**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





þ
            REPORT
                PURSUANT TO SECTION 13 OR 15(d)OF
                THE SECURITIES EXCHANGE ACT OF 1934





FOR
      THE
      QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007 or





o
            REPORT
                PURSUANT TO SECTION 13 OR 15(d) OFTHE
                SECURITIES EXCHANGE ACT OF 1934





Commission
      file number: 0-20882


**Standard
      Management Corporation**


(Exact
      name of registrant as specified in its charter)





Indiana
            No.
                35-1773567(State
                or other jurisdiction
              of
                incorporation or
                organization)
            (I.R.S.
                Employer Identification
                No.)




10689
                N. Pennsylvania Street, Indianapolis,
                Indiana
            46280(Address
                of principal executive
                offices)
            (Zip
                Code)




(317)
      574-6200


(Registrant’s
      telephone number, including area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days: Yes þ No o





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




Large
      Accelerated Filer o   Accelerated
      Filer o   Non-accelerated
      Filer þ





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act):


Yes
o
      No þ




As
      of
      November 14, 2007, the Registrant had 40,664,538 shares of Common Stock
      outstanding.







**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**  **INDEX**


**Page
                  Number**Part
                  I.
              FINANCIAL
                  INFORMATION:Item
                  1.
              Unaudited
                  Financial StatementsConsolidated
                  Balance Sheets —September
                  30, 2007 and December 31, 2006
              
              3Consolidated
                  Statements of Operations — For the Three Months and Nine Months Ended
                  September 30, 2007 and 2006
              
              4Consolidated
                  Statements of Shareholders’ Deficit — For the Nine Months Ended
                  September 30, 2007 and 2006
              
              5Consolidated
                  Statements of Cash Flows — For the Nine Months Ended September 30, 2007
                  and 2006
              
              6Notes
                  to Consolidated Financial Statements
              
              7Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              
              14Item
                  3.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              
              19Item
                  4.
              Controls
                  and Procedures
              
              19Part
                  II.
              OTHER
                  INFORMATION:Item
                  1A.
              Risk
                  Factors
              
              20Item
                  3.
              Defaults
                  Upon Senior Securities
              
              21Item
                  6.
              Exhibits
                  and Reports on Form 8-K
              
              21SIGNATURES
              
              21




2




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**




**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS**


**CONSOLIDATED
        BALANCE SHEETS**
 (unaudited,
        dollars in thousands)


**September
                  30**
              
              December
                  31**ASSETS**
              
              **2007**
              
              2006Current
                  assets:Cash
                  and cash equivalents
              
              **$**
              **254**
              
              $
              565Accounts
                  receivable, net
              
              
              **867**
              
              
              1,004Inventories
              
              
              **276**
              
              
              750Prepaid
                  and other current assets
              
              
              **211**
              
              
              535Assets
                  of discontinued operations
              
              
              **153**
              
              
              948Total
                  current assets
              
              
              **1,761**
              
              
              3,802Property
                  and equipment, net
              
              
              **7,768**
              
              
              8,037Assets
                  held for sale
              
              
              **921**
              
              
              931Deferred
                  financing fees, net
              
              
              **894**
              
              
              1,263Officer
                  and other notes receivable, less current portion
              
              
              **776**
              
              
              776Intangible
                  assets, net
              
              
              **248**
              
              
              304Goodwill
              
              
              **1,528**
              
              
              2,078Other
                  noncurrent assets
              
              
              **2,062**
              
              
              1,302Total
                  assets
              
              **$**
              **15,958**
              ****
              $
              18,493**LIABILITIES
                  AND SHAREHOLDERS' DEFICIT**Current
                  liabilities:Accounts
                  payable
              
              **$**
              **1,740**
              
              $
              1,720Accrued
                  expenses
              
              
              **5,210**
              
              
              2,101Current
                  portion of long-term debt
              
              
              **14,880**
              
              
              4,306Liabilities
                  of discontinued operations
              
              
              **577**
              
              
              1,471Total
                  current liabilities
              
              
              **22,407**
              
              
              9,598Long-term
                  debt, less current portion
              
              
              **11,384**
              
              
              22,809Common
                  stock warrants
              
              
              **716**
              
              
              87Other
                  long-term liabilities
              
              
              **1,650**
              
              
              1,070Total
                  liabilities
              
              
              **36,157**
              
              
              33,564Shareholders'
                  deficit:Common
                  stock, no par value, and additional paid in capital, 200,000,000
                  sharesauthorized
                  and 43,504,711 shares and 19,011,367 shares issuedin
                  2007 and 2006, respectively
              
              
              **73,248**
              
              
              70,785Retained
                  deficit
              
              
              **(82,832**
              **)**
              
              (75,214
              )Treasury
                  stock, at cost, 2,840,173 shares
              
              
              **(10,829**
              **)**
              
              (10,829
              )Accumulated
                  other comprehensive income
              
              
              **214**
              
              
              187Total
                  shareholders' deficit
              
              
              **(20,199**
              **)**
              
              (15,071
              )Total
                  liabilities and shareholders' deficit
              
              $
              **15,958**
              
              $
              18,493
  See
                  accompanying notes to consolidated financial statements.




3


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**   **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 (unaudited,
          dollars in thousands, except per share amounts) ****


**Three
                  Months Ended**
              
              **Nine
                  Months Ended****September
                  30**
              
              **September
                  30****2007**
              
              2006
              
              **2007**
              
              2006Net
                  revenues
              
              **$**
              **1,789**
              
              $
              2,189
              
              **$**
              **6,384**
              
              $
              6,542Cost
                  of sales
              
              
              **1,301**
              
              
              1,548
              
              
              **4,585**
              
              
              4,551Gross
                  profit
              
              
              **488**
              
              
              641
              
              
              **1,799**
              
              
              1,991Selling,
                  general and administrative expenses
              
              
              **1,633**
              
              
              2,809
              
              
              **6,082**
              
              
              10,004Impacts
                  related to value of warrants and derivatives
              
              
              **(827**
              **)**
              
              504
              
              
              **617**
              
              
              371Goodwill
                  Impairment
              
              
              **550**
              
              
              -
              
              
              **550**
              
              
              -Depreciation
                  and amortization
              
              
              **164**
              
              
              149
              
              
              **441**
              
              
              515Operating
                  loss
              
              
              **(1,032**
              **)**
              
              (2,821
              )
              
              **(5,891**
              **)**
              
              (8,899
              )Other
                  income, net
              
              
              **356**
              
              
              168
              
              
              **579**
              
              
              7,461Interest
                  expense
              
              
              **1,011**
              
              
              1,719
              
              
              **2,424**
              
              
              4,014Income
                  (loss) from continuing operations before
              
              
              **(1,687**
              **)**
              
              (4,372
              )
              
              **(7,736**
              **)**
              
              (5,452
              )income
                  taxesIncome
                  tax expense (benefit)
              
              
              **-**
              
              
              -
              
              
              -
              
              
              -Net
                  income (loss) from continuing operations
              
              
              **(1,687**
              **)**
              
              (4,372
              )
              
              **(7,736**
              **)**
              
              (5,452
              )Income
                  (loss) from discontinued operations
              
              
              **160**
              
              
              (7,021
              )
              
              **118**
              
              
              (9,608
              )Net
                  income (loss)
              
              $
              **(1,527**
              **)**
              $
              (11,393
              )
              **$**
              **(7,618**
              **)**
              $
              (15,060
              )Income
                  (loss) per share:Basic:Income
                  (loss) from continuing operations
              
              $
              **(0.04**
              **)**
              $
              (0.23
              )
              **$**
              **(0.23**
              **)**
              $
              (0.41
              )Income
                  (loss) from discontinued operations
              
              $
              **0.00**
              
              $
              (0.43
              )
              **$**
              **0.00**
              
              $
              (0.83
              )Net
                  income (loss)
              
              $
              **(0.04**
              **)**
              $
              (0.66
              )
              **$**
              **(0.23**
              **)**
              $
              (1.24
              )Weighted
                  average shares outstanding
              
              
              **40,296,977**
              
              
              16,243,844
              
              
              **33,913,365**
              
              
              11,641,923
  See
                  accompanying notes to consolidated financial statements.





