10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2004

OR

[ ]     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: 0-4408

RESOURCE AMERICA, INC.
(Exact name of registrant as specified in its charter)

Delaware	72-0654145
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1845 Walnut Street
Suite 1000
Philadelphia, PA	19103
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (215) 546-5005

        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 [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [X] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

        Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

17,421,931 Shares April 30, 2004

RESOURCE AMERICA, INC. AND SUBSIDIARIESINDEX
TO QUARTERLY REPORT
ON FORM 10-Q

		Page
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements
	Consolidated Balance Sheets - March 31, 2004 (Unaudited) and
	September 30, 2003	3
	Consolidated Statements of Income (Unaudited)
	Three Months and Six Months Ended March 31, 2004 and 2003	4
	Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
	Six Months Ended March 31, 2004	5
	Consolidated Statements of Cash Flows (Unaudited)
	Six Months Ended March 31, 2004 and 2003	6
	Notes to Consolidated Financial Statements - March 31, 2004 (Unaudited)	7 - 25
Item 2	Management's Discussion and Analysis of Financial Condition
	and Results of Operations	26 - 42
Item 3	Quantitative and Qualitative Disclosures about Market Risk	42 - 44
Item 4	Controls and Procedures	44
PART II	OTHER INFORMATION
Item 4	Submission of Matters to a Vote of Security Holders	45
Item 6	Exhibits and Reports on Form 8-K	45
SIGNATURES		46

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RESOURCE AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

	March 31, 2004			September 30, 2003
	Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	27,089		$	41,129
Accounts receivable and prepaid expenses		32,074			30,416
FIN 46 entities' and other assets held for sale		108,893			222,677
Total current assets		168,056			294,222
Investments in real estate loans and real estate		69,603			68,936
FIN 46 entities' assets		61,595			78,247
Investment in RAIT Investment Trust		13,169			20,511
Property and equipment, net		155,523			143,410
Other assets		27,808			19,509
Intangible assets, net		7,933			8,476
Goodwill		37,471			37,471
	$	541,158		$	670,782
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	12,202		$	59,471
Secured revolving credit facilities - leasing		13,836			7,168
Accounts payable		15,417			19,065
FIN 46 entities' and other liabilities associated with assets held for sale		69,375			141,473
Accrued liabilities		16,742			14,626
Liabilities associated with drilling contracts		15,465			22,158
Total current liabilities		143,037			263,961
Long-term debt		70,725			73,696
Deferred revenue and other liabilities		3,855			3,633
FIN 46 entities' liabilities		30,304			45,184
Deferred income taxes		14,860			12,878
Minority interest in Atlas Pipeline Partners, L.P.		43,163			43,976
Commitments and contingencies		--			--
Stockholders' equity:
Preferred stock $1.00 par value: 1,000,000 authorized shares		--			--
Common stock, $.01 par value: 49,000,000 authorized shares		255			255
Additional paid-in capital		227,413			227,211
Less treasury stock, at cost		(78,648	)		(78,860	)
Less ESOP loan receivable		(1,121	)		(1,137	)
Accumulated other comprehensive income		4,594			5,611
Retained earnings		82,721			74,374
Total stockholders' equity		235,214			227,454
	$	541,158		$	670,782

See accompanying notes to consolidated financial statements

3

RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended March 31,					Six Months Ended March 31,
	2004			2003		2004			2003
	(in thousands, except per share data)
REVENUES:
Energy	$	41,940		$	36,336	$	77,673		$	54,296
Real estate		5,407			3,489		9,790			6,648
Leasing		2,084			715		3,708			1,862
Equity in earnings of financial services investees		1,921			--		2,880			122
Interest, dividends, gains and other		3,049			2,150		4,878			4,122
		54,401			42,690		98,929			67,050
COSTS AND EXPENSES:
Energy		29,035			25,830		52,361			36,816
Real estate		4,196			937		8,034			1,783
Leasing		2,880			992		4,426			1,991
Financial services		74			--		413			--
General and administrative		1,580			2,520		3,566			4,092
Depreciation, depletion and amortization		3,773			3,103		7,210			6,086
Interest		1,239			3,071		3,906			6,409
Provision for possible losses		100			800		400			1,173
Minority interest in Atlas Pipeline Partners, L.P.		1,322			884		2,595			1,529
		44,199			38,137		82,911			59,879
Income from continuing operations before income taxes		10,202			4,553		16,018			7,171
Provision for income taxes		3,411			1,458		5,446			2,295
Income from continuing operations		6,791			3,095		10,572			4,876
Loss on discontinued operations, net of tax benefit of
$340 and $576		(629	)		--		(1,067	)		--
Net income	$	6,162		$	3,095	$	9,505		$	4,876
Net income (loss) per common share - basic:
From continuing operations	$	.39		$	.18	$	.61		$	.28
From discontinued operations		(.04	)		--		(.06	)		--
Net income per common share - basic	$	.35		$	.18	$	.55		$	.28
Weighted average common shares outstanding		17,374			17,118		17,364			17,245
Net income (loss) per common share - diluted:
From continuing operations	$	.37		$	.18	$	.59		$	.28
From discontinued operations		(.03	)		--		(.06	)		--
Net income per common share - diluted	$	.34		$	.18	$	.53		$	.28
Weighted average common shares		18,153			17,398		18,052			17,524

See accompanying notes to consolidated financial statements

4

RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
SIX MONTHS ENDED MARCH 31, 2004
(Unaudited)
(in thousands, except share data)

					Additional
	Common stock				Paid-In			Treasury Stock
	Shares		Amount		Capital			Shares			Amount
Balance, October 1, 2003		25,463,645	$	255	$	227,211			(8,113,500	)	$	(78,860	)
Common shares issued		28,035		--		268			--			--
Treasury shares issued		--		--		(66	)		10,043			212
Other comprehensive income		--		--		--			--			--
Cash dividends ($.066 per share)		--		--		--			--			--
Repayment of ESOP Loan		--		--		--			--			--
Net income		--		--		--			--			--
Balance, March 31, 2004		25,491,680	$	255	$	227,413			(8,103,457	)	$	(78,648	)

	ESOP Loan Receivable			Other Comprehensive Income			Retained Earnings			Totals Stockholders' Equity
Balance, October 1, 2003	$	(1,137	)	$	5,611		$	74,374		$	227,454
Common shares issued		--			--			--			268
Treasury shares issued		--			--			--			146
Other comprehensive income		--			(1,017	)		--			(1,017	)
Cash dividends ($.066 per share)		--			--			(1,158	)		(1,158	)
Repayment of ESOP Loan		16			--			--			16
Net income		--			--			9,505			9,505
Balance, March 31, 2004	$	(1,121	)	$	4,594		$	82,721		$	235,214

See accompanying notes to consolidated financial statements

5

RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended March 31,
	2004			2003
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	9,505		$	4,876
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		7,210			6,086
Amortization of discount on senior debt and deferred finance costs		648			650
Provision for possible losses		400			1,173
Equity in earnings of Trapeza entities		(2,880	)		(122	)
Equity in earnings of other equity investees		(377	)		(39	)
Minority interest in Atlas Pipeline Partners, L.P.		2,595			1,529
Loss on discontinued operations		1,067			--
Net loss (gain) on asset dispositions and buyback of senior notes		1,133			(867	)
Gain on sale of RAIT Investment Trust shares		(5,494	)		(2,119	)
Property impairments and abandonments		1,679			12
Deferred income taxes		(1,011	)		2,250
Accretion of discount		(978	)		(1,409	)
Collection of interest		--			91
Non-cash compensation		145			162
Net change in FIN 46 entities' net assets and other net assets held for sale		297			--
Changes in operating assets and liabilities		(6,656	)		2,727
Net cash provided by operating activities		7,283			15,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(18,493	)		(12,898	)
Investments in real estate loans and real estate		(2,185	)		(2,133	)
Principal payments on notes receivable and proceeds from sales of assets		8,047			4,578
Proceeds from sale of RAIT Investment Trust shares		11,545			7,357
Net investments in Trapeza entities		(2,293	)		(779	)
(Increase) decrease in other assets		(757	)		336
Net cash used in investing activities		(4,136	)		(3,539	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings		122,539			64,139
Principal payments on borrowings		(168,750	)		(61,253	)
Dividends paid		(1,158	)		(1,156	)
Distributions paid to minority interests of Atlas Pipeline Partners, L.P.		(3,379	)		(1,751	)
Purchase of treasury stock		--			(3,238	)
Repayment of ESOP loan		16			16
Increase in other assets		(1,075	)		(772	)
Proceeds from issuance of stock		261			25
Net cash used in financing activities		(51,546	)		(3,990	)
Net cash provided by (used in) discontinued operations		34,359			(5,624	)
(Decrease) increase in cash and cash equivalents		(14,040	)		1,847
Cash and cash equivalents at beginning of period		41,129			25,736
Cash and cash equivalents at end of period	$	27,089		$	27,583

See accompanying notes to consolidated financial statements

6

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2004
(Unaudited)

NOTE 1 – MANAGEMENT’S OPINION REGARDING INTERIM FINANCIAL STATEMENTS

        The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned except for Atlas Pipeline Partners, L.P. (“Atlas Pipeline”). In addition, commencing with the adoption of Financial Accounting Standards Board (“FASB”) Interpretation 46, “Consolidation of Variable Interest Entities” (“FIN 46”) on July 1, 2003, the Company has consolidated certain variable interest entities (“VIEs”) in which the Company has determined that it is the primary beneficiary.

        The consolidated financial statements and the information and tables contained in the notes to the consolidated financial statements as of March 31, 2004 and for the three and six months ended March 31, 2004 and 2003 are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended September 30, 2003. The results of operations for the three months and six months ended March 31, 2004 may not necessarily be indicative of the results of operations for the full fiscal year ending September 30, 2004.

        Certain reclassifications have been made to the consolidated financial statements as of September 30, 2003 and for the three months and six months ended March 31, 2003 to conform to the presentation as of and for the three months and six months ended March 31, 2004.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Comprehensive Income

        The following table presents comprehensive income for the periods indicated:

	Three Months Ended March 31,						Six Months Ended March 31,
	2004			2003			2004			2003
	(in thousands)
Net income	$	6,162		$	3,095		$	9,505		$	4,876
Other comprehensive income (loss):
Unrealized gain on investment in RAIT Investment
Trust, net of taxes of $630, $322, $1,273, and
$729		1,415			615			2,609			1,481
Less: reclassification adjustment for gains realized
in net income, net of taxes of $981, $363,
$1,868 and $664		(1,995	)		(738	)		(3,626	)		(1,356	)
		(580	)		(123	)		(1,017	)		125
Unrealized loss on natural gas futures and
options contracts, net of taxes of $50 and $145		--			(106	)		--			(318	)
		(580	)		(229	)		(1,017	)		(193	)
Comprehensive income	$	5,582		$	2,866		$	8,488		$	4,683

7

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Comprehensive Income — (Continued)

        Accumulated other comprehensive income is related to the following at:

	March 31, 2004	September 30, 2003
	(in thousands)
Marketable securities - unrealized gains, net of taxes	$4,594	$5,611

Property and Equipment

        Property and equipment consists of the following at:

	March 31, 2004		September 30, 2003
	(in thousands)
Mineral interests in properties:
Proved properties	$        844		$        844
Unproved properties	983		563
Wells and related equipment	201,411		184,226
Support equipment	2,336		2,189
Other	10,143		9,136
	215,717		196,958
Accumulated depreciation, depletion, amortization and valuation     allowances:
Oil and gas properties and related equipment	(56,275	)	(50,170	)
Other	(3,919	)	(3,378	)
	(60,194	)	(53,548	)
	$ 155,523		$ 143,410

Investment in RAIT Investment Trust

        The Company accounts for its investment in RAIT Investment Trust (“RAIT”) in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 115 “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS 115”). This investment is classified as available-for-sale and as such is carried at fair market value based on market quotes. Unrealized gains and losses, net of taxes, are reported as a separate component of stockholders’ equity. The cost of securities sold is based on the specific identification method.

        The following table discloses the pre-tax unrealized gains relating to the Company’s investment in RAIT at the dates indicated:

	March 31, 2004	September 30, 2003
	(in thousands)
Cost	$  6,209	$12,260
Unrealized gains	6,960	8,251
Estimated fair value	$13,169	$20,511

8

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Fair Value of Financial Instruments

        The Company uses the following methods and assumptions in estimating the fair value of each class of financial instruments for which it is practicable to estimate fair value.

        For cash and cash equivalents, receivables, payables and debt the carrying amounts approximate fair value because of the short maturity of these instruments.

        For investments in real estate loans, because each loan is a unique transaction involving a discrete property, it is impractical to determine their fair values. However, the Company believes the carrying amounts of the loans are reasonable estimates of their fair value considering the nature of the loans and the estimated yield relative to the risks involved.

        For secured revolving credit facilities — leasing, the carrying amount approximates fair value because of the short maturity of these instruments.

        The following table provides information on other financial instruments at:

	March 31, 2004		September 30, 2003
	Carrying Amount	Estimated Fair Value	Carrying Amount	Estimated Fair Value
	(in thousands)
Energy debt	$40,500	$  40,500	$  31,194	$  31,194
Real estate debt	17,995	17,995	19,469	19,469
Senior debt	--	--	54,027	55,648
Other debt	24,432	24,432	28,477	28,477
	$82,927	$  82,927	$133,167	$134,788

Earnings Per Share

        Basic earnings (loss) per share are determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Earnings (loss) per share — diluted is computed by dividing net income (loss) by the sum of the weighted average number of shares of common stock outstanding and dilutive potential shares issuable during the period. Dilutive potential shares of common stock consist of the excess of shares issuable under the terms of various stock option plans over the number of such shares that could have been reacquired (at the weighted average price of shares during the period) with the proceeds received from the exercise of the options.

9

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Earnings Per Share – (Continued)

        The following table presents a reconciliation of the components used in the computation of net income (loss) per common share-basic and net income (loss) per common share-diluted for the periods indicated:

	Three Months Ended March 31,			Six Months Ended March 31,
	2004		2003	2004		2003
	(in thousands)
Income from continuing operations	$   6,791		$  3,095	$ 10,572		$  4,876
Loss from discontinued operations, net of taxes
of $339 and $575	(629	)	--	(1,067	)	--
Net income	$   6,162		$  3,095	$   9,505		$  4,876
Weighted average common shares outstanding-basic	17,374		17,118	17,364		17,245
Dilutive effect of stock option and award plans	779		280	688		279
Weighted average common shares-diluted	18,153		17,398	18,052		17,524

Asset Retirement Obligations

        The Company accounts for the estimated plugging and abandonment costs of its oil and gas properties in accordance with SFAS No. 143, "Accounting for Asset Retirement Obligations."

        A reconciliation of the Company’s liability for well plugging and abandonment costs for the periods indicated follows:

	Three Months Ended March 31,			Six Months Ended March 31,
	2004		2003	2004		2003
	(in thousands)
Asset retirement obligations, beginning of period	$ 3,180		$3,380	$ 3,131		$     --
Liabilities incurred	71		--	101		--
Adoption of SFAS 143	--		--	--		3,380
Liabilities settled	(15	)	--	(43	)	--
Revision in estimates	83		--	83		--
Accretion expense	52		101	99		101
Asset retirement obligations, end of period	$ 3,371		$3,481	$ 3,371		$3,481

        Accretion expense is included in depreciation, depletion and amortization in the Company’s consolidated statements of income and the asset retirement obligation liabilities are included in deferred revenue and other liabilities in the Company’s consolidated balance sheets.

10

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Supplemental Cash Flow Information

        The Company considers temporary investments with a maturity at the date of acquisition of 90 days or less to be cash equivalents.

        Supplemental disclosure of cash flow information:

	Six Months Ended March 31,
	2004	2003
	(in thousands)
Cash paid during the period for:
Interest	$  4,517	$  5,891
Income taxes	$        --	$        --
Non-cash activities include the following:
Receipt of a note in connection with the sale of a real estate loan	$        --	$  1,350
Leases transferred to LEAF's sponsored investment partnership	$        --	$  3,550
Debt transferred to LEAF's sponsored investment partnership	$        --	$  3,550
Receipt of note upon resolution of a real estate loan and a FIN 46 asset	$  8,772	$        --
Asset retirement obligation	$     101	$  3,380

Stock-Based Compensation

        The Company accounts for stock-based employee compensation plans under the recognition and measurement principles of Accounting Principles Board Opinion 25, “Accounting for Stock Issued to Employees,” and related interpretations. For substantially all grants of stock options, no stock-based employee compensation cost is reflected in net income, since each option granted had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table provides the pro forma effects of recognizing compensation expense in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation, (“SFAS 123”) as amended by the required disclosures of SFAS No. 148, “Accounting for Stock Based Compensation – Transition and Disclosure.”

	Three Months Ended March 31,		Six Months Ended March 31,
	2004	2003	2004	2003
	(in thousands, except per share data)
Net income as reported	$    6,162	$    3,095	$    9,505	$    4,876
Stock-based employee compensation expense reported
in net income, net of taxes	--	--	--	--
Total stock-based employee compensation under fair
value method for all grants, net of taxes	(524)	(557)	(1,285	(1,385	)
Pro forma net income	$   5,638	$   2,538	$   8,220	$   3,491
Net income per common share:
Pro forma net income	$       .35	$       .18	$       .55	$       .28
Pro forma net income	$       .32	$       .15	$       .47	$       .20
Pro forma net income	$       .34	$       .18	$       .53	$       .28
Pro forma net income	$       .31	$       .15	$       .46	$       .20

11

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Derivative Instruments and Hedging Activities

        The Company from time to time enters into natural gas futures and option contracts to hedge its exposure to changes in natural gas prices. At any point in time, such contracts may include regulated New York Mercantile Exchange (“NYMEX”) futures and options contracts and non-regulated over-the-counter futures contracts with qualified counterparties. NYMEX contracts are generally settled with offsetting positions, but may be settled by the delivery of natural gas.

