UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D. C. 20549





**FORM
      10-K**


(Mark
      One)


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




For
      the
      fiscal year ended December 31, 2007




Or


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




For
      the
      transition period from ___________ to __________





Commission
      file number 1-4673




**WILSHIRE
      ENTERPRISES, INC.**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            
            **84-0513668**(State
                or other jurisdiction of
            
            (IRS
                Employerincorporation
                or organization)
            
            Identification
                No.)**1
                Gateway Center****Newark,
                New Jersey**
            
            **07102**(Address
                of principal executive offices)
            
            (Zip
                Code)





Registrant’s
      telephone number, including area code:   (201) 420-2796





Securities
      registered pursuant to section 12(b) of the Act:





Name
                of each exchangeTitle
                of each class
            
            on
                which registeredCommon
                Stock, $1 par value
            
            American
                Stock Exchange





Securities
      registered pursuant to section 12(g) of the Act:





None


(Title
      of
      each class)





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.   Yes o No x





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act.   Yes o No x





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 if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
      be contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-K
      or any amendment to this Form 10-K. 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 “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      accelerated filer o Accelerated filer o Non-accelerated filer x  Smaller
      reporting company o





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


Yes o No x





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant computed by reference to the price at which
      the
      common equity was last sold, or the average bid and asked price of such common
      equity, as of the last business day of the registrant’s most recently completed
      second fiscal quarter (June 30, 2007), was $20,670,000.





The
      number of shares outstanding of the registrant’s $1 par value common stock, as
      of March 25, 2008, was 7,926,248.










WILSHIRE
      ENTERPRISES, INC.


INDEX




Page No.Part
                IItem
                1.
            Business
            3Item
                1A.
            Risk
                Factors
            7Item
                1B.
            Unresolved
                Staff Comments
            8Item
                2.
            Properties
            8Item
                3.
            Legal
                Proceedings
            10Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            10Item
                4A.
            Executive
                Officers of the Registrant
            11Part
                IIItem
                5.
            Market
                for Registrant’s Common Equity, Related StockholderMatters
                and Issuer Purchases of Equity Securities
            12Item
                6.
            Selected
                Financial Data
            13Item
                7.
            Management’s
                Discussion and Analysis of Financial Conditionand
                Results of Operation
            15Item
                7A.
            Quantitative
                and Qualitative Disclosures About Market Risk
            32Item
                8.
            Financial
                Statements and Supplementary Data
            34Item
                9.
            Changes
                in and Disagreements with Accountants on Accountingand
                Financial Disclosure
            61Item
                9A.
            Controls
                and Procedures
            61Item
                9B.
            Other
                Information
            61Part
                IIIItem
                10.
            Directors,
                Executive Officers and Corporate Goverance
            62Item
                11.
            Executive
                Compensation
            62Item
                12.
            Security
                Ownership of Certain Beneficial Owners and Managementand
                Related Stockholder Matters
            62Item
                13.
            Certain
                Relationships and Related Transactions, and Director
                Independence
            62Item
                14.
            Principal
                Accountant Fees and Services
            62Part
                IVItem
                15.
            Exhibits,
                Financial Statement Schedules
            63Signatures
            68




2




**PART
      I**




**Item
      1.**  **Business**





This
      report contains “forward-looking statements” within the meaning of the federal
      securities laws. These statements relate to future economic performance, plans
      and objectives of management for future operations and projections of revenues
      and other financial items that are based on the beliefs of our management,
      as
      well as assumptions made by, and information currently available to, our
      management. The words “expect,” “estimate,” “anticipate,” “believe” and similar
      expressions are intended to identify forward-looking statements. Those
      statements involve risks, uncertainties and assumptions, including industry
      and
      economic conditions, competition and other factors discussed in this and our
      other filings with the SEC. If one or more of these risks or uncertainties
      materialize or underlying assumptions prove incorrect, actual outcomes could
      vary materially from those indicated. We have made forward-looking statements
      in
      Items 1, 2, 5, 7 and 7A of this report. See Item 1A “Risk Factors” for a
      description of some of the important risk factors that may affect actual
      outcomes.





Background





Wilshire
      Enterprises, Inc. (“Wilshire” or the “Company”) is a Delaware corporation
      founded on December 7, 1951. The Company changed its name from Wilshire Oil
      Company of Texas to its current name on June 30, 2003. The Company’s principal
      executive offices are located at 1 Gateway Center, Newark, New Jersey 07102.
      Its
      main telephone number is (201) 420-2796. Wilshire maintains a website at www.wilshireenterprisesinc.com .





Wilshire
      is principally engaged in acquiring, owning and operating real estate
      properties. As further described below, the Company currently owns multi-family
      properties, office space, retail space, and land located in the states of
      Arizona, Texas, Florida and New Jersey.





As
      previously discussed, the Company is actively exploring opportunities to sell
      or
      merge its business. The Company has negotiated with and provided significant
      due
      diligence to certain bidders. The Company continues to negotiate a transaction
      and is hopeful a definitive agreement will be executed, although no assurance
      can be given in that regard. The Company’s investment banker, Friedman,
      Billings, Ramsey & Co., Inc. (“FBR”), is assisting the Company in its sales
      process.




3




**Real
      Estate Operations**





Wilshire
      is engaged principally in acquiring, owning and operating real estate
      properties. As of December 31, 2007, Wilshire owned the properties described
      below:





Name
            
            City
            
            State
            
            Asset
                Class
            
            SizeSunrise
                Ridge
            
            Tucson
            
            AZ
            
            Apartments
            
            340
                unitsVan
                Buren
            
            Tucson
            
            AZ
            
            Apartments
            
            70
                unitsRoyal
                Mall Plaza
            
            Mesa
            
            AZ
            
            Office
                & retail
            
            66,552
                SFTempe
                Corporate
            
            Tempe
            
            AZ
            
            Office
            
            50,700
                SFTamarac
                Office Plaza
            
            Tamarac
            
            FL
            
            Office
            
            26,990
                SFAlpine
                Village
            
            Sussex
            
            NJ
            
            Apartments
            
            132
                unitsJefferson
                Gardens (a)
            
            Jefferson
            
            NJ
            
            Condominiums
            
            12
                unitsAmboy
                Tower
            
            Perth
                Amboy
            
            NJ
            
            Office
                & Retail
            
            75,000
                SFAlpine
                Village (b)
            
            Sussex
            
            NJ
            
            Land
            
            0.51
                acresAlpine
                Village (b)
            
            Wantage
            
            NJ
            
            Land
            
            17.32
                acresAlpine
                Village (b)
            
            Sussex
            
            NJ
            
            Land
            
            0.49
                acresAlpine
                Village (b)
            
            Sussex
            
            NJ
            
            Land
            
            0.22
                acresWest
                Orange
            
            West
                Orange
            
            NJ
            
            Land
            
            0.6
                acresSummercreek
            
            San
                Antonio
            
            TX
            
            Apartments
            
            180
                unitsWellington
                Estates
            
            San
                Antonio
            
            TX
            
            Apartments
            
            228
                units





*(a)
                The Company closed on the sale of 1 condominium unit on January 28,
                2008.
                Gross proceeds related to the 1 unit were approximately $150,000
                and
                resulted in an after-tax gain of approximately
                $62,000.**(b)
                Alpine Village land parcels are adjacent to the Alpine Village
                Apartments.*





**Business
      Strategy**





Wilshire’s
      principal investment objective is to increase the net asset value of its
      investment portfolio through effective management, growth, financing and
      investment strategies. Wilshire is currently focused on optimizing the valuation
      potential and cash flow from many of its assets, repositioning or selling select
      assets, and potentially acquiring assets in targeted geographic regions. The
      Company is also focused on increasing long-term growth in cash and cash
      equivalents generated from operations and cash and cash equivalents available
      for possible distribution. On May 4, 2006, the Company’s Board of Directors
      declared a special cash dividend of $3.00 per common share that was paid on
      June
      29, 2006 to stockholders of record on May 25, 2006. In accordance with the
      American Stock Exchange rules, the ex-dividend date was June 30, 2006. The
      aggregate dividend amounted to $23,697,000. See Item 5 of this Annual Report
      on
      Form 10-K.





As
      previously discussed, the Company is actively exploring opportunities to sell
      or
      merge its business. The Company has negotiated with and provided significant
      due
      diligence to certain bidders. The Company continues to negotiate a transaction
      and is hopeful a definitive agreement will be executed, although no assurance
      can be given in that regard. The Company’s investment banker, Friedman,
      Billings, Ramsey & Co., Inc. (“FBR”), is assisting the Company in its sales
      process.





The
      Company may acquire assets that offer attractive financial returns. In general,
      it seeks multifamily properties with 200 units or more in geographic regions
      in
      which the Company or its contracted property management company (see below)
      has
      operations. However, the Company may evaluate other asset classes such as office
      buildings, senior independent living facilities, retail centers and real estate
      securities and other geographic regions and may invest in one or more of these
      asset classes in lieu of a multifamily property. During 2007, the Company
      purchased two parcels of land totaling .71 acres adjacent to the Alpine Village
      land parcel for an aggregate purchase price of $170,000. The purchase of such
      parcels is considered strategic as it provides greater access to the Company’s
      existing 18 acres at Alpine Village.




4




**Divestiture
      of Assets**





The
      Company divested the following real estate properties in 2007:


TaxesName
                  (State)
                (asset
                  class)
              
              Date
                  Sold
              
              Selling
                  Price
              
              Net BookValue
              
              MortgageValue
              
              Payable
                on Sale
              
              Net Proceeds(a)Jefferson
                  Gardens (NJ)(1-bedroom
                  condominium)
              
              1/22/2007
              
              $
              144,000
              
              $
              34,000
              
              $
              10,000
              
              $
              38,000
              
              $
              81,000Jefferson
                  Gardens (NJ)(2-bedroom
                  condominium)
              
              2/12/2007
              
              $
              195,000
              
              $
              50,000
              
              $
              2,000
              
              $
              51,000
              
              $
              128,000Lake
                  Hopatcong Land(1.8
                  acres)
              
              2/15/2007
              
              $
              850,000
              
              $
              355,000
              
              $
              -
              
              $
              188,000
              
              $
              648,000Jefferson
                  Gardens (NJ) (b)(1-bedroom
                  condominium)
              
              4/23/2007
              
              $
              150,000
              
              $
              31,000
              
              $
              -
              
              $
              43,000
              
              $
              97,000Jefferson
                  Gardens (NJ)(1-bedroom
                  condominium)
              
              7/26/2007
              
              $
              150,000
              
              $
              36,000
              
              $
              -
              
              $
              40,000
              
              $
              99,000Jefferson
                  Gardens (NJ)(1-bedroom
                  condominium) (b)
              
              8/15/2007
              
              $
              155,000
              
              $
              38,000
              
              $
              -
              
              $
              39,000
              
              $
              101,000Jefferson
                  Gardens (NJ)(1-bedroom
                  condominium)
              
              11/29/2007
              
              $
              170,000
              
              $
              36,000
              
              $
              -
              
              $
              48,000
              
              $
              111,000


*(a)**Net
                  proceeds is defined as selling price less mortgage value and transaction
                  costs such as commissions, legal fees, taxes and other
                  expenses.*(b)*Taxes
                  payable on this property are deferred as a result of an Internal
                  Revenue
                  Service Section 1031 tax deferred exchange for which the Company
                  has
                  identified a replacement
                  property.*




On
      January 28, 2008 the Company closed on the sale of a one bedroom condominium
      unit at Jefferson Gardens for a gross sales price of $150,000. The unit had
      a
      book value of $36,000, had no mortgage, taxes payable are $39,000 and
      transaction costs, such as commissions, legal fees, taxes and other expenses,
      amounted to $13,000, resulting in net proceeds of $98,000 and an after-tax
      gain
      of approximately $62,000.





**Employees**





As
      of
      December 31, 2007, the Company had a total of six employees in its corporate
      office.





**Property
      Management**





Wilshire
      contracts with a property management company (the “PMC”) located in Phoenix,
      Arizona to assist in the management of the Company’s properties, including
      providing onsite personnel, regional supervision, and bookkeeping functions.
      The
      PMC has managed nearly all of Wilshire’s properties located outside of New
      Jersey since 1998. In January of 2005 Wilshire contracted with the PMC to assist
      in the management of the Company’s New Jersey properties obligating the PMC to
      provide onsite personnel and bookkeeping functions and regional supervision
      for
      the New Jersey properties. Wilshire believes that the PMC can provide
      cost-efficient bookkeeping functions in part because it is located in Arizona,
      a
      state that generally has lower wage expense than that experienced in New Jersey.
      As of December 31, 2007 the PMC employed 511 full time and 27 part time people
      and managed property on behalf of Wilshire in the states of Arizona, Florida,
      New Jersey, and Texas. To Wilshire’s knowledge, the PMC does not currently own
      real estate assets for its own investment purposes. PMC has advised Wilshire
      that in 2007, Wilshire accounted for approximately 8.1% of PMC’s total
      revenues.




5




**Insurance**





The
      Company carries comprehensive property, general liability, fire, extended
      coverage and rental loss insurance on all of its existing properties, with
      policy specifications, insured limits and deductibles customarily carried for
      similar properties. The Terrorism Risk Insurance Act of 2002 was signed into
      law
      on November 26, 2002. The law provides that losses resulting from certified
      acts
      of terrorism will be partially reimbursed by the United States after the
      insurance company providing coverage pays a statutory deductible amount. The
      law
      also requires that the insurance company offer coverage for terrorist acts
      for
      an additional premium. We accepted the offer to include this coverage in our
      property and casualty policies.





We
      believe that our properties are adequately covered by insurance. There are,
      however, some types of losses (such as losses arising from mold and acts of
      war)
      that are not generally insured because they are either uninsurable or not
      economically insurable. If an uninsured loss or a loss in excess of insured
      limits occurs, we could lose our capital invested in a property, as well as
      the
      anticipated future revenues from the property, and we would continue to be
      obligated on any mortgage indebtedness or other obligations related to the
      property. Any loss of that kind could materially adversely affect
      us.





**Competition**





All
      of
      the properties owned by the Company are in areas where there is substantial
      competition with other multifamily properties, with single-family housing that
      is either owned or leased by potential tenants and with other commercial
      properties. The principal method of competition is to offer competitive rental
      rates. In order to maintain occupancy rates and attract quality tenants, the
      Company may offer rental concessions, such as free rent to new tenants for
      a
      stated period. The Company also competes by offering properties in attractive
      locations and providing residential and commercial tenants with amenities such
      as covered parking, recreational facilities, garages and pleasant landscaping.
      The Company intends to continue upgrading and improving the physical condition
      of its existing properties and will consider selling existing properties, which
      the Company believes have realized their potential, and re-investing in
      properties that may require renovation but that offer greater appreciation
      potential.





**Environmental
      Matters**





The
      Company believes that each of its properties is in compliance, in all material
      respects, with federal, state and local regulations regarding hazardous waste
      and other environmental matters and is not aware of any environmental
      contamination at any of its properties that would require any material capital
      expenditure by the Company for the remediation thereof. No assurance can be
      given that environmental regulations will not, in the future, have a materially
      adverse effect on the Company’s operations.





**Investment
      in Marketable Securities**




The
      Company holds investments in certain marketable equity securities and short-term
      marketable debt instruments, including auction rate securities with interest
      rate resets ranging from every seven days to every 45 days. Consistent with
      our
      policy, all ARS investments were rated at the time of purchase and are still
      currently rated AAA or the equivalent thereto.  Beginning
      in February 2008, auctions for the resale of such securities have ceased to
      reliably support the liquidity of these securities. We expect to continue to
      receive interest according to the stated terms of the investments, including
      above market interest rates related to the auction failures. Although such
      loss
      of liquidity will most likely be short-term in nature as a secondary market
      for
      the securities emerges or successful auctions resume, we cannot be certain
      that
      liquidity will be restored in the foreseeable future and we may not be able
      to
      access cash by selling these securities for which there is insufficient demand
      without a loss of principal until a future auction for these investments is
      successful ,
      a
      secondary market emerges, they are redeemed by their issuer or they mature.
      If
      liquidity is not reestablished in the short term, we may be required to
      reclassify these investments as long-term assets based on the nominal maturity
      date of the underlying securities. The
      Company’s investments in marketable securities are accounted for as securities
      available for sale.




6




**Item
      1A.**  **Risk
      Factors**





In
      the
      normal course of operating our business and executing our business strategies,
      we are subject to several risks and uncertainties that could impede our ability
      to achieve our goals, including the risks described below. If any of the
      following risks actually occur, our financial condition and results of
      operations and / or the market price of our common stock could be materially
      and
      adversely affected.





**An
      acceptable price may not be obtained in our attempt to sell or merge our
      company.**





Our
      goal
      of maximizing shareholder value includes the possibility of selling our Company
      to a third party or of merging our Company into a suitable merger partner.
      As
      previously discussed, the Company is actively exploring opportunities to sell
      or
      merge its business. The Company has negotiated with and provided significant
      due
      diligence to certain bidders. The Company continues to negotiate a transaction
      and is hopeful a definitive agreement will be executed, although no assurance
      can be given in that regard. The Company’s investment banker, Friedman,
      Billings, Ramsey & Co., Inc. (“FBR”), is assisting the Company in its sales
      process.





**Our
      properties held for sale may not realize the sales prices anticipated by
      us.**





We
      are
      holding various properties that are available for sale. It is our intent to
      sell
      such properties at a price that we have determined represents their intrinsic
      value. However, there is no guarantee that a buyer will be found to purchase
      such properties at prices we will set. In this event, our options include
      continuing to operate the properties, with potentially significant capital
      expenditures, or to reduce the selling price of the property.





**Environmental
      concerns may limit our ability to operate our real estate
      properties.**





Our
      ability to operate our continuing real estate operations and sell our
      discontinued operations are impacted by potential environmental issues
      including: asbestos removal at certain properties, clean-up of spills from
      leaking heating oil tanks, faulty sewerage treatment, disposal of cleaning,
      painting and other potential contaminants and other items. Laws protecting
      the
      environment typically are strictly enforced and carry with them substantial
      monetary penalties for non-compliance. Any action by a federal or state agency
      could result in substantial penalties and other enforcement measures which
      could
      materially and adversely affect us.





**Competition
      in our markets limits rental income from tenants.**





The
      rental income that we may earn from our properties is limited to the local
      market conditions where the properties are located. This impacts actual rent
      that may be charged and concessions that may be granted to entice new tenants
      and tenants renewing their leases to continue to occupy our
      properties.





**Certain
      properties may require substantial capital expenditures to remain
      competitive.**





As
      our
      properties age, they require capital expenditures to remain competitive in
      their
      marketplaces. Such capital expenditures could be significant and could relate
      to
      roofing, replacement of boilers and air conditioning equipment, paving of
      parking lots, painting of buildings, and other capital expenditure
      items.





**Economic
      change in our marketplaces may impact our ability to locate suitable
      tenants.**





Our
      properties are concentrated in the Southwest, Florida and New Jersey. Any
      negative change in the economic environment in those areas of the country may
      impact the ability of existing tenants to remain current on their rental
      payments and our ability to attract qualified new tenants.




7




**Interest
      rate fluctuations impact our ability to raise funds for investment and the
      desire of tenants to rent versus buy housing.**





We
      are
      susceptible to changes in interest rates. Increasing interest rates are
      detrimental to our ability to raise capital for investment purposes at suitable
      interest rates. Declining interest rates generally make home ownership more
      affordable than renting for tenants and may cause vacancy rates at our
      properties to increase. A decline in general economic conditions may cause
      an
      increase in vacancy rates at our office and retail properties.





**Government
      regulations may hinder our ability to dispose of our properties held for sale
      and may limit our ability to construct improvements at our existing
      properties.**





Government
      regulations concerning zoning, property use, environmental regulations and
      taxation, among other things, could affect our decisions to sell various
      properties and to attempt to construct improvements to make the properties
      more
      desirable for tenants and investors.




**We
      may be subjected to unforeseen or unanticipated market conditions that could
      adversely affect our available working capital and financial position.**




We
      hold
      positions in short-term investments that consist of certain auction rate
      securities (ARS). These investments represent interests in collateralized
      debt obligations supported by pools of loans with long-term nominal maturities
      but for which interest
      rates are normally reset every seven days to every 45 days through a dutch
      auction process. Consistent with our policy, all ARS investments were rated
      at the time of purchase and still are currently rated AAA or the equivalent
      thereto. Beginning in February 2008, auctions for the resale of such securities
      have ceased to reliably support the liquidity of these securities. We expect
      to
      continue to receive interest according to the stated terms of the investments,
      including above market interest rates related to the auction failures. Although
      such loss of liquidity will most likely be short-term in nature as a secondary
      market for the securities emerges or successful auctions resume, we cannot
      be
      certain that liquidity will be restored in the foreseeable future. We may not
      be
      able to access cash by selling these securities for which there is
      insufficient demand
      without a loss of principal until a future auction for these investments is
      successful, a secondary market emerges, they are redeemed by their issuer or
      they mature. If liquidity is not reestablished in the short term, we may also
      be
      required to reclassify these investments as long-term assets based on the
      nominal maturity date of the underlying securities. In addition, the value
      of
      such investments could potentially be impaired on a temporary or
      other-than-temporary basis. If it is determined that the value of the
      investment is impaired on an other-than-temporary basis, we would be required
      to
      write down the investment to its fair value and record a charge to earnings
      for
      the amount of the impairment.





**Item
      1B.**  **Unresolved
      Staff Comments**





None.




**Item
      2.**  **Properties**





The
      executive and administrative office of the Company consists of approximately
      4,000 square feet, located at 1 Gateway Center, Suite 1030, Newark, New Jersey.
      Beginning on April 1, 2005, Wilshire leased this office pursuant to a five
      year
      lease, with two renewal options of five years each. The base monthly rental
      is
      $10,880.





The
      following table provides summary information regarding the Company’s apartment
      properties and condominium properties as of December 31, 2007.





Apartment Unit TypeName (State)
            
            DateAcquired
            
            No. ofUnits
            
            Studio /Efficiencies
            
            1
                BR
            
            2
                BR
            
            3
                BR
            
            Acreage
            
            Rentable
              Sq.
                Ft.**Apartments:**Alpine
                Village (NJ)
            
            
            10/29/95
            
            
            132
            
            
            -
            
            
            48
            
            
            84
            
            
            -
            
            
            13.73
            
            
            101,724Summercreek
                (TX)
            
            
            3/29/01
            
            
            180
            
            
            -
            
            
            84
            
            
            96
            
            
            -
            
            
            8.17
            
            
            142,452Sunrise
                Ridge (AZ)
            
            
            10/24/97
            
            
            340
            
            
            -
            
            
            144
            
            
            196
            
            
            -
            
            
            17.73
            
            
            291,674Van
                Buren (AZ)
            
            
            6/11/98
            
            
            70
            
            
            -
            
            
            42
            
            
            28
            
            
            -
            
            
            1.41
            
            
            81,404Wellington
                (TX)
            
            
            7/30/98
            
            
            228
            
            
            24
            
            
            60
            
            
            116
            
            
            28
            
            
            8.69
            
            
            214,744**Condominiums:**Jefferson
                Gardens (a)(b)
            
            
            3/31/94
            
            
            12
            
            
            -
            
            
            10
            
            
            2
            
            
            -
            
            
            -
            
            
            9,383




*(a)
                Classified by the Company as Discontinued Operations. See Note 2
                to the
                Consolidated Financial Statements in Item 8 of this Annual Report
                on Form
                10-K**(b)
                The Jefferson Gardens condominium complex has a total of 50 units,
                34 one
                bedroom and 16 two bedroom, of which the Company owned 12 units as
                of
                December 31, 2007.*




8




The
      following table provides summary information regarding the Company’s commercial
      properties and vacant land as of December 31, 2007.


Name
                  (State)
              
              Date Acquired
              
              Rentable Sq. Ft.
              
              Acreage**Office
                  & Retail:**Amboy
                  Tower (NJ) (a)
              
              
              3/31/98
              
              
              75,000Royal
                  Mall Plaza (AZ)
              
              
              3/31/94
              
              
              66,552Tamarac
                  Office Plaza (FL) (a)
              
              
              12/31/92
              
              
              26,990Tempe
                  Corporate (AZ)
              
              
              12/31/92
              
              
              50,700**Land:**Alpine
                  Village, Sussex (NJ) (a)
              
              
              10/28/98
              
              
              -
              
              
              0.51Alpine
                  Village, Wantage (NJ) (a)
              
              
              2/16/01
              
              
              -
              
              
              17.32Alpine
                  Village, Center Street, Sussex (NJ) (a)
              
              
              6/13/07
              
              
              -
              
              
              0.49Alpine
                  Village, Unionville Ave., Sussex (NJ) (a)
              
              
              11/26/07
              
              
              -
              
              
              0.22West
                  Orange (NJ) (a)
              
              
              3/31/94
              
              
              -
              
              
              0.60




*(a)
                Classified by the Company as Discontinued Operations. See Note 2
                to the
                Consolidated Financial Statements in Item 8 of this Annual Report
                on Form
                10-K.*





Discontinued
      operations contain properties that may have excellent cash flow or valuation
      characteristics but that may not be in a geographic region that is currently
      being targeted by the Company. Discontinued operations include properties that
      either are under contracts for sale or the Company has identified as properties
      potentially for sale depending on market conditions, including Jefferson Gardens
      (NJ) (sold 1 1-bedroom unit during the first quarter 2008), Amboy Tower (NJ),
      Tamarac Office Plaza (FL) and the West Orange, New Jersey land parcels. The
      Company may or may not sell some or all of such assets.





