 5,955                             |   |   | $ | (10,043 | ) |
| Net                  income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                                                      | 4,449  |   |                          | $      | 5,383  |                         |   | $      | 4,505                             |   |   | $ | (9,983 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                   |   |   |                          |   |   |                         |   |   |                              |   |   |   |   |   |
| Basic                  earnings (loss) per common share:                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                   |   |   |                          |   |   |                         |   |   |                              |   |   |   |   |   |
| Continuing                  operations                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                                      | 0.26   |   |                          | $      | 0.31   |                         |   | $      | 0.34                              |   |   | $ | (0.57 | ) |
| Net                  income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                                                      | 0.26   |   |                          | $      | 0.31   |                         |   | $      | 0.26                              |   |   | $ | (0.57 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                   |   |   |                          |   |   |                         |   |   |                              |   |   |   |   |   |
| Diluted                  earnings (loss) per common share:                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                   |   |   |                          |   |   |                         |   |   |                              |   |   |   |   |   |
| Continuing                  operations                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                                      | 0.23   |   |                          | $      | 0.29   |                         |   | $      | 0.31                              |   |   | $ | (0.57 | ) |
| Net                  income                  (loss)                                                                     |   | $                                                      | 0.23   |   |                          | $      | 0.29   |                         |   | $      | 0.24                              |   |   | $ | (0.57 | ) |
| **Year                    ended September 30, 2006(1)**                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                   |   |   |                          |   |   |                         |   |   |                              |   |   |   |   |   |
| Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                                                      | 17,214 |   |                          | $      | 20,537 |                         |   | $      | 17,761                            |   |   | $ | 22,712 |   |
| Operating                  income                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                                                      | 5,669  |   |                          | $      | 8,433  |                         |   | $      | 5,056                             |   |   | $ | 8,100 |   |
| Income                  from continuing operations before cumulativeeffect                  of a change in accounting                  principle                                                                                                                                                                                                                                                                                                                            |   | $                                                      | 5,381  |   |                          | $      | 4,934  |                         |   | $      | 3,113                             |   |   | $ | 3,854 |   |
| Net                  income                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $                                                      | 7,676  |   |                          | $      | 5,086  |                         |   | $      | 3,000                             |   |   | $ | 4,108 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                   |   |   |                          |   |   |                         |   |   |                              |   |   |   |   |   |
| Basic                  earnings per common share:                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                   |   |   |                          |   |   |                         |   |   |                              |   |   |   |   |   |
| Continuing                  operations                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                                      | 0.30   |   |                          | $      | 0.28   |                         |   | $      | 0.18                              |   |   | $ | 0.22 |   |
| Net                  income                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $                                                      | 0.43   |   |                          | $      | 0.29   |                         |   | $      | 0.17                              |   |   | $ | 0.24 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                   |   |   |                          |   |   |                         |   |   |                              |   |   |   |   |   |
| Diluted                  earnings per common share:                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                   |   |   |                          |   |   |                         |   |   |                              |   |   |   |   |   |
| Continuing                  operations                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                                      | 0.27   |   |                          | $      | 0.26   |                         |   | $      | 0.16                              |   |   | $ | 0.21 |   |
| Net                  income                                                                                             |   | $                                                      | 0.39   |   |                          | $      | 0.27   |                         |   | $      | 0.16                              |   |   | $ | 0.22 |   |

----

| (1) | Reflects                  the cumulative adjustment from the elimination of the quarterly                  reporting                  lag for the Company’s investments in the Trapeza entities (see Note                  2). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESOURCE        AMERICA, INC.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS -        (Continued)**

**SEPTEMBER        30, 2007**

**NOTE        24 – SUBSEQUENT EVENTS**

----

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

**ITEM        9A.                  CONTROLS        AND PROCEDURES **

**MANAGEMENT’S        REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**

*.*

----

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**RESOURCE        AMERICA, INC.**

*Internal Control—Integrated Framework*

 

 

Because        of its inherent limitations, internal control over        financial reporting may not prevent or detect misstatements.  Also,        projections of any evaluation of effectiveness to future periods are subject        to        the risk that controls may become inadequate because of changes in conditions,        or that the degree of compliance with the policies or procedures may        deteriorate.

