RESOURCE AMERICA INC, S-1, 1996-10-11

RESOURCE AMERICA INC
S-1, 1996-10-11
SHORT-TERM BUSINESS CREDIT INSTITUTIONS

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<PAGE>
Registration No. 333-_______

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

Delaware 679 72-0654145
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)

1521 Locust Street, Fourth Floor, Philadelphia, PA 19102 (215) 546-5005
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

Michael L. Staines, Senior Vice President
Resource America, Inc.
1521 Locust Street, Fourth Floor
Philadelphia, PA 19102
(215) 546-5005
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

With copies to:
J. Baur Whittlesey, Esquire Lee Meyerson, Esquire
Ledgewood Law Firm, P.C. Simpson Thacher & Bartlett
1521 Locust Street, Suite 800 425 Lexington Avenue
Philadelphia, PA 19102 New York, NY 10017

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. []

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. []

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. []

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. []

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
I Title of each class I Amount to be I Proposed maximum I Proposed maximum I Amount of I
I of securities to be I registered I offering price per I aggregate offering I registration I
I registered I I unit I price I fee I
I----------------------I--------------I---------------------I--------------------I---------------I
<S> <C> <C> <C> <C>
I Common Stock I 1,400,000 I $ 14.75(1) I $20,650,000 I $6,256.90 I
- ---------------------- -------------- --------------------- -------------------- -----------------
</TABLE>

(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933 based upon
the average of the high and low prices reported on the Nasdaq National
Market System on October 7, 1996 (a date within 5 business days prior
to the date of filing of this registration statement).

The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

<PAGE 1>
SUBJECTION TO COMPLETION, DATED SEPTEMBER _____, 1996

PROSPECTUS
[LOGO]

RESOURCE AMERICA, INC.

_________ Shares of Common Stock

Resource America, Inc., a Delaware corporation (the "Company"), is
offering hereby _____ shares of its Common Stock. The Common Stock is quoted
on The Nasdaq National Market System ("Nasdaq") under the symbol "REXI." On
October _____, 1996, the last sale price of the Common Stock, as reported by
Nasdaq, was $______ per share. See "Price Range of Common Stock and Dividend
Policy."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 10 HEREOF FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED CAREFULLY BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

===============================================================================
Price to Underwriting
Public Discount(1) Proceeds to Company(2)
- -------------------------------------------------------------------------------
Per Share $ $ $
Total(3) $ $ $
===============================================================================

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses of the offering payable by the Company
estimated to be $_____________.
(3) The Company has granted the several Underwriters a 30-day option to
purchase up to _________ additional shares of Common Stock to cover
over-allotments. If all such shares of Common Stock are purchased, the
total Price to Public, Underwriting Discount and Proceeds to Company
will be $__________, $__________ and $__________, respectively. See
"Underwriting."

The shares of Common Stock are offered by the Underwriters, subject to receipt
and acceptance by the Underwriters, approval of certain legal matters by counsel
for the Underwriters and certain other conditions. The Underwriters reserve the
right to withdraw, cancel or modify such offers and to reject orders in whole
or in part. It is expected that delivery of the shares of Common Stock will be
made in New York, New York on or about _____________, 1996.

---------------------
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.

The date of this Prospectus is ______________, 1996.

<PAGE 2>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON NASDAQ, IN THE OVER-THE-COUNTER MARKET, OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission are available for
inspection and copying at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at Seven World
Trade Center, New York, New York 10048. Copies of such documents may also be
obtained from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, copies of such documents may be obtained through the Commission's
Internet address at http://www.sec.gov. The Company's Common Stock is
authorized for quotation on Nasdaq and, accordingly, such materials and other
information can also be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.

The Company has filed with the Commission under the Securities Act of
1933, as amended (the "Securities Act"), a Registration Statement on Form S-1
(including all amendments and exhibits thereto, the "Registration Statement")
with respect to the shares of Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. The Registration Statement, including any amendments and
exhibits thereto, is available for inspection and copying as set forth above.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.

The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference (other than
exhibits to such documents which are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to
Secretary, Resource America, Inc., 1521 Locust Street, Fourth Floor,
Philadelphia, Pennsylvania 19102. Telephone requests may be directed to the
Secretary at (215) 546-5005.

<PAGE 3>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION SET FORTH HEREIN
(i) ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED, AND
(ii) GIVES EFFECT TO 6% STOCK DIVIDENDS PAID IN JANUARY 1996 AND APRIL 1996 AND
A FIVE FOR TWO STOCK SPLIT (EFFECTED IN THE FORM OF A 150% STOCK DIVIDEND) IN
MAY 1996. REFERENCES TO THE "COMPANY" IN THIS PROSPECTUS INCLUDE THE COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES, UNLESS THE CONTEXT OTHERWISE REQUIRES.

THE COMPANY

GENERAL

The Company is a specialty finance company engaged in three lines of
business: the acquisition and resolution of commercial real estate loans,
"small ticket" commercial equipment leasing, and energy operations, including
natural gas and oil production. For approximately 25 years prior to 1991, the
Company was principally involved in the energy industry. Following the
acquisition of a significant ownership position in the Company by new
stockholders in 1988 and the appointment of new senior management (including the
current Chairman, who has been a senior officer of banking and other financial
institutions for the past 30 years), the Company evaluated alternative
strategies to expand and diversify its operations (particularly in light of the
declining attractiveness of the energy business to small investors following the
1986 changes to the federal tax law).

Since 1991, the Company's business strategy has focused on locating and
developing niche finance businesses in which the Company can realize attractive
returns by targeting well-defined financial services markets and by developing
specialized skills to service those markets on a cost-effective basis. To date,
the Company has developed two business lines (asset acquisition and resolution,
and equipment leasing) that it believes meet these criteria.

The Company was organized in 1947. Its executive offices are located at 1521
Locust Street, Philadelphia, Pennsylvania 19102, and its telephone number is
(215) 546-5005.

ASSET ACQUISITION AND RESOLUTION

Company's loan portfolio has increased to $97.2 million (before discounts) at
June 30, 1996. During the fiscal years ended September 30, 1993, 1994 and
1995 and the nine months ended June 30, 1996, the Company's yield on its net
investment in loans acquired (including gains on refinancings and sales of
participations) equalled 12.1%, 30.8%, 34.6% and 31.5%, respectively, while
its gross profits from its loan activities (that is, revenues from the
segment minus costs attributable thereto and less depreciation, depletion and
amortization, but without allocation of corporate overhead) for fiscal 1993,
1994 and 1995 were $492,000, $2.3 million and $5.3 million, respectively, and
for the first nine months of fiscal 1996 were $5.2 million.

The Company seeks to reduce the amount of its own capital invested in loans
after their acquisition, and to enhance its returns, through prompt refinancing
of the properties underlying its loans, or through sale at a profit of senior
participations in its loans (typically on a recourse basis). At June 30, 1996,
senior lenders held outstanding obligations of $35.7 million secured by
properties with an aggregate appraised value of $64 million, resulting in a
ratio of senior lien obligations-to-appraised value of property of 56%.
Currently, the operating cash flow coverage on the required debt service on
refinancings and participations (exclusive of proceeds from such refinancings
or participations) is 163.6%. The balance of operating cash flow is, pursuant
to agreements with the borrowers, retained by the Company as debt service on the
outstanding balance of the Company's loans. See "Business - Asset Acquisition
and Resolution: Loan Status."

EQUIPMENT LEASING

In September 1995, the Company entered the commercial leasing business
through its acquisition of the leasing subsidiary of a regional insurance
company. This acquisition provided the Company with a servicing portfolio of
approximately 520 individual leases held by six leasing partnerships which
provided the Company with a servicing revenue stream of $1.3 million during the
first nine months of fiscal 1996. More importantly, through this acquisition
the Company acquired an infrastructure of operating systems, computer hardware
and proprietary software (generally referred to as a "platform"), as well as
personnel, which the Company is utilizing to develop a commercial leasing
business for its own account.

In order to develop this business, in early 1996 the Company hired a team
of four experienced leasing executives, including the former chief executive
officer of the U.S. leasing subsidiary of Tokai Bank, a major Japanese banking
institution. The Company's strategy in developing its leasing business is to
focus on leases with equipment costs of between $5,000 to $100,000 (with a
targeted average transaction of approximately $15,000 per lease) ("small ticket"
leasing) and to market its equipment leasing product through vendor programs
with equipment manufacturers likely to generate $10 million or less annually in
equipment leases, regional distributors and other vendors. The Company believes
that this market is under-served by equipment lessors, banks and other financial
institutions, affording the Company a niche market with significant growth
potential. From the inception of leasing activity for its own account in June
1996 through September 30, 1996, the Company has received 271 lease proposals
involving equipment with an aggregate cost of $6.5 million, approved 118 such
proposals

involving equipment with an aggregate cost of $2.5 million, entered into 39
transactions involving equipment with an aggregate cost of $741,000 and had
21 such proposals pending involving equipment with an aggregate cost of $1.3
million.

According to the Equipment Leasing Association of America ("ELA"), a
leading industry trade association, approximately 80% of all United States
businesses lease some portion of their equipment. Leasing enables a company to
obtain the equipment it needs, while preserving cash flow and often receiving
favorable accounting and tax treatment. The Company believes that small
businesses are becoming more aware of the economic benefits offered by equipment
leasing, and that small business leasing will therefore become an increasingly
important segment of the leasing market.

ENERGY OPERATIONS

The Company produces natural gas and, to a lesser extent, oil from
locations principally in Ohio, Pennsylvania and New York. At June 30, 1996, the
Company had a net investment of $13.3 million in its energy operations,
including interests in 772 individual wells owned directly by the Company or
through 52 partnerships and joint ventures managed by the Company. While the
Company has focused its business development efforts on its specialty finance
operations over the past several years, its energy operations historically have
provided a steady source of revenues and tax benefits.

THE OFFERING

Common Stock offered(1). . . . . . . . . . ___________ shares

Common Stock to be outstanding after
the Offering . . . . . . . . . . . . . . . ___________ shares (1)(2)

Use of Proceeds. . . . . . . . . . . . . . For general corporate purposes,
including the acquisition of
additional commercial real estate
loans for the Company's portfolio
and expansion of the Company's
equipment leasing operations. See
"Use of Proceeds."

Nasdaq National Market Symbol. . . . . . . REXI

Risk Factors . . . . . . . . . . . . . . . An investment in the shares of
Common Stock offered hereby
involves significant risks. See
"Risk Factors" beginning on page
10 hereof for information that
should be considered by prospective
purchasers of the Common Stock.

- -----------------------------------
(1) Assumes that the Underwriters' over-allotment option to purchase up to
_______ shares of Common Stock is not exercised.
(2) Does not give effect to any future exercise of outstanding warrants to
purchase up to 983,150 shares of Common Stock or employee stock options
to purchase up to 348,316 shares of Common Stock. See "Description of
Capital Stock - Warrants" and "Security Ownership of Certain Beneficial
Owners and Management."

<PAGE 7> SUMMARY CONSOLIDATED FINANCIAL DATA

The financial data set forth below should be read in conjunction with,
and is qualified in its entirety by, the Consolidated Financial Statements of
the Company, including the notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
herein.
<TABLE>
<CAPTION>
AS OF AND FOR THE
NINE MONTHS ENDED
AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, JUNE 30,
-------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF
OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C>

Revenues:
Asset acquisition and resolution:
Interest(1). . . . . . . . . - $ 182 $ 606 $1,401 $3,422 $2,307 $2,082
Fees . . . . . . . . . . . . - - - 25 963 903 672
Gains on refinancings and
sale of participations(2). - - - 1,096 1,729 1,230 2,826
------ ------ ------ ------ ------ ------ ------
Total . . . . . . . . . . - 182 606 2,522 6,114 4,440 5,580
Equipment leasing(3). . . . . - - - - - - 3,786
Energy production . . . . . . $3,791 3,474 3,409 3,442 3,452 2,485 2,524
Energy services . . . . . . . 4,652 2,676 2,445 2,080 1,880 1,533 1,418
Interest. . . . . . . . . . . 531 231 106 136 148 102 142
------ ------ ------ ------ ------ ------ ------
Total revenues . . . . . . . 8,974 6,563 6,566 8,180 11,594 8,560 13,450

Costs:
Asset acquisition and resolution - 230 114 248 801 655 412
Equipment leasing(3). . . . . - - - - - - 1,707
Energy production and exploration 1,835 1,921 1,735 2,004 1,732 1,237 1,134
Energy services . . . . . . . 3,831 1,247 1,106 1,131 1,027 780 734
General and administrative. . 1,721 1,890 1,841 1,901 2,265 1,829 1,598
Other 40 81 (342) 340 1,090 839 631
------ ------ ------ ------ ------ ------ ------
Total expenses . . . . . . . 7,427 5,369 4,454 5,624 6,915 5,340 6,216

Income before income
taxes, depreciation,
depletion and amortization . 1,547 1,194 2,112 2,556 4,679 3,220 7,234
Depletion, depreciation and
amortization . . . . . . . . 1,788 1,700 1,478 1,347 1,335 1,045 1,059
Income (loss) before
income taxes . . . . . . . . (241) (506) 634 1,209 3,344 2,175 6,175
Net income . . . . . . . . . . (245) (406) 590 1,309 2,714 1,803 4,385

SEGMENT PROFITABILITY:(4)

Asset acquisition and resolution
profit (loss). . . . . . . . - (82) 455 2,237 5,263 3,747 5,123
Equipment leasing profit(3). . - - - - - - 1,945
Energy production profit . . . 562 265 553 461 798 583 749
Energy services profit . . . . 525 1,181 1,167 653 515 489 475
Corporate . . . . . . . . . . (1,230) (1,740) (1,393) (2,105) (3,207) (2,566) (2,087)
</TABLE>

<TABLE> AS OF AND FOR THE
<CAPTION>
NINE MONTHS ENDED
AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, JUNE 30,
------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

BALANCE SHEET AND OTHER DATA
<S> <C> <C> <C> <C> <C> <C> <C>

Assets:
Current assets. . . . . . . . $ 8,455 $ 6,679 $ 2,150 $ 3,985 $ 3,924 $ 4,241 $ 7,810
Net investment in energy
property and equipment . . . 15,299 14,576 13,542 12,786 11,964 12,587 11,960
Net investment in real estate
loans. . . . . . . . . . . . - 1,827 7,329 10,386 17,991 17,578 19,083
Net other assets . . . . . . . 1,991 1,858 2,210 7,639 3,671 3,909 3,419
------- ------- ------- ------- -------- ------- --------
Total assets . . . . . . . . 25,745 24,940 25,231 34,796 37,550 38,315 42,272

Liabilities:
Current liabilities . . . . . 1,050 989 723 1,355 1,329 906 911
Long term debt. . . . . . . . 1,163 972 813 8,627 8,523 10,561 8,478
Deferred income taxes . . . . 468 416 834 674 1,147 890 2,367
------- ------- ------- ------- -------- ------- --------
Total liabilities. . . . . . 2,681 2,377 2,370 10,656 10,999 12,357 11,756

Stockholders' equity . . . . . 23,063 22,563 22,861 24,140 26,551 25,958 30,516
Stockholders' equity per
common share . . . . . . . . 11.68 11.43 11.59 12.52 14.21 13.62 16.11

Assets under management:
Real estate(5). . . . . . . . - 2,163 13,303 26,328 52,955 42,132 85,251
Leasing(6). . . . . . . . . . - - - - 25,994 - 19,213
Energy(7) . . . . . . . . . . 37,900 37,500 38,500 36,067 33,688 34,523 33,902

SELECTED RATIOS

Operating ratios:
Return on equity. . . . . . . (1.1)% (1.8)% 2.6% 5.4% 10.2% 6.9% 14.4%
Yield on net real estate
investment(8). . . . . . . . - 9.5% 12.1% 30.8% 34.6% 24.7% 31.5%

Balance sheet ratio:
Real estate loan to value(9). - 94.4% 82.0% 79.1% 77.5% 77.1% 71.9%
</TABLE>

<TABLE>
<CAPTION>
AS OF AND FOR THE
NINE MONTHS ENDED
AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, JUNE 30,
------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S> <C> <C> <C> <C> <C> <C> <C>
PER COMMON SHARE INFORMATION
Net income (loss) -
primary (10) . . . . . . . . $ (.12) $ (.21) $ .30 $ .64 $ 1.23 $ .86 $ 1.72
Net income (loss) -
fully diluted (11). . . . . . $ (.12) $ (.21) $ .30 $ .62 $ 1.18 $ .82 $ 1.64
Cash dividends . . . . . . . . . .36 .13 - - .09 - .28
</TABLE>

- ------------------------------------------
(1) Interest income includes accreted discounts of $0, $0, $256,000, $602,000
and $1.2 million for the fiscal years ended September 30, 1991, 1992, 1993,
1994 and 1995, respectively, and $587,000 and $776,000 for the nine months
ended June 30, 1995 and 1996, respectively.
(2) Includes gains of $0, $1.729 million, $1.230 million, and $2.254 million
during fiscal years 1994 and 1995 and the nine months ended June 30,
1995 and 1996, respectively, relating to sales of loan participations on
a recourse basis.
(3) Reflects revenues from equipment leasing partnerships acquired by the
Company in September 1995 (see "Business - General"). The Company did not
begin originating equipment leases for its own account until after June 30,
1996; accordingly, future results may not be comparable to historical data.
(4) Represents revenues from the segment minus costs from the segment and less
depreciation, depletion and amortization attributable to the segment, but
without allocation of corporate overhead. For additional segment
information, including operating profit (loss) after allocation of
corporate overhead, see Note 10 to the Consolidated Financial Statements.
(5) Represents the stated, or face, amount of outstanding loans plus accrued
interest and penalties.
(6) Represents the net book value of assets held by the six equipment leasing
limited partnerships managed by the Company.
(7) Represents the original cost of assets held by the 52 energy partnerships
and joint ventures managed by the Company.
(8) Calculated as gross asset acquisition and resolution revenues divided by
the book cost of asset acquisition and resolution assets.
(9) Calculated as the aggregate amount of loans outstanding with respect to any
property (including all loans with liens senior to or of the same seniority
with the loan interest held by the Company) divided by the appraised value
of the property.
(10) Based on weighted average common shares and common share equivalents of
1.974 million, 1.975 million, 1.99 million, 2.076 million, 2.235 million,
2.12 million and 2.549 million at September 30, 1991, 1992, 1993, 1994,
1995 and June 30, 1995 and 1996, respectively.
(11) Based on weighted average common shares and common share equivalents of
1.974 million, 1.975 million, 1.99 million, 2.117 million, 2.293 million,
2.189 million and 2.675 million at September 30, 1991, 1992, 1993, 1994,
1995 and June 30, 1995 and 1996, respectively.

RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE SHARES
OF COMMON STOCK OFFERED BY THIS PROSPECTUS. THE CAUTIONARY STATEMENTS SET FORTH
BELOW AND ELSEWHERE IN THIS PROSPECTUS SHOULD BE READ AS ACCOMPANYING FORWARD-
LOOKING STATEMENTS INCLUDED UNDER "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS," "BUSINESS" AND ELSEWHERE HEREIN.
THE RISKS DESCRIBED IN THE STATEMENTS SET FORTH BELOW COULD CAUSE THE COMPANY'S
RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN OR INDICATED BY SUCH
FORWARD-LOOKING STATEMENTS.

GENERAL

ABILITY TO GENERATE FUNDING FOR GROWTH. The Company's future growth
will be largely dependent upon the continued availability of funds to acquire
and resolve commercial real estate loans and to fund equipment lease
transactions. To date, funding for the Company's asset acquisition and
resolution operations has been derived from internally generated funds, the sale
of a senior note to Physicians Life Insurance Company of Ohio ("PICO"), sales
by the Company to PICO of participations in its portfolio loans and borrowers'
refinancing of their mortgage obligations. It is anticipated that funding for
the Company's asset acquisition and resolution operations will continue to be
derived from internally generated funds and existing third-party sources,
although the Company may seek additional third-party sources in the future.

Funding for the Company's equipment leasing operations will be obtained
through third-party warehouse financing (full recourse, short-term borrowings
secured by the underlying equipment and repaid with the proceeds of permanent
funding) and third-party permanent funding (both bank term loans and
securitization of lease portfolios). Although the Company has received a
preliminary financing proposal ("term sheet") from two major banking
institutions, acting as co-agents, for an initial $20 million credit facility
for the Company's leasing operations, no funding has been finally committed to
or negotiated as of the date of this Prospectus. See "Business - Sources of
Funds." In the event these institutions do not complete this financing, the
Company will be required to seek other financing sources for its equipment
leasing operations.

The availability of third-party financing for each of the Company's
specialty finance businesses will be dependent upon a number of factors over
which the Company has limited or no control, including general conditions in the
credit markets, the size and liquidity of the market for the types of real
estate loans or equipment leases in the Company's portfolio and the respective
financial performance of the loans and equipment leases in the Company's
portfolio. Although the Company believes that the additional capital provided
by this offering will enhance both the number of funding sources available to
it and the total amount of funding obtainable, there can be no assurance that
the Company will be able to generate funding on satisfactory terms and in
acceptable amounts.

ABILITY TO GENERATE GROWTH OPPORTUNITIES. The Company's growth will
also depend on its continued ability to generate attractive opportunities for
acquiring commercial real estate loans at a discount and to originate equipment
leases. In each area, the Company will rely primarily upon the knowledge,
experience and industry contacts of its senior management to generate investment
opportunities. See "Management." There can be no assurance that the Company
will continue to generate opportunities satisfactory to it or sufficient
opportunities to sustain growth or that, in its asset acquisition and resolution
activities, the Company will be able to acquire loans in the same manner, on
similar terms or at similar levels of discount as its current portfolio loans.
The availability of loans for acquisition on terms acceptable to the Company
will be dependent upon a number of factors over which the Company has no
control, including economic conditions, interest rates, the market for and value
of properties securing loans which the Company may seek to acquire, and the
willingness of financial institutions to dispose of troubled or under-performing
loans in their portfolios.

CREDIT RISKS. Mortgage loans and equipment leases are subject to the
risk of default in payment by borrowers and lessees. Upon a default, the
Company will have the responsibility of seeking to recover outstanding loan or
lease balances through foreclosure, repossession of equipment or similar
procedures. With respect to any particular lease or commercial real estate loan
transaction, instituting any of these procedures could adversely impact the
Company's yield on such loan or lease. There can be no assurance that, in the
event of default, the amount realizable from the property securing a defaulted
loan or the equipment subject to a defaulted lease will be sufficient to recover
amounts invested by or owed to the Company (including the residual value
assigned to leased equipment). See "Risk Factors - Asset Acquisition and
Resolution Considerations: Lien Priority" and "Equipment Leasing -
Considerations: Residuals."

The Company's real estate mortgage loans are typically not the general
obligations of the borrower and, accordingly, in seeking to collect amounts owed
on a loan, the Company must rely solely on the value of the property underlying
the loan to satisfying the obligation. This value will be affected by numerous
factors beyond the Company's control, including general or local economic
conditions, neighborhood values, interest rates, operating expenses (such as
real estate taxes and insurance costs), occupancy rates and the presence of
competitive properties. In addition, most of the Company's loans require a
substantial lump sum payment at maturity. The ability of a borrower to pay a
lump sum, and thus the ability of the Company to collect promptly all amounts
due upon maturity, may be dependent on a borrower's ability to obtain suitable
refinancing or otherwise raise a substantial cash amount which, in turn, will
depend upon factors (such as those referred to previously) over which the
Company has no control. To the extent that the Company has sold a participation
in a loan, or the loan has been refinanced, the Company will typically retain
a subordinated interest in the loan, which may be unsecured. See "Risk Factors
- - Asset Acquisition and Resolution Considerations: Lien Priority." Such
retained interests are subject to materially increased risks of collection upon
default.

The Company anticipates that many of the end-users of the equipment it
leases for its own account will be small businesses which may not be able to
supply the kinds of financial information available from larger firms, and which
may be more susceptible to changes in

economic conditions or have lesser financial resources with which to meet
lease obligations than larger firms. Although the Company will seek to
mitigate this risk through the use of its Small Business Credit Scoring
System, its Fidelity Asset Tracking System and loan servicing and collection
procedures (see "Business -Equipment Leasing: Small Ticket Leasing"), there
can be no assurance that the Company will not be subject to higher risks of
default than firms leasing to larger entities.

COMPETITION. In each of its business operations, the Company is subject
to intense competition from numerous competitors, many of whom possess far
greater financial and other resources than the Company. See "Business - Asset
Acquisition and Resolution: Competition," "-Equipment Leasing: Competition"
and "- Energy: Competition." The Company will also have to compete for the
capital necessary to fund both its asset acquisition and resolution and
equipment leasing operations based largely upon the performance of its portfolio
loans and equipment leases. See "Risk Factors - General: Credit Risks."

ASSET ACQUISITION AND RESOLUTION CONSIDERATIONS

TROUBLED STATUS OF LOANS AND UNDERLYING PROPERTIES. The Company seeks
to acquire commercial real estate loans at a discount from both the unpaid
principal and interest amounts of the loan and the appraised value of the
underlying property. As a consequence, the Company will often be involved with
loans which are the subject of contentious and often complex disputes among
various parties regarding application of cash flow from the property, loan
terms, lease terms or similar matters, or which are secured by properties that,
while income producing, are unable to generate sufficient revenues to pay the
full amount of debt service under the original loan terms. Although prior to
acquisition the Company will generally negotiate with the borrower or other
parties in interest and, where appropriate, make financial accommodations to
take into account the operating conditions of the property, resolve outstanding
disputes and ensure the Company's control of the cash flow from the underlying
property, there can be no assurance that the underlying property will not be
subject to recurrence of the problems which existed prior to the Company's
acquisition of the loan, or other problems.

LIEN PRIORITY. Although the Company normally acquires first mortgage
loans, it is not limited as to the lien priority of a loan which it may acquire.
Moreover, a lender refinancing a loan in the Company's portfolio will typically
require, as a condition to its refinancing (the proceeds of which generally are
paid to the Company, see "Business - Asset Acquisition and Resolution"), that
the Company's remaining interest in the loan be subordinated to such lender's
interest and unsecured. The Company currently holds twenty-one junior lien
loans or subordinated participations, six of which, aggregating $14.6 million
(after loan amounts attributable to senior lien interests), are not formally
secured by recorded mortgages (although they are protected by either judgment
liens, unrecorded deeds in lieu of foreclosure, borrowers' covenants not to
further encumber the property without the Company's consent, or similar
devices). To the extent that either the lien securing a loan is junior to other
liens encumbering an underlying property or the loan is unsecured, the Company
will be subject to greater risks of loss upon a default. See "Risk Factors -
General: Credit Risks." In addition, in certain

circumstances, mortgage loans, including first mortgage loans, may be subject
to mechanics', materialmens' or government liens which may be prior in right
of payment to liens held by the Company. In the event of a default on a
senior mortgage, the Company may make payments, if it has the right to do so,
in order to prevent foreclosure on the senior mortgage, increasing its
investment cost without necessarily improving its lien position.

In the event of a foreclosure, the Company will only be entitled to
share in the net proceeds after the payment of all senior lienors, including
senior mortgagees, and mechanics', materialmens' and government liens. It is
therefore possible that the total amount which may be recovered by the Company
upon a foreclosure may be less than the outstanding balance of the loan or the
Company's investment in the loan, with resultant loss to the Company. It is
also possible that, in some cases, a "due on sale" clause included in a senior
mortgage, which accelerates the amount due under the senior mortgage in case of
the sale of the property, may apply to the sale of the property upon foreclosure
of a junior loan, and may accordingly increase the risks to the Company in the
event of a default by the borrower on the junior loan.

ENVIRONMENTAL LIABILITIES. In the event of a default on a portfolio
loan, the Company may acquire the underlying property through foreclosure.
There is a risk that hazardous substances, wastes, contaminants or pollutants
would be discovered on the foreclosed property after acquisition by the Company.
In such event, the Company might be required to remove such substances from the
property at its sole cost and expense. There can be no assurance that the cost
of such removal would not substantially exceed the value of the affected
property or the loan secured by the property, that the Company would have
adequate remedies against the prior owner or other responsible parties or that
the Company would not find it difficult or impossible to sell the affected
properties either prior to or following any such removal.

DISPOSITION OF LOAN INTERESTS. After the Company has acquired a loan,
the Company will typically sell a participation in the loan, or assist the
borrower in obtaining third-party refinancing, while retaining an interest in
the loan. Although the sale of a participation or a refinancing may result in
the return of the entire amount of (or, in some cases, more than) the Company's
investment in the loan (including amounts advanced to the borrower after loan
acquisition; see "Business - Asset Acquisition and Resolution: Acquisition and
Administration"), in most such sales or refinancings a reduced portion of the
Company's investment in the loan remains unrecovered. Based upon the appraised
value of the properties underlying the loans, the Company believes that it will
recover amounts substantially in excess of the Company's remaining invested
capital; however, there can be no assurance that, upon termination of the loan,
the Company will be able to dispose of its remaining loan interest for an amount
in excess of its remaining investment in such loan, or that the property
underlying the loan can be disposed of for an amount equal to or in excess of
the interests of senior lienors and the Company's remaining investment in the
loan.

SALES OF PARTICIPATIONS TO INSURANCE COMPANY. Eleven of the
participations sold in the Company's portfolio of loans have been sold to PICO.
Pursuant to the terms of these sales (the "PICO Sales"), if the borrower under
any such loan defaults in the payment of debt service,

the Company is required to replace the defaulted obligation with a performing
one. Since the Company has sold participations in, or refinanced most of its
current portfolio of loans, if the Company were required to replace a
defaulted participation loan with a performing loan pursuant to the terms of
the PICO Sales, it may not be able to do so without acquiring additional
commercial real estate loans. If the Company could not fulfill its obligation
to PICO pursuant to the terms of the PICO Sales, PICO would have various legal
remedies including foreclosure on and sale of the underlying property (see
":Credit Risks," above), requiring the Company to repay its participation, or
declaring the Senior Note immediately due and payable. There can be no
assurance that the borrower of one or more loans that are subject to the PICO
Sales will not default on such loans or that in such event, the Company would
be able to acquire additional commercial real estate loans to substitute in
the PICO participations or, if a replacement loan is not so acquired and
substituted, that PICO would not seek to require the Company to repay PICO's
participation or declare the Senior Note immediately due and payable.

LOSS RESERVES. In accordance with generally accepted accounting
principles, the Company would establish reserves in its financial statements for
portfolio losses (including losses which may occur if a participation is
reacquired by the Company) when it is determined to be probable that a loss has
been incurred (i.e. the realizable value of an investment appears to be less
than its carrying value on the Company's books). Since the appraised value of
each of the Company's portfolio loans is currently substantially in excess of
the outstanding balance of senior liens (including participations) and the
Company's outstanding investment, the Company has not to date established any
reserves. If the Company were to be required to reacquire a participation,
and if the value of the underlying property were to decline as a result of the
default resulting in the reacquisition (and the Company has not theretofore
established reserves with respect thereto), the Company may be required to
charge any resulting loss against earnings. There can be no assurance that
such a charge would not be material.

OBLIGATION OF COMPANY TO ACQUIRE INTEREST OF EXISTING SENIOR LIENOR. The
Company has agreed that a senior lienor, whose interest existed at the time the
Company acquired its loan (and to which the Company's loan is subject), may
require the Company to purchase its interest on or after June 30, 2001 for an
amount equal to the outstanding balance of its interest. Such balance was
$1.2 million at September 30, 1996. See "Business - Asset Acquisition and
Resolution: Loan Status." Although the Company anticipates that this interest
will be refinanced prior to June 30, 2001, failure to do so will require the
Company to seek financing for such a purchase or acquire it with available
corporate funds.

POSSIBLE FLUCTUATIONS IN EARNINGS FROM ASSET ACQUISITION AND RESOLUTION
BUSINESS. A material portion of the Company's revenues from its asset
acquisition and resolution business is derived from the sale of participations
in, or refinancings of, its portfolio loans. These sales and refinancings are,
with respect to any one loan, non-recurring. Accordingly, the Company's ability
to recognize these gains in the future will depend upon its continuing ability
to acquire loans and the sale of participations in, or refinancings of, such
loans. See "Risk Factors -General: Ability to Generate Growth Opportunities."
Moreover, depending upon the timing of portfolio acquisitions and participation
sales or refinancings, the Company's revenues from its asset

acquisition and resolution business could be subject to significant
fluctuations from period to period. For a discussion of the Company's
accounting treatment of sales of participations or refinancings, see
"Business - Asset Acquisition and Resolution: Accounting for Discounted
Loans."

EQUIPMENT LEASING CONSIDERATIONS

LIMITED EQUIPMENT LEASING OPERATING HISTORY. The Company acquired
the equipment leasing operations of The Fidelity Mutual Life Insurance Company
("Fidelity") in September 1995 and, in 1996, the Company expanded these leasing
operations to include small ticket equipment leasing for its own account.
Although the leasing business acquired by the Company has been in operation
since 1986, and the executives primarily responsible for developing the
Company's proprietary leasing program have had lengthy experience in the
equipment leasing industry (see "Management - Other Significant Employees"), the
Company has only a limited direct experience upon which an evaluation of its
prospects in the equipment leasing business can be based. Such prospects must
be considered in light of the expenses and difficulties frequently encountered
by an acquiror in integrating a newly-acquired business with its other
operations, and in expanding the scope of the newly-acquired business.

DEMAND FOR COMPANY'S EQUIPMENT LEASE FINANCING. The demand for the
equipment lease financing provided by the Company is subject to numerous factors
beyond the control of the Company, including general economic conditions,
fluctuations in interest rate levels and fluctuations in demand for the types
of equipment as to which the Company provides equipment lease financing. In
addition, the demand for the Company's equipment lease financing will be
materially affected by the ability of the Company to market its services to
manufacturers, distributors and dealers. See "Business -Equipment Leasing:
Competition."

FINANCING FOR EQUIPMENT LEASING OPERATIONS. The Company anticipates
that it may be required to provide credit enhancement for debt obligations
issued and sold as a part of any warehouse or permanent financing utilized in
its equipment leasing operations. See "Risk Factors - Ability to Generate
Funding for Growth." These credit enhancements may include cash deposits,
funding of subordinated tranches of securitizations, the pledge of additional
equipment loans which are funded by the Company's capital, and/or a guaranty by
the Company and may involve restrictive covenants concerning maintenance by the
Company of minimum capital levels or debt to equity ratios. Any such
requirements may reduce the Company's liquidity and require it to obtain
additional capital. See "Business - Sources of Funds" for a description of
certain terms of an equipment leasing credit facility which has been proposed
to the Company.

The Company anticipates that warehouse financing will bear interest at
variable rates while its permanent funding will typically be at fixed rates set
at the time the financing is provided. Accordingly, the Company will be subject
to interest rate risk to the extent interest rates increase between the time a
lease is funded by warehouse facilities and the time of permanent funding.
Increases in interest rates during this period could narrow or eliminate the
spread between the

effective interest rates on the Company's equipment leases and the rates on
the Company's funding, or result in a negative spread.

RESIDUALS. The Company anticipates that a significant portion of the
Company's revenues from leasing operations may result from the sales or re-
leasing of equipment upon lease termination or from an extension of the lease
term beyond its initial expiration date ("residuals"). The Company's
realization of residuals is subject to numerous factors beyond the Company's
control, including equipment obsolescence, excessive supply of similar
equipment, reductions in manufacturers' prices for similar equipment, the
ability or willingness of a lessee to purchase or re-lease equipment and similar
matters, which could materially adversely affect the amount of residuals
obtainable by the Company and, accordingly, the operating results and financial
condition of the Company. See "Business -Equipment Leasing Operations: Small
Ticket Leasing."

