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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, 2009.

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 of principal
executive offices)

(Zip Code)

(561) 338-2800

(Registrants telephone number, including area code)

Not Applicable

(Former name, former
address and former fiscal year, if changed since last report)





Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is
a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the 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   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | x

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, 2009
|Common Stock Par value $0.0001 per share |  | 25,458,634                    









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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, 2009(unaudited) and December 31, 2008        |  | 3   
|                              |  | Condensed Consolidated Statements of Income and Loss for the Three Months ended March 31, 2009 and 2008(unaudited) |  | 4   
|                              |  | Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2009 and 2008(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                                                                                            |  | 11  
|Part II. Other Information    |  |                                                                                                                   
|Item 6.                       |  | Exhibits                                                                                                           |  | 11  
|Signatures                    |  | 12                                                                                                                

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 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 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-K for the fiscal year ended December 31, 2008.



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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 31,2009 |            |   | December 31,2008 |  
|                                                                                                                                                                                   |  | (unaudited)   |            |   |                  |  
|ASSETS                                                                                                                                                                             |  |               |            |   |                  |   |            |  
|Cash and cash equivalents                                                                                                                                                          |  | $             | 4,906,761  |   |                  | $ | 5,166,614  |  
|Deposit held at clearing brokers                                                                                                                                                   |  |               | 128,659    |   |                  |   | 128,648    |  
|Commissions receivable                                                                                                                                                             |  |               | 1,409,820  |   |                  |   | 865,899    |  
|Other receivables, net                                                                                                                                                             |  |               | 710,602    |   |                  |   | 654,742    |  
|Securities owned, at fair value                                                                                                                                                    |  |               | 8,375      |   |                  |   | 7,904      |  
|Prepaid expenses and other current assets                                                                                                                                          |  |               | 357,669    |   |                  |   | 512,649    |  
|Property and equipment at cost, net                                                                                                                                                |  |               | 134,913    |   |                  |   | 152,728    |  
|Goodwill                                                                                                                                                                           |  |               | 500,714    |   |                  |   | 500,714    |  
|                                                                                                                                                                                   |  |               |            |   |                  |   |            |  
|TOTAL ASSETS                                                                                                                                                                       |  | $             | 8,157,513  |   |                  | $ | 7,989,898  |  
|                                                                                                                                                                                   |  |               |            |   |                  |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                               |  |               |            |   |                  |   |            |  
|LIABILITIES                                                                                                                                                                        |  |               |            |   |                  |   |            |  
|Accounts payable and accrued expenses                                                                                                                                              |  | $             | 898,524    |   |                  | $ | 1,079,671  |  
|Accrued commission expense                                                                                                                                                         |  |               | 1,684,776  |   |                  |   | 1,400,342  |  
|                                                                                                                                                                                   |  |               |            |   |                  |   |            |  
|TOTAL LIABILITIES                                                                                                                                                                  |  |               | 2,583,300  |   |                  |   | 2,480,013  |  
|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; 25,473,546 issued and 25,458,634 outstanding at March 31, 2009
and December 31, 2008                     |  |               | 2,547      |   |                  |   | 2,547      |  
|Additional paid-in capital                                                                                                                                                         |  |               | 9,800,761  |   |                  |   | 9,747,038  |  
|Unearned stock-based compensation                                                                                                                                                  |  |               | (722,846   | ) |                  |   | (823,322   | )
|Treasury stock (14,912 shares, at cost)                                                                                                                                            |  |               | (10,884    | ) |                  |   | (10,884    | )
|Accumulated deficit                                                                                                                                                                |  |               | (3,495,378 | ) |                  |   | (3,405,507 | )
|                                                                                                                                                                                   |  |               |            |   |                  |   |            |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                         |  |               | 5,574,213  |   |                  |   | 5,509,885  |  
|                                                                                                                                                                                   |  |               |            |   |                  |   |            |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                         |  | $             | 8,157,513  |   |                  | $ | 7,989,898  |  
|                                                                                                                                                                                   |  |               |            |   |                  |   |            |  

