**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**


þ
              QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF
                  THE SECURITIES EXCHANGE ACT OF 1934FOR
                  THE QUARTERLY PERIOD ENDED March 31, 2008 oro
              TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                THE
                  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
            
            (I.R.S.
                Employer Identification No.)of
                incorporation or organization)





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 x No o





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


Large
      Accelerated Filer o Accelerated
      Filer o Non-accelerated
      Filer o Smaller
      Reporting Company x





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


Yes o No x





As
      of May
      15, 2008, the Registrant had 51,865,920 shares of Common Stock
      outstanding.







**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





**INDEX**





**Page Number**Part
                I.
            FINANCIAL
                INFORMATION:Item
                1.
            Unaudited
                Financial StatementsConsolidated
                Balance Sheets —March
                31, 2008 and December 31, 2007
            3Consolidated
                Statements of Operations —For
                the Three Months Ended March 31, 2008 and 2007
            4Consolidated
                Statements of Shareholders’ Deficit —For
                the Three Months Ended March 31, 2008
            5Consolidated
                Statements of Cash Flows —For
                the Three Months Ended March 31, 2008 and 2007
            6Notes
                to Consolidated Financial Statements
            7Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            15Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            17Item
                4T.
            Controls
                and Procedures
            18Part
                II.
            OTHER
                INFORMATION:Item
                1A.
            Risk
                Factors
            19Item
                2.
            Unregistered
                Sale of Equity Securities and Use of Proceeds
            20Item
                3.
            Defaults
                Upon Senior Securities
            20Item
                6.
            Exhibits
            20SIGNATURES
            20


2




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





**PART
      I – FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS**





**CONSOLIDATED
      BALANCE SHEETS**


(unaudited,
      dollars in thousands)





**March
                31**
            
            December
                31**2008**
            
            2007**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            **$**
            **-**
            
            $
            -Accounts
                receivable, net
            
            
            **52**
            
            
            5Prepaid
                and other current assets
            
            
            **41**
            
            
            127Assets
                of discontinued operations
            
            
            **433**
            
            
            2,036Total
                current assets
            
            
            **526**
            
            
            2,168Property
                and equipment, net
            
            
            **7,012**
            
            
            7,038Assets
                held for sale
            
            
            **180**
            
            
            918Deferred
                financing fees, net
            
            
            **710**
            
            
            731Officer
                note receivable
            
            
            **776**
            
            
            776Other
                noncurrent assets
            
            
            **378**
            
            
            229Total
                assets
            
            **$**
            **9,582**
            
            $
            11,860**LIABILITIES
                AND SHAREHOLDERS' DEFICIT**Current
                liabilities:Accounts
                payable
            
            **$**
            **1,785**
            
            $
            1,719Accrued
                interest
            
            
            **1,441**
            
            
            1,396Accrued
                other expenses
            
            
            **3,353**
            
            
            2,896Current
                portion of long-term debt
            
            
            **12,250**
            
            
            14,811Liabilities
                of discontinued operations
            
            
            **-**
            
            
            -Total
                current liabilities
            
            
            **18,829**
            
            
            20,822Long-term
                debt, less current portion
            
            
            **15,669**
            
            
            13,268Accrued
                interest on subordinated notes
            
            
            **2,506**
            
            
            2,204Common
                stock warrants
            
            
            **566**
            
            
            571Other
                long-term liabilities
            
            
            **485**
            
            
            573Total
                liabilities
            
            
            **38,055**
            
            
            37,438Minority
                interest in subsidiary
            
            
            **385**
            
            
            -Shareholders'
                deficit:Common
                stock, no par value, and additional paid in capital, 200,000,000
                shares
                authorized and 49,141,093 shares and 43,504,711 shares issued in
                2008 and
                2007, respectively
            
            
            **73,474**
            
            
            73,248Retained
                deficit
            
            
            **(91,686**
            **)**
            
            (88,227
            )Treasury
                stock, at cost, 2,840,173 shares
            
            
            **(10,829**
            **)**
            
            (10,829
            )Accumulated
                other comprehensive income
            
            
            **183**
            
            
            230Total
                shareholders' deficit
            
            
            **(28,858**
            **)**
            
            (25,578
            )Total
                liabilities and shareholders' deficit
            
            **$**
            **9,582**
            
            $
            11,860




3




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


(unaudited,
      dollars in thousands, except per share amounts)





**Three Months Ended****March 31****2008**
            
            2007Net
                revenues
            
            **$**
            **-**
            
            $
            -Cost
                of sales
            
            
            **-**
            
            
            -Gross
                profit
            
            
            **-**
            
            
            -General
                and administrative expenses
            
            
            **1,046**
            
            
            1,452Impacts
                related to value of warrants and derivatives
            
            
            **2,120**
            
            
            569Depreciation
                and amortization
            
            
            **58**
            
            
            40Operating
                loss
            
            
            **(3,224**
            **)**
            
            (2,061
            )Other
                income, net
            
            
            **103**
            
            
            97Interest
                expense
            
            
            **(708**
            **)**
            
            (770
            )Loss
                from continuing operations before income taxes
            
            
            **(3,829**
            **)**
            
            (2,734
            )Income
                tax expense (benefit)
            
            
            **-**
            
            
            -Net
                loss from continuing operations
            
            
            **(3,829**
            **)**
            
            (2,734
            )Income
                (loss) from discontinued operations
            
            
            **370**
            
            
            (170
            )Net
                loss
            
            **$**
            **(3,459**
            **)**
            $
            (2,904
            )Loss
                per share - basic and dilutedLoss
                from continuing operations
            
            **$**
            **(0.09**
            **)**
            $
            (0.12
            )Income
                (loss) from discontinued operations
            
            
            **0.01**
            
            
            (0.01
            )Net
                loss
            
            **$**
            **(0.08**
            **)**
            $
            (0.13
            )Weighted
                average shares outstanding
            
            
            44,647,619
            
            
            21,662,861





See
      accompanying notes to consolidated financial statements.