ENERGY INDUSTRY CONSIDERATIONS

MARKET FOR PRODUCTION. Historically, the availability of a ready market
for oil and natural gas, and the price obtained therefor, has depended upon
numerous factors including the extent of domestic production, import of foreign
natural gas and/or oil, political instability in oil and gas producing countries
and regions, market demands, the effect of federal regulation on the sale of
natural gas and/or oil in interstate commerce, and other governmental regulation
of the production and transportation of natural gas and/or oil. Certain other
factors outside the Company's control may also limit sales such as, for example,
operational and transportation difficulties of pipeline or oil purchasing
companies. In addition, the marketability of natural gas depends upon the needs
of the purchasers to which the producer has access. Depending upon the
purchasers' needs, the price obtainable for natural gas produced by the Company,
or the amount of natural gas which the Company is able to sell, the revenues of
the Company may be adversely affected.

POSSIBLE DECLINE IN PRODUCTION. Production of oil and gas from a
particular well generally declines over time until it is no longer economical
to produce from the well, at which time the well is plugged and abandoned.
Wells which the Company owns or in which it has an interest have been drilled
at various times from 1966 to the present. The Company's wells generally have
productive lives of 15 to 20 years and have been subject to normal production
declines. To date, these declines have been offset largely by the acquisition
of additional well interests. However, from 1993 to the date hereof, the
Company has participated in the drilling of only a small number of wells. See
"Business - Energy Operations: Exploration and Development." Although, in
general, the Company does not anticipate material growth in its energy
operations relative to its asset acquisition and resolution and equipment
leasing operations, the Company from time to time considers potential
acquisitions of energy assets. The Company cannot predict whether the Company
will acquire further energy assets or as to the timing or cost thereof.

ENVIRONMENTAL LIABILITIES. Oil and gas operations are subject to
numerous hazards (such as seepage, spillage of well substances such as brine or
oil, and escape of oil or gas from wells,

tanks or pipelines) which can cause substantial pollution damage to the
environment or severely damage the property of others. While the Company
maintains liability insurance coverage and has not had a material
environmental incident, there can be no assurance that incidents will not
occur in the future or that the liability resulting therefrom will not be
substantial.

IMPORTANCE OF KEY EMPLOYEES

The Company's future success will depend upon the continued services of
the Company's senior management and, with respect to its leasing operations, the
Chairman and Chief Executive Officer of its leasing subsidiary. The unexpected
loss of the services of any of these management personnel could have a material
adverse effect upon the Company. See "Management." The Company does not
maintain key man life insurance on any of its senior management.

CONTROL BY PRINCIPAL SHAREHOLDER

Upon completion of the offering, Edward E. Cohen, the Company's Chairman,
President and Chief Executive Officer, will own beneficially ______% (_____%
including shares subject to outstanding options held by Mr. Cohen) of the
Company's Common Stock. See "Security Ownership of Certain Beneficial Owners
and Management." As a result, Mr. Cohen will have a significant influence upon
the activities of the Company, as well as on all matters requiring approval of
the shareholders, including electing or removing members of the Company's Board
of Directors, causing the Company to engage in transactions with affiliated
entities, causing or restricting the sale or merger of the Company, and changing
the Company's dividend policy.

RESTRICTION ON PAYMENT OF DIVIDENDS

Under the terms of senior note financing obtained by the Company,
dividend payments by the Company are subject to certain restrictions. See
"Price Range of Common Stock and Dividend Policy" and "Business - Sources of
Funds."

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of this offering, the Company will have __________
shares of Common Stock outstanding. Of these shares, ____________ shares
(_________ shares if the Underwriters' over-allotment option is exercised in
full) will be freely tradeable without restriction or further registration under
the Securities Act by persons other than affiliates (as that term is defined in
the Securities Act) of the Company and ____________ shares or _____% of the
Company's outstanding Common Stock (_____% if the Underwriters' over-allotment
option is exercised in full) will be beneficially owned by executive officers
and directors of the Company and their affiliates. Pursuant to Rule 144 under
the Securities Act, these persons may sell such shares subject to the volume and
other restrictions contained in such Rule. See "Description of Capital Stock -
Warrants." In addition to the foregoing, _____________ shares of Common Stock
have been reserved for issuance upon the exercise of outstanding management
stock options and warrants held by PICO (an officer of which is a director of
the Company).

PICO has demand and piggy-back registration rights with respect to
shares underlying its warrants. The Company's executive officers and directors,
their affiliates, PICO and the Company have agreed not to sell any shares of
Common Stock (including shares issuable pursuant to exercise of options or
warrants) for 180 days from the date of this Prospectus without the prior
written consent of Friedman, Billings, Ramsey & Co., Inc., as representative of
the Underwriters. No prediction can be made as to the effect, if any, that
future sales of shares of Common Stock or availability of such shares for future
sale will have on the market price of the Common Stock prevailing from time to
time. Sales of substantial amounts of Common Stock (including shares issued
upon the exercise of outstanding options and warrants), or the perception that
such sales could occur, could adversely affect prevailing market prices for the
Common Stock.

DILUTION RESULTING FROM WARRANT AND OPTION EXERCISES

The Company has outstanding warrants for the purchase of 983,150 shares
of Common Stock at exercise prices of $3.38 per share (561,800 shares) and $4.18
per share (421,350 shares). See "Description of Capital Stock - Warrants." The
Company also currently has outstanding management options to purchase 348,316
shares of Common Stock at prices ranging from $2.76 to $9.01 per share. Since
the exercise prices for these options and warrants are less than the current
book value per share of the Common Stock ($16.11 per share, exclusive of options
or warrants, at June 30, 1996) and substantially less than the public offering
price per share of the Common Stock being offered hereby, it is possible
(depending on the book value per share of the Common Stock at the time of
exercise) that the exercise of these options and warrants could have a
substantial dilutive effect on the book value of the Common Stock. If all of
such warrants and options had been exercised at June 30, 1996, the Company's pro
forma book value per share of Common Stock at that date would have been $14.91.

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the
Common Stock offered hereby, based upon an assumed initial offering price of
$_____ per share and after deducting the underwriting discount and estimated
offering expenses, are estimated to be $________________ ($________________ if
the Underwriters' over-allotment option is exercised in full).

The Company intends to use the net proceeds for general corporate
purposes, including the acquisition of additional discounted commercial real
estate loans for its portfolio and expansion of its equipment leasing
operations. While the Company has not specifically allocated the net proceeds
among its operations, it is currently anticipated that $_____ million will be
allocated to its asset acquisition and resolution operations and $_____ million
to its equipment leasing operations. There can, however, be no assurance that
the allocation, as finally made, will not differ from what is anticipated, or
that such differences will not be material. The final allocation will depend
upon numerous factors, including the availability of attractive opportunities
to acquire commercial real estate loans, the funding needs of the equipment
leasing operations and the availability of other funding sources for any of the
Company's operations.

PRICE RANGE OF COMMON STOCK
AND DIVIDEND POLICY

The Company's Common Stock is quoted on Nasdaq under the symbol "REXI."
The following table sets forth the high and low sale prices, as reported by
Nasdaq, on a quarterly basis for the Company's last two full fiscal years.

1996 (fiscal) High Low
------------- ---- -----

Fourth Quarter . . . . . . . . . . . . . . . . . $17.50 12.00
Third Quarter. . . . . . . . . . . . . . . . . . 21.19 12.83
Second Quarter . . . . . . . . . . . . . . . . . 16.23 7.43
First Quarter. . . . . . . . . . . . . . . . . . 8.63 6.58

1995 (fiscal) High Low
------------- ---- -----

Fourth Quarter . . . . . . . . . . . . . . . . . $8.68 $4.80
Third Quarter. . . . . . . . . . . . . . . . . . 5.43 4.18
Second Quarter . . . . . . . . . . . . . . . . . 4.80 4.18
First Quarter. . . . . . . . . . . . . . . . . . 4.90 4.18

Prior to this offering, trading volume in the Company's Common Stock on
Nasdaq has been relatively low. The average monthly trading volume in the
Company's Common Stock for fiscal 1995 and 1996, as reported by Nasdaq (and as
adjusted for the Company's stock dividends and stock split), was approximately
29,800 shares and 98,000 shares, respectively. No prediction can be made as to
the effect, if any, that this offering will have on the market price of the
Company's Common Stock or the liquidity or trading volume of the market for the
Company's Common Stock after this offering.

As of August 31, 1996, there were 1,894,410 shares of Common Stock
outstanding held of record by 796 persons.

The Company has paid regular quarterly cash dividends since August 31,
1995, as follows:

Dividend Payment Date Per Share Dividends
--------------------- -------------------

August 30, 1996 $.10
May 31, 1996 $.10
February 29, 1996 $.094
November 30, 1995 $.089
August 31, 1995 $.089

The Board of Directors, at a meeting held September 24, 1996, has
authorized payment on November 29, 1996 of a dividend of $.10 per share to
shareholders of record November 15, 1996.

The Company declared and paid a 6% stock dividend in January 1996, a 6%
stock dividend in April 1996, and effected a five for two stock split in the
form of a 150% stock dividend in May 1996. For a description of certain
restrictions on the Company's ability to pay cash dividends on its Common
Stock resulting from the Senior Note, see "Business - Sources of Funds: The
Senior Note."

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company as of June 30, 1996, and as adjusted for the sale of the shares of
Common Stock offered hereby at an assumed public offering price of $_____ per
share and after deduction of underwriting discounts and estimated offering
expenses, but assuming no exercise of the Underwriters' over-allotment option.

As of June 30, 1996
----------------------------
Actual As Adjusted
------ -----------

Long-term debt . . . . . . . . . . . . . . . . $8,478,374 $8,478,374
Stockholders' equity
Preferred Stock, $1.00 par value,
1,000,000 shares authorized,
none issued. . . . . . . . . . . . . . . . 0 0
Common Stock, $.01 par value,
8,000,000 shares authorized,
1,894,410 shares issued and
outstanding; _________ shares,
as adjusted. . . . . . . . . . . . . . . . 20,463
Additional paid-in capital . . . . . . . . 21,767,988
Retained earnings. . . . . . . . . . . . . 11,885,363
Less cost of treasury shares . . . . . . . (2,708,413) (2,708,413)
Less loan receivable from ESOP . . . . . . (449,982) (449,982)
----------- -----------
Total stockholders' equity. . . . . . 30,515,419
----------- -----------
Total capitalization . . . . . . . . . . . . . $38,993,793 $
=========== ===========

SELECTED CONSOLIDATED FINANCIAL DATA

The selected historical financial and operating data set forth below for
the Company for each of the five years in the period ended September 30, 1995
have been derived from the Company's financial statements which have been
audited by the Company's independent public accountants. The selected
historical financial and operating data presented below for the nine months
ended June 30, 1995 and 1996 have been derived from the Company's unaudited
financial statements and include, in the opinion of management, all adjustments
(which consist only of normal recurring adjustments) necessary to present fairly
the data for such periods. Results for the nine-month periods are not
necessarily indicative of the results to be expected for the full fiscal year
or for any other interim period. The information set forth below should be read
in conjunction with the Consolidated Financial Statements and Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" included elsewhere in this Prospectus.

STATEMENT OF
OPERATIONS DATA:

<S> <C> <C> <C> <C> <C> <C>
Revenues:
Asset acquisition and resolution:
Interest(1). . . . . . . . . - $ 182 $ 606 $1,401 $3,422 $2,307 $2,082
Fees . . . . . . . . . . . . - - - 25 963 903 672
Gains on refinancings and
sale of participations(2) . . - - - 1,096 1,729 1,230 2,826
------ ------ ------ ------ ------ ------ ------
Total . . . . . . . . . . - 182 606 2,522 6,114 4,440 5,580
Equipment leasing(3). . . . . - - - - - - 3,786
Energy production . . . . . . $3,791 3,474 3,409 3,442 3,452 2,485 2,524
Energy services . . . . . . . 4,652 2,676 2,445 2,080 1,880 1,533 1,418
Interest. . . . . . . . . . . 531 231 106 136 148 102 142
------ ------ ------ ------ ------ ------ ------
Total revenues . . . . . . . 8,974 6,563 6,566 8,180 11,594 8,560 13,450

Costs:
Asset acquisition and resolution - 230 114 248 801 655 412
Equipment leasing(3). . . . . - - - - - - 1,707
Energy production and exploration 1,835 1,921 1,735 2,004 1,732 1,237 1,134
Energy services . . . . . . . 3,831 1,247 1,106 1,131 1,027 780 734
General and administrative. . 1,721 1,890 1,841 1,901 2,265 1,829 1,598
Other . . . . . . . . . . . . 40 81 (342) 340 1,090 839 631
------ ------ ------ ------ ------ ------ ------
Total expenses . . . . . . . 7,427 5,369 4,454 5,624 6,915 5,340 6,216

<TABLE>
<CAPTION>
AS OF AND FOR THE
NINE MONTHS ENDED
AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, June 30,
------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

SEGMENT PROFITABILITY:(4)

<S> <C> <C> <C> <C> <C> <C> <C>
Asset acquisition and resolution
profit (loss). . . . . . . . - (82) 455 2,237 5,263 3,747 5,123
Equipment leasing profit(3). . - - - - - - 1,945
Energy production profit . . . 562 265 553 461 798 583 749
Energy services profit . . . . 525 1,181 1,167 653 515 489 475
Corporate . . . . . . . . . . (1,230) (1,740) (1,393) (2,105) (3,207) (2,566) (2,087)

BALANCE SHEET AND OTHER DATA

Assets:
Current assets. . . . . . . . $ 8,455 $ 6,679 $ 2,150 $ 3,985 $ 3,924 $ 4,241 $ 7,810
Net investment in energy
property and equipment . . . 15,299 14,576 13,542 12,786 11,964 12,587 11,960
Net investment in real estate
loans. . . . . . . . . . . . - 1,827 7,329 10,386 17,991 17,578 19,083
Net other assets . . . . . . . 1,991 1,858 2,210 7,639 3,671 3,909 3,419
------- ------- ------- ------- ------- ------- -------
Total assets . . . . . . . . 25,745 24,940 25,231 34,796 37,550 38,315 42,272

Liabilities:
Current liabilities . . . . . 1,050 989 723 1,355 1,329 906 911
Long term debt. . . . . . . . 1,163 972 813 8,627 8,523 10,561 8,478
Deferred income taxes . . . . 468 416 834 674 1,147 890 2,367
------- ------- ------- ------- ------- ------- -------
Total liabilities. . . . . . 2,681 2,377 2,370 10,656 10,999 12,357 11,756

Stockholders' equity . . . . . 23,063 22,563 22,861 24,140 26,551 25,958 30,516
Stockholders' equity per
common share . . . . . . . . 11.68 11.43 11.59 12.52 14.21 13.62 16.11

SELECTED RATIOS

Operating ratios:
Return on equity. . . . . . . (1.1)% (1.8)% 2.6% 5.4% 10.2% 6.9% 14.4%
Yield on net real estate
investment(8). . . . . . . . - 9.5% 12.1% 30.8% 34.6% 24.7% 31.5%

Balance sheet ratio:
Real estate loan to value(9). - 94.4% 82.0% 79.1% 77.5% 77.1% 71.9%
</TABLE>

PER COMMON SHARE INFORMATION
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (loss) -
primary (10). . . . . . . . . $ (.12) $ (.21) $ .30 $ .64 $ 1.23 $ .86 $ 1.72
Net income (loss) -
fully diluted (11). . . . . . $ (.12) $ (.21) $ .30 $ .62 $ 1.18 $ .82 $ 1.64
Cash dividends . . . . . . . . . .36 .13 - - .09 - .28
</TABLE>

(7) Represents the original cost of assets held by the 52 energy partnerships
and joint ventures managed by the Company.
(8) Calculated as gross asset acquisition and resolution revenues divided by
the book cost of asset acquisition and resolution assets.
(9) Calculated as the aggregate amount of loans outstanding with respect to any
property (including all loans with liens senior to or of the same seniority
with the loan interest held by the Company) divided by the appraised value
of the property.
(10) Based on weighted average common shares and common share equivalents of
1.974 million, 1.975 million, 1.99 million, 2.076 million, 2.235 million,
2.12 million and 2.549 million at September 30, 1991, 1992, 1993, 1994,
1995 and June 30, 1995 and 1996, respectively.
(11) Based on weighted average common shares and common share equivalents of
1.974 million, 1.975 million, 1.99 million, 2.117 million, 2.293 million,
2.189 million and 2.675 million at September 30, 1991, 1992, 1993, 1994,
1995 and June 30, 1995 and 1996, respectively.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

The Company's operating results and financial condition over the past
several years reflects its shift in focus from its pre-existing energy
businesses to the development of specialty finance businesses. Between fiscal
year 1993 and the nine month period ended June 30, 1996, the Company's asset
acquisition and resolution operations grew from 9% of the Company's gross
revenues and 29% of its total assets to 41% of gross revenues and 45% of total
assets. Equipment leasing expanded in the nine-month period ended June 30, 1996
from 0% of gross revenues to 28% of gross revenues. Oil and gas revenues
declined from 89% of the Company's gross revenues in fiscal 1993 to 29% of gross
revenues in the nine-month period ended June 30,1996, while related assets
declined from 54% of total assets to 32% in the same period, as the Company
focused its efforts on expanding its asset acquisition and resolution operations
and on the acquisition and development of its equipment leasing operation. From
1993 to 1995, the Company's long-term debt rose from $812,000 to $8.5 million,
principally as a result of the issuance of its $8.0 million senior note (see
"Business - Sources of Funds"), the proceeds of which were used to expand the
Company's commercial real estate loan portfolio. While the Company has
generated only a relatively small amount of revenue from its leasing operations
(as distinguished from its lease servicing and partnership management revenues),
it anticipates that both revenues from, and assets used in, its leasing
operations will grow significantly during the remainder of 1996 (although there
can be no assurance that this will be the case, see "Risk Factors - General:
Ability to Generate Funding for Growth").

RESULTS OF OPERATIONS: ASSET ACQUISITION AND RESOLUTION

The following table sets forth certain information relating to the
income recognized on the Company's commercial real estate loan portfolio during
the periods indicated:

Nine Months
Years Ended September 30, Ended June 30,
------------------------- --------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(Dollars in thousands, except for yield data)

Interest $ 350 $ 799 $ 2,246 $ 1,720 $ 1,306
Accreted discount 256 602 1,176 587 776
Fees - 25 963 903 672
Gains on refinancings and
sale of participations - 1,096 1,729 1,230 2,826
------ ------ ------- ------- -------
Total $ 606 $2,522 $ 6,114 $ 4,440 $ 5,580
====== ====== ======= ======= =======

Average balance of
investment, net $5,020 $8,179 $17,683 $17,970 $17,687

Yield on net average balance 12.1% 30.8% 34.6% 24.7% 31.5%

NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO NINE MONTHS ENDED JUNE
30, 1995

Asset acquisition and resolution revenues increased to $5.6 million
(26%) in the nine months ended June 30, 1996 compared to the same period of the
prior year. This increase was attributable to a 130% increase in gains
recognized on the refinancing of loans and sale of participations in loans held
by the Company and was offset in part by a 26% decrease in transaction fees (due
to a lesser number of refinancings of, and participations sold in, the Company's
portfolio loans) and a 10% decrease in interest revenues on portfolio loans (due
to the refinancing of, or sale of participations in, certain of the Company's
portfolio loans). During the first nine months of 1996, participations were
sold in, or borrowers refinanced six of the Company's portfolio loans
(representing an aggregate Company investment of $20.7 million), compared to the
sale of participations in, and refinancings of, nine of the Company's portfolio
loans (representing an aggregate Company investment of $10.9 million) in the
comparable period of 1995.

During the nine months ended in June 30, 1996, the Company purchased
eight real estate loans for a total cost of $12.1 million as compared to five
loans for a total cost of $13.0 million during the nine months ended June 30,
1995. In addition, the Company increased its investment in certain of its
existing loans by $1.4 million in the nine months ended June 30, 1996, compared
to an increase of $767,000 in the prior year period. In each case, these
additional investments

represented amounts advanced for purposes of paying property improvement costs,
unpaid taxes or similar items relating to properties underlying portfolio
loans. All such items had been anticipated by the Company at the time of
loan acquisition and had been included in its analysis of loan costs and
yields. All of the loans were purchased at a discount to the original face
value.

Asset acquisition and resolution expenses decreased 37% for the nine months
ended June 30, 1996 compared to the prior year period, primarily as a result of
lower legal costs which were, in turn, due to the lesser number of refinancings
of, and participations sold in the Company's portfolio loans. As a consequence
of the foregoing, the Company's gross profit (revenues minus costs, less
depreciation, depletion and amortization, but before allocation of
administrative overhead) from its asset acquisition and resolution operations
increased from $3.7 million for the nine months ended June 30, 1995 to $5.1
million for the nine months ended June 30, 1996 (36.7%).

YEAR ENDED SEPTEMBER 30, 1995 COMPARED TO YEARS ENDED SEPTEMBER 30, 1994 AND
SEPTEMBER 30, 1993

Revenues from asset acquisition and resolution operations increased to
$6.1 million in fiscal 1995 from $2.5 million in fiscal 1994 and $605,809 in
fiscal 1993. These increases were attributable to increases in the average
amount of real estate loans outstanding and gains recognized on the refinancing
of, or sale of participations in, loans held by the Company, which resulted in
increased interest and fee income to the Company. The Company realized gains
of $1.7 million in connection with the sale of participation interests in or
refinancing of eleven loans during fiscal 1995 (representing an aggregate
Company investment of $13.2 million), as compared to $1.1 million on the
refinancing of one loan (representing an aggregate Company investment of
$943,000) in fiscal 1994. No participations were sold in portfolio loans, nor
were any portfolio loans refinanced, in fiscal 1993.

During 1995, the Company purchased seven real estate loans, for a total
cost of $13.6 million, as compared to three loans for a total of $2.5 million
in fiscal 1994 and four loans for a total of $3.9 million in fiscal 1993. In
addition, the Company increased its investment in certain existing loans by $1.3
million in fiscal 1995, $717,000 in fiscal 1994 and $527,000 in fiscal 1993 for
purposes of paying for property improvement costs, unpaid taxes and similar
items relating to properties underlying portfolio loans. As set forth above,
all such items had been anticipated by the Company at the time of loan
acquisition and included in its analysis of loan costs and yields. In addition,
asset acquisition and resolution expenses rose significantly in 1995 compared to
both fiscal 1993 and fiscal 1994, primarily as a result of higher legal and
personnel costs associated with the expansion of these operations. As a
consequence of the foregoing, the Company's gross profit from asset acquisition
and resolution operations increased from $500,000 for fiscal 1993 to $2.3
million for fiscal 1994 (363%) and to $5.3 million for fiscal 1995 (134%).

RESULTS OF OPERATIONS: EQUIPMENT LEASING

Equipment leasing revenues recognized to date represent fees associated
with managing portfolios of equipment leases owned by limited partnerships in
which a subsidiary of the

Company is a general partner, as well as the Company's pro rata share of
income from these partnerships and lease brokerage fees. The Company acquired
this business in September 1995 and accordingly, did not recognize revenues
from this sector until after the completion of fiscal 1995. At June 30, 1996,
the Company acted as general partner for six limited partnerships which held
a total of $19.2 million (book value) in lease assets. For the nine months
ended June 30, 1996, the Company's servicing revenues from these equipment
leasing partnerships were $818,000. The Company also received revenues in
the period of $1.3 million from its interests in the equipment leasing
partnerships and $461,000 from its lease brokerage operations.

Equipment leasing expenses include costs incurred in the management of
equipment leasing partnerships in which the Company is a general partner. In
accordance with the terms of the related partnership agreements, the Company is
reimbursed by the partnerships for certain general and administrative expenses
incurred and allocable, directly or indirectly, to the partnerships. Such
reimbursements are included in equipment leasing revenue.

RESULTS OF OPERATIONS: ENERGY

NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO NINE MONTHS ENDED JUNE 30, 1995

Revenues from production sales for the nine months ended June 30, 1996
increased 2%, compared to the same period of the previous year. A comparison
of the Company's revenues from production sales, daily production volumes, and
average sales prices follows:

Nine Months Ended
June 30,
---------------------
1995 1996
---- ----
Sales (in thousands)
Gas(1). . . . . . . . . . . . . . . $ 1,986 $ 1,991
Oil . . . . . . . . . . . . . . . . 452 468
Production volumes
Gas (mcf/day) . . . . . . . . . . . 3,088 3,170
Oil (bbls/day). . . . . . . . . . . 98 94
Average sales prices
Gas (per mcf). . . . . . . . . . . $ 2.36 $ 2.29
Oil (per bbl). . . . . . . . . . . 16.96 18.23

- -----------------------------------
(1) Excludes sales of residue gas, which are typically at a substantial
discount to market price, and sales to landowners, which are typically at
the retail price to individual consumers (which is substantially in excess
of the commercial price received by the Company for its production).

Natural gas revenues from production sales remained stable during the
nine months ended June 30, 1996 as compared with the same period in the prior
year because, while the average price per 1,000 cubic feet of natural gas
("mcf") decreased 3%, production volumes increased 3%. Oil revenues increased
4% due to a 7% increase in the average price received per barrel of oil ("bbl"),
partially offset by a 4% decrease in production volumes, as compared to the same
period in the prior year. The decline in production volumes reflects the
natural production decline experienced in the life of wells.

Energy services revenues decreased $116,000 (8%) for the nine months
ended June 30, 1996, compared to the prior year. This decrease resulted from
a decrease in wells operated for third parties.

A comparison of the Company's production costs as a percentage of oil
and gas sales, and the production cost per equivalent unit for oil and gas for
the nine month periods ended June 30, 1995 and 1996, is as follows:

Nine Months Ended
June 30,
---------------------
Production Costs 1995 1996
---------------- ---- ----

As a percent of sales(1) . . . . . 46% 42%
Gas (mcf). . . . . . . . . . . . . $1.13 $1.02
Oil (bbl). . . . . . . . . . . . . $6.78 $6.12

- -----------------------------------
(1) Excludes sales of residue gas and sales to landowners.

Exploration and production expenses decreased $103,000 (8%) compared to
the prior year. This decrease was primarily attributable to a decrease in the
number of wells requiring cleanout and workover operations. These operations
are conducted on an as-needed basis and, accordingly, costs incurred by the
Company may vary from year to year. Depreciation and amortization consists
primarily of amortization of oil and gas properties which, as a percentage of
oil and gas revenues, decreased from 29% to 25% in the first nine months of
fiscal 1996 as compared to the prior year. Variations from period to period are
attributable to changes in the Company's oil and gas reserve quantities, product
prices, and fluctuations in the depletable costs basis of oil and gas
properties. See Note 2 to the Consolidated Financial Statements. Energy
services expenses decreased $46,000 (6%) for the nine months ended June 30, 1996
compared to the prior year as a result of a decrease in wells operated for third
parties.

As a result of the foregoing, gross profit from energy operations
increased from $2.0 million for the nine months ended June 30, 1995 to $2.1
million for the nine months ended June 30, 1996 (4.0%).

YEAR ENDED SEPTEMBER 30, 1995 COMPARED TO YEARS ENDED SEPTEMBER 30, 1994 AND
SEPTEMBER 30, 1993.

Oil and gas revenues from production sales remained essentially constant
for fiscal years 1993, 1994 and 1995.

A comparison of oil and gas sales revenue, daily production volumes, and
average sales prices for the years indicated is as follows:

Year Ended
September 30,
-------------------------------
1993 1994 1995
---- ---- ----
Sales (in thousands)
Gas(1) . . . . . . . . . . . $2,820 $2,851 $2,762
Oil. . . . . . . . . . . . . 574 535 610
Production volumes
Gas (mcf/day)(1) . . . . . . 3,229 3,183 3,283
Oil (bbls/day) . . . . . . . 84 93 100
Average sales prices
Gas (per mcf). . . . . . . . 2.39 2.45 2.31
Oil (per bbl). . . . . . . . 18.64 15.74 16.74

- -----------------------------------
(1) Excludes sales of residue gas and sales to landowners.

Natural gas revenues from production sales decreased 3% in fiscal 1995
from fiscal 1994 due to a 6% decrease in the average price per mcf of natural
gas partially offset by a 3% increase in production volumes. In fiscal 1994,
natural gas revenues increased 1% from revenues in fiscal 1993 due to a 3%
increase in the average price per mcf of natural gas produced, partially offset
by a 1% decrease in production volumes. Oil revenues increased by 14% in fiscal
1995 from fiscal 1994 due to a 7% increase in production volumes and a 6%
increase in the average price per barrel. In fiscal 1994, oil revenues
decreased by 7% from revenues in fiscal 1993 due to a 16% decrease in the
average price per barrel partially offset by a 10% increase in production
volumes. Primarily as a result of these price changes, the Company's gross
profit from energy operations decreased from $3 million for fiscal 1993 to $2.4
million for fiscal 1994 (21%) and to $2.6 million for fiscal 1995 (8%).

The Company continues to experience normally declining production from
its properties located in New York State. This decline has been almost totally
offset by the acquisition of additional well interests in Ohio. The Company
participated in the drilling of three successful exploratory wells and
recompleted one successful developmental well during 1995. The impact on
revenues from these wells, however, was not fully realized or reflected on the
Company's financial statements until fiscal 1996. In fiscal 1994, the Company
participated in the drilling of two successful exploratory wells and recompleted
one successful development well whose

impact on revenues began to be realized in fiscal 1995. See "Business - Energy
Operations: Exploration and Development."

Energy services revenues decreased 10% in fiscal 1995 over fiscal 1994
and 15% in fiscal 1994 over fiscal 1993. The decrease from 1994 to 1995
resulted from a 16% ($220,000) decrease in revenue from the operation of wells
for limited partners. With respect to the decrease from 1993 to 1994, 1993
revenues included a distribution of approximately $86,000 from a 10% equity
investment in a joint venture formed to own and operate a natural gas pipeline
located in New York State. Excluding this 1993 distribution, gas gathering
revenues fell 2% from fiscal 1993 to 1994. Well operating revenues decreased
10% ($144,000) from fiscal 1993 to 1994 as a result of a decrease in the number
of wells operated for third parties. Financial services provided to
partnerships, which are included in energy services, also decreased 27%
($126,000) due to a reduction in reporting services provided to certain
partnerships.

A comparison of the Company's production costs as a percentage of oil
and gas sales, and the production cost per equivalent unit for oil and gas for
1993, 1994 and 1995, is as follows:

Production Costs 1993 1994 1995
---------------- ---- ---- ----

As a percent of sales(1) . . . . 43% 40% 44%
Gas (mcf). . . . . . . . . . . . $1.08 $1.00 $1.06
Oil (bbl). . . . . . . . . . . . $6.48 $6.01 $6.36

- -----------------------------------
(1) Excludes sales of residue gas and sales to landowners.

Production costs increased 10% ($133,000) from fiscal 1994 to fiscal
1995 as a result of the acquisition of limited partners' interest in certain oil
and gas partnerships for which the Company serves as general partner and
increased workover costs in the Company's Ohio fields of operation. Production
costs decreased 7% ($109,000) from fiscal 1993 to fiscal 1994, a result of a 6%
($29,000) decrease in transportation and compressor expenses and a 22% ($21,000)
decrease in production taxes, a result of slightly less volumes produced in
fiscal 1995 as compared to fiscal 1994.

Exploration costs decreased 64% ($405,000) in 1995 from 1994, and
increased 147% ($378,000) from 1993 to 1994, due to higher impairment and
abandonment of non-producing properties and dry hole costs incurred in fiscal
1994. During 1995, the Company's participation in two exploratory dry holes and
lease impairments totalled $56,000. During 1994, the Company's participation
in two exploratory dry holes and the determination that an exploratory well
drilled in a previous year was not capable of economic production along with
lease impairment totalled $547,000.

Depreciation, depletion and amortization consist primarily of
amortization of costs relating to oil and gas properties. Amortization of oil
and gas property costs as a percentage of oil and

gas revenues was 27% in 1995, 28% in 1994 and 33% in 1993. The variance from
year to year is directly attributable to changes in the Company's oil and gas
reserve quantities, product prices and fluctuations in the depletable cost
basis of oil and gas properties. See Note 2 to the Consolidated Financial
Statements.

RESULTS OF OPERATIONS: OTHER INCOME (EXPENSE)

General and administrative expense decreased 13% ($231,000) for the nine
months ended June 30, 1996 as compared to the same period in 1995 primarily as
a result of a decrease in executive compensation due to the death of a senior
officer in July 1995. General and administrative expense increased 19% from
1994 to 1995, after having remained relatively flat from 1993 to 1994. The
increase in 1995 was a result of the payment of incentive compensation to
executive officers (see "Management - Executive Officer Compensation"). During
1993, the Company settled a lawsuit (see Note 3 to the Consolidated Financial
Statements) in which the Company received the return of $450,000 of compensation
previously paid to its Chairman and its then-President. In connection with this
settlement, the Company reimbursed the plaintiff $79,250 for certain legal fees
and expenses. Loss on debt restructuring in 1993 represents the write-off of
deferred finance costs associated with an unused revolving credit facility which
the Company decided to terminate as a result of the unstable market for oil and
gas and decreased drilling activity.

Interest expense increased $781,000 from 1994 to 1995, and $269,000 from
1993 to 1994, reflecting an increase in borrowings to fund the growth of the
Company's asset acquisition and resolution operations. In May 1994, the Company
privately placed an $8.0 million Senior Note (see "Business - Sources of
Funds"). In December 1994, the Company borrowed $2.5 million from another
lender and $2.0 million from PICO. The $2.5 million was repaid in June 1995 and
the $2.0 million was repaid in September 1995. See "Management - Certain
Relationships and Related Transactions".

LIQUIDITY AND CAPITAL RESOURCES

NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO NINE MONTHS ENDED JUNE 30, 1995

Sources and uses of cash for the nine months ended June 30, 1995 and
1996 are as follows:

June 30, June 30,
1995 1996
-------- --------

Provided by operations . . . . . . . . . . $ 1,610 $ 10
Provided by (used in) investing activities (7,017) 2,361
Provided by (used in) financing activities 5,770 (604)
------- -------
$ 363 $ 1,767
======= =======

The Company had $4.2 million in cash and cash equivalents on hand at
June 30, 1996. The Company's ratio of current assets to current liabilities was
8.6:1 on June 30, 1996, up from 2.9:1 at September 30, 1995 and 4.7:1 at June
30, 1995. Working capital at June 30, 1996 was $6.9 million, up from $2.6
million at September 30, 1995 and $3.3 million at June 30, 1995.

Cash provided by operating activities decreased $1.6 million in the
first nine months of fiscal 1996 as compared to the same period in the prior
year. This decrease was the result of changes in net working capital
(principally a $1.8 million increase in accounts receivable), partially offset
by an increase in net income.

The Company invested $12.1 million in the acquisition of eight real
estate loans and advanced $1.4 million on existing loans held by the Company
during the first nine months of fiscal 1996 as compared to the investment of
$13.0 million in the acquisition of five real estate loans and $767,000 in
advances during the similar prior period. In addition, the Company sold senior
participations in three loans and received proceeds upon the refinancing of
three loans amounting to $16.0 million in the first nine months of fiscal 1996.
Senior participations were sold in, or borrowers refinanced nine loans
generating $5.4 million in cash in the similar prior period. As a result, the
Company's net cash provided by investing activities increased $9.4 million
during the first nine months of fiscal 1996, as compared to the prior year. See
"Business - Sources of Funds."