In        our opinion, Resource America, Inc. maintained, in all        material respects, effective internal control over financial reporting as        of        September 30, 2007, based on criteria established in *Internal        Control-Integrated Framework* issued by COSO. 

**/s/        GRANT THORNTON LLP**

----

**ITEM        9B.                              OTHER        INFORMATION**

----

**PART        III**

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

**ITEM        11.                  EXECUTIVE COMPENSATION**

**ITEM        12.                  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND**

**   MANAGEMENT        AND        RELATED STOCKHOLDER MATTERS**

**ITEM        13.                     CERTAIN        RELATIONSHIPS AND RELATED TRANSACTIONS**

**ITEM        14.                      PRINCIPAL        ACCOUNTING FEES AND SERVICES**

----

**PART        IV**

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

|   | **1.** | **Financial                  Statements** |
|--------|--------|-------------------------------------------|

|   |   | Report                  of Independent Registered Public Accounting                  Firm |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | Consolidated                  Balance Sheets at September 30, 2007 and                  2006 |
|--------|----------------------------------------------------------------------------------------------|

|   | Consolidated                  Statements of Income for the years ended September 30, 2007, 2006                  and                  2005 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | Consolidated                  Statements of Changes in Stockholders' Equity                  for |
|--------|--------------------------------------------------------------------------------------------------|

|   |   the                  years ended September                  30, 2007, 2006 and 2005 |
|--------|-------------------------------------------------------------------------------------------------|

|   | Consolidated                  Statements of Cash Flows for the years ended September 30, 2007,                  2006 and                  2005 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Notes                  to Consolidated Financial Statements − September 30,                  2007 |
|--------|---------------------------------------------------------------------------------------------------------|

|   | **2.** | **Financial                  Statement Schedules** |
|--------|--------|----------------------------------------------------|

|   | Schedule                  II – Valuation and Qualifying                  Accounts |
|--------|-----------------------------------------------------------------------------------------|

|   | Schedule                  III -                  Investments in Real Estate |
|--------|-----------------------------------------------------------------------------|

|   | Schedule                  IV – Investments in Mortgage Loans on Real                  Estate |
|--------|----------------------------------------------------------------------------------------------------|