The
      following table provides summary financial information for the Company’s
      properties that are not carried as discontinued operations:





As of December 31, 2007
            
            For the Year Ended December 31, 2007Name (State)
            
            Net BookValue
            
            MortgagePrincipal
            
            NetOperatingIncome
            
            InterestExpense
            
            CapitalExpenditures**Apartments:**Sunrise
                Ridge (AZ)
            
            $
            5,271,000
            
            $
            10,007,000
            
            $
            1,243,000
            
            $
            589,000
            
            $
            220,000Van
                Buren (AZ)
            
            
            1,627,000
            
            
            1,964,000
            
            
            209,000
            
            
            116,000
            
            
            9,000Summercreek
                (TX)
            
            
            4,933,000
            
            
            3,955,000
            
            
            254,000
            
            
            319,000
            
            
            21,000Wellington
                (TX)
            
            
            3,634,000
            
            
            4,115,000
            
            
            472,000
            
            
            242,000
            
            
            50,000Alpine
                Village (NJ)
            
            
            3,159,000
            
            
            4,676,000
            
            
            412,000
            
            
            275,000
            
            
            12,000**Office
                & Retail:**Royal
                Mall Plaza (AZ)
            
            
            1,366,000
            
            
            -
            
            
            411,000
            
            
            -
            
            
            100,000Tempe
                Corporate (AZ)
            
            
            2,441,000
            
            
            3,661,000
            
            
            555,000
            
            
            240,000
            
            
            32,000Total:
            
            $
            22,431,000
            
            $
            28,378,000
            
            $
            3,556,000
            
            $
            1,781,000
            
            $
            444,000




9




**Item
      3.**  **Legal
      Proceedings**





*Other
      Matters*





As
      previously disclosed, during the latter portion of 2006 and the first quarter
      of
      2007, the Company conducted a preliminary inquiry into its relationship with
      a
      private consulting firm. As a result of that inquiry, the Company voluntarily
      reported to governmental authorities that a principal of the private consulting
      firm was, and may continue to be, a public servant in a municipality in which
      the Company does business; for some period of time the consulting firm was
      provided office space by the Company on a rent-free basis in a building owned
      by
      the Company; and the fees charged the Company by the private consulting firm
      for
      consulting services may have been above the customary fees for the services
      provided.





The
      Company will continue to cooperate fully with governmental authorities with
      respect to this matter. The Company does not believe that it will be named
      in
      any formal legal proceeding in connection with this matter, although no
      assurance can be given in that regard; however, it is possible that the
      indemnification obligations of the Company could still be
      significant.





The
      Company has undertaken a review of its records and record-keeping practices.
      As
      a result of this review, the Company has concluded that (i) the events under
      investigation do not materially adversely affect any financial statements
      previously filed by the Company and (ii) the Company is not aware of any
      comparable arrangements with other public servants.





The
      Company has incurred considerable expense in connection with its preliminary
      investigation, the steps taken to cooperate with governmental authorities,
      the
      advancement of amounts subject to indemnification claims and certain related
      matters. Approximately $87,000 of such expenses was incurred during the fourth
      quarter of 2006 and approximately $569,000 of such expenses was incurred during
      fiscal 2007. The Company is unable to predict the aggregate amount of expenses
      that it will incur in resolving these matters, but recognizes that continuing
      expenses may be considerable.





**Item
      4.****Submission
      of Matters to a Vote of Security Holders**





No
      matters were submitted to a vote of security holders during the fourth quarter
      of fiscal 2007.




10




**Item
      4A.**  **Executive
      Officers of the Registrant**





The
      following table sets forth the name and age of each executive officer of the
      Company. Each officer is appointed by the Company's Board of Directors. Unless
      otherwise indicated, the persons named below have held the position indicated
      for more than the past five years. ****





Name and Age
            
            Executive Officer of TheCompany Since
            
            Position with the Companyand Business ExperienceS.
                Wilzig Izak, Age 49
            
            1987
            
            Chairman
                of the Board of the Company since September 20, 1990; Chief Executive
                Officer since May 1991; Executive Vice President (1987-1990); prior
                thereto, Senior Vice PresidentFrancis
                J. Elenio, Age 42
            
            September
                2006
            
            Chief
                Financial Officer, Secretary and Treasurer of the Company since September
                2006; Chief Financial Officer of Premier Wealth Management, Inc.
                since
                September 2007; Chief Financial Officer of Webcollage, Inc. (March
                2006 -
                August 2006); Interim Chief Financial Officer of TWS Holdings, Inc.
                (November 2005 - March 2006); Chief Financial Officer and Director
                of
                Roomlinx, Inc. (April 2004 - November 2005); Chief Financial Officer,
                Secretary and Treasurer of GoAmerica, Inc. (January 1999 - August
                2003)




11




**PART
      II**




**Item
      5.**  **Market
      for Registrant’s Common Equity, Related Stockholder Matters**  **and
      Issuer Purchases of Equity Securities**





The
      Company’s common stock is traded on the American Stock Exchange. The following
      table indicates the high and low sales prices of the Company’s common stock for
      the quarters indicated during the years ended December 31, 2007 and
      2006:


Quarter
                    1
                
                Quarter
                    2
                
                Quarter
                    3
                
                Quarter
                    4High
                
                -
                
                Low
                
                High
                
                -
                
                Low
                
                High
                
                -
                
                Low
                
                High
                
                -
                
                Low2007
                
                $
                5.10
                
                
                -
                
                
                4.50
                
                $
                5.95
                
                
                -
                
                
                4.90
                
                $
                5.99
                
                
                -
                
                
                3.97
                
                $
                4.35
                
                
                -
                
                
                3.072006
                
                
                8.48
                
                
                -
                
                
                7.70
                
                
                9.39
                
                
                -
                
                
                5.80
                
                
                5.86
                
                
                -
                
                
                4.00
                
                
                5.00
                
                
                -
                
                
                4.55




As
      of
      March 20, 2008, there were 3,526 common shareholders of record.





On
      May 4,
      2006, the Company’s Board of Directors declared a special cash dividend of $3.00
      per common share that was paid on June 29, 2006 to stockholders of record on
      May
      25, 2006. In accordance with the American Stock Exchange rules, the ex-dividend
      date was June 30, 2006. The aggregate dividend amounted to $23,697,000. Based
      on
      a primary objective of increasing shareholder value, the Board of Directors
      will
      continue to consider the payment of dividends from time to time in the future
      based on the Company’s strategic direction, capital requirements, results of
      operations and other factors. The Company currently does not have a plan to
      pay
      any additional dividends.





In
      June
      2004, the Company’s Board of Directors authorized management to conduct a
      buyback of up to 1,000,000 common shares. The authorization to repurchase common
      shares has no expiration date and the Company has not determined when, or if,
      the program will be discontinued. Under this authorization, the Company
      conducted an odd-lot share repurchase program, which offered shareholders who
      owned a small number of common shares the opportunity to sell their shares
      without paying a broker’s commission. The Company also benefited under the
      odd-lot share repurchase program by lowering its administrative costs through
      the closing of approximately 1,900 shareholder accounts. Under the Board
      authorization, the Company also allowed other shareholders the opportunity
      to
      sell their shares to the Company. No shares were repurchased during the period
      October 1, 2007 through December 31, 2007.




12




**Equity
      Compensation Plan Information**





The
      following table provides information as of December 31, 2007 with respect to
      shares of the Company’s common stock that may be issued under the Company’s
      existing equity compensation plans, which consist of the (i) 1995 Stock Option
      and Incentive Plan, (ii) 1995 Non-Employee Director Stock Option Plan, (iii)
      2004 Stock Option and Incentive Plan, and (iv) 2004 Non-Employee Director Stock
      Option Plan, each of which has been approved by the Company’s
      shareholders.


(a)
                Number of
                Securities To Be
                Issued Upon
                Exercise Of
                Outstanding
                Options, Warrants
                  and
                    Rights
              
              (b)
                Weighted
                Average Exercise
                Price Of
                Outstanding
                Options, Warrants
                  and
                    Rights
              
              (c)
                Number of
                Securities
                Remaining
                Available
                For Future
                Issuance
                Under Equity
                Compensation
                Plans
                (Excluding
                Securities
                Reflected
                  In Column (a))Equity
                  compensation plans approved by security holders
              
              
              135,000
              
              $
              6.26
              
              
              575,424Equity
                  compensation plans not approved by security holders
              
              
              -
              
              
              -
              
              
              -Total
              
              
              135,000
              
              $
              6.26
              
              
              575,424




**Item
      6.**  **Selected
      Financial Data**





The
      selected consolidated financial data for the Company for each of the five (5)
      fiscal years in the period ended December 31, 2007 are derived from the
      consolidated financial statements that have been audited. J.H. Cohn LLP, an
      Independent Registered Public Accounting Firm, has reported upon the
      consolidated financial statements as of and for the years ended December 31,
      2007, 2006, 2005 and 2004. The consolidated financial statements as of and
      for
      the year ended December 31, 2003 has been reported upon by Ernst & Young
      LLP, Independent Registered Public Accounting Firm.





The
      following table sets forth the Company’s selected financial data and should be
      read in conjunction with the Consolidated Financial Statements and notes thereto
      included in Item 8, “Financial Statements and Supplementary Data” and Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of
      Operations” in this Annual Report on Form 10-K.




13


As
                of December 31,(In
                thousands)2007
            
            2006
            
            2005
            
            2004
            
            2003**Balance
                Sheet Data at Year-End:**Total
                assets
            
            $
            45,384
            
            $
            46,915
            
            $
            88,915
            
            $
            86,916
            
            $
            98,997Long-term
                debt
            
            
            28,952
            
            
            29,618
            
            
            33,352
            
            
            46,855
            
            
            58,494Stockholders'
                equity
            
            
            13,136
            
            
            13,923
            
            
            41,852
            (1)
            
            28,474
            
            
            24,527Weighted
                average shares outstanding:Basic
            
            
            7,922
            
            
            7,888
            
            
            7,864
            
            
            7,796
            
            
            7,810Diluted
            
            
            7,922
            
            
            8,015
            
            
            7,966
            
            
            7,955
            
            
            7,810




For
                the Year Ended December 31,(In
                thousands of dollars except per share amounts)2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003**Income
                Statement Data:**Revenues
            
            $
            9,420
            
            $
            8,834
            
            $
            8,186
            
            $
            8,114
            
            $
            7,911Costs
                and expenses:Operating
                expenses
            
            
            5,863
            
            
            5,275
            
            
            4,708
            
            
            4,441
            
            
            4,519Depreciation
            
            
            1,368
            
            
            1,987
            
            
            1,215
            
            
            1,427
            
            
            1,533General
                and administrative
            
            
            3,617
            
            
            2,475
            
            
            3,493
            
            
            2,143
            
            
            2,349Total
                costs and expenses
            
            
            10,848
            
            
            9,737
            
            
            9,416
            
            
            8,011
            
            
            8,401Dividend
                and interest income
            
            
            540
            
            
            836
            
            
            700
            
            
            685
            
            
            743Sale
                of marketable securities
            
            
            -
            
            
            -
            
            
            134
            
            
            -
            
            
            2,621Sale
                of real estate related assets
            
            
            -
            
            
            -
            
            
            675
            
            
            -
            
            
            -Life
                insurance proceeds
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,000Other
                income
            
            
            36
            
            
            7
            
            
            32
            
            
            -
            
            
            232Interest
                  expense including amortization ofdeferredfinancing
                  costs
            
            
            (1,837
            )
            
            (1,811
            )
            
            (1,911
            )
            
            (1,916
            )
            
            (2,403
            )Income
                (loss) before provision for taxes
            
            
            (2,689
            )
            
            (1,871
            )
            
            (1,600
            )
            
            (1,128
            )
            
            1,703Income
                tax expense (benefit)
            
            
            (1,321
            )
            
            (829
            )
            
            (1,019
            )
            
            (409
            )
            
            169Income
                (loss) from continuing operations
            
            
            (1,368
            )
            
            (1,042
            )
            
            (581
            )
            
            (719
            )
            
            1,534Discontinued
                operations - real estate
            
            
            176
            
            
            3,212
            
            
            8,577
            
            
            4,068
            
            
            271Discontinued
                operations - oil & gas
            
            
            300
            
            
            115
            
            
            (1,105
            )
            
            (1,322
            )
            
            (3,178
            )Net
                income (loss)
            
            $
            (892
            )
            $
            2,285
            
            $
            6,891
            
            $
            2,027
            
            $
            (1,373
            )Basic
                earnings (loss) per share:Continuing
                operations
            
            $
            (0.17
            )
            $
            (0.13
            )
            $
            (0.07
            )
            $
            (0.09
            )
            $
            0.20Discontinued
                operations
            
            
            0.06
            
            
            0.42
            
            
            0.95
            
            
            0.35
            
            
            (0.38
            )Net
                income (loss) per share
            
            $
            (0.11
            )
            $
            0.29
            
            $
            0.88
            
            $
            0.26
            
            $
            (0.18
            )Diluted
                earnings (loss) per share:Continuing
                operations
            
            $
            (0.17
            )
            $
            (0.13
            )
            $
            (0.07
            )
            $
            (0.09
            )
            $
            0.20Discontinued
                operations
            
            
            0.06
            
            
            0.41
            
            
            0.94
            
            
            0.34
            
            
            (0.38
            )Net
                income (loss) per share
            
            $
            (0.11
            )
            $
            0.28
            
            $
            0.87
            
            $
            0.25
            
            $
            (0.18
            )





(1)
                Includes $6.7 million representing the non-controlling interest of
                a joint
                venture partner. See Item 7, “Management’s Discussion and Analysis of
                Financial Condition and Results of Operations - Effect of Recent
                Financial
                Pronouncements.”


14




**Item
      7.**  **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**





In
      2007,
      Wilshire primarily engaged in the real estate business. During 2007, 2006 and
      2005, the Company also conducted activities related to winding up its oil and
      gas business which was sold in April 2004.





The
      real
      estate business consists of residential and commercial properties in Arizona,
      Florida, New Jersey and Texas. Within this portfolio of properties, certain
      properties have been designated as being held for sale and have been classified
      as discontinued operations. Discontinued operations contain properties that
      may
      have excellent cash flow or valuation characteristics but that may be positioned
      for sale at an optimal valuation or may not be in a geographic region that
      is
      currently being targeted by the Company. The following discussion takes an
      income statement approach and discusses the results of operations first for
      the
      properties comprising “continuing operations” and then discusses the
      discontinued operations.





The
      assets comprising Wilshire’s oil and gas business were sold in April 2004,
      effective March 1, 2004. Oil and gas operations for all periods presented in
      this report have been classified as discontinued operations.





The
      Company’s activities are reviewed and analyzed in the following discussion,
      which should be read in conjunction with the financial statements and notes
      contained in Item 8 of this Annual Report on Form 10-K. Certain statements
      in
      this discussion may constitute “forward-looking statements” within the meaning
      of the Private Securities Litigation Reform Act of 1995. Forward-looking
      statements reflect Wilshire’s current expectations regarding future results of
      operations, economic performance, financial condition and achievements of
      Wilshire, and do not relate strictly to historical or current facts. Wilshire
      has tried, wherever possible, to identify these forward looking statements
      by
      using words such as “believe,” “expect,” “anticipate,” “intend,” “plan,”
“estimate,” or words of similar meaning. Although Wilshire believes that the
      expectations reflected in such forward-looking statements are based on
      reasonable assumptions, such statements are subject to risks and uncertainties,
      which may cause the actual results to differ materially from those projected.
      Such factors include, but are not limited to the risks described in Item 1A
      of
      this Annual Report.





**Critical
      Accounting Policies**





Pursuant
      to the Securities and Exchange Commission (“SEC”) disclosure guidance for
“Critical Accounting Policies,” the SEC defines Critical Accounting Policies as
      those that require the application of management’s most difficult, subjective,
      or complex judgments, often because of the need to make estimates about the
      effects of matters that are inherently uncertain and may change in subsequent
      periods.





Wilshire’s
      discussion and analysis of its financial condition and results of operations
      is
      based upon Wilshire’s consolidated financial statements, which have been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires Wilshire
      to make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenues and expenses. Wilshire bases its estimates on historical
      experience and on various other assumptions that are believed to be reasonable
      under the circumstances, the results of which form the basis for making
      judgments about the carrying values of assets and liabilities that are not
      readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.





15





**Impairment
      of Property and Equipment**





On
      a
      periodic basis, management assesses whether there are any indicators that the
      value of its real estate properties may be impaired. A property’s value is
      considered impaired if management’s estimate of the aggregate future cash flows
      (undiscounted and without interest charges) to be generated by the property
      is
      less than the carrying value of the property. To the extent impairment has
      occurred, the loss shall be measured as the excess of the carrying amount of
      the
      property over the fair value of the property. Management does not believe at
      December 31, 2007 or 2006 that the value of any of its properties was
      impaired.





**Revenue
      Recognition**





Revenue
      from real estate properties is recognized during the period in which the
      premises are occupied and rent is due from tenants. For commercial properties,
      rental revenue is recognized on a straight-line basis over the term of the
      lease. The excess of rents recognized over amounts contractually due pursuant
      to
      the underlying leases are included in accounts receivable. For residential
      properties where lease agreements are almost exclusively for one-year terms,
      rental revenue is recognized in accordance with the contractual terms of the
      underlying leases. The Company follows a policy of aggressively pursuing its
      rental tenants to ensure timely payment of amounts due. When a tenant becomes
      30
      days in arrears on paying rent, the amount is written-off and turned over to
      a
      collection agency for action. Accordingly, no allowance for uncollectible
      accounts is maintained for the Company’s real estate tenants.





**Foreign
      Operations**





The
      assets and liabilities of Wilshire’s substantially liquidated Canadian
      subsidiary have been translated at year-end exchange rates. The related revenues
      and expenses have been translated at average annual exchange rates. Translation
      gains or losses are included in the Company’s results of
      operations.





As
      a
      result of the sale of the Canadian oil and gas assets in 2004, Wilshire provided
      for at December 31, 2005 and paid during 2006, $2.1 million of United States
      taxes. During 2005, the Company’s Canadian affiliate declared and paid to
      Wilshire dividends amounting to $11.5 million, resulting in the payment of
      $576,000 of Canadian taxes. See Note 1 “Foreign Operations” of the Notes to the
      Consolidated Financial Statements in Item 8 of this Annual Report on Form
      10-K.





**Stock-Based
      Compensation**





Wilshire
      followed the disclosure-only provisions of Statement of Financial Accounting
      Standards (“SFAS”) 123 and SFAS 148. In December 2004, the Financial Accounting
      Standards Board (“FASB”) issued SFAS No. 123R, “Accounting for Stock-Based
      Compensation.” The provisions of SFAS 123R were adopted commencing January 1,
      2006. SFAS 123R establishes standards for the accounting for transactions in
      which an entity exchanges its equity instruments for goods or services. This
      Statement focuses primarily on accounting for transactions in which an entity
      obtains employee services in share-based payment transactions. SFAS 123R
      requires that the fair value of such equity instruments be recognized as an
      expense in the historical financial statements as services are performed. Prior
      to SFAS 123R, only certain pro forma disclosures of fair value were required.
      The adoption of this new accounting pronouncement did not have a material impact
      on Wilshire’s consolidated financial statements with respect to previously
      granted equity compensation.





**Effects
      of Recent Accounting Pronouncements**




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements” (“SFAS 157”), which defines fair value, establishes a framework
      for measuring fair value in U.S. generally accepted accounting principles,
      and
      expands disclosures about fair value measurements. SFAS 157 applies under other
      accounting pronouncements that require or permit fair value measurements, the
      FASB having previously concluded in those accounting pronouncements that fair
      value is the relevant measurement attribute. SFAS 157 is effective for financial
      statements issued for fiscal years beginning after November 15, 2007, and
      interim periods within those fiscal years. The Company’s adoption of SFAS 157 in
      2008 is not expected to have a material impact on its consolidated financial
      statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
      for Financial Assets and Financial Liabilities, Including an Amendment of FASB
      Statement No. 115” (“SFAS 159”), which is effective for fiscal years
      beginning after November 15, 2007. SFAS 159 permits entities to measure
      eligible financial assets, financial liabilities and firm commitments at fair
      value, on an instrument-by-instrument basis, that are otherwise not permitted
      to
      be accounted for at fair value under other U.S. generally accepted accounting
      principles. The fair value measurement election is irrevocable and subsequent
      changes in fair value must be recorded in earnings. The Company’s adoption of
      SFAS 159 in 2008 is not expected to have a material impact on its consolidated
      financial statements.




16




In
      December 2007, the FASB issued SFAS No. 141 (R), “Business
      Combinations” (“SFAS 141(R)”) and SFAS No. 160, “Noncontrolling Interests
      in Consolidated Financial Statements” (“SFAS 160”). The standards are intended
      to improve, simplify, and converge internationally the accounting for business
      combinations and the reporting of noncontrolling interests in consolidated
      financial statements. SFAS 141(R) requires the acquiring entity in a business
      combination to recognize all (and only) the assets acquired and liabilities
      assumed in the transaction; establishes the acquisition-date fair value as
      the
      measurement objective for all assets acquired and liabilities assumed; and
      requires the acquirer to disclose to investors and other users all of the
      information they need to evaluate and understand the nature and financial effect
      of the business combination. SFAS 141(R) is effective for fiscal years, and
      interim periods within those fiscal years, beginning on or after
      December 15, 2008. SFAS 141(R) applies prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008.
      Earlier adoption is prohibited.




SFAS
      160
      is designed to improve the relevance, comparability, and transparency of
      financial information provided to investors by requiring all entities to report
      noncontrolling (minority) interests in subsidiaries in the same way—as equity in
      the consolidated financial statements. Moreover, SFAS 160 eliminates the
      diversity that currently exists in accounting for transactions between an entity
      and noncontrolling interests by requiring they be treated as equity
      transactions. SFAS 160 is effective for fiscal years, and interim periods within
      those fiscal years, beginning on or after December 15, 2008. Earlier
      adoption is prohibited. In addition, SFAS 160 shall be applied prospectively
      as
      of the beginning of the fiscal year in which it is initially applied, except
      for
      the presentation and disclosure requirements. The presentation and disclosure
      requirements shall be applied retrospectively for all periods presented. The
      Company does not have an outstanding noncontrolling interest in one or more
      subsidiaries and therefore, SFAS 160 is not applicable to the Company at this
      time.




17




**Results
      of Operations**





The
      following table presents the increases (decreases) in each major statement
      of
      income category for the year ended December 31, 2007 (“2007”) compared with the
      year ended December 31, 2006 (“2006”) and 2006 compared with the year ended
      December 31, 2005 (“2005”).





