##### Table of Contents





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 June 30, 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 August 12, 2009
|Common Stock Par value $0.0001 per share |  | 25,458,634                       









---

##### Table of Contents





SUMMIT FINANCIAL SERVICES
GROUP, INC.

INDEX



|                              |  |                                                                                                             |  |     
|----------------------------- |  | ----------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |                                                                                                             |  | Page
|Part I. Financial Information |  |                                                                                                            
|Item 1.                       |  | Financial Statements                                                                                        |  |     
|                              |  | Condensed Consolidated Statements of Financial Condition at June 30, 2009(unaudited) and December 
31, 2008 |  | 3   
|                              |  | Condensed Consolidated Statements of Income for the Three Months ended June 30, 2009 and 2008(unaudited)    |  | 4   
|                              |  | Condensed Consolidated Statements of Income for the Six Months ended June 30, 2009 and 2008(unaudited)      |  | 5   
|                              |  | Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2009 and 2008(unaudited)  |  | 6   
|                              |  | Notes to Unaudited Condensed Consolidated Financial Statements                                              |  | 7   
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                       |  | 8   
|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.



Page 2



---

##### Table of Contents

PART I. FINANCIAL INFORMATION



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

SUMMIT FINANCIAL
SERVICES GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Condition



|                                                                                                                                                                                   |  |              |            |   |                  |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                                                                                                   |  | June 30,2009 |            |   | December 31,2008 |  
|                                                                                                                                                                                   |  | (unaudited)  |            |   |                  |  
|ASSETS                                                                                                                                                                             |  |              |            |   |                  |   |            |  
|Cash and cash equivalents                                                                                                                                                          |  | $            | 5,024,185  |   |                  | $ | 5,166,614  |  
|Deposits held at clearing brokers                                                                                                                                                  |  |              | 128,670    |   |                  |   | 128,648    |  
|Commissions receivable                                                                                                                                                             |  |              | 1,249,082  |   |                  |   | 865,899    |  
|Notes receivable, net                                                                                                                                                              |  |              | 891,665    |   |                  |   | 512,456    |  
|Other receivables, net                                                                                                                                                             |  |              | 99,499     |   |                  |   | 142,286    |  
|Securities owned, at fair value                                                                                                                                                    |  |              | 10,428     |   |                  |   | 7,904      |  
|Prepaid expenses and other current assets                                                                                                                                          |  |              | 334,499    |   |                  |   | 512,649    |  
|Property and equipment at cost, net                                                                                                                                                |  |              | 130,959    |   |                  |   | 152,728    |  
|Goodwill                                                                                                                                                                           |  |              | 500,714    |   |                  |   | 500,714    |  
|                                                                                                                                                                                   |  |              |            |   |                  |   |            |  
|TOTAL ASSETS                                                                                                                                                                       |  | $            | 8,369,701  |   |                  | $ | 7,989,898  |  
|                                                                                                                                                                                   |  |              |            |   |                  |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                               |  |              |            |   |                  |   |            |  
|LIABILITIES                                                                                                                                                                        |  |              |            |   |                  |   |            |  
|Accounts payable and accrued expenses                                                                                                                                              |  | $            | 835,877    |   |                  | $ | 1,079,671  |  
|Accrued commission expense                                                                                                                                                         |  |              | 1,775,176  |   |                  |   | 1,400,342  |  
|                                                                                                                                                                                   |  |              |            |   |                  |   |            |  
|TOTAL LIABILITIES                                                                                                                                                                  |  |              | 2,611,053  |   |                  |   | 2,480,013  |  
|                                                                                                                                                                                   |  |             
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                      |  |              |            |   |                  |   |            |  
|                                                                                                                                                                                   |  |             
|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 June 30, 2009
and December 31, 2008                      |  |              | 2,547      |   |                  |   | 2,547      |  
|Additional paid-in capital                                                                                                                                                         |  |              | 9,801,258  |   |                  |   | 9,747,038  |  
|Unearned stock-based compensation                                                                                                                                                  |  |              | (624,579   | ) |                  |   | (823,322   | )
|Treasury stock (14,912 shares, at cost)                                                                                                                                            |  |              | (10,884    | ) |                  |   | (10,884    | )
|Accumulated deficit                                                                                                                                                                |  |              | (3,409,707 | ) |                  |   | (3,405,507 | )
|                                                                                                                                                                                   |  |              |            |   |                  |   |            |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                         |  |              | 5,758,648  |   |                  |   | 5,509,885  |  
|                                                                                                                                                                                   |  |              |            |   |                  |   |            |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                         |  | $            | 8,369,701  |   |                  | $ | 7,989,898  |  
|                                                                                                                                                                                   |  |              |            |   |                  |   |            |  

See accompanying notes to unaudited condensed consolidated financial statements.



