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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2008.

OR



| ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File No: 333-108818





SUMMIT FINANCIAL SERVICES GROUP, INC.

(Exact name of registrant as specified
in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 05-0577932                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

980 North Federal Highway

Suite 310

Boca Raton, FL 33432

(561) 338-2800

(Address, including
zip code, and telephone number, including area code, of Registrants principal executive offices)





Check whether the issuer (1) filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act 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   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                                              |  |   |  |  |  |                           |  |  
|--------------------------------------------- |  | - |  |  |  | ------------------------- |  | -
|Large accelerated filer                       |  |  ̈ |  |  |  | Accelerated filer         |  |  ̈
|Non-accelerated filer                         |  |  ̈ |  |  |  | Smaller reporting company |  | x
|(Do not check if a smaller reporting company) |  |   |  | 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:



|                                         |  |                               
|---------------------------------------- |  | ------------------------------
|Class                                    |  | Outstanding as of May 12, 2008
|Common Stock Par value $0.0001 per share |  | 25,855,823                    

Transitional Small Business Disclosure Format     ̈  Yes    x  No









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SUMMIT FINANCIAL SERVICES GROUP, INC.

INDEX



|                              |  |                                                                                                                |  |   
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | --
|                              |  | Page                                                                                                          
|Part I. Financial Information |  |                                                                                                               
|Item 1.                       |  | Financial Statements                                                                                           |  |   
|                              |  | Condensed Consolidated Statements of Financial Condition at March 31, 2008 (unaudited) and December 31, 2007   |  | 3 
|                              |  | Condensed Consolidated Statements of Income for the Three Months ended March 31, 2008 and 2007 (unaudited)     |  | 4 
|                              |  | Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2008 and 2007 (unaudited) |  | 5 
|                              |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                 |  | 6 
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                          |  | 7 
|Item 4.                       |  | Controls and Procedures                                                                                        |  | 10
|Part II. Other Information    |  |                                                                                                               
|Item 5.                       |  | Other Information                                                                                              |  | 10
|Item 6.                       |  | Exhibits                                                                                                       |  | 10
|Signatures                    |  | 11                                                                                                            

FORWARD LOOKING STATEMENTS

This Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the
Exchange Act), and Section 27A of the Securities Act of 1933, as amended (the Securities Act). When used in this 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 or Plan of Operation. 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 the Companys
control, and actual results for future periods could differ materially from those discussed in this Report, depending on a variety of important factors, among which are the success or failure of managements efforts to implement its business
strategy; the level of acquisition opportunities available to the Company and the Companys ability to price and negotiate such transactions on a favorable basis; the Companys ability to properly manage growth and successfully integrate
acquired companies and operations; the Companys ability to compete with major established companies; the Companys ability to attract and retain qualified personnel; the regulatory environment, economic and financial market conditions
generally; and other risks and uncertainties which may be described from time to time in the Companys filings with the Securities and Exchange Commission (the SEC), including the Companys annual report on Form 10-KSB for the
fiscal year ended December 31, 2007 (file no. 0-29337).



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

SUMMIT FINANCIAL SERVICES GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Condition