4


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**


**CONSOLIDATED
        STATEMENTS OF SHAREHOLDERS’ DEFICIT**
 (unaudited,
          dollars in thousands)


Common
                    stockand
                  additional
              
              
              
              
              
              
              
              
              Accumulated
                  otherTotal
              
              
              paid
                    in capitalTotal
              
              
              Retained
                  deficit
              
              
              Treasury
                  stock
              
              
              comprehensive
                  incomeBalance
                  at January 1, 2006
              
              $
              4,943
              
              $
              68,537
              
              $
              (55,793
              )
              $
              (7,901
              )
              $
              100Comprehensive
                  loss:Net
                  loss
              
              
              (14,452
              )
              
              -
              
              
              (14,452
              )
              
              -
              
              
              -Change
                  in unrealized loss on securities
              
              
              8
              
              
              **-**
              
              
              -
              
              
              -
              
              
              8Comprehensive
                  loss
              
              
              (14,444
              )
              
              **-**
              
              
              **-**
              
              
              **-**
              
              
              **-**Stock-based
                  compensation expense
              
              
              36
              
              
              36
              
              
              -
              
              
              -
              
              
              -Reclassification
                  of warrants to liabilities
              
              
              (140
              )
              
              (140
              )Exchange
                  - Trust Preferred
              
              
              1,802
              
              
              1,802
              
              
              -
              
              
              -
              
              
              -Issuance
                  of warrants for services
              
              
              123
              
              
              123
              
              
              -
              
              
              -
              
              
              -Sale
                  of Common Stock, net of issuance costs
              
              
              412
              
              
              412
              
              
              -
              
              
              -
              
              
              -Treasury
                  stock acquired
              
              
              (2,927
              )
              
              -
              
              
              -
              
              
              (2,927
              )
              
              -Balance
                  at September 30 2006
              
              $
              (10,195
              )
              $
              70,770
              
              $
              (70,245
              )
              $
              (10,828
              )
              $
              108Balance
                  at January 1, 2007
              
              $
              (15,071
              )
              $
              70,785
              
              $
              (75,214
              )
              $
              (10,829
              )
              $
              187Comprehensive
                  loss:Net
                  loss
              
              
              (7,618
              )
              
              -
              
              
              (7,618
              )
              
              -
              
              
              -Change
                  in unrealized gain on securities
              
              
              27
              
              
              -
              
              
              **-**
              
              
              **-**
              
              
              27Comprehensive
                  loss
              
              
              (7,591
              )Sale
                  of common stock
              
              
              2,208
              
              
              2,208
              
              
              -
              
              
              -
              
              
              -Stock-
                  based compensation expense
              
              
              250
              
              
              250
              
              
              **-**
              
              
              **-**
              
              
              **-**Other
              
              
              5
              
              
              5
              
              
              -
              
              
              -
              
              
              -Balance
                  at September 30, 2007
              
              $
              (20,199
              )
              $
              73,248
              
              $
              (82,832
              )
              $
              (10,829
              )
              $
              214
  See
          accompanying notes to consolidated financial statements.
  5
 **STANDARD
          MANAGEMENT CORPORATION AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 (unaudited,
          dollars in thousands)
 **Nine
                      Months Ended September 30****2007**
                  
                  
                  **2006****OPERATING
                      ACTIVITIES:**Net
                      loss
                  
                  **$**
                  **(7,618**
                  **)**
                  $
                  (15,060
                  )Net
                      loss from discontinued operations
                  
                  
                  **118**
                  
                  
                  (9,608
                  )Net
                      loss from continuing operations
                  
                  
                  **(7,736**
                  **)**
                  
                  (5,452
                  )Adjustments
                      to reconcile net loss to net cash used in continuing operating
                      activities:Depreciation
                      and amortization
                  
                  
                  **441**
                  
                  
                  515Goodwill
                      Impairment
                  
                  
                  **550**
                  
                  
                  -Amortization
                      of deferred financing costs and debt discount
                  
                  
                  **294**
                  
                  
                  511Gain
                      on Trust Preferred exchange
                  
                  
                  **-**
                  
                  
                  (9,194
                  )Non-cash
                      stock- based compensation expense
                  
                  
                  **250**
                  
                  
                  36Provision
                      for bad debts
                  
                  
                  **44**
                  
                  
                  86Net
                      loss related to sale of assets
                  
                  
                  **-**
                  
                  
                  2,981Impacts
                      related to value of warrants and derivatives
                  
                  
                  **617**
                  
                  
                  371Change
                      in operating assets and liabilities:Accounts
                      receivable
                  
                  
                  **93**
                  
                  
                  688Inventories
                  
                  
                  **474**
                  
                  
                  (496
                  )Prepaid
                      and other current assets
                  
                  
                  **694**
                  
                  
                  (317
                  )Accounts
                      payable
                  
                  
                  **20**
                  
                  
                  1,904Accrued
                      expenses
                  
                  
                  **3,775**
                  
                  
                  794Other
                  
                  
                  **(70**
                  **)**
                  
                  (21
                  )Net
                      cash used in operating activities of continuing operations
                  
                  
                  **(554**
                  **)**
                  
                  (7,594
                  )**INVESTING
                      ACTIVITIES:**Capital
                      expenditures
                  
                  
                  **(26**
                  **)**
                  
                  (109
                  )Refund
                      of proceeds from sale of business
                  
                  
                  **-**
                  
                  
                  (300
                  )Proceeds
                      from sale of businesses and assets held for sale
                  
                  
                  **476**
                  
                  
                  13,083Redemption
                      of preferred stock
                  
                  
                  **-**
                  
                  
                  1,500Cash
                      paid for pending acquisitions
                  
                  
                  **(762**
                  **)**
                  
                  -Change
                      in other noncurrent assets, net
                  
                  
                  **30**
                  
                  
                  8Net
                      cash provided by (used in) investing activities of continuing
                      operations
                  
                  
                  **(282**
                  **)**
                  
                  14,182**FINANCING
                      ACTIVITIES:**Borrowings
                  
                  
                  **684**
                  
                  
                  7,555Net
                      cash provided to discontinued operations
                  
                  
                  **(457**
                  **)**
                  
                  (4,517
                  )Proceeds
                      from sale of stock
                  
                  
                  **2,185**
                  
                  
                  412Purchase
                      of treasury stock
                  
                  
                  **-**
                  
                  
                  (2,927
                  )Deferred
                      financing costs paid
                  
                  
                  **(295**
                  **)**
                  
                  (55
                  )Repayments
                      of long-term debt
                  
                  
                  **(1,592**
                  **)**
                  
                  (8,180
                  )Net
                      cash provided by (used in) financing activities of continuing
                      operations
                  
                  
                  **525**
                  
                  
                  (7,712
                  )Net
                      cash used in operating activities of discontinued
                      operations
                  
                  
                  **(525**
                  **)**
                  
                  (4,589
                  )Net
                      cash used in investing activities of discontinued
                      operations
                  
                  
                  **-**
                  
                  
                  (66
                  )Net
                      cash provided by financing activities of discontinued
                      operations
                  
                  
                  **457**
                  
                  
                  4,517Net
                      decrease in cash and cash equivalents of discontinued
                      operations
                  
                  
                  **(68**
                  **)**
                  
                  (138
                  )Total
                      decrease in cash and cash equivalents
                  
                  
                  **(379**
                  **)**
                  
                  (1,262
                  )Net
                      decrease in cash and cash equivalents of discontinued
                      operations
                  
                  
                  **(68**
                  **)**
                  
                  (138
                  )Net
                      decrease in cash and cash equivalents of continuing
                      operations
                  
                  
                  **(311**
                  **)**
                  
                  (1,124
                  )Cash
                      and cash equivalents of continuing operations at beginning
                      of
                      period
                  
                  
                  **565**
                  
                  
                  1,708Cash
                      and cash equivalents of continuing operations at end of
                      period
                  
                  $
                  **254**
                  
                  $
                  584See
                      accompanying notes to consolidated financial statements.
  6




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**





**Note
      1 - Basis of Presentation**





Standard
      Management Corporation (“Standard Management”) is an Indianapolis-based company
      that, and through its subsidiaries, (collectively, the “Company”), provides
      pharmaceutical products and services to the healthcare industry. As of October
      2007, the Company owned and operated one pharmacy in Tennessee. The Company
      is
      seeking to acquire, through a newly formed entity, Universal HealthCare Company,
      LLC (“UHCC”), other existing pharmacies to expand its business. Ultimately, the
      Company intends to manage regional and other institutional pharmacies to provide
      pharmaceuticals to long-term care and infusion therapy facilities.





The
      Company had previously operated additional pharmacies. However, as more fully
      described in Note 2, the Company sold or closed those operations during 2005
      and
      2006 and, accordingly, has reflected those businesses as discontinued operations
      in the accompanying consolidated financial statements. The Company reports
      within a single operating segment. All significant intercompany transactions
      and
      balances have been eliminated in consolidation. Additionally, the Company has
      reclassified certain amounts from the prior periods to conform to the 2007
      presentation and to reflect its discontinued operations separately from its
      continuing operations. These reclassifications have no effect on net loss or
      shareholders’ deficit.





Based
      on
      current estimates of cash flow, management believes that, absent a significant
      additional cash infusion or significantly increased cash flow from operations,
      at some point within the next several months, the Company may not have
      sufficient cash to meet its operating and debt service requirements. The
      Company, as of September 30, 2007, has a shareholders’ deficit of $20.2 million
      and a working capital deficit of $20.6 million. This situation raises
“substantial doubt” about the Company’s ability to continue as a going concern.
      The consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.





In
      response to this situation, during the third quarter of 2006, the Company
      realigned its expense structure, resulting in the retirement or resignations
      of
      four executives and, if applicable, their related employment agreements.
      Additionally, in February 2007, Standard Management entered into a Management
      Agreement whereby Standard Management will act as the manager of the
      pharmaceutical operations expected to be acquired by UHCC. Standard Management’s
      ownership in UHCC is expected to be diluted to below 22% in connection with
      equity financing from unrelated parties to fund the expected acquisitions.
      Standard Management paid a $300,000 deposit towards one pending UHCC acquisition
      during the second quarter of 2007 and has deferred an additional $462,000 of
      costs (included with other non current assets) related to the pending
      acquisitions and related financing. Standard Management is expected to earn
      guaranteed and performance based management fees based on operating results
      of
      the acquired pharmacy operations. Management expects that this new investment
      and financial structure will provide adequate financial support to complete
      the
      Company’s development plans. In addition, management intends to refinance the
      $5.5 million mortgage on its corporate headquarters currently due in June 2008
      with long term debt.