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 and Loss



|                                            |  |                                     |            |   |             |   |           
|------------------------------------------- |  | ----------------------------------- | ---------- | - | ----------- | - | ----------
|                                            |  | For The Three Months EndedMarch 31,
|                                            |  | 2009                                |            |   | 2008       
|                                            |  | (Unaudited)                         |            |   | (Unaudited)
|Revenues                                    |  |                                     |            |   |             |   |           
|Commissions                                 |  | $                                   | 7,670,490  |   |             | $ | 8,284,570 
|Interest and dividends                      |  |                                     | 301,176    |   |             |   | 340,171   
|Other                                       |  |                                     | 106,342    |   |             |   | 99,301    
|                                            |  |                                     |            |   |             |   |           
|                                            |  |                                     | 8,078,008  |   |             |   | 8,724,042 
|                                            |  |                                     |            |   |             |   |           
|Expenses                                    |  |                                     |            |   |             |   |           
|Commissions and clearing costs              |  |                                     | 6,248,791  |   |             |   | 6,820,669 
|Employee compensation and benefits          |  |                                     | 1,192,329  |   |             |   | 1,244,358 
|Occupancy and equipment                     |  |                                     | 155,777    |   |             |   | 158,322   
|Communications                              |  |                                     | 112,895    |   |             |   | 101,031   
|Depreciation and amortization               |  |                                     | 19,311     |   |             |   | 62,781    
|Other operating expenses                    |  |                                     | 435,027    |   |             |   | 284,617   
|                                            |  |                                     |            |   |             |   |           
|                                            |  |                                     | 8,164,130  |   |             |   | 8,671,778 
|                                            |  |                                     |            |   |             |   |           
|Income (loss) before income taxes           |  |                                     | (86,122    | ) |             |   | 52,264    
|                                            |  |                                     |            |   |             |   |           
|Provision for income taxes                  |  |                                     |           |   |             |   |          
|                                            |  |                                     |            |   |             |   |           
|Net income (loss)                           |  | $                                   | (86,122    | ) |             | $ | 52,264    
|                                            |  |                                     |            |   |             |   |           
|Basic income (loss) per common share        |  | $                                   | (0.00      | ) |             | $ | 0.00      
|                                            |  |                                     |            |   |             |   |           
|Diluted income (loss) per common share      |  | $                                   | (0.00      | ) |             | $ | 0.00      
|                                            |  |                                     |            |   |             |   |           
|Weighted average common shares outstanding: |  |                                     |            |   |             |   |           
|Basic                                       |  |                                     | 25,458,634 |   |             |   | 25,866,754
|                                            |  |                                     |            |   |             |   |           
|Diluted                                     |  |                                     | 25,458,634 |   |             |   | 31,194,112
|                                            |  |                                     |            |   |             |   |           

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 Months EndedMarch 31, |          
|                                                                                                  |  | 2009                                |           |   | 2008        |  
|                                                                                                  |  | (Unaudited)                         |           |   | (Unaudited) |  
|Cash flows from operating activities                                                              |  |                                     |           |   |             |   |           |  
|Net income (loss)                                                                                 |  | $                                   | (86,122   | ) |             | $ | 52,264    |  
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities |  |                                     |           |   |             |   |           |  
|Depreciation                                                                                      |  |                                     | 19,311    |   |             |   | 17,805    |  
|Stock based compensation, net                                                                     |  |                                     | 154,200   |   |             |   | 173,354   |  
|Amortization of customer list                                                                     |  |                                     |          |   |             |   | 44,976    |  
|Amortization of advisor notes                                                                     |  |                                     | 40,030    |   |             |   | 14,976    |  
|Changes in:                                                                                       |  |                                     |           |   |             |   |           |  
|Deposits held at clearing brokers                                                                 |  |                                     | (10       | ) |             |   | (100,201  | )
|Commissions receivable                                                                            |  |                                     | (543,921  | ) |             |   | (408,406  | )
|Other receivables                                                                                 |  |                                     | (95,890   | ) |             |   | (78,000   | )
|Prepaid expenses and other                                                                        |  |                                     | 154,980   |   |             |   | 260,949   |  
|Securities owned                                                                                  |  |                                     | (471      | ) |             |   | 9,152     |  
|Accounts payable and accrued expenses                                                             |  |                                     | (181,148  | ) |             |   | (244,238  | )
|Accrued commission expense                                                                        |  |                                     | 284,434   |   |             |   | 201,842   |  
|Deposits                                                                                          |  |                                     |          |   |             |   | 587,687   |  
|                                                                                                  |  |                                     |           |   |             |   |           |  
|Net cash provided by (used in) operating activities                                               |  |                                     | (254,607  | ) |             |   | 532,160   |  
|                                                                                                  |  |                                     |           |   |             |   |           |  
|Cash flows from investing activities                                                              |  |                                     |           |   |             |   |           |  
|Purchase of property and equipment                                                                |  |                                     | (1,496    | ) |             |   | (24,956   | )
|                                                                                                  |  |                                     |           |   |             |   |           |  
|Net cash used in investing activities                                                             |  |                                     | (1,496    | ) |             |   | (24,956   | )
|                                                                                                  |  |                                     |           |   |             |   |           |  
|Cash flows from financing activities                                                              |  |                                     |           |   |             |   |           |  
|Purchase and retirement of common stock shares                                                    |  |                                     |          |   |             |   | (587,687  | )
|Payment of preferred stock dividend                                                               |  |                                     | (3,750    | ) |             |   | (3,750    | )
|Proceeds from exercise of warrants                                                                |  |                                     |          |   |             |   | 30,000    |  
|                                                                                                  |  |                                     |           |   |             |   |           |  
|Net cash used in financing activities                                                             |  |                                     | (3,750    | ) |             |   | (561,437  | )
|                                                                                                  |  |                                     |           |   |             |   |           |  
|Net decrease in cash and cash equivalents                                                         |  |                                     | (259,853  | ) |             |   | (54,233   | )
|Cash and cash equivalents at beginning of period                                                  |  |                                     | 5,166,614 |   |             |   | 4,828,606 |  
|                                                                                                  |  |                                     |           |   |             |   |           |  
|Cash and cash equivalents at end of period                                                        |  | $                                   | 4,906,761 |   |             | $ | 4,774,373 |  
|                                                                                                  |  |                                     |           |   |             |   |           |  

