The Management's Discussion and Analysis of Financial Condition and Results of Operations is designed to be read in conjunction with the financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations in the last annual report on Form 10-K.

OPERATIONS OVERVIEW

We are primarily engaged in real estate land sales and development, reinvestment of land sales proceeds into income properties, self development of income properties, and golf course operations. We own approximately 11,200 acres in Florida, of which approximately 10,200 are located within and form a substantial portion of the western boundary of the City of Daytona Beach. Our lands are well-located in the central Florida Interstate-4 and Interstate-95 corridors, providing an excellent opportunity for reasonably stable land sales in future years.

With our substantial land holdings in Daytona Beach, we have parcels available for the entire spectrum of real estate uses. Along with land sales, we selectively develop parcels primarily for commercial uses. Although pricing levels and changes by us and our immediate competitors can affect sales, we generally enjoy a competitive edge due to low costs associated with long-time land ownership and a significant ownership position in the immediate market. As a general policy we do not discount sales prices to accelerate land sales.

Until the dramatic downturn in the national and local economies in 2008, sales activity on Company owned lands had been strong over several years. Development activities on and around Company owned lands continued relatively strong throughout 2008 and into 2009 with the commencement and completion of projects planned or in process before the downturn. Sales and development activities over the last several years included: the sale of 120 acres of land to Florida Hospital for the construction of a new hospital, which opened in July of this year; the expansion of the Daytona Beach Auto Mall; the opening of a second office building in the Cornerstone Office Park; continued development within the 250-acre Gateway Commerce Park (where a 32,000 square-foot industrial building was completed in early 2009) and the 60-acre Interstate Commerce Park, both adjacent to Interstate 95; and the sale of approximately 100 acres of land west of Interstate 95 on which a private high school was constructed and opened in August 2008. In early 2009, the City of Daytona Beach police headquarters, located adjacent to Gateway Commerce Park, was completed and occupied. Also in 2009, construction was completed on a 288-unit apartment complex and a medical office building, with development of a townhouse residential community on the east side of Interstate 95 continuing. During the first quarter of 2009, construction commenced on an upscale restaurant on a parcel adjacent to the Interstate 95 and LPGA Boulevard interchange, which the Company sold during the fourth quarter of 2008 . On the west side of Interstate 95, development has been completed on a fire station, a hotel, and a 59,000 square-foot furniture retail store in the Interstate Commerce Park, along with a new elementary school which opened in August 2009.

These commercial and residential development activities tend to create additional buyer interest and sales opportunities, although weak economic conditions led us to continue in 2009 with a smaller than normal backlog of contracts, with few select opportunities for additional transactions in the near term.

In 2000, we initiated a strategy of investing in income properties utilizing the proceeds of agricultural land sales qualifying for income tax deferral through like-kind exchange treatment for tax purposes. As of September 30, 2009, we have invested approximately $120 million in twenty-six income properties through this process. With this investment base in income properties, lease revenue of approximately $9.3 million is projected to be generated annually. This income, along with income from additional net-lease income property investments, is expected to decrease earnings volatility in future years and add to overall financial performance. This has enabled us to enter into the business of building, leasing, and holding in our portfolio select income-producing properties that are strategically located on our lands.

In the third quarter of this year, we were notified by Barnes & Noble that it would be vacating its store in Lakeland, Florida, upon the expiration of the original lease term at the end of January 2010. The Company is exploring all strategic alternatives on this 18,150 square-foot property. All remaining properties remain leased with the average remaining lease term in excess of 11 years, excluding additional option years. The Barnes & Noble store in Daytona Beach, Florida which has a lease termination date at the end of January 2011, excluding option years, is the next lease up for renewal. No other leases have less than six-years remaining on the initial lease term.

We currently have two self-developed projects in the lease up stage. The first project is a two-building 31,000 square-foot flex office space complex located within Gateway Commerce Park. Construction of these buildings was completed in 2008. As of September 30, 2009, there was one tenant under lease for approximately 3,840 square feet, with negotiations ongoing with additional tenant prospects. Also under development is the first phase of a 12-acre, 4-lot commercial complex located at the corner of LPGA and Williamson Boulevards in Daytona Beach, Florida. The parcel includes a 23,000 square-foot "Class A" office building. With the exception of additional tenant improvements, which are to be made as vacant space is leased, construction of the building has been completed. Approximately 75% of the building is under lease to two tenants. The first tenant occupied the building in mid-July and the second tenant began occupying the building in September.

