---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM
10-K

|(Mark One) |                                                                                            
|---------- | -------------------------------------------------------------------------------------------
|x          | ANNUAL REPORT PURSUANT TO SECTION
 13 OR 15(d)                                             
|           | OF THE SECURITIES EXCHANGE ACT OF
 1934                                                    
|           |                                                                                            
|           | For the fiscal year ended December
 31, 2007                                               
|           | or                                                                                         
|           |                                                                                            
|o          | TRANSITION REPORT PURSUANT TO
 SECTION 13 OR 15(d) 
 OF THE SECURITIES EXCHANGE ACT OF 1934
|           |                                                                                            
|           | For the transition period from
             to                                             

Commission
file number 001-33737

Rodman & Renshaw Capital Group, Inc.(Exact name of Company as specified in its charter)

|                                           |                     
|------------------------------------------ | --------------------
|Delaware                                   | 84-1374481          
|(State
 or other jurisdiction              | (I.R.S.
 Employer   
|of
 incorporation or organization)         | Identification
 No.)
|                                           |                     
|1270
 Avenue of the Americas, New York, NY | 10020               
|(Address
 of principal executive offices)  | (Zip
 Code)         

Registrants
telephone number, including area code:
212-356-0500

Securities
registered pursuant to Section 12(b) of the Act:


|                              |                                           
|----------------------------- | ------------------------------------------
|Title
 of each class          | Name
 of each exchange on which registered
|Common Stock, $.001 par value | NASDAQ                                    

Securities
registered pursuant to Section 12(g) of the Act:
None(Title of class)

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined by
Rule 405 of the Securities Act. 
Yes o No x

Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. Yes o No x

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 o

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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 o | Accelerated Filer o | Non-accelerated filer x | Smaller Reporting Company o

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

The
aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 30, 2007 was approximately $76,820.

The
number of shares outstanding of the registrants common stock, $.001 par value,
as of March 12, 2008 was 34,945,738 shares.

DOCUMENTS INCORPORATED BY REFERENCE

None

---

---



TABLE
OF CONTENTS

|            |                                                                                                                   |     
|----------- | ----------------------------------------------------------------------------------------------------------------- | ----
|            |                                                                                                                   | Page
|            |                                                                                                                   |     
|            |                                                                                                                   |     
|            | PART I                                                                                                            |     
|Item 1.     | Business                                                                                                          | 2   
|Item 1A.    | Risk Factors                                                                                                      | 9   
|Item 1B.    | Unresolved Staff Comments                                                                                         | 21  
|Item 2.     | Properties                                                                                                        | 22  
|Item 3.     | Legal Proceedings                                                                                                 | 22  
|Item 4.     | Submission of Matters to a Vote of
 Security Holders                                                              | 24  
|            |                                                                                                                   |     
|            | PART II                                                                                                           |     
|Item 5.     | Market Price of Registrants Common
 Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities | 24  
|Item 6.     | Selected Financial Data                                                                                           | 25  
|Item 7.     | Managements Discussion and Analysis
 of Financial Condition and Results of Operations                            | 27  
|Item 7A.    | Quantitative and Qualitative Disclosures About
 Market Risk                                                       |     
|Item 8.     | Financial Statements and
 Supplementary Data                                                                      | 38  
|Item 9.     | Changes in and Disagreements with
 Accountants on Accounting and Financial Disclosure                             | 38  
|Item 9A(T). | Controls and Procedures                                                                                           | 38  
|Item 9B.    | Other Information                                                                                                 | 39  
|            |                                                                                                                   |     
|            | PART III                                                                                                          |     
|Item 10.    | Directors, Executive Officers and
 Corporate Governance                                                           | 40  
|Item 11.    | Executive Compensation                                                                                            | 44  
|Item 12.    | Security Ownership of Certain
 Beneficial Owners and Management and Related Stockholder Matters                   | 52  
|Item 13.    | Certain Relationships and Related
 Transactions, and Director Independence                                        | 53  
|Item 14.    | Principal Accounting Fees and
 Services                                                                           | 55  
|            | PART IV                                                                                                           |     
|Item 15.    | Exhibits and Financial Statement
 Schedules                                                                       | 55  
|            |                                                                                                                   |     
|Signatures  |                                                                                                                   | 57  

FORWARD
LOOKING STATEMENT INFORMATION

Certain
statements made in this Annual Report on Form 10-K are forward-looking
statements regarding the plans and objectives of management for future
operations. Such statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. Our plans and objectives are based, in part,
on assumptions involving judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which
are beyond our control. Although we believe that our assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein particularly in view of the current state of our operations, the
inclusion of such information should not be regarded as a statement by us or
any other person that our objectives and plans will be achieved. Factors that
could cause actual results to differ materially from those expressed or implied
by such forward-looking statements include, but are not limited to, the factors
set forth herein under the headings Business, Risk Factors and
Managements Discussion and Analysis of Financial Condition and Results of
Operations. We undertake no obligation to revise or update publicly any
forward-looking statements for any reason.

1

---



PART
I

Item 1. Business

(a)
General Development of Business

Rodman
& Renshaw Capital Group, Inc. (RRCG) is a Delaware holding company which
was organized on December 20, 2006. RRCG, through its various subsidiaries, is
engaged in the investment banking business. RRCGs principal operating
subsidiary is Rodman & Renshaw, LLC (the Broker-Dealer), a Delaware
limited liability company organized on June 20, 2002. The Broker-Dealer is
registered with the Financial Industry Regulatory Authority, Inc. (FINRA).
RRCG and its subsidiaries, including the Broker-Dealer, are collectively
referred to herein as Company, we, our or us.

Exchange Transaction

On
July 10, 2007 (the Exchange Date), pursuant to an Exchange Agreement, dated
as of July 10, 2007 (the Exchange Agreement), the beneficial owners of the
outstanding debt and equity securities of Rodman & Renshaw Holding, LLC
(Holding) consummated a reorganization transaction (the Exchange) with its
subsidiary, Enthrust Financial Services, Inc. (Enthrust), which was a
non-operating public shell company. As a result of the Exchange, the
beneficial owners of Holdings debt and equity securities became stockholders
of Enthrust. Prior to the Exchange, Enthrust was not engaged in any trade or
business and its common stock was listed on the OTC Bulletin Board. In
addition, prior to the Exchange, Holding owned 80% of Enthrust indirectly
through a subsidiary. The Exchange consisted of the following:

| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | Paul Revere, LLC (Paul Revere), a Delaware limited
 liability company, which owned 70% of Holding, contributed its membership
 interest in Holding to Enthrust in exchange for 12,711,683 shares of
 Enthrusts common stock;                                                                                                                                                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (ii)  | the stockholders of R&R Capital Group, Inc.
 (R&R), a Delaware S corporation, who, through their ownership of
 R&R, owned 30% of Holding and 25.5% of RRPR, LLC (RRPR), a Delaware
 limited liability company, contributed all of their R&R shares to
 Enthrust in exchange for 5,967,591 shares of Enthrusts common stock;                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (iii) | the holders of the 6% Senior Convertible Debentures
 in the aggregate principal amount of $20 million (the Debentures) and
 warrants to purchase 714,286 shares of Holding stock at a price of $7.70 per
 share (the Holding Warrants) issued by Holding in March 2007 contributed
 the Debentures and the Holding Warrants to Enthrust in exchange for 5,970,099
 shares of Enthrusts common stock and warrants to purchase 1,355,600 shares
 of Enthrusts common stock at a purchase price of $7.00 per share (the
 Warrants); and
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (iv)  | options held by employees of Holding to purchase up
 to 2,848,370 shares of Holdings stock at prices ranging from $0.409 to $8.24
 per share were, by their terms, converted into options to acquire up to 5,278,071
 shares of Enthrusts common stock at prices ranging from $0.22 to $4.45 per
 share.                                                                                                                                                                                                                                  

Immediately
after the Exchange, 1,707,144 shares of Enthrusts common stock that were
outstanding prior to the Exchange, including all of the shares held indirectly
by Holding, were cancelled. Thus, the shares of Enthrusts common stock
issued to Paul Revere, the R&R stockholders and the holders of the Debentures
and the Holding Warrants pursuant to the Exchange Agreement represented 98.6%
of Enthrusts issued and outstanding shares immediately after the Exchange.

On
the Exchange Date, all of Enthrusts officers resigned and its then sole
director, Arnold P. Kling, appointed Edward Rubin, Holdings President and a
member of Holdings board of directors, as a director of Enthrust. Messrs.
Kling and Rubin then appointed the officers of Holding as Enthrusts new
officers. In addition, they appointed the other members of Holdings board of
directors to Enthrusts board of directors effective as of July 22, 2007, the
tenth day after Enthrust mailed an Information Statement pursuant to Rule 14f-1
of the Securities Exchange Act of 1934, as amended (the Exchange Act) to its
stockholders of record. Mr. Kling then resigned as a

2

---



director of Enthrust effective as of July 22, 2007. In
this report, we refer to our board of directors after July 22, 2007 as the
Board of Directors.

Finally,
on August 31, 2007, Enthrust changed its name to Rodman & Renshaw Capital
Group, Inc.

Public Offering

On
July 19, 2007, RRCG filed a Registration Statement on Form S-1 (the
Registration Statement) with the United States Securities and Exchange
Commission (the SEC). As amended, the Registration Statement covered (i) 9.2
million shares of Common Stock to be sold by RRCG in an underwritten public
offering taking into account up to 1.2 million shares covered by an
over-allotment option granted to the underwriters (the Offering) and (ii) the
resale of 7,325,699 shares of Common Stock held by the former holders of the
Debentures, including 1,355,600 shares underlying the warrants issued to them
in the Exchange. The Registration Statement was declared effective on October
16, 2007 and the Offering closed on October 19, 2007 resulting in net proceeds
to RRCG of $36,270,806 million, after deducting the underwriting discount of
$2,800,000 and other offering expenses of $929,194. The shares registered on
behalf of the former holders of the Debenture are subject to 180-day lock-up
agreements with the underwriters that expire on April 13, 2008.

Material Changes in the Mode of Conducting the
Business

In
October 2007, RRCGs management, in consultation with the Board of Directors,
determined that RRCGs asset management operation, as constituted, was not
central to its strategic development. Accordingly, RRCG decided to terminate
its asset management operation in the fourth quarter of 2007. This decision did
not have a material effect on net income in the fourth quarter.

(b)
Financial Information about Industry Segments

RRCG
operates in only one industry segment. Revenues generated from operations,
measures of profit or loss or loss and total assets of RRCG are reported in
Item 8. Financial Statements and Supplementary Data.

(c) Narrative
Description of Business

Our
business consists of: (i) investment banking, which includes corporate finance
and strategic advisory services; (ii) sales and trading; (iii) research; and
(iv) merchant banking.

Investment Banking

Our
investment banking professionals focus on providing corporate finance and
strategic advisory services to public and private companies. As of December 31,
2007, our investment banking group consisted of 18 senior investment bankers,
including senior managing directors, managing directors, directors and senior
vice presidents, who focus on originating, structuring and placing
transactions. A significant majority of our investment banking revenues is
earned from public companies with a market capitalization below $500 million.
We believe the experience and talent of our professionals enable us to deliver
the specialized advice and differentiated services our clients demand and to be
innovative in our approach to addressing client needs.

Over
the past five years, we have established our position as one of the leading
investment banks in the biotechnology sector. By devoting substantial resources
to this sector, we have acquired a comprehensive understanding of the
challenges and demands that public and private biotechnology companies face in
raising capital and completing strategic transactions. We believe the high
levels of expertise and client trust we have developed have been significant
factors contributing to our growth and will allow us to generate significant
repeat business.

Our
investment bankers have been successful in establishing long-term relationships
with the senior management of many companies operating in the biotechnology
sector. We aim to provide these companies with capital origination services and
strategic advice throughout their various stages of development. In turn, this
has led to high levels of client loyalty and significant rates of repeat
business. In 2007, 2006 and 2005, over 38%, 34% and 44%, respectively, of our investment
banking transactions were executed with repeat clients.

3

---



Corporate Finance

Our
corporate finance efforts are principally focused on public and private equity
products, including:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Private Investment in Public
 Equity, or PIPE. In these transactions, a publicly-traded
 reporting company sells unregistered securities of a class, and/or
 convertible or exchangeable for a class, that is already publicly traded.
 Generally, the issuer is obligated to register the securities within a specified
 period after the transaction closes.                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | Registered Direct Offerings,
 or RD. These transactions are direct placements of securities that have
 been registered under a shelf registration statement and, therefore, are
 immediately tradeable.                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | Private Placements.
 These transactions involve sales of unregistered securities. In most cases
 the issuer is a private company, although public companies can undertake
 private placements as well. The securities sold may be common or preferred
 equity, debt, convertible debt, or derivatives, such as warrants. The debt
 could be secured or unsecured, senior, mezzanine or subordinated. Many of
 these transactions involve units, which include more than one class of
 securities.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | Public Offerings.
 These transactions involve securities that have been registered and that are
 listed or traded on an exchange. The offering may constitute an initial
 public offering by a private company or a follow-on offering by an
 existing public company.                                                                                                                                                                                                                       

Our
banking professionals have developed a well-earned reputation for being
responsive, creative, and effective in originating, structuring and executing
these transactions. From January 1, 2003 through December 31, 2007, we
completed 229 financing transactions. The aggregate amount raised in these
financing transactions was $5.8 billion. In a large majority of these
transactions we were the lead investment bank and in many of them we were the
only investment bank. In addition, we are a recognized industry leader in PIPE
and RD financing transactions. From January 1, 2003 through December 31, 2007,
we executed over 190 PIPE and RD financing transactions in the aggregate, which
raised in excess of $3.0 billion in the aggregate.

We
believe that we differentiate ourselves from our competitors by constantly
striving to develop and deploy a variety of financial products and financing
strategies that address the needs and concerns of both issuers and investors.
For example, we coupled a PIPE financing transaction with a reverse merger of a
private company into a reporting public shell company. We use this structure,
successfully, as an alternative to the traditional underwritten public
offering.

We
have also developed a financial product that we call a Collateralized
Acquisition Pool®, or CAP®, the proceeds of which are
held in trust and released to the issuer upon meeting milestones or the closing
of a suitable acquisition. The instrument is typically senior secured
convertible debt convertible into the common equity of a publicly-traded
company and carries warrant coverage. A CAP® is a flexible product
that can be used to facilitate a targeted acquisition, and, as such, may
function as an alternative to a Special Purpose Acquisition Corporation or it
can be used as a source of working capital.

Our
ongoing development of new products and financing structures provides issuers
with financial flexibility, competitive cost, and increased access to capital,
and enhances our reputation for presenting investors with attractive investment
opportunities. We believe our innovation and creativity will continue to be a
key driver in the growth of our business.

Strategic
Advisory Services

We
advise our clients in connection with mergers, acquisitions, dispositions and
similar transactions. We are involved at each stage of these transactions, from
initial structuring to final execution.

When
we advise companies in connection with these types of corporate transactions,
our services may include:

| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | identifying and/or evaluating potential acquisition
 targets or acquirers;
| |   |                                                                           
| |  | providing valuation analyses;                                             

4

---



| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | evaluating and proposing financial and strategic
 alternatives;                         
| |   |                                                                                         
| |  | rendering, if appropriate, fairness opinions;                                           
| |   |                                                                                         
| |  | providing advice regarding the timing, structure and
 pricing of a proposed transaction;
| |   |                                                                                         
| |  | assisting in negotiating and closing a proposed
 transaction;                           
| |   |                                                                                         
| |  | advising on the appropriate sale process; and                                           
| |   |                                                                                         
| |  | assisting in preparing an offering memorandum or
 other appropriate sales materials.    

Sales and Trading

As
of December 31, 2007, our sales and trading unit includes seven sales people,
four sales traders and three traders. They focus on executing trades for
institutional investor clients in the United States and Europe. Distributing
proprietary research and investment ideas to institutional investor clients is
a key factor in client generation. As of December 31, 2007, we were a
market-maker for 238 stocks.

We
believe institutional investors are becoming increasingly selective in
identifying sources of investment and trading expertise. As these investors
continue to realign their resources by sector, the premium they place on sector
expertise is growing. As a result, we believe that the value they place on
timely, focused, insightful, proprietary research and dedicated sales and
trading professionals is growing.

Because
of our determination to build a comprehensive investment banking platform
dedicated to the biotechnology sector, we developed a level of knowledge and
focus that differentiates our sales and trading capabilities from those of our
competitors. Specializing in this sector enables our traders to provide strong
execution because of our extensive understanding of institutional investor
client interest in specific biotechnology companies. This sector expertise also
allows our sales and trading professionals to better understand and service the
needs of our clients and to create and maintain strong relationships with key
institutional investor clients.

Our
sales professionals provide our institutional investor clients with access to
the management of companies outside the context of financing transactions.
These meetings, commonly referred to as non-deal road shows, are highly valued
by both our company and institutional investor clients. Non-deal road shows
allow our issuer clients to increase their visibility with the institutional
investor community while providing our institutional investor clients with the
opportunity to further educate themselves on companies and industries through
meetings with management. We believe our strong relationships with company
management teams and our sector-focused approach provides us with significant access
to management.

We
also provide investors with extensive access to corporate management teams
through our conferences focused on the life science sector (with particular
emphasis on biotechnology companies). At our most recent Annual Healthcare
Conference held in New York City in November 2007, we had 340 presenting
companies and over 2,000 attendees and at our most recent Global Healthcare
Conference held in Monaco in May 2007, we had 170 presenting companies and over
600 attendees. Our healthcare conferences emphasize small-cap and mid-cap
companies working on the latest scientific and medical breakthroughs for
debilitating illnesses that frequently do not have effective treatments, bring
together company executives, scientists, industry specialists, venture
capitalists and other institutional investors and feature company
presentations, panel discussions and one-on-one meetings between company
managements and investors. Expert panelists who appear at our conferences are
drawn from our extensive network of industry experts developed by our
professional staff over the course of their careers. Our investor clients
recognize that our expert networks are comprised of many of the leading
professionals in their respective fields.

Research

As
of December 31, 2007, our research department includes seven senior analysts:
four cover the biotechnology sector, one covers specialty pharmaceuticals, one
covers technology and one covers industrial services. These senior analysts are
supported by sixteen associate analysts. As of December 31, 2007, the research
department covered 127 companies.

The
goal of our research professionals is to provide institutional investor clients
with timely, insightful and useful research and investment strategies. We work
diligently to keep our institutional investor clients current on

5

---



new opportunities in the biotechnology sector, new
regulatory developments and other information necessary for successful
investing. We believe the best recommendations we can make to investors are not
only accurate, but also differentiated from or incremental to the collective
opinion of other analysts and the investment community. Our differentiated
approach to research focuses our experienced analysts efforts toward delivering
specific investment ideas and de-emphasizes maintenance research, which we
define as the collection and dissemination of available information without
detailed analysis.

Merchant Banking

To
date, our merchant banking efforts have been comprised primarily of making
limited principal investments in several PIPE and RD financing transactions
where we also acted as the placement agent, and obtaining equity ownership
stakes in publicly-traded shell companies, i.e.,
reporting companies that have no active trade or business and nominal assets,
that were subsequently merged with operating private companies through reverse
mergers or CAPs® (Collateralized Acquisition Pools®)
arranged by us.

Asset Management

Through
November 30, 2007, we operated in asset management on a limited basis through
Rodman & Renshaw Fund Management, LLC which managed R&R Opportunity
Fund, L.P. (the Fund). More than half of the capital invested in the Fund was
contributed by John J. Borer III, formerly our Chief Executive Officer and
currently a Senior Managing Director and Co-Head of Investment Banking, and
members of his family. In October 2007, RRCGs management, in consultation with
the Board of Directors, determined that RRCGs asset management operation, as
constituted, was not central to its strategic development. Accordingly, RRCG
terminated its asset management operation in the fourth quarter of 2007.

Government Regulation

Our
business, as well as the financial services industry generally, is subject to
extensive regulation in the United States and elsewhere. As a matter of public
policy, regulatory bodies in the United States and the rest of the world are
charged with safeguarding the integrity of the securities and other financial
markets and with protecting the interests of participants in those markets. In
the United States, the SEC is the federal agency responsible for the
administration of the federal securities laws. The Broker-Dealer is registered
as a broker-dealer with the SEC and FINRA and in 23 states. Accordingly, the
Broker-Dealer is subject to regulation and oversight by the SEC and FINRA, a
self-regulatory organization, which is itself subject to oversight by the SEC
and which adopts and enforces rules governing the conduct, and examines the
activities, of its member firms. State securities regulators also have
regulatory or oversight authority over the Broker-Dealer. Our business may also
be subject to regulation by foreign governmental and regulatory bodies and
self-regulatory authorities in other countries.

Broker-dealers
are subject to regulations that cover all aspects of the securities business,
including sales methods, trade practices among broker-dealers, use and
safekeeping of customers funds and securities, capital structure,
record-keeping, the financing of customers purchases and the conduct and
qualifications of directors, officers and employees. In particular, as a
registered broker-dealer and member of various self-regulatory organizations,
the Broker-Dealer is subject to the SECs uniform net capital rule, Rule 15c3-1
of the Exchange Act, which specifies the minimum level of net capital a
broker-dealer must maintain and also requires that a significant part of its
assets be kept in relatively liquid form. The SEC and various self-regulatory
organizations impose rules that require notification when net capital falls
below certain predefined criteria, limit the ratio of subordinated debt to
equity in the regulatory capital composition of a broker-dealer and constrain
the ability of a broker-dealer to expand its business under certain
circumstances. Additionally, the SECs uniform net capital rule imposes certain
requirements that may have the effect of prohibiting a broker-dealer from
distributing or withdrawing capital and requiring prior notice to the SEC for
certain withdrawals of capital. The SEC has adopted rule amendments that
establish alternative net capital requirements for broker-dealers that are part
of a consolidated supervised entity. As a condition to its use of the
alternative method, a broker-dealers ultimate holding company and affiliates
(referred to collectively as a consolidated supervised entity) must consent
to group-wide supervision and examination by the SEC. If we elect to become
subject to the SECs group-wide supervision, we will be required to report to
the SEC computations of our capital adequacy.

The
research areas of investment banks have been and remain the subject of
increased regulatory scrutiny. In 2002 and 2003, acting in part pursuant to a
mandate contained in the Sarbanes-Oxley Act of 2002 (S-Ox), the

6

---



SEC, the New York Stock Exchange (NYSE), NASDAQ and
FINRA adopted rules imposing heightened restrictions on the interaction between
equity research analysts and investment banking personnel at member securities
firms. In addition, since 2003, twelve securities firms in the United States
have reached a settlement with certain federal and state securities regulators and
self-regulatory organizations to resolve investigations into their equity
research analysts alleged conflicts of interest. Under this settlement, to
which we were not a party, the firms have been subject to certain restrictions
and undertakings. In addition, the settlement imposes restrictions on the interaction
between research and investment banking departments, and these securities firms
are required to fund the provision of independent research to their customers.
In connection with the research settlement, the firms also subscribed to a
voluntary initiative imposing restrictions on the allocation of shares in
public offerings to executives and directors of public companies. The SEC has
proposed amendments to Regulation M that would further affect the manner in
which securities are distributed and allocated in registered public offerings,
and FINRA has proposed similar rulemaking in this area. We cannot fully predict
the practical effect that such restrictions or measures will have on our
business. Furthermore, the SEC, NYSE, NASDAQ and FINRA may, in the future,
adopt additional and more stringent rules with respect to offering procedures
and the management of conflicts of interest.

The
SEC has conducted studies with respect to soft dollar practices in the
brokerage and asset management industries. In October 2005, the SEC proposed
interpretive guidance regarding the scope of permitted brokerage and research
services in connection with soft dollar practices. The SEC has indicated that
it is considering additional rulemaking in this area, and we cannot predict the
effect that additional rulemaking may have on our business.

The
effort to combat money laundering and terrorist financing is a priority in
government policy with respect to financial institutions. The USA PATRIOT Act
of 2001 contains anti-money laundering and financial transparency laws and
mandates the implementation of various regulations applicable to broker-dealers
and other financial services companies, including standards for verifying
client identification at account opening, and obligations to monitor client
transactions and report suspicious activities. Through these and other
provisions, the USA PATRIOT Act of 2001 seeks to promote the identification of
parties that may be involved in terrorism or money laundering. Anti-money
laundering laws outside the United States contain some similar provisions. The
obligation of financial institutions, including us, to identify their
customers, watch for and report suspicious transactions, respond to requests
for information by regulatory authorities and law enforcement agencies, and
share information with other financial institutions, has required the
implementation and maintenance of internal practices, procedures and controls
which have increased, and may continue to increase, our costs, and any failure
with respect to our programs in this area could subject us to serious
regulatory consequences, including substantial fines and, potentially, other
liabilities.

Certain
of our businesses are subject to compliance with laws and regulations of the
United States, state governments, foreign governments and their respective
agencies and/or various self-regulatory organizations or exchanges relating to
the privacy of client information, and any failure to comply with these regulations
could expose us to liability and/or reputational damage.

Additional
legislation, changes in rules promulgated by the SEC and self-regulatory
organizations or changes in the interpretation or enforcement of existing laws
and rules, either in the United States or elsewhere, may directly affect the
mode of our operation and profitability.

The
United States and foreign government agencies and self-regulatory
organizations, as well as state securities commissions in the United States,
are empowered to conduct administrative proceedings that can result in censure,
fine, the issuance of cease-and-desist orders or the suspension or expulsion of
a broker-dealer or its directors, officers or employees.

Since
March 2004, we have received inquiries, subpoenas and requests for production
of documents from the SEC, FINRA and the Attorney General of the State of New
York (AG) with respect to individual PIPE transactions in which we acted as
placement agent. We have responded to each such inquiry, subpoena and request,
and, to our best knowledge, our responses have been to the satisfaction of the
inquiring party. We have never been advised by the SEC, FINRA or the AG that we
are, or have been, a target in connection with any such inquiry or
investigation in connection with our PIPE business, and we have no reason to
believe that we are currently a target in connection with any such inquiry or
investigation. We believe that these inquiries and investigations are
consistent with the general regulatory scrutiny that PIPE transactions have
been the subject of during this period.

7

---



During
2006 and 2007, we have received ongoing inquiries from FINRA relating to our
participation in resale registration offerings that register securities placed
in private placement financing transactions in which we acted as placement
agent. The inquiries have focused on whether the offerings contemplated by such
resale registration statements are subject to the filing requirements set forth
in Rule 2710 of FINRA Conduct Rules (Rule 2710) and FINRA Notice to Members
88-101. A Rule 2710 filing seeks approval from FINRA as to the fairness of the
compensation received, or to be received, by a member in a financing
transaction covered by the rule. The rule generally covers a member that is
participating in a public offering, the definition of which is currently the
subject of industry discussion and debate. We have responded to each such
inquiry, and to our best knowledge, such responses have been to the
satisfaction of the inquiring party. We expect that FINRA may seek further
information from us. We have never been advised by FINRA that we are, or were,
a target in connection with any inquiry or investigation relating to Rule 2710.

Competition

All
aspects of our business are intensely competitive. Our competitors are other
investment banks, brokerage firms, merchant banks and financial advisory firms.
We consider our primary competitors to include the following firms:

| |                                 |                                | 
| | ------------------------------- | ------------------------------ | 
| | Banc of America Securities, LLC | Leerink Swann & Co.            | 
| |                                 |                                | 
| | C.E. Unterberg, Towbin          | Lehman Brothers, Inc.          | 
| |                                 |                                | 
| | Canaccord Adams, Inc.           | Merriman Curhan Ford & Company | 
| |                                 |                                | 
| | CIBC World Markets              | Oppenheimer & Co., Inc.        | 
| |                                 |                                | 
| | Cowen and Company, LLC          | Piper Jaffray & Co.            | 
| |                                 |                                | 
| | Deutsche Bank Securities, Inc.  | RBC Capital Markets, Inc.      | 
| |                                 |                                | 
| | Jefferies & Company, Inc.       | Roth Capital Partners, LLC     | 
| |                                 |                                | 
| | JMP Securities                  | ThinkEquity Partners, LLC      | 
| |                                 |                                | 
| | Ladenburg Thalmann & Co.        | Thomas Weisel Partners, LLC    | 
| |                                 |                                | 
| | Lazard Ltd.                     |                                | 

In addition, as we continue to expand our business
into new sectors and new business lines, we are likely to face competition from
other firms.

We
compete on a national, regional and local level as well as on product and
business-line bases. Some of our competitors have teams that specifically focus
on the biotechnology sector, and some of them specialize in PIPE and/or RD
transactions. We do not believe that any of our competitors have the same level
of expertise as we do in both the biotechnology sector and with PIPE and RD
financing transactions. Many of our competitors, however, have substantially
greater capital and resources than we do and offer a broader range of financial
products. We believe that the principal factors affecting competition in our
business include client relationships, reputation, quality and price of our
products and services, market focus and the experience of our professionals.

In
recent years, there has been substantial consolidation and convergence among
companies in the financial services industry, including among many of our
former competitors. In particular, a number of large commercial banks have
established or acquired broker-dealers or have merged with other financial
institutions. Many of these firms have the ability to offer a broader range of
products and services than we offer, including loans, deposit accounts,
insurance and alternative investment strategies. Many of these firms also have
more extensive investment banking services, which may enhance their competitive
position. They also have the ability to support investment banking and
securities products with commercial banking, insurance and other financial
services revenue in an effort to gain market share, which could result in
pricing pressure in our business. This trend toward consolidation and
convergence has also significantly increased the capital base and geographic
reach of our competitors.

8

---



In
the investment banking industry, competition for the recruitment and retention
of qualified professionals is also intense. Our ability to continue to compete
effectively in our business will depend upon our continued ability to retain
and motivate our existing professionals and attract new professionals.

Employees

As
of December 31, 2007, we had a total of 108 employees, of which all but four
are based in our principal offices in New York City. All of our employees are
full-time. We are not a party to any collective bargaining agreements and we
have not had any work stoppages. We consider our relations with our employees
to be good.

(d)
Financial Information About Geographic Areas

In
2007, RRCG derived certain revenues from business outside of the United States;
however, such revenues were not material. In 2006 and 2005, RRCG derived all of
its revenues from business within the United States. Financial information
concerning RRCGs operations is reported in Item 8, Financial Statements and
Supplementary Data.

(e)
Available Information

RRCGs
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and amendments are available on the SECs internet website at
www.sec.gov.

A
copy of Form 10-K will be provided upon written request and without charge.
Please send your requests to the attention of Investor Relations, Rodman &
Renshaw Capital Group, Inc., 1270 Avenue of the Americas, New York, New York
10020.

The
public may read and copy any materials we file with the SEC at the SECs Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public
may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. As noted above, the SEC also maintains an Internet
site that contains reports, proxy and information statements, and other
information regarding issuers such as us that file electronically with the SEC.

Item 1A.
Risk
Factors

The
following are certain risk factors that could affect our business, financial
position and results of operations. These risk factors should be considered in
connection with evaluating the forward-looking statements contained in this
Annual Report on Form 10-K because these factors could cause the actual results
and conditions to differ materially from those projected in the forward-looking
statements. Before you buy our common stock or other securities, you should
know that making such an investment involves risks, including the risks
described below. The risks that have been highlighted below are not the only
risks of our business. If any of the risks actually occur, our business,
financial condition or results of operations could be negatively affected. In
that case, the trading price of our common stock or other securities could
decline, and you may lose all or part of your investment. Certain risk factors
that could cause actual results to differ materially from our forward-looking
statements include the following:

Risks
Related to Our Business

We derive a significant portion of our revenues from
the life science sector, primarily from biotechnology companies. Adverse
developments or a decline in investor interest in this sector could harm our
business.

In
2007, 2006 and 2005, 70.0%, 60.4% and 82.4% respectively, of our revenues were
derived from the life science sector. Although we expect this percentage to
decrease as our business grows and we execute our growth strategy, we
anticipate that the life science sector (primarily biotechnology companies)
will continue to account for the largest portion of our revenues in the
foreseeable future. The life science sector is known for its volatility due to
a number of factors including the following:

9

---



| |   |                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------
| |  | many companies in this sector rely on a single
 product or class of products;                         
| |   |                                                                                                       
| |  | the sector is highly regulated;                                                                       
| |   |                                                                                                       
| |  | a companys success and viability depends on the
 results of clinical trials, which are unpredictable;
| |   |                                                                                                       
| |  | technological developments;                                                                           
| |   |                                                                                                       
| |  | disposition of patent applications;                                                                   
| |   |                                                                                                       
| |  | international respect of patents;                                                                     
| |   |                                                                                                       
| |  | product recalls;                                                                                      
| |   |                                                                                                       
| |  | general economic conditions and political
 developments;                                              
| |   |                                                                                                       
| |  | global competition; and                                                                               
| |   |                                                                                                       
| |  | availability of insurance coverage.                                                                   

Unless we expand into new segments of the economy, our
revenue and net profits will continue to be subject to the volatility of the
life science sector, which could have a detrimental impact on the price of our
securities.

We expect our growth rates to decline and anticipate
downward pressure on our operating margins in the future.

In
2007 and 2006 our total revenues were $71.4 million and $61.3 million,
respectively, an increase of 16.5%. Similarly, in 2007 and 2006 our net income
was $4.8 million and $16.5 million, respectively. As our business grows and
matures, it is unlikely that our growth rate can be sustained at those levels,
if at all. We expect that in the future our revenue growth rate will decline
and anticipate that there will also be downward pressure on our operating
margins. We believe this decline and downward pressure could be the inevitable
result of a number of factors, including the following:

| |   |                                                                             
| | - | ----------------------------------------------------------------------------
| |  | expenses increasing at a greater rate than revenues;                        
| |   |                                                                             
| |  | increasing competition in those segments of the
 market in which we compete;
| |   |                                                                             
| |  | additional costs related to being a public reporting
 company;              
| |   |                                                                             
| |  | our inability to execute our growth strategy; and                           
| |   |                                                                             
| |  | our lack of liquidity and access to capital.                                

If we are unable to manage our future growth successfully,
we may not be able to sustain profitability. Continued growth may place
significant demands on our operational, administrative and financial resources.

Our
rapid growth has caused, and if it continues, will continue to cause,
significant demands on our operational, administrative and financial infrastructure
and increase our expenses. If we do not effectively manage our growth, the
quality of our services could suffer, which would adversely affect our
operating results and our reputation. To effectively manage future growth, we
will have to hire, train and manage a larger work force and improve our
financial and management controls and our reporting systems and procedures.
These systems enhancements and improvements will require significant capital
expenditures and allocation of valuable management resources. If the
improvements are not implemented successfully, our ability to manage our growth
will be impaired and we may incur significant additional expenditures to
address these issues, further impairing our financial condition and
profitability. We cannot assure you that we will be able to manage our growth
effectively and any failure to do so could adversely affect our ability to
generate revenues and control expenses.

10

---



We depend on the services of Mr. Vasinkevich, Mr. Borer, Mr.
Chambers and Mr. Rubin, and the loss of their services could have a material
adverse effect on us.

We
depend on the efforts and reputations of Michael Vasinkevich, our Vice
Chairman, John J. Borer III and John W. Chambers, Co-Heads of Investment
Banking, and Edward Rubin, our President. Their reputations and relationships
with clients and potential clients are critical elements in expanding our
businesses, and we believe our historical and future performance is strongly
correlated to their involvement to date and their continued involvement in our
operations. We entered into employment agreements with each of Messrs.
Vasinkevich, Rubin and Borer, which initially expire on February 28, 2010. Each
employment agreement then renews automatically for an unlimited number of
one-year periods until either party gives a 90-day non-renewal notice. If the
executives employment terminates for any reason, he is subject to a covenant
that prohibits him from competing with us for a period of one year from the
date of termination. We cannot assure you that one or more of Messrs.
Vasinkevich, Borer and Rubin will not resign, join a competitor or form a
competing company or that the non-competition provisions in their employment
agreements are enforceable. The loss or reduction of the services of any of
Messrs. Vasinkevich, Borer, Rubin or Chambers, due to death, disability,
termination of employment or regulatory restriction, could have a material
adverse effect on our operations.

Our client base and the number of products we offer are
limited. Our rate of growth will be impaired unless we expand our client base
and increase our investment banking revenues.

We
derive most of our revenues from investment banking engagements, including
placement agent and underwriting fees and strategic advisory fees, which have
the highest profit margins of any of our operating units. For the years 2007,
2006 and 2005, investment banking transactions accounted for 80.3%, 70.3% and
61.1%, respectively, of our total revenues. In addition, most of our investment
banking revenue derives from publicly-traded companies in the life science
sector. From January 1, 2003 through December 31, 2007, we acted as sole or
lead manager in connection with 143 financing transactions, of which 106 were
or are on behalf of companies in the life science sector. Most of our
investment banking clients are public companies and many of them have little or
no revenue. From January 1, 2003 through December 31, 2007, our corporate
finance transactions ranged from $1.3 million to $163.0 million.

Although
our growth strategy contemplates that we will develop new sources of revenue
and expand our sales and trading, strategic advisory, asset management and
merchant banking capabilities, our future growth still largely depends on our
ability to generate significant placement agent and underwriting fees. To do
so, we must: (i) expand into new sectors; (ii) increase the volume of corporate
finance transactions in which we act as sole or lead manager; and (iii) actively
solicit engagements for larger transactions. Significant factors affecting this
strategy include our relatively small size, our lack of familiarity with, and
visibility in, sectors other than life science and competition from larger
investment banks. We cannot assure you that we will be able to compete
effectively for new investment banking engagements. If we are unable to
increase our investment banking revenue, our rate of growth will be adversely
affected, which may cause the price of our common stock to decline.

Our future success depends on our ability to expand our
investment banking services into sectors of the economy other than life
science.

For the
years ended December 31, 2007, 2006 and 2005, revenues from non-life science
companies were 30.0%, 39.6% and 17.6%, respectively, of our total revenues.
Since we do not have any particular expertise in sectors other than life
science, we rely, in part, on our relationships with institutional investors
and private equity funds to introduce us to companies that need capital and on
our own ability to identify opportunities to which we can apply our corporate
finance know-how. We cannot assure you that we will be able to continue to
receive referrals from institutional investor sources. We may hire teams of
investment bankers and other professionals with expertise in a particular
sector, which would, in the short-term, increase our operating costs. If these
costs are not offset with increases in revenues, our profitability will be
adversely affected, which may cause the price of our common stock to decline.

11

---



PIPE transactions
have been subject to intense regulatory scrutiny over the last few years. To
the extent the investor interest is reduced as a result, our business will be
adversely affected.

A
significant factor in our growth to date has been our leading position as
placement agent in PIPE transactions. These transactions usually can be
accomplished in less time and at less cost than registered public offerings.
Various regulatory and governmental agencies, including the SEC, have been
reviewing PIPE transactions. Periodically, we receive requests for information
from the SEC and other regulatory and governmental agencies regarding PIPEs in
general or regarding specific transactions. In most cases, these communications
include a request for copies of transaction documents. We always comply with
these requests. If the SEC or any other regulatory agency promulgates
regulations that make it more difficult or expensive to consummate PIPE
transactions, investors and issuers may prefer other financing strategies, such
as registered public offerings. Since underwriting registered public offerings
has never been a significant source of revenue for us, any decline in the
number of PIPE transactions could have a material adverse impact on our
business, operations and financial condition, which may cause the price of our
common stock to decline.

