TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	ITEM 6. EXHIBITS
SIGNATURES
EX-31.(A) SECTION 302, CERTIFICATION OF THE CEO
EX-31.(B) SECTION 302, CERTIFICATION OF THE CFO
EX-32.(A) SECTION 906, CERTIFICATION OF THE CEO
EX-32.(B) SECTION 906, CERTIFICATION OF THE CFO

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Table of Contents

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ABRAMS INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2006, AND APRIL 30, 2005
(UNAUDITED)

NOTE 1. ORGANIZATION AND BUSINESS

Abrams Industries, Inc. (together with its subsidiaries, the “Company”) was organized under Delaware law in 1960. In 1984, the Company changed its state of incorporation from Delaware to Georgia. The Company (i) provides energy engineering and analytical consulting services and develops, implements and supports facility management software applications; (ii) implements energy saving lighting programs and provides other energy services, including facility related improvements that reduce energy and operating costs; and (iii) engages in real estate investment and development.

NOTE 2. UNAUDITED STATEMENTS

The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations, although management believes that the accompanying disclosures are adequate to make the information presented not misleading. In the opinion of management, the accompanying financial statements contain all adjustments, consisting of normal recurring accruals that are necessary for a fair statement of the results for the interim periods presented. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2005. Results of operations for interim periods are not necessarily indicative of annual results.

Certain reclassifications have been made to the fiscal 2005 consolidated financial statements to conform to the classifications adopted in 2006.

NOTE 3. SIGNIFICANT ACCOUNTING POLICIES

For purposes of the required pro forma disclosures required by Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, as amended by SFAS 148, Accounting for Stock-Based Compensation — Transition and Disclosure, the Company has computed the value of all stock option awards granted for the quarter ended January 31, 2006, and January 31, 2005, using the Black-Scholes option pricing model.

If the Company had accounted for its stock-based compensation awards in accordance with SFAS 123, pro forma results would have been as follows:

		Quarter								Nine Months
		Ended January 31,								Ended January 31,
		2006				2005				2006				2005
Net earnings (loss), as reported		$	493,530			$	(248,240	)		$	133,590			$	(832,354	)
Add: Stock-based compensation			4,913				13,887				21,000				48,568
Deduct: Total stock-based compensation expense as determined under fair value based method for all awards, net of related tax effects			(20,184	)			(31,622	)			(78,869	)			(138,904	)
Add: Forfeitures, net of related tax effects			—				1,128				9,659				47,663
Pro forma net earnings (loss)		$	478,259			$	(264,847	)		$	85,380			$	(875,027	)
Net earnings (loss) per share:
Basic and diluted — as reported		$	0.14			$	(0.07	)		$	0.04			$	(0.24	)
Basic and diluted — pro forma		$	0.14			$	(0.08	)		$	0.02			$	(0.25	)

The Company adjusted the stock awards and stock options previously awarded for the 10% stock dividend declared and distributed during the quarter ended October 31, 2005 (See Note 7). All share amounts have been adjusted on a prospective basis to reflect the stock dividend.

Options to purchase 773,890 shares were outstanding at January 31, 2006, of which 646,868 options were vested. The Company did not grant any stock options or shares of restricted stock for the quarters ended January 31, 2006, and January 31, 2005. The Company granted 4,000 stock options and 900 shares of restricted stock for the first nine months ended January 31, 2006, and granted 84,900 stock options and 7,500 shares of restricted stock for the first nine months ended January 31, 2005. The number of stock options forfeited in the quarters ended January 31, 2006, and January 31, 2005, was 0 and 2,200, respectively. The number of stock options forfeited in the first nine months ended January 31, 2006, and January 31, 2005, was 16,248 and 68,200, respectively. There were 4,028 stock options that were “in-the-money” and exercisable as of January 31, 2006. The number of shares of unvested and restricted stock forfeited in the quarters ended January 31, 2006, and January 31, 2005, was 110 and 0, respectively. The number of shares of unvested and restricted stock forfeited in the first nine months ended January 31, 2006, and January 31, 2005, was 320 and 700, respectively.

NOTE 4. RECEIVABLES

All net contract and trade receivables are expected to be collected within one year.

