UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





x
            ANNUAL REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF
              1934 FOR THE FISCAL YEAR ENDED DECEMBER 31,
  2008





Commission
File No.: 1-31292





JESUP
& LAMONT, INC.





(Name of
small business issuer in its charter)





Florida
                                              
                                              56-3627212(State
      or other jurisdiction of
                                              
                                              (I.R.S.
      Employerincorporation
      or organization)
                                              
                                              Identification
      No.)




650
      Fifth AvenueNew
      York, New York 10019(Address
      of principal executive offices) (Zip
Code)
 (212)
      307-2660(Issuer's
      telephone
number)




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


Title
      of Each Class
                        
                        Name
      of Each Exchange on Which RegisteredCommon
      Stock, $.01 Par Value
                        
                        NYSE
      AmexSecurities
      Registered Pursuant to Section 12(g) of the Act:None





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





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. Yes  ̈ 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
 ̈





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. Yes  ̈ No
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.





Large
accelerated filer  ̈


Non-accelerated
filer  ̈


Accelerated
filer  ̈


Smaller
reporting company x





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





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Issuer  as of June 30, 2008, the last business day of
the Issuer’s most recently completed second fiscal quarter, computed by
reference to the closing price of Issuer's common stock reported on the NYSE
Amex on such date was $9,108,260.





The
number of shares of outstanding Issuer's common stock, $.01 par value per share,
as of March 23, 2009 was 21,873,582.




DOCUMENTS
INCORPORATED BY REFERENCE
  None.




2




TABLE OF
CONTENTS




PagePART
      IItem
      1
                                            Description
      of Business
                                            5Item
      1A
                                            Risk
      Factors
                                            11Item
      1B
                                            Unresolved
      Staff Comments
                                            17Item
      2
                                            Description
      of Property
                                            17Item
      3
                                            Legal
      Proceedings
                                            18Item
      4
                                            Submission
      of Matters to a Vote of Security Holders
                                            18PART
      IIItem
      5
                                            Market
      for Common Equity, Related Stockholder Matters and Issuer Purchases of
      Equity Securities
                                            19Item
      6
                                            Selected
      Financial Data
                                            20Item
      7
                                            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operation
                                            20Item
      7A
                                            Quantitative
      and Qualitative Disclosure about Market Risk
                                            33Item
      8
                                            Financial
      Statements
                                            33Item
      9
                                            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
                                            34Item
      9A
                                            Controls
      and Procedures
                                            34Item
      9B
                                            Other
      Information
                                            35Part
      IIIItem
      10
                                            Directors,
      Executive Officers, Promoters, Control Persons and Corporate Governance;
      Compliance With Section 16(a) of the Exchange Act.
                                            36Item
      11
                                            Executive
      Compensation
                                            39Item
      12
                                            Security
      Ownership of Certain Beneficial Owners,Management and Related Stockholder
      Matters
                                            42Item
      13
                                            Certain
      Relationships, Related Transactions and Director
    Independence
                                            47Item
      14
                                            Principal
      Accountant Fees and Services
                                            47Part
      IVItem
      15
                                            Exhibits
                                            49




3




This
Annual Report on Form 10-K contains statements about future events and
expectations which are "forward-looking statements." Any statement in this 10-K
that is not a statement of historical fact may be deemed to be a forward-looking
statement. Forward-looking statements represent our judgment about the future
and are not based on historical facts. These statements include: forecasts for
growth in the number of customers using our service, statements regarding our
anticipated revenues, expense levels, liquidity and capital resources and other
statements including statements containing such words as "may," "will,"
"expect," "believe," "anticipate," "intend," "could," "estimate," "continue" or
"plan" and similar expressions or variations. These statements reflect the
current risks, uncertainties and assumptions related to various factors
including, without limitation, fluctuations in market prices, competition,
changes in securities regulations or other applicable governmental regulations,
capital impairments, technological changes, management disagreements and other
factors described under the heading "Factors affecting our operating results,
business prospects, and market price of stock" and elsewhere in this report and
in other filings made by us with the SEC. Based upon changing conditions, should
any one or more of these risks or uncertainties materialize, or should any
underlying assumptions prove incorrect, actual results may vary materially from
those described in this report as anticipated, believed, estimated or intended.
We undertake no obligation to update, and we do not have a policy of updating or
revising, these forward-looking statements. Except where the context otherwise
requires, the terms "we," "us," or "our" refer to the business of Jesup &
Lamont, Inc. (formerly Empire Financial Holding Company) ("JLI" or the
"Company") and our wholly-owned subsidiaries: Empire Financial Group, Inc.
("EFG"), Empire Investment Advisors, Inc. ("EIA"), and Jesup & Lamont
Securities Corporation ("JLSC").





4




PART
I





ITEM
1.  DESCRIPTION OF BUSINESS





Overview





We
provide securities brokerage, investment banking, market making and order
execution services in all 50 states, Europe, Asia and other locations through
Jesup and Lamont Securities Corporation (JLSC).  Brokerage services
are provided to both retail and institutional customers. During the year, we
also conducted business through Empire Financial Group (EFG), which ceased doing
business on November 12, 2008.  See Note 19 to the Financial
Statements. In addition, we also provide investment advisory and asset
management services.





Growth
Strategy





Our
current growth strategy is a combination of growth by acquisition and organic
growth of our existing and acquired businesses. We plan to build a mix of
financial services and products that provide a varied and continuing revenue
stream, not solely dependent on market conditions, to build stable
profitability. As examples, we intend to continue building our institutional
sales and research businesses. We also intend to focus on expanding the scope of
our international trading ADR and ordinary business. In addition, we plan on
continuing to build our fixed income business. During 2008, the Company began a
strategic initiative that would emphasize growth in high margin businesses and
curtail those that have been determined to be at lower margins. As part of that
strategy, the Company began a fixed income department and anticipates that this
business will be a growth area for the Company.  The company’s strategy is
to develop fixed income capabilities and to market fixed income products through
its existing retail broker network from JLSC and EFG, customer base and other
existing company assets. The leveraging of the Company’s Jesup and Lamont brand
name and its long standing operating history expedite its entrance into this new
business line. The Company believes that this new strategic initiative is
beneficial to its customer base since it provides safer investment products and
at the same time provides higher gross margins and will assist the company’s
return to profitability.





As part
of our internal growth plan to add incremental revenue to our existing and
acquired businesses, we will continue to recruit entrepreneurial financial
advisors (both independent and employees) with established customer bases who
generate substantial income and who desire independence and an entrepreneurial
atmosphere in which to conduct their business. These financial advisors are
comprised of both independent contractors and employees. For independent
contractors, we offer flexibility in selecting investment products best suited
to their customers' investment objectives, and supervision over branch office
operations as required for regulatory compliance. In return, the financial
advisors pay the capital costs and most operating expenses associated with their
branch offices. Independent ownership and operation of branch offices enables us
to expand that business with relatively minimal capital outlay and without a
proportionate increase in either capital costs or operating expenses. Many of
these same advantages assist in attracting employee brokers to our
businesses.





We have
invested in back office and field operations systems along with an integrated
accounting system to enhance our ability to grow and provide our independent and
employee financial advisor base and their clients with up-to-date on-line
information management. These systems provide our back office support personnel
with the tools to greatly increase our productivity without significantly
increasing personnel and other service costs. This will allow us to service a
significantly larger volume of business through a greater number of financial
advisors.





5




We also
intend to continue to service other broker dealers as well as our independent
and employee financial advisor base. We plan to expand the number of securities
for which we make a market and aggressively market our established order
execution capabilities to additional domestic and international broker dealers,
hedge funds and institutions. We intend to capitalize by focusing on the
underserved small to mid-size institutions. We intend to
provide  services that are usually reserved for larger institutional
clients. We will continue to strengthen our relationships with customers
utilizing technology and a high degree of service. Continued implementation of
these strategies will increase our transaction volume thus increasing our net
trading revenues. We also believe that continuing improvements in our capital
structure and a return to profitability will provide the platform to allow us to
increase the number of transactions we process for unaffiliated broker dealers
and institutions.





Brokerage
Services





Full Service Brokerage
Services





Through
our wholly owned subsidiary (JLSC) we provide full service brokerage services
directly to our retail customers, including individuals and small to mid-sized
institutions such as banks, credit unions, hedge funds, money managers, mutual
funds and pension funds. Experienced registered representatives execute buy and
sell orders for customers for stocks, bonds, traded options, commodities, and
financial derivatives and, where requested, provide account management, advisory
information and oversight services. Our customers also receive back office
support, client statements and reports, branch office regulatory compliance
support and advisory services. Approximately 72% of our 2008 revenues and
approximately 65% of our 2007 revenues were derived from commissions and fees
generated in connection with our retail financial brokerage
services.





Ancillary Services





We
support our full service brokerage operation and our network of affiliated and
unaffiliated broker dealers by offering the following ancillary
services:





·
            MARKET
      DATA AND FINANCIAL INFORMATION. We continually receive a direct line, or
      feed, of detailed quote data, market information and news. Our retail
      customers can create their own personal watch list of stocks and options
      for quick access to current pricing information. We provide our customers
      with access to various real-time quotes
  services.





·
            PORTFOLIO
      TRACKING AND RECORDS MANAGEMENT. Customers have online access to a listing
      of all their portfolio assets held with us, cost basis (if purchased
      through us), current price and current market value. The system offers the
      ability to transfer data to popular software programs such as Microsoft
      Money and Quicken to allow our customers to calculate unrealized profits
      and losses for each asset held in addition to the many other features
      these programs may offer. Online account holders may elect to receive
      electronic confirmations and detailed monthly statements. All clients
      receive printed confirmations and statements unless they elect to receive
      confirmations and statements electronically. Our clearing firms provide
      for the transmittal of proxy, annual report and tender offer materials to
      our customers.





·
            CASH
      MANAGEMENT SERVICES. Customer dividends, interest, sales proceeds and
      deposits are credited to customer accounts. We also provide cash
      management services to our customers. For example, funds not invested in
      securities earn interest in a credit interest program or can be invested
      in money market funds. In addition, we provide checking services and debit
      cards for our customer accounts through a commercial
  bank.





·
            ACCOUNT
      SECURITY. We use a combination of proprietary and industry standard
      security measures to protect customers' assets. Customers are assigned
      unique account numbers, user identifications and passwords that must be
      used each time they log on to our system. We rely on encryption and
      authentication technology to provide the security necessary to effect the
      confidential exchange of information. We do not plan to share customer
      data with third parties.





6


Fixed Income Business





During
2008, the company made a strategic decision to enter the fixed income segment of
the business. As part of that effort, the firm, under its Jesup and Lamont
Securities Corp. subsidiary, developed expertise in three major areas; municipal
bond trading, corporate/high yield bond trading and certificate of deposit
underwritings. These businesses were initially established with a focus on
institutional clients with the anticipation that the desks would have a liaison
to our retail operations. By the end of 2008, all desks were fully staffed and
operational.





Strategically,
the fixed income business unit should provide for more stable earnings as its
business tends to be stronger when equities are under pressure. Additionally,
margins in the company’s fixed income unit tend to higher, on average, than
margins in the equity side of the business. Finally during the current difficult
economic environment, the fixed income business has been seen as a flight to
quality and has helped offset the weakness seen in the equities business units.
Revenues generated from these sources were less than 5% of total 2008
revenues.





Market
Making And Order Execution Services





We
provide market making and order execution services for affiliated and
unaffiliated broker dealers and institutions. Our systems allow us to receive
orders telephonically or electronically. Our services consist of filling orders
received from independent broker dealers to buy securities or sell securities in
domestic or foreign securities. As a market maker, we offer to buy shares from,
or sell shares to, broker dealers. We display the prices at which we are willing
to buy and sell these securities and adjust our prices in response to market
conditions. We sometimes commit our own capital and typically derive revenue
from the difference between the prices at which we buy and sell shares. We
generally receive a fee or commission for providing institutional execution
services. Our trading revenues are dependent on our ability to take advantage of
daily stock price fluctuations and institutional order flow. Thus, we must be
able to evaluate and act rapidly on market trends and manage risk successfully.
Our methodology focuses on the dynamic, real-time analysis of market activity
and price movements, which enables us to increase our revenues and manage risk
better. We utilize state of the art industry standard execution and compliance
systems to manage our risk and seamlessly process and settle transactions with
unaffiliated broker dealers. We maintain strict inventory management procedures
and seek to reduce our exposure from market volatility.





Approximately
22% and 13% of our revenues for the years ended December 31, 2008 and 2007,
respectively, were derived from these services.





Investment
Banking Services





Our
investment banking clients are primarily served from our offices in New York
City and San Francisco. These offices provide services to small and medium sized
companies that seek capital to expand their businesses and further implement
their business plans. There are numerous companies that are too small to obtain
services from the larger investment banks. We have employed personnel who have
had substantial experience with larger firms who initiate, negotiate and place
much needed capital to these smaller and medium sized companies from
institutions and retail sources.





Our New
York office engages in institutional trading utilizing experienced securities
licensed professionals who both support our investment banking operations and
provide institutional clients with trading and execution services.





Approximately
6% and 23% of our revenues for the years ended December 31, 2008 and 2007,
respectively, were derived from investment banking services.





Investment
Advisory Services





We offer
fee-based investment advisory services to our customers, independent registered
investment advisors and unaffiliated broker dealers through our wholly owned
subsidiaries, Empire Investment Advisors, Inc. ("EIA")and JLSC. EIA and JLSC are
registered as investment advisors in all 50 states under the Investment Company
Act of 1940. These services are delivered through a platform that uses a variety
of independent third party providers. We believe these services enable us to
establish more comprehensive relationships with our customers. The investment
advisory services we provide include:




7




·
            Investment
      portfolio planning with recommendations on asset allocations on customers’
      risk tolerances and long term
needs;





·
            Recommendations
      and separate account manager and mutual fund research and due
      diligence;





·
            Portfolio
      performance review and
reallocation;





·
            All-inclusive
      wrap accounts for registered investment
advisors





These
services are provided for an all-inclusive fee based on assets under management.
As of December 31, 2008, the average fee being charged was approximately 140
basis points per annum of the value of our customers’ managed
assets.





Our
investment advisory services provide a competitive advantage to our capital
management division. The independent registered representatives and our own
employee representatives can offer the product and services of EIA and JLSC to
their retail clients upon affiliating with EIA and JLSC allowing them to compete
with bank and trust companies in offering investment advisory services to high
net worth clients.





Competition





The
market for brokerage services is extremely competitive with many large national
firms and numerous smaller regional and local firms providing services. This
competition is expected to continue to grow in the future. Many competitors are
significantly larger and can advertise and promote their services in ways that
are closed to us. We believe that the major competitive factors for brokerage
services include cost, service, and quality, ease of use and customer
satisfaction.





We
provide market making and execution services for equity securities to
unaffiliated broker dealers. The market for these services is rapidly evolving
and intensely competitive. We expect competition to continue to intensify in the
future. We compete primarily with wholesale, national and regional broker
dealers and trade execution firms such as Knight Trading Group, Inc., as well as
electronic communications networks, which provide a direct trading venue to
institutional and retail investors. We compete primarily on the basis of
execution quality, customer service and technology.





In
investment banking we compete primarily with larger regional and national firms
who offer similar services, but sometimes on a larger scale.





Technology





We
believe our use of traditional and proprietary systems and software allows us to
maintain low fixed processing and labor costs in our retail and market making
businesses. We utilize direct and Internet-based order systems that link our
retail, broker dealer and institutional customers to our back office and market
making services. Our systems allow us to process and reconcile transactions more
effectively by maximizing the use of our execution and clearing services in
trade orders we receive.





We
utilize third party technology vendors, employees, and local consultants to
support our technology efforts. We continually evaluate our systems. We will
either outsource software or technology development or use third party packages
when we deem it more cost effective than building the technology.





8




Government
Regulation





Broker Dealer Regulation





The
securities industry is subject to extensive regulation under federal and state
law. The Securities and Exchange Commission ("SEC") is the federal agency
responsible for administering the federal securities laws. In general, broker
dealers are required to register with the SEC under the Securities Exchange Act
of 1934, as amended(“the Exchange Act”). Our subsidiaries, EFG and JLSC, are
broker dealers registered with the SEC. Under the Exchange Act, every registered
broker dealer that does business with the public is required to be a member of
and is subject to the rules of the Financial Industry Regulatory Authority
("FINRA"). Securities professionals associated with a broker-dealer also are
subject to registration and supervision by FINRA. FINRA has established conduct
rules for all securities transactions among broker dealers and private
investors, trading rules for the over-the-counter markets and operational rules
for its member firms. FINRA conducts examinations of member firms, investigates
possible violations of the federal securities laws and its own rules, and
conducts disciplinary proceedings involving member firms and associated
individuals. FINRA administers qualification testing for all securities
principals and registered representatives in accordance with its rules and on
behalf of the state securities authorities which apply the same or additional
examination requirements.





We are
also subject to regulation under state law. EFG and JLSC are registered as
broker-dealers in all 50 states and in Puerto Rico. An amendment to the federal
securities laws prohibits the states from imposing substantive requirements on
broker-dealers that exceed those imposed under federal law. This amendment,
however, does not preclude the states from imposing registration requirements on
broker-dealers that operate within their jurisdiction, from sanctioning these
broker-dealers for engaging in misconduct or from supervising associated persons
that operate within a state.





Net Capital
Requirements and Liquidity





As
registered broker-dealers and members of FINRA, EFG and JLSC are subject to the
Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934. The
Net Capital Rule, which specifies minimum net capital requirements for
registered broker-dealers, is designed to measure the general financial
integrity and liquidity of a broker-dealer and requires that at least a minimum
part of its assets be kept in relatively liquid form. In general, net capital is
defined as net worth (assets minus liabilities), plus qualifying subordinated
borrowings and certain discretionary liabilities, and less certain mandatory
deductions that result from excluding assets that are not readily convertible
into cash and from valuing security positions conservatively. Among these
deductions are adjustments which reflect the possibility of a decline in the
market value of securities prior to disposition.





The Net
Capital Rule also provides that the SEC may restrict for up to 20 business days
any withdrawal of equity capital, or unsecured loans or advances to
stockholders, employees or affiliates if the capital withdrawal, together with
all other net capital withdrawals during a 30-day period, exceeds 30% of excess
net capital and the SEC concludes that the capital withdrawal may be detrimental
to the financial integrity of the broker-dealer. In addition, the Net Capital
Rule provides that the total outstanding principal amount of certain of a
broker-dealer's subordinated indebtedness, the proceeds of which are included in
its net capital, may not exceed 70% of the sum of the outstanding principal
amount of all subordinated indebtedness included in net capital, par or stated
value of capital stock, paid in capital in excess of par, retained earnings and
other capital accounts for a period in excess of 90 days.





On April
9, 2008, EFG was notified by FINRA that FINRA believed that EFG was out of
compliance with the SEC's Net Capital Rule 15c3-1 as of April 3, 2008.
Accordingly, EFG had to cease conducting a securities business, other than
liquidating transactions, while purportedly remaining out of compliance with
FINRA's interpretation. According to the notification from FINRA, the net
capital deficiency had occurred as a result of EFG's purported failure to
account for an unsecured debit balance totaling $2,034,929 at April 3, 2008 in
EFG's net capital computation. This debit balance was primarily due to balances
owed by JLI to its clearing broker. Before giving effect to the FINRA position,
EFG had determined that its net capital at April 3, 2008 was $1,033,021, which
exceeded the minimum net capital requirement by $564,021 (an excess amount
challenged by FINRA). On April 10, 2008, the Company filed a notification under
Exchange Act Rule 17a-11 with the SEC and FINRA, challenging the conclusions of
FINRA.





9




EFG
resumed full operations of conducting its securities business on April 15,
2008.In April 2008, the Company filed an action in Palm Beach County Circuit
Court seeking discovery of the supporting documents, reports and analysis that
were relied upon by FINRA in making an earlier determination that EFG was out of
compliance with the SEC’s Net Capital Rule.





On
November 12, 2008, EFG was out of compliance with the SEC's Net Capital Rule
15c3-1 and, accordingly, ceased conducting a securities business, other than
liquidating transactions, while remaining out of compliance with this rule.
EFG's out of compliance condition was caused by an arbitration award against it
for $772,000 plus costs and fees of approximately $100,000, notice of which was
received by EFG on November 12, 2008.  See Note 19 to the financial
statements for further details.





JLSC is a
member of the Securities Investor Protection Corporation which provides, in the
event of the liquidation of a broker-dealer, protection for clients' accounts up
to $500,000, subject to a limitation of $100,000 for claims for cash
balances.





Investment Company Act





Our
subsidiaries, EIA and JLSC are registered with the SEC as investment advisors
under the Investment Company Act of 1940. Registration by the SEC does not
represent an endorsement of EIA or JLSC by the SEC. EIA and JLSC must comply
with rules that govern the way they conduct their business, including the
information that must be given to clients, records that must be maintained,
compliance procedures and ethical requirements that must be enforced, and terms
that must be included in advisory agreements. As investment advisors, EIA and
JLSC are fiduciaries for their clients, and must act with loyalty and care in
the performance of their duties.





Additional Regulations





Due to
the increasing popularity and use of the Internet and other online services,
various regulatory authorities are considering laws and/or regulations with
respect to the Internet or other online services covering issues such as user
privacy, pricing, copyrights and quality of services. The growth and development
of the market for online commerce may prompt more stringent consumer protection
laws that may impose additional burdens on those companies conducting business
online. Moreover, the recent increase in the number of complaints by online
traders could lead to more stringent regulations of online trading firms and
their practices by the SEC, FINRA and other regulatory
agencies.


Furthermore,
the applicability to the Internet and other online services of existing laws in
various jurisdictions governing issues such as other taxes and personal privacy
is uncertain and may take years to resolve. As our services are available over
the Internet in multiple states and foreign countries, and as we have numerous
clients residing in these states and foreign countries, these jurisdictions may
claim that we are required to qualify to do business as a foreign corporation in
each such state and foreign country.





10




Employees





As of
December 31, 2008, we had 189 full-time employees of which 101 were registered
representatives, 7 were in management, 51 provided operation and client support
for our retail and order execution services, 4 provided accounting services, 4
provided information technology services, and 22 provided order execution and
market making services to our correspondents and retail client base. We also
supported a network of 23 independently owned offices or OSJ's with a total of
200 independent contractors. The independent contractors provide retail services
to our customers. No employee is covered by a collective bargaining agreement or
is represented by a labor union. We consider our employee and independent
contractor relations to be good.





Our
Company





Jesup
& Lamont, Inc. is organized as a corporation under the laws of the State of
Florida and serves as the parent of Empire Financial Group, Inc., Empire
Investment Advisors, Inc., and Jesup & Lamont Securities Corporation. The
JLI principal executive offices are located at 650 Fifth Avenue, 3rd Floor,
New York, NY 10019. Our shares are listed on the NYSE Amex, quoted under the
symbol "JLI," and began trading in April of 2002. The JLI Web site is located at
www.jesuplamont.com. Information contained in or connected to our Web sites are
not a part of this report.





Our
periodic filings are available on our Web site. Hard copies of our periodic
filings can be requested directly from us in writing (Attn: Investor Relations).
We will provide free of charge our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these
reports, our proxy statements and/or reports filed by officers and directors
with the Securities and Exchange Commission under Section 16(a) of the
Securities Exchange Act. These reports are also available on the Securities
Exchange Commission website at www.sec.gov by searching the EDGAR database for
our company's filings under the name "Jesup & Lamont, Inc.". You may also
read and copy, for a copying fee, our filed reports at the SEC’s Public Reading
Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for more information on its Public Reference Room.





ITEM 1A.  RISK
FACTORS





THE
EXISTENCE AND TERMS OF OUTSTANDING OPTIONS, WARRANTS, CONVERTIBLE PREFERRED
STOCK, STOCK SUBSCRIBED AND CONVERTIBLE DEBT IMPAIRS OUR ABILITY TO RAISE
CAPITAL THROUGH SUBSEQUENT DEBT OR EQUITY OFFERINGS AND COULD IMPAIR OUR ABILITY
TO OBTAIN ANY FINANCING ON FAVORABLE TERMS.





The
existence and the terms of outstanding options, warrants,  convertible
preferred stock, stock subscribed and convertible debt may adversely affect the
terms at which we can obtain capital through additional equity financings. In
addition, the terms of our convertible debt impose restrictions on our ability
to obtain capital through debt financing. The holders of the options, warrants
and convertible preferred stock have the opportunity to profit from a rise in
the value or market price of our common stock and to exercise or convert them at
a time when we could obtain equity capital on more favorable terms than those
contained in these securities. The existence of these securities impairs our
ability to raise capital through subsequent equity and debt
offerings.





FAILURE
OF OUR SECURITIES BROKERAGE SUBSIDIARIES TO MAINTAIN REQUIRED MINIMUM NET
CAPITAL MAY SUBJECT THEM TO FINES, PENALTIES AND OTHER SANCTIONS INCLUDING
SUSPENSION OR EXPULSION AS BROKER-DEALERS.





Our
securities brokerage subsidiaries, EFG (currently dormant) and JLSC, are subject
to SEC Uniform Net Capital Rule 15c3-l, which requires the maintenance of
minimum net capital and requires that the ratio of aggregate indebtedness to net
capital, both as defined, shall not exceed 15 to 1. Net capital and the related
ratio of aggregate indebtedness to net capital, as defined, may fluctuate on a
daily basis.