|   | **a)** | **Exhibits** |
|--------|--------|--------------|

|   | Exhibit                  No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.1                          | Restated                  Certificate of Incorporation of Resource America. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | 3.2                          | Amended                  and Restated Bylaws of Resource America. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | 10.1                         | Loan                  and Security Agreement, dated May 24, 2007, between Resource America,                  Inc., Commerce Bank, N.A. and the other parties thereto.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | 10.1(a)                      | First                  Amendment and Joinder to Loan                  and Security Agreement, dated July 18, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | 10.1(b)                      | Second                  Amendment and Joinder to Loan                  and Security Agreement, dated November 15, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | 10.2                         | Employment                  Agreement between Michael S. Yecies and Resource America, Inc.,                  dated                  November 17, 2006. (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 10.3                         | Employment                  Agreement between Thomas C. Elliott and Resource America, Inc.,                  dated                  November 17, 2006. (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 10.4                         | Employment                  Agreement between Jeffrey F.                  Brotman and Resource America, Inc., dated June 18,                  2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | 10.5                         | U.S.                  $250,000,000 Receivables Loan and Security Agreement, dated as                  of October                  31, 2006, among Resource Capital Funding II, LLC, as the Borrower,                  and                  LEAF Financial Corporation, as the Servicer, and Morgan Stanley                  Bank, as a                  Lender and Collateral Agent, and U.S. Bank National Association,                  as the                  Custodian and the Lender’s Bank and Lyon Financial Services, Inc. (D/B/A                  U.S. Bank Portfolio Services), as the Backup Servicer. (4) |
|   | 10.5(a)                      | First                  Amendment to Receivables Loan and Security Agreement, dated as                  of October                  31, 2006. (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | 10.5(b)                      | Purchase                  and Sale Agreement, dated as of October 31, 2006. (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | 10.5(c)                      | First                  amendment to Purchase and Sale Agreement, dated as of December                  21, 2006.                  (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | 10.5(d)                      | Morgan                  Stanley Bank, Fee Letter, dated October 31, 2006. (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | 10.6                         | Second                  Amendment to Credit Agreement, dated December 22, 2006, between                  LEAF                  Financial Corporation, LEAF Funding, Inc. and National City Bank.(4)                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | 10.6(a)                      | Third                  Amendment to Credit Agreement, dated March 14, 2007, between LEAF                  Financial Corporation, LEAF Funding, Inc. and National City Bank.(5)                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | 10.                  7       | Credit                  Agreement, dated August 31, 2007, between LEAF Commercial Finance                  Co.,                  LLC, Various Financial Institutions and Other Persons from Time                  to Time                  Parties thereto, and National City Bank. (6)                                                                                                                                                                                                                                                                                                                                      |
|   | 10.7(a)                      | First                  Amendment to Credit Agreement,                  dated June 22, 2007, between LEAF Commercial Finance Co., LLC,                  Various                  Financial Institutions and Other Persons from Time to Time Parties                  thereto, and National City Bank, dated                  August                  31, 2007.                                                                                                                                                                                                                                                                |
|   | 10.8                         | Asset                  Purchase Agreement, dated June 19, 2007, between LEAF Funding,                  Inc., LEAF                  Financial Corporation and LEAF Commercial Finance Co., LLC and                  Pacific                  Capital Bank, N.A. (6)                                                                                                                                                                                                                                                                                                                                                           |

----

|   | 10.9    | Limited                      Liability Company Agreement of LEAF Ventures, LLC, dated March                      2007,                      between LEAF Financial Corporation and Crit DeMent, Miles Herman,                      Robert                      Moskovitz, David English, Matthew Goldenberg and Nicholas Capparelli.                      (5) |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.9(a) | Credit                      Agreement, dated March 15, 2007, between Merit Capital Advance,                      LLC and                      Deutsche Bank AG Cayman Islands. (5)                                                                                                                                                                            |
|   | 10.9(b) | Limited                      Liability Company Agreement of Merit Capital Advance, LLC,                      dated March 15,                      2007. (5)                                                                                                                                                                                                   |
|   | 10.9(c) | Merit                      Capital Advance, LLC 15% Subordinated Convertible PIK Note,                      dated March                      15, 2007. (5)                                                                                                                                                                                                    |
|   | 14.1    | Insider                      Trading Policy. (7)                                                                                                                                                                                                                                                                                                              |
|   | 21.1    | Subsidiaries                      of Resource America,                      Inc.                                                                                                                                                                                                                                                                              |
|   | 23.1    | Consent                      of Grant Thornton                      LLP.                                                                                                                                                                                                                                                                                      |
|   | 31.1    | Certification                      of Chief Executive Officer pursuant                      to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                 |
|   | 31.2    | Certification                      of Chief Financial Officer pursuant                      to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                 |
|   | 32.1    | Certification                      of Chief Executive Officer pursuant                      to Section 1350 18 U.S.C., as adopted pursuant to Section 906                      of the                      Sarbanes-Oxley Act of 2002.                                                                                                                        |
|   | 32.2    | Certification                      of Chief Financial Officer pursuant                      to Section 1350 18 U.S.C., as adopted pursuant to Section 906                      of the                      Sarbanes-Oxley Act of 2002.                                                                                                                        |