Our revenue and
profits are highly volatile, which may make it difficult for us to achieve
steady earnings growth on a quarterly basis and may cause the price of our common
stock to decline. In addition, the investment banking sector can be highly
volatile, which could adversely impact our revenues and profits.

We
have experienced, and expect to experience in the future, significant
variations from period-to-period in our revenues and results of operations.
These variations may be attributed in part to the fact that our investment
banking revenues, which represent the largest portion of our revenues, are
typically earned when the financing or merger or acquisition transaction is
consummated, the timing of which is uncertain and largely beyond our control.
In most cases, we receive little or no payment for investment banking
engagements that do not result in a successfully completed transaction. As a
result, our business depends a great deal on market conditions as well as the
decisions and actions of our clients and interested third parties. For example,
a client could delay or terminate financing transactions because of a failure
to agree upon final terms with the counterparty, failure to obtain necessary
regulatory consents or board or stockholder approvals, adverse market
conditions or because its business is experiencing unexpected operating or
financial problems. In addition, many companies seeking a financing
simultaneously explore a merger or sale option. Our investment banking revenues
would be adversely affected if companies for which we are acting as placement
agent or underwriter were sold and we were not also engaged as a strategic
advisor. If a transaction fails to close, we will earn little or no revenue
despite the fact that we may have devoted considerable resources to, and
incurred significant out-of-pocket expenses in connection with, the
transaction. This risk may be intensified by our focus on companies in the
biotechnology sector, which is extremely volatile. As a result, our financial
results will likely fluctuate from quarter to quarter based on the timing when
fees are earned, which could, in turn, lead to increased volatility in the
price of our common stock.

Market
conditions and valuations for companies in the life science sector, as well as
general market conditions, can materially affect our financial performance. The
nature of our revenue generation, including the size of transactions, the
timing of transaction closings and the sectors in which those transactions
occur, make our future performance difficult to predict and potentially highly
variable. Revenues for many of the services we provide are earned only upon the
successful completion of a transaction. Accordingly, revenues and net income in
any period may not be indicative of full-year results or the results of any
other period and may vary significantly from year-to-year and
quarter-to-quarter depending on whether and when transactions are completed and
the number, size and type of transactions completed. In particular, recent
volatility in the capital markets may lead to disruptions that delay or
eliminate revenue opportunities.

Our corporate
finance and strategic advisory engagements are singular in nature and do not
generally provide for subsequent engagements.

Our
investment banking engagements, whether for a financing, a merger or an
acquisition transaction, are usually transaction specific as opposed to long-term
engagements. As such, we must continually seek new engagements even from
companies that have engaged us in the past. For this reason, we believe it is
important to nurture strong relationships with our clients. Although we have
been successful in securing repeat engagements from clients in the past, our
ability to do so on a regular basis is by no means assured. As a result, high
activity levels in any period are not necessarily indicative of continued high
levels of activity in any subsequent period. If we

12

---



are unable to
generate a substantial number of new engagements that generate fees from new or
existing clients, our business, results of operations and financial condition
could be adversely affected.

We may invest our
own principal capital in equities that have limited liquidity and that expose
us to a significant risk of capital loss.

We
use a portion of our own capital in a variety of principal investment
activities, including purchasing shell companies to be used in connection with
future financing transactions and purchasing securities offered in financing
transactions for which we are acting as placement agent. We also hold a
portfolio of equity securities, including stock and warrants that we received
as part of our compensation in connection with acting as a placement agent.
Principal investing involves numerous risks, including illiquidity, loss of
invested capital and revaluation.

As
part of our growth strategy, we intend to expand our merchant banking operating
unit, which may involve purchasing securities in venture capital and other
high-risk financings of early-stage, pre-public, mezzanine or turn-around
companies. These securities are likely to be restricted as to resale and may,
in any event, be highly illiquid. For example, in the case of investments in
marketable securities, principal investments could be significant relative to
the overall capitalization of the company in which we invest. Resale of a
significant amount of these securities might adversely affect their market
and/or sales price. Moreover, the companies in which we invest may rely on new
or developing technologies or novel business models or concentrate on markets
which have not yet developed and which may never develop sufficiently to
support successful operations. Even if we make an appropriate investment
decision based on the intrinsic value of an enterprise, we cannot assure you
that general market conditions will not cause the market value of our
investments to decline. For example, an increase in interest rates, currency
fluctuations, a general decline in the stock markets, or other market
conditions adverse to companies of the type in which we may invest could result
in a decline in the value of our investments or a total loss of our investment.
This could materially and adversely impact our financial results and the price
of our common stock.

We
may also commit our own capital to facilitate client sales and trading
activities. The number and size of these transactions may adversely affect our
results of operations. To the extent that we have long positions in any of
those markets, a downturn in the value of those assets or in those markets
could result in losses. Conversely, to the extent that we have short positions
in any of those markets an upturn in those markets could expose us to
potentially large losses as we attempt to cover our short positions by
acquiring assets in a rising market. These long and short positions and the
movement of the market relative to these positions could further contribute to
the fluctuations in our revenues and earnings, which, in turn, could contribute
to volatility in the price of our common stock.

We face strong
competition from other investment banks that serve the biotechnology sector and
that specialize in PIPE and RD financing transactions. If we fail to address
the challenges posed by this competition, we could lose our leading position in
these areas, causing our operating results to suffer.

The
investment banking industry is intensely competitive, and we expect it to
remain so for the foreseeable future. This is true in the case of the
biotechnology sector as well as in connection with PIPE and RD financing
transactions, in which we specialize. We consider our principal competitors to be
Banc of America Securities, LLC, C. E. Unterberg, Towbin, Canaccord Adams,
Inc., CIBC World Markets, Cowen and Company, LLC, Deutsche Bank Securities,
Inc., Jefferies & Company, Inc., JMP Securities, Ladenburg Thalmann &
Co., Lazard Ltd., Leerink Swann & Co., Lehman Brothers, Inc., Merriman
Curhan Ford & Company, Oppenheimer & Co., Inc., Piper Jaffray &
Co., RBC Capital Markets, Inc., Roth Capital Partners, LLC, ThinkEquity
Partners, LLC and Thomas Weisel Partners, LLC. In addition, as we expand our
business into new sectors and new business lines, we will face competition from
other firms.

We
compete on the basis of a number of factors, including the scope and quality of
services, price, market focus and industry knowledge, client relationships and
reputation. Larger firms provide a broader range of investment banking services
to their clients than we do.

We
have experienced intense price competition in our various businesses. Pricing
and other competitive pressures in investment banking, including the trends
toward multiple book runners, co- managers and multiple financial advisors
handling transactions, could adversely affect our revenues, even as the size
and number of our investment banking transactions may increase. If we do not address
these competitive factors successfully, we may not be able to execute our
growth strategy or even maintain our existing market share. In either case, our
operating results could suffer as could the price of our common stock.

13

---



As we grow, we will
likely face competition from much larger investment banking firms. In order to
compete with them, we may have to increase our operating expenses significantly
and/or make larger commitments of capital in our trading and underwriting
business. This increases the potential for capital loss, which could adversely
impact our operating results.

We
are a relatively small investment bank. Primarily because of the types of
transactions in which we specialize and the relatively small size of those
transactions, except in rare circumstances, we have avoided competing with
larger investment banks. However, we expect this to change as we pursue
investment banking opportunities with larger companies and engagements for
larger transactions. Larger investment banks not only offer a broader range of
products and services than we do, they also have significantly greater
financial and marketing resources than we do, greater name recognition, more
senior professionals to serve their clients needs, greater global reach and
may have more established relationships with clients than we have. Thus, they
are better able to respond to changes in the investment banking industry,
compete for skilled professionals, finance acquisitions, fund internal growth
and compete for market share. For example, many of our larger competitors have
the ability to support investment banking with commercial banking, insurance
and other financial services, which has resulted, and could further result, in
pricing pressure in our businesses.

In
addition, financial services firms have begun to make larger and more frequent
commitments of capital in many of their activities. In order to win business,
they are increasingly committing to purchase large blocks of stock from
publicly traded issuers or significant stockholders, instead of the more
traditional marketed underwriting process in which marketing is typically
completed before an investment bank commits to purchase securities for resale.
They are willing to provide debt financing out of internal funds, often giving
them a significant competitive advantage. Because we do not have the resources
to match these investment banking firms, we may be unable to compete as
effectively for larger clients and larger transactions. In that case, we may
not be able to execute that part of our growth strategy, which could have an
adverse impact on our operations and financial condition.

Our ability to
retain our senior professionals and recruit additional professionals is
critical to our growth strategy and our failure to do so may adversely affect
our reputation, business, results of operations and financial condition.

Our
people are our most valuable resource. Our future success depends to a
substantial degree on our ability to retain and recruit qualified personnel,
particularly senior managing directors. We anticipate that it will be necessary
for us to add financial professionals as we pursue our growth strategy.
However, we may not be successful in our efforts to recruit and retain the required
personnel as the market for qualified financial professionals is extremely
competitive. We cannot assure you that our compensation arrangements and
non-competition and non-solicitation agreements with our key employees are
broad or effective enough to deter or prevent employees from resigning, joining
or forming competitors or soliciting our clients. Further, we cannot assure you
that we could successfully enforce our rights under those agreements.

Our
ability to obtain and successfully execute the transactions that generate a
significant portion of our revenues depends upon the reputation, judgment,
business generation capabilities and project execution skills of our senior
professionals from investment banking, sales and trading and research. The
reputations and relationships of our senior professionals with our clients are
a critical element in obtaining and executing client engagements. Accordingly,
retaining these particular employees is critical to our future success and
growth. Turnover in the investment banking industry is high and we encounter
intense competition for qualified employees from other companies in the
investment banking industry as well as from businesses outside the investment
banking industry, such as hedge funds and private equity funds. We have
experienced departures of investment banking and other professionals in the
past and losses of key employees may occur in the future. As a result of such
departures, we may not be able to retain valuable relationships and some of our
clients could choose to use the services of a competitor instead of our
services. If we are unable to retain our senior professionals and/or recruit
additional professionals, our reputation, business, results of operations and
financial condition could be adversely affected.

14

---



Our transition to a
corporate structure may adversely affect our ability to recruit, retain and
motivate our senior managing directors and other key employees, which in turn
could adversely affect our ability to compete effectively and to grow our
business.

In
connection with our transition to a corporate structure, our senior executives
and managing directors may experience significant reductions in their cash
compensation or even their overall compensation. We intend to use equity,
equity-based incentives and other employee benefits rather than pure cash
compensation to motivate and retain our key employees, including our senior
executives and managing directors. Our compensation mechanisms as a public
company may not be effective, especially if the market price of our common
stock declines. In addition, beginning with the current fiscal year, we have
agreed to target our total compensation and benefits expense, excluding
insurance premiums paid in respect of key-man life insurance policies for our
benefit and equity-based compensation attributable to awards granted prior to
September 30, 2007, to approximately 55% of revenues each year. Although we may
increase this percentage for years subsequent to 2008, this agreement could
adversely impact the overall compensation our key employees, including our
senior executive officers and managing directors, may receive. Our senior
executives and managing directors may receive less compensation under this
formula than they otherwise would have received before it was adopted and may
receive less compensation than they otherwise would receive at other firms.
Such a reduction in compensation (or the belief that a reduction may occur)
could make it more difficult to retain our key employees, including our senior
executives and managing directors. In addition, current or potential managing
directors and other employees may be more attracted to the benefits of working
at a private partnership and the prospects of becoming a partner at such a
firm, or at one of our larger competitors.

Limitations on our
access to capital could impair our ability to expand our underwriting
businesses.

Liquidity,
or ready access to funds, is essential to financial services firms, including
ours. The Broker-Dealer is subject to the net capital requirements of the SEC,
FINRA and various self-regulatory organizations of which it is a member. These
requirements typically specify the minimum level of net capital a broker-dealer
must maintain and also mandate that a significant part of its assets be kept in
relatively liquid form. Any failure to comply with these net capital
requirements could impair our ability to expand our underwriting business.
Furthermore, there are laws that authorize regulatory bodies to block or reduce
the Broker-Dealers ability to distribute funds to us. As a result, regulatory
actions could impede our access to funds that we need to make payments on
obligations or dividend payments. In addition, because we hold equity interests
in our subsidiaries, our rights as an equity holder to the assets of these
subsidiaries may not materialize, if at all, until the claims of the creditors
of these subsidiaries are satisfied.

Our risk management
policies and procedures may leave us exposed to unidentified or unanticipated
risks.

Our
risk management strategies and techniques may not be fully effective in
mitigating our risk exposure in all market environments or against all types of
risk. We are exposed to the risk that third parties that owe us money,
securities or other assets will not perform their obligations. These parties
may default on their obligations to us due to bankruptcy, lack of liquidity,
operational failure, breach of contract or other reasons. We are also subject to
the risk that our rights against third parties may not be enforceable in all
circumstances, and, as a result, default risks may arise from events or
circumstances that are difficult to detect, foresee or reasonably guard
against. In addition, concerns about, or a default by, one institution could
lead to significant liquidity problems, losses or defaults by other
institutions, which in turn could adversely affect us. If any of the variety of
processes and strategies we utilize to manage our exposure to various types of
risk are not effective, we may incur losses.

Our operations and
infrastructure and those of the service providers upon which we rely may
malfunction or fail.

We
outsource our technology infrastructure, including data centers, disaster
recovery systems, and wide area networks, as well as some trading applications.
We depend on our technology providers to manage and monitor those functions. A
disruption of any of the outsourced services would be out of our control and
could negatively impact our business. We have experienced disruptions on
occasion, none of which has been material to our operations or results.
However, we cannot guarantee that future disruptions with these providers will
not occur or that their impact would not be material.

15

---



We
also face the risk of operational failure or termination of relations with any
of the clearing agents, exchanges, clearing houses or other financial
intermediaries we use to facilitate our securities transactions. Any such
failure or termination could adversely affect our ability to effect
transactions and to manage our exposure to risk.

In
addition, our ability to conduct business may be adversely impacted by a
disruption in the infrastructure, including electrical, communications,
transportation and other services, that support our businesses and the area in
which we are located. This may affect, among other things, our financial,
accounting or other data processing systems. Nearly all of our employees work
in close proximity to each other. Although we have a formal disaster recovery
plan in place, if a disruption occurs and our employees are unable to
communicate with or travel to other locations, our ability to service and
interact with our clients may suffer, and we may not be able to implement
contingency plans that depend on communication or travel.

Our
operations also rely on the secure processing, storage and transmission of
confidential and other information in our computer systems and networks.
Although we take protective measures and endeavor to modify them as
circumstances warrant, our computer systems, software and networks may be
vulnerable to unauthorized access, computer viruses or other malicious code and
other events that could have an adverse impact on their integrity and/or
viability. If one or more of such events occur, this could jeopardize our or
our clients or counterparties confidential and other information processed
and stored in, and transmitted through, our computer systems and networks, or
otherwise cause interruptions or malfunctions in our, our clients, our
counterparties or third parties operations. We may be required to expend
significant additional resources to modify our protective measures, to
investigate and remediate vulnerabilities or other exposures or to make
required notifications, and we may be subject to litigation and financial
losses that are either not insured or not fully covered through any insurance
that we maintain.

Strategic
investments or acquisitions and joint ventures, or our entry into new business
areas, may result in additional risks and uncertainties in our business.

Our
growth strategy contemplates strategic investments, acquisitions and joint
ventures, which involve numerous risks and uncertainties, including the
following:

| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | problems
 with the effective integration of operations and systems;                                    
| |   |                                                                                                        
| |  | the
 inability to maintain key pre-acquisition business relationships and
 integrate new relationships;
| |   |                                                                                                        
| |  | increased
 operating costs;                                                                            
| |   |                                                                                                        
| |  | conflicts or
 disagreements among principals;                                                          
| |   |                                                                                                        
| |  | risk of
 misconduct by employees not subject to our control;                                           
| |   |                                                                                                        
| |  | difficulties
 in realizing projected efficiencies, synergies and cost savings; and                     
| |   |                                                                                                        
| |  | exposure to
 new or unknown liabilities.                                                               

Any
future growth of our business, such as the further expansion of our principal
investment activities, may require significant resources and/or result in
significant unanticipated losses, costs or liabilities. In addition,
expansions, acquisitions or joint ventures may require significant managerial
attention, which may be diverted from our other operations. These capital,
equity and managerial commitments may impair the operation of our businesses.
In addition, future acquisitions or joint ventures may involve the issuance of
additional shares of our common stock, which may dilute the ownership interest
of our existing stockholders.

The demands of
running a public company could result in additional costs and require our
senior management to devote more time to regulatory and other requirements.

As
a public reporting company, we expect to incur an additional $1.0 million to
$2.0 million in operating costs annually. These additional costs include the
cost to comply with the significant regulatory and reporting requirements under
the Exchange Act and other Federal and state securities laws, listing and
corporate governance requirements of the exchange on which our common stock is
listed and the compliance obligations of S-Ox. In

16

---



addition, we
intend to hire additional financial reporting, internal control and compliance
staff in order to sustain appropriate internal controls and reporting
procedures. Our historical consolidated financial information does not reflect
the added costs that we expect to incur as a public company or the resulting
changes that will have occurred in our capital structure and operations.

Under
Section 404 of S-Ox, we are required to annually furnish a report assessing our
internal controls over financial reporting. An inability to complete and
document this assessment in subsequent years could cause investors to lose
confidence in the accuracy or completeness of our financial reports, which
could adversely impact the price of our stock. Additionally, ineffective
internal controls over financial reporting could expose us to increased risk of
fraud or misuse of corporate assets and subject us to delisting by any exchange
on which our securities are listed.

In
addition, our senior managers do not have experience as officers of a
publicly-traded company. Since inception, our senior management has been
actively involved in the revenue generating activities of our operations. As
the senior executives of a public reporting company, they will now be required
to devote more of their time to compliance issues and to develop and implement
the internal controls and reporting procedures required by S-Ox, which means
they will have less time to devote to business and operational matters and to
developing new business. If our senior management is required to devote more
time to the additional requirements of managing a public company, and we are
unable to successfully transition some or all of the revenue generating
responsibilities of our senior management to other suitable professionals, our
reputation, business, results of operations and financial condition may be
harmed. Also, if we are unable to comply with S-Oxs internal controls
requirements, we may not be able to obtain the independent accountant
certifications that S-Ox requires publicly-traded companies to obtain.

Evaluating our
prospects in light of our limited operating history and fluctuations in our
operating results is difficult.

We
have a limited operating history upon which you can evaluate our business and
prospects. Also, because our business is relatively young and is still
evolving, our historical operating results may not be useful in predicting our
future operating results. As a relatively young enterprise, we face numerous
risks and uncertainties, including those relating to our ability to attract and
retain clients on a cost-effective basis, expand and enhance our service and
product offerings, raise additional capital and respond to competitive market
conditions. We may not be able to address these risks adequately, and our
failure to do so may harm our business and the value of your investment in our
common stock.

In
addition, our operating results may fluctuate because of a number of factors,
many of which are outside our control. For this reason, comparing our results
on a period-to-period basis may not be meaningful and you should not rely on
our past results as an indication of future performance. Our quarterly and
annual expenses as a percentage of revenues may be significantly different from
our historical or projected rates. Our operating results in future quarters may
fall below expectations. Any of these results could cause the price of our
common stock to decline. Our short operating history and rapid growth do not accurately
reflect the cyclical nature of the investment banking business. As our growth
slows, we expect this cyclicality may become more apparent and may lead to
further fluctuations in our performance and in the price of our common stock.

Our historical financial
information may not permit you to predict our costs of operations.

Our
historical consolidated financial information does not reflect the added costs
that we expect to incur as a public company or the resulting changes that have
occurred in our capital structure and operations as a result of the Exchange.
For example, because we historically operated through partnerships and limited
liability companies, our profits were only taxed at the owner level. Thus, our
historical financial information may not be indicative of our actual experience
as a public corporation.

We may be required
to make substantial payments under certain indemnification agreements.

In
connection with our conversion to corporate form, we entered into agreements
that provide for the indemnification of our former members against certain tax
liabilities relating to periods before the Exchange Date. We may be required to
make substantial payments under these indemnification agreements, which could
adversely affect our financial condition.

17

---



Risks Related to Our Industry

Difficult market
conditions can adversely affect our business in many ways, which could
materially reduce our revenue or income.

Our
business is materially affected by conditions in the global financial markets
and economic conditions throughout the world. The future market and economic
climate may deteriorate because of many factors beyond our control, including
rising interest rates, the rate of inflation, currency exchange rates, changes
in the regulatory environment, wars, acts of terrorism or political
uncertainty. Difficult market and economic conditions, the level and volatility
of interest rates, investor sentiment and political events have in the past
adversely affected and may in the future adversely affect our business and
profitability in many ways. For example, our revenues are directly related to
the volume and value of investment banking transactions in which we are
involved. During periods of unfavorable market or economic conditions, the
volume and size of these transactions may decrease, thereby reducing the demand
for our services and increasing price competition among financial services
companies seeking those engagements. Our results of operations would be
adversely affected by any reduction in the volume or size of corporate finance
transactions. Similarly, weakness in equity markets and diminished trading
volume of securities could adversely impact our sales and trading business.
Finally, a general decline in the value of securities would adversely impact
our investment portfolio. Our profitability may also be adversely affected by
our fixed costs and the possibility that we would be unable to scale back other
costs within a time frame sufficient to match any decreases in revenue relating
to changes in market and economic conditions.

Significantly
expanded corporate governance and public disclosure requirements may result in
fewer public offerings and discourage companies from engaging in capital market
transactions, which may reduce the number of investment banking opportunities
available for us to pursue.

Highly-publicized
financial scandals in recent years have led to investor concerns over the
integrity of the U.S. financial markets, and have prompted the U.S. Congress,
the SEC, FINRA, the NYSE and NASDAQ to significantly expand corporate
governance and public disclosure requirements. To the extent that private
companies, in order to avoid becoming subject to these new requirements, decide
to forego public offerings or elect to be listed on foreign markets, our
underwriting business may be adversely affected. In addition, provisions of
S-Ox and the corporate governance rules imposed by self-regulatory
organizations and stock exchanges have diverted the attention of many companies
away from capital market transactions, including securities offerings and
acquisition and disposition transactions. In particular, companies that either
are or are planning to become public companies are incurring significant
expenses in complying with the SEC reporting requirements relating to internal
controls over financial reporting, and companies that disclose material
weaknesses in such controls under the new standards may have greater difficulty
accessing the capital markets. These factors, in addition to adopted or
proposed accounting and disclosure changes, may have an adverse effect on our
business.

Financial services
firms have been subject to increased scrutiny over the last several years,
increasing the risk of financial liability and reputational harm resulting from
adverse regulatory actions.

The
financial services industry has experienced increased scrutiny from a variety
of regulators, including the SEC, the NYSE, NASDAQ, FINRA and state attorney
generals. Penalties and fines sought by regulatory authorities have increased
substantially over the last several years. This regulatory and enforcement
environment has created uncertainty with respect to a number of transactions
that had historically been entered into by financial services firms and that
were generally believed to be permissible and appropriate. We may be adversely
affected by changes in the interpretation or enforcement of existing laws and
rules by these governmental authorities and self-regulatory organizations. Each
of the regulatory bodies with jurisdiction over us has regulatory powers
dealing with many aspects of financial services, including, but not limited to,
the authority to fine us and to grant, cancel, restrict or otherwise impose
conditions on the right to carry on particular businesses. For example, a
failure to comply with the obligations imposed by the Exchange Act on
broker-dealers and the Investment Advisers Act on investment advisers,
including record-keeping, advertising and operating requirements, disclosure
obligations and prohibitions on fraudulent activities, or by the Investment
Company Act of 1940, could result in investigations, sanctions and reputational
damage. We also may be adversely affected as a result of new or revised legislation
or regulations imposed by the SEC, other U.S. or foreign governmental
regulatory authorities, FINRA or other self-regulatory

18

---



organizations
that supervise the financial markets. Substantial legal liability or
significant regulatory action against us could have adverse financial effects
on us or harm our reputation, which could harm our business prospects.

Financial
services firms are subject to numerous conflicts of interests or perceived
conflicts. The SEC and other Federal and state regulators have increased their
scrutiny of potential conflicts of interest. We have adopted, and regularly
review and update, various policies, controls and procedures to address or
limit actual or perceived conflicts. However, appropriately addressing conflicts
of interest is complex and difficult and our reputation could be damaged if we
fail, or appear to fail, to appropriately address conflicts of interest. Our
policies and procedures to address or limit actual or perceived conflicts may
also result in increased costs and additional operational personnel. Failure to
adhere to these policies and procedures may result in regulatory sanctions or
litigation against us. For example, the research operations of investment banks
have been and remain the subject of heightened regulatory scrutiny which has
led to increased restrictions on the interaction between equity research
analysts and investment banking professionals at securities firms. Twelve
securities firms in the United States have reached a global settlement since
2003 with certain Federal and state securities regulators and self-regulatory
organizations to resolve investigations into the alleged conflicts of interest
of research analysts, which resulted in rules that have imposed additional
costs and limitations on the conduct of our business.

Our exposure to
legal liability is significant, and damages and other costs that we may be
required to pay in connection with litigation and regulatory inquiries, and the
reputational harm that could result from legal action against us, could
adversely affect our businesses.

We
face significant legal risks in our businesses and, in recent years, the volume
of claims and amount of damages sought in litigation and regulatory proceedings
against financial institutions have been increasing. These risks include
potential liability under securities or other laws for materially false or
misleading statements made in connection with securities offerings and other
transactions, employment claims, potential liability for fairness opinions
and other advice we provide to participants in strategic transactions and
disputes over the terms and conditions of complex trading arrangements.

As
an investment banking firm, we depend to a large extent on our reputation for
integrity and professionalism to attract and retain clients. As a result, if a
client is not satisfied with our services, it may be more damaging to our
business than to other businesses. Moreover, our role as advisor to our clients
on important underwriting or mergers and acquisitions transactions involves
complex analysis and the exercise of professional judgment, including rendering
fairness opinions in connection with mergers and acquisitions and other
transactions. Therefore, our activities may subject us to the risk of
significant legal liabilities to our clients and aggrieved third parties,
including our clients stockholders who could bring securities class action
suits against us. Our investment banking engagements typically include broad indemnities
from our clients and provisions to limit our exposure to legal claims relating
to our services. However, there can be no assurance that these provisions will
protect us or be enforceable in all cases. As a result, we may incur
significant legal and other expenses in defending against litigation and may be
required to pay substantial damages for settlements and adverse judgments.
Substantial legal liability or significant regulatory action against us could
harm our results of operations or harm our reputation, which could adversely
affect our business and prospects.

Employee misconduct,
which is difficult to detect and deter, could harm us by impairing our ability
to attract and retain clients and subjecting us to significant legal liability
and reputational harm.

Recently,
there have been a number of highly-publicized cases involving fraud or other
misconduct by employees in the financial services industry, and there is a risk
that our employees could engage in misconduct that adversely affects our
business. For example, we often deal with confidential matters of great
significance to our clients. If our employees were to improperly use or
disclose confidential information provided by our clients, we could be subject
to regulatory sanctions and suffer serious harm to our reputation, financial
position, current client relationships and ability to attract future clients.
We are also subject to a number of obligations and standards arising from our
investment management business and our authority over the assets managed by our
investment management business. The violation of these obligations and
standards by any of our employees would adversely affect us and our clients. It
is not always possible to deter employee misconduct, and the precautions we
take to detect and prevent this activity may not be effective in all cases. If
our employees engage in misconduct, our business could be adversely affected.

19

---



Our sales and
trading business may be adversely affected by potential changes in industry
practices.

Historically,
our clients have paid us for equity research through commissions on trades.
Recently, Fidelity Investments, a large fund manager, entered into arrangements
with financial institutions of which it is a client, pursuant to which Fidelity
agreed to pay separately for trading and research services, a process known as
unbundling. As a result, the financial institutions will reduce their commission
on trades but will charge Fidelity separately for research that they provide.
It is uncertain whether unbundling arrangements will become an industry trend
and, if so, to what extent. Furthermore, if it does become the industry norm,
we cannot predict the consequences it will have on our operations in general,
or on our sales and trading and research businesses in particular.

If we were deemed an
investment company under the Investment Company Act of 1940, applicable
restrictions could make it impractical for us to continue our business as
contemplated and could have an adverse effect on our business.

We
are not an investment company under the Investment Company Act of 1940 and we
intend to conduct our operations so that we will not be deemed an investment
company. However, if we were to be deemed an investment company, restrictions
imposed by the Investment Company Act of 1940, including limitations on our
capital structure and our ability to transact with affiliates, could make it impractical
for us to continue our business as contemplated and could harm our business and
the price of our common stock.

Risks Related to Our Common Stock

Historically, there
has been a limited public market for our common stock. We cannot assure you
that an active trading market for our common stock will ever develop or be
sustained.

Through
October 15, 2007, our common stock was listed on the OTC Bulletin Board and
traded under the symbol RDRN.OB. While listed on the OTC Bulletin Board, our
common stock was thinly traded, making it difficult to maintain liquidity.
Since October 16, 2007, our common stock has been listed on the NASDAQ Global
Market and trades under the symbol RODM. Nevertheless, we cannot assure you
that an established and liquid trading market will develop or continue if it
does develop. Accordingly, investors should consider the potential lack of
liquidity and the long-term nature of an investment in our common stock prior
to investing.

If securities
analysts do not publish research or reports about our business or if they
downgrade us or our sector, the price of our common stock could decline.

The
trading market for our common stock will depend in part on research and reports
that industry or financial analysts publish about us or our business. We do not
control these analysts. Furthermore, if one or more of the analysts who cover
us downgrades us or the industry in which we operate or the stock of any of our
competitors, the price of our common stock will probably decline. If one or
more of these analysts ceases coverage altogether, we could lose visibility,
which could also lead to a decline in the price of our common stock.

The market price and
trading volume of our common stock may be volatile.

The
market price of our common stock could be subject to significant fluctuations
due to factors such as:

| |   |                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | actual or
 anticipated fluctuations in our financial condition or results of operations;                                                                                            
| |   |                                                                                                                                                                                     
| |  | the success
 or failure of our operating strategies and our perceived prospects and those
 of the financial services industry in general;                                           
| |   |                                                                                                                                                                                     
| |  | realization
 of any of the risks described in this section;                                                                                                                         
| |   |                                                                                                                                                                                     
| |  | failure to
 be covered by securities analysts or failure to meet the expectations of
 securities analysts;                                                                          
| |   |                                                                                                                                                                                     
| |  | a decline in
 the stock prices of peer companies; and                                                                                                                               
| |   |                                                                                                                                                                                     
| |  | a discount
 in the trading multiple of our common stock relative to that of common stock
 of certain of our peer companies due to perceived risks associated with our
 smaller size.

20

---



As
a result, shares of our common stock may trade at prices significantly below
the price you paid to acquire them. Furthermore, declines in the price of our
common stock may adversely affect our ability to raise capital or to recruit
and retain key employees, including our managing directors and other key
professional employees.

Future sales of our
common stock could cause our stock price to decline and your interest may be
diluted if we issue additional shares of common stock.

Sales
of substantial amounts of common stock by our executives, employees and other
stockholders, or the possibility of such sales, may adversely affect the price
of our common stock and impede our ability to raise capital through the
issuance of equity securities. As of March 12, 2008, there are 34,945,738
shares of common stock outstanding, of which 8,350,627 shares of common stock
are freely transferable without restriction or further registration under the
Securities Act of 1933, as amended (the Securities Act) other than 86,000
shares that are owned by affiliates. The remaining 25,399,373 shares of common
stock are available for future sale subject to timing and volume limitations
under Rule 144, upon the expiration or waiver of transfer restrictions. Of these
shares, 5,970,099 shares are covered by a selling stockholder prospectus.
However, those shares are also covered by lock-up agreements preventing their
sale or transfer prior to April 14, 2008 except in limited circumstances.

In
addition, we may issue additional shares of capital stock or rights or options
to acquire such shares in the future in order to raise capital, to consummate
an acquisition, to pay for products or services or to attract or retain key
employees. Stockholders do not have preemptive rights to any common stock
issued by us in the future. Therefore, stockholders may experience dilution of
their equity investment if we issue additional shares of common stock in the
future, including shares issuable under equity incentive plans, or if we issue
securities that are convertible into shares of our common stock.

Provisions of our
organizational documents may discourage an acquisition of us, which could
adversely impact the price of our common stock.

Our
organizational documents contain provisions that may impede the removal of
directors and may discourage a third party from making a proposal to acquire
us. The Board of Directors may have the ability to take defensive measures that
could impede or thwart a takeover such as, under certain circumstances,
adopting a poison pill or causing us to issue preferred stock that has greater
voting rights than our common stock. If a change of control or change in
management that our stockholders might otherwise consider to be favorable is
prevented or delayed, the market price of our common stock could decline.

We have no current
plan to pay dividends on our common stock and investors may lose the entire
amount of their investment.

We
have no current plans to pay dividends on our common stock. Therefore,
investors will not receive any funds absent a sale of their shares. We cannot
assure investors of a positive return on their investment when they sell their
shares nor can we assure that investors will not lose the entire amount of
their investment.

We are controlled by
a limited number of stockholders whose interests may differ from those of our
other stockholders.

Paul
Revere, LLC, our largest stockholder, owns 36.4% of our outstanding common
stock. Revere is owned one-third by our President and a trust for the benefit
of his children and two-thirds by a trust, the beneficiaries of which are the
wife and children of our Vice Chairman. In addition, our other senior executive
officers collectively own 11.7% of our common stock. As a result, our public
stockholders have limited influence over the election of directors, management,
company policies or major corporate decisions that require the consent of
stockholders owning a majority of our issued and outstanding shares of common
stock, such as mergers, consolidations and the sale of all or substantially all
of our assets. This could adversely impact the market value of our common
stock.

|                                   | 
|---------------------------------- | 
|Item 1B. Unresolved Staff Comments

None.

21

---



Item 2. Properties

Our
corporate headquarters are located in New York City on the 16th floor at 1270
Avenue of the Americas, where we lease 16,700 square feet under a lease that
expires in July 2008. We are currently seeking a new location for our corporate
headquarters.

Item 3. Legal Proceedings

We
face significant legal risks in our businesses and, in recent years, the volume
of claims and amount of damages sought in litigation and regulatory proceedings
against investment banking firms have been increasing. These risks include
potential liability under Federal securities and other laws in connection with
securities offerings and other transactions, as well as advice and opinions we
may provide concerning strategic transactions. In addition, like most investment
banking firms, we could be the subject of claims made by current and former
employees arising out of their employment or termination of employment with us.
These claims often relate to dissatisfaction with an employees bonus or
separation payment, or involve allegations that the employee was the subject of
some form of discrimination, retaliation or other unlawful employment practice.

The
following constitute our material pending legal proceedings as of the date of
this report:

On
October 6, 2006, we and our senior officers filed an action (the SDNY Action)
in the U.S. Federal District Court for the Southern District of New York
(Rodman & Renshaw, LLC, John Borer, Edward Rubin, Michael Vasinkevich, and
Wesley K. Clark v. Mathew N. Murray, U.S. District Court, Southern District of
New York, 06 CV 8210 (WHP)), alleging various claims for trademark dilution,
trademark infringement, cybersquatting, cyberpiracy, and false designation of
origin as a result of various websites allegedly created by or at the instance
of Matthew N. Murray (Murray), a former research analyst whom we terminated
on March 2, 2006 for engaging in unprofessional conduct, using, among other
things, the given names and surnames of certain of our principals and high
ranking employees. The action, among other things, sought permanent injunctive
relief restraining Murray from continuing the acts complained of, as well as
compensatory and punitive damages, each in the amount of at least $10.0
million. On October 6, 2006, we and the other plaintiffs moved for a temporary
restraining order and preliminary injunction seeking an order enjoining Murray
from continuing to maintain the offending websites and directing that the sites
be taken down and the domain names transferred to us and to the other
plaintiffs. Murray signed an order on October 10, 2006, effectively agreeing to
all of our demands, which document was so-ordered by the Court on October 11,
2006. On or about October 17, 2006, Murray filed an answer and counterclaims,
which he amended on November 14, 2006, for breach of contract, defamation, and
declaratory relief, seeking at least $1.0 million each in compensatory damages
and punitive damages in an amount to be determined at trial. Murray also
alleges that he was promised an option to purchase two percent of Rodman for
book value.

On
or about October 18, 2006, we, as claimant, filed a statement of claim with
FINRA against Murray (Rodman & Renshaw, LLC v. Mathew N. Murray, FINRA
Dispute Resolution Arbitration No. 0604643). The statement of claims at that
time asserted claims for defamation, tortious interference with business
relations, breach of fiduciary duty, conversion, breach of contract, and prima
facie tort. In that proceeding, we seek compensatory damages against Murray of
at least $10.0 million, plus punitive damages of at least $15 million, together
with certain injunctive relief. The claims relate to wrongful activities
allegedly undertaken by Murray.

On
or about November 17, 2006, the plaintiffs in the SDNY Action moved to sever
and dismiss Murrays counterclaims and Murray moved to stay and preliminarily
enjoin the FINRA proceeding or, in the alternative, to stay the SDNY Action.
The court heard oral argument on the motions on December 21, 2006, and issued
an order dated December 22, 2006, declining to stay the FINRA proceeding;
declining to sever and dismiss Murrays counterclaims; and directing that the
SDNY Action be stayed pending the full adjudication of FINRA proceeding.

On
April 9, 2007, the statement of claim in the FINRA proceeding was amended to
include the claims first set forth in the complaint in the SDNY Action and to
include the individual plaintiffs in the SDNY Action as additional claimants in
the FINRA proceeding. On May 24, 2007, Murray filed a motion to dismiss the
amended statement of claim, as well as an answer and three counterclaims. Two
of the counterclaims seek damages for breach of contract of at least $1.0
million dollars; the third counterclaim seeks damages for defamation of at
least $1.0 million dollars, plus additional, but unspecified, compensatory and
punitive damages, plus expungement of the Form U-5 that we filed in connection
with Murrays termination. Murray also seeks a declaration concerning his
rights and our conduct in connection with the allegations in his answer and
counterclaims and in connection with our

22

---



right to
adjudicate our claims in the arbitration. On August 2, 2007, claimants filed
    a reply to Murrays counterclaims, an opposition to Murrays motion
    to dismiss claimants amended statement of claim and a motion to dismiss
    two of Murrays
counterclaims (the counterclaim seeking damages for breach of contract in
connection with Murrays claim that he had been promised an option to purchase
two percent of Rodman for book value and the counterclaim
seeking damages for defamation) as well as his claims for declaratory relief.
On or about August 31, 2007, Murray filed an opposition to claimants motion
to dismiss his counterclaims and claims for declaratory relief, as well as a
reply in further support of his motion to dismiss the amended statement of claim.
On December 6, 2007, claimants filed a reply in further support of their motion
to dismiss second and third counterclaims asserted by Murray. On January 14,
2008, claimants filed a second amended statement of claim. On January 16, 2008,
Murray filed an answer and motion to dismiss the second amended statement of
claim. In December 2007 and January 2008, the Panel denied both parties
motions to dismiss. The Panel has set hearing dates (for the FINRA arbitration
proceeding) for May 68, 2008, inclusive, with additional hearing dates
to be scheduled in the future.

The
actions concerning Murray are at a preliminary stage, and although we believe
that claimants will prevail on their claims and that they have meritorious
defenses to Murrays counterclaims, we are not in a position at this stage to
predict or assess the likely outcome of these proceedings.