Page 3



---

##### Table of Contents

SUMMIT FINANCIAL SERVICES GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income



|                                            |  |                                    |            |             |   |           
|------------------------------------------- |  | ---------------------------------- | ---------- | ----------- | - | ----------
|                                            |  | For The Three Months EndedJune 30,
|                                            |  | 2009                               |            | 2008       
|                                            |  | (Unaudited)                        |            | (Unaudited)
|Revenues                                    |  |                                    |            |             |   |           
|Commissions                                 |  | $                                  | 9,743,970  |             | $ | 8,168,257 
|Interest and dividends                      |  |                                    | 322,733    |             |   | 302,798   
|Other                                       |  |                                    | 133,545    |             |   | 95,166    
|                                            |  |                                    |            |             |   |           
|                                            |  |                                    | 10,200,248 |             |   | 8,566,221 
|                                            |  |                                    |            |             |   |           
|Expenses                                    |  |                                    |            |             |   |           
|Commissions and clearing costs              |  |                                    | 8,180,070  |             |   | 6,483,744 
|Employee compensation and benefits          |  |                                    | 1,146,344  |             |   | 1,184,231 
|Occupancy and equipment                     |  |                                    | 154,533    |             |   | 159,563   
|Communications                              |  |                                    | 99,905     |             |   | 115,373   
|Depreciation and amortization               |  |                                    | 18,242     |             |   | 66,658    
|Other operating expenses                    |  |                                    | 511,733    |             |   | 301,312   
|                                            |  |                                    |            |             |   |           
|                                            |  |                                    | 10,110,827 |             |   | 8,310,881 
|                                            |  |                                    |            |             |   |           
|Income before income taxes                  |  |                                    | 89,421     |             |   | 255,340   
|                                            |  |                                    |            |             |   |           
|Provision for income taxes                  |  |                                    |           |             |   | 105,567   
|                                            |  |                                    |            |             |   |           
|Net income                                  |  | $                                  | 89,421     |             | $ | 149,773   
|                                            |  |                                    |            |             |   |           
|Basic income per common share               |  | $                                  |           |             | $ | 0.01      
|                                            |  |                                    |            |             |   |           
|Diluted income per common share             |  | $                                  |           |             | $ |          
|                                            |  |                                    |            |             |   |           
|Weighted average common shares outstanding: |  |                                    |            |             |   |           
|Basic                                       |  |                                    | 25,458,634 |             |   | 25,852,457
|                                            |  |                                    |            |             |   |           
|Diluted                                     |  |                                    | 29,996,406 |             |   | 30,255,719
|                                            |  |                                    |            |             |   |           

See accompanying notes to unaudited condensed consolidated financial statements.



Page 4



---

##### Table of Contents

SUMMIT FINANCIAL SERVICES GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income