----

|   | (1) | Filed                      previously as an exhibit to our Quarterly Report on Form 10-Q                      for the                      quarter ended December 31, 1999 and by this reference incorporated                      herein. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Filed                      previously as an exhibit to our Current Report on Form 8-K                      filed on June                      1, 2007 and by this reference incorporated                      herein. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Filed                      previously as an exhibit to our Current Report on Form 8-K                      filed on                      November 21, 2006 and by this reference incorporated                      herein. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Filed                      previously as an exhibit to our Quarterly Report on Form 10-Q                      for the                      quarter ended December 31, 2006 and by this reference incorporated                      herein. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | File                      previously as an exhibit to our Quarterly Report on Form 10-Q                      for the                      quarter ended March 31, 2007 and by this reference incorporated                      herein. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | Filed                      previously as an exhibit to our Quarterly Report on Form 10-Q                      for the                      quarter ended June 30, 2007 and by this reference incorporated                      herein. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | Filed                      previously as an exhibit to our Current Report on Form 8-K                      filed on August                      31, 2007 and by this reference incorporated                      herein. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

|                               | RESOURCE                  AMERICA, INC.                                 |
|------------------------------------|-------------------------------------------------------------------------|
| December                  14, 2007 | By:  /s/                  Jonathan Z. Cohen                   |
|                               | Chief                  Executive Officer and                  President |

| /s/                    Edward E. Cohen    |   | Chairman                  of the Board       | December                  14, 2007 |
|-------------------------------------------|--------|----------------------------------------------|------------------------------------|
| EDWARD                  E. COHEN          |   |                                         |                               |
|                                      |   |                                         |                               |
| /s/                    Jonathan Z. Cohen  |   | Director,                  President         | December                  14, 2007 |
| JONATHAN                  Z. COHEN        |   | and                  Chief Executive Officer |                               |
|                                      |   |                                         |                               |
| /s/                    Michael J. Bradley |   | Director                                     | December                  14, 2007 |
| MICHAEL                  J. BRADLEY       |   |                                         |                               |
|                                      |   |                                         |                               |
| /s/                    Carlos C. Campbell |   | Director                                     | December                  14, 2007 |
| CARLOS                  C. CAMPBELL       |   |                                         |                               |
|                                      |   |                                         |                               |
| /s/                    Kenneth A. Kind    |   | Director                                     | December                  14, 2007 |
| KENNETH                  A. KIND          |   |                                         |                               |
|                                      |   |                                         |                               |
| /s/                    Hersh Kozlov       |   | Director                                     | December                  14, 2007 |
| HERSH                  KOZLOV             |   |                                         |                               |
|                                      |   |                                         |                               |
| /s/                    Andrew M. Lubin    |   | Director                                     | December                  14, 2007 |
| ANDREW                  M. LUBIN          |   |                                         |                               |
|                                      |   |                                         |                               |
| /s/                    John S. White      |   | Director                                     | December                  14, 2007 |
| JOHN                  S. WHITE            |   |                                         |                               |
|                                      |   |                                         |                               |
| /s/                    Steven J. Kessler  |   | Executive                  Vice President    | December                  14, 2007 |
| STEVEN                  J. KESSLER        |   | and                  Chief Financial Officer |                               |