|                                                                                                                                                                                                            |  |                |            |   |                   |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ---------- | - | ----------------- | - | ---------- | -
|                                                                                                                                                                                                            |  | March 31, 2008 |            |   | December 31, 2007 |  
|                                                                                                                                                                                                            |  | (unaudited)    |            |   |                   |  
|ASSETS                                                                                                                                                                                                      |  |                |            |   |                   |   |            |  
|Cash and cash equivalents                                                                                                                                                                                   |  | $              | 4,774,373  |   |                   | $ | 4,828,606  |  
|Deposit held at clearing broker                                                                                                                                                                             |  |                | 128,345    |   |                   |   | 28,144     |  
|Commissions receivable                                                                                                                                                                                      |  |                | 1,351,522  |   |                   |   | 943,117    |  
|Other receivables, net                                                                                                                                                                                      |  |                | 314,054    |   |                   |   | 251,030    |  
|Securities owned, at fair value                                                                                                                                                                             |  |                | 14,138     |   |                   |   | 23,290     |  
|Prepaid expenses                                                                                                                                                                                            |  |                | 272,897    |   |                   |   | 533,846    |  
|Property and equipment at cost, less accumulated depreciation of $152,676 and $134,870                                                                                                                      |  |                | 142,890    |   |                   |   | 135,740    |  
|Goodwill                                                                                                                                                                                                    |  |                | 500,714    |   |                   |   | 500,714    |  
|Customer list, less accumulated amortization of $952,923 and $907,947                                                                                                                                       |  |                | 134,937    |   |                   |   | 179,913    |  
|Deposit                                                                                                                                                                                                     |  |                | 87,313     |   |                   |   | 675,000    |  
|                                                                                                                                                                                                            |  |                |            |   |                   |   |            |  
|TOTAL ASSETS                                                                                                                                                                                                |  | $              | 7,721,183  |   |                   | $ | 8,099,400  |  
|                                                                                                                                                                                                            |  |                |            |   |                   |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                        |  |                |            |   |                   |   |            |  
|LIABILITIES                                                                                                                                                                                                 |  |                |            |   |                   |   |            |  
|Accounts payable and accrued expenses                                                                                                                                                                       |  | $              | 956,250    |   |                   | $ | 1,200,489  |  
|Accrued commission expense                                                                                                                                                                                  |  |                | 1,634,995  |   |                   |   | 1,433,155  |  
|                                                                                                                                                                                                            |  |                |            |   |                   |   |            |  
|TOTAL LIABILITIES                                                                                                                                                                                           |  |                | 2,591,245  |   |                   |   | 2,633,644  |  
|STOCKHOLDERS EQUITY                                                                                                                                                                                        |  |                |            |   |                   |   |            |  
|Preferred stock, undesignated; par value $0.0001 per share; authorized 4,850,000 shares; none issued and outstanding                                                                                        |  |                |           |   |                   |   |           |  
|Preferred stock, Series A, 12% cumulative convertible; par value $0.0001 per share; authorized 150,000 shares; 125,000 issued and outstanding
(liquidation preference of $125,000)                          |  |                | 13         |   |                   |   | 13         |  
|Common stock, par value $0.0001 per share; authorized 100,000,000 shares; 25,870,735 issued and 25,855,823 outstanding at March 31, 2008;
28,249,987 issued and 28,235,075 outstanding at December 31, 2007 |  |                | 2,588      |   |                   |   | 2,825      |  
|Additional paid-in capital                                                                                                                                                                                  |  |                | 9,601,986  |   |                   |   | 10,088,338 |  
|Unearned stock-based compensation                                                                                                                                                                           |  |                | (881,726   | ) |                   |   | (983,982   | )
|Treasury stock (14,912 shares, at cost)                                                                                                                                                                     |  |                | (10,884    | ) |                   |   | (10,884    | )
|Accumulated deficit                                                                                                                                                                                         |  |                | (3,582,039 | ) |                   |   | (3,630,554 | )
|                                                                                                                                                                                                            |  |                |            |   |                   |   |            |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                                  |  |                | 5,129,938  |   |                   |   | 5,465,756  |  
|                                                                                                                                                                                                            |  |                |            |   |                   |   |            |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                  |  | $              | 7,721,183  |   |                   | $ | 8,099,400  |  
|                                                                                                                                                                                                            |  |                |            |   |                   |   |            |  

See accompanying notes to unaudited condensed consolidated financial statements.



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SUMMIT FINANCIAL SERVICES GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income