|                                            |  |                                  |            |             |   |           
|------------------------------------------- |  | -------------------------------- | ---------- | ----------- | - | ----------
|                                            |  | For The Six Months EndedJune 30,
|                                            |  | 2009                             |            | 2008       
|                                            |  | (Unaudited)                      |            | (Unaudited)
|Revenues                                    |  |                                  |            |             |   |           
|Commissions                                 |  | $                                | 17,414,460 |             | $ | 16,452,827
|Interest and dividends                      |  |                                  | 623,909    |             |   | 642,969   
|Other                                       |  |                                  | 239,887    |             |   | 194,468   
|                                            |  |                                  |            |             |   |           
|                                            |  |                                  | 18,278,256 |             |   | 17,290,264
|                                            |  |                                  |            |             |   |           
|Expenses                                    |  |                                  |            |             |   |           
|Commissions and clearing costs              |  |                                  | 14,428,861 |             |   | 13,304,413
|Employee compensation and benefits          |  |                                  | 2,338,673  |             |   | 2,428,589 
|Occupancy and equipment                     |  |                                  | 310,310    |             |   | 317,885   
|Communications                              |  |                                  | 212,800    |             |   | 216,404   
|Depreciation and amortization               |  |                                  | 37,553     |             |   | 129,439   
|Other operating expenses                    |  |                                  | 946,760    |             |   | 580,170   
|                                            |  |                                  |            |             |   |           
|                                            |  |                                  | 18,274,957 |             |   | 16,976,900
|                                            |  |                                  |            |             |   |           
|Income before income taxes                  |  |                                  | 3,299      |             |   | 313,364   
|                                            |  |                                  |            |             |   |           
|Provision for income taxes                  |  |                                  |           |             |   | 111,327   
|                                            |  |                                  |            |             |   |           
|Net income                                  |  | $                                | 3,299      |             | $ | 202,037   
|                                            |  |                                  |            |             |   |           
|Basic income per common share               |  | $                                |           |             | $ | 0.01      
|                                            |  |                                  |            |             |   |           
|Diluted income per common share             |  | $                                |           |             | $ | 0.01      
|                                            |  |                                  |            |             |   |           
|Weighted average common shares outstanding: |  |                                  |            |             |   |           
|Basic                                       |  |                                  | 25,458,634 |             |   | 25,854,140
|                                            |  |                                  |            |             |   |           
|Diluted                                     |  |                                  | 30,186,254 |             |   | 31,353,832
|                                            |  |                                  |            |             |   |           

See accompanying notes to unaudited condensed consolidated financial statements.



Page 5



---

##### Table of Contents

SUMMIT FINANCIAL SERVICES GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows



|                                                                                           |  |                                  |           |   |             |   |           |  
|------------------------------------------------------------------------------------------ |  | -------------------------------- | --------- | - | ----------- | - | --------- | -
|                                                                                           |  | For The Six Months EndedJune 30, |          
|                                                                                           |  | 2009                             |           |   | 2008        |  
|                                                                                           |  | (Unaudited)                      |           |   | (Unaudited) |  
|Cash flows from operating activities                                                       |  |                                  |           |   |             |   |           |  
|Net income                                                                                 |  | $                                | 3,299     |   |             | $ | 202,037   |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities |  |                                  |           |   |             |   |           |  
|Depreciation                                                                               |  |                                  | 37,553    |   |             |   | 39,487    |  
|Stock based compensation, net                                                              |  |                                  | 252,964   |   |             |   | 267,411   |  
|Amortization of customer list                                                              |  |                                  |          |   |             |   | 89,952    |  
|Amortization of advisor notes                                                              |  |                                  | 98,434    |   |             |   | 33,123    |  
|Changes in:                                                                                |  |                                  |           |   |             |   |           |  
|Deposits held at clearing brokers                                                          |  |                                  | (21       | ) |             |   | (100,319  | )
|Commissions receivable                                                                     |  |                                  | (383,183  | ) |             |   | (464,947  | )
|Notes receivable                                                                           |  |                                  | (478,058  | ) |             |   | (147,465  | )
|Other receivables                                                                          |  |                                  | 43,203    |   |             |   | 39,672    |  
|Prepaid expenses and other                                                                 |  |                                  | 178,149   |   |             |   | 311,073   |  
|Securities owned                                                                           |  |                                  | (2,524    | ) |             |   | 13,957    |  
|Accounts payable and accrued expenses                                                      |  |                                  | (243,795  | ) |             |   | (287,995  | )
|Accrued commission expense                                                                 |  |                                  | 374,834   |   |             |   | 10,589    |  
|Deposits                                                                                   |  |                                  |          |   |             |   | 583,625   |  
|                                                                                           |  |                                  |           |   |             |   |           |  
|Net cash provided by (used in) operating activities                                        |  |                                  | (119,145  | ) |             |   | 590,200   |  
|                                                                                           |  |                                  |           |   |             |   |           |  
|Cash flows from investing activities                                                       |  |                                  |           |   |             |   |           |  
|Purchase of property and equipment                                                         |  |                                  | (15,784   | ) |             |   | (50,392   | )
|                                                                                           |  |                                  |           |   |             |   |           |  
|Net cash used in investing activities                                                      |  |                                  | (15,784   | ) |             |   | (50,392   | )
|                                                                                           |  |                                  |           |   |             |   |           |  
|Cash flows from financing activities                                                       |  |                                  |           |   |             |   |           |  
|Purchase and retirement of common stock shares                                             |  |                                  |          |   |             |   | (587,687  | )
|Payment of preferred stock dividend                                                        |  |                                  | (7,500    | ) |             |   | (7,500    | )
|Proceeds from exercise of warrants                                                         |  |                                  |          |   |             |   | 30,874    |  
|                                                                                           |  |                                  |           |   |             |   |           |  
|Net cash used in financing activities                                                      |  |                                  | (7,500    | ) |             |   | (564,313  | )
|                                                                                           |  |                                  |           |   |             |   |           |  
|Net decrease in cash and cash equivalents                                                  |  |                                  | (142,429  | ) |             |   | (24,505   | )
|Cash and cash equivalents at beginning of period                                           |  |                                  | 5,166,614 |   |             |   | 4,828,606 |  
|                                                                                           |  |                                  |           |   |             |   |           |  
|Cash and cash equivalents at end of period                                                 |  | $                                | 5,024,185 |   |             | $ | 4,804,101 |  
|                                                                                           |  |                                  |           |   |             |   |           |  