**Increase
                (Decrease) in Consolidated Statements****of
                Income Categories for the Periods:****2007
                v. 2006**
            
            **2006
                v. 2005****Amount
                ($)**
            
            **%**
            
            **Amount
                ($)**
            
            **%****Revenues**
            
            $
            586,000
            
            
            6.6
            %
            $
            648,000
            
            
            7.9
            %**Costs
                and expenses:**Operating
                expenses
            
            
            588,000
            
            
            11.1
            %
            
            567,000
            
            
            12.0
            %Depreciation
            
            
            (619,000
            )
            
            (31.2
            )%
            
            772,000
            
            
            63.5
            %General
                and administrative
            
            
            1,142,000
            
            
            46.1
            %
            
            (1,018,000
            )
            
            (29.1
            )%Total
                costs and expenses
            
            
            1,111,000
            
            
            
            
            
            321,000**Loss
                from Operations**
            
            
            (525,000
            )
            
            
            
            
            327,000**Other
                Income**Dividend
                and interest income
            
            
            (296,000
            )
            
            (35.4
            )%
            
            136,000
            
            
            19.4
            %Sale
                of marketable securities
            
            
            -
            
            
            -
            
            
            (134,000
            )
            
            (100.0
            )%Sale
                of real estate assets
            
            
            -
            
            
            -
            
            
            (675,000
            )
            
            (100.0
            )%Other
                income
            
            
            29,000
            
            
            414.3
            %
            
            (25,000
            )
            
            (78.1
            )%Interest
                expense
            
            
            (26,000
            )
            
            (1.4
            )%
            
            100,000
            
            
            (5.2
            )%**Loss
                before provision for taxes**
            
            
            (818,000
            )
            
            
            
            
            (271,000
            )**Income
                tax benefit**
            
            
            (492,000
            )
            
            59.3
            %
            
            190,000
            
            
            (18.6
            )%**Loss
                from continuing operations**
            
            
            (326,000
            )
            
            
            
            
            (461,000
            )Discontinued
                operations - real estateLoss
                from operations
            
            
            509,000
            
            
            (49.9
            )%
            
            (322,000
            )
            
            46.1
            %Gain
                from sales
            
            
            (3,545,000
            )
            
            (83.7
            )%
            
            (5,043,000
            )
            
            (54.4
            )%Discontinued
                operations - oil & gas
            
            
            
            
            
            
            
            
            -Loss
                from operations
            
            
            185,000
            
            
            160.9
            %
            
            1,220,000
            
            
            (110.4
            )%Gain
                from sale
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                income (loss)
            
            $
            (3,177,000
            )
            
            (139.0
            )%
            $
            (4,606,000
            )
            
            (66.8
            )%Basic
                earnings (loss) per share:Loss
                from continuing operations
            
            $
            (0.04
            )
            
            30.8
            %
            $
            (0.06
            )
            
            85.7
            %Income
                from discontinued operations
            
            
            (0.36
            )
            
            (85.7
            )%
            
            (0.53
            )
            
            (55.8
            )%Net
                income (loss) applicable to common stockholders
            
            $
            (0.40
            )
            
            (137.9
            )%
            $
            (0.59
            )
            
            (67.0
            )%Diluted
                earnings (loss) per share:Loss
                from continuing operations
            
            $
            (0.04
            )
            
            30.8
            %
            $
            (0.06
            )
            
            85.7
            %Income
                from discontinued operations
            
            
            (0.35
            )
            
            (85.4
            )%
            
            (0.53
            )
            
            (56.4
            )%Net
                income (loss) applicable to common stockholders
            
            $
            (0.39
            )
            
            (139.3
            )%
            $
            (0.59
            )
            
            (67.8
            )%


18





**Results
      of Operations - For the year ended December 31, 2007 as compared to the year
      ended December 31, 2006**





**Overview**





Net
      loss
      for the year ended December 31, 2007 was $892,000 or $0.11 per basic and diluted
      share, a decrease of $3,177,000 from net income of $2,285,000 or $0.28 per
      diluted share for the year ended December 31, 2006. Results of operations are
      shown as continuing and discontinued, with discontinued operations comprised
      of
      the results of operations from the Company’s oil and gas businesses, the results
      of the sale of the oil and gas properties, the operating results from real
      estate properties held for sale and the gain from real estate properties held
      for sale that were sold during the period.





**Continuing
      Operations:**





Loss
      from
      continuing operations was $1,368,000 during 2007 as compared to a loss of
      $1,042,000 during 2006. Results per diluted share from continuing operations
      were $(0.17) for the year ended December 31, 2007 as compared to $(0.13) per
      diluted share during 2006. The increased loss from continuing operations during
      2007 as compared to 2006 primarily relates to an increase in general
      and administrative expense of $1,142,000, which primarily relates to the legal
      costs associated with the matters described above in Item 3 - Legal Proceedings
      which amounted to $569,000 during 2007 and professional fees incurred in
      connection with negotiating merger agreements with potential bidders which
      amounted to $367,000, which was partially offset by a decrease in personnel
      related costs, and a decrease in depreciation expense of $619,000 related to
      the
      reclassification of Alpine Village Apartments, New Jersey, Summercreek
      Apartments, Texas and Wellington Estates, Texas, into continuing operations
      from
      discontinued operations during the second quarter of 2006.





Reported
      loss from continuing operations in 2007 compared with 2006 reflects an increased
      loss from operations (defined as revenues reduced by operating expenses,
      depreciation and general and administrative expenses), that was partially offset
      by the other factors described herein. These factors are discussed
      below.




**Segment
      Information**





Wilshire
      presently conducts business in the residential (including condominiums that
      it
      owns and rents) and commercial real estate segments. The following table sets
      forth comparative data for Wilshire’s real estate segments in continuing
      operations.


**Residential
                  Real Estate**
              
              **Commercial
                  Real Estate**
              
              **Total**
              
              **Total****Year
                  ended**
              
              **Increase**
              
              **Year
                  ended**
              
              **Increase**
              
              **Year
                  ended**
              
              **Increase****December
                  31,**
              
              **(Decrease)**
              
              **December
                  31,**
              
              **(Decrease)**
              
              **December
                  31,**
              
              **(Decrease)****2007**
              ****
              **2006**
              ****
              **$**
              ****
              **%**
              ****
              **2007**
              ****
              **2006**
              ****
              **$**
              ****
              **%**
              ****
              **2007**
              ****
              **2006**
              ****
              **$**
              ****
              **%**(In
                  000's of $)
              
              
              
              
              
              (In
                  000's of $)
              
              
              
              
              
              (In
                  000's of $)Total
                  revenues
              
              $
              7,765
              
              $
              7,387
              
              $
              378
              
              
              5.1
              %
              $
              1,655
              
              $
              1,447
              
              $
              208
              
              
              14.4
              %
              $
              9,420
              
              $
              8,834
              
              $
              586
              
              
              6.6
              %Operating
                  expenses
              
              
              5,174
              
              
              4,572
              
              
              602
              
              
              13.2
              %
              
              689
              
              
              703
              
              
              (14
              )
              
              -2.0
              %
              
              5,863
              
              
              5,275
              
              
              588
              
              
              11.1
              %Net
                  operating income
              
              $
              2,591
              
              $
              2,815
              
              $
              (224
              )
              
              -8.0
              %
              $
              966
              
              $
              744
              
              $
              222
              
              
              29.8
              %
              $
              3,557
              
              $
              3,559
              
              $
              (2
              )
              
              -0.1
              %





19





Reconciliation to consolidated loss from continuing
                operations:Net
                operating income
            
            $
            3,557
            
            $
            3,559Depreciation
                expense
            
            
            (1,368
            )
            
            (1,987
            )General
                and administrative expense
            
            
            (3,617
            )
            
            (2,475
            )Other
                income
            
            
            576
            
            
            843Interest
                expense
            
            
            (1,837
            )
            
            (1,811
            )Income
                tax benefit
            
            
            1,321
            
            
            829Loss
                from continuing operations
            
            $
            (1,368
            )
            $
            (1,042
            )


20





The
      above
      table details the comparative net operating income (“NOI”) for Wilshire’s
      residential and commercial real estate segments, and reconciles the combined
      NOI
      to consolidated loss from continuing operations. NOI is based on operating
      revenue and expenses directly associated with the operations of the real estate
      properties, but excludes depreciation and interest expense. Wilshire assesses
      and measures segment operating results based on NOI, which is a direct measure
      of each property’s contribution to the results of the Company before considering
      revenues from treasury activities, overhead expenses and other costs that are
      not directly related to the performance of a property. The Company believes
      NOI
      is a more descriptive measure of the Company’s performance than loss from
      continuing operations. NOI is not a measure of operating results or cash flow
      as
      measured by accounting principles generally accepted in the United States of
      America and is not necessarily indicative of cash available to fund cash needs
      and should not be considered an alternative to cash flows as a measure of
      liquidity.





**Residential
      Segment**





The
      residential segment is comprised of Sunrise Ridge Apartments and Van Buren
      Apartments, both in Arizona, Wellington Estates and Summercreek Apartments,
      both
      in Texas, and Alpine Village Apartments in New Jersey. During 2007 NOI decreased
      by $224,000 or 8.0% to $2,591,000 as a result of an increase in operating
      expenses of $602,000 or 13.2% to $5,174,000 which was partially offset by an
      increase in revenues of $378,000 or 5.1% to $7,765,000.





The
      increase in operating expenses was related to all residential properties and
      was
      comprised of increased upgrades and maintenance costs related to occupancy
      turnover and required repairs to the properties. In addition, during the first
      quarter of 2007 operating expense increased at our Texas properties resulting
      from severe weather damage requiring non-recurring repairs of approximately
      $60,000 and increased real estate taxes of $24,000.





The
      increase in revenues primarily relates to an overall increase in rental rates.
      Significant and successful efforts have been made at the Texas properties to
      increase occupancy and related revenues. The Arizona and New Jersey properties
      have maintained steady results by maintaining high occupancy levels and
      obtaining modest rental increases.





**Commercial
      Segment**





The
      commercial segment is comprised of Royal Mall Plaza in Mesa, Arizona and Tempe
      Corporate Center in Tempe, Arizona. During 2007 NOI increased $222,000 or 29.8%
      to $966,000 primarily due to an increase in revenues of $208,000 or 14.4% to
      $1,655,000 and a slight decrease in operating expenses of $14,000 or 2.0% to
      $689,000. The
      revenue increase was primarily attributable to a $141,000 increase in revenue
      at
      Tempe Corporate Center (Arizona) and a $67,000 increase at Royal Mall (Arizona).




**Revenues**





Years
                Ended December 31,
            
            Increase2007
            
            2006
            
            (Decrease)Sunrise
                Ridge, Arizona
            
            $
            2,870,000
            
            $
            2,737,000
            
            $
            133,000Van
                Buren Apartments, Arizona
            
            
            662,000
            
            
            620,000
            
            
            42,000Wellington
                Estates, Texas
            
            
            1,775,000
            
            
            1,736,000
            
            
            39,000Alpine
                Village, New Jersey
            
            
            1,327,000
            
            
            1,225,000
            
            
            102,000Summercreek,
                Texas
            
            
            1,131,000
            
            
            1,069,000
            
            
            62,000Sub-total
                - Residential Properties
            
            
            7,765,000
            
            
            7,387,000
            
            
            378,000Royal
                Mall Plaza, Arizona
            
            
            710,000
            
            
            643,000
            
            
            67,000Tempe
                Corporate Center, Arizona
            
            
            945,000
            
            
            804,000
            
            
            141,000Sub-total-
                Commercial Properties
            
            
            1,655,000
            
            
            1,447,000
            
            
            208,000Total
                Revenues
            
            $
            9,420,000
            
            $
            8,834,000
            
            $
            586,000


21




Revenues
      from rental properties amounted to $9,420,000 in 2007, an increase of $586,000
      or 6.6%, from $8,834,000 in 2006. The majority of the increase during 2007
      is
      attributable to Sunrise Ridge Apartments, which had an increase in rental
      revenues of $133,000 or 4.9%, Tempe Corporate Center which had an increase
      in
      rental income of $141,000 or 17.5%, and Alpine Village which experienced a
      $102,000 increase in rental revenue or 8.3%.





**Operating
      Expenses**





Years
                Ended December 31,
            
            Increase2007
            
            2006
            
            (Decrease)Sunrise
                Ridge, Arizona
            
            $
            1,627,000
            
            $
            1,465,000
            
            $
            162,000Van
                Buren Apartments, Arizona
            
            
            453,000
            
            
            443,000
            
            
            10,000Wellington
                Estates, Texas
            
            
            1,303,000
            
            
            1,151,000
            
            
            152,000Alpine
                Village, New Jersey
            
            
            914,000
            
            
            718,000
            
            
            196,000Summercreek,
                Texas
            
            
            877,000
            
            
            795,000
            
            
            82,000Sub-total
                - Residential Properties
            
            
            5,174,000
            
            
            4,572,000
            
            
            602,000Royal
                Mall Plaza, Arizona
            
            
            300,000
            
            
            313,000
            
            
            (13,000
            )Tempe
                Corporate Center, Arizona
            
            
            389,000
            
            
            390,000
            
            
            (1,000
            )Sub-total-
                Commercial Properties
            
            
            689,000
            
            
            703,000
            
            
            (14,000
            )Total
                Operating Expenses
            
            $
            5,863,000
            
            $
            5,275,000
            
            $
            588,000





Operating
      expenses were $5,863,000 in 2007, which is an increase of $588,000, or 11.1%
      as
      compared to $5,275,000 during 2006. The increase for 2007 was
      primarily related to all residential properties and was comprised of increased
      upgrades and maintenance costs related to occupancy turnover and required
      repairs to the properties. In addition, during the first quarter of 2007
      operating expense increased at our Texas properties resulting from severe
      weather damage requiring non-recurring repairs of approximately $60,000 and
      increased real estate taxes of $24,000.





Depreciation
      expense amounted to $1,368,000 in 2007, a decrease of $619,000 or 31.2% as
      compared to $1,987,000 during 2006. The decrease primarily relates to the
      reclassification in 2006 of Alpine Village Apartments, New Jersey, Summercreek
      Apartments, Texas, and Wellington Estates, Texas, into continuing operations
      from discontinued operations. Additionally, during 2006 the Company invested
      in
      capital expenditures throughout its network of residential and commercial
      properties. These expenditures were undertaken as part of a program to
      reposition and strengthen the Company’s properties within their targeted
      markets. Depreciation expense is not included in the operating expenses shown
      in
      the preceding table and discussion.




General
      and administrative expense increased $1,142,000, or 46.1%, to $3,617,000 in
      2007
      as compared to $2,475,000 during 2006. This increase was primarily the result
      of the
      legal
      costs associated with the matters described above in Item 3 - Legal Proceedings
      which amounted to $569,000 and professional fees associated with the
      contemplated sale or merger of the Company which amounted to $367,000, which
      was
      partially offset by a decrease in personnel related costs .





Other
      income decreased by $267,000 to $576,000 in 2007 as compared to $843,000 in
      2006. The decrease primarily relates to a
      decline
      in interest and dividend income as a result of the payment of a special
      distribution on June 29, 2006 to stockholders of $3.00 per share or $23.7
      million, which was partially offset by increased interest rates during 2007.





Interest
      expense increased to $1,837,000 in 2007 from $1,811,000 during 2006. The
      increase primarily relates to the amortization of deferred financing costs
      associated with the mortgages on the properties.


22




The
      provision for income taxes amounted to a tax benefit of $1,321,000 in 2007
      compared to a tax benefit of $829,000 during 2006. The change in the provision
      for income taxes is related to the level of loss from continuing operations
      in
      2007 compared to 2006 and
      the
      change in the mix between taxable and tax-exempt income.





**Discontinued
      Operations, Net of Taxes:**





**Real
      Estate**





Income
      from discontinued operations amounted to after tax income of $176,000 during
      2007 and $3,212,000 during 2006. The
      income during the 2007 period reflects the sale of six condominium units at
      Jefferson Gardens and the sale of the Lake Hopatcong land resulting in gross
      proceeds of $1.8 million and after tax gain of $699,000.





During
      2006, the Company sold all its condominium units at Galsworthy Arms in Long
      Branch, New Jersey, for gross proceeds of $7,197,000 which resulted in an
      after-tax gain of $2,975,000, and its triple net lease on a bank branch in
      Rutherford, New Jersey, for gross proceeds of $1,603,000 which resulted in
      an
      after-tax gain of $550,000. The Company also sold its Twelve Oaks apartment
      complex in Riverdale, Georgia, for gross proceeds of $2,180,000, which resulted
      in an after-tax gain of $444,000. Additionally, the Company sold the Wilshire
      Grand Hotel during 2006. The Wilshire Grand Hotel was owned by WO Grand Hotel,
      L.L.C., which is 50% owned by the Company and 50% owned by Proud Three, L.L.C.
      The hotel was sold for gross proceeds of $12.8 million, including adjustments
      to
      the purchase price for fees extending the closing date. The sale resulted in
      an
      after-tax gain to the Company of $264,000 and approximately $6.0 million of
      proceeds from the transaction, including the repayment of debt.





The
      loss
      on operating discontinued real estate properties decreased to $512,000 during
      2007 from $1,021,000 during 2006. The decreased loss is primarily attributable
      to the operating losses at the Company’s office building in Perth Amboy, New
      Jersey and Jefferson Gardens Condominiums where many units were left vacant
      in
      2006 in anticipation of their sale to private investors.





**Oil
      and Gas**





The
      Company announced in July 2003 its intention to sell its oil and gas businesses.
      The Canadian oil and gas business was sold in April 2004 to Addison Energy
      Inc.,
      a wholly owned subsidiary of Exco Resources, Inc., for $15 million in gross
      proceeds. The United States oil and gas business was sold in April 2004 to
      Crow
      Creek Energy LLC, a Tulsa, Oklahoma based privately held portfolio company
      of
      Natural Gas Partners of Dallas, Texas, for $13.3 million in gross proceeds. During
      2007, the Company recognized after-tax income from the wind down of its former
      oil and gas business, of $300,000 as compared to $115,000 during 2006. The
      net
      income from the wind down of the oil and gas business during 2007 relates to
      a
      foreign currency gain and interest income during the period. The income in
      2006
      is a result
      of an over provision of withholding taxes related to cash maintained in Canada.


23




**Results
      of Operations - For the year ended December 31, 2006 as compared to the year
      ended December 31, 2005**





**Overview**





Net
      income for the year ended December 31, 2006 was $2,285,000 or $0.28 per diluted
      share, a decrease of $4,606,000 from net income of $6,891,000 or $0.87 per
      diluted share for the year ended December 31, 2005. Results of operations are
      shown as continuing and discontinued, with discontinued operations comprised
      of
      the results of operations from the Company’s oil and gas businesses, the results
      of the sale of the oil and gas properties, the operating results from real
      estate properties held for sale and the gain from real estate properties held
      for sale that were sold during the period.





**Continuing
      Operations:**





Loss
      from
      continuing operations was $1,042,000 during 2006 as compared to a loss of
      $581,000 during 2005. Results per diluted share from continuing operations
      were
      $(0.13) for the year ended December 31, 2006 as compared to $(0.07) per diluted
      share during 2005. The increased loss from continuing operations during 2006
      as
      compared to 2005 primarily relates to an increase in depreciation expense of
      $772,000 related to the reclassification of Alpine Village Apartments, New
      Jersey, Summercreek Apartments, Texas, and Wellington Estates, Texas, into
      continuing operations. Additionally, during 2005 the Company recognized a gain
      of $675,000 as a result of a settlement from a mortgage receivable. This was
      offset by decreased General and Administrative expenses of approximately
      $1,018,000 during 2006. This decrease was primarily the result of a $1,029,000
      expense related to the termination of a consulting contract and the exercise
      of
      stock options by the former President of the Company during 2005.





Reported
      loss from continuing operations in 2006 compared with 2005 reflects a decreased
      loss from operations (defined as revenues reduced by operating expenses,
      depreciation and general and administrative expenses), that was partially offset
      by higher depreciation expense and the other factors described herein. These
      factors are discussed below.





**Segment
      Information**





Wilshire
      presently conducts business in the residential (including condominiums that
      it
      owns and rents) and commercial real estate segments. The following table sets
      forth comparative data for Wilshire’s real estate segments in continuing
      operations.


**Residential
                      Real Estate**
                  
                  **Commercial
                      Real Estate**
                  
                  **Total**
                  
                  **Total****Year
                      ended**
                  
                  **Increase**
                  
                  **Year
                      ended**
                  
                  **Increase**
                  
                  **Year
                      ended**
                  
                  **Increase****December
                      31,**
                  
                  **(Decrease)**
                  
                  **December
                      31,**
                  
                  **(Decrease)**
                  
                  **December
                      31,**
                  
                  **(Decrease)****2006**
                  
                  **2005**
                  
                  $
                  
                  %
                  
                  **2006**
                  
                  **2005**
                  
                  $
                  
                  %
                  
                  **2006**
                  
                  **2005**
                  
                  $
                  
                  %(In
                      000's of $)
                  
                  
                  
                  
                  
                  (In
                      000's of $)
                  
                  
                  
                  
                  
                  (In
                      000's of $)Rental
                      income
                  
                  $
                  7,384
                  
                  $
                  6,902
                  
                  $
                  482
                  
                  
                  7.0
                  %
                  $
                  1,447
                  
                  $
                  1,279
                  
                  $
                  168
                  
                  
                  13.1
                  %
                  $
                  8,831
                  
                  $
                  8,181
                  
                  $
                  650
                  
                  
                  7.9
                  %Vending
                      income
                  
                  
                  2
                  
                  
                  5
                  
                  
                  (3
                  )
                  
                  (60.0
                  )%
                  
                  0
                  
                  
                  0
                  
                  
                  0
                  
                  
                  0.0
                  %
                  
                  2
                  
                  
                  5
                  
                  
                  (3
                  )
                  
                  (60.0
                  )%Other
                  
                  
                  1
                  
                  
                  0
                  
                  
                  1
                  
                  
                  0.0
                  %
                  
                  0
                  
                  
                  0
                  
                  
                  0
                  
                  
                  0.0
                  %
                  
                  1
                  
                  
                  0
                  
                  
                  1
                  
                  
                  0.0
                  %Total
                      revenues
                  
                  
                  7,387
                  
                  
                  6,907
                  
                  
                  480
                  
                  
                  6.9
                  %
                  
                  1,447
                  
                  
                  1,279
                  
                  
                  168
                  
                  
                  13.1
                  %
                  
                  8,834
                  
                  
                  8,186
                  
                  
                  648
                  
                  
                  7.9
                  %Operating
                      expenses
                  
                  
                  4,572
                  
                  
                  4,143
                  
                  
                  429
                  
                  
                  10.4
                  %
                  
                  703
                  
                  
                  565
                  
                  
                  138
                  
                  
                  24.4
                  %
                  
                  5,275
                  
                  
                  4,708
                  
                  
                  567
                  
                  
                  12.0
                  %Net
                      operating income
                  
                  $
                  2,815
                  
                  $
                  2,764
                  
                  $
                  51
                  
                  
                  1.8
                  %
                  $
                  744
                  
                  $
                  714
                  
                  $
                  30
                  
                  
                  4.2
                  %
                  $
                  3,559
                  
                  $
                  3,478
                  
                  $
                  81
                  
                  
                  2.3
                  %
 24




Reconciliation to consolidated loss from continuing
                operations:Net
                operating income
            
            $
            3,559
            
            $
            3,478Depreciation
                expense
            
            
            (1,987
            )
            
            (1,215
            )General
                and administrative expense
            
            
            (2,475
            )
            
            (3,493
            )Other
                income
            
            
            843
            
            
            1,541Interest
                expense
            
            
            (1,811
            )
            
            (1,911
            )Income
                tax benefit
            
            
            829
            
            
            1,019Loss
                from continuing operations
            
            $
            (1,042
            )
            $
            (581
            )


25





The
      above
      table details the comparative net operating income (“NOI”) for Wilshire’s
      residential and commercial real estate segments, and reconciles the combined
      NOI
      to consolidated income (loss) from continuing operations. NOI is based on
      operating revenue and expenses directly associated with the operations of the
      real estate properties, but excludes depreciation and interest expense. Wilshire
      assesses and measures segment operating results based on NOI, which is a direct
      measure of each property’s contribution to the results of the Company before
      considering revenues from treasury activities, overhead expenses and other
      costs
      that are not directly related to the performance of a property. The Company
      believes NOI is a more descriptive measure of the Company’s performance than
      income (loss) from continuing operations. NOI is not a measure of operating
      results or cash flow as measured by accounting principles generally accepted
      in
      the United States of America and is not necessarily indicative of cash available
      to fund cash needs and should not be considered an alternative to cash flows
      as
      a measure of liquidity.





**Residential
      Segment**





The
      residential segment is comprised of Sunrise Ridge Apartments and Van Buren
      Apartments, both in Arizona, Wellington Estates and Summercreek Apartments,
      both
      in Texas, and Alpine Village Apartments in New Jersey. During 2006 NOI increased
      modestly by $51,000 or 1.8% to $2,815,000 based upon a revenue increase of
      $480,000 or 6.9% to $7,387,000 which was primarily offset by an operating
      expense increase of $429,000 or 10.4% to $4,572,000.





The
      increase in revenues was primarily attributable to the Sunrise Ridge Apartments,
      Wellington Estates and Alpine Village Apartments, which have generally
      experienced an increase in occupancy and rental rates during 2006. The increase
      in operating expenses is reflective of increased labor costs and increased
      marketing and maintenance expenses to attract new tenants. In addition, the
      properties have experienced increased utility costs.





**Commercial
      Segment**





The
      commercial segment is comprised of Royal Mall Plaza in Mesa, Arizona and Tempe
      Corporate Center in Tempe, Arizona. During 2006 NOI increased $30,000 or 4.2%
      to
      $744,000 due to an increase in revenues of $168,000 or 13.1% to $1,447,000
      and
      an increase in operating expenses of $138,000 or 24.4% to $703,000.




The
      revenue increase was related to increased occupancy and rents at Tempe Corporate
      Center. The Royal Mall Plaza is a mixed use commercial/retail property with
      an
      emphasis on medical services tenants. This property has experienced difficulty
      attracting tenants as many medical services entities prefer to buy condominiums
      or buildings versus renting. The Company is evaluating investing in refurbishing
      the property, including painting and potential exterior renovations, and has
      retained a leasing agent to seek to attract new tenants to this
      property.





The
      increase in operating expenses is mainly related to higher utility costs (water,
      sewer, electric).