11




Failure
to maintain the required net capital may subject EFG and/or JLSC to suspension
or revocation of registration by the SEC and suspension or expulsion by FINRA
and other regulatory bodies and ultimately could require EFG's and/or JLSC's
liquidation. The Net Capital Rule prohibits payments of dividends, redemption of
stock, the prepayment of subordinated indebtedness and the making of any
unsecured advance or loan to a shareholder, employee or affiliate, if the
payment would reduce the Firm's net capital below a certain level.





At
December 31, 2008, EFG was out of compliance with the SEC's Net Capital Rule
15c3-1 and, accordingly, ceased conducting a securities business. See
Note 19 to the financial statements.  At December 31, 2008, JLSC
reported net capital of $314,609, which was $214,609 above the required net
capital of $100,000.





FAILURE
TO MAINTAIN NYSE AMEX LISTING.





We cannot
assure you that we will be able to continue to satisfy the requirements
necessary to remain listed on the NYSE Amex or that the NYSE Amex will change
its rules or that the NYSE Amex will not take additional actions to delist our
common stock. If for any reason, our stock were to be delisted from the NYSE
Amex, we may not be able to list our common stock on another national exchange
or market. If our common stock is not listed on a national exchange or market,
the trading market for our common stock may become illiquid. Upon any such
delisting, our common stock could become subject to the penny stock rules of the
SEC, which generally are applicable to equity securities with a price of less
than $5.00 per share, other than securities registered on certain national
securities exchanges provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system. The penny stock rules require a broker-dealer, before a transaction in a
penny stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the SEC that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with bid and ask quotations for the
penny stock, the compensation of the broker-dealer and its salesperson in the
transaction and monthly account statements showing the market value of each
penny stock held in the customer's account. In addition, the penny stock rules
require that, before a transaction in a penny stock that is not otherwise exempt
from such rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. As a result of these
requirements, if our common stock were to become subject to the penny stock
rules, it is likely that the price of our common stock would decline and that
our stockholders would find it more difficult to sell their shares.





We are
currently out of compliance with NYSE Amex standards relating to our failure to
hold our 2008 Meeting of Stockholders.  The meeting is now scheduled
to be held on May 5, 2009, and if and when held, we believe we will regain
compliance with this requirement.





WE ARE AT
COMPETITIVE DISADVANTAGES TO A NUMBER OF COMPANIES.





Our
competitors generally have greater marketing, financial and technical resources
than ours. These competitors can offer a wider range of services and financial
products than we can. Our competitors also have greater name recognition and
more extensive client bases. These competitors may be able to respond more
quickly to new or changing opportunities, technologies and client requirements
and may be able to undertake more extensive promotional activities, offer more
attractive terms to clients and adopt more aggressive pricing policies.
Moreover, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties or may
consolidate to enhance their services and products. We expect that new
competitors or alliances among competitors will emerge and may acquire
significant market share. We cannot operate successfully, and may not be able to
continue to operate, unless we overcome these competitive
disadvantages.





12




THE
OCCURRENCE OF LOSSES NOT REFLECTED ON OUR STATEMENT OF FINANCIAL CONDITION COULD
REDUCE OUR OPERATING RESULTS AND IMPAIR OUR LIQUIDITY WITHOUT ADEQUATE PRIOR
NOTICE TO INVESTORS.





Retail
customer transactions are cleared through the clearing brokers on a fully
disclosed basis. In the event that customers default in payments of funds or
delivery of securities, the clearing brokers may charge the Company for any loss
incurred in satisfying the customer's obligations. Additional credit risk occurs
if the clearing brokers of affiliates do not fulfill their obligations. Though
we regularly monitor the activity in our customer accounts for compliance with
margin requirements, rapid change in market value or lack of liquidity for
securities held in margin accounts could impose losses on us. In addition, we
have sold securities which we do not currently own and therefore will be
obligated to purchase the securities at a future date. We have recorded these
obligations in our financial statements at December 31, 2008 at the market
values of the securities and will incur a loss if the market value increases
subsequent to December 31, 2008. The occurrence of these off balance sheet
losses could impair our liquidity and force us to reduce or curtail
operations.





CONCENTRATIONS
OF CREDIT RISK INCREASE THE RISK OF MATERIAL HARM FROM DEFAULTS.





We are
engaged in various trading and brokerage activities in which counterparties
primarily include broker-dealers, banks and other financial institutions. In the
event counterparties do not fulfill their obligations, we may be exposed to
risk. The risk of default depends on the creditworthiness of the counterparty or
issuer of the instrument. It is our policy to review, as necessary, the credit
standing of each counter-party. Our cash in bank accounts, at times, exceeds the
Federal Deposit Insurance Corporation ("FDIC") temporary insurable limit of
$250,000. We have not experienced any previous losses due to this policy. The
concentration of these credit risks increases the magnitude of the harm we would
suffer in the event of default.





POTENTIAL
LOSSES OR SANCTION AS A RESULT OF EMPLOYEE MISCONDUCT.





Employee
misconduct could result in regulatory sanctions and unanticipated costs to us.
Because our business involves handling cash and marketable securities on behalf
of our customers, employee misconduct could result in unknown and unmanaged
risks or losses. Misconduct by employees could also include binding us to
transactions that exceed authorized limits or present unacceptable risks or
unauthorized or unsuccessful activities. If these losses are significant they
could materially reduce our income and impair our liquidity.





MARKET
PRICE FLUCTUATIONS COULD RESULT IN LOST REVENUES TO US AND ADVERSELY AFFECT OUR
PROFITABILITY.





Our order
execution services involve the purchase and sale of securities predominantly as
principal, instead of buying and selling securities as an agent for our
customers. As a result, we may own securities or may be required to buy or sell
securities to complete customer transactions. During the period that we own the
securities or may be required to buy or sell securities, market prices could
fluctuate significantly which could result in lost revenues to us and adversely
affect our profitability.





TERMINATION
OF BUSINESS RELATIONSHIPS BY OUR NETWORK OF INDEPENDENT REGISTERED
REPRESENTATIVES.





Our
independent registered representatives could terminate their relationship with
us on little or no notice and could associate with another broker-dealer. The
independent registered representatives can transfer their client accounts which
could adversely affect our revenues.





OUR
ADMINISTRATIVE COSTS, INCLUDING COMPLIANCE WITH SECTION 404 OF THE
SARBANES-OXLEY ACT, WILL BE SIGNIFICANTLY HIGHER THAN THEY ARE NOW, WHICH WILL
MAKE IT MORE DIFFICULT FOR US TO BE PROFITABLE AND EFFECT OUR CASH FLOW.
DIFFICULTIES IN COMPLYING WITH SECTION 404 OF THE SARBANES-OXLEY ACT COULD
AFFECT OUR MARKET VALUE.





The
Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the
Securities and Exchange Commission and the NYSE Amex have imposed various new
requirements on public companies, including requiring changes in corporate
governance practices. Our management and other personnel will need to devote a
substantial amount of time to these compliance requirements. Moreover, these
rules and regulations increase our legal and financial compliance costs and make
some activities more time-consuming and costly.





13




The
Sarbanes-Oxley Act requires, among other things, that we maintain effective
internal control over financial reporting and disclosure controls and
procedures. We are required to perform system and process evaluation and testing
of our internal control over financial reporting to allow management to report
on the effectiveness of our internal control over financial reporting, as
required by Section 404 of the Sarbanes-Oxley Act. Beginning in 2009, our
independent registered public accounting firm will be required to evaluate and
test our internal control over financial reporting, and to issue an opinion on
the effectiveness of our internal control over financial reporting. Our testing,
or the subsequent testing by our independent registered public accounting firm,
may reveal deficiencies in our internal control over financial reporting that
are deemed to be material weaknesses. Our compliance with Section 404 will
require that we incur substantial accounting expense and expend significant
management time on compliance-related issues. We currently do not have
an internal audit group, and we will evaluate the need to hire additional
accounting and financial staff with appropriate public company experience and
technical accounting knowledge. If we are not able to comply with the
requirements of Section 404 in a timely manner, or if we or our independent
registered public accounting firm identifies deficiencies in our internal
control over financial reporting that are deemed to be material weaknesses, the
market price of our stock could decline and we could be subject to sanctions or
investigations by the Securities and Exchange Commission, the NYSE Amex or other
regulatory authorities, which would require additional financial and management
resources. In addition, if we are unable to meet filing deadlines for reports
required by the Securities Exchange Act, our securities could be delisted from
the NYSE Amex. If our securities were delisted, trading, if any, in our
securities would be conducted in the over the counter market on FINRA's "OTC
Bulletin Board." Consequently, the liquidity of our securities could be
impaired.





FUTURE
SALES OR THE POTENTIAL FOR SALE OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON
STOCK COULD CAUSE THE TRADING PRICE OF OUR COMMON STOCK TO DECLINE.





Sales of
a substantial number of shares of our common stock in the public markets, or the
perception that these sales may occur, could cause the market price of our stock
to decline and could materially impair our ability to raise capital through the
sale of additional equity securities. We have 22,397,700 shares of common stock
issued and 21,873,582 outstanding at December 31, 2008 and an additional
21,207,775 shares of common stock underlying options, warrants, convertible
securities, and common stock and warrants subscribed. The exercise or conversion
of these securities and the sale of the underlying shares could depress the
price of our common stock.





WE MAY
ISSUE SHARES OF PREFERRED STOCK IN THE FUTURE, WHICH COULD DEPRESS THE PRICE OF
OUR STOCK.





Our
corporate charter authorizes us to issue shares of "blank check" preferred
stock. Our Board of Directors has the authority to fix and determine the
relative rights and preferences of preferred shares, as well as the authority to
issue such shares, without further shareholder approval.





WE MAY
EXPERIENCE SIGNIFICANT FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS DUE TO
THE NATURE OF OUR BUSINESS AND THEREFORE MAY FAIL TO MEET PROFITABILITY
EXPECTATIONS.





Our
revenue and operating results may fluctuate from quarter to quarter and from
year to year due to a combination of factors, including fluctuating gains and
losses in our trading income, turnover in our brokers, and the level of
investment banking transactions completed by us and the level of fees we receive
from those transactions. Accordingly, our operating results may fluctuate
significantly in any particular quarter or year.





14




WE MAY
INCUR SIGNIFICANT LOSSES FROM TRADING AND INVESTMENT ACTIVITIES DUE TO MARKET
FLUCTATIONS AND VOLATILITY.





We may
maintain trading and investment positions in the equity markets. To the extent
that we own securities, i.e., long positions, a downturn in those markets could
result in losses from a decline in the value of those long positions.
Conversely, to the extent that we have sold securities that we do not own, i.e.,
short positions, an upturn in those markets could expose us to potentially
unlimited losses as we attempt to cover our short positions by acquiring assets
in a rising market.





We may
from time to time have a trading strategy consisting of holding a long position
in one security and a short position in another security from which we expect to
earn revenues based on changes in the relative value of the two securities. If,
however, the relative value of the two securities changes in a direction or
manner that we did not anticipate or against which we are not hedged, we might
realize a loss in those paired positions. In addition, we maintain trading
positions that can be adversely affected by the level of volatility in the
financial markets, i.e., the degree to which trading prices fluctuate over a
particular period, in a particular market, regardless of market
levels.





OUR
BUSINESS COULD BE ADVERSELY AFFECTED BY A DOWNTURN IN THE FINANCIAL
MARKETS.





Over the
past several months, the United States economy has been negatively impacted by a
variety of factors including, but not limited to, significant asset quality
issues in the securities industry. These issues have had an adverse effect on
professional institutional investors as well as retail investors. The issues are
complex and it is unsure when the issues surrounding the financial services
industry will be resolved. Continued weakness in the financial services arena, a
poor economic environment and weak consumer confidence could hurt our abilities
to generate revenues.





As a
securities broker-dealer, our business is materially affected by conditions in
the financial markets and economic conditions generally, both in the United
States and elsewhere around the world. Many factors or events could lead to a
downturn in the financial markets including war, terrorism, natural catastrophes
and other types of disasters. These types of events could cause people to begin
to lose confidence in the financial markets and their ability to function
effectively. If the financial markets are unable to effectively prepare for
these types of events and ease public concern over their ability to function,
our revenues are likely to decline and our operations will be adversely
affected.





OUR
REVENUES MAY DECLINE IN ADVERSE MARKET OR ECONOMIC CONDITIONS.





Our
investment banking revenues, in the form of financial advisory and underwriting
fees, are directly related to the number and size of the transactions in which
we participate and therefore may be adversely affected by any downturn in the
securities markets. Additionally, downturn in market conditions may lead to a
decline in the volume of transactions that we execute for our customers and,
therefore, to a decline in the revenues we would otherwise receive from
commissions and spreads. Should these adverse financial and economic conditions
appear and persist for any extended period of time, we will incur a further
decline in transactions and revenues that we receive from commissions and
spreads.





WE DEPEND
ON OUR SENIOR EMPLOYEES AND THE LOSS OF THEIR SERVICES COULD HARM OUR
BUSINESS.





Our
success is dependent in large part upon the services of several of our senior
executives and employees. We do not maintain and do not intend to obtain key man
insurance on the life of any executive or employee. If our senior executives or
employees terminate their employment with us and we are unable to find suitable
replacements in relatively short periods of time, our operations may be
materially and adversely affected.





15




OUR RISK
MANAGEMENT POLICIES AND PROCEDURES MAY LEAVE US EXPOSED TO UNIDENTIFIED RISKS OR
AN UNANTICIPATED LEVEL OF RISK.





The
policies and procedures we employ to identify, monitor and manage risks may not
be fully effective. Some methods of risk management are based on the use of
observed historical market behavior. As a result, these methods may not predict
future risk exposures, which could be significantly greater than the historical
measures indicate. Other risk management methods depend on evaluation of
information regarding markets, clients or other matters that are publicly
available or otherwise accessible by us. This information may not be accurate,
complete, up-to-date or properly evaluated. Management of operational, legal and
regulatory risk requires, among other things, policies and procedures to
properly record and verify a large number of transactions and events. We cannot
assure you that our policies and procedures will effectively and accurately
record and verify this information.





We seek
to monitor and control our risk exposure through a variety of separate but
complementary financial, credit, operational and legal reporting systems. We
believe that we effectively evaluate and manage the market, credit and other
risks to which we are exposed. Nonetheless, the effectiveness of our ability to
manage risk exposure can never be completely or accurately predicted or fully
assured. For example, unexpectedly large or rapid movements or disruptions in
one or more markets or other unforeseen developments can have a material adverse
effect on our results of operations and financial condition.





The
consequences of these developments can include losses due to adverse changes in
inventory values, decreases in the liquidity of trading positions, higher
volatility in earnings, increases in our credit risk to customers as well as to
third parties and increases in general systemic risk.





CREDIT
RISK EXPOSES US TO LOSSES CAUSED BY FINANCIAL OR OTHER PROBLEMS EXPERIENCED BY
THIRD PARTIES.





We are
exposed to the risk that third parties that owe us money, securities or other
assets will not perform their obligations. These parties include:





·
            trading
      counterparties;





·
            customers;





·
            clearing
      agents;





·
            exchanges;





·
            clearing
      houses; and





·
            other
      financial intermediaries as well as issuers whose securities we
      hold.





These
parties may default on their obligations owed to us due to bankruptcy, lack of
liquidity, operational failure or other reasons. This risk may arise, for
example, from:





·
            holding
      securities of third parties;





·
            executing
      securities trades that fail to settle at the required time due to
      non-delivery by the counterparty or systems failure by clearing agents,
      exchanges, clearing houses or other financial intermediaries;
      and





·
            extending
      credit to clients through bridge or margin loans or other
      arrangements.





Significant
failures by third parties to perform their obligations owed to us could
adversely affect our revenues and perhaps our ability to borrow in the credit
markets.





16




INTENSE
COMPETITION FROM EXISTING AND NEW ENTITIES MAY ADVERSELY AFFECT OUR REVENUES AND
PROFITABILITY.





The
securities industry is rapidly evolving, intensely competitive and has few
barriers to entry. We expect competition to continue and intensify in the
future. Many of our competitors have significantly greater financial, technical,
marketing and other resources than we do. Some of our competitors also offer a
wider range of services and financial products than we do and have greater name
recognition and a larger client base. These competitors may be able to respond
more quickly to new or changing opportunities, technologies and client
requirements. They may also be able to undertake more extensive promotional
activities, offer more attractive terms to clients, and adopt more aggressive
pricing policies. We may not be able to compete effectively with current or
future competitors and competitive pressures faced by us may harm our
business.





ITEM 1B. UNRESOLVED STAFF
COMMENTS


None.





ITEM
2.  DESCRIPTION OF PROPERTY





We do not
own and do not plan to own any real estate. Our office locations are discussed
below.





JLI, JLSC
and EIA Offices:





Our
principal executive offices and the main office of JLSC are located in
approximately 19,020 square feet of office space, at 650 Fifth Avenue, 3rd Floor,
New York, NY 10019. These offices are leased pursuant to a lease which provides
for an average rent of approximately $65,000 per month, including sales and
property taxes.  The JLSC office employs registered individuals who
service our retail and institutional clients and our Investment Banking and
Research departments with staff to service these areas.





Our
secondary executive and administrative offices are  located in
approximately 8,000 square feet of Office space, at 2170 West S.R. 434, Suite
100, Longwood, Florida with a monthly rent of approximately
$13,600.





The San
Francisco office is located at 150 California Street, Suite 2100, San Francisco,
California, 94111, and occupies 5,687 square feet with monthly rent of
$23,696.





Due to
the large amounts of travel between the New York area and significant costs
associated with overnight hotel rooms, we maintain an apartment at 418 Central
Park West in New York City. The apartment is approximately 500 square feet with
monthly rentals of $2,750.





The Boca
Raton office is located at 2500 N. Military Trail, 1st Floor, Boca Raton, FL,
and occupies 5,044 square feet with monthly rent of $8,500. This office houses
our Research Department and a portion of our institutional


trading
desk.





The
Chicago office is located at 111 S. Wacker Dr, Chicago, IL and occupies 3,739
square feet with a monthly rent of $12,463. This office  is used for
institutional equity and retail equity sales.





The
Delaware office is located at 3 Mill Road Suite 304, Wilmington DE, and occupies
2,807 square feet with a monthly rent of $5,238. This office houses two retail
brokers and also services our institutional clients.





The
Boston, Massachusetts office is located at 60 State St, 18th Floor, Boston MA,
and occupies approximately 7,000 square feet with a monthly rent of $29,736.
This office employs registered individuals and staff who service our retail and
institutional clients.





17




The
Worcester, Massachusetts office is located at 588 Main Street, Worcester MA, and
occupies 4,000 square feet with a monthly rent of $3,750 (this is a tenant at
will, no lease). This office employs registered individuals and staff who
service our retail and institutional clients.





There are
two New Jersey Offices located at 399 Thornall Street, Edison, NJ, and 299
Cherry Hill Rd., Parsippany, NJ.  These offices occupy 4,277 and 5,571
s.f., respectively with a monthly rent of $10,693 and $ 11,374, respectively.
These offices employ registered individuals and staff who service our retail and
institutional clients.





The St.
Louis office located at 10805 Sunset Office Dr, Sunset Hills,
MO,  occupies 466 sq. feet with a monthly rent of
$2,550.  This office employs  registered individuals and
staff who service our retail and institutional clients.





The Ft.
Lauderdale office located at 888 E. Las Olas Blvd, Suite 600, Ft. Lauderdale,
FL   occupies 3,454 sq. feet with a monthly rent of
$6,275.  This office employs  registered individuals and
staff who service our retail and institutional clients.





As of
December 31, 2008 JLSC also serviced 23 fully independent offices throughout The
United States. We do not have any lease agreements or any
direct  financial commitments to these locations.





ITEM 3.  LEGAL
PROCEEDINGS


Our
business involves substantial risks of liability, including exposure to
liability under federal and state securities laws in connection with the
underwriting or distribution of securities and claims by dissatisfied clients
for fraud, unauthorized trading, churning, mismanagement and breach of fiduciary
duty. In recent years there has been an increasing incidence of litigation
involving the securities industry, including class actions which generally seek
rescission and substantial damages. In the ordinary course of business, we and
our principals are, and may become a party to additional legal or regulatory
proceedings or arbitrations. We are not currently involved in any additional
legal or regulatory proceeding or arbitrations, the outcome of which is expected
to have a material adverse impact on our business.





On
January 15, 2009, the Company, announced that EFG has filed a $25 million
arbitration claim against one of its clearing brokers, Penson Financial
Services, Inc., a NASDAQ listed company, its CEO, Phil Pendergraft, its
President, Daniel Son and its Chairman, Roger Engemoen. Empire’s causes of
action include extortion, civil theft, conspiracy, tortuous interference with
contractual relationships and aiding and abetting breach of fiduciary duty. The
claims relate to the assistance Penson provided in connection with a $1 million+
fraud perpetrated upon Empire and Penson’s collusion with a “raid” of Empire’s
global execution services business.





Empire
further alleges that Penson sought to profit by making false statements to
FINRA, Empire’s primary regulator, in the interest of closing the firm.
Thereafter, Penson demanded payments of over $1 million before Empire could
reopen. Penson has also seized a substantial clearing deposit of Empire’s as
well as commission revenue. As a result of these acts, the brokerage firm has
sustained significant harm. (See Footnote 17 for further details on current
litigations.)





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





No
matters were submitted to a vote of security holders during the fourth quarter
of 2008.





18




PART
II





ITEM 5.  MARKET
FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES





Market
Prices. Our common stock began trading on the NYSE Amex (formerly, the American
Stock Exchange ) on April 9, 2002, and trades under the symbol "JLI". Set forth
below is high and low price information for the common stock as reported on the
NYSE Amex for each period presented.





2007
                    
                    HIGH SALES PRICE
                    
                    
                    LOW SALES PRICEFirst Quarter
                    
                    $
                    3.04
                    
                    
                    $
                    2.38Second
      Quarter
                    
                    
                    2.89
                    
                    
                    
                    1.40Third
      Quarter
                    
                    
                    1.87
                    
                    
                    
                    1.10Fourth
      Quarter
                    
                    
                    1.25
                    
                    
                    
                    0.992008
                    
                    HIGH SALES PRICE
                    
                    
                    LOW SALES PRICEFirst
      Quarter
                    
                    $
                    1.20
                    
                    
                    $
                    .50Second
      Quarter
                    
                    
                    1.60
                    
                    
                    
                    .44Third
      Quarter
                    
                    
                    1.20
                    
                    
                    
                    .82Fourth
      Quarter
                    
                    
                    .95
                    
                    
                    
                    0.26





As of
March 23, 2009, there were approximately 753 stockholders of record of our
common stock.





DIVIDEND
INFORMATION.





We did
not pay any dividends to our common stockholders in 2008 and we do not
anticipate paying any dividends to our common stockholders in the foreseeable
future. We intend to retain earnings to finance the development and expansion of
our business. Payment of dividends to common stockholders in the future will be
subject to the discretion of our board of directors and will depend on our
ability to generate earnings, our need for capital and our overall financial
condition.





EQUITY
COMPENSATION PLANS.





The
Company adopted the 2000 Incentive Compensation Plan and the 2007 Incentive
Compensation Plan (collectively the "Plans"). The Plans are designed to serve as
an incentive for retaining directors, employees, consultants and advisors. Stock
options, stock appreciation rights and restricted stock options may be granted
to certain persons in proportion to their contributions to the overall success
of the Company as determined by the Board of Directors.





The
following table provides information as of December 31, 2008 with respect to
compensation plans (including individual compensation arrangements) under which
our equity securities are authorized for issuance.





19





Equity
Compensation Plan Information





Plan Category
                                  
                                  Number of
                                    securities to
                                    be issued upon
                                    exercise of
                                    outstanding
                                    options,
                                    (a)
                                  
                                  
                                  Weighted-average
                                    exercise price
                                    of outstanding
                                    options,
                                    (b)
                                  
                                  
                                  Number of
                                      securities
                                      remaining available
                                      for future issuance
                                        under equity
                                        compensation plans
                                    (excluding
                                    securities reflected
                                    in column (b)
                                    (c)Equity
      Compensation plans approved by stockholders
                                  
                                  
                                  8,000,000
                                  
                                  
                                  $
                                  2.83
                                  
                                  
                                  
                                  3,164,334





ITEM 6.  SELECTED
FINANCIAL DATA





JLI is a
“smaller reporting company,” as defined by Regulation S-K, and as such, is not
providing the information contained in this item pursuant to Regulation
S-K.





ITEM
7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.





INTRODUCTION





We were
incorporated in Florida during February 2000. Most of our business is conducted
through our wholly owned subsidiary Jesup & Lamont Securities Corporation.
Empire Financial Group, Inc. was founded in 1992 and merged into Empire
Financial Holding Company in 2000. On November 12, 2008, EFG was out of
compliance with the SEC's Net Capital Rule 15c3-1 and, accordingly, ceased
conducting a securities business, other than liquidating transactions, while
remaining out of compliance with this rule. EFG's out of compliance condition
was caused by an arbitration award against it for $772,000 plus costs and fees
of approximately $100,000, notice of which was received by EFG on November 12,
2008.  See Note 19 to the financial statements for further
details.  On November 10, 2006, effective as of November 1, 2006, we
acquired Jesup & Lamont Securities Corporation. Effective January 2, 2008,
we changed the name of Empire Financial Holding Company to Jesup & Lamont,
Inc. Accordingly, the following discussion and analysis of our financial
condition and results of operations is based on the combined results of these
businesses.





