In 2008, Wilshire primarily engaged in the real estate business. During 2008, 2007 and 2006, the Company also conducted activities related to winding up its oil and gas business which was sold in April 2004.

The real estate business consists of residential and commercial properties in Arizona, New Jersey and Texas. Within this portfolio of properties, certain properties have been designated as being held for sale and have been classified as discontinued operations. Discontinued operations contain properties that may have excellent cash flow or valuation characteristics but that may be positioned for sale at an optimal valuation or may not be in a geographic region that is currently being targeted by the Company. The following discussion takes an income statement approach and discusses the results of operations first for the properties comprising "continuing operations" and then discusses the discontinued operations.

The assets comprising Wilshire's oil and gas business were sold in April 2004, effective March 1, 2004. Oil and gas operations for all periods presented in this report have been classified as discontinued operations.

The Company's activities are reviewed and analyzed in the following discussion, which should be read in conjunction with the financial statements and notes contained in Item 8 of this Annual Report on Form 10-K. Certain statements in this discussion may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect Wilshire's current expectations regarding future results of operations, economic performance, financial condition and achievements of Wilshire, and do not relate strictly to historical or current facts. Wilshire has tried, wherever possible, to identify these forward looking statements by using words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning. Although Wilshire believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties, which may cause the actual results to differ materially from those projected. Such factors include, but are not limited to the risks described in Item 1A of this Annual Report.

Critical Accounting Policies

Pursuant to the Securities and Exchange Commission ("SEC") disclosure guidance for "Critical Accounting Policies," the SEC defines Critical Accounting Policies as those that require the application of management's most difficult, subjective, or complex judgments, often because of the need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods.

Wilshire's discussion and analysis of its financial condition and results of operations is based upon Wilshire's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires Wilshire to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Wilshire bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Impairment of Property and Equipment

On a periodic basis, the Company assesses whether there are any indicators that the value of its real estate properties may be impaired. A property's value is considered impaired if management's estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property. The Company does not believe that at December 31, 2008 or 2007 the value of any of its properties was impaired.

Revenue Recognition

Revenue from real estate properties is recognized during the period in which the premises is occupied and rent is due from tenants. For commercial properties, rental revenue is recognized on a straight-line basis over the term of the lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in accounts receivable. For residential properties where lease agreements are almost exclusively for one-year terms, rental revenue is recognized in accordance with the contractual terms of the underlying leases. The Company follows a policy of aggressively pursuing its rental tenants to ensure timely payment of amounts due. When a tenant becomes 30 days in arrears on paying rent, the amount is written-off and turned over to a collection agency for action. Accordingly, no allowance for uncollectible accounts is maintained for the Company's real estate tenants.

Foreign Operations

The assets and liabilities of Wilshire's substantially liquidated Canadian subsidiary have been translated at year-end exchange rates. The related revenues and expenses have been translated at average annual exchange rates. Translation gains or losses are included in the Company's results of operations.

As a result of the sale of the Canadian oil and gas assets in 2004, Wilshire provided for at December 31, 2005 and paid during 2006, $2.1 million of United States taxes. During 2005, the Company's Canadian subsidiary declared and paid to Wilshire dividends amounting to $11.5 million, resulting in the payment of $576,000 of Canadian taxes. See Note 1 "Foreign Operations" of the Notes to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Stock-Based Compensation

Wilshire followed the disclosure-only provisions of Statement of Financial Accounting Standards ("SFAS") 123 and SFAS 148. In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123R, "Accounting for Stock-Based Compensation." The provisions of SFAS 123R were adopted commencing January 1, 2006. SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123R requires that the fair value of such equity instruments be recognized as an expense in the historical financial statements as services are performed. Prior to SFAS 123R, only certain pro forma disclosures of fair value were required. The adoption of this new accounting pronouncement did not have a material impact on Wilshire's consolidated financial statements with respect to previously granted equity compensation.

Effects of Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"), which defines fair value, establishes a framework for measuring fair value in U.S. generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company's adoption of SFAS 157 in 2008 did not have a material impact on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115" ("SFAS 159"), which is effective for fiscal years beginning after November 15, 2007. SFAS 159 permits entities to measure eligible financial assets, financial liabilities and firm commitments at fair value, on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other U.S. generally accepted accounting principles. The fair value measurement election is irrevocable and subsequent changes in fair value must be recorded in earnings. The Company's adoption of SFAS 159 in 2008 did not have a material impact on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (R), "Business Combinations" ("SFAS 141(R)") and SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements" ("SFAS 160"). The standards are intended to improve, simplify, and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements. SFAS 141(R) requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. SFAS 141(R) is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Earlier adoption is prohibited.