Golf operations consist of the operation of two championship golf courses and a clubhouse facility, including food and beverage activities, located within the LPGA International mixed-use residential community on the west side of Interstate 95, south and east of LPGA Boulevard. The Champions course was designed by Rees Jones and the Legends course was designed by Arthur Hills.

Our agricultural operations consist of growing, managing, and selling timber and hay on approximately 10,700 acres of land primarily on the west side of Daytona Beach, Florida. We are currently in the process of converting a significant portion of our timberlands to hay production.

SUMMARY OF 2009 OPERATING RESULTS

During the quarter ended September 30, 2009, net income totaled $209,662, equivalent to $.04 per share. This income was generated on the sale of nine acres of land and continued strong earnings from income properties. During 2008's third quarter, when no land sales were recorded, net income amounting to $105,246, equivalent to $.02 per share, was produced.

Net income of $719,677, equivalent to $.13 per share, was posted for the nine-month period ended September 30, 2009 on the sale of 16 acres of land. This net income represents a significant downturn from profits of $2,432,562, equivalent to $.42 per share, recorded in 2008's same period. The unfavorable results can primarily be attributed to higher general and administrative costs due to increased expenses associated with stock options and shareholder relations. In addition, during 2008's first nine months, the decrease in the price of the Company's stock during the first six months of the year resulted in an addition to income of $879,470 after income taxes for stock option accruals.

We also use Earnings before Depreciation, Amortization, and Deferred Taxes (EBDDT) as a performance measure. Our strategy of investing in income properties through the deferred tax like-kind exchange process produces significant amounts of depreciation and deferred taxes.

The following is the calculation of EBDDT:

                                                    Three Months Ended
                                             September 30,       September 30,
                                                 2009                2008
Net Income                                  $       209,662     $       105,246
Add Back:
     Depreciation and Amortization                  695,813             676,733
     Deferred Taxes                                  47,308             321,607
E   Earnings before Depreciation,
Amortization, and Deferred Taxes            $       952,783     $     1,103,586

                                                     Nine Months Ended
                                             September 30,       September 30,
                                                 2009                2008
Net Income                                  $       719,677     $     2,432,562
Add Back:
     Depreciation and Amortization                2,063,970           1,966,494
     Deferred Taxes                                 161,171           1,137,206
    Earnings before Depreciation,
Amortization, and Deferred Taxes            $     2,944,818     $     5,536,262

EBDDT is calculated by adding depreciation, amortization, and the change in deferred income tax to net income, as they represent non-cash charges. EBDDT is not a measure of operating results or cash flows from operating activities as defined by U.S. generally accepted accounting principles. Further, EBDDT is not necessarily indicative of cash availability to fund cash needs and should not be considered as an alternative to cash flow as a measure of liquidity. We believe, however, that EBDDT provides relevant information about operations and is useful, along with net income, for an understanding of our operating results.

EBDDT totaling $952,783 and $2,944,818 for the third quarter and first nine months of 2009, respectively, was lower than 2008's third quarter and first nine months of EBDDT amounting to $1,103,586 and $5,536,262, respectively. The decrease in EBDDT for both periods was partially due to the reduced add back for deferred income taxes, primarily associated with taxes relating to stock options accruals, with lower earnings also contributing significantly to the decrease in EBDDT for the nine month period.

REAL ESTATE OPERATIONS

REAL ESTATE SALES

During the third quarter of 2009 the sale of nine acres of land produced revenues and profits of $959,081 and $702,681, respectively. A loss of $247,320 was reported in 2008's third quarter as no land sales occurred during the period. Real estate sales costs and expenses were reduced during 2009's third quarterly period primarily due to lower real estate taxes and compensation costs.

The sale of 16 acres of land during the first nine months of 2009 resulted in the realization of revenues and profits totaling $2,585,974 and $1,772,704, respectively. During 2008's same period the sale of 21 acres of land generated profits of $1,126,881 on revenues totaling $2,358,789. The decrease in costs and expenses during the nine month period was again the result of lower real estate taxes and compensation costs in addition to lower cost of sales associated with the land sales.