        At March 31, 2004, the Company had no open natural gas futures contracts related to natural gas sales. Gains or losses on futures contracts are determined as the difference between the contract price and a reference price, generally prices on NYMEX. The Company did not settle any contracts during the six months ended March 31, 2004. The Company recognized losses of $448,000 and $544,000 on settled contracts for the three months and six months ended March 31, 2003. The Company recognized no gains or losses during the six months ended March 31, 2004 and 2003 for hedge ineffectiveness or as a result of the discontinuance of cash flow hedges.

        Although hedging provides the Company some protection against falling prices, these activities could also reduce the potential benefits of price increases, depending upon the instrument.

Recently Issued Financial Accounting Standards

        In December 2003, the FASB revised SFAS No. 132, “Employers’ Disclosures about Pensions and other Postretirement Benefits” (“SFAS 132”), establishing additional annual disclosures about plan assets, investment strategy, measurement date, plan obligations and cash flows. In addition, the revised standard established interim disclosure requirements related to the net periodic benefit cost recognized and contributions paid or expected to be paid during the current fiscal year. The new annual disclosures are effective for financial statements with fiscal years ending after December 15, 2003 and the interim-period disclosures are effective for interim periods beginning after December 15, 2003. The adoption of the revised SFAS 132 had no impact on the Company’s results of operations or financial position.

        In April 2003, the FASB issued SFAS No. 149 “Amendment of Statement No. 133 on Derivative Instruments and Hedging Activates” (“SFAS 149”). SFAS 149 is effective for contracts entered into or modified after December 31, 2003 and amends and clarifies financial accounting and reporting for derivative instruments. The adoption of SFAS 149 did not have a material effect on the Company’s financial position or results of operations.

12

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 3 — CONSOLIDATION OF VARIABLE INTEREST ENTITIES

        In January 2003, FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51” (“FIN 46”). In December 2003, FASB issued a revised interpretation of FIN 46 (“FIN 46-R”), which supersedes FIN 46 and clarifies and expands current accounting guidance for variable interest entities (“VIE’s”). We refer to this interpretation throughout this document as FIN 46 or FIN 46-R. FIN 46 clarifies when a company should consolidate in its financial statements the assets, liabilities and activities of a VIE. FIN 46 provides general guidance as to the definition of a VIE and requires it to be consolidated if a party with an ownership, contractual or other financial interest absorbs the majority of the VIE’s expected losses, or is entitled to receive a majority of the residual returns, or both. A variable interest holder that is such a primary beneficiary of the VIE is required to consolidate the VIE’s assets, liabilities and non-controlling interests at fair value at the date the interest holder first becomes the primary beneficiary of the VIE. FIN 46 and FIN 46-R are effective immediately for all VIEs created after January 31, 2003 and for VIEs created prior to February 1, 2003, no later than the end of the first reporting period after March 15, 2004. The Company early adopted FIN 46 on July 1, 2003.

        Certain entities relating to the Company’s real estate finance business have been consolidated in accordance with FIN 46-R. The assets, liabilities, revenues and expenses of the consolidated VIEs are included in the Company’s financial statements where previously the Company’s interests in the VIEs had been recorded as investments in real estate loans. These VIEs are consolidated because the Company has been determined to be the primary beneficiary of these entities as defined in FIN 46-R.

        The assets and liabilities of the VIEs that are now included in the consolidated financial statements are not the Company’s. The liabilities will be satisfied from the cash flows of the VIEs’ consolidated assets, not from the assets of the Company, which has no legal obligation to satisfy those liabilities. The following tables provide supplemental information about assets, liabilities, revenues and expenses associated with entities consolidated in accordance with FIN 46-R and not classified as held for sale at the dates indicated.

	March 31, 2004	September 30, 2003
	(in thousands)
Assets:
Cash	$       895	$      1,689
Accounts receivables	201	451
Real estate assets, net	60,494	76,035
Other	5	72
Total FIN 46 entities' assets	$  61,595	$  78,247
Liabilities:
Mortgage loans on real estate	$  24,451	$  37,620
Other	5,853	7,564
Total FIN 46 entities' liabilities	$  30,304	$  45,184

13

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 3 — CONSOLIDATION OF VARIABLE INTEREST ENTITIES — (Continued)

	Three Months Ended March 31, 2004	Six Months Ended March 31, 2004
	(in thousands)
Operating Information - included in real estate finance:
Revenues	$3,062	$5,426
Costs and expenses:
Operating expenses	1,787	3,455
Depreciation and amortization	368	654
Interest	236	627
Total costs and expenses	2,391	4,736
Operating income	$   671	$   690

        The following tables provide supplemental information about assets, liabilities, revenues and expenses associated with entities that are held for sale, substantially all of which are consolidated in accordance with FIN 46 (See Note 10). During the six months ended March 31, 2004, the Company liquidated its position in four entities which were classified as held for sale.

	March 31, 2004	September 30, 2003
	(in thousands)
Assets:
Cash	$    3,498	$    3,960
Accounts receivables	1,149	2,988
Real estate assets, net	100,892	213,026
Other	3,354	2,703
Total assets	$108,893	$222,677
Liabilities:
Mortgage loans on real estate	$  60,601	$130,687
Other	8,774	10,786
Total liabilities	$  69,375	$141,473

	Three Months Ended March 31, 2004		Six Months Ended March 31, 2004
	(in thousands)
Income (loss) from Discontinued Operations:
Revenues	$ 3,392		$ 5,306
Expenses	3,128		4,911
Operating income	264		395
Loss on disposals	(1,835	)	(2,640	)
Income tax benefit	550		786
Loss from discontinued operations	$(1,021	)	$(1,459	)

14

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 4 – OTHER ASSETS, INTANGIBLE ASSETS AND GOODWILL

Other Assets

        The following table provides information about other assets at the dates indicated:

	March 31, 2004	September 30, 2003
	(in thousands)
Deferred financing costs, net of accumulated amortization of
$5,779 and $5,504	$  2,357	$  2,105
Equity method investments in Trapeza entities	9,451	4,802
Investments at lower of cost or market	6,727	6,185
Other	9,273	6,417
Total other assets	$27,808	$19,509

        Deferred financing costs are amortized over the terms of the related loans (two to seven years).

        Investments in Trapeza entities are accounted for using the equity method of accounting because the Company, as a 50% owner of the general partner of these entities, has the ability to exercise significant influence over their operating and financial decisions. The Company’s combined general and limited partner interests in these entities range from 13% to 18%. The Company accounts for its share of equity earnings using a one-quarter lag, as permissible by accounting principles generally accepted in the United States of America.

        Investments at the lower of cost or market include non-marketable investments in entities in which the Company has less than a 20% ownership interest, and in which it does not have the ability to exercise significant influence. These investments include approximately 10% of the outstanding shares of The Bancorp, Inc. (“TBI”), a related party.

Intangible Assets

        Partnership management and operating contracts and the Company’s equipment leasing operating system, or leasing platform, were acquired through acquisitions recorded at fair value on their acquisition dates. The Company amortizes contracts acquired on a declining balance method over their respective estimated lives, ranging from five to thirteen years. The leasing platform is amortized on the straight-line method over seven years. Amortization expense for the six months ended March 31, 2004 and 2003 was $543,000 and $658,000, respectively. The aggregate estimated annual amortization expense is approximately $1.1 million for each of the succeeding five years.

        The following table provides information about intangible assets at the dates indicated:

	March 31, 2004		September 30, 2003
	(in thousands)
Partnership management and operating contracts	$ 14,343		$ 14,343
Leasing platform	918		918
	15,261		15,261
Accumulated amortization	(7,328	)	(6,785	)
Intangible assets, net	$   7,933		$   8,476

15

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 4 – OTHER ASSETS, INTANGIBLE ASSETS AND GOODWILL – (Continued)

Goodwill

        The Company accounts for its goodwill in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets.” The Company evaluates its goodwill at least annually as of the last day of the fiscal year and will reflect the impairment of goodwill, if any, in operating income in the statement of income in the period in which the impairment is indicated. All goodwill recorded on the Company’s balance sheets is related to the Company’s energy segments. At March 31, 2004 and September 30, 2003 the Company had goodwill of $37.5 million, net of accumulated amortization of $4.2 million.

NOTE 5 — CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

        In December 2003, RAIT provided the Company a standby commitment to provide bridge financing in the amount of $10.0 million. RAIT received a $100,000 facilitation fee from the Company in connection with providing this standby commitment. On January 15, 2004, the Company borrowed the $10.0 million from RAIT, and on January 21, 2004, the Company repaid RAIT in full.

        In October 2003, the Company recapitalized a loan it acquired in 1998 under a plan of reorganization in bankruptcy for a cost of $95.6 million. At the time of such acquisition, an order of the bankruptcy court required that legal title to the property underlying the loan be transferred. To comply with that order, to maintain control of the property and to protect the Company’s interest, an entity whose general partner is a subsidiary of the Company and whose limited partners are Messrs. Scott Schaeffer, Daniel Cohen and Edward. Cohen (with a 94% aggregate beneficial interest) assumed title to the property. As part of the recapitalization, Messrs. Edward Cohen and Scott Schaeffer transferred all of their interests to an unrelated third party for no consideration and Mr. Daniel Cohen reduced his interest from 31.3% to 15% interest to such third party for no consideration. In consideration for the limited partners’ agreeing to the recapitalization of the loan, the Company agreed to reimburse the limited partners the amount that they had paid to the Company in 1998 for the interests transferred. Such payment was $200,000 in the aggregate.

        In October 2003, a FIN 46 entities asset underlying one of the Company’s loans was sold to an entity of which Daniel Cohen is an affiliate of the general partner; such entity was the highest bidder for the property and the Company received $6.6 million in cash and recognized a gain of $77,000. Prior to such sale, the FIN 46 entities asset had been owned by a partnership in which Messrs. Edward Cohen, Daniel Cohen and Adam Kauffman and Ms. Betsy Cohen were limited partners. (See Note 3).

        In March 2004, the Company acquired $3.7 million of leases at book value from leasing investment partnerships in which we are the general partner. These funds are in the liquidation process.

16

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 6 – INVESTMENTS IN LEASE RECEIVABLES

        Components of the investment in direct financing leases at the dates indicated are as follows:

	March 31, 2004		September 30, 2003
	(in thousands)
Total future minimum lease payments receivable	$ 19,953		$ 7,982
Initial direct costs, net of amortization	297		122
Unguaranteed residual	155		51
Unearned lease income	(3,448	)	(1,326	)
Unearned residual income	(62	)	(12	)
Investments in lease receivables	$ 16,895		$ 6,817

        Although the lease terms extend over many years as indicated in the table below, the investments in lease receivables are included in accounts receivable and prepaid expenses in the Company’s consolidated balance sheets since the Company routinely sells the leases to Lease Equity Appreciation Fund I or Merrill Lynch Equipment Finance, LLC shortly after their origination in accordance with agreements with each party. The contractual future minimum lease payments receivable for each of the five succeeding annual periods ending March 31 and thereafter, are as follows (in thousands):

2005	$  5,144
2006	5,111
2007	3,653
2008	2,594
2009	2,079
Thereafter	1,372
	$19,953

NOTE 7 – INVESTMENTS IN REAL ESTATE LOANS AND REAL ESTATE

        In real estate, the Company focuses on the sponsorship and management of real estate investment programs and the management and resolution of its investments in income-producing real estate loans. In the management of real estate investment programs, the Company receives fees for the acquisition, debt placement and management related to properties acquired by these programs. In the management and resolution of real estate loans, the Company records as income the accretion of a portion of the difference between its cost basis in a loan and the sum of projected cash flows therefrom. Cash received by the Company for payment on each loan is allocated between principal and interest. This accretion of discount amounted to $421,000 and $978,000 during the three months and six months ended March 31, 2004 and $714,000 and $1.4 million for the three months and six months ended March 31, 2003, respectively. As the Company receives funds from refinancing of its loans by the borrower, a portion of the cash received is employed to reduce the cumulative accretion of discount included in the carrying value of the Company’s investments in real estate loans.

17

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 7 – INVESTMENTS IN REAL ESTATE LOANS AND REAL ESTATE — (Continued)

        At March 31, 2004 and 2003, the Company held real estate loans having an aggregate face value of $184.6 million and $614.2 million, respectively. The reduction at March 31, 2004 primarily reflects the removal of loans having $393.6 million of aggregate face value ($132.7 million of carrying value) upon the adoption of FIN 46 on July 1, 2003 as discussed in Note 1 and Note 3. Amounts receivable, net of senior lien interests, were $48.5 million and $187.7 million at March 31, 2004 and 2003, respectively.

        The following is a summary of the changes in the carrying value of the Company’s investments in real estate loans and real estate for the periods indicated.

	Three Months Ended March 31,				Six Months Ended March 31,
	2004		2003		2004		2003
	(in thousands)
Loan balance, beginning of period	$ 48,611		$ 186,354		$ 40,416		$ 187,542
New loan	--		--		8,772		1,350
Additions to existing loans	1,825		1,261		2,062		2,421
Accretion of discount (net of collection of interest)	421		714		978		1,409
Write-downs	--		(393	)	--		(393	)
Collection of principal	--		(208	)	--		(4,601	)
Cost of loans resolved	(2,322	)	--		(3,693	)	--
Loan balance, end of period	$ 48,535		$ 187,728		$ 48,535		$ 187,728
Real estate ventures	$ 10,936		$   13,650		$ 10,936		$   13,650
Real estate owned, net of accumulated depreciation of
$759 and $493	11,805		4,307		11,805		4,307
Allowance for possible losses	(1,673	)	(4,260	)	(1,673	)	(4,260	)
Balance, loans and real estate, end of period	$ 69,603		$ 201,425		$ 69,603		$ 201,425

18

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 7 – INVESTMENTS IN REAL ESTATE LOANS AND REAL ESTATE — (Continued)

        In determining the Company’s allowance for possible losses related to its real estate loans and real estate ventures, the Company considers general and local economic conditions, neighborhood values, competitive overbuilding, casualty losses and other factors which may affect the value of loans and real estate. The value of loans and real estate may also be affected by factors such as the cost of compliance with regulations and liability under applicable environment laws, changes in interest rates and the availability of financing. Income from a property will be reduced if a significant number of tenants are unable to pay rent or if available space cannot be rented on favorable terms. In addition, the Company continuously monitors collections and payments from its borrowers and maintains an allowance for estimated losses based upon its historical experience and its knowledge of specific borrower collection issues identified. The Company reduces its investments in real estate loans and real estate ventures by an allowance for amounts that may become unrealizable in the future. Such allowance can be either specific to a particular loan or property or general to all loans and real estate ventures.

        The following is a summary of activity in the Company’s allowance for possible losses related to real estate loans for the periods indicated:

	Three Months Ended March 31,				Six Months Ended March 31,
	2004		2003		2004		2003
	(in thousands)
Balance, beginning of period	$ 1,717		$ 3,853		$ 1,417		$ 3,480
Provision for possible losses	100		800		400		1,173
Write-downs	(144	)	(393	)	(144	)	(393	)
Balance, end of period	$ 1,673		$ 4,260		$ 1,673		$ 4,260

NOTE 8 — REAL ESTATE LEASING ACTIVITIES

        The following table provides information about the Company’s investments in real estate owned at the dates indicated:

	March 31, 2004		September 30, 2003
	(in thousands)
Land	$      280		$      630
Leasehold interest	4,800		4,800
Office building	--		3,596
Apartment building	3,439		3,380
Hotel	4,045		4,040
	12,564		16,446
Less accumulated depreciation	(759	)	(640	)
Total	$ 11,805		$ 15,806

19

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 9 – DEBT

        Total debt consists of the following:

	March 31, 2004	September 30, 2003
	(in thousands)
Senior debt	$         --	$  54,027
Energy debt	40,500	31,000
Real estate debt:
Non-recourse revolving credit facility and term notes	17,995	19,663
Other	17,358	19,612
Total real estate debt	35,353	39,275
Other debt	7,074	8,865
	82,927	133,167
Less current maturities	12,202	59,471
	$  70,725	$  73,696

        During the six months ended March 31, 2004, the Company retired $54.0 million of its senior debt, resulting in a loss of approximately $2.0 million which is included in interest, dividends, gains and other in the Company’s statements of income.

        Annual debt principal payments over the next five fiscal periods ending March 31 are as follows: 2005 — $12.2 million, 2006 — $66.2 million, 2007 — $4.5 million, 2008 — $0 and after — $12,000.

NOTE 10 – DISCONTINUED OPERATIONS

        The assets and liabilities of six of the entities that are consolidated under the provisions of FIN 46 have been classified as held for sale in accordance with the Company’s intent to sell its interest in the real estate loans underlying those assets and liabilities of which three were disposed. In addition, the Company foreclosed on two properties in which it held loans and has classified these properties as held for sale.

        Summarized operating results of the Company’s real estate operations held for sale are as follows:

	Three Months Ended March 31,			Six Months Ended March 31,
	2004		2003	2004		2003
	(in thousands)
Income from discontinued operations before	$      264		$            --	$      395		$            --
income taxes
Loss on disposal	(1,835	)	--	(2,640	)	--
Income tax benefit	550		--	786		--
Loss from discontinued operations	$  (1,021	)	$             --	$  (1,459	)	$             --

20

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 10 – DISCONTINUED OPERATIONS — (Continued)

        In September 1999, the Company adopted a plan to discontinue its residential mortgage lending business, Fidelity Mortgage Funding, Inc. (“FMF”). The business was disposed of in November 2000. Accordingly, FMF has been reported as a discontinued operation.

