<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)
[X]      Annual Report under Section 13 or 15(d) of the Securities Exchange Act
         of 1934 For the fiscal year ended DECEMBER 31, 2002
                                       or
[ ]      Transition Report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934 For the transition period from _________ to _________

                                    000-29337
                              (Commission File No.)

                         SUMMIT BROKERAGE SERVICES, INC.
                 (Name of Small Business Issuer in Its Charter)

                    FLORIDA                                    59 - 3202578
(State or other jurisdiction of incorporation or             (I.R.S. Employer
                  organization)                             Identification No.)

     25 FIFTH AVENUE, INDIALANTIC, FLORIDA                         32903
    (Address of principal executive offices)                    (Zip Code)


         Issuer's Telephone Number, including area code: (321) 245-3636

                    Securities registered under Section 12(b)
                     of the Securities Exchange Act of 1934:

                                      NONE

                    Securities registered under Section 12(g)
                     of the Securities Exchange Act of 1934:

                         COMMON STOCK, $.0001 PAR VALUE

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]  No [ ]

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
[X]

Issuer's revenues for its most recent fiscal year were $6,154,854

As of March 19, 2003, the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was
recently sold was $11,135,655

As of March 19, 2003, there were 23,140,064 shares of issuer's common stock
outstanding.


<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                               <C>
PART I...........................................................................................................  1

   Item 1.    Description of Business............................................................................  1
   Item 2.    Description of Property............................................................................  5
   Item 3.    Legal Proceedings..................................................................................  5
   Item 4.    Submission of Matters to a Vote of Security Holders................................................  5

PART II..........................................................................................................  5

   Item 5.    Market for Common Equity and Related Stockholder Matters...........................................  5
   Item 6.    Management's Discussion and Analysis of Financial Condition and Results of Operations..............  8
   Item 7     Financial Statements..............................................................................  13
   Item 8.    Changes In and Disagreements With Accountants on Accounting and Financial Disclosure..............  13

PART III........................................................................................................  13

   Item 9.    Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of
              the Exchange Act..................................................................................  13
   Item 10.   Executive Compensation............................................................................  15
   Item 11.   Security Ownership of Certain Beneficial Owners...................................................  19
   Item 12.   Certain Relationships and Related Transactions....................................................  20
   Item 13.   Exhibits and Reports on Form 8-K..................................................................  20
   Item 14.   Controls and Procedures...........................................................................  21
</TABLE>


INTRODUCTORY COMMENT

         Throughout this Annual Report on Form 10-KSB, the terms "we," "us,"
"our," "Summit" and "the Company" refer to Summit Brokerage Services, Inc., a
Florida corporation, and, unless the context indicates otherwise, includes our
subsidiaries.

FORWARD LOOKING STATEMENTS

         This contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. When used in this Annual Report, the words
"may," "will," "expect," "anticipate," "continue," "estimate," "project" or
"intend" and similar expressions identify forward-looking statements regarding
events, conditions and financial trends in connection with our future plan of
operations, business strategy, operating results and financial position.
Discussions containing such forward-looking statements may be found in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Current shareholders and prospective investors are cautioned that
any forward-looking statements are not guarantees of future performance. Such
forward-looking statements by their nature involve substantial risks and
uncertainties, certain of which are beyond our control, and actual results for
future periods could differ materially from those discussed in this Annual
Report, depending on a variety of important factors, among which are the success
or failure of our management's efforts to implement our business strategy; the
level of acquisition opportunities available to us and our ability to price and
negotiate such transactions on a favorable basis, our ability to properly manage
growth and successfully integrate acquired companies and operations, our ability
to compete with major established companies, our ability to attract and retain
qualified personnel, and other risks which may be described from time to time in
future filings with the Securities and Exchange Commission.




                                       i
<PAGE>

                                     PART I

ITEM 1.    DESCRIPTION OF BUSINESS.

GENERAL OVERVIEW AND HISTORY

         Summit Brokerage Services, Inc. (referred to herein alternately as
"Summit," "Company," "we," "our" or "us"), is an independent broker dealer
licensed in 46 states and offer financial services to clients across the
country. We are a member of the National Association of Securities Dealers
(NASD), as well as the Securities Investor Protection Corporation (SIPC). As of
the date of this Annual Report, we currently have over 100 Registered
Representatives working as independent contractors or employees out of our 59
locations nationwide, through which we provide our services.

         We provide the following financial services to our clients through our
Registered Representatives:

         -        Full service and discount stock and bond brokerage services;
         -        Load and no-load mutual fund executions;
         -        Asset allocation services for mutual funds, stocks and bonds;
         -        Life, health and disability insurance coverage;
         -        Money market funds;
         -        Clearing services for our branch offices through our
                  third-party clearing companies;
         -        Registered investment advisor services; and
         -        Financial planning services.

         Our branch offices are located throughout the United States. While we
service retail customers for the most part, we also service a number of
corporate and institutional clients. We are essentially a "financial planning"
firm, whereby a Registered Representative, whom we sometimes refer to as
"Planners," discusses a clients' financial needs and objectives in detail,
develops a plan and implements the plan with the clients' approval.

We have a history of significant operating losses, as outlined in "Item 6.
Management's Discussion and Analysis of Financial Condition and Results of
Operations." We recently completed a private placement in which we raised
approximately $3 million from the sale of our common stock, and we believe that
our operations and current capital resources will be sufficient to fund our
working capital needs through fiscal year 2003. However, we cannot assure you
that we will be able to limit our future negative cash flow or that we will be
able to obtain any outside financing that we may require in the future. Unless
we are able to increase our revenues, add new branch offices and Registered
Representatives, and/or significantly reduce our operating costs, we may need to
fund any future negative cash flows from additional debt or equity financing. In
addition, we anticipate that our strategy of growth through acquisitions will
necessitate additional debt and/or equity financing. Our failure to obtain
sufficient financing that we may need in the future could have a material
adverse effect on our operations and our ability to continue as a going concern.

CHANGE OF CONTROL

         On May 22, 2003, Marshall T. Leeds, our current Chairman, Chief
Executive Officer and principal shareholder, closed on the acquisition of a
controlling interest in the Company pursuant to a privately negotiated
transaction (the "Leeds Transaction"). Mr. Leeds acquired 5,000,000 shares of
our common stock for a total purchase price of $500,000, or $.10 per share. Upon
the closing, Mr. Leeds assumed the officer positions he now holds and Richard
Parker, the Company's then Chairman and CEO became President, Chief Operating
Officer and Vice Chairman. Two of the then existing board members, Mr. Parker
and Harry Green, remained on the board of directors, while Mr. Leeds, Steven C.
Jacobs and Sanford B. Cohen were appointed to the board. The new officers and
reconstituted board were confirmed by our shareholders at our annual
shareholders' meeting held in August 2002. The closing of the Leeds Transaction
included the execution and delivery of a Shareholders' Voting Agreement and
Irrevocable Proxy (the "Voting Agreement") whereby Richard Parker, the current
President and Chief Operating Officer, and his spouse granted to Mr. Leeds
voting control with respect to their shares of outstanding common stock of the
Company, owned individually and jointly, in addition to voting control over
certain of Mr. Parker's shares issuable upon exercise of


<PAGE>


stock options by him. See Item 11 of this Report, "Security Ownership of Certain
Beneficial Owners."


ORGANIZATION

         Summit, incorporated under the laws of the State of Florida in
September 1993, has three wholly-owned subsidiaries: Summit Financial Group,
Inc., which is a Registered Investment Advisor under the Investment Advisors Act
of 1940, as amended; SBS Insurance Agency of Florida, Inc., which is an
insurance sales agency operating in 34 states; and Summit Holding Group, Inc.,
which currently has no operations. SBS Insurance Agency of California, Inc. is a
wholly-owned subsidiary of SBS Insurance Agency of Florida, Inc., and currently
has no operations.

         Our common stock is quoted on the Over-the-Counter Electronic Bulletin
Board under the symbol "SUBO" and began trading in June 1998.

         Our offices are located at 25 Fifth Avenue, Indialantic, Florida,
32903; telephone: 321-724-2303 and at 980 North Federal Highway, Suite 310, Boca
Raton, Florida 33432; telephone 800-257-6082; web site: www.summitbrokerage.com.

INDUSTRY BACKGROUND

         The financial services industry has been in existence for over 100
years. The industry evolved from three separate areas: the banking industry, the
brokerage industry and the insurance industry. Over the last 25 years, the three
industries have slowly merged together to form an industry now commonly referred
to as "financial services." The industry offers financial planning services to a
wide array of individuals and companies. With the introduction of the Internet,
a host of industry publications, and several financial television networks, the
general public has become increasingly versed with the financial instruments
available and much more knowledgeable about investments in general.

         Over the last two decades, 401(k) plans have become the investment of
choice for many investors. Companies desiring to limit their ongoing liability
have moved away from defined benefit and profit sharing plans, electing to
utilize the 401(k) to invest retirement funds for their employees. Many
investors begin working with the financial services industry through
participation in their company's 401(k) plan.

PRODUCTS

         Summit offers a broad range of products to the investing public through
Registered Representatives working as both independent contractors and employees
out of our branch offices. These products include mutual funds, annuities,
individual stocks, bonds, insurance products and managed money accounts.

         We earn income, which we record as "commission revenue," as products
are sold by our Registered Representatives. We receive commission revenue from
our product suppliers, such as mutual fund companies or insurance companies. We
then pay out a percentage of this amount, which we record as "commission
expense," to the Registered Representative who sold the product, in accordance
with the agreement each Registered Representative enters into with us.

         Our Registered Representatives offer "package products" to the
investing public which include, among other things, mutual funds, annuities and
unit investment trusts. The term "package product" describes a package of
securities, usually common stocks, which are managed by an investment company.
While many are licensed to sell individual stocks and bonds, this has been a
relatively small percentage of our business in the past. We believe that the use
of a package product provides:

         -        More suitable products to the general public;
         -        More efficient management of the funds;
         -        A reduction of risks from buying individual securities; and
         -        An easier supervision process for our compliance team.


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<PAGE>


         The managed accounts are charged a fee which provides recurring
revenue for Summit. While investors are sometimes reluctant to buy individual
securities and to pay what they may consider high commission fees, they have
invested heavily in mutual funds and annuities in recent years. These products
are usually part of a group of mutual funds sometimes referred to as a "family."
It is possible for the investor, through management of these accounts, to move
from fund to fund within the family, and take advantage of sectors of the
economy which are experiencing growth which may be greater than that of other
sectors at that particular time. For example, an investor may be in a growth and
income fund and move to a technology fund based upon the advice of an investment
adviser. By managing the investor's portfolio within the mutual fund family and
advising as to when the move should be made, the adviser continues to earn the
fee from the amount of money under management rather than a one-time commission,
which may or may not materialize based upon whether or not the stock markets
move up or down.

         For example, if an investor has $200,000 under management, Summit may
realize a management fee of 1.75%, or $3,500, on an annual basis. Even if the
value of portfolio decreases to $150,000, Summit continues to realize income
from the management fee in the amount of $2,625, which is less than in the
previous year. On the positive side, if the portfolio grew to $250,000, Summit
will realize an annual fee of $4,375. Currently, Summit has over $36 million
under management. By offering our product mix, we believe that our Registered
Representatives will be viewed more as advisers than traditional stockbrokers.
This helps by creating personal relationships with the clients that provide a
long and mutually beneficial working relationship.

         Revenues, by product, for fiscal 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                               2002                       2001
                                        -------------------        -------------------
<S>                                     <C>            <C>         <C>            <C>
Mutual funds.........................   $2,031,102      33%        $3,171,414      45%
Annuities............................   $1,477,165      24%        $1,902,848      27%
Equities.............................   $  861,680      14%        $  211,428       3%
Registered Investment Advisory Fees..   $  369,291       6%        $  140,952       2%
Insurance............................   $1,169,422      19%        $1,550,469      22%
Miscellaneous........................   $  246,194       4%        $   70,476       1%
                                        ----------     ---         ----------     ---
     Total...........................   $6,154,854     100%        $7,047,587     100%
                                        ==========     ===         ==========     ===
</TABLE>


BUSINESS STRATEGY

         Since 1995, we have implemented a strategy of affiliating independent
financial planning offices across the country with our company. These
independent offices bear the full expense of the day-by-day operations of their
independently owned locations. We receive, on average, a 10% to 20% over-ride of
the gross revenue provided by these locations. In addition, there are several
other forms of income we derive from these offices.

         We derive additional revenue from Registered Investment Advisory (RIA)
fees in the form of fee-based management of individual stocks and/or bond
accounts and mutual fund accounts offered by our Registered Representatives.
Much of the management of these funds is out-sourced to outside managers for the
day-by-day management.

         Another source of revenue comes from the wide array of insurance
products we offer, including life insurance, annuities, long-term care and
disability insurance.

         We also recently implemented a strategy of supplementing our growth
through acquisitions of assets of retail broker/dealer firms or branches that
are complementary to our business. The Company believes that small to mid-sized
broker/dealer firms have entered a period of consolidation. The Company intends
to pursue acquisition opportunities as a means of expanding its market presence
and overall customer base.

         One of the positive aspects of the financial services industry is that
virtually any person or company is a potential client. In the early years of
life, young families invest for college funding and begin to prepare for their




                                       3
<PAGE>


retirement. Middle age families focus more on retirement planning and capital
accumulation to achieve other financial goals. The seniors' market focuses on
preservation of capital and providing income through the retirement years.


SEASONALITY AND CYCLICAL FACTORS

         Our revenues are affected only slightly by the traditional U.S.
vacation seasons, such as July, August and December. Our revenues may be more
adversely affected by cyclical factors, such as financial market downturns,
problems or recessions in the U.S. or global economies. These downturns may
cause investor concern, which has historically resulted in fewer transactions
and less investing through broker/dealers and financial planners such as Summit,
thereby reducing our revenues and potential profits. Such conditions would
present risk in that we would need to raise additional capital to offset related
significant reductions in revenues.

COMPETITION

         We compete with numerous investment banking and brokerage firms,
consulting firms and financial service companies that are larger, have more
financial resources, have longer operating histories and, in some cases, offer
more services to a client than we do. In addition, there is increasing
competition from businesses such as commercial banking and insurance companies
and certain accounting firms that now offer financial services. Businesses in
the securities industry compete primarily in the following areas:

         -        Quality and ability of professional personnel;
         -        Experience and reputation of the firm;
         -        Relative prices of services and products offered;
         -        The scope of products and services; and
         -        The efficiency of back office operations.

         We have focused our efforts on positioning our company competitively by
targeting our services to individuals and middle-market companies and providing
them with competitively priced products and services. Our targeted markets are
those we believe are not adequately served by, and not the primary focus of, the
larger firms.

EMPLOYEES

         As of December 31, 2002, we employed 18 full-time people, consisting of
5 in management and 13 in general staff positions. We also contract with over
100 licensed Registered Representatives, who are normally engaged by us as
independent contractors, although some are engaged as employees.

         None of our employees are represented by a labor union or are subject
to a collective bargaining agreement. We believe that our relations with our
employees are good.