4




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





**CONSOLIDATED
      STATEMENTS OF SHAREHOLDERS’ DEFICIT**


(unaudited,
      dollars in thousands)





Total
            
            Common stock
              and additional
              paid in capital
            
            Retained deficit
            
            Treasury stock
            
            Accumulated other
              comprehensive incomeBalance
                at January 1, 2008
            
            $
            (25,578
            )
            $
            73,248
            
            $
            (88,227
            )
            $
            (10,829
            )
            $
            230Comprehensive
                loss:Net
                loss
            
            
            (3,459
            )
            
            -
            
            
            (3,459
            )
            
            -
            
            
            -Change
                in unrealized gain on securities
            
            
            (47
            )
            
            -
            
            
            -
            
            
            -
            
            
            (47
            )Comprehensive
                loss
            
            
            (3,506
            )Sale
                of common stock
            
            
            215
            
            
            215
            
            
            -
            
            
            -Conversion
                of debt and interest into shares
            
            
            11
            
            
            11
            
            
            -
            
            
            -
            
            
            -Balance
                at March 31, 2008
            
            $
            (28,858
            )
            $
            73,474
            
            $
            (91,686
            )
            $
            (10,829
            )
            $
            183





See
      accompanying notes to consolidated financial statements.


5




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


(unaudited,
      dollars in thousands)





**Three Months Ended March 31****2008**
            
            **2007****OPERATING
                ACTIVITIES:**Net
                loss
            
            **$**
            **(3,459**
            **)**
            $
            (2,904
            )Net
                income (loss) from discontinued operations
            
            
            **370**
            
            
            (170
            )Net
                loss from continuing operations
            
            
            **(3,829**
            **)**
            
            (2,734
            )Adjustments
                to reconcile net loss to net cash used in continuing operating
                activities:Depreciation
                and amortization
            
            
            **26**
            
            
            42Amortization
                of deferred financing costs and debt discount
            
            
            **91**
            
            
            163Non-cash
                stock- based compensation expense
            
            
            **-**
            
            
            250Impacts
                related to value of warrants and derivatives
            
            
            **2,120**
            
            
            569Change
                in operating assets and liabilities:Accounts
                receivable
            
            
            **(47**
            **)**
            
            71Prepaid
                and other current assets
            
            
            **86**
            
            
            67Accounts
                payable
            
            
            **66**
            
            
            (670
            )Accrued
                expenses
            
            
            **1,101**
            
            
            747Other
            
            
            **(94**
            **)**
            
            2Net
                cash used in operating activities of continuing operations
            
            
            **(480**
            **)**
            
            (1,493
            )**INVESTING
                ACTIVITIES:**Proceeds
                from sale of business
            
            
            **-**
            
            
            342Change
                in other noncurrent assets, net
            
            
            **(149**
            **)**
            
            (20
            )Net
                cash provided by (used in) investing activities of continuing
                operations..
            
            
            **(149**
            **)**
            
            322**FINANCING
                ACTIVITIES:**Borrowings
            
            
            **50**
            
            
            218Net
                cash provided from (to) discontinued operations.
            
            
            **(11**
            **)**
            
            245Proceeds
                from sale of stock
            
            
            **215**
            
            
            2,185Minority
                investment in subsidiary
            
            
            **385**
            
            
            -Deferred
                financing costs paid..
            
            
            **-**
            
            
            (295
            )Repayments
                of long-term debt
            
            
            **(10**
            **)**
            
            (1,295
            )Net
                cash provided by financing activities of continuing
                operations
            
            
            **629**
            
            
            1,058Net
                cash provided by (used in) operating activities of discontinued
                operations
            
            
            **(11**
            **)**
            
            716Net
                cash used in investing activities of discontinued
                operations
            
            
            **-**
            
            
            (26
            )Net
                cash provided by (used in) financing activities of discontinued
                operations
            
            
            **11**
            
            
            (245
            )Net
                increase in cash and cash equivalents of discontinued
                operations.....
            
            
            **-**
            
            
            445Total
                increase in cash and cash equivalents.......
            
            
            **-**
            
            
            332Net
                increase in cash and cash equivalents of discontinued
                operations
            
            
            **-**
            
            
            445Net
                decrease in cash and cash equivalents of continuing
                operations..
            
            
            **-**
            
            
            (113
            )Cash
                and cash equivalents of continuing operations at beginning of
                period
            
            
            **-**
            
            
            222Cash
                and cash equivalents of continuing operations at end of
                period
            
            **$**
            **-**
            
            $
            109





See
      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, through it’s subsidiaries (collectively, the “Company”), had provided and
      plans to again provide pharmaceutical products and services to the healthcare
      industry. The Company is seeking to acquire, through its subsidiaries, existing
      pharmacies and homecare providers to expand its business. Ultimately, the
      Company intends to manage a) regional and other institutional pharmacies to
      provide pharmaceuticals to long-term care and infusion therapy facilities
      through its Universal Healthcare Company (“UHCC”) subsidiary and b) healthcare
      and supportive services businesses to provide care to individuals in their
      homes
      through a newly formed entity (“Newco”).