**Revenues**





Years
                Ended December 31,
            
            Increase2006
            
            2005
            
            (Decrease)Sunrise
                Ridge, Arizona
            
            $
            2,737,000
            
            $
            2,435,000
            
            $
            302,000Van
                Buren Apartments, Arizona
            
            
            620,000
            
            
            584,000
            
            
            36,000Wellington
                Estates, Texas
            
            
            1,736,000
            
            
            1,639,000
            
            
            97,000Alpine
                Village, New Jersey
            
            
            1,225,000
            
            
            1,163,000
            
            
            62,000Summercreek,
                Texas
            
            
            1,069,000
            
            
            1,086,000
            
            
            (17,000
            )Sub-total
                - Residential Properties
            
            
            7,387,000
            
            
            6,907,000
            
            
            480,000Royal
                Mall Plaza, Arizona
            
            
            643,000
            
            
            606,000
            
            
            37,000Tempe
                Corporate Center, Arizona
            
            
            804,000
            
            
            673,000
            
            
            131,000Sub-total-
                Commercial Properties
            
            
            1,447,000
            
            
            1,279,000
            
            
            168,000Total
                Revenues
            
            $
            8,834,000
            
            $
            8,186,000
            
            $
            648,000


26




Revenues
      from rental properties amounted to $8,834,000 in 2006, an increase of $648,000
      or 7.9%, from $8,186,000 in 2005. The majority of the increase during 2006
      is
      attributable to Sunrise Ridge Apartments, which had an increase in rental
      revenues of $302,000 or 12.4%. Additionally, Tempe Corporate Center experienced
      an increase in rental income of $131,000 or 19.5%, and Wellington Estates
      experienced a $97,000 increase in rental revenue or 5.9%. The Texas apartment
      complexes were adversely affected by the aftermath of Hurricane Katrina during
      the 4 th quarter
      of 2005. However, as a result of marketing efforts, certain rent concessions
      and
      changes in the local economy, we have experienced increased rental revenue
      during the second half of 2006 and into 2007 at our Texas
      properties.





**Operating
      Expenses**





Years
                Ended December 31,2006
            
            2005
            
            IncreaseSunrise
                Ridge, Arizona
            
            $
            1,465,000
            
            $
            1,277,000
            
            $
            188,000Van
                Buren Apartments, Arizona
            
            
            443,000
            
            
            387,000
            
            
            56,000Wellington
                Estates, Texas
            
            
            1,151,000
            
            
            1,105,000
            
            
            46,000Alpine
                Village, New Jersey
            
            
            718,000
            
            
            633,000
            
            
            85,000Summercreek,
                Texas
            
            
            795,000
            
            
            741,000
            
            
            54,000Sub-total
                - Residential Properties
            
            
            4,572,000
            
            
            4,143,000
            
            
            429,000Royal
                Mall Plaza, Arizona
            
            
            313,000
            
            
            224,000
            
            
            89,000Tempe
                Corporate Center, Arizona
            
            
            390,000
            
            
            341,000
            
            
            49,000Sub-total-
                Commercial Properties
            
            
            703,000
            
            
            565,000
            
            
            138,000Total
                Operating Expenses
            
            $
            5,275,000
            
            $
            4,708,000
            
            $
            567,000





Operating
      expenses were $5,275,000 in 2006, which is an increase of $567,000, or 12.0%
      as
      compared to $4,708,000 during 2005. The increase for 2006 is primarily
      attributable to higher costs that are sensitive to the warm weather experienced
      in our market areas, such as water, electric and landscaping and to increased
      maintenance costs related to new tenants and turnover of units.





Depreciation
      expense amounted to $1,987,000 in 2006, an increase of $772,000 or 63.5% as
      compared to $1,215,000 during 2005. The increase primarily relates to the
      reclassification of Alpine Village Apartments, New Jersey, Summercreek
      Apartments, Texas, and Wellington Estates, Texas, into continuing operations
      from discontinued operations. Additionally, during 2006 the Company invested
      in
      capital expenditures throughout its network of residential and commercial
      properties. These expenditures were undertaken as part of a program to
      reposition and strengthen the Company’s properties within their targeted
      markets. Depreciation expense is not included in the operating expenses shown
      in
      the preceding table and discussion.




General
      and administrative expense decreased $1,018,000, or 29.1%, to $2,475,000 in
      2006
      as compared to $3,493,000 during 2005. This decrease was primarily the result
      of
      a $1,029,000 expense related to the termination of a consulting contract and
      the
      exercise of stock options by the former President of the Company during
      2005.





Other
      income decreased by $698,000 to $843,000 in 2006 as compared to $1,541,000
      in
      2005. The decrease primarily relates to $134,000 of gains from the sale of
      marketable securities in 2005 and $675,000 of gain from the settlement of a
      mortgage receivable during 2005.





Interest
      expense decreased to $1,811,000 in 2006 from $1,911,000 during 2005. The
      decrease primarily relates to the retirement of debt related to the sale of
      properties during 2006.


27




The
      provision for income taxes amounted to a tax benefit of $829,000 in 2006
      compared to a tax benefit of $1,019,000 during 2005. The change in the provision
      for income taxes is related to the level of loss from continuing operations
      in
      2006 compared to 2005 and state income tax carrybacks which were recorded in
      2005.





**Discontinued
      Operations, Net of Taxes:**





**Real
      Estate**





Income
      from discontinued operations amounted to after tax income of $3,212,000 during
      2006 and $8,577,000 during 2005. The decreased income reflects a decreased
      level
      of sales of properties in 2006 as compared to 2005.





During
      2006, the Company sold all its condominium units at Galsworthy Arms in Long
      Branch, New Jersey, for gross proceeds of $7,197,000 which resulted in an
      after-tax gain of $2,975,000, and its triple net lease on a bank branch in
      Rutherford, New Jersey, for gross proceeds of $1,603,000 which resulted in
      an
      after-tax gain of $550,000. The Company also sold its Twelve Oaks apartment
      complex in Riverdale, Georgia, for gross proceeds of $2,180,000, which resulted
      in an after-tax gain of $444,000. Additionally, the Company sold the Wilshire
      Grand Hotel during 2006. The Wilshire Grand Hotel was owned by WO Grand Hotel,
      L.L.C., which is 50% owned by the Company and 50% owned by Proud Three, L.L.C.
      The hotel was sold for gross proceeds of $12.8 million, including adjustments
      to
      the purchase price for fees extending the closing date. The sale resulted in
      an
      after-tax gain to the Company of $264,000 and approximately $6.0 million of
      proceeds from the transaction, including the repayment of debt.





During
      2005, the Company sold the Biltmore Club Apartments in Phoenix, Arizona, for
      gross proceeds of $20,956,000 that resulted in an after-tax gain of $8,847,000.
      In addition, in 2005, the Company sold three units (2 1-bedroom units and 1
      2-bedroom units) at Galsworthy Arms Condominiums subsequent to significant
      interior upgrades and two units (1 1-bedroom unit and 1 2-bedroom unit) at
      Jefferson Gardens Condominiums for total gross proceeds of $1,094,000, resulting
      in an after-tax gain of $429,000.





The
      loss
      on operating discontinued real estate properties increased to $1,021,000 during
      2006 from $699,000 during 2005. The increased loss is primarily attributable
      to
      the sales of Biltmore Club Apartments, Galsworthy Arms and the Wilshire Grand
      Hotel during 2006, all of which contributed income to discontinued operations
      during 2005. Additionally, the Company recorded operating losses at its office
      building in Perth Amboy, New Jersey and Jefferson Gardens Condominiums where
      many units were left vacant in 2006 in anticipation of their sale to private
      investors, while Tamarac Office Complex generated income during
      2006.





**Oil
      and Gas**





The
      Company announced in July 2003 its intention to sell its oil and gas businesses.
      The Canadian oil and gas business was sold in April 2004 to Addison Energy
      Inc.,
      a wholly owned subsidiary of Exco Resources, Inc., for $15 million in gross
      proceeds. The United States oil and gas business was sold in April 2004 to
      Crow
      Creek Energy LLC, a Tulsa, Oklahoma based privately held portfolio company
      of
      Natural Gas Partners of Dallas, Texas, for $13.3 million in gross proceeds.
      During 2006, the Company recognized after-tax income of $115,000 as a result
      of
      an over provision of withholding taxes related to cash maintained in Canada.
      The
      net loss from operating the oil and gas business in 2005 reflects the continuing
      reconciliation process between the Company and its partners for periods prior
      to
      the effective date of the sale, adjustments to the accruals recorded in prior
      years for the liquidation of the oil and gas business and a $449,000 foreign
      currency translation loss related to the Company’s Canadian oil and gas
      business.





**Effects
      of Inflation**





The
      effects of inflation on the Company’s financial condition are not considered to
      be material by management.




**Liquidity
      and Capital Resources**





At
      December 31, 2007 and 2006, the Company had working capital, including
      restricted cash, of $14.6 and $15.0 million, respectively.





The
      Company has $14.5 million of cash and cash equivalents, including restricted
      cash and short-term marketable debt and equity securities at December 31, 2007.
      This balance is comprised of working capital accounts for its real estate
      properties and corporate needs, short-term investments in government and
      corporate securities, including auction rate debt securities, and money market
      funds and marketable equity securities. In the short-term, the Company will
      continue to invest these funds in high quality investments that are consistent
      with its investment policy.




28


Regarding
      the investments in short-term marketable debt securities, the Company invests
      its available funds in high quality investments that are consistent with the
      Company’s investment policy which includes the following objectives: a) To
      maintain liquidity which is sufficient to meet any reasonably forecasted cash
      requirements; b) To preserve principal through investment in products and
      entities that are consistent with the Company’s risk tolerance; and c) To
      maximize income consistent with the Company’s liquidity and risk tolerance.
      Consistent with this investment policy, the Company only invests in approved
      securities such as obligations of the U.S. Treasury, the U.S. Government and
      agencies with obligations guaranteed by the U.S. Government and highly rated
      municipal and corporate issuers. As it relates to the Company's investment
      in
      marketable equity securities, the Company has invested in a publicly traded
      real
      estate company. The Company generally does not invest in marketable equity
      securities and such current investment is considered non-recurring.




The
      Company holds investments in certain marketable equity securities and short-term
      marketable debt instruments, including auction rate securities with interest
      rate resets ranging from every seven days to every 45 days. Consistent
      with our policy, all ARS investments were
      rated at the time of purchase and are still currently rated AAA or the
      equivalent thereto.  Beginning
      in February 2008, auctions for the resale of such securities have ceased to
      reliably support the liquidity of these securities. We expect to continue to
      receive interest according to the st ated
      terms of the investments, including above market interest rates related to
      the
      auction failures. Although such loss of liquidity will most likely be short-term
      in nature as a secondary market for the securities emerges or successful
      auctions resume, we cannot be certain that liquidity will be restored in the
      foreseeable future and we may not be able to access cash by selling these
      securities for which there is insufficient demand without a loss of principal
      until a future auction for these investments is successful, a secondary market
      emerges, they are redeemed by their issuer or they mature. If liquidity is
      not
      reestablished in the short term, we may be required to reclassify these
      investments as long-term assets based on the nominal maturity date of the
      underlying securities.





The
      Company continues to explore opportunities to invest in its real estate
      properties to enhance value and is investigating corporate and real estate
      property transactions, both as buyer and seller, as they arise. The Company
      is
      actively exploring opportunities to sell or merge its business. The timing
      of
      such transactions, if any, will depend upon, among other criteria, economic
      conditions and the favorable evaluation of specific opportunities presented
      to
      the Company. Management considers its liquidity position adequate to fulfill
      the
      Company’s current business plans.





Net
      cash
      used in operating activities amounted to $1.4 million in 2007, $11.4 million
      in
      2006 and $2.3 million in 2005. The 2007 use of net cash primarily relates to
      gains on sales of real estate assets of $1.1 million, a net loss of $0.9 million
      and an increase in income taxes receivable of $1.0 million partially offset
      by
      depreciation expense of $1.4 million. The 2006 use of net cash primarily relates
      to gains on sales of real estate assets of $7.0 million and a deferred tax
      benefit of $7.0 million partly offset by net income of $2.3 million and a
      depreciation expense of $2.0 million. The 2005 use of net cash primarily related
      to gains on sales of real estate assets of $16.0 million, partly offset by
      net
      income of $6.9 million and a deferred income tax provision of $5.6
      million.





Net
      cash
      (used in) provided by investing activities amounted to $(2.8) million in 2007,
      $48.0 million in 2006 and $2.3 million in 2005. The cash used in investing
      activities during 2007 is due to an increase in short-term marketable securities
      of $3.6 million and capital expenditures related to our real estate properties
      of $0.9 million partially offset by proceeds from the sales of real estate
      assets of $1.7 million.





The
      cash
      provided by investing activities during 2006 is due to the proceeds from the
      sale of real estate of $22.7 million, a decrease in short-term marketable
      securities of $17.7 million and a decrease in restricted cash of $10.5 million.
      This was partially offset by capital expenditures of $3.5 million. The decrease
      in marketable securities and restricted cash related to the special cash
      dividend paid on June 29, 2006.





The
      cash
      provided by investing activities in 2005 is due to $21.7 million of proceeds
      from the sale of real estate and real estate related assets, partly offset
      by a
      $10.9 million increase in short-term marketable debt securities, $2.2 million
      of
      capital expenditures related to our real estate properties and a $6.7 million
      increase in restricted cash. The increase in restricted cash is related to
      an
      IRS Section 1031 exchange that the Company entered into with the proceeds from
      the sale of the Biltmore Club Apartments less the reversal of the restricted
      cash related to the sale of land at Schalk Station in 2004 which was
      subsequently released during the second quarter of 2006 since the Section 1031
      exchange was not consummated.





Net
      cash
      used in financing activities amounted to $0.6 million in 2007, $33.0 million
      in
      2006 and $13.8 million in 2005. The 2007 use of cash reflects the normal annual
      amortization of long-term debt from monthly debt service payments. The 2006
      use
      of cash reflects the payment of the special dividend of $23.7 million paid
      to
      stockholders on June 29, 2006, a cash distribution of $5.4 million paid to
      the
      non-controlling joint venture partner related to the sale of the Wilshire Grand
      Hotel and the repayment of long-term debt of $4.2 million as a result of sales
      of real estate properties and normal amortization of long-term debt from monthly
      debt service payments. The 2005 use of cash reflects the repayment of long-term
      debt due to the sales of real estate properties and the oil and gas assets
      and
      normal annual amortization of long-term debt from monthly debt service
      payments.




29




The
      Company does not have any sources of working capital outside of its business
      operations. It does not have any bank lines of credit or contingently available
      sources of funds. The Company believes it has adequate capital resources to
      fund
      its operations for the foreseeable future.





The
      Company is committed to investing in its properties to maintain their
      competitiveness within their markets and for the purposes of upgrading and
      repositioning in more upscale markets. The following table sets forth the
      amounts of capital expenditures made in each property within the past three
      years, exclusive of those properties which were sold.




**Name
                of property**
            
            **Years
                ended December 31,****2007**
            
            **2006**
            
            **2005**Residential
                continuing operations:Sunrise
                Ridge
            
            $
            220,000
            
            $
            223,000
            
            $
            294,000Van
                Buren
            
            
            9,000
            
            
            94,000
            
            
            102,000Wellington
            
            
            50,000
            
            
            174,000
            
            
            156,000Alpine
            
            
            12,000
            
            
            175,000
            
            
            67,000Summercreek
            
            
            21,000
            
            
            117,000
            
            
            54,000Commercial
                continuing operations:Royal
                Mall Plaza
            
            
            100,000
            
            
            242,000
            
            
            59,000Tempe
                Corporate (a)
            
            
            32,000
            
            
            305,000
            
            
            173,000Discontinued
                operations - residential:Biltmore
                Club (b)
            
            
            -
            
            
            -
            
            
            132,000Galsworthy
                Arms (c)
            
            
            -
            
            
            -
            
            
            35,000Jefferson
                Gardens
            
            
            4,000
            
            
            2,000
            
            
            14,000Twelve
                Oaks (e)
            
            
            -
            
            
            -
            
            
            92,000Alpine
                Land (f)
            
            
            355,000
            
            
            -
            
            
            -Discontinued
                operations - commercial:Amboy
                Towers
            
            
            60,000
            
            
            893,000
            
            
            140,000Tamarac
                Office Plaza
            
            
            21,000
            
            
            23,000
            
            
            14,000Wilshire
                Grand Hotel & Banquet Facility (d)
            
            
            -
            
            
            -
            
            
            5,486,000Total
                capital expenditures
            
            $
            884,000
            
            $
            2,248,000
            
            $
            6,818,000




(a)
      2005
      includes commissions paid to leasing agents related to multiple year
      leases.




(b)
      The
      Biltmore Club Apartments was sold on December 23, 2005.




(c)
      The
      Galsworthy Arms condominiums were sold in the first quarter of
      2006.




(d)
      The
      Wilshire Grand Hotel & Banquet Facility was sold on May 4,
      2006.




(e)
      Twelve Oaks apartment complex was sold in September 2006.





(f)
      Alpine Land represents land and a residential building bought in
      2007.




On
      June
      3, 2004, the Company’s Board of Directors approved the repurchase of up to
      1,000,000 shares of its common stock on the open market, in privately negotiated
      transactions or otherwise. This purchasing activity may occur from time to
      time,
      in one or more transactions. At December 31, 2007, the Company had purchased
      138,231 shares at an aggregate cost of $1,017,000 under this
      program.




30




In
      February 2005, the Company concluded negotiations with the city of Perth Amboy,
      New Jersey concerning the redevelopment zone status of its office building
      (Amboy Towers). The City agreed to name Wilshire as the redeveloper for Amboy
      Towers and the Company agreed to invest at least $750,000 in capital
      improvements in the building over the next 18 months (following February 2005),
      which the Company has complied with during 2006.





During
      March 2005, Wilshire negotiated a long-term lease for new offices in Newark,
      New
      Jersey. The lease is for a 65 month term with two renewal options each for
      a
      five-year term and covers 4,502 rentable square feet at a base rate of $29.00
      per square foot.





In
      January 2008, the Company closed on the sale of a 1 bedroom condominium at
      Jefferson Gardens, New Jersey for gross proceeds of approximately $150,000.
      After payments of closing costs and providing for taxes, the Company expects
      to
      realize a gain during the first quarter 2008 of approximately $62,000 from
      this
      sale.




See
      Item
      7A of this Annual Report for information regarding certain long-term
      commitments.





31


**Item
      7A.****Quantitative
      and Qualitative Disclosures About Market Risk**





The
      Company has an investment in the common stock of one publicly traded real estate
      company in the United States in which the Company has exposure to the risk
      of
      market value fluctuation. The Company accounts for this investment as securities
      that are available for sale and marks them to market at each period-end. The
      change in value in the investment, net of tax impact, is reported in Accumulated
      Other Comprehensive Income (Loss), a separate component of stockholders’ equity.
      The Company also evaluates its investment to determine if it has suffered a
      decline in market value that is permanent, which would require a charge to
      the
      Statement of Operations. At December 31, 2007, in the opinion of management,
      there has been no permanent decline in value in the Company’s holdings of equity
      securities.





After
      the
      sale of its Canadian oil and gas assets, the Company has cash and cash
      equivalents at its Canadian subsidiary whose value is exposed to fluctuations
      in
      the value of the Canadian dollar / U.S. dollar exchange rate. The change in
      value in the Canadian dollar denominated accounts is reported in the Statement
      of Operations. The Company anticipates that it will repatriate all assets,
      net
      of liabilities, of its Canadian subsidiary during 2008.





Long-term
      debt, consisting solely of mortgage notes payable, totaled the following as
      of
      December 31, 2007 and December 31, 2006 –




2007
            
            2006Total
                debt
            
            
            28,952,000
            
            
            29,618,000Less-current
                portion (1)
            
            
            518,000
            
            
            535,000Long
                term portion (2)
            
            $
            28,434,000
            
            $
            29,083,000





(1)
            Includes
                debt associated with discontinued operations of $14,000 in 2007 and
                $58,000 in 2006.(2)
            Includes
                debt associated with discontinued operations of $559,000 in 2007
                and
                $699,000 in 2006.





The
      aggregate maturities of the long-term debt in each of the five years subsequent
      to December 31, 2007 and thereafter are -




Year
            
            Amount2008
            
            $
            518,0002009
            
            
            4,380,0002010
            
            
            517,0002011
            
            
            548,0002012
            
            
            579,000Thereafter
            
            
            22,410,000$
            28,952,000





32




At
      December 31, 2007, the Company had $28,952,000 of mortgage debt and notes
      outstanding which all bear interest at an average fixed rate of 6.1% and an
      average remaining life of approximately 5.2 years. The fixed rate mortgages
      and
      notes are subject to repayment (amortization) schedules that are longer than
      the
      term of the mortgages. As such, the approximate amount of balloon payments
      for
      all mortgage debt and notes that will be required is as follows:





Year
            
            Amount2009
            
            $
            3,870,0002010
            
            
            239,0002013
            
            
            23,511,000$
            27,620,000





Wilshire
      expects to re-finance the individual mortgages and notes with new mortgages
      and
      notes when their terms expire. To this extent, we have exposure to interest
      rate
      risk on our fixed rate mortgage debt and note obligations. If interest rates,
      at
      the time any individual debt instrument is due, are higher than the current
      fixed interest rate, higher debt service may be required, and/or re-financing
      proceeds may be less than the amount of mortgage debt or notes being
      retired.





We
      believe that the values of our properties will be adequate to command
      re-financing proceeds equal to, or higher than, the mortgage debt to be
      re-financed. This expectation represents a forward-looking statement. Factors
      that could cause actual results to differ materially from the Company’s forward
      looking statement include economic conditions in the markets where such
      properties are located and the level of market interest rates at the time the
      Company is seeking to re-finance the properties.





At
      December 31, 2007, we had $7.9 million of principal invested in auction
      rate securities (ARS). As of March 21, 2008, we had reduced our holdings in
      ARS investments to approximately $7.8 million. The monthly auctions for these
      ARS investments have historically provided a liquid market for these securities.
      Our investments in ARS represent interests in collateralized debt obligations
      supported by pools of loans with long-term nominal maturities but for which
      interest rates are normally reset every seven days to every 45 days through
      a
      dutch auction process. Consistent with our policy, all ARS investments were
      rated at the time of purchase and are still currently rated AAA or the
      equivalent thereto. None of the ARS investments in our portfolio were backed
      by
      sub-prime mortgage loans or other collateral with exposure to certain current
      market conditions. Additionally, all ARS holdings at December 31, 2007 have
      subsequently been successfully settled through the dutch auction process by
      either being liquidated into cash or experiencing an interest rate reset.




However,
      liquidity issues experienced recently in global credit and capital markets
      have
      prevented us from liquidating certain ARS investments that reset subsequent
      to
      December 31, 2007 as the amount of securities submitted for sale at recent
      ARS auctions has exceeded the market demand, though they continue to pay
      interest according to their stated terms. Although insufficient demand for
      certain ARS may continue, we anticipate, based on discussions with our
      investment advisors, that liquidity for our securities may possibly be realized
      through the emergence of secondary markets in the near term, particularly
      considering the high default interest rates, high credit ratings, the backing
      of
      the Federal Family Education Loan Program (“FFELP”) and/or the underlying assets
      collateralizing these investments. As such, we believe that the primary impact
      of the failed auctions is reduced liquidity rather than impairment of principal.
      In the event that we are unable to sell the investments at or above our carrying
      value, these securities may not provide us with a liquid source of cash.




Notwithstanding
      the above, if uncertainties in the credit and capital markets continue and
      secondary markets for ARS do not emerge, we may not be able to convert these
      investments into cash during our required timeframe. Even if secondary markets
      do emerge, we may experience a temporary loss of principal if such securities
      are initially marketed at a discount or a sustained loss if it becomes necessary
      to sell these investments at such a discount. In addition, should the credit
      ratings of our ARS be downgraded, we might incur further problems in liquidating
      our investments.





33




**Item
      8.**  **Financial
      Statements and Supplementary Data**




**Report
      of Independent Registered Public Accounting Firm**





The
      Board
      of Directors and Stockholders


Wilshire
      Enterprises, Inc.





We
      have
      audited the accompanying consolidated balance sheets of Wilshire Enterprises,
      Inc. and Subsidiaries as of December 31, 2007 and 2006, and the related
      consolidated statements of operations, stockholders’ equity and cash flows and
      financial statement schedule listed in the index at Item 15 for each of the
      three years in the period ended December 31, 2007. These consolidated financial
      statements and financial statement schedule are the responsibility of the
      Company’s management. Our responsibility is to express an opinion on these
      consolidated financial statements and financial statement schedule based on
      our
      audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Wilshire Enterprises, Inc.
      and Subsidiaries as of December 31, 2007 and 2006, and their results of
      operations and cash flows for each of the three years in the period ended
      December 31, 2007, in conformity with accounting principles generally accepted
      in the United States of America. Also, in our opinion, the financial statement
      schedule referred to above, when considered in relation to the basic
      consolidated financial statements taken as a whole, presents fairly, in all
      material respects, the information required to be included therein.




As
      discussed in Note 11 to the consolidated financial statements, the Company
      is
      involved in an investigation by government authorities. At this time, the
      Company is unable to assess the scope of such investigation or the impact,
      if
      any, of such investigation on the Company.