|                                       |  |                                     |            |             |   |            |  
|-------------------------------------- |  | ----------------------------------- | ---------- | ----------- | - | ---------- | -
|                                       |  | For The Three MonthsEnded March 31, |           
|                                       |  | 2008                                |            | 2007        |  
|                                       |  | (Unaudited)                         |            | (Unaudited) |  
|REVENUES                               |  |                                     |            |             |   |            |  
|Commissions                            |  | $                                   | 8,273,135  |             | $ | 8,823,087  |  
|Interest and dividends                 |  |                                     | 340,171    |             |   | 267,337    |  
|Other                                  |  |                                     | 110,736    |             |   | 71,368     |  
|                                       |  |                                     |            |             |   |            |  
|                                       |  |                                     | 8,724,042  |             |   | 9,161,792  |  
|                                       |  |                                     |            |             |   |            |  
|EXPENSES                               |  |                                     |            |             |   |            |  
|Commissions and clearing costs         |  |                                     | 6,820,669  |             |   | 7,291,962  |  
|Employee compensation and benefits     |  |                                     | 1,244,358  |             |   | 1,065,519  |  
|Occupancy and equipment                |  |                                     | 158,322    |             |   | 184,169    |  
|Communications                         |  |                                     | 101,031    |             |   | 87,989     |  
|Legal, accounting and litigation costs |  |                                     | 23,539     |             |   | (21,459    | )
|Depreciation and amortization          |  |                                     | 62,781     |             |   | 56,362     |  
|Other operating expenses               |  |                                     | 261,078    |             |   | 390,795    |  
|                                       |  |                                     |            |             |   |            |  
|                                       |  |                                     | 8,671,778  |             |   | 9,055,337  |  
|                                       |  |                                     |            |             |   |            |  
|INCOME BEFORE INCOME TAXES             |  |                                     | 52,264     |             |   | 106,455    |  
|                                       |  |                                     |            |             |   |            |  
|PROVISION FOR INCOME TAXES             |  |                                     |           |             |   |           |  
|                                       |  |                                     |            |             |   |            |  
|NET INCOME                             |  | $                                   | 52,264     |             | $ | 106,455    |  
|                                       |  |                                     |            |             |   |            |  
|BASIC EARNINGS PER SHARE               |  | $                                   | 0.0019     |             | $ | 0.0038     |  
|                                       |  |                                     |            |             |   |            |  
|DILUTED EARNINGS PER SHARE             |  | $                                   | 0.0016     |             | $ | 0.0035     |  
|                                       |  |                                     |            |             |   |            |  
|WEIGHTED AVERAGE SHARES OUTSTANDING    |  |                                     |            |             |   |            |  
|BASIC                                  |  |                                     | 25,866,754 |             |   | 28,210,075 |  
|                                       |  |                                     |            |             |   |            |  
|DILUTED                                |  |                                     | 31,194,112 |             |   | 30,036,568 |  
|                                       |  |                                     |            |             |   |            |  

See accompanying notes to unaudited condensed consolidated financial statements.



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SUMMIT FINANCIAL SERVICES GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows



|                                                                                           |  |                                     |           |   |             |   |           |  
|------------------------------------------------------------------------------------------ |  | ----------------------------------- | --------- | - | ----------- | - | --------- | -
|                                                                                           |  | For The Three MonthsEnded March 31, |          
|                                                                                           |  | 2008                                |           |   | 2007        |  
|                                                                                           |  | (Unaudited)                         |           |   | (Unaudited) |  
|Cash flows from operating activities                                                       |  |                                     |           |   |             |   |           |  
|Net income                                                                                 |  | $                                   | 52,264    |   |             | $ | 106,455   |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities |  |                                     |           |   |             |   |           |  
|Depreciation                                                                               |  |                                     | 17,805    |   |             |   | 11,386    |  
|Stock based compensation, net                                                              |  |                                     | 173,354   |   |             |   | 105,684   |  
|Amortization of customer list                                                              |  |                                     | 44,976    |   |             |   | 44,976    |  
|Changes in:                                                                                |  |                                     |           |   |             |   |           |  
|Deposit held at clearing broker                                                            |  |                                     | (100,201  | ) |             |   | (310      | )
|Commissions receivable                                                                     |  |                                     | (408,406  | ) |             |   | (618,538  | )
|Other receivables                                                                          |  |                                     | (63,024   | ) |             |   | (19,135   | )
|Prepaid expenses and other                                                                 |  |                                     | 260,949   |   |             |   | 75,237    |  
|Securities owned                                                                           |  |                                     | 9,152     |   |             |   | 414       |  
|Accounts payable and accrued expenses                                                      |  |                                     | (244,238  | ) |             |   | (231,587  | )
|Accrued commission expense                                                                 |  |                                     | 201,842   |   |             |   | 356,608   |  
|Deposits                                                                                   |  |                                     | 587,687   |   |             |   |          |  
|                                                                                           |  |                                     |           |   |             |   |           |  
|Net cash provided by (used in) operating activities                                        |  |                                     | 532,160   |   |             |   | (168,810  | )
|                                                                                           |  |                                     |           |   |             |   |           |  
|Cash flows from investing activities                                                       |  |                                     |           |   |             |   |           |  
|Purchase of property and equipment                                                         |  |                                     | (24,956   | ) |             |   | (14,345   | )
|                                                                                           |  |                                     |           |   |             |   |           |  
|Net cash used by investing activities                                                      |  |                                     | (24,956   | ) |             |   | (14,345   | )
|                                                                                           |  |                                     |           |   |             |   |           |  
|Cash flows from financing activities                                                       |  |                                     |           |   |             |   |           |  
|Purchase and retirement of common stock shares                                             |  |                                     | (587,687  | ) |             |   |          |  
|Payment of preferred stock dividend                                                        |  |                                     | (3,750    | ) |             |   | (3,000    | )
|Proceeds from exercise of warrants                                                         |  |                                     | 30,000    |   |             |   |          |  
|                                                                                           |  |                                     |           |   |             |   |           |  
|Net cash used by financing activities                                                      |  |                                     | (561,437  | ) |             |   | (3,000    | )
|                                                                                           |  |                                     |           |   |             |   |           |  
|Net decrease in cash and cash equivalents                                                  |  |                                     | (54,233   | ) |             |   | (186,155  | )
|Cash and cash equivalents at beginning of period                                           |  |                                     | 4,828,606 |   |             |   | 3,880,967 |  
|                                                                                           |  |                                     |           |   |             |   |           |  
|Cash and cash equivalents at end of period                                                 |  | $                                   | 4,774,373 |   |             | $ | 3,694,812 |  
|                                                                                           |  |                                     |           |   |             |   |           |  