SFAS 160 is designed to improve the relevance, comparability, and transparency of financial information provided to investors by requiring all entities to report noncontrolling (minority) interests in subsidiaries in the same way-as equity in the consolidated financial statements. Moreover, SFAS 160 eliminates the diversity that currently exists in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. In addition, SFAS 160 shall be applied prospectively as of the beginning of the fiscal year in which it is initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. The Company does not have an outstanding noncontrolling interest in one or more subsidiaries and therefore, SFAS 160 is not applicable to the Company at this time.

In April 2008, the FASB issued FASB Staff Position ("FSP") FAS 142-3, "Determination of Useful Life of Intangible Assets" ("FSP FAS 142-3"). FSP FAS 142-3 amends the factors that should be considered in developing the renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142, "Goodwill and Other Intangible Assets." FSP FAS 142-3 also requires expanded disclosure related to the determination of intangible asset useful lives. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008. Earlier adoption is not permitted. The Company does not expect FSP FAS 142-3 to have a material impact on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section, 411 "The Meaning of 'Present Fairly in Conformity with Generally Accepted Accounting Principles'" . The statement is intended to improve financial reporting by identifying a consistent hierarchy for selecting accounting principles to be used in preparing financial statements that are presented in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Company has not completed its evaluation of the effects, if any, that SFAS 162 may have on its consolidated financial position, results of operations and cash flows.

Results of Operations

The following table presents the increases (decreases) in each major statement of income category for the year ended December 31, 2008 ("2008") compared with the year ended December 31, 2007 ("2007") and 2007 compared with the year ended December 31, 2006 ("2006").

                                             Increase (Decrease) in Consolidated Statements
                                                of Operations Categories for the Periods:
                                               2008 v. 2007                    2007 v. 2006
                                        Amount ($)            %          Amount ($)         %

Revenues                               $    (217,000 )          (2.3 )% $    586,000           6.6 %
Costs and expenses:
Operating expenses                            29,000             0.5 %       588,000          11.1 %
Depreciation                                (180,000 )         (13.2 )%     (619,000 )       (31.2 )%
General and administrative                   199,000             5.5 %     1,142,000          46.1 %
Total costs and expenses                      48,000            0.4  %     1,111,000         11.4  %
Loss from Operations                        (265,000 )         18.6  %      (525,000 )       58.1  %
Other Income
Dividend and interest income                (125,000 )         (23.1 )%     (296,000 )       (35.4 )%
Sale of marketable securities               (188,000 )             -               -             -
Other income                                 (36,000 )        (100.0 )%       29,000         414.3 %
Interest expense                              61,000            (3.3 )%      (26,000 )        (1.4 )%
Loss before provision for taxes             (553,000 )          20.6  %     (818,000 )        43.7  %
Income tax benefit                           (22,000 )           1.7 %      (492,000 )        59.3 %
Loss from continuing operations             (531,000 )          38.8 %      (326,000 )        31.3  %
Discontinued operations - real
estate
Loss from operations                         (80,000 )          15.6 %       509,000         (49.9 )%
Gain from sales                              118,000            17.2 %    (3,545,000 )       (83.7 )%
Discontinued operations - oil & gas                                                -
Loss from operations                          24,000             8.0 %       185,000         160.9 %
Net loss                               $    (469,000 )         (52.6 )% $ (3,177,000 )      (139.0 )%
Basic earnings (loss) per share:
Loss from continuing operations        $       (0.07 )          41.2 %  $      (0.04 )        30.8 %
Income from discontinued operations             0.01            16.7 %         (0.36 )       (85.7 )%
Net income (loss) applicable to
common stockholders                    $       (0.06 )          54.5 %  $      (0.40 )      (137.9 )%
Diluted earnings (loss) per share:
Loss from continuing operations        $       (0.07 )          41.2 %  $      (0.04 )        30.8 %
Income from discontinued operations             0.01            16.7 %         (0.35 )       (85.4 )%
Net income (loss) applicable to
common stockholders                    $       (0.06 )          54.5 %  $      (0.39 )      (139.3 )%

Results of Operations - For the year ended December 31, 2008 as compared to the year ended December 31, 2007

Overview

Net loss for the year ended December 31, 2008 was $1,361,000 or $0.17 per basic and diluted share, an increase of $469,000 from a net loss of $892,000 or $0.11 per basic and diluted share for the year ended December 31, 2007. Results of operations are shown as continuing and discontinued, with discontinued operations comprised of the results of operations from the Company's oil and gas businesses, the results of the sale of the oil and gas properties, the operating results from real estate properties held for sale and the gain from real estate properties held for sale that were sold during the year.