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, 2009

NOTE 1GENERAL

The condensed consolidated financial statements for the three-month periods ended March 31,
2009 and March 31, 2008 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 of Financial Condition and
Results of Operations, contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2008 for Summit Financial Services Group, Inc. (the Company or SFSG). The results of operations for the
three-month period ended March 31, 2009 are not necessarily indicative of the results for the entire fiscal year ending December 31, 2009.

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.

Certain amounts from the prior year have been reclassified to conform to the current-year presentation. These reclassifications had no impact on the reported net income for the period ended March 31, 2008.

NOTE 2STOCKHOLDERS EQUITY

Basic earnings (loss) per
share is computed by dividing the net income (loss) 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 (loss) 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, 2009, the Company had options and warrants outstanding entitling the holders thereof to purchase a total of approximately 18.9 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 the diluted loss per share, the Company has not assumed the exercise of any options and warrants because the effect thereof would be
either non- or anti-dilutive. 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, 2009 approximated $21,000.

Stock-Based Awards

The Company accounts for stock-based compensation 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



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period. The fair value of each option grant is estimated at the date of grant using the Black-Scholes option pricing model. The Black-Scholes model was
developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. The amortization of earned stock expense related to issuances to employees is included in the accompanying consolidated
statements 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.

During the three-month period ended March 31, 2009, the Company issued, in the aggregate, options with fair market values of approximately $72,000
and $2,500 to employees and non-employees, respectively. During the same period, the Company recognized net amortization expense of approximately $131,000 and $23,000 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, 2008, the Company issued, in the aggregate, options to employees with a fair market value of approximately $81,000. 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.

NOTE 3INCOME TAXES

The Company
has not provided for income taxes for the three months ended March 31, 2009 based on the Companys current estimate of the effective tax rate for the full year ended December 31, 2009. For the three months ended March 31, 2008,
the Companys provision for income taxes reflects an estimated income tax accrual 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 SEC 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, 2009, Summit Brokerage had net capital of approximately $2.17 million, which was $1.92 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 1.22 to 1 at March 31, 2009.

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, 2009 and 2008 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

The Company is a Florida-based financial services holding company that provides, through its Summit Brokerage 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 SEC registered investment advisor subsidiary, Summit Financial Group, Inc. (SFG), asset management and investment advisory services. SFSG was incorporated under the laws of the State
of Florida in 2003.