The Company's cash flow used in financing activities increased $6.4
million during the first nine months of fiscal 1996 as compared to the same
period in the prior year. During the first nine months of fiscal 1995, the
Company (i) sold a $2.0 million loan participation, (ii) borrowed $2.5 million
and (iii) by pledging substantially all of the Company's oil and gas properties
as collateral security for the Senior Note, was able to make available for
corporate investment purposes $3.9 million in previously restricted cash. No
such financing was obtained during the first nine months of fiscal 1996. In
addition, the Company resumed the payment of dividends in the fourth quarter of
fiscal 1995 and paid $568,000 in dividends the first nine months of fiscal 1996.

During the period, the Company's effective tax rate increased from 17%
to 29% as a result of a continuing decrease in the generation of depletion (for
tax purposes) and tax credits and due to 1995 not benefiting, as did 1994, from
the reversal of a previously established valuation allowance. See "Year Ended
September 30, 1995 Compared to Years Ended September 30, 1994 and September 30,
1993," below. Deferred tax liability increased from $1.147 million at September
30, 1995 to $2.367 million at June 30, 1996 as a result of the following:

<PAGE 34>
(DOLLARS IN THOUSANDS)

Increase in statutory depletion and tax
credit carryforwards used for tax purposes. . . . . $780
Increase in excess depreciation, amortization
and depletion claimed for tax purposes. . . . . . . 140
Increase in excess asset acquisition and
resolution revenues claimed for book purposes . . . 300
------
$1,220
======

As a result of higher taxable income in 1995 and 1996 than in prior
years, the Company had used all of its depletion and investment tax credit
carryforwards as of June 30, 1996. The changes in the above table reflect
temporary differences between the recognition of items for financial statement
purposes and their recognition for federal income tax purposes.

As of June 30, 1996, the Company had no material commitments for capital
expenditures (including commitments to acquire loans or fund lease
transactions). Subsequent to June 30, 1996, the Company funded $663,000 in
lease transactions and had committed to fund lease transactions of approximately
$1.872 million. See "Business - Sources of Funds: Lease Financing Proposal."

YEAR ENDED SEPTEMBER 30, 1995 COMPARED TO YEARS ENDED SEPTEMBER 30, 1994 AND
SEPTEMBER 30, 1993

Sources and (uses) of cash for the three years ended September 30, 1995,
are as follows:

1993 1994 1995
---- ---- ----
(in thousands of dollars)
-------------------------
Provided by operations . . . . . . . . . . . $1,378 $2,258 $1,578
Used in investing activities . . . . . . . . (5,248) (2,518) (6,113)
Provided by (used in) financing activities . (751) 2,096 4,395
------- ------ ------
$(4,621) $1,836 $ (140)
======= ====== ======

The Company had $2.5 million in cash and cash equivalents on hand at
September 30, 1995, as compared to $2.6 million at September 30, 1994 and
$762,000 at September 30, 1993. The Company's ratio of current assets to
current liabilities was 2.9:1 on each of September 30, 1995, 1994 and 1993.
Working capital at September 30, 1995 was $2.6 million as compared to $2.6
million at September 30, 1994 and $1.4 million at September 30, 1993.

Cash provided by operating activities decreased $681,000, or 30%, during
1995, as compared to the prior year, while it increased $881,000, or 63%, during
1994 from 1993. These changes are primarily the result of changes in net
working capital. The decrease in fiscal 1995

was primarily the result of an increase in the accretion of discount due to
increases in the Company's loan portfolio, while the increase in fiscal 1994
was principally due to decreases in accounts payable and accrued liabilities.

The Company's cash used in investing activities increased $3.6 million,
or 143%, during 1995, as compared to 1994, and decreased $2.7 million, or 52%,
during 1994 as compared to 1993. The changes resulted from changes in the
amount of cash used to fund asset acquisition and resolution activities. The
Company invested (net of proceeds) $10.2 million, $1.0 million and $5.3 million
in fiscal 1995, 1994 and 1993, respectively. During fiscal 1995 the Company
also invested $877,000 in the acquisition of a leasing company (see Note 9 to
the Consolidated Financial Statements). Cash used for capital expenditures
decreased $219,000, or 21%, during 1995 due to a decrease in purchases of
additional working interests in wells operated by the Company, but increased
$473,000, or 84%, during 1994 due to an increase in such working interest
purchases.

The Company's cash flow provided by financing activities increased $2.3
million during 1995, as compared to 1994, and increased $2.8 million in 1994 as
compared to 1993. During fiscal 1994, the Company issued the Senior Note in the
amount of $8.0 million (see "Business - Sources of Funds: Senior Note"), of
which $5.2 million was pledged, along with seven of the Company's portfolio
loans, as collateral and restricted as to its usage. The Company was, however,
free to use such restricted cash for the purpose of purchasing additional loans
provided such purchased loans were immediately pledged in place of the utilized
cash. During fiscal 1995, the Company (i) sold a $2.0 million loan
participation, (ii) borrowed $2.5 million and (iii) was able to release for
corporate investment purposes $4.9 million of the restricted cash as a result
of the purchase of loans for the Company's portfolio. The Company invested $2.5
million during fiscal 1994 in three loans and $527,000 was advanced on existing
loans held by the Company. Funds received from the sales of assets totaled $2.2
million for the year ended September 30, 1994, compared to $372,000 in 1993, due
to the refinancings of one loan in fiscal 1994. Asset sales in 1993 consisted
of the sale of certain oil and gas interests and the sale of a tract of land
previously held by the Company for real estate development.

The effective tax rate increased from (8%) in fiscal 1994 to 19% in
fiscal 1995 due to a lesser amount of tax credits and statutory depletion being
generated in fiscal 1995 as compared to fiscal 1994. In addition, adjustments
to the prior year's accruals and the valuation allowance resulted in a 6
percentage point increase in fiscal 1995 as compared to fiscal 1994. Deferred
tax liability increased $473,000 from fiscal 1994 to fiscal 1995 due to the
following changes:

(DOLLARS IN THOUSANDS)

Increase in statutory depletion and tax
credit carryforwards used for tax purposes. . . . . . $975
Decrease in asset acquisition and resolution
revenue claimed for book, not tax purposes. . . . . . (120)
Elimination of valuation allowance . . . . . . . . . . (271)
Decrease in excess depreciation, amortization
and depreciation claimed for book purposes. . . . . . (173)
Increase in accelerated deduction for employee
stock ownership plan payments claimed for
tax purposes. . . . . . . . . . . . . . . . . . . . . 37
Increase in other items, net . . . . . . . . . . . . . 25
----
$473
====

The effective tax rate decreased from 7% in fiscal 1993 to (8%) in
fiscal 1994. This decrease was the result of adjustments to the valuation
allowance for deferred tax assets. During fiscal 1993 the realization of
certain deferred tax assets was uncertain due to the uncertainty that the
Company would generate adequate taxable income to utilize these deferred
assets. The allowance was partially reversed in fiscal 1994, resulting in a
25 percentage point decrease between the two fiscal periods. This decrease was
partially offset by lower tax credits and statutory depletion being generated
in fiscal 1994 as compared to fiscal 1993, which caused an 8 percentage point
increase from fiscal 1993 to fiscal 1994. As of September 30, 1995, the
Company had no material commitments for capital expenditures (including
commitments to acquire loans or fund lease transactions).

INFLATION AND CHANGES IN PRICES

Inflation affects the Company's operating expenses and increases in
those expenses may not be recoverable by increases in finance rates chargeable
by the Company. Inflation also affects interests rates, and movements in rates
may adversely affect the Company's profitability.

The Company's revenues and the value of its oil and gas properties have
been and will continue to be affected by changes in oil and gas prices. Oil and
gas prices are subject to fluctuations which the Company is unable to control
or accurately predict.

ENVIRONMENTAL REGULATION

A continued trend to greater environmental and safety awareness and
increasing environmental regulation has resulted in higher operating costs for
the oil and gas industry and the Company. The Company believes environmental
and safety costs will continue to increase in the future. To date, compliance
with environmental laws and regulations has not had a material impact on the
Company's capital expenditures, earnings or competitive position. The

Company monitors environmental laws and believes it is in compliance with
applicable environmental regulations. The Company is unable to predict the
impact of future laws and regulations on the Company's operations.

BUSINESS

GENERAL

The Company is a specialty finance company engaged in three lines of
business: the acquisition and resolution of commercial real estate loans,
commercial equipment leasing, and energy operations, including natural gas and
oil production. For approximately 25 years prior to 1991, the Company was
principally involved in the energy industry. Following the acquisition of a
significant ownership position in the Company by new stockholders in 1988 and
the appointment of new senior management (including the current Chairman, who
has been a senior officer of banking and other financial institutions for the
past 30 years), the Company evaluated alternative strategies to expand and
diversify its operations (particularly in light of the declining attractiveness
of the energy business to small investors following the 1986 changes to the
federal tax law).

The Company's asset acquisition and resolution business involves the
purchase at a discount of relatively small (generally $1 million to $5 million
in purchase price), troubled commercial real estate loans from private market
sellers (primarily financial institutions), and the restructuring and
refinancing of those loans. These loans typically involve legal and other
disputes among the lender, the borrower and/or other parties in interest, and
generally are secured by properties which are unable to produce sufficient cash
flow to fully service the loans in accordance with the original lender's loan
terms. Since entering this business in 1991, the Company's loan portfolio has
grown to $97.2 million (before discounts) at June 30, 1996. During the fiscal
years ended September 30, 1993, 1994 and 1995 and the nine months ended June 30,
1996, the Company's yield on its net investment in loans acquired (including
gains on refinancings and sales of participations) equalled 12.1%, 30.8%, 34.6%
and 31.5%, respectively, while its gross profits from its loan activities for
fiscal 1993, 1994 and 1995 were $500,000, $2.3 million and $5.3 million,
respectively, and for the first nine months of fiscal 1996 were $5.2 million.

below. At June 30, 1996, senior lenders held outstanding obligations of
$35.7 million, secured by properties with an aggregate appraised value of $64
million, resulting in a ratio of senior lien obligations-to-appraised value of
property of 56%. Currently, the operating cash flow coverage on the required
debt service on refinancings and participations (exclusive of proceeds from such
refinancings and participations) is 163.6%. The balance of operating cash flow
is, pursuant to agreements with the borrowers, retained by the Company as debt
service on the outstanding balance of the Company's loans. See "- Asset
Acquisition and Resolution: Loan Status," below.

In September 1995, the Company entered the commercial leasing business
through its acquisition of the leasing subsidiary of Fidelity. This acquisition
provided the Company with a servicing portfolio of approximately 520 individual
leases held by six leasing partnerships which provided the Company with a
servicing revenue stream of $1.3 million during the first nine months of fiscal
1996. More importantly, through this acquisition the Company acquired an
infrastructure of operating systems, computer hardware and proprietary software
(generally referred to as a "platform"), as well as personnel, which the Company
is utilizing to develop its commercial leasing business for its own account.

In order to develop this business, in early 1996 the Company hired a team
of four experienced leasing executives, including the former chief executive
officer of the U.S. leasing subsidiary of Tokai bank, a major Japanese banking
institution. See "Management - Other Significant Employees." The Company's
strategy in developing its leasing business is to focus on leases with equipment
costs of between $5,000 to $100,000 (with a targeted average transaction of
approximately $15,000 per lease) ("small ticket" leasing) and to market its
equipment leasing product through vendor programs with equipment manufacturers
likely to generate $10 million or less annually in equipment leases, regional
distributors and other vendors. The Company believes that this market is under-
served by equipment lessors, banks and other financial institutions, affording
the Company a niche market with significant growth potential. From the
inception of leasing activity for its own account in June 1996 through September
30, 1996, the Company has received 271 lease proposals involving equipment with
an aggregate cost of $6.5 million, approved 118 such proposals involving
equipment with an aggregate cost of $2.5 million, entered into 39 transactions
involving equipment with an aggregate cost of $711,000 and, had 21 such
proposals pending involving equipment with an aggregate cost of $1.3 million.

ASSET ACQUISITION AND RESOLUTION

STRATEGY

IDENTIFICATION AND ACQUISITION OF TROUBLED COMMERCIAL REAL ESTATE LOANS. The
Company believes that the success to date of its asset acquisition and
resolution business has been due in large part to its ability to identify and
acquire troubled commercial real estate loans which, due to legal or factual
disputes, operational difficulties or other problems, can be acquired at a
discount from the unpaid principal and interest amounts of the loan and the
estimated value of the underlying property. A principal part of this strategy
is the Company's focus on relatively small commercial loans (generally $1
million to $5 million in purchase price) held by large private sector financial
institutions. Due to the small size of these loans relative to a large
institution's total portfolio, the lender is often not able, or willing, to
devote the managerial and other resources necessary to resolve the problems to
which the loans are subject, and thus is sometimes willing to dispose of these
loans at prices favorable to the Company. The Company, which offers to acquire
a loan quickly and for immediate cash, provides a convenient way for an
institution to dispose of these loans and to eliminate future work-out costs.
The Company believes that the trend of consolidation in the banking industry may
cause an increase in the amount of smaller loans available for sale and provide
the Company significant opportunities for growth.

EFFICIENT RESOLUTION OF LOANS. The Company believes that a further
aspect of its success to date has been its ability to resolve problems
surrounding loans it has identified for acquisition. The principal element of
this strategy is the cost-effective use of management and third-party resources
to negotiate and resolve disputes concerning a troubled loan or the property
securing it, and to identify and resolve any existing operational or other
problems at the property. To implement this strategy, the Company has taken
advantage of the background and expertise of its management (see "Management")
and has identified third-party subcontractors (such as property managers and
legal counsel; see "Management - Certain Relationships and Related
Transactions.") familiar with the type of problems to which smaller commercial
properties may be subject and who have, in the past, provided effective services
to the Company.

REFINANCING OR SALE OF PARTICIPATIONS IN PORTFOLIO LOANS. The Company
seeks to reduce its invested capital and enhance its returns through prompt
refinancing of the properties underlying its loans or through sales, at a
profit, of senior participations in its loans. In so doing, the Company has in
the past obtained a return of a substantial portion (and in some cases all) of
its invested capital, which it will typically seek to reinvest in further loans,
while maintaining a significant continuing position in the original loan. See
"- Asset Acquisition and Resolution: Sale of Participations and Refinancings,"
below. The Company's strategic plan contemplates a continued growth in its loan
portfolio, in part through the liquidity provided by such sales or refinancings.

DISPOSITION OF LOANS. In the event a borrower does not repay a loan
when due (whether upon expiration of the Forbearance Agreement or otherwise),
the Company will seek to sell the

property underlying the loan or otherwise liquidate the loan. In appropriate
cases and for appropriate consideration, the Company may agree to further
forbearance. See "- Asset Acquisition and Resolution: Forbearance
Agreements" and ": Loan Status," below.

MARKET FOR ASSET ACQUISITION AND RESOLUTION SERVICES.

The discounted loans acquired by the Company to date are secured by
commercial properties (multi-family housing, small office buildings or single-
user retail properties) which, while income producing, are unable to fully meet
debt service requirements set forth in their initial underwriting. All of the
loans have been acquired from private sector entities (banks and other financial
institutions or institutional sellers) except for one loan purchased from the
United States Department of Housing and Urban Development. Typically, the loans
identified by the Company for acquisition (and the properties securing them)
have been the subjects of complex and/or contentious factual and legal disputes,
operational difficulties or other problems demanding commitments of managerial
and other resources that are perceived by the selling institutions to be
inordinate relative to the comparatively small asset value of these loans.

The market for asset acquisition and resolution services of the type
provided by the Company is, the Company believes, relatively new. A major
impetus to this market has been the sales of packages of under-performing and
non-performing loans by government agencies, in particular the Resolution Trust
Corporation ("RTC") and Federal Deposit Insurance Corporation ("FDIC"). While
the need for asset acquisition and resolution services by governmental agencies
has declined in recent years (the RTC terminated its loan pool packaging and
sales operations on December 31, 1995, and any RTC assets remaining to be sold
at that time were transferred to the FDIC for sale), the Company believes (based
upon its operations to date) that a permanent market for these services is
emerging in the private sector as financial institutions realize that outside
specialists may be able to resolve troubled loan assets more cost-efficiently
than the institution's internal staff. Moreover, the sale of loan assets
provides the institutions with a means of disposing of under-performing loans,
thereby obtaining liquidity and improving the institution's balance sheet. The
trend has been reinforced, management believes, by consolidation within the
banking industry and, within the insurance industry, by the implementation of
risk-based capital rules.

ACQUISITION AND ADMINISTRATION.
Prior to acquiring any loan, the Company conducts an acquisition review.
This review includes an evaluation of the adequacy of the loan documentation
(for example, the existence and adequacy of notes, mortgages, collateral
assignments of rents and leases, and title policies insuring first or other lien
positions) and other available information (such as credit and collateral
files). The value of the property securing the loan is estimated by the Company
based upon a recent independent appraisal obtained by the borrower, an
independent appraisal obtained by the Company, or upon valuation information
obtained by the Company and thereafter confirmed by independent appraisal. One
or more members of the Company's management makes an on-site inspection of the
property; where appropriate, the Company will require further inspections by
engineers, architects or property management consultants. The Company may also
retain

environmental consultants to review potential environmental issues. The
Company obtains and reviews available rental, expense, maintenance and other
operational information regarding the property, prepares cash flow and debt
service analyses and reviews all pertinent information relating to any legal or
factual disputes to which the property is subject. The amount of the Company's
offer to purchase is based upon the foregoing evaluations and analyses. The
Company generally will not acquire a loan unless (i) current net cash flow from
the property securing the loan is sufficient to yield an immediate cash return
on the Company's investment of not less than 10% per annum, (ii) the ratio of
the Company's investment to the appraised value of the property underlying the
loan is less than 80%, (iii) there is the possibility of either prompt
refinancing of the loan by the borrower after acquisition, or sale by the
Company of a participation, that will result in an enhanced yield to the Company
on its (reduced) funds still outstanding (see "- Sale of Participations and
Refinancings," below), and (iv) there is the possibility of substantial increase
in the value of the property underlying the loan over its appraised value,
increasing the potential amount of the loan discount recoverable by the Company
at loan termination. On occasion the Company will acquire a loan that does not
meet one or more of the criteria specified above if in the Company's judgment
other factors make the loan an appropriate investment opportunity. The Company
currently has in its portfolio five loans in which the ratio of initial
investment-to-appraised value of underlying property exceeded 80%. Also, the
Company has acquired loans outside of its targeted range of $1 million to $5
million (5 loans were acquired at a lesser cost, while one loan was acquired at
a greater cost), and as opportunities arise, may do so in the future. The
Company is not limited by regulation or contractual obligation as to the
types of properties securing the loans it may seek to acquire, the nature
or priority of any lien or other encumbrance it may accept with respect to a
property, whether, after sale of a participation or a refinancing, its interest
in a loan must continue to be secured, the amount it may invest in any one loan
or the ratio of initial investment-to-appraised value of the underlying
property.

As part of the acquisition process, the Company typically resolves
disputes relating to the loans or the underlying properties. Through
negotiations with the borrower and, as appropriate or necessary, with other
creditors or parties in interest, the Company seeks to arrive at arrangements
that reflect more closely the current operating conditions of the property and
the present strategic position of the various interested parties. Where
appropriate, the Company will offer concessions to assure the Company's future
control of the property's cash flow free from dispute. These arrangements are
normally reflected in a Forbearance Agreement, pursuant to which the Company
agrees to defer foreclosure or other action so long as the arrangements
reflected in the Forbearance Agreement are met. The Company also seeks to
resolve operational problems of the properties by appointment of a property
manager acceptable to it (see "- Asset Acquisition and Resolution: Forbearance
Agreements," below, and "Management -Certain Relationships and Related
Transactions") and may advance funds for purposes of paying property improvement
costs, unpaid taxes and similar items. Prior to loan acquisition the Company
includes in its pre-acquisition analysis of loan costs and yields an estimate
of such advances; see "Management's Discussion and Analysis of Financial
Condition and Results of Operations: Results of Operations: Asset Acquisition
and Resolution").

After acquiring a loan, the Company follows specified procedures to
monitor loan performance and compliance. In particular, the Company requires
that all revenues from the property underlying the loan be paid into an
operating account on which the Company is the sole

signatory. All expenditures with respect to a property (including debt service,
taxes, operational expenses and maintenance costs) are paid from that account
and are reviewed and approved by a senior officer of the Company prior to
payment. The Company further requires that its approval be obtained before
any material contract or commercial lease with respect to a property is
executed. To assist it in monitoring the loan, the Company requires that the
borrower prepare a budget for the property not less than sixty days prior to
the beginning of a year, which must be reviewed and approved by the Company,
and submit both a monthly cash flow statement and a monthly occupancy report.
The Company analyzes these reports in comparison with each other and with
account activity in the operating account referred to above.

SALE OF PARTICIPATIONS AND REFINANCINGS.

In evaluating a potential loan, the Company places significant emphasis on
the likelihood of its being able to sell a participation on favorable terms
after the acquisition and/or the borrower's likely ability, with or without the
Company's assistance, to secure favorable refinancing. When a loan is
refinanced, or a participation sold, the Company will obtain net refinance or
participation proceeds in an amount representing a major portion of (and
sometimes exceeding) the amount of its investment in the loan. After such
refinancing or sale of a participation, the Company will typically retain an
interest in the loan, which is usually subordinated to the interest of the
refinance lender or loan participant.

Where a participation interest is sold, the balance of the Company's loan
outstanding at the time of sale remains outstanding, including as a part of that
balance the amount of the participation. Thus, the Company's remaining interest
effectively "wraps around" the participation interest. Typically the interest
rate on the participation interest is less than the stated rate on the Company's
loan. From debt service payments received by the Company, the Company remits
to the participant the debt service applicable to its interest, retaining the
balance. See "- Asset Acquisition and Resolution: Loan Status," below.
Participations sold during 1994 and 1995 to PICO also obligated the Company, in
the event of a default on the related loan, to replace it with a performing
loan. See "Risk Factors - Sales of Participations to Insurance Company' and
"Business - Sources of Funds: Participations."

Where a refinancing is effectuated, the Company reduces the amount
outstanding on its loan by the amount of net refinancing proceeds received by
it and either converts the outstanding balance of the original note (both
principal and accrued interest, as well as accrued penalties) into the stated
principal amount of an amended note on the same terms as the original note or
retains the original loan obligation as paid down by the amount of refinance
proceeds received by the Company. As with participations, the interest rate on
the refinancing is less than the interest rate on the Company's retained
interest. After sale of a participation or a refinancing, the Company's
retained interest may not be formally secured by a mortgage (because of
conditions imposed by the refinance lender), although it may be protected by a
judgment lien, an unrecorded deed-in-lieu of foreclosure, the borrower's
covenant not to further encumber the property without the Company's consent, or
a similar device. See "Risk Factors - Asset Acquisition and Resolution
Considerations: Lien Priority" and ": Credit Risks."

FORBEARANCE AGREEMENTS.

On substantially all of its portfolio loans, the Company has entered into
Forbearance Agreements with borrowers pursuant to which (i) the Company agrees,
subject to receipt of minimum monthly payments, to defer the exercise of
existing rights to proceed on the defaulted loan (including the right to
foreclose), (ii) the Company directly receives the rents from the underlying
property and (iii) the borrower agrees to retain a property management firm
acceptable to the Company. As a result of provision (iii), an affiliated
company, Brandywine Construction and Management, Inc. ("BCMI") (see "Management
- - Certain Relationships and Related Transactions"), has assumed responsibility
for supervisory and, in many cases, day to day management of the underlying
properties. In five instances, the President of BCMI has also acted as the
general partner of the borrower. The minimum payments required under a
Forbearance Agreement (generally related to anticipated cash flow from the
property after operating expenses) are normally materially less than the debt
service payments called for by the original terms of the loan. The difference
between the minimum required payments under the Forbearance Agreement and the
payments called for by the original loan terms continues to accrue, but (except
for amounts recognized as an accretion of discount; see "- Asset Acquisition and
Resolution: Accounting for Discounted Loans," below) are not recognized as
revenue to the Company until actually paid.

At the end of the term of a Forbearance Agreement, the borrower is
required to pay the loan in full. The borrower's ability to do so, however,
will be dependent upon a number of factors, including prevailing conditions at
the underlying property, the state of real estate and financial markets
(generally and as regards the particular property), and general economic
conditions. In the event the borrower does not do so, the Company will seek to
sell the property underlying the loan or otherwise liquidate the loan. The
Company anticipates that it may, in appropriate cases, and for appropriate
additional consideration, agree to further forbearance.

An existing Forbearance Agreement remains in effect with no
modifications when the Company sells a participation in a loan. In such
instance, the participant's interest is in the loan as modified by the terms of
the Forbearance Agreement. However, when a borrower refinances a loan, the
Forbearance Agreement is thereby amended to (i) reflect the pay down of the loan
balance, (ii) acknowledge the existence of the refinancing and (iii) provide
for the continued effectiveness of all provisions of the Forbearance Agreement
for the term specified therein, except that where specific provisions of the
Forbearance Agreement is inconsistent with the terms of the refinancing, the
terms of the refinancing have priority. In some refinancings, the refinance
lender may require that the borrower issue an amended note (a "retained interest
note") to reflect the reduction of the borrower's indebtedness to the Company
and, where applicable, any other revised terms (such as extension of the
forbearance period).

LOAN STATUS.

Of the twenty-three loans in the Company's portfolio, seventeen were
acquired as first mortgage loans and six were acquired as junior lien
obligations. In accordance with the Company's emphasis on acquiring loans in
anticipation of refinancing, borrowers on six of the

Company's loans have obtained refinancing, and the Company has sold
participations in eleven loans. After such refinancings and sales of
participation interests, the Company holds subordinated interests in
twenty-one loans, of which six interests are not collateralized by recorded
mortgages. See "Risk Factors - General: Credit Risks" and Note 11 to the
Consolidated Financial Statements. The following table sets forth the
Company's acquisition and refinancing activity from 1991 (the year the
Company commenced its asset acquisition and resolution operations) through
June 30, 1996:

<TABLE>
<CAPTION>
Outstanding Appraised Value
Property Type of Loan Loan of Property Cost of
Number Property Location Seller Acquired Receivable(1) Securing Loan(2) Investment(3)
- -------- -------- -------- ------ -------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
001 Multifamily Pennsylvania Alpha Petroleum 1991 $ 8,204,078 $ 5,300,000 $ 4,596,614
Pension Fund
002 Multifamily Pennsylvania CoreStates Bank(9) 1992 1,443,832 800,000 547,495
003 Multifamily New Jersey RAM Enterprises/Glenn 1993 2,482,753 1,350,000 1,075,441
Industries Pension Plan
004 Multifamily Pennsylvania St. Paul Federal 1993 1,424,320 1,120,000 840,945
Bank for Savings(12)
005 Office Pennsylvania Shawmut Bank(9) 1993 5,430,419 1,600,000 1,179,441
006 Office/Retail Virginia Nationsbank(9) 1993 5,354,953 2,425,000 2,283,952
007 Single User Minnesota Prudential Insurance 1993 4,356,649 2,525,000 1,362,421
(Retail) Alpha Petroleum
Pension Fund
008 Multifamily Pennsylvania Nomura/Cargill/ 1994 5,245,039 1,950,000 1,612,674
Eastdil Realty(13)
009 Multifamily Pennsylvania Mellon Bank(9) 1995 1,581,426 1,730,000 1,358,884
010 Multifamily Pennsylvania RIVA Financial 1994 1,471,736 750,000 454,856
011 Office Washington, D.C. First Union Bank(9) 1995 1,059,045 1,250,000 912,486
012 Multifamily Pennsylvania CoreStates Bank(9)(12) 1995 2,547,928 1,825,000 1,245,538
013 Single User California California Federal 1995 2,997,624 2,400,000 1,671,695
(Commercial) Bank, FSB
014 Office Washington, D.C. Nomura/Cargill/ 1995 14,171,703 11,000,000 8,546,218
Eastdil Realty(13)
015 Condo/ North Carolina First Bank, South 1995 3,736,570 3,501,000 2,697,612
Multifamily Trust Bank(14)
016 Single User California Mass Mutual, Alpha 1995 6,536,626 3,000,000 2,064,494
(Retail) Petroleum Pension Fund
017 Single User West Virginia Triester Investments(9) 1996 3,860,684 1,900,000 911,152
(Retail)
018 Single User California Emigrant Savings Bank, 1996 2,865,097 4,555,000 2,142,025
(Retail) Walter R. Samuels and
Jay Furman (16)
019 Multifamily Pennsylvania Summit Bancorp(9) 1996 4,935,380 4,600,000 3,756,603
020 Office New Jersey Cargill/Eastdil 1996 5,850,348 4,000,000 2,709,083
Realty(13)
021 Multifamily Pennsylvania Bruin Holdings/Berkeley 1996 7,857,048 2,700,000 1,424,311
Federal Savings Bank
022 Multifamily Pennsylvania FirsTrust FSB 1996 3,288,423 3,250,000 2,281,525
023 Multifamily Pennsylvania Jefferson Bank 1996 625,330 510,000 412,206
----------- ----------- -----------
Totals $97,227,011 $64,031,000 $46,087,671
=========== =========== ===========
</TABLE>

Proceeds from Company's Net Maturity of Loan/
Refinancing or Interest In Expiration of
Property Participations Net Carried Cost Outstanding Loan Forbearance
Number Sold Investment(4) of Investment(5) Receivables(6) Agreement(7)
- -------- -------------- ------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
001 $ 2,570,000(8) $ 2,026,614 $ 2,410,664 $ 5,674,078 12/31/02
002 575,000(10) (27,505) 179,980 843,832 10/31/98
003 825,000(10) 250,441 694,850 1,632,753(11) 10/31/98
004 871,000(10) (30,055) 226,967 528,320 10/31/98
005 940,000(10) 239,441 1,088,709 4,590,419 2/7/01
006 840,000 1,443,952 1,537,546 4,471,953 10/31/98
007 2,099,000 (736,579) 527,845 2,043,649 12/31/14
008 934,300 678,374 721,211 4,119,039 7/31/98
009 654,600 704,284 510,608 686,426 11/1/99
010 575,000(10) (120,144) 112,467 871,736 9/2/99
011 660,000(10) 252,486 414,361 374,045 9/30/99
012 1,135,000(10) 110,538 747,640 2,547,928(11) 12/2/99
013 1,975,000(10) (303,305) 302,352 997,624 12/21/99
014 6,487,000 2,059,218 3,170,843 7,256,576 11/30/98
015 2,475,000(8) 222,612 356,148 1,284,492 8/25/00
016 2,375,000(10) (310,506) 428,702 4,136,626 12/31/00
017 524,000(8) 387,152 425,556 3,337,684 12/31/18(15)
018 1,969,000(10) 173,025 782,974 896,097 11/1/98
019 3,020,000 736,603 900,016 1,635,380 12/29/00
020 600,000 2,109,083 1,536,728 5,850,348 2/7/01
021 2,010,000(10) (585,689) 516,035 5,847,700(17) 7/1/16(17)
022 1,250,000(8) 1,031,525 1,060,176 2,038,423 10/31/98(18)
023 303,000(8) 109,206 110,559 322,330 3/28/01(19)
-------------- ------------ ----------- ----------------
Totals $35,666,900 $10,420,771 $18,762,937 $61,987,458
============== ============ =========== ================
</TABLE>

- ------------------------------------------------------
(1) Consists of the stated, or face value of the obligations plus accrued
interest and penalties and the amount of senior secured interests at
June 30, 1996.
(2) The Company obtains appraisals on each of its properties at least once
every three years. Accordingly, appraisal dates range from 1993 to 1996.
(3) Consists of the original cost of the investment to the Company (including
acquisition costs and the amount of any senior lien obligation to which
the property remained subject) plus subsequent advances, but excludes the
proceeds to the Company of the sale of participations or borrower
refinancings.
(4) Represents the unrecovered costs of the Company's investment (calculated
as the cash investment made in acquiring the loan less cash received from
sale of a participation in or borrower refinancing of the loan). Negative
amounts represent the receipt by the Company of proceeds from the sale of
participations or borrower refinancings in excess of the Company's
investment.
(5) Represents the cost of the investment carried on the books of the Company
after accretion of discount and allocation of gains from the sale of a
participation in or borrower refinancing of the loan. For a discussion
of accretion of discount and allocation of gains, see "Business - Asset
Acquisition and Resolution: Accounting for Discounted Loans."
(6) Consists of the amount set forth in the column "Outstanding Loan
Receivable" less senior secured interests.
(7) With respect to properties 6, 7, 8, 9, 14 and 19, the date given is for
the maturity of the subordinated note for the residual loan balance
received by the Company in connection with the refinancing. For the
remaining properties, the date given is the expiration date of the related
Forbearance Agreement.
(8) Represents the amount of the senior lien in place on date of acquisition.
(9) Successor by merger to the Seller.
(10) Participation sold to PICO. See "Risk Factors - Asset Acquisition and
Resolution Considerations: Sales of Participations to Insurance Company"
for a discussion of PICO's right, upon a default, to require the Company
to substitute a performing loan.
(11) Includes proceeds of the sale of participations which were repurchased by
the Company prior to June 30, 1996 in contemplation of refinancing. The
refinancings were accomplished subsequent to June 30, 1996.
(12) Seller was a wholly-owned subsidiary of this institution.
(13) Seller was a partnership of these entities.
(14) The positions of these institutions are currently held by Gene M. and Anne
S. Holbrooks, the guarantors thereof, who acquired these positions as part
of the transaction in which the Company made its loan.
(15) The loan acquired consists of a series of notes becoming due yearly
through December 31, 2018. The notes are being paid in accordance with
their terms and, accordingly, a Forbearance Agreement was not required.
(16) Amounts advanced by the Company were used in part to directly repay the
loan of Emigrant Savings Bank; the balance was applied to purchase a note
held by Messrs. Samuels and Furman.
(17) The loan acquired consists of twenty-seven separate mortgage loans on
individual condominium units in a single building. Nine of such loans
are due on July 1, 2016, fifteen are due January 1, 2015 and three are
due January 15, 2000.
(18) The senior lienor has the right to sell its interest to the Company on or
after June 30, 2001 for an amount equal to the outstanding balance of such
interest.
(19) Includes a note for $14,948 which is payable to the Company on demand.

The following table sets forth the current monthly cash flow from each
of the properties underlying the Company's portfolio loans, the monthly debt
service payable to participants and refinance lenders and the current monthly
payment with respect to the Company's retained interest:

Monthly Debt Monthly
Monthly Cash Service on Payment to
Property Flow from Refinancing the Company's
Number Property (1)(2) or Participations(3) Interest(2)
- -------- --------------- ----------------- ----------------

001 $ 30,533 $ 17,626 $ 12,907
002 5,964 4,875 1,089
003 7,000 6,058 942
004 8,107 7,280 827
005 12,158 6,825 5,333
006 21,176 8,021 13,155
007 20,400 20,400 -
008 23,971 10,670 13,301
009 19,829 7,359 12,470
010 6,750 4,875 1,875
011 8,000 5,566 2,434
012 15,833 9,425 6,408
013 19,000 15,833 3,167
014 107,218 58,551 48,667
015 29,278 27,330 1,948
016 20,557 19,500 1,057
017 9,068 5,415 3,653
018 24,827(4) 15,998 8,829
019 36,000 25,300 10,700
020 22,667 - 22,667
021 16,577 16,331 246
022 25,408 8,075 17,333
023 6,206 2,273 3,933
------------ ---------- ----------
$496,527 $303,586 $192,941

- -----------------------------------
(1) "Cash Flow" as used herein is that amount equal to the operating revenues
from property operations less operating expenses, including real estate and
other taxes pertaining to the property and its operations, and before
depreciation, amortization and capital expenditures.
(2) Except as set forth in note (4), monthly cash flow from each of the
properties has been calculated as the average monthly amount during the
three months ended September 30, 1996.
(3) Monthly debt service consists of required payments of principal, interest
and other regularly recurring charges payable to the holder of the
refinancing loan or participation.