NOTE 5. DISCONTINUED OPERATIONS

Construction Segment
During fiscal 2004, the Company made the decision to curtail its operations as a general contractor, and pursuant to this decision, all operating activities were ceased. The former Construction Segment has been classified as a discontinued operation.

Real Estate Sales of Income-Producing Properties
The Company is in the business of creating long-term value by periodically realizing gains through the sale of existing real estate assets, and then redeploying its capital by reinvesting the proceeds from such sales. Effective May 1, 2002, the Company adopted SFAS 144, Accounting for the Impairment or

Disposal of Long-Lived Assets, which requires, among other things, that the operating results of certain income-producing assets, sold subsequent to April 30, 2002, be included in discontinued operations in the statements of operations for all periods presented. The Company classifies an asset as held for sale when the asset is under a binding sales contract with minimal contingencies, and the buyer is materially at risk if the buyer fails to complete the transaction. However, each potential transaction is evaluated based on its separate facts and circumstances. Pursuant to this standard, as of January 31, 2006, the Company had no assets that were classified as held for sale.

On January 30, 2006, the Company sold its professional medical office building located in Douglasville, Georgia, which the Company had acquired in April 2004, and recognized a pre-tax gain on the sale of approximately $1.37 million. On April 18, 2005, the Company sold its shopping center located in Jackson, Michigan, and recognized a pre-tax gain of approximately $4.1 million. On February 9, 2005, the Company sold its shopping center in Cincinnati, Ohio, and recognized a pre-tax gain of approximately $850,000. As a result of these transactions, the Company’s financial statements have been prepared with the assets, liabilities, results of operations, cash flows, and the gains on the sales of these properties shown as discontinued operations. All historical statements have been restated in accordance with SFAS 144. Summarized financial information for discontinued operations for the quarters and nine month periods ended January 31, 2006, and 2005, is as follows:

		Third Quarter Ended								Nine Months Ended
		January 31,								January 31,
		2006				2005				2006				2005
REVENUES:
Construction		$	—			$	—			$	40			$	145,513
Rental properties			178,634				552,472				513,103				1,513,655
Total revenues			178,634				552,472				513,143				1,659,168
COSTS AND EXPENSES:
Construction cost and expenses			—				—				(25,964	)			114,734
Rental property operating expenses, including depreciation			111,708				406,706				386,058				1,060,357
Interest expense and prepayment fees			201,380				113,409				319,983				343,266
Construction selling, general & administrative			29,246				(18,667	)			101,315				130,326
Total costs and expenses			342,334				501,448				781,392				1,648,683
(Loss) earnings from discontinued operations			(163,700	)			51,024				(268,249	)			10,485
Income tax (benefit) expense			(62,205	)			23,531				(101,934	)			12,855
(Loss) earnings from discontinued operations, net of tax			(101,495	)			27,493				(166,315	)			(2,370	)
Gain on sale from real estate			1,371,658				—				1,371,658				—
Income tax expense			521,230				—				521,230				—
Gain on sale from real estate, net of tax			850,428				—				850,428				—
Earnings (loss) from discontinued operations, net of tax		$	748,933			$	27,493			$	684,113			$	(2,370	)

		Balances at
Assets of discontinued operations		January 31, 2006				April 30, 2005
Receivables, net		$	—			$	101,257
Other current assets			30,393				41,724
Income-producing properties			—				3,720,273
Intangible assets			—				369,714
Other assets			—				84,151
		$	30,393			$	4,317,119

		Balances at
Liabilities of discontinued operations		January 31, 2006				April 30, 2005
Trade and subcontractors payables		$	26,721			$	76,723
Accrued expenses			31,169				194,123
Current maturities of long-term debt			—				55,342
Mortgage notes payable			—				2,831,091
		$	57,890			$	3,157,279

NOTE 6. OPERATING SEGMENTS

The Company has three operating segments: Energy and Facilities Solutions, Energy Services, and Real Estate. The table below shows selected financial data on a segment basis. Net earnings (loss) is total revenues less operating expenses, including depreciation, interest, and income taxes. In this presentation, management fee expense charged by the Parent Company has not been allocated to the subsidiaries.