See accompanying notes to unaudited condensed consolidated financial statements.



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SUMMIT FINANCIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

March 31, 2008

NOTE 1GENERAL

The condensed consolidated financial statements for the three-month periods ended March 31, 2008 and March 31, 2007 reflect all adjustments (consisting only of normal, recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and operating results for the periods indicated. The consolidated financial statements herein should be read in conjunction with the audited consolidated financial statements
and notes thereto, together with Managements Discussion and Analysis or Plan of Operation, contained in the Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 for Summit Financial Services Group, Inc.
(the Company). The results of operations for the three-month period ended March 31, 2008 are not necessarily indicative of the results for the entire fiscal year ending December 31, 2008.

In the event the Companys operations are negatively impacted by downturns in the economy, in general, or the financial markets, in particular, the Company may need
to raise or borrow additional funds to support its operating requirements. There can be no assurance that any such sources of financing would be available when needed, on commercially reasonable terms, or at all. Also, in the normal course of
business, the Company evaluates acquisitions of businesses that compliment its business. In connection with any acquisitions, the Company may issue additional securities, which could result in dilution for existing shareholders.

NOTE 2STOCKHOLDERS EQUITY

Basic earnings per share is
computed by dividing the net income available to common shareholders for the relevant period by the weighted average number of shares of common stock issued and outstanding during the period. For purposes of calculating diluted earnings per share,
the denominator includes both the weighted average number of shares of common stock and the number of dilutive common stock equivalents. The number of dilutive common stock equivalents includes the effect of stock options calculated using the
treasury stock method and the number of issuable common shares upon the conversion of preferred stock using the if converted method.

As of
March 31, 2008, the Company had options and warrants outstanding entitling the holders thereof to purchase a total of approximately 18.0 million shares of common stock. The Company also had outstanding shares of preferred stock convertible
into approximately 140,000 shares of common stock. For purposes of computing diluted earnings per share, the Company has assumed the exercise of options and warrants for approximately 12.9 million shares only, since the options and warrants for
the remaining approximately 5.2 million shares are either non- or anti-dilutive.

Preferred stock dividends in arrears as of March 31, 2008
approximated $21,000.

Stock-Based Awards

In December 2004,
the Financial Accounting Standards Board (FASB) issued SFAS (Statement of Financial Accounting Standards) No. 123 (revised 2004), Share-Based Payment, which is a revision of SFAS No. 123, Accounting for
Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS
No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on
their fair values.

The Company accounts for stock-based compensation of non-employees using the fair market value method under the provisions of SFAS
No. 123(R).

Most often, options are granted for the provision of future services, such as continued employment or, in the case of independent
financial advisors, their affiliation with the Company. Consequently, the options typically provide for vesting over a period of years, with a certain percentage of the options vesting each year upon the anniversary date of the grant if the grantee
is then still affiliated with the Company. In certain instances, unearned stock compensation is recorded for options issued to either employees or non-employees for services to be rendered in the future. Any unearned stock compensation is generally
amortized over the period the underlying options are earned, which is typically the vesting period. The fair value of each option grant is estimated at the date of grant using the Black-Scholes option pricing model. The amortization of earned stock
expense related to issuances to employees is included in the accompanying Consolidated Statement of Income under the caption Employee Compensation and Benefits, while the amortization of earned stock expense related to issuances to
non-employees is included under the caption Other Operating Expenses.