        The estimated loss on the disposal of FMF was originally $275,000 (net of taxes of $148,000) including anticipated operating losses after the date of disposal. Upon final resolution of certain lease obligations associated with FMF, the Company has recognized a gain on disposal in the three months ended March 31, 2004. Summarized results of FMF are as follows:

	Three Months Ended March 31,			Six Months Ended March 31,
	2004		2003	2004		2003
	(in thousands)
Gain on disposal	$ 602		$          --	$ 602		$          --
Income tax provision	(210	)	--	(210	)	--
Gain on discontinued operations	$ 392		$          --	$ 392		$          --

        Summarized results of discontinued real estate and FMF operations are:

	Three Months Ended March 31,			Six Months Ended March 31,
	2004		2003	2004		2003
	(in thousands)
Income from discontinued operations, net of
taxes of $92 and $137	$ 172		$          --	$    258		$         --
Loss on disposal, net of taxes of $432 and $713	(801	)	--	(1,325	)	--
Loss from discontinued operations	$(629	)	$          --	$(1,067	)	$          --

21

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 11 — OPERATING SEGMENT AND MAJOR CUSTOMER INFORMATION

        The Company’s operations include five reportable operating segments. In addition to the five reportable operating segments, certain other activities are reported in the “Other energy” and “All other” categories. These operating segments reflect the way the Company manages its operations and makes business decisions. The leasing segment first met the criteria for reportable operating segments in the three months ended June 30, 2003 and, accordingly, the prior periods have been restated to reflect this new segment. The Company does not allocate income taxes to its operating segments. Operating segment data for the periods indicated are as follows:

        Three Months Ended March 31, 2004  (in thousands):

	Well Drilling	Production and Exploration	Other Energy (a)		Real Estate Finance	Leasing		Financial Services	All Other	Eliminations		Total
Revenues from
external customers.	$26,248	$  11,763	$   4,069		$    5,459	$   2,092		$  1,758	$  3,074	$(62	)	$  54,401
Interest income	--	--	20		31	8		--	100	(62	)	97
Interest expense	--	--	473		365	275		--	188	(62	)	1,239
Depreciation,
depletion and
amortization	--	2,513	1,021		130	109		--	--	--		3,773
Segment profit (loss)	3,007	5,847	(1,141	)	668	(1,171	)	1,684	1,308	--		10,202
Other significant
items:
Segment assets	$  7,724	$150,638	$ 57,260		$242,051	$ 21,817		$10,341	$51,327	$ --		$541,158

Three months Ended March 31, 2003  (in thousands):

	Well Drilling	Production and Exploration	Other Energy (a)		Real Estate Finance	Leasing		Financial Services		All Other		Eliminations		Total
Revenues from
external customers .	$23,366	$    9,416	$   3,692		$    3,506	$    710		$      --		$   2,032		$(32	)	$  42,690
Interest income	--	--	47		17	(5	)	--		104		(32	)	131
Interest expense	--	--	429		386	120		--		2,168		(32	)	3,071
Depreciation,
depletion and
amortization	--	2,034	949		67	53		--		--		--		3,103
Segment profit (loss)	1,521	5,249	(383	)	1,316	(454	)	(22	)	(2,674	)	--		4,553
Other significant
items:
Segment assets	$  7,332	$132,034	$ 56,318		$202,518	$ 5,473		$ 3,972		$ 62,447		$ --		$470,094

(a) Revenues and expenses from segments below the quantitative thresholds are attributable to two operating segments of the Company. Those segments include well services and natural gas transportation. These segments have never met any of the quantitative thresholds for determining reportable segments.

22

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 11 — OPERATING SEGMENT AND MAJOR CUSTOMER INFORMATION — (Continued)

Six Months Ended March 31, 2004  (in thousands):

	Well Drilling	Production and Exploration	Other Energy (a)		Real Estate Finance	Leasing		Financial Services	All Other		Eliminations		Total
Revenues from
external customers .	$48,207	$  21,959	$   7,773		$    9,870	$   3,741		$  2,843	$   4,643		$(107	)	$  98,929
Interest income	--	--	59		64	34		--	218		(107	)	268
Interest expense	--	--	960		857	607		--	1,589		(107	)	3,906
Depreciation,
depletion and
amortization	--	4,723	2,056		253	178		--	--		--		7,210
Segment profit (loss)	5,505	12,031	(2,295	)	326	(1,469	)	2,430	(510	)	--		16,018
Other significant
items:
Segment assets	$  7,724	$150,638	$ 57,260		$242,051	$ 21,817		$10,341	$ 51,327		$   --		$541,158

Six months Ended March 31, 2003  (in thousands):

	Well Drilling	Production and Exploration	Other Energy (a)		Real Estate Finance	Leasing		Financial Services	All Other		Eliminations		Total
Revenues from
external customers .	$29,949	$  17,485	$   7,175		$    6,683	$ 1,901		$   130	$   3,846		$(119	)	$  67,050
Interest income	--	--	138		35	39		8	281		(119	)	382
Interest expense	--	--	1,059		804	195		--	4,470		(119	)	6,409
Depreciation,
depletion and
amortization	--	3,966	1,889		133	98		--	--		--		6,086
Segment profit (loss)	1,394	8,869	(912	)	2,790	(382	)	108	(4,696	)	--		7,171
Other significant
items:
Segment assets	$  7,332	$132,034	$ 56,318		$202,518	$ 5,473		$3,972	$ 62,447		$   --		$470,094

(b) Revenues and expenses from segments below the quantitative thresholds are attributable to two operating segments of the Company. Those segments include well services and natural gas transportation. These segments have never met any of the quantitative thresholds for determining reportable segments.

        Operating profit (loss) per segment represents total revenues less costs and expenses attributable thereto. Costs and expenses allocated to segments include interest, provision for possible losses and depreciation, depletion and amortization, but exclude general corporate overhead expenses.

23

RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 11 — OPERATING SEGMENT AND MAJOR CUSTOMER INFORMATION — (Continued)

        The Company markets its gas and oil production on a competitive basis. Gas is sold under various types of contracts ranging from life-of-the-well to short-term contracts. The Company is party to a ten-year agreement which expires in March 2009 to sell the majority of its existing and future production to an affiliate of First Energy Corporation, (“FEC”) a publicly-traded company (NYSE:FE). Pricing under the contract is tied to index-based formulas which the Company negotiates annually. Approximately 55% and 80% of the Company’s current production was dedicated to the performance of this agreement for the six months ended March 31, 2004 and 2003, respectively. Payments to the Company by the affiliate are guaranteed by FEC.

        The Company anticipates that it will negotiate mutually agreeable pricing terms for subsequent 12-month periods pursuant to the aforementioned agreement. Management believes that the loss of any one customer would not have a material adverse effect as it believes that, under current market conditions, the Company’s production could readily be absorbed by other purchasers.

NOTE 12 — PENDING ACQUISITION

        In September 2003, Atlas Pipeline entered into a purchase and sale agreement with SEMCO Energy, Inc. (“SEMCO”) pursuant to which Atlas Pipeline or its designee will purchase substantially all of the assets of SEMCO’s wholly-owned subsidiary, Alaska Pipeline Company, which owns an intrastate natural gas transmission pipeline that delivers gas to metropolitan Anchorage (the “Acquisition”). The total consideration, payable in cash at closing, will be approximately $95.0 million, subject to an adjustment based on the amount of working capital that Alaska Pipeline has at closing.

        Consummation of the Acquisition is subject to a number of conditions, including receipt of governmental and non-governmental consents and approvals and the absence of a material adverse change in Alaska Pipeline’s business. The purchase and sale agreement may be terminated by either Atlas Pipeline or SEMCO if the transaction is not consummated by June 16, 2004. Among the required governmental authorizations are approval of the Regulatory Commission of Alaska and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Atlas Pipeline received an early termination of the waiting period in January 2004 and approval by the Regulatory Commission in April 2004. On April 20, 2004, the Regulatory Commission issued an “Order Accepting Stipulation Approving Transfer of Control, Finding Motion for Expedited Consideration Moot, and Requiring Filing” finding that approval of the transaction is in the public interest and consistent with controlling law. A 30-day appeal period commenced with the issuance of the Regulatory Commission’s order. We believe that the Regulatory Commission order meets the regulatory approval requirements recited in the purchase and sale agreement, and that the acquisition can be completed within the agreed upon timeframe. SEMCO Energy has informed Atlas Pipeline that it believes the Regulatory Commission order does not comply with the regulatory approval requirements. One May 5, 2004, SEMCO Energy filed a “Petition for Clarification or Alternatively Reconsideration” on an expedited basis with the Regulatory Commission seeking clarification or amendment of the order that SEMCO Energy believes would make the order comply with the regulatory approval requirements. The acquisition could be delayed or prevented if the issues surrounding the order and SEMCO Energy’s petition are not resolved in a timely manner.

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RESOURCE AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
March 31, 2004
(Unaudited)

NOTE 12 — PENDING ACQUISITION — (Continued)

        As part of the Acquisition, at closing, Alaska Pipeline and ENSTAR Natural Gas Company (“ENSTAR”), a division of SEMCO which conducts its gas distribution business in Alaska, will enter into a Special Contract for Gas Transportation pursuant to which ENSTAR will pay a reservation fee of $943,000 per month for the use of all of the pipeline’s transportation capacity plus $.075 per thousand cubic feet, or mcf, of gas transported, for 10 years. During 2003, total gas volumes delivered through the Alaska Pipeline system averaged approximately 147.0 million cubic feet per day. SEMCO will execute a gas transmission agreement with Alaska Pipeline pursuant to which SEMCO will be obligated to make up any difference if the Regulatory Commission of Alaska reduces the transportation rates payable by ENSTAR pursuant to the Special Contract.

        Further, Alaska Pipeline will enter into an Operation and Maintenance and Administrative Services Agreement with ENSTAR under which ENSTAR will continue to operate and maintain the pipeline for at least 5 years for a fee of $334,000 per month for the first three years. Thereafter, ENSTAR’s fee will be adjusted for inflation.

NOTE 13 – SUBSEQUENT EVENTS

        In April 2004, Atlas Pipeline completed a public offering of 750,000 common units of limited partner interest. The net proceeds after underwriting discounts, commissions and estimated costs were approximately $25.0 million. Atlas Pipeline intends to use these proceeds for the acquisition of Alaska Pipeline from SEMCO by increasing its investment in APC Acquisition LLC, its subsidiary that will purchase Alaska Pipeline, from $24.4 million to $49.4 million. (See Note 12) The proceeds of this offering will enable Atlas Pipeline to forgo the mezzanine financing that would otherwise have been provided by Friedman, Billings, Ramsey Group, Inc. To the extent that Atlas Pipeline does not apply the net proceeds to the purchase of Alaska Pipeline, it intends to use them as working capital.

        On May 10, 2004, Atlas America, Inc. completed an initial public offering of 2,300,000 shares of its common stock at a price of $15.50 per common share. The net proceeds of the offering of $33.2 million, after deducting underwriting discounts will be distributed to the Company in the form of a repayment of inter-company debt and a non-taxable dividend. Following the offering, the Company will continue to own approximately 82.3% of Atlas America’s common stock. The underwriters have been granted an over-allotment option for an additional 345,000 shares of common stock exercisable within thirty days. The over-allotment option, if fully exercised, would generate an additional $5.0 million in net proceeds for distribution to the Company, thus reducing its ownership to 80.2%.

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ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                 AND RESULTS OF OPERATIONS (Unaudited)

        When used in this Form 10-Q, the words “believes” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties more particularly described in Item 1, under the caption “Risk Factors”, in our annual report on Form 10-K/A for fiscal 2003. These risks and uncertainties could cause actual results to differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to forward-looking statements which we may make to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

Overview of Three Months and Six Months Ended March 31, 2004 and 2003

        During the three months and six months ended March 31, 2004, our operations reflected the continuing dominant position of our energy business. While our energy operations remain the single largest contributor to our revenues, our strategic initiatives in financial services and equipment leasing will increase in importance to us in the remainder of fiscal 2004. In April 2004, we completed Trapeza CDO VI, Ltd. a $350.0 million pooled trust collateralized debt obligation. We will continue to receive management fees and carried interests in the Trapeza entities’ profits. In addition, we have begun to seek new growth from our real estate operations through the sponsorship of real estate investment programs and expect that our revenues from this initiative will increase in fiscal 2004.

These changes are reflected in the following tables:

Revenues as a Percent of Total Revenues

	Three Months Ended March 31,				Six Months Ended March 31,
	2004		2003		2004		2003
Energy	79	%	85	%	79	%	81	%
Real estate	10	%	8	%	10	%	10	%
Leasing	4	%	2	%	4	%	3	%
Equity in earnings of Trapeza entities	4	%	--		3	%	--
All other (1)	5	%	5	%	4	%	6	%

Assets as a Percent of Total Assets

	March 31, 2004		September 30, 2003
Energy	40	%	35	%
Real estate	45	%	55	%
Leasing	4	%	2	%
Equity in earnings of Trapeza entities	2	%	1	%
All other (2)	9	%	7	%

⁽¹⁾ We attribute the balance to revenues derived from assets related to operations which do not meet the definition of a business segment and corporate assets such as cash, common shares held in RAIT Investment Trust and other corporate investments.

⁽²⁾ We attribute the balance to assets related to operations which do not meet the definition of a business segment, as referred to in footnote (1) above.

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        On May 10, 2004, Atlas America, Inc. completed an initial public offering of 2,300,000 shares of its common stock at a price of $15.50 per common share. The net proceeds of the offering of $33.2 million, after deducting underwriting discounts will be distributed to us in the form of a repayment of inter-company debt and a non-taxable dividend. Following the offering, we will continue to own approximately 82.3% of Atlas America’s common stock. The underwriters have been granted an over-allotment option for an additional 345,000 shares of common stock exercisable within thirty days. The over-allotment option, if fully exercised, would generate an additional $5.0 million in net proceeds for distribution to us, thus reducing own ownership to 80.2%.

        In September 2003, we entered into a purchase and sale agreement with SEMCO Energy, Inc. under which we or our designee will purchase substantially all of the assets of SEMCO’s wholly-owned subsidiary, Alaska Pipeline Company, which owns a 354-mile intrastate natural gas transmission pipeline that delivers gas to metropolitan Anchorage. The total consideration, payable in cash at closing, will be approximately $95.0 million, subject to an adjustment based on the amount of working capital that Alaska Pipeline has at closing. Completion of the transaction is subject to a number of conditions, including receipt of governmental and non-governmental consents and approvals and the absence of a material adverse change in Alaska Pipeline’s business. Among the required governmental authorizations are approval of the Regulatory Commission of Alaska and expiration, without adverse action, of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The purchase and sale agreement may be terminated by either SEMCO or us if the transaction is not completed by June 16, 2004 unless the party seeking the termination caused the delay by failing to fulfill its obligations under the agreement. We received an early termination of the Hart-Scott-Rodino waiting period in January 2004. On April 20, 2004, the Regulatory Commission issued an “Order Accepting Stipulation Approving Transfer of Control, Finding Motion for Expedited Consideration Moot, and Requiring Filing” finding that approval of the transaction is in the public interest and consistent with controlling law. A 30-day appeal period commenced with the issuance of the Regulatory Commission’s order. We believe that the Regulatory Commission order meets the regulatory approval requirements recited in the purchase and sale agreement, and that the acquisition can be completed within the agreed upon timeframe. SEMCO Energy has informed us that it believes the Regulatory Commission order does not comply with the regulatory approval requirements. On May 5, 2004, SEMCO Energy filed a “Petition for Clarification or Alternatively Reconsideration” on an expedited basis with the Regulatory Commission seeking clarification or amendment of the order that SEMCO Energy believes would make the order comply with the regulatory approval requirements. The acquisition could be delayed or prevented if the issues surrounding the order and SEMCO Energy’s petition are not resolved in a timely manner.

        In April 2004, Atlas Pipeline completed a public offering of 750,000 common units of limited partner interest. The net proceeds after underwriting discounts, commissions and estimated costs were approximately $25.0 million. Atlas Pipeline intends to use these proceeds for the acquisition of Alaska Pipeline from SEMCO by increasing its investment in APC Acquisition LLC, its subsidiary that will purchase Alaska Pipeline, from $24.4 million to $49.4 million. The proceeds of this offering will enable Atlas Pipeline to forgo the mezzanine financing that would otherwise have been provided by Friedman, Billings, Ramsey Group, Inc. To the extent that Atlas Pipeline does not apply the net proceeds to the purchase of Alaska Pipeline, it intends to use them as working capital.

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Results of Operations: Energy

        The following tables set forth information relating to revenues recognized and costs and expenses incurred, daily production volumes, average sales prices, production costs as a percentage of natural gas and oil revenues and depletion per mcfe ⁽²⁾ for our energy operations during the periods indicated:

	Three Months Ended March 31,				Six Months Ended March 31,
	2004		2003		2004		2003
	(in thousands, except production sales prices, production costs equivalent mcfe (2)
Revenues:
Production	$11,799		$  9,416		$21,995		$17,485
Well drilling	26,248		23,366		48,207		29,949
Well services	2,123		2,014		4,060		3,868
Transportation	1,579		1,402		3,178		2,810
Other	191		138		233		184
	$41,940		$36,336		$77,673		$54,296
Costs and expenses:
Production	$  1,795		$  1,644		$  3,432		$  3,179
Exploration	1,528		958		1,576		1,009
Well drilling	22,824		20,318		41,919		26,043
Well services	1,021		1,037		2,062		1,862
Transportation	620		612		1,216		1,203
Non-direct	1,247		1,261		2,156		3,520
	$29,035		$25,830		$52,361		$36,816
Production revenues:
Gas (1)	$10,116		$  8,231		$19,182		$15,281
Oil	$  1,666		$  1,187		$  2,789		$  2,203
Production volume:
Gas (mcf/day) (1) (2)	18,265		17,933		18,875		18,648
Oil (bbls/day) (2)	576		410		514		429
Average sales prices:
Gas (per mcf)	$    6.09		$    5.10		$    5.55		$    4.50
Oil (per bbl)	$  31.81		$  32.17		$  29.65		$  28.24
Production costs (3):
As a percent of production revenues	15	%	17	%	16	%	18	%
Per mcf equivalent unit (2)	$     .91		$     .90		$     .85		$     .82
Depletion per equivalent mcfe	$    1.24		$    1.05		$    1.15		$    1.00

(1) Excludes sales of residual gas and sales to landowners.