The
      Company had previously operated several pharmacies. As more fully described
      in
      Note 2, the Company has sold, closed and transferred each of the pharmacy
      operations during 2006, 2007 and 2008. Accordingly, the Company has reflected
      those businesses as discontinued operations in the accompanying consolidated
      financial statements. As a result of the discontinuance, the Company, as of
      April 2008, has no substantive active revenue-producing operations. The Company,
      has reclassified certain amounts from the prior periods to conform to the 2008
      presentation and to reflect its newly discontinued operations separately from
      its continuing operations. These reclassifications had no effect on net loss
      or
      shareholders’ deficit in those prior periods. All significant intercompany
      transactions and balances have been eliminated in consolidation.





The
      Company has incurred recurring significant losses, which have resulted in a
      shareholders’ deficit balance of approximately $28.8 million as of March 31,
      2008, and has sold businesses to provide working capital and to reduce debt.
      However, with no current revenue producing operations, the Company does not
      have
      adequate financing to meet its near-term cash requirements or to embark upon
      its
      strategic plans. In addition, as of March 31, 2008, the Company had a working
      capital deficit of approximately $18.3 million, of which $12.3 million is
      outstanding debt due or currently callable in 2008 - $5.7 million of which
      has
      since been or will be settled by relinquishing the related collateral assets.
      This aggregate 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.





The
      Company’s plans include the acquisition of institutional pharmacies and home
      care businesses through UHCC and Newco. The Company expects to fund these
      acquisitions with proceeds from lenders and investors in these subsidiaries.
      The
      Company’s ownership will be determined as investors provide necessary capital.
      Standard Management has already entered into an agreement with UHCC and plans
      to
      do so with Newco under which Standard Management will be engaged as an investor
      and manager of each of the acquired businesses and will thereby earn management
      fees and other sources of compensation from those businesses. The Company
      expects that this new investment and financial structure will provide adequate
      financial support to complete its development plans. In the first quarter of
      2008, the Company raised $385,000 of initial third party contributions into
      UHCC
      representing less than 2.8% ownership interest. An additional $22,500 of
      contributions were received in April and through June 15, 2008.





Included
      in noncurrent other assets are $283,000 of deferred costs related to potential
      future debt and equity financings and acquisitions. Management has reassessed
      each possible future transaction as of March 31, 2008 and continues to believe
      that such transactions may occur. However, circumstances can change and the
      Company may have to ultimately write off these deferred costs if the related
      transaction is not consummated. During 2007 and 2006, the Company did expense
      $706,000 and $1,325,000, respectively, of such costs as part of other income
      (expense) when management determined that the related transaction would not
      be
      consummated.




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,
      2007.


7




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





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. Common stock equivalents outstanding as of March 31,
      2008 and 2007 were convertible or exercisable into 320,889,228 and 24,900,573
      shares, respectively.




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





During
      2002 through 2005, the Company acquired several pharmacy operations, all of
      which have now been sold, discontinued or transferred as described below. Two
      of
      these acquired businesses were “HomeMed” and “Precision”.





Subject
      to management’s late 2006 decision to sell a portion of the 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 $.5 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 2006 with minimal additional write down in early 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 HomeMed related lease in
      the
      second quarter of 2007, the Company reduced a previously established lease
      reserve by $325,000. Remaining accounts payable and accrued lease payments
      as of
      March 31, 2008, will be paid in due course.




At
      February 6, 2008, the Company was in default on a note due to Mr. Sam Schmidt.
      Mr. Schmidt is a director of the Company and the Company’s largest shareholder.
      The collateral under the note included a pledge of Company stock in Precision
      and certain unimproved real estate located in Monroe County, Indiana. In order
      to ensure an orderly resolution of the Company’s obligation to Mr. Schmidt, on
      that date, the Company  voluntarily agreed to deliver to Mr. Schmidt a deed in lieu of foreclosure
      of
      the mortgage on the Monroe County real estate and agreed to a strict foreclosure
      under the Indiana Uniform Commercial Code on the pledge of the Precision stock.
      Accordingly, Mr. Schmidt took title to those assets and the Company’s
      obligations to him, consisting of a $2,500,000 promissory note and related
      earned, but unpaid, interest of approximately $200,000, were settled (except
      for
      a $30,000 piece of the note). In November 2007, when Precision was assigned
      as
      collateral under this note, the Company  ceded
      all
      voting rights in our stock of Precision to Mr. Schmidt. Due to this loss of
      control - even though the Company  then
      continued to own 100% of Precision’s stock, the Company  deconsolidated
      Precision and reflected the Company’s ownership as an Investment in
      Unconsolidated Subsidiaries. That investment is included as a component of
      Assets of Discontinued Operations as of December 31, 2007 and was reduced by
      a
      $550,000 impairment charge to reduce its carrying value, when combined with
      the
      carrying value of the Monroe real estate, down to the then-estimated carrying
      value of the debt and interest ultimately settled by its transfer to Mr.
      Schmidt. The collateral transfer occurred on May 22, 2008, at which point the
      Company’s obligation under the note was settled as planned at a $331,000
      gain.


8


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**


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





**As
                of**March 31,
            
            December 31,2008
            
            2007Current
                assets
            
            $
            80
            
            $
            128Investment
                in unconsolidated subsidiaries
            
            
            353
            
            
            1,908Net
                liabilities of discontinued operations
            
            $
            433
            
            $
            2,036





**For the three months ended**March 31,
            
            March 31,2008
            
            2007Net
                revenues
            
            $
            -
            
            $
            2,550Cost
                of sales
            
            
            -
            
            
            (1,817
            )Selling,
                general and administrative expenses
            
            
            -
            
            
            (791
            )Depreciation
                and amortization
            
            
            -
            
            
            (23
            )Other
                expense
            
            
            (61
            )
            
            (49
            )Income
                of unconsolidated subsidiaries
            
            
            431
            
            
            -Interest
                expense
            
            
            -
            
            
            (40
            )Net
                income (loss) from discontinued operations
            
            $
            370
            
            $
            (170
            )