/s/
      J.H.
      Cohn LLP





Roseland,
      New Jersey


April
      14,
      2008




34




**WILSHIRE
      ENTERPRISES, INC.**


**CONSOLIDATED
      BALANCE SHEETS**


**As
      of December 31, 2007 and 2006**





2007
            
            2006**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            4,843,000
            
            $
            9,602,000Restricted
                cash
            
            
            257,000
            
            
            212,000Marketable
                debt securities, available for sale, at fair value
            
            
            7,925,000
            
            
            4,275,000Marketable
                equity securities, available for sale, at fair value
            
            
            1,432,000
            
            
            1,672,000Accounts
                receivable, net
            
            
            201,000
            
            
            235,000Prepaid
                income taxes and income taxes receivable
            
            
            1,650,000
            
            
            567,000Deferred
                income taxes
            
            
            26,000
            
            
            -Prepaid
                expenses and other current assets
            
            
            1,431,000
            
            
            1,665,000Total
                current assets
            
            
            17,765,000
            
            
            18,228,000Property
                and equipment:Real
                estate properties
            
            
            38,632,000
            
            
            38,191,000Real
                estate properties - Held for sale
            
            
            5,947,000
            
            
            6,162,00044,579,000
            
            
            44,353,000Less:Accumulated
                depreciation and amortization
            
            
            16,104,000
            
            
            14,734,000Accumulated
                depreciation and amortization – Property held for
                sale
            
            
            856,000
            
            
            932,00027,619,000
            
            
            28,687,000Total
                Assets
            
            $
            45,384,000
            
            $
            46,915,000**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities;Current
                portion of long-term debt
            
            $
            503,000
            
            $
            477,000Accounts
                payable
            
            
            1,528,000
            
            
            1,642,000Income
                taxes payable
            
            
            81,000
            
            
            81,000Deferred
                income taxes
            
            
            -
            
            
            48,000Accrued
                liabilities
            
            
            556,000
            
            
            330,000Deferred
                income
            
            
            147,000
            
            
            130,000Current
                liabilities associated with discontinued operations
            
            
            292,000
            
            
            480,000Total
                current liabilities
            
            
            3,107,000
            
            
            3,188,000Noncurrent
                liabilities:Long-term
                debt, less current portion
            
            
            27,861,000
            
            
            28,383,000Deferred
                income taxes
            
            
            595,000
            
            
            552,000Deferred
                income
            
            
            112,000
            
            
            138,000Noncurrent
                liabilities associated with discontinued operations
            
            
            573,000
            
            
            731,000Total
                liabilities
            
            
            32,248,000
            
            
            32,992,000Commitments
                and ContingenciesStockholders'
                equity:Non-controlling
                interest of joint venture partner
            
            
            -
            
            
            2,000Preferred
                  stock, $1 par value, 1,000,000 shares authorized; none issued and
                  outstandingin
                  2007 and 2006
            
            
            -
            
            
            -Common
                  stock, $1 par value, 15,000,000 shares authorized; issued 10,013,544
                  sharesin
                  2007 and 2006
            
            
            10,014,000
            
            
            10,014,000Capital
                in excess of par value
            
            
            9,202,000
            
            
            8,984,000Treasury
                  stock, 2,087,296 and 2,097,296 shares at December 31, 2007 andDecember
                  31, 2006, respectively, at cost
            
            
            (9,885,000
            )
            
            (9,918,000
            )Retained
                earnings
            
            
            3,881,000
            
            
            4,773,000Accumulated
                other comprehensive income (loss)
            
            
            (76,000
            )
            
            68,000Total
                stockholders’ equity
            
            
            13,136,000
            
            
            13,923,000Total
                liabilities and stockholders' equity
            
            $
            45,384,000
            
            $
            46,915,000





The
      accompanying notes to consolidated financial statements are an integral part
      of
      these financial statements.





35




**WILSHIRE
      ENTERPRISES, INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**For
      the years ended December 31, 2007, 2006 and 2005**





2007
            
            2006
            
            2005**Revenues**
            
            $
            9,420,000
            
            $
            8,834,000
            
            $
            8,186,000**Costs
                and Expenses**Operating
                expenses
            
            
            5,863,000
            
            
            5,275,000
            
            
            4,708,000Depreciation
                expense
            
            
            1,368,000
            
            
            1,987,000
            
            
            1,215,000General
                and administrative
            
            
            3,617,000
            
            
            2,475,000
            
            
            3,493,000Total
                costs and expenses
            
            
            10,848,000
            
            
            9,737,000
            
            
            9,416,000**Loss
                from Operations**
            
            
            (1,428,000
            )
            
            (903,000
            )
            
            (1,230,000
            )**Other
                Income**Dividend
                and interest income
            
            
            540,000
            
            
            836,000
            
            
            700,000Gain
                on sale of marketable securities
            
            
            
            
            
            
            
            
            134,000Gain
                on sale of real estate and real estate related assets
            
            
            
            
            
            
            
            
            675,000Other
                income
            
            
            36,000
            
            
            7,000
            
            
            32,000**Interest
                Expense**
            
            
            (1,837,000
            )
            
            (1,811,000
            )
            
            (1,911,000
            )**Loss
                before provision for income taxes**
            
            
            (2,689,000
            )
            
            (1,871,000
            )
            
            (1,600,000
            )**Income
                Tax Benefit**
            
            
            (1,321,000
            )
            
            (829,000
            )
            
            (1,019,000
            )**Loss
                from Continuing Operations**
            
            
            (1,368,000
            )
            
            (1,042,000
            )
            
            (581,000
            )**Discontinued
                Operations - Real Estate, Net of Taxes****Loss
                from operations**
            
            
            (512,000
            )
            
            (1,021,000
            )
            
            (699,000
            )**Gain
                from sales**
            
            
            688,000
            
            
            4,233,000
            
            
            9,276,000**Discontinued
                Operations - Oil & Gas, Net of Taxes****Income
                (loss) from operations**
            
            
            300,000
            
            
            115,000
            
            
            (1,105,000
            )**Net
                income (loss)**
            
            $
            (892,000
            )
            $
            2,285,000
            
            $
            6,891,000**Basic
                earnings (loss) per share:**Loss
                from continuing operations
            
            $
            (0.17
            )
            $
            (0.13
            )
            $
            (0.07
            )Income
                (loss) from discontinued operations -Real
                estate - loss from operations
            
            
            (0.06
            )
            
            (0.13
            )
            
            (0.09
            )Real
                estate - gain on sales
            
            
            0.09
            
            
            0.54
            
            
            1.18Oil
                and gas – income (loss) from operations
            
            
            0.03
            
            
            0.01
            
            
            (0.14
            )Oil
                and gas - gain on sale
            
            
            0.00
            
            
            0.00
            
            
            0.00Net
                income (loss) applicable to common stockholders
            
            $
            (0.11
            )
            $
            0.29
            
            $
            0.88**Diluted
                earnings (loss) per share:**Loss
                from continuing operations
            
            
            (0.17
            )
            
            (0.13
            )
            $
            (0.07
            )Income
                (loss) from discontinued operations -Real
                estate - loss from operations
            
            
            (0.06
            )
            
            (0.13
            )
            
            (0.09
            )Real
                estate - gain on sales
            
            
            0.09
            
            
            0.53
            
            
            1.17Oil
                and gas – income (loss) from operations
            
            
            0.03
            
            
            0.01
            
            
            (0.14
            )Oil
                and gas - gain on sale
            
            
            0.00
            
            
            0.00
            
            
            0.00Net
                income (loss) applicable to common stockholders
            
            $
            (0.11
            )
            $
            0.28
            
            $
            0.87




The
      accompanying notes to consolidated financial statements are an integral part
      of
      these financial statements.





36




**WILSHIRE
      ENTERPRISES, INC.**


**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY**


**December
      31, 2007, 2006 and 2005**





Non- Controlling
              Interest in
              Joint
              Venture
            
            Preferred Stock
            
            Common Stock
            
            Capital in
              Excess of
            
            Unearned
            
            Retained
            
            Treasury
            
            Accumulated
              Other
                Comprehensive
            
            Comprehensive
            
            Total
              Stockholders'Partner
            
            Shares
            
            Amount
            
            Shares
            
            Amount
            
            Par
                Value
            
            Compensation
            
            Earnings
            
            Stock
            
            Income (Loss)
            
            Income (Loss)
            
            EquityBalance,
                December 31, 2004
            
            
            -
            
            
            -
            
            
            -
            
            
            10,013,544
            
            
            10,014,000
            
            
            9,524,000
            
            
            (431,000
            )
            
            19,294,000
            
            
            (10,491,000
            )
            
            564,000
            
            
            
            
            
            28,474,000Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            6,891,000
            
            
            
            
            
            
            
            $
            6,891,000
            
            
            6,891,000Reclassification
                adjustment for gains on marketable securities sold, net of tax of
                $(53,000)
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (76,000
            )
            
            (76,000
            )
            
            (76,000
            )Change
                in unrealized loss on marketable securities, net of income tax benefit
                of
                $141,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (344,000
            )
            
            (344,000
            )
            
            (344,000
            )Comprehensive
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            6,471,000Issuance
                of shares of common stock for services, net of forfeitures
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (302,000
            )
            
            
            
            
            741,000
            
            
            
            
            
            
            
            
            439,000Compensation
                associated with stock options
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (495,000
            )
            
            495,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Amortization
                of compensation associated with stock and stock option
                awards
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            105,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            105,000Exercise
                of stock options
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            40,000
            
            
            
            
            
            
            
            
            40,000Purchase
                of treasury stock
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (357,000
            )
            
            
            
            
            
            
            
            (357,000
            )Acquisition
                of interest in joint venture
            
            $
            6,680,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            6,680,000Balance,
                December 31, 2005
            
            
            6,680,000
            
            
            -
            
            
            -
            
            
            10,013,544
            
            
            10,014,000
            
            
            9,029,000
            
            
            (133,000
            )
            
            26,185,000
            
            
            (10,067,000
            )
            
            144,000
            
            
            
            
            
            41,852,000Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,285,000
            
            
            
            
            
            
            
            $
            2,285,000
            
            
            2,285,000Change
                in unrealized loss on marketable securities, net of income tax benefit
                of
                $301,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (76,000
            )
            
            (76,000
            )
            
            (76,000
            )Comprehensive
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            2,209,000Cash
                dividend
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (23,697,000
            )
            
            
            
            
            
            
            
            
            
            
            (23,697,000
            )Issuance
                of shares of common stock for services, net of forfeitures
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (146,000
            )
            
            
            
            
            
            
            
            321,000
            
            
            
            
            
            
            
            
            175,000Compensation
                associated with stock options
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (133,000
            )
            
            133,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Amortization
                of compensation associated with stock and stock option
                awards
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            234,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            234,000Exercise
                of stock options
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            290,000
            
            
            
            
            
            
            
            
            290,000Purchase
                of treasury stock
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (462,000
            )
            
            
            
            
            
            
            
            (462,000
            )Disposition
                of interest in joint venture
            
            
            (6,678,000
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (6,678,000
            )Balance,
                December 31, 2006
            
            
            2,000
            
            
            -
            
            
            -
            
            
            10,013,544
            
            
            10,014,000
            
            
            8,984,000
            
            
            -
            
            
            4,773,000
            
            
            (9,918,000
            )
            
            68,000
            
            
            
            
            
            13,923,000Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (892,000
            )
            
            
            
            
            
            
            $
            (892,000
            )
            
            (892,000
            )Change
                in unrealized loss on marketable securities, net of income tax benefit
                of
                $77,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (144,000
            )
            
            (144,000
            )
            
            (144,000
            )Comprehensive
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            (1,036,000
            )Amortization
                of compensation associated with stock and stock option
                awards
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            218,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            218,000Exercise
                of stock options
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            33,000
            
            
            
            
            
            
            
            
            33,000Disposition
                of interest in joint venture
            
            
            (2,000
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,000
            )Balance,
                December 31, 2007
            
            $
            -
            
            
            -
            
            
            -
            
            
            10,013,544
            
            $
            10,014,000
            
            $
            9,202,000
            
            
            -
            
            $
            3,881,000
            
            $
            (9,885,000
            )
            $
            (76,000
            )
            
            
            
            $
            13,136,000




The
      accompanying notes to consolidated financial statements are an integral part
      of
      these financial statements.




37





**WILSHIRE
      ENTERPRISES, INC.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**For
      the Years Ended December 31, 2007, 2006 and 2005**





**2007**
            
            **2006**
            
            **2005**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                income (loss)
            
            $
            (892,000
            )
            $
            2,285,000
            
            $
            6,891,000Adjustments
                to reconcile net income (loss) to net cash used in operating activities
                -Depreciation
                and amortization
            
            
            1,368,000
            
            
            2,021,000
            
            
            1,289,000Stock
                based compensation expense
            
            
            218,000
            
            
            235,000
            
            
            258,000Deferred
                income tax (benefit)
            
            
            (31,000
            )
            
            (6,965,000
            )
            
            5,612,000Decrease
                in deferred income
            
            
            (9,000
            )
            
            (3,000
            )
            
            (27,000
            )Other
                expense – non-controlling interest of joint venture
                partner
            
            
            -
            
            
            549,000
            
            
            185,000Gain
                on sales of marketable securities
            
            
            -
            
            
            -
            
            
            (134,000
            )Gain
                on sales of real estate assets
            
            
            (1,147,000
            )
            
            (7,055,000
            )
            
            (16,018,000
            )Changes
                in operating assets and liabilities -Decrease
                (increase) in accounts receivable
            
            
            34,000
            
            
            62,000
            
            
            (108,000
            )Decrease
                (increase) in prepaid income taxes and income taxes
                receivable
            
            
            (1,083,000
            )
            
            792,000
            
            
            2,393,000Decrease
                (increase) in prepaid expenses and other current assets
            
            
            234,000
            
            
            264,000
            
            
            (515,000
            )Decrease
                in accounts payable, accrued liabilities and taxes payable
            
            
            (64,000
            )
            
            (3,618,000
            )
            
            (2,155,000
            )Net
                cash used in operating activities
            
            
            (1,372,000
            )
            
            (11,433,000
            )
            
            (2,329,000
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Net
                capital expenditures - real estate
            
            
            (882,000
            )
            
            (3,499,000
            )
            
            (2,201,000
            )Net
                capital expenditures - oil & gas
            
            
            -
            
            
            (5,000
            )
            
            -Proceeds
                from sales and redemptions of marketable securities
            
            
            -
            
            
            -
            
            
            374,000Purchase
                of mortgage notes and loans receivable
            
            
            -
            
            
            -
            
            
            (123,000
            )Proceeds
                from mortgage notes receivable
            
            
            -
            
            
            536,000
            
            
            1,113,000Proceeds
                from sales of real estate
            
            
            1,729,000
            
            
            22,669,000
            
            
            20,615,000(Increase)
                decrease in short-term marketable securities
            
            
            (3,554,000
            )
            
            17,731,000
            
            
            (10,859,000
            )(Increase)
                decrease in restricted cash
            
            
            (45,000
            )
            
            10,522,000
            
            
            (6,652,000
            )Net
                cash (used in) provided by investing activities
            
            
            (2,752,000
            )
            
            47,954,000
            
            
            2,267,000CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from issuance of debt
            
            
            -
            
            
            416,000
            
            
            400,000Principal
                payments of long-term debt
            
            
            (666,000
            )
            
            (4,150,000
            )
            
            (13,903,000
            )Proceeds
                from exercise of stock options
            
            
            33,000
            
            
            290,000
            
            
            40,000Purchase
                of treasury stock
            
            
            -
            
            
            (462,000
            )
            
            (357,000
            )Cash
                distributions to non-controlling interest of joint venture
                partner
            
            
            (2,000
            )
            
            (5,397,000
            )
            
            -Payment
                of cash dividend
            
            
            -
            
            
            (23,697,000
            )
            
            -Net
                cash used in financing activities
            
            
            (635,000
            )
            
            (33,000,000
            )
            
            (13,820,000
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            (4,759,000
            )
            
            3,521,000
            
            
            (13,882,000
            )CASH
                AND CASH EQUIVALENTS, beginning of year
            
            
            9,602,000
            
            
            6,081,000
            
            
            19,963,000CASH
                AND CASH EQUIVALENTS, end of year
            
            $
            4,843,000
            
            $
            9,602,000
            
            $
            6,081,000SUPPLEMENTAL
                DISCLOSURES TO THE STATEMENTS OF CASH FLOWS:Cash
                paid during the period for -Interest
            
            $
            1,824,000
            
            $
            1,993,000
            
            $
            2,903,000Income
                taxes, net
            
            $
            580,000
            
            $
            9,868,000
            
            $
            (2,702,000
            )




SUPPLEMENTAL
      DISCLOSURE OF NONCASH INFORMATION:




On
      May 4,
      2006, a joint venture in which the Company owned a 50% interest and was the
      controlling shareholder, sold its principal asset, the Wilshire Grand Hotel.
      As
      a result of this sale, the other partner to the joint venture, Proud Three
      LLC,
      received a cash distribution of $5.4 million and wrote-down its remaining
      interest in the joint venture by $1.8 million to $2,000, an amount equal to
      its
      expected share of future cash distributions from the joint venture.





The
      accompanying notes to consolidated financial statements are an integral part
      of
      these financial statements.




38




**WILSHIRE
      ENTERPRISES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**







**1.**
                **Organization
                    and significant accounting
                    policies:**




Wilshire
      Enterprises, Inc. (“Wilshire” or “the Company”) is engaged in acquiring, owning
      and managing real estate properties and real estate related securities. The
      Company’s real estate holdings are located in the states of Arizona, Florida,
      New Jersey and Texas. The Company’s real estate holdings are owned both in its
      own name and through holding companies and limited liability companies. The
      Company also maintains investments in marketable securities, which are
      classified as available for sale.





The
      Company had been engaged in oil and gas exploration and production in the United
      States and Canada. In April 2004, the Company sold its oil and gas operations
      and received net proceeds of $28,131,000, recording a gain of $567,000 (after
      taxes) on the transaction. Since the sale was effective as of March 1, 2004,
      the
      2007, 2006 and 2005 consolidated financial statements include the continuing
      reconciliation process between the Company and its joint interest partners,
      final assessments from various governmental bodies for tax audits and other
      matters and changes in estimates for the remaining obligations related to the
      wind-up of the oil and gas businesses.





**Principles
      of consolidation:**





The
      consolidated financial statements include the accounts of the Company and its
      subsidiaries and controlled joint venture for the years ended December 31,
      2007,
      2006 and 2005. All significant intercompany account balances and transactions
      have been eliminated in consolidation. At December 31, 2006, the Company had
      a
      50% ownership in a joint venture that was consolidated under the provisions
      of
      Financial Accounting Standards Board (“FASB”) Interpretation No. 46 (revised
      December 2003) (“FIN 46R”), “Consolidation of Variable Interest Entities, an
      Interpretation of Accounting Research Bulletin No. 51.” The “minority interest”
in this investment is included in Stockholders’ Equity under the caption
“Non-controlling interest of joint venture partner.” This joint venture was
      dissolved as of December 31, 2007.





**Use
      of estimates:**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect certain reported amounts and disclosures.
      Accordingly, actual results could differ from those estimates.





**Cash
      and cash equivalents and marketable debt securities:**





Financial
      instruments that potentially subject Wilshire to concentrations of credit risk
      consist primarily of cash and cash equivalents and marketable investments.
      Wilshire considers all highly liquid investments purchased with a maturity
      of
      three months or less to be cash equivalents. Marketable debt investments consist
      primarily of auction rate interest bearing securities whose interest rates
      reset
      every seven to 45 days. These securities are redeemable at each interest rate
      reset date. Wilshire maintains its cash in the United States in bank accounts
      ($2,285,000) and brokerage and securities accounts ($10,174,000). The balances
      maintained in bank accounts may, at times, exceed Federally insured limits.
      At
      December 31, 2007, cash balances in banks that exceeded Federally insured limits
      amounted to $1,950,000. Investments in accounts maintained at brokerage houses
      consist of funds held in highly liquid money market accounts ($816,000) and
      short-term, mainly tax-exempt or tax advantaged, investments ($9,357,000) that
      are subject to the Company’s investment policy guidelines concerning credit
      rating, concentrations and size of transaction. At December 31, 2007, these
      short-term securities were comprised principally of auction rate securities
      that
      have short-term interest rate reset and redemption features, usually every
      seven
      to 45 days. The Company also has $1,998,000 in cash with its Canadian subsidiary
      that is being invested in short-term deposits at a major Canadian bank. The
      funds at the Canadian subsidiary are expected to be repatriated to the United
      States during 2008, and represent principally the only assets currently held
      outside of the United States.




39




Restricted
      cash represents $257,000 of residential tenant deposits for Company properties
      located in New Jersey.





**Marketable
      equity securities:**




The
      Company holds investments in certain marketable equity securities and short-term
      marketable debt securities, including auction rate securities with interest
      rate
      resets ranging from every seven days to every 45 days. B eginning
      in February 2008, auctions for the resale of such securities have ceased to
      reliably support the liquidity of these securities. We expect to continue to
      receive interest according to the stated terms of the investments, including
      above market interest rates related to the auction failures. Although such
      loss
      of liquidity will most likely be short-term in nature as a secondary market
      for
      the securities emerges or successful auctions resume, we cannot be certain
      that
      liquidity will be restored in the foreseeable future. We may not be able to
      access cash by selling these securities for which there is insufficient demand
      without a loss of principal until a future auction for these investments is
      successful, a secondary market emerges, they are redeemed by their issuer or
      they mature. If liquidity is not reestablished in the short term, we may be
      required to reclassify these investments as long-term assets based on the
      nominal maturity date of the underlying securities.




As
      of
      December 31, 2007 and 2006, the marketable equity securities held by the Company
      consist of common shares in one real estate company in the United States, which
      is classified as available for sale. These securities are carried at fair value
      based upon quoted market prices of $1,432,000 at December 31, 2007 and
      $1,672,000 at December 31, 2006, which was below their cost of $1,559,000 at
      December 31, 2007 by $127,000 and exceeded their cost at December 31, 2006
      by
      $113,000. Unrealized gains and losses, representing the difference between
      an
      investment’s cost and its fair value, are charged (credited) directly to
      stockholders’ equity, net of related income taxes, as a component of accumulated
      comprehensive income (loss). The cost of securities sold is determined on a
      specific identification basis.





The
      Company periodically reviews available for sale securities for impairment that
      is other than temporary. At December 31, 2007 and 2006, no write down was
      required to record other than temporary impairment of securities.





**Deferred
      loan costs:**





Prepaid
      expenses and other current assets include deferred loan costs of $254,000 at
      December 31, 2007 and $314,000 at December 31, 2006. Deferred loan costs are
      amortized on the straight-line method by annual charges to operations over
      the
      terms of the loans. Amortization of such costs is included in interest expense
      and amounted to approximately $56,000 in 2007, $52,000 in 2006, $59,000 in
      2005.
      Deferred loan costs relate to mortgage loans for both continuing and
      discontinued real estate properties.





**Real
      estate and other properties:**





Real
      estate properties and other property and equipment are stated at cost. Costs
      incurred to maintain and repair the property are expensed as incurred.
      Depreciation is provided on the straight-line method using an estimated useful
      life of 30 to 35 years for real estate buildings and seven years for furniture,
      fixtures and equipment at the properties, which approximates their estimated
      useful life.





The
      Company has designated certain real estate properties as held for sale and
      reports results of operating the properties, including interest expense, and
      the
      gain or loss on the sale of such real estate properties as “Discontinued
      Operations”. The Company ceases depreciating a property when it is designated as
      held for sale.





40









The
      composition of the Company’s real estate and other properties
      follows:





December
                31,2007
            
            2006Real
                estate and other properties:Land
            
            $
            3,378,000
            
            $
            3,378,000Building
            
            
            26,563,000
            
            
            26,149,000Furniture,
                fixtures and equipment
            
            
            8,691,000
            
            
            8,664,000Accumulated
                depreciation
            
            
            (16,104,000
            )
            
            (14,734,000
            )Net
                real estate and other properties
            
            
            22,528,000
            
            
            23,457,000Real
                estate held for sale:Land
            
            
            1,259,000
            
            
            1,486,000Building
            
            
            4,283,000
            
            
            4,253,000Furniture,
                fixtures and equipment
            
            
            405,000
            
            
            423,000Accumulated
                depreciation
            
            
            (856,000
            )
            
            (932,000
            )Net
                real estate held for sale
            
            
            5,091,000
            
            
            5,230,000Net
                real estate and other properties
            
            $
            27,619,000
            
            $
            28,687,000





On
      a
      periodic basis, management assesses whether there are any indicators that the
      value of the real estate properties may be impaired. A property’s value is
      considered impaired if management’s estimate of the aggregate future cash flows
      (undiscounted and without interest charges) to be generated by the property
      are
      less than the carrying value of the property. To the extent impairment has
      occurred, the loss shall be measured as the excess of the carrying amount of
      the
      property over the fair value of the property.





Management
      does not believe at December 31, 2007 and 2006 that the value of any of its
      properties is impaired.