The
      Company’s unaudited consolidated financial statements reflect normal recurring
      adjustments that are necessary to present fairly the Company’s financial
      position and results of operations on a basis consistent with that of the prior
      audited consolidated financial statements. As permitted by rules and regulations
      of the Securities and Exchange Commission (the “Commission”) applicable to
      quarterly reports on Form 10-Q, the Company has condensed or omitted certain
      information and disclosures normally included in financial statements prepared
      in accordance with accounting principles generally accepted in the United States
      (“GAAP”). Results for interim periods are not necessarily indicative of the
      results that may be expected for a full year. These interim financial statements
      should be read along with the audited consolidated financial statements included
      in the Company’s Form 10-K for the year ended December 31, 2006.





The
      preparation of financial statements in conformity with GAAP requires management
      to make estimates and assumptions that affect the reported amounts of assets
      and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ materially from those
      estimates.





Basic
      net
      loss per common share is based upon weighted average common shares outstanding.
      Diluted net loss per common share is based upon the weighted average number
      of
      common shares outstanding, including the dilutive effect, if any, of stock
      options, warrants and convertible securities. However, due to net losses in
      each
      of the periods presented, the Company has no dilutive stock options, warrants
      or
      convertible securities. Anti-dilutive common stock equivalents outstanding
      as of
      September 30, 2007 and 2006 were convertible or exercisable into 42,084,440
      and
      13,927,548 shares, respectively.




7


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**


**Note
      2 - Discontinued Operations - Pharmacy Services**





During
      2005, the Company acquired four pharmacy operations referred to herein as
      Rainier, Holland, Precision and Long Term Rx. On August 11, 2006, the Company
      sold certain rights, properties and assets of Rainier and Holland to Omnicare,
      Inc. (“Omnicare”). At the closing, Omnicare agreed to pay the Company an
      aggregate purchase price of up to $13.2 million and assumed certain liabilities
      of Rainier and Holland valued at $750,000. Of the purchase price, (1) $12.0
      million in cash was paid by Omnicare at the closing, (2) $700,000 was held
      back
      pending a potential post-closing adjustment to be measured against a specified
      historical value of the purchased net assets and (3) up to $520,000 could have
      been earned based on a calculation defined in the sales agreement. The Company
      also agreed to grant Omnicare a three year right of first refusal for the
      purchase of any other pharmacy businesses of the Company. The Company recorded
      an original loss on the sale of $3.6 million, including its estimate of the
      eventual holdback payment to be received or paid and without consideration
      of
      the contingent purchase price of $520,000 in the third quarter of
      2006.





Concurrently
      with the sale of Rainier and Holland, on August 11, 2006, the Company entered
      into a Settlement Agreement with John Tac Hung Tran, Cynthia J. Wareing-Tran
      and
      The Jonathan Tran Irrevocable Trust (collectively, the “Trans”), who were the
      former owners of Rainier. The Settlement Agreement resolved all disputes among
      the parties with respect to, among other matters, a promissory note granted
      by
      the Company to the Trans as part of the consideration for the acquisition,
      the
      amount of bonus and earn-out payments owed to Mr. Tran under the terms of his
      Employment Agreement with Rainier and certain leases entered into with the
      Trans
      as part of the acquisition. Under the settlement, the Company has paid the
      Trans
      approximately $5.5 million, of which approximately $1.5 million was
      for the
      repayment of the promissory
      note, $1.0 million for the disputed earn-out payments, $150,000 for the disputed
      bonus payment, $2.5 million to redeem all 762,195 shares of common stock of
      the
      Company issued to the Trans as part of the acquisition at their guaranteed
      price, and $310,000 to redeem all of the shares purchased by the Trans and
      other
      associates of the Trans in May 2006 as part of the Company’s private placement
      at the acquisition price. In exchange for this payment, the Company received
      a
      full and absolute release of any and all claims and liens made by the Trans
      against the Company. The Company also agreed to release the Trans from any
      and
      all claims it had against them pertaining to these matters. Finally, the Company
      agreed to dismiss with prejudice all litigation currently pending pertaining
      to
      these matters. The $1.150 million of earn-out and bonus payments are reflected
      as expenses of discontinued operations in the third quarter of
      2006.




On
      July
      25, 2006, the Company sold the assets of PCA to Indiana Life Sciences (a company
      owned by one of the Company’s executive officers) for $1 and a commitment to
      purchase $100,000 of the Company’s common stock currently through a private
      placement offering. That investment was made in July 2006. The Company recorded
      a loss on the sale of $428,000 in the third quarter of 2006.




On
      October 20, 2006, the Company completed the sale of certain rights, properties
      and assets of Long Term Rx to Omnicare, Inc. The contract purchase price was
      for
      $5.1 million. Of the purchase price, (1) $4.2 million in cash was paid by
      Omnicare at the closing, (2) $750,000 was held back pending a potential
      post-closing adjustment to be measured against a specified historical value
      of
      the purchased net assets, and (3) up to $225,000 could have been made based
      on a
      calculation defined in the sale agreement. The Company recorded an original
      gain
      on the sale of $.6 million including its estimate of the eventual holdback
      payment to be received or paid and without consideration of the contingent
      purchase price of $225,000, and after an expense related to the buy out of
      a
      portion of the remaining lease for space no longer needed at the Company’s
      operating facility in Indianapolis in the fourth quarter of 2006.




Based
      on
      ongoing correspondence regarding the final determination of the holdbacks for
      both Rainier and Long Term Rx, the Company has, as of December 31, 2006, reduced
      their holdback receivables from Omnicare to management’s best estimate of the
      ultimate settlement of these amounts. The related adjustment is included as
      an
      additional loss on the respective sales in the fourth quarter of 2006. No
      adjustments have been made in 2007 as discussions are still
      ongoing.




In
      November 2006, the Company sold RoyalMed for $75,000, recognizing a loss on
      sale
      of $.2 million in the fourth quarter of 2006.




8


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**


Subject
      to management’s late 2006 decision to sell a portion of the Company’s “HomeMed”
pharmacy operations and to close the remaining “HomeMed” operations, such
      actions were completed in March 2007. A portion of the operations were sold
      to
      HomeMed, LLC, a non-related entity for a cash purchase price of $.4 million.
      All
      unsold assets were written down to their minimal estimated realizable value
      as
      of December 31, 2006. An aggregate $653,000 charge was recorded as a component
      of discontinued operations in the fourth quarter of 2006 with minimal additional
      write down in the first quarter of 2007. Concurrently, the Company entered
      into
      a management services agreement with the buyer to provide accounting and other
      related services for two or more years. Related management services fees of
      $100,000 were paid in advance upon closing the sale. Pursuant to a negotiated
      termination of a Home Med related lease in the second quarter of 2007, the
      Company reduced the previously established lease reserve by $325,000. Remaining
      accounts payable and accrued lease payments as of September 30, 2007, will
      be
      paid in due course.




The
      following tables summarize the financial position and operating results of
      the
      Company’s discontinued pharmacy operations as of and for the periods ended on
      the dates indicated (in thousands):


2007
              
              2006Current
                  assets
              
              $
              153
              
              $
              425Property
                  & equipment net
              
              
              -
              
              
              523Intangible
                  assets net
              
              
              -
              
              
              -Current
                  liabilities
              
              
              (577
              )
              
              (1,471
              )Net
                  liabilities of discontinued operations
              
              $
              (424
              )
              $
              (523
              )
  Three
                  Months
              
              
              Three
                  Months
              
              
              Nine
                  Months
              
              
              Nine
                  MonthsEnding
              
              
              Ending
              
              
              Ending
              
              
              EndingSeptember
                  30
              
              
              September
                  30
              
              
              September
                  30
              
              
              September
                  302007
              
              
              2006
              
              
              2007
              
              
              2006Net
                  revenues
              
              $
              -
              
              $
              6,056
              
              $
              197
              
              $
              28,309Cost
                  of sales
              
              
              -
              
              
              (4,427
              )
              
              (147
              )
              
              (20,290
              )Selling,
                  general and administrative expenses
              
              
              (23
              )
              
              (2,157
              )
              
              (339
              )
              
              (9,955
              )Depreciation
                  and amortization
              
              
              (63
              )
              
              (501
              )
              
              (63
              )
              
              (1,338
              )Impairment
                  (charge) reversal and loss on sale
              
              
              53
              
              
              (5,971
              )
              
              -
              
              
              (5,971
              )Other
                  income
              
              
              145
              
              
              -
              
              
              470
              
              
              6Interest
                  expense
              
              
              48
              
              
              (21
              )
              
              -
              
              
              (69
              )Net
                  income (loss) from discontinued operations
              
              $
              160
              
              $
              (7,021
              )
              $
              118
              
              $
              (9,308
              )




The
        2006
        nine month period includes a $300,000 loss relating to a settlement regarding
        the sale of the Company's financial services operations.
  Subsequent
        to the end of the third quarter of 2007, the Company decided to dispose of
        Precision. As such, future financial statements will reflect the related
        operations as discontinued.
  9


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**


**Note
      3 -** **New
      Accounting Policy**




In
      July
      2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
      No. 48 regarding “Accounting for Uncertainty in Income Taxes,” an interpretation
      of FASB No. 109 (“FIN 48”), which defines the threshold for recognizing the
      benefits of tax-return positions in the financial statements as
“more-likely-than-not” to be sustained by the taxing authorities. The Company
      has reviewed its tax positions for open tax years 2004 and later and the
      adoption of FIN 48 on January 1, 2007 did not result in establishing a
      contingent tax liability reserve nor a corresponding charge to retained
      earnings. The Company has substantial tax benefits derived from its operating
      loss carryforwards but has provided 100% valuation allowances against them
      due
      to uncertainties associated with the realization of those tax
      benefits.