As
a result of allegations by Murray that we terminated him in violation of NASD
Rule 2711 (Rule 2711) and SEC Regulation AC (Reg AC) in retaliation for his
desire to downgrade an issuer that he provided research coverage on, the
Committee on Finance of the U.S. Senate (SFC) and the SEC commenced
inquiries, the AG issued a subpoena and FINRA initiated an investigation.

The
SFC, by letter dated May 25, 2006 from its former chairman, Senator Charles E.
Grassley (Grassley), requested that our Chairman make himself available for
an interview with Grassleys staff and respond to certain questions in
connection with Murrays termination. By letter of the same date, Grassley,
along with Senator Max Baucus, who was at that time the ranking member of the
SFC, wrote to Christopher Cox, then chairman of the SEC, asking the SEC to
conduct a comprehensive and thorough examination into our termination of
Murray. Both the letter to us and the letter to Cox reference possible
violations of Rule 2711 and Reg AC. We responded to the letter from Grassley
and our Chairman voluntarily appeared for an interview by Grassleys staff in
July 2006. The last written correspondence from Grassleys offices to us with
respect to this matter occurred in September 2006. Neither former chairman
Grassley nor the SFC has contacted us since that date, and the SFC has not, to
our knowledge, issued any subpoena in connection with its inquiry.

By
letter dated March 27, 2006, the SEC advised us that it was undertaking an
inquiry of us and it requested that we produce documents in connection with
that inquiry. Although the letter from the SEC does not specifically reference
either Rule 2711 or Reg AC, the documents they requested and our counsels
conversation with the SEC staff indicated that the focus of the inquiry was Mr.
Murrays allegations. We responded to the SEC inquiry and produced responsive
documents to the SEC. In addition, we produced our chief compliance officer for
an interview at the SEC.

By
letter dated April 18, 2007, the SEC advised us that its inquiry had been
terminated and that no enforcement action had been recommended.

On
or about July 7, 2006, the AG served us with a subpoena containing a number of
requests for information and documents concerning, among other things, the
termination of Murray. The subpoena does not specifically reference either Rule
2711 or Reg AC. We produced documents and information responsive to the
subpoena (including all of the documents that we also had previously provided
to the SEC). To our knowledge, the AG has not interviewed any of our employees
and we have not received any communication from the AG since the end of August
2006.

By
letter dated April 10, 2006, FINRA advised us that it was reviewing matters
related to the circumstances surrounding the termination of Mr. Murray and
requested that we produce documents in connection with that review. By letter
dated April 11, 2006, FINRA withdrew its request to avoid regulatory
duplication upon learning that the SEC was also reviewing the same events.
Thereafter, by letter dated May 1, 2007, following the SECs termination of its
inquiry and in connection with its own investigation, FINRA requested the
production of certain information and documentation. We have produced all
information and documentation responsive to the May 1, 2007 letter.
Subsequently, by letter dated July 24, 2007, FINRA requested additional
information and documentation. We produced all information and documentation
responsive to the July 24, 2007 letter. By letter dated August 6, 2007, FINRA
requested the interviews of certain employees of our Broker-Dealer. We complied

23

---



with the
request for the interviews. Subsequently, by letter dated November 9, 2007,
FINRA requested further information and documentation. We produced all
information and documentation responsive to the November 9, 2007 letter, and we
continue to cooperate fully with FINRA.

Item 4. Submission of Matters to a Vote of Security
 Holders

None.

PART II

Item 5. Market Price of Registrants Common Stock,
 Related Stockholder Matters and Issuer Purchases of Equity Securities

Through
October 15, 2007, our common stock was listed on the OTC Bulletin Board and
traded under the symbol RDRN.OB. Since October 16, 2007, our common stock has
been listed on the NASDAQ Global Market and traded under the symbol RODM. The
following table sets forth for the periods indicated the high and low bid
prices per share for our common stock, as reported on NASDAQ. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commissions,
and may not represent actual transactions.

|                  |  |           |      |     |   |      | 
|----------------- |  | --------- | ---- | --- | - | ---- | 
|                  |  | Bid Price |     
|                  |  |           |     
|                  |  | High      |      | Low |  
|                  |  |           |      |     |  
|Fiscal year 2007  |  |           |      |     |   |      | 
|First
 Quarter    |  | $         | 0.51 |     | $ | 0.51 | 
|Second
 Quarter   |  |           | 1.50 |     |   | 0.26 | 
|Third
 Quarter(1) |  |           | 9.50 |     |   | 0.35 | 
|Fourth
 Quarter   |  |           | 7.00 |     |   | 3.20 | 
|Fiscal year 2006  |  |           |      |     |   |      | 
|First
 Quarter    |  |           | 5.32 |     |   | 1.12 | 
|Second
 Quarter   |  |           | 4.20 |     |   | 2.80 | 
|Third
 Quarter(2) |  |           | 3.08 |     |   | 0.34 | 
|Fourth
 Quarter   |  |           | 1.01 |     |   | 0.51 | 




|    |                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | On July 10, 2007, the last
 trading day before the Exchange was consummated, the high and low bid prices
 were each $0.35. On July 11, 2007, the first trading day after the Exchange
 was consummated the high and low bid prices were $6.00 and $0.55,
 respectively.
|(2) | A 1-for-28 reverse-stock
 split was effected on September 18, 2006. All prices prior to the reverse
 split have been adjusted to give retroactive effect to the reverse split.                                                                                         

As
of February 29, 2008, we had approximately 321 stockholders of record.

RRCG
has never declared or paid cash dividends on its common stock. RRCG currently
intends to retain earnings to finance its ongoing operations and it does not
anticipate paying cash dividends in the foreseeable future. Future policy with
respect to payment of dividends on the common stock will be determined by the
Board of Directors based upon conditions then existing, including RRCGs
earnings and financial condition, capital requirements and other relevant
factors.

Information
concerning RRCGs equity compensation plans required by Item 201(d) of
Regulation S-K appears in Part III, Item 11 hereof and in Note 15 to RRCGs
Consolidated Financial Statements.

Unregistered Sales of Equity
Securities and Use of
Proceeds

In
February 2008, we issued an aggregate of 1,370,238 restricted shares of our
common stock to 25 of our employees as incentive compensation. The shares vest
ratably on the first, second and third anniversary of grant and are subject to
accelerated vesting and forfeiture upon certain events. The issuance of these
shares was exempt under Section 4(2) of the Securities Act and Rule 701
promulgated thereunder. The stock certificates representing these

24

---



shares were imprinted with a legend restricting transfer unless pursuant to an effective
registration statement or an available exemption under the Act.

In
September 2007, we issued 750,000 restricted shares of our common stock to
Michael Lacovara in connection with the commencement of his employment as our
chief executive officer. The issuance of these shares to Mr. Lacovara was
exempt under Section 4(2) of the Securities Act and Rule 701 promulgated
thereunder. The stock certificates representing these shares were
imprinted with a legend restricting transfer unless pursuant to an effective
registration statement or an available exemption under the Act.

On
October 16, 2007 we sold 8,000,000 shares of common stock in an underwritten
public offering pursuant to a registration statement on Form S-1, commission
file number 333-144684, declared effective by the SEC on that date. The
managing underwriter of the offering was Sandler ONeill & Partners, L.P.
and the co-managers were Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC and Paulson
Investment Company, Inc. The public offering price per share was $5.00 and,
after underwriting discounts, and other expenses of the offering, the net
proceeds to us were approximately $36.3 million. As of the date of this report,
except as set forth in the previous sentence, none of the net proceeds of the
offering have been used.

Stock Repurchase
Plan

On February
20, 2008, we announced that our Board of Directors had approved a stock repurchase
plan in which we may buy back up to one million shares. Through March 12, 2008,
we have repurchased an aggregate of 174,500 shares of our common stock at an
average price of approximately $2.20 for gross proceeds of approximately
$384,610. We may purchase additional shares of common stock under the plan.

STOCKHOLDER RETURN PERFORMANCE GRAPH

Set
forth below is a line graph comparing the yearly percentage change in the
cumulative total stockholder return on the Companys Common Stock, based
on the market price of the Companys Common Stock with the total return
of companies included within the Nasdaq Composite Stock Market Index and a peer
group of companies engaged in the investment banking business (the Peer
Industry Index) for the period commencing July 11, 2007, the Exchange Date,
and ending December 31, 2007. The members of the Peer Industry Index are Cowen
and Company, LLC, Jefferies & Company, Inc., JMP Securities, Ladenburg Thalmann
& Co., Merriman Curhan Ford & Company and Thomas Weisel Partners, LLC.
The calculation of total cumulative return assumes a $100 investment in the
Companys Common Stock, the Nasdaq Stock Market Index and the Peer Industry
Index on July 11, 2007, the first day of trading of the Companys Common
Stock after the Exchange, and the reinvestment of all dividends.

[The following
is the data to be set forth in graph form]

|                                      |  |           |        |          |   |        | 
|------------------------------------- |  | --------- | ------ | -------- | - | ------ | 
|                                      |  | 7/11/2007 |        | 12/31/07 |  
|                                      |  |           |        |          |  
|                                      |  |           |        |          |   |        | 
|Nasdaq
 Composite Stock Market Index  |  | $         | 100.00 |          | $ | 100.01 | 
|                                      |  |           |        |          |   |        | 
|Peer
 Industry Index                  |  | $         | 100.00 |          | $ | 82.12  | 
|                                      |  |           |        |          |   |        | 
|Rodman &
 Renshaw Capital Group, Inc. |  | $         | 100.00 |          | $ | 59.09  | 

Item 6. Selected Financial Data

SELECTED HISTORICAL CONSOLIDATED FINANCIAL
DATA

The
following table summarizes our selected historical consolidated financial data
for the periods and at the dates indicated. You should read this information in
conjunction with our audited consolidated financial statements and related
notes, Managements Discussion and Analysis of Financial Condition and Results
of Operations, and other financial information appearing elsewhere in this
Form 10-K. We derived our selected historical consolidated

25

---



financial data
as of December 31, 2007, 2006, 2005 and 2004 and for the years ended December
31, 2007, 2006 and 2005 and for the nine months ended December 31, 2004, from
our audited consolidated financial statements. We derived our selected
historical consolidated financial data for the years ended March 31, 2004 and
2003 from our unaudited consolidated financial statements which are not
included in this report. The results of operations for certain business that
the Company no longer owns is reported as discontinued operations.

|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|----------------------------------------------------------------------------- |  | ----------------------------------------------------- | ---------- | ------------------------------- | - | ----------------------- |  | --------- | ---------- | ----------- | - | ------ |  | - | ------ |  | - | ----- | -
|                                                                              |  | Years
 Ended
 December 31                             |            | Nine Months
 Ended
 December 31 |   | Years
 Ended
 March 31, | 
|                                                                              |  |                                                       |            |                                 |   |                         | 
|                                                                              |  | 2007                                                  |            | 2006                            |   | 2005                    |  | 2004      |            | 2004        |   | 2003   | 
|                                                                              |  | (Audited)                                             |            | (Audited)                       |   | (Audited)               |  | (Audited) |            | (Unaudited) |  
|                                                                              |  | (in thousands, except earnings per share information) |           
|Consolidated Statement of Operations Data:                                    |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Revenues:                                                                     |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Private placement, underwriting and strategic advisory
fees(1)                |  | $                                                     | 57,334     |                                 | $ | 43,081                  |  | $         | 17,887     |             | $ | 16,669 |  | $ | 32,207 |  | $ | 3,046 |  
|Gains (losses) on securities and principal transactions,
net                  |  |                                                       | 3,836      |                                 |   | 10,744                  |  |           | 7,349      |             |   | 827    |  |   | 5,580  |  |   | (75   | )
|Commissions(2)                                                                |  |                                                       | 6,913      |                                 |   | 5,161                   |  |           | 2,429      |             |   | 2,140  |  |   | 673    |  |   |      |  
|Conference fees                                                               |  |                                                       | 2,472      |                                 |   | 2,092                   |  |           | 1,488      |             |   | 1,112  |  |   |       |  |   |      |  
|Other income(3)                                                               |  |                                                       | 884        |                                 |   | 187                     |  |           | 102        |             |   | 129    |  |   | 555    |  |   | 79    |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Total Revenues                                                                |  | $                                                     | 71,439     |                                 | $ | 61,265                  |  | $         | 29,255     |             | $ | 20,877 |  | $ | 39,015 |  | $ | 3,050 |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Operating
 Expenses:                                                          |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Employee compensation and related benefits                                    |  | $                                                     | 40,436     |                                 | $ | 26,110                  |  | $         | 15,345     |             | $ | 14,448 |  | $ | 33,744 |  | $ | 2,724 |  
|Other employee benefits                                                       |  |                                                       | 498        |                                 |   | 410                     |  |           | 279        |             |   | 142    |  |   | 152    |  |   | 52    |  
|Broker-Dealer commissions                                                     |  |                                                       | 1,094      |                                 |   | 366                     |  |           |           |             |   |       |  |   |       |  |   |      |  
|Conference fees                                                               |  |                                                       | 5,903      |                                 |   | 4,748                   |  |           | 3,673      |             |   | 2,957  |  |   | 876    |  |   |      |  
|Professional fees                                                             |  |                                                       | 6,236      |                                 |   | 6,181                   |  |           | 1,492      |             |   | 1,026  |  |   | 765    |  |   | 60    |  
|Business development                                                          |  |                                                       | 3,006      |                                 |   | 1,880                   |  |           | 765        |             |   | 410    |  |   | 356    |  |   | 11    |  
|Communication and market research                                             |  |                                                       | 1,981      |                                 |   | 1,452                   |  |           | 671        |             |   | 282    |  |   | 132    |  |   | 68    |  
|Other operating expenses                                                      |  |                                                       | 4,247      |                                 |   | 3,124                   |  |           | 2,144      |             |   | 1,819  |  |   | 1,173  |  |   | 247   |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Total Operating Expenses                                                      |  | $                                                     | 63,401     |                                 | $ | 44,271                  |  | $         | 24,369     |             | $ | 20,584 |  | $ | 37,198 |  | $ | 3,152 |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Operating income (loss) from continuing operations                            |  |                                                       | 8,038      |                                 |   | 16,994                  |  |           | 4,886      |             |   | 293    |  |   | 1,817  |  |   | (102  | )
|Interest expense                                                              |  |                                                       | 3,772      |                                 |   |                        |  |           |           |             |   |       |  |   |       |  |   |      |  
|Income from continuing operations before income taxes and minority
 interests |  |                                                       | 4,266      |                                 |   | 16,994                  |  |           | 4,886      |             |   | 293    |  |   | 1,817  |  |   | (102  | )
|Income taxes expense (benefit)                                                |  |                                                       | (440       | )                               |   | 879                     |  |           | 395        |             |   | 19     |  |   | 392    |  |   |      |  
|Minority interest in loss of subsidiaries                                     |  |                                                       | 36         |                                 |   | 65                      |  |           | 18         |             |   |       |  |   |       |  |   |      |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Income from continuing operations                                             |  |                                                       | 4,742      |                                 |   | 16,180                  |  |           | 4,509      |             |   | 274    |  |   | 1,425  |  |   | (102  | )
|Income (loss) from discontinued operations                                    |  |                                                       | 17         |                                 |   | 338                     |  |           |           |             |   |       |  |   |       |  |   |      |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Net Income (Loss)                                                             |  | $                                                     | 4,759      |                                 | $ | 16,518                  |  | $         | 4,509      |             | $ | 274    |  | $ | 1,425  |  | $ | (102  | )
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Unrealized (loss) gain on investments, net of income
taxes(4)                 |  |                                                       | (141       | )                               |   | 1,002                   |  |           |           |             |   |       |  |   |       |  |   |      |  
|Reclassification adjustment for realized gains on
investments                 |  |                                                       | (1,002     | )                               |   |                        |  |           |           |             |   |       |  |   |       |  |   |      |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Comprehensive Income (Loss)                                                   |  | $                                                     | 3,616      |                                 | $ | 17,520                  |  | $         | 4,509      |             | $ | 274    |  | $ | 1,425  |  | $ | (102  | )
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Basic
 Income Per Share:                                                      |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|From Continuing Operations                                                    |  | $                                                     | 0.21       |                                 | $ | 0.89                    |  | $         | 0.25       |             |   |        |  |   |        |  |   |       |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|From Discontinued Operations                                                  |  | $                                                     | 0.00       |                                 | $ | 0.02                    |  | $         | 0.00       |             |   |        |  |   |        |  |   |       |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Diluted
 Income Per Share:                                                    |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|From Continuing Operations                                                    |  | $                                                     | 0.20       |                                 | $ | 0.88                    |  | $         | 0.25       |             |   |        |  |   |        |  |   |       |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|From Discontinued Operations                                                  |  | $                                                     | 0.00       |                                 | $ | 0.02                    |  | $         | 0.00       |             |   |        |  |   |        |  |   |       |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Weighted
 average number of shares outstanding:                               |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Basic                                                                         |  |                                                       | 23,039,216 |                                 |   | 18,159,547              |  |           | 18,159,547 |             |   |        |  |   |        |  |   |       |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  
|Diluted                                                                       |  |                                                       | 24,023,897 |                                 |   | 18,484,688              |  |           | 18,159,547 |             |   |        |  |   |        |  |   |       |  
|                                                                              |  |                                                       |            |                                 |   |                         |  |           |            |             |   |        |  |   |        |  |   |       |  

|    |                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Includes fees earned in
 connection with private placement and underwritten financing transactions and
 advisory fees earned in connection with mergers, acquisitions, divestitures
 and similar transactions.
|    |                                                                                                                                                                                                               
|(2) | Amounts paid by our investor
 clients from brokerage transactions in equity and other types of securities.                                                                                                    
|    |                                                                                                                                                                                                               
|(3) | Interest and dividend
 income.                                                                                                                                                                                
|    |                                                                                                                                                                                                               
|(4) | Unrealized gains and losses
 on publicly traded unrestricted common stock that we cannot sell in the short
 term (i.e.,
 12 months) due to low volume or illiquidity.                                         

---

26

---



Consolidated Balance Sheet Data:

|                          |  |                           |        |      |   |        |  |      |       |  |   |       | 
|------------------------- |  | ------------------------- | ------ | ---- | - | ------ |  | ---- | ----- |  | - | ----- | 
|                          |  | As of
 December 31,       |       
|                          |  |                           |       
|                          |  | 2007                      |        | 2006 |   | 2005   |  | 2004 |      
|                          |  |                           |        |      |   |        |  |      |      
|                          |  | (Audited)
 (in thousands) |       
|                          |  |                           |       
|Cash and cash equivalents |  | $                         | 54,834 |      | $ | 10,387 |  | $    | 1,946 |  | $ | 4,716 | 
|Securities owned          |  | $                         | 4,428  |      | $ | 14,156 |  | $    | 2,460 |  | $ | 1,304 | 
|Total assets              |  | $                         | 71,872 |      | $ | 38,106 |  | $    | 9,682 |  | $ | 9,709 | 
|Total liabilities         |  | $                         | 11,104 |      | $ | 16,080 |  | $    | 1,378 |  | $ | 5,567 | 
|Shareholders equity      |  | $                         | 60,768 |      | $ | 22,026 |  | $    | 8,304 |  | $ | 4,142 | 

|                                                                                               | 
|---------------------------------------------------------------------------------------------- | 
|Item 7. Managements Discussion and Analysis of
 Financial Condition and Results of Operations

The
following discussion should be read in conjunction with the consolidated
financial statements of RRCG and the notes thereto and the Selected
Consolidated Financial Data included elsewhere herein. Historical operating
results are not necessarily indicative of trends in operating results for any
future period.

Overview

We
are a full service investment bank dedicated to providing investment banking
services to companies that have significant recurring capital needs due to
their growth and development strategies. We also provide research and sales and
trading services to institutional investor clients that focus on those types of
companies. Since 2003, we have been a leading investment banking firm to the
biotechnology sector, a capital intensive market segment, as well as a leader
in the PIPE and RD transaction markets.

We
provide a broad range of investment banking services to biotechnology,
specialty pharmaceutical, medical device and other companies operating in the
life science sector. Our current business began in 2002 when we made the
strategic decision to focus on the biotechnology sector and to build an
integrated investment banking platform to service this sector. This was based,
in part, on our belief that the biotechnology sector was underserved by the
investment banking community as a result of: (i) consolidation, beginning in
the 1990s, of well-established middle market and boutique investment banks
with and into larger financial institutions; and (ii) a significant downturn in
capital market activity in the biotechnology sector beginning in 2001.

In
furtherance of our strategy, we recruited investment bankers, research
analysts, traders and institutional sales people with expertise in the
biotechnology sector from other investment banks, from academia and from
companies that operate in this sector. As a result, many members of our
biotechnology team have PhDs or other advanced medical or scientific
degrees. With this expertise, we have been able to better understand the potential
performance of the products under development by, and the regulatory
environment impacting, biotechnology companies and to evaluate general economic
and business trends affecting those companies. We believe the experience and
talent of our professionals enable us to deliver the specialized advice and
differentiated services our clients demand, which has resulted in a
significant amount of repeat business.

As
we continued to expand our capital raising efforts for biotechnology companies,
we concluded that many of the financing strategies and transaction structures
that we have developed for companies in the biotechnology sector could be
equally effective for companies operating in other sectors of the economy.
Applying our financing know-how, understanding of the financing needs of
capital intensive companies and appreciation of the concerns and goals of
institutional investors that invest in such companies, we have begun to
leverage our performance and reputation as a leading investment bank in the
biotechnology sector to expand our product-based expertise and business reach
to other sectors with similar financing needs. Over the past two years, we have
completed investment banking transactions for companies in the environmental
services, business services, technology, security, oil and gas, retail and
logistics sectors, in addition to continuing to grow our presence in the
biotechnology sector.

Our
activities as an investment banking firm constitute a single business segment,
with the following principal sources of revenue:

|  |  |                                                                                                                
|- |  | ---------------------------------------------------------------------------------------------------------------
| |  | investment banking fees,
 which are derived from corporate finance activities and strategic advisory
 services;
|  |  |                                                                                                                
| |  | realized and unrealized
 gains with respect to securities held for our own account;                            
|  |  |                                                                                                                
| |  | commissions on sales and
 trading activities;                                                                  

27

---



|  |  |                                                                          
|- |  | -------------------------------------------------------------------------
| |  | conference fees; and                                                     
|  |  |                                                                          
| |  | other miscellaneous
 sources of revenues, such as interest and dividends.

While
we have multiple sources of revenue, most of our revenues are derived from our
investment banking services and consist of private placement, underwriting and
strategic advisory fees earned upon the successful completion of financing or
other types of corporate transactions, such as mergers, acquisitions and
dispositions. We do not separately report or analyze financial data or
operating results, such as operating expenses, profit and loss or assets, for
our various operating units.

Business Environment

Market
conditions and valuations for companies in the life science sector, as well as
general market conditions, can materially affect our financial performance.
While we have experienced significant revenue growth over recent periods, the
nature of our revenue generation, including the size of transactions, the
timing of transaction closings and the sectors in which those transactions
occur, make future performance difficult to predict and potentially highly
variable. Revenues for many of the services we provide are earned only upon the
successful completion of a transaction. Accordingly, revenues and net income in
any period may not be indicative of full-year results or the results of any
other period and may vary significantly from year-to-year and
quarter-to-quarter depending on whether and when transactions are completed and
the number, size and type of transactions completed.

Historically,
the first and fourth quarters are our highest revenue-generating periods,
however, recent volatility in the capital markets has led to disruptions that
have delayed or eliminated certain revenue opportunities during the fourth
quarter of 2007.

We
incurred significant non-recurring expenses in the third quarter of 2007 that
were directly related to the Exchange. Most of these expenses were non-cash
charges. Accordingly, we do not believe that our statement of operations as
reported in accordance with GAAP accurately reflects our operating results.
Accordingly, we also use non-GAAP calculations with respect to income from
continuing operations before income tax expense, income tax expense (benefit),
net income, employee compensation and related benefit expense, compensation
ratio and basic and diluted earnings per share as an additional metric to aid
in understanding and analyzing our financial results for the year ended
December 31, 2007. These calculations eliminate the non-recurring expenses
directly related to the Exchange, stock-based compensation expense in
connection with stock options and shares of restricted stock granted prior to
the public offering and the corresponding income taxes effect. We believe that
these non-GAAP measures will allow for a better evaluation of the operating
performance of our business and facilitate meaningful comparison of our results
in the current year to those in prior and future years. Our reference to these
non-GAAP measures should not be considered as a substitute for results that are
presented in a manner consistent with GAAP. These non-GAAP measures are
provided to enhance investors overall understanding of our current financial performance.

A
limitation of utilizing non-GAAP measures for income from continuing operations
before income tax expense (benefit), income tax expense (benefit), net income,
employee compensation and related benefits expense, compensation ratio and
diluted earnings per share is that the GAAP effects of those events do in fact
reflect the underlying financial results of our business and these effects
should not be ignored in evaluating and analyzing our financial results.

In
October 2007, we determined that our asset management operation, as
constituted, was not central to our strategic development and injected
disproportionate volatility into our financial performance. Accordingly, we
decided to terminate our asset management operation in the fourth quarter of
2007. This decision did not have a material effect on our net income in the
fourth quarter.

Results of Operations

The
following table sets forth our revenues, expenses, net income and comprehensive
income for the years ended December 31, 2007, 2006 and 2005. The financial
information below, to the extent it relates to the years ended December 31,
2007, 2006 and 2005, are derived from our audited consolidated financial
statements included elsewhere in this report.

28

---



|                                                                              |  |                           |        |      |   |        |   |   |        |  
|----------------------------------------------------------------------------- |  | ------------------------- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                                              |  | Year
 Ended
 December 31, |       
|                                                                              |  |                           |       
|                                                                              |  | 2007                      |        | 2006 |   | 2005   |  
|                                                                              |  |                           |       
|                                                                              |  | (in
 thousands)           |       
|Revenues:                                                                     |  |                           |        |      |   |        |   |   |        |  
|Private placement, underwriting and strategic
 advisory fees                  |  | $                         | 57,334 |      | $ | 43,081 |   | $ | 17,887 |  
|As a percentage of total revenues                                             |  |                           | 80.3   | %    |   | 70.3   | % |   | 61.1   | %
|Gains on securities and principal transactions, net                           |  |                           | 3,836  |      |   | 10,744 |   |   | 7,349  |  
|As a percentage of total revenues                                             |  |                           | 5.4    | %    |   | 17.5   | % |   | 25.1   | %
|Commissions                                                                   |  |                           | 6,913  |      |   | 5,160  |   |   | 2,429  |  
|As a percentage of total revenues                                             |  |                           | 9.7    | %    |   | 8.4    | % |   | 8.3    | %
|Conference fees                                                               |  |                           | 2,472  |      |   | 2,093  |   |   | 1,488  |  
|As a percentage of total revenues                                             |  |                           | 3.5    | %    |   | 3.4    | % |   | 5.1    | %
|Interest and other income                                                     |  |                           | 884    |      |   | 187    |   |   | 102    |  
|As a percentage of total revenues                                             |  |                           | 1.2    | %    |   | 0.3    | % |   | 0.3    | %
|Total Revenues                                                                |  | $                         | 71,439 |      | $ | 61,265 |   | $ | 29,255 |  
|                                                                              |  |                           |        |      |   |        |   |   |        |  
|Operating Expenses:                                                           |  |                           |        |      |   |        |   |   |        |  
|Employee compensation and related benefits                                    |  | $                         | 40,436 |      | $ | 26,110 |   | $ | 15,345 |  
|As a percentage of total revenues                                             |  |                           | 56.6   | %    |   | 42.6   | % |   | 52.5   | %
|Other employee benefits                                                       |  |                           | 498    |      |   | 410    |   |   | 279    |  
|As a percentage of total revenues                                             |  |                           | 0.7    | %    |   | 0.7    | % |   | 1.0    | %
|Broker-Dealer Commissions                                                     |  |                           | 1,094  |      |   | 366    |   |   |       |  
|As a percentage of total revenues                                             |  |                           | 1.5    | %    |   | 0.6    | % |   | 0.0    | %
|Conference fees                                                               |  |                           | 5,903  |      |   | 4,748  |   |   | 3,673  |  
|As a percentage of total revenues                                             |  |                           | 8.3    | %    |   | 7.7    | % |   | 12.6   | %
|Professional fees                                                             |  |                           | 6,236  |      |   | 6,181  |   |   | 1,492  |  
|As a percentage of total revenues                                             |  |                           | 8.7    | %    |   | 10.1   | % |   | 5.1    | %
|Business development                                                          |  |                           | 3,006  |      |   | 1,880  |   |   | 765    |  
|As a percentage of total revenues                                             |  |                           | 4.2    | %    |   | 3.1    | % |   | 2.6    | %
|Communication and market research                                             |  |                           | 1,981  |      |   | 1,452  |   |   | 671    |  
|As a percentage of total revenues                                             |  |                           | 2.8    | %    |   | 2.4    | % |   | 2.3    | %
|Other operating expenses                                                      |  |                           | 4,247  |      |   | 3,124  |   |   | 2,144  |  
|As a percentage of total revenues                                             |  |                           | 5.9    | %    |   | 5.1    | % |   | 7.3    | %
|Total Operating Expenses                                                      |  | $                         | 63,401 |      | $ | 44,271 |   | $ | 24,369 |  
|As a percentage of total revenues                                             |  |                           | 88.7   | %    |   | 72.3   | % |   | 83.3   | %
|Operating
 income from continuing operations                                  |  |                           | 8,038  |      |   | 16,994 |   |   | 4,886  |  
|Interest
 Expense                                                             |  |                           | 3,772  |      |   |       |   |   |       |  
|Income from continuing operations before income taxes
 and minority interests |  | $                         | 4,266  |      | $ | 16,994 |   | $ | 4,886  |  
|As a percentage of total revenues                                             |  |                           | 6.0    | %    |   | 27.7   | % |   | 16.7   | %
|Income taxes expenses (benefit)                                               |  |                           | (440   | )    |   | 879    |   |   | 395    |  
|Minority Interest in loss of subsidiaries                                     |  |                           | 36     |      |   | 65     |   |   | 18     |  
|Income from discontinued operations                                           |  |                           | 17     |      |   | 338    |   |   |       |  
|Net income                                                                    |  | $                         | 4,759  |      | $ | 16,518 |   | $ | 4,509  |  
|As a percentage of total revenues                                             |  |                           | 6.7    | %    |   | 27.0   | % |   | 15.4   | %
|Reclassification
 adjustment for realized gain on investments                 |  |                           | (1,002 | )    |   |       |   |   |       |  
|Unrealized (loss) gain on investments, net of income
 taxes                   |  |                           | (141   | )    |   | 1,002  |   |   |       |  
|Comprehensive income                                                          |  | $                         | 3,616  |      | $ | 17,520 |   | $ | 4,509  |  
|As a percentage of total revenues                                             |  |                           | 5.1    | %    |   | 28.6   | % |   | 15.4   | %

2007 compared to 2006

Total
revenues for the year ended December 31, 2007 were $71.4 million, representing
an increase of 16.5% over total revenues of $61.3 million in the prior year.
Total operating expenses for the year ended December 31, 2007 were $63.4
million, representing an increase of $19.1 million, or 43.1% compared to total
operating expenses of $44.3 million for the year ended December 31, 2006. The
largest contributor to this increase in expenses was employee compensation and
related benefits, which increased by $14.3 million. For the year ended December
31, 2007, net income was $4.8 million compared to net income of $16.5 million
in the prior year, an $11.7 million decrease, or 70.9%. Net income for the 2007
fiscal year includes non-recurring expenses,
stock-based compensation expense in connection with stock options and shares
    of restricted stock granted prior to the public offering net of the corresponding
income taxes effect, totaling to approximately $6.0 million. The non-recurring
    expenses include $3.8 million of non-cash expenses related to the Exchange.

29

---



These expenses
include the following:

| |   |                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Interest
  expense of approximately $3.8 million reflecting interest expense and
  amortization of the debt discount and deferred financing cost;                    
| |   |                                                                                                                                                                      
| |  | Stock-based
  compensation expense of approximately $2.5 million attributable to stock
  options and shares of restricted stock granted prior to the public offering;
| |  
| |  | A write-off
  of approximately $0.4 million of goodwill attributable to Enthrust;                                                                                    
| |   |                                                                                                                                                                      
| |  | Professional
  and consulting fees of approximately $1.2 million.                                                                                                    

On
a non-GAAP basis, without taking into account the foregoing expenses, total
operating expenses for the 2007 year were $59.3 million.

The
table below reconciles our income from continuing operations before income tax
expense, net income, employee compensation and related benefit expense,
compensation ratio and diluted earnings per share in accordance with GAAP and
on a non-GAAP basis for the year ended December 31, 2007:

(Dollars
in thousands, except per share information)

Year ended December 31, 2007:

|                                                                      |  |              |            |                          |   |                  |        |   |            |  
|--------------------------------------------------------------------- |  | ------------ | ---------- | ------------------------ | - | ---------------- | ------ | - | ---------- | -
|                                                                      |  | GAAP
  Basis |            | Reconciliation 
  Amount |   | Non-GAAP
  Basis |       
|                                                                      |  |              |            |                          |   |                  |        |   |            |  
|Employee compensation and related
benefits                            |  | $            | 40,436     |                          | $ | (2,541           | )  (a) | $ | 37,895     |  
|                                                                      |  |              |            |                          |   |                  |        |   |            |  
|                                                                     
|Income from continuing operations before income
tax expense (benefit) |  |              | 4,266      |                          |   | 7,902            |        |   | 12,168     |  
|                                                                      |  |              |            |                          |   |                  |        |   |            |  
|                                                                     
|Income tax expense (benefit)                                          |  |              | (440       | )                        |   | 1,859            | (b)    |   | 1,419      |  
|                                                                      |  |              |            |                          |   |                  |        |   |            |  
|                                                                     
|Net Income                                                            |  | $            | 4,759      |                          | $ | 6,043            | (c)    |   | 10,802     |  
|                                                                      |  |              |            |                          |   |                  |        |   |            |  
|                                                                      |  |              |            |                          |   |                  |        |   |            |  
|Compensation ratio (d)                                                |  |              | 56.6       | %                        |   |                  |        |   | 53.1       | %
|                                                                      |  |              |            |                          |   |                  |        |   |            |  
|Earnings per share:                                                   |  |              |            |                          |   |                  |        |   |            |  
|Basic                                                                 |  | $            | 0.21       |                          | $ | 0.26             |        | $ | 0.47       |  
|Diluted                                                               |  | $            | 0.20       |                          | $ | 0.25             |        | $ | 0.45       |  
|                                                                      |  |              |            |                          |   |                  |        |   |            |  
|Weighted average number of common shares
outstanding:                 |  |              |            |                          |   |                  |        |   |            |  
|Basic                                                                 |  |              | 23,039,216 |                          |   |                  |        |   | 23,039,216 |  
|Diluted                                                               |  |              | 24,023,897 |                          |   |                  | (e)    |   | 24,023,897 |  

|    |                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The non-GAAP adjustment
  represents the pre-tax stock-based compensation expense attributable to stock
  options and shares of restricted stock granted prior to the public offering.                                                                   
|    |                                                                                                                                                                                                                                                          
|(b) | The non-GAAP adjustment
  with respect to income tax expense (benefit) represents the elimination of
  the tax benefit related to the stock compensation expense described in note
  (a) above and non-recurring expense in connection with the Exchange.
|    |                                                                                                                                                                                                                                                          
|(c) | The non-GAAP adjustment to
  net income reflects the after-tax effect of the elimination of the stock
  compensation expense described in note (a) above and non-recurring expense
  incurred in connection with the Exchange.                           
|    |                                                                                                                                                                                                                                                          
|(d) | The compensation ratio for
  the year-ended December 31, 2007 was calculated by dividing employee
  compensation and benefit expense by total revenues of $71,439.                                                                                       
|    |                                                                                                                                                                                                                                                          
|(e) | The diluted weighted
  average number of common shares outstanding was not adjusted to reflect the
  elimination of stock options and shares of restricted stock granted prior to
  the public offering.                                                 

Revenues

Investment
banking revenues for the year ended December 31, 2007 were $57.3 million
compared to $43.1 million for the year ended December 31, 2006, representing an
increase of $14.2 million, or 32.9%. The increase in

30

---



our investment
banking revenues was primarily attributable to larger and more profitable
financing transactions. In 2007, we were the sole or lead manager in connection
with 40 financing transactions, which generated investment banking revenues of
$35.4 million. In 2006, we were the sole or lead manager in connection with 41
financing transactions, which generated investment banking revenues of $35.9
million. We earned investment banking revenues from 68 different clients in
2007 as compared to 56 clients in 2006. In 2007, $51.5 million of investment
banking revenues constituted placement agent or underwriting fees and $5.8
million constituted strategic advisory fees as compared to $42.3 million of
investment banking revenues or underwriting fees and $0.8 million of strategic
advisory fees during the 2006 period. In 2007, 70.0% of our investment banking
revenues was derived from clients in the life science sector compared to 60.0%
in 2006.

In
2007, gains on securities and principal transaction, net were $3.8 million as
compared to $10.7 million in 2006. The realized gains during the year ended
December 31, 2006 was primarily the result of two warrant positions having been
exercised and sold for an aggregate gain of approximately $3.6 million. In the
2007 period, gains relating to the exercise and sale of warrant positions were
$2.2 million. Also, in 2007, we recorded $1.0 million of realized gains on
publicly traded unrestricted common stock, representing a reclassification of
the unrealized gains recorded as other comprehensive income in 2006.

In
March 2007, we distributed 85% of the beneficial interests in certain equity
securities, including stock and warrants, which we held in 62 companies, to our
members; we distributed a 59.5% interest to Paul Revere and a 25.5% interest to
R&R. We retained the remaining 15% interest in these securities. We then,
together with Paul Revere and R&R, contributed our interests in these
securities to RRPR in exchange for membership interests in RRPR that mirrored
our respective direct interests in these securities. As a result of the
Exchange, we own 40.5% of RRPR, 15.0% directly and 25.5% through our ownership
of R&R. As a result of this transfer of securities, principal transaction
revenues subsequent to the transfer are higher than it would have been if we
continued to hold a 100% interest in these securities since such securities
decreased in fair value after the transfer.

We
earned commissions of $6.9 million in 2007 compared to $5.2 million in 2006, an
increase of $1.7 million, or 32.7%. The increase was primarily attributable to
an increase in the volume of shares traded for our customers, which, in turn,
is attributable to a number of factors, including the overall strength of the
capital markets in the first half of 2007, an increase in the number of traders
and institutional sales personnel and increasing investor interest in our
research products.

Conference
fees and other revenues in 2007 totaled $3.4 million, compared to $2.3 million
in 2006, an increase of $1.1 million. Conference fees for the years ended
December 31, 2007 and 2006 were $2.5 million and $2.1 million, respectively,
remaining fairly constant over the two years. These fees are related to our
healthcare conferences and include fees paid by participants and presenters.
Other revenues for the years ended December 31, 2007 and 2006 consisted
primarily of interest and dividend income.

Operating Expenses

Total
operating expenses in 2007 were $63.4 million compared to $44.3 million in
2006, an increase of $19.1 million, or 43.1%. In 2007, total operating expenses
constituted 88.7% of revenues compared to 72.3% in 2006. The increase in
expenses generally reflects an expansion of our operating platform as well as
approximately $5.0 million in non-recurring expenses in connection with the
Exchange.