See accompanying notes to unaudited condensed consolidated financial statements.



Page 6



---

##### Table of Contents

SUMMIT FINANCIAL SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

June 30, 2009

NOTE 1GENERAL

The condensed consolidated financial statements for the three- and six-month periods ended
June 30, 2009 and June 30, 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- and six-month periods ended June 30, 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 three- and six month periods ended
June 30, 2008.

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 and warrants calculated using the treasury stock method and the number of issuable common shares upon the conversion of preferred stock using the if converted method. For purposes of computing the diluted earnings per share
for the three- and six-month periods ended June 30, 2009 and June 30, 2008, respectively, the Company has assumed the exercise of those securities as follows:

(Shares in 000s)



|          |  |                                     |  |                                   |  |              |  |        |  |          |  |              |  |        |  |          |  |              |  |        |  |          |  |             
|--------- |  | ----------------------------------- |  | --------------------------------- |  | ------------ |  | ------ |  | -------- |  | ------------ |  | ------ |  | -------- |  | ------------ |  | ------ |  | -------- |  | ------------
|          |  | For The Three Months Ended June 30, |  | For The Six Months Ended June 30,
|          |  | 2009                                |  | 2008                              |  | 2009         |  | 2008  
|          |  | Total                               |  | Dilutive                          |  | Non-Dilutive |  | Total  |  | Dilutive |  | Non-Dilutive |  | Total  |  | Dilutive |  | Non-Dilutive |  | Total  |  | Dilutive |  | Non-Dilutive
|Options   |  | 18,080                              |  | 12,145                            |  | 5,935        |  | 17,175 |  | 10,003   |  | 7,172        |  | 18,080 |  | 10,773   |  | 7,307        |  | 17,175 |  | 10,946   |  | 6,229       
|Warrants  |  | 783                                 |  | 783                               |  |             |  | 808    |  | 808      |  |             |  | 783    |  | 783      |  |             |  | 808    |  | 808      |  |            
|Preferred |  | 144                                 |  |                                  |  | 144          |  | 144    |  |         |  | 144          |  | 144    |  |         |  | 144          |  | 144    |  |         |  | 144         
|          |  |                                     |  |                                   |  |              |  |        |  |          |  |              |  |        |  |          |  |              |  |        |  |          |  |             
|Total     |  | 19,007                              |  | 12,928                            |  | 6,079        |  | 18,127 |  | 10,811   |  | 7,316        |  | 19,007 |  | 11,556   |  | 7,451        |  | 18,127 |  | 11,754   |  | 6,373       

Preferred stock dividends in arrears as of June 30, 2009 approximated $22,000.

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.
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 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.

The following schedule is intended to reflect the total fair market values of options issued to both employees and
non-employees during the three- and six-month periods ended June 30, 2009 and 2008, respectively, as well as the net amortization expense recognized by the Company during those periods related to the issuance of options in the current and prior
periods:



|                                                           |  |                                    |        |                                 |   |        |  |      |         |  |   |        
|---------------------------------------------------------- |  | ---------------------------------- | ------ | ------------------------------- | - | ------ |  | ---- | ------- |  | - | -------
|                                                           |  | For The Three MonthsEnded June 30, |        | For The Six MonthsEnded June 30
|                                                           |  | 2009                               |        | 2008                            |   | 2009   |  | 2008
|Fair market value of options issued - employees            |  | $                                  | -0-    |                                 | $ | 10,000 |  | $    | 72,000  |  | $ | 81,000 
|Fair market value of options issued - non-employees        |  | $                                  | 5,500  |                                 | $ | 1,000  |  | $    | 8,000   |  | $ | 1,000  
|Net amortization expense - options issued to employees     |  | $                                  | 65,000 |                                 | $ | 61,000 |  | $    | 196,000 |  | $ | 202,000
|Net amortization expense - options issued to non-employees |  | $                                  | 34,000 |                                 | $ | 33,000 |  | $    | 57,000  |  | $ | 65,000 