(4) Includes one-fourth of an annual payment of $110,000 received in December
of each year.

All of the Company's portfolio loans are currently performing in
accordance with the terms set forth in their respective Forbearance Agreements
or remainder interest notes.

ACCOUNTING FOR DISCOUNTED LOANS

The difference between the Company's cost basis in a loan and the sum of
projected cash flows from, and the appraised value of, the underlying property
is accreted into interest income over the estimated life of the loan using a
method which approximates the level interest method. The projected cash flows
from the property are reviewed on a regular basis and changes to the projected
amounts reduce or increase the amounts accreted into interest income over the
remaining life of the loan on a method approximating the level interest method.

The Company records the investments in its loan portfolio at cost, which
is significantly discounted from the face value of, and accrued interest and
penalties on, the notes. This discount totaled $3.5 million, $14.5 million and
$33.7 at September 31, 1993, 1994 and 1995, respectively, and $63.6 million at
June 30, 1996. The cost basis in the various loans is periodically reviewed to
determine that it is not greater than the sum of the projected cash flows and
the appraised value of the underlying properties. If the cost basis were found
to be greater, the Company would provide, through a charge to operations, an
appropriate allowance. For the years ended September 31, 1993, 1994 and 1995,
and the nine months ended June 30, 1996, no such provision was required.

Gains on the sale of a participation in or refinancings of a portfolio
loan are allocated between the portion of the loan sold or refinanced and the
portion retained based upon the fair value of those respective portions on the
date of sale or refinance. The fair values of the loans are the current
appraised values of the properties underlying the loans. Any gain recognized
on a sale of a participation or a refinancing is brought into income on the date
of such sale or refinancing.

COMPETITION.

Although the asset acquisition and resolution business is intensely
competitive in virtually all of its aspects, the Company's focus on the
acquisition of relatively small troubled commercial real estate loans subject
to complex and/or contentious situations is a niche in which the Company's
believes there are relatively few, specialized investors. In the overall market
for the acquisition of real estate obligations, however, there are a substantial
number of competitors (including investment partnerships, financial
institutions, investment companies, public and private mortgage funds and other
entities), many of which possess far greater financial resources than the
Company. The Company's ability to add to its loan portfolio will depend on its
success in obtaining funding for the acquisition of additional mortgages. See
"Risk Factors -Ability to Generate Funding for Growth." In raising such funds
in the financial capital markets, the

Company will have to compete for capital based largely on the Company's
overall financial performance and, more specifically, the performance of the
Company's loan portfolio.

EQUIPMENT LEASING

GENERAL

The Company conducts its leasing operations through three separate
corporate divisions: Fidelity Leasing, Inc. ("FLI"), which conducts the
Company's small ticket leasing operations; F.L. Partnership Management, Inc.
("FLPM"), which manages six public leasing partnerships formerly managed by
Fidelity; and FL Financial Services, Inc. ("FLFS"), which provides lease finance
placement and advisory services. The Company's primary focus is on the
development of FLI and its small ticket leasing operation, which has only
recently commenced operations. FLPM's operations will be reduced over the next
several years as partnership assets are sold and cash is distributed back to the
investors. FLPM does not anticipate forming new limited partnerships in the
future. FLFS will continue to operate its lease finance placement and advisory
business which, while profitable, is not expected to constitute a material
source of revenues for the Company.

STRATEGY

FOCUS ON SMALL TICKET LEASING. The Company focuses on leasing equipment
costing between $5,000 and $100,000. By so doing, the Company takes advantage
not only of the background and expertise of its leasing management team (which
previously had managed the United States small ticket leasing operations of
Tokai Bank; see "Management - Other Significant Employees"), but also of the
servicing platform the Company has acquired and developed, which has the
capacity to monitor the large amounts of equipment and related assets involved
in a small-ticket leasing operation. In addition, small ticket items represent
a substantial portion of the equipment sought by small business, a segment of
the end-user market the Company believes is under-served by equipment lessors,
banks and other financial institutions, which affords the Company a niche market
with significant growth potential (see "- Focus on Leasing to Small Businesses,"
below). Moreover, the small size of a typical transaction relative to the
Company's total lease portfolio reduces the Company's credit risk exposure from
any particular transaction. See "Risk Factors - Credit Risks."

FOCUS ON VENDOR PROGRAMS, PARTICULARLY WITH SMALLER MANUFACTURERS. The
significant majority of equipment leased to end-user customers by the Company
will be purchased from manufacturers or regional distributors with whom the
Company is establishing vendor programs. In so doing, the Company utilizes the
manufacturer's or distributor's sales organization to gain access to the
manufacturer's end-user base without incurring the costs of establishing
independent customer relationships. The vendor relationship will typically
provide for the upgrade, refurbishment and remarketing of equipment purchased
and leased by the Company. Through these relationships, and particularly with
respect to the vendor's involvement in remarketing the equipment, the Company's
profit opportunity from residual sales or re-leasing of equipment is

enhanced. The Company is actively pursuing the establishment of multiple
vendor programs in an effort to reduce its reliance on any one vendor and,
thus, to reduce the risk of tying the success of the Company's leasing
operations to the continuation of a relationship with one (or a small group)
of vendors. The Company emphasizes the establishment of vendor programs with
smaller manufacturers (those likely to generate $10 million or less annually in
equipment leases) and regional distributors. Historically, the Company's
primary competitors, most of whom are far larger than the Company, target
vendors with substantially larger leasing volumes. As a result, the Company's
targeted group of vendors often do not have a relationship with an equipment
finance provider, again offering the Company a market niche with significant
growth potential.

FOCUS ON LEASING TO SMALL BUSINESSES. The Company focuses its marketing
programs and resources on lease programs for small business end-users (generally
those with 500 or fewer employees). Because small business end-users frequently
are unable to provide standardized financial information for credit analysis
(for example, audited financial statements), the Company believes that these
end-users may be perceived by the Company's larger competitors as less desirable
credit risks thereby reducing competition for their business and creating a
niche market the Company believes it can profitably serve. The Company has
acquired and developed credit evaluation and scoring systems (based upon credit
evaluation services provided by Dun & Bradstreet) which it believes
significantly reduce the perceived credit risk (see "Business - Equipment
Leasing: Small Ticket Leasing"). The Company also believes that small business
end-users, while sensitive to the size of a monthly lease payment, are less
sensitive than large end-users to the interest rate structure of a lease,
allowing the Company to increase its yield by lengthening lease terms to lower
monthly rent. The Company currently offers lease terms of from two to five
years to meet the needs of its end-users.

FOCUS ON FULL-PAYOUT LEASES. The Company seeks to reduce the financial
risk associated with the lease transactions it originates through the use of
full payout leases. The principal benefit from this lease format is the
repayment to the Company during the lease term of its invested capital plus an
amount sufficient to cover its transaction costs and, typically, a return on its
invested capital. The Company seeks to substantially increase this return
through amounts received upon remarketing the equipment or through continued
leasing of the equipment after expiration of the initial lease term. See "Risk
Factors - Equipment Leasing Considerations: Residuals."

FOCUS ON PROVIDING SERVICE. The Company provides service and support
to its small business customers and vendors by seeking to minimize the time
required to respond to customer applications for lease financing and by
providing sales training programs to its vendors and their sales staff (which
it customizes to their particular needs) regarding the use of lease financing
for marketing purposes to increase a vendor's equipment sales and market share.
The Company has acquired and developed proprietary management systems to assist
it in providing lease quotes and application decisions to its customers,
generally within 24 hours after receipt of a request.

INDUSTRY OVERVIEW.

Equipment leasing is a significant factor in the financing of productive
assets by United States businesses. According to the ELA, a leading industry
trade association, of the estimated $571.1 billion of such capital expenditures
in 1995 (up from $296.2 billion in 1986), $160.7 billion (up from $85.0 billion
in 1986) represented lease financing. The ELA further estimates that total
capital expenditures will increase to $582.1 billion in 1996, of which $169.1
billion (or 29%) will be acquired through leasing, a leasing growth rate of
5.6%, slightly less than the average annual rate of 6.5%.

The Company's targeted market is businesses with less than 500 employees
and leases involving equipment with a cost of under $100,000. According to
studies conducted by the U.S. Small Business Administration, in 1991 there were
5.7 million such businesses and an additional 8.9 million sole proprietorships.
A 1995 survey conducted by the Federal Reserve Board found that in the study
year (1993) 9.2% of all small businesses used equipment leasing services (not
including vehicle leases), 14.0% used credit lines or loans to acquire equipment
and 7.5% obtained one or more leases from a leasing company. Moreover, in a
1995 survey of its membership, the ELA found that 30% of all new leasing volume
(by dollar amount) was for equipment costing under $100,000, while 47.8 % of all
new leasing volume (by number of transactions) was for equipment costing under
$100,000.

According to the ELA, approximately 80% of all United States businesses
lease some portion of their equipment. Leasing enables a company to obtain
equipment it needs, while preserving cash flow and often receiving favorable
accounting and tax treatment. Leasing, particularly with shorter term leases,
also provides a lessee with greater flexibility than ownership in the event it
outgrows its equipment or requires equipment upgrades. The Company believes
that small businesses are becoming more aware of the economic benefits offered
by equipment leasing, and that small business leasing will therefore become an
increasingly important segment of the leasing market.

SMALL TICKET LEASING.

The Company offers full pay-out leases with options, exercisable by the
lessee at the end of the lease term, either to purchase the equipment at fair
market value, to purchase the equipment for a fixed price negotiated at the time
the lease is signed, or to continue as a lessee on a month-to-month basis. A
"full pay-out lease" is a lease under which the non-cancelable rental payments
due during the initial lease term are at least sufficient to recover the
purchase price of the equipment under the lease and related acquisition fees.
The Company's leases have a provision which requires the lessee to make all
lease payments under all circumstances. The leases are also net leases,
requiring the lessee to pay (in addition to rent) any other expenses associated
with the use of equipment, such as maintenance, casualty and liability
insurance, sales or use taxes and personal property taxes. The Company also
offers lease terms of between two to five years and will consider other lease
terms in appropriate circumstances.

Equipment types initially being financed include telecommunication
systems, medical diagnostic and treatment equipment, document processing and
storage equipment, small

manufacturing machines and office furniture. The Company will vary the
equipment categories in which it is willing to lease based upon the demands
of its small business customers.

The Company has developed credit evaluation and lease administration
systems based upon systems the Company acquired from Fidelity. The credit
evaluation system, known as the "Small Business Credit Scoring System," is
intended to respond to the inability of small businesses to supply standardized
financial information for credit analysis (for example, audited financial
statements). The system operates by assigning point amounts, or "scores," to
various factors (such as business longevity, type of business, payment history,
bank account balances and credit ratings) deemed relevant by the Company in
determining whether an end-user is a creditworthy lessee. The scoring system
declines approval of end-users with low scores, approves end-users with high
scores and refers mid-range scores to credit analysts for further consideration
and decision. Information is obtained from the end-user, from reports by
standard credit reporting firms and from reports provided by consumer credit
bureaus. The credit scoring system is also based upon industry data and the
past experience of the Company and will be reviewed and modified as required in
response to actual portfolio performance. Financial statements may be required
for larger transactions (in the $30,000 to $100,000 range) as a complement to
the scoring system.

The Company oversees its leasing program through a lease administration
and management system, known as the "Fidelity Asset Tracking System." The
system currently administers 520 leases with respect to more than 12,500 pieces
of equipment for six public leasing partnerships managed by FLPM and has the
capacity to administer leases with respect to more than 200,000 pieces of
equipment. The system controls invoicing, collection, sales and property taxes
and financial and other reporting to management (including reports regarding
regular payments, payment shortages, advance payments, security deposits,
insurance payments and late or finance charges). The Company will supplement
the system with an internal audit department (which will evaluate the
safeguarding of assets, reliability of financial information and compliance with
the Company's credit policies) and a collection department.

The Company is marketing its leasing services primarily through the
establishment of vendor programs. See "Business - Equipment Leasing: Strategy:
Focus on Vendor Programs, Particularly with Smaller Manufacturers."
Under a typical vendor program, the Company will work with the vendor and the
lessee to structure the lease, finance the lease, purchase the related equipment
and administer the lease, including providing all billing and collection
services (except for private-label leasing, referred to below). At the end of
the initial lease term, the Company and the vendor will typically coordinate the
re-marketing of the equipment. The Company seeks to establish vendor
relationships by (i) obtaining manufacturers' endorsements of the Company's
finance programs, (ii) offering inventory financing credit lines to a
manufacturer's vendors, (iii) developing customized sales training programs to
offer to vendors and (iv) assisting the manufacturers and their vendors in
establishing a sales package including the lease financing provided by the
Company. The Company anticipates that it will also compete by establishing
private-label leasing programs with its vendors. Private-label leasing involves
the lease by a vendor of its own equipment on a lease form bearing the vendor's
name

as lessor (but otherwise identical to the Company's lease form), the sale
of the lease and equipment to the Company, and the provision of basic
administrative services by the vendor (such as billing and collecting rent).
The Company will provide assistance, particularized rental payment structures
and other customized lease terms, remarketing, customized invoicing and
management information reports. The Company also seeks to develop programs
marketing directly to end-user groups, primarily through small business affinity
groups or associations, participation in trade shows and conventions, and media
advertising.

It is anticipated that a significant portion of the Company's revenues
from leasing operations will be derived from residuals. See "Risk Factors -
Equipment Leasing Considerations: Residuals." The Company anticipates that
residuals will principally involve the original end-users; however, equipment
not sold or re-leased to end-users will be disposed of in the secondary market.
While residual realization is generally higher with original end-users than in
the secondary market, the secondary market (essentially, networks of
distributors and dealers in various equipment categories) is well developed in
the product categories the Company intends to pursue and transactions in these
product categories have historically resulted in residual recoveries, on
average, equal to the book value of the equipment. Equipment reacquired by the
Company prior to lease termination (through lease default or otherwise) will be
sold in the secondary market.

PARTNERSHIP MANAGEMENT.

The Company acts as the general partner and manager of six public limited
partnerships formed between 1985 and 1990 with total assets at June 30, 1996 of
$39.9 million, including $19.2 million (book value) of equipment with an
original cost of $68.0 million. A seventh partnership completed its operations
in the first quarter of fiscal 1996. The partnerships lease computer and
related peripheral equipment to investment grade, middle market, capital
intensive companies. The principal stated objective of each of the limited
partnerships is to generate leasing revenues for distribution to the investors
in the partnerships.

For its services as general partner, the Company receives management
fees, an interest in partnership cash distributions and a reimbursement of
specified expenses related to administration of the partnerships (including
costs of non-executive personnel, legal, accounting and third-party contractor
fees and costs, and costs of equipment used in a partnership's behalf).
Management fees range from 3% to 6% of gross rents except that, if leases are
full payout leases, management fees range from 1% to 3% of gross rents. In four
of the partnerships, management fees are subordinated to the receipt by limited
partners of a cumulative annual cash distribution of 11% (two partnerships) or
12% (two partnerships) of the limited partners' aggregate investment. The
Company's interest, as general partner, in cash distributions from the
partnerships is 5% (one partnership), 3.5% (one partnership) and 1% (four
partnerships).

FINANCE PLACEMENT AND ADVISORY.

The Company also operates a lease finance placement and advisory business
which focuses on two related types of leasing transactions: the origination of
leases by others and the

identification of third-party lease funding sources. Lease transactions
generated by the division are generally full payout leases. The Company
generally receives between 1% and 4% of the equipment cost at the time the
transaction is closed for its services in arranging a transaction. In
some of the transactions it generates, the Company also enters into a
remarketing agreement that entitles it to fees upon residual sale. During the
first nine months of fiscal 1996, lease finance and placement generated revenues
of $461,000.

COMPETITION.

The Company believes that, although the small ticket leasing business has
experienced substantial consolidation in the past few years, the business of
equipment leasing remains highly competitive. The Company believes, however,
that small ticket leasing, to be viable, requires the financing and monitoring
of large amounts of equipment and related assets. Because of the complexity and
cost of developing and maintaining the platforms and vendor programs to handle
such high volumes, the Company believes that there are substantial barriers to
others entering into this business. Accordingly, the Company believes that its
principal competitors are and will be primarily major financial institutions and
their affiliates. The Company also believes that the scale on which these
competitors generally operate inhibits their attention to the needs of the
Company's targeted market of small manufacturers and regional distributors and
provides the Company with an under-served market niche.

ENERGY OPERATIONS

GENERAL.

The Company produces natural gas and, to a lesser extent, oil from
locations principally in Ohio, Pennsylvania and New York. At June 30, 1996, the
Company had (either directly or through partnerships and joint ventures managed
by it) interests in 772 wells (of which the Company operates 568 wells), 310
miles of natural gas pipelines and 83,000 acres of mineral rights. Natural gas
produced from wells operated by the Company is collected in gas gathering
pipeline systems owned by partnerships managed by the Company (and in which the
Company also has an interest) and by systems directly owned by the Company, and
is sold to a number of customers, such as gas brokers and local utilities, under
a variety of contractual arrangements. Oil produced from wells operated by the
Company is sold at the well site to regional oil refining companies at the
prevailing spot price for Appalachian crude oil.

WELL OPERATIONS.

The following table sets forth information as of June 30, 1996 regarding
productive oil and gas wells operated by the Company for the partnerships it
manages as well as its own account both in gross and net to the Company's
interest:

Number of Productive Wells
--------------------------
Gross(1) Net(1)
-------- ------

Oil Wells. . . . . . . . . . . . 186 37
Gas Wells. . . . . . . . . . . . 586 384
--- ---
Total. . . . . . . . . . . . . 772 421
=== ===

- ----------------------------------
(1) Includes the Company's equity interest in wells owned by 52 partnerships
and joint ventures. Does not include royalty or overriding interests
held by the Company.

The following table sets forth net quantities of oil and natural gas
produced, average sales prices, and average production (lifting) costs per
equivalent unit of production, for the periods indicated, including the
Company's equity interests in the production of 52 partnerships and joint
ventures, for the periods indicated.

<TABLE>
<CAPTION>
Production Average Sales Price
--------------------------- ------------------- Average Lifting Cost
Fiscal Year Oil (bbls)(1) Gas (mcf)(1) per bbl per mcf per Equivalent mcf(2)
- ----------- ------------- ------------ ------- ------- ---------------------
<S> <C> <C> <C> <C> <C>
1996 (1) 25,666 868,702 $18.23 $2.29 $1.02
1995 36,420 1,198,245 $16.74 $2.31 $1.06
1994 34,002 1,161,685 $15.74 $2.45 $1.00
1993 30,788 1,178,727 $18.64 $2.39 $1.08
</TABLE>
- -----------------------------------
(1) Through June 30, 1996.
(2) Oil production is converted to mcf equivalents at the rate of six mcf
per barrel.

Neither the Company nor the partnerships and joint ventures it manages
are obligated to provide any fixed quantities of oil or gas in the future under
existing contracts.

EXPLORATION AND DEVELOPMENT.

The following table sets forth information with respect to the number of
wells completed in Ohio and New York (the only areas in which Company drilling
activities occurred) at any time during fiscal 1993, 1994, 1995, and 1996
(through June 30), regardless of when drilling was initiated.

Exploratory Wells Development Wells
------------------------- --------------------------
Productive Dry Productive Dry
----------- ----------- ------------ -----------
Gross Net Gross Net Gross Net Gross Net
----- --- ----- --- ----- ---- ----- ---

1996 (1) 2.0 .34 - - 2.0 1.50 - -
1995 3.0 .36 2.0 .36 1.0 .87 2.0 1.75
1994 2.0 .18 2.0 1.18 - - - -
1993 - - - - - - - -

- -----------------------------------------------
(1) Through June 30, 1996.

All drilling has been on acreage held by the Company. The Company does not own
its own drilling equipment; rather, it acts as a general contractor for well
operations and subcontracts drilling and certain other work to third parties.

OIL AND GAS RESERVE INFORMATION.

An evaluation of the Company's estimated proved developed oil and gas
reserves as of September 30, 1995, was verified by E.E. Templeton & Associates,
Inc., an independent petroleum engineering firm. Such study showed, subject to
the qualifications and reservations therein set forth, reserves of 12.8 million
mcf of gas and 301,000 barrels of oil at September 30, 1995. See Note 13 to the
Consolidated Financial Statements.

The following table sets forth information with respect to the Company's
developed and undeveloped oil and gas acreage as of June 30, 1996. The
information in this table includes the Company's equity interest in acreage
owned by 52 partnerships and joint ventures.

Developed Acreage Undeveloped Acreage
----------------- -------------------
Gross Net Gross Net
----- --- ----- ---

Arkansas . . . . . . . 2,560 403 - -
Kansas . . . . . . . . 160 20 - -
Louisiana. . . . . . . 1,819 206 - -
Mississippi. . . . . . 40 3 - -
New York . . . . . . . 12,030 10,386 31,342 30,187
Ohio . . . . . . . . . 34,946 28,098 11,469 10,430
Oklahoma . . . . . . . 4,243 635 - -
Pennsylvania . . . . . 2,365 1,742 - -
Texas. . . . . . . . . 4,520 209 - -
------ ------ ------ ------
62,683 41,702 42,811 40,617
====== ====== ====== ======

The terms of the oil and gas leases held by the Company's managed
partnerships and by the Company for its own account vary, depending upon the
location of the leased premises and the minimum remaining terms of undeveloped
leases, from less than one year to five years. Rentals of approximately $18,100
were paid in fiscal 1995 and $6,600 in the first nine months of fiscal 1996 to
maintain leases on such acreage in force.

The Company believes that the partnership, joint venture and Company
properties have satisfactory title. The developed oil and gas properties are
subject to customary royalty interests generally contracted for in connection
with the acquisition of the properties, burdens incident to operating
agreements, current taxes and easements and restrictions (collectively,
"Burdens"). Presently, the partnerships and the Company are current with
respect to all such Burdens.

At June 30, 1996, the Company had no individual interests in any oil and
gas property that accounted for more than 10% of the Company's proved developed
oil and gas reserves, including the Company's interest in reserves owned by 52
partnerships and joint ventures.

PIPELINE OPERATION.

The Company operates, on behalf of three limited partnerships of which it
is both a general and limited partner (in which it owns 13%, 46% and 22%
interests), and for its own account, various gas gathering pipeline systems
totaling approximately 310 miles in length. Such pipeline systems are located
in Ohio, New York and Pennsylvania.

WELL SERVICES.

The Company provides a variety of well services to wells of which it is the
operator and to wells operated by independent third party operators. These
services include well operations, petroleum engineering, well maintenance and
well workover and are provided at rates in conformity with general industry
standards.

SOURCES AND AVAILABILITY OF RAW MATERIALS.

The Company contracts for drilling rigs and purchases tubular goods
necessary for the drilling and completion of wells from a substantial number of
drillers and suppliers, no one of which supplies a significant portion of the
Company's annual needs. During fiscal 1995 and fiscal 1996 to date, the Company
faced no shortage of such goods and services. The duration of the current
supply and demand situation cannot be predicted with any degree of certainty due
to numerous factors affecting the oil and gas industry, including selling
prices, demand for oil and gas, and governmental regulations.

MAJOR CUSTOMERS.

The Company had one customer that accounted for approximately 6%, 15% and
27% of total revenues from energy operations for fiscal 1994, fiscal 1995 and
the nine months ended June 19, 1996, respectively.

COMPETITION.

The oil and gas business is intensely competitive in all of its aspects.
The oil and gas industry also competes with other industries in supplying the
energy and fuel requirements of industrial, commercial and individual customers.
Domestic oil and gas sales are also subject to competition from foreign sources.
Moreover, competition is intense for the acquisition of leases considered
favorable for the development of oil and gas in commercial quantities. The
Company's competitors include other independent oil and gas companies,
individual proprietors and partnerships. Many of these entities possess greater
financial resources than the Company. While it is impossible for the Company
to accurately determine its comparative industry position with respect to its
provision of products and services, the Company does not consider its oil and
gas operations to be a significant factor in the industry.

MARKETS.

The availability of a ready market for oil and gas produced by the Company,
and the price obtained therefor, will depend upon numerous factors beyond the
Company's control including the extent of domestic production, import of foreign
natural gas and/or oil, political instability in oil and gas producing countries
and regions, market demands, the effect of federal regulation on the sale of
natural gas and/or oil in interstate commerce, other governmental regulation of
the production and transportation of natural gas and/or oil and the proximity,

availability and capacity of pipelines and other required facilities.
Currently, the supply of both crude oil and natural gas is more than sufficient
to meet projected demand in the United States. These conditions have had, and
may continue to have, a negative impact on the Company through depressed prices
for its oil and gas reserves.

GOVERNMENTAL REGULATION.

The exploration, production and sale of oil and natural gas are subject to
numerous state and federal laws and regulations. Compliance with the laws and
regulations affecting the oil and gas industry generally increases the Company's
costs of doing business and consequently affects its profitability. Inasmuch
as such regulations are frequently changing, the Company is unable to predict
the future cost or impact of complying with such regulations. The Company is
not aware of any pending or threatened matter involving a claim that it has
violated environmental regulations which would have a material effect on its
operations or financial position.

SOURCES OF FUNDS

Historically, the Company has relied upon internally generated funds to
finance its growth. Since 1992, internally generated funds have been augmented
by refinancings of the Company's portfolio loans by borrowers. See "Business -
Asset Acquisition and Resolution: Sale of Participations and Refinancings."
The Company has also obtained funds by the issuance, in May 1994, of an $8
million principal amount 9.5% Senior Note due 2004 to PICO and by the sale, in
1994 and 1995, of $12 million of participations in the Company's portfolio loans
to PICO. In addition, the Company obtained, in August 1996, a preliminary
financing proposal for an initial $20 million credit facility for its equipment
leasing operations. See "Risk Factors - General: Ability to Generate Funding
for Growth."

THE SENIOR NOTE. The Senior Note is secured by substantially all of the
Company's oil and gas properties and ten of the Company's portfolio loans.
Under the agreement pursuant to which the Senior Note was sold, the Company may
not, without the holder's consent: (i) sell, lease or dispose of all or
substantially all of the Company's assets; (ii) merge or consolidate with any
entity other than a Company affiliate, unless the entity assumes and complies
with the covenants in the note agreement; (iii) incur debt senior to the Senior
Note or debt secured by any assets pledged as security for the Senior Note; (iv)
pay dividends on Common Stock where such dividends, together with any other
dividends previously paid in the same fiscal year, are more than the Company's
net income (before extraordinary gain or income items but after extraordinary
deduction or loss items) for the immediately preceding fiscal year; and (v)
issue any class of stock senior to the Common Stock. The Company also agreed
to (a) maintain a debt to equity ratio of not more than 1.5 to 1; (b) maintain
a ratio of operating cash flow to interest due on the Senior Note of not less
than 1.5 to 1; (c) maintain the value of the assets pledged as security for the
Senior Note at 170% of the Senior Note's outstanding principal balance; and (d)
use its best efforts to cause the nomination of one person designated by the
Senior Noteholder to the Company's board of directors and the investment
committee thereof. John R. Hart, a

director of the Company and a member of the investment committee of the board
of directors, is the person currently designated. See "Management -
Directors and Executive Officers." In connection with the issuance of the
Senior Note, the Company granted the Senior Noteholder warrants to purchase
449,440 shares of Common Stock. See "Description of Capital Stock -
Warrants." As of the date of this Prospectus, the Company is in compliance
with all of its covenants under the Senior Note.

PARTICIPATIONS. In 1994 and 1995, PICO provided refinancing of $12
million with respect to the Company's portfolio loans through the purchase of
participation interests in such loans. See "Business - Asset Acquisition and
Resolution: Sale of Participations and Refinancings." If a borrower defaults
in the payment of debt service on any of these participations, the Company is
required to replace the defaulted obligation with a performing obligation. See
"Risk Factors - Asset Acquisition and Resolution Considerations: Sales of
Participations to Insurance Company." The Company receives an annual mortgage
servicing fee of 0.25% of the principal amount of any financing provided by
PICO. In connection with these financing arrangements, the Company has issued
to PICO warrants to purchase 533,710 shares of Common Stock. For a description
of the terms of such warrants, see "Description of Capital Stock - Warrants."

LEASE FINANCING PROPOSAL. The Company has received a preliminary
financing proposal ("term sheet") from CoreStates Bank and First Union Bank, as
co-agents, for an initial $20 million revolving credit facility with term loan
availability. Although the terms of the credit facility have not been finally
negotiated or agreed upon (and the extension of the credit facility is
specifically made subject to completion of due diligence examinations, formal
credit approval and satisfactory documentation), the following principal terms
have been proposed: (i) the loans will be secured by a first lien on the
equipment leases being financed (and on the underlying equipment), a guaranty
by the Company and a pledge of the capital stock of FLI; (ii) revolving credit
loans may be converted to term loans (with terms of 18, 24 or 36 months),
provided that term loans must be in increments of $2 million and no more than
five term loans may be outstanding at any time; (iii) FLI will be required to
maintain a debt (excluding non-recourse debt) to "worth" ratio of 4.5:1, a
minimum net worth of $2 million plus 75% of net income, and specified ratios of
cash flow to the sum of debt service plus 25% of outstanding obligations; and
(iv) the Company will be required to maintain minimum shareholders' equity of
$24 million following this offering.

OFFICE PROPERTY

The Company's executive office and headquarters for asset acquisition
and resolution operations is in Philadelphia, and is leased under an agreement
providing for rents of $49,600 per year through May 2000. See "Management -
Certain Relationships and Related Transactions." The Company's equipment
leasing headquarters is located in Ambler, Pennsylvania, and is leased under
agreements providing for rents of $125,000 per year through November 2000. The
Company owns a 9,600 square foot office building and related land in Akron,
Ohio, housing its energy and accounting operations. The Company also maintains
two energy field offices in Ohio

and New York and an equipment lease brokerage office in California. Rents paid
for fiscal 1995 for these offices totalled $60,500.

EMPLOYEES

As of September 30, 1996, the Company employed 65 persons.

LITIGATION

The Company is party to various routine legal proceedings arising out
of the ordinary course of its business. Management believes that none of these
actions, individually or in the aggregate, will have a material adverse effect
on the financial condition or operations of the Company.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following sets forth certain information regarding the directors and
executive officers of the Company:

Name Age Position with the Company
- ---- --- -------------------------

Edward E. Cohen(1) . . . . . . . . 57 Chairman of the Board of Directors,
President, Chief Executive Officer and
Director

Michael L. Staines(2). . . . . . . 47 Senior Vice President, Secretary and
Director

Freddie M. Kotek . . . . . . . . . 40 Senior Vice President - Leasing

Scott F. Schaeffer . . . . . . . . 34 Senior Vice President - Real Estate

Nancy J. McGurk. . . . . . . . . . 40 Vice President - Finance and Treasurer

Carlos C. Campbell(1). . . . . . . 58 Director

John R. Hart(3). . . . . . . . . . 36 Director

Andrew M. Lubin(3) . . . . . . . . 49 Director

Alan D. Schreiber, M.D.(3) . . . . 53 Director

John S. White(2) . . . . . . . . . 55 Director

- -----------------------------------
(1) Term as director expires in 1999.
(2) Term as director expires in 1997.
(3) Term as director expires in 1998.

Edward E. Cohen has been Chairman of the Board of Directors of the
Company since 1990, its Chief Executive Officer and a director since 1988 and
its President since 1995. He is Chairman of the Board and a director of Bryn
Mawr Resources, Inc. (see "Security Ownership of Certain Beneficial Owners and
Management"), and Chairman of the Board of Directors and a director of
Brandywine Construction and Management, Inc., a real estate construction and
management company. See "Management - Certain Relationships and Related
Transactions." Since 1981, Mr. Cohen has been Chairman of the Executive
Committee and a director of JeffBanks, Inc. (a bank holding company with total
assets of approximately $1 billion). From 1969 through 1989, Mr. Cohen was
Chairman of the Board or Chairman of the Executive Committee of State National
Bank of Maryland (now First Union Bank of Maryland) and/or its holding company.
Mr. Cohen is the father of Daniel G. Cohen. See "Management - Other Significant
Employees."

Michael L. Staines has been Senior Vice President, Secretary and a
director of the Company since 1989.

Freddie M. Kotek has been a Senior Vice President of the Company since
1995 and an Executive Vice President of Resource Properties, Inc. (a wholly
owned subsidiary of the Company) since 1993. Prior thereto, he was a First Vice
President of Royal Alliance Associates (an investment banking and brokerage
firm) from 1991 to 1993, and a Senior Vice President and Chief Financial Officer
of Paine Webber Properties (a real estate investment firm) from 1990 to 1991.

Scott F. Schaeffer has been a Senior Vice President of the Company since
1995 and President of Resource Properties, Inc. (a wholly owned subsidiary of
the Company) since 1992. From 1992 to 1995 he was also Vice President - Real
Estate of the Company. Prior thereto, from 1985 to 1992 Mr. Schaeffer was Vice
President of the Dover Group, Ltd. (a real estate investment firm).

Nancy J. McGurk has been Vice President - Finance of the Company since
1992 and Treasurer and Chief Accounting Officer of the Company since 1984.

Carlos C. Campbell has been a director of the Company since 1990. He
is President of C.C. Campbell and Company (a management consulting firm), Vice
Chairman of the Board of Directors of Computer Dynamics, Inc. (a computer
services corporation) and a director of Sensys, Inc. (a telecommunication/asset
management corporation).

John R. Hart has been a director of the Company since 1994. Mr. Hart
has been Chief Executive Officer of Quaker Holdings, Ltd. (an investment firm)
since 1991, and President and director of Physicians Insurance Company of Ohio
since 1995 and 1993, respectively. Prior thereto, from 1984 to 1991 he was a
principal of Detweiler, Ryan, & Co., Inc. (an investment firm).

Andrew M. Lubin has been a director of the Company since 1994. He has
been President of Delaware Financial Group, Inc. (a private investment firm)
since 1984.

Alan D. Schreiber, M.D. has been a director of the Company since 1994.
Dr. Schreiber has been Chief Scientific Officer of CorBec Pharmaceuticals, Inc.
(of which he was a founder) since 1993. He has been a Professor of Medicine and
Assistant Dean for Research and Research Training at the University of
Pennsylvania School of Medicine since 1973.

John S. White has been a director of the Company since 1993. He has
been Chairman of the Board and Chief Executive Officer of DCC Securities
Corporation (a securities brokerage firm) since 1990.

OTHER SIGNIFICANT EMPLOYEES

The following sets forth certain information regarding other significant
employees of the Company:

Abraham Bernstein, age 63, is the Chairman, Chief Executive Officer and
President of FLI, a subsidiary of the Company. From 1982 to 1993, he was the
President and Chief Executive Officer of Tokai Financial Services, Inc., the
equipment leasing subsidiary of Tokai Bank of Japan. From 1993 to 1995, the
contractual period during which Mr. Bernstein's restrictive covenant with Tokai
was in effect, Mr. Bernstein was a Managing Director of the Rittenhouse
Consulting Group (a financial consulting company).