Employee
compensation and related benefits in 2007 was $40.4 million compared to $26.1
million in 2006, an increase of $14.3 million, or 54.8%. Employee compensation
and related benefits in 2007 constituted 56.6% of revenues compared to a 42.6%
in 2006. The overall increase in employee compensation and related benefits and
the higher ratio is due in part to approximately $0.4 million in non-recurring
stock compensation expense associated with the accelerated vesting of options
as a result of the Exchange and an overall increase in personnel and related
expenses. For the current year, we targeted employee compensation and benefits
expense at 55%.

In
2007, other operating expenses, other than employee compensation and related
benefits, were $23.0 million compared to $18.2 million in 2006, an increase of
$4.8 million, or 26.3%. The key components of this increase, which corresponded
to the expansion of our operations and related revenues, were business
development expenses, which increased by $1.1 million, conference expenses,
which increased by $1.2 million, occupancy and equipment rental expenses, which
increased by $0.3 million, communication and market research expense, which
increased by $0.5 million, insurance expense, which increased by $0.4 million,
broker-dealer commissions, which

31

---



increased by
$0.7 million, and miscellaneous expenses, including the write-off of goodwill,
which increased by $0.4 million. The overall increase relates to the increase
in revenue generating activities.

Interest expense

Interest
expense in 2007 was $3.8 million, which primarily represents the unamortized
portion of the debt discount on the Debentures and deferred financing cost that
were written off in connection with the Exchange and the accrued interest on
the Debentures from March 1, 2007, the date of issuance, through July 10, 2007,
the date of the Exchange. There was no interest expense in 2006.

Discontinued
operations

In
October 2007, the Companys management, in consultation with the Board of
Directors, determined that the Companys asset management operation, Rodman
& Renshaw Opportunity Fund (the Partnership), as constituted,
was not central to its strategic development. Accordingly, the Company terminated
its asset management operation in the fourth quarter of 2007. Effective December
1, 2007, an unaffiliated entity was appointed sole general partner of the
Partnership. The Company retained its limited partner rights and contributions
(the Investment) but will not have any significant continuing involvement
in, or cash flows from, the operations. Accordingly, the asset management operations
are reported as discontinued in 2007 and 2006.

For
the eleven months ended November 30, 2007, the asset management operations
reported net income of $16,596 from discontinued operations. Effective December
1, 2007, the Company has no significant influence over the Partnerships
operating and financial policies. Notwithstanding, the Investment is accounted
for on the equity method of accounting in accordance with Emerging Issues Task
Force Topic D-46  Accounting for Limited Partnership Investments (EITF
D-46). As of December 31, 2007, the Investment in the Partnership was
$407,048.

Net Income

Net
Income in 2007 was $4.8 million compared to $16.5 million in 2006, representing
a decrease of $11.7 million. This decrease was primarily due to the increases
in employee compensation of $14.3 million, one-time interest expense of $3.8
million, conference expense of $1.2 million, business development expense of
$1.1 million and $2.7 million in all other expenses, partially offset by
increased revenues of $10.1 million and decreased income tax expense of $1.3
million. As a percentage of revenues 2007 net income was 6.0 % in 2007 compared
to 27.7% for 2006.

2006 compared to 2005

Revenues

Revenues
in 2006 increased by $32.0 million, or 109.2%, to $61.3 million from $29.3
million in 2005. We believe this increase in revenues is based on our success
in operating in a business environment that presents many opportunities for
growth and expansion. In 2006 we added a number of senior managing directors
and other professionals, including investment bankers, sales traders and
institutional sales people, to help us identify and exploit these
opportunities. In addition, we believe that our marketing efforts, particularly
the life science conferences and some of our other investments in branding and
intellectual property, have helped us generate new business opportunities. We
believe these factors will continue to impact our growth.

Investment
banking revenues in 2006 were $43.1 million compared to $17.9 million in 2005,
representing an increase of $25.2 million, or 140.7%. In 2006, $42.2 million of
investment banking revenues constituted placement agent or underwriting fees
and $0.8 million constituted strategic advisory fees. In 2005, $17.8 million of
investment banking revenues constituted placement agent or underwriting fees
and $0.1 million constituted strategic advisory fees. In 2006, we were the sole
or lead manager in connection with 41 financing transactions, which raised an
aggregate of $921 million. In 2005, we were the sole or lead manager in
connection with 18 financing transactions, which raised an aggregate of $250
million. In 2006, our ten largest fee-paying clients constituted 55% of our
investment banking revenues and we had one client that individually constituted
16% of our investment banking revenues. In 2005, our ten largest fee-paying
clients constituted 71% of our investment banking revenues and we had one
client that individually constituted 18% of our investment banking revenues.

32

---



The
increase in investment banking revenues was attributable to both an increase in
the number of financing transactions in 2006 compared to 2005 and an increase
in the size of those transactions. In 2006, we earned investment banking
revenues from 75 different clients compared to 34 clients in 2005; 63 of the
2006 clients did not produce any fees for us in 2005. In addition, in 2006 we
successfully expanded our investment banking platform to other industry
sectors. For 2006, 60.0% of our investment banking revenues was derived from
clients in the life science sector compared to 82.0% in 2005.

Gains
on securities and principal transactions in 2006 were $10.7 million compared to
$7.3 million in 2005, an increase of $3.4 million. This increase reflects our
revenue growth, since a portion of our placement agent fee is in the form of
securities, and the increase in the value of securities held at the beginning
of the year. At December 31, 2006 and 2005, we held $14.2 million and $2.5
million, respectively, of marketable and non-marketable securities.

The
operations of the RROF were consolidated with our operations in 2006 but not in
2005, and $2.7 million in revenues was attributable to the Fund and
reclassified to discontinued operations. In addition, $6.2 million of
securities held at December 31, 2006 was held by the Fund and reclassified to
discontinued operations.

We
earned commissions of $5.2 million in 2006 compared to $2.4 million in 2005, an
increase of $2.8 million, or 116.6%. The increase is attributable to the
performance of newly hired employees, the strength of the capital markets and
higher trading volume, which is due in part to increasing investor interest in
our research products.

Conference
fees and other income in 2006 totaled $2.3 million compared to $1.6 million in
2005, an increase of $0.7 million, or 43.8%. Conference fees in 2006 were $2.1
million and other income was $0.2 million. For 2005, conference fees were $1.5
million and other income was $0.1 million. The increase in conference revenue
is attributable to the increase in the number of companies presenting at our
conferences and an increase in the fee we charge presenters.

Operating Expenses

Total
operating expenses in 2006 were $44.3 million compared to $24.4 million for
2005, an increase of $19.9 million, or 81.6%. For 2006, total expenses
constituted 72.3% of revenues compared to 83.3% for 2005. This decrease
generally reflects the leverage we have extracted from an expansion of our
operating platform as we continue to focus on growth.

Employee
compensation and related benefits in 2006 totaled $26.1 million compared to
$15.3 million in 2005, an increase of $10.8 million, or 70.6%. For 2006, the
ratio of employee compensation and related benefits, as reported, to total
revenues was 42.6% compared to 52.5% for 2005. The increase in employee
compensation and related benefits is due primarily to larger payout commitments
to senior managing directors hired in 2006 and is directly related to the 109.4%
increase in revenues from 2005 to 2006. The 2006 amount also reflects $0.4
million of non-cash employee compensation and benefits related to the grant of
options to those senior managing directors. Finally, the increase is also
attributable to an increase in the number of employees. At December 31, 2006,
we employed a total of 95 people compared to 58 at December 31, 2005.

For
2006, other operating expenses totaled $18.2 million compared to $9.0 million
for 2005, an increase of $9.2 million or 102.2%. Other operating expenses as a
percentage of revenues for 2006 was 29.6% compared to 30.7% in 2005. The
increase in other operating expenses was primarily attributable to significant
increases in professional fees and costs related to our conferences,
communications and information services, advertising and brokerage and trade
execution. With respect to professional fees, which increased to $6.2 million
from $1.5 million, $2.0 million is allocable to legal fees relating to
litigation with a former employee and the related regulatory investigations. In
addition, a portion of the increase is attributable to legal fees associated
with the increased number of transactions. Conference expenses for 2006 were
$4.7 million compared to $3.7 million in 2005. Business development expenses in
2006 were $1.9 million in 2006 compared to $0.8 million in 2005. We believe
that both our conferences and our other business development activities have
had a positive effect on our revenue growth. Communication and market research
expenses in 2006 were $1.5 million compared to $0.7 million in 2005. Occupancy
and equipment rental expenses in 2006 were $0.8 million compared to $0.4
million in 2005. Finally, depreciation expense in 2006 was $0.5 million
compared to $0.2 million in 2005.

33

---



Discontinued
operations

The
Company terminated its asset management operation in the fourth quarter of
2007. Financial results of the asset management operations were retroactively
reclassified for 2006 and are reported as discontinued operations. In 2006, the
asset management operations reported profit, net of taxes, of $338,052.

For
the year ended December 31, 2005, the asset management operations were not
consolidated.

Net Income

Net
income in 2006 was $16.5 million compared to $4.5 million in 2005, representing
an increase of $12.0 million, or 266%. This increase was due primarily to a
$32.0 million increase in revenues offset by a $19.9 million increase in
operating expenses, a $0.5 million increase in tax expense for the New York
State and City Unincorporated Business Tax (UBT). As a percentage of
revenues, 2006 net income was 27.0% compared to 15.4% for 2005.

Liquidity and Capital Resources

We
have historically satisfied our capital and liquidity requirements through cash
generated internally from operations. In addition, in March 2007, we completed
a $20 million private placement to accredited investors (the Private
Placement) and in October 2007 we completed the Offering, which generated net proceeds
of approximately $36.3 million.

At
December 31, 2007, we had liquid assets, consisting of cash and cash
equivalents and due from clearing broker, of $56.7 million and working capital
of $54.0 million.

The
timing of bonus and retention compensation payments to our employees may
significantly affect our cash position and liquidity from period-to-period.
While our employees are generally paid salaries on a semi-monthly basis during
the year, bonus payments, which make up a significant portion of total
compensation, are generally paid quarterly, semi-annually or annually.

As
a registered securities broker-dealer, we are subject to the net capital
requirements of the uniform net capital requirement set forth in Rule 15c3-1 promulgated
by the SEC pursuant to the Exchange Act. SEC regulations also provide that
equity capital may not be withdrawn or cash dividends paid if certain minimum
net capital requirements are not met. At December 31, 2007, we had excess net
capital of $9.0 million. Regulatory net capital requirements may change based
on investment and underwriting activities.

Because
of the nature of settlement transactions in our investment banking and
brokerage business, we regularly monitor our liquidity position, including our
cash and net capital positions. We believe that our current level of equity
capital, combined with funds anticipated to be provided by operating
activities, will be adequate to meet our liquidity and regulatory capital
requirements for at least the next twelve months.

In
2007, we had a net increase in cash and cash equivalents of $44.4 million.
Continuing operating activities provided cash of $7.5 million and financing
activities provided cash of $36.3 million. The primary components of cash
provided by operations were: (i) net income from continuing operations of $4.7
million; (ii) a decrease in private placement and other fees receivable of $1.5
million; (iii) stock-based compensation expense of $2.5 million; and (iv) a
decrease in investment in affiliate of $0.2 million; offset by: (i) a realized
gain on available for sale investments of $1.0 million; and (ii) an increase in
due from clearing broker of approximately of $0.8 million. Cash provided by
financing activities consisted of $36.3 million in net proceeds from the public
offering of the Companys common stock and $20.0 million of gross proceeds from
the Private Placement; offset by $19.0 million of distributions to members and
$1.0 million of deferred financing costs related to the Private Placement. Our
cash and cash equivalents were $54.8 million at December 31, 2007.

Contractual Obligations

Our
commitments and contingencies include: (i) a real property lease; (ii)
employment agreements; and (iii) equipment leases. Our principal offices are
located at 1270 Avenue of the Americas, New York, New York where we lease the
entire 16th floor. The lease expires in July 2008. We are exploring options for
leasing new office space in New York City.

34

---



The
following table sets forth information relating to our contractual obligations
as of December 31, 2007:

|                            |  |                        |     |      |   |      |  |       |         |  |   |         | 
|--------------------------- |  | ---------------------- | --- | ---- | - | ---- |  | ----- | ------- |  | - | ------- | 
|                            |  | Payment
 Due by Period |    
|                            |  |                        |    
|                            |  | After                  |     | 2009 |   | 2008 |  | Total |        
|                            |  |                        |     |      |   |      |  |       |        
|                            |  | (in
 thousands)        |    
|Operating lease obligations |  | $                      |    |      | $ | 31.8 |  | $     | 1,024.2 |  | $ | 1,056.0 | 
|Other                       |  |                        | 4.2 |      |   | 8.2  |  |       | 8.8     |  |   | 21.2    | 
|                            |  |                        |     |      |   |      |  |       |         |  |   |         | 
|Total                       |  | $                      | 4.2 |      | $ | 40.0 |  | $     | 1,033.0 |  | $ | 1,077.2 | 
|                            |  |                        |     |      |   |      |  |       |         |  |   |         | 

Off-Balance
Sheet Arrangements

An
off-balance sheet arrangement is any contractual arrangement involving an
unconsolidated entity under which a company has (a) made guarantees, (b) a
retained or a contingent interest in transferred assets, (c) any obligation
under certain derivative instruments or (d) any obligation under a material
variable interest in an unconsolidated entity that provides financing,
liquidity, market risk, or credit risk support to the Company, or engages in
leasing, hedging, or research and development services for the benefit of the
Company.

The
Company does not have any off-balance sheet financing arrangements or
unconsolidated special purpose entities.

Significant
Accounting Policies and Critical Accounting Estimates

Our
consolidated financial statements include the accounts of all of our wholly-owned
and majority-owned subsidiaries. The consolidated financial statements also
include the accounts of a limited partnership, i.e.,
the Fund, for which we are the general partner beginning January 1, 2006, in
accordance with Emerging Issues Task Force Issue No. 04-5 Determining Whether
a General Partner, or the General Partners as a Group, Controls a Limited
Partnership or Similar Entity When the Limited Partners Have Certain Rights.
In accordance with Statement of Financial Accounting Standards No. 94,
Consolidation of All Majority-owned Subsidiariesan amendment of ARB No. 51,
with related amendments of APB Opinion No. 18 and ARB No. 43, Chapter 12, all
majority-owned subsidiaries have been consolidated beginning on the date the
respective interest was acquired.

Comprehensive Income

Statement
of Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income,
establishes standards for the reporting and presentation of comprehensive
income and its components in the consolidated financial statements.

Valuation of Securities OwnedMarketable and Non-Marketable

Marketable
securities consist of: (i) publicly traded unrestricted common stocks, which we
have the intent and the ability to sell in the short term (trading securities);
and (ii) publicly traded unrestricted common stocks, which we have the intent
but not the ability to sell in the short term due to low volume or illiquidity
(available for sale securities). Trading securities are valued at the closing
price on the valuation date, with any realized and unrealized holding gains or
losses reflected in the consolidated statements of income as realized gains on
securities, net and principal transactions, net, respectively. Available for
sale securities are valued at the closing price on the valuation date, with any
unrealized holding gains or losses reflected as a component of accumulated
other comprehensive income in the consolidated statements of members equity,
and any realized gains or losses are reflected in the consolidated statements
of income as realized gains on securities, net.

Non-marketable
securities consist of: (i) non-tradable warrants exercisable into common stock
of public companies (non-tradable warrants); (ii) restricted common stock in
publicly held companies (restricted securities); (iii) common stock and
preferred stock in privately held companies and interests in partnerships,
where we have less than a 20% voting interest and no significant influence
(securities in privately-held entities); and (iv) convertible notes and notes
receivables in privately held companies (debt securities in privately-held
companies). Non-tradable warrants are valued at intrinsic value based on the
closing price at the date of the valuation, as we have the intent and the
ability to exercise and sell in the short term, at the closing price.
Restricted securities, securities in privately-held entities and debt
securities in privately-held companies are carried at cost. Any realized and
unrealized holding gains or losses derived from non-marketable securities are
reflected in the consolidated

35

---



statements of income as realized gains on securities,
net and principal transactions, net, respectively. Interest on debt securities
in privately-held companies is included in the consolidated statements of
income and comprehensive income as other income. We account for gains and
losses on the sale of marketable and non-marketable securities under the
specific identification method.

Discontinued Operations

Discontinued
operations is reported in accordance with SFAS 144, Accounting For the
Impairment or Disposal of Long Lived Assets (SFAS 144) and EITF 03-13,
applying the conditions in paragraph 42 of SFAS 144 in determining whether to
report discontinued operations (EITF 03-13). Since we have determined
that the Partnership and its cash flows are clearly distinguished for financial reporting
purposes from the rest of our operations, they have been eliminated from our
ongoing operations, and we will not have any significant continuing involvement
in or cash flows from the Partnerships operations.

Investment in Affiliates

Investment
in affiliates in which we own more than 20% of the voting rights and have
significant influence is accounted under the equity method in accordance with
APB Opinion No. 18. Investment in limited partnerships in which we own less than
20% but more than 5% and have no significant influence are accounted under the
equity method in accordance with EITF D-46.

Securities Transactions and Revenue Recognition

Proprietary
securities transactions, gains and losses from the sale of securities owned,
commission revenue and commission expense are recorded on a trade-date basis.
Profit and loss arising from all securities transactions entered into for our
account and for which we are at risk, are recorded on a trade-date basis.

Private
placement fees arising from securities offerings in which our Broker-Dealer
acts as an underwriter or agent, along with fees earned from providing
financial advisory services are recognized at the time the transaction is
consummated. We recognize advisory fee revenue ratably over the terms of the
related contracts.

Conference Revenue and Expenses

We
receive conference deposits from presenters, which are recorded as a liability
and then recognized as revenue when the conference is conducted. We also make
advance payments for conference facilities, entertainment, and related costs
which are recorded as prepaid expenses and then recognized when the conference
is conducted.

Debt with Equity Instruments

We
account for debt with equity instruments in accordance with the guidance
provided by EITF 00-27, Application of Issue No. 98-5 to Certain Convertible
Instruments. Accordingly, the aggregate purchase price is allocated to the
debt and equity instruments based on their relative fair market values with an
amount attributable to the relative fair value of the warrants being recorded
as a debt discount on the debt instruments, such that the debt instruments are
recorded on the consolidated statement of financial condition at a value, which
is net of the value assigned to the equity instruments. The debt discount,
which is credited to members equity, is accreted over the life of the debt
instruments.

The
fair value of the warrants is determined based on the Black-Scholes valuation
model, which requires the input of highly subjective assumptions, including the
expected share price volatility. Given the fact that Holdings equity was not
publicly traded, Holding developed an expected volatility figure based on a
review of the historical volatilities, over a period of time equivalent to the
expected life of these warrants, of similarly positioned publicly traded
companies within its industry, during the early stages of their life as a
publicly traded company.

In
addition, based on the intrinsic value method, we recorded an additional debt
discount, related to the beneficial conversion feature of the debt instruments,
after taking into account the value of the equity instruments issued. This
discount is accreted over the life of the debt instruments.

36

---



Income Taxes

Prior
to the Exchange, Holding filed consolidated federal and combined New York State
and New York City UBT returns. The members of Holding, Paul Revere and R&R,
were taxed on Holdings federal and state taxable income. Accordingly, no
provision or liability for federal or state income taxes has been included in
Holdings consolidated financial statements, except for the UBT.

Deferred
tax assets and liabilities are determined based on the difference between the
consolidated financial statement carrying amounts and tax bases of assets and
liabilities using enacted tax rates in effect for UBT purposes in the years in
which the differences are expected to reverse. In addition, we also recognize
deferred tax assets for future tax benefits, to the extent that realization of
such benefits is more likely than not to occur.

In
June 2006, the FASB issued Interpretation No. 48, Accounting of Uncertainty in
Income Taxes-an interpretation of FASB Statement No. 109 (FIN-48). This
Interpretation prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return, and provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods, disclosure,
and transition. This Interpretation is effective for fiscal years beginning
after December 31, 2006. We adopted FIN-48 effective with our 2007 fiscal year.
FIN-48 currently has no effect on our consolidated financial statements.

Use of Estimates

The
preparation of financial statements is in conformity with U.S. generally
accepted accounting principles, which requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.

Stock-Based Compensation

Until
January 1, 2006, we accounted for grants using the intrinsic value method,
under which compensation cost related to grants of stock options and restricted
stock is recorded to the extent that the exercise price of the option or the
purchase price for the stock was less than the market value of the underlying
shares on the date of grant. Any such compensation expense would have been
recorded over the service or vesting period.

Effective
January 1, 2006, we adopted the modified prospective method set forth in SFAS
123R for valuing stock-based compensation. Under the provisions of SFAS 123R,
stock-based compensation cost is measured at the grant date based on the fair
value of the award and the expense is recognized over the requisite service
period which generally is the vesting period stipulated in the grant for all
employees. Under the modified prospective method, compensation cost is
recognized beginning with the effective date (a) based on the requirements of
SFAS 123R for all share-based payments granted after the effective date and (b)
based on the requirements of SFAS 123 for all awards granted to employees prior
to the effective date of SFAS 123R that remain unvested on the effective date.

Registration Payment Arrangements

In
December 2006, the FASB issued a Staff Position on EITF 00-19-2 Accounting for
Registration Payment Arrangements (FSP 00-19-2). FSP 00-19-2 specifies that
the contingent obligation to make future payments or otherwise transfer
consideration under a registration payment arrangement, whether issued as a
separate agreement or included as a provision of a financial instrument or
other agreement, should be separately recognized and measured in accordance
with SFAS No. 5, Accounting for Contingencies (SFAS 5). If the transfer of
consideration under a registration payment arrangement is probable and can be
reasonably estimated at inception, the contingent liability under the
registration payment arrangement is included in the allocation of proceeds from
the related financing transaction (or recorded subsequent to the inception of a
prior financing transaction) using the measurement guidance in SFAS 5. FSP
00-19-2 was effective immediately for registration payment arrangements and the
financial instruments subject to those arrangements that are entered into or
modified subsequent to the issuance of FSP 00-19-2. For prior arrangements, FSP
00-19-2 is effective for financial statements issued for fiscal years beginning
after December 15, 2006 and interim periods within those years. We adopted FSP
00-19-2 effective with our 2007 fiscal year. FSP 00-19-2 currently has no
effect on our consolidated financial statements.

37

---



Recent Accounting Pronouncements

In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which
defines fair value, establishes a framework for measuring fair value, and
expands disclosures about fair value measurements. This standard applies under
other accounting pronouncements that require or permit fair value measurements
but does not require any new fair value measurements. SFAS No. 157 will become
effective for us in 2008. We are in the process of evaluating the effect that
the adoption of this standard will have on our consolidated financial
statements. In
February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial
Assets and Financial Liabilities (SFAS 159). SFAS 159 provides companies
with an option to report selected financial assets and liabilities at fair
value and establishes presentation and disclosure requirements designed to
facilitate comparisons between companies that choose different measurement
attributes for similar types of assets and liabilities. SFAS 159 is effective
for fiscal years beginning after November 15, 2007. We are in the process of
evaluating the effect that the adoption of this standard will have on our
consolidated financial statements.

In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141R, Business Combinations (SFAS 141R), which replaces SFAS No.
141, Business Combinations. SFAS 141R establishes principles and requirements
for determining how an enterprise recognizes and measures the fair value of
certain assets and liabilities acquired in a business combination, including
noncontrolling interests, contingent consideration, and certain acquired
contingencies. SFAS 141R also requires acquisition-related transaction expenses
and restructuring costs be expensed as incurred rather than capitalized as a
component of the business combination. SFAS 141R will be applicable
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. SFAS 141R would have an impact on accounting for any
businesses acquired after the effective date of this pronouncement.

In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements  An Amendment of ARB No. 51 (SFAS
160). SFAS 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary (previously referred to as minority
interests). SFAS 160 also requires that a retained noncontrolling interest upon
the deconsolidation of a subsidiary be initially measured at its fair value.
Upon adoption of SFAS 160, we would be required to report any noncontrolling
interests as a separate component of stockholders equity. We would also be
required to present any net income allocable to noncontrolling interests and
net income attributable to the stockholders
of the company separately in our consolidated
statements of income. SFAS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. SFAS 160 requires retroactive adoption of the presentation and disclosure
requirements for existing minority interests. All other requirements of SFAS
160 shall be applied prospectively. SFAS 160 would have an impact on the
presentation and disclosure of the noncontrolling interests of any non
wholly-owned businesses acquired in the future.

Item 7A.Quantitative
        and Qualitative Disclosures About Market Risk

Market
    risk represents the risk of loss that may result from the change in value
    of a financial instrument due to fluctuations in its market price. Market
    risk is inherent in all financial instruments. Market risk may be exacerbated
    in times of trading illiquidity when market participants refrain from transacting
    in normal quantities and/or at normal bid-offer spreads. Our exposure to
    market risk is directly related to our role as a financial intermediary in
    customer trading and to our market-making and investment activities.

We trade
    in equity securities as an active participant in both listed and OTC equity
    markets. We maintain securities in inventory to facilitate our market-making
    activities and customer order flow. We may use a variety of risk management
    techniques and hedging strategies in the ordinary course of our trading business,
    including establishing position limits by product type and industry sector,
    closely monitoring inventory turnover, maintaining long and short positions
    in related securities, and using exchange-traded equity options and other
    derivative instruments. We do not use derivatives for speculative purposes.

In connection
    with our trading business, management also reviews reports appropriate to
    the risk profile of specific trading activities. Typically, market conditions
    are evaluated and transaction details and securities positions are reviewed.
    These activities seek to ensure that trading strategies are within acceptable
    risk tolerance parameters, particularly when we commit our own capital to
    facilitate client trading. Our accounting department is actively involved
    in ensuring the integrity and clarity of the daily profit and loss statements,
    to the extent that we maintain trading positions for a period longer than
    one day. Activities include price verification procedures, position reconciliation
    and review of transaction booking. We believe that these procedures, which
    stress timely communications between our traders and senior management, are
    important elements of the risk management process.

|                                                     | 
|---------------------------------------------------- | 
|Item 8. Financial Statements and
 Supplementary Data

The
information in response to this item is contained elsewhere in this Report
beginning on Page F-1.

|                                                                                              | 
|--------------------------------------------------------------------------------------------- | 
|Item 9. Changes in and Disagreements with Accountants on
 Accounting and Financial Disclosure

None.

|                                     | 
|------------------------------------ | 
|Item 9A(T). Controls and
 Procedures

(a)
Evaluation of Disclosure Controls and Procedures

Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures (as defined in the Securities Exchange Act) Rules 13a-15(e) and
15-d-15(e)) as of the end of the period covered by this Report (the Evaluation
Date). Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that as of the Evaluation Date, our disclosure
controls and procedures are effective to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act
(i) is recorded, processed, summarized and reported, within the time periods
specified in the SECs rules and forms and (ii) is accumulated and

38

---



communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.

Our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource
constraints and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within RRCG have been detected.

(b)
Managements Report on Internal Control over Financial Reporting

Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act). Our management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2007. In making this
assessment, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in Internal
Control-Integrated Framework. Our management has concluded that, as of December
31, 2007, our internal control over financial reporting is effective based on
these criteria. This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the SEC that permit us to
provide only managements report in this Report.

(c)
Changes in Internal Control over Financial Reporting

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

|                           | 
|-------------------------- | 
|Item 9B. Other Information

None.

39

---



PART III

|                                                                 | 
|---------------------------------------------------------------- | 
|Item 10.Directors,
  Executive Officers and Corporate Governance

MANAGEMENT

Set
forth below is information concerning our directors and senior executive
officers.

|                        |  |        |  |                                                                       
|----------------------- |  | ------ |  | ----------------------------------------------------------------------
|Name                    |  | Age(1) |  | Titles                                                                
|                        |  |        |  |                                                                       
|Officers and Directors: |  |        |  |                                                                       
|Wesley K. Clark         |  | 63     |  | Chairman and Director                                                 
|Michael Vasinkevich     |  | 40     |  | Vice Chairman and Director                                            
|Michael Lacovara        |  | 44     |  | Chief Executive Officer (Principal Executive
  Officer) and Director  
|Edward Rubin            |  | 40     |  | President and Director                                                
|John J. Borer III       |  | 50     |  | Senior Managing Director, Co-Head of Investment
  Banking and Director
|Thomas Pinou            |  | 48     |  | Chief Financial Officer (Principal Accounting
  Officer)              
|John W. Chambers        |  | 46     |  | Senior Managing Director, Co-Head Investment Banking                  
|Sam Dryden              |  | 57     |  | Director                                                              
|Richard M. Cohen        |  | 56     |  | Director                                                              
|Winston Churchill       |  | 67     |  | Director                                                              
|Mark L. Friedman        |  | 60     |  | Director                                                              
|Marvin I. Haas          |  | 65     |  | Director                                                              
|Peter F. Drake          |  | 54     |  | Director                                                              



---

|    |                                
|--- | -------------------------------
|(1) | Ages are as of January 31, 2008



---

Executive
officers are appointed by, and serve at the pleasure of, the Board of
Directors. A brief biography of each director, executive officer and other key
employee follows.

Wesley
K. Clark. General Clark was appointed Chairman on the
Exchange Date and became a director on July 22, 2007. He was appointed chairman
of Holding in January 2006. He is chairman and chief executive officer of
Wesley K. Clark & Associates, a strategic advisory firm he founded in March
2003. From June 2000 through March 2003, General Clark was a managing director
at Stephens, Inc., an investment banking firm based in Arkansas. From June 1966
through June 2000, General Clark served in the U.S. Army where he held numerous
staff and command positions and rose to the rank of 4-star general. He served
as NATO Supreme Allied Commander and Commander in Chief of the U.S.-European
Command from July 1997 through May 2000. In August 2000, General Clark was
awarded the Presidential Medal of Freedom, the United States highest civilian
honor. General Clark graduated from the United States Military Academy at West
Point in 1966. He received a Masters in Philosophy, Politics and Economics from
Oxford University where he was a Rhodes Scholar from 1966 to 1968.

Michael
Vasinkevich. Mr. Vasinkevich was appointed Vice Chairman on
the Exchange Date and became a director on July 22, 2007. He was appointed vice
chairman of Holding in May 2007. He joined us in July 2002 as senior managing
director and was appointed a director of our Broker-Dealer, in 2006 and a
director of Holding in 2004. From August 1999 through May 2002, Mr. Vasinkevich
was a managing director at Ladenburg Thalmann & Co. Inc., and for the last
11 months of his tenure there he was president of capital markets. From
November 1998 through July 1999 he was the founder and managing director of
Tandem Venture Partners, Ltd., a specialized financial advisory firm focusing
on growth companies in the United States and Asia. From June 1997 to November
1998, he was the managing director of the structured finance group at Jesup
& Lamont Securities Corp.

Michael
Lacovara. Mr. Lacovara became our Chief Executive Officer,
our principal executive officer, and a director in September 2007. Mr. Lacovara
was a principal of Sandler ONeill + Partners, L.P. from February 2004 through
August 2007 and the co-chief operating officer of the firm from January 2005
through August 2007. Mr. Lacovara resigned from his positions at Sandler in
anticipation of assuming his responsibilities with us. From

40

---



October 1989 through December 1996, Mr. Lacovara was
an associate at, and from January 1997 through January 2004 a member of, the
law firm of Sullivan & Cromwell, LLP, where he represented a variety of
financial services and technology firms and served as trial counsel to
Microsoft Corporation in United States v.
Microsoft. Mr. Lacovara received his bachelors degree in 1984, summa cum laude, from the
University of
Pennsylvania, where he was elected to the Phi Beta Kappa Society. He was
selected to study at Cambridge University on a Thouron Fellowship, receiving a
masters degree in international relations in 1985. He also earned a law
degree, cum laude, from Harvard
Law School in 1988.

Edward
Rubin. Mr. Rubin was appointed President and became a
director on July 10, 2007. He was appointed president of Holding in May 2007.
He originally joined Holding in June 2002 as a senior managing director. He has
served as President of our Broker-Dealer from September 2006, as a director of
our Broker-Dealer since 2006 and as a director of Holding since 2004. From
August 1999 through May 2002, Mr. Rubin was a director, corporate finance with
Ladenburg Thalmann & Co. Inc. From November 1998 through July 1999, he was
the founder and executive vice president of Tandem Venture Partners, Ltd., a
specialized financial advisory firm focusing on growth companies in the United
States and Asia. From July 1998 to November 1998, he was a vice president in
the structured finance group at Jesup & Lamont Securities Corp. From
November 1995 through December 1997, Mr. Rubin was assistant general counsel
for NCH Capital, an investment fund specializing in investments in Eastern
Europe and the former Soviet Union. From September 1993 through November 1995,
Mr. Rubin was an associate in two law firms in New York, Friedman & Kaplan
and Coudert Brothers. Mr. Rubin received his B.A. in political science from
Bernard M. Baruch College in 1989 and his J.D. from New York University School
of Law in 1993.

John
J. Borer III. Mr. Borer became a director on July 22, 2007
and a Senior Managing Director and Co-Head of Investment Banking in September
2007 when Mr. Lacovara became Chief Executive Officer. Mr. Borer had been our
Chief Executive Officer since the Exchange Date. Mr. Borer was appointed chief
executive officer of Holding in May 2007. He also served as a director of
Holding since April 2004 and a director of our Broker-Dealer since 2002. From
1998 through 2006 he was a senior managing director and the president of our
Broker-Dealer. From 1991 through 1998, Mr. Borer was a managing director and
head of investment banking at the broker-dealer affiliate of the original
Rodman & Renshaw firm. From 1984 through 1991, Mr. Borer was senior vice
president and investment manager in the new business development office of
Security Pacific Business Credit Inc. From 1979 through 1984, he served as a
vice president and business development officer with Barclays American Business
Credit in its Los Angeles office. Mr. Borer received his B.S. in Agricultural
Economics from the University of California at Davis in 1978 and his J.D. from
Loyola Law School in Los Angeles in 1984.

Thomas
Pinou. Mr. Pinou was appointed Chief Financial Officer, our
principal accounting officer, on July 10, 2007. He was the chief financial
officer of Holding since October 1998. From August 1996 to December 1997, he
was the controller of the broker-dealer affiliate of the original Rodman &
Renshaw firm, and in December 1997 was appointed chief financial officer of the
original Rodman & Renshaw firm, a position he held until March 1998. From
September 1991 to May 1996, Mr. Pinou was responsible for trading and syndicate
accounting at Yamaichi Securities and Bankers Trust. Mr. Pinou received his
B.B.A. from Pace University in 1982.

John
W. Chambers. Mr. Chambers joined our Broker-Dealer in August
2006 as a Senior Managing Director  Investment Banking and was appointed
President of our former AcumenBioFindivision
in November 2006 and Co-Head of Investment Banking in December 2007. From May
2005 through June 2006, he served as a managing director and senior
biotechnology specialist at Cowen. From April 2002 through May 2005, Mr.
Chambers was the managing director responsible for the biotechnology sector at
Lehman Brothers. From November 1999 through March 2002, Mr. Chambers
spearheaded the global biotechnology sector as a managing director at UBS. Mr.
Chambers received his M.B.A. from Columbia Business School in 1988 and his B.S.
in Mechanical Engineering from Union College in 1984.

Sam
Dryden. Mr. Dryden became a director on July 22, 2007. He had
been appointed to the board of directors of Holding in March 2007. Since
January 1, 2007, he has served as a managing director of Wolfensohn &
Company, a corporate advisory and investment firm, where he focuses on private
equity investments in biofuels and other alternative energies. He is currently
the chief executive officer of Emergent Genetics, LLC, a life science
investment holding company, a position he has held since April 2004. From
January 1997 through June 2006, he served as chairman and chief executive
officer of Emergent Genetics, Inc, an international biotechnology company. He
founded and held executive positions with both, Agrigenetics Corporation, now
part of Dow AgroSciences, and

41

---



Big Stone Inc., a private venture-investment and
development company, which participated in the founding of over a dozen life
science companies. Mr. Dryden is an advisor to the World Bank regarding rural
development strategy and a member of the Council on Foreign Relations where he
serves on its Advisory Committee on Intellectual Property and American
Competitiveness. Mr. Dryden received his B.A. from Emory University in 1973.

Richard
M. Cohen. Mr. Cohen became a director on August 13, 2007.
Since 1996, he has been the President of Richard M. Cohen Consultants, a
financial services consulting company that accepts engagements from public and
private companies to assist with their corporate governance and corporate
finance needs. Since 2003 Mr. Cohen has served as a director of Dune Energy,
Inc., a publicly traded energy company (AMEX: DNE) for which he served as chief
financial officer from November 2003 to April 2005. He is also currently
serving as corporate secretary of Dune. Since February 2006, Mr. Cohen has
served as a director of Helix Biomedix Inc. (OTCBB: HXBM.OB) and as the Chief
Financial Officer of ABC Funding Inc. (OTCBB: AFDG.OB). Since July 2007, Mr.
Cohen has served as a director of Universal Travel Group (OTCBB:UTVG.OB), which
provides domestic and international air ticketing, hotel reservations, tourism
services and freight forwarding services across China. From 1984 through 1992,
Mr. Cohen was an investment banker at Henry Ansbacher, Furman Selz, where he
specialized in mergers & acquisitions, public equity offerings, and
restructurings. From 1980 through 1983, Mr. Cohen was a vice president of
corporate development at Macmillan, Inc. Mr. Cohen is a certified public
accountant (New York State). He received a B.S. from The University of
Pennsylvania (Wharton) in 1973 and an M.B.A. from Stanford University in 1975.

Winston
Churchill. Mr. Churchill became a director on October 16,
2007. He has served as the chairman of the board of Vector Intersect Security
Acquisition Corp. (OTCBB:VTRQ.OB), a special purpose acquisition corporation,
since May 31, 2006. Since 1996, Mr. Churchill has been the managing general
partner of SCP Partners, which manages several private equity and venture
capital funds. From 1993 to the present he has been the co-chairman of CIP
Capital Management, Inc., which manages a small business investment company,
as defined by the National Association of Small Business Investment Companies.
He is currently a director of Innovative Solutions and Support, a company
engaged in the design, manufacture, and sale of flight information computers,
flat panel displays, and monitoring systems; Amkor Technology, Inc., a
subcontractor of semiconductor packaging and test services; Griffin Land &
Nurseries, a real estate and landscape nursery business; and a number of
private portfolio companies. Mr. Churchill received a BS in Physics, summa cum laude, from Fordham
University
in 1962, an MA in Economics from Oxford University, where he was a Rhodes
Scholar, in 1964, and a JD from Yale Law School in 1967. He is a trustee of
Georgetown University, Fordham University and Inmaculata University.

Mark
L. Friedman. Mr. Friedman became a director on October 16,
2007. Since 2001, he has served as a managing partner of Constellation
Investment Partners LLC, a Florida based merchant-banking and special
investment firm. In 2003, Mr. Friedman co-founded OnForce, Inc., an online
marketplace for onsite technology services. Mr. Friedman was a partner of Shea
& Gould, a national law firm, from 1982-1992 and also served as a member of
its management committee. He previously served as a director of Allied Digital
Technologies Corp. and of Disc Graphics, Inc., where he also served as director
and chairman of the audit committee. Mr. Friedman received his B.A. in history,
magna cum laude, in 1970 and his
J.D., cum laude, in 1973 from the
University of Pennsylvania. He was elected to the Phi Beta Kappa Society and
was Articles Editor of the University of Pennsylvania Law Review.