NOTE 3INCOME TAXES

The Company has not provided for income taxes for the three or six month periods ended June 30, 2009 based on the Companys current estimate of its taxable income for the full year ended December 31,
2009. For the three- and six-month periods ended June 30, 2008, the Companys provision for income taxes reflects an estimated income tax accrual of approximately $105,000 and $111,000 respectively, based on the Companys estimated
effective tax rate for the year ending December 31, 2008.



---

##### Table of Contents

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 June 30, 2009, Summit Brokerage had net capital of approximately $2.09 million,
which was $1.84 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 1.28 to 1 at June 30, 2009.

NOTE 5CONTINGENCIES

The Company is, or may become, 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 asserted matters. Management believes that, to the best of
its knowledge, the range of potential net losses resulting from currently asserted proceedings in excess of the accrued amount, if any, will not be material to the Companys financial position or results of operations. Management cannot
currently determine with any certainty the effect that any unasserted proceedings may have on the Companys financial position or results of operations.

NOTE 6SUBSEQUENT EVENTS

In May 2009, the Financial Accounting Standards Board issued new professional standards related to
subsequent events (Standards) which establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. The
standards provides guidance on the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the
circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that an entity should make about events or transactions that occurred after the
balance sheet date. The Company adopted the Standards during the second quarter of 2009, and its application had no impact on the Companys condensed consolidated financial statements. Management evaluated subsequent events through the date the
accompanying financial statements were issued, which was August 14, 2009.



|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- and six-month periods ended June 30, 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 Services, Inc. (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.

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 July 2009, we had approximately 275 financial advisors operating from approximately 165 offices
located throughout the country. 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
three-month and six-month periods ended June 30, 2009 and 2008:



|                           |  |                                    |            |  |                                  |   |  |      |           |  |      |   |  |   |            |  |     |   |  |   |            |  |     |  
|-------------------------- |  | ---------------------------------- | ---------- |  | -------------------------------- | - |  | ---- | --------- |  | ---- | - |  | - | ---------- |  | --- | - |  | - | ---------- |  | --- | -
|                           |  | For The Three Months EndedJune 30, |            |  | For The Six Months EndedJune 30, |  
|                           |  | 2009                               |            |  | 2008                             |   |  | 2009 |           |  | 2008 |  
|Insurance related products |  | $                                  | 3,130,209  |  | 31                               | % |  | $    | 2,718,645 |  | 32   | % |  | $ | 5,810,890  |  | 31  | % |  | $ | 5,714,834  |  | 33  | %
|Equities                   |  |                                    | 2,742,630  |  | 27                               |   |  |      | 1,733,559 |  | 20   |   |  |   | 4,609,991  |  | 25  |   |  |   | 3,327,823  |  | 19  |  
|Mutual funds               |  |                                    | 1,168,449  |  | 12                               |   |  |      | 1,350,015 |  | 16   |   |  |   | 2,031,485  |  | 11  |   |  |   | 2,633,737  |  | 15  |  
|Investment advisory fees   |  |                                    | 1,262,057  |  | 12                               |   |  |      | 1,491,092 |  | 17   |   |  |   | 2,472,549  |  | 14  |   |  |   | 3,065,485  |  | 18  |  
|Other commission income    |  |                                    | 1,440,624  |  | 14                               |   |  |      | 874,946   |  | 10   |   |  |   | 2,489,545  |  | 14  |   |  |   | 1,710,948  |  | 10  |  
|Miscellaneous              |  |                                    | 456,279    |  | 4                                |   |  |      | 397,964   |  | 5    |   |  |   | 863,796    |  | 5   |   |  |   | 837,437    |  | 5   |  
|                           |  |                                    |            |  |                                  |   |  |      |           |  |      |   |  |   |            |  |     |   |  |   |            |  |     |  
|                           |  |                                    |            |  |                                  |   |  |     
|Total                      |  | $                                  | 10,200,248 |  | 100                              | % |  | $    | 8,566,221 |  | 100  | % |  | $ | 18,278,256 |  | 100 | % |  | $ | 17,290,264 |  | 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.