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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 conduct its brokerage activities in all 50 states, plus the District of Columbia. SFG is registered or eligible to conduct business as an investment advisor in 35
states and the District of Columbia. SBSIA, 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 2009, we had approximately 250 financial advisors operating from approximately 156 offices located throughout the country, with approximately
one third of those offices located in Florida and the Southeast United States. Our financial advisors service retail, and to a much lesser extent, institutional clients. The number of financial advisors in each affiliate office typically ranges from
one to five, although the number of financial advisors in certain offices may exceed this amount. With the exception of our Boca Raton, Florida branch (the Boca Branch), all of our branch offices and satellite locations are owned and
operated by independent owners, whom we refer to as affiliates, who maintain all appropriate licenses and are responsible for all of their respective office overhead and expenses. Our financial advisors 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. Historically, many of our affiliates have also provided financial planning services to their clients,
wherein the financial advisor evaluates a clients financial needs and objectives, develops a detailed plan, and then implements the plan with the clients approval. When the implementation of such objectives involves the purchase or sale
of securities (including the placement of assets within a managed account) such transactions are effected through Summit Brokerage, for which we earn either a commission or a fee. The following table reflects the various sources of revenue and the
percentage of total revenues for the quarters ending March 31, 2009 and 2008:



|                           |  |                |           |  |                |   |  |   |           |  |     |  
|-------------------------- |  | -------------- | --------- |  | -------------- | - |  | - | --------- |  | --- | -
|                           |  | March 31, 2009 |           |  | March 31, 2008 |  
|Insurance related products |  | $              | 2,680,681 |  | 33             | % |  | $ | 2,996,188 |  | 34  | %
|Equities                   |  |                | 1,867,361 |  | 23             |   |  |   | 1,594,263 |  | 18  |  
|Mutual funds               |  |                | 863,036   |  | 11             |   |  |   | 1,283,723 |  | 15  |  
|Investment advisory fees   |  |                | 1,210,492 |  | 15             |   |  |   | 1,574,393 |  | 18  |  
|Other commission income    |  |                | 1,048,920 |  | 13             |   |  |   | 836,003   |  | 10  |  
|Miscellaneous              |  |                | 407,518   |  | 5              |   |  |   | 439,472   |  | 5   |  
|                           |  |                |           |  |                |   |  |   |           |  |     |  
|Total                      |  | $              | 8,078,008 |  | 100            | % |  | $ | 8,724,042 |  | 100 | %
|                           |  |                |           |  |                |   |  |   |           |  |     |  

We do not hold any funds or securities of our customers, but instead utilize, on a fully disclosed
basis, the services of First Clearing, LLC (a division of Wachovia Corporation) and Pershing LLC (an affiliate of the Bank of New York Mellon) as our clearing brokers (the Clearing Brokers). Our clearing arrangements provide us with back
office support, transaction processing services on all principal national and international securities exchanges, and access to many other financial services and products. These arrangements allows us to offer a range of products and services that
are generally offered only by firms that are larger and have more capital than Summit Brokerage.

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
future results, and may vary significantly from period to period. 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.

In general, our financial results can be impacted by a number of factors, including general market conditions and volatility, as well as our ability to
recruit and retain financial advisors. During the quarter ended March 31, 2009, our results were negatively impacted by a lack of investor confidence resulting from the turmoil in the financial markets, as well as an overall concern about the
economy. As a result, our revenue per financial advisor declined, even though we increased the number of financial advisors licensed with Summit Brokerage. Prospectively, we believe that a lack of investor confidence will continue through 2009, and
potentially beyond, as concerns about the both the national as well as global economy persist. A continued lack of investor confidence will negatively impact our operating results.



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Although we expect our results, in general, to be impacted by macroscopic forces such as the state of the
economy, as well as overall market conditions and investor confidence, we may experience fluctuations in our revenue that do not follow such trends, or mirror trends experienced by the financial services industry as a whole. This is because, given
our size, we may add, or lose, financial advisors who generate a significant amount of commissions from the sale of a particular type of investment product. As we grow larger, we anticipate that the ability of any branch office to impact the overall
revenue mix will be diminished. However, due to our size, it is possible that the addition or loss of financial advisors (and their customers) who focus on certain products over other products will be a factor in causing fluctuations in our revenue
and/or revenue mix from period to period which may not be representative of results in other periods or reflective of general market conditions or economic trends.