The
      recognition and measurement of certain tax benefits includes estimates and
      judgment by management and inherently includes subjectivity. Changes in
      estimates may create volativity in the Company’s effective tax rate in future
      periods from obtaining new information about particular tax positions that
      may
      cause management to change its estimates. If the Company would establish a
      contingent tax liability reserve, interest and penalties related to uncertain
      tax positions would be classified in general and administrative
      expenses.





**Note
      4 - Indebtedness**


The
          Company’s long-term debt was as follows (dollars in
          thousands):
  Interest
              
              
              **September
                  30**
              
              
              December
                  31Rate(1)
              
              
              **2007**
              
              
              2006Mortgages
                  payable
              
              
              11.54
              %
              $
              **5,645**
              
              $
              5,701Promissory
                  notes
              
              
              12.56
              %
              
              **1,009**
              
              
              1,7957%
                  convertible notes
              
              
              7.00
              %
              
              **3,300**
              
              
              3,30010%
                  notes
              
              
              10.00
              %
              
              **2,500**
              
              
              -6%
                  notes
              
              
              6.00
              %
              
              **250**
              
              
              -6%
                  notes mandatory convertible
              
              
              6.00
              %
              
              -
              
              
              2,750Laurus
                  convertible notes
              
              
              10.25
              %
              
              **2,401**
              
              
              2,401Subordinated
                  debentures
              
              
              10.25
              %
              
              **9,577**
              
              
              9,5772006
                  6% convertible notes
              
              
              6.00
              %
              
              **1,282**
              
              
              1,300Derivatives
                  embedded in 2006 notes
              
              
              
              
              
              **1,645**
              
              
              1,685Capital
                  lease obligations
              
              
              
              
              
              **24**
              
              
              77Total
                  indebtedness
              
              
              
              
              
              **27,633**
              
              
              28,586Less
                  debt discount on convertible notes
              
              
              
              
              
              **1,356**
              
              
              1,471Less
                  current portion
              
              
              
              
              
              **14,880**
              
              
              4,306Total
                  long-term debt, less current portion
              
              
              
              
              **$**
              **11,397**
              
              $
              22,809(1)
                  Current weighted average rate at September 30, 2007.




Mortgages
      payable primarily represents a promissory note in the amount of $5.5 million
      due
      June 30, 2008, secured by the Company’s corporate headquarters. The note bears
      interest at 11.75% per annum and is payable in equal monthly installments of
      $51,728, with a final payment of $5.1 million in June 2008. The note may be
      prepaid in whole or in part, at a redemption price equal to 102% of the
      principal amount (plus accrued interest) declining to 101% in 2007 with no
      penalty in the final year. The Company is currently in default on this note
      due
      to late interest payments and is negotiating the refinancing of this mortgage
      on
      a long term basis.





The
      Company has various unsecured promissory notes primarily related to the
      acquisitions of various healthcare companies. On August 24, 2006, the Company
      issued a promissory note to AmerisourceBergen Drug Corporation (“ABDC”), its
      primary vendor, in exchange for amounts previously due to ABDC in the amount
      of
      $1.5 million payable in fifteen equal weekly installments of $85,000 with the
      remaining $225,000 due December 15, 2006. This note bore an interest rate of
      10.25%. This note was extended with the agreement of ABDC with the December
      31,
      2006 balance of $275,000 paid in January, 2007. On May 26, 2007, the Company
      borrowed $103,000 to finance business insurance. On September 27, 2007, the
      Company issued a $50,000 thirty day note at 6.5% interest accompanied by
      warrants to purchase 20,000 shares of Standard Management stock at $.10 per
      share and 5,000 shares of stock in UHCC at $10.00 per share. Both warrants
      contain a two year term. The value ascribed to both sets of warrants was
      immaterial. On August 17, 2007, the Company issued to an individual a $200,000
      note at a rate of interest of 12% secured by the stock of Premier Life Insurance
      Company of Bermuda (“Premier Life”), a wholly owned subsidiary of the Company,
      which was due, but not paid, on September 28, 2007. While this note is
      outstanding, the Company has granted the lender voting control of all
      outstanding Premier Life shares. The lender, however, has not caused any action
      on this matter and does not intend to do so without further notice to borrower.
      Certain of these notes are currently in default due to untimely interest and
      principal payments. Accordingly, they are classified as current
      obligations.




10


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**


On
      February 10, 2004, the Company issued $3.3 million of 7% unsecured convertible
      notes due in full in 2009. The notes are convertible into shares of the
      Company’s common stock at a price equal to $4.20 per share at any time at the
      holder’s option subject to certain conditions. These notes are in default as of
      September 30, 2007 due to late interest payments and are therefore classified
      as
      current obligations.


On
        November 30, 2004, the Company issued $2.75 million of 6% mandatory unsecured
        convertible notes due in full in 2008. The notes were convertible into shares
        of
        the Company’s common stock at a price equal to an adjusted $3.28 per share at
        any time at the holder’s option subject to certain conditions. In March 2007,
        $2.5 million of these notes were exchanged for a like amount of notes due
        in May
        2008 at an interest rate of 6 % (adjusted to 10 % on June 1, 2007 as $1 million
        in principal was not prepaid by then) in conjunction with the equity financing
        described in first three paragraphs of Note 5. The remaining $250,000 is
        due in
        May 2008 with an interest rate of 6%. The conversion features were eliminated
        on
        all of the $2.75 million. It was determined that the original notes were
        extinguished causing the Company to write off the $33,000 of unamortized
        deferred financing costs remaining on the notes in March 2007. In the fourth
        quarter of 2007 it is anticipated, pending stockholder approval, the $2.5
        million and related accrued interest will be settled by transferring the
        Company’s ownership of Precision and certain unimproved land to the lender. The
        carrying values of these obligations and assets required the third quarter
        impairment charge of $550,000 to Precision’s goodwill.


On
      March
      21, 2005, the Company issued $4.75 million of convertible notes, which have
      been
      paid down to $2.4 million to Laurus Master Fund, Ltd. (the “Laurus Notes”).
      Principal payments are due in monthly installments through March 2008 and bear
      interest at the prime rate plus 2% with a floor of 7.25%, unless such rate
      is
      reduced in the event that the trading price of the Company’s common stock
      increase above certain levels. Also, the Company may pay interest and principal
      in shares of its common stock instead of cash under certain circumstances.
      All
      principal and interest to date have been paid in cash. These notes are
      convertible into shares of the Company’s common stock at any time at the
      holder’s option at a rate of $3.28 per share, subject to certain conditions. As
      with the 2004 7% and 6% convertible notes, because the Company’s common shares
      were trading at less than the effective conversion price upon issuance of the
      notes, no value was assigned to the conversion feature. The notes were issued
      with a detachable warrant that allows the holder to purchase 532,511 shares
      of
      common stock at an original exercise price of $3.90 per share, which was reduced
      to $0.01 per share as part of a settlement negotiated between the holder and
      the
      Company. That settlement included a) the release of certain real estate as
      collateral (which the Company sold in May 2006 for $1.1 million and a gain
      of
      $.5 million), b) a $1.1 million pay down of the notes, c) amended maturity
      schedule still ending in March 2008, and d) the reduction of the warrant
      exercise price which resulted in a $.2 million charge in the second quarter
      of
      2006.





On
      August
      9, 2001, SMAN Capital Trust I (the “Trust”) completed a public offering of $20.7
      million of its 10.25% preferred securities, which mature on August 9, 2031
      (“Trust Preferred Securities”). The Trust, in turn, loaned the offering proceeds
      to the Company as subordinated debentures with terms similar to the Trust
      Preferred Securities. Since all income and cash flows into the Trust benefit
      the
      preferred securities holders rather than Standard Management, the Trust is
      not
      consolidated with Standard Management.





On
      March
      8, 2006, the Company announced its intention to defer distributions on the
      Trust
      Preferred Securities. The deferral, which began with the distribution date
      scheduled for March 31, 2006, is expected to continue for up to two years.
      The
      Company will make a decision each quarter as to the continuation of the deferral
      of the distributions. All unpaid distributions will accrue interest at the
      rate
      of 10.25% per annum until paid by the Company. Deferred distributions as of
      September 30, 2007 were $1,856,000.