**Revenue
      recognition:**





Revenue
      from real estate properties is recognized during the period in which the
      premises are occupied and rent is due from tenants. For commercial properties,
      rental revenue is recognized on a straight-line basis over the term of the
      lease. The excess of rents recognized over amounts contractually due pursuant
      to
      the underlying leases are included in accounts receivable. For residential
      properties where lease agreements are almost exclusively for one-year terms,
      rental revenue is recognized in accordance with the contractual terms of the
      underlying leases. The Company follows a policy of aggressively pursuing its
      rental tenants to ensure timely payment of amounts due. When a tenant becomes
      30
      days in arrears on paying rent, the amount is generally written-off and turned
      over to a collection agency for action. Accordingly, no allowance for
      uncollectible accounts is maintained for the Company’s real estate
      tenants.





An
      allowance for uncollectible accounts was maintained based on the Company’s
      estimate of the inability of its joint interest partners in the oil and gas
      division to make required payments. With the sale of the oil and gas division,
      the Company no longer maintains an allowance for uncollectible
      accounts.




41





**Income
      taxes:**





Deferred
      taxes are provided for the net tax effect of temporary differences between
      the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes. The primary temporary differences
      are
      those related to like kind exchanges, tax over book depreciation and unrealized
      gains and losses on marketable securities.




Deferred
      tax benefits are evaluated for realizability and a determination is made, taking
      into account tax planning strategies, on whether the deferred tax benefit is
      more likely than not to be realized. Based upon this evaluation, a valuation
      allowance is established to reduce the deferred tax benefit to the level where
      it is more likely than not to be ultimately realized. At December 31, 2007
      and
      2006, the Company had a zero valuation allowance.




On
      January 1, 2007, the Company adopted FASB Interpretation No. 48,
“ Accounting
      for Uncertainty in Income Taxes” (“FIN
      48”) *.* FIN
      48
      clarifies the criteria for recognizing tax benefits related to uncertain tax
      positions under SFAS 109 and requires additional financial statement disclosure.
      FIN 48 requires that the Company recognize, in its consolidated financial
      statements, the impact of a tax position if that position is more likely than
      not to be sustained upon examination, based on the technical merits of the
      position. FIN 48 also requires explicit disclosure about the Company’s
      uncertainties related to the income tax position, including a detailed
      roll-forward of tax benefits taken that do qualify for financial statement
      recognition. Adoption of FIN 48 had no impact on the Company’s consolidated
      results of operations or financial position.





**Foreign
      operations:**





The
      assets and liabilities of the Company’s substantially liquidated Canadian
      subsidiary have been translated at year-end exchange rates. The related revenues
      and expenses have been translated at average annual exchange rates. In 2007,
      2006 and 2005, foreign currency translation losses totaling $272,000, $26,000
      and $449,000, respectively were included in the statements of
      operations.





**Earnings
      (loss) per share:**





Basic
      earnings per share are calculated by dividing net income by the weighted average
      number of shares outstanding during each period. The calculation of diluted
      earnings per share is similar to that of basic earnings per share, except that
      the denominator is increased to include the number of additional shares that
      would have been outstanding if all potentially dilutive shares, such as those
      issuable upon the exercise of stock options, were issued during the
      period.





In
      computing diluted earnings per share for the years ended December 31, 2007,
      2006
      and 2005, the assumed exercise of all of Wilshire’s outstanding stock options,
      adjusted for application of the treasury stock method, would have increased
      the
      weighted average number of shares outstanding as shown in the earnings (loss)
      per share calculation table below.


42


2007
            
            2006
            
            2005Numerator-Net
                income (loss) – Basic and Diluted
            
            $
            (892,000
            )
            $
            2,285,000
            
            $
            6,891,000Denominator-Weighted
                  average common
                shares
                  outstanding – Basic
            
            
            7,922,303
            
            
            7,887,777
            
            
            7,863,886Incremental
                  shares from assumedconversions of stock options
            
            
            -
            
            
            127,234
            
            
            102,512Weighted
                  average common sharesoutstanding – Diluted
            
            
            7,922,303
            
            
            8,015,011
            
            
            7,966,398Basic
                earnings (loss) per share:
            
            $
            (0.11
            )
            $
            0.29
            
            $
            0.88Diluted
                earnings (loss) per share:
            
            $
            (0.11
            )
            $
            0.28
            
            $
            0.87





**Stock-based
      compensation:**





In
      December 2004, the FASB issued Statement on Financial Accounting Standards
      (“SFAS”) No. 123R (“SFAS 123R”), “Accounting for Stock-Based Compensation.” SFAS
      123(R) establishes standards for the accounting for transactions in which an
      entity exchanges its equity instruments for goods or services. This Statement
      focuses primarily on accounting for transactions in which an entity obtains
      employee services in share-based payment transactions. SFAS 123(R) requires
      that
      the fair value of such equity instruments be recognized as an expense in the
      historical financial statements as services are performed. Prior to SFAS 123(R),
      only certain pro forma disclosures of fair value were required.





The
      Company has adopted the provisions of SFAS 123(R) effective January 1, 2006.
      During 2007 and 2006 the Company recorded charges of $107,000 and $94,000,
      respectively, in connection with the issuance of stock options to employees
      and
      non-employee directors. The effect of applying SFAS 123(R) on basic and diluted
      earnings (loss) per share was $0.01 for the years ended December 31, 2007 and
      2006.





For
      the
      year ended December 31, 2005, the Company accounted for stock options in
      accordance with the provision of Accounting Principles Board Opinion No. 25
      (“APB No. 25”), “Accounting for Stock Issued to Employees” and related
      interpretations. In accordance with the provisions of APB No. 25, the Company
      recognized compensation cost as a result of the issuance of stock options to
      employees, including directors, based on the excess, if any, of the fair value
      of the underlying shares at the date of grant or award (or at an appropriate
      subsequent measurement date) over the amount the employees must pay to acquire
      the shares (the “intrinsic value method”). However, for periods through December
      31, 2005, the Company was not required to recognize compensation expense as
      a
      result of any grants to employees at an exercise price that is equal to or
      greater than fair value. All outstanding stock options granted through December
      31, 2005 were granted at exercise prices that equaled the fair value of the
      underlying stock at the date of grant. Accordingly, no compensation expense
      has
      been recognized for stock option plans in 2005.





The
      pro
      forma impact of expensing stock options for the year ended December 31, 2005
      would have reduced reported net income for the year ended December 31, 2005
      by
      approximately $47,000 and the per share impact, basic and diluted, would have
      been less than $0.01.




43





The
      fair
      value of each option award is estimated on the date of grant using the
      Black-Scholes option valuation model. The Company recognizes the fair value
      of
      each option as compensation expense ratably using the straight-line attribution
      method over the service period, which is generally the vesting period. The
      Black-Scholes model incorporates the following assumptions:





·
            Expected
                volatility - the Company estimates the volatility of common stock
                at the
                date of grant using historical volatility.·
            Expected
                term - the Company estimates the expected term of options granted
                based on
                a combination of vesting schedules, term of the option and historical
                experience.·
            Risk-free
                interest rate - the Company estimates the risk-free interest rate
                using
                the U.S. Treasury yield curve for periods equal to the expected term
                of
                the options in effect at the time of grant.·
            Dividends
                - the Company uses an expected dividend yield of zero despite the
                fact
                that the Company paid a one-time distribution of $3.00 per share
                during
                2006. The Company intends to retain any earnings to fund future operations
                and potentially invest in additional real estate activities and,
                therefore, does not anticipate paying any cash dividends in the
                foreseeable future.





The
      following table outlines the variables used in the Black-Scholes option-pricing
      model.




2007
            
            2006
            
            2005Risk
                free interest rate
            
            
            5.04
            %
            
            5.03
            %
            
            4.09
            %Volatility
            
            
            51.51
            %
            
            18.90
            %
            
            40.30
            %Dividend
                yield
            
            
            -
            %
            
            -
            %
            
            -
            %Expected
                option life
            
            
            10
                years
            
            
            10
                years
            
            
            5
                years





As
      of
      December 31, 2007 and 2006, the Company had total unrecognized compensation
      expense related to options granted to non-employee directors of $199,000 and
      $210,000, respectively, which will be recognized over a remaining average period
      of 1.9 years. The expected future amortization expense for unrecognized
      compensation expense for stock option grants to non-employee directors at
      December 31, 2007 is as follows:




Year
                ending December 31, 2008
            
            $
            90,000Year
                ending December 31, 2009
            
            $
            62,000Year
                ending December 31, 2010
            
            $
            33,000Year
                ending December 31, 2011
            
            $
            14,000$
            199,000




**Accumulated
      other comprehensive income (loss):**





Comprehensive
      income (loss) includes net income (loss), and unrealized gain (loss) on
      available for sale securities.




44





Changes
      in the components of Accumulated other Comprehensive Income (Loss), net of
      taxes
      for the years 2007, 2006 and 2005 are as follows -




Unrealized
              Gains (Losses)
              on Available-
              for-Sale
              SecuritiesBALANCE,
                December 31, 2004
            
            $
            564,000Change
                for the year 2005
            
            
            (420,000
            )BALANCE,
                December 31, 2005
            
            
            144,000Change
                for the year 2006
            
            
            (76,000
            )BALANCE,
                December 31, 2006
            
            
            68,000Change
                for the year 2007
            
            
            (144,000
            )BALANCE,
                December 31, 2007
            
            $
            (76,000
            )




The
      change in unrealized gains (losses) on available for sale securities in 2005
      include transfers to realized gain of $129,000.





**Advertising
      expense:**





The
      Company advertises for tenants for its properties through various media,
      including print and internet. Advertising costs are expensed as incurred and
      amounted to $150,000 in 2007, $112,000 in 2006 and $248,000 in
      2005.





**Reclassifications:**





Certain
      amounts in the 2006 and 2005 consolidated financial statements have been
      reclassified to conform to the 2007 presentation.


**2.**
              **Discontinued
                  operations:**





During
      2007, the Company sold its 1.8 acres of land in Lake Hopatcong, New Jersey
      and
      six condominium units at Jefferson Gardens Condominiums in Sussex, New Jersey
      for a gross sales price of $1,814,000 and an after-tax gain of $699,000. In
      2006, the Company sold its triple net lease on a bank branch in Rutherford,
      New Jersey, its hotel known as the Wilshire Grand Hotel and Banquet Facility
      in
      New Jersey, its forty two (42) condominium units at Galsworthy Arms Condominiums
      in Long Branch, New Jersey and Twelve Oaks apartment complex in Riverdale,
      Georgia for gross proceeds of $22,669,000 and an after-tax gain of $4,233,000.
      In 2005, the Company sold three condominium units at Galsworthy Arms
      Condominiums in Long Branch, New Jersey, two condominium units at Jefferson
      Gardens Condominiums in Sussex, New Jersey and the Biltmore Club Apartments
      in
      Phoenix, Arizona for gross proceeds of $20,615,000 and an after-tax gain of
      $9,276,000.




On
      September 30, 2005, the Company, as managing member of WO Grand Hotel, LLC
      (the
“Seller”), entered into a definitive agreement (the “Purchase Agreement”) with
      350 Pleasant Valley Hotel Associates, L.L.C. (the “Acquirer”) to sell the
      Wilshire Grand Hotel & Banquet Facility (the “Hotel”) to the Acquirer for
      $12.75 million. The Acquirer is an investor group with which Wilshire has no
      prior relationship. The sale closed on May 4, 2006.





On
      June
      2, 2005, the Company completed a transaction with respect to its property
      located in West Orange, New Jersey known as the Wilshire Grand Hotel and Banquet
      Facility (the “Hotel”). The Company had leased the Hotel under two 25-year
      operating leases, one for the hotel and one for the banquet facility, to an
      experienced hotel operator (the “Hotel Operator”). The Hotel Operator had
      encountered financial adversity and ceased payments in 2004 on its mortgage
      obligations held by Proud Three LLC (“Proud Three”) and secured by multiple
      properties. The Hotel Operator was also delinquent on its lease payments for
      the
      Hotel to the Company since January 2005.




45





The
      resolution of this matter included the termination of the leases with the Hotel
      Operator and the contribution of the Hotel by the Company to a newly formed
      limited liability company, WO Grand Hotel, LLC (“the LLC”). Proud Three
      contributed its loan receivable of $11.9 million from the Hotel Operator, and
      the Company and Proud Three are the sole members of the LLC.





The
      operating agreement of the LLC provides for various circumstances which might
      result in the distribution of cash flow from operations and net proceeds
      resulting from the sale or liquidation of the Hotel. The operating agreement
      stipulates that in the event that the Company enters into a binding contract
      to
      sell the Hotel during the six months and twenty days subsequent to June 2,
      2005,
      then the net proceeds resulting from the sale will be allocated and distributed
      on an equal basis to the Company and Proud Three. As a result of the closing
      of
      the sale of the Hotel on May 4, 2006, the Company received a distribution of
      $6.1 million.





As
      part
      of the resolution of this matter, Proud Three paid 50% of the delinquent rent
      to
      the Company.





Because
      Proud Three is affiliated with the Company’s Chairman and CEO, the transaction
      was reviewed and approved by a special independent committee of the Company’s
      Board of Directors that had been appointed for this purpose. As part of its
      review process, this committee retained an independent investment banking firm
      to evaluate the transaction and received an opinion from that firm that the
      transaction was fair to the Company and its stockholders from a financial point
      of view.





Effective
      June 2, 2005, the LLC and its results of operations are being included in the
      Company’s condensed consolidated financial statements as part of discontinued
      operations. The assets contributed to the LLC were valued at their historical
      basis, except for the loan receivable contributed to the LLC by Proud Three
      which was deemed impaired and written down to its net realizable
      value.





The
      Company has designated certain of its properties as held for sale, which under
      accounting principles generally accepted in the United States requires that
      the
      Company report the results of operating these properties as discontinued
      operations. At December 31, 2007, the Company’s residential apartment complex
      known as Jefferson Gardens Condominiums (Sussex, New Jersey) and its office
      buildings Amboy Towers (Perth Amboy, New Jersey), Tamarac (Tamarac, Florida)
      and
      several parcels of undeveloped land in New Jersey have been classified as
      discontinued operations.





Since
      December 31, 2007, the Company has sold one condominium at Jefferson Gardens
      for
      gross proceeds of $150,000 and an after-tax gain of approximately
      $62,000.





46




During
      2007, 2006 and 2005, the Company recorded income (losses), net of taxes from
      operating its oil and gas businesses of $300,000, $115,000 and ($1,105,000),
      respectively. The net income (loss) from operating the oil and gas business
      in
      2007, 2006 and 2005 reflects the professional fees associated with the wind
      down
      of the oil and gas businesses, the continuing reconciliation process between
      the
      Company and its partners for periods prior to the effective date of the sale,
      adjustments to the accruals recorded in prior years for the liquidation of
      the
      oil and gas business and a $449,000 foreign currency translation loss related
      to
      the Company’s Canadian oil and gas business during 2005.





The
      2005
      consolidated statement of operations has been reclassified to reflect the
      current alignment of the Company’s properties between continuing operations and
      discontinued operations.


**3.**
              **Long-term
                  debt:**





Long-term
      debt as of December 31 consists of the following:





2007
            
            2006Mortgage
                notes payable (a)
            
            $
            4,234,000
            
            $
            4,504,000Mortgage
                notes payable (b)
            
            
            20,762,000
            
            
            21,096,000Mortgage
                notes payable (c)
            
            
            3,956,000
            
            
            4,018,000Total
            
            
            28,952,000
            
            
            29,618,000Less:
                Current portion
            
            
            518,000
            
            
            535,000Long-term
                debt
            
            $
            28,434,000
            
            $
            29,083,000Long-term
                debt applicable to discontinued operations:Included
                in current liabilities
            
            $
            14,000
            
            $
            58,000Included
                in non-current liabilities
            
            
            559,000
            
            
            700,000Total
            
            $
            573,000
            
            $
            758,000






(a)
            Mortgage
                notes payable to North Fork Bank payable in monthly installments,
                bearing
                interest at a weighted average effective rate of 6.375%. These mortgage
                notes were secured by a first mortgage interest in various residential
                and
                commercial real estate properties in Arizona, Florida, and New Jersey.
                The
                notes are being amortized over a 25-year period and mature in February
                2013, with a balloon principal payment due at maturity. At December
                31,
                2007, the properties securing the notes had an approximate net book
                value
                of $3,655,000.(b)
            Mortgage
                notes payable to five real estate mortgage conduits arranged by Wachovia
                Bank that are payable in monthly installments of principal and interest,
                bearing interest at a weighted average effective rate of 5.75%, a
                30-year
                amortization and a ten year term, maturing in March 2013, with a
                balloon
                principal payment due at maturity. The residential properties securing
                the
                mortgage conduit loans are located in Arizona, New Jersey and Texas
                and at
                December 31, 2007 had an approximate net book value of
                $13,691,000.(c)
            Mortgage
                note payable to Orix Real Estate Capital Markets that is payable
                in
                monthly installments of principal and interest, bearing interest
                at 7.9%.
                The note is being amortized over a 30-year period and matures in
                June
                2009, with a balloon principal payment due at maturity. The note
                is
                secured by residential property located in Texas that at December
                31, 2007
                had an approximate net book value of
                $4,933,000.







47




The
      aggregate maturities of the long-term debt in each of the five years subsequent
      to December 31, 2007 and thereafter are as follows:





Year
            
            Amount2008
            
            $
            518,0002009
            
            
            4,380,0002010
            
            
            517,0002011
            
            
            548,0002012
            
            
            579,000Thereafter
            
            
            22,410,000$
            28,952,000




**4.**
              **Mortgage
                  notes receivable:**





During
      June 2000, the Company acquired mortgage notes receivable collateralized by
      underlying property from The Trust Company of New Jersey for $3,500,000. The
      Company subsequently advanced the borrower an additional $2,790,000. Under
      its
      original terms, the mortgage notes receivable and subsequent advances were
      due
      2007 and bore interest at 9.75%. In connection with the mortgage note receivable
      the Company was to earn a $2,500,000 financing fee. The fee was being recognized
      in income by the effective interest method over the term of the mortgage
      receivable. Under this agreement, the Company had the right to receive a portion
      of the proceeds from the sale of the underlying property. During the year 2005,
      the Company received amortization and financing fees in the amount of
      $3,000.





In
      February 2005, the Company and the borrower negotiated a settlement of the
      outstanding mortgage notes receivable for $1.1 million, which was paid during
      the first quarter of 2005. The Company recognized a gain in the first quarter
      2005 of approximately $675,000 before taxes ($400,000 after taxes) on this
      transaction.





48




**5.**
              **Commitments
                  and contingencies:**





**Commercial
      leases:**





Wilshire
      leases commercial space to tenants for periods of up to seven years. Most of
      the
      leases contain clauses for reimbursement of real estate taxes, maintenance,
      insurance and certain other operating expenses of the properties. Minimum rental
      income to be received from non-cancelable operating leases in the five years
      subsequent to December 31, 2007 is as follows:




Year
            
            Amount2008
            
            $
            1,777,0002009
            
            
            1,387,0002010
            
            
            1,008,0002011
            
            
            398,0002012
            
            
            124,000$
            4,694,000





The
      above
      amounts assume that all leases which expire are not renewed and, accordingly,
      neither minimum rentals nor rentals from replacement tenants are
      included.





Minimum
      future rentals do not include contingent rentals, which may be received under
      certain leases on the basis of the percentage of tenants’ reported sales volume
      or other factors. Rental income that is contingent on future events is not
      included in income until the contingency is resolved. Contingent rentals
      included in income for each of the three years in the period ended December
      31,
      2007 were not material.





**Residential
      leases:**





Lease
      terms for residential tenants are usually one year or less.





**City
      of Perth Amboy, New Jersey:**





Wilshire
      achieved a settlement agreement with the City of Perth Amboy, New Jersey,
      regarding the redevelopment zone status of its office building, Amboy Towers.
      In
      an agreement signed in February 2005, the City agreed to name the Company as
      the
      redeveloper for Amboy Towers and Wilshire agreed to invest at least $750,000
      in
      capital improvements in the building over the 18-month period commencing with
      the signing of the agreement. The Company satisfied its commitment during 2006
      and has spent approximately $970,000 through December 31, 2007 on capital
      improvements since reaching this agreement.





**Headquarters
      lease:**





Wilshire
      entered into an agreement to lease office space for its headquarters at One
      Gateway Center in Newark, New Jersey. The effective date of the lease is April
      1, 2005 and it is for a 65 month period with two renewal options, each for
      a
      five-year period. The base rent in the lease is $29.00 per square foot, with
      Wilshire receiving five months of free rent in the third year of the lease
      agreement. Base rental expense is recognized on a straight-line basis and
      amounts to $121,000 per year. The future minimum rental payments are $131,000
      for the years ending December 31, 2008 and 2009 and $98,000 for the year ending
      December 31, 2010.





The
      Company leased space on a month-to-month basis in Jersey City, New Jersey prior
      to moving its headquarters to Newark, NJ. During 2007, the Company received
      a
      rent abatement in accordance with the lease for five months. Rental expense
      for
      all of the Company’s offices amounted to approximately $93,000 in 2007, $140,000
      in 2006 and $137,000 in 2005.




49





**Rights
      plan:**





In
      June
      1996, the Company’s Board of Directors adopted the Stockholder Protection Rights
      Plan (the “Rights Plan”). The Rights Plan provides for the issuance of one Right
      for each share of common stock outstanding as of July 6, 1996 and for each
      share
      of Common Stock issued after July 6, 1996, pursuant to the provisions of the
      Rights Plan. In June 2006, the Company’s Board of Directors approved an
      extension of the Rights Plan. The extension was for a one year period provided
      that at the end of this period, the Board of Directors could approve an
      additional one year extension through a vote of the independent members of
      the
      Board. The independent members of the Board extended the Rights Plan for one
      additional year. Any further extension of the Rights Plan would require a vote
      of the Company’s stockholders. On December 6, 2006, the Company’s Board of
      Directors adopted an Amended and Restated Stockholder Protection Rights
      Agreement (the “Amended and Restated Rights Agreement”), which amends the
      definition of “Acquiring Person”. In general, the term “Acquiring Person” refers
      to “any Person who is a Beneficial Owner of 15% or more of the outstanding
      shares of Common Stock” of the Company. However, pursuant to the amended
      language, a Person (as defined in the Amended and Restated Rights Agreement)
      who
      is a Beneficial Owner (as defined in the Amended and Restated Rights Agreement)
      of any shares of the Company’s common stock on December 6, 2006 will not be an
“Acquiring Person” unless and until (a) such Person is or becomes a Beneficial
      Owner of 15% or more of the outstanding shares of the Company’s outstanding
      common stock and (b)
      subsequent to the execution of the Amended and Restated Rights Agreement, such
      Person becomes the Beneficial Owner of additional shares of the Company’s common
      stock representing more than 6% of the shares of the Company’s common stock
      outstanding at the time the additional shares are acquired. Prior to the
      December 6, 2006 amendment to the definition of “Acquiring Person”, the
      Company’s Rights Plan provided that an “Acquiring Person” did not include a
      Person who Beneficially Owned 10% or more of the Company’s common stock on June
      21, 1996 (the date on which the Company’s Rights Plan was originally entered
      into by the Company and the Rights Agent) so long as that Person did not become
      the Beneficial Owner of 25% or more of the outstanding shares of the Company’s
      common stock. This provision has been deleted. No other substantive changes
      have
      been made to the Company’s Rights Plan. The Rights are separable from and
      exercisable upon the occurrence of certain triggering events and may be redeemed
      by the Board of Directors at a redemption price of $0.01 per Right at any time
      prior to the announcement by the Company that a person or group has become
      an
      Acquiring Person.




On
      and
      after the tenth day following such triggering events, each Right would entitle
      the holder (other than the Acquiring Person) to purchase $50 in market value
      of
      the Company’s Common Stock for $25. In addition, if there is a business
      combination between the Company and an Acquiring Person, or in certain other
      circumstances, each Right (if not previously exercised) would entitle the holder
      (other than the Acquiring Person) to purchase $50 in market value of the common
      stock of the Acquiring Person for $25.





As
      of
      December 31, 2007 and 2006, 7,926,248 and 7,916,248, respectively, of Rights
      were outstanding. Each Right entitles the holder to purchase, for an exercise
      price of $25, one one-hundredth of a share of Series A Participating Preferred
      Stock. Each one one-hundredth share of Series A Participating Preferred Stock
      is
      designed to have economic terms similar to those of one share of common stock
      but will have one one-hundredth of a vote. Because the Rights are only
      exercisable under certain conditions, none of which were in effect as of
      December 31, 2007 and 2006, the outstanding Rights are not considered in the
      computation of basic and diluted earnings (loss) per share.





**Share
      repurchase authorization:**





On
      June
      3, 2004, the Company announced that the Board of Directors had authorized the
      purchase of up to 1,000,000 shares of its common stock on the open market,
      in
      privately negotiated transactions or otherwise. This purchasing activity may
      occur from time to time, in one or more transactions. Through December 31,
      2007,
      the Company had purchased 138,231 shares under this program at an approximate
      cost of $1,017,000 or $7.35 per share.