Despite the aforementioned, we continue to focus our business plan on increasing our network of affiliated financial advisors, primarily through recruiting efforts. Although we will continue to attempt to recruit
those financial advisors who serve as financial planners (who sell primarily annuities, insurance, mutual funds and fee-based products), we also intend to pursue the addition of financial advisors who focus on the sale of different types of
securities, namely equities, fixed income and investment advisory products. There can be no assurance that we will be successful in our recruiting efforts. By focusing our business plan on increasing our network of affiliated financial advisors, we
believe we can expand our base of revenue and our network for the retail brokerage of securities without the capital expenditures that would be required to open Company-owned offices and the additional administrative and other costs of hiring
financial advisors as in-house employees. As was the case with the Boca Branch, however, we may evaluate potential acquisitions, including those that would result in acquired financial advisors becoming employees of Summit Brokerage. Historically,
Summit Brokerage has recruited offices comprised of between one and three financial advisors. Prospectively, we expect to continue to recruit smaller offices, although we will also target larger offices comprised of many financial advisors. Because
of the size of these larger offices, we may be required to pay a greater percentage of the offices commissions then we would pay to a smaller office. As a result, if we are successful, of which no assurance can be given, we may experience a
potential decline in our gross margin percentage.

We may also pursue mergers with, or the acquisition of the assets of, other brokerage
firms. Our ability to realize growth through acquisitions, however, will depend on the availability of suitable broker-dealer candidates and our ability to successfully negotiate favorable terms (from both sellers as well as financing sources, if
necessary), and there can be no assurance that we will be able to consummate any such acquisitions. Further, there are costs associated with the integration of new businesses and personnel, which may be more than we anticipate at that time. Thus,
there is no assurance that we will be able to successfully execute such growth strategy.

As we continue to grow, we may also incur
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 can be no assurance that any increased revenue
from growth will be sufficient to offset any 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 financial advisors. As a result, the Companys future earnings may be significantly less than in prior years.

For our current level of operating activities, we believe that our operations and current capital resources will be sufficient to fund our working
capital needs through 2009. The Company may, however, seek additional capital within the next 12 months should it elect to continue pursuing a strategy that incorporates the use of both forgivable and non-forgivable loans to induce newly recruited
financial advisors to affiliate with the Company. In addition, we anticipate that our strategy of growth through acquisitions may necessitate additional debt and/or equity financing, although there can be no assurances that this will happen. Our
failure to obtain sufficient financing for either of these purposes could have a materially adverse affect on our ability to execute our growth strategy to the extent desired.

Results of Operations

The following discussion relates to the results of operations for the
three months ended March 31, 2009 (the 2009 Quarter) and the comparable period in the prior year (the 2008 Quarter).



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Comparison of Three Months Ended March 31, 2009 and March 31, 2008

Revenue:

Commission revenue of approximately $7.67
million for 2009 Quarter represents a decline of approximately $.61 million, or 7%, over the $8.28 million of commission revenue reported for the 2008 Quarter. For the 2009 Quarter, our revenues were negatively impacted by the turmoil experienced by
the financial markets, and the related loss of investor confidence, which resulted in a decline in the average production per financial advisor. This decline, however, was partially offset by an increase in the number of financial advisors
associated with Summit Brokerage. For the balance of 2009, we believe general market conditions, and therefore investor confidence, will continue to be negatively impacted which will therefore adversely affect our operating results.

In any period, 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, such as fixed income securities. Additionally, during any period, we may add, or lose, a significant number of financial advisors who focus only on the sale
of a particular type or types of investment product(s) (e.g., insurance, equities, fixed income, etc.).

Interest and dividends decreased
by approximately $39,000 from approximately $340,000 in the 2008 Quarter to approximately $301,000 in the 2009 Quarter. Interest and dividend income is comprised primarily of that portion of the interest income earned from, and the interest expense
charged to, clients of Summit Brokerage that are received from our Clearing Brokers. Should interest rates remain at their current levels, or decline even further, we expect that the amounts received by Summit Brokerage will decline over amounts
paid in prior years. The loss of a significant amount of these payments could have a material adverse impact on the Companys operating results.

Expenses:

Commissions and clearing costs decreased to approximately $6.25 million in the 2009 Quarter, which represents a
decrease of $.57 million, or 8%, from the approximately $6.82 million reported for the 2008 Quarter. In general, commissions and clearing costs are directly related to commission revenue, and will typically increase or decrease proportionately as
commission revenue rises or falls. Commissions and clearing costs, as a percentage of commission revenue, decreased in the 2009 Quarter to 81.5% from 82.3% in the 2008 Quarter. Prospectively, we would expect this percentage to increase as we recruit
more independent financial advisors. Because our independent financial advisors are responsible for the payment of all costs associated with operating their offices, we must pay 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 Boca Branch. For the 2009 Quarter, this decline was due to the reversal of approximately $100,000 in
commission expense that had previously been recorded for which the Company was ultimately determined to have no liability. In the absence of such reversal, commissions and clearing costs, as a percentage of commission revenue, would have been
approximately 82.8%.