INCOME PROPERTIES

When compared to the prior year's same period, revenues from income properties rose a modest 2% for 2009's third quarter to $2,429,747. This rise was due to additional rental income realized from leasing of the new self-developed Class A office building located in Daytona Beach, Florida. Income properties costs and expenses rose 18% during the period on costs, including depreciation, from the office building along with costs associated with the Gateway Commerce Park flex buildings. These increases in revenues and costs and expenses resulted in a 2% decrease in profits to $1,822,976. Third quarter 2008 revenues and net income from income properties totaled $2,380,052 and $1,864,627, respectively.

Year-to-date through September 30, 2009 income properties profit totaled $5,493,982. These profits reflect a modest 1% rise from the profits posted in 2008's same period totaling $5,465,157. The gain in profitability was produced on a 3% rise in revenues offset by a 14% increase in costs and expenses. The increase in revenues was the result of lease revenues from the new office building coupled with additional revenues from the Charlotte, North Carolina, Harris Teeter supermarket building, which was acquired in April 2008. These two factors, in addition to the Gateway Commerce Center flex buildings, also accounted for the rise in costs and expenses through September 30, 2009. Income properties revenues amounted to $7,106,796 and $6,874,518, respectively, for 2009 and 2008.

GOLF OPERATIONS

Losses from golf operations for the quarter ended September 30, 2009, totaled $658,509, an 8% improvement over the loss of $717,416 posted in 2008's third quarter. The improvement was achieved on an 8% gain in total revenues. Revenues of $881,775 were generated in 2009's third quarter with revenues amounting to $814,067 realized in 2008's same period. The increase in revenues was the result of a 7% gain in revenues from golfing activities, coupled with a 12% increase in food and beverage activities. The number of rounds played during the period rose 33%, but was somewhat offset by a 15% decline in the average rate paid per round played. Golf operations costs and expenses rose 1%, to $1,540,284, on higher food and beverage cost of sales and wage costs, due to the increased activity, offset by lower golf course maintenance expenses.

During the first nine months of 2009, a loss of $1,280,710 was realized from golf operations. This loss represented an 11% reduction from the loss of $1,435,487 generated in 2008's first nine month period. Revenues amounting to $3,566,746 were produced during the period, a 2% rise over the prior year's revenues totaling $3,481,770. This revenue gain was generated on a 1% increase in golfing activities revenues in addition to an 8% gain in food and beverage revenues. The number of rounds of golf played during the nine month period rose 28% over the prior year, but was offset by a 19% decline in the average rate paid per round played. Lower compensation costs and golf course maintenance expenses resulted in a 1% decrease in golf operations costs and expenses.

GENERAL, CORPORATE, AND OTHER

During the first nine months of 2009, profits on the release of subsurface interests totaled $32,839, of which $18,289 was earned in the third quarter. Releases were granted on 18 acres and one acre for the nine months and third quarter of 2009, respectively. Profits on the sale of other real estate interests totaled $590,439 and $794,696 for the third quarter and first nine months of 2008, respectively. These profits were realized on the release of subsurface rights on 772 acres, of which the release of 537 acres occurred in the third quarter.

When compared to the prior year's same period, interest and other income decreased 39% for the quarter ended September 30, 2009, to $55,718, and 70% for the nine-month period to $161,712. These declines resulted from lower investment interest earned on decreased investment securities, lower interest earned on mortgage notes receivable due to the non-accrual of interest on delinquent notes, and lower interest on funds held for reinvestment through the like-kind exchange process. During 2008's third quarter and first nine months, interest and other income totaled $91,089 and $535,839, respectively.

General and administrative expenses totaled $1,602,005 in 2009's third quarter, while in 2008's third quarter general and administrative expenses amounted to $1,410,864. This 14% increase was principally the result of increased stock option expense.

Increased stock options accruals accounted for $2,200,945 of the rise in general and administrative expenses during the first nine months of 2009. This variance resulted from a significant decrease in the price of Company stock in the first half of 2008, while the stock price has increased in 2009. Also contributing to the higher expenses were legal and other costs associated with a shareholder lawsuit and proxy contest of approximately $735,000. General and administrative expenses totaled $5,013,474 and $2,555,806 for the nine-month periods ended September 30, 2009 and 2008, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Cash, restricted cash, and investment securities declined $867,959 during the first nine months of 2009, with a balance of $5,244,461 at September 30, 2009. This balance included no funds being held by a qualified intermediary for reinvestment through the like-kind exchange process. The balance of cash, restricted cash, and investment securities totaled $6,112,420 at December 31, 2008. In addition to the decrease in cash and investment securities during the nine-month period, notes payable increased $1,747,161, with $3,983,598 outstanding on the Company's $20,000,000 revolving line of credit at September 30, 2009.