In
      June
      2006, the Company completed an exchange offer for a portion of the Trust
      Preferred Securities which allowed all Trust Preferred Security holders to
      exchange their Trust Preferred Securities for six shares of common stock of
      Standard Management. The Company received tenders for 1,112,341 shares or 53.7%
      of outstanding Trust Preferred Securities by the expiration date of the offer
      to
      exchange. On June 30, 2006, as a result of the exchange offer, the Company
      issued 6,674,046 shares of its common stock valued at $1.8 million in exchange
      for $11.1 million of the Trust Preferred Securities and $.6 million of related
      deferred interest, which in turn, reduced the outstanding balance of the
      subordinated debentures and accrued interest by like amounts. After the write
      off of a pro rata portion of previously-unamortized deferred financing fees
      and
      the costs of the transaction, the Company recorded a $9.2 million gain upon
      the
      exchange as a component of Other Income, net in the second quarter of 2006.




11


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**


On
      April
      13, 2006, the Company entered into a senior loan agreement with one of the
      officers of a recently acquired company for $2.8 million at an interest rate
      of
      8.25% per annum due April 13, 2008. Additionally, the Company issued warrants
      exercisable for 100,000 shares of the Company’s common stock. Such warrants are
      exercisable for seventy three cents ($0.73) per share. This note was paid in
      full in July 2006.





On
      July
      27, 2006, the Company entered into a senior loan in favor of an individual,
      who,
      until the issuance, was a member of the Company’s board of directors, in the
      principal amount of $2.8 million at an interest rate of 12.0% per annum due
      no
      later than September 15, 2006. The proceeds from this note were used to retire
      the $2.8 million senior loan issued on April 13, 2006. On August 11, 2006,
      the
      Company repaid the sum of $3.1 million, including all but $500,000 of the senior
      note and facility fees of $750,000.  A second senior loan of $500,000 with
      similar terms was made on September 28, 2006. Both senior notes were paid,
      along
      with an additional $200,000 of tender and facility fees, in late October 2006.
      From October 2006 through December 31, 2006, an additional $715,000 of similar
      notes at interest rates of 12% were issued to this same lender and paid along
      with $143,000 of facility fees (expensed in 2006) in early 2007. The outstanding
      balance of these notes as of December 31, 2006 are included in promissory notes
      in the above table. These notes are now paid in full.





On
      September 8, 2006, the Company entered into a new debt agreement to issue
      an aggregate principal amount of $2.0 million of new 6% Convertible Notes due
      2009 to four investors in a private placement. Notes in the principal amount
      of
      $700,000 were issued on September 8, 2006 and an additional $600,000 in notes
      was issued on October 4, 2006 in conjunction with the Company’s filing of a
      registration statement called for in the debt agreement to register the shares
      issueable upon conversion of the notes and exercise of the warrants described
      below. The last $700,000 of notes has yet to be issued pending effectiveness
      of
      the registration statement called for in the debt agreement. The notes are
      convertible at any time into shares of the Company’s common stock based on a
      floating conversion price based on the trading price of its common stock. The
      notes mature on September 8, 2009 and bear interest at 6% per annum prior to
      maturity and 15% per annum after the maturity date and until paid in full.
      However, no interest is due for any month in which the intraday trading price
      of
      the Company’s common stock is greater than $0.25 for each trading day of the
      month - which has not occurred since issuance. The notes are secured by certain
      personal property of the Company. The Company may redeem the notes at any time
      for 130% of the outstanding principal amount until the maturity date, under
      certain conditions and may redeem stated portions of the new notes after any
      monthly period in which the Company’s stock price is consistently below a
      certain threshold. As the Company was not able to register the shares as
      required, these notes were in default through July. In July 2007, the Company
      entered into an agreement to issue warrants to purchase 8 million shares with
      an
      exercise price of $.17 per share for a term of 7 years to cure this default.
      The
      Company utilized the Black-Scholes method to value these warrants at $.13 each
      thereby recording an expense in June 2007 of $1,040,000.




The
      conversion provisions and the various call and other provisions that are based
      on the Company’s common stock price which are included in the agreements related
      to the above debt represent financial instruments that must be accounted for
      as
      derivatives and the value of which must be reflected as separate Company
      liabilities. Based on valuations performed by independent parties, the Company
      determined that the original aggregate value of these various instruments was
      $840,000 and $720,000 for the September 2006 and October 2006 tranches,
      respectively. These values, along with the value assigned to the warrants issued
      with the September 2006 tranche as described below, are also recorded as debt
      discount related to this debt. To the extent that the debt discount would have
      been in excess of the cash proceeds from the issuance of the debt, such excess
      was immediately expensed (and aggregated $948,000) and both tranches of debt
      were originally recorded with 100% discounts. Such discounts are being amortized
      over the term of the related debt under the effective interest rate method
      and
      such amortization has not yet been material.




In
      the
      September tranche of the same private placement transaction, the Company issued
      to the investors, warrants to purchase an aggregate of 3,000,000 shares of
      the
      Company’s common stock. The warrants are immediately exercisable at a price of
      $0.60 per share, expire seven years from the date of issue and contain
      provisions that allow for a reduction of the exercise price under certain
      conditions. These warrants have been valued at $688,000 as of their issuance
      date and are reflected as separate long-term liabilities of the Company.




12




STANDARD
      MANAGEMENT CORPORATION AND
      SUBSIDIARIES




Additionally,
      due to the nature of the related conversion feature of these 2006 6% convertible
      notes, all of the Company’s previously-outstanding warrants that had been
      classified as equity instruments were required to be reclassified as liabilities
      at their estimated values as of the date of the note issuance. That estimated
      value of $264,000 was reclassified out of equity into a long-term liability.
      The
      aggregate value of all outstanding warrants and the derivative instruments
      described above are required to be marked-to-market value each balance sheet
      date. That revaluation through December 31, 2006 aggregated to $667,000 of
      income. This income, combined with the $948,000 of expense above and $210,000
      of
      income related to valuation changes for certain warrants already classified
      as
      liabilities prior to September 2006, aggregate to $71,000 of expense related
      to
      warrants and derivatives for the year ended December 31, 2006. The aggregate
      expense related to warrants and derivatives recorded in the first nine months
      of
      2007 was $617,000, including the $1,040,000 described above.




The
      Company issued to the same lenders unrelated unsecured notes in October
      2007 for $250,000 due October 2010 with an interest rate of 8% and conversion
      features identical to those described above.





**Note
      5 - Equity Transactions**





In
      March
      2007, Mr. Sam Schmidt of Las Vegas, Nevada and certain investors related to
      Mr.
      Schmidt completed the purchase of 20,000,000 shares of Standard Management
      stock
      at a purchase price of $.10 per share. Upon completion of the transaction,
      Mr.
      Schmidt beneficially owned approximately 52.6% of the Registrant’s outstanding
      common shares. Mr. Schmidt has the power to direct the affairs of Standard
      Management. Mr. Schmidt agreed to vote his shares of the Company’s common shares
      for the election to the Company’s board of director of himself, Mr. Dennis King,
      Mr. Ronald D. Hunter, Mr. James H. Steane II, and Mr. Dainforth B. French,
      Jr.
      Mr. Schmidt, Mr. King, Mr. Hunter, Mr. Steane, and Mr. French are all current
      members of the board of directors of the Company. The Company used the proceeds
      of the sale of its shares to Mr. Schmidt for debt reduction and general
      corporate purposes.





In
      March
      2007, Mr. Schmidt granted options to purchase 3,000,000 of the Company’s common
      shares purchased by the investor group to Mr. Ronald Hunter, 1,000,000 common
      shares to Mark B.L. Long and 1,000,000 common shares to Dr. Martial R. Knieser,
      M.D. The exercise price of the options is $0.20 per share, and the options
      have
      a term of two years. Each of Mr. Hunter, Dr. Long, and Dr. Knieser is an officer
      of the Company. Accordingly, for accounting purposes the Company treated these
      options as if the options had been granted by the Company. The Company valued
      the options granted to Mr. Hunter, Dr. Long, and Dr. Knieser at $.05 per share
      using the Black-Scholes option-pricing model resulting in a $250,000 charge
      being recorded as a general and administrative expense in March,
      2007.





Pursuant
      to the letter agreement, on March 9, 2007 the Company issued to Mr. Schmidt
      a
      secured 6% promissory note, due May 1, 2008 (the “Secured Note) in the principal
      amount of $2,500,000, in exchange for Mr. Schmidt’s surrender of a 6%
      convertible note due 2008 in the same principal amount that the Company sold
      to
      Mr. Schmidt in 2004. The Secured Note is secured by a first priority security
      interest in certain real estate located in Bloomington, Indiana. The interest
      rate increased to 10% on June 1, 2007. The Company also granted to Mr. Schmidt
      a
      first priority security interest in the personal property of the Company and
      a
      pledge of the shares of the Company’s subsidiary, Precision, securing same
      indebtedness. In November 2007, the Company extinguished this debt and related
      accrued interest by transferring ownership of Precision and the Bloomington
      real
      estate to Mr. Schmidt.





The
      Company also sold 1,850,000 shares of Standard Management stock during the
      first
      quarter of 2007 at a purchase price of $.10 per share to four outside investors.
      While not specifically required, in April and May of 2007, the Company issued
      an
      additional 2,133,318 shares of its stock to certain shareholders who had
      previously acquired the shares at $.30 per share to effectively reprice those
      issuances to the $.10 per share price used in the 2007 issuances. In April
      2007,
      the Company issued 107,042 shares of its stock to one of the previous owners
      of
      Precision in accordance with the terms of the Purchase Agreement.