Crit DeMent, age 43, is the Executive Vice President of FLI. Prior
thereto, from 1983 through 1996 he was Vice President - Marketing and Leasing
Associate - Senior Account Representative for Tokai Financial Services, Inc.

Mark A. Mayper, age 42, is the President of FLFS, a subsidiary of the
Company, and was Senior Vice President of its predecessor, heading its lease
syndication business, since 1987. From 1984 to 1987, he was legal counsel and
Assistant Vice President of FNS Corporate Funding, a subsidiary of First
Nationwide Savings.

Joseph T. Ellis, Jr., age 35, is the Director of Vendor Services for
FLI. Prior thereto, from 1985 through February 1996, he held various marketing
and sales positions with Tokai Financial Services, Inc., most recently as the
Director of Program Management and Strategic Market Development.

Jeffrey C. Simmons, age 38, has been Vice President - Energy of the
Company since 1994. Prior thereto, from 1988 to 1994 he was Director of Well
Services of the Company.

Daniel G. Cohen, age 27, is Vice President - Financial Services of the
Company. Prior to joining the Company in November 1995, Mr. Cohen was
principally engaged in graduate studies at the University of Pennsylvania,
following his graduation from the University of Chicago in 1991. Mr. Cohen is
the son of Edward E. Cohen. See "Management - Directors and Executive
Officers."

EXECUTIVE OFFICER COMPENSATION

The following tables set forth certain information concerning the
compensation paid or accrued during each of the last three fiscal years by the
Company and its subsidiaries to the Company's Chief Executive Officer and each
of the Company's other most highly compensated executive officers whose
aggregate salary and bonus (including amounts of salary and bonus foregone to
receive non-cash compensation) exceeded $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------- ----------------------------------
Restricted Securities
Name and Stock Underlying LTIP All
Principal Position Year Salary Bonus Other Award(1) Options(2) Payouts(3) Other
- ----------------------- ---- -------- -------- ----- -------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward E. Cohen 1995 $210,000 $130,000 $ 0 $19,824 0 $0 $ 0
Chairman & Chief 1994 97,500 59,000 0 13,966 0 0 0
Executive Officer 1993 150,000 0 0 8,759 84,270 0 0

Francis J. Bagnell(*) 1995 150,000 70,000 0 19,824 0 0 0
President & Chief 1994 143,500 59,000 0 18,060 0 0 0
Operating Officer 1993 150,000 0 0 8,759 56,180 0 0

Freddie M. Kotek 1995 145,000 45,000 0 19,824 0 0 3,760
Senior Vice President

Scott F. Schaeffer 1995 145,000 45,000 0 19,824 0 0 3,058
Senior Vice President

Michael L. Staines 1995 112,500 7,500 0 16,023 0 0 0
Senior Vice President & 1994 105,000 0 0 9,368 0 0 0
Secretary 1993 105,000 0 0 6,125 28,090 0 0
</TABLE>
- ------------------------------------------------
(*) Mr. Bagnell died in July 1995.

(1) Reflects shares awarded under the Company's Employee Stock Ownership
Plan, valued at the closing price of the Company's Common Stock at
September 30 of each year ($8.40 per share, $5.50 per share, and $3.50
per share for fiscal years 1995, 1994, and 1993, respectively. For
purposes of this table, all shares are assumed to be fully vested.
Messrs. Cohen and Staines, and the Estate of Mr. Bagnell, were 100%
vested as of September 30, 1995. Shares awarded to Messrs. Schaeffer
and Kotek were vested 20% and 0%, respectively, as of such date, and
will vest an additional 20% in fiscal 1996.

(2) Options awarded include options for 49,157, 49,157 and 28,090 shares
repriced during 1993 for Messrs. Cohen, Bagnell and Staines,
respectively. Total options held at September 30, 1995, for Messrs.
Cohen, Schaeffer and Staines and the Estate of Mr. Bagnell were 84,270,
28,090, 28,090 and 56,180, respectively. All options held by Mr.
Schaeffer were issued during 1993. Such options were 50% vested as of
September 30, 1995, and 75% vested as of April 20, 1996.
(3) Except for the Company's Employee Stock Ownership Plan and the stock
option plans, reported elsewhere in this table, the Company does not
have long-term incentive plans or pension or profit-sharing plans.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised in-the-Money
Options at Options at
Shares FY-End FY-End
Name and Acquired Value Exercisable/ Exercisable/
Principal Position Year on Exercise Realized Unexercisable Unexercisable(1)
- ----------------------- ---- ----------- -------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Edward E. Cohen 1995 0 $ 0 42,135/42,135 $187,050/187,050
Chairman & Chief
Executive Officer

Francis J. Bagnell (2) 1995 0 0 28,090/28,090 132,500/132,500
President & Chief
Operating Officer

Scott F. Schaeffer 1995 0 0 14,045/14,045 66,250/66,250
Senior Vice President

Michael L. Staines 1995 0 0 14,045/14,045 66,250/66,250
Senior Vice President &
Secretary
</TABLE>
- ------------------------------------------
(1) Value is calculated by subtracting the total exercise price from the
fair market value of the securities underlying the options at
September 30, 1995.

(2) Mr. Bagnell died in July 1995. Such options were held by his estate at
September 30, 1995 and, in accordance with the terms of the original
Grant of Options, options for 28,090 shares were exercised prior to
their January 24, 1996 date of expiration.

No stock options were awarded to any directors, executive officers or
other employees of the Company during fiscal 1995. During the first quarter of
fiscal 1996, the Company issued incentive stock options to the following persons
in the following amounts: Mr. E. Cohen - 95,506 shares; Mr. Staines - 11,236
shares; Mr. Kotek - 39,326 shares; Mr. Schaeffer - 22,472 shares; Ms. McGurk -
11,236 shares; Mr. Simmons - 11,236 shares; and Mr. D. Cohen - 11,236 shares.
None of such options is currently vested. All of the options expire in 2005 and
are exercisable at a price of $8.19 per share (the market price at the date of
grant) except that Mr. E. Cohen's options expire in 2000 and are exercisable at
a price of $9.01 per share. For a description of

certain options issued during 1996 with respect to the common stock of a
subsidiary, see "Management - Management Arrangements Regarding Leasing
Operations."

DIRECTOR COMPENSATION

Each director who does not serve as an officer of the Company is paid
a retainer of $500 per month. Each non-employee director who is a chairman of
a committee of the Board of Directors is paid an additional retainer of $500 per
month. Each non-employee director who is a member of a committee of the Board
of Directors, but not its chairman, is paid $500 per meeting. A total of
$60,500 was paid to five directors during fiscal 1995 for attendance at Board
and committee meetings.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Until April 1996, Mr. Cohen was of counsel to Ledgewood Law Firm, P.C.,
a law firm which provides legal services to the Company. Such firm was paid
$562,000 during fiscal 1995 for legal services, primarily related to the
purchase and restructuring of real estate mortgages. Such firm was paid $464,000
during fiscal year 1994, at which time Mr. Cohen was a principal of such firm,
for legal services primarily related to the purchase of real estate mortgages
and the placement of the Senior Note. The Company holds commercial real estate
loans of borrowers whose underlying properties are managed by BCMI. The Company
has advanced funds to certain of these borrowers for improvements on their
properties which have been performed by BCMI. In five instances, the President
of BCMI has also acted as the general partner of the borrower. Mr. Cohen is
Chairman of the Board of Directors and a minority shareholder (approximately 8%)
of BCMI. BCMI has agreed to subordinate its management fees to receipt by the
Company of minimum required debt service payments under the obligations held by
the Company. The Company also maintains normal banking and borrowing
relationships with Jefferson Bank, a subsidiary of JeffBanks, Inc. Mr. Cohen
and his spouse are officers and directors of JeffBanks, Inc. (and his spouse is
Chairman and Chief Executive Officer of Jefferson Bank and JeffBanks, Inc.), and
are principal shareholders thereof. The Company borrowed $2.5 million from
Jefferson Bank in the first quarter of fiscal 1995 under terms which the Company
believes were no less favorable to it than those available from independent
third parties. The loan was repaid within fiscal 1995. The Company anticipates
that it may effect other borrowings in the future from Jefferson Bank; it
anticipates that any such borrowings will be on terms similar to those which
could be obtained by an unrelated borrower.

in the original principal amount of $3,550,000 (and with a then-outstanding
balance of $4,388,644), for an investment of $1,612,674. The borrower is a
limited partnership of which Mr. Lubin, a director of the Company, is
currently the general partner. Mr. Lubin assumed such position after the
Company's acquisition of the loan. Previously, the general partner had been
the President of BCMI. The borrower subsequently refinanced the loan with
another third party, and repaid the Company $934,300, leaving the Company with
a net investment of $678,374. In April 1996, the Company provided $114,948 of
financing to a partnership controlled by the President of BCMI for the purchase
by such partnership of a property owned, through foreclosure, by Jefferson
Bank. After first mortgage financing, the Company had a net investment of
$109,206. The Company leases its executive offices and asset acquisition and
resolution headquarters in Philadelphia from a partnership of which Mr.
Schaeffer is the general partner and Mr. Cohen is a limited partner. See
"Business - Office Property."

The Company has obtained material amounts of financing from PICO. See
"Business - Sources of Funds." Mr. Hart, who became director of the Company in
connection with the Senior Note portion of such financings, is an executive
officer and director of PICO.

MANAGEMENT ARRANGEMENTS REGARDING LEASING OPERATIONS

In March 1996, the Company, through FLI, entered into employment
arrangements with Abraham Bernstein. Under the terms of the arrangements, Mr.
Bernstein has assumed the positions of Chairman, Chief Executive Officer and
President of FLI for a three-year term, and is responsible for developing the
Company's small ticket equipment leasing business. Mr. Bernstein receives a
base salary of $150,000 per year and is eligible for bonuses based upon the
performance of FLI. In addition, Mr. Bernstein has received options to purchase
10% of the common stock of FLI (1 million shares) at an aggregate price of
$220,000, and will receive payments on the options in lieu of dividends, should
FLI declare a dividend. FLI has also established another option plan, in the
amount of 500,000 shares of FLI common stock, for grant (at the discretion of
FLI'S board of directors) to Messrs. DeMent and Ellis and other employees of
FLI. In the event that, prior to becoming a public company, FLI issues stock
to anyone other than the Company or Mr. Bernstein, Mr. Bernstein is entitled to
receive such additional options as will allow him to maintain his 10% equity
position in FLI (excluding shares issuable pursuant to the employee option plan
referred to above), at an exercise price equal to the price paid or value
received in the additional issuance. The Company does not anticipate making any
such issuances.

The options issued to Mr. Bernstein vest 25% per year beginning in March
1997 (becoming fully invested in March 2000), and terminate in March 2005,
provided that no more than $100,000 of shares (measured by "fair market value")
may be purchased in any year pursuant to option exercises. The options become
fully vested and immediately exercisable in the event of a "change in control"
of the Company (defined as occurring when Mr. Cohen is no longer an officer or
a 5% or more shareholder of the Company). Mr. Bernstein has certain rights,
commencing after March 5, 2000, to require FLI to register his option shares
under the Securities Act. In the event FLI does not become a public company by
March 5, 2001, Mr. Bernstein may

require that FLI thereafter buy, for cash, FLI shares subject to Mr.
Bernstein's options at a price equal to ten times FLI's after-tax earnings
per share for the fiscal year ended immediately prior to the giving of notice
by Mr. Bernstein of his exercise of this right, in accordance with the
following schedule:

Percent of shares
originally subject to
option which FLI can be
Through March 5 required to purchase
--------------- -------------------------

2002 25%
2003 50%
2004 75%
2005 100%

Obligations of FLI to repurchase shares in any year in excess of $500,000
(including amounts deferred in prior years) may be deferred to the following
year. The Company anticipates that amounts invested in FLI by the Company in
excess of the $2 million initial investment that the Company has agreed to make
(including substantially all of the proceeds of this offering allocated to
equipment leasing options) will be in the form of loans to FLI. Debt service
payable with respect to such loans will reduce the amount of FLI's after-tax
earnings per share, thus reducing the cost to the Company of any exercise by Mr.
Bernstein of his right to sell FLI shares to the Company, referred to above.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the number and percentage of shares of
Common Stock owned, as of August 31, 1996, by (a) each person who, to the
knowledge of the Company, is the beneficial owner of 5% or more of the
outstanding shares of Common Stock, (b) each of the Company's present directors,
(c) each of the Company's executive officers, and (d) all of the Company's
present executive officers and directors as a group. This information is
reported in accordance with the beneficial ownership rules of the Commission
under which a person is deemed to be the beneficial owner of a security if that
person has or shares voting power or investment power with respect to such
security or has the right to acquire such ownership within 60 days. Shares of
Common Stock issuable pursuant to options or warrants are deemed to be
outstanding for purposes of computing the percentage of the person or group
holding such options or warrants but are not deemed to be outstanding for
purposes of computing the percentage of any other person. See notes (4), (5),
(6) and (7) below, for information concerning outstanding options and warrants.

Common Stock
----------------------------------------
Amount Percent of
Beneficial Owner Owned (1) Class
- ---------------- ------ -----------

Directors
- ---------

Carlos C. Campbell 25 *
Edward E. Cohen 690,164 (2)(3)(4)(5)(8) 35.26%
John R. Hart 983,150 (6) 34.17%
Andrew M. Lubin 280 *
Alan D. Schreiber, M.D. 3,370 *
Michael L. Staines 32,462 (4)(5)(7) 1.69%
John S. White 0 *

Executive Officers
- ------------------

Freddie M. Kotek 3,462 (5)(8) *
Nancy J. McGurk 15,858 (4)(5)(8) *
Scott F. Schaeffer 25,783 (4)(5)(8) 1.35%

All present officers 1,754,553 (2)(3)(4) 58.74%
and directors as a group (5)(6)(7)
(10 persons) (8)

Other owners of 5% or More
of Outstanding Shares(9)
- ------------------------

Physicians Insurance
Company of Ohio (6) 983,150 34.17%
Bryn Mawr Resources (2) 583,430 30.80%
J.W. Straker Trust 176,185 9.30%

- -----------------------------------
* Less than 1%

(1) Excludes options to acquire Common Stock granted to certain
officers and directors during the first quarter of fiscal 1996. See "Management
- - Executive Officer Compensation." None of such options is vested or
exercisable as of the date hereof or within 60 days of the date hereof.

(2) Includes the 583,430 shares of Common Stock beneficially owned by
Bryn Mawr Resources, Inc. ("Bryn Mawr") and held of record by BMR Holdings,
Inc., a subsidiary of Bryn Mawr. Bryn Mawr has filed Schedule 13D with the
Commission concerning its ownership of the Company's Common Stock. Mr. Cohen
is an officer, director and principal shareholder of Bryn Mawr.

(3) Of the 130,671 shares held in the name of the Resource America,
Inc. 1989 Employee Stock Ownership Trust (the "Trust"), 106,597 have been
allocated to the accounts of eligible employees. The Trustee of the Trust, Mr.
Cohen, has voting power for the 24,074 shares which have not been allocated to
the accounts of eligible employees. Accordingly, only unallocated shares held
by the Trust and shares allocated to Mr. Cohen's account are included in the
share amount for Mr. Cohen. See note (5).

(4) Includes shares issuable on exercise of options granted in 1993
under the 1989 Key Employee Stock Option Plan of: Mr. Cohen - 63,202 shares,
Mr. Schaeffer - 21,067 shares, Mr. Staines - 12,640 shares and Ms. McGurk -
4,213 shares.

(5) Includes shares allocated under the 1989 Employee Stock Ownership
Trust in the amounts of: Mr. Cohen - 17,580 shares; Mr. Staines - 11,395
shares; Mr. Schaeffer - 4,537 shares; Mr. Kotek - 2,660 shares and Ms. McGurk -
7,432 shares.

(6) Represents shares issuable pursuant to warrants exercisable by
PICO, of which Mr. Hart is an officer and director. For information relating
to such warrants, see "Description of Capital Stock - Warrants."

(7) Includes 8,427 shares issuable on exercise of options granted to
Mr. Staines in 1993 under the 1984 Key Employee Stock Option Plan.

(8) Includes shares allocated under the Resource Exploration, Inc.
Employee Savings Plan in the amount of: Mr. Cohen - 1,877 shares; Mr. Kotek -
802 shares; Ms. McGurk - 4,213 shares and Mr. Schaeffer - 179 shares, as to
which each has voting power.

(9) The address for PICO is 13515 Yarmouth Drive N.W., Pickerington,
Ohio 43147; the address for Bryn Mawr Resources is 1521 Locust Street, Fourth
Floor, Philadelphia, PA 19102; and the address for the J.W. Straker Trust is
4120 Harbour Oaks Court, Bonita Bay, Bonita Springs, Florida 33923-2642.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company is authorized to issue 9,000,000 shares of capital stock,
consisting of 8,000,000 shares of Common Stock, par value $.01 per share, and
1,000,000 shares of preferred stock, par value $1.00 per share ("Preferred
Stock"). As of the date of this Prospectus, there are 1,894,410 shares of
Common Stock outstanding and no shares of Preferred Stock outstanding.

Prior to the date of this Prospectus, the Common Stock was divided into
Class A Common Stock and Class B Common Stock, with the difference between the
classes relating primarily to voting for the election of directors. However,
pursuant to the terms under which the Class B Common Stock was established, the
Class B Common Stock merged automatically into the Class A Common Stock upon the
effective date of the registration statement of which this Prospectus is a part
(___________, 1996) and the merged class was redesignated as Common Stock.

COMMON STOCK

Holders of Common Stock are entitled to dividends when, as and if
declared by the Company's Board of Directors and in such amounts as the Board
of Directors may deem advisable. See "Price Range of Common Stock and Dividend
Policy." In the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, holders of Common Stock are entitled,
after payment or provision for payment of the debts or other liabilities of the
Company, and subject to the prior rights of holders of any Preferred Stock which
may then be outstanding, to share ratably in the remaining assets of the
Company. Shares of Common Stock do not possess preemptive rights. Holders of
Common Stock are entitled to one vote for each share held of record on each
matter submitted to a vote at a meeting of shareholders. For a description of
certain provisions of the Company's Certificate of Incorporation and Delaware
law which affect the voting rights of shareholders of the Company and provide
for a classified board of directors, see "Description of Capital Stock - Anti-
Takeover Provisions of Delaware Law" and " - Classes of Directors."

PREFERRED STOCK

Preferred Stock may be issued from time to time in one or more series
and the Board of Directors, without further approval of the shareholders, is
authorized to fix the dividend rights and terms, conversion rights, voting
rights, redemption rights and terms, liquidation preferences, sinking funds and
any other rights, preferences, privileges and restrictions applicable to each
such series of Preferred Stock. The issuance of Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely affect the voting power
of the holders of Common Stock and, under certain circumstances, make it more
difficult for a third party to gain control of the Company. The Company has no
current plan to issue any Preferred Stock.

WARRANTS

The Company has issued warrants to purchase an aggregate of 983,150
shares of Common Stock to PICO in connection with certain financing provided by
PICO, as follows (adjusted to give effect to stock dividends): (i) warrants to
purchase 449,440 shares at a price of $3.38 per share were issued in conjunction
with the issuance of the Senior Note, and (ii) warrants to purchase 533,710
shares, consisting of 112,360 shares at a price of $3.38 per share and 421,350
shares at a price of $4.18 per share, were issued in conjunction with mortgage
financing provided by PICO (see "Business - Sources of Funds"). John R. Hart,
a director of the Company, is an officer and director of PICO. See "Management
- - Directors and Executive Officers" and "Security Ownership of Certain
Beneficial Owners and Management."

The Warrants expire in 2004 (as to 561,800 shares) and 2005 (as to
421,350 shares) and contain standard anti-dilution provisions regarding stock
or other securities dividends, stock reclassifications, splits and combinations,
sale of Common Stock for consideration less than the exercise price, issuance
of subscription rights to shareholders, and issuance of dividends other than
regular cash dividends or cash distributions out of net profits. In addition,
the Warrants contain anti-dilution provisions with respect to the exercise of
options under any stock option plan of the Company created after the date of the
Warrant where the shares issuable pursuant to the options are issuable at prices
less than the exercise price under the Warrant. No option plans have been
created after the date of the Warrants, although one such option plan was
amended in October 1995 to increase the number of shares subject to option
grant. No option grant thereunder has been at a price less than the exercise
price of any Warrant.

Each of the Warrants provides that the warrantholder has the right to
cause the Company to file a registration statement under the Securities Act for
the shares covered by the Warrant upon the demand of the warrantholder. Any
such registration is at the expense of the warrantholder. Each of the Warrants
further provides that the warrantholder has the right to include some portion
or all of the shares subject to the Warrant in a registration statement
otherwise being filed by the Company, subject to underwriting cutbacks, delays
and termination. The warrantholder has the right to effect two such
registrations, and bears a proportionate share of the expenses of registration.

ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW

The Company is a Delaware corporation and consequently is subject to
certain anti-takeover provisions of the Delaware General Corporation Law (the
"Delaware Law"). Under the business combination provision contained in Section
203 of the Delaware Law ("Section 203"), a Delaware corporation may not engage
in any business combination with any interested shareholder for a period of
three years following the date such shareholder became an interested
shareholder, unless (i) prior to such date the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the shareholder becoming an interested shareholder, or (ii) upon
completion of the transaction which resulted in the shareholder becoming an
interested shareholder, the interested shareholder owned at least 85% of the
voting

stock of the corporation outstanding at the time the transaction commenced
(excluding, for purposes of determining the number of shares outstanding, (a)
shares owned by persons who are directors and also officers and (b) employee
stock plans, in certain instances), or (iii) on or subsequent to such date
the business combination is approved by the board of directors and authorized
at an annual or special meeting of shareholders by at least two-thirds of the
outstanding voting stock that is not owned by the interested shareholder.
Section 203 defines an interested shareholder of a corporation to be any
person (other than the corporation and any direct or indirect majority-
owned subsidiary of the corporation) who (i) owns, directly or indirectly, 15%
or more of the outstanding voting stock of the corporation or (ii) is an
affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock of the corporation at any time within the three-
year period immediately prior to the date on which it is sought to be determined
whether such person (and the affiliates and the associates of such person) is
an interested shareholder. Section 203 defines business combinations to include
certain mergers, consolidations, asset sales, transfers and other transactions
resulting in a financial benefit to the interested shareholder.

The restrictions imposed by Section 203 will not apply to a corporation
if (i) the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by Section 203 or (ii) the
corporation, by the action of shareholders holding a majority of outstanding
voting stock, adopts an amendment to its certificate of incorporation or by-laws
expressly electing not to be governed by Section 203 (such amendment will not
be effective until 12 months after adoption and shall not apply to any business
combination between such corporation and any person who became an interested
shareholder of such corporation on or prior to such adoption). The Company has
not opted out of Section 203. Section 203 could under certain circumstances
make it more difficult for a third party to gain control of the Company, deny
shareholders the receipt of a premium on their Common Stock and have a
depressive effect on the market price of the Common Stock.

CLASSES OF DIRECTORS

The Board of Directors of the Company is currently classified into three
classes. One class of directors is elected each year and the members of such
class hold office for a three-year term or until their successors are duly
elected and qualified. The classification of directors will have the effect of
making it more difficult for a third party to change the composition of the
Board of Directors without the support of the incumbent Board. At least two
annual shareholder meetings, instead of one, will be required to effect a change
in the control of the Board, unless shareholders remove directors for cause.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's Common Stock is
American Stock Transfer & Trust Company.

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representative,
have severally agreed to purchase from the Company the following respective
number of shares of Common Stock at the offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus:

Underwriter Number of Shares
----------- ----------------
Friedman, Billings, Ramsey & Co., Inc. . . . . . ----------------

Total . . . . . . . . . . . . . . . . . ================

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the shares offered hereby (other than those
covered by the over-allotment option described below), if any of such shares are
purchased.

The Company has been advised by the Underwriters that the Underwriters
propose to offer the shares of Common Stock to the public at the offering price
set forth on the cover page of this Prospectus and to certain dealers at such
price less a concession not in excess of $________ per share. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of
$_______________ per share to certain other dealers. After the initial
offering, the offering price and other selling terms may be changed by the
Representative of the Underwriters.

The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to
______________ additional shares of Common Stock at the initial offering price
less the underwriting discounts and commissions set forth on the cover page of
this Prospectus. To the extent that the Underwriters exercise such option, each
of the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by it shown in the above table bears to ______________ and the Company
will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover over-
allotments made in connection with the sale of Common Stock offered hereby. If
purchased, the Underwriters will offer such additional shares on the same terms
as those on which the __________ shares are being offered.

The Company has agreed to indemnify the Underwriters against certain
liabilities including liabilities under the Securities Act .

LEGAL MATTERS

The legality of the Common Stock offered hereby is being passed upon by
Ledgewood Law Firm, P.C., Philadelphia, Pennsylvania. For a discussion of
certain relationships between such firm and the Company, see "Management -
Certain Relationships and Related Transactions" and "Security Ownership of
Certain Beneficial Owners and Management." Certain legal matters will be passed
upon for the Underwriters by Simpson Thacher & Bartlett (a partnership which
includes professional corporations), New York, New York.

EXPERTS

The consolidated financial statements and schedules of the Company and
its subsidiaries as of September 30, 1995 and 1994 and for each of the years in
the three-year period ended September 30, 1995 included in this Prospectus have
been included herein in reliance upon the reports of Grant Thornton LLP,
independent certified public accountants, upon the authority of such firm as
experts in accounting and auditing.

RESOURCE AMERICA, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
NUMBER
PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED): --------
Pro forma combined balance sheet at June 30, 1995 . . . . . . . . . F-3
Pro forma combined statement of operations for the nine
months ended June 30, 1995 . . . . . . . . . . . . . . . . . . . F-4
Notes to pro forma combined financial statements . . . . . . . . . F-5
Pro forma combined statement of operations for the year
ended September 30, 1994 . . . . . . . . . . . . . . . . . . . . F-6
Notes to pro forma combined financial statements . . . . . . . . . F-7

RESOURCE AMERICA, INC.:
Report of Independent Auditors . . . . . . . . . . . . . . . . . . F-8
Consolidated balance sheets at September 30, 1994 and 1995
and June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . F-9
Consolidated statements of operations for the years ended
September 30, 1995, 1994 and 1993 and the nine months
ended June 30, 1995 and 1996 . . . . . . . . . . . . . . . . . . F-10
Consolidated statements of stockholders' equity for the
years ended September 30, 1993, 1994 and 1995 and the
nine months ended June 30, 1996 . . . . . . . . . . . . . . . . F-11
Consolidated statements of cash flows for the years ended
September 30, 1993, 1994 and 1995 and the nine months
ended June 30, 1995 and 1996 . . . . . . . . . . . . . . . . . . F-12
Notes to consolidated financial statements . . . . . . . . . . . . F-13

FIDELITY LEASING CORPORATION:
Report of Independent Public Accountants . . . . . . . . . . . . . F-37
Balance sheets at December 31, 1993 and 1994 . . . . . . . . . . . F-38
Statements of operations for the years ended December 31,
1992, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . . . F-39
Statements of shareholders' investment for the years ended
December 31, 1992, 1993 and 1994 . . . . . . . . . . . . . . . . F-40
Statements of cash flows for the years ended December 31,
1992, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . . . F-41
Notes to financial statements . . . . . . . . . . . . . . . . . . . F-42

RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION

The unaudited pro forma financial information of Resource America, Inc. (the
"Company") presented below reflects the pro forma effects of the acquisition of
Fidelity Leasing Corporation, accounted for as a purchase transaction.

The unaudited pro forma balance sheet of Resource America, Inc. is presented as
if the acquisition had occurred on June 30, 1995. The unaudited pro forma
statement of operations of Resource America, Inc. for the period ended
September 30, 1994 give effect to the acquisition as if it had occurred on
October 1, 1993. The unaudited pro forma statements of operations of Resource
America, Inc. for the period ended June 30, 1995 give effect to the acquisition
as if it had occurred on October 1, 1994.

The pro forma financial information does not purport to be indicative of either
the financial position or results of operations that might have occurred had
the acquisition of Fidelity Leasing Corporation taken place at the dates or for
the periods indicated, or to project the Company's financial position or
results of operations for any future date or period.

The pro forma financial information has been prepared by the Company and all
calculations have been made by the Company based upon assumptions deemed
appropriate by the Company. Certain of these assumptions are set forth under
the Notes to Unaudited Pro Forma Financial Statements. Such pro forma
financial information should be read in conjunction with the Company's
historical financial statements and notes thereto contained in the Annual
Report on Form 10-KSB for the fiscal year ended September 30, 1994 and the
Quarterly Report on Form 10-QSB for the period ended June 30, 1995, and in the
historical financial statements of Fidelity Leasing Corporation acquired
included in Item 7(a) of Form 8-K.

RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1995
(UNAUDITED)

The following unaudited pro forma balance sheet combines the balance sheets of
Resource America, Inc. and Fidelity Leasing Corporation as of June 30, 1995 as
if the acquisition had occurred on that date.

<TABLE>
<CAPTION>
Resource Fidelity Pro Forma
Assets America, Inc. Leasing Corp. Adjustments Combined
- ------ ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash $ 2,960,623 $2,053,396 (a)$(3,350,772) $ 1,663,247
Short-term investments - 888,327 (a)(888,327) -
Computer inventory - 641,945 (a)(641,945) -
Other current assets 1,280,849 147,042 1,427,891
Other property and equipment,
oil and gas properties and
equipment (successful
efforts) 28,951,450 - - 28,951,450
Other 2,603,921 920,063 (a)(920,063) 2,603,921
Less accumulated
depreciation and depletion (18,748,041) (864,051) (a)864,051 (18,748,041)
Investments in Real Estate
Loans 17,577,784 - - 17,577,784

Restricted cash 1,885,170 - - 1,885,170

Other assets 1,803,007 552,861 (a)672,606 3,028,474
------------ ---------- ----------- -----------
Total assets $ 38,314,763 $4,339,583 $(4,264,450) $38,389,896
============ ========== ============ ===========

Liabilities and Stockholders' Equity
- ------------------------------------

Liabilities
- -----------
Current liabilities $ 906,381 $ 75,133 - $981,514
Long-term debt,
excluding current portion 10,561,075 - - 10,561,075
Deferred taxes 890,000 - - 890,000

Stockholders' Equity
- --------------------
Capital Stock 8,179 100 (a)(100) 8,179
Additional paid-in capital 19,214,210 3,362,322 (a)(3,362,322) 19,214,210
Retained earnings 9,782,232 902,028 (a)(902,028) 9,782,232
Treasury stock (2,533,040) - - (2,533,040)
Loan receivable from ESOP (514,274) - - (514,274)
------------ ---------- ----------- -----------
Total liabilities and
stockholders' equity $ 38,314,763 $4,339,583 $(4,264,450) $38,389,896
============ ========== =========== ===========

</TABLE>

See accompanying Notes to Unaudited Pro Forma Financial Statements

RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 1995
(UNAUDITED)

The following unaudited pro forma statement of operations combines the results
of Resource America, Inc. with the results of Fidelity Leasing Corporation for
the nine months ended June 30, 1995 as if the acquisition had occurred on
October 1, 1994.

<TABLE>
<CAPTION>
Resource Fidelity Pro Forma
America, Inc. Leasing Corp. Adjustments Combined
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Gross Revenue $8,360,488 $1,840,269 (b)$(203,000) $9,997,757
General and
administrative expense (1,628,828) (996,797) - (2,625,625)
Other expense (4,558,228) (186,794) (c)85,000 (4,660,022)
---------- ---------- --------- ----------

Income from operations 2,173,432 656,678 (118,000) 2,712,110

Gain(loss) on sale of property 1,291 4,458 - 5,749
---------- ---------- --------- ----------

Income before taxes 2,174,723 661,136 (118,000) 2,717,859

(Provision) benefit for
federal income taxes (372,000) - (d)(222,000) (594,000)
---------- ---------- --------- ----------

Net Income $1,802,723 $661,136 $(340,000) $2,123,859
========== ========== =========== ==========
Net income per common
share $2.39 $2.82
========== ==========
Weighted average common
shares outstanding 753,100 753,100
========== ==========

See accompanying Notes to Unaudited Pro Forma Financial Statements

RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
JUNE 30, 1995
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The following note describe the pro forma adjustments made to reflect the
acquisition of Fidelity Leasing Corporation:

(a) To record the purchase price of Fidelity Leasing Corporation:
-------------------------------------------------------------
DR<CR)
Cash $(3,350,772)
Short-term investments (888,327)
Computer Inventory (641,945)
Other property & equipment (920,063)
Accumulative depreciation 864,051
Other assets 672,606
Capital stock 100
Additional paid-in stock 3,362,322
Retained earnings 902,028

The pro forma allocation of the purchase price to the net assets of Fidelity
Leasing Corporation has been based on estimated asset values determined from
information prepared internally by management for purposes of pro forma
financial information.

(b) To reduce interest income for the reduction of cash spent to acquire
assets and cash Fidelity paid to its parent prior to the transaction

Revenue 203,000

Other expense (85,000)

(d) To record pro forma tax effects

Provision for federal
income taxes 222,000

RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
FOR YEAR ENDED SEPTEMBER 30, 1994
(UNAUDITED)

The following unaudited pro forma statement of operations combines the results
of Resource America, Inc. with the results of Fidelity Leasing Corporation for
the year ended September 30, 1994 as if the acquisition had occurred on October
1, 1993.

</TABLE>
<TABLE>
<CAPTION>
Resource Fidelity Pro Forma
America, Inc. Leasing Corp. Adjustments Combined
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Gross Revenue $ 7,986,661 $ 2,654,868 (a)$(300,000) $10,341,529
General and
administrative expense (1,708,008) (1,591,408) - (3,299,416)
Other expense (5,062,410) (278,176) (b) 143,000 (5,197,586)

Income from operations 1,216,243 785,284 (157,000) 1,844,527
Gain(loss) on sale of property (7,610) - - (7,610)
----------- ----------- --------- -----------
Income before taxes 1,208,633 785,284 (157,000) 1,836,917
(Provision) benefit for
federal income taxes 100,000 - (c) (273,000) (173,000)
----------- ----------- --------- -----------

Net Income $ 1,308,633 $ 785,284 $(430,000) $1,663,917
=========== =========== ========= ===========
Net income per common
share - primary $1.83 $2.33
=========== ===========
Weighted average common
shares outstanding 715,400 715,400
=========== ===========
Net income per
common share - fully
diluted $ 1.69 $2.15
=========== ===========
Weighted average
common shares
outstanding 774,700 774,700
=========== ===========

See accompanying Notes to Unaudited Pro Forma Financial Statements

RESOURCE AMERICA, INC. AND FIDELITY LEASING CORPORATION
SEPTEMBER 30, 1994
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The following note describe the pro forma adjustments made to reflect the
acquisition of Fidelity Leasing Corporation:

(a) To reduce interest income for the reduction of cash spent to acquire
assets and cash paid to its parent prior to the transaction

Revenue 300,000

(b) To adjust depreciation and amortization based on new value of assets

Other expense (143,000)

Provision for federal
income taxes 273,000

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Stockholders and Board of Directors
RESOURCE AMERICA, INC.

We have audited the accompanying consolidated balance sheets of Resource
America, Inc. and subsidiaries as of September 30, 1995 and 1994, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for each of the three years in the period ended September 30,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Resource America,
Inc. and subsidiaries as of September 30, 1995 and 1994, and the consolidated
results of their operations and cash flows for each of the three years in the
period ended September 30, 1995, in conformity with generally accepted
accounting principles.