50




**6.**
              **Stock
                  option plans:**





In
      June
      2004, the Company’s stockholders approved the 2004 Stock Option and Incentive
      Plan (the “2004 Incentive Plan”). The purpose of the 2004 Incentive Plan is to
      encourage stock ownership by key employees and consultants of the Company,
      to
      provide additional incentive for them to promote the successful business
      operations of the Company, to encourage them to continue providing services
      to
      the Company, and to attract new employees and consultants to the Company. Awards
      under the 2004 Incentive Plan may be granted in any one or all of the following
      forms, as those terms are defined under the 2004 Incentive Plan: (i) incentive
      stock options; (ii) non-qualified stock options; (iii) stock appreciation
      rights; (iv) restricted shares of common stock; (v) performance shares; (vi)
      performance units; and (vii) unrestricted shares of common stock. The maximum
      aggregate number of shares of common stock available for award under the 2004
      Incentive Plan is 600,000, subject to adjustment under the terms of the 2004
      Incentive Plan.





In
      June
      2004, the Company’s stockholders approved the 2004 Non-Employee Director Stock
      Option Plan (the “2004 Director Plan”). The purpose of the 2004 Director Plan is
      to attract qualified personnel to accept positions of responsibility as
      directors of the Company, to provide incentives for persons to remain on the
      Board and to induce such persons to maximize the Company’s performance during
      the terms of their options. Only non-qualified stock options may be granted
      under the 2004 Director Plan. The maximum aggregate number of shares of common
      stock available for grant under the 2004 Director Plan is 150,000, subject
      to
      adjustment under the terms of the 2004 Director Plan. Upon adoption of the
      2004
      Director Plan, each non-employee director was granted 10,000 options to purchase
      common shares of the Company at fair market value on the date of grant and
      on
      each anniversary date of the 2004 Director Plan’s adoption will receive an
      additional 5,000 options to purchase common shares of the Company at fair market
      value on the date of grant.





In
      June
      1995, the Company adopted two stock-based compensation plans (1995 Stock Option
      and Incentive Plan, the “Incentive Plan”; and 1995 Non-employee Director Stock
      Option Plan, the “Director Plan”) under which, up to 450,000 and 150,000 shares,
      respectively were available for grant. In 2003, 50,000 options were granted
      under the Incentive Plan and 5,000 options were granted under the Director
      Plan.
      In 2004, 5,000 options were granted under the Director Plan. The Incentive
      Plan
      and Director Plan expired ten years after their date of adoption. Accordingly,
      no additional awards may be granted under either of these plans.





Stock
      option grants under the 2004 Director Plan amounted to 25,000 options in 2007,
      2006 and 2005. No options were granted under the 2004 Incentive Plan in 2007,
      2006 or 2005.





The
      number and terms of the options granted under these plans are determined by
      the
      Company’s Compensation Committee (the Committee) based on the fair market value
      of the Company’s common stock on the date of grant. The period during which an
      option may be exercised varies, but no option may be exercised after ten years
      from the date of grant.





51




A
      summary
      of option activity under the option plans as of December 31, 2007, and changes
      during the year then ended is presented below:


Shares
              
              WeightedAverage
                Exercise Price
              
              Weighted Average
                  Remaining
                Contractual Term
              
              Aggregate
                Intrinsic ValueOptions
                  Outstanding at January 1, 2007
              
              
              120,000
              
              $
              6.15
              
              
              7.5
              
              $
              192,000Options
                  granted
              
              
              25,000
              
              
              5.60
              
              
              9.5
              
              
              -Options
                  exercised
              
              
              (10,000
              )
              
              3.32
              
              
              -
              
              
              21,000Options
                  terminated and expired
              
              
              -
              
              
              -
              
              
              -
              
              
              -Options
                  outstanding at December 31, 2007
              
              
              135,000
              
              $
              6.26
              
              
              7.2
              
              $
              -Options
                  exercisable at December 31, 2007
              
              
              63,250
              
              $
              5.73
              
              
              6.1
              
              $
              -




The
      fair
      value of the options granted during 2007 was $95,000 and the weighted average
      grant date fair value was $3.82 per share. Also, options for 37,000 shares
      had
      vested during 2007 with a weighted average remaining contractual life of 6.4
      years and a weighted average grant date fair value of $1.77 per
      share.




A
      summary
      of the status of the Company’s nonvested restricted shares as of December 31,
      2007, and changes during the year ended December 31, 2007, is presented below:


Nonvested
                  Shares
              
              Shares
              
              Weighted-AverageGrant-Date Fair ValueNonvested
                  shares at January 1, 2007
              
              
              59,100
              
              $
              7.48Shares
                  Granted
              
              
              -
              
              
              -Shares
                  Vested
              
              
              (24,633
              )
              
              5.59Shares
                  Forfeited
              
              
              -
              
              
              -Nonvested
                  shares at December 31, 2007
              
              
              34,467
              
              $
              7.65




During
      2006, 29,500 restricted shares of common stock were granted to employees under
      the 2004 Incentive Plan. The employee’s right to receive these restricted shares
      vests over a three-year period. Compensation expense for the year ended December
      31, 2006 includes $42,000 related to the issuance of restricted shares in 2006.
      Also during 2006, 22,465 shares of common stock were granted to employees under
      the 2004 Incentive Plan without any restrictions. These shares were issued
      in
      satisfaction of incentive bonus awards that had been accrued and expensed in
      2005.





During
      2005, 47,400 restricted shares of common stock were granted to employees under
      the 2004 Incentive Plan. The employee’s right to receive these restricted shares
      vests over a three-year period. Compensation expense for the years ended
      December 31, 2006 and 2005 include $97,000 and $170,000 related to the issuance
      of restricted shares in 2005. Also during 2005, 66,000 shares of common stock
      were granted to employees under the 2004 Incentive Plan without any
      restrictions. The majority of these shares were issued in satisfaction of
      incentive bonus awards that had been accrued and expensed in 2004.





52




On
      April
      19, 2005, the Company reached a mutual agreement with the former President
      to
      terminate his consulting agreement with the Company. The Company agreed to
      provide him with a final lump sum payment in the amount of $50,625 and the
      former President agreed to forego an additional $75,000 of consulting fees
      due
      to him under the terms of his consulting arrangement. Also, at the Company’s
      request, the former President agreed to exercise his 300,000 stock options
      at
      the applicable exercise prices for a total sum of $1,005,500 and then sell
      to
      the Company all of the exercised shares at a purchase price per share of $7.00
      for an aggregate payment of $2,100,000, or a net cash payment of $1,094,500,
      which has been classified as a general and administrative expense in the
      consolidated statement of operations. The transaction was completed on April
      20,
      2005 and resulted in the Company recording an after-tax charge of approximately
      $600,000 in 2005.


**7.**
              **Income
                  taxes**





The
      components of income before income taxes are as follows:




2007
            
            2006
            
            2005United
                States operations
            
            $
            (2,116,000
            )
            $
            3,874,000
            
            $
            11,969,000Operations
                outside the United States
            
            
            31,000
            
            
            (46,000
            )
            
            100,000Total
            
            $
            (2,085,000
            )
            $
            3,828,000
            
            $
            12,069,000





53





Provision
      (benefit) for income taxes consists of the following:




2007
            
            2006
            
            2005Continuing
                OperationsFederalCurrent
            
            $
            (1,194,000
            )
            $
            (264,000
            )
            $
            (700,000
            )Deferred
            
            
            34,000
            
            
            (416,000
            )
            
            (41,000
            )(1,160,000
            )
            
            (680,000
            )
            
            (741,000
            )StateCurrent
            
            
            25,000
            
            
            (159,000
            )
            
            (277,000
            )Deferred
            
            
            (186,000
            )
            
            10,000
            
            
            (1,000
            )(161,000
            )
            
            (149,000
            )
            
            (278,000
            )Total
                Continuing
            
            $
            (1,321,000
            )
            $
            (829,000
            )
            $
            (1,019,000
            )Discontinued
                OperationsReal
                EstateFederalCurrent
            
            $
            107,000
            
            $
            2,262,000
            
            $
            (320,000
            )Deferred
            
            
            0
            
            
            (347,000
            )
            
            4,744,000107,000
            
            
            1,915,000
            
            
            4,424,000StateCurrent
            
            
            21,000
            
            
            831,000
            
            
            211,000Deferred
            
            
            0
            
            
            (159,000
            )
            
            910,00021,000
            
            
            672,000
            
            
            1,121,000Total
                Real Estate
            
            $
            128,000
            
            $
            2,587,000
            
            $
            5,545,000Oil
                and GasFederalCurrent
            
            $
            0
            
            $
            0
            
            $
            (59,000
            )Deferred
            
            
            0
            
            
            0
            
            
            00
            
            
            0
            
            
            (59,000
            )StateCurrent
            
            
            0
            
            
            0
            
            
            191,000Deferred
            
            
            0
            
            
            0
            
            
            00
            
            
            0
            
            
            191,000ForeignCurrent
            
            
            0
            
            
            (215,000
            )
            
            452,000Deferred
            
            
            0
            
            
            0
            
            
            00
            
            
            (215,000
            )
            
            452,000Total
                Oil & Gas
            
            $
            0
            
            $
            (215,000
            )
            $
            584,000Total
            
            $
            (1,193,000
            )
            $
            1,543,000
            
            $
            5,110,000




54




A
      reconciliation of the differences between the effective tax rate and the
      statutory U.S. income tax rate from continuing operations is as
      follows:


2007
              
              2006
              
              2005Amount
              
              %
              
              Amount
              
              %
              
              Amount
              
              %Federal
                  income tax provision (benefit) at statutory rate
              
              $
              (941,000
              )
              
              35.0
              %
              $
              (607,000
              )
              
              35.0
              %
              $
              (698,000
              )
              
              35.0
              %State
                  tax expense (benefit) net of (including) Federal impact
              
              
              (105,000
              )
              
              3.9
              
              
              (96,000
              )
              
              5.6
              
              
              (180,000
              )
              
              10.0Dividend
                  exclusion
              
              
              (41,000
              )
              
              1.5
              
              
              (29,000
              )
              
              1.7
              
              
              (37,000
              )
              
              2.1Tax-exempt
                  interest
              
              
              (88,000
              )
              
              3.3
              
              
              (96,000
              )
              
              5.5
              
              
              (113,000
              )
              
              6.3Other
              
              
              (146,000
              )
              
              5.4
              
              
              (1,000
              )
              
              0.0
              
              
              9,000Total
                  tax expense (benefit) / Effective tax rate (benefit)
              
              $
              (1,321,000
              )
              
              49.1
              %
              $
              (829,000
              )
              
              47.8
              %
              $
              (1,019,000
              )
              
              53.4
              %





Significant
      components of deferred tax liabilities as of December 31, 2007 and 2006 were
      as
      follows:





2007
            
            2006Tax
                  over book depreciation, depletion and amortization -Oil and gas and
                  real estate properties - U.S.
            
            $
            748,000
            
            $
            602,000State
                net loss carryover
            
            
            (119,000
            )
            
            0Deferred
                gains on sales of real estate properties - U.S.
            
            
            80,000
            
            
            0Deferred
                income
            
            
            (104,000
            )
            
            (106,000
            )Restricted
                stock
            
            
            11,000
            
            
            56,000Unrealized
                gain (loss) on marketable securities
            
            
            (47,000
            )
            
            48,000Net
                deferred tax liability
            
            
            569,000
            
            
            600,000Current
                portion of deferred tax asset (liability)
            
            
            26,000
            
            
            (48,000
            )Noncurrent
                deferred tax liability
            
            $
            595,000
            
            $
            552,000




The
      Company believes that there are no uncertain tax positions that fail to meet
      the
      more likely than not recognition threshold under FIN 48 to be sustained upon
      examination. As such, a tabular presentation of those tax benefits taken that
      do
      not qualify for recognition is not presented.





From
      time
      to time, the Company may be assessed interest or penalties by its tax
      jurisdictions, although, historically, there have been no such assessments
      and
      the Company believes that any potential future assessments would be minimal
      and
      immaterial to the Company’s results of operations and financial position. In the
      event the Company receives an assessment for interest and/or penalties, it
      would
      be classified in the consolidated financial statements as general and
      administrative expense.


**8.**
              **Segment
                  information:**




SFAS
      No.
      131, “Disclosures about Segments of an Enterprise and Related Information,”
established standards for reporting financial information about operating
      segments in interim and annual financial reports and provides for a “management
      approach” in identifying the reportable segments.





Wilshire
      has determined that it has two reportable segments within its continuing
      operations: residential properties and commercial properties. These reportable
      segments have different types of customers and are managed separately because
      each requires different operating strategies and management expertise. The
      residential property segment has two separate properties and the commercial
      segment has three properties. The accounting policies of the segments are the
      same as those described in Note 1.





Wilshire
      assesses and measures segment operating results based on net operating income
      (“NOI”), which is a direct measure of each property’s contribution to the
      results of the Company before considering revenues from treasury activities,
      overhead expenses and other costs that are not directly related to the
      performance of a property. The Company believes NOI is a more descriptive
      measure of the Company’s performance than income (loss) from continuing
      operations. NOI is not a measure of operating results or cash flow as measured
      by generally accepted accounting principles, and is not necessarily indicative
      of cash available to fund cash needs and should not be considered an alternative
      to cash flows as a measure of liquidity.





55


Continuing
      real estate revenue, operating expenses, NOI and recurring capital improvements
      for the reportable segments are summarized below and reconciled to consolidated
      net income (loss) from continuing operations for each of the three years in
      the
      period ended December 31, 2007. Asset information is not reported since Wilshire
      does not use this measure to assess performance.





2007
            
            2006
            
            2005Real
                estate revenue:Residential
            
            $
            7,765,000
            
            $
            7,387,000
            
            $
            6,907,000Commercial
            
            
            1,655,000
            
            
            1,447,000
            
            
            1,279,000Totals
            
            $
            9,420,000
            
            $
            8,834,000
            
            $
            8,186,000Real
                estate operating expenses:Residential
            
            $
            5,174,000
            
            $
            4,572,000
            
            $
            4,143,000Commercial
            
            
            689,000
            
            
            703,000
            
            
            565,000Totals
            
            $
            5,863,000
            
            $
            5,275,000
            
            $
            4,708,000Net
                operating income (“NOI”):Residential
            
            $
            2,591,000
            
            $
            2,815,000
            
            $
            2,764,000Commercial
            
            
            966,000
            
            
            744,000
            
            
            714,000Totals
            
            $
            3,557,000
            
            $
            3,559,000
            
            $
            3,478,000Capital
                improvements:Residential
            
            $
            312,000
            
            $
            783,000
            
            $
            673,000Commercial
            
            
            132,000
            
            
            546,000
            
            
            231,000Totals
            
            $
            444,000
            
            $
            1,329,000
            
            $
            904,000Reconciliation
                of NOI to consolidated net loss from continuing
                operations:Segment
                NOI
            
            $
            3,557,000
            
            $
            3,559,000
            
            $
            3,478,000Total
                other income, including net investment income
            
            
            576,000
            
            
            843,000
            
            
            1,541,000Depreciation
                expense
            
            
            (1,368,000
            )
            
            (1,987,000
            )
            
            (1,215,000
            )General
                and administrative expense
            
            
            (3,617,000
            )
            
            (2,475,000
            )
            
            (3,493,000
            )Interest
                expense
            
            
            (1,837,000
            )
            
            (1,811,000
            )
            
            (1,911,000
            )Income
                tax benefit
            
            
            1,321,000
            
            
            829,000
            
            
            1,019,000Loss
                from continuing operations
            
            $
            (1,368,000
            )
            $
            (1,042,000
            )
            $
            (581,000
            )






**9.**
                **Preferred
                    Stock**


The
      Company is authorized to issue up to 1,000,000 shares of preferred stock, par
      value $1.00 per share. At December 31, 2007 and 2006, there were no shares
      of
      preferred stock outstanding. The preferred stock may be issued in one or more
      series, from time to time, with each such series to have such designation,
      powers, preferences and relative participating, optional or other special
      rights, and qualifications, limitations or restriction thereof, as shall be
      stated and expressed in the resolution or resolutions providing for the issue
      of
      such series adopted by the Board of Directors of the Company, subject to the
      limitations prescribed by law and in accordance with the provisions set forth
      in
      the Certificate of Incorporation of the Company.





56




**10.**
              **Fair
                  value of financial
                  instruments**




The
      following disclosures of estimated fair value were determined by management,
      using available market information and appropriate valuation methodologies.
      Considerable judgment is necessary to interpret market data and develop
      estimated fair values. Accordingly, the estimates presented herein are not
      necessarily indicative of the amounts the Company could realize on disposition
      of the financial instruments. The use of different market assumptions and/or
      estimation methodologies may have a material effect on the estimated fair value
      amounts.





Cash
      equivalents, accounts receivable, and accounts payable reasonably approximate
      their fair values due to the short maturities of these items.





Mortgage
      notes payable have an estimated fair value based on discounted cash flow models
      of approximately $28.8 million at December 31, 2007, which is lower than the
      carrying value by $0.1 million. At December 31, 2006, mortgage notes payable
      had
      an estimated fair value based on discounted cash flow models of approximately
      $28.6 million, which is lower than the carrying value by $1.0
      million.





Disclosure
      about fair value of financial instruments is based on pertinent information
      available to management as of December 31, 2007.




**11.**
              **Other
                  matters**




As
      previously disclosed, during the latter portion of 2006 and the first quarter
      of
      2007, the Company conducted a preliminary inquiry into its relationship with
      a
      private consulting firm. As a result of that inquiry, the Company voluntarily
      reported to governmental authorities that a principal of the private consulting
      firm was, and may continue to be, a public servant in a municipality in which
      the Company does business; for some period of time the consulting firm was
      provided office space by the Company on a rent-free basis in a building owned
      by
      the Company; and the fees charged the Company by the private consulting firm
      for
      consulting services may have been above the customary fees for the services
      provided.





The
      Company will continue to cooperate fully with governmental authorities with
      respect to this matter. The Company does not believe that it will be named
      in
      any formal legal proceeding in connection with this matter, although no
      assurance can be given in that regard; however, it is possible that the
      indemnification obligations of the Company could still be
      significant.





The
      Company has undertaken a review of its records and record-keeping practices.
      As
      a result of this review, the Company has concluded that (i) the events under
      investigation do not materially adversely affect any financial statements
      previously filed by the Company and (ii) the Company is not aware of any
      comparable arrangements with other public servants.





The
      Company has incurred considerable expense in connection with its preliminary
      investigation, the steps taken to cooperate with governmental authorities,
      the
      advancement of amounts subject to indemnification claims and certain related
      matters. Approximately $87,000 of such expenses was incurred during the fourth
      quarter of 2006 and approximately $569,000 of such expenses was incurred during
      fiscal 2007. The Company is unable to predict the aggregate amount of expenses
      that it will incur in resolving these matters, but recognizes that continuing
      expenses may be considerable.




**12.**
              **Subsequent
                  events**




The
      Company closed on the sale of one condominium unit during January 2008. The
      gross sales price related to the sale of this unit was $150,000 which resulted
      in an after-tax gain of approximately $62,000.




57




**13.**
            **Quarterly
                data (Unaudited)**




The
      following represents the Company’s results of operations for each quarter for
      the years ended December 31, 2007 and 2006. The earnings per share amounts
      may
      not total to the earnings per share for the full year.





Quarter
                EndedMarch
                31
            
            June
                30
            
            September
                30
            
            December
                31**2007:**Revenues
            
            $
            2,280,000
            
            $
            2,352,000
            
            $
            2,412,000
            
            $
            2,376,000Costs
                and expenses:Operating
                expenses
            
            
            1,490,000
            
            
            1,416,000
            
            
            1,435,000
            
            
            1,522,000Depreciation
            
            
            381,000
            
            
            353,000
            
            
            364,000
            
            
            270,000General
                and administrative
            
            
            1,018,000
            
            
            727,000
            
            
            892,000
            
            
            980,000Total
                costs and expenses
            
            
            2,889,000
            
            
            2,496,000
            
            
            2,691,000
            
            
            2,772,000Loss
                from operations
            
            
            (609,000
            )
            
            (144,000
            )
            
            (279,000
            )
            
            (396,000
            )Dividend
                and interest income
            
            
            125,000
            
            
            144,000
            
            
            137,000
            
            
            134,000Other
                income
            
            
            3,000
            
            
            1,000
            
            
            48,000
            
            
            (16,000
            )Interest
                expense including amortization of deferred financing costs
            
            
            (442,000
            )
            
            (446,000
            )
            
            (447,000
            )
            
            (502,000
            )Loss
                before benefit from taxes
            
            
            (923,000
            )
            
            (445,000
            )
            
            (541,000
            )
            
            (780,000
            ).Income
                tax benefit
            
            
            (363,000
            )
            
            (229,000
            )
            
            (175,000
            )
            
            (554,000
            )Loss
                from continuing operations
            
            
            (560,000
            )
            
            (216,000
            )
            
            (366,000
            )
            
            (226,000
            )Discontinued
                operations - real estate gain from sales
            
            
            426,000
            
            
            61,000
            
            
            123,000
            
            
            78,000Discontinued
                operations - real estate
            
            
            (186,000
            )
            
            (167,000
            )
            
            (168,000
            )
            
            9,000Discontinued
                operations - oil and gas
            
            
            92,000
            
            
            179,000
            
            
            205,000
            
            
            (176,000
            )Net
                loss
            
            $
            (228,000
            )
            $
            (143,000
            )
            $
            (206,000
            )
            $
            (315,000
            )Basis
                earnings (loss) per share:Continuing
                operations
            
            $
            (0.07
            )
            $
            (0.03
            )
            $
            (0.05
            )
            $
            (0.02
            )Discontinued
                operations
            
            
            0.04
            
            
            0.01
            
            
            0.02
            
            
            (
                0.01
            )Net
                loss
            
            $
            (0.03
            )
            $
            (0.02
            )
            $
            (0.03
            )
            $
            (0.03
            )Diluted
                earnings (loss) per share:Continuing
                operations
            
            $
            (0.07
            )
            $
            (0.03
            )
            $
            (0.05
            )
            $
            (0.02
            )Discontinued
                operations
            
            
            0.04
            
            
            0.01
            
            
            0.02
            
            
            (
                0.01
            )Net
                loss
            
            $
            (0.03
            )
            $
            (0.02
            )
            $
            (0.03
            )
            $
            (0.03
            )




58





Quarter
                endedMarch
                31
            
            June
                30
            
            September
                30
            
            December
                31**2006:**Revenues
            
            $2,109,000
            
            $2,234,000
            
            $2,248,000
            
            $2,243,000Costs
                and expenses:Operating
                expenses
            
            
            1,212,000
            
            
            1,233,000
            
            
            1,423,000
            
            
            1,407,000Depreciation
            
            
            224,000
            
            
            922,000
            
            
            558,000
            
            
            283,000General
                and administrative
            
            
            512,000
            
            
            840,000
            
            
            396,000
            
            
            727,000Total
                costs and expenses
            
            
            1,948,000
            
            
            2,995,000
            
            
            2,377,000
            
            
            2,417,000Income
                (loss) from operations
            
            
            161,000
            
            
            (761,000
            )
            
            (129,000
            )
            
            (174,000
            )Dividend
                and interest income
            
            
            252,000
            
            
            300,000
            
            
            160,000
            
            
            124,000Other
                income
            
            
            3,000
            
            
            2,000
            
            
            -
            
            
            2,000Interest
                expense including amortization of deferred financing costs
            
            
            (454,000
            )
            
            (472,000
            )
            
            (431,000
            )
            
            (454,000
            )Income
                (loss) before provision for taxes
            
            
            (38,000
            )
            
            (931,000
            )
            
            (400,000
            )
            
            (502,000
            )Income
                tax expense (benefit)
            
            
            (71,000
            )
            
            (323,000
            )
            
            (213,000
            )
            
            (222,000
            )Income
                (loss) from continuing operations
            
            
            33,000
            
            
            (608,000
            )
            
            (187,000
            )
            
            (280,000
            )Discontinued
                operations - real estate
            
            
            3,544,000
            
            
            26,000
            
            
            255,000
            
            
            (613,000
            )Discontinued
                operations - oil & gas
            
            
            (153,000
            )
            
            (347,000
            )
            
            (6,000
            )
            
            621,000Net
                income (loss)
            
            $
            3,424,000
            
            $
            (929,000
            )
            $
            62,000
            
            $
            (272,000
            )Basic
                earnings (loss) per share:Continuing
                operations
            
            $
            -
            
            $
            (0.07
            )
            $
            (0.02
            )
            $
            (0.03
            )Discontinued
                operations
            
            
            0.44
            
            
            (0.05
            )
            
            0.03
            
            
            0.00Net
                income (loss)
            
            $
            0.44
            
            $
            (0.12
            )
            $
            0.01
            
            $
            (0.03
            )Diluted
                earnings (loss) per share:Continuing
                operations
            
            $
            -
            
            $
            (0.07
            )
            $
            (0.02
            )
            $
            (0.03
            )Discontinued
                operations
            
            
            0.43
            
            
            (0.05
            )
            
            0.03
            
            
            0.00Net
                income (loss)
            
            $
            0.43
            
            $
            (0.12
            )
            $
            0.01
            
            $
            (0.03
            )