		Energy and
For the Quarter Ended January 31, 2006		Facilities Solutions				Energy Services				Real Estate				Parent				Eliminations				Consolidated
										(1)
Revenues from unaffiliated customers		$	971,079			$	1,925,207			$	1,540,032			$	—			$	—			$	4,436,318
Interest and other income			205				24,340				254,811				10,948				(182,392	)			107,912
Intersegment revenue			—				—				134,613				—				(134,613	)			—
Total revenues from continuing operations		$	971,284			$	1,949,547			$	1,929,456			$	10,948			$	(317,005	)		$	4,544,230
Net earnings (loss)(2)		$	(147,771	)		$	76,852			$	1,106,748			$	(547,322	)		$	3,497			$	492,004

		Energy and								Real Estate
For the Quarter Ended January 31, 2005		Facilities Solutions				Energy Services				(1)				Parent				Eliminations				Consolidated
Revenues from unaffiliated customers		$	839,864			$	2,478,420			$	1,415,138			$	—			$	—			$	4,733,422
Interest and other income			—				(8,100	)			88,008				6,717				(59,378	)			27,247
Intersegment revenue			14,867				—				113,599				—				(128,466	)			—
Total revenues from continuing operations		$	854,731			$	2,470,320			$	1,616,745			$	6,717			$	(187,844	)		$	4,760,669
Net (loss) earnings (2)		$	(192,317	)		$	109,093			$	266,944			$	(550,941	)		$	111,550			$	(255,671	)

		Energy and								Real Estate
For the Nine Months Ended January 31, 2006		Facilities Solutions					Energy Services			(1)				Parent				Eliminations				Consolidated
Revenues from unaffiliated customers		$	2,865,031			$	5,894,848			$	4,584,054			$	—			$	—			$	13,343,933
Interest and other income			1,938				33,870				827,428				24,588				(427,950	)			459,874
Intersegment revenue			—				—				396,506				—				(396,506	)			—
Total revenues from continuing operations		$	2,866,969			$	5,928,718			$	5,807,988			$	24,588			$	(824,456	)		$	13,803,807
Net earnings (loss)(2)		$	(405,211	)		$	313,081			$	1,901,083			$	(1,631,518	)		$	(3,838	)		$	173,597

		Energy and								Real Estate
For the Nine Months Ended January 31, 2005		Facilities Solutions				Energy Services				(1)				Parent				Eliminations				Consolidated
Revenues from unaffiliated customers		$	2,670,159			$	6,434,818			$	6,778,226			$	—			$	—			$	15,883,203
Interest and other income			—				3,025				236,415				21,923				(159,492	)			101,871
Intersegment revenue			14,867				—				371,352				—				(386,219	)			—
Total revenues from continuing operations		$	2,685,026			$	6,437,843			$	7,385,993			$	21,923			$	(545,711	)		$	15,985,074
Net (loss) earnings (2)		$	(410,899	)		$	(50,897	)		$	1,291,694			$	(1,854,624	)		$	262,962			$	(761,764	)

	(1)		The Company is in the business of creating long-term value by periodically realizing gains through the sale of income-producing properties. The Real Estate Segment’s net earnings include results from income-producing properties that are reflected as discontinued operations pursuant to SFAS 144, including gains on the sale of those properties.
	(2)		The Company has changed its measurement of profit or loss previously disclosed from net earnings (loss) from continuing operations before income taxes to net earnings (loss). The chief executive officer uses this measurement to analyze each Segment’s operating performance.

The following is a reconciliation of Segment net earnings (loss) shown in the table above to consolidated net earnings (loss) on the statements of operations for the quarters and nine months ended January 31, 2006, and 2005:

		Quarter Ended								Nine Months Ended
		January 31,								January 31,
		2006				2005				2006				2005
Consolidated Segment net earnings (loss)		$	492,004			$	(255,671	)		$	173,597			$	(761,764	)
Discontinued Construction Segment net earnings (loss)			1,526				80,716				(40,007	)			(70,590	)
Eliminations related to Construction Segment			—				(73,285	)			—				—
Consolidated net earnings (loss)		$	493,530			$	(248,240	)		$	133,590			$	(832,354	)

NOTE 7. EARNINGS (LOSS) PER SHARE

Basic earnings per share are computed by dividing net earnings (loss) by the weighted average shares outstanding during the reporting period. Diluted earnings per share are computed giving effect to dilutive stock equivalents resulting from outstanding stock options and stock warrants. The dilutive effect on the number of common shares for the third quarter and for the first nine months of fiscal 2006 was 626 and 67,541 shares, respectively, and was 711 and 287 shares, respectively, for the third quarter and for the first nine months of fiscal 2005. Since the Company had a loss from continuing operations for all periods presented, all stock equivalents were antidilutive during these periods, and therefore, are excluded when determining the diluted weighted average shares outstanding.

