Critical Accounting Policies and Estimates.
Securities and Exchange Commission Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies and methods used in the preparation of the financial statements. Note 1 of the consolidated financial statements, included elsewhere on this Annual Report of Form 10-K, includes a summary of the significant accounting policies and methods used in the preparation of the Company's consolidated financial statements. The Company believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the Company's financial statements:

Marketable Securities. Consistent with the Company's overall investment objectives and activities, management has classified its entire marketable securities portfolio as trading. As a result, all unrealized gains and losses on the Company's investment portfolio are included in the Consolidated Statement of Comprehensive Income. Our investments in trading equity and debt marketable securities are carried at fair value and based on quoted market prices or other observable inputs. Marketable securities are subject to fluctuations in value in accordance with market conditions.

Other Investments. The Company's other investments consist primarily of nominal equity interests in various privately-held entities, including limited partnerships whose purpose is to invest venture capital funds in growth-oriented enterprises. The Company does not have significant influence over any investee and the Company's investment represents less than 3% of the investee's ownership. None of these investments meet the criteria of accounting under the equity method and are carried at cost less distributions and other than temporary unrealized losses. These investments do not have available quoted market prices, so we must rely on valuations and related reports and information provided to us by those entities. These valuations are by their nature subject to estimates which could change significantly from period to period. The Company regularly reviews the underlying assets in its other investment portfolio for events, including but not limited to bankruptcies, closures and declines in estimated fair value, that may indicate the investment has suffered an other-than-temporary decline in value. When a decline is deemed other-than-temporary, we permanently reduce the cost basis component of the investments to its estimated fair value, and the loss is recorded as a component of net income from other investments. As such, any recoveries in the value of the investments will not be recognized until the investments are sold.

Our estimates of each of these items historically have been adequate. However, due to uncertainties inherent in the estimation process, it is reasonably possible that the actual resolution of any of these items could vary significantly from the estimate and, accordingly, there can be no assurance that the estimates may not materially change in the near term.

Depreciation is computed utilizing the straight-line method over the estimated useful lives of ten to forty years for buildings and improvements and five to ten years for furniture, fixtures and equipment. Tenant improvements are amortized on a straight-line basis over the term of the related leases.

The Company is required to make subjective assessments as to the useful lives of its properties for purposes of determining the amount of depreciation to reflect on an annual basis with respect to those properties. These assessments have a direct impact on the Company's net income. Should the Company lengthen the expected useful life of a particular asset, it would be depreciated over more years, and result in less depreciation expense and higher annual net income.

Assessment by the Company of certain other lease related costs must be made when the Company has a reason to believe that the tenant will not be able to execute under the term of the lease as originally expected.

The Company periodically reviews the carrying value of certain of its properties and long-lived assets in relation to historical results, current business conditions and trends to identify potential situations in which the carrying value of assets may not be recoverable. If such reviews indicate that the carrying value of such assets may not be recoverable, the Company would estimate the undiscounted sum of the expected future cash flows of such assets or analyze the fair value of the asset, to determine if such sum or fair value is less than the carrying value of such assets to ascertain if a permanent impairment exists. If a permanent impairment exists, the Company would determine the fair value by using quoted market prices, if available, for such assets, or if quoted market prices are not available, the Company would discount the expected future cash flows of such assets and would adjust the carrying value of the asset to fair value. Judgments as to impairments and assumptions used in projecting future cash flow are inherently imprecise.

Results of Operations:
For the years ended December 31, 2008 and 2007, the Company reported a net loss of approximately $1,617,000 (or $1.58 per share) and $443,000 (or $.43 per share), respectively.

Revenues:
Total revenues for the year ended December 31, 2008 as compared with that of 2007 increased by approximately $589,000 (or 6%). This increase was primarily due to an increase in real estate rentals and related revenues and increased restaurant revenues, as discussed below.

Monty's restaurant operations:
Summarized statement of income of the Monty's restaurant operations for the years ended December 31, 2008 and 2007 is presented below (Note: the information below represents 100% of the restaurant operations while the Company's ownership percentage in these operations is 50%):

                                             Year ended                       Year ended
   Summarized statements of income of       December 31,     Percentage      December 31,     Percentage of
           Monty's restaurant                   2008          of sales           2007             sales
                Revenues:
Food and Beverage Sales                     $  6,697,000             100 %   $  6,344,000               100 %