59




**Item
        15**
  **Real
        Estate and Accumulated Depreciation**
 **December
        31, 2007**
 **($
        in 000s)**
 
 Column
                  A
              
              Column B
              
              Column C Initial Cost
              
              Column D Costs
                Capitalized
                Subsequent To
                Acquisition
              
              Column E Gross Amount At
                Which Carried as of December
                31, 2007
              
              Column F
              
              Column H
              
              Column IDescription
              
              Encum- brances
              
              Land
              
              Building &
                Improve- ments
              
              Land
              
              Building &
                Improve- ments
              
              Land
              
              Building &
                Improve- ments
              
              Total
              
              Accumulated
                Depreciation
              
              Date
                Acquired
              
              Life on Which
                Depreciation is
                Computed**Arizona**340 unit garden
                  apartment complex
              
              $
              10,007
              
              $
              800
              
              $
              5,600
              
              
              
              
              $
              -0-
              
              $
              3,623
              
              $
              800
              
              $
              9,223
              
              $
              10,024
              
              $
              4,753
              
              
              1992
              
              
              Various53,000
                  square foot office building
              
              $
              3,661
              
              $
              313
              
              $
              2,384
              
              
              
              
              $
              -0-
              
              $
              2,210
              
              $
              313
              
              $
              4,594
              
              $
              4,907
              
              $
              2,466
              
              
              1992
              
              
              Various**Texas**228
                  unit apartment complex
              
              $
              4,115
              
              $
              620
              
              $
              3,015
              
              
              
              
              $
              -0-
              
              $
              3,101
              
              $
              620
              
              $
              6,116
              
              $
              6,736
              
              $
              3,102
              
              
              1992
              
              
              Various180
                  unit apartment complex
              
              $
              3,955
              
              $
              805
              
              $
              4,450
              
              
              
              
              $
              -0-
              
              $
              849
              
              $
              805
              
              $
              5,299
              
              $
              6,104
              
              $
              1,171
              
              
              2001
              
              
              Various**New
                  Jersey**132
                  unit apartment complex
              
              $
              4,676
              
              $
              480
              
              $
              3,541
              
              
              
              
              $
              -0-
              
              $
              820
              
              $
              480
              
              $
              4,361
              
              $
              4,841
              
              $
              1,682
              
              
              1997
              
              
              VariousOther
                  residential
              
              $
              1,964
              
              $
              326
              
              $
              2,457
              
              
              
              
              $
              -0-
              
              $
              988
              
              $
              326
              
              $
              3,445
              
              $
              3,771
              
              $
              1,596
              
              
              Various
              
              
              VariousOther
                  office/retail
              
              $
              573
              
              $
              637
              
              $
              2,686
              
              
              
              
              $
              -0-
              
              $
              3,867
              
              $
              637
              
              $
              6,553
              
              $
              7,190
              
              $
              2,094
              
              
              Various
              
              
              VariousLand
                  held for development
              
              $
              -0-
              
              $
              655
              
              $
              -0-
              
              
              
              
              $
              -0-
              
              $
              -0-
              
              $
              655
              
              $
              -0-
              
              $
              655
              
              $
              -0-
              
              
              Various
              
              
              Various$
              28,951
              
              $
              4,636
              
              $
              24,133
              
              
              
              
              $
              -0-
              
              $
              15,458
              
              $
              4,636
              
              $
              39,591
              
              $
              44,228
              
              $
              16,864


60




The
      changes in real estate for the three years ended December 31, 2007, are as
      follows ($ in 000s) :




2007
            
            2006
            
            2005Balance
                at beginning of year
            
            $
            44,353
            
            $
            58,854
            
            $
            58,937Property
                acquisitions
            
            
            -
            
            
            -
            
            
            6,765Improvements
            
            
            882
            
            
            3,504
            
            
            1,339Retirements/disposals
            
            
            (656
            )
            
            (18,005
            )
            
            (8,187
            )Balance
                at end of year
            
            $
            44,579
            
            $
            44,353
            
            $
            58,854





The
      aggregate cost of land, buildings and improvements, before depreciation, for
      Federal income tax purposes at December 31, 2007 was approximately
      $44,383.





The
      changes in accumulated depreciation, for the three years ended December 31,
      2007, are as follows:




2007
            
            2006
            
            2005Balance
                at beginning of year
            
            $
            15,666
            
            $
            14,682
            
            $
            16,900Depreciation
                for year
            
            
            1,373
            
            
            2,021
            
            
            1,288Retirements/disposals
            
            
            (79
            )
            
            (1,037
            )
            
            (3,506
            )Balance
                at end of year
            
            $
            16,960
            
            $
            15,666
            
            $
            14,682






**Item
                9.**
              **Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure**





None.


**Item
                9A.**
              **Controls
                  and Procedures**




Disclosure
      controls and procedures (as defined in Exchange Act Rule 13a-15(e)) are designed
      only to provide reasonable assurance that they will meet their objectives that
      information required to be disclosed in our Exchange Act reports is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms, and that such information is accumulated and communicated
      to our management, including our Chief Executive Officer and Chief Financial
      Officer, as appropriate, to allow timely decisions regarding required
      disclosures. As of the end of the period covered by this report, we carried
      out an evaluation, under the supervision and with the participation of our
      management, including our Chief Executive Officer and Chief Financial Officer,
      of the effectiveness of the design and operation of our disclosure controls
      and
      procedures (as defined in Rule 13a-15(e)) pursuant to Exchange Act Rule
      13a-15. Based upon that evaluation and subject to the foregoing, our Chief
      Executive Officer and Chief Financial Officer have concluded that our disclosure
      controls and procedures were effective as of December 31, 2007.




**Changes
      in internal control over financial reporting.**




Management
      has determined that, as of December 31, 2007, there were no changes in our
      internal control over financial reporting that occurred during our fiscal
      quarter then ended that has materially affected, or is reasonably likely to
      materially affect, our internal control over financial reporting.




**Management’s
      Report on Internal Control Over Financial Reporting**


Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the
      Securities Exchange Act of 1934. The Company’s internal control over financial
      reporting is a process designed to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with accounting principles generally
      accepted in the United States of America.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Therefore, even those systems determined to
      be
      effective can provide only reasonable assurance with respect to financial
      statement preparation and presentation. Also, projections of any evaluation
      of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.





Management
      assessed the effectiveness of the Company’s internal control over financial
      reporting as of December 31, 2007. Management based this assessment on
      criteria for effective internal control over financial reporting described
      in
“Internal Control-Integrated Framework” issued by the Committee of Sponsoring
      Organizations of the Treadway Commission. Management’s assessment included an
      evaluation of the design of the Company’s internal control over financial
      reporting and testing of the operational effectiveness of its internal control
      over financial reporting. Management reviewed the results of its assessment
      with
      the Audit Committee.




Based
      on
      this assessment, management determined that, as of December 31, 2007, the
      Company’s internal control over financial reporting was effective to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance with
      accounting principles generally accepted in the United States of America.





**Item9B.**
            **Other
                Information**





None




61


**PART
        III**
 
 Certain
        information required by Part III is incorporated by reference to Wilshire’s 2008
        definitive proxy statement (the “Proxy Statement”) to be filed with the
        Securities and Exchange Commission no later than 120 days after the end of
        Wilshire’s fiscal year covered by this Annual Report. Only those sections of the
        Proxy Statement that specifically address the items set forth in this Annual
        Report are incorporated by reference from the Proxy Statement into this Annual
        Report.
  **Item 10.**
              **Directors,
                  Executive Officers and Corporate
                  Governance**
 
 The
        Company responds to this Item by incorporating by reference the material
        responsive to this Item in the Company's definitive proxy statement for its
        2008
        Annual Meeting of Stockholders.
  The
        information concerning Wilshire’s executive officers required by this item is
        included in Item 4A of this Annual Report on Form 10-K.
 
 The
        Company has adopted a Code of Conduct for its officers and employees. A copy
        of
        the Code of Conduct is available on the Company’s website ( http://www.wilshireenterprisesinc.com ) under
        the caption “Corporate Policies.”
  **Item 11.**
              **Executive
                  Compensation**
 
 The
        Company responds to this Item by incorporating by reference the material
        responsive to this Item in the Company's definitive proxy statement for its
        2008
        Annual Meeting of Stockholders.
  **Item 12.**
              **Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Maters**
 
 The
        Company responds to this Item by incorporating by reference the material
        responsive to this Item in the Company's definitive proxy statement for its
        2008
        Annual Meeting of Stockholders.
  **Item 13.**
              **Certain
                  Relationships and Related Transactions, and Director
                  Independence**
 
 The
        Company responds to this Item by incorporating by reference the material
        responsive to this Item in the Company's definitive proxy statement for its
        2008
        Annual Meeting of Stockholders.
  **Item 14.**
              **Principal
                  Accountant Fees and
                  Services**
 
 The
        Company responds to this Item by incorporating by reference the material
        responsive to this Item in the Company's definitive proxy statement for its
        2008
        Annual Meeting of Stockholders.
  62
  **PART
        IV**
  **Item 15.**
              **Exhibits
                  and Financial Statement
                  Schedules**
 
 (a)
              Financial
                  Statements
 
 (i)
              Report
                  of Independent Registered Public Accounting Firm(ii)
              Consolidated
                  Balance Sheets as of December 31, 2007 and 2006(iii)
              Consolidated
                  Statements of Operations for the years ended December 31, 2007,
                  2006 and
                  2005(iv)
              Consolidated
                  Statements of Changes in Stockholders’ Equity for the years ended December
                  31, 2007, 2006 and 2005(v)
              Consolidated
                  Statements of Cash Flows for the years ended December 31, 2007,
                  2006 and
                  2005(vi)
              Notes
                  to Consolidated Financial
                  Statements
  Financial
        Statement Schedules:
 
 (i)
              Real
                  Estate and Accumulated Depreciation December 31,
                  2007
  (b)
              Exhibits
 
 **Exhibit
                  #**
              
              **Description**3.1
              
              Restated
                  Certificate of Incorporation of Wilshire Enterprises, Inc. (formerly
                  known
                  as Wilshire Oil Company of Texas) dated December 24, 1983, Certificate
                  of
                  Correction of Restated Certificate of Incorporation of Wilshire
                  Enterprises, Inc. (formerly known as Wilshire Oil Company of Texas)
                  dated
                  March 24, 1987, Certificate of Amendment of Restated Certification
                  of
                  Incorporation dated July 29, 1987, Certificate of Amendment of
                  Certificate
                  of Incorporation of Wilshire Enterprises, Inc. (formerly known
                  as Wilshire
                  Oil Company of Texas) dated August 20, 1991,  Certificate of
                  Amendment of Restated Certificate of Incorporation of Wilshire
                  Enterprises, Inc. (formerly known as Wilshire Oil Company of Texas)
                  dated
                  June 30, 2003 and Certificate of  Designations and Terms of Series A
                  Participating Preferred Stock of Wilshire Enterprises, Inc, dated
                  June 22,
                  2006 (Incorporated by reference to Exhibits 3.1 and 3.2 of the
                   Registrant's Quarterly Report on Form 10-Q for the period ended
                  June
                  30, 2006.)3.2
              
              By-laws,
                  as amended and restated through December 4, 2006.  (Incorporated by
                  reference to Exhibit 3.2 of the Registrant's Current Report on
                  Form 8-K
                  filed with the SEC on December 7, 2006.)4.1
              
              Amended
                  and Restated Stockholder Protection Rights Agreement, dated as
                  of December
                  6, 2006, between Wilshire Enterprises, Inc. and Continental Stock
                  Transfer
                  & Trust Company, as Rights Agent.  (Incorporated by reference to
                  Exhibit 4.1 of the Registrant's Current Report on Form 8-K filed with
                  the SEC on December 7, 2006.)10.1
              
              Wilshire
                  Enterprises, Inc. 1995 Stock Option and Incentive Plan. (Incorporated
                  by
                  reference to Exhibit A of the Registrant’s Definitive Proxy Statement for
                  its 1995 Annual Meeting of Stockholders.)10.2
              
              Wilshire
                  Enterprises, Inc. 1995 Non-Employee Director Stock Option Plan.
                  (Incorporated by reference to Exhibit B of the Registrant’s Definitive
                  Proxy Statement for its 1995 Annual Meeting of
                  Stockholders.)
  63
 
 10.3
              
              Wilshire
                  Enterprises, Inc. 2004 Stock Option and Incentive Plan. (Incorporated
                  by
                  reference to Appendix C of the Registrant’s Definitive Proxy Statement for
                  its 2004 Annual Meeting of Stockholders.)10.4
              
              Wilshire
                  Enterprises, Inc. 2004 Non-Employee Director Stock Option Plan.
                  (Incorporated by reference to Appendix D of the Registrant’s Definitive
                  Proxy Statement for its 2004 Annual Meeting of
                  Stockholders.)10.5
              
              Promissory
                  Note given by Alpine Village Apartments, L.L.C., a subsidiary of
                  Wilshire
                  Enterprises, Inc., and Merrill Lynch Mortgage Lending, Inc. dated
                  February
                  28, 2003. (Incorporated by reference to the similarly numbered
                  exhibit to
                  the Company’s Annual Report on Form 10-K for the year ended December 31,
                  2002.)10.6
              
              Environmental
                  Indemnity Agreement between Alpine Village Apartments, L.L.C.,
                  a
                  subsidiary of Wilshire Enterprises, Inc., and Merrill Lynch Mortgage
                  Lending, Inc. dated February 28, 2003. (Incorporated by reference
                  to the
                  similarly numbered exhibit to the Company’s Annual Report on Form 10-K for
                  the year ended December 31, 2002.)10.7
              
              Indemnity
                  and Guaranty Agreement between Alpine Village Apartments, L.L.C.,
                  a
                  subsidiary of Wilshire Enterprises, Inc., and Merrill Lynch Mortgage
                  Lending, Inc. dated February 28, 2003. (Incorporated by reference
                  to the
                  similarly numbered exhibit to the Company’s Annual Report on Form 10-K for
                  the year ended December 31, 2002.)10.8
              
              Multifamily
                  Mortgage, Security Agreement, Assignment of Rents and Fixture Filing
                  between Alpine Village Apartments, L.L.C., a subsidiary of Wilshire
                  Enterprises, Inc., and Merrill Lynch Mortgage Lending, Inc. dated
                  February
                  28, 2003. (Incorporated by reference to the similarly numbered
                  exhibit to
                  the Company’s Annual Report on Form 10-K for the year ended December 31,
                  2002.)
  64
  10.9
              
              Promissory
                  Note given by Sunrise Ridge, L.L.C., a subsidiary of Wilshire Enterprises,
                  Inc., and Merrill Lynch Mortgage Lending, Inc. dated February 27,
                  2003.
                  (Incorporated by reference to the similarly numbered exhibit to
                  the
                  Company’s Annual Report on Form 10-K for the year ended December 31,
                  2002.)10.10
              
              Environmental
                  Indemnity Agreement between Sunrise Ridge, L.L.C., a subsidiary
                  of
                  Wilshire Enterprises, Inc., and Merrill Lynch Mortgage Lending,
                  Inc. dated
                  February 27, 2003. (Incorporated by reference to the similarly
                  numbered
                  exhibit to the Company’s Annual Report on Form 10-K for the year ended
                  December 31, 2002.)10.11
              
              Indemnity
                  and Guaranty Agreement between Sunrise Ridge, L.L.C., a subsidiary
                  of
                  Wilshire Enterprises, Inc., and Merrill Lynch Mortgage Lending,
                  Inc. dated
                  February 27, 2003. (Incorporated by reference to the similarly
                  numbered
                  exhibit to the Company’s Annual Report on Form 10-K for the year ended
                  December 31, 2002.)10.12
              
              Multifamily
                  Deed of Trust, Security Agreement, Assignment of Rents and Fixture
                  Filing
                  between Sunrise Ridge, L.L.C., a subsidiary of Wilshire Enterprises,
                  Inc.,
                  and Merrill Lynch Mortgage Lending, Inc. dated February 27, 2003.
                  (Incorporated by reference to the similarly numbered exhibit to
                  the
                  Company’s Annual Report on Form 10-K for the year ended December 31,
                  2002.)10.13
              
              Promissory
                  Note given by Van Buren, L.L.C., a subsidiary of Wilshire Enterprises,
                  Inc., and Merrill Lynch Mortgage Lending, Inc. dated February 27,
                  2003.
                  (Incorporated by reference to the similarly numbered exhibit to
                  the
                  Company’s Annual Report on Form 10-K for the year ended December 31,
                  2002.)10.14
              
              Environmental
                  Indemnity Agreement between Van Buren, L.L.C., a subsidiary of
                  Wilshire
                  Enterprises, Inc., and Merrill Lynch Mortgage Lending, Inc. dated
                  February
                  27, 2003. (Incorporated by reference to the similarly numbered
                  exhibit to
                  the Company’s Annual Report on Form 10-K for the year ended December 31,
                  2002.)10.15
              
              Indemnity
                  and Guaranty Agreement between Van Buren, L.L.C., a subsidiary
                  of Wilshire
                  Enterprises, Inc., and Merrill Lynch Mortgage Lending, Inc. dated
                  February
                  27, 2003. (Incorporated by reference to the similarly numbered
                  exhibit to
                  the Company’s Annual Report on Form 10-K for the year ended December 31,
                  2002.)10.16
              
              Multifamily
                  Deed of Trust, Security Agreement, Assignment of Rents and Fixture
                  Filing
                  between Van Buren, L.L.C., a subsidiary of Wilshire Enterprises,
                  Inc., and
                  Merrill Lynch Mortgage Lending, Inc. dated February 27, 2003.
                  (Incorporated by reference to the similarly numbered exhibit to
                  the
                  Company’s Annual Report on Form 10-K for the year ended December 31,
                  2002.)10.17
              
              Promissory
                  Note given by Wellington Apartments, L.L.C., a subsidiary of Wilshire
                  Enterprises, Inc., and Merrill Lynch Mortgage Lending, Inc. dated
                  February
                  27, 2003. (Incorporated by reference to the similarly numbered
                  exhibit to
                  the Company’s Annual Report on Form 10-K for the year ended December 31,
                  2002.)10.18
              
              Environmental
                  Indemnity Agreement between Wellington Apartments, L.L.C., a subsidiary
                  of
                  Wilshire Enterprises, Inc., and Merrill Lynch Mortgage Lending,
                  Inc. dated
                  February 27, 2003. (Incorporated by reference to the similarly
                  numbered
                  exhibit to the Company’s Annual Report on Form 10-K for the year ended
                  December 31, 2002.)10.19
              
              Indemnity
                  and Guaranty Agreement between Wellington Apartments, L.L.C., a
                  subsidiary
                  of Wilshire Enterprises, Inc., and Merrill Lynch Mortgage Lending,
                  Inc.
                  dated February 27, 2003. (Incorporated by reference to the similarly
                  numbered exhibit to the Company’s Annual Report on Form 10-K for the year
                  ended December 31, 2002.)
  65
 
 10.20
              
              Multifamily
                  Deed of Trust, Security Agreement, Assignment of Rents and Fixture
                  Filing
                  between Wellington Apartments, L.L.C., a subsidiary of Wilshire
                  Enterprises, Inc., and Merrill Lynch Mortgage Lending, Inc. dated
                  February
                  27, 2003. (Incorporated by reference to the similarly numbered
                  exhibit to
                  the Company’s Annual Report on Form 10-K for the year ended December 31,
                  2002.)10.21
              
              Agreement
                  dated March 17, 2004 between Wilshire Enterprises, Inc. and Crow
                  Creek
                  Energy L.L.C. to sell the U.S. Oil and Gas business. (Incorporated
                  by
                  reference to the similarly numbered exhibit to the Company’s Annual Report
                  on Form 10-K for the year ended December 31, 2003.)10.22
              
              Contract
                  of sale dated January 23, 2004 between Wilshire Enterprises, Inc.
                  and
                  Economic Properties 2004 L.L.C. for the sale of eleven properties
                  in
                  Jersey City, New Jersey. (Incorporated by reference to the similarly
                  numbered exhibit to the Company’s Annual Report on Form 10-K for the year
                  ended December 31, 2003.)10.23
              
              Employment
                  agreement between the Company and Philip Kupperman dated as of
                  July 1,
                  2002. (Incorporated by reference to Exhibit 10.1 to the Company’s Current
                  Report on Form 8-K dated September 4, 2002.)10.24
              
              Severance
                  Letter Agreement between the Company and Sherry Wilzig Izak dated
                  as of
                  March 29, 2004. (Incorporated by reference to the similarly numbered
                  exhibit to the Company’s Annual Report on Form 10-K for the year ended
                  December 31, 2003.)10.25
              
              Employment
                  agreement between the Company and Daniel C. Pryor dated as of April
                  24,
                  2004. (Incorporated by reference to Exhibit 10.32 to the Company’s Annual
                  Report on Form 10-K for the year ended December 31,
                  2004.)10.26
              
              Letter
                  agreement between the Company and Philip Kupperman dated as of
                  April 18,
                  2005 terminating the employment agreement between the Company and
                  Philip
                  Kupperman. (Incorporated by reference to Exhibit 10.1 to the Company’s
                  Current Report on Form 8-K dated April 19, 2005.)10.27
              
              Purchase
                  agreement and escrow instructions between Biltmore Club Apartments,
                  L.L.C.
                  (a subsidiary of Wilshire Enterprises, Inc.) and GDG Partners L.L.C.
                  dated
                  February 2, 2005. (Incorporated by reference to Exhibit 10.34 to
                  the
                  Company’s Annual Report on Form 10-K for the year ended December 31,
                  2004.)10.28
              
              Operating
                  agreement of WO Grand Hotel, LLC dated as of June 2, 2005. (Incorporated
                  by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form
                  10-Q for the quarter ended June 30, 2005.)10.29
              
              Hotel
                  purchase agreement dated as of September 30, 2005, by and between
                  WO GRAND
                  HOTEL, LLC, a New Jersey limited liability company, and 350 PLEASANT
                  VALLEY HOTEL ASSOCIATES, L.L.C., a New Jersey limited liability
                  company.
                  (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly
                  Report on Form 10-Q for the quarter ended September 30,
                  2005.)10.30
              
              Form
                  of Indemnification Agreement of Directors and Chief Financial Officer
                  (Incorporated by reference to Exhibit 10.1 of the Registrant's
                  Current
                  Report on Form 8-K filed with the SEC on January 18,
                  2007).21
              
              List
                  of significant subsidiaries of the
                  Registrant.
  66
 
 23.1
              
              Consent
                  of J.H. Cohn LLP, Independent Registered Public Accounting
                  Firm.24
              
              Power
                  of attorney.31.1
              
              Certification
                  of the Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley
                  Act of 2002.31.2
              
              Certification
                  of the Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley
                  Act of 2002.32.1
              
              Certification
                  of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
                  as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.32.2
              
              Certification
                  of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
                  as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.
  The
        Company agrees to furnish the Commission upon request any agreements with
        respect to long-term debt not referenced herein.
 
 67
  **SIGNATURES**
 
 Pursuant
        to the requirements of Section 13 or 15(d) 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.
  WILSHIRE
                  ENTERPRISES, INC.
                (Registrant)Date:
                  April 14, 2008
              By:
              /s/
                  S. Wilzig IzakS.
                  Wilzig IzakChairman
                  of the Board and Chief Executive
                  Officer
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, this report has
        been
        signed below by the following persons on behalf of the registrant and in
        the
        capacities and on the dates indicated.
 
 **Directors:**
 
 By:
              
              *
              
              Date:
                  April 14, 2008Miles
                  BergerBy:
              
              *
              
              Date:
                  April 14, 2008Milton
                  DonnenbergBy:
              
              /s/
                  S. Wilzig Izak
              
              Date:
                  April 14, 2008S.
                  Wilzig IzakBy:
              
              *
              
              Date:
                  April 14, 2008Eric
                  J. Schmertz, Esq.By:
              
              *
              
              Date:
                  April 14, 2008Ernest
                  WachtelBy:
              
              *
              
              Date:
                  April 14, 2008Martin
                  Willschick
  **Officers:**
  By:
              
              /s/
                  S. Wilzig Izak
              
              Date:
                  April 14, 2008S.
                  Wilzig Izak*Chairman
                  of the Board and Chief Executive Officer*By:
              
              /s/
                  Francis J. Elenio
              
              Date:
                  April 14, 2008Francis
                  J. Elenio*Chief
                  Financial Officer*
 
 *
 
        Signed under power of attorney dated April 9, 2008 and filed herewith as
        Exhibit
        24.
 
 68
  **Exhibit
        Index**
 
 **Exhibit
                  #**
              
              **Description**21
              
              List
                  of significant subsidiaries.23.1
              
              Consent
                  of J.H. Cohn LLP, Independent Registered Public Accounting
                  Firm.24
              
              Power
                  of attorney.31.1
              
              Certification
                  of the Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley
                  Act of 2002.31.2
              
              Certification
                  of the Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley
                  Act of 2002.32.1
              
              Certification
                  of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
                  as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.32.2
              
              Certification
                  of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
                  as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.
  69