Employee compensation and benefits decreased to approximately $1.19 million in the 2009 Quarter, which represents a
decrease of approximately $50,000, or 4%, from the approximately $1.24 million reported for the 2008 Quarter. This decline was due primarily to a reduction in accrued performance-based employee compensation, as well as a decrease in payroll tax and
certain employee benefit costs. 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 2009 and 2008
Quarters, a total of approximately $131,000 and $141,000, respectively, was expensed (net of recaptured amortization), all of which related to the amortization of unearned stock compensation for employees.

Communications costs increased by approximately $12,000, or 12%, to $113,000 in the 2009 Quarter from approximately $101,000 in the 2008 Quarter. The
increase was due primarily to an increase in the costs to maintain our technology infrastructure. A portion of the increase is also attributable to an increase in the net cost that we pay our Clearing Brokers to provide technology to Summit
Brokerage and its financial advisors.

Other operating expenses include the general and administrative costs incurred by the Company, to
the extent such costs are not included elsewhere. Other operating expenses increased by approximately $150,000, or 53%, to approximately $435,000 during the 2009 Quarter from approximately $285,000 for the 2008 Quarter. During the 2009 Quarter, we
experienced increases in costs related to licensing and registrations, advertising and marketing, and attracting and hiring financial advisors. These increases were partially offset by a decrease in our net insurance costs. Other operating expenses
also include amounts paid for legal, accounting and litigation costs. For the 2009 Quarter, such expenses increased by approximately $80,000 over the 2008 Quarter, due primarily to an increase in costs related to



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arbitrations and litigation. 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 2009 and 2008 Quarters, a total of approximately $23,000 and $32,000, respectively, was expensed (net of recaptured amortization) for such issuances, all of which related to the
amortization of unearned stock compensation.

Net Income:

For the 2009 Quarter, we generated a net loss of approximately $86,000, or $0.00 per basic and diluted share, as compared to net income reported for the 2008 Quarter of approximately $52,000, or $0.00 per basic and
diluted share.

Liquidity and Capital Resources

Net cash used by operating activities during the 2009 Quarter totaled approximately $255,000 compared to net cash provided by operating activities of approximately $532,000 during the 2008 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 2009 Quarter, cash flows from operating activities were positively
impacted by non-cash stock-based compensation of approximately $154,000, versus approximately $173,000 during the 2008 Quarter. Cash provided by operating activities also decreased as a result of the net change in certain balance sheet accounts. For
the 2009 Quarter, the net change in these balance sheet accounts resulted in a decrease in cash provided by operating activities of approximately $382,000, versus an increase in cash provided by operating activities of approximately $229,000 for the
2008 Quarter.

Cash and cash equivalents decreased during the 2009 Quarter by approximately $260,000 to approximately $4,907,000 at
March 31, 2009 from approximately $5,167,000 at December 31, 2008. This decrease was due almost entirely to the increase in cash used in operations as previously described.

During the 2009 Quarter, we purchased approximately $1,500 of property and equipment, which amount was $23,500 less than the approximately $25,000
purchased during the 2008 Quarter. We do not project material capital expenditures over the next twelve months.

Financing activities used
cash of $3,750 during the 2009 Quarter, which was entirely for the dividends paid on our Series A preferred stock. For the 2008 Quarter, financing activities were 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, as well as the receipt of $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 March 31, 2009. 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 quarter ended March 31, 2009, 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 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

Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                   |  |  |  |                                                                                
|------------------ |  |  |  | -------------------------------------------------------------------------------
|Date: May 15, 2009 |  |  |  | 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, 2009 |  |  |  | /s/ Steven C. Jacobs                                                           
|                   |  |  |  | Steven C. Jacobs, Executive Vice President and Chief Financial Officer         
|                   |  |  |  | (Principal Accounting Officer)                                                 



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EXHIBIT INDEX



|               |  |                                                                                                    
|-------------- |  | ---------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | 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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