                Expenses:
Cost of food and beverage sold                 1,794,000            26.8 %      1,720,000              27.1 %
Labor, entertainment and related costs         1,557,000            23.2 %      1,451,000              22.9 %
Other food and beverage related costs            287,000             4.3 %        246,000               3.9 %
Other operating costs                            529,000             7.9 %        555,000               8.7 %
Insurance                                        318,000             4.7 %        332,000               5.2 %
Management and accounting fees                   140,000             2.1 %        325,000               5.1 %
Utilities                                        255,000             3.8 %        209,000               3.3 %
Rent (as allocated)                              688,000            10.3 %        651,000              10.3 %
Total Expenses                                 5,568,000            83.1 %      5,489,000              86.5 %

Income before loss on disposal of assets,
depreciation and minority interest          $  1,129,000            16.9 %   $    855,000              13.5 %

The Monty's restaurant is subject to seasonal fluctuations in sales. January through May sales typically account for over 50% of annual sales.

Sales in 2008 as compared with 2007 increased by approximately 6% primarily due to menu price increases.

Expenses in 2008 were generally consistent with that in 2007. The decrease in Management and accounting fees was due to the change in April 2007 of the management of the restaurant which resulted in the hiring of in-house general manager. In 2007 management fees paid to the former manager were included in management and accounting fees whereas in 2008 the in-house

manger's salary is included in labor costs. The former management company was retained to perform accounting and related services only for $114,000 per year.

Grove Isle and Monty's marina operations:
The Grove Isle marina operates for the benefit of the slip owners and maintains all aspects of the marina in exchange for an annual maintenance fee from the slip owners to cover operational expenses. As of December 31, 2008 and 2007, 79 of the 85 slips were owned by unrelated individuals or entities, the remaining 6 slips are owned by the Company. The Company rents the unsold slips to boat owners on a short term basis.

The Monty's marina consists of 132 boat slips of which approximately 30 slips are leased on a long term basis (more than one year) to tenants of the upland property, and the others are available for rent to the public.

Total marina revenues increased by approximately $40,000 (or 2%) for the year ended December 31, 2008 as compared with 2007 primarily as a result of increased member dues at the Grove Isle marina. Marina expense for the year ended December 31, 2008 as compared with 2007 remained consistent with the exception of decreased utilities expense resulting from increased electrical usage reimbursements from tenants at Monty's marina and decreased repairs and maintenance at the Grove Isle marina.

Summarized and combined statements of income from marina operations:
(The Company owns 50% of the Monty's marina and 95% of the Grove Isle marina)

                                     Grove               Combined     Combined
                                     Isle     Monty's     marina       marina
                                    Marina     Marina   operations   operations
                                     Year
                                     ended   Year ended Year ended   Year ended
       Summarized statements of    December   December   December   December 31,
     income of marina operations   31, 2008   31, 2008   31, 2008       2007
              Revenues:
    Dockage fees and related                 $1,235,000
    income                          $104,000             $1,339,000   $1,336,000
    Grove Isle marina slip owners                     -
    dues                             420,000                420,000      383,000
    Total marina revenues            524,000  1,235,000   1,759,000    1,719,000

              Expenses:
    Labor and related costs          247,000          -     247,000      232,000
    Insurance                         59,000    135,000     194,000      201,000
    Management fees                   40,000     37,000      77,000       73,000
    Utilities (net of                                 -
    reimbursements)                   25,000                 25,000       60,000
    Bay bottom lease                  38,000    198,000     236,000      237,000
    Repairs and maintenance           41,000     74,000     115,000      154,000
    Other                             24,000     50,000      74,000      104,000
    Total Expenses                   474,000    494,000     968,000    1,061,000

       Income before interest,
      depreciation and minority
               interest              $50,000   $741,000    $791,000     $658,000

Grove Isle spa operations:

Spa revenues increased by $58,000 (or 8%), primarily in increased massage revenue. This was partially the result of continued exposure to guests of the Grove Isle resort which has increased promotions of hotel accommodations offering spa packages.

Spa expenses decreased by $159,000 (or 19%), primarily due to the reversal of approximately $86,000 in certain technical fees which had been charged to the Spa by the former tenant-operator of the Spa since 2005. This was done in conjunction with the aforementioned Grove Isle lease assumption in November 2008. Employee wages and related costs also decreased by approximately $63,000 in 2008 as compared with 2007 as a result of a reduction in staff.

Below is a summarized income statement for these operations for the year ended December 31, 2008 and 2007. The Company owns 50% of the Grove Isle Spa with the other 50% owned by an affiliate of the Grand Heritage Hotel Group, the tenant operator of the Grove Isle Resort.