Funds used during the nine-month period were centered around construction and development activities, continued hay conversion, payment of income taxes and dividends. The completion of the 23,000 square-foot "Class A" office building along with the completion of the construction of a road, Tournament Drive, on our core lands adjacent to LPGA Boulevard in Daytona Beach, Florida were the primary uses of the $3.1 million expended for construction and development. Hay conversion costs approximated $850,000 during the period. The payment of income taxes amounted to $1,949,919, with dividends paid totaling $1,431,283, equivalent to $.25 per share, for the nine month period.

During August of 2009 the Company completed the reacquisition of a 6 acre parcel of land through the foreclosure of a mortgage note receivable. The mortgage note receivable was written-off with the land recorded in Land and Development costs in the amount of $1,961,324. There was no gain or loss recognized on the transaction. An additional mortgage note receivable was foreclosed in early November. The mortgage note, valued at $2,269,580 including accrued interest, was secured by 317 acres of property. In determining impairment on notes receivable the Company also evaluates the property which supports the mortgage note.

During the fourth quarter of 2008, our Board of Directors authorized a program to repurchase shares of our common stock having an aggregate value of up to $8,000,000. The authorization permits us to effect the repurchases from time to time through a variety of methods including open market repurchases and privately negotiated transactions. The repurchase plan is intended to be funded through reduced dividend payments in the future. We have no plans to increase debt to fund the repurchase plan. Through November 1, 2009, 4,660 shares had been repurchased at a total cost of $104,648, with no repurchases occurring in the third quarter of 2009.

Capital expenditures for the remainder of 2009 are projected to approximate $2.7 million. These expenditures include tenant improvements at the flex office building located in Gateway Commerce Park, and the continuation of the conversion of timber lands to hay. Also included in capital expenditures for the remainder 2009 is the acquisition of property through Internal Revenue Code
Section 1033 involuntary conversion under threat of condemnation tax deferral provisions. We plan to reinvest $2.2 million by year-end 2009 through this process with an additional $7.9 million to be expended in subsequent years.

At the end of 2008, the Company focused its efforts on obtaining federal stimulus dollars to extend Dunn Avenue, a major east/west thoroughfare bridging Interstate 95, to provide improved access to Company lands. In June, the Company entered into a cost sharing agreement with the City of Daytona Beach and the County of Volusia that will allow the use of federal funds to build this road project. The Company's cost participation of $1,125,000 is not due until 2010.

Capital to fund the planned expenditures in 2009 is expected to be provided from cash and investment securities (as they mature), operating activities, and financing sources that are currently in place, including the $20 million revolving line of credit, which matures on March 29, 2010.

We also believe that we have the ability, if needed, to borrow on a non-recourse basis against our existing income properties, which are all free of debt as of the date of this filing. As additional funds become available through qualified sales, we expect to reinvest in additional real estate opportunities.

Our Board of Directors and management continually review the allocation of any excess capital with the goal of providing the highest long-term return for all shareholders. The reviews consider various alternatives, including increasing or decreasing regular dividends, declaring special dividends, repurchasing stock, and retaining funds for reinvestment, including road development and hay conversion of timber lands. The Board of Directors has reaffirmed its support for the stated business plan of reinvesting agricultural land sales proceeds into 1031 tax-deferred income-producing properties, self-development of income properties, and the creation of infrastructure and entitlements on Company lands to increase long-term shareholder value.

At its regular Board of Directors meeting on October 28, 2009, the Company declared a dividend of $.05 per share. The Company recognizes the importance of providing a quarterly dividend and maintaining that commitment during the recent economic downturn. The Board of Directors will continue to monitor the national and local economic conditions and balance the Company's capital needs against its desire to maintain the quarterly dividend at or near its current level

CRITICAL ACCOUNTING POLICIES

The profit on sales of real estate is accounted for in accordance with the Accounting for Sales of Real Estate Topic of FASB ASC. We recognize revenue from the sale of real estate at the time the sale is consummated unless the property is sold on a deferred payment plan and the initial payment does not meet established criteria, or we retain continuing involvement with the property. A majority of our land sales contracts contain an anti-speculation clause. This clause requires the buyer to begin construction of their project within a specified period of time, generally two years. If this requirement is not met, we have the right, but not the obligation, to repurchase the property at its original sales price.