Cleveland, Ohio
November 23, 1995

CONSOLIDATED BALANCE SHEET
Resource America, Inc.
September 30,
June 30, 1996 1995 1994
- -------------------------------------------------------------------------------
ASSETS (unaudited)
Current Assets
Cash and cash equivalents $ 4,224,835 $ 2,457,432 $ 2,597,556
Accounts and notes receivable 3,088,775 1,303,556 1,136,656
Inventory 118,674 128,488 135,614
Prepaid expenses and other
current assets 377,221 34,557 115,345
----------- ----------- -----------
Total current assets 7,809,505 3,924,033 3,985,171
- -------------------------------------------------------------------------------
Property and Equipment
Oil and gas properties and
equipment (successful efforts) 24,128,444 24,039,762 28,682,497
Gas gathering and transmission
facilities 1,527,723 1,514,127 1,485,323
Other 1,422,378 1,072,243 1,018,609
----------- ----------- -----------
27,078,545 26,626,132 31,186,429
Less accumulated depreciation,
depletion, and amortization (14,735,052) (14,043,455) (17,841,564)
----------- ----------- -----------
12,343,493 12,582,677 13,344,865
- --------------------------------------------------------------------------------
Investments in Real Estate Loans 19,082,740 17,991,415 10,385,587
- --------------------------------------------------------------------------------
Restricted Cash 994,851 904,409 5,768,439
Other Assets (less accumulated
amortization of $907,722
and $857,182) 2,041,605 2,147,430 1,311,620
----------- ----------- -----------
$42,272,194 $37,549,964 $34,795,682
=========== =========== ===========
- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 495,741 $ 721,673 $ 739,777
Accrued liabilities 322,660 516,066 426,640
Accrued income taxes - - 100,000
Current portion of long-term debt 93,000 91,000 88,000
----------- ----------- -----------
Total current liabilities 911,401 1,328,739 1,354,417
Long-term Debt, net of current portion 8,478,374 8,522,682 8,627,014
Deferred Income Taxes 2,367,000 1,147,000 674,000
Commitments and Contingencies - - -

- --------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred Stock, $1.00 par
value, 1,000,000 authorized
shares, none issued - - -
Common Stock, $.01 par value 20,463 8,179 8,179
Additional paid-in capital 21,767,988 19,214,210 19,136,420
Retained earnings 11,885,363 10,532,719 7,979,509
Less treasury stock, at cost (2,708,413) (2,721,437) (2,437,437)
Less loan receivable from ESOP (449,982) (482,128) (546,420)
----------- ----------- -----------
Total stockholders' equity 30,515,419 26,551,543 24,140,251
----------- ----------- -----------
$42,272,194 $37,549,964 $34,795,682
=========== =========== ===========

See accompanying notes to consolidated financial statements.

Consolidated Statement of Operations Resource America, Inc.

</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
June 30, (unaudited) Years Ended September 30,
1996 1995 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Real estate finance $ 5,580,242 $ 4,439,813 $ 6,114,258 $ 2,522,472 $ 605,809
Equipment leasing 3,785,543 - - - -
Energy: production 2,524,663 2,485,046 3,452,327 3,441,752 3,409,086
: services 1,417,739 1,533,471 1,879,001 2,079,800 2,445,115
Interest 141,749 102,084 148,331 135,546 106,174
----------- ----------- ----------- ----------- ----------
13,449,936 8,560,414 11,593,917 8,179,570 6,566,184
- -----------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Energy: Exploration and production 1,134,098 1,237,044 1,732,388 2,003,745 1,734,485
: services 734,419 780,250 1,026,136 1,131,457 1,105,130
Real estate 411,728 654,841 800,970 248,000 114,196
Equipment leasing 1,707,051 - - - -
General and administrative 1,597,780 1,828,754 2,265,036 1,900,917 1,841,003
Depreciation, depletion, and
amortization 1,059,245 1,045,448 1,334,956 1,346,602 1,477,986
Interest 642,766 844,277 1,091,027 310,332 41,040
Other - net (5,171) (3,632) (2,028) 22,274 (9,579)
----------- ----------- ----------- ----------- -----------
7,281,916 6,386,982 8,248,485 6,963,327 6,304,261
----------- ----------- ----------- ----------- -----------
Income from operations 6,168,020 2,173,432 3,345,432 1,216,243 261,923
- -----------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Executive compensation settlement - - - - 370,750
Gain (loss) on sale of property 7,165 1,291 (1,305) (7,610) 99,019
Loss on debt restructuring - - - - (97,500)
- ----------------------------------------------------------------------------------------------------------
Income before income taxes 6,175,185 2,174,723 3,344,127 1,208,633 634,192

Provision (benefit) for
income taxes 1,790,000 372,000 630,000 (100,000) 44,000
----------- ----------- ----------- ----------- -----------
Net income $ 4,385,185 $ 1,802,723 $ 2,714,127 $ 1,308,633 $ 590,192
=========== =========== =========== =========== ===========

Net income per common
share - primary $ 1.72 $ .86 $ 1.23 $ .64 $ .30
=========== =========== =========== =========== ===========
Weighted average common
shares outstanding 2,549,000 2,120,000 2,235,400 2,076,100 1,990,100
=========== =========== =========== =========== ===========

Net income per common
share - fully diluted $ 1.64 $ .82 $ 1.18 $ .62 $ .30
=========== =========== =========== =========== ===========
Weighted average common
shares outstanding 2,675,000 2,189,000 2,292,700 2,117,100 1,990,100
=========== =========== =========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

Consolidated Statement of Changes in Stockholders' Equity Resource America, Inc.
Years Ended September 30, 1995, 1994 and 1993 and Nine Months Ended
June 30, 1996

Additional Total
Common Stock Paid-in Retained Treasury Stock ESOP Share Stockholders'
Shares Amount Capital Earnings Shares Amount Amount Equity
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1992 817,912 $ 8,179 $19,041,360 $ 6,080,771 (114,893) $(2,238,307) $(685,715) $22,206,288
Treasury shares acquired (1,014) (12,669) (12,669)
Treasury shares issued to
employee benefit plan (4,940) 362 7,602 2,662
Cash dividends (87) (87)
Repayment of ESOP loan 75,004 75,004
Net income 590,192 590,192
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1993 817,912 8,179 19,036,420 6,670,876 (115,545) (2,243,374) (610,711) 22,861,390
Treasury shares acquired (15,857) (194,063) (194,063)
Warrants issued 100,000 100,000
Repayment of ESOP loan 64,291 64,291
Net income 1,308,633 1,308,633
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1994 817,912 8,179 19,136,420 7,979,509 (131,402) (2,437,437) (546,420) 24,140,251
Treasury shares acquired (21,298) (284,000) (284,000)
Cash dividends (160,917) (160,917)
Warrants issued 77,790 77,790
Repayment of ESOP loan 64,292 64,292
Net income 2,714,127 2,714,127
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1995 817,912 8,179 19,214,210 10,532,719 (152,700) (2,721,437) (482,128) 26,551,543
Issuance of shares
(unaudited) 10,000 100 77,400 77,500
Treasury shares
acquired (unaudited) (30,060) (540) (17,198) (47,258)
6% stock dividends
(unaudited) 82,688 826 2,452,478 (2,453,304) -
Five-for-two stock split
effected in the form of
a 150% stock dividend
(unaudited) 1,135,610 $11,358 (11,358) -
Treasury shares
issued to employee
benefit plan (unaudited) 13,001 1,440 30,222 43,223
Cash dividends (unaudited) (567,879) (567,879)
Warrants issued (unaudited) 40,959 40,959
Repayment of ESOP
loan (unaudited) 32,146 32,146
Net income (unaudited) 4,385,185 4,385,185
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1996 2,046,210 $20,463 $21,767,988 $11,885,363 (151,800) $(2,708,413) $(449,982) $30,515,419
(unaudited)
==================================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements

Consolidated Statement of Cash Flows Resource America, Inc.

Nine Months Ended
June 30, (unaudited) Years Ended September 30,
1996 1995 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,385,185 $ 1,802,723 $ 2,714,127 $ 1,308,633 $ 590,192
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation, depletion, and
amortization 1,059,245 1,045,448 1,334,956 1,346,602 1,477,986
Amortization of discount on
senior note and deferred
finance costs 55,987 55,361 74,020 21,684 -
Deferred income taxes 1,220,000 216,000 473,000 (160,000) 61,000
Gain on dispositions and
investments (3,432,951) (1,231,027) (1,727,227) (1,088,159) (99,019)
Property impairments and
abandonments 36,662 38,500 56,497 547,342 -
Change in operating assets
and liabilities:
(Increase) decrease in
accounts receivable (1,785,219) 250,411 81,084 (46,439) 19,420
(Increase) decrease in
prepaid expenses and
other current assets (342,664) (139,638) 80,788 70,805 (104,985)
Increase (decrease) in
accounts payable (225,932) (292,177) (291,272) 227,492 (239,226)
Increase (decrease) in
accrued income taxes - - (100,000) 100,000 -
Accretion of discount (776,488) 23,918 (1,175,887) (346,151) (256,000)
Increase (decrease) in
other current liabilities (193,407) (155,859) 50,494 300,804 (92,205)
(Increase) decrease in inventory 9,814 (4,007) 7,126 (24,147) 20,538
----------- ----------- ----------- ----------- ----------
Net cash provided by
operating activities 10,232 1,609,653 1,577,706 2,258,466 1,377,701
- ----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business,
less cash acquired - - (876,535) - -
Capital expenditures (766,154) (632,686) (817,139) (1,036,545) (563,343)
Proceeds from sale of assets 16,697,180 5,790,905 10,348,220 2,156,881 371,793
Increase in other assets (110,348) (32,107) (59,452) (540,774) 216,290
Increase in investments in real
estate loans (13,459,113) (12,142,822) (14,708,125) (3,097,812) (5,272,986)
----------- ----------- ----------- ----------- ----------
Net cash provided by (used in)
investing activities 2,361,565 (7,016,710) (6,113,031) (2,518,250) (5,248,246)
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings - 2,000,000 2,000,000 8,000,000 -
Dividends paid (567,879) - (160,917) - (87)
(Increase) decrease in
restricted cash (90,442) 3,883,268 4,864,030 (5,046,728) (721,711)
Increase in other assets - - - (642,425) -
Principal payments on debt (19,538) (2,517,541) (4,523,912) (21,248) (19,031)
Purchase of treasury stock (47,258) (95,603) (284,000) (194,063) (12,669)
Short-term borrowings - 2,500,000 2,500,000 - -
Proceeds from issuance of stock 120,723 - - - 2,662
----------- ----------- ----------- ----------- ----------
Net cash provided by (used in)
financing activities (604,394) 5,770,124 4,395,201 2,095,536 (750,836)
Increase (decrease) in cash and
cash equivalents 1,767,403 363,067 (140,124) 1,835,752 (4,621,381)
Cash and cash equivalents at
beginning of year 2,457,432 2,597,556 2,597,556 761,804 5,383,185
----------- ----------- ----------- ----------- ----------
Cash and cash equivalents at
end of year $ 4,224,835 $ 2,960,623 $ 2,457,432 $ 2,597,556 $ 761,804
=========== =========== =========== =========== ==========

</TABLE>

See accompanying notes to consolidated financial statements

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

NOTE 1 - NATURE OF OPERATIONS

Resource America, Inc. ("The Company") is a specialty finance company engaged in
three lines of business: the acquisition and resolution of commercial real
estate loans, commercial equipment leasing, and energy operations, including
natural gas and oil production. Based on net assets and net income, the asset
acquisition and resolution of commercial real estate loans is the dominant
business line at the current time. It is anticipated that the commercial
equipment leasing business line will grow substantially in relation to the
other two business lines over the next several years. The markets for the
Company's business lines are as follows: in energy, gas is sold to a number
of customers such as gas brokers and local utilities; oil is sold at the well
site to regional oil refining companies. In asset acquisition and resolution
the Company obtains its real estate loans from commercial banks and other
financial institutions. In commercial equipment leasing the Company will
market its equipment leasing product through vendor programs with equipment
manufacturers likely to generate $10 million or less annually in equipment
leases.

The Company's ability to acquire and resolve commercial real estate loans and
to find equipment lease transactions will be dependent on the continued
availability of funds. The availability of third-party financing for each of
these specialty finance businesses will be dependent upon a number of factors
over which the Company has limited or no control, including general conditions
in the credit markets, the size and liquidity of the market for the types of
real estate loans or equipment leases in the Company's portfolio and the
respective financial performance of the loans and equipment leases in the
Company's portfolio.

The Company's growth will also depend on its continued ability to generate
attractive opportunities for acquiring commercial real estate loans at a
discount and to originate equipment leases. The availability of loans for
acquisition on terms acceptable to the Company will be dependent upon a number
of factors over which the Company has no control, including economic
conditions, interest rates, the market for and value of properties securing
loans which the Company may seek to acquire, and the willingness of financial
institutions to dispose of troubled or under-performing loans in their
portfolios.

Mortgage loans and equipment leases are subject to the risk of default in
payment by borrowers and lessees.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Resource America,
Inc., and its wholly owned subsidiaries and its pro rata share of the assets,
liabilities, income, and expenses of the oil and gas partnerships in which
the Company has an interest. All material intercompany transactions have been
eliminated. All per share amounts and references to numbers of shares have
been restated to give effect to 6% stock dividends paid in January 1996 and
April 1996 and a five-for-two stock split (effected in the form of a stock
dividend) in May 1996.

OIL AND GAS PROPERTIES
The Company follows the successful efforts method of accounting. Accordingly,
property acquisition costs, costs of successful exploratory wells, all
development costs, and the cost of support equipment and facilities are
capitalized. Costs of unsuccessful exploratory wells are expensed when
determined to be nonproductive. The costs associated with drilling and
equipping wells not yet completed are capitalized as uncompleted wells,
equipment, and facilities. Geological and geophysical costs and the costs of
carrying and retaining undeveloped properties, including delay rentals, are
expensed as incurred. Production costs, overhead, and all exploration costs
other than costs of exploratory drilling are charged to expense as incurred.

Unproved properties are assessed periodically to determine whether there has
been a decline in value, and if such decline is indicated, a loss is
recognized. The Company compares the carrying value of its oil and gas
producing properties to the estimated future cash flow from such properties,
less applicable income taxes in order to determine whether the carrying value
of such properties should be reduced. No adjustment was necessary as of
June 30, 1996, September 30, 1995, 1994 or 1993.

On an annual basis, the Company estimates the costs of future dismantlement,
restoration, reclamation, and abandonment of its gas and oil producing
properties. Additionally, the Company evaluates the estimated salvage value
of equipment recoverable upon abandonment. At June 30, 1996, the Company's
evaluation of equipment salvage values was greater than or equal to the costs
of future dismantlement, restoration, reclamation, and abandonment.

DEPRECIATION, DEPLETION, AND AMORTIZATION
Proved developed oil and gas properties, which include intangible drilling and
development costs, tangible well equipment, and leasehold costs, are amortized
on the unit-of-production method using the ratio of current production to the
estimated aggregate proved developed oil and gas reserves. The net book value
of producing properties is limited to the value of their future net cash flow
based on unescalated prices and costs less a provision for estimated income
taxes.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

Depreciation of property and equipment, other than oil and gas properties, is
computed using the straight-line method over the estimated economic lives,
which range from 3 to 25 years.

Intangible assets consist primarily of contracts acquired through acquisitions
recorded at fair value on their acquisition dates and the excess of the
acquisition cost over the fair value of the net assets of a business acquired
(goodwill). The contracts are being amortized on a declining balance method
over their respective estimated lives, ranging from 5 to 13 years. Goodwill
is being amortized on a straight-line basis over 15 years.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating the
fair value of each class of financial instruments for which it is practicable
to estimate that value.

For cash and cash equivalents, receivables and payables, the carrying amounts
approximate fair value because of the short maturity of these instruments. For
long-term debt, including current maturities, the fair value of the Company's
long-term debt approximates historically recorded cost since interest rates
approximate market.

For investments in real estate loans, the Company believes the carrying amounts
of the loans are reasonable estimates of their fair values considering the
nature of the loans and the estimated yield relative to the risks involved.

USE OF ESTIMATES
Preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.

REVENUE RECOGNITION

Real Estate Finance Revenues

The difference between the Company's cost basis in a loan and the sum of
projected cash flows from, and the appraised value of the underlying property
is accreted into income over the estimated life of the loan using a method
which approximates the level interest method. Projected cash flows from the
property are reviewed on a regular basis and changes to the projected amounts
reduce or increase the amounts accreted into interest income over the
remaining life of the loan.

Equipment Leasing

Equipment leasing is comprised of management fees, brokerage fees and a share
of net income from funds in which a subsidiary of the Company serves as general
partner. Management fees are earned for management services provided to the
funds. Such fees are recognized as earned.

Energy

Working interest, royalties and override revenues are recognized based on
production. Well Service income is recognized as revenue as services are
performed.

ACCOUNTING STANDARDS
In March 1995, the Financial Standards Board (FASB) issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of." This standard required the review of long-lived assets for
impairment. SFAS No. 121 is required to be adopted for financial statements
with fiscal years beginning after December 15, 1995 and requires the cumulative
effect of the accounting change to be reported in net income in the year of
adoption. The Company believes adoption of this standard will not have a
material adverse impact on the Company's financial position or results of
operation.

In October 1995, FASB issued SFAS No. 123, "Accounting for Stock Based
Compensation." The Company recognizes compensation expense with respect to
stock option grants to employees using the intrinsic value method prescribed
by Accounting Principles Board Opinion No. 25. The Company does not intend to
elect the fair value method of accounting for employee stock-based compensation
encouraged, but not required, by Statement of Financial Accounting Standards
No. 123, "Accounting for Stock Based Compensation."

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

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

RESTRICTED CASH
The Company's restricted cash is invested in short-term highly-liquid
investments. Classified as a noncurrent asset, it represents collateral for a
portion of the Company's long-term debt.

Nine Months Ended June 30, Years Ended September 30,
Supplemental disclosure of cash flow information: 1996 1995 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------

Cash paid (refunded) during the year for:
<S> <C> <C> <C> <C> <C>
Interest $776,780 $987,591 $1,103,527 $22,812 $32,793
Income Taxes 570,000 168,182 254,981 (40,000) 41,844
</TABLE>

LIMITED PARTNERSHIPS
A substantial portion of the Company's activities and revenues are attributable
to limited partnerships ("Partnerships") in which it serves as general partner
and assumes the customary rights and obligations for the Partnerships. As the
general partner in these various limited partnerships, the Company is liable
for partnership liabilities and can be liable to limited partners if it breaches
its responsibilities with respect to the operations of the limited partnerships.
Investments in leasing partnerships are accounted for on the equity basis.

The Company is entitled to receive management fees, reimbursement for
administrative costs, and to share in the Partnerships' revenue and costs and
expenses according to the respective Partnership agreements. Such fees and
reimbursements are recognized as income and are included in energy services
and equipment leasing revenue. Amounts reimbursed for costs incurred as
operator of certain oil and gas partnership properties for the nine months
ended June 30, 1996 and the years ended September 30, 1995, 1994 and 1993 were
$112,000, $144,000, $178,000 and $362,000, respectively, and have been offset
against general and administrative expense. The Company includes in its
operations the portion of the oil and gas Partnerships' revenues and expenses
applicable to its interests therein.

INCOME TAXES
The Company recognizes deferred tax assets and liabilities for the estimated
future tax effects attributable to temporary differences between the financial
statement and tax bases of assets and liabilities and carryforwards utilizing
enacted rates. Deferred tax provision or benefit represents the change during
the period in the deferred tax asset and liability balances.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

EARNINGS PER SHARE
Earnings per common share - primary are determined by dividing net income by the
weighted average number of common shares and common share equivalents
outstanding during each period. Common share equivalents include shares
issuable under the terms of various stock option and warrant agreements (see
Notes 4 and 7). Fully diluted earnings per share reflect additional dilution
related to stock options and warrants due to the use in that computation of the
market price of the Company's shares at the end of the period, which price is
higher than the average price for the period.

RECLASSIFICATIONS
Certain reclassifications have been made to the 1993, 1994 and 1995 consolidated
financial statements to conform with the June 30, 1996 presentation.

INTERIM FINANCIAL INFORMATION
The unaudited consolidated financial statements for the nine months ended June
30, 1996 and 1995 are presented for comparative purposes only and have been
prepared on a basis substantially consistent with that of the audited financial
statements included herein. In the opinion of management, such unaudited
financial statements include all adjustments, all of which are of a normal and
recurring nature, considered necessary for a fair presentation.

NOTE 3 - TRANSACTIONS WITH RELATED PARTIES

The Company administers the activities of certain partnerships that it sponsors
(see Note 2). Energy service revenues primarily represent services provided to
Partnerships and joint ventures managed by the Company.

The Company acquired limited partners' interests in and purchased wells from
various oil and gas partnerships for which the Company served as the general
partner. The aggregate purchase price of these acquisitions was $133,000 and
$623,000 in 1995 and 1994, respectively.

In accordance with industry practice, the Company charges each producing well in
the Partnerships and joint ventures a fixed monthly overhead fee and a
proportionate share of certain lease operating expenses. These charges
are to reimburse the Company for certain operating and general and
administrative expenses.

The Company has been engaged to provide financial reporting and data processing
services to certain real estate partnerships sponsored by others. The general
partners of such partnerships may be deemed to be indirect affiliates or
associates of an officer of the Company. Financial services revenues include
$25,000, $46,000 and $219,000 in 1995, 1994 and 1993, respectively, for the
billings of these services. Amounts due from these real estate partnerships
amounted to $27,600 at September 30, 1994.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

Until April 1996, an officer of the the Company was of counsel to Ledgewood Law
Firm, P.C., a law firm which provides legal services to the Company. Such firm
was paid $562,000 during fiscal 1995 for legal services, primarily related to
the purchase and restructuring of real estate mortgages. Such firm was paid
$464,000 during fiscal year 1994, at which time Mr. Cohen was a principal of
such firm, for legal services primarily related to the purchase of real estate
mortgages and the placement of the Senior Note.

In addition, during 1994 the Company retained an individual who is associated
with the Chairman of the Company in other business ventures, to perform due
diligence services in connection with the placement of the $8,000,000 senior
secured note referred to in Note 4. The Company paid approximately $76,000 to
this individual during 1994.

The Company holds commercial real estate loans of borrowers whose underlying
properties are managed by Brandywine Construction and Management, Inc. ("BCMI").
The Company has advanced funds to certain of these borrowers for improvements on
their properties which have been performed by BCMI. In five instances, the
President of BCMI has also acted as the general partner of the borrower. The
Chairman of the Company is Chairman of the Board of Directors and a minority
shareholder (approximately 8%) of BCMI. BCMI has agreed to subordinate its
management fees to receipt by the Company of minimum required debt service
payments under the obligations held by the Company.

The Company also maintains normal banking and borrowing relationships with
Jefferson Bank, a subsidiary of JeffBanks, Inc. The Chairman of the Company and
his spouse are officers and directors of JeffBanks, Inc. (and his spouse is
Chairman and Chief Executive Officer of Jefferson Bank and JeffBanks, Inc.), and
are principal shareholders thereof. The Company borrowed $2.5 million from
Jefferson Bank in the first quarter of fiscal 1995 under terms which the Company
believes were no less favorable to it than those available from independent
third parties. The loan was repaid within fiscal 1995. The Company anticipates
that it may effect other borrowings in the future from Jefferson Bank; it
anticipates that any such borrowings will be on terms similar to those which
could be obtained by an unrelated borrower.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

In December, 1994, the Company acquired a loan with a face amount of $3,000,000
from California Federal Bank, FSB, at a cost of $1,671,695. The loan is secured
by a property owned by a borrower whose general partner is the President of
BCMI. The Chairman of the Company is a limited partner in such partnership.
The borrower refinanced the Company's loan in September 1995, applying
$1,975,000 of the proceeds to the repayment of the Company's loan. As a result,
the Company obtained a gain on its investment of $303,305, while maintaining a
continuing interest in the loan of approximately $1 million. In August 1994,
the Company acquired from third parties a loan, in the original principal amount
of $3,550,000 (and with a then-outstanding balance of $4,388,644), for an
investment of $1,612,674. The borrower is a limited partnership of which Mr.
Lubin, a director of the Company, is currently the general partner. A director
of the Company assumed such position after the Company's acquisition of the
loan. Previously, the general partner had been the President of BCMI. The
borrower subsequently refinanced the loan with another third party, and repaid
the Company $934,000, leaving the Company with a net investment of $419,039. In
April 1996, the Company provided $303,000 of mortgage financing to a partnership
controlled by the President of BCMI for the purchase by such partnership of a
property owned, through foreclosure, by Jefferson Bank. After first mortgage
financing, the Company had net investment of $110,000. The Company leases its
executive offices and asset acquisition and resolution headquarters in
Philadelphia from a partnership of which an officer of the Company is the
general partnership and Mr. Cohen is a limited partner.

During fiscal year 1992, the parties to an action entitled KRUGLIAK V. COHEN,
ET AL., agreed to a litigation settlement whereby certain officers of the
Company accepted a three-year compensation arrangement providing for specified
base salary and incentive compensation amounts. As consideration for entering
into the new compensation arrangement, such officers relinquished $450,000 of
compensation paid to them in previous fiscal years. Said settlement also
resulted in reimbursement to the plaintiff by the Company of $79,250 for
certain legal fees and expenses incurred by him.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

NOTE 4 - LONG-TERM DEBT

Long-term debt consists of the following:

June 30, September 30,
1996 1995 1994
Mortgage note payable to a bank, secured by
real estate, monthly installments of
approximately $3,300 including interest at
3/4% above the prime rate through May 2002
(rate of 9.5% at September 30, 1995) $ 221,809 $ 241,347 $ 265,262

Loan payable to a bank, secured by a
certificate of deposit, 20 equal semiannual
installments of $32,143 through February,
2003, and quarterly payments of interest at
84% of the prime rate through July 1996
(rate of 7.35% at September 30, 1995), at
which time the rate converts to 1/2% above
the prime rate through 2003 (See Note 6) 449,982 482,128 546,419

9.5% senior secured note payable, interest
due semi-annually, principal due May 2004 7,899,583 7,890,207 7,903,333
--------- --------- ---------
8,571,374 8,613,682 8,715,014
Less amounts payable in one year 93,000 91,000 88,000
--------- --------- ---------
$8,478,374 $8,522,682 $8,627,014
========== ========== ==========

The long-term debt maturing over the next five years is as follows:
1996 - $91,000; 1997 - $94,000; 1998 - $97,000; 1999 - $101,000;
and 2000 - $105,000.

In May 1994, the Company privately placed with an insurance company at 9.5%, a
senior secured note in the principal amount of $8,000,000 together with an
immediately exercisable detachable warrant to purchase, at any time through
May 24, 2004, 449,440 shares, subject to adjustment, of the Company's common
stock at an exercise price of $3.38 per share. The value assigned to the warrant
($100,000) has been accounted for as paid-in capital, resulting in a discount
which is being amortized on a straight-line basis over the life of the note.
The note is collateralized by substantially all of the Company's oil and gas
properties and certain of the Company's Real Estate Loans (see Note 11). Among
other restrictions, the note agreement limits the payment of dividends, requires
the insurance company's consent to mergers and the sale of substantial assets,
limits the Company's incurring additional indebtedness, and requires the
maintenance of certain financial ratios. At September 30, 1995 and 1994,
the Company was in compliance with such covenants.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

NOTE 5 - INCOME TAXES

The following table details the components of the Company's income tax expense.

Nine Months Ended Years Ended September 30,
June 30, 1996 1995 1994 1993
- --------------------------------------------------------------------------------
Provision (benefit) for
federal income tax
Deferred $1,220,000 $473,000 $(160,000) $44,000
Current 570,000 157,000 60,000 -
---------- -------- --------- -------
$1,790,000 $630,000 $(100,000) $44,000

A reconciliation between the statutory federal income tax rate and the Company's
effective federal income tax rate is as follows:

June 30, September 30,
1996 1995 1994 1993
- -------------------------------------------------------------------------------
Statutory tax rate 34% 34% 34% 34%
Statutory depletion (4) (4) (18) (16)
Non-conventional fuel credits (1) (1) (4) (14)
Adjustment of prior year's accruals - (3) (7) (5)
Adjustment to valuation allowance
for deferred tax assets - (7) (9) 16
Other - - (4) (8)
----- ----- ----- -----
29% 19% (8%) 7%

The components of the net deferred tax liability are as follows:

June 30, September 30,
1996 1995 1994
--------- --------- ----------
Deferred tax assets:
Statutory depletion carryforward - $ 634,000 $1,300,000
Investment tax credit carryforwards
(less valuation allowance of
$271,000 in 1994) - 122,000 113,000
Alternative minimum tax credit
carryforwards 200,000 221,000 268,000
Interest receivable - 120,000 -
Other items, net - - 25,000
--------- ---------- ----------
200,000 1,097,000 1,706,000

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

Deferred tax liabilities:
Interest receivable (180,000) - -
Excess of tax over book depreciation,
depletion, and amortization (2,267,000) (2,138,000) (2,311,000)
ESOP benefits (120,000) (106,000) (69,000)
--------- ---------- ----------
(2,567,000) (2,244,000) (2,380,000)
--------- ---------- ----------
Net deferred tax liability $(2,367,000) $(1,147,000) $ (674,000)
=========== =========== ==========

At September 30, 1995, the Company had a $122,000 investment tax credit
carryforward, and a $1,864,000 statutory depletion carryforward available for
federal income tax reporting purposes. Additionally, the Company has an
alternative minimum tax credit carry over of $221,000 which can reduce regular
income taxes in future years.

The investment credit carryforward, if unused, will expire in varying amounts
from 1996 to 2001. There is no expiration date for the utilization of statutory
depletion carry overs and alternative minimum tax credit carry overs.

NOTE 6 - STOCKHOLDERS' EQUITY

REPURCHASE OF COMMON STOCK
In 1993, the Board of Directors of the Company authorized management to develop
a definitive program to offer to purchase all shares of its common stock held in
accounts of fewer than 281 shares (fewer than 100 shares prior to the 1996 stock
dividends and splits). The purpose of this offer was to reduce the relatively
high costs incurred by the Company in servicing its many stockholders with small
holdings. Management devised a plan to purchase such shares at a price of $4.27
per share to holders of record as of the close of business on July 15, 1994.
Approximately 160,000 shares were eligible for purchase under the plan. In
September and October, 1994, the Company purchased 39,048 and 9,177 shares held
in 386 and 89 accounts, respectively. In addition to the shares acquired under
the definitive program, in August, 1995, the Company repurchased 36,730 shares
in a private and unrelated transaction at a cost of $183,000.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

NOTE 7 - EMPLOYEE BENEFIT PLANS

EMPLOYEE STOCK OWNERSHIP PLAN
During 1989, the Company established an Employee Stock Ownership Plan ("ESOP"),
to which it sold 168,540 newly-issued shares for $1,200,000. The ESOP is a
qualified non-contributory retirement plan to acquire shares of the Company's
common stock for the benefit of all employees 21 years of age or older and
who have completed 1,000 hours of service for the Company. Contributions to the
ESOP are made at the discretion of the Board of Directors. The ESOP borrowed
the funds to purchase the shares under a seven year bank term loan that was
guaranteed by the Company. In February 1993, this loan was retired and
refinanced by a loan from the Company, which borrowed the funds for such loan
from another bank (see Note 4).

The stock purchased by the ESOP with the money borrowed is held by the ESOP
trustee in a "suspense account." On an annual basis, a portion of the common
stock is released from the "suspense account" and allocated to participating
employees. Any dividends on ESOP shares are used to pay principal and interest
on the loan. As of September 30, 1995, there were 127,672 shares allocated to
participants and 24,073 suspense shares. Compensation expense related to the
plan is based upon principal and interest payments to the bank less dividends
paid to ESOP shares, such expense amounted to $91,300, $94,800 and $89,500 for
the years ended September 30, 1995, 1994 and 1993, respectively.

The loan from the bank to the Company is payable in semiannual installments
through February 1, 2003. The loan from the Company to the ESOP is payable on a
quarterly basis through August 1, 1996. Both the loan obligation and the
unearned benefits expense (a reduction in shareholders' equity) will be reduced
by the amount of any loan principal payments made by the Company and ESOP,
respectively.

EMPLOYEE SAVINGS PLAN
The Company has an Employee Retirement Savings Plan and Trust under Section
401(k) of the Internal Revenue Code which allows employees to defer up to 10%
of their income on a pretax basis through contributions to the savings plan. The
Company matches up to 100% of each employee's contribution. Included in general
and administrative expenses are $28,100, $20,000 and $16,900 for the Company's
contributions for the years ended September 30, 1995, 1994, and 1993,
respectively.

STOCK OPTIONS
Under the Company's 1984 Key Employee Stock Option Plan, officers and certain
key employees may be granted options to purchase shares of stock at an option
price of not less than the fair market value on the date of the grant. The plan
also provides for the grant of Stock Appreciation Rights ("SAR's") to accompany
the grant of options. A right entitles the holder to benefit from market
appreciation in the Company's stock subject to the right between the date of
grant and the date of exercise without requiring any payment on the part of the
holder. Upon exercise of a right, the holder is entitled to receive an amount of
stock (or, at the election of the Board of Directors, cash) equal in value to
the amount of such appreciation.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

A total of 56,180 shares was originally reserved for issuance under the plan.
The exercise of SAR's on 44,944 shares has reduced the number of shares reserved
to 11,236 for which options were outstanding at September 30, 1995, at an
exercise price of $2.76 per share. To exercise any part of an option, an
optionee must remain in the continuous employment of the Company for one year
after the date of grant.

In January 1990, the stockholders approved the Resource America, Inc., 1989 Key
Employee Stock Option Plan ("Plan"). The Plan, for which 196,630 shares have
been reserved, provides for the issuance of Incentive Stock Options and Non-
qualified Stock Options ("Options") and SAR's. The Plan is administered by a
Compensation Committee ("Committee") of the Board of Directors consisting of at
least two members of the Board, neither of whom can receive Options or SAR's
under the Plan. The Committee may grant to eligible employees Options to
purchase shares or SAR's and, at its discretion, may set terms and conditions
required of a recipient as a condition to his exercise of the Option or SAR. At
September 30, 1995, Options for a total of 191,012 shares were outstanding at a
weighted-average exercise price of $2.88 per share.

Options under either plan become exercisable as to 25% of the optioned shares
each year after the date of grant, and expire not later than ten years after
grant.

A summary of the changes in shares under option for both plans follows:

(number of shares) Years ended September 30,
1995 1994 1993
- -------------------------------------------------------------------------------
Outstanding, October 1 202,248 202,248 136,236
Expired at $5.78 through $9.34 per share (4,213)
Canceled at $5.78 through $9.34 per share (132,023)
Granted at $2.76 and $3.04 per share 202,248
Outstanding, September 30 202,248 202,248 202,248
Exercisable, September 30 101,124 50,562 -
Available for grant, September 30 5,618 5,618 5,618

NOTE 8 - FORMATION OF LIMITED PARTNERSHIPS

In 1990, the Company sponsored the Resource America 1990 Pipeline Income Program
("1990 Program"), a limited partnership which purchased a pipeline system from
the Company.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

The Company had guaranteed that the limited partners would receive cash
distributions during each of the first two years of the operation of the 1990
Program equal to 12% of their capital contributions to the 1990 Program. To the
extent that cash flow to the 1990 Program was less than 12%, the Company
contributed sufficient capital to the 1990 Program to allow the guaranteed
distributions to be made. The Company believes the amount contributed
($299,000), for which it is entitled to be repaid on a preferential basis upon
termination of the 1990 Program, will be realized upon final disposition of the
pipeline.