**Note
      3 Discontinued Operations – Other**





In
      addition to the discontinued pharmacy operations, we also, in late 2007,
      discontinued the ancillary insurance operations we retained after selling our
      Financial Services business in 2005. This business, called Premier Life, had
      been operated out of our Bermuda subsidiary, the shares of which were pledged
      as
      collateral under a note agreement. Similar to the Precision situation described
      above, we ceded all voting rights in these shares to the lender and accordingly,
      have deconsolidated this business and reflected it as an Investment in
      Unconsolidated Subsidiary, a component of Assets of Discontinued Operations,
      as
      of December 31, 2007. Ultimately, we expect to pass title to these shares to
      the
      lender to settle the related debt or sell the business, which consists of only
      a
      few life insurance policies and various investments held in support of those
      policy liabilities, and use the sales proceeds to settle the debt. Based on
      the
      carrying values of the investments (which are at fair value) and the estimated
      policy liabilities, we determined that the net carrying value of the business
      exceeded the likely ultimate debt, interest and fee obligation to this lender.


9




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





**Note
      4 – Indebtedness**





The
      Company’s long-term debt was as follows (dollars in thousands):





Interest Rate
              (1)
            
            **March 31**
              **2008**
            
            **December 31**
              **2007**Mortgages
                payable.
            
            
            11.75
            %
            **$**
            **5,644**
            
            **$**
            **5,644**Promissory
                notes
            
            
            12.43
            %
            
            **1,149**
            
            
            **1,009**7%
                convertible notes
            
            
            7.00
            %
            
            **3,200**
            
            
            **3,300**10%
                notes
            
            
            10.00
            %
            
            **30**
            
            
            **2,500**6%
                notes
            
            
            6.00
            %
            
            **250**
            
            
            **250**Laurus
                convertible notes
            
            
            9.25
            %
            
            **2,401**
            
            
            **2,401**Subordinated
                debentures
            
            
            10.25
            %
            
            **9,577**
            
            
            **9,577**2006
                10% convertible notes
            
            
            10.00
            %
            
            **1,279**
            
            
            **1,282**2007
                10% convertible notes
            
            
            10.00
            %
            
            **250**
            
            
            **250**2008
                10% convertible notes
            
            
            10.00
            %
            
            **92**
            
            
            **-**Accrued
                interest on subordinated debentures
            
            **2,506**
            
            
            **2,204**Derivatives
                embedded in 10% convertible notes
            
            
            
            
            
            **5,611**
            
            
            **3,409**Capital
                lease obligations
            
            
            
            
            
            **-**
            
            
            **2**Total
                indebtedness
            
            
            
            
            
            **31,989**
            
            
            **31,828**Less
                debt discount on convertible notes
            
            
            
            
            
            **1,564**
            
            
            **1,545**Less
                accrued interest on subordinated debentures
            
            **2,506**
            
            
            **2,204**Less
                current portion
            
            
            
            
            
            **12,250**
            
            
            **14,811**Total
                long-term debt, less current portion
            
            
            
            
            **$**
            **15,669**
            
            **$**
            **13,268**





(1)
            Weighted
                average rate at March 31, 2008.




Mortgages
      payable primarily represents a promissory note in the amount of $5.5 million
      which the Company settled along with $724,000 of accrued interest and fees
      on
      May 22, 2008 by transferring title to the Company’s corporate headquarters
      building to the lender. The Company then leased back space in the building
      from
      which it will conduct its business. As the carrying value of the building was
      in
      excess of the amounts ultimately settled with its transfer to the lender, the
      Company recorded a $.6 million impairment charge in December 2007.





The
      Company has various unsecured promissory notes primarily related to the
      acquisitions of various healthcare companies all of which are due or callable
      due to defaults in 2008. Additionally, the Company had a 2006 $1.5 million
      note
      at 10.25% interest due to its then primary vendor, which was fully paid off
      in
      early 2007. Also, 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,
      a wholly owned subsidiary of the Company, which was due, but not paid, on
      September 28, 2007. As described in Note 3, the Company intends to ultimately
      settle this obligation by tendering the shares of Premier Life to the lender
      or
      selling that business in order to fund the payment of this obligation.





On
      February 10, 2004, the Company issued $3.3 million of 7% unsecured convertible
      notes due in full in July, 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 due to
      late interest payments.




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 demand notes
      at
      an interest rate of 6% (adjusted to 10% in June 2007 as $1 million of principal
      was not repaid by then in conjunction with the equity financing described in
      Note 7). The remaining $250,000 is due in May 2008. The conversion feature
      was
      eliminated on the full $2.75 million of debt. As described in Note 2, the
      Company, in February 2008, settled all but $30,000 of this $2.5 million note
      and
      related accrued interest by transferring ownership of its Precision subsidiary
      to the lender.


10


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**


On
      March
      21, 2005, the Company issued $4.75 million of Laurus convertible 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.
      As of
      March 31, 2008, the Company had an outstanding loan principal balance with
      Laurus of $2.4 million which is all classified as current due to defaults caused
      by late principal and interest payments. 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 2006 settlement negotiated between the holder and the Company in response
      to late principal and interest payments.







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 June 30, 2006, as a result of an
      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.





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 five years.
      All
      unpaid distributions will accrue interest at the rate of 10.25% per annum until
      paid by the Company. Deferred distributions as of March 31, 2008 and December
      31, 2007 were $ 2,506,000 and $2,204,000, respectively.