REGULATION

         The securities industry in the United States is subject to extensive
regulation under various federal and state laws and regulations. While the SEC
administers most of the federal securities laws, much of the regulation of the
securities industry is subject to various self-regulatory organizations such as
the NASD. The self-regulatory organizations, among other things, promulgate
regulations and provide oversight in the following areas:

         -        Sales practices;
         -        Trade practices among broker-dealers;
         -        Capital requirements;
         -        Record keeping; and
         -        Conduct of employees and affiliates of member organizations.



                                       4
<PAGE>


         The SEC and the self regulatory organizations also have the authority
to conduct administrative proceedings which can result in the censure, fine,
suspension or expulsion of a broker-dealer, its employees or officers. Also, new
legislation, changes in the rules and regulations promulgated by the SEC or self
regulatory organizations, or changes in the interpretation or enforcement of
existing laws and rules often directly affect the operation and profitability of
broker-dealers. The stated purpose of much of the regulation of broker-dealers
is the protection of customers and the securities markets, rather than the
protection of creditors and shareholders of broker-dealers.

SUBSEQUENT EVENTS

         On January 2, 2003, the Company acquired, in an asset purchase
agreement, the Boca Raton branch of Wachovia Securities Financial Network, Inc.
(the "Branch"). The Branch was an affiliated retail branch office of Wachovia
Securities Financial Network, Inc. ("Wachovia"), with approximately 22
registered representatives conducting retail brokerage business. The purchase
price was approximately $1,800,000, payable to Wachovia over four years. The
purchase price contemplated the signing of an employment agreement with each of
the registered representatives. Management believes that the acquisition will
expand its market presence and overall customer base.

         In March 2003, the Company completed a private offering of its common
stock which it commenced in October 2002. In that offering, the Company raised
approximately $3 million with the sale of approximately 12,000,000 shares of
common stock. The investors in that private placement have certain piggy-back
registration rights and the Company is obligated to file with the SEC within the
next 60 days (subject to extension or delay up to 180 days under certain
circumstances), a registration statement registering the private investors'
common shares for subsequent re-sale. However, the shares are subject to a
lock-up that provides that one-half of the shares may be sold commencing six
months after the effective date of the registration statement and all common
shares may be sold commencing 12 months after the effective date of the
registration statement.



ITEM 2.    DESCRIPTION OF PROPERTY

         On May 22, 2002 the Company entered into a lease for approximately
5,000 square feet of office space for approximately $8,800 a month. This lease
expires in May 2004. The lessor is First America Living Trusts, Inc., an entity
wholly-owned by Richard Parker, our Vice Chairman, President and Chief Operating
Officer.

         The Company occupies approximately 10,900 square feet of office space
in three locations within the same building in Boca Raton, Florida, all of which
space was previously occupied by Wachovia Financial Securities Network ("WFSN").
Approximately 1,900 square feet of space occupied by the Company was subleased
in January 2001 from WFSN, on a month-to-month basis, by Gold Coast
Acquisitions, Inc. ("GCA"), an entity wholly owned by Marshall T. Leeds, the
Company's Chairman and Chief Executive Officer. The Company also occupies an
additional 3,000 square feet of office space adjoining the aforementioned space.
The Company currently pays directly to WFSN such monthly lease payments of
approximately $12,542. The Company is currently negotiating with WFSN to enter
into a long term lease arrangement with respect to these two locations. In
connection with the acquisition of the Branch, the Company agreed to execute an
assignment of lease with WFSN for approximately 6,000 square feet of space,
which requires minimum monthly lease payments of $18,971 and terminates on
January 31, 2005. Pending the execution of assignment, the Company has been
making the aforementioned lease payments.

ITEM 3.    LEGAL PROCEEDINGS

         From time to time the Company is engaged in various legal and
regulatory proceedings arising in the normal course of business. Many aspects of
the securities brokerage business involve substantial risks of liability. In
recent years, there has been an increasing incidence of litigation involving the
securities brokerage industry, including class action and other suits that
generally seek substantial damages, including in some cases punitive damages.
The Company currently maintains errors and omissions insurance, the proceeds of
which may help to reduce the amount we may otherwise be required to pay with
respect to certain types of claims. There can be no assurance, however, that the
Company will be able to obtain errors and omissions insurance in the future, or
that if it can be obtained, that the price for such insurance will be
reasonable, or that even if such insurance is in force the amount of any award
will not exceed the maximum coverage provided by such insurance, in which case
we will be required to pay any uncovered portion. While it is not possible to
determine with certainty the outcome of these matters, we are of the opinion the
eventual resolution of such proceedings will not have a material adverse effect
on our financial position or operating results. Any such litigation brought in
the future could have a material adverse effect on our business, financial
condition and operating results.


                                       5
<PAGE>


ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.



                                     PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         Our common stock is traded in the Over-the-Counter market and is quoted
on the Electronic Bulletin Board under the symbol "SUBO." The following table
represents the range of the high and the low last sale prices, as reported by
the NASDAQ Trading and Market Services, for each fiscal quarter for the last two
fiscal years ended December 31, 2002 and 2001. These quotations represent prices
between dealers, may not include retail mark-ups, markdowns or commissions, and
may not necessarily represent actual transactions.



      FISCAL QUARTER ENDED              LOW                 HIGH
      --------------------              ---                 ----
      March 31, 2002                   $ .20                $1.75
      June 30, 2002                    $1.01                $2.75
      September 30, 2002               $ .55                $1.50
      December 31, 2002                $ .65                $1.80

      March 31, 2001                   $ .25                $1.06
      June 30, 2001                    $ .44                $1.05
      September 30, 2001               $ .22                $1.13
      December 31, 2001                $ .20                $ .35


         On March 19, 2003, the closing price of our common stock was $.87 and
we had approximately 189 holders of record.

DIVIDENDS AND DIVIDEND POLICY

         We have not paid any cash dividends on our common stock during the last
two fiscal years and we do not anticipate paying any cash dividends on our
common stock in the foreseeable future. We currently intend to retain any future
earnings for reinvestment in our business. Any future determination to pay cash
dividends will be at the discretion of our Board of Directors and will be
dependent on our financial condition, results of operations, capital
requirements and other relevant factors. During 2002, we paid a total of $ 5,000
in cash dividends on our Series A preferred stock.


RECENT SALES OF UNREGISTERED SECURITIES

         On October 9, 2002, 100,000 shares of Summit's common stock was issued
to two outside consultants for services performed for us. The services provided
were valued at $50,000. In connection with this transaction, we relied on the
exemption provided by Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"). The investors were provided information about Summit or
had access to such information and were afforded opportunities to ask questions
of management regarding the information provided or made available. The
investors confirmed in writing to Summit that they were acquiring the securities
for investment purposes only. The securities are restricted and the certificates
bear a legend accordingly.

         During the fourth fiscal quarter ended December 31, 2002, we received
$2,050,000 in cash proceeds



                                       6
<PAGE>


from the sale of 8,200,000 shares of common stock related to a private
placement. In connection with the offer and sale of such securities, we relied
on the exemption provided under Section 4(2) of the Securities Act and Rule 506
of Regulation D promulgated thereunder. The purchasers of the securities
confirmed in writing to Summit that they were accredited investors and that they
were purchasing the securities for investment purposes only. The securities are
restricted and the certificates bear a legend accordingly. The securities are
subject to certain lock-up provisions and certain registration rights.

EQUITY COMPENSATION PLAN INFORMATION

         The following table summarizes share information about our equity
compensation plans, including the 2000 Incentive Compensation Plan and non-plan
equity compensation agreements as of December 31, 2002.

<TABLE>
<CAPTION>

                                  NUMBER OF SECURITIES TO BE        WEIGHTED-AVERAGE          NUMBER OF SECURITIES
                                    ISSUED UPON EXERCISE OF         EXERCISE PRICE OF        REMAINING AVAILABLE FOR
                                     OUTSTANDING OPTIONS,         OUTSTANDING OPTIONS,        FUTURE ISSUANCE UNDER
PLAN CATEGORY                         WARRANTS AND RIGHTS          WARRANTS AND RIGHTS      EQUITY COMPENSATION PLANS
-------------                     --------------------------      --------------------      -------------------------
<S>                               <C>                             <C>                       <C>
Equity Compensation Plans
   Approved By Shareholders(1)..          9,418,121                       $.57                     1,781,487(2)
Equity Compensation Plans Not
   Approved by Shareholders(3)..            984,038                       $.76                           -0-
Total...........................         10,402,159                       $.64                     1,781,487(2)
</TABLE>
--------------
(1)      Includes 2,218,513 shares subject to outstanding options under the 2000
         Incentive Compensation Plan, and 7,199,608 shares subject to non-plan
         option agreements outstanding as of December 31, 2002.
(2)      Represents shares available for award grants under the 2000 Incentive
         Compensation Plan as of December 31, 2001.
(3)      Includes 454,038 shares subject to non-plan option agreements
         outstanding as of December 31, 2001, and 530,000 shares issuable upon
         exercise of common stock purchase warrants earned by selling
         broker/dealers in connection with our common stock private placement.
         In fiscal 2002, Summit authorized the issuance of up to 2,000,000 of
         common stock purchase warrants to selling broker/dealers in the private
         placement, at an exercise price of $.30 per share and vesting
         immediately upon issuance. Of that amount, 530,000 warrants were earned
         as of December 31, 2002.

         Equity Compensation Plans Not Approved by Shareholders - Options. The
equity compensation plans not approved by shareholders consist of outstanding
options for 454,038 shares of Summit's common stock (as of December 31, 2002)
pursuant to option agreements dated May 16, 2000, the form of which for 254,732
shares is attached to Summit's definitive Proxy Statement as Exhibit A dated
August 8, 2002 and filed with the SEC on August 12, 2002, and the form of which
for 199,306 shares is included as an exhibit to Summit's quarterly report on
Form 10-QSB for the quarter ended June 30, 2000 and filed with the SEC on August
14, 2000. The options for 254,732 shares vested one-fourth each year commencing
November 1, 2000; however, under their change of control provisions, all the
options became vested upon Marshall T. Leeds acquiring a majority interest in
Summit. The terms of the options for 199,306 shares are the same as the other
options except that they vested immediately upon grant, with an exercise price
of $2.50 per share. The unexercised portion of the options expire on May 16,
2010, unless terminated earlier in the event of termination of employment: (i)
three months after voluntary termination by the optionee, (ii) immediately upon
termination for cause (defined as willful misconduct or gross negligence), (iii)
12 months after termination by reason of disability; (iv) 12 months after the
optionee's death; and (v) immediately in the event that the optionee files any
lawsuit or arbitration claim against Summit, or any of its affiliates.

         The optionees may pay the exercise price with respect to their options
either in cash, by check, with already owned shares of common stock of Summit
that have been held by the optionee for at least six (6) months (or such



                                       7
<PAGE>


other shares as will not cause Summit to recognize for financial accounting
purposes a charge for compensation expense), by delivery of a properly executed
exercise notice together with documentation required by Summit to effectuate a
"cashless exercise," a combination of the above, or such other consideration or
in such other manner as may be determined by Summit. The option agreements
provide for appropriate adjustment of the number of shares subject to the
options and the exercise price of the options in the event of any increase or
decrease in the number of issued and outstanding shares of Summit's capital
stock resulting from a stock dividend, a recapitalization or other capital
adjustment of Summit. Summit has discretion to make appropriate anti-dilution
adjustments to outstanding options in the event of a merger, consolidation or
other reorganization of Summit or a sale or other disposition of substantially
all of Summit's assets.

         The options are not assignable or transferable, other than by will or
by the laws of descent and distribution. During the lifetime of the optionee, an
option is exercisable only by him or her. Subject to vesting, the options may be
exercised, in whole or in part, at any time prior to termination or expiration.

         Equity Compensation Plans Not Approved by Shareholders - Warrants.
Summit's board of directors authorized the issuance of up to 2,000,000 common
stock purchase warrants, at an exercise price of $.30 per share, which warrants
will be issued to selling broker/dealers in connection with Summit's common
stock private offering which commenced in October 2002 and which was terminated
on March 19, 2003. As of December 31, 2002, 530,000 of such common stock
purchase warrants had been earned by selling broker/dealers. Since the private
placement is now closed, Summit will be issuing warrant agreements representing
those warrants (and an additional 490,000 warrants earned as of the close of the
private placement on March 19, 2003), which will have a term of 5 years and will
contain, among other provisions, the mechanics of exercise, issuance of the
shares upon the payment of the exercise price, and certain piggy-back
registration rights.



ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

         The following discussion and analysis of our consolidated financial
condition and results of operations for the fiscal years ended December 31, 2002
and December 31, 2001 should be read in conjunction with our consolidated
financial statements included elsewhere in this Annual Report.

         When used in conjunction in the following discussions, the words
"believes," "anticipates," "intends," "expects," and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
certain risks and uncertainties, which could cause results to differ materially
from those projected, including, but not limited to, those set forth in "Factors
That May Affect Future Results and Market Price of Our Stock" of this Item 6.

OVERVIEW OF THE COMPANY

         Summit, a NASD member firm, is a licensed, independent broker-dealer
offering financial services to clients across the country through Registered
Representatives working as independent contractors and employees out of Summit's
branch and non-branch offices.

         In 1997, we began an aggressive expansion of new branch offices. In
order to accomplish this, it was necessary to build up our infrastructure,
including additional management and staff personnel, computer systems and
offices. These increased expenditures resulted in lower earnings and the need
for additional capital infusions. Therefore, from 1997 through 2002, our
financial statements reflect significant losses during this period of building
current and future revenues, while we were raising the necessary capital through
private offerings of our capital stock.




                                       8
<PAGE>



RESULTS OF OPERATIONS

FISCAL YEAR ENDED DECEMBER 31, 2002 COMPARED TO FISCAL YEAR ENDED
DECEMBER 31, 2001

         Revenues decreased in fiscal 2002 by $892,733, or -12.7%, to $6,154,854
from $7,047,587 in fiscal 2001. This decrease was primarily due to the downturn
in the economy and the related impact on the financial markets, which in turn
reduced investor activity and lowered our revenues.

         Expenses increased in fiscal 2002 by $178,529, or 2.4%, to $7,773,864
from $7,595,335 in fiscal 2001. The higher expenses were largely attributable to
the increase in legal and professional fees, due in part to the stock
transaction as described under the Change of Control section in Item 1 above.
These costs increased by $145,642, or 92%, to $303,265 from $157,623 in fiscal
2001.

         Non-cash expenses for amortization of unearned stock compensation
increased in fiscal 2002 by $83,834, to $285,224 from $201,390 in fiscal 2001.

FISCAL YEAR ENDED DECEMBER 31, 2001 COMPARED TO FISCAL YEAR ENDED
DECEMBER 31, 2000

         Revenues increased in fiscal 2001 by $67,901, or 1.0%, to $7,047,587
from $6,979,686 in fiscal 2000. This small increase was primarily due to the
downturn in the economy and the related impact on the financial markets, which
in turn reduced investor activity and lowered our revenues. In addition, the
events of September 11, 2001 caused substantial disruptions in our industry and
in our business as well. Specifically, our revenues for the third and fourth
quarters were negatively affected by these circumstances.

         Expenses decreased in fiscal 2001 by $29,710, or .4%, to $7,595,335
from $7,625,045 in fiscal 2000. The reduction was largely attributable to lower
operating costs, specifically the reduction in payroll related costs due to
personnel layoffs following the events of September 11, 2001. Total operating
expenses decreased by $292,682 to $1,749,167 in 2001 from $2,041,849 in 2000.