JLSC is
our financial brokerage services subsidiary providing brokerage services to full
service retail and institutional customers. We provide our employee and
independent registered representatives and advisors back office compliance and
administrative services over the telephone at 1-800-569-3337 or through their
designated registered representative. We provide our retail customers access to
useful financial products and services through our website and by telephone. Our
customers may, upon request, also receive advice from our brokers regarding
stock, bonds, mutual funds and insurance products. We also provide securities
execution and market making services, providing execution services involving
filling orders to purchase or sell securities received from unaffiliated broker
dealers on behalf of their retail customers. We typically act as principal in
these transactions and derive our net trading revenues from the difference
between the price paid when a security is bought and the price received when
that security is sold. We typically do not receive a fee or commission for
providing retail order execution services.





Additionally
through EIA and JLSC, we offer fee-based investment advisory services to our
customers, independent registered investment advisors and unaffiliated broker
dealers. These services are web-based and are delivered through a platform that
combines a variety of independent third party providers.





20




Services
include access to separate account money managers, managed mutual fund
portfolios, asset allocation tools, separate account manager and mutual fund
research, due diligence and quarterly performance review. We charge our
customers an all-inclusive fee for these services, which is based on assets
under management. As of December 31, 2008, the annual fee was equal to
approximately 140 basis points times the assets under management.





CRITICAL
ACCOUNTING POLICIES





Our
discussion and analysis of our financial condition and results of operations are
based on our consolidated financial statements which have been prepared in
conformity with accounting principles generally accepted in the United States of
America. Because we operate in the financial services industry, we follow
certain accounting guidance used by the brokerage industry. Our consolidated
balance sheet is not separated into current and non-current assets and
liabilities. Certain financial assets, such as trading securities are carried at
fair market value on our consolidated statements of financial condition while
other assets are carried at historic values.





We
account for income taxes on an asset and liability approach to financial
accounting and reporting. Deferred income tax assets and liabilities are
computed annually for differences between the financial and tax basis of assets
and liabilities that will result in taxable or deductible amounts in the future,
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. A valuation allowance is
recognized if, based on the weight of available evidence, it is more likely than
not that some portion or all of the deferred asset will not be realized. Income
tax expense is the tax payable or refundable for the period, plus or minus the
change during the period in deferred tax assets and liabilities.





ACCOUNTING
FOR CONTINGENCIES





We accrue
for contingencies in accordance with Statement of Accounting Standards ("SFAS")
No. 5, "Accounting for Contingencies," when it is probable that a liability or
loss has been incurred and the amount can be reasonably estimated. Contingencies
by their nature relate to uncertainties that require our exercise of judgment
both in assessing whether or not a liability or loss has been incurred and
estimating the amount of probable loss.





USE OF
ESTIMATES





Note 2 to
our consolidated financial statements contains a summary of our significant
accounting policies, many of which require the use of estimates and assumptions
that affect the amounts reported in the consolidated financial statements for
the periods presented. We believe that certain of our significant accounting
policies are based on estimates and assumptions that require complex, subjective
judgments which can materially impact reported results.





GOODWILL
AND OTHER INTANGIBLE ASSETS





The
Company applies SFAS 142, Goodwill and Other Intangible Assets and performs a
quarterly impairment test. Under SFAS 142, the fair value of an asset (or
liability) is the amount at which that asset (or liability) could be bought (or
incurred) or sold (or settled) in a current transaction between willing parties,
that is, other than in a forced or liquidation sale. Thus, the fair value of a
reporting unit refers to the amount at which the unit as a whole could be bought
or sold in a current transaction between willing parties. Quoted market prices
in active markets are the best evidence of fair value and shall be used as the
basis for the measurement, if available. However, the market price of an
individual equity security (and thus the market capitalization of a reporting
unit with publicly traded equity securities) may not be representative of the
fair value of the reporting unit as a whole. The quoted market price of an
individual equity security, therefore, need not be the sole measurement basis of
the fair value of a reporting unit. Substantial value may arise from the ability
to take advantage of synergies and other benefits that flow from control over
another entity. Consequently, measuring the fair value of a collection of assets
and liabilities that operate together in a controlled entity is different from
measuring the fair value of that entity's individual equity securities. An
acquiring entity often is willing to pay more for equity securities that give it
a controlling interest than an investor who would pay for a number of equity
securities representing less than a controlling interest. That control premium
may cause the fair value of a reporting unit to exceed its market
capitalization.





21




Our
goodwill was recorded for acquisitions which are less than three years old. We
believe we have not nearly begun to realize the fair value of these acquisitions
or the synergies which we believe will be realized from combining with our
pre-acquisition operations. For example, fixed income is becoming a primary part
of our business initiative.  We believe that we can generate
significant revenues by using our institutional sales force as a source of
investment ideas for a retail distribution.


Application
of the goodwill impairment test requires judgment, including the identification
of reporting units, assignment of assets and liabilities to reporting units,
assignment of goodwill to reporting units, and determination of the fair value
of each reporting unit. The fair value of each reporting unit is estimated using
a discounted cash flow methodology. This requires significant judgments
including estimation of future cash flows, which is dependent on internal
forecasts, estimation of the long-term rate of growth of the Company's business,
the useful life over which cash flows will occur, and determination of the
Company's weighted average cost of capital. Changes in these estimates and
assumptions could materially affect the determination of fair value and
potential goodwill impairment for each reporting unit. The Company has elected
to perform its goodwill impairment test quarterly.





If the
Company subsequently determines its goodwill and other intangible assets have
been impaired, the Company may have to write off a portion or all of such
goodwill and other intangible assets. If all goodwill and other intangible
assets were written off, the Company would record a non cash loss approximating
$17.4 million to operations and stockholders' equity.





MARKET-MAKING
ACTIVITIES





Securities
owned and securities sold, but not yet purchased, which primarily consist of
listed, over-the-counter, American Depository Receipts and foreign ordinary
stocks, are carried at market value and are recorded on a trade date basis.
Market value is estimated daily using market quotations available from major
securities exchanges and dealers.





SOURCES
AND DESCRIPTION OF REVENUES





COMMISSIONS AND FEES.





Approximately
72% of our 2008 revenues and approximately 65% of our 2007 revenues consist of
commissions and fees. Commissions and fees include revenues generated from
transactional fees charged to retail and institutional customers. Commissions
and fees also include mutual fund transaction commissions and trailer fees,
which are periodic fees paid by mutual funds as an incentive to keep assets
invested with them over time. Transactional fees charged to retail and
institutional customers are primarily affected by changes in transaction volumes
and changes in the commission or fee rates charged per transaction. Also
included are commissions generated from our fixed income division. Commissions
were generated in municipal bond trading, corporate bond trading and certificate
of deposit underwritings.





TRADING REVENUES.





Approximately
22% of our 2008 and 13% of our 2007 revenues consist of equities market-making
trading revenues. Equities market-making trading revenues are generated from the
difference between the prices we pay to buy securities and the price we are paid
when we sell securities. Volatility of stock prices, which can result in
significant price fluctuations in short periods of time, may result in trading
gains or losses. Our equities market-making trading revenues are dependent on
our ability to evaluate and act rapidly on market trends and manage risk
successfully. We typically act as principal in these transactions and do not
receive a fee or commission for providing order execution services.





22




Our 2008
trading revenues were $8,398,425 which consisted of net realized gains of
8,150,527 and net unrealized gains of $247,898.





INVESTMENT BANKING.





The
remaining 6% of our 2008 revenues came from investment banking as compared to
22% in 2007. Our 2008 and 2007 net investment banking revenues were $2,358,428
and $11,449,695, respectively.





DESCRIPTION
OF OPERATING EXPENSES





EMPLOYEE COMPENSATION AND
BENEFITS.





Employee
compensation and benefits, which include salaries and wages, incentive
compensation, stock compensation and related employee benefits and payroll taxes
accounted for approximately 42% of our expenses during 2008 and approximately
34% of our expenses during 2007. Approximately 60% of our employees are
compensated primarily on a performance basis. Therefore, a significant portion
of compensation and benefits expense will fluctuate based on our operating
revenue.





COMMISSIONS AND CLEARING
COSTS.





Commissions
and clearing costs include commissions paid to independent brokers, fees paid to
floor brokers and exchanges for trade execution costs, fees paid to third-party
vendors for data processing services and fees paid to clearing entities for
certain clearance and settlement services. Commissions and clearing costs
generally fluctuate based on transaction volume. Approximately 38% of our 2008
expenses and approximately 49% of our 2007 expenses consisted of commissions and
clearing costs.





GENERAL AND
ADMINISTRATIVE.





Our
general and administrative expenses consist primarily of executive compensation,
legal, accounting and other professional fees, software consulting fees, travel
and entertainment expenses, insurance coverage, depreciation, occupancy
expenses, communications and other similar operating expenses. These expenses
accounted for approximately 21% and 17% of our expenses for 2008 and 2007,
respectively.





OTHER INCOME AND
EXPENSES.





Other
income and expenses consist of interest income earned on our bank balances while
interest expenses are costs of capital employed in our market making activities
to purchase and hold inventory and to service our debt. Interest income
(expense) net for 2008 and 2007 was ($1,031,374) and ($1,327,593),


respectively.





Included
in other income for 2008 is the gain on termination settlement with a former
officer of $806,744.  This resulted from reduction of notes payable
due that officer arising from the acquisition of Jesup & Lamont Securities
of which he was a former owner.  Also included in other income for
2007, we recognized income of $350,000 resulting from funds returned to us from
a settlement with the SEC.





RESULTS
OF OPERATIONS - DECEMBER 31, 2008 COMPARED WITH DECEMBER 31, 2007





The year
ending 2008 was a transitional year for the Company. While the poor economy
negatively impacted many, if not all, industries, it had a severe negative
impact on the financial services business. Trading volumes among institutional
investors throughout the industry were down and this contributed to lower
commission revenues. In addition, retail volumes were also lower as customers
stayed away from the financial markets as they waited for markets and the
economy to stabilize.





23




In
response to these issues, the Company took certain initiatives that it believes
will help make the Company stronger over the long term. The Company exited
certain low margined businesses and entered into higher margined sectors. In
particular, the Company strategically entered the fixed income arena, a sector
that not only has higher margins but is also a sector that benefits during
market turmoil as investors purchase these vehicles since they are viewed as
safer securities.





Total
revenues for the year ended December 31, 2008 decreased $12,601,237 or 25%, to
$38,070,661 from $50,671,898 for the year ended December 31, 2007. Commissions
and fees revenue accounted for $5,420,039 or approximately 43% of the decrease
in total revenues. Investment banking income accounted for $9,091,267, or
approximately 72% of the decrease in revenues.  The revenue decline
was partially offset by Trading revenues from equities and market-making
activities which increased $1,910,069.





The
decrease in total revenues is primarily due to the following:





Commission
and fees revenue decreased by $5,420,039 to $27,313,808 from $32,733,847 in
2007, due to the overall decrease in financial market activity which accounted
for 100% of the decrease. Commissions and fees revenues accounted for
approximately 72% and 65% of our total revenues for the years ended December 31,
2008 and 2007, respectively.





Investment
banking revenues decreased $9,091,267 to $2,358,428 from $11,449,695 in 2007.
The decrease was primarily due to the lack of available credit to fund
investment activities and the overall economic downturn.





These
revenue decreases were offset by an increase in trading revenues, which
increased by $1,910,069 to $8,398,425 in 2008 from $6,488,356, in 2007, due to a
reorganization of our trading activities.





Operating
expenses in 2008 decreased $7,002,448, or approximately 12%, to $53,419,522 from
$60,421,970 in 2007, from a combination of reasons as described
below:





Clearing
and execution costs in 2008 decreased $9,513,924, or approximately 32%, to
$20,063,213 from $29,577,137 in 2007. This decrease was due to the decrease in
financial market activity, and our reduction of retail business. As a
percentage, clearing and execution costs accounted for approximately 38% and 49%
of total expenses for the years ended December 31, 2008 and 2007,
respectively.





Employee
compensation and benefits in 2008 increased $1,990,267, or approximately 10%, to
$22,488,833 from $20,498,566 in 2007. This increase was primarily due to the
addition of salaried personnel for fixed income and institutional trading
business lines. In addition, 2008 included a charge for employee compensation of
$933,651 for stock option expense related to SFAS No. 123 verses $725,480 in
2007.  Employee compensation and benefits as a percentage of total
expenses increased from approximately 34% in 2007 to 42% in 2008.





General
and administrative and communication and data processing expenses increased
$521,210 or approximately 7%, to $10,867,477 from $10,346,267 in 2007. This
increase was primarily due to our operations and facilities not changing
significantly in 2008.  As a percentage of total expenses, general and
administrative expenses were 21% and 17% for 2008 and 2007,
respectively.





Other
income and expenses consisted of interest income, interest expense and other
items as described below:





In 2008,
interest income decreased $104,234, or approximately 69%, to $45,787 as compared
to interest income in 2007 of $150,021, as we reduced deposits at our clearing
organizations. Interest expense decreased $400,453, or approximately 27% to
$1,077,161 as compared to $1,477,614 in 2007. This was due mainly to the
reduction of balances due to clearing organizations which decreased
$1,457,801.





24




During
2005, we received and executed a settlement offer from the Securities and
Exchange Commission. This settlement offer resolved an enforcement action that
was brought against EFG, in May of 2004, for trading mutual fund shares on
behalf of clients. In connection with the settlement, EFG deposited $350,000
into an escrow account pending ratification by the SEC's main office in
Washington D.C. On May 11, 2007, we notified the SEC that we were withdrawing
our settlement offer related to the enforcement action brought against EFG in
May of 2004. On June 14, 2007 we withdrew the $350,000 from escrow, which was
recorded as other income in the statement of operations. On August 23, 2007, we
received a letter from the SEC stating that this investigation was completed and
no further action would be pursued.





In May
2008, the Company entered into settlement agreements with two former officers.
The agreements included offsetting receivables owed to JLI totaling $675,297
against the note payable by JLI to the former officers totaling $861,105. As
part of his settlement agreement one of the former officers also received the
rights to certain investment banking engagements and transferred 524,118 shares
of JLI's common stock to JLI. We recorded the stock received as $733,765 of
treasury stock valued at the closing market price ($1.40 per share) on the date
we entered into the settlement agreement. The gain recognized on these
transactions totaled $806,744 after deduction of $112,829 of accelerated
discount amortization related to the canceled notes payable.  This
gain is included in other income for 2008.





For the
year ended December 31, 2008, we reported a net loss applicable to common
stockholders of ($16,046,084), or ($1.00) per basic and diluted share, as
compared to a net loss applicable to common stockholders of $(10,901,898), or
($1.00) per basic and diluted share for the year ended December 31,
2007.





LIQUIDITY
AND CAPITAL RESOURCES





As of
December 31, 2008, we had $26,402,567 in total assets, of which, $2,136,745 or
approximately 8% consisted of cash or assets readily convertible into cash,
principally securities owned and receivables from clearing brokers, which
include interest bearing cash balances held with our clearing organization. At
December 31, 2008, we had liabilities due within one year totaling 9,920,992.
Historically, we have financed our operating cash deficits from private
placements of stock and debt offerings as discussed below.





During
2008 cash used by operations was $11,480,946 as compared to $7,825,858 cash used
in 2007. The major uses of cash from operations for the year ended December 31,
2008 resulted from the net loss of $15,773,491, which was partially offset from
non cash expenses and revenues and changes in working capital totaling
$4,292,545.





Net cash
used in investing activities for 2008 was $947,033, related to purchases of
furniture and equipment of $305,533 and issuances of notes receivable totaling
$641,500. Cash used in investing activities for 2007 was $415,562, related to
cash paid for the purchases of furniture and equipment of $266,063, and
issuances of notes receivable, net of payments, totaling $149,489.





Net cash
provided by financing activities was $12,303,282 in 2008, as compared to
$7,786,871 provided in 2007.





The
Company raised $2,000,000 and $6,038,106 from the sale of preferred stock and
common stock respectively, and $2,894,996 from the subscription of common stock,
and made payments of $1,994,137 against notes payable.





As of
August 7, 2008, JLI entered into binding Subscription Agreements to sell an
aggregate subscription amount of $175,000 to purchase a total of 205,554 shares
of common stock, par value $0.01 per share along with five-year warrants to
purchase a total of 51,388 shares of common stock. Each share of common stock
was priced at $0.8201 per share, the closing price on May 12, 2008. The warrants
are exercisable after six months from the date of issue at a price of $0.9841
per share, subject to limited anti-dilution protection for capital changes and
similar events. The subscribers are to receive one warrant, priced at $0.125 per
warrant, for each of the four shares of Common Stock subscribed. The
Subscription Agreements were entered into pursuant to a private placement to
accredited investors.




25




In July
2008, JLI entered into agreements to sell an aggregate subscription amount of
$1,162,497 to purchase a total of 1,096,695 shares of common stock, par value
$0.01 per share at $1.06 per share, the closing price on July 11,
2008.
 
 On June
12, 2008, JLI entered into binding Subscription Agreements to sell an aggregate
subscription amount of $1,000,000 to purchase a total of 969,696 shares of
common stock, par value $0.01 per share, and five-year warrants to purchase a
total of 242,424 shares of common stock. Each share of common stock was priced
at $1.00 per share, the closing price on June 11, 2008. The warrants are
exercisable after six months from the date of issue at a price of $1.20 per
share, subject to limited anti-dilution protection for capital changes and
similar events. The subscribers are to receive one warrant, priced at $0.125 per
warrant, for each of the four shares of Common Stock subscribed. The
Subscription Agreements were entered into pursuant to a private placement to
accredited investors. Pursuant to the terms of the agreements, the investors
have demand rights to register the purchased shares for resale. None of the
shares of common stock will be issued until the NYSE Amex has approved their
listing.
 
 On May
13, 2008, JLI entered into agreements to sell an aggregate amount of $1,038,105
to purchase a total of 1,219,363 shares of common stock, par value $0.01 per
share along with five-year warrants to purchase a total of 304,841 shares of
common stock. Each share of common stock was priced at $0.8201 per share, the
closing price on May 12, 2008. The warrants are exercisable after six months
from the date of issue at a price of $0.9841 per share, subject to limited
antidilution protection for capital changes and similar events.
 
 The
investors received one warrant, priced at $0.125 per warrant, for each four
shares of Common Stock received. The agreements were entered into pursuant to a
private placement to accredited investors. Pursuant to the terms of the
agreements, the investors have demand rights to register the purchased shares
for resale.
 
 On April
9, 2008, JLI entered into agreements to sell 7,739,938 shares of common stock,
par value $0.01 per share, at a price of $0.646 per share, the closing price on
April 9, 2008, for an aggregate amount of $5,000,000. The agreements were
entered into pursuant to a private placement to accredited investors. Pursuant
to the terms of the agreements, the investors have demand rights to register the
purchased shares for resale.
 
 As of
March 3, 2008, the Company entered into binding Subscription Agreements to sell
$2,000,000 of units in a private placement to accredited investors. Each unit
consists of one share of Series G 10% Subordinated Cumulative Convertible
Preferred Stock, par value $0.01 per share, and five-year warrants to purchase
1,470 shares of the Company's Common Stock, par value $0.01 per share. Each
share of Series G Preferred Stock is initially convertible into 1,470 shares of
Common Stock, subject to limited antidilution protection for capital changes and
similar events. The warrants are exercisable after six months from the date of
issue at a price of $0.816 per share, subject to limited antidilution protection
for capital changes and similar events. The initial conversion price of the
Series G Preferred Stock is $0.68 per share, the closing price of the Company's
common stock on March 3, 2008. The Subscription Agreement also includes JLSC's
agreement to register all shares of the common stock underlying the units.
Pursuant to the terms of the transaction, the Company must pay partial
liquidated damages in the amount of 1% per month of the purchase price, subject
to a cap of an overall aggregate payment of 6% of the purchase price, upon any
failure to (a) file a registration statement with the Securities and Exchange
Commission within 30 days after the closing date of the transaction, or 30 days
after filing its annual report on Form 10-K, whichever is later, or (b) register
all shares of common stock underlying the units within 120 days of the closing
date. None of the shares of common stock underlying the units will be issued
until the NYSE Amex has approved their listing.
 
 26
  On March
19, 2008, effective as of January 29, 2008, Fifth Third Bank converted the
credit line to a note payable. Under the new note payable, 100% of EFG's and
JLSC's stock is still pledged as collateral. The note carries certain
restrictions and requires pre-approval from Fifth Third Bank for certain events,
including but not limited to, divesture of business assets. The note carries
interest at the Bank's Prime Rate plus 4% (7.25% at March 19, 2009). The note
calls for monthly interest payments and repayments of principal as
follows:
 
 Principal Reduction Due
Date
                    
                    Principal Reduction Payment
      AmountMarch
      31, 2008
                    
                    $
                    100,000May
      1, 2008
                    
                    $
                    250,000August
      1, 2008
                    
                    $
                    250,000November
      3, 2008
                    
                    $
                    250,000April
      2, 2009
                    
                    $
                    1,049,450
 
 Total interest expense under this
credit line for the year ended December
31, 2008 was $111,327.
 
 As of
August 20, 2007, the Company had entered into binding agreements to sell
$2,250,000 of units in a private placement to 4 accredited individual and
institutional investors. The units consist of $1,898,580.06 to purchase
1,622,718 shares of Common Stock, and $101,419.94 to purchase five-year
on-redeemable warrants to purchase 811,359 shares of common stock. The warrants
are exercisable after six months from the date of issue at a price of $1.40 per
share. Each share of common stock underlying the units is priced at $1.17, the
closing price of the Company's common stock on August 20, 2007. The subscription
included the Company's agreement to register all 2,434,077 shares of common
stock included in and underlying the units. Pursuant to the terms of the
agreements, the Company must pay partial liquidated damages in the amount of 1%
per month of the purchase price, subject to a cap of an overall aggregate
payment of 10% of the purchase price, upon certain failures to register all
shares of common stock underlying the units within 120 days of the closing date
of the transaction. The Company paid total cash commissions of $80,000 in
connection with these transactions.
 
 The above
sales were made for investment by accredited investors and will be issued
without registration under the Securities Act of 1933, as amended, pursuant to
the exemptions provided under sections 4(6) and 4(2) thereof, and pursuant to
the exemption provided by Regulation D. All the securities are restricted
securities and will bear a restrictive legend and be subject to stop transfer
restrictions. None of the shares of common stock included in and underlying the
units will be issued until the NYSE Amex has approved its listing.
 
 As of
March 6, 2007 the Company sold $7,282,434 of units in a private placement to 31
accredited individual and institutional investors. The units consisted of an
aggregate principal amount of $6,387,158 of convertible debentures, currently
convertible into 2,672,437 shares of common stock, 296,922 shares of common
stock, and five-year warrants to purchase 1,484,610 shares of common stock. The
debentures have a term of five years, pay interest at 6.5% per annum, and are
convertible to common stock at a price of $2.39 per share. The debentures
contain a provision whereby the Company may require the holders to convert their
debentures in the event that the Company's common stock trades at a price above
$7.50 per share for 20 consecutive days or more. The warrants are exercisable
after nine months from the date of issue at a price of $2.62 per share, and
contain provisions for cashless exercise in the event that one year after the
date of issuance the shares underlying the warrants may not be resold pursuant
to an effective registration statement. Each share of common stock underlying
the units is priced at $2.39, the closing price of the Company's common stock on
March 6, 2007. On March 7, 2007 the Company also entered into binding
registration rights agreements dated as of March 6, 2007, to register all
4,453,969 shares of the common stock included in and underlying the units. The
Company filed its registration statement as required under the registration
rights agreements under Form S-3 on May 1, 2007. The Company received a Notice
of Effectiveness declaring the registration had become effective on May 18,
2007. No further listing, registration or contingent requirements exist. The
total separate purchase prices of the debentures, common stock and warrants were
$6,387,158, $709,685, and $185,591, respectively. The Company considered SFAS
133 and EITF 00-19 in recording this private placement. We accounted for the
warrants as equity, recording the warrants at the minimum purchase of $0.125 per
share required by the NYSE Amex rules for an "at the market offering". The
debentures, common stock and warrants were all recorded at their face value
purchase prices which were determined to be their fair values upon sale of the
securities.
  27





During
2007, we sold 290,000 shares of common stock and 181,500 warrants to purchase
common stock at an exercise price of $5.46 per share, for $725,000 in
cash.





During
2007, we sold 866,139 shares of newly created Series F convertible preferred
stock and warrants to acquire 433,069 shares of common stock at an exercise
price of $4.50 per share, for $2,814,993 cash.





During
2007, we issued a total of $3,924,000 of short term bridge notes. We also issued
common stock warrants as part of the bridge note financing exercisable into a
total of 550,000 shares of common stock at exercise prices ranging from $2.82 to
$4.85 per share.





On
January 31, 2007, we obtained a $2 million credit line from Fifth Third Bank. As
part of that credit line agreement, we pledged 100% of EFG's and JLSC's stock as
collateral. At December 31, 2007 we had drawn $1,999,450 of the line. The line
expired on February 1, 2008. The credit line was subject to two debt covenants.
The first covenant required EFG and JLSC to maintain combined net capital as
defined under Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act
of 1934 in an amount at least equal to the amount drawn under the credit line.
The second covenant required the Company to maintain tangible net worth of at
least $6 million. The Company was in violation of both covenants at December 31,
2007, and had not obtained a waiver. Although it had not given any indication it
intended to do so, Fifth Third Bank could have called the line of credit at
anytime.





Based on
our current rate of cash outflows, we believe that our net cash and liquid
assets totaling $2,136,745 at December 31, 2008, combined with our most recent
capital financings completed in 2007, 2008 and early 2009, will be sufficient to
meet our anticipated cash needs for working capital and capital expenditures for
the remainder of 2009.