----

**Resource        America, Inc.**

**Schedule        II – Valuation and Qualifying Accounts**

|                                                                         |   | **Balance                    at Beginning of Year** |    |   | **Additions                    Charged to Costs and Expenses** |   |    | **Amounts                    Written Off Against the Allowance** |   |   | **Balance                    at****End                    of Year** |   |
|------------------------------------------------------------------------------|--------|-----------------------------------------------------|---------|--------|----------------------------------------------------------------|--------|---------|------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------|--------|
| **Allowance                  for investments in real estate loans**:         |   |                                                |    |   |                                                           |   |    |                                                             |   |   |                                                                |   |
| September                  30, 2007                                          |   | $                                                   | 770     |   |                                                           | $      | − |                                                             |   | $      | (141                                                                | )      |   | $ | 629 |   |
| September                  30, 2006                                          |   | $                                                   | 770     |   |                                                           | $      | − |                                                             |   | $      | −                                                             |   |   | $ | 770 |   |
| September                  30, 2005                                          |   | $                                                   | 770     |   |                                                           | $      | − |                                                             |   | $      | −                                                             |   |   | $ | 770 |   |
|                                                                         |   |                                                |    |   |                                                           |   |    |                                                             |   |   |                                                                |   |   |   |   |   |
| **Allowance                  for investments in commercial finance assets:** |   |                                                |    |   |                                                           |   |    |                                                             |   |   |                                                                |   |   |
| September                  30, 2007                                          |   | $                                                   | − |   |                                                           | $      | 229     |                                                             |   | $      | (109                                                                | )      |   | $ | 120 |   |
| September                  30, 2006                                          |   | $                                                   | − |   |                                                           | $      | − |                                                             |   | $      | −                                                             |   |   | $ | − |   |
| September                  30, 2005                                          |   | $                                                   | − |   |                                                           | $      | − |                                                             |   | $      | −                                                             |   |   | $ | − |   |

----

**Resource        America, Inc. **

**SCHEDULE        III**

**Real        Estate and Accumulated Depreciation**

**September        30, 2007**

**(in        thousands)**

| **Column**                                                             | **Column**   |    | **Column**                                       |   | **Column**                                                                    |   | **Column**                                                                          |    | **Column**                                |   | **Column**                            |   | **Column**                     | **Column**                                                                                |
|------------------------------------------------------------------------|--------------|---------|--------------------------------------------------|--------|-------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|---------|-------------------------------------------|--------|---------------------------------------|--------|--------------------------------|-------------------------------------------------------------------------------------------|
| **A**                                                                  | **B**        |    | **C**                                            |   | **D**                                                                         |   | **E**                                                                               |    | **F**                                     |   | **G**                                 |   | **H**                          | **I**                                                                                     |
| Description                                                            | Encumbrances |    | Initial                    cost to Company       |   | Cost                  capitalizedsubsequent                    to acquisition |   | Gross                  Amount at which carried at closeof                    period |    | Accumulated                  Depreciation |   | Date                  of Construction |   | Date                  Acquired | Life                  on which depreciation in latest income is                  computed |
|                                                                   |         |    | Buildings                  and Land Improvements |   | ImprovementsCarrying                  Costs                                   |   | Buildings                  and Land Improvements Total                              |    |                                      |   |                                  |   |                           |                                                                                      |
| **Real                  estate owned**                                 |         |    |                                             |   |                                                                          |   |                                                                                |    |                                      |   |                                  |   |                           |                                                                                      |
| Hotel,                  Savannah, GA                                   | $            | 12,381  |                                             | $      | 10,187                                                                        |   | $                                                                                   | 1,249   |  (a)                                 | $      | 15,510                                |   | $                              | 2,125                                                                                     |   |   | 1853 |   | 6/30/2005                  (b) | 40                  years |
|                                                                   |         |    |                                             |   |                                                                          |   |                                                                                |    |                                      |   |                                  |   |                           |                                                                                      |   |   |   |   |   |   |
| **FIN                  46 Assets**                                     |         |    |                                             |   |                                                                          |   |                                                                                |    |                                      |   |                                  |   |                           |                                                                                      |   |   |   |   |   |   |
| Commercial                  Retail (c)St.                  Cloud, MI   |         | 1,387   |                                             |   | 2,300                                                                         |   |                                                                                | − |                                      |   | 2,300                                 |   |                           | 403                                                                                       |   |                     1970 |   | 7/01/2003                  (d) | 40                  years |
|                                                                   |         |    |                                             |   |                                                                          |   |                                                                                |    |                                      |   |                                  |   |                           |                                                                                      |   |   |   |   |   |   |
| Commercial                  Retail (c)Elkins                  West, WV |         | − |                                             |   | 1,600                                                                         |   |                                                                                | − |                                      |   | 1,600                                 |   |                           | 194                                                                                       |   |                     1963 |   | 7/01/2003                  (d) | 40                  years |
|                                                                   | $            | 13,768  |                                             | $      | 14,087                                                                        |   | $                                                                                   | 1,249   |                                      | $      | 19,410                                |   | $                              | 2,722                                                                                     |   |   |   |   |   |   |