         Non-cash expenses for amortization of unearned stock compensation
decreased in fiscal 2001 by $147,638, to $201,390 from $349,028 in fiscal 2000.

LIQUIDITY AND CAPITAL RESOURCES

         Historically, our cash flows from operations have been negative and
therefore have been funded by stock issuances. There can he no assurance that in
the future we will not need to raise additional capital in order to meet
operating costs. We are presently attempting to increase revenue primarily
through the acquisition of new branch offices

         On October 14, 2002, we commenced a common stock private offering
of up to 20,000,000 shares of our common stock to accredited investors at a
purchase price of $.25 per share. During the year ended December 31, 2002, we
received $2,050,000 in cash proceeds from the sale of 8,200,000 shares of common
stock related to the private placement. This offering closed in March 2003 and
at March 19, 2003, we had received $3,010,000 in cash proceeds from the sale of
12,040,000 shares of common stock related to the private placement.

         Our net cash used in operations was $(1,190,711) for the year ended
December 31, 2002 and $(263,535) for the year ended December 31, 2001. The
$927,176 decrease in cash flows was primarily the result of our net loss of
$(1,619,010) for fiscal 2002.

         Cash flows from financing activities were $2,766,169 in fiscal year
2002 and $176,983 in fiscal year 2001. The $2,589,186 increase in cash resulted
from our common stock private offering, as well as from the stock transaction as
described under the Change of Control discussion in Item 1 above.

         During the year ended December 31, 2002, Marshall T. Leeds, our
Chairman and Chief Executive Officer, exercised an option for 1,400,000 shares
of common stock at $.25 per share for gross proceeds to the Company of $350,000.



                                       9
<PAGE>


SIGNIFICANT BUSINESS RELATIONSHIPS

         On January 26, 1994, we entered into a clearing agreement with First
Clearing Corporation, a subsidiary of First Union Bank (formerly Wheat First
Securities, Inc.), to execute securities orders and maintain accounts for
clients on behalf of our company.

         On November 1, 2000, we entered into a second clearing agreement with
Dain Correspondent Services, a subsidiary of Dain Rauscher Incorporated, to
execute securities orders and maintain accounts for clients on behalf of our
company.

FACTORS THAT MAY AFFECT FUTURE RESULTS AND MARKET PRICE OF OUR STOCK

         We operate in a rapidly changing environment that involves numerous
risks, some of which are beyond our control. The following discussion highlights
some of these risks.

         WE HAVE HAD RECENT LOSSES. We realized net losses for the twelve months
ended December 31, 2002 and 2001 of $1,619,010 and $547,748 respectively, and we
cannot assure you that we will be profitable in the near future or that our
revenues will grow. Additionally, our revenues and profitability have been, and
may continue to be, negatively impacted by current economic conditions as well
as the armed conflict in Iraq.

         OUR BUSINESS COULD BE HARMED BY MARKET VOLATILITY, DECLINES IN GENERAL
ECONOMIC CONDITIONS AND OTHER SECURITIES INDUSTRY RISKS. Our revenues are
derived primarily from securities brokerage and related services, and we expect
this business to continue to account for almost all of our revenues. We, like
other securities firms, are directly affected by economic and political
conditions (including, but not limited to, acts of war, terrorism, etc.), broad
trends in business and finance, and changes in the conditions of the securities
markets in which our customers trade. Over the past several years, the
securities markets in the United States have fluctuated considerably. A downturn
in these markets such as we have experienced during the past year, adversely
affects our operating results. In major stock market declines, many firms in the
securities industry suffer financial losses, and the level of individual
investor trading activity decreases after these events. When trading volume is
low, our profitability is adversely affected because a significant portion of
our costs does not vary with revenue. For these reasons, severe market
fluctuations have a material adverse effect on our business, financial condition
and operating results. Some of our competitors with more diversified business
lines might withstand such a downturn in the securities industry better than we
would.

         OUR BUSINESS RELIES HEAVILY ON COMPUTERS AND OTHER ELECTRONIC SYSTEMS
AND CAPACITY CONSTRAINTS AND FAILURES OF THESE SYSTEMS COULD HARM OUR BUSINESS.
As our business expands, we face risks relating to the need to expand and
upgrade our transaction processing systems, network infrastructure and other
aspects of our technology. While many of our systems are designed to accommodate
additional growth without redesign or replacement, we may nevertheless need to
make significant investments in additional hardware and software to accommodate
growth. We cannot assure you that we will be able to predict accurately the
timing or rate of such growth, or expand and upgrade our systems and
infrastructure on a timely basis. Additionally, our business may be negatively
impacted by acts of cyberterrorism.

         WE OPERATE IN A HIGHLY REGULATED INDUSTRY AND COMPLIANCE FAILURES COULD
ADVERSELY AFFECT OUR BUSINESS. The securities industry in the jurisdictions in
which we operate is subject to extensive regulation covering all aspects of the
securities business. The various governmental authorities and industry
self-regulatory organizations that supervise and regulate us generally have
broad enforcement powers to censure, fine, issue cease-and-desist orders or
suspend or expel us or any of our officers or employees who violate applicable
laws or regulations. Our ability to comply with all applicable laws and rules is
largely dependent on our establishment and maintenance of compliance and
reporting systems, as well as our ability to attract and retain qualified
compliance and other personnel. We could be subject to disciplinary or other
regulatory or legal actions in the future due to noncompliance. In addition, it
is possible that any past noncompliance could subject us to future civil
lawsuits, the outcome of which could have a material adverse effect on our
financial condition and operating results.

         In addition, we use the Internet to provide information to our
customers. Due to the increasing popularity of the Internet, it is possible that
new laws and regulations may be adopted dealing with such issues as user
privacy, content and pricing. Such laws and regulations might increase our cost
of using, or limit our ability to use, the Internet as a distribution channel.
In addition, the growth of the Internet as a means of conducting international
business has raised many legal issues regarding, among other things, the
circumstances in which countries or other



                                       10
<PAGE>

jurisdictions have the right to regulate Internet services that may be available
to their citizens from service providers located elsewhere. In many cases, there
are no laws, regulations, judicial decisions or governmental interpretations
that clearly resolve these issues. This uncertainty may adversely affect our
ability to use the Internet to expand our international operations, and creates
the risk that we could be subject to disciplinary sanctions or other penalties
for failure to comply with applicable laws or regulations.

         WE FACE SUBSTANTIAL COMPETITION WHICH COULD REDUCE OUR MARKET SHARE AND
HARM OUR FINANCIAL PERFORMANCE. All aspects of our business are highly
competitive. We compete directly with national and regional full service
broker-dealers and, to a lesser extent, with discount brokers, dealers,
investment banking firms, investment advisors and certain commercial banks. The
financial services industry has become considerably more concentrated as
numerous securities firms have either ceased operations or have been acquired by
or merged into other firms. These mergers and acquisitions have increased
competition from these firms, many of which have significantly greater equity
capital and financial and other resources than we do. With respect to retail
brokerage activities, certain regional firms with which we compete have operated
in certain markets longer than we have and have established long-standing client
relationships. In addition, we expect competition from commercial banks to
increase because of recent and anticipated legislative and regulatory
initiatives in the United States to remove or relieve certain restrictions on
commercial banks' securities activities. We also compete with others in the
financial services industry in recruiting new employees and retaining current
employees.

         We expect to face increasing competition from companies offering
electronic brokerage services, which is a rapidly developing industry. These
competitors may have lower costs or provide fewer services, and may offer
certain customers more attractive pricing or other terms, than we offer. In
addition, disintermediation may occur as issuers attempt to sell their
securities directly to purchasers, including sales using electronic media such
as the Internet. To the extent that issuers and purchasers of securities
transact business without the assistance of financial intermediaries like us,
our operating results could be adversely affected.

         WE MAY BE UNABLE TO HIRE, INTEGRATE OR RETAIN QUALIFIED PERSONNEL. Most
aspects of our business are dependent on highly skilled individuals. We devote
considerable resources to recruiting, training and compensating these
individuals. In addition, one component of our strategy is to increase market
penetration by recruiting experienced Registered Representatives. We cannot
assure that these recruiting efforts will be successful or, if successful, that
they will enhance our business, results of operations, or financial condition.

         Competition for key personnel is intense. We cannot assure that losses
of key personnel due to such competition, or for other reasons, will not occur
in the future. The loss of any key employee, particularly Marshall T. Leeds, our
Chairman and Chief Executive Officer, could materially and adversely affect our
operating results. We have applied for key man life insurance on Mr. Leeds,
although there can be no assurance that such insurance will be obtained.

         While we generally do not have employment agreements with employees
other than senior management, we attempt to retain employees with incentives
such as incentive compensation plans, stock issuances or other investment
opportunities conditioned on continued employment, and options to buy stock that
vest over a number of years of employment. These incentives, however, may be
insufficient in light of the increasing competition for experienced
professionals in the securities industry, particularly if our stock price were
to decline, or fail to appreciate sufficiently. If that happened, our benefit
plans might no longer be a competitive incentive for our key employees to stay
with us.

         FAILURE TO INTRODUCE NEW SERVICES AND PRODUCTS IN A TIMELY MANNER MAY
AFFECT OUR ABILITY TO COMPETE EFFECTIVELY. Our future success will depend in
large part on our ability to develop and enhance our services and products. We
operate in a very competitive industry in which the ability to develop and
deliver advanced services through the Internet and other channels is a key
competitive factor. There are significant technical risks in the development of
new or enhanced services and products, including the risk that we will be unable
to:

         -        effectively use new technologies;
         -        adapt our services and products to emerging industry
                  standards; or
         -        develop, introduce and market enhanced or new services and
                  products.


                                       11
<PAGE>


         Historically, we have been able to develop and introduce enhanced or
new products and services in response to market and customer requirements and
emerging industry standards. However, if in the future we are unable to develop
and introduce enhanced or new services and products quickly enough to respond to
market or customer requirements or to comply with emerging industry standards,
or if these services and products do not achieve market acceptance, our
business, financial condition and operating results could be materially
adversely affected.

         WE NEED TO COMPLY WITH STRINGENT CAPITAL REQUIREMENTS. Many of the
regulatory agencies, securities exchanges and other industry self-regulatory
organizations that regulate us have stringent rules with respect to the
maintenance of specific levels of net capital by securities broker-dealers. Net
capital is the net worth of a broker or dealer, less deductions for certain
types of assets. If we fail to maintain the required net capital, we may be
subject to suspension or revocation of our licenses, which could ultimately lead
to us being liquidated. If such net capital rules are changed or expanded, or if
there is an unusually large charge against net capital, we might be required to
limit or discontinue those portions of our business that require the intensive
use of capital. A large operating loss or charge against net capital could
adversely affect our ability to expand or even maintain our present levels of
business.

         BECAUSE WE RELY ON ENCRYPTION TECHNOLOGY, OUR BUSINESS IS VULNERABLE TO
SECURITY RISKS WHICH MAY COMPROMISE OUR CUSTOMER TRANSACTION DATA. A significant
barrier to Internet commerce is the secure transmission of confidential
information over public networks. We rely on third-party encryption and
authentication technology to facilitate secure transmission of confidential
information. We cannot assure you that advances in computer and cryptography
capabilities or other developments will not result in a compromise of the
algorithms we use to protect customer transaction data.

         OUR RAPID GROWTH HAS PLACED SIGNIFICANT DEMANDS ON OUR MANAGEMENT AND
OTHER RESOURCES AND IS LIKELY TO CONTINUE. To manage the currently anticipated
growth of our business, we will need to attract, hire and retain highly skilled
and motivated officers and employees. In particular, we expect that a need for
increased staffing will continue for service personnel to support the expansion
of our branch offices. We will also need to continue improving our existing
systems, and/or implement new systems, for transaction processing, operational
and financial management and training, integrating and managing our growing
employee base. We cannot assure you that we will be able to attract the
employees or conduct the system improvements necessary to manage this growth
effectively or that we will be able to achieve the rate of growth we have
experienced in the past.

             WE MAY HAVE DIFFICULTY INTEGRATING BUSINESSES AND/OR GENERATING
ACCEPTABLE RETURNS FROM FUTURE ACQUISITIONS. As part of our long-term growth
strategy, we evaluate the acquisition of other companies, assets or product
lines that would complement or expand our business in attractive service markets
or that would broaden our customer relationships. We cannot assure you that we
will be able to identify suitable acquisition candidates available for sale at
reasonable prices, consummate any acquisition or successfully integrate any
acquired business into our operations. The success of any completed acquisition
will depend in large measure on our ability to integrate the operations of the
acquired business with our operations and otherwise to maintain and improve the
results of operations of the acquired business. Acquisitions involve a number of
special risks and present financial, managerial and operational challenges,
including diversion of management's attention, unanticipated events or
circumstances, existence of unknown liabilities, potential disputes with
sellers, and adverse effects on our reported earnings per share in the event
acquired intangible assets become impaired. An acquisition increases the risk
that any business may lose customers or employees, including key employees of
the acquired business. An acquired business could under perform relative to our
expectations and we may not realize the value we expect from the acquisition.
Adverse market conditions or poor investment or other performance by an acquired
company may adversely affect revenue. We could also experience financial or
other setbacks if an acquired company has problems of which we are not aware.
Although we conduct due diligence reviews of potential acquisition candidates,
we may not identify all material liabilities or risks related to acquisition
candidates. Some or all of these risks could have a material adverse effect on
our business, financial condition and results of operations. Further, future
acquisitions may further increase our leverage or, if we issue equity securities
to pay for the acquisitions, our shareholders could suffer dilution of their
interests.

            THERE ARE OPERATIONAL RISKS TO OUR BUSINESS. There is considerable
fluctuation during any year and from year-to-year in the volume of transactions
we must process. We record transactions and post our books on a



                                       12
<PAGE>


daily basis. Operations personnel monitor operations to determine compliance
with applicable laws, rules and regulations. Failure to keep current and
accurate books and records can render us liable to disciplinary action by
governmental and self-regulatory authorities, as well as to claims by our
clients.

         We depend on our headquarters and operations center for continued
operation of our business. A disaster directly affecting our headquarters or
operations center may have a material adverse impact on our ability to continue
to operate our business without interruption. Although we have disaster recovery
programs in place, there can be no assurance that these will be sufficient to
mitigate the harm that may result from such a disaster. In addition, insurance
and other safeguards might only partially reimburse us for our losses.

         OUR EXPOSURE TO POSSIBLE SECURITIES LITIGATION COULD ADVERSELY AFFECT
OUR BUSINESS. From time to time we are engaged in various legal and regulatory
proceedings arising in the normal course of business. Many aspects of the
securities brokerage business involve substantial risks of liability. In recent
years, there has been an increasing incidence of litigation involving the
securities brokerage industry, including class action and other suits that
generally seek substantial damages, including in some cases punitive damages. We
currently maintain errors and omissions insurance, the proceeds of which may
help to reduce the amount we may otherwise be required to pay with respect to
certain types of claims. There can be no assurance, however, that we will be
able to obtain errors and omissions insurance in the future, or that if it can
be obtained, that the price for such insurance will be reasonable, or that even
if such insurance is in force the amount of any award will not exceed the
maximum coverage provided by such insurance, in which case we will be required
to pay any uncovered portion. While it is not possible to determine with
certainty the outcome of these matters, we are of the opinion the eventual
resolution of such proceedings will not have a material adverse effect on our
financial position or operating results. Any such litigation brought in the
future could have a material adverse effect on our business, financial condition
and operating results.