---

##### Table of Contents

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 three- and six-month periods ended
June 30, 2009, our revenues were positively impacted (when compared with the same periods of the prior year) by the net addition of new financial advisors, which more than offset a decline in per advisor production resulting from a lack of
investor confidence in the financial markets, as well as an overall concern about the economy. Prospectively, we believe that a lack of investor confidence may 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.

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
adding financial advisors becoming employees of Summit Brokerage. Historically, Summit Brokerage has recruited offices comprised of between one and five 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 in the form
of both forgivable and non-forgivable loans to financial advisors. As of June 30, 2009, the net carrying value of these loans was approximately $892,000, compared with approximately $512,000 as of December 31, 2008 and $254,000 as of
June 30, 2008. 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 June 30, 2009 (the 2009 Quarter) and the
comparable period in the prior year (the 2008 Quarter), as well as the results of operations for the six months ended June 30, 2009 (the 2009 Period) and the comparable period in the prior year (the 2008
Period).

Comparison of Three Months Ended June 30, 2009 and June 30, 2008

Revenue:

Commission revenue of approximately $9.74
million for 2009 Quarter represents an increase of approximately $1.57 million, or 19%, over the $8.17 million of commission revenue reported for the 2008 Quarter. For the 2009 Quarter, our revenues were positively impacted by the net addition of
new financial advisors. This increase, however, was partially offset by a decline in per advisor production resulting from a lack of investor confidence in the financial markets. For the balance of 2009, we believe general market conditions, and
therefore investor confidence, may 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.).



---

##### Table of Contents

Interest and dividends increased by approximately $20,000 from approximately $303,000 in the 2008 Quarter
to approximately $323,000 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 increased to approximately $8.18 million in the 2009 Quarter, which represents an increase of $1.7 million, or 26%, from
the approximately $6.48 million reported for the 2008 Quarter. Typically, commissions and clearing costs will increase or decrease in approximately the same proportion as commission revenue rises or falls. For the 2009 Quarter, the increase in
commissions and clearing costs (26%) exceeded the increase in commission revenue (19%) primarily due to a temporary increase in the percentage of their gross commissions that Summit Brokerage was paying to its newly recruited financial
advisors as an incentive for joining the Firm. Furthermore, although Summit brokerage received a bonus from one of its clearing firms in the 2009 Quarter that served to reduce its gross commission and clearing costs, the amount of the bonus was less
than that received by Summit Brokerage during the 2008 Quarter. As a result, the percentage of commissions and clearing costs to commission revenue increased from 79.4% during the 2008 Quarter to 84.0% during the 2009 Quarter. In the absence of
these bonuses, commission and clearing costs as a percentage of commission revenue would have been approximately 84.6% and 80.9% for the 2009 Quarter and the 2008 Quarter, respectively. Prospectively, and in the absence of such bonuses, 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. Furthermore, because of increased
competition, the percentage that we pay our newly recruited advisors of their gross commissions may increase.

Employee compensation and
benefits decreased to approximately $1.15 million in the 2009 Quarter, which represents a decrease of approximately $38,000, or 3%, from the approximately $1.18 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 $65,000 and $61,000, respectively, was expensed (net of recaptured amortization), all of which related to the amortization of
unearned stock compensation for employees.

Communications costs decreased by approximately $15,000, or 13%, to $100,000 in the 2009
Quarter from approximately $115,000 in the 2008 Quarter. The decrease was due primarily to a reduction in fees paid to outside parties for the maintenance and support of our technology infrastructure.

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 $210,000, or 70%, to approximately $511,000 during the 2009 Quarter from approximately $301,000 for the 2008 Quarter. This increase was due primarily to an increase in legal, accounting and litigation
costs of approximately $122,000, combined with advertising and marketing costs of approximately $97,000 and costs of recruiting our financial advisors of approximately $47,000. These increases were partially offset by a decrease in our net insurance
costs. 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
$34,000 and $33,000, 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 net income of approximately $89,000, or $0.00 per
basic and diluted share, as compared to net income reported for the 2008 Quarter of approximately $150,000, or $0.01 per basic and $0.00 per diluted share.