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During the three-month period ended March 31, 2008 the Company issued, in the aggregate, options to employees with a
fair market value of approximately $81,200. The Company did not issue any options to non-employees. During the same period, the Company recognized net amortization expense of approximately $141,000 and $32,000 of expense related to the issuance in
the current and prior periods of options to employees and non-employees, respectively. During the three-month period ended March 31, 2007, the Company issued, in the aggregate, options to employees with a fair market value of approximately
$307,000. The Company did not issue any options to non-employees. During the same period, the Company recognized net amortization expense of approximately $80,000 and $26,000 of expense related to the issuance in the current and prior periods of
options to employees and non-employees, respectively.

On December 12, 2007, SBS (as defined below) entered into a Mediation Settlement Agreement
(Agreement) with Richard Parker (Parker), SBSs former Vice Chairman and President and a principal shareholder of the Company. In accordance with the terms of the Agreement, all disputes relating to the litigation styled
Summit Brokerage Services, Inc. v. Richard Parker (the Suit), which the Company commenced on August 18, 2003 in Palm Beach County, Florida, were resolved, subject to the fulfillment of certain conditions specified in the
Agreement. The Agreement requires Parker to relinquish all security interest he has in the Company, totaling 3,421,927 shares of our Common Stock (including 500,000 shares to be acquired through the exercise of an option (the Option)).
In exchange, the Company was obligated to, among other things, pay $675,000 to Mr. Parker on or before December 31, 2007. On December 31, 2007, the Company paid the $675,000 to Parkers counsel, which amount was to be held in
escrow pending the delivery by Parker of the shares and the Option. On January 3, 2008, Parker delivered to the Company 2,479,252 shares, together with the Option. Accordingly, Summit authorized the release of $587,687 from escrow, with the
balance, or $87,313, to be released upon the delivery by Parker of the remaining shares. This amount is reflected in the consolidated statement of financial condition at December 31, 2007 as deposit. All of the shares acquired, or
to be acquired, by the Company from Parker were retired.

NOTE 3INCOME TAXES

The Companys provision for income taxes reflects an estimated income tax accrual for the three months ended March 31, 2008 of approximately $54,000, fully offset by the use of an equal portion of the
Companys net operating loss carryforward.

NOTE 4NET CAPITAL REQUIREMENT

Summit Brokerage Services, Inc., the Companys wholly-owned broker-dealer subsidiary (Summit Brokerage or SBS), is subject to the Securities and Exchange Commission Uniform Net Capital
Rule (SEC Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At March 31, 2008, Summit Brokerage had net capital
of approximately $2.55 million, which was $2.30 million in excess of its SEC-required minimum net capital of $250,000. Under SEC Rule 15c3-1, Summit Brokerages aggregate indebtedness to net capital ratio was 1.02 to 1 at March 31, 2008.

NOTE 5CONTINGENCIES

The Company is a party to
legal proceedings relating to various claims and lawsuits arising in the normal course of business. Management has provided an accrual for estimated probable losses, which could result from these matters. Management believes that the range of
potential net losses resulting from these proceedings in excess of the accrued amount, if any, will not be material to the Companys financial position or results of operations.



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion and analysis of the Companys financial condition and results of its operations for the three-month periods ended March 31, 2008 and 2007 should be read in conjunction with the
Companys condensed consolidated financial statements included as Item 1 herein. When used in the following discussions, the words believes, anticipates, intends, expects, and similar
expressions are intended to identify forward-looking statements. As further explained in the section entitled Forward Looking Statements on page 2 herein, such statements are subject to certain risks and uncertainties, which could cause
results to differ materially from those projected.

Overview

Summit Financial Services Group, Inc. (SFSG or the Company) is a Florida-based financial services holding company that provides, through its Summit Brokerage Services, Inc. (Summit
Brokerage or SBS) operating subsidiary, a broad range of securities brokerage and investment services to primarily individual investors. Summit Brokerage also sells insurance products, predominantly fixed and variable annuities and
life insurance, under licenses held by its SBS Insurance Agency of Florida, Inc. (SBSIA) subsidiary (or by SBSIAs subsidiary entities). Summit Brokerage also provides, through its Securities and Exchange Commission
(SEC) registered investment adviser subsidiary, Summit Financial Group, Inc. (SFG), asset management and investment advisory services.

