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

Critical Accounting Policies and Estimates

The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. Certain of the Company's accounting policies

require the application of judgment in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments and estimates are based upon the Company's historical experience, current trends and information available from other sources that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company believes the following critical accounting policies are more significant to the judgments and estimates used in the preparation of its consolidated financial statements. Revisions in such estimates are recorded in the period in which the facts that give rise to the revisions become known.

The Company's allowance for doubtful accounts receivable and notes receivable is based on an analysis of the risk of loss on specific accounts. The analysis places particular emphasis on past due accounts. Management considers such information as the nature and age of the receivable, the payment history of the tenant, customer or other debtor and the financial condition of the tenant, customer or other debtor. Management's estimate of the required allowance, which is reviewed on a quarterly basis, is subject to revision as these factors change.

Deferred Tax Assets

Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. The future recoverability of the Company's net deferred tax assets is dependent upon the generation of future taxable income prior to the expiration of the loss carry forwards. The Company has established a full valuation reserves for its existing deferred tax assets.

Liquidity and Capital Resources

At June 30, 2008, the Company had current assets of $16.3 million and current liabilities of $1.7 million.

Cash and cash equivalents at June 30, 2008 were $159,000, as compared to $172,000 at December 31, 2007.

Net cash provided from operating activities was $286,000 for the six months ended June 30, 2008. During the six-month period, the Company had a net income of $15.0 million.

Net cash provided from investing activities was $3.8 million for the six months ended June 30, 2008, consisting of proceeds from the sale of mineral rights in Arkansas of $23 million reduced by a short term loan to an affiliate of $14 million and a deposit for the acquisition of oil and gas interests of $5.4 million and the purchase of $36,000 of equipment at the Company's retirement community.

Net cash used in financing activities was $4.1 million for the six months ended June 30, 2008, consisting of net funds raised from the sale of 950,000 shares of common stock of $2.8 million less the payment of $6.9 million of notes payable principally due to the sale of certain mineral rights.

Results of Operations

The Company reported net income of $15.0 million for the three and six months ended June 30, 2008, as compared to a net loss of $6,000 and $433,000 for the same periods in 2007.

For the three and six months ended June 30, 2008, the Company recorded revenues of $699,000 and $1.4 million from its retirement property compared to $761,000 and $1.5 million for the same periods in 2007. The Company's retirement property is fully occupied and it is anticipated that it will remain so during 2008.

For the three and six months ended June 30, 2008, operating expenses and lease expense at the retirement property were $550,000 and $1.1 million as compared to $543,000 and $1.1 million for the same periods in 2007.

For the three and six months ended June 30, 2008, corporate general & administrative expenses were $264,000 and $525,000 as compared to $251,000 and $474,000 for the same periods in 2007.

For the three and six months ended June 30, 2008, interest income was $198,000 and $250,000 compared to $27,000 and $111,000 for the same periods in 2007. The increases are due to the Company's increased investment in interest bearing notes.

The Company recorded interest expense for the three and six months ended June 30, 2008, of $68,000 and $230,000 as compared to no interest expense for the same periods in 2007. A wholly owned subsidiary of the Company purchased leasehold interests in November 2007 in approximately 1,712 acres of land in the Fayetteville Shale area of Arkansas in exchange for a $6.8 million note with interest at 9.5% per annum.

Other income was $148,000 and $412,000 for the three and six months ended June 30, 2008, as compared to no other income and $10,000 for the same periods in 2007. The increase in the period ended March 31, 2008 was principally due to the collection of back interest from a mortgage bond receivable due to the sale of a property in August 2001. Because the mortgage bond was payable based on cash flow and profit of the property, the uncollected interest was not recorded until collected. The increase during the three months ended June 30, 2008 was principally due to the collection of a note that was previously written off.

Forward Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: A number of the matters and subject areas discussed in this filing that are not historical or current facts deal with potential future circumstances, operations and prospects. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from the Company's actual future experience involving any one or more of such matters and subject areas relating to interest rate fluctuations, the ability to obtain adequate debt and equity financing, demand, pricing, competition, construction, licensing, permitting, construction delays on new developments, contractual and licensure, and other delays on the disposition, transition, or restructuring of currently or previously owned, leased or managed properties in the Company's portfolio, and the ability of the Company to continue managing its costs and cash flow while maintaining high occupancy rates and market rate charges in its retirement community. The Company has attempted to identify, in context, certain of the factors that it currently believes may cause actual future experience and results to differ from the Company's current expectations regarding the relevant matter of subject area. These and other risks and uncertainties are detailed in the Company's reports filed with the Securities and Exchange Commission ("SEC"), including the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.

Inflation

The Company's principal source of revenue is rents from a retirement community and fees for services rendered. The real estate operation is affected by rental rates that are highly dependent upon market conditions and the competitive environment in the areas where the property is located. Compensation to employees and maintenance are the principal cost elements relative to the operation of this property. Although the Company has not historically experienced any adverse effects of inflation on salaries or other operating expenses, there can be no assurance that such trends will continue or that, should inflationary pressures arise, the Company will be able to offset such costs by increasing rental rates in its real estate operation.

Environmental Matters

The Company has conducted environmental assessments on most of its existing owned or leased properties. These assessments have not revealed any environmental liability that the Company believes would have a material adverse affect on the Company's business, assets or results of operations. The Company is not aware of any such environmental liability. The Company believes that all of its properties are in compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances or petroleum products. The Company has not been notified by any governmental authority and is not otherwise aware of any material non-compliance, liability or claim relating to hazardous or toxic substances or petroleum products in connection with any of its communities.