On August 25, 2005, the Company awarded a stock dividend of ten percent (10%) to all shareholders of record on September 27, 2005. On October 11, 2005, the Company issued 335,203 shares of stock pursuant to the stock dividend. Earnings (loss) per share have been adjusted retroactively to present the shares issued, including the shares pursuant to the stock dividend, as outstanding for all periods presented.

NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amounts and accumulated amortization for all of the Company’s intangible assets as of January 31, 2006, are as follows:

		Gross Carrying				Accumulated
		Amount				Amortization
Amortized intangible assets:
Proprietary facility management software applications		$	2,253,051			$	774,614
Computer software			415,085				391,719
Real estate lease costs			1,184,633				715,443
Customer relationships			218,000				90,833
Deferred loan costs			751,547				535,984
Other			55,608				36,895
		$	4,877,924			$	2,545,488
Unamortized intangible assets:
Trademark		$	708,707			$	—
Goodwill		$	5,458,717			$	—

Aggregate amortization expense for all amortized intangible assets
For the three months ended January 31, 2006		$	145,068
For the nine months ended January 31, 2006			394,833
For the three months ended January 31, 2005			136,817
For the nine months ended January 31, 2005			408,652

The Company tested goodwill impairment and intangible assets, with indefinite useful lives related to its Energy Services Segment as of December 19, 2005, for impairment, as required by SFAS 142, utilizing the estimated discounted cash flows. The analysis did not result in an impairment.

NOTE 9. DISPOSITIONS

On January 30, 2006, the Company closed on the sale of its medical office building in Douglasville, Georgia, which it had acquired in April 2004, for a sales price of $5.5 million, resulting in a pre-tax gain of approximately $1.37 million. The Company provided financing for a portion of the transaction and recorded a note receivable in the amount of $3.3 million, bearing interest at an annual rate of 5.5%, commencing on March 1, 2006, with interest only payments due monthly until maturity on May 31, 2006. The $3.3 million is included in notes receivable on the accompanying balance sheet. After selling expenses and the repayment of the mortgage note payable, the sale generated proceeds of approximately $2.5 million. The Company currently intends to use the net proceeds from this sale to acquire an additional income producing property, which would qualify the sale under Internal Revenue Code Section 1031 for federal income tax deferral, and has assigned the note receivable to a third party intermediary in connection therewith.

On December 22, 2005, the Company closed on the sale of a 4.7 acre tract of land in Louisville, Kentucky, for a sales price of approximately $270,000, resulting in a pre-tax gain of approximately $185,000. After selling expenses, the sale generated proceeds of approximately $265,000.

On October 28, 2005, the Company closed on the sale of one of its outparcels located in North Fort

Myers, Florida, for a sales price of $625,000, resulting in a pre-tax gain of approximately $296,000. After selling expenses, the sale generated proceeds of approximately $577,000 of which $450,000 was recorded as a note receivable, bearing interest at an annual rate of 7.25%, commencing on December 1, 2005, with interest only payments due monthly until maturity on April 28, 2006.

On October 21, 2005, the Company closed on the sale of one of its outparcels located in North Fort Myers, Florida, for a sales price of approximately $529,000, resulting in a pre-tax gain of approximately $246,000. After selling expenses, the sale generated net cash proceeds of approximately $488,000.

NOTE 10. COMMITMENTS AND CONTINGENCIES

The Company is subject to legal proceedings and other claims that arise in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, the Company believes that the final outcome of these matters will not have a material adverse effect on the Company’s financial position or results of operations.

NOTE 11. SUBSEQUENT EVENT

The Company has entered into a contract to sell an approximately seven acre parcel of land in North Fort Myers, Florida, at a gain. The contract specifies a closing date in fiscal 2006. The sale is subject to customary conditions, and there can be no assurance that the contract will close.

The Company has entered into a contract to sell the Company’s leaseback interest in a shopping center located in Bayonet Point, Florida, at a gain. The contract specifies a closing date in fiscal 2006. The sale is subject to customary conditions, and there can be no assurance that the contract will close.