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
      issuable 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 mature
      on
      September 8 and October 4, 2009, respectively, and have a stated interest rate
      of 6% per annum prior to maturity and 15% per annum after maturity or when
      in
      default, until paid. 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 did not occur since issuance. 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 notes after any monthly period in which the Company’s stock price is
      consistently below a certain threshold 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 are secured by certain
      personal property of the Company. In July 2007, the Company issued warrants
      to
      the lenders to purchase 8 million shares with an exercise price of $0.17 per
      share for a term of 7 years as compensation for not getting the shares
      underlying the notes and warrants registered on a timely basis. The Company
      utilized the Black-Scholes method to value these warrants at $0.13 each, thereby
      recording an expense in June 2007 of $1,040,000. Also, in October 2007, as
      further compensation for the same reason, the Company amended the conversion
      rate formula to be based on 40% of the applicable common stock price rather
      than
      the previous 55% basis.  This additional compensation was measured as the
      incremental value of the conversion provisions immediately before and after
      the
      modification.  That incremental value is included in the "Impacts related
      to value of warrants and derivatives" balance in the fourth quarter of 2007
      statement of operations.


11


**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





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 traunches,
      respectively. These values, along with the value assigned to the warrants issued
      with the September 2007 traunch 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 traunches 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.




In
      the
      September 2006 traunch of the same private placement transaction, the Company
      issued to the lenders, warrants to purchase an aggregate of 3,000,000 shares
      of
      the Company’s common stock. The warrants were 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.




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
      Company also issued to these 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. Additionally, this new $250,000
      debt issuance included the issuance of warrants to purchase an aggregate of
      15,000,000 shares of the Company’s common stock. The warrants were immediately
      exercisable at a price of $0.008 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 $1,261,000 as
      of
      their issuance date and are reflected as separate long-term liabilities of
      the
      Company.





On
      January 31, 2008, the Company exchanged $92,334 of accrued interest on the
      above
      convertible debt into debt with the same provisions as contained in that
      convertible debt. This exchange included $302,000 of additional conversion
      value
      resulting in an immediate expense of $210,000.





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. During 2007,
      value changes, along with the $1,040,000 expenses described above and the impact
      related to the issuance of the $250,000 note (including the modification to
      prior conversion provisions), netted to a $1,985,000 expense ($569,000 through
      March 31, 2007). Further value changes through March 31, 2008 and the $210,000
      of expenses related to the interest/note exchange.amounted to $2,120,000.




During
      2007, $24,000 of debt and related unpaid interest was converted into 402,619
      shares of common stock of the Company. During the first quarter of 2008, $3,505
      of debt and related unpaid interest was converted into 550,000 shares of common
      stock of the Company. Upon conversion, the related liabilities, net of the
      related debt discount and including conversion feature value, were reclassified
      to additional paid-in capital.




The
      above
      convertible debt was in technical default as of December 31, 2007 due at least
      to not having the shares underlying the debt and the warrants registered as
      required.  An event of default, pursuant to the related debt agreements,
      allows the lenders to a) charge interest at the default rate, b) charge
      penalties for each day that registration is not achieved up to a certain date,
      c) call the debt immediately and d) require payment, in cash or shares, of
      a formula amount based largely on the highest price of the Company's common
      stock during the default period.  The impact to the Company's financial
      statements if these default provisions were applicable would be
      substantial, predominately non-cash expenses related to the increase in
      derivative value pursuant to the 'highest price' formula.  However, on May
      15, 2008, the lenders waived all defaults under these notes and related
      agreements.  As compensation for such waiver, all of the notes, effective
      January 1, 2008, started bearing a  stated interest at 10% per
      annum.





Of
      the
      $15.7 million of debt classified as non-current as of March 31, 2008, $5.6
      million represents the value of embedded derivatives, a negative $1.1 million
      represents unamortized debt discount and $11.2 million is debt principal. 
This principal is due as scheduled in 2009 ($1.3 million), 2010 ($.3 million)
      and 2031 ($9.6 million).


12




**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**




**Note
      5 – Warrants, Common Shares and Treasury Shares**





***Warrants***





Historically,
      the Company has issued warrants to purchase common stock (a) as a component
      of
      the purchase price of pharmacy acquisitions, (b) in connection with the issuance
      of convertible debt and (c) for equity and capital marketing related services.
      As described in Note 4, all of the Company warrants were revalued and classified
      as liabilities in conjunction with the issuance of the 2006 6% convertible
      notes. The fair value of each warrant granted is estimated at the date of grant
      using the Black-Scholes option-pricing model with assumptions similar to those
      used to revalue the warrants at year end. Assumptions used to value these
      warrants as of March 31, 2008 include dividend yield of 0.0%, expected lives
      of **** 2.0
      to
      6.5 years, expected volatility of 150% and risk-free interest rates of 2.56%
      to
      2.67%.





The
      following is a summary of outstanding warrants:





**Warrants
                Outstanding****Exercise**
            
            **March
                31,**
            
            **December
                31,****Issue
                Date**
            
            **Expiration
                Date**
            
            **Price**
            
            **2008**
            
            **2007**October
              2007
            
            October
              2014
            
            
            0.08
            
            
            **16,500,000**
            
            
            **16,500,000**September
              2007
            
            September
              2009
            
            
            0.17
            
            
            **20,000**
            
            
            **20,000**July
              2007
            
            July
              2014
            
            
            0.17
            
            
            **8,000,000**
            
            
            **8,000,000**October
              2006
            
            October
              2011
            
            
            0.36
            
            
            **20,000**
            
            
            **20,000**September
              2006
            
            September
              2013
            
            
            0.60
            
            
            **3,000,000**
            
            
            **3,000,000**August
              2006
            
            August
              2011
            
            
            0.36
            
            
            **176,715**
            
            
            **176,715**July
              2006
            
            July
              2011
            
            
            0.36
            
            
            **41,096**
            
            
            **41,096**June
              2006
            
            June
              2011
            
            
            0.36
            
            
            **20,548**
            
            
            **20,548**May
              2006
            
            May
              2011
            
            
            0.36
            
            
            **61,646**
            
            
            **61,646**May
              2006
            
            May
              2011
            
            
            0.73
            
            
            **100,000**
            
            
            **100,000**February
              2006
            
            May
              2011
            
            
            0.88
            
            
            **200,000**
            
            
            **200,000**March
              2005
            
            March
              2010
            
            
            3.28
            
            
            **175,000**
            
            
            **175,000**March
              2005
            
            March
              2010
            
            
            0.01
            (a)
            