----

| (a) | These                  assets are included with property and equipment (see Note 10 to                  our                  consolidated financial statements). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Date                  of foreclosure. |
|-----|---------------------------------------|

| (c) | Balances                  as of June 30, 2007 due to one-quarter lag reporting FIN 46-R                  results. |
|-----|-------------------------------------------------------------------------------------------------------------------|
| (d) | Date                of FIN 46-R adoption.  |
|-----|-------------------------------------------------|

----

**Resource        America, Inc. **

**SCHEDULE        III – (Continued)**

**Real        Estate and Accumulated Depreciation**

**September        30, 2007**

**(in        thousands)**

|                                                                    |   | **Years                    Ended September 30,** |    |
|-------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                    |   | **2007**                                         |    |   | **2006** |   |   | **2005** |   |
| Balance                  at the beginning of the period                 |   | $                                                | 19,545  |   |   | $ | 141,127 |   |   | $ | 163,321 |   |
| Additions                  during period:                               |   |                                             |    |   |   |   |   |   |   |   |   |   |
| Improvements,                  etc.                                     |   |                                             | 1,249   |   |   |   | − |   |   |   | 499 |   |
| Other–basis                  adjustments                          |   |                                             | (91     | ) |   |   | 323 |   |   |   | − |   |
| Other−reclass                  from other                  assets |   |                                             | − |   |   |   | 4,678 |   |   |   | − |   |
|                                                                    |   |                                             | 20,703  |   |   |   | 146,128 |   |   |   | 163,820 |   |
|                                                                    |   |                                             |    |   |   |   |   |   |   |   |   |   |
| Deductions                  during the period:                          |   |                                             |    |   |   |   |   |   |   |   |   |   |
| Cost                  of real estate                  sold              |   |                                             | 919     |   |   |   | 126,177 |   |   |   | 3,372 |   |
| Other−write                  down                                 |   |                                             | 374     |   |   |   | 406 |   |   |   | 19,321 |   |
| Balance                  at close of period                             |   | $                                                | 19,410  |   |   | $ | 19,545 |   |   | $ | 141,127 |   |