Marvin
I. Haas, became a director on October 16, 2007. Since
December 2006, Mr. Haas has served on the board of directors of Universal Power
Group, Inc. (AMEX:UPG) and serves as chairman of its compensation committee and
as a member of its corporate governance and nominating committee. From 1993
until its sale to the Sara Lee Corporation in 1999, Mr. Haas served as
president and chief executive officer of Chock Full ONuts Corporation (NYSE:
CHF). Since his retirement from Chock Full ONuts, Mr. Haas has been a private
investor. Mr. Haas received a B.A. from Northeastern University in 1965 and an
MBA from its Graduate School of Business in 1967.

Peter
F. Drake. Dr. Drake became a director on October 16, 2007.
Dr. Drake is currently the managing general partner of Mayflower Partners, a
healthcare investment fund. From 1999 to 2002, he served as a managing director
in the Equity Research Department of Prudential Securities, Inc., following
Prudentials acquisition of Vector Securities International, an investment
banking firm co-founded by Dr. Drake in 1988. Vector specialized in raising
capital for emerging healthcare companies and acted as an advisor in merger and
alliance transactions in the healthcare area. Dr. Drake joined the investment
banking firm of Kidder, Peabody & Co. as a biotechnology analyst

42

---



in 1983, becoming a partner in 1986. He currently
serves on the board of directors of Trustmark Insurance Co., a healthcare
insurance provider, Penwest Pharmaceuticals Co. (NGM:PPCO), a publicly traded
healthcare company providing drug delivery systems, MetaMorphix, Inc., a
private animal healthcare company, Cortex Pharmaceuticals, Inc. (ASE:COR), a
publicly traded neuroscience company, and the Alliance for Aging Research, a
non-profit organization dedicated to improving the health and quality of life
for the elderly. Dr. Drake received a B.A. in Biology from Bowdoin College in
1976, a CBA from the Wharton School of Business at the University of
Pennsylvania in 1980 and a Ph.D. in Biochemistry and Neurobiology from Bryn
Mawr College in 1983.

Board
Composition

Under
our bylaws, the number of directors at any one time may not be less than one or
more than eleven. The maximum number of directors at any one time may be
increased by a vote of a majority of the directors then serving. Currently, the
Board of Directors consists of eleven members, six of whom qualify as
independent under the rules and regulations of the SEC and NASDAQ.

Our
charter provides for the annual election of directors. At each annual meeting
of stockholders, our directors will be elected for a one-year term and serve
until their respective successors have been elected and qualified. It is
anticipated that the Board of Directors will meet at least quarterly.

Family
Relationships

None
of the directors or executive officers is related by blood, marriage or
adoption.

Board
Committees

The
Board of Directors has the authority to appoint committees to perform certain
management and administrative functions. The Board of Directors has established
a Compensation Committee, an Audit Committee and a Corporate Governance and
Nominating Committee. Each of the Audit Committee, Compensation Committee and
Corporate Governance and Nominating Committee will have three members, all of
whom will qualify as independent under the rules and regulations of the SEC
and NASDAQ.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Audit Committee.
  The Board of Directors has appointed Richard Cohen, Winston Churchill and
  Peter F. Drake as the members of the Audit Committee. Mr. Cohen is the
  chairman of the committee and also qualifies as an audit committee financial
  expert within the meaning of the rules of the SEC and NASDAQ. The Audit
  Committee will review and report to the Board of Directors on our internal
  accounting and financial controls and on the accounting principles and
  auditing practices and procedures to be employed in preparing and reviewing
  our consolidated financial statements. The Audit Committee is also
  responsible for engaging and overseeing our independent public auditors, the
  scope of the audit to be undertaken by such auditors and the pre-approval of
  any audit and permitted non-audit services provided by such auditors.                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Compensation Committee.
  The Board of Directors has appointed Mark L. Friedman, Sam Dryden and Marvin
  I. Haas as the members of the Compensation Committee. Mr. Friedman serves as
  chairman of the committee. The Compensation Committee will review and, as it
  deems appropriate, recommend to the Board of Directors policies, practices
      and procedures relating to the compensation of the officers and other managerial
  employees, including the determination in its discretion of the amount of
  annual bonuses, if any, for our executive officers and certain other professionals,
  and the establishment and administration of employee benefit plans. The
  Compensation Committee will exercise all authority under our employee equity
  incentive plans and will advise and consult with our senior executives as may
  be requested regarding managerial personnel policies.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Corporate Governance and
  Nominating Committee. The Board of Directors has appointed
  Winston Churchill, Peter F. Drake and Mark L. Friedman as the members of the
  Corporate Governance and Nominating Committee. Mr. Churchill serves as
  chairman of the committee. The Corporate Governance and Nominating Committee
  will identify and recommend nominees to the Board of Directors and oversee
  compliance with our corporate governance guidelines.                                                                                                                                                                                                                                                                                                                                                                                                                                           

43

---



Section
16(a) Beneficial Ownership Reporting Compliance

Section
16(a) of the Exchange Act requires our directors and executive officers, and
persons who own more than 10% of our equity securities that are registered
pursuant to Section 12 of the Exchange Act, to file with the SEC initial
reports of ownership and reports of changes in ownership of our equity
securities. Officers, directors and greater than 10% stockholders are required
by SEC regulations to furnish us with copies of all Section 16(a) reports they
file.

Based
solely upon a review of the Forms 3, 4 and 5 (and amendments thereto) furnished
to us for the fiscal year ended December 31, 2007, we have determined that our
directors, officers and greater-than-10% beneficial owners complied with all
applicable Section 16 filing requirements.

Code of
Ethics

We
have adopted a Code of Ethics that applies to our principal executive officer,
principal financial officer and other persons performing similar functions, as
well as all of our other employees and directors. The Code of Ethics is posted
on our Web site at www.rodmanandrenshaw.com.

|                                 | 
|-------------------------------- | 
|Item 11.Executive
  Compensation

Compensation
Discussion and Analysis

Overview

Our
executive compensation program is designed to create incentives for our
executive officers to lead, manage and grow our business. Because the
compensation of our executive officers plays an integral role in our success,
our compensation programs are designed to attract, retain, and motivate top
quality and effective executives and professionals. We refer to our Chief
Executive Officer, our Chief Financial Officer and our three other most highly
compensated executive officers during 2007 as our named executive officers.

A
substantial portion of each named executive officers total compensation is
variable and delivered on a pay-for-performance basis. We believe this model
provides the greatest incentive to motivate management to achieve our business
objectives. The executive compensation program provides compensation
opportunities, contingent upon performance, that are competitive with practices
of other similar investment banking firms. We are committed to utilizing the
executive compensation program to maintain our ownership culture and to broaden
executive ownership over time. We strongly believe that the cash and equity
components of our compensation plans will align the interests of our named
executive officers and other key employees with our stockholders and will
promote the creation of long-term stockholder value.

The
Compensation Committee has set a compensation and benefits expense target for
the 2007 and 2008 fiscal years at 55% excluding equity-based compensation
granted prior to September 30, 2007 and insurance premiums paid in respect of
key-man life insurance policies for our benefit.

Determination of Compensation

In
allocating compensation to our named executive officers, the primary emphasis,
in addition to our performance, is on each individuals contribution and
business unit performance and on compensation recommendations of the
Compensation Committee, which will have the primary responsibility and
authority to determine and recommend the compensation of our named executive
officers and other key employees. We may utilize third-party compensation
consultants and surveys to provide industry data to better support our
determination of the key elements of our named executive officer compensation
programs. Compensation of our named executive officers will be determined by
the Compensation Committee.

Compensation Components

The
most significant components of the compensation program for our named executive
officers in 2007 were base salary, cash bonuses and, to the extent applicable,
profit allocations on membership interests. Beginning with the current fiscal
year, the key components of our compensation program will be base salary, cash
bonus and equity-based awards and we are targeting our total compensation and
benefits expense, excluding equity-based

44

---



compensation granted prior to September 30, 2007 and insurance premiums paid in respect of
key-man life insurance policies for our benefit, to be approximately 55% of
total consolidated revenues each year.

Base Salary

Consistent
with industry practice, the base salaries for our named executive officers
account for a relatively small portion of their overall compensation. We
believe that relatively modest salaries are accepted in the industry and the
potential for substantial bonus compensation is seen by senior management
personnel as the more important component. Named executive officer base
salaries and subsequent adjustments, if any, are expected to be determined
annually based on a review of relevant market data and each executives performance
for the prior year, as well as each executives experience, expertise and
position.

Cash Bonus

Cash
bonus compensation has been a key component of our executive compensation
program. We have in the past, and our Compensation Committee will, in the
future, award discretionary cash bonuses based on a number of variables that
are linked to our overall, and the executives individual, performance.

In
March 2007, we established an executive bonus plan (the March Bonus Plan) for
three of our named executive officers, Michael Vasinkevich, Edward Rubin and
John J. Borer III (the Principals). Although certain limitations on the
payment of bonuses under the March Bonus Plan would have terminated upon the
Exchange, we and the Principals agreed to continue the March Bonus Plan through
2007 and to target our total compensation and benefits expense, excluding
equity-based compensation granted prior to July 1, 2007, at 55% of revenues.
The compensation and benefits payable to each of the Principals in any year
will be determined before the end of each fiscal year, by reference to the
individuals productivity during such year and his overall contribution to our
profits and success during that period.

In
August 2007, the Compensation Committee and the Board of the Directors
unanimously approved and adopted and our stockholders approved, a revised
Executive Bonus Plan (the August Bonus Plan). The August Bonus Plan includes
the following key provisions:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The plan is
 administered by the Compensation Committee of the Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | The plan has
 a term of five years ending August 31, 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | The initial
 participants in the plan are Michael Vasinkevich, Michael Lacovara, Edward
 Rubin and John J. Borer III. The Compensation Committee may designate other
 employees as participants.                                                                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | The
 Compensation Committee shall determine the size of the bonus pool to be
 distributed to the participants and the amount to be allocated to each
 participant based on performance criteria that it establishes.                                                                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | In no event
 may the amount distributed in any single fiscal year to a participant exceed
 25% of our total consolidated gross revenues for such year, as reported on
 our financial statements.                                                                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | In no event
 shall the amounts payable pursuant to the plan in any one fiscal year, when
 added to all of our other compensation and benefits expenses for that year,
 as reported on our financial statements, exceed 60% of our total consolidated
 gross revenues for that year, excluding insurance premiums paid with respect
 to key-man life insurance policies for our benefit and equity-based
 compensation attributable to awards granted prior to September 30, 2007. The
 Board of Directors has set the target at 55% of consolidated gross revenues.

Profit Distributions on Membership Interests

Prior
to the Exchange, we operated as a limited liability company, taxable as a
partnership for federal and state income tax purposes. Accordingly, we were
able to distribute profits based on special allocations to our senior executive
officers in their capacities as members. As a result of the Exchange, we now
operate as a C corporation and, as such, we no longer have the ability to
make profits distributions to our senior executives based on special
allocations.

45

---



Equity-based Compensation

In
August 2007, the Compensation Committee and the Board of Directors unanimously
approved and adopted and our stockholders ratified, the 2007 Stock and
Incentive Plan. The purpose of the 2007 Stock and Incentive Plan is to align
the interests of the participants with those of our stockholders through
equity-based compensation alternatives, thereby promoting our long-term
financial interests and enhancing long-term stockholder return. The 2007 Stock
and Incentive Plan is intended to enhance our ability to effectively recruit,
motivate and retain the caliber of employees essential for our success and
provide them with incentive compensation opportunities that are competitive
with those of similar companies and to give us needed certainty and flexibility
in designing and managing equity-based compensation to meet the needs of its
growing business over an extended period of time.

The
following is a brief summary of the material features of the 2007 Stock and
Incentive Plan.

The
2007 Stock and Incentive Plan will be administered by a committee of directors
(each of whom will be a non-employee director for purposes of Rule 16b-3
promulgated by the SEC and an outside director for purposes of Section 162(m)
of the Internal Revenue Code) designated from time to time by the Board of the
Directors. The Compensation Committee has been charged with the responsibility
of administering our stock-based compensation programs including the 2007 Stock
and Incentive Plan.

Subject
to certain restrictions that are set forth in the 2007 Stock and Incentive
Plan, the committee will have complete and absolute authority to make any and
all decisions regarding the administration of the 2007 Stock and Incentive
Plan, including the authority to construe and interpret the plan and awards
under the plan, establish administrative rules and procedures, select award
recipients, determine the type of awards, establish the terms, conditions and
other provisions of awards and amend awards. Subject to certain restrictions
that are set forth in the 2007 Stock and Incentive Plan, the committee may
delegate any of its authority and responsibility to management, except for
determinations and decisions regarding awards to be made, which must be made by
the committee itself.

The
persons eligible to receive awards under the 2007 Stock and Incentive Plan
include all employees, directors, officers and agents of, and other service
providers to, us and our subsidiaries.

The
number of shares of common stock that are authorized and available for issuance
under the 2007 Stock and Incentive Plan is 5,250,000. No more than 5,000,000
shares, however, can be issued pursuant to awards in the form of: (i) incentive
stock options; or (ii) performance units and restricted stock, as described
below. In September 2007, pursuant to the 2007 Stock and Incentive Plan, we
issued 750,000 shares of restricted common stock to our new Chief Executive
Officer, Michael Lacovara. We also granted Mr. Lacovara options to purchase
750,000 shares of common stock on October 16, 2007. See  Employment
Arrangements below. If the shares of stock that are subject to an award are
not issued or cease to be issuable because the award is terminated, forfeited
or expires unexercised, those shares will then become available for future
awards. The number of shares authorized and available for issuance under the
plan is subject to adjustment in the event of a stock split, stock dividend,
recapitalization, spin-off or similar action.

Awards
under the 2007 Stock and Incentive Plan may take the form of stock options
(either incentive stock options or non-qualified options), stock appreciation
rights, restricted stock or performance units. Subject to restrictions that are
set forth in the 2007 Stock and Incentive Plan, the committee will have
complete and absolute authority to set the terms, conditions and provisions of
each award, including the size of the award, the exercise or base price, the
vesting and exercise schedule (including provisions regarding acceleration of
vesting and exercise) and termination and forfeiture provisions.

The
committee is subject to the following specific restrictions regarding the types
and terms of awards:

| |   |                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | No
 participant may receive in any calendar year awards of (i) options and stock
 appreciation rights, or (ii) restricted stock and performance units, that in
 each case cover more than 2,000,000 shares.
| |   |                                                                                                                                                                                                            
| |  | The exercise
 price for a stock option may not be less than 100% of the fair market value
 of the stock on the date of grant.                                                                              
| |   |                                                                                                                                                                                                            
| |  | No award may
 be granted more than ten years after the date of the 2007 Stock and Incentive
 Plan.                                                                                                         

No
stock option can be repriced without the consent of stockholders and of the
option holder if the effect would be to reduce or increase the exercise price
per share. For this purpose, repricing includes a tandem

46

---



cancellation
and re-grant or any other amendment or action that would have substantially the
same effect as decreasing or increasing the exercise price.

If
the applicable award agreement so provides, upon certain events constituting a
change in control, as specified in the 2007 Stock and Incentive Plan,
immediately prior to the occurrence of the change in control all options and
stock appreciation rights subject to the award will become immediately
exercisable, the expiration of the restrictions applicable to any restricted
stock grant made under the award shall immediately be accelerated, and such
other results shall take place with respect to other awards as may be set forth
in the relevant award agreement.

To
the extent permitted by law, the Board of Directors, without the consent or
approval of any plan participant, may amend, suspend or terminate the 2007
Stock and Incentive Plan, so long as that action does not adversely affect the
rights of any holder under any award then outstanding. Without the approval of
the stockholders, however, in general the Board of Directors may not amend the
2007 Stock and Incentive Plan to increase the number of shares available for
issuance or to modify the requirements regarding eligibility in the 2007 Stock
and Incentive Plan. No Awards will be granted under the 2007 Stock and Incentive
Plan after the tenth anniversary of its effective date.

Other Compensation

All
of our executives are eligible to participate in our employee benefit plans,
including medical, dental, life insurance and 401(k) plans. These plans are
available to all salaried employees and do not discriminate in favor of senior
executive officers. It is generally our policy to not extend significant
perquisites to our executives that are not available to our employees
generally. We have no current plans to make changes to levels of benefits and
perquisites provided to senior executives.

47

---



Summary
Compensation Table

The
 information below describes the components of the total compensation paid to
 our named executive officers for 2007, 2006 and 2005.

|                                                        |  |      |      |        |   |         |  |                  |           |                   |   |                             |  |       |         |  |   |           |  |   |           | 
|------------------------------------------------------- |  | ---- | ---- | ------ | - | ------- |  | ---------------- | --------- | ----------------- | - | --------------------------- |  | ----- | ------- |  | - | --------- |  | - | --------- | 
|                                                        |  | Year |      | Salary |   | Bonus   |  | Stock
 Awards(1) |           | Option
 Awards(1) |   | All
 Other
 Compensation(2) |  | Total |        
|                                                        |  |      |      |        |   |         |  |                  |           |                   |   |                             |  |       |         |  |   |           |  |   |           | 
|Principal
 Executive Officer                            |  |      |      |        |   |         |  |                  |           |                   |   |                             |  |       |         |  |   |           |  |   |           | 
|Michael Lacovara                                        |  |      | 2007 |        | $ | 50,000  |  | $                | 420,000   |                   | $ | 404,212                     |  | $     | 108,523 |  | $ | 2,526     |  | $ | 950,516   | 
|Chief Executive
 Officer(3)                             |  |      |      |        |   |         |  |                  |           |                   |   |                             |  |       |         |  |   |           |  |   |           | 
|                                                        |  |      |      |        |   |         |  |                  |           |                   |   |                             |  |       |         |  |   |           |  |   |           | 
|John J. Borer
 III                                      |  |      | 2007 |        | $ | 125,000 |  | $                | 495,600   |                   | $ |                            |  | $     |        |  | $ | 8,046     |  | $ | 628,646   | 
|Chief Executive
 Officer(4)                             |  |      | 2006 |        | $ |        |  | $                | 400,000   |                   | $ |                            |  | $     |        |  | $ | 1,534,000 |  | $ | 1,934,000 | 
|                                                        |  |      | 2005 |        | $ |        |  | $                | 471,182   |                   | $ |                            |  | $     |        |  | $ | 14,000    |  | $ | 485,182   | 
|                                                        |  |      |      |        |   |         |  |                  |           |                   |   |                             |  |       |         |  |   |           |  |   |           | 
|Principal
 Accounting Officer                           |  |      |      |        |   |         |  |                  |           |                   |   |                             |  |       |         |  |   |           |  |   |           | 
|Thomas Pinou                                            |  |      | 2007 |        | $ | 150,000 |  | $                | 250,000   |                   | $ |                            |  | $     | 32,727  |  | $ | 8,046     |  | $ | 425,975   | 
|Chief Financial
 Officer                                |  |      | 2006 |        | $ | 150,000 |  | $                | 250,000   |                   | $ |                            |  | $     | 11,942  |  | $ | 14,000    |  | $ | 425,942   | 
|                                                        |  |      | 2005 |        | $ | 150,000 |  | $                | 172,000   |                   | $ |                            |  | $     |        |  | $ | 14,000    |  | $ | 336,000   | 
|                                                        |  |      |      |        |   |         |  |                  |           |                   |   |                             |  |       |         |  |   |           |  |   |           | 
|Michael
 Vasinkevich                                    |  |      | 2007 |        | $ | 125,000 |  | $                | 2,493,600 |                   | $ |                            |  | $     |        |  | $ | 8,046     |  | $ | 2,626,646 | 
|Vice Chairman                                           |  |      | 2006 |        | $ |        |  | $                | 712,172   |                   | $ |                            |  | $     |        |  | $ | 4,230,626 |  | $ | 4,942,798 | 
|                                                        |  |      | 2005 |        | $ |        |  | $                | 2,464,257 |                   | $ |                            |  | $     |        |  | $ | 46,928    |  | $ | 2,511,185 | 
|                                                        |  |      |      |        |   |         |  |                  |           |                   |   |                             |  |       |         |  |   |           |  |   |           | 
|Edward Rubin                                            |  |      | 2007 |        | $ | 125,000 |  | $                | 1,245,800 |                   | $ |                            |  | $     |        |  | $ | 8,046     |  | $ | 1,378,846 | 
|President                                               |  |      | 2006 |        | $ |        |  | $                | 378,929   |                   | $ |                            |  | $     |        |  | $ | 2,056,897 |  | $ | 2,435,826 | 
|                                                        |  |      | 2005 |        | $ |        |  | $                | 1,176,359 |                   | $ |                            |  | $     |        |  | $ | 37,462    |  | $ | 1,213,821 | 
|                                                        |  |      |      |        |   |         |  |                  |           |                   |   |                             |  |       |         |  |   |           |  |   |           | 
|John W. Chambers(5)                                     |  |      | 2007 |        | $ | 150,000 |  | $                | 1,635,000 |                   | $ |                            |  | $     | 186,385 |  | $ | 8,046     |  | $ | 1,979,431 | 
|Senior Managing
 Director Co-Head of Investment Banking |  |      | 2006 |        | $ | 56,250  |  | $                | 800,000   |                   | $ |                            |  | $     | 21,447  |  | $ | 851       |  | $ | 888,421   | 



---

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Reflects the value of the
 restricted stock or stock options, as applicable, that was charged to income
 in the reported period as reported on our financial statements.                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(2) | Does not include amounts
 distributed to Revere and R&R that were then distributed proportionately
 to their respective members and stockholders. However, in the case of Messrs.
 Borer, Vasinkevich and Rubin the 2006 amount includes a special distribution of
 2006 profits that was made by Holding directly to them. Also includes medical premiums, term life
 insurance premium, tax preparation expense, and legal fees incurred on behalf
 of the named executive officer.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(3) | Mr. Lacovaras employment
 commenced in September 2007.                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(4) | As of September 2007, Mr.
 Borer ceased being our Chief Executive Officer and became our Co-Head of
 Investment Banking.                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(5) | Mr.
 Chambers employment commenced August 1, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                  

48

---



Employment Arrangements

In
March 2007, we entered into an employment agreement with each of Michael
Vasinkevich, Edward Rubin and John J. Borer III, subsequently modified in July
2007. Each of these agreements is substantially identical and their salient
provisions are as follows:

Term:
Three years, terminating February 28, 2010, with a 90-day evergreen
provision.

Base
Salary: $150,000 per annum, subject to increase in the
sole discretion of the Compensation Committee.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Incentive Compensation: For each fiscal year
 during the term of their agreements, an amount to all of the Principals,
 which, when added to the amount of salaries, bonuses, the cost of benefits
 and all other employee-related expenses (including employment taxes), but
 excluding equity-based compensation granted prior to October 16, 2007, does
 not exceed in the aggregate 55% of our gross revenues for such fiscal year,
 although we may increase this percentage for years subsequent to 2007 with
 their consent. The amount of incentive compensation will be determined by the
 Compensation Committee based on our overall revenue and profits and the
 relative productivity of the individual.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Benefits. Each individual is entitled to
 participate in our group health, dental and life insurance plans, 401(k)
 savings plan and equity incentive plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Termination of Employment. Upon termination
 other than for cause (as defined in the respective agreements), the
 individual is entitled to, in addition to his base salary and incentive
 compensation for the year in which the termination occurs, a lump-sum payment
 equal to twelve times his Monthly Salary amount, which is defined in the
 respective agreements to mean one-twelfth of the sum of (a) the individuals
 then current base salary plus (b) the average of the annual incentive
 compensation paid to the individual for the full fiscal year periods
 immediately preceding the termination, commencing with the fiscal year period
 ended December 31, 2006.                             

In
June 2007, we amended and restated an employment agreement with Wesley K.
Clark. His employment had commenced January 30, 2006. Under the agreement, Mr.
Clark serves as our Chairman. His annual base salary is $250,000. In addition,
he is eligible to receive the following cash bonuses: (i) up to 15% of fees
received by our Broker-Dealer, in connection with any transaction introduced by
him; and (ii) a discretionary amount at the end of each calendar quarter. In
addition, the agreement:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | granted him
 options to purchase 425,980 shares of our common stock at $3.78 per share,
 subject to a vesting schedule; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | provides for
 payment of an amount if there is a Change of Control Event during the
 period of employment. In general, the amount cannot exceed $1,514,942, and
 reduces to the extent that the fair market value of a share of our common
 stock is less than $3.78 per share (as adjusted) on the date of the Change of
 Control Event. We may make the payment, in our absolute discretion, in cash
 or other property, including the shares or other property which may have been
 received in the transaction which constituted the Change of Control Event. A
 Change of Control Event, in general, means the acquisition by any one
 person, or a group, of more than 50% of the total fair market value or total
 voting power of our capital stock or of substantially all of our assets.

In
August 2007, we entered into an employment agreement with Michael Lacovara,
which provides for Mr. Lacovara to serve as our Chief Executive Officer. Mr.
Lacovaras employment agreement was unanimously approved by the Board and the
Compensation Committee and the performance-based compensation provisions it
contains were also approved by our stockholders.

| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | The material
 terms of Mr. Lacovaras employment agreement are as follows:              
| |                                                                                         
| | Term: September 4, 2007 through December 31,
 2009, with a 90-day evergreen provision.
| |                                                                                         
| | Title: Chief Executive Officer and a member
 of the Board of Directors.                 

49

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Base compensation: $150,000 per year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Level One Incentive Compensation: Year ended
 12/31/07 - $616,666; Year ended 12/31/08 -$800,000 plus $1,050,000 if our
 consolidated gross revenues for the year ended December 31, 2008 is more than
 110% of our consolidated gross revenues for the year ended December 31, 2007;
 Year ended 12/31/09 - $800,000 plus $1,050,000 if our consolidated gross
 revenues for the year ended December 31, 2009 is more than 120% of our
 consolidated gross revenues for the year ended December 31, 2007.                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Additional Incentive Compensation: Mr.
 Lacovara will be eligible to participate in the August Bonus Plan as well as
 any other plan we adopt for our executives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Restricted Stock Grant: In September 2007,
 upon commencement of his employment, Mr. Lacovara received 750,000 shares of
 restricted common stock pursuant to the 2007 Stock and Incentive Plan. The
 shares will vest in three annual installments on the first, second and third
 anniversary of the grant date subject to the achievement of targeted revenue
 goals, and will be subject to accelerated vesting in the event of death,
 disability, termination without cause, termination for Good Reason and
 termination upon a Change in Control Event. In the event that we do not
 extend the agreement beyond December 31, 2009, any unvested shares will be
 forfeited and will revert to us.                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Stock Options: On October 16, 2007, we
 granted Mr. Lacovara options to purchase 750,000 shares of common stock under
 the 2007 Stock and Incentive Plan. The exercise price per share is $5.00. The
 options will vest in three tranches on the first, second and third
 anniversary of the grant date, subject to continued employment on such dates,
 and will be subject to accelerated vesting in the event of death, disability,
 termination without cause, termination for Good Reason (as defined in his
 employment agreement) and termination upon a Change in Control Event. In the
 event that we do not extend the agreement beyond December 31, 2009, one-half
 of any unvested options will immediately vest and one-half will be immediately
 cancelled.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Termination Payment. In the event we do not
 extend the employment agreement beyond its stated December 31, 2009
 expiration date, we shall pay to Mr. Lacovara, in consideration for his
 covenant not to compete, a lump sum payment equal to nine times his monthly
 salary amount (which is equal to one-twelfth his average base and incentive
 compensation for the year preceding such termination).                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Section 162(m) Tax Treatment: The Level One
 Incentive Compensation, the Additional Incentive Compensation, the Restricted
 Stock Grant and the Stock Options are all intended to be performance-based
 compensation, such that the deduction of compensation expense attributable to
 these payments and awards will not be limited by Section 162(m) of the Internal
 Revenue Code.                                                                                                                                                                                                                                                                                                                                                                                    

Grants of Plan-Based Awards

The
following table provides information regarding each grant of an award made to a
named executive officer in the year ended December 31, 2007. The number of
securities underlying options and the exercise price of an option give
retroactive effect to the Exchange.

|                    |  |             |            |                                       |  |                                    |  |                                           |      |  |   |           | 
|------------------- |  | ----------- | ---------- | ------------------------------------- |  | ---------------------------------- |  | ----------------------------------------- | ---- |  | - | --------- | 
|Name                |  | Grant
 Date |            | Number
 of Shares
 Underlying Options |  | Exercise
 Price of
 Options ($/Sh) |  | Grant
 Date Fair
 Value of Option
 Awards |     
|                    |  |             |            |                                       |  |                                    |  |                                           |     
|Michael
 Lacovara   |  |             | 10/16/2007 |                                       |  | 750,000                            |  | $                                         | 5.00 |  | $ | 1,550,325 | 
|John J. Borer III   |  |             |           |                                       |  |                                   |  |                                           |     |  |   |          | 
|Thomas Pinou        |  |             |           |                                       |  |                                   |  |                                           |     |  |   |          | 
|Michael Vasinkevich |  |             |           |                                       |  |                                   |  |                                           |     |  |   |          | 
|Edward Rubin        |  |             |           |                                       |  |                                   |  |                                           |     |  |   |          | 
|John W. Chambers    |  |             |           |                                       |  |                                   |  |                                           |     |  |   |          | 

50

---



Outstanding Equity Awards as of December 31,
2007

The
following table provides information regarding each unexercised stock option
held by each of our named executive officers as of December 31, 2007. No
options were exercised during the year ended December 31, 2007.

|                     |  |                                                        |   |                      |  |                      |     |   |      |  |  |            | 
|-------------------- |  | ------------------------------------------------------ | - | -------------------- |  | -------------------- | --- | - | ---- |  |  | ---------- | 
|                     |  | Option
 Awards(1)                                      |  
|                     |  |                                                        |  
|                     |  | Number
 of Securities
 Underlying Unexercised
 Options |   | OptionExercise
Price |  | OptionExpirationDate |    
|                     |  |                                                        |   |                      | 
|Name                 |  | Exercisable                                            |   | Unexercisable        |  |                      |    
|                     |  |                                                        |   |                      |  |                      |     |   |     
|Michael Lacovara     |  |                                                        |   |                      |  | 750,000              | (1) | $ | 5.00 |  |  | 10/15/2017 | 
|John J.
 Borer III   |  |                                                        |  |                      |  |                     |     | $ |     |  |  |            | 
|Edward Rubin         |  |                                                        |  |                      |  |                     |     | $ |     |  |  |            | 
|Michael
 Vasinkevich |  |                                                        |  |                      |  |                     |     | $ |     |  |  |            | 
|Thomas Pinou         |  |                                                        |  |                      |  | 106,495              | (2) | $ | 3.78 |  |  | 04/01/2011 | 
|John W.
 Chambers    |  |                                                        |  |                      |  | 434,675              | (3) | $ | 3.78 |  |  | 11/20/2011 | 

|    |                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | The options vest in equal annual installments over a
 three year period.                                                                                                                                                                 
|    |                                                                                                                                                                                                                                          
|(2) | The options vest in equal quarterly installments over
 a two-year period beginning 15 months after the date of grant with 12.5% of
 the options becoming exercisable on each vesting date; and in any event in
 full as of July 10, 2008.
|    |                                                                                                                                                                                                                                          
|(3) | The options vest in equal quarterly installments over
 a two-year period beginning 15 months after the date of grant with 12.5% of
 the options becoming exercisable on each vesting date.                                               
|    |                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                          

Potential Payments upon Change of Control

The
following table and summary set forth potential payments payable to our named
executive officers upon a change of control. The table below reflects amounts
payable to our named executive officers assuming a change of control occurred
on December 31, 2007.

|                     |  |               |           |                            |   |           | 
|-------------------- |  | ------------- | --------- | -------------------------- | - | --------- | 
|Name                 |  | Cash
 Payment |           | Option/Stock
 Acceleration |  
|                     |  |               |           |                            |  
|Michael
 Lacovara    |  | $             | 1,850,000 |                            | $ | 4,787,590 | 
|John J.
 Borer III   |  | $             | 2,069,310 |                            |   |          | 
|Edward Rubin         |  | $             | 2,639,091 |                            |   |          | 
|Michael
 Vasinkevich |  | $             | 5,232,333 |                            |   |          | 
|Thomas Pinou         |  | $             |          |                            | $ | 20,812    | 
|John W. Chambers     |  | $             |          |                            |   |          | 

Director Compensation

Each
member of the Board of Directors who is not an employee will receive as
compensation for service on the Board of Directors: (i) an annual retainer of
$20,000; (ii) $1,000 for each meeting of the Board of Directors attended either
in person or telephonically; and (iii) an option to purchase 10,000 shares of
common stock, which was granted on October 16, 2007 and thereafter will be
granted on the date of each annual meeting of stockholders at which they are
reelected to the Board of Directors. The options will: (i) have an exercise
price equal to the fair market value of a share of common stock on the date of
grant; (ii) have a term of 10 years; and (iii) vest ratably in three equal
annual installments beginning on the first anniversary of the date of grant.
Non-employee directors will also receive $750 for each committee meeting
attended either in person or telephonically. Finally, the committee chairman
will receive an additional annual retainer as follows: (i) Audit Committee 
$12,500; (ii) Compensation Committee  $7,500; and (iii) Corporate Governance
and Nominating Committee  $5,000. Such additional compensation is intended to
reflect special efforts of such board members. Board members will be reimbursed
for reasonable travel expenses associated with attending any board or committee
meetings.

51

---



The
following table sets forth the compensation paid to our directors for the year
ended December 31, 2007.

DIRECTOR COMPENSATION

|                  |  |                                    |        |                    |  |                               |  |            |   |  |  |        | 
|----------------- |  | ---------------------------------- | ------ | ------------------ |  | ----------------------------- |  | ---------- | - |  |  | ------ | 
|Name              |  | Fees Earned or 
 Paid in Cash
 ($) |        | Option Awards
 ($) |  | All Other 
 Compensation
 ($) |  | Total
 ($) |  
|                  |  |                                    |        |                    |  |                               |  |            |  
|                 
|Sam Dryden        |  |                                    | 16,167 |                    |  | 1,447                         |  |            |  |  |  | 17,614 | 
|Richard Cohen     |  |                                    | 15,708 |                    |  | 1,447                         |  |            |  |  |  | 17,155 | 
|Winston Churchill |  |                                    | 9,500  |                    |  | 1,447                         |  |            |  |  |  | 10,947 | 
|Peter F. Drake    |  |                                    | 8,250  |                    |  | 1,447                         |  |            |  |  |  | 9,697  | 
|Mark L. Friedman  |  |                                    | 9,375  |                    |  | 1,447                         |  |            |  |  |  | 10,822 | 
|Marvin I. Haas    |  |                                    | 6,750  |                    |  | 1,447                         |  |            |  |  |  | 8,197  | 

Compensation Committee Interlocks and Insider
Participation

None
of our executive officers serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of the Board of Directors or Compensation Committee.

Compensation Committee Report

The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis set forth on pages 44 through 47 of this Report with management
and, based on such review and discussion, the Compensation Committee recommends
that it be included in this Report.

| |                                         
| | ----------------------------------------
| | Submitted by
 the Compensation Committee
| |                                         
| | Mark L.
 Friedman, chairman             
| | Sam Dryden                              
| | Marvin I.
 Haas                         

The
Compensation Committee Report does not constitute solicitation material and
shall not be deemed filed or incorporated by reference into any of our other
filings under the Securities Act or the Exchange Act, whether made before or
after the date hereof and irrespective of any general incorporation language in
any such filings.

Item 12.Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

The
following table sets forth information regarding beneficial ownership of our
common stock as of the date of this report by: (i) each stockholder known by us
to be the beneficial owner of more than 5% of the outstanding shares of our
common stock; (ii) each of our directors; (iii) each of our named executive
officers; and (iv) all of our directors and named executive officers as a
group.

Unless
otherwise indicated in the footnotes to this table, based on information furnished
by such stockholders, each of the stockholders named in this table has sole
voting and investment power with respect to the shares indicated as
beneficially owned.

52

---



|                                           |                                                                                                                       |                                      |   |            |  |  |      |  
|------------------------------------------ | --------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | - | ---------- |  |  | ---- | -
|                                           |                                                                                                                       | Common
 Stock
 Beneficially Owned(3) |  
|Name
and Address of
Beneficial Owner(1)(2) |                                                                                                                       |                                      |  
|                                           | Shares                                                                                                                |                                      | % |           
|                                           |                                                                                                                       |                                      |   |            | 
|Directors
 and Named Executive Officers:   |                                                                                                                       |                                      |   |            |  |  |     
|                                           | Wesley K. Clark(4)                                                                                                    |                                      |   | 435,980    |  |  | 1.2  | %
|                                           | Michael Vasinkevich(5)                                                                                                |                                      |   |           |  |  |     |  
|                                           | Michael Lacovara                                                                                                      |                                      |   | 896,429    |  |  | 2.6  | %
|                                           | John J. Borer III(6)                                                                                                  |                                      |   | 2,444,083  |  |  | 7.0  | %
|                                           | Edward Rubin(7)                                                                                                       |                                      |   | 12,711,683 |  |  | 36.2 | %
|                                           | Thomas Pinou(8)                                                                                                       |                                      |   | 505,320    |  |  | 1.4  | %
|                                           | John W. Chambers(9)                                                                                                   |                                      |   | 516,941    |  |  | 1.5  | %
|                                           | Sam Dryden(10)                                                                                                        |                                      |   | 38,628     |  |  | *    |  
|                                           | Richard Cohen                                                                                                         |                                      |   |           |  |  |     |  
|                                           | Winston Churchill(11)                                                                                                 |                                      |   | 255,671    |  |  | *    |  
|                                           | Mark L. Friedman                                                                                                      |                                      |   | 12,500     |  |  | *    |  
|                                           | Marvin I. Haas                                                                                                        |                                      |   | 4,000      |  |  | *    |  
|                                           | Peter F. Drake                                                                                                        |                                      |   | 16,100     |  |  | *    |  
|                                           | All officers and directors
as a group (14 persons)(12)                                                                |                                      |   | 17,837,335 |  |  | 49.8 | %
|5%
 Stockholders:                          |                                                                                                                       |                                      |   |            |  |  |     
|                                           | Steven A. Horowitz(7)c/o Moritt Hock Hamroff &
Horowitz 
400 Garden City Plaza, Suite 202
Garden City, New York 11530 |                                      |   | 12,711,683 |  |  | 36.2 | %

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|*    | Less than 1.0%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(1)  | Under the rules and regulations of the SEC,
 beneficial ownership includes: (i) shares actually owned; (ii) shares
 underlying options and warrants that are currently exercisable; and (iii)
 shares underlying options and warrants that are exercisable within 60 days of
 the date of this report. All shares beneficially owned by a particular person
 under clauses (ii) and (iii) of the previous sentence are deemed to be
 outstanding for the purpose of computing the percentage ownership of that
 person but are not deemed outstanding for the purpose of computing the
 percentage ownership of any other person.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(2)  | Unless otherwise indicated, the address for each
 person listed under Directors and Named Executive Officers is: c/o Rodman
 & Renshaw Capital Group, Inc., 1270 Avenue of the Americas, New York, New
 York 10020.                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(3)  | Based on 34,945,738 shares issued and outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(4)  | Common stock beneficially owned includes 425,980
 shares underlying options that are currently exercisable at $3.78 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(5)  | Mr. Vasinkevich does not beneficially own any shares.
 Revere, a former member of Holding, beneficially owns 12,711,683 shares. ARF
 Trust, a trust for the benefit of Mr. Vasinkevichs wife and children, owns a
 two-thirds membership interest in Revere. See note 7 below.                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(6)  | Includes 250,000 shares owned by a trust for the
 benefit of Mr. Borers children of which his wife is the trustee and 15,873
 shares owned by his wife of which Mr. Borer disclaims any pecuniary interest
 therein.                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(7)  | Shares owned by Revere, a former member of Holding.
 The members of Revere are the ARF Trust (two-thirds) and Edward Rubin and a
 trust for the benefit of his children (one-third). Steven A. Horowitz is the
 sole trustee of the ARF Trust and the wife and children of Michael
 Vasinkevich, our Vice Chairman, are its beneficiaries. Each of Messrs. Rubin
 and Horowitz has voting and disposition rights over all of the shares owned
 by Revere.                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(8)  | Common stock beneficially owned includes 53,248
 shares underlying options that are currently exercisable or exercisable
 within 60 days of the date of this report at $3.78.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(9)  | Common stock beneficially owned reflects 217,338
 shares underlying options that are currently exercisable at $3.78 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(10) | Common stock beneficially owned includes 6,778 shares
 underlying Warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(11) | Common stock beneficially owned includes 28,806
 shares underlying Warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(12) | Common stock beneficially owned includes 732,150 shares
 underlying options and warrants that are currently exercisable or exercisable
 within 60 days of the date of this report.                                                                                                                                                                                                                                                                                                                                                                                                                                               

Item 13. Certain
Relationships and Related Transactions, and Director Independence

Reorganization Transactions and Corporate
Structure

On
July 10, 2007, the Exchange was consummated. See Part I, Item 1 hereof and Note
1 to RRCGs Consolidated Financial Statements of this report for a more
complete description of the Exchange.