Continuing Operations:

Loss from continuing operations was $1,899,000 during 2008 as compared to a loss of $1,368,000 during 2007. Results per basic and diluted share from continuing operations were $(0.24) for the year ended December 31, 2008 as compared to $(0.17) per basic and diluted share during 2007. The increased loss from continuing operations during 2008 as compared to 2007 primarily relates to an increase in general and administrative expense of $199,000, a decrease in dividend and interest income of $125,000 and a loss on the sale of marketable securities of $188,000 during the year end December 31, 2008.

Reported loss from continuing operations in 2008 compared with 2007 reflects an increased loss from operations (defined as revenues reduced by operating expenses, depreciation and general and administrative expenses), that was partially offset by the other factors described herein. These factors are discussed below.

Segment Information

Wilshire presently conducts business in the residential (including condominiums
that it owns and rents) and commercial real estate segments. The following table
sets forth comparative data for Wilshire's real estate segments in continuing
operations.

                   Residential Real Estate                      Commercial Real Estate                    Total               Total
                Year ended            Increase              Year ended            Increase             Year ended            Increase
               December 31,          (Decrease)            December 31,          (Decrease)           December 31,          (Decrease)
              2008       2007        $        %           2008       2007        $         %         2008       2007       $         %
              (In 000's of $)                             (In 000's of $)                            (In 000's of $)

Total
revenues    $   7,770   $ 7,765   $    5       0.1 %    $   1,433   $ 1,655   $ (222 )    (13.4 )% $   9,203   $ 9,420   $ (217 )    (2.3 )%

Operating
expenses        5,192     5,174       18       0.3 %          700       689       11        1.6 %      5,892     5,863       29       0.5 %

Net
operating
income      $   2,578   $ 2,591   $  (13 )   (.0.5 )%   $     733   $   966   $ (233 )    (24.1 )% $   3,311   $ 3,557   $ (246 )    (6.9 )%

Reconciliation to consolidated loss from continuing operations:

Net operating income                          $     3,311     $  3,557
Depreciation expense                               (1,188 )     (1,368 )
General and administrative expense                 (3,816 )     (3,617 )
Other income                                          227          576
Interest expense                                   (1,776 )     (1,837 )
Income tax benefit                                  1,343        1,321
Loss from continuing operations               $    (1,899 )   $ (1,368 )

The above table details the comparative net operating income ("NOI") for Wilshire's residential and commercial real estate segments, and reconciles the combined NOI to consolidated loss from continuing operations. NOI is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes depreciation and interest expense. Wilshire assesses and measures segment operating results based on NOI, which is a direct measure of each property's contribution to the results of the Company before considering revenues from treasury activities, overhead expenses and other costs that are not directly related to the performance of a property. The Company believes NOI is a more descriptive measure of the Company's performance than loss from continuing operations. NOI is not a measure of operating results or cash flow as measured by accounting principles generally accepted in the United States of America and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

Residential Segment

The residential segment is comprised of Sunrise Ridge Apartments and Van Buren Apartments, both in Arizona, Wellington Estates and Summercreek Apartments, both in Texas, and Alpine Village Apartments in New Jersey. During 2008, NOI decreased by $13,000 or .5% to $2,578,000 as a result of an increase in operating expenses of $18,000 or .4% to $5,192,000 which was partially offset by an increase in revenues of $5,000 or .1% to $7,770,000.

The increase in revenues primarily relates to an overall increase in rental rates. Significant and successful efforts have been made at the Texas and New Jersey properties to increase occupancy and related revenues. The Arizona properties were impacted by the economic downturn in 2008. Vacancy levels increased in Arizona, while supplemental revenues decreased due to the inability to collect early lease termination fees.

The increase in operating expenses related to the residential properties in Texas and New Jersey and was related to occupancy turnover and required repairs to these properties. The reduced costs at the Arizona properties are a result of costs controls and reduced revenues which had a direct impact on operating expenses. All residential properties experienced reduced insurance costs during 2008 as a result of effective risk management control at the properties.