         WE MAY NOT BE ABLE TO COMPLETELY PROTECT OURSELVES FROM VARIOUS FORMS
OF BUSINESS INTERRUPTION. Although we maintain business interruption insurance,
the net proceeds from such insurance may not be sufficient to cover lost
revenues and earnings. Additionally, in the future, it may not be possible to
obtain business interruption insurance on terms that management deems
acceptable, especially if such interruption relates to acts of terror, including
acts of cyberterrorism.

        WE MAY HAVE TO INDEMNIFY OUR DIRECTORS AND OFFICERS FOR CERTAIN ACTIONS.
Our Amended and Restated Articles of Incorporation require us to indemnify (to
the fullest extent permitted under Florida law) each of our directors and
officers against liabilities imposed upon them (including reasonable amounts
paid in settlement) and expenses incurred by them in connection with any claim
made against them or any action, suit or proceeding to which they may be a party
by reason of their being or having been directors or officers of our company.
The foregoing provisions may reduce the likelihood of derivative litigation
against directors and may discourage or deter shareholders or management from
suing directors for breaches of their duty of care, even though such an action,
if successful, might otherwise benefit our shareholders and us. We maintain
officers and directors liability insurance coverage in the amount of $1 million.
There can be no assurance that such insurance will be available in the future,
or that if available, it will be available on terms that are acceptable to us.
Furthermore, there can be no assurance that the insurance coverage provided will
be sufficient to cover the amount of any judgment awarded against an officer or
director (either individually or in the aggregate). Consequently, if such
judgment exceeds the coverage under the policy, we may be forced to pay such
difference.


ITEM 7.    FINANCIAL STATEMENTS.

         The financial statements required by this item are set forth on pages
F-1 through F-18 and are incorporated herein by this reference.

ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE.

         Effective October 4, 2001, we dismissed Hoyman, Dobson & Company, P.A.
as the independent auditors of our financial statements, and appointed Moore
Stephens Lovelace, P.A., as our new independent auditors. The decision to change
accountants was approved by our Board of Directors.

         No report of Hoyman, Dobson & Company, P.A. on our financial statements
for the past two years contained an adverse opinion or disclaimer of opinion,
nor was any such report qualified or modified as to uncertainty, audit scope, or
accounting principles. During the two most recent fiscal years and through the
date of its letter, there were no disagreements nor differences of opinion with
Hoyman on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Hoyman, would cause it to make reference to the subject
matter of the disagreements in connection with its report. During the two most
recent fiscal years and through the date of its letter, Hoyman did not advise us
of any events as listed in paragraphs (1) through (3) of Item 304(a)(1)(iv)(B)
of Regulation S-B.

         We have furnished Hoyman with a copy of our above statements, which are
made in response to Item 304 (a)(1) of the SEC Regulation S-B and have requested
that Hoyman furnish us with a letter addressed to the SEC, stating whether or
not Hoyman agrees with such statements. A copy of Hoyman's letter, dated March
24, 2003 is attached as an exhibit to this Annual Report.


                                       13
<PAGE>



                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT..

         The executive officers and directors of the Company are as follows:

NAME                   AGE     TITLE DIRECTOR
----                   ---     --------------

Marshall T. Leeds      47      Chairman of the Board and Chief Executive Officer
Richard Parker         51      Vice Chairman of the Board, President and Chief
                               Operating Officer
Mark F.  Caulfield     44      Chief Financial Officer, Secretary and Treasurer
Ronald F. Caprilla     51      Vice President - Operations
Gregory J. Bentley     45      Executive Vice President
Steven C. Jacobs       42      Executive Vice President and Director
Sanford B. Cohen       46      Director
Harry S. Green         61      Director


         MARSHALL T. LEEDS, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER.
Mr. Leeds acquired a controlling interest in the Company on May 22, 2002
whereupon he became the Company's Chairman and Chief Executive Officer. From
March 22, 2002 to May 22, 2002, he was engaged by the Company as its Director of
Recruiting. Prior to joining the Company, Mr. Leeds was most recently Chairman
and Chief Executive Officer of First Union Securities Financial Network, Inc.
Prior to joining First Union, Mr. Leeds served as Chairman, President and Chief
Executive Officer of JW Genesis Financial Corp., a publicly traded investment
banking and securities brokerage concern that he co-founded in 1983. JW Genesis
Financial Corp. was acquired by First Union Securities Financial Network, Inc.
on January 1, 2001. Mr. Leeds is a past Chairman of the National Investment
Bankers Association, Inc. and also served on the Independent Contractor Firm
Committee of the Securities Industry Association.

         RICHARD PARKER, VICE CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
OPERATING OFFICER. Mr. Parker served as our Chairman of the Board and Chief
Executive Officer since founding the Company in 1993 until May 22, 2002 when he
became the Company's Vice Chairman of the Board, President and Chief Operating
Officer. From 1991 until he founded the Company as a NASD licensed broker/dealer
in 1993, Mr. Parker was the branch manager of Security Service Network in
Knoxville, Tennessee. Prior to joining Security Service Network, Mr. Parker
served, from 1989 to 1991 as the branch manager of Anchor National Financial, a
SunAmerica company, in Melbourne, Florida that was in the business of insurance
products and securities brokerage. From 1986 until 1989, Mr. Parker was a
licensed securities and insurance representative with the Indialantic, Florida
office of Dean Witter. Prior to his association with Dean Witter, Mr. Parker
co-owned and operated R/D Parker Realty, a franchise of Century 21, from 1975
until 1986, from which he sold, developed, built and managed real estate
projects, primarily throughout Polk County.

         MARK CAULFIELD, CHIEF FINANCIAL OFFICER, SECRETARY AND TREASURER. Mr.
Caulfield has served as our Chief Financial Officer, Secretary and Treasurer
since January 1998. Mr. Caulfield is a Certified Public Accountant with over 23
years in financial management, serving in such key roles as Chief Financial
Officer, Vice President of Finance and Administration, as well as Controller.
During 1997-98, Mr. Caulfield served as CFO of Kallmart Telecommunications, a
communications service provider. Prior to 1997, he had been involved with a
number of similar rapidly growing companies, in such industries as hospitality
management, travel and tourism, restaurants, and service contracting. He has
served on numerous business, charitable, and community boards and committees. He
and his family currently devote a great deal of time to church and Rotary
involvement. He is also a member of several professional associations, including
the American Institute of Certified Public Accountants.

         GREGORY J. BENTLEY, EXECUTIVE VICE PRESIDENT. Mr. Bentley is a
financial services executive with over 20 years experience focusing on strategic
marketing and product development in the financial services industry. He was
recently Senior Vice President, Director of Insurance, for JWGenesis Financial
Corp., Boca Raton, Florida, from 1999 to 2001, where he was responsible for
developing the sales and marketing of annuities and other



                                       14
<PAGE>


insurance products. Prior to joining that company, he served as President and
Chief Operating Officer of Empire Financial Services, Longwood, Florida, from
1991 to 1999, responsible for operations and the development, sales and
marketing of financial products. Prior to 1991, Mr. Bentley was Vice President
and National Insurance Manger for Invest Financial Services, Tampa, Florida and
Vice President of Empire Agency, Inc., Longwood, Florida, a subsidiary of Empire
of America, FSB. Mr. Bentley received his B.A. in Business Administration in
1976 from State University College of New York.

         STEVEN C. JACOBS, EXECUTIVE VICE PRESIDENT / DIRECTOR. Mr. Jacobs was
formerly the Managing Partner of Tucker Ridge Financial Partners, LLC, a private
investment banking and financial advisory firm serving emerging growth and
middle market companies. For the ten year period prior to founding Tucker Ridge
in October 2000, Mr. Jacobs held several senior executive investment banking
positions, including having served for five years as the Senior Vice President
and Managing Director of Investment Banking for JWCharles Financial Services,
Inc., as well as a founding partner and Managing Director of Pinnacle Partners
and its related entities. Immediately following his graduation from the
University of Florida in 1982 with a Bachelors in Accounting, Mr. Jacobs held
audit, tax and consulting positions with the international accounting and
consulting firm of Deloitte Haskins + Sells (currently Deloitte & Touche), and
subsequent thereto served as Manager of Tax and Special Projects for Microtel,
Inc., one of the first independent long distance carriers in Florida (currently
part of MCI Group). Mr. Jacobs also served as Chief Financial Officer for
Corporate Securities Group, Inc., an NASD member broker/dealer (currently a
subsidiary of First Union Securities).


         RONALD CAPRILLA, VICE PRESIDENT - OPERATIONS. Mr. Caprilla has been
Vice President of Operations of the Company since December 2000. Prior to
joining the Company, Mr. Caprilla had been a financial consultant and registered
sales representative with A.G. Edwards & Sons, Inc, Melbourne, Florida, from
1982 to December 2000. Mr. Caprilla has worked in financial services during his
entire career starting in military finance for the United States Army - Ft.
Benning, Columbus, Georgia, after which he received a Bachelors Degree in
Finance from the University of Central Florida, Orlando, Florida. Subsequent to
graduation, he spent two years in the Peace Corps working for a Columbia
development bank where he set up business management systems for small
companies. Upon his return to the United States and prior to joining A.G.
Edwards & Sons, Inc., Mr. Caprilla purchased and operated for four years a
General Business Services franchise in Melbourne, Florida, that provided
accounting and tax services to small businesses.

         SANFORD B. COHEN, DIRECTOR. In 1985, Mr. Cohen founded Prescott Valley
Broadcasting Co., Inc., owner of KPPV- FM and KQNA-AM radio stations in Prescott
Valley, Arizona, and has been its President since its inception. From 1982 to
1984, Mr. Cohen was Vice President of National Phonecasting Co., a joint venture
with Gannett Broadcasting Corp., a private company engaged in telephone
broadcasting of financial information. Mr. Cohen received his B.A. degree in
Economics in 1979 from Michigan State University. Mr. Cohen is not employed
full-time at Summit.

         HARRY S. GREEN, DIRECTOR. Mr. Green was elected a director of Summit in
August 1998. From 1966 until he retired in 1994, Mr. Green worked for Wal-Mart
Stores, Inc. After graduation from University of Arkansas in 1970, he started in
Wal-Mart's management program and was promoted to District Manager in 1977. In
1984, he was promoted to Regional Vice President and in 1988 he was Regional
Vice President of Sam's, an affiliate of Wal-Mart. From 1990 to 1994, he worked
with SuperCenters and was Operations Director for Bud's, an affiliate of
Wal-Mart. Mr. Green is not employed full-time at Summit.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Based solely upon a review of Forms 3, 4 and 5 and amendments to these
forms furnished to us, all parties subject to the reporting requirements of
Section 16(a) of the Exchange Act filed all such required reports with respect
to fiscal year 2002.



                                       15
<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION.

         The following table sets forth all compensation awarded to, earned by,
or paid for all services rendered to Summit during the fiscal years ended
December 31, 2000, 2001, and 2002 by our Chief Executive Officer and any
executive officer who received compensation in excess of $100,000 during those
years. (each a "Named Executive Officer").

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                      LONG-TERM COMPENSATION
                                                          ANNUAL COMPENSATION (1)             AWARDS
NAME AND PRINCIPAL                      FISCAL        ------------------------------  ----------------------
--------------------------------  ------------------                                  SECURITIES UNDERLYING       ALL OTHER
POSITION                                 YEAR            SALARY             BONUS            OPTIONS             COMPENSATION
--------------------------------  ------------------  -----------     --------------  ----------------------    ---------------
<S>                               <C>                 <C>             <C>             <C>
Marshall T. Leeds
     Chairman and                      12/31/02          $35,000             -0-            7,000,000 (2)              -0-
     Chief Executive Officer           12/31/01               -0-            -0-                   -0-                 -0-
                                       12/31/00               -0-            -0-                   -0-                 -0-

Richard Parker                         12/31/02          $73,627             -0-              900,000 (3)        $134,742 (6)
     Vice Chairman, President          12/31/01          $77,675             -0-               91,860 (4)        $  1,539 (6)
     and Chief Operating Office        12/31/00          $45,756             -0-              404,440 (5)              -0-
</TABLE>

(1)      The amounts reflected in the above table do not include any amounts for
         perquisites and other personal benefits extended to the Named Executive
         Officer. The aggregate amount of such compensation for the named
         executive officer is less than 10% of the total annual salary and
         bonus.
(2)      Represents 7,000,000 options granted in 2002 that are exercisable at
         $.25 per share until December 31, 2007.
(3)      Represents 400,000 options granted in 2002 which vest over three years
         exercisable at $.50 per share until December 31, 2007, and 500,000
         options granted in 2002 that are exercisable at $.10 per share until
         December 31, 2007.
(4)      Represents 10,000 options granted in 2001 that are exercisable at $1.00
         per share until December 31, 2011, and 81,860 options granted in 2001
         that are exercisable at $ .50 per share until December 31, 2011.
(5)      Represents options granted in 2000 that are exercisable at $2.50 per
         share until 2010, 394,440 of which replaced options granted in 1999.
(6)      Represents commissions paid to Mr. Parker in connection with trades
         executed by him on behalf of his clients.


STOCK OPTIONS GRANTED IN FISCAL 2002

          The following table sets forth certain information concerning grants
of options made during fiscal 2002 to the Named Executive Officers.

<TABLE>
<CAPTION>
                                                PERCENT
                                 NUMBER OF     OF TOTAL
                                SECURITIES      OPTIONS       EXERCISE        FAIR MARKET
                                UNDERLYING    GRANTED TO       OR BASE           VALUE
                                  OPTIONS      EMPLOYEES        PRICE         ON DATE OF       EXPIRATION
NAME                             GRATED(#)      IN 2002        ($/SH)            GRANT            DATE
----                             ---------      -------        ------            -----            ----

<S>                             <C>           <C>             <C>             <C>             <C>
Marshall T. Leeds..........     7,000,000         71%          $0.25             $.20         12/31/2007
Richard Parker.............       500,000          5%           0.10             $.20         12/31/2007
                                  400,000          4%           0.50             $.20         12/31/2007
</TABLE>



                                       16
<PAGE>


AGGREGATE STOCK OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE

          The following table sets forth certain information concerning option
exercises in fiscal 2002, the number of stock options held by the Named
Executive Officers as of December 31, 2002 and the value (based on the fair
market value of a share of stock at fiscal year-end) of in-the-money options
outstanding as of such date.