Summit Brokerage is registered as a broker-dealer with the SEC, is a member of the Financial Industry Regulatory Authority (FINRA) (f/k/a National Association of Securities
Dealers, Inc. (NASD)), the Municipal Securities Rule Making Board (MSRB), the National Futures Association (NFA) and the Securities Investor Protection Corporation (SIPC), and is licensed to



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conduct its brokerage activities in all 50 states, plus the District of Columbia. SFG, our investment advisory firm, is registered or eligible to conduct
business as an investment advisor in 34 states and the District of Columbia. SBSIA, our subsidiary insurance agency, directly or through its subsidiary entities, is licensed to sell insurance, or is not required to be so licensed, in all
jurisdictions where the Company conducts its brokerage activities.

As of April 30, 2008, we had approximately 215 registered
representatives serving retail and, to a much lesser extent, institutional customer accounts. With the exception of our Boca Branch, our approximately 115 other branch offices are owned and operated by independent owners who maintain all appropriate
licenses and are responsible for all office overhead and expenses. Because these independent operators, many of whom are financial planners, are required to pay their own expenses, we generally pay them a much greater percentage of the commissions
and fee income they generate, typically 80%90%.

Our registered representatives offer a broad range of investment products and
services. These products and services allow us to generate both commissions (from transactions in securities and other investment products) and fee income (for providing investment advisory services, namely managing a clients account). The
investment products and services offered include mutual funds, annuities, insurance, individual stocks and bonds, and managed money accounts.

Summit Brokerage is a fully-disclosed broker dealer, and therefore relies on its clearing firms to provide the back office support and transaction processing services necessary to effect transactions on all principal national and
international securities exchanges. Additionally, because the clearing firms provide us with access to many other financial products and services that we would not otherwise be able to offer, we are able to provide our clients with products and
services comparable to much larger brokerage firms. In exchange for providing these services, the clearing firm typically charges us a fee every time they effect a transaction on behalf of the firm or its clients. We have clearing arrangements with
First Clearing, LLC (a subsidiary of Wachovia Corporation) and Pershing LLC (an affiliate of the Bank of New York Mellon).

By their
nature, our business activities are highly competitive and are subject to, among other things, general market conditions, including the volatility of the trading markets and the attractiveness of various forms of investment products. Consequently,
our revenues and net income or loss are subject to substantial positive and negative fluctuations due to a variety of factors that cannot be predicted with great certainty and may result in revenues and net income or loss in any particular period
that may not be representative of full-year results, or indicative of future results, and may vary significantly from period to period. In general, our financial results can be impacted by a number of factors, including our ability to recruit and
retain financial advisors as well as general market conditions and volatility, which is often an expression of investor confidence. Furthermore, our mix of business in any particular period will be impacted by several factors, including the
attractiveness of any particular type of investment when compared with other types of investments, and the types of investments sold by newly added financial advisors to our Company, many of whom specialize in the sale of specific types of
investment products.

For the three month period ended March 31, 2008, the Companys revenues declined over those levels reported
for the comparable period of 2007. We believe that this decline was due to a lack of investor confidence during the period, including as a result of the problems experienced by Bear Stearns & Co., Inc. as well as in the housing market and
rising gas prices. For the balance of 2008, we believe general market conditions, and therefore investor confidence, will be impacted by a number of factors, including concern over the viability of some of the nations largest financial
services firms, declining real estate values (and the resulting problems with mortgage-backed securities related thereto), as well as a possible recession. Furthermore, investor confidence may be eroded by a tightening of liquidity in the capital
markets and concern over the necessity of government intervention in providing stability in the marketplace. Reductions in investor confidence will negatively impact our revenues and earnings. As we continue to grow, we may also have increases in
expenses related to, among other things, marketing and recruiting, personnel, office space, and the amortization of forgivable loans provided to newly recruited financial advisors. There is no assurance that any increased revenue from growth will be
sufficient to offset increased expenses. Furthermore, the Company has determined that its long term growth strategy can best be maximized through the reinvestment of its earnings into the development of its infrastructure and its recruiting and
business development efforts, including through the payment of upfront amounts to advisors. As a result, we cannot predict with certainty our revenues and net income (or losses) in any particular period. Furthermore, the results for any period may
not be representative of full-year results and may vary significantly from year to year and from quarter to quarter.