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

The following discussion should be read in conjunction with the consolidated financial statements, including the notes to those statements, which are presented elsewhere in this report. The Company also recommends that this discussion and analysis be read in conjunction with the management’s discussion and analysis section and the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2005.

The Company’s fiscal year 2006 ends April 30, 2006.

In the following charts, changes in revenues, costs and expenses and changes in selling, general and administrative expenses from period to period are analyzed on both segment and consolidated basis. For net earnings and similar profit information on a consolidated basis, please see the Company’s consolidated financial statements.

Pursuant to SFAS 144, the figures shown in the following charts for all periods presented do not include Real Estate Segment revenues, cost and expenses, and selling, general and administrative expenses, generated by certain owned income-producing properties which have been sold, including the gains on the sale of these properties; such amounts have been reclassified to discontinued operations. See “Critical Accounting Policies – Discontinued Operations” later in this discussion and analysis section.

Results of operations of the third quarter and first nine months of fiscal 2006, compared to the third quarter and first nine months of fiscal 2005

REVENUES From Continuing Operations

For the third quarter of fiscal 2006, consolidated revenues from continuing operations, including interest income and other income, and net of intersegment eliminations, were $4,544,230 compared to $4,760,669 for the third quarter of fiscal 2005, a decrease of 5%. For the first nine months of fiscal 2006, consolidated revenues from continuing operations were $13,803,807, compared to $15,985,074 for the first nine months of fiscal 2005, a decrease of 14%.

The figures in Chart A are segment revenues from continuing operations, net of intersegment eliminations, and do not include interest income or other income.

CHART A
REVENUES FROM CONTINUING OPERATIONS BY SEGMENT
(Dollars in Thousands)

		Third Quarter Ended								Amount				Percent				Nine Months Ended								Amount				Percent
		January 31,								Increase				Increase				January 31,								Increase				Increase
		2006				2005				(Decrease)				(Decrease)				2006				2005				(Decrease)				(Decrease)
Energy and Facilities Solutions(1)		$	971			$	840			$	131				16			$	2,865			$	2,670			$	195				7
Energy Services (2)			1,925				2,478				(553	)			(22	)			5,895				6,435				(540	)			(8	)
Real Estate (3)			1,540				1,415				125				9				4,584				6,778				(2,194	)			(32	)
		$	4,436			$	4,733			$	(297	)			(6	)		$	13,344			$	15,883			$	(2,539	)			(16	)

NOTES TO CHART A

(1)

Energy and Facilities Solutions revenues from continuing operations increased $131,000 or 16% for the third quarter of fiscal 2006, and $195,000 or 7% for the first nine months of fiscal 2006, compared to the same periods in fiscal 2005, primarily due to:

	(a)		an increase in revenues related to energy engineering services of approximately $102,000 and $93,000, in the third quarter of fiscal 2006 and for the first nine months of fiscal 2006, respectively; and
	(b)		an increase in revenues related to the installation of the Company’s proprietary facility management software applications of approximately $63,000 and $151,000, in the third quarter and for the first nine months of fiscal 2006, respectively.

(2)		Energy Services revenues from continuing operations decreased $553,000 or 22% for the third quarter of fiscal 2006, compared to the same period in fiscal 2005, because the fiscal 2005 period included revenues from two large contracts in the education and government sector.
		Energy Services revenues from continuing operations decreased $540,000 or 8% for the first nine months of fiscal 2006, compared to the same period in fiscal 2005, primarily due to:

(a)

revenues from two large contracts in fiscal 2005 in the education and government sector;

offset by:

(b)

the recognition of approximately $660,000 in revenues in the first quarter of fiscal 2006 from a consulting services contract that was substantially performed in prior periods and did not have any associated costs and expenses (See Chart B).