<TABLE>
<CAPTION>
                                                                   NUMBER OF UNEXERCISED                 VALUE OF UNEXERCISED
                                                                      OPTIONS HELD AT                    IN-THE-MONEY OPTIONS
                           NUMBER OF                                 FISCAL YEAR-END(#)                  AT FISCAL YEAR END (1)
                        SHARES ACQUIRED         VALUE                ------------------                  ----------------------
NAME                    ON EXERCISE(#)      REALIZED($)(1)       EXERCISABLE     UNEXERCISABLE       EXERCISABLE       UNEXERCISABLE
----                    --------------      --------------       -----------     -------------       -----------       -------------

<S>                     <C>                 <C>                  <C>             <C>                 <C>               <C>
Marshall T.  Leeds        1,400,000          $1,064,000           5,600,000               --          $4,256,000                --
Richard Parker                   --                  --             500,000               --          $  455,000
                                 --                  --                  --          400,000                  --          $204,000
                                 --                  --                  --          496,300                  --
</TABLE>

(1)      Options are in-the-money if the fair market value of the common stock
         exceeds the exercise price of the option. The closing sale price for
         the Company's common stock as reported by the NASDAQ Trading and Market
         Services on December 31, 2002 was $1.01 per share. Value is calculated
         by multiplying (a) the difference between $1.01 and the option exercise
         price by (b) the number of shares of common stock underlying the
         option.

EMPLOYMENT AGREEMENTS

         The Company entered into an employment agreement with Marshall T. Leeds
dated March 22, 2002 pursuant to which he was employed by the Company as its
Director of Recruiting in connection with its broker recruitment efforts and
other strategic matters. In connection with his employment, Mr. Leeds received
an option exercisable for 7,000,000 shares of common stock at an exercise price
of $.25 per share pursuant to an option agreement dated March 22, 2002. On May
22, 2002, his employment agreement was amended and restated for a term of two
years and pursuant to which Mr. Leeds became the Company's Chief Executive
Officer and Chairman. The employment agreement, as amended and restated,
provides that, in consideration for Mr. Leed's services, he is to be paid a base
salary of $50,000 and will be reviewed annually. He will receive an override or
fee equal to 3% of the first twelve month's gross production generated by
brokers recruited by him who remain with the Company for at least 12 months. Mr.
Leeds will also receive commission income generated by him for his production as
a registered representative with the Company. The agreement provides for a
12-month severance arrangement upon termination without cause or in connection
with a change of control, as such terms are defined in the employment agreement.
Mr. Leeds has the right to terminate the employment agreement upon 60-days
notice to the Company.

            Effective May 22, 2002, the Company entered into a two-year
employment agreement with Richard Parker who is the Company's President, Chief
Operating Officer and Vice Chairman. The employment agreement provides that, in
consideration for Mr. Parker's services, he is to be paid a base salary of
$50,000 initially which will be subject to increase upon specified Company
performance goals being met. He will receive an override or fee equal to 3% of
the first twelve month's gross production generated by brokers recruited by him
or his affiliate, Educational Seminars of America, Inc., who remain with the
Company for at least 12 months. Mr. Parker will also receive commission income
generated by him for his production as a registered representative with the
Company. The agreement provides for a 12-month severance arrangement upon
termination without cause or in connection with a change of control, as such
terms are defined in the employment agreement. Mr. Parker has the right to
terminate the employment agreement upon 60-days notice to the Company. Mr.
Parker received an immediately exercisable option for 500,000 shares of the
Company's common stock at an exercise price of $.10 per share, and an option for
400,000 shares at an exercise price of $.50 per share, vesting over three years,
pursuant to option agreements dated March 22, 2002.


2000 INCENTIVE COMPENSATION PLAN

         Our 2000 Incentive Compensation Plan (the "Plan") was approved by our
Board of Directors and shareholders in 2000. Our Plan is currently administered
by the Company's Board of Directors. The Plan provides for the grant of options
(incentive and non-statutory), stock appreciation rights and restricted stock to
officers, directors, employees and independent contractors capable of
contributing to the Company's performance. The Company has reserved an aggregate
of 4,000,000 shares of common stock for grants under the Plan, pursuant to an
amendment to the Plan approved by the shareholders in August 2002. Incentive
stock options may be granted only to employees eligible to receive them under
the Internal Revenue Code of 1986, as amended. As of December 31, 2002, the
Company had outstanding options (only non-statutory) for a total of 2,218,513
shares of the Company's common stock, leaving a total of 1,781,487 shares
available for future grants. Options have a term of ten years, unless earlier
terminated in accordance with the provisions of the Plan and applicable stock
option agreements. The exercise prices of the options range from $.50 per share
to $2.50 per share, and generally have scheduled vesting. Upon expiration of
unexercised options, the unpurchased shares subject to such options will again
be available for purposes of the Plan.



                                       17
<PAGE>


OPTIONS GRANTED OUTSIDE OF OUR 2000 INCENTIVE COMPENSATION PLAN

         As of December 31, 2002, we had outstanding options to purchase an
aggregate of 7,653,646 shares of common stock with a range of exercise prices
from $.10 to $2.50 per share. Options for a total 6,500,000 shares expire on
December 31, 2007, unless terminated earlier in accordance with their terms. All
other non-plan options have a term of ten years from the date of grant unless
otherwise terminated in accordance with their terms. Of such outstanding options
granted outside of our Plan, options for approximately 6,961,701 shares are
immediately exercisable as of December 31, 2002.

DIRECTOR COMPENSATION

         In serving on our Board, directors receive compensation of $350 for
each meeting attended, as well as the grant of stock options from time to time
at the discretion of our Board. Directors are also reimbursed for their
reasonable expenses incurred in attending Board or Committee meetings.
Additional fees and options may be granted for chairing special committees, such
as the Audit Committee. As of December 31, 2002, the Company had granted options
for a total of 176,000 shares of common stock to directors in connection with
their service on the Board or a committee.


                   REPORT OF THE COMPENSATION COMMITTEE OF THE
                  BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION


GENERAL

         The Compensation Committee of the Board of Directors during fiscal year
2002 consisted of Sanford B. Cohen and Steven C. Jacobs, effective August 24,
2002. Until February 2003, each Compensation Committee member was a non-employee
director of the Company. On February 3, 2003, Mr. Jacobs became an employee of
the Company. The Board intends to expand the Compensation Committee to include
at least one additional non-employee director.

          The Compensation Committee administers the Company's executive
compensation program, monitors corporate performance and its relationship to
compensation for executive officers, and makes appropriate recommendations
concerning matters of executive compensation.

COMPENSATION PHILOSOPHY

          The Company has developed and implemented a compensation program that
is designed to attract, motivate, reward and retain the broad-based management
talent required to achieve the Company's business objectives and increase
shareholder value. There are two major components of the Company's compensation
program: base salary and incentives, each of which is intended to serve the
overall compensation philosophy.

BASE SALARY

          The Company's salary levels for executive officers, including its
Chief Executive Officer, are intended to be consistent with competitive pay
practices of similarly-sized companies within the industry. In determining
executive officers' salaries, the Compensation Committee considers level of
responsibility, competitive trends, the financial performance and resources of
the Company, general economic conditions, as well as factors relating to the
particular individual, including overall job performance, level of experience
and prior service, ability, and knowledge of the job. However, the base salary
for Marshall T. Leeds, the Company's Chairman and Chief Executive Officer, is
currently not competitive with other similarly situated executives and this was
intentionally negotiated between the Company and Mr. Leeds at the time he
acquired control of the Company due to the Company's financial situation at that
time. It is anticipated that in the future his compensation will become more
competitive as the Company's performance improves through an increase in base
salary and/or through performance incentives.



                                       18
<PAGE>


INCENTIVES

          Incentives consist of stock options and performance bonuses paid in
cash. The Compensation Committee strongly believes that the compensation program
should provide employees with an opportunity to increase their ownership and
potential for financial gain from increases in the Company's stock price. This
approach closely aligns the best interests of shareholders and Registered
Representatives, executives and employees. Therefore, executives and other
employees and Registered Representatives are eligible to receive stock options,
giving them the right to purchase shares of the Company's common stock at a
specified price in the future. Stock option grants are determined by the
Company's Board of Directors for all employees except the two most highly
compensated, and as to those executives, the compensation committee determines
stock options. The grant of options is based primarily on an individual's
potential contribution to the Company's growth and profitability, as measured by
the market value of the Company's common stock.

                                            Respectfully submitted,

                                            THE COMPENSATION COMMITTEE


                                             Sanford B. Cohen
                                             Steven C. Jacobs



                                       19
<PAGE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.

         The following table sets forth certain information as of March 19, 2003
with respect to the beneficial ownership of common stock by: (i) each
shareholder known by the Company to be the beneficial owner of more than 5% of
the Company's common stock; (ii) each director; (iii) each executive officer
named in the Summary Compensation Table; and (iv) all executive officers and
directors as a group.

NAME OF BENEFICIAL
OWNER(1)(2)                             NO. OF SHARES        PERCENTAGE
-----------                             -------------        ----------

Marshall T. Leeds ...............       16,722,765(3)          51.7%
Richard Parker ..................        4,722,765(4)          14.6%
Harry S. Green (5)...............          117,500              0.4%
Steven C. Jacobs (6).............           45,000              0.1%
Sanford B. Cohen (7).............           20,000              0.1%

All officers and directors
  as a group (8 persons) ........       22,259,868(8)          68.9%

--------------
(1)      Unless otherwise noted, the address of each person or entity listed is
         Summit Brokerage Services, Inc., 25 Fifth Avenue, Indialantic, Florida
         32903.

(2)      Based on 23,140,064 shares actually outstanding, and additional shares
         deemed to be outstanding as to a particular person in accordance with
         the following applicable rules of the SEC. Beneficial ownership is
         determined in accordance with the rules of the SEC and generally
         includes voting or investment power with respect to securities. Shares
         of common stock subject to options, warrants or convertible securities
         that are exercisable within 60 days of the date of March 19, 2003, are
         deemed outstanding for computing the percentage of the person holding
         such options, warrants or convertible securities but are not deemed
         outstanding for computing the percentage of any other person. Except as
         indicated by footnote and subject to community property laws where
         applicable, the persons named in the table have sole voting and
         investment power with respect to all shares of common stock shown as
         beneficially owned by them.

(3)      Includes: (a) 6,400,000 shares of common stock; (b) 5,600,000 shares
         issuable pursuant to options that are exercisable within the next 60
         days; and (c) 4,722,765 shares of common stock beneficially owned by
         Mr. Parker but for which Mr. Leeds has sole voting power pursuant to a
         Shareholders' Voting Agreement and Irrevocable Proxy ("Voting
         Agreement") granted to him by Mr. Parker and his spouse in connection
         with the closing of the Leeds Transaction, which shares are represented
         as follows: (i) 3,313,595 outstanding shares beneficially owned by Mr.
         Parker; and (ii) 1,409,170 shares issuable pursuant to stock options
         which are exercisable within the next 60 days (the "Voting Trust
         Shares"). Excludes 200,000 shares issuable pursuant to stock options
         held by Mr. Parker which are not exercisable within the next 60 days,
         and which shares are also subject to the Voting Agreement.

(4)      Includes (i) 2,743,920 shares of common stock; (ii) 497,675 shares owed
         jointly with his spouse; (iii) 27,000 shares owned by his spouse; (iv)
         1,249,170 shares issuable pursuant to stock options exercisable within
         the next 60 days; (iv) 45,000 shares he and/or his spouse control as
         trustees of two foundations and a trust; and (v) 160,000 shares
         issuable pursuant to stock options held by his spouse which are
         exercisable within the next 60 days.

(5)      Includes 117,500 shares issuable pursuant to stock options exercisable
         within the next 60 days.

(6)      Includes 45,000 shares issuable pursuant to stock options exercisable
         within the next 60 days. Excludes 40,000 common stock purchase warrants
         to which Mr. Jacobs is entitled.

(7)      Includes 20,000 shares issuable pursuant to stock options exercisable
         within the next 60 days.

(8)      Includes 7,739,508 shares issuable pursuant to stock options
         exercisable within the next 60 days.



                                       20
<PAGE>


ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         We lease approximately 5,000 square feet of office space for our
headquarters from First America Living Trust, Inc., a company wholly-owned by
Mr. Parker ("First America"). Annual lease payments are $105,800. The lease
expires in May 2004. We entered into this lease on May 22, 2002, replacing the
previous lease with the same company. We paid rent under these leases of
approximately $133,000 and $109,200 during 2002 and 2001, respectively.

         We advanced expenses for Summit Group of Companies, Inc., wholly-owned
by Richard Parker, which outstanding unpaid balance at December 31, 2002 and
2001 was $11,410 and $16,183, respectively. The receivable is not evidenced in
writing.

         We reimbursed $96,839 during 2002 to Gold Coast Acquisitions, Inc.,
wholly-owned by Marshall T. Leeds ("GCA"), for costs paid on behalf of the
Company related to the private placement of our common stock described in the
Liquidity and Capital Resources section under Item 6.

         In connection with sales of common stock in our private placement made
in 2003 by Steven C. Jacobs, a director, Mr. Jacobs is entitled to receive
40,000 common stock purchase warrants with an exercise price of $.30 per share.

         We believe that the terms of the foregoing arrangements were no less
favorable to us than we could have obtained from non-affiliated third parties.
We anticipate that all future transactions with our affiliates, if any, will be
on terms believed by our management to be no less favorable than are available
from unaffiliated third parties and will be approved by a majority of
disinterested directors.

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K

         A.       EXHIBITS

         Set forth below is a list of the exhibits to this Annual Report on Form
10-KSB.