Comparison of Six Months Ended June 30, 2009 and June 30, 2008

Revenue:

Commission revenue of approximately $17.41 million for the 2009 Period represents an increase of approximately $.96 million, or 6%, over the $16.45
million of commission revenue reported for the 2008 Period. For the 2009 Period, our revenues were positively impacted by the net addition of new financial advisors. This increase, however, was partially offset by a decline in per advisor production
resulting from a lack of investor confidence in the financial markets. For the balance of 2009, we believe general market conditions, and therefore investor confidence, may 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 $19,000 from approximately $643,000 in the 2008 Period to approximately $624,000 in the 2009 Period. 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 increased
to approximately $14.43 million in the 2009 Period, which represents an increase of $1.13 million, or 8%, from the approximately $13.3 million reported for the 2008 Period. Typically, commissions and clearing costs will increase or decrease in
approximately the same proportion as commission revenue rises or falls. For the 2009 Period, the increase in commissions and clearing costs (8%) exceeded the increase in commission revenue (6%) primarily due to a temporary increase in the
percentage of their gross commissions that Summit Brokerage was paying to its newly recruited financial advisors as an incentive for joining the Firm. Furthermore, although Summit brokerage received a bonus from one of its clearing firms in the 2009
Period that served to reduce its gross commission and clearing costs, the amount of the bonus was less than that received by Summit Brokerage during the 2008 Period. Additionally, during the 2009 Period, Summit Brokerage reversed 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 a bonus and commission expense reversal, commissions and clearing costs, as a percentage of
commission revenue would have been approximately 83.8% for the 2009 Period, compared with approximately 81.6% for the 2008 Period when adjusted for the bonuses. Prospectively, and in the absence of such bonuses, we would expect this percentage to
increase as we recruit more independent financial advisors. Because our



---

##### Table of Contents

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. Furthermore, because of increased competition, the
percentage that we pay our newly recruited advisors of their gross commissions may increase.

Employee compensation and benefits decreased
to approximately $2.34 million in the 2009 Period, which represents a decrease of approximately $90,000, or 4%, from the approximately $2.43 million reported for the 2008 Period. 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 Periods, a total of approximately $196,000 and $202,000, respectively, was expensed (net of recaptured amortization), all of which related to the amortization of
unearned stock compensation for employees.

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 $365,000, or 63%, to approximately $945,000 during the 2009 Period from approximately $580,000 for the 2008 Period. This increase was due
primarily to an increase in advertising and marketing costs of approximately $124,000, as well as an increase in the costs of recruiting our financial advisors of approximately $102,000. These increases were partially offset by a decrease in our net
insurance costs. 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 Periods, a total of
approximately $57,000 and $65,000, 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 Period, we generated net
income of approximately $3,300, or $0.00 per basic and diluted share, as compared to net income reported for the 2008 Period of approximately $202,000, or $0.01 per basic and diluted share.

Liquidity and Capital Resources

Net cash used
by operating activities during the 2009 Period totaled approximately $119,000 compared to net cash provided by operating activities of approximately $590,000 during the 2008 Period. Cash provided by, or used in, operating activities for any period
includes the net income or loss for that period adjusted for non-cash items and the effects of changes in working capital. The change between the 2009 and 2008 Periods is due largely to a decrease in net income of approximately $200,000, a net
increase in other receivables of approximately $337,000 (representing primarily both forgivable and non-forgivable loans provided to advisors in connection with their affiliation with Summit Brokerage), and a decrease in deposits on hand of
approximately $584,000, which amount was used to repurchase shares of our common stock during the 2008 Period.

Cash and cash equivalents
decreased during the 2009 Period by approximately $142,000 to approximately $5,024,000 at June 30, 2009 from approximately $5,166,000 at December 31, 2008. This decrease was due almost entirely to the increase in cash used in operations as
previously described.

During the 2009 Period, we purchased approximately $16,000 of property and equipment, which amount was $34,000 less
than the approximately $50,000 purchased during the 2008 Period. We do not project significant capital expenditures over the next twelve months.

Financing activities used cash of $7,500 during the 2009 Period, which was entirely for the dividends paid on our Series A preferred stock. For the 2008 Period, 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 June 30, 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 June 30, 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.



Page 11



---

##### Table of Contents



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: August 14, 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: August 14, 2009 |  | /s/ Steven C. Jacobs                                                           
|                      |  | Steven C. Jacobs, Executive Vice President and Chief Financial Officer         
|                      |  | (Principal Accounting Officer)                                                 



Page 12



---

##### Table of Contents



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.



Page 13