53

---



Distributions

From
January 1, 2004 through December 31, 2007, we distributed an aggregate of $9.2
million in cash to Revere and R&R, which then distributed an aggregate of
$7.7 million to John J. Borer III and Thomas Pinou, stockholders of R&R,
and to Edward Rubin, and the ARF Trust, the beneficiaries of which are the wife
and children of Michael Vasinkevich, the members of Revere. This is in addition
to any amount paid to Messrs. Vasinkevich, Borer, Rubin and Pinou as
compensation.

Pursuant
to a Distribution Agreement, dated as of July 9, 2007, on July 9, 2007, we
distributed $5.0 million to Revere and R&R, of which $4.2 million was then
distributed to John J. Borer III, Thomas Pinou, Edward Rubin and the ARF Trust.
This distribution represented approximately 70% of the taxes payable on our
estimated taxable income for the period beginning on January 1, 2007 and ending
on the Exchange Date (the Short Year) based on the maximum combined
individual federal, New York State and New York City income tax rate of 45.498%
(the Maximum Rate). As soon as reasonably practicable, we will calculate our
actual taxable income for the Short Year and then make a final distribution to
Revere and the former stockholders of R&R, who are now our stockholders
(pro rata in accordance with their former interests in R&R), in an amount
equal to the taxes payable, based on the Maximum Rate, on our actual taxable
income for the Short Year over the amount distributed to Revere and R&R on
July 9, 2007. In the event the amount distributed on July 9, 2007 exceeds the
actual taxes payable with respect to our actual taxable income for the Short
Year, Revere and the former stockholders of R&R are obligated to reimburse
us for such excess distribution.

In
March 2007, we distributed 85% of the beneficial interests in equity
securities, including stock and warrants, of 62 companies, to Revere (59.5%)
and R&R (25.5%), retaining 15%. We, Revere and RCG then contributed our
interests in these securities to RRPR in exchange for membership interests in
the same proportion that we owned the securities. Revere is owned two-thirds by
a trust whose beneficiaries are the wife and children of Michael Vasinkevich,
and one-third by Edward Rubin, and R&R was owned 40.7% by John J. Borer III
and 7.2% by Thomas Pinou. The value of the securities on the date of transfer
was $11.9 million. As a result of the Exchange, we own 40.5% of RRPR  15.0%
through our ownership of Holding and 29.5% through our ownership of R&R.

In
March 2007, we assigned our rights to fees associated with three pending
financing transactions to our members, Revere and R&R, in accordance with
their then ownership interests in us. These financing transactions were
consummated in April, July and September 2007 and the net fees associated with
these transactions were paid to Revere and the former stockholders of R&R.

Related Employees

Cynthia
Van Osch, the wife of John Borer a director, our Co-Head of Investment Banking
and our former Chief Executive Officer, is employed by the broker-dealer as
vice president, institutional trading. During 2007 Ms. Van Osch received
$417,399 for services rendered.

Director and Officer Indemnification

We
have entered into indemnity agreements with our directors and officers
indemnifying them against all losses, damages, costs and expenses incurred by
them arising out of their service in such capacity, subject to the limitations
imposed by Delaware law. This agreement is in addition to our indemnification
obligations under our bylaws.

Tax Indemnification Agreement

Prior
to the Exchange, we operated as a limited liability company (treated as a
partnership for income tax purposes) and, as such, our former members, Revere
and R&R, generally, will be liable for adjustments to taxes (including
federal and state income taxes) attributable to our operations prior to the
Exchange. In connection with the Exchange, we entered into a tax
indemnification agreement to indemnify Revere and R&R, and their respective
members and stockholders, including John J. Borer III, Edward Rubin, Thomas
Pinou and a trust for the benefit of the wife and children of Michael
Vasinkevich, against increases in taxes that relate to our activities prior to
the Exchange. The tax indemnification agreement includes provisions that permit
us to control any tax proceeding or contest which might result in our being
required to make a payment under the tax indemnification agreement.

54

---



Policies and Procedures for Related Party
Transactions

We
adopted a code of business conduct and ethics, pursuant to which our executive
officers, directors and principal stockholders, including their immediate
family members and affiliates, are not permitted to enter into a related party
transaction with us without the prior consent of our Audit Committee, or other
independent committee of the Board of Directors in the case where it is
inappropriate for our Audit Committee to review such a transaction due to a
conflict of interest. All of our directors, executive officers and employees
are required to report to our Audit Committee any such related party
transaction. In approving or rejecting the proposed transaction, our Audit
Committee will consider the relevant facts and circumstances available and
deemed relevant to the Audit Committee, including, but not limited to the
risks, costs and benefits to us, the terms of the transaction, the availability
of other sources for comparable services or products, and, if applicable, the
impact on a directors independence. The Audit Committee will approve only
those agreements that, in light of known circumstances, are in, or are not
inconsistent with, our best interests, as the Audit Committee determines in the
good faith exercise of its discretion.

Item 14. Principal Accounting Fees and Services.

Audit Committee Pre-Approval Policy

Under
the policies and procedures established by our Audit Committee, each engagement
for audit and permissible non-audit services to be provided by our independent
registered public accounting firm must be approved by the Audit Committee. The
preapproval policy prohibits the independent registered public accounting firm
from providing the following services: bookkeeping or other services related to
our accounting records or financial statements; financial information systems
design and implementation; appraisal or valuation services; fairness opinions
or contribution-in-kind reports; actuarial services; internal audit outsourcing
services; management function services; human resource services; broker-dealer,
investment adviser or investment banking services; legal services; and expert
services unrelated to the audit.

Service Fees Paid to the Independent
Registered Public Accounting Firm

Marcum
& Kleigman served as our independent auditors with respect to the fiscal
years ended December 31, 2007 and 2006. the following is the breakdown of
aggregate fees paid to Marcum & Kleigman for the last two fiscal years:

|                       |  |      |         |      |   |         | 
|---------------------- |  | ---- | ------- | ---- | - | ------- | 
|                       |  | 2007 |         | 2006 |  
|                       |  |      |         |      |  
|                      
|Audit Fees             |  | $    | 685,000 |      | $ | 457,000 | 
|Audit Related
 Fees(1) |  |      | 110,000 |      |   |        | 
|Tax Fees(2)            |  |      | 34,000  |      |   | 21,000  | 
|                       |  |      |         |      |   |         | 
|Total                  |  | $    | 829,000 |      | $ | 478,000 | 
|                       |  |      |         |      |   |         | 

| |     |                                                                                           
| | --- | ------------------------------------------------------------------------------------------
| | (1) | Audit
 services in connection with accounting consultations and internal control
 reviews.
| |     |                                                                                           
| | (2) | Consists
 primarily of tax compliance and planning.                                       

PART IV

Item 15.Exhibits
and Financial Statement Schedules

| |     |                                                           
| | --- | ----------------------------------------------------------
| | (a) | The
 following documents are filed as part of this Report:

1.
Financial Statements. The
following financial statements and the report of RRCGs independent auditor
thereon, are filed herewith.

55

---



|   |                                                               |                                                                                                                  
|-- | ------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------
|   |                                                              | Report of
 Independent Registered Public Accounting Firm                                                         
|   |                                                               |                                                                                                                  
|   |                                                              | Consolidated
 Statements of Financial Condition as of December 31, 2007 and 2006                                 
|   |                                                               |                                                                                                                  
|   |                                                              | Consolidated
 Statements of Operations for the years ended December 31, 2007, 2006 and 2005                      
|   |                                                               |                                                                                                                  
|   |                                                              | Consolidated
 Statements of Changes in Stockholders Equity for the years ended December
 31, 2007, 2006 and 2005
|   |                                                               |                                                                                                                  
|   |                                                              | Consolidated
 Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005                      
|   |                                                               |                                                                                                                  
|   |                                                              | Notes to
 Consolidated Financial Statements                                                                      
|   |                                                               |                                                                                                                  
|2. | Financial Statement Schedules.                               
|   |                                                              
|   | None                                                         
|   |                                                              
|3. | Exhibits Incorporated by Reference or Filed with this Report.

|                |     |             |                                                                                                          
|--------------- | --- | ----------- | ---------------------------------------------------------------------------------------------------------
|Exhibit
 Number |     | Description
|                |     |            
|3.1             | (a) |             | Certificate
 of Incorporation (1)                                                                        
|               
|3.1             | (b) |             | Amendment to
 Certificate of Incorporation (2)                                                           
|               
|3.2             |     |             | Bylaws(1)                                                                                                
|               
|4.1             |     |             | Specimen
 stock certificate(2)                                                                           
|               
|4.2             |     |             | Form of
 Enthrust Common Stock Purchase Warrant(3)                                                       
|               
|4.3             |     |             | Registration
 Rights Agreement dated July 10, 2007(3)                                                    
|               
|10.1            |     |             | 2007 Stock
 and Incentive Plan(2)                                                                        
|               
|10.2            |     |             | Michael
 Vasinkevich Employment Agreement, as amended(3)                                                 
|               
|10.3            |     |             | John J.
 Borer III Employment Agreement, as amended(3)                                                   
|               
|10.4            |     |             | Edward Rubin
 Employment Agreement, as amended(3)                                                        
|               
|10.5            |     |             | Amended and
 Restated Wesley Clark Employment Agreement(3)                                               
|               
|10.6            |     |             | Form of Tax
 Indemnification Agreement, dated as of July 10, 2007(3)                                     
|               
|10.7            |     |             | Form of
 Indemnification Agreement, dated as of July 10, 2007(3)                                         
|               
|10.8            |     |             | Michael
 Lacovara Employment Agreement(2)                                                                
|               
|10.9            |     |             | Executive
 Bonus Plan(2)                                                                                 
|               
|16.1            |     |             | Lazar Levine
 & Felix LLP letter re change in certifying accountant(3)                                   
|               
|21.1            |     |             | Subsidiaries(2)                                                                                          
|               
|31.1            |     |             | Certification
 of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
 Act of 2002*
|               
|31.2            |     |             | Certification
 of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
 Act of 2002*
|               
|32.1            |     |             | Certification
 of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
 Act of 2002*
|               
|32.2            |     |             | Certification
 of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
 Act of 2002*

| |     |                                                                                                                                                                 
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | *   | Filed herewith.                                                                                                                                                 
| |     |                                                                                                                                                                 
| | (1) | Filed as an exhibit to our
 Current Report on Form 8-K filed on January 22, 2007 and incorporated herein
 by reference.                                         
| |     |                                                                                                                                                                 
| | (2) | Filed as an exhibit to
 Amendment #1 to our Registration Statement on Form S-1 (SEC No. 333-144684)
 on September 20, 2007 and incorporated herein by reference.
| |     |                                                                                                                                                                 
| | (3) | Filed as an exhibit to our
 Current Report on Form 8-K filed on July 11, 2007 and incorporated herein by
 reference.                                            
| |     |                                                                                                                                                                 
| | (4) | Filed as an exhibit to
 Amendment #2 to our Registration Statement on Form S-1 (SEC No. 333-144684)
 on October 12, 2007 and incorporated herein by reference.  

56

---



SIGNATURES

Pursuant
    to the requirements of Section 13 or 15(d) of the Securities Exchange Act
    of 1934, Rodman & Renshaw Capital Group, Inc. has duly caused this report
    to be signed on its behalf by the undersigned, thereunto duly authorized.

| |                                                |                                                                                         
| | ---------------------------------------------- | ----------------------------------------------------------------------------------------
| | RODMAN & RENSHAW CAPITAL GROUP,
          INC.
|
| | By:                                            | /s/ THOMAS PINOU                                                                        
| |                                                |                                                                                         
| |                                                | Thomas Pinou Chief Financial Officer
      (principal financial and accounting officer)

Date: March 14, 2008

Pursuant
    to the requirements of the Securities Exchange Act of 1934, this report has
    been signed below by the following persons on behalf of Rodman & Renshaw
    Capital Group, Inc. and in the capacities indicated on this March 14, 2008.

|                        |                                                       
|----------------------- | ------------------------------------------------------
|/s/ MICHAEL LACOVARA    | Chief Executive Officer and Director                  
|                        | (principal executive officer)                         
|Michael Lacovara        |                                                       
|                        |                                                       
|/s/ THOMAS PINOU        | Chief Financial Officer                               
|                        | (principal financial and accounting
          officer)
|Thomas Pinou            |                                                       
|                        |                                                       
|/s/ WESLEY K. CLARK     | Chairman and Director                                 
|                        |                                                       
|Wesley K. Clark         |                                                       
|                        |                                                       
|/s/ MICHAEL VASINKEVICH | Vice Chairman and Director                            
|                        |                                                       
|Michael Vasinkevich     |                                                       
|                        |                                                       
|/s/ EDWARD RUBIN        | President and Director                                
|                        |                                                       
|Edward Rubin            |                                                       
|                        |                                                       
|/s/ JOHN J. BORER III   | Senior Managing Director, Co-Head
          of        
|                        | Investment Banking and Director                       
|John J. Borer III       |                                                       
|                        |                                                       
|/s/ SAM DRYDEN          | Director                                              
|                        |                                                       
|Sam Dryden              |                                                       
|                        |                                                       
|/s/ RICHARD M. COHEN    | Director                                              
|                        |                                                       
|Richard M. Cohen        |                                                       
|                        |                                                       
|/s/ WINSTON CHURCHILL   | Director                                              
|                        |                                                       
|Winston Churchill       |                                                       

57

---



|                     |         
|-------------------- | --------
|/s/ MARK L. FRIEDMAN | Director
|                     |         
|Mark L. Friedman     |         
|                     |         
|/s/ MARVIN I. HAAS   | Director
|                     |         
|Marvin I. Haas       |         
|                     |         
|/s/ PETER F. DRAKE   | Director
|                     |         
|Peter F. Drake       |         

58

---



RODMAN & RENSHAW CAPITAL GROUP, INC.

INDEX TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

|                                                                                                                     |  |     
|-------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                     |  | Page
|                                                                                                                    
|Report of Independent Registered
Public Accounting
 Firm                                                             |  | F-2 
|                                                                                                                     |  |     
|Consolidated Statements of
Financial Condition as of
 December 31, 2007 and 2006                                     |  | F-3 
|                                                                                                                     |  |     
|Consolidated Statements of
Operations and
 Comprehensive Income for the years ended December 31, 2007, 2006 and 2005 |  | F-4 
|                                                                                                                     |  |     
|Consolidated Statement of Changes
in Stockholders
 Equity for the years ended December 31, 2007, 2006 and 2005      |  | F-5 
|                                                                                                                     |  |     
|Consolidated Statements of Cash
Flows for the years
 ended December 31, 2007, 2006 and 2005                          |  | F-6 
|                                                                                                                     |  |     
|Notes to Consolidated Financial
Statements                                                                           |  | F-8 

F-1

---



RODMAN & RENSHAW CAPITAL GROUP, INC.

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee of the 
  Board
of Directors and Stockholders 
of Rodman & Renshaw Capital Group, Inc.

We have
audited the accompanying consolidated statements of financial condition of
Rodman & Renshaw Capital Group, Inc. and subsidiaries (the Company)
as of December 31, 2007 and 2006, and the related consolidated statements of
operations and comprehensive income, changes in stockholders equity and
cash flows for the years ended December 31, 2007, 2006 and 2005. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted
our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining
on a test basis evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our
opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Rodman
& Renshaw Capital Group, Inc. and subsidiaries as of December 31, 2007
and 2006, and the results of their operations and their cash flows
for the years ended December 31, 2007, 2006 and 2005, in conformity with
United States generally accepted accounting principles.

/s/ MARCUM
& KLIEGMAN LLP
New York, New York

March 14, 2008

F-2

---



RODMAN & RENSHAW CAPITAL GROUP, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
AS AT DECEMBER 31,

|                                                                                                                                                                 |  |      |            |      |   |            | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | 
|                                                                                                                                                                 |  | 2007 |            | 2006 |  
|                                                                                                                                                                 |  |      |            |      |  
|                                                                                                                                                                 |  |      |            |      |   |            | 
|Cash and cash equivalents                                                                                                                                        |  | $    | 54,834,189 |      | $ | 10,386,868 | 
|Securities owned:                                                                                                                                                |  |      |            |      |   |            | 
|Marketable, at market
value                                                                                                                                      |  |      | 1,120,841  |      |   | 2,358,675  | 
|Non-marketable                                                                                                                                                   |  |      | 3,307,702  |      |   | 11,797,813 | 
|Private placement and other fees
receivable                                                                                                                      |  |      | 967,473    |      |   | 2,500,216  | 
|Due from clearing broker                                                                                                                                         |  |      | 1,888,854  |      |   | 1,124,144  | 
|Deposit with clearing broker                                                                                                                                     |  |      | 110,170    |      |   | 105,794    | 
|Prepaid expenses                                                                                                                                                 |  |      | 688,550    |      |   | 228,926    | 
|Deferred income taxes                                                                                                                                            |  |      | 2,258,301  |      |   |           | 
|Investment in and due from affiliates                                                                                                                            |  |      | 3,598,172  |      |   |           | 
|Property and equipment, net                                                                                                                                      |  |      | 913,645    |      |   | 1,325,881  | 
|Other assets                                                                                                                                                     |  |      | 134,620    |      |   | 134,620    | 
|Goodwill                                                                                                                                                         |  |      | 2,049,690  |      |   | 1,938,714  | 
|Assets associated with discontinued
operations                                                                                                                   |  |      |           |      |   | 6,204,531  | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|TOTAL ASSETS                                                                                                                                                     |  | $    | 71,872,207 |      | $ | 38,106,182 | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|LIABILITIES
 AND STOCKHOLDERS EQUITY                                                                                                                           
|LIABILITIES                                                                                                                                                     
|                                                                                                                                                                 |  |      |            |      |   |            | 
|Accrued compensation payable                                                                                                                                     |  | $    | 6,140,839  |      | $ | 6,864,801  | 
|Accounts payable and accrued expenses                                                                                                                            |  |      | 2,914,468  |      |   | 2,523,435  | 
|Conference deposits                                                                                                                                              |  |      | 15,443     |      |   | 222,591    | 
|Securities sold, not yet purchased, at market
value                                                                                                              |  |      | 147,663    |      |   |           | 
|Due to affiliate                                                                                                                                                 |  |      | 382,963    |      |   |           | 
|Distributions payable                                                                                                                                            |  |      | 1,440,000  |      |   |           | 
|Deferred income taxes                                                                                                                                            |  |      |           |      |   | 327,100    | 
|Income taxes payable                                                                                                                                             |  |      | 48,067     |      |   | 413,732    | 
|Minority interests and other liabilities
associated with discontinued
 operations                                                                                |  |      |           |      |   | 5,715,867  | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|TOTAL LIABILITIES                                                                                                                                                |  | $    | 11,089,443 |      | $ | 16,067,526 | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|COMMITMENTS AND CONTINGENCIES                                                                                                                                    |  |      |            |      |   |            | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|MINORITY INTERESTS                                                                                                                                               |  | $    | 14,604     |      | $ | 12,833     | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|STOCKHOLDERS EQUITY                                                                                                                                             |  |      |            |      |   |            | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|Preferred stock, $0.001, par value; 1,000,000
shares authorized; none issued                                                                                     |  |      |           |      |   |           | 
|Common stock, $0.001, par value; 100,000,000
shares authorized;
 33,750,000 and 18,159,547 issued and outstanding as of December 31, 2007 and 2006,
respectively |  |      | 33,750     |      |   | 18,159     | 
|Deferred stock compensation                                                                                                                                      |  |      | (3,345,788 | )    |   |           | 
|Additional paid-in capital                                                                                                                                       |  |      | 65,690,860 |      |   | 348,256    | 
|Accumulated other comprehensive income (loss),
net of income taxes                                                                                               |  |      | (140,757   | )    |   | 1,001,664  | 
|Retained earnings (deficit)                                                                                                                                      |  |      | (1,469,905 | )    |   | 20,657,744 | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|TOTAL STOCKHOLDERS
EQUITY                                                                                                                                       |  |      | 60,768,160 |      |   | 22,025,823 | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|                                                                                                                                                                 |  |      |            |      |   |            | 
|TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY                                                                                                                       |  | $    | 71,872,207 |      | $ | 38,106,182 | 
|                                                                                                                                                                 |  |      |            |      |   |            | 

The accompanying notes are an integral part of these consolidated financial
statements

F-3

---



RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31,

|                                                                              |  |      |            |      |   |            |  |   |            | 
|----------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- |  | - | ---------- | 
|                                                                              |  | 2007 |            | 2006 |   | 2005       | 
|                                                                              |  |      |            |      |   |            | 
|REVENUES                                                                      |  |      |            |      |   |            |  |   |            | 
|Private placement, underwriting and advisory
fees                             |  | $    | 57,333,683 |      | $ | 43,080,933 |  | $ | 17,887,426 | 
|Gains on securities and principal transactions,
net                           |  |      | 3,836,295  |      |   | 10,743,634 |  |   | 7,348,968  | 
|Commissions                                                                   |  |      | 6,913,476  |      |   | 5,160,576  |  |   | 2,428,466  | 
|Conference fees                                                               |  |      | 2,472,013  |      |   | 2,092,591  |  |   | 1,488,194  | 
|Interest and other income                                                     |  |      | 883,071    |      |   | 187,419    |  |   | 101,735    | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|TOTAL REVENUES                                                                |  |      | 71,438,538 |      |   | 61,265,153 |  |   | 29,254,789 | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|OPERATING EXPENSES                                                            |  |      |            |      |   |            |  |   |            | 
|Employee compensation and related
benefits                                    |  |      | 40,435,644 |      |   | 26,109,773 |  |   | 15,344,809 | 
|Other employee benefits                                                       |  |      | 498,032    |      |   | 410,495    |  |   | 279,303    | 
|Broker dealer commissions                                                     |  |      | 1,094,026  |      |   | 365,883    |  |   |           | 
|Conferences                                                                   |  |      | 5,903,295  |      |   | 4,748,330  |  |   | 3,672,746  | 
|Professional and consulting fees                                              |  |      | 6,236,223  |      |   | 6,181,207  |  |   | 1,492,183  | 
|Business development                                                          |  |      | 3,005,706  |      |   | 1,879,982  |  |   | 764,639    | 
|Communication and market research                                             |  |      | 1,980,612  |      |   | 1,451,894  |  |   | 670,574    | 
|Office                                                                        |  |      | 1,001,292  |      |   | 591,826    |  |   | 481,548    | 
|Occupancy and equipment rentals                                               |  |      | 1,085,393  |      |   | 827,964    |  |   | 446,410    | 
|Clearance and execution charges                                               |  |      | 504,789    |      |   | 417,943    |  |   | 266,265    | 
|Depreciation and amortization                                                 |  |      | 604,868    |      |   | 538,353    |  |   | 208,703    | 
|Miscellaneous                                                                 |  |      | 1,050,784  |      |   | 747,541    |  |   | 741,731    | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|TOTAL OPERATING EXPENSES                                                      |  |      | 63,400,664 |      |   | 44,271,191 |  |   | 24,368,911 | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|OPERATING INCOME                                                              |  |      | 8,037,874  |      |   | 16,993,962 |  |   | 4,885,878  | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|INTEREST EXPENSE                                                              |  |      | 3,771,570  |      |   |           |  |   |           | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES AND MINORITY
 INTERESTS |  |      | 4,266,304  |      |   | 16,993,962 |  |   | 4,885,878  | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|INCOME TAXES EXPENSE (BENEFIT)                                                |  |      | (440,066   | )    |   | 879,390    |  |   | 394,872    | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY
INTERESTS                   |  |      | 4,706,370  |      |   | 16,114,572 |  |   | 4,491,006  | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|MINORITY INTERESTS IN LOSS OF
SUBSIDIARIES                                    |  |      | 35,867     |      |   | 65,724     |  |   | 17,706     | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|INCOME FROM CONTINUING OPERATIONS                                             |  |      | 4,742,237  |      |   | 16,180,296 |  |   | 4,508,712  | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|DISCONTINUED OPERATIONS (NOTE 3)                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|Income (loss) from discontinued
operations                                    |  |      | (2,277,633 | )    |   | 2,591,973  |  |   |           | 
|Income tax expense (benefit)                                                  |  |      | (91,580    | )    |   | 14,085     |  |   |           | 
|Minority interest in discontinued
operations                                  |  |      | (2,202,649 | )    |   | 2,239,836  |  |   |           | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|INCOME FROM DISCONTINUED OPERATIONS                                           |  |      | 16,596     |      |   | 338,052    |  |   |           | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|NET INCOME                                                                    |  |      | 4,758,833  |      |   | 16,518,348 |  |   | 4,508,712  | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|OTHER COMPREHENSIVE INCOME
(LOSS)                                             |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|Reclassification adjustment for realized gains on
investments                 |  |      | (1,001,664 | )    |   |           |  |   |           | 
|Unrealized (loss) gain on investment, net of
income taxes                     |  |      | (140,757   | )    |   | 1,001,664  |  |   |           | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|COMPREHENSIVE INCOME                                                          |  | $    | 3,616,412  |      | $ | 17,520,012 |  | $ | 4,508,712  | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:                          |  |      |            |      |   |            |  |   |            | 
|Basic                                                                         |  |      | 23,039,216 |      |   | 18,159,547 |  |   | 18,159,547 | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|Diluted                                                                       |  |      | 24,023,897 |      |   | 18,484,688 |  |   | 18,159,547 | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|NET INCOME PER SHARE OF COMMON STOCK 
BASIC                                  |  |      |            |      |   |            |  |   |            | 
|Income from continuing operations                                             |  | $    | 0.21       |      | $ | 0.89       |  | $ | 0.25       | 
|Income from discontinued operations                                           |  |      | 0.00       |      |   | 0.02       |  |   | 0.00       | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|Net Income                                                                    |  | $    | 0.21       |      | $ | 0.91       |  | $ | 0.25       | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|NET INCOME PER SHARE OF COMMON STOCK 
DILUTED                                |  |      |            |      |   |            |  |   |            | 
|Income from continuing operations                                             |  | $    | 0.20       |      | $ | 0.88       |  | $ | 0.25       | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|Income from discontinued operations                                           |  |      | 0.00       |      |   | 0.02       |  |   | 0.00       | 
|                                                                              |  |      |            |      |   |            |  |   |            | 
|Net Income                                                                    |  | $    | 0.20       |      | $ | 0.90       |  | $ | 0.25       | 
|                                                                              |  |      |            |      |   |            |  |   |            | 

The accompanying notes are an integral part of these consolidated
financial statements

F-4

---



RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS
EQUITY

|                                                                                     |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   |             |   |   |             |  
|------------------------------------------------------------------------------------ |  | ------------- |  | --------------- | ------ | ---------------- | - | ----------- | -------- | ----------------------------- | ------------------ | -------- | - | ---------- | - | - | ----------- | - | - | ----------- | -
|                                                                                     |  |               |  |                 |        |                  |   |             |          | AccumulatedOtherComprehensive |                    |          |   |            |  
|                                                                                     |  | Common
 Stock |  |                 |        |                  |   |             |          |                               | TotalStockholders |         
|                                                                                     |  |               |  | Deferred
 Stock |        | Additional
 Paid |   |             | Retained |                               |                   
|                                                                                     |  | Shares        |  | Amount          |        | Compensation     |   | In
 Capital |          | Income                        |                    | Earnings |   | Equity     |  
|                                                                                     |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |  
|Balance-January
 1, 2005                                                             |  | 18,159,547    |  | $               | 18,159 |                  |   |             |          | $                             | (18,159            | )        |   |            |   | $ | 4,141,678   |   | $ | 4,141,678   |  
|Distributions                                                                        |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   | (345,994    | ) |   | (345,994    | )
|Net income                                                                           |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   | 4,508,712   |   |   | 4,508,712   |  
|                                                                                     |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   |             |   |   |             |  
|Balance-December
 31, 2005                                                           |  | 18,159,547    |  |                 | 18,159 |                  |   |             |          |                               | (18,159            | )        |   |            |   |   | 8,304,396   |   |   | 8,304,396   |  
|                                                                                     |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   |             |   |   |             |  
|Stock based
 compensation                                                            |  |               |  |                 |        |                  |   |             |          |                               | 366,415            |          |   |            |   |   |             |   |   | 366,415     |  
|Unrealized gain
 on investments                                                      |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   | 1,001,664  |   |   |             |   |   | 1,001,664   |  
|Distributions                                                                        |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   | (4,165,000  | ) |   | (4,165,000  | )
|Net income                                                                           |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   | 16,518,348  |   |   | 16,518,348  |  
|                                                                                     |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   |             |   |   |             |  
|Balance-December
 31, 2006                                                           |  | 18,159,547    |  |                 | 18,159 |                  |   |             |          |                               | 348,256            |          |   | 1,001,664  |   |   | 20,657,744  |   |   | 22,025,823  |  
|                                                                                     |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   |             |   |   |             |  
|Reclassification
 adjustment for realized gain on investments, net of income taxes   |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   | (1,001,664 | ) |   |             |   |   | (1,001,664  | )
|Issuance of
 warrants                                                                |  |               |  |                 |        |                  |   |             |          |                               | 1,134,615          |          |   |            |   |   |             |   |   | 1,134,615   |  
|Beneficial
 conversion feature of debentures                                         |  |               |  |                 |        |                  |   |             |          |                               | 1,134,657          |          |   |            |   |   |             |   |   | 1,134,657   |  
|Contribution of
 tax benefit to the Corporation by the LLC Members                   |  |               |  |                 |        |                  |   |             |          |                               | 2,075,316          |          |   |            |   |   |             |   |   | 2,075,316   |  
|Enthrusts equity
 at the time of the exchange                                       |  | 350,627       |  |                 | 351    |                  |   |             |          |                               | (12,161            | )        |   |            |   |   | 11,810      |   |   |            |  
|Recapitalization
 of LLCs (Holding) accumulated deficit at the time of the exchange |  |               |  |                 |        |                  |   |             |          |                               | (3,599,614         | )        |   |            |   |   | 3,599,614   |   |   |            |  
|Stock issued for
 conversion of debentures                                           |  | 5,970,099     |  |                 | 5,970  |                  |   |             |          |                               | 20,426,288         |          |   |            |   |   |             |   |   | 20,432,258  |  
|Stock issued for
 investment in RRCG (excluding its investment in Holding)           |  | 519,727       |  |                 | 520    |                  |   |             |          |                               | 2,034,466          |          |   |            |   |   |             |   |   | 2,034,986   |  
|Issuance of
 restricted stock to employee                                            |  | 750,000       |  |                 | 750    |                  |   | (3,750,000  | )        |                               | 3,749,250          |          |   |            |   |   |             |   |   |            |  
|Distributions                                                                        |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   | (30,497,906 | ) |   | (30,497,906 | )
|Stock based
 compensation                                                            |  |               |  |                 |        |                  |   | 404,212     |          |                               | 2,136,981          |          |   |            |   |   |             |   |   | 2,541,193   |  
|Issuance of
 Common Stock                                                            |  | 8,000,000     |  |                 | 8,000  |                  |   |             |          |                               | 36,262,806         |          |   |            |   |   |             |   |   | 36,270,806  |  
|Unrealized loss
 on investments, net of income taxes                                 |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   | (140,757   | ) |   |             |   |   | (140,757    | )
|Net income                                                                           |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   | 4,758,833   |   |   | 4,758,833   |  
|                                                                                     |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   |             |   |   |             |  
|Balance-December
 31, 2007                                                           |  | 33,750,000    |  | $               | 33,750 |                  | $ | (3,345,788  | )        | $                             | 65,690,860         |          | $ | (140,757   | ) | $ | (1,469,905  | ) | $ | 60,768,160  |  
|                                                                                     |  |               |  |                 |        |                  |   |             |          |                               |                    |          |   |            |   |   |             |   |   |             |  

The
accompanying notes are an integral part of these consolidated financial
statements

F-5

---



RODMAN & RENSHAW CAPITAL GROUP, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR THE YEARS ENDED DECEMBER 31,

|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|--------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                                                          |  | 2007 |             | 2006 |   | 2005       |  
|                                                                                                          |  |      |             |      |   |            |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                      |  |      |             |      |   |            |   |   |            |  
|Income from continuing operations                                                                         |  | $    | 4,742,237   |      | $ | 16,180,296 |   | $ | 4,508,712  |  
|Adjustments to reconcile income from continuing operations to net cash
 provided by operating activities: |  |      |             |      |   |            |   |   |            |  
|Minority interest in subsidiaries                                                                         |  |      | (35,867     | )    |   | (65,724    | ) |   | (17,706    | )
|Minority share of the Companys contributions in subsidiaries,
net                                        |  |      | 20,797      |      |   | (15,945    | ) |   |           |  
|Depreciation and amortization                                                                             |  |      | 604,868     |      |   | 538,353    |   |   | 208,703    |  
|Stock based compensation                                                                                  |  |      | 2,541,193   |      |   | 366,415    |   |   |           |  
|Realized gain on available for sale investments                                                           |  |      | (1,001,664  | )    |   |           |   |   |           |  
|Write off of goodwill                                                                                     |  |      | 375,717     |      |   |           |   |   |           |  
|Interest (including amortization of debt discount and deferred
 financing costs)                          |  |      | 3,771,570   |      |   |           |   |   |           |  
|Deferred income taxes                                                                                     |  |      | (1,079,353  | )    |   | 302,414    |   |   | 16,097     |  
|Changes in operating assets and liabilities:                                                              |  |      |             |      |   |            |   |   |            |  
|Securities owned, marketable                                                                              |  |      | (224,083    | )    |   | (1,258,249 | ) |   | (43,398    | )
|Securities owned, non-marketable                                                                          |  |      | (1,968,951  | )    |   | (9,587,641 | ) |   | (1,112,212 | )
|Private placement and other fees receivable                                                               |  |      | 1,532,743   |      |   | (1,914,252 | ) |   | 1,559,733  |  
|Due from clearing broker                                                                                  |  |      | (764,710    | )    |   | (619,104   | ) |   | (352,085   | )
|Prepaid expenses                                                                                          |  |      | (457,706    | )    |   | 601,902    |   |   | (730,546   | )
|Prepaid income taxes                                                                                      |  |      |            |      |   | 85,053     |   |   | (85,053    | )
|Deposit with clearing broker                                                                              |  |      | (4,376      | )    |   | (4,438     | ) |   | (1,356     | )
|Other assets                                                                                              |  |      |            |      |   | 69,501     |   |   | (111,514   | )
|Securities sold, not yet purchased, at market value                                                       |  |      | 147,663     |      |   | (2,538     | ) |   | (3,312     | )
|Accrued compensation payable                                                                              |  |      | (723,962    | )    |   | 6,459,546  |   |   | (4,288,150 | )
|Accounts payable and accrued expenses                                                                     |  |      | 384,929     |      |   | 1,966,800  |   |   | (250,773   | )
|Income taxes payable                                                                                      |  |      | (388,171    | )    |   | 413,732    |   |   |           |  
|Investment, due to and due from affiliates, net                                                           |  |      | 266,813     |      |   |           |   |   |           |  
|Conference deposits                                                                                       |  |      | (207,148    | )    |   | (138,817   | ) |   | 267,008    |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|NET
 CASH PROVIDED BY (USED IN) CONTINUING OPERATIONS                                                     |  |      | 7,532,539   |      |   | 13,377,304 |   |   | (435,852   | )
|NET
 CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS                           |  |      | (2,011,761  | )    |   | 187,877    |   |   |           |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|NET
 CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                                      |  |      | 5,520,778   |      |   | 13,565,181 |   |   | (435,852   | )
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                      |  |      |             |      |   |            |   |   |            |  
|Purchases of property and equipment                                                                       |  |      | (192,632    | )    |   | (711,486   | ) |   | (1,163,957 | )
|Acquisition of public shell subsidiaries                                                                  |  |      | (463,748    | )    |   | (60,000    | ) |   | (824,400   | )
|Distributions from affiliate                                                                              |  |      | 1,148,646   |      |   |           |   |   |           |  
|Investment in RRCG (excluding its investment in Holding)                                                  |  |      | 159,815     |      |   |           |   |   |           |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|NET
 CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                                      |  |      | 652,081     |      |   | (771,486   | ) |   | (1,988,357 | )
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                                           |  |      |             |      |   |            |   |   |            |  
|Proceeds from issuance of senior convertible debentures and
warrants                                      |  |      | 20,000,000  |      |   |           |   |   |           |  
|Public offering of common stock, net of expenses                                                          |  |      | 36,270,806  |      |   |           |   |   |           |  
|Deferred financing costs                                                                                  |  |      | (1,070,040  | )    |   |           |   |   |           |  
|Distributions to members                                                                                  |  |      | (18,923,979 | )    |   | (4,165,000 | ) |   | (345,994   | )
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|NET
 CASH PROVIDED BY (USED IN) CONTINUING OPERATIONS                                                     |  |      | 36,276,787  |      |   | (4,165,000 | ) |   | (345,994   | )
|NET
 CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS                           |  |      | 1,997,675   |      |   | (187,877   | ) |   |           |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                                           |  |      | 38,274,462  |      |   | (4,352,877 | ) |   | (345,994   | )
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|NET
 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                     |  |      | 44,447,321  |      |   | 8,440,818  |   |   | (2,770,203 | )
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|CASH AND CASH EQUIVALENTS  BEGINNING OF YEAR                                                             |  |      | 10,386,868  |      |   | 1,946,050  |   |   | 4,716,253  |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  
|CASH AND CASH EQUIVALENTS  END OF YEAR                                                                   |  | $    | 54,834,189  |      | $ | 10,386,868 |   | $ | 1,946,050  |  
|                                                                                                          |  |      |             |      |   |            |   |   |            |  

The accompanying notes are an integral part
of these consolidated financial statements

F-6

---



RODMAN & RENSHAW CAPITAL GROUP, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS, (CONTINUED) 
FOR THE YEARS ENDED DECEMBER 31

|                                                                                      |  |      |            |      |   |          |   |   |          |  
|------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | -------- | - | - | -------- | -
|                                                                                      |  | 2007 |            | 2006 |   | 2005     |  
|                                                                                      |  |      |            |      |   |          |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                     |  |      |            |      |   |          |   |   |          |  
|Cash paid during the year for:                                                        |  |      |            |      |   |          |   |   |          |  
|Income taxes                                                                          |  | $    | 1,040,947  |      | $ | 220,106  |   | $ | 451,164  |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|NON-CASH INVESTING AND FINANCING ACTIVITIES                                           |  |      |            |      |   |          |   |   |          |  
|Conversion of preferred stock into common stock                                       |  |      |            |      | $ | 25,447   |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Distribution of beneficial interest in securities                                     |  | $    | 10,133,927 |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Estimated additional distribution with respect to pre-exchange
 members income taxes |  | $    | 1,440,000  |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Conversion of senior convertible debentures and accrued
interest                      |  | $    | 20,432,258 |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Contribution of income taxes benefit to the Corporation from the LLC
 Members         |  | $    | 2,075,316  |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Issuance of restricted stock to employee                                              |  | $    | 3,750,000  |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Investment in R&R:                                                                    |  |      |            |      |   |          |   |   |          |  
|Working capital deficit (excluding cash)                                              |  | $    | 19,300     |      |   |          |   |   |          |  
|Investment in RRPR                                                                    |  |      | (2,670,485 | )    |   |          |   |   |          |  
|Deferred income taxes liability                                                       |  |      | 776,014    |      |   |          |   |   |          |  
|Capital stock issued at par value                                                     |  |      | 520        |      |   |          |   |   |          |  
|Additional paid in capital                                                            |  | $    | 2,034,466  |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Cash received with investment                                                         |  | $    | 159,815    |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Acquisition of interest in Newtown Lane:                                              |  |      |            |      |   |          |   |   |          |  
|Fair
 value of net assets assumed                                                     |  | $    | 6,104      |      |   |          |   |   |          |  
|Goodwill
 recognized on purchase                                                      |  |      | (486,693   | )    |   |          |   |   |          |  
|Minority
 interest in fair value of net assets acquired                               |  |      | 16,841     |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Net cash paid in acquiring interest in Newtown Lane                                   |  | $    | (463,748   | )    |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Acquisition of interest in Twin Lakes:                                                |  |      |            |      |   |          |   |   |          |  
|Fair
 value of net liabilities assumed                                                |  |      |            |      | $ | 42,114   |   |   |          |  
|Goodwill
 recognized on purchase                                                      |  |      |            |      |   | (102,114 | ) |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Cash
 paid to acquire interest in Twin Lakes                                          |  |      |            |      | $ | (60,000  | ) |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Acquisition of interest in Enthrust:                                                  |  |      |            |      |   |          |   |   |          |  
|Fair
 value of net assets acquired                                                    |  |      |            |      |   |          |   | $ | (65,008  | )
|Goodwill
 recognized on purchase                                                      |  |      |            |      |   |          |   |   | (375,717 | )
|Minority
 interest in fair value of net assets acquired                               |  |      |            |      |   |          |   |   | (20,325  | )
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Net cash paid in acquiring interest in Enthrust                                       |  |      |            |      |   |          |   | $ | (420,400 | )
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Acquisition of interest in 24Holdings, Inc.:                                          |  |      |            |      |   |          |   |   |          |  
|Fair
 value of net assets acquired                                                    |  |      |            |      |   |          |   | $ | (100,000 | )
|Goodwill
 recognized on purchase                                                      |  |      |            |      |   |          |   |   | (370,436 | )
|Minority
 interest in fair value of net assets acquired                               |  |      |            |      |   |          |   |   | (66,436  | )
|                                                                                      |  |      |            |      |   |          |   |   |          |  
|Net cash paid in acquiring interest in 24Holdings                                     |  |      |            |      |   |          |   | $ | (404,000 | )
|                                                                                      |  |      |            |      |   |          |   |   |          |  

The accompanying notes are an integral part
of these consolidated financial statements

F-7

---



RODMAN & RENSHAW CAPITAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - Organization, Nature of
Operations and Basis of Presentation

Rodman
& Renshaw Capital Group, Inc. (the Company) is a Delaware holding company
which, through its various subsidiaries, is engaged in the investment banking
business. The Companys principal operating subsidiary is Rodman & Renshaw,
LLC (the Broker-Dealer), a Delaware limited liability company formed on June
20, 2002. The Broker-Dealer is registered with the Financial Industry
Regulatory Authority, Inc. (FINRA).