            **532,511**
            
            
            **532,511**March
              2005
            
            March
              2010
            
            
            3.90
            
            
            **30,619**
            
            
            **30,619****28,878,135**
            
            
            **28,878,135**





(a)
            Pursuant
                to a 2006 amendment to the Laurus convertible notes agreement under
                which
                these warrants wereoriginally
                issued, the exercise price was reduced from $3.90 per share to $0.01
                per
                share which resulted inadditional
                debt discount of $0.2 million.


13




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**








***Changes
      in Shares of Common Stock and Treasury Stock***





The
      following table represents changes in the number of common and treasury shares
      .





**Three Months Ended March 31,****2008**
            
            2007Common Stock:Balance,
                beginning of period
            
            
            **43,504,711**
            
            
            19,011,367Issuance
                to settle stock price guarantee
            
            
            **5,086,382**
            
            
            -Trust
                preferred exchange
            
            
            **-**
            
            
            -Private
                placement issuances
            
            
            **-**
            
            
            21,850,000Debt
                and interest conversions
            
            
            **550,000**
            
            
            -Balance,
                end of period
            
            
            **49,141,093**
            
            
            40,861,367Treasury
                Stock:Balance,
                beginning of period
            
            
            **2,840,173**
            
            
            2,840,173Treasury
                stock acquired
            
            
            **-**
            
            
            -Treasury
                shares issued
            
            
            **-**
            
            
            -Balance,
                end of period
            
            
            **2,840,173**
            
            
            2,840,173





During
      the first quarter of 2008, the Company issued 5,086,382 shares of common in
      stock according to stock price guarantee provisions of the Purchase Agreement
      of
      Precision and issued 550,000 shares for exchange on convertible notes. The
      Company received $215,000 for subscriptions of 10,750,000 shares Standard
      Management common stock which are expected to be issued by July 15,
      2008.





During
      2007, the Company issued an additional 1,850,000 shares of common stock at
      a
      price of $.10 per share to four outside investors. While not specifically
      required, the Company issued an additional 2,133,318 shares of its common stock
      to certain shareholders who had previously acquired the shares at $.30 per
      share
      in 2006 to effectively reprice those issuances to the $.10 per share price
      used
      in the 2007 issuances. Also in 2007 and 2006, the Company issued 107,407 shares
      and 133,122 shares, respectively, to previous owners of acquired businesses
      under the terms of their respective purchase agreements.





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 Company’s outstanding
      common shares (since reduced to 38%). 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 Dr. 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.





During
      the first quarter of 2008, the Company received $385,000 of subscriptions for
      77,000 shares of UHCC stock valued at $5 per share from various unrelated third
      parties. These shares, along with further subscriptions received after quarter
      end, are expected to be issued by July 15, 2008 and the offering is expected
      to
      remain open until August 30, 2008. Proceeds received under the subscription
      agreements have been reflected as a minority interest liability in the
      accompanying consolidated balance sheet as of March 31, 2008.





On
      October 16, 2006, the Company increased it authorized common shares to
      200,000,000 from 60,000,000 and in April, 2008 increased this level again to
      300,000,000. Authorized preferred shares of 1,000,000 have not been designated
      or issued.




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, the Company, in the first quarter of 2008, issued 5,086,382 shares
      of its common stock to the prior owners of Precision. However, the prior owners
      have initiated legal proceedings to compel issuance of cash instead. 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.


14


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**


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





**Comparison
      of the Three Months Ended March 31, 2008 and March 31,
      2007:**





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, 2007, should be read in conjunction with this Form
      10-Q.





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





*General*





As
      of
      March 31, 2008 , we had sold, discontinued, or transferred each of our previous
      operations to provide working capital and to reduce debt. As such, our
      continuing operations currently include our corporate office functions and
      certain ancillary activities. All revenue-producing activities and related
      costs
      have been reflected as part of our discontinued operations.








*General
      and administrative expenses*





General
      and administrative expenses for the first quarter of 2008 decreased by $.4
      million or 28% to $1.0 million compared to the first quarter of 2007, primarily
      due to a $.4 million decrease in employee expenses including $.2 million in
      non
      cash compensation incurred in 2007.





*Impacts
      related to value of warrants and derivatives*





As
      a
      result of certain terms of conversion features on debt issued in 2006, 2007,
      and
      2008, certain derivatives embedded in that debt and all outstanding warrants
      to
      acquire stock have been reflected as liabilities of the Company, which require
      mark to market adjustments each balance sheet date. The original recording
      of
      these liabilities upon issuance of the related securities and the changes in
      market value, predominantly related to changes in our common stock price,
      combine to result in these net expenses for 2008 and 2007. Generally, a decrease
      in our stock price results in the value of the derivatives and warrants to
      decrease, thereby resulting in income. While our stock price has generally
      declined during 2007 and 2008, the initial recording of these derivative and
      warrant liabilities has created expense that more than offset the impact of
      changing values for both years.





*Depreciation
      and amortization*





Depreciation
      and amortization remained relatively unchanged.