In addition to
declining revenues for the period, we also experienced a decline in earnings. This decline was primarily due to a decrease in gross margin (resulting from a decrease in revenues), as well as an increase in certain operating costs, which amounts were
only partially offset by an increase in interest and dividends and other income. Furthermore, we may continue to have increases in expenses such as increased personnel and infrastructure costs.

Our business plan is focused primarily on increasing our network of affiliated registered representatives, which may permit the Company to expand its
base of revenue and its network for the retail distribution of securities without the capital expenditures that would be required to open company-owned offices and the additional administrative and other costs of hiring registered representatives as
in-house employees. As was the case with the Boca Branch, however, we will opportunistically evaluate acquisitions, including those that would result in registered representatives in acquired branches becoming employees of Summit Brokerage.



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Results of Operations

The following discussion relates to the results of operations for the three months ended March 31, 2008 (the 2008 Quarter) and the comparable period in the prior year (the 2007 Quarter).

Comparison of Three Months Ended March 31, 2008 and March 31, 2007

Revenue:

Commission revenue of $8.27 million for the
2008 Quarter represents a decrease of $.55 million, or 6%, when compared to commission revenue of $8.82 million for the 2007 Quarter. We believe the main factor contributing to this decline was a lack of investor confidence in the financial markets
during the 2008 Quarter.

In any quarter, our mix of business will be impacted by several factors, including, among other things, investor
confidence, as reflected by the movements of the equities markets, and the attractiveness of non-equity-related investment products, including those affected by changes in interest rates, such as fixed income securities. Additionally, during any
quarter, we may add or lose a significant number of registered representatives who focus primarily on the sale of a particular type or types of investment product(s) (e.g., insurance, equities, fixed income, etc.).

Expenses:

Commissions and clearing costs decreased
to $6.82 million during the 2008 Quarter, which represents a decrease of $.47 million, or 6%, from the $7.29 million reported for the 2007 Quarter. In general, commissions and clearing costs are directly related to commission revenue, and will
typically increase or decrease proportionately as commission revenue rises. Commissions and clearing costs, as a percentage of commission revenue, remained approximately the same at 82.5% for both the 2008 Quarter and the 2007 Quarter. Because our
independent financial advisors are responsible for the payment of all costs associated with operating their offices, we must pay to them a higher percentage of the commissions they generate, typically 80% to 90%, than we pay to those financial
advisors working from the Boca Branch, where Summit pays the costs associated with operating the Branch. As a result, on a prospective basis, we would expect commissions and clearing costs, as a percentage of commission revenue, to continue to
increase as we recruit more independent financial advisors.

Employee compensation and benefits increased by approximately $.18 million to
approximately $1.24 million during the 2008 Quarter, or an approximate increase of 17% when compared with the approximately $1.07 million reported for the 2007 Quarter. This increase was due primarily to an increase in management and other employee
salaries and employment-related costs, as well as the addition of new employees. Additionally, we include within employee compensation and benefits those net expenses related to the issuance of common stock and common stock equivalents, such as
options, to our employees. For the 2008 Quarter, we recognized a net expense of approximately $141,000 related to the amortization of unearned stock compensation. For the 2007 Quarter, we recognized a net expense of approximately $80,000 related to
the amortization of unearned stock compensation.

Occupancy and equipment cost for the 2008 Quarter decreased by approximately $26,000, to
approximately $158,000, or an approximate decrease of 14% when compared with the approximately $184,000 reported for the 2007 Quarter. Although the Companys recurring occupancy costs were higher in the 2008 Quarter, results for the 2007
Quarter were negatively impacted by an assessment from the Companys landlord during that period of approximately $45,000 over and above the Companys recurring monthly rent expense. There was no corresponding charge in the 2008 Quarter.

Legal, accounting and litigation costs increased by approximately $45,000 to approximately $24,000 during the 2008 Quarter, compared to
approximately ($21,000) reported for the 2007 Quarter. This decrease is largely attributable to an increase in arbitration-related costs, as well as an increase in fees paid to our accountants.

Communications costs increased by approximately $13,000, or 15%, to approximately $101,000 in the 2008 Quarter in comparison to $88,000 in the 2007
Quarter. The increase in communications costs between the 2008 Quarter and the 2007 Quarter is due primarily to an increase in certain technology infrastructure costs.