(2) As used in this discussion, “mcf” and mmcf” means thousand cubic feet and million cubic feet; “mcfe” and mmcfe” means thousand cubic feet equivalent and million cubic feet equivalent, and “bbls” means barrels. Bbls are converted to mcfs equivalent using the ratio of six mcfs to one bbl.

(3) Production costs include labor to operate the wells and related equipment, repairs and maintenance, materials and supplies, property taxes, severance taxes, insurance, gathering charges and production overhead.

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        Our well drilling revenues and costs and expenses incurred represent the billings and costs associated with the completion of 157 and 123 net wells for partnerships sponsored by Atlas America in the three months ended March 31, 2004 and 2003, respectively, and 268 and 160 net wells in the six months ended March 31, 2004 and 2003, respectively. The following table sets forth information relating to these revenues and costs during the periods indicated:

	Three Months Ended March 31,				Six Months Ended March 31,
	2004		2003		2004		2003
	(in thousands, except production sales prices, production costs data)
Average drilling revenue per well	$   167		$   190		$   180		$   187
Average drilling cost per well (1)	145		165		157		163
Average drilling gross profit per well	$     22		$     25		$     23		$     24
Gross profit margin	$3,424		$3,048		$6,288		$3,906
Gross margin percent	13	%	13	%	13	%	13	%
Net wells drilled	157		123		268		160

(1) The amounts shown do not reflect the total cost of a well. The drilling revenue and associated drilling cost reflect that portion of the total well cost that is attributable to our investor partners in each investment drilling program as specified in the relevant drilling contracts.

        Our natural gas revenues were $10.1 million and $19.2 million in the three months and six months ended March 31, 2004, an increase of $1.9 million (23%) and $3.9 million (26%) from $8.2 million and $15.3 million in the three months and six months ended March 31, 2003, respectively. The increases were due to increases in the average sales price of natural gas of 19% and 23% for the three months and six months ended March 31, 2004 and increases of 2% and 1% in the volume of natural gas we produced in the three months and six months ended March 31, 2004, respectively. The $1.9 million increase in gas revenues in the three months ended March 31, 2004 as compared to the prior period consisted of a $1.6 million increase attributable to increases in natural gas sales prices, and by a $293,000 increase attributable to increased production volumes. The $3.9 million increase in natural gas revenues in the six months ended March 31, 2004 as compared to the prior period consisted of a $3.6 million increase attributable to an increase in natural gas sales prices, and a $335,000 increase attributable to increased production volumes.

        Our oil revenues were $1.7 million and $2.8 million in the three months and six month periods ended March 31, 2004, an increase of $479,000 (40%) and $586,000 (27%) from $1.2 million and $2.2 million in the three months and six months ended March 31, 2003, primarily due to increases in oil production volumes of 40% and 20%, for the respective periods. Oil prices decreased 1% during the three months and increased 5% during the six months ended March 31, 2004 as compared to 2003. The $479,000 increase in oil revenues in the three months ended March 31, 2004 as compared to the prior period consisted of increases of $493,000 attributable to increases in oil production volumes and $14,000 attributable to decreased sale prices. The $586,000 increase in oil revenues for the six months ended March 31, 2004 as compared to the prior period consisted of increases of $476,000 attributable to increases in production volumes and $110,000 attributable to increased sales prices.

        Our well drilling gross margin was $3.4 million and $6.3 million in the three months and six months ended March 31, 2004, an increase of $376,000 (12%) and $2.4 million (61%) from $3.0 million and $3.9 million in the three months and six months ended March 31, 2003, respectively. In the three months ended March 31, 2004, the increase of $376,000 was attributable to an increase in the number of wells drilled of $741,000 and a decrease in the gross margin per well of $365,000. In the six months ended March 31, 2004, the increase of $2.4 million was attributable to an increase in the number of wells drilled of $2.5 million and a decrease in the gross margin per well of $152,000.

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        Our gross profit per well decreased as a result of a decrease in our average cost per well which, because our drilling contracts are on a “cost plus” basis (typically cost plus 15%), determines our average revenue per well. The decrease in our average cost per well in the three month and six months ended March 31, 2004 resulted from a decrease in the cost of tangible equipment used in the wells as a result of a portion of the wells we drilled targeting shallower formations and requiring less equipment. In addition, it should be noted that “Liabilities associated with drilling contracts” on our balance sheet includes $15.5 million of funds raised in our drilling investment program in the first three months of fiscal 2004 that had not been applied to drill wells as of March 31, 2004 due to the timing of drilling operations, and thus had not been recognized as well drilling revenue. We expect to recognize this amount as revenue in the remainder of fiscal 2004. Because we raised $40.2 million in our drilling investment partnerships in the first quarter of fiscal 2004 alone, we anticipate drilling revenues and related costs to be substantially higher than in fiscal 2003.

        Our transportation revenues increased $177,000 (13%) in the three months and six months ended March 31, 2004 as compared to the similar prior year periods. This increase resulted from higher gross volumes transported due to the additional volumes associated with new partnership wells drilled by us and connected to our gathering system and an increase in the average prices received for the natural gas transported, upon which the fees chargeable under a portion of our transportation arrangements are based.

        Our production costs were $1.8 million and $3.4 million in the three months and six months ended March 31, 2004, an increase of $151,000 (9%) and $253,000 (8%), respectively. These increases were attributable to increases in repairs and maintenance, due to discretionary workovers on marginal wells, and transportation expenses associated with increased volumes and prices, as a portion of our wells are charged transportation based on the sales price of the gas transported.

        Our exploration costs were $1.5 million and $1.6 million in the three months and six months ended March 31, 2004, an increase of $570,000 (59%) and $567,000 (56%) from the three months and six months ended March 31, 2003, respectively. These increases were attributable to expenditures for dry hole costs of $587,000 in the three months ended March 31, 2004, which were charged to operations upon our decision that a well drilled in an exploratory area of our operations was not capable of economic production.

        Our non-direct expenses were $1.2 million and $2.2 million in the three months and six months ended March 31, 2004, a decrease of $14,000 (1%) and $1.4 million (39%), respectively. The decrease in the six months ended March 31, 2004 was attributable to reimbursements we received for costs we incurred in our partnership management and drilling activities, resulting from an increase in the number of wells we drilled and managed compared to the similar prior period and was partially offset by increases in the cost of running our energy corporate office as a result of continued growth in our energy operations.

Results of Operations: Real Estate

        During the three months and six months ended March 31, 2004, our real estate operations continued to be affected by three principal trends or events:

o We continued to selectively resolve the loans in our existing portfolio through repayments, sales, refinancings, restructurings and foreclosures.

o The adoption of FIN 46.

o We sought growth in our real estate business through the sponsorship of real estate investment partnerships in which we are also an investor.

        The principal effect of the first factor has been to reduce the number of our real estate loans as a result of repayments, sales, refinancings and restructurings, increasing our cash flow from loan resolutions. The principal effect of the adoption of FIN 46 has been to consolidate in our financial statements the assets, liabilities, revenues and expenses of a number of borrowers, although not affecting our creditor-debtor legal relationship with these borrowers and not causing these assets and obligations to become our legal assets or obligations. Our FIN 46 assets were $170.5 million and $300.9 million at March 31, 2004 and September 30, 2003, respectively. Our FIN 46 liabilities were $99.7 million and $186.7 million at March 31, 2004 and September 30, 2003, respectively. The principal effect of the third factor has been to increase our interest in real property through the sponsorship of real estate investment partnerships.

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        The following table sets forth certain information relating to the revenues recognized and costs and expenses incurred in our real estate finance operations during the periods indicated:

	Three Months Ended March 31,		Six Months Ended March 31,
	2004	2003	2004	2003
	(in thousands)
Revenues:
Interest	$   388	$1,799	$   566	$3,730
Accreted discount	421	714	978	1,409
Gains on resolution of loans, ventures and
FIN 46 assets	659	--	732	813
Fee income	197	555	731	555
FIN 46 properties	3,062	--	5,426	--
Equity in earnings of equity investees	240	387	377	39
Rental properties	440	34	980	102
	$5,407	$3,489	$9,790	$6,648
Costs and expenses:
Real estate general and administrative	$1,302	$   937	$2,353	$1,783
Rental properties	503	--	945	--
FIN 46 properties	2,391	--	4,736	--
	$4,196	$   937	$8,034	$1,783

Three Months Ended March 31, 2004 as Compared to the Three Months Ended March 31, 2003

        Revenues increased $1.9 million (55%) from $3.5 million to $5.4 million in the three months ended March 31, 2004. We attribute the increase to the following:

o An increase of $659,000 in gains on resolutions of loans and ventures in the three months ended March 31, 2004 compared to the three months ended March 31, 2003. In the three months ended March 31, 2004, we received $3.4 million for the sale of our investment in one venture resulting in a gain of $841,000. We also resolved one loan with a book value of $2.3 million for $2.1 million recognizing a loss of $182,000 as compared to no loans resolved in the three months ended March 31, 2003.

o An increase of $3.1 million in FIN 46 revenues in the three months ended March 31, 2004, as compared to the three months ended March 31, 2003. We early adopted FIN 46 on July 1, 2003 which resulted in our consolidating seven entities as of March 31, 2004 and recording their operations as FIN 46 revenues and expenses.

o An increase of $406,000 in rental income in the three months ended March 31, 2004 as compared to the three months ended March 31, 2003. The increase was the result of recording rental income from properties underlying two loans upon which we foreclosed subsequent to the prior year period.

        The increases were partially offset by the following:

o A decrease in interest and accreted discount of $1.7 million (68%) resulting from the following:

— The transfer of fourteen loans to FIN 46 accounting treatment as of July 1, 2003, which decreased interest income by $1.1 million in the three months ended March 31, 2004 as compared to the three months ended March 31, 2003.

— The resolution of nine loans since April 1, 2003, which decreased interest income by $369,000 in the three months ended March 31, 2004 as compared to the three months ended March 31, 2003.

— The completion of accretion of discount on one loan, which decreased interest income by $33,000 in the three months ended March 31, 2004 as compared to the three months ended March 31, 2003.

— The foreclosure of two loans subsequent to the prior year period, which decreased interest income by $81,000 in the three months ended March 31, 2004 as compared to the three months ended March 31, 2003.

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— A decrease in our average rate of accretion, which decreased interest income by $86,000 in the three months ended March 31, 2004 as compared to the three months ended March 31, 2003.

o A decrease of $358,000 in fee income in the three months ended March 31, 2004, as compared to the three months ended March 31, 2003. We earned fees for services provided to the real estate investment partnerships which we sponsored relating to the purchase and third party financing of one property in the three months ended March 31, 2003. During the three months ended March 31, 2004 we earned management fees for the existing properties; we did not earn any fees relating to the purchase and third party financing of any new acquisitions. We anticipate earning additional fees from our two partnerships and any future real estate investment partnerships which we may sponsor.

o A decrease of $147,000 in our share of the operating results of our unconsolidated real estate investments accounted for on the equity method in the three months ended March 31, 2004 as compared to the three months ended March 31, 2003. The decrease was the result of lower earnings from two of our three investments.

        Gains on resolutions of loans, ventures and FIN 46 assets (if any) and the amount of fees received (if any) vary from transaction to transaction and there may be significant variations in our gains on resolutions and fee income from period to period.

        Costs and expenses of our real estate finance operations were $4.2 million in the three months ended March 31, 2004, an increase of $3.3 million (348%) from $937,000 in the three months ended March 31, 2003. We attribute the increase to the following:

o An increase of $365,000 in real estate general and administrative expenses in the three months ended March 31, 2004, as compared to the three months ended March 31, 2003. The increase resulted primarily from the following:

— An increase in insurance of $48,000 reflecting an increase in insurance rates in general.

— An increase in wages and benefits of $206,000 as a result of the addition of personnel in our real estate subsidiary to manage our existing portfolio of commercial loans and real estate and to expand our real estate operations through the sponsorship of real estate investment partnerships.

— An increase in legal fees of $61,000 reflecting the efforts to monetize the real estate loan portfolio.

— An increase in audit expense of $61,000 reflecting the additional fees incurred in adopting FIN 46.

o An increase of $503,000 in rental properties expenses in the three months ended March 31, 2004, as compared to the three months ended March 31, 2003. These expenses are primarily related to two properties upon which we foreclosed subsequent to the prior year period.

o An increase of $2.4 million in FIN 46 expenses in the three months ended March 31, 2004, as compared to the three months ended March 31, 2003. We early adopted FIN 46 on July 1, 2003, which resulted in our consolidating seven entities as of March 31, 2004 and recording their operations as FIN 46 revenues and expenses. These expenses include such non-cash items as depreciation and amortization.

Six Months Ended March 31, 2004 as Compared to the Six Months Ended March 31, 2003

        Revenues increased $3.1 million (47%) to $9.8 million in the six months ended March 31, 2003 from $6.7 million in the six months ended March 31, 2004. We attribute the increase to the following:

o An increase of $5.4 million in FIN 46 revenues in the six months ended March 31, 2004, as compared to the six months ended March 31,2003. We early adopted FIN 46 on July 1, 2003 which resulted in our consolidating seven entities as of March 31, 2004 and recording their operations as FIN 46 revenue and expenses.

o An increase of $338,000 in our share of the operating results of our unconsolidated real estate investments accounted for on the equity method in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003. The increase was the result of higher earnings from two of our three investments.

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o An increase of $878,000 in rental income in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003. The increase was the result of recording rental income from properties underlying two loans upon which we foreclosed subsequent to the prior year period.

o An increase of $176,000 in fee income in the six months ended March 31, 2004, as compared to the six months ended March 31, 2003. We earned fees for services provided to the real estate investment partnerships which we sponsored relating to the purchase and third party financing of one property in the six months ended March 31, 2004 and one property in the six months ended March 31, 2003. Additionally, we earned management fees for the properties owned by real estate investment partnerships which we sponsored during the six months ended March 31, 2004. We anticipate earning additional fees from our two partnerships and any future real estate investment partnerships which we may sponsor.

        The increases were partially offset by the following:

o A decrease in interest and accreted discount income of $3.6 million (70%) resulting from the following:

— The transfer of fourteen loans to FIN 46 accounting treatment as of July 1, 2003, which decreased interest income by $2.4 million in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003.

— The resolution of eleven loans since April 1, 2003 which decreased interest income by $894,000 in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003.

— The completion of accretion of discount on one loan, which decreased interest income by $66,000 in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003.

— The foreclosure of two loans after June 30, 2003, which decreased interest income by $162,000 in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003.

— A decrease of our average rate of accretion, resulting in a decrease in interest income of $81,000 in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003.

o A decrease of $81,000 in gains on resolutions of loans and ventures. In the six months ended March 31, 2004 we resolved three loans having an aggregate book value of $3.7 million for $3.5 million, recognizing losses of $109,000. We also received $3.4 million for the sale of our investment in one venture resulting in a gain of $841,000. In the six months ended March 31, 2003, we resolved one loan having a book value of $4.2 million for $5.0 million, recognizing a gain of $813,000.

        Gains on resolutions of loans, ventures and FIN 46 assets (if any) and the amount of fees received (if any) vary from transaction to transaction and there may be significant variations in our gains on resolutions and fee income from period to period.

        Costs and expenses of our real estate finance operations were $8.0 million in the six months ended March 31, 2004, an increase of $6.3 million (351%) from $1.8 million in the six months ended March 31, 2003.

        We attribute the increase to the following:

o An increase of $570,000 in real estate general and administrative expenses in the six months ended March 31, 2004, as compared to the six months ended March 31, 2003. The increase resulted primarily from the following:

— An increase in insurance of $125,000 reflecting an increase in insurance rates in general.

— An increase in wages and benefits of $284,000 as a result of the addition of personnel in our real estate subsidiary to manage our exiting portfolio of commercial loans and real estate and to expand our real estate operations through the sponsorship of real estate investments partnerships.

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— An increase in legal fees of $61,000 reflecting the efforts to monetize the real estate loan portfolio.

— An increase in audit expense of $61,000 reflecting the additional fees incurred in adopting FIN 46.

— An increase in travel costs of $47,000 due to the increased acquisition activity associated with the management of our real estate investment programs.

o An increase of $945,000 in rental properties expenses in the six months ended March 31, 2004, as compared to the six months ended March 31, 2003. These expenses are primarily related to two properties upon which we foreclosed subsequent to the prior year period.

o An increase of $4.7 million in FIN 46 expenses for the six months ended March 31, 2004, as compared to the six months ended March 31, 2003. We early adopted FIN 46 on July 1, 2003, which resulted in our consolidating seven entities as of March 31, 2004 and recording their operations as FIN 46 revenues and expenses. These expenses include such non-cash items as depreciation and amortization.

Results of Operations: Leasing

        The following table sets forth certain information relating to the revenue, costs and expenses incurred in our equipment leasing operations during the periods indicated:

	Three Months Ended March 31,				Six Months Ended March 31,
	2004		2003		2004		2003
	(in thousands)
Revenues:
Management	$	569	$	410	$	1,242	$	1,395
Leasing		492		91		953		200
Fees		574		157		1,016		170
Gains on lease terminations		338		--		338		--
Other		111		57		159		97
	$	2,084	$	715	$	3,708	$	1,862
Costs and expenses	$	2,880	$	992	$	4,426	$	1,991

        The following table sets forth certain information related to our lessee’s business and the concentration of our equipment on our leases under management as of March 31, 2004, as a percentage of our total managed portfolio:

Lessee Business			Equipment Under Lease
Health Services	28	%	Medical Equipment	23	%
Auto Dealers & Gas Stations	10	%	Computer Equipment	21	%
Personal Services	7	%	Software	10	%
Business Services	6	%	Industrial Equipment	9	%
Wholesale Trade Durable Goods	4	%	Dry Cleaning Equipment	4	%
Other Categories	45	%	Other Equipment Types	33	%
	100	%		100	%

        In fiscal 2002, we began to pursue expansion of our equipment leasing operations through the sponsorship of equipment leasing programs. Our first such program commenced operations in March 2003. We intend to further develop our equipment leasing operations through the sponsorship of other equipment leasing programs. In addition, in April 2003, we entered into a multi-year agreement to originate and service leases on behalf of Merrill Lynch Equipment Finance LLC.