<TABLE>
<CAPTION>
NUMBER               NAME
---------     --------------------------------------------------------------------------------------------------------------
<S>           <C>
3.1           Amended and Restated Articles of Incorporation (1)
3.1.1         Amendment to Amended and Restated Articles of Incorporation (1)
3.1.2         Amendment to Amended and Restated Articles of Incorporation (8)
3.2           Amended and Restated Bylaws (2)
10.1          2000 Incentive Compensation Plan (3)
10.1.2        2000 Incentive Compensation Plan, as amended (9)
10.2          Stock Option Agreement between the Company and Richard Parker (4)
10.3          Stock Option Agreement between the Company and Mark F. Caulfield (4)
10.4          Employment Agreement between the Company and Richard Parker (5)
10.5          Employment Agreement between the Company and Mark F. Caulfield (5)
10.6          Secured Demand Note Collateral Agreement between the Company and Summit Group of Companies, Inc. (6)
10.7          Amendment to Secured Demand Note Collateral Agreement (6)
10.8          Employment Agreement between the Company and Ronald Caprilla* (7)

10.9          Stock  Purchase  Agreement by and among the Company,  Richard  Parker and Marshall T. Leeds,  dated March 22,
              2002 (8)
10.10         Employment Agreement between the Company and Marshall T. Leeds dated March 22, 2002(8)
10.11         Stock Option Agreement between the Company and Marshall T. Leeds dated March 22, 2002 (8)
10.12         Stock Option Agreement between the Company and Richard Parker dated March 22, 2002 (8)
10.13         Stock Option Agreement between the Company and Richard Parker dated March 22, 2002 (8)
10.14         Employment Agreement between the Company and Richard Parker dated May 22, 2002 (10)
10.15         Amended and Restated Employment Agreement between the Company and Marshall T. Leeds dated May 22, 2002 (10)
10.16         Shareholders'  Voting Agreement and Irrevocable  Proxy by and among the Company,  Marshall T. Leeds,  Richard
              Parker and Joan Parker, dated May 22, 2002. (10)
10.17         Commercial Lease between the Company and First America Living Trust, dated May 22, 2002 (10)
10.18         Form of Registration Rights Agreement between the Company and certain investors*
16.1          Letter from Hoyman, Dobson & Company*
21.1          Subsidiaries of the Company*
99.1          Certification  Pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley
              Act of 2002*
99.2          Certification  Pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley
              Act of 2002*
</TABLE>



                                       21
<PAGE>


------------------
* Filed herewith

(1)      Incorporated by reference to the Company's Quarterly Report on Form
         10-QSB for the fiscal quarter ended June 30, 2001, filed August 20,
         2001, file no. 000-29337.
(2)      Exhibit 3.2 filed with the Company's Quarterly Report on Form 10-QSB
         for the fiscal quarter ended June 30, 2001 was filed prematurely and
         subsequently not adopted by the Board of Directors. As a result, the
         Amended and Restated Bylaws dated July 21, 2000 remain in effect and
         were re-filed with, and are incorporated by reference to, the Company's
         Quarterly Report for the fiscal quarter ended September 30, 201, on
         Form 10-QSB, file no. 000-29337.
(3)      Incorporated by reference to the Company's Proxy Statement on Schedule
         14A, filed July 31, 2000, file no. 000-29337.
(4)      Incorporated by reference to the Company's Information Statement on
         Schedule 14C, filed September 26, 2000, file no. 000-29337.
(5)      Incorporated by reference to the Company's Quarterly Report for the
         fiscal quarter ended June 30, 2000 on Form 10-QSB, filed August 14,
         2000 and amended August 15, 2000, file no. 000-29337.
(6)      Incorporated by reference to the Company's Quarterly Report for the
         fiscal quarter ended March 31, 2001 on Form 10-QSB filed May 21, 2001,
         file no. 000-29337.
(7)      Incorporated by reference to the Company's Annual Report for the fiscal
         year ended December 31, 2001 on Form 10-KSB, filed April 15, 2002, file
         no. 000-29337.
(8)      Incorporated by reference to the Company's Quarterly Report for the
         fiscal quarter ended March 31, 2002 on Form 10-QSB, Filed May 24, 2002,
         file no. 000-29337
(9)      Incorporated by reference to the Company's definitive Proxy Statement
         filed August 12, 2002, file no. 000-29337
(10)     Incorporated by reference to the Company's Quarterly Report for the
         fiscal quarter ended June 30, 2002 on Form 10-QSB, filed August 19,
         2002, file no. 000-29337


         B.       REPORTS ON FORM 8-K

         On March 22, 2002, the Company filed a Current Report on Form 8-K to
annex a press release announcing the stock purchase agreement between the
Company, Richard Parker and Marshall T. Leeds.

         On June 6, 2002, the Company filed a Current Report on Form 8-K to
report the closing of the stock purchase agreement between it, Richard Parker
and Marshall T. Leeds and the acquisition of a controlling interest in the
Company by Mr. Leeds.


ITEM 14.     CONTROLS AND PROCEDURES

         The Company's President and Chief Executive Officer along with the
Company's Chief Financial Officer evaluated the Company's disclosure controls
and procedures within 90 days of the filing date of this annual report. Based
upon this evaluation, the Company's President and Chief Executive Officer along
with the Company's Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in ensuring that material
information required to be disclosed is included in the reports that it files
with the Securities and Exchange Commission.

         There were no significant changes in the Company's internal controls
or, to the knowledge of the management of the Company, in other factors that
could significantly affect internal controls subsequent to the evaluation date,
including any corrective actions with regard to significant deficiencies and
material weaknesses.


                                       22
<PAGE>

SIGNATURES

         Pursuant to the requirements of the Securities and Exchange Act of
1934, as amended, Summit Brokerage Services, Inc. has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

                             SUMMIT BROKERAGE SERVICES, INC.


                             /s/ MARSHALL T. LEEDS
                             ---------------------------------------------------
                             Marshall T. Leeds
                             Chairman of the Board and Chief Executive Officer
                             (principal executive officer)

Date:  March 31, 2003

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
Summit Brokerage Securities, Inc. and in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
              SIGNATURE                                       TITLE                                  DATE
              ---------                                       -----                                  ----
   <S>                                 <C>                                                      <C>
        /s/ MARSHALL T. LEEDS          Chairman of the Board and Chief Executive Officer        March 31, 2003
   -------------------------------             (principal executive officer)
          Marshall T. Leeds

        /s/ MARK F. CAULFIELD           Chief Financial Officer, Secretary and Treasurer        March 31, 2003
   -------------------------------                (principal financial officer)
          Mark F. Caulfield

         /s/ RICHARD PARKER             (Vice Chairman of the Board) President, and Chief       March 31, 2003
   -------------------------------                      Operating Officer
           Richard Parker

        /s/ STEVEN C. JACOBS                  Executive Vice-President and Director             March 31, 2003
   -------------------------------
          Steven C. Jacobs

         /s/ HARRY S. GREEN                                 Director                            March 27, 2003
   -------------------------------
           Harry S. Green

</TABLE>





                                       23
<PAGE>

                            CERTIFICATION PURSUANT TO

                 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         I, Marshall T. Leeds, (Chairman and Chief Executive Officer of Summit
Brokerage Services, Inc.) certify that:


1.       I have reviewed this annual report on Form 10-KSB of Summit Brokerage
Services, Inc.;

2.       Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.       Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.       The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a)       designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

         c)       presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

         a)       all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls; and

6.       The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date:  March 31, 2003

   /s/ Marshall T. Leeds
------------------------------------------------------
Name: Marshall T. Leeds
Title: Chairman of the Board / Chief Executive Officer



                                       24
<PAGE>



                            CERTIFICATION PURSUANT TO

                 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         I, Mark Caulfield, (Chief Financial Officer of Summit Brokerage
Services, Inc.) certify that:


1.       I have reviewed this annual report on Form 10-KSB of Summit Brokerage
Services, Inc.;


2.       Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.       Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.       The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a)       designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

         b)       evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

         c)       presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

         a)       all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls; and

6.       The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.




Date:  March 31, 2003

/s/ Mark F. Caulfield
-----------------------------------------
Name: Mark Caulfield
Title: Chief Financial Officer



                                       25
<PAGE>




                         SUMMIT BROKERAGE SERVICES, INC.
                                AND SUBSIDIARIES


                        CONSOLIDATED FINANCIAL STATEMENTS


                     YEARS ENDED DECEMBER 31, 2002 AND 2001












<PAGE>

                                 C O N T E N T S
                                    ---------


<TABLE>
<CAPTION>
                                                                                     Page
                                                                                    Number
                                                                                    ------


<S>                                                                                 <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                   F-1


CONSOLIDATED FINANCIAL STATEMENTS

     Consolidated Statement of Financial Condition                                   F-2

     Consolidated Statements of Loss                                                 F-3

     Consolidated Statements of Changes in Stockholders' Equity                      F-4

     Consolidated Statements of Cash Flows                                           F-5

     Notes to Consolidated Financial Statements                                      F-6


SUPPLEMENTAL INFORMATION

     Schedule I - Computation of Net Capital Under Rule 15c3-1
         of the Securities and Exchange Commission                                  F-16

     Report of Independent Certified Public Accountants on
         Internal Control Structure Required by SEC Rule 17a-5
         for a Broker-Dealer Claiming an Exemption from SEC Rule 15c3-3             F-17
</TABLE>




<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




Board of Directors and Shareholders
Summit Brokerage Services, Inc. and Subsidiaries
Indialantic, Florida


We have audited the accompanying consolidated statement of financial condition
of Summit Brokerage Services, Inc. and Subsidiaries as of December 31, 2002, and
the related consolidated statements of loss, changes in stockholders' equity and
cash flows for the years ended December 31, 2002 and 2001 that you are filing
pursuant to Rule 17a-5 under the Securities Exchange Act of 1934. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Summit Brokerage
Services, Inc. and Subsidiaries as of December 31, 2002, and the results of
their operations and their cash flows for the years ended December 31, 2002 and
2001 in conformity with accounting principles generally accepted in the United
States of America.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The information contained in Schedule I
is presented for purposes of additional analysis and is not a required part of
the basic financial statements, but is supplemental information required by Rule
17a-5 under the Securities Exchange Act of 1934. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.


/s/ Moore Stephens Lovelace, P.A.
Certified Public Accountants


Orlando, Florida
February 17, 2003




                                      F-1
<PAGE>


SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Consolidated Statement of Financial Condition
December 31, 2002


ASSETS
   Cash and cash equivalents                                    $ 1,607,674
   Deposit held at clearing broker                                   25,045
   Deposit held at clearing broker - related party                   45,459
   Commissions receivable                                           346,920
   Other receivables                                                109,646
   Securities owned, at fair value                                    3,300
   Prepaid expenses                                                  77,643
   Property and equipment, net                                      116,088
                                                                -----------
TOTAL ASSETS                                                    $ 2,331,775
                                                                ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
   Accounts payable and accrued expenses                        $   210,091
   Accrued commission expense                                       310,640
   Note payable - related party                                      40,200
                                                                -----------
      Total liabilities                                             560,931
                                                                -----------

STOCKHOLDERS' EQUITY
   Preferred stock, 12% cumulative convertible;
       par value $0.0001 per share; authorized
       150,000 shares; 125,000 issued and outstanding
       (liquidation preference of $125,000)                              13
   Common stock, par value $0.0001 per share; authorized
       50,000,000 shares; 20,200,064 issued and
       20,192,148 outstanding                                         2,020
   Additional paid-in capital                                     6,336,751
   Unearned stock compensation                                     (237,123)
   Treasury stock, at cost                                           (3,718)
   Accumulated deficit                                           (4,327,099)
                                                                -----------
       Total stockholders' equity                                 1,770,844
                                                                -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $ 2,331,775
                                                                ===========


    The accompanying notes are an integral part of the financial statements.


                                      F-2
<PAGE>


SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Loss
For The Years Ended December 31, 2002 and 2001


                                                     2002               2001
                                             ------------       ------------
REVENUES
   Commissions                               $  6,065,976       $  6,899,311
   Interest and dividends                          76,202            107,811
   Other                                           12,676             40,465
                                             ------------       ------------
                                                6,154,854          7,047,587
                                             ------------       ------------

EXPENSES
   Commissions                                  5,275,867          5,863,693
   Employee compensation and benefits             806,909            715,054
   Occupancy and equipment                        188,253            169,985
   Communications                                 116,445            129,724
   Professional expenses                          610,415            283,202
   Stock-based compensation                       285,224            201,390
   Other operating expenses                       490,751            232,287
                                             ------------       ------------
                                                7,773,864          7,595,335
                                             ------------       ------------

NET LOSS BEFORE INCOME TAXES                   (1,619,010)          (547,748)

PROVISION FOR INCOME TAXES                             --                 --
                                             ------------       ------------

NET LOSS                                     $ (1,619,010)      $   (547,748)
                                             ============       ============

WEIGHTED AVERAGE COMMON SHARES AND
   COMMON SHARE EQUIVALENTS OUTSTANDING        10,264,778          4,693,970
                                             ============       ============

BASIC AND DILUTED LOSS PER SHARE             $     (0.158)      $     (0.117)
                                             ============       ============

    The accompanying notes are an integral part of the financial statements.




                                      F-3
<PAGE>


SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
For The Years Ended December 31, 2002 and 2001

<TABLE>
<CAPTION>

                                                Preferred Stock               Common Stock
                                           ----------------------      -----------------------                     Unearned
                                           Number of                    Number of                  Additional        Stock
                                            Shares          Par          Shares          Par         Paid-In         Compen-
                                          Outstanding      Value       Outstanding      Value        Capital         sation
                                          -----------     -------      -----------      ------     -----------      ---------

<S>                                       <C>             <C>          <C>              <C>        <C>              <C>
BALANCES, DECEMBER 31, 2000                       --      $    --        4,691,224      $  470     $ 2,898,910      $(207,732)
Issuance of preferred stock for cash         125,000           13               --          --         124,987             --
Purchase of treasury stock                        --           --           (6,500)         --              --             --
Issuance of treasury stock                        --           --            4,817          --              --             --
Other                                             --           --            1,539          --              --             --
Amortization of unearned stock
    compensation/consultant expenses              --           --               --          --              --        201,390
Unrealized gain on securities                     --           --               --          --              --             --
Net loss                                          --           --               --          --              --             --
                                             -------      -------       ----------      ------     -----------      ---------

BALANCES, DECEMBER 31, 2001                  125,000           13        4,691,080         470       3,023,897         (6,342)
Preferred stock dividend
Issuance of treasury stock                        --           --            1,068          --              --             --
Cancellation of stock subscription                --           --               --          --         (10,250)            --
Common stock/options issued for
services                                          --           --          100,000          10         515,995       (468,612)
Issuance of common stock                          --           --       14,000,000       1,400       2,457,249             --
Exercise of common stock options                  --           --        1,400,000         140         349,860             --
Amortization of unearned stock
    compensation/consultant expenses              --           --               --          --              --        237,831
Reduction in unrealized gain                      --           --               --          --              --             --
Net loss                                          --           --               --          --              --             --
                                             -------      -------       ----------      ------     -----------      ---------

BALANCES, DECEMBER 31, 2002                  125,000      $    13       20,192,148      $2,020     $ 6,336,751      $(237,123)
                                             =======      =======       ==========      ======     ===========      =========


<CAPTION>


                                                        Accumulated                                     Total
                                                           Other                                        Stock-
                                            Treasury   Comprehensive Subscription    Accumulated       holders'
                                             Stock        Income      Receivable       Deficit          Equity
                                            --------      -------      --------      -----------      -----------

<S>                                         <C>        <C>           <C>             <C>              <C>
BALANCES, DECEMBER 31, 2000                 $(29,857)     $ 1,775      $(10,250)     $(2,155,341)     $   497,975
Issuance of preferred stock for cash              --           --            --               --          125,000
Purchase of treasury stock                    (7,800)          --            --               --           (7,800)
Issuance of treasury stock                    21,419           --            --               --           21,419
Other                                             --           --            --               --               --
Amortization of unearned stock
    compensation/consultant expenses              --           --            --               --          201,390
Unrealized gain on securities                     --          885            --               --              885
Net loss                                          --           --            --         (547,748)        (547,748)
                                            --------      -------      --------      -----------      -----------

BALANCES, DECEMBER 31, 2001                  (16,238)       2,660       (10,250)      (2,703,089)         291,121
Preferred stock dividend                                                                  (5,000)          (5,000)
Issuance of treasury stock                    12,520           --            --               --           12,520
Cancellation of stock subscription                --           --        10,250               --               --
Common stock/options issued for
services                                          --           --            --               --           47,393
Issuance of common stock                          --           --            --               --        2,458,649
Exercise of common stock options                  --           --            --               --          350,000
Amortization of unearned stock
    compensation/consultant expenses              --           --            --               --          237,831
Reduction in unrealized gain                      --       (2,660)           --               --           (2,660)
Net loss                                          --           --            --       (1,619,010)      (1,619,010)
                                            --------      -------      --------      -----------      -----------

BALANCES, DECEMBER 31, 2002                 $ (3,718)     $    --      $     --      $(4,327,099)     $ 1,770,844
                                            ========      =======      ========      ===========      ===========
</TABLE>


    The accompanying notes are an integral part of the financial statements.