                                              For the     For the
                                               year        year
                      Grove Isle Spa           ended       ended
                 Summarized statement of     December    December
                          income             31, 2008    31, 2007
                        Revenues:
               Services provided               $754,000    $688,000
               Membership and other              45,000      53,000
               Total spa revenues               799,000     741,000

                        Expenses:
               Cost of sales (commissions
               and other)                       246,000     188,000
               Salaries, wages and related      233,000     296,000
               Other operating costs            145,000     259,000
               Management and
               administrative fees               43,000      45,000
               Other                                  -      44,000
               Total Expenses                   667,000     832,000

                   Income (loss) before
                 interest, depreciation,
               minority interest and income
                          taxes                $132,000   ($91,000)

Expenses:
Total expenses for the year ended December 31, 2008 as compared to that of 2007 increased by approximately $55,000 (or less than 1%). Food and beverage costs are solely from the Monty's restaurant operations. Spa expenses are solely from the Grove Isle spa operations. Marina expenses are from both the Monty's and Grove Isle marinas. Summarized income statements and discussion of significant changes in expenses for each of these operations are presented above.

Operating expenses of rental and other properties for the year ended December 31, 2008 were consistent with 2007.

Depreciation and amortization expense increased by approximately $87,000 (or 7%) primarily increased purchases of fixed assets and improvements at the Monty's restaurant in 2008 and the write off of unamortized deferred loan costs at Grove Isle Spa.

Interest expense decreased by approximately $262,000 (or 16%) for year ended December 31, 2008 as compared to 2007. This was due to decreased interest rates and as a result of loan principal reductions of approximately $684,000 during the year ended December 31, 2008.

Adviser's base fee expense increased by $120,000 (or 13%) for year ended December 31, 2008 as compared to 2007 as a result of the amendment to the Advisory Agreement effective January 1, 2008, as previously reported.

General and administrative expense decreased by approximately $31,000 (or 9%) for year ended December 31, 2008 as compared to 2007. This was due to decreased corporate general liability insurance of approximately $17,000 and decreased other taxes of approximately $14,000.

Professional fees decreased by approximately $20,000 (or 6%) for the year ended December 31, 2008 as compared to 2007. This was primarily due to decreased legal and consulting expenses relating to the Monty's facility.

Other Income:

Net gain (loss) from investments in marketable securities:
Net gain from investments in marketable securities, including marketable
securities distributed by partnerships in which the Company owns minority
positions, for the years ended December 31, 2008 and 2007, is as follows:

                       Description                   2008       2007
          Net realized (loss) gain from sales of
          marketable securities                   ($53,000)   $249,000
          Unrealized net loss in marketable
          securities                             (1,383,000)  (135,000)
          Total net gain (loss) from investments
          in marketable securities               ($1,436,000) $114,000

Consistent with the Company's overall current investment objectives and activities, the entire marketable securities portfolio is classified as trading (versus available for sale, as defined by generally accepted accounting principles). Unrealized gains or losses from marketable securities are recorded as other income in the consolidated statements of comprehensive income.

Investment gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company's net earnings. However, the amount of investment gains or losses on marketable securities for any given period has no predictive value and variations in amount from period to period have no practical analytical value.

Investments in marketable securities give rise to exposure resulting from the volatility of capital markets. The Company attempts to mitigate its risk by diversifying its marketable securities portfolio.

Net income from other investments is summarized below:

                                                            2008           2007
    Partnerships owning stocks and bonds (a)              $ 392,000     $  143,000
    Venture capital funds - diversified businesses (b)      208,000        438,000
    Real estate and related                                 (38,000 )       (6,000 )
    Venture capital funds - technology & communications      22,000       (125,000 )
    Income from investment in 49% owned affiliate (c)        40,000        107,000
    Restaurant development & operation (d)                        -       (150,000 )
    Other                                                     4,000        320,000
                          Totals                          $ 628,000     $  727,000

(a) In 2008 and 2007 amounts consist of gains from the full redemption of investments in private capital funds that invested in equities, debt or debt like securities.

(b) In 2008 and 2007 amounts consist primarily of gains from distributions of investments in two private limited partnerships which own interests in various diversified businesses, primarily in the manufacturing and production related sectors.

(c) This gain represents income from the Company's 49% owned affiliate, T.G.I.F. Texas, Inc. ("TGIF"). In December 2008 and 2007 TGIF declared and paid a cash dividend of the Company's portion of which was approximately $224,000 and $140,000, respectively. These dividends were recorded as reduction in the investment carrying value as required under the equity method of accounting for investments.