(3)		Real estate revenues from continuing operations increased $125,000 or 9% for the third quarter of fiscal 2006, compared to the same period in fiscal 2005, primarily due to an increase in rental income in fiscal 2006 related to increased occupancy.
		Real estate revenues from continuing operations decreased $2,194,000 or 32% for the first nine months of fiscal 2006, compared to the same period in fiscal 2005, primarily due to:

(a)

an increase in rental income in fiscal 2006 of approximately $202,000 related to increased occupancy;

offset by:

(b)

one-time rental revenues of $2,250,000 in fiscal 2005 from the termination of the Company’s leaseback interest in a shopping center in Minneapolis, Minnesota, in September 2004; whereas there were no rental revenues from a leaseback termination in the first nine months of fiscal 2006; and

(c)

a decrease in leaseback income of approximately $141,000 related to the leaseback termination mentioned in (b) above.

The following table indicates the backlog of contracts and rental income for the next twelve months, by industry segment.

		January 31,
		2006				2005
Energy and Facilities Solutions (a)		$	3,108,000			$	2,634,000
Energy Services (b)			2,299,000				4,439,000
Real Estate (c)			5,920,000				6,009,000
Less: Intersegment eliminations			(544,000	)			(528,000	)
Total Backlog		$	10,783,000			$	12,554,000

(a)

The increase in backlog is primarily due to an increase in energy engineering service contracts. Backlog includes contracts that can be cancelled with less than one year’s notice, and assumes cancellations provisions will not be invoked. The cancellation rate for such contracts in the previous twelve months was approximately 9%.

(b)

The decrease in backlog is primarily due to one large order included in the prior period in the retail sector and one smaller contract in the prior period in the education and government sector.

(c)

Revenues from any contract to sell real estate in which the prospective buyer is not materially at risk are not included in backlog. As of January 31, 2006, backlog does not include a contract to sell, at a gain, a tract of land in North Fort Myers, Florida, and a contract to sell, at a gain, the Company’s leaseback interest in a shopping center located in Bayonet Point, Florida. See Note 11 to the consolidated financial statements.

COSTS AND EXPENSES APPLICABLE TO REVENUES
From Continuing Operations

As a percentage of total segment revenues from continuing operations (See Chart A), the total applicable costs and expenses (See Chart B) were 60% and 66% for the third quarters of fiscal 2006 and 2005, respectively, and 59% and 58%, respectively, for the first nine months of fiscal 2006 and 2005, respectively. In reviewing Chart B, the reader should recognize that the volume of revenues generally will affect the amounts and percentages presented there.

The figures in Chart B are net of intersegment eliminations.

CHART B

COSTS AND EXPENSES APPLICABLE TO REVENUES
FROM CONTINUING OPERATIONS BY SEGMENT
(Dollars in Thousands)

										Percent of Segment																Percent of Segment
										Revenues for																Revenues for
		Third Quarter Ended								Third Quarter Ended								Nine Months Ended								Nine Months Ended
		January 31,								January 31,								January 31,								January 31,
		2006				2005				2006				2005				2006				2005				2006				2005
Energy and Facilities Solutions (1)		$	517			$	467				53				56			$	1,520			$	1,501				53				56
Energy Services (2)			1,127				1,669				59				67				3,394				4,528				58				70
Real Estate (3)			1,015				981				66				69				2,978				3,234				65				48
		$	2,659			$	3,117				60				66			$	7,892			$	9,263				59				58

NOTES TO CHART B

(1)

The change in the percentage of costs and expenses applicable to revenues from continuing operations of the Energy and Facilities Solutions Segment for all periods presented is primarily due to:

	(a)		changes in the mix of services and products; and
	(b)		improved operational efficiencies related to energy engineering services.

(2)		On a dollar basis, costs and expenses from continuing operations decreased $542,000 or 32% for the third quarter of fiscal 2006 and $1,134,000 or 25% for the first nine months of fiscal 2006, compared to the same periods of fiscal 2005, primarily due to a corresponding decrease in installation contract revenues.
		On a percentage basis, costs and expenses decreased for the third quarter of fiscal 2006, compared to the same period of fiscal 2005, primarily due to improved operational efficiencies on lighting installations.
		On a percentage basis, costs and expenses decreased for the first nine months of fiscal 2006, compared to the same period of fiscal 2005, primarily due to:

	(a)		improved operational efficiencies on lighting installations; and
	(b)		the recognition of revenue from a consulting services contract in the first quarter of fiscal 2006, that had no associated cost and expense in the first nine months of fiscal 2006.