                                      F-4
<PAGE>

SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For The Years Ended December 31, 2002 and 2001


<TABLE>
<CAPTION>
                                                                   2002             2001
                                                               -----------      -----------

<S>                                                            <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                     $(1,619,010)     $  (547,748)
  Adjustments to reconcile net loss to net cash used in
           operating activities
       Provision for doubtful accounts                               4,721               --
       Depreciation                                                 51,338           56,640
       Stock-based compensation                                    285,224          201,390
       Changes in:
           Deposit held at clearing broker                              17               79
           Deposit held at clearing broker - related party           6,051               --
           Commission receivable                                   120,598           15,418
           Other receivables                                        92,016         (136,167)
           Prepaid expenses                                        (14,205)         (16,658)
           Due from related party, net                                  --           (2,861)
           Accounts payable and accrued expenses                    35,783           83,122
           Accrued commissions expense                            (153,244)          83,250
                                                               -----------      -----------
                Net cash used in operating activities           (1,190,711)        (263,535)
                                                               -----------      -----------


CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                              (11,002)         (96,380)
                                                               -----------      -----------
     Net cash used in investing activities                         (11,002)         (96,380)
                                                               -----------      -----------


CASH FLOWS FROM FINANCING ACTIVITIES
   (Payment) proceeds on note payable                              (50,000)          50,000
   Issuance of preferred stock                                          --          125,000
   Dividends paid - preferred stock                                 (5,000)              --
   Purchase of treasury stock                                           --           (7,800)
   Issuance of treasury stock                                       12,520           21,419
   Issuance of common stock                                      2,808,649               --
   Payments on capital lease obligation                                 --          (11,636)
                                                               -----------      -----------
       Net cash provided by financing activities                 2,766,169          176,983
                                                               -----------      -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             1,564,456         (182,932)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                      43,218          226,150
                                                               -----------      -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                       $ 1,607,674      $    43,218
                                                               ===========      ===========
</TABLE>



    The accompanying notes are an integral part of the financial statements.


                                      F-5
<PAGE>

SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2002 and 2001


NOTE 1 -     NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BUSINESS - Summit Brokerage Services Inc. (the "Company") is a National
         Association of Securities Dealers (NASD) member firm. The Company is an
         independent broker-dealer offering financial services to clients across
         the country through its 50 independent broker-dealer branch offices.

         CONSOLIDATION POLICY - The accompanying consolidated financial
         statements include the accounts of the Company and its subsidiaries.
         The Company's primary subsidiaries include Summit Holding Group, Inc.
         (a holding company) and its wholly owned subsidiaries Summit Financial
         Group, Inc. (a registered investment advisor) and SBS Insurance Agency
         of Florida, Inc. (an insurance business). Intercompany transactions and
         balances have been eliminated in consolidation.

         CASH AND CASH EQUIVALENTS - The company considers all highly liquid
         debt instruments purchased with a maturity of three months or less to
         be cash equivalents.

DEPOSIT HELD AT CLEARING BROKERS - The Company has an interest-bearing reserve
deposit with certain clearing brokers. These clearing brokers require deposits
of all introducing brokers for whom they transact business. One of the Company's
deposits is from a related party of the Company (see Note 4).

COMMISSIONS RECEIVABLE - The Company considers commissions receivable fully
collectible; accordingly, no allowance is required.

SECURITIES OWNED, AT FAIR VALUE - Securities owned are valued at estimated fair
value as determined by management. The resulting differences between cost and
estimated fair value are included in the consolidated statements of loss.

         PROPERTY AND EQUIPMENT - Property and equipment is stated at cost.
         Depreciation, for financial reporting purposes, is primarily based on
         the straight-line method over the estimated useful lives of the related
         assets, generally 3 to 7 years.

TREASURY STOCK - Treasury stock is reflected at cost.

         COMMISSIONS REVENUE AND EXPENSES - Commissions revenues are recorded on
         a trade-date basis. The Company receives commissions on securities
         transactions sold by registered representatives of the branch offices.
         The Company receives the gross amount of commissions due from the
         transactions and remits a percentage of that amount to the registered
         representatives based on a formal commission payout schedule maintained
         with each representative.

         INCOME TAXES - Income taxes are provided for the tax effects of
         transactions reported in the financial statements and consist primarily
         of taxes currently due plus deferred taxes related to net operating
         losses. The deferred tax assets and liabilities represent the future
         tax return consequences of those differences, which will either be
         taxable or deductible when the assets and liabilities are recovered or
         settled. Deferred tax may also be recognized for operating losses and
         tax credits that are available to offset future taxable income.



                                      F-6
<PAGE>



         LOSS PER SHARE - Basic loss per share for the years ended December 31,
         2002 and 2001 have been computed by dividing net loss by the weighted
         average number of common shares outstanding. Diluted loss per share for
         the years ended December 31, 2002 and 2001 are the same as basic, as
         the dilutive calculation would have an anti-dilutive effect because of
         the net loss.

         ESTIMATES - The preparation of consolidated financial statements in
         conformity with accounting principles generally accepted in the United
         States of America requires management to make estimates and assumptions
         that affect the reported amount of assets and liabilities and
         disclosure of contingent assets and liabilities at the date of the
         consolidated financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates.

         RECLASSIFICATIONS - Certain amounts from the prior year have been
         reclassified to conform to the current year presentation.

NOTE 2 -     PROPERTY AND EQUIPMENT


Property and equipment consisted of the following at December 31, 2002:

Computer systems and software                             $ 126,489
Equipment and furniture                                      70,040
Leasehold improvements                                      151,743
                                                          ---------
   Total                                                    348,272
     Less: accumulated depreciation                        (232,184)
                                                          ---------
       Total property and equipment                       $ 116,088
                                                          =========

Depreciation expense was $51,338 and $56,640 for the years ended December 31,
2002 and 2001, respectively.

NOTE 3 -     ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at December 31,
2002:

Accounts payable                                         $198,479
Accrued wages and other                                    11,612
                                                         --------
                                                         $210,091
                                                         ========

NOTE 4 -     NOTE PAYABLE - RELATED PARTY

On March 31, 2000, the Company entered into a demand note collateral agreement
with a corporation 100% owned by a shareholder and officer of the Company. The
collateral for the note was held as a clearing deposit with one of the Company's
clearing firms. The note became due on April 30, 2002 and accrues interest at
12.0% per annum. As of November 1, 2002, the Company no longer was allowed to
use the subordinated agreement for net capital purposes. As of December 31,
2002, the outstanding balance is $40,200 and is due on demand.

During the year ended December 31, 2002, the Company paid off a $50,000 note
payable to an unrelated third party.

Cash paid for interest was $22,593 and $22,396 for 2002 and 2001, respectively.




                                      F-7
<PAGE>


NOTE 5 -     COMMON STOCK

On July 16, 1997, the Company established a restricted stock bonus plan as an
incentive for employees and certain consultants to remain in the employment or
service of the Company. The shares granted under the plan were in the form of
restricted stock and vest over a period ranging from immediately to four years
after the date of grant of the award. Since the stock issued is subject to
continuous employment or service from the date of the grant award, unearned
compensation is recorded at the fair market value at the date awarded as a
reduction of stockholders' equity. Compensation and consultant expense is
recognized pro rata over the period during which the shares are earned, in
accordance with Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("FAS123"). The Company amortized $237,831 and
$201,390 of unearned stock compensation and consultant expenses during the years
ended December 31, 2002 and 2001, respectively.

On May 22, 2002, Marshall T. Leeds, in a privately negotiated transaction,
purchased an aggregate of 5,000,000 shares of our common stock for a total
purchase price of $500,000, or $0.10 per share. Mr. Leeds became our largest
shareholder, as well as our Chief Executive Officer and Chairman of the Board of
Directors. Richard Parker, the Company's former Chairman and Chief Executive
Officer, became President, Chief Operating Officer and Vice Chairman. Two of our
Board members, Mr. Parker and Harry Green, remained on the Board, and Mr. Leeds
and two of his designees comprised a new five-member Board. Mr. Parker has also
granted Mr. Leeds voting control of his beneficially owned shares for a period
of time. Mr. Leeds became a consultant to the Company in March 2002, and an
employee in May, 2002.

In connection with this transaction, on March 15, 2002 and March 28, 2002, Mr.
Parker borrowed a total of $250,000 from Marshall T. Leeds for use by Mr. Parker
to purchase a total of 2,500,000 shares of the Company's common stock. On May
17, 2002, Mr. Parker borrowed an additional $100,000 from Mr. Leeds to purchase
an additional 1,000,000 shares of common stock. The total loans of $350,000 were
secured by a pledge to Mr. Leeds from Mr. Parker of the 3,500,000 shares he
purchased, plus 2,500,000 other shares of common stock previously owned by Mr.
Parker. The loans were drawn from the $500,000 amount contemplated by the Stock
Purchase Agreement paid by Mr. Leeds to purchase 5,000,000 shares of the
Company's common stock. The loans provided the Company with capital that was
needed immediately in order for it to fund operations and certain of its
business obligations. At the closing of the stock purchase discussed in the
preceding paragraph, Mr. Leeds purchased the 3,500,000 shares acquired by Mr.
Parker from the Company with the $350,000 of loan proceeds, in exchange for the
cancellation of Mr. Parker's indebtedness to Mr. Leeds for the loans. Mr. Leeds
also purchased the remaining 1,500,000 shares for an additional cash payment of
$150,000, bringing his total stock purchased to 5,000,000 shares for a total
price of $500,000.

On August 20, 2002, the Company amended its Articles of Incorporation to
increase the number of authorized common shares from 20,000,000 to 50,000,000.

On October 9, 2002, 100,000 shares of common stock was issued to outside
consultants for services performed for the Company. The Company recorded $66,000
in unearned stock compensation in the statement of financial position as the
estimated fair value of the stock at the date of issuance.

On October 14, 2002, the Company approved the Common Stock Private Offering (the
"Offering"), which consists of a private placement of up to 20,000,000 shares of
its common stock to accredited investors at a purchase price of $.25 per share.
The Company also authorized the issuance of up to 2,000,000 of common stock
purchase warrants to selling broker-dealers in the Offering. These warrants have
an exercise price equal to 120% of the per share price of the common stock sold
in the Offering and vest immediately upon issuance. During the year ended
December 31, 2002, the Company issued 8,200,000 shares of common stock related
to the Offering for $2,050,000. In addition, as of December 31, 2002, the
Company issued 530,000 warrants to selling broker-dealers at an exercise price
of $.30. These warrants were fair valued in accordance with FAS123 at
approximately $390,000. The entire $390,000 is considered offering costs and was
charged against additional paid-in capital, which resulted in no net effect to
equity. Additionally, other Offering costs of approximately $270,000 were
charged against paid-in capital.



                                      F-8
<PAGE>



During the year ended December 31, 2002, the Company's Chief Executive Officer
an option for 1,400,000 shares of common stock at $.25 per share.

At various other periods during 2002, common stock was issued for cash to
various individuals exclusive of the Offering. During the year ended December
31, 2002, 5,000,000 shares of common stock were issued for $.10 a share and in
July 2002, the Company sold 200,000 shares of Series B Preferred Stock for net
proceeds of approximately $180,000 in a private placement of Series B Preferred
Stock. The Series B Preferred Stock private placement was subsequently
terminated without further sales and the investor's shares of Series B Preferred
Stock were converted into 800,000 shares of common stock of the Company at an
effective conversion rate of $0.25 per share.

NOTE 6 -     PREFERRED STOCK

On March 27, 2002, the Company amended its Articles of Incorporation to reduce
the preferred stock, par value $.0001 per share, from 5,000,000 authorized
shares to 150,000. During the year ended December 31, 2001, the Company issued
125,000 shares of 12% cumulative convertible preferred stock for $125,000. The
number of shares of common stock which may be issued in respect of the shares of
preferred stock shall be determined by dividing (i) a numerator equal to the
number of shares of Series A 12% Convertible Preferred Stock being converted
multiplied by 115% of the subscription price, (ii) a denominator representing
the per share price that is the lower of the closing price and the average
closing sale price for the 20 trading days immediately preceding the Series A
conversion date; provided, however, in no event shall the denominator be less
than the subscription price. All such preferred stock is non-voting stock. The
holders of Series A 12% Convertible Preferred Stock shall be entitled to
receive, out of funds legally available for that purpose, cash dividends at the
rate of $0.12 per annum, subject to voluntary conversion. Such dividends shall
accrue and be cumulative from the issue date. Dividends shall be payable in
arrears, when and as declared by the Board of Directors, on March 31, June 30,
September 30 and December 31 of each year; provided, however, the first dividend
payment date shall not occur before the last calendar day of the first full
fiscal quarter following the issue date. During the year ended December 31,
2002, $5,000 in cash dividends was paid. As of December 31, 2002, undeclared
dividends in arrears approximated $18,300. In the event of any liquidation,
dissolution or winding up of the Company's affairs for a price per share which
is less than the subscription price set forth herein, holders of the preferred
shares will be entitled to a liquidation preference of $1.00 per preferred
share, plus the dividends set forth above, prior to any distribution to the
holders of common stock in full and complete liquidation of the interest of the
holders of preferred shares. In the event that the Company does not have
sufficient funds to pay the full liquidation preference payable to the holders
of preferred shares, and any other shares issued on a parity with the preferred
shares ("Parity Shares"), the existing funds will be allocated among the holders
of all such preferred shares and Parity Shares pro rata in proportion to the
full amounts to which they would respectively be entitled. At any time after
August 1, 2002, the Company may, unless otherwise prevented by law, redeem from
the holder thereof, the holder's preferred shares at the subscription price
($1.00 per share), together with any accrued but unpaid dividends thereon to and
including the date of redemption, in whole or, from time to time, in part. Any
partial redemption shall be allocated among the holders of preferred shares pro
rata or by lot, as determined by the Company.

NOTE 7 -     TREASURY STOCK

Treasury stock is reflected at cost, and consists of 7,916 and 8,984 shares of
common stock at December 31, 2002 and 2001, respectively.



                                      F-9
<PAGE>


NOTE 8 -     STOCK OPTIONS AND WARRANTS

In March 2002, the Company issued to the Company's current President, COO and
Vice Chairman 900,000 options to purchase the Company's common stock in
connection with his employment contract with the Company. Of this total, 500,000
options have an exercise price of $0.10 per share and vested upon issuance and
400,000 options have an exercise price of $0.50 per share and vest over a
two-year period. All options expire on December 31, 2007. Stock-based
compensation of approximately $50,000 was recorded as a result of issuing these
options.

In March 2002, the Company issued to the Company's current CEO and Chairman of
the Board of Directors, 7,000,000 options to purchase the Company's common stock
at an exercise price of $0.25 per share. These options vested upon issuance and
expire on December 31, 2007. These options were issued in connection with his
employment contract with the Company.