We acquire income properties with long-term leases in place. Upon acquisition, the portion of the purchase price that represents the market value associated with the lease is allocated to an intangible asset. The amount of the intangible asset represents the cost of replacing the tenant should the lease be discontinued. Factors such as vacancy period, tenant improvements, and lease commissions, among others, are considered in calculating the intangible asset. The intangible asset is amortized over the remaining life of the lease at the time of acquisition. At September 30, 2009, the intangible asset associated with the income properties totaled $4,693,942, net of amortization of $1,902,598.

In accordance with Accounting for the Impairment or Disposal of Long-Lived Assets Topic of FASB ASC we have reviewed the recoverability of long-lived assets, including real estate development, income properties, and other property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may or may not be recoverable. Long-lived assets are evaluated for impairment by using an undiscounted cash flow approach which considers future estimated capital expenditures. Impairment on long-lived assets is measured at fair value. There has been no impairment of long-lived assets reflected in the consolidated financial statements.

At the time our debt was refinanced in 2002, we entered into an interest rate swap agreement. This swap arrangement changes the variable-rate cash flow exposure on the debt obligations to fixed cash flows so that we can manage fluctuations in cash flows resulting from interest rate risk. This swap arrangement essentially creates the equivalent of fixed-rate debt. The above referenced transaction is accounted for under Derivative Instruments and Certain Hedging Activities Topic of FASB ASC. The accounting requires the derivative to be recognized on the balance sheet at its fair value and the changes in fair value to be accounted for as other comprehensive income or loss.

We measure the ineffectiveness of the interest rate swap derivative by comparing the present value of the cumulative change in the expected future cash flows on the variable leg of the swap with the present value of the cumulative change in the expected future interest cash flows on the floating rate liability. This measure resulted in no ineffectiveness for the periods ended September 30, 2009 and September 30, 2008. A liability in the amount of $756,388 at September 30, 2009, has been established on our balance sheet. The change in fair value, net of applicable taxes, in the cumulative amount of $464,611 at September 30, 2009, has been recorded as accumulated other comprehensive loss, a component of shareholders' equity.

We maintain a stock option plan pursuant to which 500,000 shares of our common stock may be issued. The current Plan was approved at the April 25, 2001 shareholders' meeting. Under the Plan, the option exercise price equals the stock market price on the date of grant. The options generally vest over five years and all expire after ten years. The Plan provides for the grant of
(1) incentive stock options, which satisfy the requirements of Internal Revenue Code (IRC) Section 422, and (2) non-qualified options, which are not entitled to favorable tax treatment under IRC Section 422. No optionee may exercise incentive stock options in any calendar year for shares of common stock having a total market value of more than $100,000 on the date of grant (subject to certain carryover provisions).

In connection with the grant of non-qualified options, a stock appreciation right for each share covered by the option may also be granted. The stock appreciation right will entitle the optionee to receive a supplemental payment, which may be paid in whole or in part in cash or in shares of common stock equal to a portion of the spread between the exercise price and the fair market value of the underlying shares at the time of exercise. All options granted to date have been non-qualified options.

Both our stock options and stock appreciation rights are liability classified awards under the Share Based Payment Topic of FASB ASC and are required to be remeasured to fair value at each balance sheet date until the award is settled.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal market risk (i.e., the risk of loss arising from adverse changes in market rates and prices) to which we are exposed is interest rates. The objective of our asset management activities is to provide an adequate level of liquidity to fund operations and capital expansion, while minimizing market risk. We utilize overnight sweep accounts and short-term investments to minimize the interest rate risk. We do not actively invest or trade in equity securities. We do not believe that our interest rate risk related to cash equivalents and short-term investments is material due to the nature of the investments.

We manage our debt considering investment opportunities and risk, tax consequences, and overall financial strategies. We are primarily exposed to interest rate risk on our $8,000,000 ($6,313,878 outstanding at September 30, 2009) long-term mortgage. The borrowing bears a variable rate of interest based on market rates. Management's objective is to limit the impact of interest rate changes on earnings and cash flows and to lower the overall borrowing costs. To achieve this objective, we entered into an interest rate swap agreement during the second quarter of 2002. A hypothetical change in the interest rate of 100 . . .