Our plan
for future operations has several different aspects. We have cut our overhead
costs by combining tasks which helped eliminate positions, restructured various
contracts with vendors to lower general and administrative expenses and reworked
payout percentages to improve profit margin in our retail unit. In addition to
lower costs, we have taken several steps to increase revenues as outlined
below:





·
            increase
      our trading revenues by adding additional stocks in which we make a
      market;


·
            expand
      our trading capabilities by establishing fixed income trading desks that
      serve both institutional and retail
clients;


·
            expand
      our institutional trading activities by continuing to add quality trading
      personnel with existing institutional
clients;


·
            continue
      to recruit quality registered
representatives;


·
            expand
      our offering of proprietary financial products to our retail and
      institutional customer;


·
            continue
      to look for and close acquisitions of similar
  businesses.





The
Company has resolved several outstanding regulatory issues that have
enabled us to focus on operating our business in full compliance with all
applicable laws and regulations.




28




If our
plans change, or our assumptions change or prove to be inaccurate, or if our
available cash otherwise proves to be insufficient to implement our business
plans, we may require additional financing through subsequent equity or debt
financings. The Company cannot predict whether additional funds will be
available in adequate amounts or on acceptable terms. If funds are needed but
not available, the Company's business may be harmed.





Given the
uncertain economic environment and the pressure that financial sector has been
under, the Company plans to raise additional equity capital in 2009 for working
capital. By doing so, the Company believes that it will protect itself against
any future negative consequences that may arise if the economy continues to
decline. The Company also has an acquisition plan which contemplates raising
debt and equity capital to finance the acquisitions.





The
Company plans to raise additional equity capital in 2009 for working capital.
The Company also has an acquisition plan which contemplates raising debt and
equity capital to finance the acquisitions.





The
Company has implemented many operating changes which are expected to benefit
operations in the future. The more notable of these changes have been to
eliminate our proprietary trading and begin consolidating operations of our
broker dealers. The pro forma summary set forth below summarizes the intended
impact on our net loss, cash and net capital as if these changes had been made
as of January 1, 2008.





NET
CAPITAL REQUIREMENTS





Our
broker dealer subsidiary, JLSC, is subject to the requirements of the Net
Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934, which
requires the maintenance of minimum net capital and requires that the ratio of
aggregate indebtedness to net capital, both as defined, should not exceed 15 to
1. Net capital and related ratio of aggregate indebtedness to net capital, as
defined, may fluctuate on a daily basis.





At
December 31, 2008, JLSC reported net capital of $314,609, which was $214,609
above the required net capital of $100,000.





The ratio
of aggregate indebtedness to net capital was 4.65 to 1 for JLSC. We claim
exemption from Rule 15c3-3 under Paragraph (k) (2) (ii) of the Rule as all
customer transactions are cleared through other broker-dealers on a
fully-disclosed basis.





OFF-BALANCE
SHEET ARRANGEMENTS





Clearing
Arrangements. We do not carry accounts for customers or perform custodial
functions related to customers' securities. We introduce all of our customer
transactions, to our clearing brokers, who maintain our customers' accounts and
clear such transactions. Additionally, the clearing brokers provide the clearing
and depository operations for our proprietary securities transactions. These
activities may expose us to off-balance-sheet risk in the event that customers
do not fulfill their obligations with the primary clearing brokers, as we have
agreed to indemnify our clearing brokers for any resulting losses. We
continually assess risk associated with each customer who is on margin credit
and record an estimated loss when we believe collection from the customer is
unlikely.





Customer
Claims, Litigation and Regulatory Matters. In the normal course of business, we
have been and continue to be the subject of civil actions and arbitrations
arising out of customer complaints relating to our broker dealer activities, as
an employer and as a result of other business activities.





We have
sold securities which we do not currently own and therefore will be obligated to
purchase the securities at a future date. We have recorded these obligations in
our financial statements at December 31, 2008, in the amount of $170,603, at the
market values of the securities and will incur a loss if the market value
increases subsequent to December 31, 2008. Occurrence of these off-balance sheet
losses could impair our liquidity and force us to reduce or curtail
operations.




29




Tabular
Disclosure of Contractual Obligations





Listed
below is a tabular representation of our long-term debt obligations, capital
lease obligations, operating lease obligations, purchase obligations and other
long-term liabilities reflected on our Statement of Financial Condition as of
December 31, 2008.





Payment due by periodLess
      than
                
                More
      thanContractual Obligations
                
                Total
                
                
                1 year
                
                
                1-3 years
                
                
                3-5 years
                
                
                5 yearsLong-term
      debt obligations
                
                $
                12,730,400
                
                
                $
                2,884,347
                
                
                $
                1,638,895
                
                
                $
                6,207,158
                
                
                $
                2,000,000Capital
      lease obligations
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating
      lease obligations
                
                $
                5,154,046
                
                
                $
                2,230,432
                
                
                $
                2,301,186
                
                
                $
                451,816
                
                
                $
                170,612





FACTORS
AFFECTING OUR OPERATIONS, BUSINESS PROSPECTS AND MARKET PRICE OF
STOCK





For the
year ending December 31, 2008, we had a net loss attributable to common
stockholders of $15,773,491.





Our
continued existence is dependent upon our ability to generate cash either from
operations or from new financings. We will continue implementing our plan, which
we believe will allow us to be profitable. We intend to continue to expand our
market making and order execution services through increased marketing to
independent third party broker-dealers and investment advisors.





However,
there is no assurance that we will be profitable or be able to generate cash
from either operations or from issuance of additional debt or equity financings
which may hinder our plans for expansion.





RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET EFFECTIVE





Statements
of Financial Accounting Standards (SFAS):





SFAS
141(R), Business Combinations -retains the fundamental requirements in Statement
141 that the acquisition method of accounting (which Statement 141 called the
purchase method) be used for all business combinations and for an acquirer to be
identified for each business combination. This Statement defines the acquirer as
the entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control. SFAS 141(R) also:





· replaces
Statement 141's cost-allocation process and requires an acquirer to recognize
the assets acquired, the liabilities assumed, and any noncontrolling interest in
the acquiree at the acquisition date, measured at their fair values as of that
date,





· requires
the acquirer in a business combination achieved in stages (sometimes referred to
as a step acquisition) to recognize the identifiable assets and liabilities, as
well as the noncontrolling interest in the acquiree, at the full amounts of
their fair values,





· requires
that an acquirer evaluate new information and measure a liability at the higher
of its acquisition-date fair value or the amount that would be recognized if
applying Statement 5, then measuring an asset at the lower of its
acquisition-date fair value or the best estimate of its future settlement
amount, and




30




· requires
the acquirer to recognize contingent consideration at the acquisition date,
measured at its fair value at that date.  SFAS 141(R) is effective for
fiscal years beginning after December 15, 2008




SFAS 157,
Fair Value Measurements -defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
This Statement applies under other accounting pronouncements that require or
permit fair value measurements, where the Board previously concluded in those
accounting pronouncements that fair value is the relevant measurement attribute.
Accordingly, this Statement does not require any new fair value measurements.
However, for some entities, the application of this Statement will change
current practice. This Statement is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. Earlier application is encouraged, provided that the
reporting entity has not yet issued financial statements for that fiscal year,
including financial statements for an interim period within that fiscal
year.





SFAS 159,
The Fair Value Option for Financial Assets and Financial Liabilities—including
an amendment of FASB Statement No. 115 –permits entities to choose to measure
many financial instruments and certain other items at fair value. The objective
is to improve financial reporting by providing 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. This Statement is expected to expand the use of fair value
measurement, which is consistent with the Board's long-term measurement
objectives for accounting for financial instruments. This Statement is effective
as of the beginning of an entity's first fiscal year that begins after November
15, 2007, and interim periods within those fiscal years. Early adoption is
permitted as of the beginning of a fiscal year that begins on or before November
15, 2007, provided the entity also elects to apply the provisions of FASB
Statement No. 157, Fair Value Measurements.





SFAS 160,
Noncontrolling Interests in Consolidated Financial Statements changes the way
the consolidated income statement is presented. It requires consolidated net
income to be reported at amounts that include the amounts attributable to both
the parent and the noncontrolling interest. It also requires disclosure, on the
face of the consolidated statement of income, of the amounts of consolidated net
income attributable to the parent and to the noncontrolling interest.
Previously, net income attributable to the noncontrolling interest generally was
reported as an expense or other deduction in arriving at consolidated net
income. It also was often presented in combination with other financial
statement amounts. This statement is effective for fiscal years beginning after
December 15, 2008.





FASB
Staff Positions (FSP):





FSP FAS
157-1, "Application of FASB Statement No. 157 to FASB Statement No. 13 and Other
Accounting Pronouncements That Address Fair Value Measurements for Purposes of
Lease Classification or Measurement under Statement 13" — amends FASB
Statement No. 157, Fair Value Measurements, to exclude FASB Statement No. 13,
Accounting for Leases, and other accounting pronouncements that address fair
value measurements for purposes of lease classification or measurement under
Statement 13.However, this scope exception does not apply to assets acquired and
liabilities assumed in a business combination that are required to be measured
at fair value under FASB Statement No. 141, Business Combinations, or No. 141
(revised 2007), Business Combinations, regardless of whether those assets and
liabilities are related to leases.




31




FSP FAS
157-2, "Effective Date of FASB Statement No. 157" - delays the effective date of
FASB Statement No. 157, Fair Value Measurements, for nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually).
The delay is intended to allow the Board and constituents additional time to
consider the effect of various implementation issues that have arisen, or that
may arise, from the application of Statement 157. This FSP defers the effective
date of Statement 157 to fiscal years beginning after November 15, 2008, and
interim periods within those fiscal years for items within the scope of this
FSP.





FSP FAS
140-3, "Accounting for Transfers of Financial Assets and Repurchase Financing
Transactions" - amends FASB Statement 140 to state that a transferor and
transferee shall not separately account for a transfer of a financial asset and
a related repurchase financing unless (a) the two transactions have a valid and
distinct business or economic purpose for being entered into separately and (b)
the repurchase financing does not result in the initial transferor regaining
control over the financial asset. This FSP is effective for financial statements
issued for fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years. Earlier application is not
permitted.





FSP FIN
46(R)-7, "Application of FASB Interpretation No. 46(R) to Investment Companies"
—states that investments accounted for at fair value in accordance with the
specialized accounting guidance in the AICPA Audit and Accounting Guide,
Investment Companies, are not subject to consolidation according to the
requirements of FIN 46(R).





FSP FIN
39-1, "Amendment of FASB Interpretation No. 39" -addresses whether a reporting
entity that is party to a master netting arrangement can offset fair value
amounts recognized for the right to reclaim cash collateral (a receivable) or
the obligation to return cash collateral (a payable) against fair value amounts
recognized for derivative instruments that have been offset under the same
master netting arrangement. It clarifies that offsetting of fair value amounts
recognized for multiple derivative instruments executed with the same
counterparty under a master netting arrangement and fair value amounts
recognized for the right to reclaim cash collateral (a receivable) or the
obligation to return cash collateral  (a payable) arising from the
same master netting arrangement as the derivative instruments is permitted. This
FSP is effective for fiscal years beginning after November 15, 2007, with early
application permitted.





FSP FIN
48-2, This FASB Staff Position (FSP) defers the effective date of FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxes, for certain
nonpublic enterprises to the annual financial statements for fiscal years
beginning after December 15, 2007.





FSP SOP
07-1-1, This FASB Staff Position (FSP) indefinitely delays the effective date of
AICPA Statement of Position 07-1, Clarification of the Scope of the Audit and
Accounting Guide Investment Companies and Accounting by Parent Companies and
Equity Method Investors for Investments in Investment
Companies.





EITF
Consensuses (EITF):





EITF
Issue No. 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based
Payment Awards" -a realized income tax benefit from dividends or dividend
equivalents that are charged to retained earnings and are paid  to
employees for equity classified nonvested equity shares, nonvested equity share
units, and outstanding equity share options should be  recognized as
an increase in additional paid-in capital. The amount recognized in additional
paid-in capital for the realized income tax benefit from dividends on those
awards should be included in the pool of excess tax benefits available to absorb
potential future tax deficiencies on share-based payment awards. This Issue
should be applied prospectively to the income tax benefits that result from
dividends on equity-classified employee share-based payment awards that are
declared in fiscal years beginning after December 15, 2007, and interim periods
within those fiscal years.




32




EITF
Issue No. 07-1, "Accounting for Collaborative Arrangements " – when entities
enter into arrangements to participate in a joint operating activity a
collaborative arrangement may provide that one participant has sole or primary
responsibility for certain activities or that two or more participants have
shared responsibility for certain activities. Participants should evaluate
whether an arrangement is a collaborative arrangement at the inception of the
arrangement based on the facts and circumstances present at that time. Revenue
generated and costs incurred by participants from transactions with parties
should be reported gross or net on the appropriate line item in each
participant's respective financial statements depending on the nature of the
participation. Disclosures should include information about the nature and
purpose of its collaborative arrangements, the entity's rights and obligations
under the collaborative arrangements, the accounting policy for collaborative
arrangements, and the income statement classification and amounts attributable
to transactions arising from the collaborative arrangement. This Issue is
effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal
years.





AICPA
Statements of Position (SOP):





SOP
07-01, Clarification of the Scope of the Audit and Accounting Guide Investment
Companies and Accounting by Parent Companies and Equity Method Investors for
Investments in Investment Companies states that an investment company is a
separate legal entity whose business purpose and activity are investing in
multiple substantive investments for current income, capital appreciation, or
both, with investment plans that include exit strategies. Accordingly,
investment companies do not acquire or hold investments for strategic operating
purposes and do not obtain benefits  (other than current income,
capital appreciation, or both) from investees that are unavailable to
noninvestor entities that are not related parties to the investee. The SOP also
addresses whether the specialized industry accounting principles should be
retained by a parent company in consolidation or by an investor that has the
ability to exercise significant influence over the investment company and
applies the equity method of accounting to its investment in the entity
(referred to as an equity method investor). In addition, this SOP includes
certain disclosure requirements for parent companies and equity method investors
in investment companies that retain investment company accounting in the parent
company's consolidated financial statements or the financial statements of an
equity method investor. The provisions of this SOP are effective for fiscal
years beginning on or after December 15, 2007, with earlier application
encouraged.





The
Company does not expect that the recently issued but not yet effective
accounting pronouncements described above will have any material effect on
future financial statements.





ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.




JLI is a
“smaller reporting company,” as defined by Regulation S-K, and as such, is not
providing the information contained in this item pursuant to Regulation
S-K.





ITEM
8.  FINANCIAL STATEMENTS.




The
consolidated financial statements of JLI, the accompanying notes thereto and the
independent registered public accounting firm's report are included as part of
this Annual Report on Form 10-K and immediately follow the signature page of
this Annual Report on Form 10-K on page F-1.




33


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




None.





ITEM
9A. CONTROLS AND PROCEDURES.




(a)   Management's
Annual Report on Internal Control Over Financial Reporting





The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company. Internal
control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Exchange Act as a process designed by, or under the
supervision of, the Company's principal executive and principal financial
officers and effected by the Company's board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:





Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the
Company;





Provide
reasonable assurance that transactions are recorded as necessary to permit
reparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company's
assets that could have a material effect on the financial
statements.





The
Company's internal control system was designed to provide reasonable assurance
to the Company's management and Board of Directors regarding the preparation and
fair presentation of published financial statements. All internal control
systems, no matter how well designed, have inherent limitations which may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





Management
conducted an evaluation of the effectiveness of the Company's internal control
over financial reporting based on the framework in "Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission". Based on this evaluation, management concluded that the Company's
internal control over financial reporting was effective as of December 31,
2008.





This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.





(b) Changes in Internal Control Over
Financial Reporting





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





34





(c) Evaluation of Disclosure Controls
and Procedures





Disclosure
controls and procedures are our controls and other procedures that are designed
to ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate to
allow timely decisions regarding disclosure.





A review
of Jesup & Lamont’s Sarbanes-Oxley compliance standards was performed both
internally and by outside consultants as of year-end 2008.  The conclusion
of this review determined that, as of the end of the period, Jesup & Lamont
had a material deficiency regarding the Company’s internal controls.  The
deficiency was related to a weakness in the documentation of certain
procedures.  The Company is taking steps to remediate the weakness by
upgrading and improving its documentation procedures.





ITEM
9B. OTHER INFORMATION




AMENDMENT
TO ARTICLES OF INCORPORATION





The
Company filed a Certificate of Amendment to its Articles of Incorporation with
the Secretary of State of the State of Florida, effective March 28, 2008. The
amendment was filed to amend the Company's Articles of Incorporation to create a
new class of Series G Convertible Preferred Stock. A copy of the amendment is
filed herewith as Exhibit 4.4.




35


PART
III





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




Our
executive officers and directors and their respective ages as of March 24,
2009 are as follows:





DirectorName
                  
                  Age
                  
                  Since
                  
                  PositionDonald
      A. Wojnowski Jr.
                  
                  49
                  
                  2004
                  
                  President,
      Chief Executive Officer and
      DirectorAlan
      Weichselbaum
                  
                  44
                  
                  2008
                  
                  Chief
      Financial Officer and DirectorJames
      B. Fellus
                  
                  43
                  
                  
                  
                  Chief
      Executive Officer of Jesup and Lamont Securities
      CorporationVladimir
      Uchenik
                  
                  37
                  
                  
                  
                  Chief
      Operating Officer of Jesup and LamontSecurities
      CorporationSteven
      M. Rabinovici
                  
                  56
                  
                  2005
                  
                  Chairman
      of the BoardJohn
      C. Rudy
                  
                  66
                  
                  2005
                  
                  DirectorBenjamin
      J. Douek
                  
                  58
                  
                  2008
                  
                  DirectorMark
      A. Wilton
                  
                  62
                  
                  2009
                  
                  Director





Donald A.
Wojnowski Jr. is our President, Chief Executive Officer and a member of the
Board of Directors. Mr. Wojnowski is also the President and Chief Executive
Officer of our wholly-owned subsidiaries, EFG and EIA. Mr. Wojnowski was elected
Chief Executive Officer in July of 2005 and has served as our President since
June 2004. Prior to holding his current position, Mr. Wojnowski was our Vice
President of Business Development, a position he held from September 1999 until
February 2004. Mr. Wojnowski joined us in 1993.





Alan
Weichselbaum became  our Chief Financial Officer in February
2009.  Mr. Weichselbaum has held multiple senior positions in the
asset management and financial services industries. Since March 2006 he has
served as a founder and managing member of Gimmel Partners L.P., a limited
partnership that invests in US equities with a concentration in the small cap
and micro cap sectors. From February 2001 until December 2005 he was
an analyst and asset manager at Fulcrum Global Partners. Before that
Mr. Weichselbaum worked at Gerard Klauer Mattison, Arbor Partners, NatWest
Securities, Phillip Morris Capital Corporation and Price Waterhouse. He holds an
MBA and is a CPA.





James B.
Fellus was elected by the Board of Directors of Jesup as Chief Executive Officer
of JLSC on May 1, 2008.  Mr. Fellus joined Jesup and Lamont in
May 2008. Mr. Fellus has held various senior executive positions
within the broker-dealer and financial services industry from 2004 until he
joined the Company in 2008.  He was Senior Managing Director of
Capital Markets for Sterne Agee, Inc., where he assisted in building their Fixed
Income and Capital Markets business. Prior to that, from 2006 to 2008 he was
Senior Managing Director of Fixed Income at Platinum Partner L.P., a hedge fund,
where he established the Fixed Income Department. He also served as Senior
Managing Director of Capital Markets at Advest, Inc. and Societe Generale
Securities respectively.





36




Vladimir
Uchenik was elected Chief Operating Officer of JLSC in June 2008. Before that,
from May 2005, he was Chief Operating Officer of Safdie Investment Services
Corp., and Vice President of Regulatory Risk Control of the US Trust Company of
New York from November, 2003 until May, 2005. Before that, from August, 2001 to
November, 2003 he was Chief Compliance Officer of Banco Bilbao Vizcaya
Argentaria Securities Inc. His previous experience includes work as a securities
examiner for the NASD.  He holds an MBA from Temple University and a
B.Sc. from Rutgers University.




Steven M.
Rabinovici  was elected Chairman of the Board in July 2005. Mr.
Rabinovici has over 25 years experience as a senior executive in both the profit
and non-profit sectors. From 1992 through 2004, Mr. Rabinovici was the chief
executive officer of Complete Management Inc., a physician practice management
company.





John C.
Rudy serves as Chairman of the audit committee and also serves on the
compensation and nominating committees. Mr. Rudy is the founder and principal of
Beacon Business Services, Inc. in Matawan, New Jersey, a consulting firm
specializing in providing financial, accounting and business advisory services
to small companies since 1992. From August 1998 through April 2000 he served as
interim chief financial officer of Hometown Auto Retailers, Inc., a publicly
traded automobile dealership. From August 2005 until May 2007 he served as
interim chief financial officer of Sona Mobile Holdings Corp., a publicly traded
wireless technology company. Since July 2005 Mr. Rudy has been serving as a
director of AdStar, Inc., a publicly-traded company engaged in internet ad
placement products and services and since May 2005 he has been serving as a
director of Trey Resources, Inc., a publicly-traded software reseller. Mr. Rudy
currently serves as Chief Financial Officer and member of the Board of Directors
of Zunicom, Inc., a publicly traded company installing and maintaining business
centers in hotels through a wholly owned subsidiary located in Toronto, Canada.
Mr. Rudy qualifies as an "Audit Committee Financial Expert" as that term is
defined under SEC regulations. Mr. Rudy received an M.B.A. from Emory University
and a B.S. in economics from Albright College, and has been a Certified Public
Accountant in New York State since 1972.





Benjamin
J. Douek serves on our audit, compensation and nominating committees.
Mr. Douek has served on boards of directors, has been CEO, CFO or CRO
of companies in a wide array of corporations providing financial services,
crisis and turnaround management, consulting and diverse internet media
services. Since 2006, Mr. Douek has served as a consultant to financial
institutions engaged in general securities operations and wealth management; and
advisor to two consumer goods companies.  From 2002 to 2005 he co-headed
the New York office of Buccino & Associates, Inc., a consulting firm that
specialized in restructuring and crisis management of companies with a diverse
range of businesses.  Earlier in his career, he served as Executive Vice
President and Director of Investment Banking and as a member of the Board of
Directors and Management and Commitment Committees of Ladenburg Thalmann and Co.
Inc.; as a Managing Director, head of a distressed asset group and member of the
Fairness Committee of Bankers Trust Company; and as a Managing Director and
Principal of Donaldson, Lufkin & Jenrette Securities Corporation.  He
is a lawyer by training and practiced at Sullivan & Cromwell in New
York.





Mark A.
Wilton  currently serves as the President and CEO of MarWil
Investments GMBh – Co-KG, an international corporation that has owned and
managed European commercial real estate since 1976.  Mr. Wilton also
serves as the sole director of MarWil Investments USA, a company he founded in
1978 that owns, develops and manages residential income
properties.  From 1978 to 1985, Mr. Wilton served as President and CEO
of Marlind Inc., a general contracting and development company that he also
founded.  Mr. Wilton has also held directorships with several
banks.  From 1976 to 1980, Mr. Wilton was a director of Centennial
Bank, from its organization through its bank certification.  From 2000
to 2008, Mr. Wilton was a director of Greater Bay Bank, the successor to Bay
Bank of Commerce, for which he also served as a director from 1981 to 2000, from
its organization and bank certification until its sale to Greater Bay
Bank.  Greater Bay Bank was subsequently sold to Wells Fargo Bank in
2008.  Mr. Wilton is a graduate of the American College of Switzerland
with a B.B.S. in both International Economics and International
Business.





All
directors hold office until the next annual meeting of stockholders and until
their successors are duly elected and qualified. Officers are elected to serve,
subject to the discretion of the Board of Directors, until their successors are
elected.




37




DIRECTOR
INDEPENDENCE





We have a
separately-designated standing audit committee established in accordance with
Section 3(a)(58)(A) of the Exchange Act. Our Audit Committee is currently
comprised of three non-employee members of our Board of Directors, John C. Rudy,
Benjamin J. Douek and Mark A. Wilton. The Board of Directors has determined
that:





(1) Messrs. Rudy, Douek and Wilton
qualify as "Audit Committee Financial Experts" as that term is defined in the
instructions to Item 407 (d)(5) of Regulation S-K;





(2) Messrs. Rudy, Douek and Wilton
are "independent" as that term is defined in the applicable rules and
regulations of the NYSE Amex and the Securities and Exchange Commission (SEC);
and,





(3) Messrs. Rudy, Douek and Wilton
are financially literate.





On
February 11, 2008, the Company received notice from the NYSE Amex that it is not
in compliance with certain standards for continued listing contained in Section
121(B)(2)(c) of the NYSE Amex Company Guide, which require that the Company must
maintain a Board of Directors comprised of a majority of independent directors,
and an audit committee of at least two members, comprised solely of independent
directors who also meet the requirements of Rule 10A-3 under the Securities
Exchange Act of 1934. In its notice, the NYSE Amex gave the Company until May
12, 2008 to regain compliance with continued listing standards.





The
Company has filled vacancies on its Board of Directors and audit committee
caused by the resignations of two independent directors during January,
2008  and believes that it is now in compliance with the NYSE Amex
standards described above.





COMPLIANCE
WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934





Section
16(a) of the Exchange Act requires our officers and directors, and persons who
own more than ten percent (10%) of a registered class of our equity securities
to file reports of ownership and changes in ownership with the SEC. Officers,
directors and greater than ten percent (10%) stockholders are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file. To
the best of our knowledge, based solely on review of the copies of such forms
furnished to us or amendments thereto, or written representations that no other
forms were required, we believe that all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent (10%)
stockholders were complied with during 2008. With respect to any of our former
directors, officers, and ten percent (10%) stockholders, we do not have any
knowledge of any known failures to comply with the filing requirements of
Section 16(a).