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Three and Six Months Ended March 31, 2004 as Compared to the Three and Six Months Ended March 31, 2003

        Our lease originations were $20.0 million and $47.0 million for the three and six months ended March 31, 2004, an increase of $15.2 million (317%) and $38.0 million (421%) from the three and six months ended March 31, 2003, respectively. Our assets under management at March 31, 2004 were $89.3 million, an increase of $64.9 million (265%) over March 31, 2003. Included in our lease originations for the three months ended March 31, 2004 were $3.7 million of leases acquired at book value from leasing investment partnerships in which we are the general partner. These funds are in the liquidation process. These increases reflect the growth of our leasing business facilitated by our relationships with Merrill Lynch and our investment partnership.

        Our leasing revenues were $2.1 million and $3.7 million in the three and six months ended March 31, 2004, an increase of $1.4 million (191%) and $1.8 million (99%) from $715,000 and $1.9 million in the three and six months ended March 31, 2003, respectively. The increases are primarily due to lease income, lease termination activity, and fees associated with our new leasing programs. Gains on lease terminations, if any, vary from transaction to transaction, and there may be significant variances from period to period.

        Our leasing expenses were $2.9 million and $4.4 million in the three and six months ended March 31, 2004, an increase of $1.9 million (190%) and $2.4 million (122%) from $992,000 and $2.0 million in the three and six months ended March 31, 2003, respectively. Due to the expansion of our leasing operations, there was an increase in corporate allocated expense of $200,000 and $400,000, an increase in our wages and benefits of $540,000 and $719,000, and an increase in overhead operational expenses of $68,000 and $46,000 for the three and six months ended March 31, 2004, respectively. In addition, we previously deferred organization and offering costs in connection with the fund raising activities of our equipment leasing investment partnership. The investment partnership reimburses us for these costs as it sells partnership interests in connection with its public offering. From time to time we adjust the amount of these costs based on the reimbursements we expect to receive. The offering period for the current equipment leasing investment partnership terminates August 15, 2004. During the three and six month periods ended March 31, 2004, based on market conditions affecting the sale of investment units, we have reduced the remaining offering costs to be reimbursed by $1.1 million and $1.3 million, respectively by a charge to earnings.

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Results of Operations: Financial Services

As part of our financial services business segment, we sponsor and have 50% interests in entities that manage pools of trust preferred securities for issuers of collateralized debt obligations. We refer to the sponsored entities as the Trapeza entities and the issuers of collateralized debt obligations as the CDO issuers. The Trapeza entities act as the general partners of the limited partnerships that own the equity interest in the CDO issuers. We typically make a direct investment in the limited partner interests of these limited partnerships as well. The Trapeza entities receive collateral management fees from the CDO issuers, general partner distributions from the limited partnerships and partnership administration fees. We receive limited partner distributions with respect to our limited partner interests.

        Our equity in the earnings of the Trapeza entities was $1.9 million and $2.9 million in the three and six months ended March 31, 2004, respectively, an increase of $1.9 million and $2.8 million from $122,000 in the six months ended March 31, 2003. The increase reflects our equity earnings subsequent to completion of offerings by five Trapeza CDO issuers which we had sponsored as of March 31, 2004 as compared to two Trapeza CDO issuers which we had sponsored as of March 31, 2003. We made the decision, in the three months ended March 31, 2003, to account for our equity earnings in the Trapeza entities on a one-quarter lag as permissible by accounting principles generally accepted in the United States of America. This resulted in no equity earnings recognition in the three months ended March 31, 2003.

        We also own a 50% interest in 1845 Warehouse, LLC (“1845 Warehouse”), an entity created to support a warehouse line of credit to be used to provide financing to CDO issuers we sponsor in the future. We invested $2.5 million in 1845 Warehouse in November 2003 along with a like amount by the other owner of 1845 Warehouse. 1845 Warehouse has obtained a warehouse line of credit for its own account from an unaffiliated third party. We expect that 1845 Warehouse will receive distributions from future CDO closings equal to a portion of the positive spread between its warehouse financing costs and the interest received on the trust preferred securities it finances. The third party lender will receive the balance of such positive spread.

        Our financial services expenses were $74,000 and $413,000 in the three months and six months ended March 31, 2004. These expenses represent costs associated with our sponsorship and management of investment partnerships in the trust preferred area. These expenses include primarily salaries and benefits and legal and professional fees. These expenses were partially offset by reimbursements of $400,000 and $643,000 from our investment partnerships in the three months and six months ended March 31, 2004.

Results of Operations: Other Revenues, Costs and Expenses

        Our interest, dividends, gains and other income were $3.0 million and $4.9 million in the three months and six months ended March 31, 2004, respectively, an increase of $899,000 (42%) and $756,000 (18%) as compared to $2.2 million and $4.1 million in the three months and six months ended March 31, 2003, respectively. The following table sets forth information relating to other income during the periods indicated:

	Three Months Ended March 31,					Six Months Ended March 31,
	2004			2003		2004			2003
	(in thousands)
Gains on sales of RAIT shares	$	2,986		$	1,150	$	5,494		$	2,119
Write-off of deferred finance costs and premium paid
on redemption of senior notes		(428	)		--		(1,955	)		--
Dividend income		267			672		671			1,461
Interest income		97			131		268			382
Other		127			197		400			160
	$	3,049		$	2,150	$	4,878		$	4,122

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        Gains on sales of RAIT shares increased $1.8 million and $3.4 million, to $3.0 million and $5.5 million in the three months and six months ended March 31, 2004 from $1.2 million and $2.1 million in the three months and six months ended March 31, 2003. In the three months and six months ended March 31, 2004, we sold 223,000 and 447,700 shares realizing proceeds of $5.9 million and $11.5 million, respectively. In the three months ended March 31, 2003 we sold 189,100 and 352,600 shares realizing proceeds of $4.0 million and $7.4 million, respectively. In the three months and six months ended March 31, 2004, we redeemed $13.0 million and $54.0 million of our senior notes and paid a 3% premium which resulted in write-offs of $428,000 and $2.0 million, respectively. Dividend income decreased $405,000 (60%) and $790,000 (54%) from $672,000 and $1.5 million in the three months and six months ended March 31, 2003. The decrease was due to the sale of RAIT shares during the twelve months ended March 31, 2004, thus lowering dividends received. Interest income decreased $34,000 (26%) and $114,000 (30%) in three months and six months ended March 31, 2004 from $131,000 and $382,000 in the three months and six months ended March 31, 2003. This decrease was the result of a decrease in funds invested as well as in interest rates earned on those funds, reflecting generally low market interest rate levels.

        Our general and administrative expenses decreased $940,000 (37%) and $526,000 (13%) in the three months and six months ended March 31, 2004 to $1.6 million and $3.6 million from $2.5 million and $4.1 million in the three months and six months ended March 31, 2003, respectively. These decreases were the result of a legal settlement in the prior year of an action by the former chairman of TRM Corporation, partially offset by increases in legal and professional fees and insurance costs.

        Our depreciation, depletion, and amortization consist mainly of depletion of oil and gas properties and amortization of contracts acquired. Our depletion as a percentage of oil and gas production revenues was 21% in the three and six months ended March 31, 2004 compared to 21% and 22% in the three and six months ended March 31, 2003. The variance from period to period is directly attributable to changes in our oil and gas reserve quantities, product prices, and fluctuations in the depletable cost basis of oil and gas properties.

        Our interest expense was $1.2 million and $3.9 million in the three months and six months ended March 31, 2004, a decrease of $1.9 million (60%) and $2.5 million (39%) from $3.1 million and $6.4 million in the three and six months ended March 31, 2003, respectively. This decrease was primarily a result of our redemption of $65.3 million of our senior notes during the twelve months ended March 31, 2004, partially offset by an increase in our leasing segment interest expense as a result of the expansion of our leasing business.

        As a result of the secondary public offering by Atlas Pipeline Partners in May 2003, we had a 39% interest in this partnership through both our general partner interest and our subordinated units. In April 2004, as a result of the completion of another public offering, we now have a combined 32% interest in this partnership. The minority interest in Atlas Pipeline Partners is the interest of Atlas Pipeline Partners’ common unit holders. As general partner, we control Atlas Pipeline Partners; therefore we include it in our consolidated financial statements and show the ownership by the public as a minority interest. The minority interest in Atlas Pipeline Partners earnings was $1.3 million and $2.6 million in the three months and six months ended March 31, 2004, as compared to $884,000 and $1.5 million in the three months and six months ended March 31, 2003, an increase of $438,000 (50%) and $1.1 million (70%), respectively. These increases were the result of an increase in Atlas Pipeline Partners’ net income principally caused by increases in transportation fees received and an increase in the amount of Atlas Pipeline Partners’ earnings attributable to minority interests ownership as a result of its secondary public offering.

        Our provision for possible losses decreased $700,000 and $773,000 to $100,000 and $400,000 in the three months and six months ended March 31, 2004, respectively, as compared to $800,000 and $1.2 million in the three months and six months ended March 31, 2003, respectively. These decreases resulted primarily from a decrease in our real estate investments and consideration of general and local economic conditions, neighborhood values, competitive over building and other factors.

        Our effective tax rate increased to 34% in the three months and six months ended March 31, 2004 as compared to 32% in the three months and six months ended March 31, 2003 as a result of a decrease in tax exempt interest and an increase in state income taxes.

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Discontinued Operations

        In accordance with Statement of Financial Accounting Standards or SFAS No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets,” our decision in fiscal 2003 and 2004 to dispose of certain real estate properties resulted in the presentation of these assets, liabilities and operations as discontinued operations for the three months and six months ended March 31, 2004. We classified three FIN 46 entities’ assets and liabilities and one real estate rental property as held for sale at March 31, 2004 and their operations as discontinued. Included in discontinued operations (loss on disposal) is an impairment charge of $2.6 million for one such investment caused by a change in market conditions. In addition, we recognized a gain on disposal as a result of a final resolution of a lease obligation associated with our discontinued residential lending business (See Note 10 to the consolidated financial statements).

Liquidity and Capital Resources

        General.        Our major sources of liquidity have been funds generated by operations, funds raised and fees earned from investment partnerships, resolutions of real estate loans, borrowings under our existing energy, real estate finance, leasing and corporate credit facilities and the sale of our RAIT shares. We have employed these funds principally in the expansion of our energy operations, the redemption of our senior notes and the acquisition of senior lien interests relating to our real estate loans. The following table sets forth our sources and uses of cash for the periods indicated:

	Six Months Ended March 31,
	2004			2003
	(in thousands)
Provided by operations	$	7,283		$	15,000
Used in investing activities		(4,136	)		(3,539	)
Used in financing activities		(51,546	)		(3,990	)
Provided by (used in) discontinued operations		34,359			(5,624	)
	$	(14,040	)	$	1,847

        We had $27.1 million in cash and cash equivalents on hand at March 31, 2004, as compared to $41.1 million at September 30, 2003. Our ratio of earnings from continuing operations before income taxes, minority interest and interest expense to fixed charges was 7.1 to 1.0 in the six months ended March 31, 2004 as compared to 2.5 to 1.0 in the six months ended March 31, 2003. Working capital at March 31, 2004 was $25.0 million as compared to $30.3 million at September 30, 2003. The decrease was primarily due to of the repayment of long term debt and investments in our drilling partnerships and Trapeza. Our ratio of debt (including current maturities) to equity was 41% and 62% at March 31, 2004 and September 30, 2003, respectively.

        Our liquidity is affected by national, regional and local economic trends and uncertainties as well as trends and uncertainties more particular to us, including natural gas prices, interest rates, and our ability to raise funds through our sponsorship of investment partnerships. While the current favorable natural gas pricing and interest rate environment have been positive contributors to our liquidity and lead us to believe that we will be able to refinance, repay, or renew, our indebtedness as it matures, there are numerous risks and uncertainties involved. Factors affecting our liquidity, as well as the risks and uncertainties relating to our ability to generate this liquidity, are described in “-Results of Operations,” and “-Contractual Obligations and Commercial Commitments,” as well as in Item 1, “Business-Risk Factors” in our Annual Report on Form 10K/A for fiscal 2003.

        Cash Flows from Operating Activities.Cash provided by operations is an important source of short-term liquidity for us. It is directly affected by changes in the prices of natural gas and oil, interest rates, our ability to raise funds for our drilling investment partnerships and the strength of the market for rentals of the types of properties secured by our real estate loans and real estate. Netcash provided by operating activities decreased $7.7 million in the six months ended March 31, 2004 to $7.3 million from $15.0 million in the six months ended March 31, 2003, substantially as a result of the following:

o A decrease in the level of accounts payable and accrued liabilities associated with our sponsorship of investment drilling programs decreased cash flow by $8.2 million in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003. The level of these liabilities is dependent on the timing of funds raised and subsequently used in our drilling programs.

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o Net fundings of direct financing leases associated with our sponsorship of our investment leasing program and our Merrill Lynch Equipment Finance, LLC agreement and their related receivables decreased cash flows by $4.2 million in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003. The level of assets and liabilities of our lease originations at any balance sheet date is dependent upon the timing of fundings from these investment programs.

o The remaining increase in cash was generated by continuing operations, most of which was due to increases in our drilling activities and the prices we receive for our natural gas and oil produced.

        Cash Flows from Investing Activities.Net cash used in our investing activities increased $597,000 in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003 as a result of the following:

o Capital expenditures increased $5.6 million in the six months ended March 31, 2004, compared to the six months ended March 31, 2003, substantially all of which was related to funding our share of drilling costs associated with our sponsorship of investment drilling programs and costs related to the expansion of our gathering systems.

o Payments on notes receivable and proceeds from sale of assets increased by $3.5 million in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003. These payments vary from transaction to transaction and are normally discretionary on the borrower’s part.

o Proceeds from sales of RAIT shares increased cash flow by $4.2 million in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003.

o Our net investments in our Trapeza entities increased by $1.5 million. We had five Trapeza CDO issuers sponsored as of March 31, 2004 whereas two Trapeza CDO issuers were sponsored as of March 31, 2003.

        Cash Flows from Financing Activities. Net cash used in our financing activities increased $47.6 million in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003, as a result of the following:

o Net debt payments increased $49.1 million, primarily as a result of the redemption of $54.0 million of our senior notes which would have matured in August 2004 and the repayment of a real estate term loan in the amount of $5.8 million, partially offset by $10.0 million in new real estate borrowings.

        Net cash Provided By (Used In) Discontinued Operations. Net cash provided by discontinued operations increased by of $40.0 million in the six months ended March 31, 2004 as compared to the six months ended March 31, 2003, primarily due to proceeds of $34.5 million principally related to the sale of two FIN 46 assets, offset by cash out lays for certain other discontinued assets. In the six months ended March 31, 2003 we used $5.6 million in the partial settlement of claims associated with the sale of our leasing subsidiaries in August 2000.

        During the six months ended March 31, 2004 and 2003, our capital expenditures related primarily to our investments in our drilling programs and pipeline expansions, in which we invested $17.3 million and $11.7 million, respectively. For the six months ended March 31, 2004 and the remaining quarters of fiscal 2004, we funded and expect to continue to fund these capital expenditures through cash on hand, borrowings under our credit facilities, and from operations. Through our energy subsidiaries, we have established two credit facilities to facilitate the funding of our capital expenditures. In March 2004, we obtained an increase in the borrowing base on our energy credit facility administered by Wachovia Bank to $65.0 million. In addition, in September 2003n we replaced our $15.0 million credit facility with a new $20.0 million credit facility with Wachovia Bank.

        The level of capital expenditures we must devote to our energy operations is dependent upon the level of funds raised through our drilling investment partnerships. We have budgeted to raise up to $90.0 million in fiscal 2004 through drilling investment programs. Through the six months ended March 31, 2004, we have raised $40.2 million. We believe cash flow from operations and amounts available under our credit facilities will be adequate to fund our contributions to these partnerships. However, the amount of funds we raise and the level of our capital expenditures will vary in the future depending on market conditions for natural gas and other factors.

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        We continuously evaluate acquisitions of gas and oil and pipeline assets. In order to make any acquisition, we believe we will be required to access outside capital either through debt or equity placements or through joint venture partners. There can be no assurance that we will be successful in our efforts to obtain outside capital.

        Our senior notes were to mature in August 2004; we redeemed the remaining $54.0 million of these notes outstanding during the six months ended March 31, 2004.

Contractual Obligations and Commercial Commitments

        The following table summarizes our contractual obligations at March 31, 2004.

		Payments Due by Period (in thousands)
Contractual cash obligations:	Total	Less than 1 Year	1 - 3 Years	4 - 5 Years	After 5 Years
Long-term debt	$  82,927	$12,202	$66,201	$4,512	$12
Secured revolving credit facilities	13,836	13,836	--	--	--
Operating lease obligations	4,663	1,519	3,032	112	--
Capital lease obligation	--	--	--	--	--
Unconditional purchase obligations	--	--	--	--	--
Other long-term obligations	--	--	--	--	--
Total contractual cash obligations	$101,426	$27,557	$69,233	$4,624	$12

		Amount of Commitment Expiration Per Period (in thousands)
Other commercial commitments:	Total	Less than 1 Year	1 - 3 Years	4 - 5 Years	After 5 Years
Standby letters of credit	$    1,945	$1,695	$       --	$       250	$       --
Guarantees	1,461	400	1,061	--	--
Standby replacement commitments	4,571	2,409	2,162	--	--
Other commercial commitments	266,394	5,098	62,130	124,725	74,441
Total commercial commitments	$274,371	$9,602	$65,353	$124,975	$74,441

        A real estate investment partnership in which we have a general partner interest has obtained senior lien financing with respect to five properties it acquired. The senior liens are with recourse only to the properties securing them subject to certain standard exceptions, which we have guaranteed. These guarantees expire as the related indebtedness is paid down over the next ten years. In addition, property owners have obtained senior lien financing with respect to five of our real estate investments. The senior liens are with recourse only to the properties securing them subject to certain standard exceptions, which we have guaranteed. These guarantees expire as the related indebtedness is paid down over the next five years.