On
July 10, 2007 Rodman & Renshaw Holding, LLC (Holding) consummated a
reverse acquisition through an exchange transaction with its subsidiary,
Enthrust Financial Services, Inc. (Enthrust), which was a non-operating
public shell company. For accounting purposes, Holding is treated as the
continuing reporting entity and the acquisition has been treated as a
recapitalization of Enthrust with Holding as the acquirer. On August 31, 2007,
Enthrust changed its name to Rodman & Renshaw Capital Group, Inc. The
historical financial statements of the Company prior to July 10, 2007 are those
of Holding.

Exchange Transaction

On
July 10, 2007 (the Exchange Date), pursuant to an Exchange Agreement dated as
of July 10, 2007 (the Exchange Agreement), the beneficial owners of the
outstanding debt and equity securities of Holding consummated a reorganization
transaction (the Exchange) with Enthrust. As a result of the Exchange, the
beneficial owners of Holdings debt and equity securities became stockholders
of Enthrust. Prior to the Exchange, Enthrust was not engaged in any trade or
business and its common stock was listed on the OTC Bulletin Board. In addition,
prior to the Exchange, Holding owned 80% of Enthrust indirectly through a
subsidiary.

The
Exchange consisted of the following: (i) Paul Revere, LLC, a Delaware limited
liability company (Paul Revere), contributed its 70% membership interest in
Holding to Enthrust in exchange for 12,711,683 shares of Enthrusts common
stock, par value $.001 per share (the Common Stock); (ii) the stockholders of
R&R Capital Group, Inc. (R&R), which owned 30% of Holding and 25.5%
of RRPR, LLC (RRPR), a Delaware limited partnership, contributed all of their
RRCG shares to Enthrust in exchange for 5,967,591 (including 519,727 shares
attributable to the 25.5% interest in RRPR) shares of Common Stock; (iii) the
holders of the senior convertible debentures (Debentures) and the warrants
(Warrants) (see Note 7) issued by Holding contributed those securities to
Enthrust in exchange for 5,970,099 shares of Common Stock and warrants to
purchase 1,355,600 shares of Common Stock at $7.00 per share; and (iv) options held
by Holding employees to purchase up to 2,848,370 shares of Holdings shares at
prices ranging from $0.409 per share to $8.24 per share were exchanged for
options to acquire up to 5,278,071 shares of Common Stock at prices ranging
from $0.22 to $4.45 per share. In contemplation of the Exchange, on July 9,
2007, two Enthrust stockholders contributed 250,715 and 42,143 shares of Common
Stock, respectively, to the capital of Enthrust. In addition, immediately after
the Exchange, the 1,707,144 shares of Common Stock held indirectly by Holding
were cancelled. These 2,000,002 shares were retired and returned to the status
of authorized but unissued shares. As a result, after the Exchange, the former
beneficial owners of Holdings debt and equity securities owned 98.6% of
Enthrusts issued and outstanding shares of Common Stock.

F-8

---



On
the Exchange Date: (i) Enthusts president and chief financial officer
resigned; (ii) Enthrusts sole director appointed Holdings president
as a director of Enthrust; (iii) the two Enthrust directors appointed the officers
of Holding as the officers of Enthrust; (iv) the two Enthrust directors
appointed the other directors of Holding to be the directors of Enthrust,
effective as of the tenth day following the date on which Enthrust mailed an
Information Statement pursuant to Rule 14f-1 promulgated under the Exchange Act
to its stockholders; and (v) the original director of Enthrust resigned
effective as of the date the directors of Holding became the directors of
Enthrust. The Rule 14f-1 Information Statement was mailed on July 12, 2007 and
the Holding directors became directors of Enthrust on July 23, 2007.

Given
that immediately after the Exchange: (i) the former holders of Holdings debt
and equity securities owned 98.6% of the Companys issued and outstanding
shares of Common Stock; (ii) the officers of Holding became the officers of the
Company; (iii) the directors of Holding became the directors of the Company;
(iv) the Company changed its name to Rodman & Renshaw Capital Group, Inc.
to reflect the corporate identity of the Company; and (v) Enthrust was not
engaged in any trade or business prior to the Exchange so that after the
Exchange its only business is the business that had previously been conducted
by Holdings; for accounting purposes: (a) Holding was treated as the acquirer;
(b) the historical financial statements of Holding became the Companys
historical financial statements; and (c) the Exchange was accounted for as a
reverse acquisition and recapitalization of the Company.

Historical
members equity of Holding prior to the Exchange was retrospectively adjusted
for the par value of equivalent number of shares received by the members of
Holding. Transaction costs incurred in connection with the Exchange have been
charged directly to equity only to the extent of the cash received; costs in
excess of cash received are charged to expense.

The Companys significant subsidiaries are as
follows:

Rodman & Renshaw, LLC and Techvest,
LLC

The
Broker-Dealer is a full-service investment banking firm specializing in
investment banking services to corporations and businesses and the trading and
sale of primarily equity securities. The Broker-Dealer assists emerging growth
    companies through capital raising, strategic advice, insightful research,
    and the development of institutional support. The Broker-Dealer is an introducing
    broker and clears all transactions through a clearing organization on a fully
    disclosed basis. Accordingly, the Broker-Dealer is exempt from rule 15c3-3
of the Securities and Exchange Act of 1934, as amended.

Techvest,
LLC (Techvest) is a New York limited liability company engaged in the
business of conducting a conference management business for the benefit of the
Broker-Dealer.

R&R Biotech Partners, LLC

On
April 1, 2004, R&R Biotech Partners, LLC (R&R Biotech) was formed as
a wholly-owned subsidiary of the Company for the purpose of making investments
primarily in biotechnology and other emerging companies. In addition to making
investments in operating companies, R&R Biotech has made several
investments in public company corporate shells for use by prospective
investment banking clients that desire to go public by effecting a reverse
merger. R&R Biotechs ownership interests in these corporate shell
companies are up to 80%. The accounting treatment with respect to these
investments is
either consolidation, equity method, cost method or fair value depending on the percentage of ownership interests.

F-9

---



During
the years ended December 31, 2005 and 2004, R&R Biotech incorporated five
blank check companies, as defined by the Securities and Exchange Commission
(the SEC), which are named R&R Acquisition I through V, Inc. (Delaware
corporations).

On
March 31, 2006, R&R Acquisition I, Inc. changed its name to Global
Employment Holdings, Inc. (GEH) and GEH entered into a merger agreement with
Global Employment Solutions, Inc. (GES), resulting in GES being 100% owned by
GEH, effective April 10, 2006. In connection with these transactions, R&R
Biotech contributed shares
back to GEH, leaving it with a 2.4% interest in GEH. The investment in GEH was distributed to RRPR, LLC on February 28,
2007 (see Notes 5 and 13).

On
September 30, 2006, pursuant to a Common Stock Purchase Agreement entered into
on September 20, 2006, R&R Acquisition II, Inc. (RRA-II) closed on a
private placement transaction whereby it sold 10,000,000 shares of its common
stock to SENK, LLC, an Illinois limited liability company, in exchange for
aggregate gross proceeds of $60,000. At December 31, 2007, R&R Biotech owns 2,000,000 shares of RRA-II,
representing a 16% interest, which is carried at cost.

On
November 17, 2006, pursuant to a Common Stock Purchase Agreement entered into
on such date, R&R Acquisition IV, Inc. (RRA-IV) closed on a private
placement transaction whereby it sold 10,000,000 shares of its common stock to
MAP III, LLC, an Illinois limited liability company, in exchange for aggregate
gross proceeds of $66,000. At December 31, 2006, R&R Biotech, owns
2,000,000 shares of RRA-IV, representing a 16% interest, which is carried at
cost.

At
various times during the year ended December 31, 2006, R&R Biotech
incorporated eight blank check companies, as defined by the SEC, which were
named R&R Acquisition VI-X, Inc. (Delaware corporations formed in June
2006) and Rodman International Enterprise I-III, Ltd (British Virgin Island
(BVI) Business Companies formed on July 6, 2006).

In
addition, during the year ended December 31, 2005, R&R Biotech purchased
interests in three public company corporate shells, including 24Holdings, Inc., Enthrust (see above and Note 8) and
Castle & Morgan Holdings, Inc. (C&M).

At
various dates during 2005 and through May 18, 2006, R&R Biotech purchased
(1) 450,196 shares of common stock of C&M, which represented a 35.5%
interest in this public reporting entity; and (2) a convertible note with a
face value of $47,705, which was convertible into 636,057 shares of common
stock of C&M. On May 24, 2006, C&M entered into a share and warrant
exchange agreement with Osteologix A/S, a privately owned Danish company, resulting
in Osteologix A/S being wholly owned by C&M. In addition, Osteologix, Inc.,
a Georgia corporation (Osteologix) and wholly owned subsidiary of
Osteologix A/S, merged into C&M and Osteologix was the surviving entity.
In connection with these transactions, R&R Biotech exchanged the convertible
note for 636,057 shares of common stock and sold 152,076 shares to a third party
in exchange for $100,000 cash consideration, leaving the Company with 934,177
shares of Osteologix. The Company sold an additional 306,900 shares of common
stock during the year ended December 31, 2006 for gross proceeds of $316,348
which resulted in a realized gain on the sale of the common stock in the amount
of $245,261, which left the Company with 3% of the outstanding common shares
of Osteologix at December 31, 2006. On February 28, 2007, the investment in
C&M was distributed to RRPR, LLC (see Notes 5 and 13).

During
the year ended December 31, 2006, R&R Biotech purchased interests in two
public company corporate shells, including Twin Lakes, Inc. (Twin Lakes) and
Aerobic Creations, Inc. (Aerobic). On February 28, 2007, the investment in Aerobic was distributed to
RRPR, LLC (see Notes 5 and 13).

F-10

---



On
August 8, 2007, R&R Biotech acquired a 72% ownership interest in a public
shell company, Newtown Lane Marketing, Incorporated (see Note 8).

NOTE 2 - Summary of Significant Accounting
Policies

Reclassifications

Certain
accounts in the prior years financial statements have been reclassified for
comparative purposes to conform to the current years presentation. These
classifications have no effect on the previously reported stockholders
equity, comprehensive income, other comprehensive income and net income.

Comprehensive Income

SFAS
No. 130, Reporting Comprehensive Income establishes standards for the
reporting and presentation of comprehensive income and its components in the
consolidated financial statements. For the year ended December 31, 2007, other
comprehensive loss, net of income taxes, consists of a reclassification
adjustment for realized gains on investments of ($1,001,664), and an unrealized
loss on investment of
($255,923) offset by an income tax
benefit of $115,166. For the year ended December 31, 2006,
accumulated other comprehensive income consists of unrealized investment gains
of $1,001,664.

Cash and Cash Equivalents

The
Company considers all short-term investments with a maturity of three months or
less when purchased to be cash equivalents.

Principles of Consolidation

All
significant intercompany accounts and transactions have been eliminated in
consolidation.

The
accompanying consolidated financial statements include the accounts of all
wholly-owned and majority-owned subsidiaries of the Company. Effective January
1, 2006 through November 30, 2007, and in accordance with Emerging Issues Task
Force Issue No. 04-5, Determining Whether a General Partner, or the General
Partners as a Group, Controls a Limited Partnership or Similar Entity When the
Limited Partners Have Certain Rights (EITF 04-5), the Companys consolidated
financial statements also included the accounts of a limited partnership as
discontinued operations (See Note 3) for which the Company was the general
partner.

Use of Estimates

The
preparation of financial statements is in conformity with GAAP, which requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
these estimates.

F-11

---



Valuation of Securities Owned - Marketable and
Non-Marketable

Marketable
securities consist of: (i) publicly traded unrestricted common stocks in which
the Company has the intent and the ability to sell in the short term (trading
securities); and (ii) publicly traded unrestricted common stocks in which the
Company has the intent to sell but not the ability to sell in the short term
due to low volume or illiquidity (available for sale securities). Trading
securities are valued at the closing price on the valuation date, with any
realized and unrealized gains or losses reflected in the consolidated
statements of operations as gains (losses) on securities and principal
transactions, net. Available for sale securities are valued at the closing
price on the valuation date, with any unrealized gains or losses reflected as other comprehensive income in the
consolidated statements of comprehensive income and stockholders equity, and any realized gains or losses reflected in
the consolidated statements of income as gains (losses) on securities and
principal transactions, net.

Non-marketable
securities consist of: (i) non-tradable warrants exercisable into common stock
of public companies (non-tradable warrants); (ii) restricted common stock in
publicly held companies (restricted securities); (iii) common stock and
preferred stock in privately held companies and partnerships where the Company
has less than a 5% voting interest and has no significant influence
(securities in privately-held entities); and (iv) convertible notes and notes
receivables in privately held companies (debt securities in privately-held
companies). Non-tradable warrants are valued at intrinsic value based on the
closing price at the date of the valuation, as the Company has the intent and
the ability to exercise and sell in the short term, at the closing price.
Restricted securities, securities in privately-held entities and debt
securities in privately-held companies are carried at cost. Any realized and
unrealized holding gains or losses derived from non-marketable securities are
reflected in the consolidated statements of operations as realized gains
(losses) on securities and principal transactions, net, respectively. Interest
on debt securities in privately-held companies is included in the consolidated
statements of operations and comprehensive income as other income.

Revenue Recognition

Private
placement fees arising from securities offerings in which the Broker-Dealer
acts as an underwriter or agent, along with fees earned from providing
financial advisory services are recognized at the time the transaction is
consummated. The Company recognizes advisory fee revenue ratably over the terms
of the related contracts.

Proprietary
securities transactions, gains and losses from the sale of securities owned,
commission revenue and commission expense are recorded on a trade-date basis.
Profit and loss arising from all securities transactions entered into for the
account and risk of the Company are recorded on a trade-date basis.

The
Company receives conference deposits from presenters, which are recorded as a
liability and then recognized as revenue when the conference is conducted. The
Company also makes advance payments for conference facilities, entertainment
and related costs, which are recorded as prepaid expenses and then recognized
when the conference is conducted.

Debt with Equity Instruments

Debentures
and Warrants are accounted for in accordance with EITF 00-27, Application of
Issue No. 98-5 to Certain Convertible Instruments, the aggregate purchase price was
allocated to the Debentures and the Warrants based on their relative fair
values, with amount attributable to the relative fair value of the Warrants
being recorded as a debt discount on the Debentures and credited to additional paid in capital. The debt discount was
accreted over the life of the Debentures.

F-12

---



The
fair value of the Warrants was determined based on the Black-Scholes model,
which requires the input of highly subjective assumptions, including the
expected share price volatility. Given that Holdings shares were not publicly
traded, Holding developed an expected volatility figure based on a review of
the historical volatilities, over a period of time equivalent to the expected
life of the Warrants, of similarly positioned public companies within its
industry, during the early stages of their life as a public company. In
applying the Black-Scholes model, Holdings used the following assumptions:

|                                                     |  |  |      |  
|---------------------------------------------------- |  |  | ---- | -
|Risk free interest rate                              |  |  | 4.54 | %
|Weighted
  average expected life of Warrants (years) |  |  | 3.0  |  
|Expected
  volatility of Companys common stock      |  |  | 33   | %
|Expected
  dividends                                 |  |  |     |  

In
addition, based on the intrinsic value method, an additional amount of debt
discount was recorded and credited to additional paid in capital, related to
the beneficial conversion feature of the Debentures after taking into account
the value of the Warrants issued. The debt discount was accreted over the life
of the Debentures.

On
July 10, 2007, the Debentures were exchanged in consideration for shares of
Common Stock as part of the Exchange, and the unamortized debt discount was
charged to interest expense and are included in the statements of operations
(see Note 7.)

Income Taxes

Prior
to the Exchange, Holding filed consolidated Federal income tax and combined New
York State and New York City Unincorporated Business Tax (UBT) returns.
However, as a limited liability company, Holding was not subject to Federal or
State income taxes. Rather, the owners of Paul Revere and RRCG, the members of
Holding, were taxed on Holdings Federal and state taxable income. Accordingly,
there was no provision or liability for Federal or State income taxes recorded,
except for the UBTs effective tax rate of 4%. Subsequent to the Exchange, the
Company is subject to Federal and State corporate income taxes at an effective
tax rate of approximately 45%.

Deferred
tax assets and liabilities are determined based on the difference between the
consolidated financial statement carrying amounts and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse. In addition, the Company also recognizes
deferred tax assets for future tax benefits, to the extent that realization of
such benefits is more likely than not to occur.

As
of the Exchange Date, deferred tax assets and liabilities, based upon an
effective tax rate of approximately 45%, was credited to additional paid in
capital as part of the recapitalization of Holding from an LLC to a
corporation.

In
June 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an
interpretation of FASB Statement No. 109 (FIN 48). FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in
a tax return, and provides guidance on de-recognition, classification, interest
and penalties, accounting in interim periods, disclosure, and transition. FIN
48 is effective for fiscal years beginning after December 31, 2006. The Company
adopted FIN 48 effective with its 2007 fiscal year. Management does not believe
that the Company has any material uncertain tax position requiring recognition
or measurement in accordance with the provisions of FIN 48. Accordingly, the
adoption of FIN 48 did not have a material effect on the

F-13

---



Companys
financial statements. The Companys policy is to classify penalties and
interest (if any) associated with uncertain tax positions, if required as a
component of its income tax provision.

Concentrations of Credit Risk

The
Broker-Dealer is engaged in trading and provides a broad range of securities
brokerage and investment services to institutional clients as well as private
placement services to business entities. Counterparties to the Broker-Dealers
business activities include broker-dealers and clearing organizations, banks
and other financial institutions.

The
Broker-Dealer uses a clearing broker to process transactions and maintain
client accounts on a fee basis. The Broker-Dealer permits the clearing firm to
extend credit to a client secured by cash and securities in the clients
account. The Broker-Dealers exposure to credit risk associated with the
non-performance by its clients and counterparties in fulfilling their
contractual obligations can be directly impacted by volatile or illiquid
trading markets, which may impair the ability of clients and counterparties to
satisfy their obligations to the Broker-Dealer. The Broker-Dealer has agreed to
indemnify its clearing brokers for losses incurred while extending credit to
the Broker-Dealers clients. The Broker-Dealers policy is to review, as
necessary, the credit standing of its clients and counterparties. Amounts due
from clients that are considered uncollectible are charged back to the Broker-Dealer
by the clearing brokers when such amounts become determinable.

Securities
sold but not yet purchased commit the Broker-Dealer to deliver specified
securities at predetermined prices. The transactions may result in market risk
since, to satisfy the obligation, the Broker-Dealer must acquire the securities
at market prices, which may exceed the values reflected on the statement of
financial condition.

The
Company maintains cash with major financial institutions. Cash is insured by the
Federal Deposit Insurance Corporation up to $100,000 at each institution. The
uninsured cash bank balances were approximately $53,528,000 and $9,258,000 at
December 31, 2007 and 2006, respectively. The Company believes that it is not
exposed to any significant credit risks for cash.

Stock-Based
      Compensation

Through
December 31, 2005, as permitted by Statement of Financial Accounting Standards
No. 123 (SFAS 123), Accounting for Stock-Based Compensation,
the Company accounted for options granted as a fixed award using the intrinsic
value method prescribed by Accounting Principles Board Opinion (APB)
No. 25, Accounting
for Stock Issued to Employees. Accordingly, compensation cost would have
been recorded to the extent that the exercise price of the option was less than
the market value of the underlying shares on the date of grant. The Company did
not recognize any stock-based compensation expense during the year ended December
31, 2005.

As
required by SFAS 123, as amended by Statement of Financial Accounting Standards
No. 148, Accounting for Stock-Based CompensationTransition and Disclosure,
the Company has computed, for pro forma disclosure purposes, the fair value of
the 2005 option granted using the Black-Scholes option pricing model
(Black-Scholes). Option valuation models require the input of highly
subjective assumptions including the expected share price volatility.

F-14

---



The
following pro forma net income information for the year ended December 31, 2005
was determined as if the Company had accounted for the option under the fair
value method of SFAS 123:

|                                                                                                         |  |   |           |  
|-------------------------------------------------------------------------------------------------------- |  | - | --------- | -
|Net income as reported                                                                                   |  | $ | 4,508,712 |  
|Deduct: Total stock-based compensation
  expense determined under fair value based method for all awards |  |   | (8,436    | )
|                                                                                                         |  |   |           |  
|                                                                                                        
|Pro forma net income                                                                                     |  | $ | 4,500,276 |  
|                                                                                                         |  |   |           |  

In
December 2004, the FASB issued Statement of Financial Accounting Standards No.
123 (revised 2004), Share-Based Payment, a revision of SFAS No. 123,
Accounting for Stock-Based Compensation (SFAS 123R). The effective date for
SFAS 123R was the first fiscal year beginning after December 15, 2005. Under
the provisions of SFAS 123R, stock-based compensation cost is measured at the
grant date based on the fair value of the award and expense is recognized over
the requisite service period which generally is the vesting period stipulated
in the grant for all employees. SFAS 123R clarifies and amends the guidance of
SFAS No. 123 in several areas, including measuring fair value, classifying an
award as equity or as a liability, attributing compensation cost to service
periods and accounting for forfeitures of awards.

SFAS
123R permits companies to adopt its requirements using one of two methods.
Under the modified prospective method, compensation cost is recognized
beginning with the effective date (a) based on the requirements of SFAS 123R
for all share-based payments granted after the effective date and, (b) based on
the requirements of SFAS 123 for all awards granted to employees prior to the
effective date of SFAS 123R that remain unvested on the effective date. Under
the modified retrospective method, the requirements of the modified
prospective method are adhered to, but entities are permitted to restate, based
on the amounts previously recognized under SFAS 123 for purposes of pro forma
disclosures, either (a) all prior periods presented, or (b) prior interim
periods of the year of adoption.

Effective
January 1, 2006, the Company adopted SFAS 123R and adopted the modified
prospective method with respect to its accounting for the transition to SFAS
123R. Accordingly, the Company recognized $2,541,193 and $366,415 in employee
compensation and related benefits in the consolidated statements of operations
and comprehensive income for the fair value of the employee stock options and
shares of restricted stock that vested during the years ended December 31, 2007
and 2006, respectively.

The
fair value of options granted was calculated using Black-Scholes with an
expected dividend yield of zero, market price based on valuation of the
Companys stock or the public offering price, weighted average expected life of
the option and risk free interest rate (see Note 13).

Deferred
stock based compensation costs with respect to shares of restricted stock
granted are presented as a separate component in the consolidated statement of
stockholders equity.

Property and Equipment

Property
and equipment is recorded at cost. Furniture and fixtures and computer and
office equipment are depreciated on a straight-line basis over the economic
useful lives of assets, which range from three to five years. Leasehold
improvements are amortized on a straight-line basis over the lesser of their
economic useful lives or the expected term of the related lease. When disposed
of, the cost and

F-15

---



related
accumulated depreciation and amortization are eliminated from the accounts and
any resulting gain or loss is reflected in income.

The
Company periodically assesses the recoverability of long-lived assets,
including property and equipment, when there are indications of potential
impairment, based on estimates of undiscounted future cash flows. The amount of
impairment is calculated by comparing anticipated discounted future cash flows
with the carrying value of the related asset. In performing this analysis,
management considers such factors as current results, trends, and future
prospects, in addition to other economic factors.

Goodwill

In
accordance with the requirements of Statement of Financial Accounting Standards
No. 141 (SFAS No. 141), Business Combinations, in connection with certain
acquisitions (see Note 8), the Company recognized goodwill. Goodwill of
$2,049,690 and $1,938,714 at December 31, 2007 and 2006, respectively, is not
subject to amortization.

In
accordance with the provisions of SFAS No. 142, Goodwill and Other Intangible
Assets, on a regular basis, the Company performs an impairment analysis of the
carrying value of goodwill by assessing the recoverability when there are
indications of potential impairment based on estimates of undiscounted future
cash flows. The amount of impairment, if any, is calculated by comparing
anticipated discounted future cash flows with the carrying value of the related
asset. In performing this analysis, management considers such factors as
current results, trends, and future prospects, in addition to other economic
factors. As of December 31, 2007, there was no impairment of goodwill recorded.

As
part of the Exchange costs, the Company wrote-off the goodwill associated with
the acquisition of Enthrust in the amount of $375,717.

Advertising Costs

Advertising
costs are expensed as incurred. Advertising expense for the years ended
December 31, 2007, 2006 and 2005 amounted to approximately $240,600, $731,000
and $241,000, respectively, and was included in conference fees in the
accompanying consolidated statements of income and comprehensive income.

Earnings Per Share

Basic
earnings per share are computed by dividing net income by the weighted average
number of common shares outstanding for the year. Diluted earnings per share
are calculated by adjusting the weighted average outstanding shares to assume
conversion of all potentially dilutive securities.

In
connection with the Exchange Agreement, all reference to number of shares,
stock options and per share amounts in these consolidated financial statements
and accompanying notes have been adjusted to reflect the Exchange adjustment
ratio of 1.853015 and are stated on a retroactive basis as if the Exchange had
occurred on January 1, 2005.

Recent Accounting Pronouncements

In
September 2006, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 157 Fair Value Measurements (SFAS 157). SFAS 157 defines fair
value, establishes a framework for measuring fair value, and enhances
disclosures about fair value measurements. SFAS 157 applies to other accounting
pronouncements that require the use of fair value measurements. SFAS 157 is
effective

F-16

---



for interim
and annual financial statements issued for fiscal years beginning after
November 15, 2007. The Company is currently assessing the impact of adopting
SFAS 157 on its financial condition, results of operations and cash flows.

In
February 2007, the FASB issued SFAS 159 The Fair Value Option for Financial
Assets and Financial LiabilitiesIncluding an amendment of FASB Statement 115 (SFAS
159). SFAS 159 permits an entity to elect to measure various financial
instruments and certain other items at fair value. It provides entities with
the opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex
hedge accounting provisions. SFAS 159 requires that a business entity report
unrealized gains and losses, on items for which the fair value option has been
elected, in earnings at each subsequent reporting date. SFAS 159 is effective
as of the beginning of the first annual period beginning after November 15,
2007. The Company is currently assessing the impact of adopting SFAS 159 on its
financial condition, results of operations and cash flows.

In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141(R), Business Combinations (SFAS 141R), which replaces SFAS No.
141, Business Combinations. SFAS 141R establishes principles and requirements
for determining how an enterprise recognizes and measures the fair value of
certain assets and liabilities acquired in a business combination, including
noncontrolling interests, contingent consideration, and certain acquired
contingencies. SFAS 141R also requires acquisition-related transaction expenses
and restructuring costs be expensed as incurred rather than capitalized as a
component of the business combination. SFAS 141R will be applicable
prospectively to business combinations for which the acquisition date is on or after
the beginning of the first annual reporting period beginning on or after
December 15, 2008. SFAS 141R would have an impact on accounting for any
businesses acquired after the effective date of this pronouncement.

In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements  An Amendment of ARB No. 51 (SFAS
160). SFAS 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary (previously referred to as minority
interests). SFAS 160 also requires that a retained noncontrolling interest upon
the deconsolidation of a subsidiary be initially measured at its fair value.
Upon adoption of SFAS 160, the Company would be required to report any
noncontrolling interests as a separate component of stockholders equity. The
Company would also be required to present any net income allocable to
noncontrolling interests and net income attributable to stockholders of the
Company separately in its consolidated statements of income. SFAS 160 is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. SFAS 160 requires retroactive adoption
of the presentation and disclosure requirements for existing minority interests.
All other requirements of SFAS 160 shall be applied prospectively. SFAS 160
would have an impact on the presentation and disclosure of the noncontrolling
interests of any non wholly-owned businesses acquired in the future.

NOTE 3  Discontinued
Operations

The
Company operated in asset management on a limited basis through Rodman &
Renshaw Fund Management (RRFM), a wholly owned subsidiary of the Company,
which owned an interest in, was a general partner of, and managed Rodman &
Renshaw Opportunity Fund (RROF), a New York limited partnership formed in
February 2000 for the purpose of conducting a business of investing and trading
its limited partners funds. Effective January 1, 2006 through November 30,
2007, and in accordance with EITF 04-5, the Company consolidated RROF.

F-17

---



In
October 2007, the Companys management, in consultation with the Board of
Directors, determined that the Companys asset management operation, as
constituted, was not central to its strategic development. Accordingly, the
Company terminated its asset management operation in the fourth quarter of
2007. Effective December 1, 2007, an unaffiliated entity was appointed sole
general partner of RROF. The Company retained its limited partner rights and
interests.

In
accordance with SFAS 144, Accounting For the Impairment or Disposal of Long
Lived Assets (SFAS 144)
and EITF 03-13, Applying the conditions in paragraph 42 of SFAS 144 in
determining whether to report discontinued operations (EITF 03-13),
the asset management operations are reported as discontinued as of November 30,
2007 since the Company has determined that RROF and its cash flows were clearly
distinguished for financial reporting purposes from the rest of the Company and
the Company will not have any significant continuing involvement in, or cash
flows from, the operations of RROF.

The
Companys ownership interest in the capital of RROF reflected a 7.34% interest
as of December 31, 2007. Effective December 1, 2007, the Company had no significant
influence over the entitys partnership operating and financial policies
and is accounting for its interest on the equity method of accounting in accordance
with EITF D-46. As of December 31, 2007, the investment in RROF was $407,048.
Such amount is included in Investment in Affiliates in the accompanying consolidated
 statements of financial condition (see Note 5).

The
assets and minority interests and other liabilities associated with
the discontinued operations as of December 31, 2006 are as follows:

|                                                                                  |  |   |           |  | 
|--------------------------------------------------------------------------------- |  | - | --------- |  | 
|Marketable
 securities                                                            |  | $ | 4,936,366 |  | 
|Non-marketable
 securities                                                        |  |   | 1,268,165 |  | 
|Assets
 associated with discontinued operations                                   |  | $ | 6,204,531 |  | 
|                                                                                  |  |   |           |  | 
|Other
 liabilities                                                                |  | $ | 110,019   |  | 
|Minority
 interests                                                               |  |   | 5,605,848 |  | 
|Minority
 interests and other liabilities associated with discontinued operations |  | $ | 5,715,867 |  | 

The
results of the discontinued operations for the years ended December 31, 2007
and 2006 are as follows:

|                                                               |  |      |            |      |   |           | 
|-------------------------------------------------------------- |  | ---- | ---------- | ---- | - | --------- | 
|                                                               |  | 2007 |            | 2006 |  
|                                                               |  |      |            |      |  
|                                                               |  |      |            |      |   |           | 
|Gains (loss)
    on securities and principal transactions, net |  | $    | (2,326,201 | )    | $ | 2,659,603 | 
|Interest and
 other income                                     |  |      | 48,568     |      |   | 33,114    | 
|                                                               |  |      |            |      |   |           | 
|                                                               |  |      | (2,277,633 | )    |   | 2,692,717 | 
|Operating
 expenses                                            |  |      |           |      |   | 100,744   | 
|                                                               |  |      |            |      |   |           | 
|Operating income
 (loss)                                       |  |      | (2,277,633 | )    |   | 2,591,973 | 
|Income taxes
 expense (benefit)                                |  |      | (91,580    | )    |   | 14,085    | 
|Minority
 interest                                             |  |      | (2,202,649 | )    |   | 2,239,836 | 
|                                                               |  |      |            |      |   |           | 
|Net income                                                     |  | $    | 16,596     |      | $ | 338,052   | 
|                                                               |  |      |            |      |   |           | 

F-18

---



NOTE 4 -
Securities Owned and Sold, Not Yet Purchased

Securities
owned and sold, not yet purchased, consist of trading and investment
securities, as follows:

|                                             |  |                    |           |                    |   |            | 
|-------------------------------------------- |  | ------------------ | --------- | ------------------ | - | ---------- | 
|                                             |  | December
 31, 2007 |           | December
 31, 2006 |  
|                                             |  |                    |           |                    |  
|                                             |  |                    |           |                    |   |            | 
|Marketable
 securities are as follows:       |  |                    |           |                    |   |            | 
|                                             |  |                    |           |                    |   |            | 
|Trading
 securities, at market value         |  | $                  | 1,120,841 |                    | $ | 457,813    | 
|Available for
 sale securities               |  |                    |          |                    |   | 1,900,862  | 
|                                             |  |                    |           |                    |   |            | 
|                                             |  | $                  | 1,120,841 |                    | $ | 2,358,675  | 
|                                             |  |                    |           |                    |   |            | 
|                                             |  |                    |           |                    |   |            | 
|Non-marketable
 securities are as follows:   |  |                    |           |                    |   |            | 
|                                             |  |                    |           |                    |   |            | 
|Non-tradable
 warrants                       |  | $                  | 2,083,469 |                    | $ | 6,505,508  | 
|Restricted
 securities                       |  |                    | 746,734   |                    |   | 3,853,984  | 
|Securities in
 privately-held entities       |  |                    |           |                    |   | 757,157    | 
|Debt securities
 in privately-held companies |  |                    | 477,500   |                    |   | 681,164    | 
|                                             |  |                    |           |                    |   |            | 
|                                             |  | $                  | 3,307,703 |                    | $ | 11,797,813 | 
|                                             |  |                    |           |                    |   |            | 

NOTE 5 Investment
in Affiliates

Investment
    in affiliates consists of an investment in RRPR, LLC (RRPR) as
    described below and  an investment in RROF (see Note 3). On February 28,
    2007, Holding distributed to its members, Paul Revere and R&R,
85% of its beneficial interest in certain warrants and other securities and
retained the remaining 15% (see Note 13.) Simultaneous with the distribution,
Holding, Paul Revere and RRCG assigned their respective beneficial interests
    in these warrants and other securities to RRPR, a Delaware
limited liability company, which was formed on February 6, 2007 for the purpose
of managing these assets, in exchange for membership interests in RRPR in
proportion to their respective ownership percentages. Holding retained bare
legal title to these assets pursuant to a nominee agreement with RRPR, which
controls all decisions regarding the assets, is entitled to all sales proceeds
and other benefits, bears the risk of loss, and can demand conveyance of the
legal title at any time. As a result of the Exchange, the Company received an
additional 25.5% membership interest in RRPR indirectly through R&R. In
accordance with APB Opinion No.18, the Companys investment in RRPR is
accounted for under the equity method. Beginning on July 1, 2007, RRPRs
management changed its strategy with respect to the securities owned by RRPR
and has no intent to sell them in the short-term. Therefore, any unrealized gains
or losses associated with the investment in RRPR, net of income taxes, has been
included in other comprehensive income.

NOTE 6 
Related Party Transactions

As
of December 31, 2007, an aggregate of $137,914 was due from Paul Revere. This
amount relates to amounts advanced for business purposes prior to the Exchange
and will be repaid prior to December 31, 2008.