CODE OF
ETHICS





We
adopted a Code of Ethical Conduct, effective July 2004, which is applicable to
all of our directors, executive officers, and employees, including our President
and Chief Financial Officer. The Code of Ethical Conduct includes provisions
applicable to our senior executive officers consistent with the Sarbanes-Oxley
Act of 2002. Our Code of Ethical Conduct has been filed with the SEC and is
posted on our website at www.jesuplamont.com under the "Corporate Governance"
section. We will also provide at no charge a copy of the Code of Ethical Conduct
to any person upon written request addressed to our President and Chief
Executive Officer, Don Wojnowski, at our principal executive office, located at
Jesup & Lamont, Inc., 2170 West State Road 434, Suite 100, Longwood, Florida
32779.




38




ITEM
11. EXECUTIVE COMPENSATION




The
following Summary Compensation Table sets forth all compensation earned, in all
capacities, during the fiscal years ended December 31, 2008 and 2007 by our (i)
principal executive officer, (ii) executive officers other than the principal
executive officer, whose salaries for 2008 fiscal year as determined by
Regulation S-K, Item 402, exceeded $100,000 and (iii) one additional individual
for whom disclosure would have been provided within category (ii), except that
the individual was not serving as an executive officer at the end of 2008(the
individuals falling within categories (i) and (ii) are collectively referred to
as the "Named Executive Officers"). No other compensation was paid to any such
officers, other than the compensation set forth below.





SUMMARY
COMPENSATION TABLE





Name and
                                          Principal
                                          Position
                                        
                                        YEAR
                                        
                                        SALARY
                                        
                                        
                                        Bonus
                                          and
                                          Commissions
                                        
                                        
                                        Stock
                                          Awards
                                        
                                        
                                        Option
                                          Awards
                                          (5)
                                        
                                        
                                        All
                                          Other
                                          Compensation
                                        
                                        
                                        TotalD.Wojnowski
      Jr.
                                          President,
      CEO
                                          &
      Director (1)
                                        
                                        2008
                                        
                                        $
                                        300,000
                                        
                                        
                                        $
                                        67,806
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        8,730
                                        
                                        
                                        $
                                        376,5362007
                                        
                                        
                                        257,500
                                        
                                        
                                        
                                        382,588
                                        
                                        
                                        
                                        9,366
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        8,692
                                        
                                        
                                        
                                        658,147James
      Fellus,
                                          Chief
      Executive
                                          Officer
      JLSC (2)
                                        
                                        2008
                                        
                                        
                                        300,000
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        4,876
                                        
                                        
                                        
                                        304,8762007
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -J.
      Matthew,
                                          former
      CFO &
                                          Secretary
      (3)
                                        
                                        2008
                                        
                                        
                                        199,994
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        8,550
                                        
                                        
                                        
                                        208,5442007
                                        
                                        
                                        199,992
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        162,240
                                        
                                        
                                        
                                        1,666
                                        
                                        
                                        
                                        363,898Kevin
      A.
                                          Carreno,
      former
                                          COO
      (4)
                                        
                                        2008
                                        
                                        
                                        208,333
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        5,370
                                        
                                        
                                        
                                        213,7032007
                                        
                                        
                                        62,500
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        6,111
                                        
                                        
                                        
                                        6,210
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        74,821





(1) Mr.
Wojnowski served as Vice President of Business Development from September 1999
through February 2004 and was elected as President in June 2004 and elected
Chief Executive Officer in July 2005. The bonus amount for Mr. Wojnowski
includes commissions totaling $342,588 for 2007, resulting from trading
revenues. All other compensation for Mr. Wojnowski consists of Company paid
health care insurance and 401K contribution.





(2) Mr.
Fellus was elected the Chief Executive Officer of JLSC in May
2008.  Other compensation for Mr. Fellus consists of Company paid
health care insurance.





(3) Mr.
Matthew was elected as Chief Financial Officer and Secretary in May 2006, and
resigned from his position at December 31, 2008. All other compensation for Mr.
Matthew consists of Company paid health care insurance and relocation
expenses.





(4) Mr.
Carreno joined the Company in November 2007 and resigned from his position
effective October 31, 2008.





(5) The
amounts in this column reflect the expense recognized for financial statement
reporting purposes for the fiscal years ended December 31, 2008 and 2007, in
accordance with FAS 123(R), of outstanding stock options granted as part of the
stock option plan, including the effects for which would have been calculated
under FAS 123(R) had it been adopted prior to 2007. The amounts reflected for
Mr. Moreno were included in the purchase price of JLSC under the purchase
accounting method. The assumptions used in calculating these amounts, as well as
a description of our stock option plan, are set forth in the Footnotes to our
Financial Statements for the year ended December 31, 2008, of our Annual Report
on Form 10-K. Compensation cost is generally recognized over the vesting period
of the award.




39




EMPLOYMENT
AGREEMENTS





On
September 21, 2007, the Company entered into an employment agreement with Donald
A. Wojnowski. The employment agreement extends through May 31, 2010 and
automatically renews on a monthly basis thereafter. Pursuant to his employment
agreement, Donald A. Wojnowski was retained as President and Chief Executive
Officer and his total compensation is $300,000 per year plus bonus, which may be
correlated to trading income, and annual stock grant. The agreement calls for
the Company to also provide health care, 401K and any other benefits that the
Company may provide to its employees.





On August
2, 2006, the Company entered into a one year employment agreement with Steven M.
Rabinovici. The employment agreement extended through June 1, 2007 and
automatically renews on a monthly basis. The agreement can be terminated by
either party with 90 days notice. Pursuant to his employment agreement, Steven
M. Rabinovici was retained as a director and Chairman of the Board and his total
compensation is $120,000 per year plus bonus. The agreement was amended in
January 2007 to increase the annual compensation to $240,000 per year plus
bonus, and re-amended May 2007 to reduce the annual compensation to $120,000 per
year plus bonus. The agreement calls for the Company to also provide health
care, 401K and any other benefits that the  Company may provide to its
employees.





On
November 10, 2006, the Company entered into an employment agreement with William
F. Moreno. The employment agreement extends through September, 2009 and
automatically renews on a monthly basis. Pursuant to his employment agreement,
William F. Moreno was retained as President of JLSC and his total compensation
was initially $210,000 per year plus bonus, which was subsequently amended to
$240,000 per year plus bonus. The agreement calls for the Company to also
provide car allowance, 401K and any other benefits that the Company may provide
to its employees.





Outstanding
Equity Awards at December 31, 2008





The
following table includes certain information with respect to the value of all
unexercised options previously awarded, stock that has not vested, and equity
incentive plan awards to our Named Executive Officers.





OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-ENDOPTION
      AWARDS
                                            
                                            STOCK
      AWARDSEquityIncentiveMarket
                                            
                                            
                                            Equity
                                            
                                            
                                            PlanValue
                                            
                                            
                                            Incentive
                                            
                                            
                                            Awards:of
                                            
                                            
                                            Plan
                                            
                                            
                                            Market
      orEquity
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            Shares
                                            
                                            
                                            Awards:
                                            
                                            
                                            PayoutIncentive
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            or
                                            
                                            
                                            Number
      of
                                            
                                            
                                            Value
      ofPlan
      Awards:
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            Units
                                            
                                            
                                            Unearned
                                            
                                            
                                            UnearnedNumber
      of
                                            
                                            
                                            Number
      of
                                            
                                            
                                            Number
      of
                                            
                                            
                                            
                                            
                                            
                                            
                                            Number
      of
                                            
                                            
                                            of
                                            
                                            
                                            Shares,
                                            
                                            
                                            Shares,Securities
                                            
                                            
                                            Securities
                                            
                                            
                                            Securities
                                            
                                            
                                            
                                            
                                            
                                            
                                            Shares
      or
                                            
                                            
                                            Stock
                                            
                                            
                                            Units
      or
                                            
                                            
                                            Units
      orUnderlying
                                            
                                            
                                            Underlying
                                            
                                            
                                            Underlying
                                            
                                            
                                            
                                            
                                            
                                            
                                            Units
      of
                                            
                                            
                                            That
                                            
                                            
                                            Other
                                            
                                            
                                            OtherUnexercised
                                            
                                            
                                            Unexercised
                                            
                                            
                                            Unexercised
                                            
                                            
                                            Option
                                            
                                            
                                            
                                            Stock
                                            
                                            
                                            Have
                                            
                                            
                                            Rights
      That
                                            
                                            
                                            RightsOptions
                                            
                                            
                                            Options
                                            
                                            
                                            Unearned
                                            
                                            
                                            Exercise
                                            
                                            Option
                                            
                                            That
      Have
                                            
                                            
                                            Not
                                            
                                            
                                            Have
      Not
                                            
                                            
                                            That
      Have(#)
                                            
                                            
                                            (#)
                                            
                                            
                                            Options
                                            
                                            
                                            Price
                                            
                                            Expiration
                                            
                                            Not
      Vested
                                            
                                            
                                            Vested
                                            
                                            
                                            Vested
                                            
                                            
                                            Not
      VestedName
                                            
                                            Exercisable
                                            
                                            
                                            Unexercisable
                                            
                                            
                                            
                                            
                                            
                                            ($)
                                            
                                            Date
                                            
                                            (#)
                                            
                                            
                                            ($)
                                            
                                            
                                            (#)
                                            
                                            
                                            (#)(1)
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (2)Donald
      A.
                                            
                                            
                                            125,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            2.00
                                            
                                            6/15/2013
                                            
                                            
                                            64,844
                                            
                                            
                                            
                                            38,258
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Wojnowski
      Jr.
                                            
                                            
                                            300,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            2.00
                                            
                                            6/1/2015
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -SteveRabinovici
                                            
                                            
                                            75,000
                                            
                                            
                                            
                                            75,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            3.38
                                            
                                            8/24/2011
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Kevin
      A.
                                            
                                            
                                            -
                                            
                                            
                                            
                                            200,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            1.21
                                            
                                            11/7/2012
                                            
                                            
                                            100,000
                                            
                                            
                                            
                                            59,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -CarrenoWilliam
      F.
                                            
                                            
                                            58,333
                                            
                                            
                                            
                                            116,667
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            4.67
                                            
                                            11/10/2016
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Moreno
                                            
                                            
                                            -
                                            
                                            
                                            
                                            19,361
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            2.73
                                            
                                            2/28/2012
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -100,000
                                            
                                            
                                            
                                            200,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            1.50
                                            
                                            6/18/2013
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -




40




(1) The
un-exercisable options generally vest over a 2 - 3 year period from date of
grant.





(2) The
market value is based on $0.59 per share which was the closing price of the
Company's stock on December 31, 2008. The unvested portion of stock awards
vest


from 1 -
3 years.





The
following table presents a summary of the compensation paid to the members of
our Board of Directors during the fiscal year ended December 31, 2008. Except as
listed below, no other compensation was paid to our Directors.





DIRECTOR
COMPENSATION




Name
                  
                  Fees
                    Earned
                    or Paid
                    in Cash
                    ($)
                  
                  
                  Stock
                    Awards
                    ($)
                  
                  
                  Option
                    Awards
                    ($) (1)
                  
                  
                  Non-Equity
                    Incentive
                    Plan
                    Compensation
                    ($)
                  
                  
                  Non-
                    Qualified
                    Deferred
                    Compensation
                    Earnings
                    ($)
                  
                  
                  All Other
                    Compensation
                    ($)
                  
                  
                  Total
                    ($)Bradley
      L. Gordon(2)
                  
                  
                  3,167
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,167John
      C. Rudy
                  
                  
                  36,000
                  
                  
                  
                  -
                  
                  
                  
                  65,208
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  101,208Kirk
      M. Warshaw (2)
                  
                  
                  3,167
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,167Benjamin
      J. Douek
                  
                  
                  15,500
                  
                  
                  
                  -
                  
                  
                  
                  5,208
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  80,708Alan
      Weichselbaum(3)
                  
                  
                  3,500
                  
                  
                  
                  -
                  
                  
                  
                  65,208
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  68,708




(1) The
amounts in this column reflect the expense recognized for financial statement
reporting purposes for the fiscal year ended December 31, 2008, in accordance
with FAS 123(R), of outstanding stock options granted as part of the stock
option plan, including the effects for which would have been calculated under
FAS 123(R) had it been adopted prior to 2007. The assumptions used in
calculating these amounts, as well as a description of our stock option plan,
are set forth in the Footnotes to our Financial Statements for the year ended
December 31, 2008, of our Annual Report on Form 10-KSB. Compensation cost is
generally recognized over the vesting period of the award.





(2) Mr.
Warshaw resigned from the Board of Directors effective January 11, 2008, and Mr.
Gordon resigned from the Board of Directors effective January 27,
2008.





(3) Mr.
Weichselbaum became an employee of the Company in December 2008.





Our
directors' compensation plan through April 30, 2008 was as follows:





COMPENSATION.
Non-affiliated directors receive annual compensation in the amount of (i) $5,000
per year in cash to be paid by the Company quarterly in arrears (pro-rated for
partial periods served by any non-affiliate director), (ii) $500 in cash for
attendance at meetings of the Board of Directors and (iii) $250 in cash for
attendance at meetings of any committees of the Board of Directors. However,
neither affiliated directors nor directors who are also employed by the Company
receive any fee or compensation for their services as directors. All members of
the Board of Directors receive reimbursement for reasonable travel-related
expenses actually incurred in connection with their attendance at meetings of
the Board of Directors.





OPTIONS.
Directors are eligible to receive options under our Amended and Restated 2000
Incentive Compensation Plan and 2007 Incentive Compensation Plan. Additionally,
upon a person's election as a non-affiliated director, such non-affiliated
director is automatically granted an option to purchase 25,000 shares of our
common stock or more, at the discretion of management, as well as an automatic
annual grant of an option to purchase 25,000 shares of our common stock on each
anniversary of the date such non-affiliated director was first elected as one of
our directors.




41




Effective
May 1, 2008, our directors' compensation plan is as follows:





COMPENSATION.
Non-affiliated directors receive annual compensation in the amount of (i)
$10,000 per year in cash to be paid by the Company quarterly in arrears
(pro-rated for partial periods served by any non-affiliate director), (ii)$1,000
in cash for attendance at meetings of the Board of Directors and (iii) $500 in
cash for attendance at meetings of any committees of the Board of Directors. The
Chairman of the Audit Committee receives an additional $20,000per year in cash
to be paid by the Company quarterly in arrears. However,  neither
affiliated directors nor directors who are also employed by the Company receive
any fee or compensation for their services as directors. All members of the
Board of Directors receive reimbursement for reasonable travel-related expenses
actually incurred in connection with their attendance at meetings of the Board
of Directors.





OPTIONS.
Directors are eligible to receive options under our Amended and Restated 2000
Incentive Compensation Plan and 2007 Incentive Compensation Plan. Upon a
person's election as a non-affiliated director, such non-affiliated director is
automatically granted an option to purchase 100,000 shares of our common stock
or more, at the discretion of management, as well as an automatic annual grant
of an option to purchase 100,000 shares of our common stock on each anniversary
of the date such non-affiliated director was first elected as one of our
directors.





ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS




VOTING
SECURITIES





Our
voting securities on March 31, 2009 consisted of 22,397,700 shares of common
stock, 21,873,582 of which were outstanding; 7,062 shares of Series C Preferred
Stock, entitled to an aggregate of 353,100 votes; 819,987 shares of Series F
Preferred Stock, entitled to an aggregate of 819,987 votes; and 1,688 shares of
Series G Preferred Stock, entitled to an aggregate of 2,481,360 votes. The
following table shows as of March 31, 2009, the amount of voting securities
beneficially owned by:





(i)          
each of our Named Executive officers (as defined in the Summary Compensation
Table above),





(ii)          each
of our directors





(iii)         all
of our directors and executive officers as a group and





(iv)         each
person known by us to beneficially own more than 5% of the total combined voting
power of all voting securities.





Unless otherwise stated, the address
of each holder is c/o Jesup & Lamont, Inc., 2170 West State Road 434, Suite
100, Longwood, Florida 32779.





Except as
otherwise indicated, the persons listed below have sole voting and investment
power with respect to all shares of common stock owned by them. All information
with respect to beneficial ownership has been furnished to us by the respective
stockholder.


42


Number
      of Shares
                  
                  
                  Percentage
      ofName of Beneficial Owner
(1)
                  
                  Beneficially Owned (2)
                  
                  
                  OutstandingDonald
      A. Wojnowski Jr. (3)
                  
                  
                  625,860
                  
                  
                  
                  2.8
                  %Steven
      M. Rabinovici (9,10)
                  
                  
                  5,381,962
                  
                  
                  
                  24.0
                  %John
      C. Rudy (4)
                  
                  
                  235,000
                  
                  
                  
                  0.6
                  %Benjamin
      J. Douek (5)
                  
                  
                  100,000
                  
                  
                  
                  0.3
                  %Alan
      Weichselbaum (6)
                  
                  
                  4,576,029
                  
                  
                  
                  14.3
                  %James
      B. Fellus (7)
                  
                  
                  4,519,929
                  
                  
                  
                  14.1
                  %James
      M. Matthew* (10)
                  
                  
                  125,000
                  
                  
                  
                  0.6
                  %Kevin
      A. Carreno** (11)
                  
                  
                  -
                  
                  
                  
                  -
                  %Stephen
      J. DeGroat (9)
                  
                  
                  632,451
                  
                  
                  
                  2.8
                  %William
      F. Moreno (12)
                  
                  
                  308,021
                  
                  
                  
                  1.4
                  %The
      Gagne First Revocable Trust (8,9)
                  
                  
                  1,002,676
                  
                  
                  
                  4.5
                  %EFH
      Partners, LLC (13,15)
                  
                  
                  5,181,962
                  
                  
                  
                  23.1
                  %Wexus
      Capital
                  
                  
                  3,869,969
                  
                  
                  
                  17.3
                  %Joab
      Capital
                  
                  
                  3,869,969
                  
                  
                  
                  17.3
                  %Steven
      A. Horowitz (14)
                  
                  
                  5,384,462
                  
                  
                  
                  24.0
                  %Paul
      H. Brown (15)
                  
                  
                  3,342,984
                  
                  
                  
                  14.9
                  %Daniel
      J. Barnett (16)
                  
                  
                  1,262,110
                  
                  
                  
                  5.6
                  %Harvey
      McGrath (17)
                  
                  
                  1,240,680
                  
                  
                  
                  5.5
                  %All
      directors and executive officers as a group (six
    individuals)
                  
                  
                  15,338,780
                  
                  
                  
                  36.9
                  %







*
            Mr.
      Matthew resigned from his position as Chief Financial Officer of Jesup
      & Lamont, Inc. effective December 31,
2008.




**
            Mr. Carreno
      resigned from his position as Chief Operating Officer of Jesup &
      Lamont, Inc. effective October 31,
2008.




(1)
            The
      addresses of the persons named in this table are as follows:
              Donald
      A. Wojnowski, Steven M. Rabinovici, James M. Matthew, and Kevin A.
      Carreno, 2170 West State Road 434, Suite 100, Longwood, Florida 32779;
      John C. Rudy, 245 Main Street, Suite 2N, Matawan, NJ 07747; Benjamin J.
      Douek, 650 Fifth Ave., 17th
      Floor, New York, NY 10019; Alan Weichselbaum, 50 Sealy Dr., Lawrence, NY
      11559; James B. Fellus, 3 Filomena Ct., Dixhills, NY 11746; Kevin Gagne,
      1911 Lake Markham Preserve Trail, Sanford, Fl 32771; Steven A. Horowitz,
      400 Garden City Plaza, Garden City, NY 11530; EFH Partners, LLC, 405 Park
      Avenue, Suite 1401, New York, NY 10022; The Gagne First Revocable Trust,
      1911 Lake Markham Preserve Trail, Sanford, Fl 32771; Stephen J. DeGroat
      and William F. Moreno, Jesup & Lamont Securities Corporation, 650
      Fifth Avenue New York, NY 10019; Paul H. Brown, Le Panorama AB, 57 Rue
      Grimaldi, MC 98000, Monaco; Daniel J. Barnett, 297 Asharoken Avenue,
      Northport, NY 11768; and Harvey McGrath, c/o Windels Marx Lane &
      Mittendorf LLP, 156 West 56th Street, New York, NY
  10019.





(2)
            A
      person is deemed to be a beneficial owner of securities that can
      be  by such person within 60 days from March 31, 2009 upon the
      exercise of options and warrants or conversion of convertible securities.
      Each beneficial owner's percentage ownership is determined by assuming
      that options, warrants and convertible securities that are held by such
      person (but not held by any other person) and that are exercisable or
      convertible within 60 days from March 31, 2009 have been exercised or
      converted. Except as otherwise indicated, and subject to applicable
      community property and similar laws, each of the persons named has sole
      voting and investment power with respect to the shares shown as
      beneficially owned. All percentages are determined based on the number of
      all shares, including those underlying options, warrants and convertible
      securities exercisable or convertible within 60 days from March 31, 2009
      held by the named individual, divided by 16,573,451 outstanding shares on
      March 31, 2009 plus those shares underlying options, warrants and
      convertible securities exercisable or convertible within 60 days from
      March 31, 2009 held by the named individual or the
  group.


43





(3)
            Mr.
      Wojnowski owns options to purchase 425,000 shares of common stock at $2.00
      per share, all of which are exercisable within 60 days from April 22,
      2008. Mr. Wojnowski also owns 64,844 shares of restricted common stock,
      none of which are vested within 60 days from April 22,
    2008.





(4)
            Mr.
      Rudy owns options that are currently eligible to purchase 50,000 shares of
      our common stock at $2.05 per share, 10,000 shares at $2.82 per share, and
      75,000 shares of our common stock at $1.42 per share, all of which are
      exercisable within 60 days from April 22, 2008.  Mr Rudy also
      owns options that are currently eligible to purchase 100,000 shares of our
      common stock at $1.07 per share, all of which are exercisable within 60
      days from November 3, 2008.





(5)
            Mr. Douek
      owns options that are currently eligible to purchase 100,000 shares of our
      common stock at $1.07 per share, all of which are exercisable within 60
      days from November 3, 2008.




(6)
            Mr. Weichselbaum’s
      beneficial ownership includes the following securities: (a) 3,869,969
      shares of common stock owned by Wexus Capital LLC; (b) 484,848 shares of
      our common stock due but have not been issued to Gimmel Partners LP; (c)
      warrants due but have not been issued to Gimmel Partners LP, currently
      exercisable to purchase 121,212 shares of our common stock at $1.20 per
      share; and (d) options currently exercisable, to purchase 100,000 shares
      of our common stock at $1.07 per share. Gimmel Partners LP is legally
      entitled to those securities pursuant to executed and fully paid
      subscription agreements. Mr. Weichselbaum disclaims beneficial
      ownership of securities owned by Gimmel Partners LP, except to the extent
      of his pecuniary interest therein, if
any.





(7)
            Mr. Fellus’s
      beneficial ownership includes the following securities: (a) 3,869,969
      shares of common stock owned by Joab Capital LLC; (b) 484,848 shares of
      our common stock due but have not been issued to Joab Partners LP; (c)
      warrants due but have not been issued to Joab Partners LP, currently
      exercisable to purchase 121,212 shares of our common stock at $1.20 per
      share; (d) 8,500 shares of our common stock owned directly; and (e) 35,400
      shares of our common stock owned by the James B. Fellus IRA. Joab Capital
      LLC is legally entitled to these securities pursuant to executed and fully
      paid subscription agreements. Mr. Fellus disclaims beneficial
      ownership of securities owned by Joab Capital LLC, except to the extent of
      his pecuniary interest therein, if
any.





(8)
            Investment
      making authority for the Gagne First Revocable Trust is vested in Kevin M.
      Gagne, Trustee. Mr. Gagne is a former chief executive officer and director
      of Empire Financial Holding Company. The Gagne First Revocable Trust is
      record owner of 640,076 shares of our common stock, 400,000 of those
      shares are subject to options granted by The Gagne First Revocable Trust
      to EFH Partners, LLC, to purchase each of those shares at an exercise
      price of $1.75 per share. A further 150,000 of those shares are subject to
      options granted by The Gagne First Revocable Trust to EFH Partners, LLC,
      to purchase each of those shares at an exercise price of $2.25 per share.
      The total 550,000 shares underlying those options are also covered by
      irrevocable proxies, dated May 20, 2005, delivered by The Gagne First
      Revocable Trust to EFH Partners, LLC, which permit EFH Partners, LLC to
      vote these shares on all matters, except that without the approval of The
      Gagne First Revocable Trust, these shares may not be voted in favor of (i)
      the sale of all or substantially all of  our assets, (ii) our
      merger with any other entity or (iii) the authorization of a new employee
      stock option plan or an increase in the number of shares of our common
      stock available under any existing employee stock option plan. In
      addition, the Gagne First Revocable Trust's beneficial ownership includes
      7,062 shares of Series C Preferred Stock, currently convertible into
      353,100 shares of our common stock, and warrants, currently exercisable,
      to purchase 9,500 shares of our common stock at $5.46 per
      share.