(d) In September 2007, the Company elected to write off $150,000 of its investment in a restaurant development and franchise entity which is being restructured and which, in the Company's opinion, will result in an other-than-temporary decline in value. The Company had invested $200,000 in this entity, representing approximately 1% of its equity. This franchise entity was restructured in a reverse merger in which the Company invested an additional $75,000 in December 2007.

Net income or loss from other investments may fluctuate significantly from period to period in the future and could have a significant impact on the Company's net earnings. However, the amount of investment gain or loss from other investments for any given period has no predictive value and variations in amount from period to period have no practical analytical value.

Interest, dividend and other income
Interest, dividend and other income for years ended December 31, 2008 and 2007 was approximately $509,000 and $541,000, respectively. The decrease of approximately $32,000 (or 6%) was primarily due to lower interest rates, repayments of notes receivable and lower dividend income as a result of sales of securities. This decrease was partially offset by increased real estate commissions earned by Courtland Houston, Inc. of approximately $151,000.

Benefit from income taxes:
Benefit from income taxes for the years ended December 31, 2008 and 2007 was $130,000 and $157,000, respectively.

The Company follows the liability method of accounting for income taxes. Under this method, deferred tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between the carrying amount and the tax basis of assets and liabilities at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. As a result of timing differences associated with the carrying value of other investments, unrealized gains and losses of marketable securities, depreciable assets and the future benefit of a net operating loss, as of December 31, 2008 and 2007, the Company has recorded a net deferred tax asset of $366,000 and $233,000, respectively. A valuation allowance against deferred tax asset has not been established as management believes it is more likely than not, based on the Company's previous history and expectation of future taxable income before expiration, that these assets will be realized.

Effect of Inflation.
Inflation affects the costs of operating and maintaining the Company's investments. In addition, rentals under certain leases are based in part on the lessee's sales and tend to increase with inflation, and certain leases provide for periodic adjustments according to changes in predetermined price indices.

Liquidity, Capital Expenditure Requirements and Capital Resources. The Company's material commitments primarily consist of maturities of debt obligations of approximately $4.4 million in 2009 and contributions committed to other investments of approximately $1.1 million due upon demand. The funds necessary to meet these obligations are expected from the proceeds from the sales of properties or investments, bank construction loan, refinancing of existing bank loans, distributions from investments and available cash. Included in the maturing debt obligations for 2009 is a note payable to the Company's 49% owned affiliate, T.G.I.F. Texas, Inc. ("TGIF") ( Reference is made to Item 12 Certain Relationships and Related Transactions) of approximately $3.7 million. This amount is due on demand. The obligation due to TGIF will be paid with funds available from distributions from its investment in TGIF and from available cash.

A summary of the Company's contractual cash obligations at December 31, 2008 is as follows:

                                                                Payments Due by Period
Contractual                                        Less than 1
Obligations                          Total             year         1 - 3 years      4 - 5 years       After 5 years
Mortgages and
notes payable                     $ 19,298,000     $  4,388,000     $  5,077,000     $  1,598,000     $     8,235,000
Other
investments
commitments (a)                      1,121,000        1,121,000               --               --                  --
Total                             $ 20,419,000     $  5,509,000     $  5,077,000     $  1,598,000     $     8,235,000

(a) The timing of amounts due under commitments for other investments is determined by the managing partners of the individual investments. These amounts are reflected as due in less than one year although the actual funding may not be required until some time in the future.

Material Changes in Operating, Investing and Financing Cash Flows.
The Company's cash flows are generated primarily from its real estate net rental and related activities, sales of marketable securities, distributions from other investments and borrowings.

For the year ended December 31, 2008 the Company's net cash provided by operating activities was approximately $241,000. This was primarily from real estate net rental and related activities. The Company believes that there will be sufficient cash flows in the next year to meet its operating requirements.

For the year ended December 31, 2008, the net cash provided by investing activities was approximately $1.8 million. This included sources of cash consisting of proceeds from the sales and redemptions of marketable securities of $3.8 million, cash distributions from other investments of $1.8 million and collections of mortgages and notes receivable of $612,000. These sources of cash were partially offset by purchases of marketable securities of $3.2 million, contributions to other investments of $659,000 and improvements of properties of $601,000.

For the year ended December 31, 2008, net cash used in financing activities was approximately $1.2 million. This consisted of $2.4 million cash deposited and restricted relating to the loan modification obtained from the lender bank of the Monty's facility, as previously reported, repayments of mortgages and notes payable of $684,000 less contributions from minority partners of $1.8 million.