*Other
      income*





Other
      income for the first quarters of 2008 and 2007 of $.1 million is primarily
      rental income from leasing space at the Company’s corporate headquarters.




*Interest
      expense*





Interest
      expense for the first quarter of 2008 decreased by $.1 million or 8 % to $.7
      million compared to the first quarter of 2007, primarily due to the February
      2008 retirement of debt related to the Precision Healthcare
      transaction.





*Federal
      income tax expense*





Provision
      for federal income tax remained zero due to a 100% valuation allowance on the
      net losses in the first quarters of 2008 and 2007.


15




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





***Discontinued
      Operations:***





*Loss
      from Discontinued Operations:*





Net
      income from discontinued operations for the first quarter of 2008 of $.4 million
      was due primarily to a gain recorded upon the transfer of the our Precision
      operations to settle outstanding obligations. The first quarter of 2007 results
      include the costs of a cessation of operations of a base of business during
      2007.





***Liquidity
      and Capital Resources;***





Our
      independent auditors have expressed substantial doubt about our ability to
      continue as a going concern based on our recurring losses, the transfer, sale
      or
      discontinuance of all of our operating businesses to provide working capital
      and
      reduce debt, and because we do not currently have adequate financing to meet
      all
      of our near-term requirements.





Our
      net
      cash used in operating activities of continuing operations during the quarter
      ended March 31, 2008 was $.5 million compared to cash used of $1.5 million
      in
      the period ended March 31, 2007. The significant decrease on cash outflow is
      primarily due to a lower net loss in 2008 after adjusting for non-cash income
      statement items and the deferral of more interest payments in 2008.





Our
      net
      cash provided by (used in) investing activities of continuing operations during
      the quarter ended March 31, 2008 was $.2 million used compared to cash provided
      of $.3 million in the period ended March 31, 2007 due primarily to deferred
      acquisition costs in 2008 and proceeds from the sale of a business in
      2007.




Our
      net
      cash provided by financing activities of continuing operations during the
      quarter ended March 31, 2008 was $.6 million compared to of $1.1 million in
      the
      period ended March 31, 2007 primarily due to the minority investment in 2008
      and
      the proceeds from the sale of stock in 2007.





As
      of
      March 31, 2008, we had no cash or cash equivalents and we are dependent on
      additional financing to maintain our business and to grow; however, we can
      provide no assurances that such financing will become available to us on terms
      that are favorable to us, or at all. However, through June 10, 2008, we have
      raised an additional $1.1 million from debt and equity financing. We continue
      to
      have discussions and negotiations with potential lenders and
      investors.





Our
      principal cash requirements are currently for operating our corporate functions
      and debt service obligations. We also require significant cash to adequately
      launch our strategic growth plans. Our recent primary sources of cash have
      been
      from certain of our now-discontinued operations, external borrowings and sales
      of equity securities. We expect to fund future growth through debt, equity,
      and
      seller financing into two of our subsidiaries under which we expect to acquire
      new healthcare businesses.





During
      2007 and the first quarter of 2008, we took the following actions in our efforts
      to maximize cash in-flows, reduce cash requirements, and generally provide
      adequate resources to meet our operating needs.





·
            By
                the first quarter of 2008, we sold or transferred substantially all
                of the
                pharmacy operations we had acquired from 2002 through 2006. Aggregate
                sales have been used primarily to pay down short term borrowings
                and other
                general corporate purposes.





·
            In
                March 2007, we issued 20 million shares of our common stock to Mr.
                Sam
                Schmidt for $2.0 million, providing Mr. Schmidt with a 52.6% (since
                reduced to approximately 38%) interest in our Company. Proceeds were
                used
                primarily to pay off short term borrowings and other general corporate
                purposes.





·
            Management,
                through Universal HealthCare Company, LLC (“UHCC”), intends to attract
                unrelated investors and lenders to fund future acquisitions of pharmacy
                operations. Standard Management is the Managing Member of UHCC pursuant
                to
                a Management Agreement under which it plans to have substantial influence
                and control of the operations of the acquired


·
            businesses.
                In return, Standard Management expects to 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. Funds of $.4 million have been raised through
                mid
                June 2008.





·
            Management
                intends to create Newco, a company formed to attract investors and
                lenders
                to fund future acquisitions of home care operations. Standard Management
                expects to operate Newco pursuant to an Agreement under which it
                has
                substantial influence and control of the operations of the acquired
                businesses. In return, Standard Management expects to receive guaranteed
                and performance based fees from Newco. These fees are expected to
                provide
                Standard Management with the funding necessary to support its operations
                as a management company.


16


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**


·
            We
                have deferred the payment of salaries (totaling $701,000 as of March
                31,
                2008) for three executives.





Cash
      requirements for the rest of 2008 and beyond include substantial debt service
      costs as more fully described in Note 4 to our consolidated financial statements
      and include $12.3 million of debt due or callable due to default provisions
      in
      2008. We have or intend to settle approximately $5.7 million of this current
      debt (and $.5 million of related interest and fees) by transferring certain
      collateralized assets to the respective lenders, including our corporate
      building and our Premier Life subsidiary (or its net assets) While we are
      attempting to find additional sources of capital, we can not make any assurances
      as to what funding will become available to meet our other debt service
      requirements or to operate our Company.





*Contractual
      Obligations* *:* During
      the first quarter of 2008, there were no significant changes in our reported
      payments due under contractual obligations at December 31, 2007.





**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 future
                operations or financings, to meet our current and future debt service
                and
                operating needs and to launch and continue our acquisition
                program.





·
            The
                ability of our management team to successfully operate home healthcare
                services and institutional pharmacy businesses as a development stage
                company in health care.