44





(9)
            Includes
      options, currently exercisable, to purchase 200,000 shares of our common
      stock at $2.00 per share. As one of two Managing Members of EFH Partners,
      LLC, jointly with Steven M. Horowitz, Steven M. Rabinovici also has shared
      dispositive and voting power with respect to 4,371,962 shares of our
      common stock owned of record by EFH Partners, LLC, and shared dispositive
      power with respect to (a) warrants currently exercisable to purchase
      60,000 shares of our common stock at $1.50 per share; (b) warrants
      currently exercisable to purchase 200,000shares of our common stock at
      $2.00 per share; (c) options to purchase 400,000 shares of our common
      stock, at an exercise price of $1.75 per share, and (d) options to
      purchase 150,000 shares of our common stock, at an exercise price of $2.25
      per share. Mr. Rabinovici also has shared voting power with respect to the
      shares underlying (c) and (d) above, which are covered by irrevocable
      proxies, dated May 20, 2005, delivered by The Gagne First Revocable Trust
      to EFH Partners, LLC, which permit EFH Partners, LLC to vote theses shares
      on all matters, except that without the approval of the Gagne First
      Revocable Trust, these shares may not be voted in favor of (i) the sale of
      all or substantially all of our assets, (ii) our merger with any other
      entity or (iii) the authorization of a new employee stock option plan or
      an increase in the number of shares of our common stock available under
      any existing employee stock option plan. (See footnote 5 above and
      footnotes 11 and 12 below). Warrants or options for a total of 1,010,000
      of these shares are exercisable within 60 days from April 22, 2008. Mr.
      Rabinovici disclaims beneficial ownership of any share beneficially owned
      by EFH Partners, LLC, except to the extent of his pecuniary interest in
      such shares.





(10)
            Mr.
      Matthew owns options to purchase 50,000 shares of common stock at $4.85
      per share and 150,000 shares at $3.38 per share, of which 125,000 shares
      are exercisable within 60 days from April 22,
  2008.





(11)
            Mr.
      Carreno owns options to purchase 200,000 shares of common stock at $1.21
      per share, none of which are exercisable within 60 days from April 22,
      2008. Mr. Carreno also owns 100,000 shares of restricted common stock,
      none of which are vested within 60 days from April
  22,2008.





(12)
            Mr. Moreno
      owns options to purchase 300,000 shares of common stock at $1.50 per
      share, all of which are exercisable within 60 days from November 3,
      2008.





(13)
            Includes
      warrants currently exercisable to purchase 60,000 shares of our common
      stock at $1.50 per share and warrants currently exercisable to purchase
      200,000 shares of our common stock at $2.00 per share. Also includes
      options, currently exercisable, to purchase (i) 400,000 shares of our
      common stock at an exercise price of $1.75 per share, and (ii) 150,000
      shares of our common stock, at an exercise price of $2.25 per share. The
      shares underlying these options are held of record by The Gagne First
      Revocable Trust, and are also covered by irrevocable  proxies,
      dated May 20, 2005, delivered by The Gagne First Revocable Trust to EFH
      Partners, LLC, which permit EFH Partners, LLC to vote these shares on all
      matters, except that without the approval of The Gagne First Revocable
      Trust, these shares may not be voted in favor of(i) the sale of all or
      substantially all of our assets, (ii) our merger with any other entity or
      (iii) the authorization of a new employee stock option plan or an increase
      in the number of shares of our common stock available under any existing
      employee stock option plan. EFH Partners, LLC is an affiliated entity and
      a major shareholder. Steven M. Rabinovici, our Chairman, is one of its two
      managing members. Investment making authority for the EFH Partners, LLC is
      vested in Steven M. Rabinovici and Steven M. Horowitz, managing members.
      EFH Partners, LLC, purchased the stock in the ordinary course of business,
      and at the time of purchase of the stock to be resold, had no agreements
      or understandings directly or indirectly with any person to sell the
      stock.


45





(14)
            Steven
      A. Horowitz, as one of two Managing Members of EFH Partners, LLC, jointly
      with Steven M. Rabinovici, has shared dispositive and voting power with
      respect to 4,371,962 shares of our common stock owned of record by EFH
      Partners, LLC, and shared dispositive power with respect to (a) warrants
      currently exercisable to purchase 60,000 shares of our common stock at
      $1.50 per share; (b) warrants currently exercisable to purchase 200,000
      shares of our common stock at $2.00 per share; (c) options to purchase
      400,000 shares of our common stock, at an exercise price of $1.75 per
      share, and (d) options to purchase 150,000 shares of our common stock, at
      an exercise price of $2.25 per share. Mr. Horowitz also has shared voting
      power with respect to the shares underlying (c) and (d) above, which are
      covered by irrevocable proxies, dated May 20, 2005, delivered by The Gagne
      First Revocable Trust to EFH Partners, LLC, which permit EFH Partners, LLC
      to vote theses shares on all matters, except that without the approval of
      the Gagne First Revocable Trust, these shares may not be voted in favor of
      (i) the sale of all or substantially all of our assets, (ii) our merger
      with any other entity or (iii) the authorization of a new employee stock
      option plan or an increase in the number of shares of our common stock
      available under any existing employee stock option plan. (See footnote 5,
      6 and 11 above). Warrants or options for a total of 810,000 of these
      shares are exercisable within 60 days from April 22, 2008. Mr. Horowitz,
      jointly with Lynn Diamond, as trustees of 3111 Broadway Reality Corp.
      Charitable Remainder Trust, has dispositive power with respect to
      warrants, currently exercisable to purchase 140,000 shares of our common
      stock at $3.10 per share, and warrants, currently exercisable, to purchase
      62,500 shares of our common stock at $5.46 per share, beneficially owned
      by 3111 Broadway Reality Corp. Charitable Remainder Trust. Mr. Horowitz
      disclaims beneficial ownership of any shares beneficially owned by EFH
      Partners, LLC and 3111 Broadway Reality Corp. Charitable Remainder Trust,
      except to the extent of his pecuniary interest in such
    shares.





(15)
            Mr.
      Brown's beneficial ownership includes the following securities: (a)
      574,416 shares of common stock that have not been issued; (b) warrants
      that have not been issued, currently exercisable, to purchase 287,208
      shares of common stock at $1.40 per share, owned by Sofisco Nominees
      Limited; (c) 844 shares of Series G Preferred Stock, currently convertible
      into 1,240,680 shares of common stock; and (d) warrants to purchase
      1,240,680 shares of common stock at $0.816 per share, owned by Impala
      Nominees Limited. Sofisco Nominees Limited and Impala Nominees Limited are
      legally entitled to those securities pursuant to executed and fully paid
      subscription agreements. Mr. Brown, as the sole director of Sofisco
      Nominees Limited and Impala Nominees Limited, has voting and investment
      authority with respect to securities owned by those entities, and
      therefore may be deemed to be the indirect beneficial owner of those
      securities. Mr. Brown disclaims beneficial ownership of securities owned
      by Sofisco Nominees Limited and Impala Nominees Limited, except to the
      extent of his pecuniary interest therein, if
  any.





(16)
            Mr.
      Barnett's beneficial ownership includes the following securities owned by
      Harvco, LLC: 422 shares of Series G Preferred Stock, currently convertible
      into 620,340 shares of common stock and warrants to purchase 620,340
      shares of common stock at $0.816 per share. Mr. Barnett, as the sole
      member and manager of Harvco, LLC, has voting and investment authority
      with respect to securities owned by that entity, and therefore may be
      deemed to be the indirect beneficial owner of those
      securities.





(17)
            Mr.
      McGrath's beneficial ownership includes the following securities:(a) 422
      shares of Series G Preferred Stock, currently convertible into 620,340
      shares of common stock; and (b) warrants to purchase 620,340 shares of
      common stock at $0.816 per share.





For
information regarding securities authorized under our equity compensation plan,
see Item 5, "Equity Compensation Plan Information".


46


ITEM
13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE





The
following is a discussion of certain relationships and related transactions for
the year ended December 31, 2008. In the opinion of management, the terms of
these transactions were as fair to the Company as could have been made with
unrelated parties.





On June
14, 2007, one of the Company's broker dealer subsidiaries obtained a short-term
loan from EFH Partners, LLC, a related party in the amount of $1 million in
connection with a proposed underwriting. The loan bore no interest but a
one-time fee of 7.5% or $75,000, was paid to the Company's clearing firm. The
loan was payable on demand. On June 26, 2007, a $500,000 payment was made. A
second payment of $500,000 was made on July 6, 2007, paying in full the
outstanding balance.





We
extended a $1 million short term note that was originally issued on March 1, 2006 to
EFH Partners, LLC. This note was extended to a new maturity date of April 1,
2009. The extended note bears interest at 4%, is payable at maturity and is
subordinated to all other debt.





On
December 5, 2007, we received a stock subscription advance totaling $1,017,000
from an entity controlled by an investor in the Company. At December 31, 2007,
prepaid expenses and other assets included  loans receivable from
officers of our subsidiary, JLSC, totaling $629,523. These loans were acquired
as part of the acquisition of JLSC and have been offset against the note payable
issued as part of the purchase price.





DIRECTOR
INDEPENDENCE





The Board
has determined that John C. Rudy, Benjamin J. Douek and Mark A. Wilton (the
"Independent Directors") are independent as that term is defined in the listing
standards of the NYSE Amex. As disclosed above, the Independent Directors are
the sole members of the Audit Committee and are independent pursuant to the
standards applicable to audit committee members under NYSE Amex listing
standards. The Independent Directors are the sole members  of the
Compensation Committee and are independent pursuant to the standards applicable
to compensation committee members under NYSE Amex listing
standards.





In
determining director independence, the Board considered the option awards to the
Independent Directors for the year ended December 31, 2008, disclosed in "Item
11 - Executive Compensation - Director Compensation" above, and determined that
such awards were compensation for services rendered to the Board and therefore
did not impact their ability to continue to serve as Independent
Directors.





ITEM
14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES





We have
retained Rosen Seymour Shapss Martin & Company, successor to Miller, Ellin
& Company, LLP) to perform our annual audit, review our quarterly and annual
SEC filings and prepare our tax returns.





AUDIT
FEES.





The
aggregate fees billed for professional services rendered by Rosen Seymour Shapss
Martin & Company successor to Miller Ellin & Company for the audit of
our annual financial statements and for the review of our interim financial
statements, which are included in our Annual Report on Form 10-K and in our
Quarterly Reports on Form 10-Q, and services that are normally provided in
connection with statutory and regulatory filings or engagements for fiscal years
2008 and 2007 were $276,907, and $263,694, respectively.





AUDIT-RELATED
FEES.





There
were no fees for assurance and related services billed by Rosen Seymour Shapss
Martin & Company  successor to Miller Ellin & Company for the
year ended December 31, 2008.  During 2007 there were $35,634 for
these services paid Miller Ellin & Company which were primarily in
connection with our registration statements on form S-3.


47


TAX
FEES.





The
aggregate fees billed for professional services for tax compliance,tax advice
and tax planning by Rosen Seymour Shapss Martin & Company were $63,853 and
$78,798 for fiscal years ending 2008 and 2007, respectively.





ALL OTHER
FEES.





There
were no other fees billed by Rosen Seymour Shapss Martin & Company or its
predecessor Miller Ellin & Company for products and services other than
the above in the amount of $0 and $0 for fiscal years ending 2008 and 2007,
respectively.





AUDIT
COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES





The Audit
Committee charter provides that the Audit Committee will pre-approve audit
services and non-audit services to be provided by our independent auditors
before the accountant is engaged to render these services. The Audit Committee
may consult with management in the decision-making process, but may not delegate
this authority to management. The Audit Committee may delegate its authority to
pre-approve services to one or more committee members, provided that the
designees present the pre-approvals to the full committee at the next committee
meeting. All audit and non-audit services performed by our independent
accountants have been pre-approved by our Audit Committee to assure that such
services do not impair the auditors' independence from us.


48


PART
IV





ITEM
15. EXHIBITS





Exhibit No.
              
              Description of Exhibit3(i)(a)
              
              Articles
      of Incorporation (1)3(i)(b)
              
              Amendment
      to Articles of Incorporation effective January 2, 2008
  (18)3(ii)
              
              Bylaws,
      as amended (2)4.1
              
              Form
      of Common Stock Certificate (1)4.2
              
              Articles
      of Amendment designating Series B Convertible Preferred Stock, Series C
      Convertible Preferred Stock, and Series D Convertible Preferred Stock
      dated May 19, 2005 (3)4.3
              
              Articles
      of Amendment designating Series F Convertible Preferred Stock dated March
      13, 2007 (4)4.4
              
              Articles
      of Amendment designating Series G Convertible Preferred Stock, effective
      March 28, 2008 (18)10.1
              
              Amended
      and Restated 2000 Incentive Compensation Plan (5)10.2
              
              2007
      Incentive Compensation Plan (6)10.3+
              
              Severance
      Agreement between the Company and Kevin M. Gagne(7)10.4+
              
              Employment
      Agreement between the Company and Donald A. Wojnowski Jr. dated as of
      September 21, 2007(2)10.5
              
              Lease
      between the Company and Emerson Investments International, Inc., relating
      to the lease of the Registrant's principal executive offices
      (8)10.6
              
              Form
      of Indemnification Agreement between the Company and each of its Directors
      and executive officers(1)10.7
              
              Mutual
      Release between the Company, Richard L. Goble, the Richard L. Goble First
      Revocable Trust, Henry N.Dreifus, Kevin M. Gagne, Bradley L. Gordon, and
      John J. Tsucalas(17)10.8
              
              Stock
      Purchase Agreement between the Gagne First Revocable Trust, Kevin M. Gagne
      and Richard L. Goble(17)10.9
              
              Fully
      Disclosed Clearing Agreement by and between Penson Financial Services,
      Inc. and Empire Financial Group, Inc.(8)10.12
              
              Stock
      Exchange Agreement, dated March 8, 2005, between Empire Financial Holding
      Company, Kevin M. Gagne and the Gagne First Revocable
      Trust.(9)10.13
              
              Transfer
      Agreement by and among Empire Financial Holding Company, Empire Financial
      Group, Inc., Regal Securities, Inc., and Penson Financial Services, Inc.,
      as Clearing Broker dated as of November 21, 2005.
  (10)


49





10.14
              
              Form
      of Securities Purchase Agreement dated as of March 10, 2006
      (4)10.15
              
              Form
      of Warrant to be issued in connection with Securities Purchase Agreement
      dated as of March 10, 2006 (4)10.16
              
              Stock
      Purchase Agreement, dated September 14, 2006, among Empire Financial
      Holding Company, Jesup & Lamont Securities Corporation, and Jesup
      & Lamont Holding Corporation. (12)10.17
              
              Amendment
      No. 1 to Stock Purchase Agreement, dated November 10, 2006
      (13)10.18
              
              Amendment
      No. 2 to Stock Purchase Agreement, dated November 10, 2007
      (13)10.19
              
              Form
      of Securities Purchase Agreement dated March 6,
2007(14)10.20
              
              Form
      of Registration Rights Agreement dated March 6,
2007(14)10.21
              
              Form
      of Debenture issuable in connection with Securities Purchase Agreement
      dated March 6, 2007 (14)10.22
              
              Form
      of Warrant issuable in connection with Securities Purchase Agreement dated
      March 6, 2007 (14)10.23
              
              Form
      of Subscription Agreement dated August 20, 2007 (15)10.24
              
              Form
      of Warrant issuable in connection with Subscription Agreement dated August
      20, 2007 (15)10.25
              
              Form
      of Subscription Agreement dated as of March 3, 2008
(16)14.1
              
              Code
      of Ethical Conduct(8)21.1
              
              Subsidiaries
      of the Company (18)31.1
              
              Certification
      by Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of
      the Securities and Exchange Act of 1934, as amended *31.2
              
              Certification
      by Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of
      the Securities and Exchange Act of 1934, as amended *32.1
              
              Principal
      Executive Officer Certification pursuant to Rule 13a-14(a) or Rule
      15d-14(a) of the Securities and Exchange Act of 1934, as amended, and 18
      U.S.C. Section 1350 *32.2
              
              Principal
      Executive Officer Certification pursuant to Rule 13a-14(a) or Rule
      15d-14(a) of the Securities and Exchange Act of 1934, as amended, and 18
      U.S.C. Section 1350 *








*     Filed
herewith


+     Indicates
management contract or compensatory plan or arrangement


50


(1)
            Incorporated
      by reference from the exhibits filed with the Company'sRegistration
      Statement on Form S-1 Registration No.
  333-86365.





(2)
            Incorporated
      by reference from the exhibits filed with the Company'sQuarterly
      Report on Form 10-QSB for the quarter ended September 30,
      2007.





(3)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K dated May 26,
2005.





(4)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K filed on March 17,
2006.





(5)
            Incorporated
      by reference from Appendix A to the Company's definitiveProxy
      Statement on Schedule 14A filed on August 1,
  2006.





(6)
            Incorporated
      by reference from Appendix A to the Company's definitiveProxy
      Statement on Schedule 14A filed on August 23,
  2007.





(7)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K dated June 25,
2004.





(8)
            Incorporated
      by reference from the exhibits filed with the Company'sAnnual
      Report on Form 10-K for the fiscal year ended December 31,
      2003.





(9)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K dated March 8,
2005.





(10)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K dated November 23,
2005.





(11)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K dated May 15,
2007.





(12)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K dated September 14,
2006.





(13)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K dated November 10,
2006.





(14)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K filed on March 12,
2007.





(15)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K filed on August 24,
2007.





(16)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K filed on March 12,
2008.





(17)
            Incorporated
      by reference from the exhibits filed with the Company'sCurrent
      Report on Form 8-K dated October 17,
2003.





(18)
            Incorporated
      by reference from the exhibits filed with the Company'sinitial
      filing of this Annual Report on Form 10-KSB on March 31,
    2008.


51


SIGNATURES





In
accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.





JESUP
      & LAMONT, INC.Dated
      April 14, 2009
              
              By: /s/ Donald A. Wojnowski
    Jr.Donald
      A. Wojnowski Jr., President(Principal
      Executive Officer)Dated
      April 14, 2009
              
              By: /s/ Alan
WeichselbaumAlan
      Weichselbaum, Chief Financial Officer(Principal
      Financial Officer andPrincipal
      Accounting Officer)





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant in the capacities and on the dates
indicated.





Signatures
              
              Title
              Date/s/ Donald A. Wojnowski Jr.
              
              President
      and Director,
              April
      14, 2009Donald
      A. Wojnowski Jr.
              
              (Principal
      Executive Officer)/s/ Alan Weichselbaum
              
              Chief
      Financial Officer,
              April
      14, 2009Alan
      Weichselbaum
              
              (Principal
      Financial Officer andPrincipal
      Accounting Officer)/s/ John C. Rudy
              
              Director
              April
      14, 2009John
      C. Rudy/s/ Steven M. Rabinovici
              
              Director
              April
      14, 2009Steven
      M. Rabinovici


52





JESUP
& LAMONT, INC. AND SUBSIDIARIES


(FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)


CONSOLIDATED
FINANCIAL STATEMENTS


FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007





TABLE OF
CONTENTS


PageReport
      of Independent Registered Public Accounting Firm
              F-2Consolidated
      Statement of Financial Condition December 31, 2008 and
2007
              F-3Consolidated
      Statements of Operations for the Years Ended December 31, 2008 and
      2007
              F-4Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2008 and
      2007
              F-5Consolidated
      Statements of Changes in Stockholders' Equity for the  Years
      Ended December 31, 2008 and 2007
              F-7Notes
      to Consolidated Financial Statements
              F-10


F-1





REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and Stockholders of


Jesup
& Lamont, Inc. and Subsidiaries


(Formerly
Empire Financial Holding Company)





We have
audited the accompanying consolidated statement of financial condition of
Jesup & Lamont, Inc. and subsidiaries (formerly Empire
Financial Holding Company) as of December 31, 2008, and the related consolidated
statements of operations, changes in stockholders' equity , and cash flows for
the years then ended.  These consolidated 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
audit.  The December 31, 2007 financial statements were audited by
Miller Ellin & Company, LLP, who merged with Rosen Seymour Shapss Martin
& Company LLP as of January 1, 2009, whose report dated March 8, 2008
expressed an unqualified opinion on those statements.





We
conducted our audit 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 consolidated financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audit provides a reasonable basis for our opinion.





In our
opinion, the 2008 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Jesup & Lamont,
Inc. and subsidiaries (formerly Empire Financial Holding Company) at December
31, 2008, and the results of its operations and its cash flows for the year
ended December 31, 2008, in conformity with accounting principles generally
accepted in the United States of America.





New York,
New York


April 8,
2009


F-2


JESUP
& LAMONT, INC. AND SUBSIDIARIES
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION





December
31,2008
                                          
                                          
                                          2007AssetsCash and cash
      equivalents
                                          
                                          $
                                          410,840
                                          
                                          
                                          $
                                          535,536Marketable securities owned, at
      market value
                                          
                                          
                                          37,027
                                          
                                          
                                          
                                          5,178,988Securities not readily marketable,
      at estimated fair value
                                          
                                          
                                          531,265
                                          
                                          
                                          
                                          1,229,659Commissions and other receivables
      from clearing organization
                                          
                                          
                                          1,033,520
                                          
                                          
                                          
                                          1,672,328Other
      Receivables
                                          
                                          
                                          1,849,816
                                          
                                          
                                          
                                          795,030Deposits at clearing
      organization
                                          
                                          
                                          655,359
                                          
                                          
                                          
                                          4,177,837Furniture and equipment,
      net
                                          
                                          
                                          527,692
                                          
                                          
                                          
                                          619,153Prepaid expenses and other
      assets
                                          
                                          
                                          513,393
                                          
                                          
                                          
                                          1,671,215Notes
      receivable
                                          
                                          
                                          1,310,889
                                          
                                          
                                          
                                          979,221Deferred tax
      asset
                                          
                                          
                                          2,117,000
                                          
                                          
                                          
                                          2,117,000Intangible assets - goodwill,
      customer lists and trademarks
                                          
                                          
                                          17,415,766
                                          
                                          
                                          
                                          17,576,493Total
assets
                                          
                                          $
                                          26,402,567
                                          
                                          
                                          $
                                          36,552,460Liabilities and stockholders'
      equityLine of credit
      payable
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          1,999,450Accounts payable, accrued expenses
      and other liabilities
                                          
                                          
                                          5,685,935
                                          
                                          
                                          
                                          4,992,314Due to clearing
      organization
                                          
                                          
                                          1,180,108
                                          
                                          
                                          
                                          7,689,830Securities sold, but not yet
      purchased, at market value
                                          
                                          
                                          170,603
                                          
                                          
                                          
                                          522,771Notes
    payable
                                          
                                          
                                          12,552,317
                                          
                                          
                                          
                                          9,766,176Total
      liabilities
                                          
                                          
                                          19,588,963
                                          
                                          
                                          
                                          24,970,541Commitments and
      ContingenciesStockholders'
      equityConvertible preferred stock,
      series C, F and G, $.01 par
    value
                                          
                                          $
                                          7,902
                                          
                                          
                                          $
                                          8,270Common stock, $.01 par value 100,000,000 shares
      authorized
                                          
                                          
                                          223,978
                                          
                                          
                                          
                                          111,065Less: Treasury
      Stock
                                          
                                          
                                          (733,765
                                          )
                                          
                                          
                                          -Stock subscription
      receivable
                                          
                                          
                                          2,894,996
                                          
                                          
                                          
                                          2,000,000Additional paid-in
      capital
                                          
                                          
                                          37,328,572
                                          
                                          
                                          
                                          26,324,579Accumulated
      deficit
                                          
                                          
                                          (32,908,079
                                          )
                                          
                                          
                                          (16,861,995
                                          )Total stockholders'
      equity
                                          
                                          
                                          6,813,604
                                          
                                          
                                          
                                          11,581,919Total liabilities and
      stockholders' equity
                                          
                                          $
                                          26,402,567
                                          
                                          
                                          $
                                          36,552,460


F-3


JESUP
& LAMONT, INC. AND SUBSIDIARIES
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 CONSOLIDATED
STATEMENTS OF OPERATIONS




YearsendedDecember31,2008
                  
                  
                  2007Revenues:Commissions and
      fees
                  
                  $
                  27,313,808
                  
                  
                  $
                  32,733,847Equity market making trading
      revenues, net
                  
                  
                  8,398,425
                  
                  
                  
                  6,488,356Investment banking
      income
                  
                  
                  2,778,153
                  
                  
                  
                  11,102,041Net gain (loss) on securities
      received for banking services
                  
                  
                  (419,725
                  )
                  
                  
                  347,65438,070,661
                  
                  
                  
                  50,671,898Expenses:Employee compensation and
      benefits
                  
                  
                  22,488,833
                  
                  
                  
                  20,498,566Clearing and execution
      costs
                  
                  
                  20,063,213
                  
                  
                  
                  29,577,137General and
      administrative
                  
                  
                  9,969,048
                  
                  
                  
                  9,468,625Communications and data
      processing
                  
                  
                  898,428
                  
                  
                  
                  877,64253,419,522
                  
                  
                  
                  60,421,970(Loss) from
      operations
                  
                  
                  (15,348,861
                  )
                  
                  
                  (9,750,072
                  )Other income
      (expenses):Other
income
                  
                  
                  806,744
                  
                  
                  
                  350,000Other
    expense
                  
                  
                  (200,000
                  )
                  
                  
                  -Interest
    income
                  
                  
                  45,787
                  
                  
                  
                  150,021Interest
      expense
                  
                  
                  (1,077,161
                  )
                  
                  
                  (1,477,614
                  )(424,630
                  )
                  
                  
                  (977,593
                  )Net (loss)
                  
                  
                  (15,773,491
                  )
                  
                  
                  (10,727,665
                  )Accrued preferred stock
      dividends
                  
                  
                  (272,593
                  )
                  
                  
                  (174,233
                  )Net (loss) applicable to common
      shareholders
                  
                  $
                  (16,046,084
                  )
                  