Commercial Segment

The commercial segment is comprised of Royal Mall Plaza in Mesa, Arizona and Tempe Corporate Center in Tempe, Arizona. During 2008, NOI decreased $233,000 or 24.1% to $733,000, primarily due to a decrease in revenues of $222,000 or 13.4% to $1,433,000 and a slight increase in operating expenses of $11,000 or 1.6% to $700,000. The revenue decrease was attributable to a $133,000 decrease in revenue at Royal Mall (Arizona) and an $89,000 decrease at Tempe Corporate Center (Arizona). The decrease in revenue is directly related to increased vacancy levels during part of 2008 as compared to 2007, as well as the impact of tenant space reductions.

Revenues

                                          Years Ended December 31,         Increase
                                            2008             2007         (Decrease)
   Sunrise Ridge, Arizona               $   2,732,000     $ 2,870,000     $  (138,000 )
   Van Buren Apartments, Arizona              655,000         662,000          (7,000 )
   Wellington Estates, Texas                1,825,000       1,775,000          50,000
   Alpine Village, New Jersey               1,394,000       1,327,000          67,000
   Summercreek, Texas                       1,164,000       1,131,000          33,000
   Sub-total - Residential Properties       7,770,000       7,765,000           5,000

   Royal Mall Plaza, Arizona                  577,000         710,000        (133,000 )
   Tempe Corporate Center, Arizona            856,000         945,000         (89,000 )
   Sub-total- Commercial Properties         1,433,000       1,655,000        (222,000 )

   Total Revenues                       $   9,203,000     $ 9,420,000     $  (217,000 )

Revenues from rental properties amounted to $9,203,000 in 2008, a decrease of $217,000 or 2.3%, from $9,420,000 in 2007. The decrease during 2008 is attributable to Sunrise Ridge Apartments, which had a decrease in rental revenues of $138,000 or 4.8%, Royal Mall Plaza, which had a decrease in rental income of $133,000 or 18.7% and Tempe Corporate Center which had a decrease in rental income of $89,000 or 9.4%, which was partially offset by increased rental income at Alpine Village which experienced a $67,000 increase in rental income or 5.0%, Wellington Estates, which had an increase in rental income of $50,000 or 2.8% and Summercreek, which had an increase in rental income of $33,000 or 2.9%.

Operating Expenses

                                          Years Ended December 31,          Increase
                                            2008             2007          (Decrease)
   Sunrise Ridge, Arizona               $   1,619,000     $ 1,627,000     $     (8,000 )
   Van Buren Apartments, Arizona              433,000         453,000          (20,000 )
   Wellington Estates, Texas                1,316,000       1,303,000           13,000
   Alpine Village, New Jersey                 927,000         914,000           13,000
   Summercreek, Texas                         897,000         877,000           20,000
   Sub-total - Residential Properties       5,192,000       5,174,000           18,000

   Royal Mall Plaza, Arizona                  301,000         300,000            1,000
   Tempe Corporate Center, Arizona            399,000         389,000           10,000
   Sub-total- Commercial Properties           700,000         689,000           11,000

   Total Operating Expenses             $   5,892,000     $ 5,863,000     $     29,000

Operating expenses were $5,892,000 in 2008, which is an increase of $29,000 or .5% as compared to $5,863,000 during 2007. The overall increase in operating expenses during 2008 was primarily related to professional fees associated with collections and lease transactions at our residential properties.

Depreciation expense amounted to $1,188,000 in 2008, a decrease of $180,000 or 13.2% as compared to $1,368,000 during 2007. The decrease relates to fully depreciated assets in 2008.

General and administrative expense increased $199,000, or 5.5%, to $3,816,000 in 2008 as compared to $3,617,000 during 2007. This increase was primarily the result of the legal costs associated with the proposed sale of the Company which was partially offset by a decrease in personnel related costs.

Other income decreased by $349,000 to $227,000 in 2008 as compared to $576,000 in 2007. The decrease primarily relates to a decline in interest and dividend income as a result of the declining interest rates during 2008.

Interest expense decreased to $1,776,000 in 2008 from $1,837,000 during 2007. The decrease primarily relates to the reduction in the Company's mortgage liability and the payoff of the mortgage on the Tamarac Office Plaza which was sold in May 2008. In addition, during 2008 the interest rate on the mortgage at Tempe Corporate Center experienced a one-time rate adjustment which resulted in a reduction in interest expense of $41,000 on this property as compared to 2007. The current interest rate on the Tempe Corporate Center mortgage will be maintained until maturity.

The provision for income taxes amounted to a tax benefit of $1,343,000 in 2008 compared to a tax benefit of $1,321,000 during 2007. The change in the provision for income taxes is related to the level of loss from continuing operations in 2008 compared to 2007.

Discontinued Operations, Net of Taxes:

Real Estate

. . .