Critical Accounting Policies

        The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and cost and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to provision for possible losses, deferred tax assets and liabilities, goodwill and identifiable intangible assets, and certain accrued liabilities. We base our estimates on historical experience and on various other assumptions that we believe 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.

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        For a detailed discussion on the application of policies critical to our business operations and other accounting policies, see Note 2 of the “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K/A.

Recently Issued Financial Accounting Standards

        In December 2003, the Financial Accounting Standards Board or FASB, revised SFAS 132, “Employers’ Disclosures about Pensions and other Postretirement Benefits,” establishing additional annual disclosures about plan assets, investment strategy, measurement date, plan obligations and cash flows. In addition, the revised standard established interim disclosure requirements related to the net periodic benefit cost recognized and contributions paid or expected to be paid during the current fiscal year. The new annual disclosures are effective for financial statements with fiscal years ending after December 15, 2003 and the interim-period disclosures are effective for interim periods beginning after December 15, 2003. The adoption of the revised SFAS No. 132 had no impact on our results of operations or our financial position.

        In April 2003, the FASB issued SFAS 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activates.” SFAS 149 is effective for contracts entered into or modified after December 31, 2003 and amends and clarifies financial accounting and reporting for derivative instruments. The adoption of SFAS 149 did not have a material effect on our financial position or our results of operations.

        In January 2003, FASB issued FIN 46. In December 2003, FASB issued a revised interpretation of FIN 46, which supersedes FIN 46 and clarifies and expands current accounting guidance for Variable Interest Entities or VIE’s. We refer to this interpretation throughout this document as FIN 46 or FIN 46-R. FIN 46 clarifies when a company should consolidate in its financial statements the assets, liabilities and activities of a VIE. FIN 46 provides general guidance as to the definition of a VIE and requires it to be consolidated if a party with an ownership, contractual or other financial interest absorbs the majority of the VIE’s expected losses, or is entitled to receive a majority of the residual returns, or both. A variable interest holder that consolidated the VIE is the primary beneficiary, and is required to consolidate the VIE’s assets, liabilities and non-controlling interests at fair value at the date the interest holder first becomes the primary beneficiary of the VIE. FIN 46 and FIN 46-R are effective immediately for all VIEs created after January 31, 2003 and for VIEs created prior to February 1, 2003, no later than the end of the first reporting period after March 15, 2004. We early adopted FIN 46 on July 1, 2003.

Pending Acquisition

        In September 2003, Atlas Pipeline entered into a purchase and sale agreement with SEMCO Energy, Inc. (“SEMCO”) pursuant to which Atlas Pipeline or its designee will purchase substantially all of the assets of SEMCO’s wholly-owned subsidiary, Alaska Pipeline Company, which owns an intrastate natural gas transmission pipeline that delivers gas to metropolitan Anchorage (the “Acquisition”). The total consideration, payable in cash at closing, will be approximately $95.0 million, subject to an adjustment based on the amount of working capital that Alaska Pipeline has at closing.

        Consummation of the Acquisition is subject to a number of conditions, including receipt of governmental and non-governmental consents and approvals and the absence of a material adverse change in Alaska Pipeline’s business. The purchase and sale agreement may be terminated by either Atlas Pipeline or SEMCO if the transaction is not consummated by June 16, 2004. Among the required governmental authorizations are approval of the Regulatory Commission of Alaska and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Atlas Pipeline received an early termination of the waiting period in January 2004 and approval by the Regulatory Commission in April 2004. On April 20, 2004, the Regulatory Commission issued an “Order Accepting Stipulation Approving Transfer of Control, Finding Motion for Expedited Consideration Moot, and Requiring Filing” finding that approval of the transaction is in the public interest and consistent with controlling law. A 30-day appeal period commenced with the issuance of the Regulatory Commission’s order. We believe that the Regulatory Commission order meets the regulatory approval requirements recited in the purchase and sale agreement, and that the acquisition can be completed within the agreed upon timeframe. SEMCO Energy has informed us that it believes the Regulatory Commission order does not comply with the regulatory approval requirements and that it may seek clarification of the order. If the parties cannot agree, or resolve through agreed upon dispute resolution procedures, that the Regulatory Commission order is sufficient, the acquisition could be delayed or prevented.

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        As part of the Acquisition, at closing, Alaska Pipeline and ENSTAR Natural Gas Company (“ENSTAR”), a division of SEMCO which conducts its gas distribution business in Alaska, will enter into a Special Contract for Gas Transportation pursuant to which ENSTAR will pay a reservation fee of $943,000 per month for the use of all of the pipeline’s transportation capacity plus $.075 per thousand cubic feet, or mcf, of gas transported, for 10 years. During 2003, total gas volumes delivered through the Alaska Pipeline system averaged approximately 147.0 million cubic feet per day. SEMCO will execute a gas transmission agreement with Alaska Pipeline pursuant to which SEMCO will be obligated to make up any difference if the Regulatory Commission of Alaska reduces the transportation rates payable by ENSTAR pursuant to the Special Contract.

        Further, Alaska Pipeline will enter into an Operation and Maintenance and Administrative Services Agreement with ENSTAR under which ENSTAR will continue to operate and maintain the pipeline for at least 5 years for a fee of $334,000 per month for the first three years. Thereafter, ENSTAR’s fee will be adjusted for inflation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. The term “market risk” refers to the risk of loss arising from adverse changes in interest rates and oil and gas prices. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonable possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures. All of our market risk sensitive instruments were entered into for purposes other than trading.

General

        We are exposed to various market risks, principally fluctuating interest rates and changes in commodity prices. These risks can impact our results of operations, cash flows and financial position. We manage these risks through regular operating and financing activities and periodically use derivative financial instruments.

        The following analysis presents the effects on our earnings, cash flows and financial position as if the hypothetical changes in market risk factors occurred on March 31, 2004. Only the potential impacts of hypothetical assumptions are analyzed. The analysis does not consider other possible effects that could impact our business.

Energy

        Interest Rate Risk. At March 31, 2004, the amount outstanding under a revolving loan attributable to our energy operations had increased to $40.5 million from $31.0 million at September 30, 2003. The weighted average interest rate for this facility increased from 2.9% at September 30, 2003 to 3.3% at March 31, 2004 due to a larger portion of our borrowings being at the bank’s prime rate at March 31, 2004. Holding all other variables constant, if interest rates hypothetically increased or decreased by 10%, our net annual income would change by approximately $87,000.

        We have a $20.0 million revolving credit facility to fund the expansion of Atlas Pipeline Partners’ existing gathering systems and the acquisitions of other gas gathering systems. In the six months ended March 31, 2004, we had no borrowings under this facility.

        Commodity Price Risk. Our major market risk exposure in commodities is fluctuations in the pricing of our gas and oil production. Realized pricing is primarily driven by the prevailing worldwide prices for crude oil and spot market prices applicable to United States natural gas production. Pricing for gas and oil production has been volatile and unpredictable for many years. To limit our exposure to changing natural gas prices, we use hedges. Through our hedges, we seek to provide a measure of stability in the volatile environment of natural gas prices. Our risk management objective is to lock in a range of pricing for expected production volumes.

42

        We do not hold or issue derivative instruments for trading purposes. Historically, we have entered into financial hedging activities for a portion of our projected natural gas production. We recognize gains and losses from the settlement of these hedges in gas revenues when the associated production occurs. The gains and losses realized as a result of hedging are substantially offset in the market when we deliver the associated natural gas. We determine gains or losses on open and closed hedging transactions as the difference between the contract price and a reference price, generally closing prices on NYMEX. We did not settle any contracts during the six months ended March 31, 2004. We recognized losses of $544,000 on settled contracts during the six months ended March 31, 2003. We recognized no gains or losses during the six months ended March 31, 2004 or 2003 for hedge ineffectiveness or as a result of the discontinuance of cash flow hedges.

        In addition, FirstEnergy Solutions and other third party marketers to which we sell gas, also use financial hedges to hedge their pricing exposure and make price hedging opportunities available to us. These transactions are similar to NYMEX-based futures contracts, swaps and options, but also require firm delivery of the hedged quantity. Thus, we limit these arrangements to much smaller quantities than those projected to be available at any delivery point. For the fiscal year ending September 30, 2004, we estimate in excess of 50% of our produced natural gas volumes will be sold in this manner, leaving our remaining production to be sold at contract prices in the month produced or at spot market prices. We also negotiate with certain purchasers for delivery of a portion of natural gas we will produce for the upcoming twelve months. The prices under most of our gas sales contracts are negotiated on an annual basis and are index-based. Considering those volumes already designated for the fiscal year ending September 30, 2004, and current indices, a theoretical 10% upward or downward change in the price of natural gas would result in approximately a 5% change in our projected natural gas revenues.

Real Estate

        Portfolio Loans and Related Senior Liens. We believe that none of the loans held in our portfolio as of March 31, 2004 (including loans treated in our consolidated financial statements as FIN 46 assets and liabilities) are sensitive to changes in interest rates since:

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

o the senior lien interests are at fixed rates and are thus not subject to interest rate fluctuation that would affect payments to us; and

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

         Debt.       The interest rates on our real estate revolving lines of credit are at the prime rate minus 1% for the outstanding $5.0 million under our line at Hudson United Bank and at the prime rate for the outstanding $18.0 million at Sovereign Bank. We have $10.0 million outstanding on our line of credit at Commerce Bank which bears interest at one of two rates, elected at our option; (i) the lender’s prime rate, or (ii) the London Inter-Bank Offered Rate or LIBOR plus 250 basis points subject to a floor of 5% and ceiling of 8 ½%. This defined prime rate was the “prime rate” as reported in The Wall Street Journal (4.00% at March 31, 2004). A hypothetical 10% change in the average interest rate applicable to these lines of credit would change our net income by approximately $90,000.

Leasing

        LEAF Financial Corporation, our equipment-leasing subsidiary, entered into a $10.0 million secured revolving credit facility with National City Bank which terminates January 31, 2005. We guarantee this facility; outstanding loans bear interest at one of two rates, elected at our option; (i) the lender’s prime rate plus 200 basis points, or (ii) the LIBOR plus 300 basis points. As of March 31, 2004, the balance outstanding was $5.1 million at an average interest rate of 4.1%. LEAF Financial Corporation also has a $10.0 million secured credit facility with Commerce Bank. The facility has the same interest rate structure as the National City Bank facility and expires June 30, 2004. As of March 31, 2004, the balance outstanding was $8.8 million at an average interest rate of 4.1%. A hypothetical 10% change in the average interest rate on these facilities would change our net income by approximately $37,000.

43

Other

        We established a $5.0 million revolving line of credit with Sovereign Bank. The facility expires in August 2005 and bears interest at the lender’s prime rate. As of March 31, 2004, $5.0 million was outstanding under this facility. A hypothetical 10% change in the average interest rate on this facility would not materially affect our net income.

ITEM 4. CONTROLS AND PROCEDURES

        We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 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 our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

        Under the supervision of our Chief Executive Officer and Chief Financial Officer and with the participation of our disclosure committee appointed by such officers, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

        There have been no significant changes in our internal controls over financial reporting that has partially affected, or is reasonably likely to materially affect, our internal control over financial reporting during our most recent fiscal quarter.

44

PART II. OTHER INFORMATION

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

        No matter was submitted to a vote of security holders during the three months ended March 31, 2004.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)         Exhibits:

Exhibit No.	Description
3.1	Restated Certificate of Incorporation of Resource America. (1)
3.2	Amended and Restated Bylaws of Resource America. (1)
10.1	Amendment Agreement and First Allonge to Term Note
10.2	Fifth Amendment to Revolving Credit Agreement and Assignment.
10.3	Third Amendment to Revolving Credit Agreement and Assignment among LEAF Financial Corporation, Lease Equity Appreciation Fund I, L.P., LEAF Funding, Inc. and National City Bank dated September 29, 2003. (2)
10.4	Fourth Amendment to Revolving Credit Agreement and Assignment among LEAF Financial Corporation, Lease Equity Appreciation Fund I, L.P., LEAF Funding, Inc. and National City Bank dated December 19, 2003. (2)
31.1	Certification Pursuant to Rule 13a-15(e)/15(d) - 15 (e).
31.2	Certification Pursuant to Rule 13a-15(e)/15(d) - 15 (e).
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

(b)         Reports on Form 8-K

        None

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

(2) Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended December 31, 2003 and by this reference incorporated herein.

45

SIGNATURES

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

	RESOURCE AMERICA, INC. (Registrant)
Date: May 13, 2004	By:    /s/Steven J. Kessler
	Steven J. Kessler Senior Vice President and Chief Financial Officer
Date: May 13, 2004	By:    /s/Nancy J. McGurk
	Nancy J. McGurk Vice-President and Chief Accounting Officer

47

EX-10

                                                                    Exhibit 10.1



                             AMENDMENT AGREEMENT AND
                           FIRST ALLONGE TO TERM NOTE
                           --------------------------

         THIS FIRST AMENDMENT AGREEMENT AND FIRST ALLONGE TO TERM NOTE
(hereinafter referred to as this "Amendment") is made as of the 29th day of
January, 2004, by and among

                  RESOURCE AMERICA, INC., a corporation duly organized and
validly existing under the laws of the State of Delaware, having its principal
business office located at 1845 Walnut Street, Philadelphia, Pennsylvania 19103
(hereinafter referred to as "RAI"),

         AND

                  RESOURCE PROPERTIES, INC., a corporation duly organized and
validly existing under the laws of the State of Delaware, having its principal
business office located at 1845 Walnut Street, Philadelphia, Pennsylvania 19103
(hereinafter referred to as "RPI"),

         AND

                  RESOURCE PROPERTIES VI, INC., a corporation duly organized and
validly existing under the laws of the State of Delaware, having its principal
business office located at 1845 Walnut Street, Philadelphia, Pennsylvania 19103
(hereinafter referred to as "RPVI"),

         AND

                  RESOURCE PROPERTIES XXXIV, INC., a corporation duly organized
and validly existing under the laws of the State of Delaware, having its
principal business office located at 1845 Walnut Street, Philadelphia,
Pennsylvania 19103 (hereinafter referred to as "RPXXXIV"),

         AND

                  RESOURCE PROPERTIES XXXVIII, INC., a corporation duly
organized and validly existing under the laws of the State of Delaware, having
its principal business office located at 1845 Walnut Street, Philadelphia,
Pennsylvania 19103 (hereinafter referred to as "RPXXXVIII", and hereinafter RAI,
RPI, RPVI, RPXXXIV, RPXXXVIII and Resource Properties II, Inc., a Delaware
corporation (hereinafter referred to as "RPII") are collectively referred to as
the "Original Borrowers"),

         AND

                  DEERFIELD RPI, LLC, a limited liability company duly organized
and validly existing under the laws of the State of Delaware, having its
principal business office located at 1845 Walnut Street, Philadelphia,
Pennsylvania 19103 (hereinafter referred to as "Deerfield"),

         AND





                  RESOURCES PROPERTIES XXXV, INC., a corporation duly organized
and validly existing under the laws of the State of Delaware, having its
principal business office located at 1845 Walnut Street, Philadelphia,
Pennsylvania 19103 (hereinafter referred to as "RPXXXV" and hereinafter RAI,
RPI, RPVI, RPXXXIV, RPXXXVIII, Deerfield, and RPXXXV are collectively referred
to as the "Borrowers" and hereinafter RAI, RPI, RPVI, Deerfield and RPXXXV are
collectively referred to as the "Continuing Borrowers"),

         AND

         HUDSON UNITED BANK, a state banking institution duly organized and
validly existing under the laws of the State of New Jersey, having an office
located at 1000 MacArthur Boulevard, Mahwah, New Jersey 07430 (hereinafter
referred to as the "Lender").