Certain
      holders of the 6% convertible notes issued in September 2006 exercised their
      conversion options in August 2007 receiving 402,619 shares of stock in exchange
      for a reduction of $18,000 of principal.





In
      October 2007, the Company issued 16,500,000 warrants with an exercise price
      of
      $.08 per share with a seven year term in connection with securing a $250,000
      loan from the group of four outside investors that holds the September 2006
      notes. The warrants will be valued using the Black-Scholes option pricing model
      and such value will represent debt discount on the $250,000 loan. Any value
      in
      excess of $250,000 will be expensed immediately.




13




STANDARD
      MANAGEMENT CORPORATION AND
      SUBSIDIARIES




Pursuant
      to provisions included in the Company’s 2005 acquisition of Precision, the
      Company guaranteed the value of 304,878 shares at $3.28 per share of the
      Company’s common stock used as consideration in that acquisition as of the
      second anniversary, which occurred on July 28, 2007. Based on the July 28,
      2007
      stock price, that guarantee requires the Company to issue $963,000 of cash
      or an
      equivalent number of its shares (7,825,000) to the prior owners of Precision.
      Neither the cash nor the shares have been issued in accordance with the
      agreements and, as such, one of the prior owners has initiated legal proceedings
      to compel such issuance. In addition, pursuant to provisions included in the
      Company’s 2005 acquisition of Long Term Rx, the Company guaranteed the value of
      182,183 shares at $3.28 per share of the Company’s common stock used as
      consideration in that acquisition as of the second anniversary, which occurred
      on July 28, 2007. Based on the July 28, 2007 stock price, that guarantee
      requires the Company to issue $465,000 of cash or an equivalent number of its
      shares (3,880,000) to the prior owner of Long Term Rx.





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





**Comparison
      of the Three and Nine Months Ended September 30, 2007 and September 30,
      2006:**





The
      following discussion highlights the material factors affecting our results
      of
      operations and the significant changes in balance sheet items. Notes to the
      consolidated financial statements included in this report and the notes to
      the
      consolidated financial statements included in our Form 10-K for the year ended
      December 31, 2006, should be read in conjunction with this Form
      10-Q.





***Continuing
      Operations*** **:**





*Net
      revenues*





*Quarterly
      Analysis:*





·
            Sales
                for the third quarter of 2007 were $1.8 million, down $.4 million
                or 18.2%
                from the $2.2 million of sales during the third quarter of 2006.
                The
                decrease is due to the Company’s cash flow constraints limiting its
                ability to acquire inventory for sale, thereby resulting in the loss
                of
                several customers.





*Year-to-date
      Analysis:*





·
            Sales
                for the first nine months of 2007 decreased 2.4% or $.2 million versus
                the
                first nine months of 2006 due to limited inventory available for
                sale.




*Gross
      profit*





*Quarterly
      Analysis:*





·
            Gross
                profit for thethirdquarter of 2007 decreased $.2 million or 23.9% to $.5 million due
                to
                reduced sales volume primarily in the higher margin wholesale
                business.





*Year-to-date
      Analysis:*





·
            Gross
                profit for the first nine months of 2007 decreased by $ .2 million
                or 9.6%
                to $1.8 million versus the first nine months of 2006, due to reducedsales
                volume primarily in the higher margin wholesale
                business.





14




STANDARD
      MANAGEMENT CORPORATION AND
      SUBSIDIARIES




*Selling,
      general and administrative expenses*





*Quarterly
      Analysis:*





·
            Selling,
                general and administrative expenses for the third quarter of 2007
                decreased by $1.2 million or 41.9% to $1.6 million compared to the
                third
                quarter of 2006, primarily due to a $.5 million decrease in compensation
                expense as a result of staffing reductions relating to the corporate
                transition, a $.4 million decrease in professional fees due to legal
                expenses incurred in 2006 relating to discontinued operations, $.2
                reduction in bureau and association dues, and a $.1 million decreased
                in
                operating expenses at Precision
                Healthcare.





*Year-to-date
      Analysis:*





·
            Selling,
                general and administrative expenses for the first nine months of
                2007
                decreased by $3.9 million or 39.2% to $6.1 million compared to the
                first
                nine months of 2006, primarily due to a $1.8 million decrease in
                compensation expense (a $2.0 million decrease in compensation partially
                offset by a $.2 million increase in stock option expense) as a result
                of
                staffing reductions relating to the corporate transition, a $1.2
                million
                decrease in professional fees due to legal expenses incurred in 2006
                relating to discontinued operations, $.3 million reduction in bureau
                and
                association dues, $.4 million reduction in operating expenses at
                the
                corporate office, and $.2 million in decreased operating expenses
                at
                Precision Healthcare.





*Impact
      related to value of warrants and derivatives*





*Quarterly
      Analysis:*





·
            The
                change in the value of outstanding warrants and derivatives is charged
                to
                the statement of operations each quarter. The value change is heavily
                dependent on the market price of the Company’s common stock. As the price
                increases, the value of the outstanding securities decrease and,
                as a
                result, the Company’s liabilities related to the securities decreases and
                income is recognized. The 2007 income of $.8 million for the third
                quarter
                is largely due to a decline in the stock price during the quarter.
                The
                2006 loss of $.5 million includes a $.9 million loss related to the
                initial charge related to securities issued in September 2006 offset
                by
                gains related to value changes.





*Year-to-date
      analysis:*





·
            Expense
                of $.6 million in 2007 represents a $.4 million net decrease in the
                value
                of outstanding warrants and derivatives due to the decline in stock
                prices
                during the period and a $1.0 million charge relating to 8 million
                warrants
                issued to a lender as consideration for waiving a related default.
                The
                2006 loss of $.4 million includes a $.9 million loss related to the
                initial charge related to securities issued in September 2006 offset
                by
                gains related to value changes.





*Goodwill
      Impairment*




·
            In
                the fourth quarter of 2007 it is anticipated, pending stockholder
                approval, the Company will transfer the stock of Precision and the
                title
                to certain land to Mr. Schmidt in exchange for forgiveness of $2.7
                million
                of principal and interest on notes due in March 2008. The net carrying
                cost of Precision’s net assets and the land was in excess of the forgiven
                obligations, thereby resulting in the $.6 million write down of goodwill
                related to the Company’s 2005
                acquisition.





*Depreciation
      and amortization*





*Quarterly
      Analysis:*





·
            Depreciation
                and amortization was $.2 million in both the third quarters of 2007
                and
                2006.





*Year-to-date
      Analysis:*





·
            Depreciation
                and amortization was $.4 million and $.5 million in the first nine
                months
                of 2007 and 2006, respectively. The decrease was due to the sale
                of
                furniture and equipment.





15




STANDARD
      MANAGEMENT CORPORATION AND
      SUBSIDIARIES




*Other
      income*





*Quarterly
      Analysis:*





·
            Other
                income for the third quarter of 2007 of $.4 million is rental income
                from
                leasing space at the Company’s corporate headquarters and a realized gain
                from the July, 2007 sale of an investment security. Other income
                for the
                third quarter of 2006 of $.2 million is rental income from leasing
                space
                at the Company’s corporate
                headquarters.





*Year-to-date
      Analysis:*





·
            Other
                income for the first nine months of 2007 of $.6 million is rental
                income
                from leasing space at the Company’s corporate headquarters and a realized
                gain from the July, 2007 sale of an investment security. Other income
                for
                the first nine months of 2006 of $7.5 million is due primarily to
                the
                following: $.5 million of income from the sale of real estate, $9.2
                million of income from the exchange offer for the Trust Preferred
                Securities, $2.8 million of loss from the June, 2006 sale of preferred
                stock owned by the Company, and $.4 million of income due to the
                dividends
                received from the preferred stock, as well as rental income from
                leasing
                space at the Company’s corporate
                headquarters.





*Interest
      expense*





*Quarterly
      Analysis:*





·
            Interest
                expense for the third quarter of 2007 decreased by $.7 million or
                59% to
                $1.0 million compared to the third quarter of 2006, primarily due
                to the
                exchange of certain debt into equity in June
                2006.





*Year-to-date
      Analysis:*





·
            Interest
                expense for the first nine months of 2007 decreased by $1.6 million
                or 39
                % to $2.4 million compared to the first nine months of 2006, primarily
                due
                to the exchange of certain debt into equity in June
                2006.





*Federal
      income tax expense*





·
            Provision
                for federal income tax remained zero due to a 100% valuation allowance
                on
                the net losses in the first nine months of 2007 and
                2006.





***Discontinued
      Operations:***





*Quarterly
      Analysis:*





·
            Net
                income from discontinued operations for the third quarter of 2007
                was $.2
                million due primarily to higher than expected proceeds from liquidation
                of
                assets from discontinued operations. The net loss of $7.0 million
                for the
                third quarter of 2006 was primarily due to the cessation of operations
                of
                a base of business during 2006.