(3)

On a dollar basis, cost and expenses from continuing operations decreased $256,000 or 8% for the first nine months of fiscal 2006, compared to the same period of fiscal 2005, primarily due to:

	(a)		the absence of lease costs of $103,000 in the first nine months of fiscal 2006 related to the termination of the Company’s leaseback interest in a shopping center located in Minneapolis, Minnesota, in September 2004; and
	(b)		a decrease in depreciation expense of approximately $99,000 related to one of the owned shopping centers being fully depreciated in fiscal 2006.

On a percentage basis, costs and expenses from continuing operations are higher for the first nine months of fiscal 2006, primarily due to the absence of the rental revenues of $2,250,000 that was included in last year’s first nine months of fiscal 2005, that resulted from the termination of the Company’s leaseback interest in the shopping center in Minneapolis, Minnesota, in the second quarter ended October 31, 2004; the cost of the sale was $42,115.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
From Continuing Operations

For the third quarters of fiscal 2006 and 2005, total selling, general and administrative expenses (“SG&A”) from continuing operations, net of intersegment eliminations, were $2,070,074 and $1,928,366, respectively. As a percentage of consolidated revenues from continuing operations, these expenses were 47% and 41% for the third quarters of fiscal 2006 and 2005, respectively. For the first nine months of fiscal 2006 and 2005, total SG&A expenses from continuing operations, net of intersegment eliminations, were $6,327,984 and $6,693,049, respectively. As a percentage of consolidated revenues from continuing operations, these expenses were 47% and 42% for the first nine months of fiscal 2006 and 2005, respectively. In reviewing Chart C, the reader should recognize that the volume of revenues generally will affect the amounts and percentages presented there. The percentages in Chart C are based upon expenses as they relate to segment revenues from continuing operations (Chart A), except that parent and total expenses relate to consolidated revenues from continuing operations.

CHART C

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
FROM CONTINUING OPERATIONS BY SEGMENT
(Dollars in Thousands)

										Percent of Segment																Percent of Segment
										Revenues for																Revenues for
		Third Quarter Ended								Third Quarter Ended								Nine Months Ended								Nine Months Ended
		January 31,								January 31,								January 31,								January 31,
		2006				2005				2006				2005				2006				2005				2006				2005
Energy and Facilities Solutions		$	582			$	622				60				74			$	1,670			$	1,720				58				64
Energy Services			548				494				28				20				1,634				1,616				28				25
Real Estate (1)			180				185				12				13				629				1,129				14				17
Parent			760				627				17				13				2,395				2,228				18				14
		$	2,070			$	1,928				47				41			$	6,328			$	6,693				47				42

NOTES TO CHART C

(1)

On a dollar and percentage basis, SG&A expenses from continuing operations are $500,000 or 44% lower for the first nine months of fiscal 2006, compared to the same period of fiscal 2005, primarily due to the legal costs and a net settlement cost that were expensed in fiscal 2005, due to the conclusion of arbitration proceedings.

Gain on sales of real estate, net of costs

On December 22, 2005, the Company closed on the sale of a 4.7 acre tract of land in Louisville, Kentucky, for a sales price of approximately $270,000, resulting in a pre-tax gain of approximately $184,000. After selling expenses, the sale generated proceeds of approximately $265,000.

On October 28, 2005, the Company closed on the sale of one of its outparcels located in North Fort Myers, Florida, for a sales price of $625,000, resulting in a pre-tax gain of approximately $296,000. After selling expenses, the sale generated proceeds of approximately $577,000 of which $450,000 was recorded as a note receivable, bearing interest at an annual rate of 7.25%, commencing on December 1, 2005, with interest only payments due monthly until maturity on April 28, 2006.

On October 21, 2005, the Company closed on the sale of one of its outparcels located in North Fort Myers, Florida, for a sales price of approximately $529,000, resulting in a pre-tax gain of approximately $246,000. After selling expenses, the sale generated net cash proceeds of approximately $488,000.

Liquidity and capital resources

Between April 30, 2005, and January 31, 2006, working capital decreased by $3,535,000. Operating activities used cash of $2,157,000 primarily due to:

	(a)		an increase in note receivables of approximately $510,000 primarily related to services performed on a consulting contract;
	(b)		cash payments of $1,089,000 related to the incentive compensation generated by the successful achievement of Company-wide earnings and performance goals in fiscal 2005; and
	(c)		current year losses from continuing operations