                  $
                  (10,901,898
                  )Basic and diluted earnings per
      share applicable to common shareholders:Earnings (loss) per share-basic
      and diluted
                  
                  $
                  (1.00
                  )
                  
                  $
                  (1.00
                  )Weighted average shares
      outstanding:Basic and
      diluted
                  
                  
                  16,006,832
                  
                  
                  
                  10,926,021


F-4


JESUP
& LAMONT, INC. AND SUBSIDIARIES
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS


Years ended December 31,2008
                              
                              
                              2007Cash flows from operating
      activities:Net (loss)
                              
                              $
                              (15,773,491
                              )
                              
                              $
                              (10,727,665
                              )Adjustments to reconcile net loss
      to net cashprovided from operating
      activities:Depreciation and
      amortization
                              
                              
                              396,992
                              
                              
                              
                              683,200Amortization of customer
      lists
                              
                              
                              160,727
                              
                              
                              
                              113,371Amortization of note
      discount
                              
                              
                              76,604
                              
                              
                              
                              95,868Unrealized (gain) loss on
      securities
                              
                              
                              (247,897
                              )
                              
                              
                              1,430,068Stock compensation
      expense
                              
                              
                              933,651
                              
                              
                              
                              725,480Amortization of notes
      receivable
                              
                              
                              309,832
                              
                              
                              
                              -Amortization of
      warrants
                              
                              
                              -
                              
                              
                              
                              285,065Amortization of restricted
      stock
                              
                              
                              -
                              
                              
                              
                              16,977Deferred
    rent
                              
                              
                              14,136
                              
                              
                              
                              54,108Unrealized (gains)/loss on
      securities receivedfor investment banking
      services
                              
                              
                              698,394
                              
                              
                              
                              (347,654
                              )Gain on settlement with
      officers
                              
                              
                              (806,744
                              )
                              
                              
                              -Issuance of stock to pay legal
      expenses
                              
                              
                              180,000
                              
                              
                              
                              -(Increase) decrease in operating
      assets:Commissions receivable from
      clearing organizations
                              
                              
                              638,808
                              
                              
                              
                              409,478Deposits at clearing
      organizations
                              
                              
                              3,522,478
                              
                              
                              
                              (2,644,063
                              )Other
      receivables
                              
                              
                              (1,054,786
                              )
                              
                              
                              511,438Marketable trading account
      securities, net
                              
                              
                              5,389,859
                              
                              
                              
                              (1,218,201
                              )Prepaid expenses and other
      assets
                              
                              
                              482,525
                              
                              
                              
                              (1,145,300
                              )Increase (decrease) in operating
      liabilities:Accounts payable, accrued expenses
      andother
      liabilities
                              
                              
                              459,856
                              
                              
                              
                              (719,518
                              )Payable to clearing
      organizations
                              
                              
                              (6,509,721
                              )
                              
                              
                              5,527,949Securities sold, not yet
      purchased
                              
                              
                              (352,168
                              )
                              
                              
                              (876,459
                              )Total
      adjustments
                              
                              
                              4,292,545
                              
                              
                              
                              2,901,807Cash provided by (used in)
      operating activities
                              
                              
                              (11,480,946
                              )
                              
                              
                              (7,825,858
                              )Cash flows from investing
      activities:Purchases of furniture and
      equipment
                              
                              
                              (305,533
                              )
                              
                              
                              (266,063
                              )Payments on notes
      receivable
                              
                              
                              -
                              
                              
                              
                              169,334Issuance of notes
      receivable
                              
                              
                              (641,500
                              )
                              
                              
                              (318,833
                              )Cash used by investing
      activities
                              
                              
                              (947,033
                              )
                              
                              
                              (415,562
                              )continued


F-5


JESUP
& LAMONT, INC. AND SUBSIDIARIES
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS


continuedYears ended December 31,2008
                                      
                                      
                                      2007Cash flows from financing
      activities:Payments of notes
      payable
                                      
                                      $
                                      (1,994,137
                                      )
                                      
                                      $
                                      (4,190,050
                                      )Payments on short-term
      loans
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (1,000,000
                                      )Proceeds from short-term
      loans
                                      
                                      
                                      -
                                      
                                      
                                      
                                      2,017,000Proceeds from line of
      credit
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,999,450Proceeds from issuance of notes
      payable
                                      
                                      
                                      3,452,500
                                      
                                      
                                      
                                      6,387,158Proceeds from sale of preferred
      stock
                                      
                                      
                                      2,000,000
                                      
                                      
                                      
                                      895,275Proceeds from common stock
      subscribed
                                      
                                      
                                      2,894,996
                                      
                                      
                                      
                                      2,000,000Proceeds from sale of
      common
                                      
                                      
                                      6,038,106
                                      
                                      
                                      
                                      -Dividends paid on preferred
      stock
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (52,300
                                      )Fees and commissions paid for
      capital raise
                                      
                                      
                                      (88,183
                                      )
                                      
                                      
                                      (269,662
                                      )Cash provided by financing
      activities
                                      
                                      
                                      12,303,282
                                      
                                      
                                      
                                      7,786,871Net increase (decrease) in cash
      and cash equivalents
                                      
                                      
                                      (124,697
                                      )
                                      
                                      
                                      (454,549
                                      )Cash and cash equivalents at
      beginning of year
                                      
                                      
                                      535,536
                                      
                                      
                                      
                                      990,085Cash and cash equivalents at end
      of year
                                      
                                      $
                                      410,840
                                      
                                      
                                      $
                                      535,536Supplemental cash flow
      information:Interest
    paid
                                      
                                      $
                                      1,077,161
                                      
                                      
                                      $
                                      703,589Income
      Taxes
                                      
                                      $
                                      34,028
                                      
                                      
                                      $
                                      -Supplemental disclosures of
      non-cash investingand financing
      activities:Accrued preferred stock dividends,
      net of payments
                                      
                                      $
                                      272,593
                                      
                                      
                                      $
                                      174,233Line of credit converted to note
      payable
                                      
                                      $
                                      1,999,450
                                      
                                      
                                      $
                                      -Note payable canceled in
      settlement with former officers
                                      
                                      $
                                      861,105
                                      
                                      
                                      $
                                      -Other assets offset against notes
      payable
                                      
                                      $
                                      675,297
                                      
                                      
                                      $
                                      -Issuance of note to pay
      liability
                                      
                                      $
                                      50,640
                                      
                                      
                                      $
                                      -Treasury stock acquired in
      settlement of receivable
                                      
                                      $
                                      733,765
                                      
                                      
                                      $
                                      -Conversion of preferred stock to
      common stock
                                      
                                      $
                                      385
                                      
                                      
                                      $
                                      462Issuance of note receivable to
      employee
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      200,000Issuance of common stock to pay
      preferred dividends
                                      
                                      $
                                      52,965
                                      
                                      
                                      $
                                      26,484Issuance of note payable for
      acquisition ofLong Island
      Office
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      4,162,856Liabilities assumed on acquisition
      of Long Island Office
                                      
                                      
                                      -
                                      
                                      
                                      
                                      921,068Acquisition of Long Island office
      - Total
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      5,083,924


F-6


JESUP
& LAMONT, INC. AND SUBSIDIARIES
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 YEARS
ENDED DECEMBER 31, 2008 AND 2007


Preferred
    StockSeries C
                                  
                                  
                                  Series F
                                  
                                  
                                  Series GShares
                                  
                                  
                                  Amount
                                  
                                  
                                  Shares
                                  
                                  
                                  Amount
                                  
                                  
                                  Shares
                                  
                                  
                                  AmountBalances at December 31,
      2006
                                  
                                  
                                  7,062
                                  
                                  
                                  $
                                  71
                                  
                                  
                                  
                                  866,139
                                  
                                  
                                  $
                                  8,661
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -Sale of common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Private placement
      fees
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Conversion of Series F preferred
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (46,152
                                  )
                                  
                                  
                                  (462
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Exercise of common stock
      options
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Amortization of common stock
      options
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Amortization of restricted
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Amortization of common stock
      warrants
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Acquisition of Jesup & Lamont
      -consulting
    fees
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Acquisition of Jesup & Lamont
      -stock to
      employee
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Issuance in exchange for escrow
      balance
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Payment of legal fees with common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Payment of preferred stock
      dividendswith common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Preferred stock
      dividends
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Net income
      (loss)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Balances at December 31,
      2007
                                  
                                  
                                  7,062
                                  
                                  
                                  
                                  71
                                  
                                  
                                  
                                  819,987
                                  
                                  
                                  
                                  8,199
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Sale of common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Exercise of common stock
      options
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Issuance of subscribed
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Exercise of common stock
      warrants
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Issuance of Series G preferred
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,688
                                  
                                  
                                  
                                  17Conversion of Series F preferred
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (38,460
                                  )
                                  
                                  
                                  (385
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Payment of preferred stock
      dividendswith common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Stock
      compensation
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Payment of fees with common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Payment of fees for sale of
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Treasury shares received
      withofficer
      settlement
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Preferred stock
      dividends
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Net income
      (loss)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Balances at December 31,
      2008
                                  
                                  
                                  7,062
                                  
                                  
                                  $
                                  71
                                  
                                  
                                  
                                  781,527
                                  
                                  
                                  $
                                  7,814
                                  
                                  
                                  
                                  1,688
                                  
                                  
                                  $
                                  17


F-7


JESUP
& LAMONT, INC. AND SUBSIDIARIES
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 YEARS
ENDED DECEMBER 31, 2008 AND 2007




Additional
                                    
                                    
                                    StockCommon
Stock
                                    
                                    
                                    Paid-in
                                    
                                    
                                    SubsriptionsShares
                                    
                                    
                                    Amount
                                    
                                    
                                    Capital
                                    
                                    
                                    ReceivableBalances at December 31,
      2006
                                    
                                    
                                    10,364,880
                                    
                                    
                                    $
                                    103,649
                                    
                                    
                                    $
                                    23,808,181
                                    
                                    
                                    $
                                    -Sale of common
      stock
                                    
                                    
                                    296,922
                                    
                                    
                                    
                                    2,969
                                    
                                    
                                    
                                    892,306
                                    
                                    
                                    
                                    2,000,000Private placement
      fees
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (269,662
                                    )
                                    
                                    
                                    -Conversion of Series F preferred
      stock
                                    
                                    
                                    46,152
                                    
                                    
                                    
                                    462
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Exercise of common stock
      options
                                    
                                    
                                    8,962
                                    
                                    
                                    
                                    90
                                    
                                    
                                    
                                    (90
                                    )
                                    
                                    
                                    -Amortization of common stock
      options
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    725,480
                                    
                                    
                                    
                                    -Amortization of restricted
      stock
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    16,977
                                    
                                    
                                    
                                    -Amortization of common stock
      warrants
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    285,065
                                    
                                    
                                    
                                    -Acquisition of Jesup & Lamont
      -consulting
    fees
                                    
                                    
                                    85,000
                                    
                                    
                                    
                                    850
                                    
                                    
                                    
                                    105,400
                                    
                                    
                                    
                                    -Acquisition of Jesup & Lamont
      -stock to
      employee
                                    
                                    
                                    200,000
                                    
                                    
                                    
                                    2,000
                                    
                                    
                                    
                                    630,000
                                    
                                    
                                    
                                    -Issuance in exchange for escrow
      balance
                                    
                                    
                                    65,218
                                    
                                    
                                    
                                    652
                                    
                                    
                                    
                                    74,348
                                    
                                    
                                    
                                    -Payment of legal fees with common
      stock
                                    
                                    
                                    23,450
                                    
                                    
                                    
                                    235
                                    
                                    
                                    
                                    30,250
                                    
                                    
                                    
                                    -Payment of preferred stock
      dividendswith common
      stock
                                    
                                    
                                    15,858
                                    
                                    
                                    
                                    158
                                    
                                    
                                    
                                    26,324
                                    
                                    
                                    
                                    -Preferred stock
      dividends
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Net income
      (loss)
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Balances at December 31,
      2007
                                    
                                    
                                    11,106,442
                                    
                                    
                                    
                                    111,065
                                    
                                    
                                    
                                    26,324,579
                                    
                                    
                                    
                                    2,000,000Sale of common
      stock
                                    
                                    
                                    8,959,301
                                    
                                    
                                    
                                    89,593
                                    
                                    
                                    
                                    5,948,512
                                    
                                    
                                    
                                    2,894,996Exercise of common stock
      options
                                    
                                    
                                    214,844
                                    
                                    
                                    
                                    2,148
                                    
                                    
                                    
                                    (2,148
                                    )
                                    
                                    
                                    -Issuance of subscribed
      stock
                                    
                                    
                                    1,622,718
                                    
                                    
                                    
                                    16,227
                                    
                                    
                                    
                                    1,983,773
                                    
                                    
                                    
                                    (2,000,000
                                    )Exercise of common stock
      warrants
                                    
                                    
                                    38,568
                                    
                                    
                                    
                                    386
                                    
                                    
                                    
                                    (386
                                    )
                                    
                                    
                                    -Issuance of Series G preferred
      stock
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,999,983
                                    
                                    
                                    
                                    -Conversion of Series F preferred
      stock
                                    
                                    
                                    38,460
                                    
                                    
                                    
                                    385
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Payment of preferred stock
      dividendswith common
      stock
                                    
                                    
                                    113,497
                                    
                                    
                                    
                                    1,135
                                    
                                    
                                    
                                    51,830
                                    
                                    
                                    
                                    -Stock
      compensation
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    933,651
                                    
                                    
                                    
                                    -Payment of fees with common
      stock
                                    
                                    
                                    303,870
                                    
                                    
                                    
                                    3,039
                                    
                                    
                                    
                                    176,961
                                    
                                    
                                    
                                    -Payment of fees for sale of
      stock
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (88,183
                                    )
                                    
                                    
                                    -Treasury shares received
      withofficer
      settlement
                                    
                                    
                                    (524,118
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Preferred stock
      dividends
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Net income
      (loss)
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Balances at December 31,
      2008
                                    
                                    
                                    21,873,582
                                    
                                    
                                    $
                                    223,978
                                    
                                    
                                    $
                                    37,328,572
                                    
                                    
                                    $
                                    2,894,996


F-8


JESUP
& LAMONT, INC. AND SUBSIDIARIES
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 YEARS
ENDED DECEMBER 31, 2008 AND 2007




LessTreasury
                                  
                                  
                                  AccumulatedStock
                                  
                                  
                                  Deficit
                                  
                                  
                                  TotalsBalances at December 31,
      2006
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (5,960,097
                                  )
                                  
                                  $
                                  17,960,465Sale of common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  2,895,275Private placement
      fees
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (269,662
                                  )Conversion of Series F preferred
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Exercise of common stock
      options
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Amortization of common stock
      options
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  725,480Amortization of restricted
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  16,977Amortization of common stock
      warrants
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  285,065Acquisition of Jesup & Lamont
      -consulting
    fees
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  106,250Acquisition of Jesup & Lamont
      -stock to
      employee
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  632,000Issuance in exchange for escrow
      balance
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  75,000Payment of legal fees with common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  30,485Payment of preferred stock
      dividendswith common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  26,482Preferred stock
      dividends
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (174,233
                                  )
                                  
                                  
                                  (174,233
                                  )Net income
      (loss)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (10,727,665
                                  )
                                  
                                  
                                  (10,727,665
                                  )Balances at December 31,
      2007
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (16,861,995
                                  )
                                  
                                  
                                  11,581,919Sale of common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  8,933,101Exercise of common stock
      options
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Issuance of subscribed
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Exercise of common stock
      warrants
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Issuance of Series G preferred
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  2,000,000Conversion of Series F preferred
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Payment of preferred stock
      dividendswith common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  52,965Stock
      compensation
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  933,651Payment of fees with common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  180,000Payment of fees for sale of
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (88,183
                                  )Treasury shares received
      withofficer
      settlement
                                  
                                  
                                  (733,765
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (733,765
                                  )Preferred stock
      dividends
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (272,593
                                  )
                                  
                                  
                                  (272,593
                                  )Net income
      (loss)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (15,773,491
                                  )
                                  
                                  
                                  (15,773,491
                                  )Balances at December 31,
      2008
                                  
                                  $
                                  (733,765
                                  )
                                  
                                  $
                                  (32,908,079
                                  )
                                  
                                  $
                                  6,813,604


F-9


JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007




1. NATURE
OF BUSINESS





ORGANIZATION
AND OPERATIONS - The accompanying financial statements include the accounts of
Jesup & Lamont, Inc. ("JLI" or the "Company"), (Formerly Empire Financial
Holding Company) a Florida corporation, and its consolidated subsidiaries,
Empire Financial Group, Inc. ("EFG"), Empire Investment Advisors, Inc. ("EIA"),
and Jesup & Lamont Securities Corporation ("JLSC").  Effective
January 2, 2008, we changed the name of the Company to Jesup & Lamont,
Inc.  All intercompany transactions and accounts have been eliminated
in consolidation.





EFG and
JLSC are introducing securities broker-dealers which provide brokerage and
advisory services to retail and institutional customers and a trading platform,
order execution services and market making services for domestic and
international securities to its customers and network of independent registered
representatives.  EIA and JLSC provide fee-based investment advisory
services to their customers.





The
Company's executive offices are located in Longwood, Florida with independent
registered representatives throughout the United States.  JLSC's main
offices are in New York City.





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





SECURITIES
TRANSACTIONS - Securities transactions and the related revenues and expenses are
recorded on a trade date basis.





TRADING
INCOME - Consists of net realized and net unrealized gains and losses on
securities traded for the Company's own account.  Trading revenues are
generated from the difference between the price paid to buy securities and the
amount received from the sale of securities.  Volatility of stock
prices, which can result in significant price fluctuations in short periods of
time, may result in trading gains or losses.  Gains or losses are
recorded on a trade date basis.





MARKET-MAKING
ACTIVITIES - Securities owned and securities sold, not yet purchased, which
primarily consist of listed, over-the-counter, American Depository Receipts and
foreign ordinary stocks, are carried at market value and are recorded on a trade
date basis.  Market value is estimated daily using market quotations
available from major securities exchanges and dealers.





CLEARING
ARRANGEMENTS. - We do not carry accounts for customers or perform custodial
functions related to customers' securities.  We introduce all of our
customer transactions, to our clearing brokers, who maintain our customers'
accounts and clear such transactions.  Additionally, the clearing
brokers provide the clearing and depository operations for our proprietary
securities transactions.  These activities may expose us to
off-balance-sheet risk in the event that customers do not fulfill their
obligations with the primary clearing brokers, as we have agreed to indemnify
our clearing brokers for any resulting losses.  We continually assess
risk associated with each customer who is on margin credit and record an
estimated loss when we believe collection from the customer is
unlikely.





SHARE-BASED
COMPENSATION is accounted for under the fair value
method.  Share-based payments to employees, including grants of stock
options, are charged to expense over the requisite service period based on the
grant-date fair value of the awards.  The Company uses the
Black-Scholes valuation method to determine the fair value of stock
options.


F-10




JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


CASH AND
CASH EQUIVALENTS consist of highly liquid investments that are readily
convertible into cash.  We consider securities with maturities of
three months or less, when purchased, to be cash equivalents.  The
carrying amount of these securities approximates fair value because of the
short-term maturity of these instruments.





MARKETABLE
SECURITIES AND SECURITIES SOLD, BUT NOT YET PURCHASED are carried at market
value, with related unrealized gains and losses reported in our results of
operations.





SECURITIES
that are not readily marketable are carried at fair value, with related
unrealized gains and losses reported in our results of
operations.  The determination of fair value is fundamental to our
financial condition and results of operations and requires management to make
complex judgments.


Fair
values are based on listed market prices, where possible. If listed market
prices are not available or if the liquidation of our positions would reasonably
be expected to impact market prices, fair value is determined based on other
relevant factors, including dealer price quotations, and
marketability.  Warrants received from investment banking engagements
are generally valued using the Black-Scholes option valuation model and
management may reduce the value if there is a restriction as to when the
warrants may be exercised.  The Black-Scholes method uses assumptions
such as volatility, interest rates, and dividend yields to determine the
value.





COMMISSIONS
RECEIVABLE FROM CLEARING ORGANIZATIONS - Receivables from broker dealers and
clearing organizations represent monies due to the Company from its clearing
agents for transactions processed.





FURNITURE
AND EQUIPMENT, NET - Property and equipment are recorded at cost. Depreciation
on property and equipment is provided utilizing the straight-line method over
the estimated useful lives of the related assets, which range from five to seven
years.  Upon the sale or retirement of an asset, the related costs and
accumulated depreciation are removed from the accounts and any gain or loss is
recognized in our results of operations.





GOODWILL
AND OTHER INTANGIBLE ASSETS. Goodwill represents the excess of acquisition costs
over the fair value of net assets of businesses purchased.  The
reported amounts of goodwill are reviewed for impairment on an annual basis and
more frequently when negative conditions such as significant current or
projected operating losses exist.  The annual impairment test for
Goodwill and Other Intangible Assets is a two-step process and involves
comparing the estimated fair value of each reporting unit to the reporting
unit's carrying value, including goodwill.  If the fair value of the
reporting unit exceeds its carrying amount, goodwill of the reporting unit is
not considered impaired, and the second step of the impairment test is
unnecessary.  If the carrying amount of a reporting unit exceeds its
fair value, the second step of the goodwill impairment test would be performed
to measure the amount of impairment loss to be recorded, if any. Our annual
impairment tests resulted in no goodwill impairment





INCOME
TAXES - The Company accounts for income taxes using an asset and liability
approach.  Deferred income tax assets and liabilities represent the
tax effects differences between the financial and tax basis of assets and
liabilities that will result in taxable or deductible amounts in the future,
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income.  A valuation
allowance is recognized if, based on the weight of available evidence, it is
more likely than not that some portion or all of the future tax benefits of
deferred tax assets will not be realized.




F-11




JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


The
Company evaluates tax positions to determine whether the benefits of tax
positions are more likely than not of being sustained upon audit based on the
technical merits of the tax position. For tax positions that are more likely
than not of being sustained upon audit, the Company recognizes the largest
amount of the benefit that is greater than 50% likely of being realized upon
ultimate settlement in the financial statements. For tax positions that are not
more likely than not of being sustained upon audit, the Company does not
recognize any portion of the benefit in the financial statements.





USE OF
ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
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 those estimates.





EARNINGS
(LOSS) PER SHARE - Basic earnings (loss) per share is computed by dividing net
income (loss) available to common stockholders by the weighted-average number of
common shares outstanding for the period.  Diluted earnings (loss) per
share considers the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or resulted in issuance of common
stock.  Diluted earnings (loss) per share reflects the potential
dilution that could occur if securities or other contracts to issue common
stock, such as options, convertible notes and convertible preferred stock, were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in earnings (loss).  Such potential additional
common shares are included in the computation of diluted earnings per
share.  Diluted loss per share is not computed because any potential
additional common shares would reduce the reported loss per share and therefore
have an antidilutive effect.





3.
MARKETABLE SECURITIES OWNED AND SECURITIES SOLD, BUT NOT YET
PURCHASED





FASB
Statement No. 157, Fair Value
Measurements, defines fair value, establishes a framework for measuring
fair value, and establishes a fair value hierarchy which prioritizes the inputs
to valuation techniques.  Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.  A
fair value measurement assumes that the transaction to sell the asset or
transfer the liability occurs in the principal market for the asset or liability
or, in the absence of a principal market, the most advantageous
market.  Valuation techniques that are consistent with the market,
income or cost approach, as specified by FASB Statement No. 157, are used to
measure fair value.





The fair
value hierarchy prioritizes the inputs to valuation techniques used to measure
fair value into three broad levels:





●
            Level
      1 inputs are quoted prices (unadjusted) in active markets for identical
      assets or liabilities the Company has the ability to
    access.





●
            Level
      2 inputs are inputs (other than quoted prices included within level 1)
      that are observable for the asset or liability, either directly or
      indirectly.





●
            Level
      3 are unobservable inputs for the asset or liability and rely on
      management’s own assumptions about the assumptions that market
      participants would use in pricing the asset or liability.  (The
      unobservable inputs should be developed based on the best information
      available in the circumstances and may include the Company’s own
      data.)


F-12


JESUP
& LAMONT, INC.


(FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007




The
following tables present the Company’s fair value hierarchy for those assets
measured at fair value on a recurring basis as of December 31, 2008 and
2007.





Fair
Value Measurements on a Recurring Basis





As
of December 31, 2008





Level
      1
              
              
              Level
      2
              
              
              Level
      3
              
              
              TotalAssetsMarketable
      securities owned
              
              $
              37,027
              
              
              $
              -
              
              
              $
              -
              
              
              $
              37,027Securities
      not readily marketable
              
              
              -
              
              
              
              -
              
              
              
              531,265
              
              
              
              531,265Totals
              
              $
              37,027
              
              
              $
              -
              
              
              $
              531,265
              
              
              $
              568,292LiabilitiesSecurities
      sold, but not yet purchased
              
              $
              170,603
              
              
              $
              -
              
              
              $
              -
              
              
              $
              170,603




Fair
Value Measurements on a Recurring Basis





As
of December 31, 2007





Level
      1
              
              
              Level
      2
              
              
              Level
      3
              
              
              TotalAssetsMarketable
      securities owned
              
              $
              5,178,988
              
              
              $
              -
              
              
              $
              -
              
              
              $
              37,027Securities
      not readily marketable
              
              
              -
              
              
              
              -
              
              
              
              1,229,659
              
              
              
              531,265Totals
              
              $
              5,178,988
              
              
              $
              -
              
              
              $
              1,229,659
              
              
              $
              568,292LiabilitiesSecurities
      sold, but not yet purchased
              
              $
              522,771
              
              
              $
              -
              
              
              $
              -
              
              
              $
              522,771




The
following is a reconciliation of the beginning and ending balances for assets
and liabilities measured at fair value on a recurring basis using significant
unobservable (level 3) during the year ended December 31, 2008 and
2007.