The
    wife of John Borer a director, the Companys
    Co-Head of Investment Banking and former Chief Executive Officer, is employed
    by the Broker-Dealer as vice president, institutional trading. During 2007
    she earned
$417,399 for services rendered.

F-19

---



NOTE 7 
Senior Convertible Debentures and Warrants

On
March 1, 2007, the Company, in a private placement transaction, issued the
Debentures and the Warrants to the Investors in exchange for $20,000,000 in
cash. The Debentures had a maturity date of December 31, 2009 and bore interest
at 6% per annum, payable at the earlier of the maturity date or at the time of
conversion or redemption of the Debentures. The Debentures, including any
accrued interest, were convertible into shares of Holdings common stock, at
any time, at the election of the holders, at a conversion price of $7.00 per
share, subject to certain adjustments. The Warrants were exercisable at any
time on or before March 1, 2010, at the election of the holder, and entitled
the holders to purchase up to 714,286 shares of Holdings common stock at an
exercise price of $7.70 per share, subject to certain adjustments.

The
Company incurred investment banking, legal and due diligence fees totaling
$1,070,040 associated with the issuance of the Debentures and Warrants. These
fees are recorded as deferred financing costs and $136,040 was amortized to
interest expense through the Exchange Date (July 10, 2007). Upon the Exchange,
the remaining unamortized balance of $934,000 was written off. Such amounts are
included in interest expense in the consolidated statements of operations.

As
part of the Exchange, the holders of the Debentures and the Warrants exchanged
those securities (and accrued interest on the Debentures) for an aggregate of
5,970,099 shares of Common Stock and warrants to purchase 1,355,600 shares of
Common Stock at an exercise price of $7.00 per share.

In
accordance with the guidance provided by EITF 00-27, Application of Issue No.
98-5 to Certain Convertible Instruments, the Company allocated the aggregate
purchase price of $20,000,000 to the Debentures and the Warrants based on their
relative fair values, with $1,134,615 allocated to the Warrants recorded as a
debt discount on the Debentures. In addition, the Company recorded an
additional debt discount of $1,134,657 at March 1, 2007 related to the
beneficial conversion feature of the Debentures (the BCF) after taking into
account the value of the Warrants. The debt discount and the amount allocated
to the BCF were credited to members equity and were to be accreted over the
life of the Debentures. Through the Exchange Date (July 10, 2007), $288,503 was
amortized to interest expense and as a result of the Exchange, the aggregate
unamortized balances of the debt discount related to the Warrants and the BCF
in the amount of $1,980,769 was written off. All the amounts are included in
interest expense in the consolidated statements of operations.

At
all times while any of the Debentures remained outstanding, the Company was
required to maintain $5,000,000 of key man life insurance on each of its then
President, Chief Executive Officer and a Senior Managing Director, as well as
maintain cash balances, together with its subsidiaries, of at least $3,000,000.
The Company was in compliance with these requirements throughout the period
during which the Debentures were outstanding.

In
connection with the sale of the Debentures and the Warrants, the Company agreed
to enter into a Registration Rights Agreement with the holders of the
Debentures, which would require it or its successor to file a resale
registration statement with the SEC within 90 days after certain trigger
events. The Exchange was a trigger event and, in connection therewith, the
Company entered into a Registration Rights Agreement with the former holders of
the Debentures. In furtherance of the Companys obligations under the Registration
Rights Agreement, the holders shares were included in the Registration
Statement that was declared effective by the SEC on October 16, 2007.

F-20

---



NOTE 8 
Goodwill

During
the year ended December 31, 2006, the Company invested in a public company
corporate shell, Twin Lakes, Inc. in which it purchased a 73% ownership
interest along with the payment of cash in the amount of $60,000, the Company
also assumed $42,114 of net liabilities, which resulted in goodwill of $102,114
being recognized in connection with this acquisition. During the year ended
December 31, 2006, the Company recorded an additional $25,447 of goodwill
related to the conversion of 24Holdings, Inc.s preferred stock into common
stock by the Company.

On
August 8, 2007, the Company acquired a 72% ownership interest in a public
shell company (Newtown Lane Marketing, Incorporated). The purchase price for
the interest was $480,000 and the Company made an additional contribution of
$50,000 associated with the acquisition. Of the total amount, $486,693 was
determined to be in excess of the value of the net underlying assets acquired
and was classified as goodwill.

As
a result of the Exchange, the Company wrote-off the goodwill associated with
the acquisition of Enthrust in the amount of $375,717.

The
following table represents a summary of the changes for the years ended
December 31, 2007 and 2006:

|                            |  |   |           |  
|--------------------------- |  | - | --------- | -
|Balance, January
 1, 2006   |  | $ | 1,811,153 |  
|Additions                   |  |   | 127,561   |  
|                            |  |   |           |  
|Balance,
 December 31, 2006 |  |   | 1,938,714 |  
|Additions                   |  |   | 486,693   |  
|Write-off                   |  |   | (375,717  | )
|                            |  |   |           |  
|Balance,
 December 31, 2007 |  | $ | 2,049,690 |  
|                            |  |   |           |  

NOTE 9 -
Property and Equipment

Property and equipment is comprised of the following
at December 31:

|                                                 |  |      |           |      |   |           | 
|------------------------------------------------ |  | ---- | --------- | ---- | - | --------- | 
|                                                 |  | 2007 |           | 2006 |  
|                                                 |  |      |           |      |  
|                                                 |  |      |           |      |   |           | 
|Computer and
 office equipment                   |  | $    | 1,174,828 |      | $ | 982,196   | 
|Furniture and
 fixtures                          |  |      | 652,637   |      |   | 652,637   | 
|Leasehold
 improvements                          |  |      | 545,014   |      |   | 545,014   | 
|                                                 |  |      |           |      |   |           | 
|                                                 |  |      | 2,372,479 |      |   | 2,179,847 | 
|                                                 |  |      |           |      |   |           | 
|Less:
 accumulated depreciation and amortization |  |      | 1,458,834 |      |   | 853,966   | 
|                                                 |  |      |           |      |   |           | 
|                                                 |  |      |           |      |   |           | 
|Property
 and Equipment, Net                     |  | $    | 913,645   |      | $ | 1,325,881 | 
|                                                 |  |      |           |      |   |           | 

Depreciation
and amortization expense for the year ended December 31, 2007, 2006 and 2005
was $604,868, $535,353, and $208,703, respectively.

F-21

---



NOTE 10
- Commitments and Contingencies

Lease
Commitments

During
April 2005, the Company entered into a non-cancellable operating lease which
commenced on July 19, 2005 and expires on July 18, 2008 with a monthly base rent
charge of $27,878. During June 2006, the Company entered into a sublease
agreement commencing on June 6, 2006 which expired on June 29, 2007 with a
monthly rent charge of $60,693.

In
addition, the Company had a non-cancelable operating lease with rents in the
amount of $3,959 per month for office space on a month-to-month basis. Rent
expense amounted to approximately $1,069,595, $868,512, and $487,754 for the
years ended December 31, 2007, 2006, and 2005, respectively.

On
December 19, 2007 the Company entered into a sublease agreement for additional
office space in New York City commencing January 1, 2008 and ending December
31, 2008 for an aggregate annual base rent of $764,282, payable in equal
monthly installments of $63,690, per month. As security on the sublease, the
Company, as subtenant, was required to deliver an irrevocable standby letter of
credit in the amount of $191,070 to the tenant.

The
Companys future minimum lease payments for the above operating leases are as
follows as of December 31:

|      |  |               |           |                  |   |        |  |   |           | 
|----- |  | ------------- | --------- | ---------------- | - | ------ |  | - | --------- | 
|      |  | Office Leases |           | Equipment Leases |   | Total  | 
|      |  |               |           |                  |   |        | 
|2008  |  | $             | 1,024,150 |                  | $ | 8,798  |  | $ | 1,032,947 | 
|2009  |  |               | 31,739    |                  |   | 8,200  |  |   | 39,939    | 
|2010  |  |               |          |                  |   | 4,200  |  |   | 4,200     | 
|      |  |               |           |                  |   |        |  |   |           | 
|      |  |               |           |                  |   |        |  |   |           | 
|Total |  | $             | 1,055,889 |                  | $ | 21,198 |  | $ | 1,077,086 | 
|      |  |               |           |                  |   |        |  |   |           | 

Employment
Agreements

On
December 22, 2006, the Company entered into an employment agreement with its
Chairman that provides for an annual base salary of $250,000, as well as
additional compensation as defined in the agreement. Effective June 26, 2007,
the employment agreement with the Chairman was modified to eliminate a bonus
that was based on net income.

On
March 1, 2007, the Company entered into three-year employment agreements with
three senior managing directors of the Broker-Dealer who are also senior
executives of the Company and members of its board of directors (the Board).
Under the terms of the agreements, which commenced on March 1, 2007 and
continue until February 28, 2010, unless extended or earlier terminated in
accordance with their terms, the Company is required to pay annual base
salaries of $150,000 to each executive ($450,000 in the aggregate), plus
incentive compensation under a bonus plan. The bonus for these executives will
be calculated at the discretion of the Compensation Committee of the Board,
based upon the overall revenue and profits of the Company for each fiscal year
commencing on or after January 1, 2007, as well as, the overall productivity of
each executive as determined by the Compensation Committee, subject to the
Companys total compensation and benefits expense with respect to all
employees, which includes cash and non-cash compensation but does not include
equity based compensation granted prior to September 30, 2007 and insurance
premiums paid in respect of key man

F-22

---



life insurance policies for the Companys benefit, for
the fiscal year not exceeding 55% of gross revenues. For the year ended
December 31, 2007, the compensation expense for these three individuals was
$4,611,000.

In
August 2007, the Company entered into an employment agreement with its new
Chief Executive Officer (CEO). The material terms of the agreement are as
follows: (i) the employment period began September 4, 2007 and terminates
December 31, 2009, unless extended or earlier terminated in accordance with its
terms; (ii) the agreement can be extended indefinitely for additional one year
periods unless either party gives the other 90-days written notice of its intent
not to renew the agreement; (iii) the CEOs base salary will be $150,000 per
year; (iv) the CEO is entitled to incentive compensation as follows: (A) for
fiscal 2007 -- $616,666; (B) for fiscal 2008 -- $800,000 plus $1,050,000 if
total consolidated gross revenues for fiscal 2008 exceed 110% of total
consolidated gross revenues for fiscal 2007; (C) for fiscal 2009 -- $800,000
plus $1,050,000 if total consolidated gross revenues for fiscal 2009 exceed
120% of total consolidated gross revenues for fiscal 2007; and (iv) the CEO
will be included as a participant in the Companys Executive Bonus Plan
(described below). Further, the agreement provided for: (i) a grant of 750,000
shares of restricted stock to the CEO on the commencement date of his
employment (September 4, 2007) that vest ratably over a three-year period
commencing on the first anniversary date of the grant; and (ii) a grant of
750,000 stock options to the CEO at a price equal to the public offering price
per share in the Companys underwritten public offering (see Note 13.) On
October 16, 2007, the CEO was granted 750,000 stock options at an exercise
price of $5.00. Finally, if the Company does not extend the agreement beyond
its stated December 31, 2009 expiration date, the agreement provides for the
payment to the CEO, in consideration for his covenant not to compete, a lump
sum payment equal to nine times his monthly salary amount (which is equal to
one-twelfth his average base and incentive compensation for the year preceding
such termination). For the year ended December 31, 2007, compensation expense
was $467,788 to the CEO under this agreement, of which $420,000 is included in
accrued compensation payable in the statement of financial condition.

Executive
Bonus Plan

In August
2007, the Compensation Committee and the Board unanimously approved the
Companys Executive Bonus Plan. The Executive Bonus Plan was subsequently
ratified by the Companys stockholders on August 31, 2007. The Executive Bonus
Plan replaced and superseded the previously existing bonus plan that had been
included in the employment agreements with three senior executives of the
Company. The material terms of the Executive Bonus Plan are as follows: (i) the
plan is for a term of five years; (ii) the initial participants are four of the
Companys senior executives; (iii) all awards under the Executive Bonus Plan
are determined by the Compensation Committee in its sole and absolute
discretion; (iv) no participant may receive, in any single year, an amount
exceeding 25% of the Companys consolidated gross revenues for that year; and
(v) in no event shall the Companys total compensation and benefits expense for
any fiscal year, after taking into account the aggregate amount awarded under
the Executive Bonus Plan (but excluding any equity compensation granted by the
Company prior to September 30, 2007), exceed 60% of the Companys total
consolidated revenues for such fiscal year.

401(k) Plan

The
    Broker-Dealer has a defined contribution 401(k) plan, which covers all eligible
    employees of the Broker-Dealer. Those eligible employees may contribute from
    1% of their compensation up to the maximum allowable by the Internal Revenue
    Code. The Broker-Dealer may make matching contributions based upon the discretion
    of management. There were no employer contributions for the years ended December
    31, 2007 and 2006 or 2005.



F-23

---



Litigation

During
the year ended December 31, 2006, as a result of actions taken by a former
employee against the Company, the Company filed a proceeding against the former
employee with FINRA and the United States District Court for the Southern
District of New York (SDNY), in which it alleged various claims against the
employee including but not limited to; trademark infringement and dilution,
cyber-squatting, cyber-piracy, defamation and tortuous interference with
business relations. In connection with each of these actions, the Company is
seeking compensatory and punitive damages of approximately $75 million. In
response to these actions filed against the former employee by the Company, the
employee filed counterclaims with the SDNY seeking compensatory and punitive
damages of approximately $3 million
against the Company for breach of contract, defamation and declaratory relief.
The Company is not in a position to predict or assess the likely outcome of
these proceedings, nor is it in a position to estimate the range of any
potential loss. As of December 31, 2007, there have been no material
developments with respect to the litigation.

By
letter dated April 10, 2006, FINRA advised the Company that it was reviewing
matters related to the circumstances surrounding the termination of the former
employee and requested that the Company produce documents in connection with
that review. By letter dated April 11, 2006, FINRA withdrew its request, to
avoid regulatory duplication, upon learning that the SEC was also reviewing the
same events. However, in 2007 the Company received certain letters from FINRA
requesting certain information, documentation and interviews. The Company
produced all information and documentation requested and continues to cooperate
fully with FINRAs investigation.

NOTE 11 - Net Capital Requirements

The
Broker-Dealer is subject to various regulatory requirements, including the
SECs Uniform Net Capital Rule (SEC Rule 15c3-1). These regulations place limitations
on certain transactions, such as repaying subordinated borrowings, paying cash
dividends, and making loans to a parent, affiliates or employees.
Broker-dealers are prohibited from such transactions which would result in a
reduction of its total net capital to less than 120% of its required minimum
net capital. Moreover, broker-dealers are required to notify the SEC before
entering into any such transactions, which if executed, would result in a
reduction of 30% or more of its excess net capital (net capital less the
minimum requirement). The SEC has the ability to prohibit or restrict such
transactions if the result is detrimental to the financial integrity of the
broker-dealer.

At
December 31, 2007 and 2006, the Broker-Dealer had net capital of $8,871,149 and
$1,279,683 which was $8,621,149 and $1,029,683, respectively, in excess of its
required net capital of $250,000.

NOTE 12 - Income Taxes

Through
the Exchange Date, the Company was an LLC, subject to UBT income taxes at a 4% effective
tax rate. Beginning July 11, 2007, the Company is subject to Federal, New York
State and New York City corporate income taxes, at an estimated 45% combined
effective tax rate. For the year ended December 31, 2007, the Company will file
partnership tax returns for the periods beginning on January 1, 2007 and ending
on the Exchange Date and the Company will file corporate tax returns for the
period beginning July 11, 2007 and ending on December 31, 2007.

F-24

---



In
connection with the Exchange, the Company entered into a Tax Indemnification
Agreement with Paul Revere, RRCG and the stockholders of RRCG (the
Indemnitees) pursuant to which the Company agreed to indemnify the Indemnitees
for any increased taxes attributable to any adjustment to Holdings tax returns
through the Exchange Date. The Company believes that the likelihood of any
payment under the indemnification agreement is remote.

Certain
temporary timing differences arose principally as a result of the Exchange and
the termination of Holdings status as a pass-through entity for tax purposes.
The related income tax benefits and liabilities to the Company of $2,075,316 and ($776,014), respectively were recorded as a net
deferred tax asset and as an increase to additional paid in capital. The
components of deferred income taxes assets (liabilities) were as follows as of:

| |                                                                              |  |                    |           |                    |   |          |  
| | ---------------------------------------------------------------------------- |  | ------------------ | --------- | ------------------ | - | -------- | -
| |                                                                              |  | December 31,
 2007 |           | December 31,
 2006 |  
| |                                                                              |  |                    |           |                    |   |          |  
| |                                                                              |  |                    |           |                    |   |          |  
| | Stock Based Compensation                                                     |  |                    |           |                    |   |          |  
| | Expenses                                                                     |  | $                  | 1,308,424 |                    | $ |         |  
| | Unrealized gains on investments                                              |  |                    | (840,325  | )                  |   | (327,100 | )
| | Net operating loss carry-forwards
 (approximately $4.0 million through 2027) |  |                    | 1,790,202 |                    |   |         |  
| |                                                                              |  |                    |           |                    |   |          |  
| |                                                                              |  |                    |           |                    |   |          |  
| | Total                                                                        |  | $                  | 2,258,301 |                    | $ | (327,100 | )
| |                                                                              |  |                    |           |                    |   |          |  

Income
tax (benefit) expense included in the statements of operations are comprised of
the following:

| |                 |  |                                  |            |      |   |         |  |   |         | 
| | --------------- |  | -------------------------------- | ---------- | ---- | - | ------- |  | - | ------- | 
| |                 |  | For the Years Ended December 31, |           
| |                 |  |                                  |           
| |                 |  | 2007                             |            | 2006 |   | 2005    | 
| |                 |  |                                  |            |      |   |         | 
| | Current         |  |                                  |            |      |   |         |  |   |         | 
| | UBT             |  | $                                | 639,287    |      | $ | 552,290 |  | $ | 378,775 | 
| |                 |  |                                  |            |      |   |         |  |   |         | 
| |                 |  |                                  |            |      |   |         |  |   |         | 
| | Deferred        |  |                                  |            |      |   |         |  |   |         | 
| | UBT             |  |                                  | (327,100   | )    |   | 327,100 |  |   | 16,097  | 
| | Federal         |  |                                  | (501,502   | )    |   |        |  |   |        | 
| | State and
 City |  |                                  | (250,751   | )    |   |        |  |   |        | 
| |                 |  |                                  |            |      |   |         |  |   |         | 
| |                 |  |                                  |            |      |   |         |  |   |         | 
| | Total
 deferred |  |                                  | (1,079,353 | )    |   | 327,100 |  |   | 16,097  | 
| |                 |  |                                  |            |      |   |         |  |   |         | 
| |                 |  |                                  |            |      |   |         |  |   |         | 
| | Total           |  | $                                | (440,066   | )    | $ | 879,390 |  | $ | 394,872 | 
| |                 |  |                                  |            |      |   |         |  |   |         | 

F-25

---



The
difference between the total tax provision and the amount computed by applying
the statutory federal income tax rate to pre-tax income from continuing
operations is as follows:

|                                                                                 |  |                         |            |      |   |            |   |   |            |  
|-------------------------------------------------------------------------------- |  | ----------------------- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                                 |  | Year Ended December 31, |           
|                                                                                 |  |                         |           
|                                                                                 |  | 2007                    |            | 2006 |   | 2005       |  
|                                                                                 |  |                         |            |      |   |            |  
|                                                                                 |  |                         |            |      |   |            |   |   |            |  
|Income from continuing operations before income and taxes and minority
 interest |  | $                       | 4,266,304  |      | $ | 16,993,962 |   | $ | 4,885,878  |  
|Statuary Federal tax rate                                                        |  |                         | 34         | %    |   | 34         | % |   | 34         | %
|                                                                                 |  |                         |            |      |   |            |   |   |            |  
|Estimated income taxes expense                                                   |  | $                       | 1,450,543  |      | $ | 5,777,947  |   | $ | 1,661,199  |  
|                                                                                 |  |                         |            |      |   |            |   |   |            |  
|Non-deductible expenses and non-taxable
 income, net                             |  |                         | 3,501,357  |      |   | 624,757    |   |   | 1,601,866  |  
|State and local income taxes, net of Federal                                     |  |                         | (162,245   | )    |   |            |   |   |            |  
|Taxable income at lower tax rate (UBT)                                           |  |                         | (5,671,307 | )    |   | (5,774,804 | ) |   | (2,884,487 | )
|Reversal of tax provisions                                                       |  |                         | (444,341   | )    |   |            |   |   |            |  
|Contribution of income taxes benefit from the
 Exchange                          |  |                         | 957,100    |      |   |            |   |   |            |  
|Other                                                                            |  |                         | (71,174    | )    |   | 251,490    |   |   | 16,294     |  
|                                                                                 |  |                         |            |      |   |            |   |   |            |  
|                                                                                 |  |                         |            |      |   |            |   |   |            |  
|Income taxes expense (benefit)                                                   |  | $                       | (440,066   | )    | $ | 879,390    |   | $ | 394,872    |  
|                                                                                 |  |                         |            |      |   |            |   |   |            |  

Deferred
income tax benefit included in other comprehensive income (loss) are comprised
of the following and was attributable to unrealized losses on the investment in
affiliate:

| |                 |  |                                   |         |      |   |      |  |   |   | 
| | --------------- |  | --------------------------------- | ------- | ---- | - | ---- |  | - | - | 
| |                 |  | For the Years Ended
 December 31, |        
| |                 |  |                                   |        
| |                 |  | 2007                              |         | 2006 |   | 2005 | 
| |                 |  |                                   |         |      |   |      | 
| |                 |  |                                   |         |      |   |      | 
| | UBT             |  | $                                 |        |      | $ |     |  | $ |  | 
| | Federal         |  |                                   | 76,777  |      |   |     |  |   |  | 
| | State and
 City |  |                                   | 38,389  |      |   |     |  |   |  | 
| |                 |  |                                   |         |      |   |      |  |   |   | 
| |                 |  |                                   |         |      |   |      |  |   |   | 
| | Total           |  | $                                 | 115,166 |      | $ |     |  | $ |  | 
| |                 |  |                                   |         |      |   |      |  |   |   | 

The
Company and its subsidiaries filed consolidated Federal and various state
partnership income tax returns in which the initial period of tax reporting for
these entities occurred during the year ended December 31, 2004. These income
tax returns have not been examined by the applicable Federal and state tax
authorities.

NOTE 13 - Equity

Distributions to Members

On
February 28, 2007, Holding distributed to its members, Paul Revere and R&R,
85% of its beneficial interest in certain warrants and other securities that
were valued at approximately $10.1 million at that date (see Note 5.)

On
March 16, 2007, and April 27, 2007, the Company distributed cash of
approximately $10.7 million and $1.7 million, respectively, to its members,
Paul Revere and R&R.

Prior
to the Exchange, on July 9, 2007, Holding distributed $5.0 million, and
subsequently accrued an additional $1.44 million for distributions, to its
members, Paul Revere and R&R, representing

F-26

---



the members
projected income tax liability on Holdings taxable income for the Short Year,
based on the maximum combined Federal, New York State and New York City income
tax rate of 45.498% (the Maximum Rate). As soon as reasonably practicable,
the Company will calculate Holdings actual taxable income for the Short Year
and then make a final distribution to Paul Revere and the former stockholders
of R&R (pro rata in accordance with their interests in R&R), in an
amount equal to the taxes actually payable with respect to Holdings Short
Year, based on the Maximum Rate, over the amount distributed on July 9, 2007.
In the event the amount distributed on July 9, 2007 exceeded the actual taxes
payable with respect to the Short Year, based on the Maximum Rate, Paul Revere
and the former stockholders of R&R are obligated to reimburse the Company
for the amount of the distribution in excess of the actual taxes payable with
respect to the Short Year based on the Maximum Rate.

Stock-Based Compensation

On
May 2, 2005, the Company granted an option to purchase shares to a new employee
which had been offered as an inducement to join the Company. The grant
consisted of a 10 year option to purchase 200,000 shares at an exercise price
of $0.409 and a fair value of $37,960. The option vests over a three year
period or immediately upon the occurrence of a liquidity event, as defined by
the option agreement.

On
April 1, 2006, the Company granted an employee a 10-year option to purchase
229,885 shares at an exercise price of $7.00 and a fair value of $304,873.

On
April 1, 2006, the Company granted 3 employees 5-year options to purchase in
aggregate 344,827 shares at an exercise price of $7.00 and a fair value of
$428,965.

On
June 28, 2006, the Company granted 3 employees 5-year options to purchase
689,655 shares at an exercise price of $7.00 per share and a fair value of
$876,552.

On
December 1, 2006, the Company granted an employee a 5-year option to purchase
234,577 shares at an exercise price of $7.00 per share and a fair value of
$505,537.

On
December 22, 2006, in connection with the employment agreement between the
Company and its Chairman, the Company granted the Chairman a 5-year option to
purchase 229,885 shares at an exercise price of $7.00 per share and a fair
value of $494,965.

The
fair value of the above awards was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions: risk free interest rate - 4.95%; expected dividend yield - 0%;
expected option life - 3.97 years; and volatility - 37%.

On
May 22, 2007, the Company granted five year options to employees to purchase
919,541 shares of its membership units, at an exercise price of $8.24, vesting
over a three year term. Using a Black-Scholes model, the options were valued at
$2,013,795, assuming a risk free interest rate of 4.76%, weighted average
expected life of 3.5 years, and an expected volatility of 33%.

In
the Exchange, the above 2,848,370 outstanding options held by employees having
exercise prices ranging from $0.41 to $8.24 were exchanged for options to
acquire up to 5,278,072 shares of the Companys Common Stock having exercise
prices ranging from $0.22 to $4.45 per share. In addition, options held by two
employees to purchase an aggregate of 796,583 shares of common stock of the
Company became immediately vested and options held by four employees to
purchase an aggregate of 1,384,435 shares of the Companys common stock became
eligible to fully vest after one-year following the date of the Exchange.

F-27

---



In
October 2007, the Company granted ten year options to purchase 10,000 shares of
its common stock to each of the six outside independent members of its Board as
compensation for services, with an exercise price of $5.00 per share, vesting
over a three-year period and expiring in 2017. In addition, 750,000 options
were granted in September 2007 to its new chief executive officer as part of an
employment agreement with an exercise price of $5.00 per share, vesting over a
three-year period and expiring in 2017. Using a Black-Scholes model, the
options were valued at $1,674,351, assuming a risk free interest rate of 4.66%,
weighted average expected life of 6 years and an expected volatility of 33%.

The
Company recorded $2,541,193 and $366,415 of stock-based compensation for the years ended
December 31, 2007 and 2006, respectively.

The
unamortized deferred stock-based compensation balance as of December 31, 2007
was $7,170,931 and will be fully amortized through 2010.

A
summary of options (with retroactive effect given for the Exchange) outstanding
as of December 31, 2007 is as follows:

| |                                  |  |                     |           |                                    |   |                                            |  |                                                 |      |                             |  |            |  |   |           | 
| | -------------------------------- |  | ------------------- | --------- | ---------------------------------- | - | ------------------------------------------ |  | ----------------------------------------------- | ---- | --------------------------- |  | ---------- |  | - | --------- | 
| |                                  |  | Number
 of
 Options |           | Weighted
 Average
 Exercise
 Price |   | Weighted
 Average
 Grant
 Date
 Fair Value |  | Weighted
 Average
 Remaining
 Contractual
 Life |      | Aggregate
 Intrinsic
 Value | 
| |                                  |  |                     |           |                                    |   |                                            |  |                                                 |      |                             | 
| |                                  |  |                     |           |                                    |   |                                            |  |                                                 |      |                             |  |            |  |   |           | 
| | Outstanding at January 1, 2005   |  |                     |          |                                    | $ |                                           |  | $                                               |     |                             |  |            |  |   |           | 
| | Granted                          |  |                     | 370,603   |                                    | $ | 0.22                                       |  | $                                               | 0.10 |                             |  |            |  |   |           | 
| | Exercised, Forfeited or Expired  |  |                     |          |                                    |   |                                           |  |                                                 |     |                             |  |            |  |   |           | 
| |                                  |  |                     |           |                                    |   |                                            |  |                                                 |      |                             |  |            |  |   |           | 
| | Outstanding at December 31, 2005 |  |                     | 370,603   |                                    | $ | 0.22                                       |  | $                                               | 0.10 |                             |  |            |  |   |           | 
| | Granted                          |  |                     | 3,203,546 |                                    | $ | 3.78                                       |  | $                                               | 0.82 |                             |  |            |  |   |           | 
| | Exercised, Forfeited or Expired  |  |                     |          |                                    |   |                                           |  |                                                 |      |                             |  |            |  |   |           | 
| |                                  |  |                     |           |                                    |   |                                            |  |                                                 |      |                             |  |            |  |   |           | 
| | Outstanding at December 31, 2006 |  |                     | 3,574,149 |                                    | $ | 3.41                                       |  | $                                               | 0.74 |                             |  |            |  |   |           | 
| | Granted                          |  |                     | 2,513,923 |                                    | $ | 4.63                                       |  | $                                               | 1.47 |                             |  |            |  |   |           | 
| | Exercised, Forfeited or Expired  |  |                     |          |                                    |   |                                           |  |                                                 |      |                             |  |            |  |   |           | 
| | Outstanding at December 31, 2007 |  |                     | 6,088,072 |                                    | $ | 3.91                                       |  | $                                               | 1.04 |                             |  | 5.2
 Years |  | $ | 1,122,660 | 
| |                                  |  |                     |           |                                    |   |                                            |  |                                                 |      |                             |  |            |  |   |           | 
| | Exercisable at December 31, 2007 |  |                     | 2,028,729 |                                    | $ | 3.23                                       |  | $                                               | 0.80 |                             |  | 4.6
 Years |  | $ | 1,122,660 | 
| |                                  |  |                     |           |                                    |   |                                            |  |                                                 |      |                             |  |            |  |   |           | 

2007 Stock and Incentive Plan

In
August 2007, the Compensation Committee and the Board unanimously approved the
Companys 2007 Stock and Incentive Plan (the Plan). The Plan was approved by
the Companys stockholders on August 31, 2007. The material terms of the Plan
are as follows: (i) the Plan is administered by a committee made up entirely of
independent directors; (ii) all employees and directors of and consultants to
the Company and its subsidiaries are eligible to receive awards under the Plan;
(iii) 5,250,000 shares of Common Stock are reserved for issuance under the
Plan; (iv) awards granted pursuant to the Plan include incentive and
non-qualified options and restricted stock grants; (v) no participant may
receive in any one year awards covering more than 2,000,000 shares of Common
Stock; (vi) in the case of option grants, the exercise price may not be less
than 100% of the fair market value of a share of Common Stock on the date of
grant; and (vii) no award may be granted more than 10 years after the date of
the Plan.

In
September 2007, the Company granted 750,000 shares of restricted common stock
under the Plan to its new chief executive officer, which was valued at
$3,750,000 and recorded as deferred compensation, and is being amortized over a
three-year vesting period until earned. As of December 31, 2007, none of the
restricted shares are vested.

F-28

---



Public Offering

On
July 19, 2007, the Company filed a Registration Statement on Form S-1 with the
SEC (the Registration Statement). As amended, the Registration Statement
covered (i) 9.2 million shares of Common Stock to be sold by the Company in an
underwritten public offering including up to 1.2 million shares covered by an
over-allotment option granted to the underwriters (the Offering) and (ii) the
resale of 7,325,699 shares of Common Stock held by the former holders of the
Debentures, including 1,355,600 shares underlying the warrants issued to them
in the Exchange. The Registration Statement was declared effective on October
16, 2007 and the Offering closed on October 19, 2007 resulting in net proceeds
to the Company of $37.2 million, after taking into account the underwriting
discount of $2,800,000 but excluding other offering expenses totaling $929,194
which is recorded as a reduction of additional paid-in capital in the
consolidated statements of financial condition. The shares registered on behalf
of the former holders of the Debenture are subject to 180-day lock-up
agreements with the underwriters that expire on April 13, 2008.

NOTE 14  Earnings Per Share

Net
income per share for the years prior to the Exchange was retroactively adjusted
to reflect the number of equivalent shares of Common Stock received by
Holdings members. Basic net income per share is computed by dividing the
net income for the year by the weighted average number of common shares
outstanding during the year based upon the weighted average number of common
shares outstanding during the year excluding non-vested shares. Diluted net
income per share is computed on the same basis, including, if dilutive, common
share equivalents which include: (i) warrants, stock options and non-vested
common shares of stock, based on the Treasury stock method; and (ii) shares
underlying convertible debentures based on the if-converted method, with an
adjustment to net income, if applicable, for interest expense, amortization and
the write-off of debt discounts and deferred financing costs. The table below
reconciles weighted average number of common shares outstanding, basic and
diluted, for the years ended December 31, 2007, 2006, and 2005:

F-29

---



|                                                                       |  |                                   |            |      |  |            |  |  |            | 
|---------------------------------------------------------------------- |  | --------------------------------- | ---------- | ---- |  | ---------- |  |  | ---------- | 
|                                                                       |  | For
the Years Ended 
December 31, |           
|                                                                       |  |                                   |           
|                                                                       |  | 2007                              |            | 2006 |  | 2005       | 
|                                                                       |  |                                   |            |      |  |            | 
|Weighted average number of shares of common
stock outstanding, basic   |  |                                   | 23,039,216 |      |  | 18,159,547 |  |  | 18,159,547 | 
|Shares of common stock upon exercise of
options                        |  |                                   | 920,531    |      |  | 325,141    |  |  |           | 
|Shares of common stock upon exercise of
warrants                       |  |                                   | 47,020     |      |  |           |  |  |           | 
|Shares of common stock upon vesting of
restricted stock                |  |                                   | 17,130     |      |  |           |  |  |           | 
|Weighted average number of shares of common
stock outstanding, diluted |  |                                   | 24,023,897 |      |  | 18,484,688 |  |  | 18,159,547 | 
|                                                                       |  |                                   |            |      |  |            |  |  |            | 

Options
to purchase 810,000 shares of common stock at $5.00 per share were outstanding
during 2007 but were not included in the computation of diluted earnings per
share because the exercise price was greater than the average market price of
the common shares and, therefore, the effect would be antidilutive.

NOTE 15 Subsequent
Events

In
February 2008, the Company issued an aggregate of 1,370,238 restricted shares
of its common stock to 25 of its employees as incentive compensation. The
shares vest ratably on the first, second and third anniversary of grant and are
subject to accelerated vesting and forfeiture upon certain events.

On
February 20, 2008, the Company announced that its
Board of Directors had approved a stock repurchase plan in which it may buy
back up to one million shares. Through March 12, 2008, the Company has
repurchased an aggregate of 174,500 shares of its common stock at an average
price of approximately $2.20 for gross proceeds of approximately $384,610. The
Company may purchase additional shares of common stock under the plan.

F-30

---



NOTE 16 Selected Quarterly Financial Data (Unaudited)

The following is a summary of unaudited quarterly statements of operations for the years ended December 31, 2007 and 2006:

|                                                       | First |            | Second |   |            | Third |  |   | Fourth     |  
|------------------------------------------------------ | ----- | ---------- | ------ | - | ---------- | ----- |  | - | ---------- | -
|2007                                                   |       |            |        |   |            |       |  |   |            |  
|Revenues                                               | $     | 19,883,756 |        | $ | 26,914,626 |       |  | $ | 9,983,760  |  
|Operating income
        (loss)                        |       | 6,809,213  |        |   | 4,172,196  |       |  |   | 269,116    |  
|                                                      
|Income (loss) from
        continuing operations       |       | 6,658,924  |        |   | 3,244,799  |       |  |   | (3,587,070 | )
|Income (loss) from
        discontinued operations     |       | 161,940    |        |   | (38,556    | )     |  |   | (108,121   | )
|Net income (loss)                                      | $     | 6,820,864  |        | $ | 3,206,243  |       |  | $ | (3,695,191 | )
|                                                      
|Earnings (loss)
        per share:                     |       |            |        |   |            |       |  |   |            |  
|                                                      
|Basic:                                                 |       |            |        |   |            |       |  |   |            |  
|Income (loss) from
        continuing operations       | $     | 0.37       |        | $ | 0.18       |       |  | $ | (0.15      | )
|Income from discontinued
        operations            |       | 0.01       |        |   | 0.00       |       |  |   | 0.00       |  
|Net income (loss)                                      | $     | 0.38       |        | $ | 0.18       |       |  | $ | (0.15      | )
|                                                      
|Diluted:                                               |       |            |        |   |            |       |  |   |            |  
|Income (loss) from
        continuing operations       | $     | 0.34       |        | $ | 0.16       |       |  | $ | (0.15      | )
|Income from discontinued
        operations            |       | 0.01       |        |   | 0.00       |       |  |   | 0.00       |  
|Net income (loss)                                      | $     | 0.35       |        | $ | 0.16       |       |  | $ | (0.15      | )
|                                                      
|Weighted average
        number of shares outstanding: |       |            |        |   |            |       |  |   |            |  
|Basic                                                  |       | 18,159,147 |        |   | 18,159,147 |       |  |   | 24,330,826 |  
|Diluted                                                |       | 20,188,605 |        |   | 24,218,617 |       |  |   | 24,330,826 |  
|                                                      
|2006                                                   |       |            |        |   |            |       |  |   |            |  
|Revenues                                               | $     | 19,490,660 |        | $ | 5,445,712  |       |  | $ | 5,641,190  |  
|Operating income
        (loss)                        |       | 11,386,572 |        |   | (2,954,246 | )     |  |   | (1,648,087 | )
|                                                      
|Income (loss) from
        continuing operations       |       | 10,909,298 |        |   | (2,792,753 | )     |  |   | (1,693,698 | )
|Income from discontinued
        operations            |       | 52,970     |        |   | 155,529    |       |  |   | 79,953     |  
|Net income (loss)                                      | $     | 10,962,268 |        | $ | (2,637,224 | )     |  | $ | (1,613,745 | )
|                                                      
|Earnings (loss)
        per share:                     |       |            |        |   |            |       |  |   |            |  
|                                                      
|Basic:                                                 |       |            |        |   |            |       |  |   |            |  
|Income (loss) from
        continuing operations       | $     | 0.60       |        | $ | (0.15      | )     |  | $ | (0.09      | )
|Income from discontinued
        operations            |       | 0.00       |        |   | 0.00       |       |  |   | 0.00       |  
|Net income (loss)                                      | $     | 0.60       |        | $ | (0.15      | )     |  | $ | (0.09      | )
|                                                      
|Diluted:                                               |       |            |        |   |            |       |  |   |            |  
|Income (loss) from
        continuing operations       | $     | 0.59       |        | $ | (0.15      | )     |  | $ | (0.09      | )
|Income from discontinued
        operations            |       | 0.00       |        |   | 0.00       |       |  |   | 0.00       |  
|Net income (loss)                                      | $     | 0.59       |        | $ | (0.15      | )     |  | $ | (0.09      | )
|                                                      
|Weighted average
        number of shares outstanding: |       |            |        |   |            |       |  |   |            |  
|Basic                                                  |       | 18,159,147 |        |   | 18,159,147 |       |  |   | 18,159,547 |  
|Diluted                                                |       | 18,479,032 |        |   | 18,159,147 |       |  |   | 18,159,147 |  

F-31

---