                              W I T N E S S E T H :
                              - - - - - - - - - -

         WHEREAS, pursuant to the terms, conditions and provisions of that
certain Term Note dated March 29, 2002, by and between the Original Borrowers,
as the borrowers, and the Lender, as the lender (hereinafter collectively
referred to as the "Original Note"), the Lender made available to the Original
Borrowers a secured term loan in the aggregate principal amount of Six Million
Eight Hundred Thousand and 00/100 ($6,800,000.00) Dollars (hereinafter referred
to as the "Original Loan"); and

         WHEREAS, the Original Note is secured or otherwise evidenced by certain
"Loan Documents" (as such term is defined in the Original Note, which Loan
Documents are hereinafter referred to as the "Original Loan Documents"); and

         WHEREAS, on or about June 26, 2003, the Treetop Property (as such term
is defined in the Original Note) was sold by the owner thereof, the Treetop Loan
(as such term is defined in the Original Note) was repaid in full, the RPII
Assignment (as such term is described in the Original Note) was reassigned by
the Lender to RPII (hereinafter collectively referred to as the "RPII Loan
Release") and RPII was released as an Original Borrower, all pursuant to the
terms of an Assignment of Note, Mortgage and Security Agreement, other Loan
Documents and the Title Insurance Policy dated as of June 26, 2003; and

         WHEREAS, in accordance with Paragraph 2(ii)(c) of the Original Note,
the Original Borrower caused to be paid to the Lender $355,516.00 as a partial
prepayment of the Original Note on or about May 29, 2002, as a result of
RPXXXVIII's failure to deliver the RPXXXVIII Assignment (as such term is defined
in the Original Note) to the Lender; and

         WHEREAS, on or about September 29, 2003, RPXXXIV caused the owner of
the Deerfield Property to execute and deliver to Deerfield a Warranty Deed, in
lieu of a foreclosure of the Deerfield Property (as such term is defined in the
Original Note), at which time Deerfield became fee owner of the Deerfield; and





                                        2


         WHEREAS, in connection with the RPII Loan Release, the Original
Borrowers deposited with the Lender, or caused to be deposited with the Lender,
$4,957,290.50 in cash collateral (hereinafter referred to as the "Cash
Collateral") in substitution for the RPII Assignment; and

         WHEREAS, RAI, RPI, RPVI and RPXXXVIII have requested that the Lender
amend the Original Note and the Original Loan to, inter alia, (i) release
RPXXXIV and RPXXXVIII as Borrowers, (ii) confirm the release of RPII as an
Original Borrower, (iii) add Deerfield and RPXXXV as Borrowers, (iv) permanently
reduce the amount of the Loan to $5,000,000.00, (v) release the Cash Collateral,
(vi) add as a new Loan Documents an Assignment of the "New 1521 Loan" (as such
term is hereinafter defined) and (vii) add as additional collateral a first
priority mortgage on the Deerfield Property; and

         WHEREAS, RPXXXV and Deerfield, as subsidiaries of RPI, will receive
direct and indirect economic and other benefits as a result of their becoming
Continuing Borrowers under the Original Loan, as amended hereby; and

         WHEREAS, the parties hereto have agreed to amend and modify the terms,
conditions and provisions of the Original Note and all of the other Original
Loan Documents, on the terms, conditions and provisions more fully set forth and
described herein; and

         NOW, THEREFORE, intending to be legally bound hereby RAI, RPI, RPVI,
Deerfield, RPVXXXIV, RPXXXV and RPXXXVIII (hereinafter referred to as the "RP
Parties") and the Lender hereby promise, covenant and agree as follows:

         1. DEFINED TERMS. All defined terms used in this Amendment but not
expressly defined herein shall have the same meaning, when used herein as set
forth in the Original Note.

         2. ACCURACY OF RECITALS. The RP Parties for each hereby represent and
warrant that all of the recitals contained in this First Amendment are true,
correct, complete and accurate and such recitals are hereby incorporated herein
by reference as part of the substantive provisions of this Amendment.

         3. NOTE. There is, as of January 22, 2004 before giving effect to the
transactions contemplated herein, presently due and owing on the Original Note
the principal sum of $6,444,000.00, plus interest, without offset, defense or
counterclaim, all of which are hereby expressly waived by the Borrowers.

         4. MODIFICATION OF ORIGINAL NOTE. The Original Note is hereby amended
and modified as follows:





                                        3


                  (i) RPXXXIV, and RPXXXVIII are hereby released as "Borrowers"
under the Original Note, and Deerfield and RPXXXV are hereby added as Continuing
Borrowers, all in accordance with paragraphs 5 and 6 of this Amendment.

                  (ii) Any and all references to the term "Borrowers", as such
term is used in the Original Note, shall hereinafter be deemed to be a
collective reference to RAI, RPI, RPVI, Deerfield, and RPXXXV.

                  (iii) The maximum aggregate principal amount of the Original
Loan shall be permanently reduced from Six Million Eight Hundred Thousand and
00/100 ($6,800,000.00) Dollars to Five Million and 00/100 ($5,000,000.00)
Dollars, and any and all references to the maximum aggregate principal amount of
the Loan as being "Six Million Eight Hundred Thousand and 00/100 ($6,800,000.00)
Dollars" shall be amended and modified to refer to a new permanently decreased
maximum aggregate principal amount the Loan of "Five Million and 00/100
($5,000,000.00) Dollars".

                  (iv) Paragraph 2(ii) of the Original Note shall be deleted in
its entirety and the following new Paragraph 2(ii) shall be inserted in its
place and stead:

                       "(ii) Payments of Principal.

                             (a) Periodic principal amortization payments shall
                             be due and payable in equal consecutive monthly
                             installments over the term of a hypothetical
                             two-hundred-forty (240) month amortization
                             schedule, each in the amount of $20,833.33 and each
                             to be paid monthly, on the first (1st) day of each
                             and every calendar month, with the first such
                             payment commencing on February 1, 2004 and the
                             final such payment being made by the Borrowers on
                             the Maturity Date.

                             (b) In addition to the foregoing, in the event any
                             principal payment is made to or is otherwise
                             received by any Borrower with respect to or on
                             account of any of the Assignment Loans (as such
                             term is defined in Paragraph 6(i)(d) hereof), all
                             such principal payments shall immediately be paid
                             by such Borrower to the Lender as a mandatory
                             payment of the Note.

                             (c) Notwithstanding anything contained herein to
                             the contrary, the entire outstanding principal
                             balance of the Note, together with all accrued and
                             unpaid interest, fees and other charges due
                             hereunder and under any other Loan Documents, shall
                             be due and payable on the Maturity Date."

                  (v) The Maturity Date of the Loan is hereby extended to
October 1, 2006, and Paragraph 2(iii) of the Original Note is hereby amended by
deleting the date "April 1, 2004" therefrom and substituting in its place and
stead the date "October 1, 2006".





                                        4


                  (vi) Paragraph 2(v) of the Original Note is hereby amended by
adding the following thereto:

                  "In addition, the Borrowers acknowledge that in connection
                  with the Amendment Agreement (as such term is hereinafter
                  defined in Paragraph 45 of this Note), the Borrowers have
                  agreed to pay to the Lender a loan amendment fee in the
                  aggregate amount of $75,000.00, representing a loan amendment
                  fee of one and one-half (1 1/2%) percent of the reduced Loan
                  amount, which loan amendment fee shall be payable (a)
                  $50,000.00 simultaneously with the execution of the Amendment
                  Agreement and (b) $25,000.00 on the one-year anniversary
                  thereof."

                  (vii) Paragraph 6(i) of the Original Note is hereby deleted in
its entirety and the following new Paragraph 6(i) is hereby be inserted in its
place and stead:

                                    "(i) (a) Additional Loan Documents. In
                  connection with this Note, the following assignments have been
                  executed and delivered to the Lender (hereinafter all items
                  described in subparagraphs (i)(a) (I) and (II) inclusive shall
                  be collectively referred to as the "Assignment Documents"):

                                             (I) A certain Assignment of Note,
                  Mortgage and Security Agreement, and other Loan Documents, and
                  Title Insurance Policy dated March 29, 2002 (hereinafter, as
                  it may be from time to time amended, modified, extended,
                  renewed, refinanced and/or supplemented, referred to as the
                  "RPVI Assignment"), executed by RPVI, as the assignor, in
                  favor of the Lender, as the assignee, pursuant to which RPVI
                  has assigned all of RPVI's rights, title and interests, as
                  mortgagee, in and to that certain first priority mortgage loan
                  (hereinafter referred to as the "Granite Loan") to Granite GEC
                  (Pittsburgh), LLC (successor-in-interest to Granite Historic
                  Associates), as mortgagor, secured by certain real property
                  and improvements being known as the Granite Office Building,
                  316 Sixth Street, Pittsburgh, Pennsylvania (hereinafter
                  referred to as the "Granite Property"); and

                                             (II) A certain Assignment of Note,
                  Mortgage and Security Agreement, and other Loan Documents, and
                  Title Insurance Policy dated of even date with the Amendment
                  Agreement (hereinafter, as it may be from time to time
                  amended, modified, extended, renewed, refinanced and/or
                  supplemented, referred to as the "RPXXXV Assignment"),
                  executed by RPXXXV, as the assignor, in favor of the Lender,
                  as the assignee, pursuant to which RPXXXV has assigned all of
                  RPXXXV's rights, title and interests, as mortgagee, in and to
                  that certain first priority mortgage loan (hereinafter
                  referred to as the "New 1521 Loan", and collectively with the
                  Granite Loan, the "Assigned Loans") to New 1521 Associates, as
                  mortgagor, secured by certain real property and improvements
                  being known as 1521 Locust Street, Philadelphia, Pennsylvania
                  (hereinafter referred to as the "New 1521 Property");




                                        5


                                         (b) As security for the payment of the
                  monies due and owing under this Note or otherwise in
                  connection with the execution of this Note and the Amendment
                  Agreement by the Borrowers, Deerfield has delivered or has
                  caused to be delivered to the Lender the following items of
                  documentation (hereinafter each individually referred to as a
                  "Deerfield Document" and collectively as the "Deerfield
                  Documents"):

                                             (I) a First Mortgage and Security
                  Agreement (said Mortgage and Security Agreement, as it may be
                  from time to time hereafter amended, modified, extended,
                  refinanced and/or supplemented shall be referred to as the
                  "Mortgage"), executed by Deerfield with respect to certain
                  real property and the improvements situated thereon owned by
                  Deerfield and located at 5390 N.E. 5th Terrace, Deerfield
                  Beach, Florida, such property and improvements also known as
                  Parcel Identification (Folio) Number 48-42-12-00-0300 on the
                  Tax Map of the City of Deerfield Beach, Broward County and
                  State of Florida (hereinafter referred to as the "Deerfield
                  Property"), and the Deerfield Property, the Granite Property
                  and the New 1521 Properties are hereinafter collectively
                  referred to as the "Properties");

                                             (II) an Absolute Assignment of
                  Leases, Rents, Income and Profits (Mortgaged Premises) (said
                  Assignment of Leases, Rents, Income and Profits (Mortgaged
                  Premises), as it may be from time to time hereafter amended,
                  modified, extended, refinanced and/or supplemented shall be
                  hereinafter referred to as the "Assignment of Leases"),
                  executed by Deerfield, assigning all of Deerfield's rights,
                  title, and interests as lessor under all leases affecting the
                  Deerfield Property; and

                                             (III) an Environmental
                  Indemnification Agreement (said Environmental Indemnification
                  Agreement, as it may be from time to time hereafter amended,
                  modified, extended, refinanced and/or supplemented shall be
                  hereinafter referred to as the "Environmental
                  Indemnification") concerning the Deerfield Property, executed
                  by Deerfield, RAI and RPI."

                  (viii) Paragraphs 6(iii) and 6(iv) of the Original Note are
hereby deleted in their entirety.

                  (ix) In Paragraph 23 of the Original Note, the Borrower names
"Resource Properties II, Inc.", "Resource Properties XXXIV, Inc." and "Resource
Properties XXXVIII, Inc." are hereby deleted and the Borrower names "Deerfield
RPI, LLC" and "Resource Properties XXXV, Inc." are hereby substituted therefor.





                                        6


                  (x)    In Paragraph 23 of the Original Note, the contact
information under the heading "if to the Lender" is hereby deleted in its
entirety, and the following is hereby substituted therefor:

                             "If to the Lender: Hudson United Bank
                                                1 North High Street
                                                West Chester, Pennsylvania 19380
                                                Attn: Ms. Barbara Kelly,
                                                      Vice President
                                                      Telecopy No.: 610-738-1176

                             With a copy to:    Hudson United Bank
                                                1000 MacArthur Boulevard
                                                Mahwah, New Jersey  07430
                                                Attn: Loan Operations"

                  (xi)   Paragraph 45(vi) of the Note is hereby deleted in its
entirety and the following new Section 45(vi) is hereby inserted in its place
and stead:

                         "(vi) "Assigned Loans" shall have the meaning ascribed
                         and assigned thereto in Paragraph 6(i)(a)(II)."

                  (xii)  Paragraph (xx) of the Note is hereby deleted in its
entirety and the following new Section 45(xx) is hereby inserted in its place
and stead:

                         "(xx) "Loan Documents" shall mean a collective
                         reference to the Assignment Documents, this Note, the
                         Amendment Agreement, the Mortgage, the Assignment of
                         Leases, the Environmental Indemnity, and any other
                         documents, agreements, instruments, certificates or
                         information delivered by the Borrowers or any other
                         Person to the Lender in connection with the Loan, as
                         any and/or all of such Loan Documents may be from time
                         to time amended, modified, extended, renewed,
                         refinanced and/or supplemented."

                  (xiii) Paragraph 45 of the Note is hereby amended by adding
the following new subparagraphs thereto:

                         "(xxv) "Deerfield" shall have the meaning assigned
                         thereto in the preamble of the First Amendment
                         Agreement.

                         (xxvi) "RPXXXV" shall have the meaning assigned thereto
                         in the preamble of the First Amendment Agreement.

                         (xxvii) "Amendment Agreement" shall mean that certain
                         Amendment Agreement and First Allonge to Term Note
                         dated as of January 29, 2004, executed by and among
                         RAI, RPI, RPVI, RPXXXIV, RPXXXVIII, Deerfield, RPXXXV
                         and the Lender, as such Amendment Agreement may be from
                         time to time amended, modified, extended, renewed,
                         refinanced and/or supplemented.




                                        7


                   (xxviii) "Mortgage" shall have the meaning as ascribed and
                   assigned thereto in Paragraph 6(i)(b)(I) of the Note.

                   (xxix) "Assignment of Leases" shall have the meaning ascribed
                   and assigned thereto in Paragraph 6(i)(b)(II) of the Note.

                   (xxx) "Environmental Indemnity" shall have the meaning
                   ascribed and assigned thereto in Paragraph 6(i)(c)(III) of
                   the Note."

            (xiii) Any references to the "Note" or to any of the other "Loan
Documents" shall be deemed to refer to the Note or such other Original Loan
Document as amended and modified by the Amendment Agreement, as any of such
documents may be hereafter amended, modified, extended, renewed, refinanced
and/or supplemented.

         5. ADDITION OF DEERFIELD AND RPXXXV AS BORROWERS. In consideration of
the execution and delivery of this Amendment by the Lender and with knowledge
that the Lender would not executed and delivered this Amendment but for the
promises of Deerfield and RPXXXV hereunder and under the other Loan Documents to
which they are a party, Deerfield and RPXXXV, by their execution and delivery
hereof, assume and accept, on a joint and several basis with all of the other
Continuing Borrowers, all of the rights, obligations, responsibilities and
liabilities of a "Borrower" under the Original Note and the Original Loan
Documents, all as amended hereby. Deerfield and RPXXXV hereby represent and
warrant to the Lender that they have read, understood and agreed to each of the
terms, conditions and provisions of the Original Note and the Original Loan
Documents, all as amended hereby. The addition of Deerfield and RPXXXV as
"Borrowers" under the Original Note, as amended hereby, shall in no way affect,
change, modify or diminish the obligations, responsibilities and liabilities of
any of the other Continuing Borrowers under the Original Note and the Original
Loan Documents, all as amended hereby.

         6. RELEASE OF RPII, RPXXXIV AND RPXXXVIII. In consideration of the
execution and delivery of this First Amendment by the Borrowers, and the
execution of all other documents executed in connection herewith, by some or all
of the Borrowers, the Lender hereby releases and discharges each of RPXXXIV and
RPXXXVIII, and satisfies and confirms the release and discharge of RPII, from
any and all liability, responsibility and obligation under the Loan. By their
execution hereof, the Continuing Borrowers hereby acknowledge, consent to and
approve of said release and discharge and confirm to the Lender that the
provisions of this Paragraph 6 do not in any way alter, diminish or otherwise
affect any of the terms, conditions and/or provisions of the Original Note and
the Original Loan Documents, all as amended hereby, as such terms, conditions
and/or provisions may relate to the Continuing Borrowers.






                                        8


         7. AMENDMENT AND MODIFICATION OF ORIGINAL LOAN DOCUMENTS. The Original
Loan Documents are hereby amended and modified as follows:

            (i) Any and all references to the "Note" shall be deemed to refer to
the Original Note, as amended and modified by this Amendment.

            (ii) Any and all references to any or all of the "Loan Documents"
shall be deemed to refer to each such Loan Document as amended and modified by
this Amendment.

            (iii) Any and all references to the term "Borrowers" shall, from and
after the date hereof, be an individual or collective reference, as the context
may dictate, to the Continuing Borrowers.

            (iv) Any and all references to the amount of the Loan as being "Six
Million Eight Hundred Thousand and 00/100 ($6,800,000.00) Dollars" or
"$6,800,000.00" shall be amended to be a reference to the reduced amount of the
Loan as being "Five Million and 00/100 ($5,000,000.00) Dollars" or
"$5,000,000.00", respectively.

         8. FURTHER AGREEMENTS AND REPRESENTATIONS. Each Continuing Borrower
does hereby:

            (i) ratify, confirm and acknowledge that, as amended and modified
hereby, the Original Note and all of the other Original Loan Documents continue
to be valid, binding and in full force and effect;

            (ii) covenant and agree to perform all of their respective
obligations contained herein, under the Original Note and/or all of the other
Original Loan Documents to which they are a party, as amended and modified
hereby;

            (iii) acknowledge and agree that as of the date hereof, none of the
Continuing Borrowers has any defense, set-off, counterclaim or challenge against
the payment of any sums due and owing to the Lender or the enforcement of any of
the terms of the Note and/or the other Original Loan Documents, as amended and
modified hereby;

            (iv) acknowledge and agree that all representations and warranties
of RAI, RPI and RPVI contained in the Original Note and/or any of the other
Original Loan Documents, as amended and modified hereby, are true, accurate and
correct as of the date hereof as if made on and as of the date hereof, except to
the extent any such representation or warranty is by its terms limited to a
certain date or dates in which case it remains true, accurate and correct as of
such date or dates, and Deerfield and RPXXXV hereby make and affirm to the
Lender all representations and warranties made by the Original Borrowers,
respectively, in the Original Note and the Loan Documents, as amended and
modified hereby, as if made by Deerfield and RPXXXV;






                                        9


             (v) represent and warrant that, after giving effect to the
transactions contemplated by this Amendment, no "Event of Default" (as such term
is defined in the Original Note, as amended and modified hereby), exists or will
exist upon the delivery of notice, passage of time, or both, and all information
described in the recitals to this First Amendment is, to the best of each
Borrower's respective knowledge, true and accurate;

             (vi) acknowledge and agree that nothing contained herein and no
actions taken pursuant to the terms hereof are intended to constitute a novation
of the Original Note and/or the Loan, or any waiver of the other Original Loan
Documents, and do not constitute a release, termination or waiver of any of the
liens, security interests or rights or remedies granted to the Lender under the
Original Loan Documents, all of which liens, security interests, rights or
remedies are hereby ratified, confirmed and continued as security for the Loan,
as amended and modified hereby; and

             (vii) acknowledge and agree that the failure by the Continuing
Borrowers to comply with or perform any of their respective covenants,
agreements or obligations contained herein, if not remedied within any
applicable notice and/or grace period, shall constitute an Event of Default
under the Original Note and under each of the Original Loan Documents, all as
amended and modified.