In December 1989, the Company had a final closing on its Resource America 1989
Pipeline Income Program ("1989 Program"). Similar to the 1990 Program, the
Company had guaranteed a 12% return on invested capital to investors during the
first two years of the 1989 Program's operations. The Company contributed
sufficient capital to the 1989 Program to allow the guaranteed distributions to
be made. The Company believes the amount contributed ($394,000), for which it is
entitled to be repaid on a preferential basis upon termination of the 1989
Program, will be realized upon final disposition of the pipeline.

The limited partners in both Programs have the right to sell their interests in
the Programs to the Company following the fifth anniversary of the respective
Program's closing at a price equal to 4.5 times the cash flow per unit during
the fifth year of partnership operations, subject to a maximum sale price of
$50,000 per unit. The limited partners may also cause the sale of the pipeline
after the fifth year of partnership operations.

In October 1994 and January 1995, in accordance with the terms of the limited
partnership agreements, the Company purchased 20 units in the 1989 Program for a
total cost of approximately $240,000. In October 1995, the Company extended an
offer to purchase 36 units in the 1990 Program for approximately $9,700 per
unit. In November,1995, a total of four units were repurchased by the Company
at a total cost of approximately $38,000.

NOTE 9 - ACQUISITION

Effective September 1, 1995, the Company acquired Fidelity Leasing Corporation
("FLC"), an equipment leasing company, for $1,456,000 in cash (including related
expenses) and the assumption of $312,000 in liabilities. The acquisition was
accounted for as a purchase and, accordingly, FLC's assets and liabilities have
been recorded at their estimated fair values at the date of acquisition. The
purchase price resulted in an excess of costs over net assets acquired
(goodwill) of approximately $558,000, which will be amortized on a straight line
basis over 15 years. FLC manages seven equipment leasing partnerships.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

The following pro forma results of operations give effect to the above
acquisition as though it had occurred on October 1, 1993:

(in thousand except per share amounts) 1995 1994
- -------------------------------------------------------------------------------
Revenue $ 13,473 $ 10,342
Net Income 2,865 1,664
Net Income per common share 1.28 .83

The pro forma results of operations have been prepared for comparative purposes
only and do not purport to present actual operating results had the acquisition
been made at the beginning of each year, or of results which may occur in the
future.

NOTE 10 - INDUSTRY SEGMENT INFORMATION AND MAJOR CUSTOMERS

The Company operates in three principal industry segments - real estate, energy
and leasing. Segment data for the years ended September 30, 1995, 1994, and
1993 are as follows:

(in thousands of $) 1995 1994 1993
- ----------------------------------------------------------------------------
Revenue:
Real estate $ 6,114 $ 2,522 $ 606
Energy 5,332 5,522 5,854
Leasing - - -
Corporate 148 136 106
------- ------- ------
11,594 8,180 6,566
======= ======= ======

Depreciation, Depletion, and
Amortization:
Real estate 37 37 37
Energy 1,254 1,268 1,404
Leasing - - -
Corporate 44 41 37
------- ------- -------
1,335 1,346 1,478
======= ======= =======
Operating Profit (Loss):
Real estate 4,444 1,819 242
Energy 1,085 488 1,447
Leasing - - -
Corporate (2,184) (1,091) (1,427)
------- ------- -------
3,345 1,216 262
======= ======= =======

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

Identifiable Assets:
Energy 13,790 14,570 15,615
Real estate 18,225 10,489 7,578
Leasing 991 - -
Corporate 4,544 9,737 2,038
------- ------- -------
37,550 34,796 25,231
======= ======= =======

Capital Expenditures:
Real Estate 172 2 -
Energy 637 982 524
Leasing - - -
Corporate 8 53 39
------- ------- -------
$ 817 $ 1,037 $ 563
======= ======= =======

Operating profit (loss) represents total revenue less operating expenses,
excluding interest and general corporate expenses. A portion of executive
salaries, included in their entirety in general and administrative expenses on
the Company's Consolidated Statement of Operations, have been allocated to each
segment based on the time spent in each area of the business.

The Company's natural gas is sold under contract to various purchasers. Gas
sales to one purchaser individually approximated 15% and 16% of total revenues
for the years ended September 30, 1995 and 1994, respectively. Interest and
fees earned from one borrower approximated 24% of total revenues for the year
ended September 30, 1995.

NOTE 11 - INVESTMENTS IN REAL ESTATE LOANS

At September 30, 1995 and 1994,the Company held real estate loans having
aggregate face values of $51,690,000 and $24,929,000, respectively, which were
being carried at aggregate costs of $17,991,000 and $10,386,000, respectively.
The following is a summary of the changes in the carrying value of the Company's
investments in real estate loans for the years ended September 30, 1995 and
1994:

1995 1994

Balance, beginning of period $ 10,385,587 $ 7,072,888
New real estate loans 13,588,000 2,996,263
Additions to existing loans 1,299,696 717,525
Accretion of discount 1,175,886 602,151
Collections of principal (2,555,285) (1,003,240)
Cost of mortgages sold (5,902,469) -
------------ -----------
Balance, end of period $ 17,991,415 $ 10,385,587
============ ===========

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

Investments in Real Estate Loans at September 30 consists of:

September 30,
1995 1994

Property 001 Subordinated wraparound note, face
value of $4,500,000, secured by
residential real estate located in
Pittsburgh, PA, interest at 14.5%,
due October 31, 1998 $ 2,334,850 $ 2,189,589

Property 002 Mortgage note, face value of
$1,080,000, secured by residential
real estate located in Philadelphia,
PA, interest at 12%, due October 31,
1998. In June 1995, the Company
sold a senior participation in this
mortgage for $600,000, resulting in
a gain of $100,000 and a remaining
face value due the Company of
$562,000 147,972 574,453

Property 003 Mortgage note, face value of
$1,312,000, secured by residential
real estate located in Philadelphia,
PA, interest at 2 1/2% over the
monthly national median annualized
cost of funds for SAIF-insured
institutions as announced by the
Federal Deposit Insurance Corporation,
due October 31, 1998. In June 1995,
the Company sold a senior participation
in this mortgage for $896,000,
resulting in a gain of $209,000 and a
remaining face value due the Company
of $479,000 189,347 833,305

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

Property 004 Mortgage note, face value of $4,234,000,
secured by commercial real estate located
in Pittsburgh, PA, interest at 10.6%, due
October 31, 1998. In June 1995, the
Company sold a senior participation in
this mortgage for $840,000, resulting in
a gain of $146,000 and a remaining face
value due the Company of $3,498,000 675,805 1,226,403

Property 005 Mortgage note, face value of $4,389,000,
secured by residential real estate located
in Philadelphia, PA, interest at 2% over
the yield of one-year United States
Treasury securities, due July 31, 1998.
In January 1995, the owner of the Property
refinanced the mortgage note with an
unaffiliated party, simultaneously paying
the Company $934,000 toward principal
and interest on this loan - 1,352,925

The Company received a note, subordinated
to the unaffiliated party, face value of
$3,559,000, secured by an unrecorded deed
on the same property and on the same terms
in exchange for the above referenced
mortgage note 724,422 -

Property 006 Mortgage note, face value of $1,798,000,
secured by residential real estate located
in Margate, NJ, interest at the Chase
Manhattan Bank prime rate (but not less
than 9% nor greater than 15.5%), due
January 1, 2003. In June 1995, the
Company sold a senior participation in
this mortgage for $685,000, resulting in a
gain of $92,000 and a remaining face value
due the Company of $1,370,000 424,749 1,102,015

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

Property 007 Note, face value of $1,776,000, secured
by a judgment lien, relating to real
estate located in St. Cloud, MN, interest
at 10%, due December 31, 2014 489,196 615,976

Property 008 Mortgage note, face value of $4,629,000,
secured by commercial real estate located
in Alexandria, VA, interest at 1/2% over
the Maryland National Bank prime rate, due
October 31, 1998. In June 1995, the owner
of the property refinanced the mortgage
note with an unaffiliated party,
simultaneously paying the Company $840,000
toward principal and interest on this loan - 2,132,921

The Company received a note, subordinated
to the unaffiliated party, face value of
$4,165,000, secured by the same property
and on the same terms, in exchange for the
above referenced mortgage note 1,469,899 -

Property 009 Wraparound note, face value of $12,000,000
consisting of a first mortgage held by the
Company of $9,000,000 secured by commercial
real estate located in Washington, D.C., a
note, face-value of $350,000, and a
$3,000,000 second mortgage held by an
unrelated party, interest at 12%, due
November 30, 1998 9,252,716 -

Property 010 Mortgage note, face value of $1,211,000,
secured by residential real estate
located in Philadelphia, PA, interest at
3% over the Federal Home Loan Bank of
Pittsburgh rate, due September 2, 1999.
In June 1995, the Company sold a senior
participation in this mortgage for
$600,000, resulting in a gain of
$227,000 and a remaining face value due
the Company of $710,000 107,450 358,000

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

Property 011 Mortgage note, face value of $900,000,
secured by commercial real estate located
in Washington, D.C., interest at 1 1/2%
over the First Union National Bank rate,
due September 30, 1999. In June 1995, the
Company sold a senior participation in
this mortgage for $685,000, resulting in
a gain of $77,000 and a remaining face
value due the Company of $317,000 289,504 -

Property 012 Mortgage notes, face value of $1,495,000,
secured by residential real estate
located in Philadelphia, PA, interest at
2% over the Mellon Bank prime rate, due
October 31, 1999. In August, 1995, the
owner of the property refinanced the
mortgage note with an unaffiliated party,
simultaneously paying the company
$655,000 toward principal and interest
on this loan. The Company now holds
a note, subordinated to the unaffiliated
party, face value of $747,000, secured
by the same property and on the same
terms 545,077 -

Property 013 Mortgage notes, face value of $1,962,000,
secured by residential real estate
located in Philadelphia, PA, varying
interest rates from 9 1/2% to 14.5%, due
December 2, 1999. In June 1995, the
Company sold a senior participation in
this mortgage for $1,160,000, resulting
in a gain of $381,000 and a remaining
face value due the Company of $931,000 195,092 -

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

Property 014 Mortgage note, face value of $3,000,000,
secured by commercial real estate located
in Pasadena, CA, interest at 2.75% over
the average cost of funds to FSLIC-
insured savings and loan associations,
11th District (but not less than 5.5% nor
greater than 15.5%), due May 1, 2001.
In September, 1995, the Company sold a
senior participation in this mortgage for
$2,000,000 resulting in a gain of
$499,000 and a remaining face value
due the Company of $975,000 295,608 -

Property 015 Subordinated wraparound note, face value
of $3,500,000, secured by residential
real estate located in New Concord, NC,
interest at 12%, due August 25, 2000 146,765 -

Property 016 Subordinated wraparound note, face value
of $5,198,000, secured by real estate
located in Rancho Cordova, CA, interest
at 8.5%, due December 31, 2019 702,963 -
$ 17,991,415 $ 10,385,587

During June 1994, the Company received $2,099,000 including accrued interest of
$128,000 for a mortgage loan with a face value of $3,435,000 and a carrying
value, exclusive of interest, of $976,000. This transaction resulted in a
pre-tax gain of $1,095,000, which is included in real estate finance revenues.

As referenced above, in June and September 1995, the Company sold senior
participations in seven and one real estate loans, respectively, to an insurance
company, pursuant to which the Company agreed to replace any non-performing loan
with a similar but performing loan. In addition, the Company issued to the
insurance company warrants to purchase 112,360 and 237,262 shares of the
Company's common stock at the then market prices of $3.38 and $4.18 per share,
respectively. The value assigned to the warrants ($77,800) has been accounted
for as paid-in capital.

Further, as referenced above, owners of three properties on which the Company
held mortgage notes refinanced those Notes with unaffiliated parties. The
Company received payments of principal and interest on these mortgage notes
as well as new notes, subordinated to the new first mortgage notes placed on the
properties by the unaffiliated parties.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

NOTE 12 - SPECIAL STOCKHOLDERS MEETING

On October 16, 1995, the Company's shareholders authorized an amendment to the
Certificate of Incorporation of the Company to effect a division of the
Company's Common Stock into two classes, Class A Common Stock and Class B Common
Stock. The Company's existing Common Stock is designated as Class A Common
Stock. Class B Common Stock is currently reserved for issuance upon the
exercise of certain warrants held and yet to be issued under prior commitment to
Physician's Insurance Company of Ohio. This action did not affect the number of
authorized or outstanding shares of Common or Preferred Stock. As a result, of
the 3,500,000 shares of Common Stock authorized, 2,500,000 shares is authorized
as Class A Common Stock and 1,000,000 shares is authorized as Class B Common
Stock, of which 1,868,580 shares and zero shares, respectively, were outstanding
at that date. Class A Common Stock and Class B Common Stock have the same
relative rights in all matters except for the election of directors.

At this same meeting, the shareholders also approved an amendment to the
Company's 1989 Key Employee Stock Option Plan to increase the number of shares
as to which options may be granted from 196,630 shares to 393,260 shares.

On September 9, 1996, the Company's shareholders authorized an amendment to the
Certificate of Incorporation of the Company to increase the total number of
shares of capital stock authorized to 9 million, of which 6.5 million are Class
A Common Stock, 1.5 million are Class B Common Stock and 1 million are Preferred
Stock.

NOTE 13 - SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)

Results of operations for oil and gas producing activities:

Year Ended September 30,
(in thousands of $) 1995 1994 1993
Revenues $ 3,452 $ 3,442 $ 3,409
Production costs (1,502) (1,369) (2,016)
Exploration expenses (230) (635) (256)
Depreciation, depletion, and
amortization (922) (977) (1,121)
Income taxes - - -
Results of operations for
producing activities $ 798 $ 461 $ 16

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

CAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES
The components of capitalized costs related to the Company's oil and gas
producing activities (less impairment reserve of $30,000 in 1995, $49,954 in
1994 and $25,759 in 1993) are as follows:

1995 1994 1993

Proved properties $ 22,416,417 $ 26,903,003 $ 27,832,733
Unproved properties 649,962 703,317 944,970
Pipelines, equipment, and
other interests 2,487,508 2,561,500 2,429,527
Total 25,553,887 30,167,820 31,207,230

Accumulated depreciation,
depletion, and
amortization (13,589,493) (17,381,995) (17,664,949)
Net capitalized costs $ 11,964,394 $ 12,785,825 $ 13,542,281

COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES
The costs incurred by the Company in its oil and gas activities during 1995,
1994 and 1993 are as follows:

1995 1994 1993
Property acquisition costs:
Unproved properties $ 5,373 $ 220 $ 72,181
Proved properties 388,392 794,585 98,824
Exploration costs 217,941 144,334 256,710
Development costs 211,313 214,747 693,250

OIL AND GAS RESERVE INFORMATION

The Company's estimates of net proved developed oil and gas reserves and the
present value thereof have been verified by E.E. Templeton & Associates, Inc.,
an independent petroleum engineering firm.

The Company's oil and gas reserves are located within the United States. There
are numerous uncertainties inherent in estimating quantities of proved reserves
and in projecting future net revenues and the timing of development
expenditures. The reserve data presented represent estimates only and should not
be construed as being exact. In addition, the standardized measures of
discounted future net cash flows may not represent the fair market value of
the Company's oil and gas reserves or the present value of future cash flows of
equivalent reserves, due to anticipated future changes in oil and gas prices and
in production and development costs and other factors for which effects have not
been provided.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

The standardized measure of discounted future net cash flows is merely
information provided for the financial statement user as a common base for
comparing oil and gas reserves of enterprises in the industry.

Gas Oil
(mcf) (bbls)

Balance-September 30, 1992 10,028,681 251,245
Purchase of reserves in-place 375,074 17,833
Current additions - -
Sales of reserves in-place (121,051) (71)
Revision to previous estimates 1,361,841 23,605
Production (1,178,727) (30,788)

Balance-September 30, 1993 10,465,818 261,824
Purchases of reserves in-place 2,835,913 53,111
Current additions - -
Sales of reserves in-place (1,865) (66)
Revisions to previous estimates (26,065) 15,992
Production (1,161,685) (34,002)

Balance-September 30, 1994 12,112,116 296,859
Purchases of reserves in-place 893,104 23,284
Current additions 430,330 3,641
Sales of reserves in-place (79,294) (628)
Revisions to previous estimates 624,471 14,423
Production (1,198,245) (36,420)

Balance-September 30, 1995 12,782,482 301,159

Presented below is the standardized measure of discounted future net cash flows
and changes therein relating to proved developed oil and gas reserves. The
estimated future production is priced at year-end prices. The resulting
estimated future cash inflows are reduced by estimated future costs to develop
and produce the proved developed reserves based on year-end cost levels. The
future net cash flows are reduced to present value amounts by applying a 10%
discount factor.

Notes to Consolidated Financial Statements
Resource America, Inc.
(Information subsequent to September 30, 1995, and for the nine months ended
June 30, 1995, is unaudited)

1995 1994 1993
- -----------------------------------------------------------------------------
Future cash inflows $ 30,257,454 $ 30,334,494 $ 26,796,867
Future production and
development costs (15,199,823) (15,071,229) (13,190,680)
Future income tax expense (1,260,450) (961,919) (647,770)
------------ ------------ ------------
Future net cash flows 13,797,181 14,301,346 12,958,417
Less 10% annual discount
for estimated timing of
cash flows (5,987,477) (6,340,083) (5,676,568)
------------ ------------ ------------
Standardized measure of
discounted future net
cash flows $ 7,809,704 $ 7,961,263 $ 7,281,849
============ ============ ============

The following table summarizes the changes in the standardized measure of
discounted future net cash flows from estimated production of proved developed
oil and gas reserves after income taxes.

1995 1994 1993
- -------------------------------------------------------------------------------
Balance, beginning of period $ 7,961,263 $ 7,281,849 $ 6,773,327
Increase (decrease) in discounted
future net cash flows:
Sales and transfers of oil and gas,
net of related costs (1,869,399) (1,344,839) (1,378,633)
Net changes in prices and production
costs (186,722) (239,502) 827,673
Revisions of previous quantity
estimates 417,560 69,501 950,130
Extensions, discoveries, and improved
recovery less related costs 252,604 - -
Purchases of reserves in-place 612,008 1,916,920 326,022
Sales of reserves in-place, net of
tax effect (46,306) (1,425) (72,945)
Accretion of discount 841,775 760,714 719,382
Net change in future income taxes (240,218) (131,190) 95,200
Other 67,139 (350,765) (958,307)
----------- ----------- -----------
Balance, end of period $ 7,809,704 $ 7,961,263 $ 7,281,849
=========== =========== ===========

FIDELITY LEASING CORPORATION
AND SUBSIDIARY

Financial Statements and Report of
Independent Certified Public Accountants
as of December 31, 1994 and 1993

- --------------------------------------------------------------------------------

Two Commerce Square
Suite 3100
2001 Market Street
Philadelphia, PA 19103-7080
215 561-4200
FAX 215 561-1066

Grant Thornton [logo]
GRANT THORNTON LLP Accountants and
Management Consultants

The U.S. Member Firm of
Grant Thornton International

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
Fidelity Leasing Corporation:

We have audited the accompanying consolidated balance sheets of Fidelity Leasing
Corporation (a Delaware corporation) and Subsidiary as of December 31, 1994 and
1993, and the related consolidated statements of earnings, changes in
shareholder's equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Fidelity Leasing
Corporation and Subsidiary as of December 31, 1994 and 1993 and the results of
their earnings and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.

/s/ Grant Thornton LLP

Philadelphia, Pennsylvania
February 23, 1995

FIDELITY LEASING CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets

<TABLE>
<CAPTION>
December 31,
ASSETS 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $1,577,751 $3,078,015
Investment securities held to maturity 1,656,688 -
Due from Fidelity Leasing Income Funds 14,553 3,488
Computer inventory 247,416 379,963
Investment in Partnerships, at equity 41,379 35,732
Equipment, net of accumulated depreciation of $896,031
and $809,855, respectively 76,014 151,943
Contractual servicing rights under partnership
management agreements, net of accumulated amortization
of $538,165 and $346,165, respectively 473,511 665,511
Other assets 64,283 78,041
---------- ----------

Total assets $4,151,595 $4,392,693
========== ==========
LIABILITIES & SHAREHOLDER'S EQUITY
- ------------------------------------------------------------------------------------------
Accounts payable and accrued expenses $ 203,477 $ 211,461
Due to Fidelity Leasing Income Funds 107,908 1,047,274
Deferred income 9,390 89,678
Commissions payable 21,120 19,864
---------- ----------

Total liabilities 341,895 1,368,277

Shareholder's Equity:
Common stock, $1 par value, authorized 1,000 shares;
issued and outstanding, 100 shares 100 100
Additional paid-in capital 3,362,322 3,362,322
Retained earnings (accumulated deficit) 447,278 (338,006)
---------- ----------

Total shareholder's equity 3,809,700 3,024,416
---------- ----------

Total liabilities and shareholder's equity $4,151,595 $4,392,693
========== ==========

The accompanying notes are an integral part of this statement.

FIDELITY LEASING CORPORATION AND SUBSIDIARY
Consolidated Statements of Earnings

</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31,
REVENUES 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Fee income $2,344,021 $ 2,569,287
Share of net income from limited partnerships 240,019 327,866
Interest and other income 70,828 36,857
---------- -----------

Total revenues 2,654,868 2,934,010
---------- -----------

EXPENSES
- ---------------------------------------------------------------------------------------
General and administrative expenses 2,450,527 2,870,859
Recovery of expenses from Fidelity Leasing Income Funds (859,119) (1,001,672)
---------- -----------

Total expenses 1,591,408 1,869,187
---------- -----------

Income before depreciation and amortization of intangibles 1,063,460 1,064,823

Depreciation (86,176) (122,445)
Amortization of intangibles (192,000) (192,000)
---------- -----------
Net earnings $ 785,284 $ 750,378
========== ===========
</TABLE>

The accompanying notes are an integral part of this statement.

FIDELITY LEASING CORPORATION AND SUBSIDIARY
Consolidated Statements of Shareholder's Equity

for the years ended December 31, 1994 and 1993

<TABLE>
<CAPTION>
RETAINED
EARNINGS
COMMON PAID-IN (ACCUMULATED
STOCK CAPITAL DEFICIT) TOTAL
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, January 1, 1993 $100 $3,362,322 $(1,088,384) $2,274,038

Net earnings - - 750,378 750,378
---- ---------- ----------- ----------
Balance, December 31, 1993 100 3,362,322 (338,006) 3,024,416

Net earnings - - 785,284 785,284
---- ---------- ----------- ----------
Balance, December 31, 1994 $100 $3,362,322 $ 447,278 $3,809,700
==== ========== =========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

FIDELITY LEASING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31,
1994 1993
- ----------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net earnings $ 785,284 $ 750,378
----------- -----------
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Share of net income from limited partnerships (240,019) (327,866)
Depreciation and amortization of intangibles 278,176 314,445
(Increase) decrease in amounts due from
Fidelity Leasing Income Funds
(Increase) decrease in computer inventory (11,065) (3,488)
132,547 (241,877)
(Increase) decrease in other, net 3,996 250,430
Increase (decrease) in accounts payable, accrued expenses
and commissions payable (6,728) (707,633)
Increase (decrease) in amounts due to
Fidelity Leasing Income Funds, net (939,366) 1,121,164
Increase (decrease) in deferred income (80,288) 35,007
Distributions from limited partnerships 244,134 327,866
----------- -----------

Net cash provided by operating activities 166,671 1,518,426
----------- -----------

Cash flows from investing activities:
Capital expenditures (10,247) (10,091)
Purchase of investment securities held to maturity (1,656,688) --
----------- -----------

Net cash used in investing activities (1,666,935) (10,091)
----------- -----------

Net increase (decrease) in cash and
cash equivalents (1,500,264) 1,508,335

Cash and cash equivalents, beginning of year 3,078,015 1,569,680
----------- -----------

Cash and cash equivalents, end of year $ 1,577,751 $ 3,078,015
=========== ===========
</TABLE>

The accompanying notes are an integral part of this statement.

FIDELITY LEASING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993

NOTE A - ORGANIZATION
- --------------------------------------------------------------------------------

Fidelity Leasing Corporation (FLC) is a wholly-owned subsidiary of FML
Leasehold, Inc. (FML), a wholly-owned subsidiary of The Fidelity Mutual Life
Insurance Company (In Rehabilitation) (FMLICO). FLC is incorporated in the state
of Delaware.

FLC was formed to negotiate, structure and market leasing transactions. FLC acts
as the general partner of the Fidelity Leasing income Funds (Funds) which have
been formed to acquire and lease to third parties various types of computer
equipment. FLC also acts as a broker on certain leasing transactions.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------

1. Consolidation

The consolidated financial statements include the accounts of FLC and First
Radnor Equities, Incorporated (FRE), a wholly-owned subsidiary of FLC. FRE is
an inactive wholesale broker-dealer for investment products and is registered
with the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc. During 1994 and 1993, FRE sold no units in limited
partnerships which were sponsored by affiliates.

2. Investment Securities Held to Maturity

FLC adopted Statement of Financial Accounting Standard (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" on January 1,
1994. This new standard requires investments in securities to be classified in
one of three categories: held to maturity, trading and available for sale. Debt
securities that FLC has the positive intent and ability to hold to maturity are
classified as held to maturity and are reported at amortized cost. As FLC does
not engage in security trading, the balance, if any, of its debt securities and
equity securities are classified as available for sale. Net unrealized gains and
losses for securities available for sale are required to be recognized as a
separate component of shareholder's equity and excluded from the determination
of net income. FLC's investment securities consist of certificates of deposits
and U.S. Government Securities with maturities of one year or less and cost
approximates market. FLC adopted this new standard for the year ended December
31, 1994 with no resulting financial statement impact. Prior to the adoption of
SFAS No. 115, investment securities were carried at cost which approximates
market.

3. Computer Inventory

Computer inventory is carried at lower of cost or market value.

4. Equipment

Equipment consists primarily of computer equipment and furniture and fixtures
and is stated at cost less accumulated depreciation. Depreciation is provided
for using the straight-line method over the estimated useful lives of the
related assets, which are generally three to seven years.

5. Contractual Services Rights under Partnership Management Agreements

Contractual services rights relate to the acquisition by FLC of certain leasing
operations in January 1989. A portion of the price paid is attributable to the
fair market value of the management contracts FLC had with the Funds that
existed at that time. Under the terms of those management agreements, FLC
renders a variety of services for which it earns a management fee. These service
rights are being amortized over the remaining lives of the individual Funds,
ranging from one to four years.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
- --------------------------------------------------------------------------------

6. Revenue Recognition

Fee income for services rendered is comprised of management fees and brokerage
fees earned by FLC. Management fees are earned for management services provided
to the Funds by FLC. These fees generally range from 4% to 6% of gross rental
payments received by the Funds on equipment under operating leases and 2% and 3%
on equipment under full pay-out leases. Such fees are recognized as earned.

In addition, FLC may be entitled to a share of the sales proceeds upon the
ultimate disposition of equipment by the Funds of up to 3%.

7. Income Taxes

FLC adopted, effective January 1, 1993, Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for income Taxes." Under the liability
method specified by SFAS No. 109, deferred tax assets and liabilities are
determined based on the differences between the financial statement and tax
basis of assets and liabilities as measured by the enacted tax rates which will
be in effect when these differences reverse. Deferred tax expense is the result
of changes in deferred tax assets and liabilities. The only difference between
assets and liabilities for financial statement and tax return purposes is
contractual servicing rights under partnership management contracts. No deferred
income taxes have been provided for this difference based on management's
evaluation of the likelihood of realization by FML, since FML has had
significant tax losses in the past few years.

The deferred method, used in years prior to 1993, required FLC to provide for
deferred tax expense based on certain items of income and expense which were
reported in different years in the financial statements and the tax returns as
measured by the tax rate in effect for the year the difference occurred. The
change from the deferred method to the liability method of accounting for income
taxes had no effect on reported earnings. The cumulative effect of the change in
accounting related to years prior to 1993 was $-0-.

FLC files a consolidated tax return for federal tax purposes with its parent,
FML, and is party to a tax sharing agreement with FML. Under the provisions of
the tax sharing agreement, FML is responsible for FLC's tax liability. Due to
the amortization of the intangible assets, FLC will have no taxable income for
federal purposes. Therefore, no provision for federal taxes has been made on
FLC's consolidated balance sheets or consolidated statements of earnings for the
years ended December 31, 1994 and 1993.

FLC files separate state income tax returns and has provided approximately
$37,000 and $16,000 for such taxes in 1994 and 1993, respectively, which is
recorded in general and administrative expenses in the accompanying consolidated
financial statements.

8. Statements of Cash Flows

For purposes of reporting cash flows, FLC considers all highly liquid debt
instruments purchased with an initial maturity of three months or less to be
cash and cash equivalents.

9. Pension Plan

FLC has a defined contribution plan (401K) covering substantially all employees.
This plan provides for voluntary company contributions equal to 50% of
contributions made by employees up to a maximum of $3,000 per individual
employee. There were no contributions made to the plan by the employees or FLC
during 1994. FLC contributed $44,500 to the plan during the year ended December
31, 1993.

During 1994, the plan's Trustee has filed for termination of the plan with the
internal Revenue Service. Upon approval of termination from the Internal Revenue
Service, all assets will be distributed to the plan's participants.

NOTE C - INVESTMENT IN PARTNERSHIPS
- --------------------------------------------------------------------------------

The investment in partnerships includes FLC's investment in each of the Funds.
FLC has contributed $1,000 to each of the Funds and states its investment in the
Funds at equity.

FLC, as the general partner in each of the Funds, is allocated net income and
net losses of the Funds and is entitled to receive cash distributions from the
Funds. Net losses of the Funds are generally allocated 99% to the limited
partners and 1% to FLC. FLC will generally be allocated net income equal to the
amount of cash to be distributed from the Funds to FLC at the close of each
month (but not less than 1% of net income), and the balance will be allocated to
the limited partners.

Cash distributions from the Funds to FLC equal 1% of cash distributed until the
limited partners have received an amount equal to the purchase price of their
units in the Funds, plus a cumulative compounded priority return, as defined
in the partnership agreement of the respective Funds. Thereafter, as provided by
the respective partnership agreements, the cash distribution to FLC increases to
15% for two of the Funds and 10% for the other six Funds, with the excess
distributed to the limited partners.

NOTE D - NOTE PAYABLE
- --------------------------------------------------------------------------------

FLC has the availability of a $3,000,000 unsecured line of credit from FMLICO.
The rate of interest on any amount outstanding is one percent in excess of the
90 day U.S. Treasury Bill Rate (effective rate of 5.56% at December 31, 1994).
In addition, FLC has the availability of a $2,000,000 secured line of credit
from Royal Bank of Pennsylvania (Royal Bank). The line is secured by a
conditional assignment of the management fees due FLC from the Funds. The rate
of interest on any amount outstanding is prime plus two percent (effective rate
of 10.50% at December 31, 1994). The primary purpose of these loan facilities is
to enable FLC to finance equipment purchases in brokered transactions on a
short-term basis. The line from FMLICO remains in effect until either FMLICO or
FLC gives written notice of termination to the other. The line from Royal Bank
is renewed on an annual basis, with a current expiration date of June 30, 1995.

NOTE E - COMMITMENTS AND CONTINGENCIES
- --------------------------------------------------------------------------------

1. Noncancellable Operating Leases

FLC leases office space under agreements which expire at varying dates through
1998. FLC has also entered into an agreement to lease certain computer equipment
through 1996. Total expenses under these leases were $418,000 and $341,000 in
1994 and 1993, respectively. FLC recovers a portion of these expenses through
sub-lease arrangements entered into for part of its office space and through the
reimbursement of its computer lease expenses from the Funds. In 1994 and 1993,
FLC recovered $193,000 and $80,000, respectively, in expenses from sub-leasing a
portion of its office space and $39,000 and $34,000, respectively, in expenses
from the reimbursement of its computer lease expenses from the Funds.

Future minimum lease payments, excluding sub-let rental payments and computer
lease expense reimbursements from the Funds, as of December 31, 1994 for the
above leases are:

Years ending December 31,
-------------------------
[S] [C]
1995 $304,000
1996 215,000
1997 26,000
1998 18,000
--------
$563,000
========

NOTE E - COMMITMENTS AND CONTINGENCIES - CONTINUED
- --------------------------------------------------------------------------------

Future sub-let rental payments and computer lease expense reimbursements due FLC
are $198,000 in 1995 and $191,000 in 1996. The net rental expense for the years
ended December 31, 1994 and 1993 were approximately $186,000 and $226,000,
respectively.

2. Employment Contracts

FLC entered into employment contracts with certain key executives. These
contracts call for, among other things, base compensation and incentive bonuses.
Aggregate approximate future commitments under these contracts as of December
31, 1994 are $98,000 in 1995 and $33,000 in 1996.

NO PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION NOT CONTAINED
IN THIS PROSPECTUS AND ANY ___________ Shares
INFORMATION OR REPRESENTATION
NOT CONTAINED HEREIN MUST NOT BE
RELIED UPON AS HAVING BEEN [LOGO]
AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY RESOURCE AMERICA, INC.
SECURITIES TO WHICH IT RELATES Common Stock
OR AN OFFER TO ANY PERSON IN ANY ------------------
JURISDICTION WHERE SUCH AN OFFER PROSPECTUS
WOULD BE UNLAWFUL. NEITHER THE ------------------
DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, FRIEDMAN, BILLINGS,
UNDER ANY CIRCUMSTANCES, CREATE RAMSEY & CO., INC.
ANY IMPLICATION THAT THERE HAS ____________, 1996
BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE
HEREOF.

- ---------------------------------
TABLE OF CONTENTS
- ---------------------------------
PAGE

Available Information. . . . . . . . . . . . . .
Prospectus Summary . . . . . . . . . . . . . . .
Summary Consolidated Financial Data. . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . .
Use of Proceeds. . . . . . . . . . . . . . . . .
Price Range of Common Stock
and Dividend Policy . . . . . . . . . . . . . .
Capitalization . . . . . . . . . . . . . . . . .
Selected Consolidated Financial Data . . . . . .
Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . .
Business . . . . . . . . . . . . . . . . . . . .
Management . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain
Beneficial Owners and Management. . . . . . . .
Description of Capital Stock . . . . . . . . . .
Underwriting . . . . . . . . . . . . . . . . . .
Legal Matters. . . . . . . . . . . . . . . . . .
Experts. . . . . . . . . . . . . . . . . . . . .
Consolidated Financial Statements. . . . . . . .

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Registration and Filing Fees:

Securities Exchange Commission . . . . . . . . . . . . $

NASD . . . . . . . . . . . . . . . . . . . . . . . . .

Total Registration and Filing Fees . . . . . . . . . . $

Printing and Engraving* . . . . . . . . . . . . . . . . .

Legal* . . . . . . . . . . . . . . . . . . . . . . .

Blue Sky* . . . . . . . . . . . . . . . . . . . . .

Accounting* . . . . . . . . . . . . . . . . . . . . .

Transfer Agent . . . . . . . . . . . . . . . . . . . . .

Total Other Expenses* . . . . . . . . . . . . . . . . . .