*Year-to-date
      Analysis:*





·
            Net
                income from discontinued operations for the first nine months of
                2007 was
                $.1 million compared to net loss of $9.6 million for the first nine
                months
                of 2006. The reduction was primarily due to the cessation of operations
                of
                a base of business during 2006.





**Liquidity
      and Capital Resources**





Our
      net
      cash used in operating activities of continuing operations during the first
      nine
      months of 2007 was $.6 million compared to cash used in operating activities
      of
      $7.6 million in the first nine months of 2006. The change is largely due to
      a $4.6 million larger 2006 loss before non-cash expenses and a $2.4 million
      higher 2007 increase in cash provided by changes in other working capital
      items.




16




STANDARD
      MANAGEMENT CORPORATION AND
      SUBSIDIARIES




Net
      cash
      used by investing activities of continuing operations during the first nine
      months of 2007 was $.3 compared to $14.2 million provided in 2006. The $.3
      million used in 2007 was $.8 million in cash paid in acquisition activities
      partially offset by $.5 million cash received in asset sale activities. The
      $14.2 million provided in 2006 was due to $13.1 million provided by the sale
      of
      businesses and assets held for sale, $ 1.5 million received from the redemption
      of preferred stock partially offset by $.3 million used in connection with
      the
      sale of Standard Life and $.1 million in capital expenditures.





Our
      net
      cash received from financing activities of continuing operations during the
      first nine months of 2007 was $.5 million compared to net cash used by financing
      activities of $7.7 million in the first nine months of 2006. The net cash
      provided by financing activities in 2007 was due to the sale of stock of $2.2
      million and borrowings of $.7 million partially offset by repayments of long
      term debt of $1.6 million, funding discontinued operations of $.5 million,
      and
      deferred financing costs paid of $.3 million. The net cash used in financing
      activities in 2006 was attributable to cash provided to our discontinued
      operations of $4.5 million, repayment of debt of $8.2 million, purchase of
      treasury stock $2.9 million, and $.1 million deferred financing costs paid
      being
      partially offset by borrowing of $7.6 million, and the sale of stock of $.4
      million .





At
      September 30, 2007, our cash and cash equivalents were $.3 million compared
      to
      $.6 million at December 31, 2006.





Based
      on
      current estimates of cash flow, management believes that, absent a significant
      additional cash infusion or significantly increased cash flow from operations,
      at some point within the next several months, the Company may not have
      sufficient cash to meet its operating and debt service requirements. The
      Company, as of September 30, 2007, has a shareholders’ deficit of $20.2 million
      and a working capital deficit of $20.6 million. This situation raises
“substantial doubt” about the Company’s ability to continue s a going concern.
      The consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty. Planned refinancing of current
      debt
      with long-term debt and resolution of defaults on other debt are expected to
      result in an improved working capital position; however, we cannot make
      assurances that such actions will be finalized.





In
      response to this situation, during the third quarter of 2006, the Company
      realigned its expense structure, resulting in the retirement or resignations
      of
      four executives and, if applicable, their related employment agreements.
      Additionally, in February 2007, Standard Management entered into a Management
      Agreement whereby Standard Management will act as the manager of the
      pharmaceutical operations expected to be acquired by UHCC. Standard Management’s
      ownership in UHCC is expected to be diluted to less than 22% in connection
      with
      equity financing from unrelated parties to fund the expected acquisitions.
      Standard Management paid a $300,000 deposit towards one pending UHCC acquisition
      during the second quarter of 2007 and has deferred an additional $462,000 of
      costs (included with other non current assets) related to the pending
      acquisitions and related financing. Standard Management is expected to earn
      guaranteed and performance based management fees based on operating results
      of
      the acquired pharmacy operations. Management expects that this new investment
      and financial structure will provide adequate financial support to complete
      the
      Company’s development plans. In addition, management intends to refinance its
      $5.5 million mortgage currently due in June of 2008, with long term
      debt.





Our
      principal cash requirements after the disposition of Precision are for operating
      expenses and debt service obligations. Our primary sources of such cash are
      cash
      flow external borrowings and sales of equity securities.




During
      2006 and early 2007, we took the following actions in our efforts to maximize
      cash in-flows, reduce cash requirements, and generally provide adequate cash
      resources to meet our operating needs.





·
            In
                April 2006, we borrowed $2.8 million from one of our then officers.
                We
                repaid this debt with proceeds from borrowings of $2.8 million from
                a then
                director in July 2006. This debt was repaid as well as an additional
                $1
                million borrowed from and due to this individual as financing fees
                at
                various times throughout the second half of 2006 and the first quarter
                of
                2007 with proceeds generally from the sale of pharmacy operations
                and our
                common stock.





·
            On
                March 8, 2006, we announced that we elected to defer distributions,
                beginning March 31, 2006, on the 10.25% preferred securities (the
“Trust
                Preferred Securities”) of our subsidiary SMAN Capital Trust I for up to
                two (2) years, with the ability to defer up to five (5) years. All
                unpaid
                distributions will accrue interest at the rate of 10.25% annually
                until
                paid.





·
            In
                June 2006, the Company completed an exchange offer for a portion
                of the
                Trust Preferred Securities which allowed all Trust Preferred Security
                holders to exchange their Trust Preferred Securities for six (6)
                shares of
                common stock of Standard Management. The Company received tenders
                for
                1,112,341 shares or 53.7% of outstanding Trust Preferred Securities
                by the
                expiration date of the offer to exchange. On June 30, 2006, as a
                result of
                the exchange offer, the Company issued 6,674,046 shares of its common
                stock valued at $1.8 million in exchange for $11.1 million of the
                Trust
                Preferred Securities and $.6 million of related deferred interest,
                which
                in turn, reduced the outstanding balance of the subordinated debentures
                and accrued interest by like amounts.




17




STANDARD
      MANAGEMENT CORPORATION AND
      SUBSIDIARIES




·
            In
                early 2006, the Company announced efforts to offer up to $15 million
                shares of its common stock for sale to accredited investors in a
                series of
                one or more private placements. Through December 31, 2006, the Company
                issued 1,491,340 shares of common stock along with warrants to acquire
                up
                to an additional 447,402 shares of common stock (exclusive of certain
                issuances which were later reacquired by the Company at the same
                price)
                for $630,000.





·
            During
                the third and fourth quarter of 2006 and the first quarter of 2007,
                the
                Company sold substantially all of the pharmacy operations it had
                acquired
                from 2002 through 2006. Aggregate sales proceeds received as of March
                31,
                2007 of $16.2 million have
                been used primarily to pay down short term borrowings and other general
                corporate purposes.





·
            In
                March 2007, the Company issued 20 million shares of its common stock
                to
                Mr. Sam Schmidt for $2.0 million, providing Mr. Schmidt with a 55.3%
                interest in the Company. An additional 1,850,000 shares were sold
                to four
                outside investors at $.10 per share. Proceeds were used primarily
                to pay
                off short term borrowings and other general corporate
                purposes.





·
            In
                November 2007, the Company transferred the stock of Precision and
                the
                title to certain land to Mr. Schmidt in exchange for forgiveness
                of $2.7
                million of principal and interest on notes due in March 2008. The
                net
                carrying cost of Precision Healthcare’s net assets and the land was in
                excess of the forgiven obligations, thereby resulting in the $.6
                million
                write down of goodwill related to the Company’s 2005
                acquisition.





·
            On
                August 17, 2007, the Company issued to an individual a $200,000 note
                at a
                rate of interest of 12% secured by the stock of Premier Life Insurance
                Company of Bermuda, (“Premier Life”), a wholly owned subsidiary of the
                Company, which was due, but not paid, on September 28, 2007. While
                this
                note is outstanding, the Company has granted the lender voting control
                of
                all outstanding Premier Life shares. The lender, however, has not
                caused
                any action on this matter and does not intend to do so without further
                notice to borrower.





·
            In
                October, 2007, the Company issued a $250,000 note at a rate of interest
                of
                8%, due on October 25, 2010 and with conversion features identical
                to the
                6% notes issued in 2006. There were 16.5 million warrants exercisable
                at
                $.08 per share with a term of seven years issued in conjunction with
                these
                notes.





·
            Management
                has created Universal HealthCare Company, LLC (“UHCC”), through which it
                intends to attract unrelated investors and lenders to fund future
                acquisitions of pharmacy operations. Management expects that Standard
                Management’s ultimate ownership of UHCC will be less than 22% as a result
                of future equity financing by these investors. Standard Management
                is the
                Managing Member of UHCC pursuant to a Management Agreement under
                which it
                has substantial influence and control of the operations of the acquired
                businesses. In return, Standard Management will receive guaranteed
                and
                performance based fees from UHCC. These fees are expected to provide
                Standard Management with the funding necessary to support its operations
                as a management company.





·
            Management
                also continues to explore other sources of funding and new business
                opportunities, which will enable the Company to continue its operations
                and become profitable. However, the Company can not provide any assurance
                that such funding or business opportunities will be
                consummated.





Cash
      requirements for the remainder of 2007 and beyond include substantial debt
      service costs. The Company’s current debt obligations are more fully described
      in Note 4 to our consolidated financial statements and include mortgage notes
      of
      $5.6 million with $5.5 million due in 2008, various promissory notes of $3.8
      million largely due in 2008, convertible and other notes of $7.0 million due
      through 2009 and subordinated trust preferred securities of $9.6 million due
      in
      2031. We expect to finance our debt obligations with management fees proceeds
      from UHCC, the potential refinancing of our corporate headquarters, and new
      debt
      and equity financings.