·
            Our
                ability to acquire new businesses, including our ability to identify
                suitable acquisition candidates, acquire them at favorable prices
                and
                successfully integrate them into our
                business.





·
            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 our planned new services, distribution channels and marketing
                initiatives.





·
            Increasing
                competition.





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





Not
      applicable.


17




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





ITEM
      4T.  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
      Principal 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 Principal Accounting Officer concluded that, as of March 31, 2008,
      the
      Company’s disclosure controls and procedures were not effective because of the
      material weaknesses identified as of December 31, 2007, described below.
      Notwithstanding the existence of the material weaknesses 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.





**b)**
            Management’s
                Report on Internal Control Over Financial Reporting at December 31,
                2007





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting. Internal control over financial reporting
      is
      defined in Rule 13a-15(f) and Rule 15d-15(f) promulgated under the Exchange
      Act.
      Under the supervision and with the participation of our management, including
      our Chief Executive Officer and Principal Accounting Officer, we conducted
      an
      evaluation of the effectiveness of our internal control over financial reporting
      as of December 31, 2007, based on the framework in Internal Control-Integrated
      Framework issued by the Committee of Sponsoring Organizations of the Treadway
      Commission. Based on our evaluation under that framework, we have identified
      certain material weaknesses in our internal control over financial reporting.
       As a result, our management has concluded that our internal control over
      financial reporting was not effective as of December 31, 2007.





A
      material weakness is a deficiency, or combination of deficiencies, in internal
      control over financial reporting such that there is a reasonable possibility
      that a material misstatement of our annual or interim financial statements
      will
      not be prevented or detected on a timely basis.





Since
      mid-2006, the Company has been undergoing a major transition as it attempts
      to
      launch the strategic plans 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 significant cash restraints during
      the
      same time period, resulted in the Company not having, as of March 31, 2008,
      a
      sufficient complement of personnel to support the Chief Accounting Officer
      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. In addition, somewhat due to the significant attention
      required of our currently limited accounting and financial staff in our efforts
      to raise capital and identify appropriate acquisition targets, the Company
      was
      unable to timely finalize its accounting for 2007 and to fully control its
      financial statement closing process. These material weaknesses lead to delays
      in
      finalizing the 2008 financial statements included in this report. As a result,
      management has concluded that there was some 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 March 31, 2008.





Management
      consults with outside advisers, external SEC counsel and others regarding
      certain reporting issues and makes retroactive adjustments (prior to when
      external filings are completed) when warranted.





Management
      has discussed these material weaknesses and related corrective actions with
      the
      Audit Committee and our independent registered public accounting firm. Other
      than as described above, we are not aware of any other material weakness in
      our
      internal control over financial reporting. Because of its inherent limitations,
      internal control over financial reporting may not prevent or detect
      misstatements. Projections of any evaluation of effectiveness to future periods
      are subject to risk that controls may become inadequate because of changes
      in
      conditions, or that the degree of compliance with the policies or procedures
      may
      deteriorate.





c)
      Management’s Response to Material Weaknesses


18




**STANDARD
      MANAGEMENT CORPORATION AND SUBSIDIARIES**





Although
      we have not remediated the material weaknesses in our internal control over
      financial reporting as of March 31, 2008, we have made and will continue to
      make, improvements to our policies, procedures, systems and staffing who have
      significant roles in internal controls to address the identified internal
      control deficiencies. Consequently, management has initiated the following
      remediation steps to address the material weaknesses described
      above:





•
            We
                will continue to focus on improving the skill sets of our accounting
                and
                finance function, through education and
                training;





•
            We
                will continue to consider the engagement of qualified professional
                consultants to assist us in cases where we do not have sufficient
                internal
                resources, with management reviewing both the inputs and outputs
                of the
                services;





•
            Upon
                the successful completion of financing sufficient to support operations
                for at least two years, we will consider the hiring of additional
                accounting and finance staff with the commensurate industry knowledge,
                experience and training necessary to complement the current staff
                in the
                financial reporting functions; and





•
            We
                will further develop our financial statement closing and reporting
                practices to include additional levels of checks and balances in
                our
                procedures and timely review.





d)
      Changes in Internal Control Over Financial Reporting





There
      were no changes in our internal control over financial reporting (as defined
      in
      Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during
      the
      quarter ended March 31, 2008, that have materially affected, or are reasonably
      likely to materially affect, our internal control over financial reporting.
      However, as discussed above, we have identified material weaknesses in our
      internal control over financial reporting.





**PART
      II. OTHER INFORMATION**





**ITEM
      1A. RISK FACTORS**





The
      risk
      factors included in our Annual Report on Form 10-K for fiscal year ended
      December 31, 2007 have not materially changed.


19


**STANDARD
        MANAGEMENT CORPORATION AND SUBSIDIARIES**




**ITEM** **** **2.
      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**




During
      the first quarter of 2008, the Company received $215,000 for subscriptions
      of
      Standard Management common stock. Also during the period, UHCC received
      subscriptions for $385,000. Subscription agreements with both Standard
      Management and UHCC were with only accredited investors. Subscription agreements
      with UHCC were pursuant to a private offering memorandum dated January 9, 2008.




**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**




The
      Company is in default of the Laurus Note for principal and interest owed for
      2007, and the $3,200,000 convertible note for the interest owed for
      2007.




**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
      June 20, 2008





STANDARD
                MANAGEMENT CORPORATION(Registrant)By:
            /s/
                Ronald D. HunterRonald
                D. HunterChairman,
                Chief Executive Officer and President(Principal
                Executive Officer)By:
            /s/
                Daniel K CalvertDaniel
                K CalvertChief
                Accounting Officer(Principal
                Financial and Accounting Officer)




20