----

**Resource        America, Inc.**

**SCHEDULE        IV**

**Mortgage        Loans on Real Estate**

**September        30, 2007**

**(in        thousands)**

| **Column                  A**                                                             | **Column                  B**                  | **Column                  C**            | **Column                  D**                 |   | **Column                  E**    |    |   | **Column                  F**                 |   |   | **Column                  G**                     |   |   | **Column                  H**                                                                                  |   |
|-------------------------------------------------------------------------------------------|------------------------------------------------|------------------------------------------|-----------------------------------------------|--------|----------------------------------|---------|--------|-----------------------------------------------|--------|--------|---------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------|--------|
| **Description**                                                                           | **Interest                  rate**             | **Final                  maturity date** | **Periodic****payment                  term** |   | **Prior                  liens** |    |   | **Face                  amount of mortgages** |   |   | **Carrying                  amount of mortgages** |   |   | **Principal                  amount of loans subject to delinquent principal****or                  interest** |   |
| **Second                  Lien Loans**                                                    |                                           |                                     |                                          |   |                             |    |   |                                          |   |   |                                              |   |   |                                                                                                           |   |
| Apartment                  building,Hartford,                  CT                         | Fixed                  interest rate of 7.5%   | 1/1/2009                                 | (a)                                           |   | $                                | 12,793  |   |                                          | $      | 21,285 |                                              |   | $      | 7,709                                                                                                          |   |   | $ | − |   |
|                                                                                      |                                           |                                     |                                          |   |                             |    |   |                                          |   |   |                                              |   |   |                                                                                                           |   |   |   |   |   |
| Office                  building,Washington,                  DC                          | Fixed                  interest rate of 8%     | 8/1/2008                                 | (b)                                           |   |                             | − |   |                                          |   | 41,478 |                                              |   |   | 13,934                                                                                                         |   |   |   | − |   |
|                                                                                      |                                           |                                     |                                          |   |                             |    |   |                                          |   |   |                                              |   |   |                                                                                                           |   |   |   |   |   |
| Office                  building,Omaha,                  NE                               | Fixed                  interest rate of 8%     | 8/31/2011                                |                                          |   |                             | − |   |                                          |   | 110    |                                              |   |   | 110                                                                                                            |   |   |   | − |   |
|                                                                                      |                                           |                                     |                                          |   |                             |    |   |                                          |   |   |                                              |   |   |                                                                                                           |   |   |   |   |   |
| Office                  building,Philadelphia,                  PA                        | Fixed                  interest rate of 6%     | 4/27/2008                                |                                          |   |                             | − |   |                                          |   | 2,816  |                                              |   |   | 2,816                                                                                                          |   |   |   | − |   |
|                                                                                      |                                           |                                     |                                          |   |                             |    |   |                                          |   |   |                                              |   |   |                                                                                                           |   |   |   |   |   |
| Multi-family                  unit,Seabrook                  Village,                  NJ | Fixed                  interest rate of 6%     | 11/30/2012                               |                                          |   |                             | − |   |                                          |   | 1,585  |                                              |   |   | 1,585                                                                                                          |   |   |   | − |   |
|                                                                                      |                                           |                                     |                                          |   |                             |    |   |                                          |   |   |                                              |   |   |                                                                                                           |   |   |   |   |   |
| Multi-family                  unit,San                  Bernardino,                  CA   | Fixed                  interest rate of 10.27% | 08/11/2016                               |                                          |   |                             | 31,500  |   |                                          |   | 2,000  |                                              |   |   | 1,605                                                                                                          |   |   |   | − |   |
|                                                                                      |                                           |                                     |                                          |   | $                                | 44,293  |   |                                          | $      | 69,274 |                                              |   | $      | 27,759                                                                                                         |   |   | $ | − |   |

----

| (a) | All                  net cash flows from related                  property |
|-----|----------------------------------------------------------------------------|

| (b) | No                  current payments |
|-----|--------------------------------------|

----

**Resource        America, Inc.**

**SCHEDULE        IV − (Continued)**

**Mortgage        Loans on Real Estate**

**September        30, 2007**

**(in        thousands)**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **Years                    Ended September 30,** |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **2007**                                         |    |   | **2006** |   |   | **2005** |   |
| Balance                  at the beginning of the                  period                                                                                     |   | $                                                | 28,584  |   |   | $ | 25,923 |   |   | $ | 24,066 |   |
| Additions                  during period:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                             |    |   |   |   |   |   |   |   |   |   |
| New                  loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                             | 1,597   |   |   |   | 4,909 |   |   |   | 2,240 |   |
| Additions                  to existing                  loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                             | 42      |   |   |   | 2,310 |   |   |   | 1,399 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                             | 760     |   |   |   | 465 |   |   |   | 860 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                             | 30,983  |   |   |   | 33,607 |   |   |   | 28,565 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                             |    |   |   |   |   |   |   |   |   |   |
| Deductions                  during the period:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                             |    |   |   |   |   |   |   |   |   |   |
| Loan                  converted to equity                  interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                             | − |   |   |   | − |   |   |   | 369 |   |
| Collections                  of                  principal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                             | 3,224   |   |   |   | 5,023 |   |   |   | 2,273 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                             | 3,224   |   |   |   | 5,023 |   |   |   | 2,642 |   |
| Balance                  at end of fiscal year (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                                                | 27,759  |   |   | $ | 28,584 |   |   | $ | 25,923 |   |

----

| (c) | This                  balance does not include a note receivable, which is not a mortgage,                  relating to a partial sale of our interest in a real estate                  venture. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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