Stock option activity during 2002 and 2001, was as follows:

                                                                 WEIGHTED-
                                               NUMBER OF          AVERAGE
                                               OPTIONS         EXERCISE PRICE
                                              ----------       --------------

Outstanding at December 31, 2000               1,162,723           $2.50
   Granted                                       504,141           $ .77
   Forfeited                                     (31,648)          $2.50
                                              ----------
Outstanding at December 31, 2001               1,635,216           $1.97
   Granted                                    10,037,620           $0.32
   Exercised                                  (1,400,000)          $ .25
   Forfeited                                    (400,677)          $1.30
                                              ----------
Outstanding at December 31, 2002               9,872,159           $0.56
                                              ==========
Shares exercisable at December 31, 2002        8,094,922           $0.55
                                              ==========

The range of exercise prices for options and warrants outstanding at December
31, 2002 was $.10 to $2.50. The following table summarizes information about
options outstanding at December 31, 2002:

<TABLE>
<CAPTION>
                                                    OUTSTANDING OPTIONS
                                   ------------------------------------------------------
                                                        WEIGHTED
                                                         AVERAGE
                                                        REMAINING             WEIGHTED
                                   NUMBER OF           CONTRACTUAL             AVERAGE
       RANGE OF EXERCISE PRICES     SHARES           LIFE (IN YEARS)       EXERCISE PRICE
       ------------------------    ----------        ---------------       --------------
       <S>                         <C>               <C>                   <C>
             $0.10                    500,000               5.0                  $0.10
             $0.25                  5,769,905               5.1                  $0.25
             $0.50                  1,755,290               9.3                  $0.50
             $0.75                    594,215               9.6                  $0.75
             $1.00                    262,690               8.9                  $1.00
             $2.50                    990,059               7.5                  $2.50
                                    ---------
                                    9,872,159                                    $0.57
                                    =========

<CAPTION>
                                                    EXERCISABLE OPTIONS
                                   ------------------------------------------------------
                                                                             WEIGHTED
                                                           NUMBER OF          AVERAGE
       RANGE OF EXERCISE PRICES                             SHARES         EXERCISE PRICE
       ------------------------                            ---------       --------------
       <S>                                                 <C>             <C>
             $0.10 - $0.25                                 6,269,905             $0.24
             $0.50 - $1.00                                   868,298             $0.62
             $2.50                                           956,719             $2.50
                                                           ---------
                                                           8,094,922             $ .55
                                                           =========
</TABLE>


                                      F-10
<PAGE>


As of December 31, 2002, the Company had 530,000 warrants outstanding for the
purchase of the Company's common stock at an exercise price of $.30 per share.
These warrants expire in November 2007.

The Company accounts for its options and warrants according to Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and
follows the disclosure provisions of FAS123. Accordingly, if options or warrants
are granted to employees for services and other consideration with an exercise
price below the fair market value of the common stock on the date of the grant,
the difference between the exercise price and the fair market value is charged
to operations and/or unearned stock compensation. For the years ended December
31, 2002 and 2001, $74,000 and $-0- was charged to operations and/or unearned
stock compensation. The fair value of the options and warrants granted during
the fiscal years ended December 31, 2002 and 2001, reported below, has been
estimated at the dates of grant using the Black-Scholes Option Valuation Model
with the following assumptions:

                                                  2002                   2001
                                               ----------              --------

       Expected life (in years)                1.0 - 10.0                10.0
       Risk-free interest rate                       5.0%                5.0%
       Volatility                                    211%                225%
       Dividend yield                                0.0%                0.0%

The Black-Scholes Option Valuation Model was developed for use in estimating the
fair value of traded options and warrants that have no vesting restrictions and
are fully transferable. In addition, option valuation models require the input
of highly subjective assumptions, including the expected stock price volatility.
Because the Company's options and warrants have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in the opinion
of management, the existing models do not necessarily provide a reliable single
measure of the fair value of its options.

For purposes of pro forma disclosures, the estimated fair value of the options
and warrants is amortized to expense over the options' and warrants' vesting
periods. The Company's pro forma information is as follows:

                                         2002            2001
                                     ------------     ----------

       Pro forma net loss            $(3,918,423)     $(667,272)
       Pro forma loss per share      $     (0.38)     $   (0.14)

The effects on pro forma disclosures of applying FAS123 are not necessarily
indicative of the effects on pro forma disclosures of future years.

NOTE 9 -     COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

         The Company leases office space under a noncancelable operating lease
         with an entity whose major shareholder is also an officer and
         shareholder of the Company. Under the terms of the lease, the Company
         leases office space for its headquarters at a rate of approximately
         $8,800 per month. The lease expires in May 2004.



                                      F-11
<PAGE>




         Total rent expense, including month-to-month leases, for the years
         ending December 31, 2002 and 2001 was $153,827 and $137,643,
         respectively.

LEGAL PROCEEDINGS

         The Company is a party to legal proceedings relating to various claims
         and lawsuits arising in the normal course of business. Management
         believes that the range of potential net loss resulting from these
         proceedings will not be material to the Company's financial position or
         results of operations.

NOTE 10 -    INCOME TAXES

A summary of the provision for income taxes at December 31, is as follows:

<TABLE>
<CAPTION>
                                                                 2002            2001
                                                               ---------       ---------

       <S>                                                     <C>             <C>
       Deferred tax benefit due to temporary differences:
          Federal                                              $ 207,000       $  52,000
          State                                                   69,000          17,000
       Change in valuation allowance                            (276,000)        (69,000)
                                                               ---------       ---------

          Total income tax benefit (expense)                   $      --       $      --
                                                               =========       =========
</TABLE>

The deferred tax asset at December 31, 2002, is as follows:

       Deferred tax asset - NOL carryforwards      $ 758,000
       Valuation allowance                          (758,000)
                                                   ---------

          Net deferred tax asset                   $      --
                                                   =========

A valuation allowance is provided when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The Company has
established a valuation allowance for the entire deferred tax asset, which
primarily consists of net operating loss carryforwards.

The Company has net operating loss carryforwards of approximately $3,280,000 for
federal and state income tax purposes, which are available to offset future
taxable income. These loss carryforwards expire in various years through 2017.

Total income tax expense/benefit differed from the amounts computed by applying
the U.S. federal income tax rates of 34% for both 2002 and 2001 to income loss
before income taxes, primarily due to the effects of net operating loss
carryforwards, the valuation allowance and non-deductible stock compensation
expense.

Under U.S. federal tax laws, certain changes in ownership of a company may cause
severe limitations on future utilization of these loss carryforwards.



                                      F-12
<PAGE>


NOTE 11 -    CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE OF FINANCIAL
             INSTRUMENTS

Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of temporary cash investments. The Company places
its temporary cash investments with financial institutions.

All financial instruments are carried at amounts that approximate fair value
because of the short maturity of these instruments.

NOTE 12 -    RELATED-PARTY TRANACTIONS

The Company paid rent of approximately $133,000 and $109,200 during 2002 and
2001, respectively, to a related company owned by an individual who is an
officer and shareholder of the Company. The related company owns one of the
buildings the Company is leasing.

The Company has a $40,200 note payable due on demand with a related company
owned by an individual who is an officer and shareholder of the Company.

During the year ended December 31, 2002, the Company reimbursed an entity
wholly-owned by an officer and shareholder of the Company approximately $97,000
for costs related to the Company's private placement of its common stock.

NOTE 13 -    NET CAPITAL REQUIREMENT

The Company is a "Fully Disclosed Broker-Dealer". The Company does not carry
customer accounts and does not accept customer funds or securities. Instead, it
has entered into a "clearing agreement" with a clearing broker and has fully
disclosed all of its customer accounts to this broker.

The Company is subject to the Securities and Exchange Commission Uniform Net
Capital Rule (SEC Rule 15c 3-1), which requires the maintenance of minimum net
capital.

The fully phased-in net capital requirement for "fully disclosed"
brokers-dealers that receive but do not hold customer or other securities, is
$50,000. The rule also requires that the ratio of aggregate indebtedness to net
capital shall not exceed 15 to 1.

At December 31, 2002, the Company had net capital of $1,377,156 and the
Company's aggregate indebtedness to net capital ratio was 0.4 to 1.

NOTE 14 -    OTHER

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplates continuation of the Company as a going concern. As shown in the
accompanying financial statements, the Company has incurred losses of
approximately $1,619,000 and $548,000 for the years ended December 31, 2002 and
2001, respectively; however, management believes that it has sufficient
resources to continue as a going concern through December 31, 2003. Management
plans to continue to raise capital through equity offerings and to make
strategic acquisitions to increase its volume.

NOTE 15 -    OFF BALANCE SHEET RISK

Included in the Company's clearing agreement with its clearing broker is an
indemnification clause. This clause relates to instances where the Company's
customers fail to settle security transactions. In the event this occurs, the
Company has indemnified the clearing broker to the extent of the net loss on the
unsettled trade. At December 31, 2002, management of the Company had not been
notified by the clearing broker, nor were they otherwise aware, of any potential
losses relating to this indemnification.




                                      F-13
<PAGE>


NOTE 16 -    SUBSEQUENT EVENT

On January 2, 2003, the Company acquired, in an asset purchase agreement, the
Boca Raton Branch of Wachovia Securities Financial Network, Inc. (the "Branch").
The Branch was an affiliated retail branch office of Wachovia Securities
Financial Network, Inc. ("Wachovia"), with approximately 30 registered
representatives conducting retail brokerage business. The purchase price was
approximately $1,800,000, payable to Wachovia over four years. The purchase
price contemplated the signing of an employment agreement with each of the
registered representatives. Management believes that the acquisition will expand
its market presence and overall customer base. In accordance with Financial
Accounting Standards ("SFAS") No. 141, "Business Combinations", the results of
operations of the Branch will be included in the Company's financial statements
as of the date of acquisition.

Based upon management's preliminary estimates, the purchase price, including
estimated transaction costs, will be allocated as follows: Customer list -
$1,142,000; Goodwill - $708,000; Equipment - $6,000. Customer list will be
amortized over its estimated beneficial life of six years.




                                      F-14
<PAGE>








                            SUPPLEMENTAL INFORMATION





                                      F-15
<PAGE>


SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES                      SCHEDULE I
Computation of Net Capital Under Rule 15c3-1 of the
Securities and Exchange Commission
As of December 31, 2002


Net Capital

      Total consolidated stockholders' equity                    $1,770,844

    Deductions and/or charges:
    Non-allowable assets:
       Commissions receivable                                    $   82,997
       Other receivables                                            109,646
       Prepaid expenses                                              77,643
       Property and equipment, net                                  116,088
                                                                    386,374

    Haircuts on securities:
       15% haircut on marketable equity securities                    7,314
                                                                 ----------

    Net capital                                                  $1,377,156
                                                                 ==========

Aggregate Indebtedness

    Items included in consolidated statement of
       financial condition
         Accrued payable and accrued expenses                    $  210,091
         Accrued commissions                                        310,640
         Note payable                                                40,200
                                                                 ----------

    Total aggregate indebtedness                                 $  560,931
                                                                 ==========

Computation of Basic Net Capital Requirement
    Minimum net capital required                                 $   50,000
                                                                 ==========

    Excess net capital at 1,500 percent                          $1,339,761
                                                                 ==========

    Excess net capital at 1,000 percent                          $1,321,063
                                                                 ==========

    Ratio: Aggregate indebtedness to net capital                   0.4 to 1
                                                                 ==========


Reconciliation with Company's Computation (Included
   in Part II of the Amended Form X-17A-5 as of December 31, 2002)

A reconciliation is not considered necessary pursuant to Rule 17a-5(d)(4), as
there are no material differences between the Company's computation of net
capital under Rule 15c3-1 and the computation of net capital included on this
schedule.



    The accompanying notes are an integral part of the financial statements.


                                      F-16
<PAGE>



                     REPORT OF INDEPENDENT CERTIFIED PUBLIC
               ACCOUNTANTS ON INTERNAL CONTROL STRUCTURE REQUIRED
                BY SEC RULE 17A-5 FOR A BROKER-DEALER CLAIMING AN
                         EXEMPTION FROM SEC RULE 15C3-3


Board of Directors and Shareholders
Summit Brokerage Services, Inc. and Subsidiaries
Indialantic, Florida

In planning and performing our audit of the consolidated financial statements
and supplemental schedule of Summit Brokerage Services, Inc. and Subsidiaries,
for the year ended December 31, 2002, we considered its internal control,
including control activities for safeguarding securities, in order to determine
our auditing procedures for the purpose of expressing our opinion on the
consolidated financial statements and not to provide assurance on internal
control.

Also, as required by Rule 17a-5(g)(1) of the Securities and Exchange Commission
("SEC"), we have made a study of the practices and procedures followed by the
Company, including tests of such practices and procedures that we considered
relevant to the objectives stated in Rule 17a-5(g) in making the periodic
computations of aggregate indebtedness (or aggregate debits) and net capital
under Rule 17a-3(a)(11) and for determining compliance with the exemptive
provisions of Rule 15c3-3. Because the Company does not carry securities
accounts for customers or perform custodial functions relating to customer
securities, we did not review the practices and procedures followed by the
Company in any of the following:

1.       Making quarterly securities examinations, counts, verifications, and
         comparisons

2.       Recordation of differences required by Rule 17a-13

3.       Complying with the requirements for prompt payment for securities under
         Section 8 of Federal Reserve Regulation T of the Board of Governors of
         the Federal Reserve System

The management of the Company is responsible for establishing and maintaining
internal control and the practices and procedures referred to in the preceding
paragraph. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
controls and of the practices and procedures referred to in the preceding
paragraph and to assess whether those practices and procedures can be expected
to achieve the SEC's above-mentioned objectives. Two of the objectives of
internal control and the practices and procedures are to provide management with
reasonable but not absolute assurance that assets for which the Company has
responsibility are safeguarded against loss from unauthorized use or disposition
and that transactions are executed in accordance with management's authorization
and recorded properly to permit the preparation of financial statements in
conformity with generally accepted accounting principles. Rule 17a-5(g) lists
additional objectives of the practices and procedures listed in the preceding
paragraph.



                                      F-17
<PAGE>


Because of inherent limitations in internal control or the practices and
procedures referred to above, error or fraud may occur and not be detected.
Also, projection of any evaluation of them to future periods is subject to the
risk that they may become inadequate because of changes in conditions or that
the effectiveness of their design and operation may deteriorate.

Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of the
specific internal control components does not reduce to a relatively low level
the risk that error or fraud in amounts that would be material in relation to
the financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving internal control, including
control activities for safeguarding securities, that we consider to be material
weaknesses, as defined above.

We understand that practices and procedures that accomplish the objectives
referred to in the second paragraph of this report are considered by the SEC to
be adequate for its purposes, in accordance with the Securities Exchange Act of
1934 and related regulations, and that practices and procedures that do not
accomplish such objectives in all material respects indicate a material
inadequacy for such purposes. Based on this understanding and on our study, we
believe that the Company's practices and procedures were adequate at December
31, 2002, to meet the SEC's objectives.

This report is intended solely for the information and use of the Board of
Directors, management, the SEC, the National Association of Securities Dealers,
and other regulatory agencies that rely on Rule 17a-5(g) under the Securities
Exchange Act of 1934 in their regulation of registered brokers and dealers, and
is not intended to be, and should not be, used by anyone other than these
specified parties.



/s/ Moore Stephens Lovelace, P.A.
Certified Public Accountants


Orlando, Florida
February 17, 2003






                                      F-18
<PAGE>



                                  EXHIBIT INDEX



NUMBER         NAME
------   -----------------------------------------------------------------------

10.18    Form of Registration Rights Agreement between the Company and certain
         investors
16.1     Letter from Hoyman, Dobson & Company
21.1     Subsidiaries of the Company
99.1     Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002
99.2     Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002