Other operating expenses typically include the general and administrative costs we incurred, to the extent such costs are not included elsewhere. Other operating expenses decreased by approximately $130,000, or 33%,
to approximately $261,000 during the 2008 Quarter versus approximately $391,000 for the 2007 Quarter. This decrease is mainly associated with a decline in business development and financial advisor-related costs in the 2008 Quarter when compared to
the 2007 Quarter. Additionally, we include within other operating expenses those net expenses related to the issuance of common stock and common stock equivalents, such as options, to non-employees. For the 2008 Quarter, we recognized a net expense
of approximately $32,000 related to the amortization of unearned stock compensation. For the 2007 Quarter, we recognized a net expense of approximately $26,000 related to the amortization of unearned stock compensation.

Net Income:

For the 2008 Quarter, we generated net
income of approximately $52,000, or $0.0019 per basic and $0.0016 per diluted share, as compared to the net income reported for the 2007 Quarter of approximately $106,000, or $0.0038 per basic and $0.0035 per diluted share.



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Liquidity and Capital Resources

Net cash provided by operating activities totaled approximately $532,000 during the 2008 Quarter, compared to net cash used of approximately $169,000 for
the 2007 Quarter. Cash provided by, or used in, operating activities for any period includes net income or loss for that period adjusted for non-cash items and the effects of changes in working capital. For the 2008 Quarter, cash flows from
operating activities were positively impacted by non-cash stock-based compensation of approximately $173,000, versus approximately $106,000 during the 2007 Quarter. Cash provided by operating activities also improved as a result of the net change in
certain balance sheet accounts. For the 2008 Quarter, the net change in these balance sheet accounts resulted in an increase in cash provided by operating activities of approximately $240,000, versus a decrease in cash providing by operating
activities of approximately $437,000 for the 2007 Quarter.

Cash and cash equivalents decreased during the 2008 Quarter by approximately
$54,000 to approximately $4,774,000 at March 31, 2008 from approximately $4,828,000 at December 31, 2007. This decrease was due almost entirely to the repurchase, for approximately $587,000, of our common stock, which amount was offset by
the increase in cash from operating activities of approximately $532,000.

During the 2008 Quarter, we purchased approximately $25,000 of
property and equipment, which amount was $11,000 less than the approximately $14,000 purchased during the 2007 Quarter. We do not project material capital expenditures over the next twelve months.

Financing activities used cash of $561,000 during the 2008 Quarter, which was comprised primarily of the purchase (approximately $588,000) by the Company
of the common stock (and a stock option) held by a former officer and shareholder. During the 2008 Quarter, the Company also received $30,000 in proceeds from the exercise of a common stock warrant.

Inflation. Inflation has not been a major factor in our business since inception.



|Item 4. | Controls and Procedures
|------- | -----------------------

The Companys Chief
Executive Officer and the Companys Chief Financial Officer evaluated the Companys disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, the Companys Chief Executive
Officer and 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.

During the quarterly period covered by this report, there were no changes in our internal controls
over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

In
March 2008, the Company issued an aggregate 100,000 shares of its common stock to one person upon such persons exercise of a like number of outstanding common stock warrants at an exercise price of $.30 per share. The shares of common stock
were issued in reliance upon the exemption from the registration requirements under the Securities Act of 1933, as amended afforded by Section 4(2) of such Act.



|Item 6. | Exhibits
|------- | --------



|       |  |                                                                                                    
|------ |  | ---------------------------------------------------------------------------------------------------
|Number |  | Name                                                                                               
|31.1   |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|       | 
|31.2   |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|       | 
|32.1   |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|       | 
|32.2   |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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SUMMIT FINANCIAL SERVICES GROUP, INC.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                   |  |                                                                                
|------------------ |  | -------------------------------------------------------------------------------
|Date: May 15, 2008 |  | Summit Financial Services Group, Inc.                                          
|                   |  | (Registrant)                                                                   
|                   | 
|                   |  | /s/ Marshall T. Leeds                                                          
|                   |  | Marshall T. Leeds, Chairman of the Board, Chief Executive Officer and President
|                   |  | (Principal Executive Officer)                                                  
|                   | 
|Date: May 15, 2008 |  | /s/ Steven C. Jacobs                                                           
|                   |  | Steven C. Jacobs, Executive Vice President and Chief Financial Officer         
|                   |  | (Principal Accounting Officer)                                                 



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EXHIBIT INDEX



|              |  |                                                                                                    
|------------- |  | ---------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION                                                                                        
|31.1          |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|              | 
|32.1          |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|              | 
|32.2          |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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