Total Expenses . . . . . . . . . . . . . . . . . . . . . $
=======

- ------------------------------------
*Estimate

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by Section 102(b)(7) of the Delaware General Corporation
Law, the Company's Certificate of Incorporation provides that directors of the
Company shall not be personally liable to the Company or its shareholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, relating to prohibited dividends or
distributions or the repurchase or redemption of stock, or (iv) for any
transaction from which the director derives an improper personal benefit. In
addition, the Company's By-laws provide for indemnification of the Company's
officers and directors to the fullest extent permitted under Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, or otherwise,

the Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

The Company maintains directors' and officers' liability insurance
against any actual or alleged error, misstatement, misleading statement, act,
omission, neglect or breach of duty by any director or officer, excluding
certain matters including fraudulent, dishonest or criminal acts or self-
dealing.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The Company issued to PICO, during 1994, 1995 and 1996, warrants to
purchase 983,150 shares of Common Stock. See "Description of Capital Stock -
Warrants" in the Prospectus. These securities were issued pursuant to the
exemption contained in Section 4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

a. Exhibits.
--------
1.* Form of Underwriting Agreement.

3.(a)** Articles of Incorporation of registrant.
(b)** By-Laws of registrant.

5.* Opinion of Ledgewood Law Firm, P.C., as to the legality of the
securities being registered (including consent).

10.(a)** 9.5% Senior Secured Note to PICO.
(b)** Form of Warrant issued to PICO.
(c) Contribution Agreement between Resource Leasing, Inc. and
Abraham Bernstein.
(d) Employment Agreement between Fidelity Leasing, Inc. and
Abraham Bernstein.
(e)** 1984 Key Employee Stock Option Plan
(f)** 1989 Employee Stock Ownership Plan.
(g)** 1989 Key Employee Stock Option Plan.

11.** Statement re: computation of per share earnings.

21.** Subsidiaries of the registrant.

23.(a) Consents of Grant Thornton LLP
(b) Consent of E.E. Templeton & Associates, Inc.
(c)* Consent of Ledgewood Law Firm, P.C. (included in Exhibit 5).

24. Power of Attorney (included as part of signature pages to this
registration statement).

- --------------------
* To be filed by amendment.
** Exhibit 3(a) appears as an exhibit to registrant's Annual Report on
Form 10-K ("10-K Report") for its 1983 fiscal year and in its definitive proxy
statement for its September 9, 1996 Special Meeting of Shareholders; Exhibit
3(b) appears as an exhibit to registrant's 10-K Report for its 1984 fiscal
year; Exhibits 10(a) and 10(b) appear as exhibits to registrant's 10-K Report
for its 1995 fiscal year; Exhibits 10(e) and 10(g) appear as exgibits to
registrant's May 2, 1996 registration statements of Form S-8; Exhibit 10(f)
appears as an exhibit to registrant's 10-K Report for its 1989 fiscal year;
Exhibit 11 appears as an exhibit to registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996; and Exhibit 21 appears as an exhibit
to registrant's 10-K Report for its 1995 fiscal year.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions of registrant's Certificate of
Incorporation, Bylaws or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned registrant undertakes that:

1. For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

2. For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

ITEM 18. FINANCIAL STATEMENTS AND SCHEDULES

(a) Inapplicable.
(b) Schedule IV - Mortgage Loans on Real Estate

INDEX TO FINANCIAL STATEMENT SCHEDULES

Report of Independent Accountants on Schedule . . . . . . . . . . . . . . . II-5
Schedule IV - Mortgage loans on real estate . . . . . . . . . . . . . . . . II-6

All other schedules have been omitted becasue they are either not applicable
or the information required has been disclosed in the financial statements and
related notes included int his Prospectus.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON SCHEDULES

Board of Directors
RESOURCE AMERICA, INC.

In connection with our audit of the consolidated financial statements of
Resource America, Inc. and subsidiaries referred to in our report dated
November 23, 1995, which is included in the Prospectus constituting Part I of
this Registration Statement, we have also audited Schedule IV as of September
30, 1995. In our opinion, this schedule presents fairly, in all material
respects, the information to be set forth therein.

Cleveland, Ohio
November 23, 1995

RESOURCE AMERICA, INC. & SUBSIDIARIES

SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

SEPT 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
PERIODIC CARRYING SUBJECT TO
INTEREST FINAL MATURITY PAYMENT PRIOR FACE AMOUNT AMOUNT OF DELINQUENT
DESCRIPTION RATE DATE TERMS LIENS OF MORTGAGES MORTGAGES(b) INTEREST
SECOND LIEN LOANS

RENTAL APARTMENTS
<S> <C> <C> <C> <C> <C> <C> <C>

Apartment bldg, Fixed interest rate December 31, 2002 (a) $2,730,000 $4,500,000 $2,334,850 -
Pittsburgh PA, of 14.5%

Rental Apartments, Two loans with fixed From June 1, (a) 6,631,000 9,782,925 1,211,375 $189,382
Rental Apartments, interest rates of 1998 to
6 loans, original 12%; all remaining August 25,
loan amounts loans have varying 2000
ranging from rates from 7.3%
$1,080,000 to to 14.5%
$3,500,000

Apartment bldg, 2% over the yield 10/31/1998 (a) 1,123,000 3,558,857 724,422 -
Philadelphia, of one-year U.S.
PA Treasury securities

Apartment bldg, Prime plus 2% 10/31/1999 (a) 900,000 1,495,555 545,077 -
Philadelphia,
PA

COMMERCIAL

Office bldg, Fixed rate of 10.6% 10/31/1998 (a) 840,000 4,234,402 675,805 53,353
Pittsburgh, PA

Office bldg, Prime plus 2.5% 9/30/1999 (a) 685,000 900,000 289,504 -
Washington, D.C.

Office bldg, Fixed interest rate 11/30/1998 (a) - 12,000,000 9,252,716 -
Washington, D.C. of 12%

Office/Retail Prime plus 1.5% 7/31/1998 (a) 898,000 4,165,000 1,469,899 -
bldg, Alexandria,
VA

Retail bldg, Fixed rate of 10.% 12/31/2014 (a) 2,252,000 1,776,246 489,196 -
St. Cloud, MN

SUNRISE Fixed rate of 8.5% 12/31/2019 (a) 2,400,000 5,198,000 702,963 -

Industrial bldg, 2.75% over the 5/1/2001 (a) 2,000,000 3,000,000 295,608 -
Pasadena, CA average cost of
funds to FSLIC-
Insured savings
and loan institu-
tions ---------- ---------- ---------- -------
20,459,000 50,610,985 17,991,415 242,735
</TABLE>

Reconciliation of the total carrying amount of real estate loans for the year
follows:

Balance at October 1, 1994 $10,385,587
Additions during the period:
New mortgage loans $13,588,000
Amortization of discount 1,175,886
Additions of existing loans 1,299,696 16,063,582
---------------------------
$26,449,169

Deductions during the period:
Collections of principal 2,555,285
Cost of mortgages sold 5,902,469 8,457,754
---------------------------

Balance at September 30, 1995 $17,991,415
===========

(a) All net cash flows from the property
(b) Cost for Federal Income tax purposes equals $18,035,108

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Philadelphia, Commonwealth of Pennsylvania, on October 10, 1996.

Resource America, Inc.

By: /s/ Edward E. Cohen
-------------------------------------
Edward E. Cohen, Chairman of the
Board of Directors, Chief Executive
Officer and President

<PAGE II-8>
POWER OF ATTORNEY
-----------------

Each person whose signature appears below in so signing also makes,
constitutes and appoints Edward E. Cohen and Michael L. Staines, and each of
them acting alone, his true and lawful attorney-in-fact, with full power of
substitution, for him in any and all capacities to execute and cause to be filed
with the Securities and Exchange Commission any and all amendments and post-
effective amendments to this registration statement with exhibits thereto and
other documents in connection therewith, and hereby ratifies and confirms all
that said attorney-in-fact or said attorney-in-fact's substitute or substitutes
may do or cause to be done by virtue hereof.

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

/s/ Edward E. Cohen Date: October 10, 1996
- --------------------------------------------- -----------------------------
EDWARD E. COHEN, Chairman of
the Board of Directors,
Chief Executive Officer,
President and Director
(Chief Executive Officer)

/s/ Carlos C. Campbell Date: October 10, 1996
- --------------------------------------------- -----------------------------
CARLOS C. CAMPBELL, Director

/s/ John R. Hart Date: October 10, 1996
- --------------------------------------------- -----------------------------
JOHN R. HART, Director

/s/ Andrew M. Lubin Date: October 10, 1996
- --------------------------------------------- -----------------------------
ANDREW M. LUBIN, Director

/s/ Alan D. Schreiber, M.D. Date: October 10, 1996
- --------------------------------------------- -----------------------------
ALAN D. SCHREIBER, M.D.,
Director

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

/s/ Michael L. Staines Date: October 10, 1996
- --------------------------------------------- -----------------------------
MICHAEL L. STAINES, Senior
Vice President, Secretary
and Director

/s/ John S. White Date: October 10, 1996
- --------------------------------------------- -----------------------------
JOHN S. WHITE, Director

/s/ Nancy J. McGurk Date: October 10, 1996
- --------------------------------------------- -----------------------------
NANCY J. MCGURK, Vice
President - Finance
(Chief Accounting Officer)

<PAGE>
EXHIBIT 10(c)

CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT (the "Agreement") made this 5th day of March,
1996, by and between RESOURCE LEASING, INC. ("RLI"), a Delaware corporation and
ABRAHAM BERNSTEIN ("BERNSTEIN").
WHEREAS, Bernstein is experienced in the business of leasing equipment the
cost of which is generally under $50,000 ("Small Ticket Leasing").
WHEREAS, RLI and Bernstein desire to conduct all of their future business
in the Small Ticket Leasing field through a newly-formed corporation in which
RLI will own all of the initial equity and of which Bernstein initially will be
the chairman, chief executive officer and president and will own stock options.
NOW, THEREFORE, the parties hereto intending to be legally bound hereby
agree as follows:

1. Formation of Newco. RLI will promptly form a new corporation
------------------
("Newco") under the laws of the Commonwealth of Pennsylvania or the State of
Delaware (depending on tax and name availability considerations), having
authorized capital stock consisting solely of 20,000,000 shares of Common Stock,
par value $.01 per share, and having Articles and Bylaws in the form attached
hereto as Exhibit A and Exhibit B, (which may be changed in a way not adverse
--------- ---------
to Bernstein solely depending on the state of incorporation) respectively. RLI
will contribute to Newco the sum of Two Million Dollars ($2,000,000) in cash
(promptly as such cash may be required by the Company), and the right to use the
name of "Fidelity Leasing." In exchange, RLI will receive nine million
(9,000,000) shares of stock of Newco, which will be all of its initial
outstanding stock. RLI will cause FLC to change its name to F.L. Partnership
Management, Inc. or such other name as shall be selected by its Board of
Directors, and will advise FLC's limited partners, creditors and others that
it is operating under a new name. Newco will change its name to Fidelity
Leasing, Inc. or such other name as shall be selected by its Board of Directors.
Promptly upon the formation of Newco, the parties will execute an Employment
Agreement in the form of Exhibit F, hereto. Promptly upon the formation of
Newco, Bernstein will be elected to the Board of Directors of Newco, and RLI
shall thereafter vote in favor of his remaining as a Director until his
Employment Agreement terminates.

2. Stock Options.
-------------

(a) Bernstein Plan. Newco will promptly adopt a 1996-1 Key
--------------
Employee Stock Option Plan (the "Bernstein Stock Option Plan") substantially in
the form of Exhibit C hereto. One million (1,000,000) shares will be authorized
by Newco and made subject to the Bernstein Stock Option Plan. Upon adoption of
the Bernstein Stock Option Plan, Newco will immediately grant to Bernstein an
option with respect to one million (1,000,000) shares of Newco stock at $.22 per
share pursuant to a Grant of Incentive Stock Options substantially in the form
of Exhibit D hereto ("the Bernstein Option Grant").

(b) Employee Plan. Within thirty (30) days of the date hereof,
-------------
Newco will adopt a 1996-2 Key Employee Stock Option Plan in a form similar to
that in Exhibit C hereto except that it may differ materially with respect to
Section 7(g) (the "Employee Stock Option Plan"). Five Hundred Thousand
(500,000) shares will be authorized by Newco and made subject to the Employee
Stock Option Plan. Grants under the Employee Stock Option Plan may contain such
provisions as the Board of Directors of Newco, through the Committee (as defined
in the Employee Stock Option Plan), may prescribe, but it is the intention of
Newco that such grants to employees other than Bernstein will not contain the
adjustment provisions set forth in Section 5 of Exhibit B.

(c) Anti-Dilution of Bernstein's Interest. In the case of any
-------------------------------------
sale or issuance of stock by Newco ("additional issuance") to anyone (including
any issuance pursuant to the exercise of conversion, exchange, option, warrant
or other rights) other than RLI (pursuant to Section 1) or Bernstein (pursuant
to Section 5 of the Bernstein Stock Option Grant), at any time prior to closing
an initial public offering of Newco common stock, Bernstein will be entitled to
additional stock options, which may be issued under the 1996-2 Key Employee
Stock Option Plan (or a different stock option plan adopted for this purpose)
in an amount calculated to allow him to maintain a ten percent (10%) ownership
in the total common stock equity in Newco (excluding from such 10% calculation
any shares or options issued pursuant to the 1996-2 Key Employee Stock Option
Plan) and shall be at an exercise price equal to the price paid or value
received for the stock in the additional issuance; provided, however, that if
such price paid or value received is below the "fair market value" of Newco
stock as defined in the 1996-2 Key Employee Stock Option Plan, Bernstein may
elect to either (i) receive the additional options as incentive stock options
at "fair market value," or (ii) receive the additional options as non-qualified
options at the price paid or value received for the stock to which the
additional issuance relates.

3. Bernstein's Right to Sell or Put RLI Shares.
-------------------------------------------

(a) If Newco common stock is registered under the Securities
--------------------------------------------------------
Exchange Act of 1934 ("publicly held"). At Closing, Newco and Bernstein will
- ---------------------------------------
enter into a Registration Rights Agreement substantially in the form of
Exhibit E hereto which will provide Bernstein certain registration rights,
- ---------
following the fourth anniversary of this Agreement, to sell fully registered
shares then owned by Bernstein.

(b) If Newco is not a public company.
--------------------------------

(i) At any time during the fifth year after the date
hereof, if Newco is not then publicly held, Bernstein shall have the right,
following written notice as described hereinbelow, to require Newco to purchase,
and Newco shall purchase from Bernstein, for cash up to 25% of the number of
shares originally subject to (including any adjustments pursuant thereto) the
Bernstein Option Grant (the "Bernstein Option Shareholdings") at a price equal
to ten times the After Tax Earnings (as defined below) per share of Newco for
the last fiscal year ended prior to the giving of notice by Bernstein ("Per
Share Purchase Price"). After Tax Earnings shall mean the before tax earnings
of Newco determined by Newco's independent auditors in accordance with generally
acceptable accounting principles consistently applied adjusted for the taxes
that would be payable if Newco were a corporation that filed a separate tax
return;
(ii) At any time during the sixth year after the date
hereof if Newco is not then publicly held, Bernstein shall have the right to
require Newco to purchase, and Newco shall purchase from Bernstein, for cash up
to 50% of the Bernstein Option Shareholdings less any amount already sold
pursuant to Section 3(b)(i) hereof, at the Per Share Purchase Price;
(iii) At any time during the seventh year after the
date hereof if Newco is not then publicly held, Bernstein shall have the right
to require Newco to purchase, and Newco shall purchase from Bernstein, for cash
up to 75% of the Bernstein Option Shareholdings less any amount already sold
pursuant to Sections 3(b)(i) and (ii) hereof at the Per Share Purchase Price;
(iv) At any time during the eighth year after the date
hereof if Newco is not then publicly held, Bernstein shall have the right to
require Newco to purchase, and Newco shall purchase from Bernstein for cash, any
or all of his Newco shares at the Per Share Purchase Price;

Provided, however, that
------------------
(A) all such purchase obligations under Sections 3(b)(i)-(iii),
above, shall be subordinated to those obligations of Newco to its outside
creditors outstanding prior to receipt by Newco of notice from Bernstein
exercising his rights hereunder;
(B) any of Newco's obligations due in each of the fifth, sixth
and seventh years under Sections 3(b)(i)-(iii), above, in excess of Five Hundred
Thousand Dollars ($500,000), may be deferred to the next following year,
provided that in no event shall the maximum amount payable in the sixth and
seventh year be more than Five Hundred Thousand Dollars ($500,000), and the
balance shall be due in the eighth year along with other amounts due in that
year under (iv), above;
(C) in no event shall any deferred amounts subject to Paragraph
(B), above, be forgiven or otherwise deemed not to be due and owing Bernstein
as a result of Newco's becoming publicly held after the date of original
incurrence of such obligation.

4. Agreement as to Inter-Company Expenses. RLI agrees that all
--------------------------------------
transactions between Newco and RLI, or any affiliate of RLI, shall be conducted
on terms reasonably compared to those that would prevail in the case of
commercial transactions between unrelated parties.

5. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given, made
and received only when delivered (personally, by courier service such as Federal
Express, when telecopied with acknowledgement of receipt (which may also be by
telecopy)) or when deposited in the United States mail, certified or registered
mail, return receipt requested, postage prepaid and addressed as set forth
below:
IF TO RLI:
Resource Leasing, Inc.
1521 Locust Street
Philadelphia, PA 19102
Attn: Freddie Kotek

IF TO BERNSTEIN:

Abraham Bernstein
1830 Rittenhouse Square
Philadelphia, PA 19103
Facsimile: 215-569-8228

RESOURCE LEASING, INC.

By: /s/ Abraham Bernstein
------------------------------------------

----------------------------------------------
Abraham Bernstein

<PAGE>

EXHIBIT 10(d)

EMPLOYMENT AGREEMENT
--------------------

This Employment Agreement ("Agreement") is made as of the 5th day of
March, 1996 by and between FIDELITY LEASING, INC., a Pennsylvania corporation
(the "Company") and ABRAHAM BERNSTEIN (the "Executive").

WHEREAS, Executive has been offered employment by the Company as Chairman,
President and Chief Executive Officer (the "Office") and

WHEREAS, Executive wishes to be employed in the Office by the Company; and

WHEREAS, the Company desires to assure itself of the availability of
Executive's services in the Office;

NOW, THEREFORE, in consideration of the mutual promises set forth herein,
the adequacy of which is hereby acknowledged, the Company and Executive agree
as follows:

1. Employment.
----------

The Company hereby employs Executive in the Office and Executive
hereby accepts such employment, positions and responsibilities, and agrees to
serve the Company in such capacities upon the terms and conditions set forth
herein.

2. Services.
--------

In carrying out his duties Executive shall report to and accept
direction from the Board of Directors of the Company; provided, however,
Executive's duties shall be limited to those normally associated with those of
Chairman, President and Chief Executive Officer of a company in the equipment
leasing industry.

Executive shall serve the Company diligently, competently, and to the
best of his abilities during the period of employment. Executive shall devote
substantially all of his time and attention to the business of the Company.
Executive's services shall be performed within a reasonable commuting distance
of Philadelphia except for reasonable travel.

Executive's duties shall include the development and the day to day
oversight of the Company's leasing business, and such other matters as may be
designated from time to time by the Company's Board of Directors and which are
appropriate to the Office.

3. Term.
----

The term of employment of Executive under this Agreement shall
commence on the date hereof and unless sooner terminated pursuant to Section 6,
shall continue in full force and effect for a period of three (3) years
thereafter (such three (3) year period herein referred to as the "Contract
Period"). Such Contract Period shall be extended for additional one year terms
unless either Executive or Company shall have given notice to the contrary at
least two months before each termination date.

4. Compensation.
------------

(a) BASE SALARY. During the period of employment, the Company shall
pay to Executive a Base Salary of One Hundred Fifty Thousand Dollars ($150,000)
per annum, payable monthly. It is understood that Company will review annually
and may, in the discretion of the Board Directors, increase or decrease (but not
below $150,000) the Base Salary, as adjusted, in light of the Executive's
performance and other factors.

(b) INCENTIVE COMPENSATION PLAN. During the period of employment the
Executive shall receive bonus payments equal to 2.75% of the annual after tax
earnings of the Company, but not more than 2.0% of the pre-tax earnings of the
Company. After Tax Earnings shall mean the before tax earnings of Newco
determined by Newco's independent auditors in accordance with generally
acceptable accounting principles consistently applied adjusted for the taxes
that would be payable if Newco were a corporation that filed a separate tax
return. Payment of such bonus shall be made within fifteen (15) days of the
receipt by the Company of its audited financial statement for the preceding
fiscal year, but in no event later than 105 days after the end of the preceding
fiscal year.

(c) PAYMENTS IN LIEU OF DIVIDENDS. In the case of any dividend paid
by the Company at a time during which Bernstein has unvested or unexercised
stock options to acquire Company stock, Bernstein shall receive, contemporaneous
with the payment of such dividend, an amount hereunder equal to that amount to
which he would have been entitled had he previously exercised his stock options.

5. Benefits.
--------

During the period of employment, Executive shall be entitled to
receive the following additional benefits:

(a) PARTICIPATION IN BENEFIT PLANS. Executive will participate on
a substantially equal basis as all other employees of Resource in all employee
benefit plans and arrangements now in effect or which may hereafter be
established which are generally applicable to other employees of the Company or
any of its subsidiaries, except that, in lieu of any health care benefits,
Bernstein shall receive an allowance of Six Hundred Seventeen Dollars ($617) per
month for the purchase of health insurance.

(b) CAR ALLOWANCE. The Company agrees to pay Executive a car
allowance not to exceed Five Hundred Dollars ($500) per month.

6. Termination.
-----------

Anything herein contained to the contrary notwithstanding, Executive's
employment hereunder shall terminate as a result of any of the following events:

(a) Executive's death;

(b) Termination by the Company, for Cause. "Cause" shall encompass
the following: (i) Executive has committed any act of fraud or gross negligence
or engaged in any other material misconduct, neglect of duties or failure to act
which adversely affects the business or affairs of the Company and/or any of its
subsidiaries or affiliates; (ii) Executive has been convicted of a felony or
committed any act not approved in writing by the Board of Directors of the
Company involving any material conflict of interest or self-dealing related to
any aspect of the Company and/or any of its subsidiaries; or (iii) Executive has
failed to follow written directions of the Board of Directors or the Chief
Executive Officer of Resource Leasing, Inc. ("Resource Leasing") which are
consistent with Executive's duties hereunder and not in violation of applicable
law; provided, however, Termination by the Company for Cause shall be effective
in the case of (i) (except for an act of fraud) or (iii) only if such failure
has not been cured within thirty (30) days after notice of such failure has been
given to the Executive by Company. If notice has been given under the previous
sentence for a failure by Executive, Executive may be discharged without notice
in the case of a similar failure;

(c) The Executive becomes disabled by reason of any physical or
mental disability whatsoever for more than ninety (90) days in the aggregate
during any 365-day period and the Board of Directors determines, in good faith
and in writing, that the Executive, by reason of such physical or mental
disability, is rendered unable to perform his duties and services hereunder (a
"Disability"); or

(d) Termination by Executive for "Good Reason" upon forty-five (45)
days' prior written notice to the Company. "Good Reason" shall mean: (i)
without the written consent of Executive, a substantial change in the services
or duties (including relocation in contravention of Paragraph 2 of this
Agreement) required of the Executive hereunder or the imposition of any services
or duties substantially inconsistent with, or in diminution of Executive's
position, services or duties, or status with the Company; (ii) failure to
continue Executive's coverage under any Company benefit plan as required under
paragraph 5(a) except pursuant to a change to a benefit plan that applies to
senior executives of the Company generally or is required by law or regulation;
(iii) any material breach by the Company of any provision of this Agreement; or
(iv) Edward E. Cohen is neither an officer nor the owner directly or indirectly
(including ownership through Bryn Mawr Resources, Inc.) of at least five percent
(5%) of the Class A voting stock of Resource America, Inc. ("RAI"); provided,
however, that Termination by Executive for Good Reason shall be effective in the
case of (i)-(iii) only if such failure has not been cured within thirty (30)
days after notice of such failure has been given to the Company. If notice has
been given under the previous sentence for a failure of the Company, Executive
may terminate this Agreement for Good Reason without notice in the case of a
similar failure.

7. Consideration Payable to Executive Upon Termination or in the Event
of Disability.
-------------------------------------------------------------------

(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("Disability Period"), the Executive shall continue to receive his full salary
at the rate then in effect for such
period until his employment is terminated pursuant to subparagraph 6(c) hereof
(together with his bonus, so long as any such disability is for less than sixty
(60) days in the aggregate in any bonus year), provided that payments so made
to the Executive shall be reduced by the sum of the amounts, if any, payable to
the Executive at or prior to the time of any such payment under disability
benefits of Company and which were not previously applied to reduce any such
payment.

(b) If Executive's employment shall terminate pursuant to
subparagraph 6(a),(b) or (c), Executive shall receive his full Base Salary,
together with all benefits required pursuant to paragraph 5, through the date
of termination, but shall not be entitled to receive any additional payments,
benefits or compensation otherwise due subsequent to the date of termination.

(c) If Executive's employment by the Company under this Agreement
shall be terminated for "Good Reason" a specified under subparagraph 6(d),
Company shall pay to Executive the Base Salary and benefits required pursuant
to paragraph 5, for the term of one (1) year plus bonus and payable at the time
when the same would have become due and payable if termination had not occurred.
Executive shall not be required to mitigate the amount of any payment provided
for in this subparagraph 7(c) by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for therein be reduced by
any compensation of any retirement benefit heretofore or hereafter earned by
Executive as the result of employment by any other person, firm or corporation.

8. Confidential Information.
------------------------

All confidential information or trade secrets which Executive
currently has or may obtain during the period of employment relating to the
business of the Company and its affiliates shall not be published, disclosed,
or made accessible by him to any other person, firm, or corporation except in
the business and for the benefits of the Company, Resource Leasing and its
affiliates. The provisions of this paragraph 8 shall survive the termination
of this Agreement, but shall not apply to any information which is or becomes
publicly available otherwise than by any breach of this paragraph 8.

9. Covenant Not to Compete.
-----------------------

Executive shall not, during the period of employment and for the two
years immediately following termination of employment, for whatever reason, for
himself, or on behalf of any other person, firm, partnership, corporation, or
other entity, directly or indirectly: (i) engage in the equipment leasing
business; or (ii) solicit or hire, or attempt to solicit or hire, any employee
of the Company or its affiliates away from the Company or its affiliates or away
from the Company's employ. For purposes of this clause (i) of this paragraph,
"to engage" shall include Executive's acting as an owner (of more than 5%),
employee, shareholder, consultant, director or officer, directly or indirectly,
of an entity so engaged. Notwithstanding the first sentence of this Paragraph
9, if the termination occurs pursuant to subparagraph 6(d) or is by mutual
consent, Executive may engage in the equipment leasing business as an
independent consultant.

10. Remedies in Case of Breach of Certain Covenants or Termination.
--------------------------------------------------------------

The Company and Executive agree that the damages that may result to
the Company from misappropriation of confidential information or competition as
prohibited by paragraphs 8 and 9 could be estimated only by conjecture and not
by any accurate standard, and, therefore, any breach by Executive of the
provisions of such paragraphs, in addition to giving rise to monetary damages,
will be enjoined. In addition, if Executive breaches the provisions of such
paragraphs, or is terminated pursuant to subparagraphs 6(a) or 6(c), Executive
shall (solely for violation of Paragraph 8 or 9) forfeit any right to receive
the payments and benefits described under paragraph 7 and Executive shall
forfeit a portion of any stock options that have been or may be granted pursuant
to the Company's Key Executive Stock Option Plan or otherwise in accordance with
the following schedule:

If Termination pursuant to a breach The following unvested stock
of Paragraphs 6(a) or 6(c) or stock options shall be
violation of Paragraphs 8 or 9 occurs: cancelled:

(i) On or prior to the first (i) All
anniversary of the date of
this Agreement

(ii) After the first but on or (ii) Stock options that vest
prior to the second in years three and four
anniversary of the date of
this Agreement

(iii) After the second but on or (iii) Stock options that vest in
prior to the third anni- year four
versary of the date of
this Agreement

(iv) After the third anniversary (iv) None
of the date of this Agreement

In the case of a termination pursuant to a breach of Paragraph 6(b), all
unvested or unexercised stock options shall be forfeited.

11. Representations and Warranties.
------------------------------

(a) Executive represents and warrants to the Company that he is under
no contractual or other restriction or obligation which would prevent the
performance of his duties hereunder, or which interfere with the rights of the
Company hereunder. Executive represents and agrees that he has no agreements
or arrangements with the Company or any of its affiliates providing for the
compensation of Executive in any respect other than as set forth in this
Agreement.

(b) The Company represents and warrants to Executive that it has all
requisite power and authority to execute, deliver, and perform this Agreement
and all necessary corporate proceedings of the Company have been duly taken to
authorize the execution, delivery, and performance of this Agreement by the
Company.

12. Indemnification.
---------------

(a) If Executive is made a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (herein a "proceeding"), by reason of the fact
that he is or was an employee (which term includes officer, director, agent and
any other capacity) of the Company or is or was serving at the request of the
Company as an employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as an employee or agent or in any other capacity while
serving as an employee or agent, Executive shall be indemnified and held
harmless by RAI and the Company to the fullest extent authorized by the Business
Corporation Law of the Commonwealth of Pennsylvania, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits RAI and the Company to provide broader
indemnification rights than said law permitted RAI and the Company to provide
prior to such amendment), against all expense, liability and loss (including,
but not limited to, attorneys' fees, judgments, fines, ERISA excise taxes and
penalties and amounts paid or to be paid in settlement) incurred or suffered by
Executive in connection therewith and such indemnification shall continue as to
Executive after he has ceased to be a director, officer, employee or agent and
shall inure to the benefit of Executive's heir, executors, and administrators;
provided, however, that RAI and the Company shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by Executive (other than a proceeding to enforce this Section 12) only
if such proceeding (or part thereof) was authorized directly or indirectly by
the Board of RAI and the Company. The right to indemnification conferred in
this paragraph shall be a contract right and shall include the right to be
promptly upon request, paid by RAI and the Company the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that if the Business Corporation Law of the Commonwealth of
Pennsylvania requires the payment of such expenses incurred by an employee in
his capacity as an employee (and not in any other capacity in which service was
or is rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, payment shall be made only upon delivery to RAI and
the Company of an undertaking, by or on behalf of Executive, to repay all
amounts so advanced if it shall ultimately be determined that such employee is
not entitled to be indemnified under this paragraph or otherwise.

(b) The indemnification provided by this paragraph shall not be
limited or exclude any rights, indemnities or limitations of liability to which
Executive may be entitled, whether as a matter of law, under the Certificate of
Incorporation, By-laws of RAI and the Company, by agreement, vote of the
stockholders or disinterested directors of RAI and the Company or otherwise.

(c) Bernstein, in seeking indemnification under this Agreement (an
"Indemnitee"), shall give the other party or parties (the "Indemnitor") prompt
written notice of any claim, suit or demand that the Indemnitee believes will
give rise to indemnification under this Agreement; provided, however, that the
failure to give such notice shall not affect the liability of the Indemnitor
under this Agreement unless the failure to give such notice materially and
adversely affects the ability of the Indemnitor to defend itself against or to
cure or mitigate the damages. Except as hereinafter provided, the Indemnitor
shall have the right (without prejudice to the right of the Indemnitee to
participate at its expense through counsel of its own choosing) to defend and
to direct the defense against any such claim, suit or demand, at the
Indemnitor's expense and with counsel chosen jointly by Indemnitor and
Indemnitee, and the right to settle or compromise any such claim, suit or
demand; provided, however, that the Indemnitor shall not, without the
Indemnitee's written consent, which shall not be unreasonably withheld, settle
or compromise any claim or consent to any entry of judgment. The Indemnitee
shall, at the Indemnitor's expense, cooperate in the defense of any such claim,
suit or demand. If the Indemnitor, within a reasonable time after notice of a
claim fails to defend the Indemnitee, the Indemnitee shall be entitled to
undertake the defense, compromise or settlement of such claim at the expense of
and for the account and risk of the Indemnitor.

(d) Executive will be covered during the entire term of this
Agreement by Officer and Director liability insurance in amounts and on terms
similar to that afforded to other executive of RAI or its affiliates, which such
insurance shall be paid by the Company.

13. Severability.
------------

In case any one or more of the provisions contained herein shall, for
any reason, be held to be invalid, illegal, or unenforceable in any respect such
validity, illegality or unenforceability shall not affect any other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision(s) had never been contained herein, provided
that such invalid, illegal or unenforceable provision(s) shall first be
curtailed, limited or eliminated only to the extent necessary to remove such
invalidity, illegality or unenforceability with respect to the applicable law
as it shall then be applied.

14. Modification Agreement.
----------------------

This Agreement shall not be modified by any oral agreement, either
expressed or implied, and all modifications thereof shall be in writing and
signed by the parties hereto.

15. Waiver.
------

The waiver of any right under this Agreement by any of the parties
hereto shall not be construed as a waiver of the same right at a future time or
as a waiver of any other rights under this Agreement.

16. Governing Law.
-------------

This Agreement shall be governed by and construed in accordance with
the internal laws of the Commonwealth of Pennsylvania, without giving affect to
the principles of conflicts of laws.

17. Notices.
-------

Any notice to be given pursuant to this Agreement shall be sufficient
if in writing and mailed by certified or registered mail, postage-prepaid, to
the addresses listed below:

IF TO COMPANY:

Fidelity Leasing, Inc.
1521 Locust Street
Suite 400
Philadelphia, PA 19102

IF TO EXECUTIVE:

Abraham Bernstein
1830 Rittenhouse Square
Philadelphia, PA 19103

IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement as of the date first written above.

FIDELITY LEASING, INC.
(the "Company")

By: /s/ Freddie M. Kotek
----------------------------------------------

/s/ Abraham Bernstein
----------------------------------------------
(the "Executive")

Solely for the purpose of Paragraph 12 hereof

RESOURCE AMERICA, INC.

By: /s/ Edward E. Cohen, Chairman
----------------------------------------------

<PAGE>
EXHIBIT 23(a)

CONSENT OF GRANT THORNTON LLP

We have issued our reports dated November 23, 1995, accompanying the financial
statements and schedules of Resource America, Inc. and subsidiaries contained in
the Registration Statement and Prospectus. We consent to the use of the
aforementioned reports in the Registration Statement and Prospectus, and to the
use of our name as it appears under the caption "Experts."

Cleveland, Ohio
October 8, 1996

CONSENT OF GRANT THORNTON LLP

We have issued our reports dated February 23, 1995, accompanying the financial
statements and schedules of Fidelity Leasing Corporation and subsidiary
contained in the Registration Statement and Prospectus. We consent to the use
of the aforementioned reports in the Registration Statement and Prospectus,
and to the use of our name as it appears under the caption "Experts."

Philadelpha, Pennsylvania
October 8, 1996

<PAGE>
EXHIBIT 23(b)

E.E. Templeton & Associates, Inc.
401 1/2 Second Street
Marietta, Ohio 45750

614-373-5046

September 16, 1996

Resource America, Inc.
Attention: Mr. Jeffrey C. Simmons
Vice President - Energy
2876 S. Arlington Rd.
Akron, Ohio 44312

Gentlemen:

We hereby consent to the use of our audit report dated November 15, 1995, on
reserves and revenue, as of October 1, 1995, from certain properties owned by
Resource America, Inc. in Resource America, Inc.'s Annual Report on
Form 10-K for the fiscal year ending September 30, 1995.

Very truly yours,

s/s Elmer E. Templeton

E. E. Templeton & Associates, Inc.

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