18




STANDARD
      MANAGEMENT CORPORATION AND
      SUBSIDIARIES




*Future
      Acquisitions:* ****** Our
      growth strategy depends significantly on our ability to identify appropriate
      acquisition targets. We are currently negotiating for the acquisition of four
      (4) pharmacies.




**Cautionary
      Notice Regarding Forward-Looking Statements**





This
      Quarterly Report on Form 10-Q contains “forward-looking statements” within the
      meaning of Section 27A of the Securities Exchange Act of 1934. All statements,
      trend analyses, and other information contained in this Annual Report on
      Form 10-K relative to markets for our products, trends in our operations or
      financial results, as well as other statements including words such as
“anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” and other
      similar expressions, constitute forward-looking statements under the Private
      Securities Litigation Reform Act of 1995. Forward-looking statements include,
      without limitation, statements relating to our business strategy and prospects,
      our acquisition strategy, including potential acquisitions discussed under
      “Future Acquisitions,” the operation and performance of acquired businesses
      post-acquisition, future financing plans, sources and availability of capital,
      governmental regulations and their effect on us and our competition. These
      forward-looking statements are subject to known and unknown risks, uncertainties
      and other factors which may cause actual results to be materially different
      from
      those contemplated by the forward-looking statements. Such factors include,
      but
      are not limited to the Risk Factors set forth under Item 1A in the Company’s
      2006 Form 10-K, as well as:





·
            Our
                having sufficient cash on hand, whether generated through operations
                or
                financings, to meet our debt service and operating needs and continue
                our
                acquisition program.





·
            The
                ability of our management team to successfully operate a pharmacy
                business
                with limited experience in that
                industry.





·
            Our
                ability to expand our pharmacy business both organically and through
                acquisitions, including our ability to identify suitable acquisition
                candidates, acquire them at favorable prices and successfully integrate
                them into our business, and to achieve anticipated levels of operational
                efficiencies and implement cost-saving
                initiatives.





·
            General
                economic conditions and other factors, including prevailing interest
                rate
                levels, and stock market performance, which may affect our ability
                to
                obtain additional capital when needed and on favorable
                terms.





·
            Customer
                response to new products, distribution channels and marketing
                initiatives.





·
            Increasing
                competition in the sale of our
                products.





We
      caution you that, while forward-looking statements reflect our good faith
      beliefs, these statements are not guarantees of future performance. In addition,
      we disclaim any obligation to publicly update or revise any forward-looking
      statement, whether as a result of new information, future events or otherwise,
      except as required by law.





**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





Our
      market risks and the way they are managed are summarized in our discussion
      and
      analysis of financial condition and results of operations in our Annual Report
      on Form 10-K for the year ended December 31, 2006. There have been no material
      changes in 2007 to these risks or the management of these risks.





**ITEM
      4.**  **CONTROLS
      AND PROCEDURES**





a)
            ***Evaluation
                of Disclosure Controls and
                Procedures***





The
      Company carried out, under the supervision and with the participation of the
      Company’s management, including the Company’s Chief Executive Officer and Chief
      Accounting Officer, an evaluation of the effectiveness of the design and
      operation of the Company’s disclosure controls and procedures (as defined in
      Rules 13(a)-15(e) and 15(d-15(e) under the Securities Exchange Act of 1934,
      as
      amended). Based on their evaluation, the Company’s Chief Executive Officer and
      its Chief Accounting Officer concluded that, as of September 30, 2007, the
      Company’s disclosure controls and procedures were not effective because of the
      previously identified material weakness described below. Notwithstanding the
      existence of the material weakness described below, management has concluded
      that the consolidated financial statements in this Form 10-Q fairly present,
      in
      all material respects, the Company’s financial position, results of operations
      and cash flows for the periods and dates presented. In making this conclusion,
      the Chief Executive Officer and Chief Accounting Officer considered the material
      weaknesses in our internal controls over financial reporting and the status
      of
      corrective actions to remedy those material weaknesses described below. Although
      the Chief Executive Officer and the Chief Accounting Officer noted certain
      incremental improvements during the period ended September 30, 2007, we have
      not
      formally documented and tested all of our potentially remediated controls to
      affirmatively conclude that such controls are operating
      effectively.




19




STANDARD
      MANAGEMENT CORPORATION AND
      SUBSIDIARIES




b)
            ***Material
                Weakness in Internal Controls and
                Procedures***





During
      the later part of 2006, the Company was in the final stages of a major
      transition in business operations as described earlier in this report. One
      of
      the results of this transition was the Company entering into substantial,
      non-routine accounting transactions which required a higher level of accounting
      knowledge to complete. This situation, combined with the loss of certain
      accounting personnel, during the same time period, resulted in the Company
      not
      having, during the later part of 2006 and the first half of 2007, a sufficient
      complement of personnel with the requisite level of accounting knowledge,
      experience, and training in the application of U.S. generally accepted
      accounting principles to properly analyze, review, monitor and record these
      more
      complicated and certain other accounting transactions. As a result, we have
      concluded that there was more than a remote likelihood that a material
      misstatement of the Company’s annual financial statements may not have been
      prevented or could have gone undetected as part of the financial statement
      closing process for the period ended September 30, 2007.





c)
            ***Company’s
                Response to Material
                Weakness***





The
      Company hired its Chief Accounting Officer, Dan Calvert, late in 2006. Mr.
      Calvert has over twenty five years of financial and accounting management
      experience in both private and public companies combined with graduate study
      in
      finance and accounting. The 2006 year end closing process itself has
      significantly increased his awareness of the Company’s historical and
      contemplated routine and non routine transactions. On April 17, 2007, the
      Company replaced its corporate controller. Mike Cleary has over ten years of
      experience developing accounting staffs and systems in private and public
      companies. The Company continues to emphasize the development and training
      of
      its accounting staff and its commitment to make available accounting research
      tools necessary to assess complex accounting issues in the future.





There
      have been some improvements in our internal control over our financial reporting
      that have occurred during the period covered by this report that have materially
      affected, or are reasonably likely to materially affect, our internal control
      over financial reporting. During the period covered by this report, we have
      taken steps to improve our internal control structure and procedures regarding
      disclosures of our financial reporting, including those contemplated by





Section
      404 of the Sarbanes-Oxley Act and the rules and regulations of the SEC
      promulgated thereunder, with which we are required to be in compliance as of
      December 31, 2007. We will continue to take steps with regard to these
      matters.





**PART
      II. OTHER INFORMATION**





**ITEM
      1A. RISK FACTORS**





In
      addition to the risk factors described in our Annual Report on Form 10-K for
      our
      year ended December 31, 2006, we note the following risk factors:


**With
        the anticipated transfer of our Precision Healthcare subsidiary, we will
        no
        longer own** **any
        pharmacy operations, and the success of our business will depend entirely
        on our
        strategy of acquiring pharmacies through UHCC.**
  In
          the
          fourth quarter of 2007 it is anticipated, pending stockholder approval,
          the
          Company will transfer the stock of Precision and the title to certain land
          to
          Mr. Schmidt in exchange for forgiveness of $2.7 million of principal and
          interest on notes due in March 2008. As a result we will no longer own
          any
          operating pharmacies. Accordingly, the success of our business will depend
          entirely on our strategy of acquiring pharmacies through UHCC.


**We
      reported a material weakness in our internal control over financial reporting,
      and if we are unable to improve our internal controls, our financial results
      may
      not be reported accurately.**





Management’s
      assessment of the effectiveness of our internal control over financial reporting
      identified a material weakness in our internal controls in our financial
      reporting process. This material weakness was due to an insufficient complement
      of personnel with the requisite level of accounting expertise. As a result
      of
      this material weakness, management determined that the Company’s disclosure
      controls and procedures were not effective. The material weakness is described
      in item 4, “CONTROLS AND PROCEDURES” of this Quarterly Report on Form
      10-Q.





20




STANDARD
      MANAGEMENT CORPORATION AND
      SUBSIDIARIES




**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**




The
      Company is in default of the Laurus Note, Citizen’s Bank Mortgage Note, the 7%
      notes, and various promissory notes for principal and interest owed in 2007.
      As
      the Company was not able to register the shares as required by the 6% notes
      issued in 2006, these notes were in default through July 2007. In July 2007,
      the
      Company cured the existing default as of July 2007 by entering into an agreement
      to issue warrants to purchase 8 million shares with a strike price of $.17
      per
      share for a term of 7 years.




**ITEM
      6. EXHIBITS**




(a)
      Exhibits




31.1
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.




31.2
            Certification
                of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.




32
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.




**SIGNATURES**





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




Dated: November 14, 2007STANDARD
                MANAGEMENT CORPORATION
              (Registrant)By:
            /s/
              Ronald D. HunterRonald
                D. Hunter
              Chairman,
                Chief Executive Officer and President
              (Principal
                Executive Officer)  By:
            /s/
              Daniel K CalvertDaniel
                  K Calvert
                Chief
                  Accounting Officer
                (Principal
                  Financial and Accounting
                  Officer)




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