         9.  NO NOVATION; LIEN PRIORITY OF THE ORIGINAL LOAN DOCUMENTS. It is
the intention of the parties hereto that this Amendment shall not constitute a
novation and shall in no way adversely affect or impair the lien priority of the
Original Loan Documents, as amended and modified hereby. In the event this
Amendment or any portion hereof, or any of the instruments executed in
connection herewith shall be construed or shall operate to affect the lien
priority of the Original Loan Documents in excess of that contemplated and
permitted thereby, and to the extent third parties acquiring an interest in the
Original Loan Documents are prejudiced hereby, this Amendment shall be void and
of no force and effect; provided, however, that notwithstanding the foregoing,
the parties hereto, as between themselves, shall be bound by all terms and
conditions hereof until all obligations of the Continuing Borrowers to the
Lender under the Original Note and the Original Loan Documents as amended and
modified hereby, shall have been paid in full.

         10. ADDITIONAL DOCUMENTS; FURTHER ASSURANCES. The Continuing Borrowers
each hereby covenant and agree to execute and deliver to the Lender, or to cause
to be executed and delivered to the Lender contemporaneously herewith, at the
sole cost and expense of the Continuing Borrowers, any and all other documents,
agreements, statements, resolutions, certificates, opinions, consents, searches
and information as the Lender may reasonably request in connection with the
matters or actions described herein. The Continuing Borrowers hereby further
covenant and agree to execute and deliver to the Lender, or to use their
respective commercially reasonable efforts to cause to be executed and delivered
to the Lender, at the sole cost and expense of the Continuing Borrowers, from
time to time, any and all other documents, agreements, statements, certificates
and information as the Lender shall reasonably request to evidence or effect the
terms of the Original Note, as amended and modified hereby, or any of the
Original Loan Documents, as amended and modified hereby, or to enforce or
protect the Lender's interest in any collateral. All such documents, agreements,
statements, etc., shall be in form and content reasonably acceptable to the
Lender.





                                       10


         11. NO WAIVER. Nothing contained herein constitutes an agreement or
obligation by the Lender to grant any further amendments to any of the Loan
Documents and nothing contained herein constitutes a waiver or release by the
Lender of any rights or remedies available to the Lender under the Original Note
or the Original Loan Documents, as amended and modified hereby, at law or in
equity, provided that the foregoing is not intended to revoke the Lender's
previous consent to the requested actions by any of the Borrowers, where such
consent was delivered by the Lender in writing.

         12. INCONSISTENCIES. To the extent of any inconsistency between the
terms and conditions of this Amendment and the terms and conditions of the
Original Note or any of the other Original Loan Documents, as amended and
modified hereby, the terms and conditions of this Amendment shall prevail. All
terms and conditions of the Original Note and the Original Loan Documents not
inconsistent herewith shall remain in full force and effect and are hereby
ratified and confirmed by the Continuing Borrowers.

         13. BINDING EFFECT. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.

         14. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.

         15. COUNTERPARTS. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.

         16. CONSTRUCTION. This Amendment, including any exhibits, schedules and
amendments hereto, has been negotiated at arm's length and between persons
sophisticated and knowledgeable in the matters dealt with in this Amendment.
Each party has been represented by experienced and knowledgeable legal counsel.
Accordingly, any rule of law or legal decision that would require interpretation
of any ambiguities in this Amendment against the party that has drafted it is
not applicable and is waived. The provisions of this Amendment shall be
interpreted in a reasonable manner to effect the purposes of the parties and
this Amendment.

         17. SINGLE INSTRUMENT. The Continuing Borrowers hereby direct the
Lender to affix this Amendment to the Original Note, whereupon the Original Note
and this First Amendment shall become and constitute a single instrument.

             IN WITNESS WHEREOF, the Lender and the Borrowers have caused this
Amendment Agreement and First Allonge to Term Note to be duly executed, attested
and delivered by their duly authorized representatives, all as of the day and
year first above written.







                                       11



                                BORROWERS:

                                RESOURCE AMERICA, INC.,
                                a Delaware corporation, as a Continuing Borrower

                                By: ____________________________________________
                                    Thomas C. Elliott
                                    Vice President

                                RESOURCE PROPERTIES, INC.,
                                a Delaware corporation, as a Continuing Borrower

                                By: ____________________________________________
                                    Victor Wang
                                    Vice President

                                RESOURCE PROPERTIES VI, INC.,
                                a Delaware corporation, as a Continuing Borrower

                                By: ____________________________________________
                                    Victor Wang
                                    Vice President

                                RESOURCE PROPERTIES XXXIV, INC.,
                                a Delaware corporation, as an Original Borrower

                                By: ____________________________________________
                                    Victor Wang
                                    Vice President


                       [SIGNATURES CONTINUED ON NEXT PAGE]








                                       12




                                RESOURCE PROPERTIES XXXVIII, INC.,
                                a Delaware corporation, as an Original Borrower


                                By: _____________________________________
                                    Victor Wang
                                    Vice President


                                DEERFIELD RPI, LLC, a Delaware
                                limited liability company, as a Continuing
                                Borrower

                                By: Resource Properties XXXIV, Inc.,
                                    as its Sole Member


                                    By:  ________________________________
                                           Victor Wang
                                           Vice President


                                RESOURCE PROPERTIES XXXV, INC., a
                                Delaware  corporation, as a Continuing
                                Borrower


                                By: _____________________________________
                                      Victor Wang
                                      Vice President


                                LENDER:
                                ------

                                HUDSON UNITED BANK

                                By:______________________________________
                                      Barbara Kelly
                                      Vice President








                                       13






COMMONWEALTH OF PENNSYLVANIA     )
                                  )   ss:
COUNTY OF PHILADELPHIA           )

         On the 23rd day of January, 2004, before me, the subscriber, a Notary
Public in and for the Commonwealth and County aforesaid personally appeared
THOMAS C. ELLIOTT who acknowledged himself to be the Vice President of RESOURCE
AMERICA, INC., a Delaware corporation, and, being authorized to do so, executed
the foregoing instrument on behalf of such corporation, as such officer.

         WITNESS my hand and seal the day and year aforesaid.




                                                   _____________________________
                                                   NOTARY PUBLIC
                                                   My Commission Expires:




COMMONWEALTH OF PENNSYLVANIA     )
                                  )   ss:
COUNTY OF PHILADELPHIA           )

         On the 23rd day of January, 2004, before me, the subscriber, a Notary
Public in and for the Commonwealth and County aforesaid personally appeared
VICTOR WANG, who acknowledged himself to be the Vice President of RESOURCE
PROPERTIES, INC., a Delaware corporation, and, being authorized to do so,
executed the foregoing instrument on behalf of such corporation, as such
officer.

         WITNESS my hand and seal the day and year aforesaid.




                                                   _____________________________
                                                   NOTARY PUBLIC
                                                   My Commission Expires:













                                       14




COMMONWEALTH OF PENNSYLVANIA     )
                                  )   ss:
COUNTY OF PHILADELPHIA           )

         On the 23rd day of January, 2004, before me, the subscriber, a Notary
Public in and for the Commonwealth and County aforesaid personally appeared
VICTOR WANG, who acknowledged himself to be the Vice President of RESOURCE
PROPERTIES VI, INC., a Delaware corporation, and, being authorized to do so,
executed the foregoing instrument on behalf of such corporation, as such
officer.

         WITNESS my hand and seal the day and year aforesaid.




                                                   _____________________________
                                                   NOTARY PUBLIC
                                                   My Commission Expires:


COMMONWEALTH OF PENNSYLVANIA     )
                                  )   ss:
COUNTY OF PHILADELPHIA           )

         On the 23rd day of January, 2004, before me, the subscriber, a Notary
Public in and for the Commonwealth and County aforesaid personally appeared
VICTOR WANG, who acknowledged himself to be the Vice President of RESOURCE
PROPERTIES XXXIV, INC., a Delaware corporation, and, being authorized to do so,
executed the foregoing instrument on behalf of such corporation, as such
officer.

         WITNESS my hand and seal the day and year aforesaid.




                                                   _____________________________
                                                   NOTARY PUBLIC
                                                   My Commission Expires:







                                       15




COMMONWEALTH OF PENNSYLVANIA     )
                                  )   ss:
COUNTY OF PHILADELPHIA           )

         On the 23rd day of January, 2004, before me, the subscriber, a Notary
Public in and for the Commonwealth and County aforesaid personally appeared
VICTOR WANG, who acknowledged himself to be the Vice President of RESOURCE
PROPERTIES XXXVIII, INC., a Delaware corporation, and, being authorized to do
so, executed the foregoing instrument on behalf of such corporation, as such
officer.

         WITNESS my hand and seal the day and year aforesaid.




                                                   _____________________________
                                                   NOTARY PUBLIC
                                                   My Commission Expires:

COMMONWEALTH OF PENNSYLVANIA     )
                                  )   ss:
COUNTY OF PHILADELPHIA           )

         On the 23rd day of January, 2004, before me, the subscriber, a Notary
Public in and for the Commonwealth and County aforesaid personally appeared
VICTOR WANG, who acknowledged himself to be the Vice President of RESOURCE
PROPERTIES XXXIV, INC., the Sole Member of DEERFIELD RPI, LLC, a Delaware
corporation, and, being authorized to do so, executed the foregoing instrument
on behalf of such corporation, as such officer.

         WITNESS my hand and seal the day and year aforesaid.




                                                   _____________________________
                                                   NOTARY PUBLIC
                                                   My Commission Expires:






                                       16



COMMONWEALTH OF PENNSYLVANIA     )
                                  )   ss:
COUNTY OF PHILADELPHIA           )

         On the 23rd day of January, 2004, before me, the subscriber, a Notary
Public in and for the Commonwealth and County aforesaid personally appeared
VICTOR WANG, who acknowledged himself to be the Vice President of RESOURCE
PROPERTIES XXXV, INC., a Delaware corporation, and, being authorized to do so,
executed the foregoing instrument on behalf of such corporation, as such
officer.

         WITNESS my hand and seal the day and year aforesaid.




                                                   _____________________________
                                                   NOTARY PUBLIC
                                                   My Commission Expires:



















                                       17

EX-10

FIFTH AMENDMENT TO REVOLVING
CREDIT AGREEMENT AND ASSIGNMENT

        THIS FIFTH AMENDMENT TO REVOLVING CREDIT AGREEMENT AND ASSIGNMENT (this “Fifth Amendment”) made as of January 30, 2004, by and among LEAF FINANCIAL CORPORATION, a Delaware corporation with offices at 1845 Walnut Street, 10^th Floor, Philadelphia, Pennsylvania 19103 (“Leaf Financial”) and LEAF FUNDING, INC., a Delaware corporation with offices at 110 S. Poplar Street, Suite 101, Wilmington, Delaware 19801 (“Leaf Funding, Inc.”, and together with Leaf Financial, each a “Debtor” and, collectively, the “Debtors”) and NATIONAL CITY BANK, a national banking association with offices at One South Broad, 13^th Floor, Philadelphia, Pennsylvania 19107 (“Secured Party”).

BACKGROUND

           A.        On June 11, 2002, Leaf Financial and Secured Party entered into that certain Revolving Credit Agreement and Assignment (the “Original Agreement”) a copy of which is attached hereto and made a part hereof as Exhibit “A”, pursuant to which Secured Party promised from time to time to make loans to Leaf Financial in exchange for Leaf Financial’s grant of a security interest and an assignment to Secured Party of all Leaf Financial’s right, title and interest in certain Collateral (as defined in Section 2(a) of the Original Agreement), evidenced by that certain Master Note of even date therewith between Leaf Financial and Secured Party (the “Master Note”).

           B.        On March 28, 2003, Leaf Financial, Lease Equity Appreciation Fund I, L.P., a Delaware limited partnership (“Leaf I”), Leaf Funding, LLC, a Delaware limited liability company (“Leaf Funding, LLC”), and Secured Party entered into that certain First Amendment to the Original Agreement (the “First Amendment”), a copy of which is attached hereto and made a part hereof as Exhibit “B”, which amended certain provisions of the Original Agreement and which was evidenced by that certain Amended and Restated Master Note of even date therewith (the “Amended and Restated Master Note”).

           C.        On April 1, 2003, Leaf Financial, Leaf I, Leaf Funding, LLC, Leaf Funding, Inc. and Secured Party entered into that certain Second Amendment to the Original Agreement (the “Second Amendment”), a copy of which is attached hereto and made a part hereof as Exhibit “C”, which amended certain provisions of the Original Agreement, as amended, and which was evidenced by that certain Amendment to Amended and Restated Master Note of even date therewith.

           D.        On June 6, 2003, Leaf Financial, Leaf I, Leaf Funding, Inc. and Secured Party entered into that certain Extension to Revolving Credit Agreement and Assignment (the “Extension”), a copy of which is attached hereto and made a part hereof as Exhibit “D”, which extended the term of the Original Agreement, as amended, for a specified period of time.

           E.        On August 1, 2003, Leaf Financial, Leaf I, Leaf Funding, Inc. and Secured Party executed an extension letter (the “August 1^st Letter”), a copy of which is attached hereto and made a part hereof as Exhibit “E”, which extended the term of the Original Agreement, as amended, until September 30, 2003.

           F.        On September 29, 2003, Leaf Financial, Leaf I, Leaf Funding, Inc. and Secured Party entered into that certain Third Amendment to Revolving Credit Agreement and Assignment (the “Third Amendment”), a copy of which is attached hereto and made a part hereof as Exhibit “F”, which, inter alia, extended the term of the Agreement until December 31, 2003.

           G.        On December 19, 2003, Leaf Financial, Leaf I, Leaf Funding, Inc. and Secured Party entered into that certain Fourth Amendment to Revolving Credit Agreement and Assignment (the “Fourth Amendment” and together with the Original Agreement, the First Amendment, the Second Amendment, the Extension, the August 1^st Letter and the Third Amendment, the “Agreement”), a copy of which is attached hereto and made a part hereof as Exhibit “G”, which, inter alia, removed Leaf I as a debtor under the Agreement and extended the term of the Agreement until January 31, 2004, and which was evidenced by that certain Master Note of even date therewith.

           H.        Debtors and Secured Party mutually desire to further amend the Agreement and are entering into this Fifth Amendment to set forth their entire understanding and agreement with respect thereto.

        NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree that the Agreement is further amended as follows:

           A.        Amendment. The Agreement is hereby further amended to provide that the “Commitment Termination Date”, as defined in the Agreement, shall be extended until January 31, 2005, or such other date as to which Secured Party shall agree in writing.

           B.        Consent. Secured Party hereby consents to the foregoing Amendment and waives all prohibitions thereto in the Agreement. Such consent and waiver does not, however, constitute a waiver to any future actions prohibited by the Agreement.

          C.        General Provisions.

                                     1.     Except as expressly set forth herein, the Agreement remains unmodified and will continue in full force and effect. The parties hereto will construe all other provisions of the Agreement to give effect to the provisions hereof.

                                     2.     This Fifth Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their nominees, successors and assigns.

                                     3.     This Fifth Amendment may be executed in any number of counterparts, all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all parties have not signed the same counterpart.

                                     4.     This Fifth Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

        IN WITNESS WHEREOF, the parties have executed and delivered this Fifth Amendment to Revolving Credit Agreement and Assignment as of the date first above written.

Address for Notices: 1845 Walnut Street, 10th Floor Philadelphia, PA 19103	LEAF FINANCIAL CORPORATION, a Delaware corporation
	By:_______________________________            Miles Herman, President

Address for Notices: c/o Leaf Financial Corporation 1845 Walnut Street, 10th Floor Philadelphia, PA 19103	LEAF FUNDING, INC., a Delaware corporation
	By:_______________________________            Miles Herman, Senior Vice President

SECURED PARTY:
 
NATIONAL CITY BANK, a national
banking association

 
 
By:_______________________________
      Name:
      Title:

EX-31

Exhibit 31.2

CERTIFICATIONS

I, Edward E. Cohen, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2004 of Resource America, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) [Omitted in accordance with SEC Release Nos. 33-8238, 34-47986 and IC-26068 (June 5, 2003)];

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occured during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial report; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over finacial reporting.

Date:  May 13, 2004
/s/ Edward E. Cohen         
Edward E. Cohen
Chairman of the Board and Chief Executive Officer

EX-31

Exhibit 31.2

CERTIFICATIONS

I, Steven J. Kessler, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2004 of Resource America, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) [Omitted in accordance with SEC Release Nos. 33-8238, 34-47986 and IC-26068 (June 5, 2003)];

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occured during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial report; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over finacial reporting.

Date:  May 13, 2004
/s/ Steven J. Kessler         
Steven J. Kessler
Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO18
U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TOSECTION
906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource America, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward E. Cohen, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  May 13, 2004
/s/ Edward E. Cohen         
Edward E. Cohen
Chairman of the Board and Chief Executive Officer

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO18
U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TOSECTION
906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource America, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven J. Kessler, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  May 13, 2004
/s/ Steven J. Kessler         
Steven J. Kessler
Senior Vice President and Chief Financial Officer