F-13




JESUP
& LAMONT, INC.


(FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007




Level
3 Financial Assets and Liabilities
 Total
Gains (Losses) Included in Income
 Principle
Transaction




Year Ended
                    December 31,
                
                Beginning
                    Balance
                
                
                Unrealized
                    Gains and
                    (Losses)
                    Related to
                    Assets Held
                    at Year End
                
                
                Realized
                    Gains and
                    (Losses)
                    Related
                    to Assets
                    No Longer
                    Held
                
                
                Investment
                    Banking
                    Realized
                    Gains and
                    (Losses)
                    No
                    Positions
                    Held at
                    Year End
                
                
                Purchases,
                    Issuances,
                    and
                    Settlements
                
                
                Transfers
                    In (Out)
                
                
                Ending
                    Balance2008AssetsMarketable
      securities owned
                
                $
                1,229,659
                
                
                $
                (698,394
                )
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                531,2652007AssetsMarketable
      securities owned
                
                $
                882,005
                
                
                $
                347,654
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                1,229,659





4. STOCK
BASED COMPENSATION





The
Black-Scholes option valuation model is used to estimate the fair value of the
options granted.  The model includes subjective input assumptions that
can materially affect the fair value estimates.  The model was
developed for use in estimating the fair value of traded options that have no
vesting restrictions and that are fully transferable.  Options issued
under the Company's option plan have characteristics that differ from traded
options.  The principal assumptions used in applying the Black-Scholes
model for the twelve months ending December 31, 2008 are outlined
below.





The
assumptions used were as follows:





2008
                
                
                2007Expected
      dividend yield:
                
                None
                
                
                NoneRisk
      free interest rate:
                
                
                3.5%
                
                
                
                5.16%Expected
      life:
                
                3
      – 5 years
                
                
                3
      – 5 yearsExpected
      volatility:
                
                
                58
      – 119%
                
                
                
                58%





Volatility
is a measure of the amount by which the Company's common stock price has
fluctuated (historical volatility) or is expected to fluctuate (expected
volatility).




F-14




JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


During
the twelve months ended December 31, 2008, the Company granted 100,000 shares of
common stock and options to acquire 625,000 shares of common stock, having
exercise prices ranging from $1.03 to $1.50 per share, which had an aggregate
fair value of $428,520.  The Company recorded compensation charges of
$933,649 and $725,480 for the years ended December 31, 2008 and 2007,
respectively, relating to the amortization of the fair value associated with the
vesting of options and stock granted.  The Company will amortize the
remaining values over the remaining vesting periods of the options and
stock.





5.
PROPERTY AND EQUIPMENT





At
December 31, 2008 and 2007, property and equipment consists of the
following:





Estimated2008
                                
                                
                                2007
                                
                                useful
      livesEquipment
                                
                                $
                                290,418
                                
                                
                                $
                                241,602
                                
                                5-7
      yearsComputers
                                
                                
                                1,198,215
                                
                                
                                
                                1,030,936
                                
                                5
      yearsFurniture
      and fixtures
                                
                                
                                436,620
                                
                                
                                
                                410,089
                                
                                7
      yearsLeasehold
      improvements
                                
                                
                                322,214
                                
                                
                                
                                259,308
                                
                                Life
      of lease2,247,467
                                
                                
                                
                                1,941,935Less
      accumulated depreciation
                                
                                
                                (1,719,775
                                )
                                
                                
                                (1,322,782
                                )$
                                527,692
                                
                                
                                $
                                619,153





Depreciation
expense charged to operations was $396,992 in 2008 and $472,780 in
2007.





6. NOTES
RECEIVABLE





The
Company has made advances to certain registered representatives in its Company
owned offices in New York, NY, San Francisco, CA, Boston, MA, and Longwood,
Florida. The notes receivable, by location, at December 31, 2008 and 2007, were
as follows:





Office
                
                2008
                
                
                2007New
      York office
                
                $
                200,000
                
                
                $
                200,000San
      Francisco office
                
                
                157,500
                
                
                
                455,000Boston
      office
                
                
                673,833
                
                
                
                273,833Chicago
      office
                
                
                25,000
                
                
                
                -Boca
      Raton office
                
                
                150,000
                
                
                
                -New
      York office
                
                
                66,500
                
                
                
                -Longwood
      office
                
                
                38,056
                
                
                
                50,388Total
      notes receivable
                
                $
                1,310,889
                
                
                $
                979,221




F-15




JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007
  7.
INTANGIBLE ASSETS





At
December 31, 2008 and 2007, intangible assets consisted of the
following:





2008
                
                
                2007Trademarks
                
                $
                3,282,000
                
                
                $
                3,282,077Customer
      lists
                
                
                907,000
                
                
                
                1,157,266Goodwill
                
                
                13,522,508
                
                
                
                13,272,16517,711,508
                
                
                
                17,711,508Less:
      accumulated amortization
                
                
                (295,742
                )
                
                
                (135,015
                )$
                17,415,766
                
                
                $
                17,576,493





Amortization
expense for intangible assets totaled $160,727 and $113,371 for the years ended
December 31, 2008 and 2007, respectively.





The
estimated annual aggregate amortization expense related to amortizable
intangible assets for the five succeeding fiscal years is as
follows:





Year
      EndingDecember
      312009
                            
                            
                            115,7272010
                            
                            
                            115,7272011
                            
                            
                            115,7272012
                            
                            
                            115,7272013
                            
                            
                            115,727





We
performed an impairment test of our intangible assets as of December 31, 2008,
and determined we had no impairment of intangible assets at that
date.  We have determined we have one reporting unit for the test of
impairment.  Summary information from our impairment tests is set
forth in the following table.




December
      31, 2008Reporting
                    Unit
                
                Carrying
                    Value
                
                
                Estimated
                    Fair
      Value
                
                
                Excess
                    Estimated
      Fair
                    Value
      Over
                    Carrying
      Value
                
                
                Percent
                    Excess
                    ValueJLSC
                
                $
                19,817,000
                
                
                $
                24,620,000
                
                
                $
                4,803,000
                
                
                
                24.2
                %





The
principal assumptions used in forecasting future cash flows are outlined
below:





2009
                                                          
                                                          
                                                          2010
                                                          
                                                          
                                                          2011
                                                          
                                                          
                                                          2012
                                                          
                                                          
                                                          2013
                                                          
                                                          
                                                          2014Nominal
      revenue growth rate
                                                          
                                                          
                                                          4.75
                                                          %
                                                          
                                                          
                                                          22.5
                                                          %
                                                          
                                                          
                                                          18.9
                                                          %
                                                          
                                                          
                                                          15.6
                                                          %
                                                          
                                                          
                                                          13.0
                                                          %
                                                          
                                                          
                                                          10.9
                                                          %Direct
      costs
                                                          
                                                          
                                                          64.0
                                                          %
                                                          
                                                          
                                                          64.0
                                                          %
                                                          
                                                          
                                                          64.0
                                                          %
                                                          
                                                          
                                                          64.0
                                                          %
                                                          
                                                          
                                                          64.0
                                                          %
                                                          
                                                          
                                                          64.0
                                                          %Operating
      expenses ($000’s)
                                                          
                                                          $
                                                          14,250
                                                          
                                                          
                                                          
                                                          30.0
                                                          %
                                                          
                                                          
                                                          30.0
                                                          %
                                                          
                                                          
                                                          30.0
                                                          %
                                                          
                                                          
                                                          30.0
                                                          %
                                                          
                                                          
                                                          30.0
                                                          %2015
                                                          
                                                          
                                                          2016
                                                          
                                                          
                                                          2017
                                                          
                                                          
                                                          2018
                                                          
                                                          
                                                          ResidualNominal
      revenue growth rate
                                                          
                                                          
                                                          9.2
                                                          %
                                                          
                                                          
                                                          7.9
                                                          %
                                                          
                                                          
                                                          6.8
                                                          %
                                                          
                                                          
                                                          5.9
                                                          %
                                                          
                                                          
                                                          3.5
                                                          %Direct
      costs
                                                          
                                                          
                                                          64.0
                                                          %
                                                          
                                                          
                                                          64.0
                                                          %
                                                          
                                                          
                                                          64.0
                                                          %
                                                          
                                                          
                                                          64.0
                                                          %
                                                          
                                                          
                                                          64.0
                                                          %Operating
      expenses
                                                          
                                                          
                                                          30.0
                                                          %
                                                          
                                                          
                                                          30.0
                                                          %
                                                          
                                                          
                                                          30.0
                                                          %
                                                          
                                                          
                                                          30.0
                                                          %
                                                          
                                                          
                                                          30.0
                                                          %




F-16




JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


Bases
      used to develop forecastsYears
      that cash flow is projected
            
            10Derivation
      of residual value at end of projection period
            
            Gordon
      growth model applied to the last year of projection
  periodWeighted
      average cost of capital
            
            14.1%





8. NOTES
PAYABLE





Notes
payable at December 31, 2008, consisted of the following:





2008
              
              
              2007Convertible
      notes payable to investors, interest payable quarterly at an annual rate
      of 6.5% percent.  The notes mature March 28, 2012 and are
      convertible into common stock at $2.39 per share
              
              $
              6,207,158
              
              
              $
              6,387,158Unsecured
      note payable to Jesup & Lamont Holding Corporation.  The
      note accrues interest at an annual rate of 4.0%, payable annually, and
      principal payable at maturity of October 1, 2011.
              
              
              1,638,895
              
              
              
              2,500,000Notes
      payable to bank at prime plus 4%(currently 7.25%).  Due April 2,
      2009 (see Line of Credit below)
              
              
              1,149,450
              
              
              
              -Unsecured
      not payable to Legent Clearing LLC, interest at a base annual rate of
      4.25% plus prime, with a maturity of November 3, 2018
              
              
              2,000,000
              
              
              
              -Short
      term note payable to Sofisco Nominees limited, with interest of 8%,
      originally due on April 2, 2009 but extended to December 31,
      2009.
              
              
              1,000,000
              
              
              
              -Subordinated
      note payable to EFH Partners, interest an annual rate of 20.0%, originally
      payable at maturity on February 17, 2007.  The note was extended
      to April 1, 2009 at a 4.0% annual interest rate and then modified to
      become due on demand.
              
              
              222,500
              
              
              
              1,000,000Unsecured
      note payable to A. Aysseh, a Company shareholder, principal and interest
      at 15% per annum, due at maturity date of January 16, 2009; since became
      payable on demand.
              
              
              400,000
              
              
              
              -Unsecured note
      payable to the Financial Industry Regulatory Authority (“FINRA”),with
      principal and Interest at 8.25% per annum, payable monthly for 48
      months.
              
              
              45,863
              
              
              
              -Unsecured
      note payable which accrues interest at an annual rate of
      5.0%.  Principal and interest payable on demand.
              
              
              66,534
              
              
              
              246,533Total
      principal payable
              
              
              12,730,400
              
              
              
              10,133,691Less:
      unamortized discount on note to Jesup & Lamont Holding
      Corporation
              
              
              (178,083
              )
              
              
              (367,515
              )$
              12,552,317
              
              
              $
              9,766,176




F-17




JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


The
annual maturities of principal on the notes payable are as follows:





Year
      EndingDecember
      312009
                          
                          $
                          2,884,3472010
                          
                          
                          -2011
                          
                          
                          1,638,8952012
                          
                          
                          6,207,158Thereafter
                          
                          
                          2,000,000$
                          12,730,400





Interest
on these notes totaled $819,323 and $650,551 for the years ended December 31,
2008 and 2007, respectively.





9. LINE
OF CREDIT PAYABLE





On
January 31, 2007, we obtained a $2 million credit line from Fifth Third
Bank.  As part of that credit line agreement, we pledged 100% of EFG's
and JLSC's stock as collateral.  At December 31, 2007 we had drawn
$1,999,450 of the line.  The line expired on February 1,
2008.





On March
19, 2008, effective as of January 29, 2008, Fifth Third Bank converted the
credit line to a note payable.  Under the new note payable, 100% of
EFG's and JLSC's stock are still pledged as collateral.  The note
carries certain restrictions and requires pre-approval of certain actions from
Fifth Third Bank, including but not limited to, divestures of business
assets.  The note carries interest at the Bank's Prime Rate plus 4%
(7.25% at December 31, 2008).  The note calls for monthly interest
payments and repayments of $100,000 on January 29th and
$1,049,450 on April 2nd,
2009.  We are in discussions with Fifth Third Bank regarding extension
of the note and believe that the repayment will be moved to a later
date.





Total
interest expense under these borrowings for the years ending December 31, 2008
and 2007 was $111,327 and $164,237, respectively.





10.
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES





At
December 31, 2008 and 2007, accounts payable, accrued expenses and other
liabilities consisted of the following:


F-18


JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


2008
                  
                  
                  2007Accounts
      Payable
                  
                  $
                  1,101,365
                  
                  
                  $
                  778,918Accrued
      payroll and taxes
                  
                  
                  1,394,788
                  
                  
                  
                  1,114,496Short
      term loans
                  
                  
                  40,000
                  
                  
                  
                  1,017,000EKN
      settlement accrual
                  
                  
                  872,000
                  
                  
                  
                  -Accrued
      legal
                  
                  
                  564,135
                  
                  
                  
                  1,288,116Accrued
      preferred stock dividends
                  
                  
                  445.568
                  
                  
                  
                  226,099Accrued
      interest on notes
                  
                  
                  356,899
                  
                  
                  
                  -Other
      accrued expenses and liabilities
                  
                  
                  911,179
                  
                  
                  
                  567,685$
                  5,685,935
                  
                  
                  $
                  4,992,314





11. DUE
TO CLEARING ORGANIZATIONS





At
December 31, 2008 the balance due to clearing organizations includes a balance
of $1,180,108 owed to EFG's clearing firm, under a promissory note with the
clearing broker.  A total of $500,000 of this balance relates to a fee
charged to enter into the promissory note agreement.  This promissory
note memorialized JLI's previous agreement with the clearing broker which
precludes them from collecting this note from EFG.  The note bears
interest at the Broker's Call Rate plus 2.45%. The note may be paid at anytime
but has no defined maturity.  The note is personally guaranteed by
JLI's Chairman and JLI's President and CEO.  The note, as had been
previously agreed with the clearing broker, was also collateralized by warrants
held by the Company and was further cross collateralized by all of the shares of
JLI held by EFH Partners, Inc.





12.
TRADING INCOME





Trading
income includes market making revenues which consist of net realized and net
unrealized gains and losses on securities traded for the Company's own
account.  Trading revenues are generated from the difference between
the price paid to buy securities and the amount received from the sale of
securities.  Volatility of stock prices, which can result in
significant price fluctuations in short periods of time, may result in trading
gains or losses. Gains or losses are recorded on a trade date
basis.  Trading revenues consisted of the following.





Years Ended December 31,2008
                    
                    
                    2007Net
      realized gains and losses
                    
                    $
                    8,150,527
                    
                    
                    $
                    7,659,738Unrealized
      gains
                    
                    
                    903,190
                    
                    
                    
                    2,049,518Unrealized
      losses
                    
                    
                    (655,292
                    )
                    
                    
                    (3,220,900
                    )Trading
      income, net
                    
                    $
                    8,398,425
                    
                    
                    $
                    6,488,356





13.
INVESTMENT BANKING INCOME





Investment
banking income consists of cash fees and warrants or other securities received
as payment for our investment banking services.  The Black-Scholes
valuation model is used to estimate the fair value of the warrants
received.  The volatility of stock prices underlying these warrants
can result in significant price fluctuations in short periods of
time.  These fluctuations in the value of the warrants results in
warrant gains or losses.  Investment banking revenues consisted of the
following:


F-19


JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


Years Ended December 31,2008
                  
                  
                  2007Investment
      banking fees
                  
                  $
                  2,778,153
                  
                  
                  $
                  11,102,041Gain
      (loss) from warrants
                  
                  
                  (419,725
                  )
                  
                  
                  347,654Investment
      banking income, net
                  
                  $
                  2,358,428
                  
                  
                  $
                  11,449,695





14. GAIN
ON SETTLEMENTS





In May
2008, the Company entered into settlement agreements with two former
officers.  The agreements included offsetting receivables owed to JLI
totaling $675,297 against the note payable by JLI to the former officers
totaling $861,105.  As part of his settlement agreement one of the
former officers also received the rights to certain investment banking
engagements and transferred 524,118 shares of JLI's common stock to
JLI.  We recorded the stock received as $733,765 of treasury stock
valued at the closing market price ($1.40 per share) on the date we entered into
the settlement agreement.  The gain recognized on these transactions
totaled $806,744 after deduction of $112,829 of accelerated discount
amortization related to the canceled notes payable.





15.
EARNINGS (LOSS) PER SHARE





The
calculation of net income(loss) per share is as follows:





Years Ended December 31,2008
                          
                          
                          2007Numerator
      for net income (loss) per share:Net
      income (loss)
                          
                          $
                          (15,773,491
                          )
                          
                          $
                          (10,727,665
                          )Preferred
      stock dividends
                          
                          
                          (272,593
                          )
                          
                          
                          (174,233
                          )Income
      (loss) attributable to common stockholders
                          
                          $
                          (16,046,084
                          )
                          
                          $
                          (10,901,898
                          )Denominator:Basic
      weighted-average shares
                          
                          
                          16,006,832
                          
                          
                          
                          10,926,021Warrants
                          
                          
                          7,024,242
                          
                          
                          
                          3,426,680Stock
      options
                          
                          
                          3,421,522
                          
                          
                          
                          4,360,822Restricted
      common stock, not issued
                          
                          
                          189,844
                          
                          
                          
                          189,844Convertible
      preferred stock Series C,F and G
                          
                          
                          3,615,987
                          
                          
                          
                          1,362,931Convertible
      notes
                          
                          
                          2,597,124
                          
                          
                          
                          2,672,437Common
      stock subscribed
                          
                          
                          4,065,244
                          
                          
                          
                          1,622,718Warrants
      subscribed
                          
                          
                          293,812
                          
                          
                          
                          811,359Diluted
      weighted-average shares
                          
                          
                          37,214,607
                          
                          
                          
                          25,372,812





F-20


JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


Basic
      and diluted income (loss) per share:Basic
      income (loss) per share
                    
                    $
                    (1.00
                    )
                    
                    $
                    (1.00
                    )Diluted
      income (loss) per share
                    
                    $
                    (1.00
                    )
                    
                    $
                    (1.00
                    )





The
Company’s loss attributable to common stockholders, along with the dilutive
effect of potentially issuable common stock due to outstanding options,
warrants, and convertible securities causes the normal computation of diluted
loss per share to be smaller than the basic loss per share; thereby yielding a
result that is counterintuitive.  Consequently, the diluted loss per
share amount presented does not differ from basic loss per share due to this
“anti-dilutive” effect.





16.
EQUITY





For the
year ended December 31, 2008, the Company recorded the following stock, option
and warrant transactions:





From
August through October 2008 JLI received stock subscriptions totaling $732,499
for a stock offering to be completed during the second quarter of
2009.





As of
August 7, 2008, JLI entered into binding Subscription Agreements to sell an
aggregate subscription amount of $175,000 to purchase a total of 205,554 shares
of common stock, par value $0.01 per share along with five-year warrants to
purchase a total of 51,388 shares of common stock. Each share of common stock
was priced at $0.8201 per share, the closing price on May 12,
2008.  The warrants are exercisable after six months from the date of
issue at a price of $0.9841 per share, subject to limited anti-dilution
protection for capital changes and similar events.  The subscribers
are to receive one warrant, priced at $0.125 per warrant, for each four shares
of Common Stock subscribed.  The Subscription Agreements were entered
into pursuant to a private placement to accredited investors.





In July
2008, JLI entered into agreements to sell an aggregate subscription amount of
$1,162,497 to purchase a total of 1,096,695 shares of common stock, par value
$0.01 per share at $1.06 per share, the closing price on July 11,
2008.





On June
12, 2008, JLI entered into binding Subscription Agreements to sell an aggregate
subscription amount of $1,000,000 to purchase a total of 969,696 shares of
common stock, par value $0.01 per share, and five-year warrants to purchase a
total of 242,424 shares of common stock.  Each share of common stock
was priced at $1.00 per share, the closing price on June 11,
2008.  The warrants are exercisable after six months from the date of
issue at a price of $1.20 per share, subject to limited anti-dilution protection
for capital changes and similar events.  The subscribers are to
receive one warrant, priced at $0.125 per warrant, for each four shares of
Common Stock subscribed.  The Subscription Agreements were entered
into pursuant to a private placement to accredited
investors.  Pursuant to the terms of the agreements, the investors
have demand rights to register the purchased shares for resale.  None
of the shares of common stock will be issued until the American Stock Exchange
has approved their listing.




F-21


JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


On May
13, 2008, JLI entered into agreements to sell an aggregate amount of $1,038,105
to purchase a total of 1,219,363 shares of common stock, par value $0.01 per
share along with five-year warrants to purchase a total of 304,841 shares of
common stock.  Each share of common stock was priced at $0.8201 per
share, the closing price on May 12, 2008.  The warrants are
exercisable after six months from the date of issue at a price of $0.9841 per
share, subject to limited antidilution protection for capital changes and
similar events.  The investors received one warrant, priced at $0.125
per warrant, for each four shares of Common Stock received.  The
agreements were entered into pursuant to a private placement to accredited
investors.  Pursuant to the terms of the agreements, the investors
have demand rights to register the purchased shares for resale.





On April
9, 2008, JLI entered into agreements to sell 7,739,938 shares of common stock,
par value $0.01 per share, at a price of $0.646 per share, the closing price on
April 9, 2008, for an aggregate amount of $5,000,000.  The agreements
were entered into pursuant to a private placement to accredited
investors.  Pursuant to the terms of the agreements, the investors
have demand rights to register the purchased shares for resale.





As of
March 3, 2008, the Company entered into agreements to sell $1,997,495 of units
in a private placement to accredited investors.  Each unit consisted
of one share of Series G 10% Subordinated Cumulative Convertible Preferred
Stock, par value $0.01 per share, and five-year warrants to purchase 1,470
shares of the Company's Common Stock, par value $0.01 per share.  Each
share of Series G Preferred Stock is initially convertible into 1,470 shares of
Common Stock, subject to limited antidilution protection for capital changes and
similar events.  The warrants are exercisable after six months from
the date of issue at a price of $0.816 per share, subject to limited
antidilution protection for capital changes and similar events.  The
initial conversion price of the Series G Preferred Stock is $0.68 per share, the
closing price of the Company's common stock on March 3, 2008.  The
agreement also includes JLI's agreement to register all shares of the common
stock underlying the units.  Pursuant to the terms of the transaction,
the Company may pay partial liquidated damages in the amount of 1% per month of
the purchase price, subject to a cap of an overall aggregate payment of 6% of
the purchase price, upon any failure to (a) file a registration statement with
the Securities and Exchange Commission within 30 days after the closing date of
the transaction, or 30 days after filing its annual report on Form 10-K,
whichever is later, or (b) register all shares of common stock underlying the
units within 120 days of the closing date.





The above
sales were made for investment by accredited investors and will be issued
without registration under the Securities Act of 1933, as amended, pursuant to
the exemptions provided under sections 4(6) and 4(2) thereof, and pursuant to
the exemption provided by Regulation D. All the securities are restricted
securities and will bear a restrictive legend and be subject to stop transfer
restrictions.





In May
2008, we received 524,118 shares of our common stock which we recorded as
$733,765 of treasury stock valued at $1.40 per share.





During
2008 we issued a total of 303,870 shares of our common stock in exchange for
legal services valued at $180,000.





During
2008 we issued a total of 214,844 shares of our common stock
to  employees under our stock option plan.





A
preferred stockholder and ex-officer of the Company was issued 113,497 shares of
common stock at $0.99 per share. The stock was issued as payment for dividends
owed from 2007.





During
2008, 38,568 shares of our common stock were issued for exercised
warrants.




F-22


JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


During
2008, we incurred expenses related to our stock offerings totaling
$88,183.





On August
24, 2007, the Company filed a Form 8-K which disclosed that as of August 20,
2007, the Company had entered into binding agreements to sell $2,250,000 of
units in a private placement to 4 accredited individual and institutional
investors, of which it subsequently took down funds representing the placement
of $2,000,000 of units in a private placement to 3 accredited institutional
investors. The units consist of $1,898,580 to purchase 1,622,718 shares of
Common Stock, and $101,420 to purchase five-year non-redeemable warrants to
purchase 811,359 shares of common stock. The warrants are exercisable after six
months from the date of issue at a price of $1.40 per share. Each share of
common stock underlying the units is priced at $1.17, the closing price of the
Company's common stock on August 20, 2007. The subscription included the
Company's agreement to register all 2,434,077 shares of common stock included in
and underlying the units. Pursuant to the terms of the agreements, the Company
must pay partial liquidated damages in the amount of 1% per month of the
purchase price, subject to a cap of an overall aggregate payment of 10% of the
purchase price, upon certain failures to register all shares of common stock
underlying the units within 120 days of the closing date of the transaction. The
Company paid total cash commissions of $80,000 in connection with these
transactions.





The above
sales were made for investment by accredited investors and will be issued
without registration under the Securities Act of 1933, as amended, pursuant to
the exemptions provided under sections 4(6) and 4(2) thereof, and pursuant to
the exemption provided by Regulation D.  All the securities are
restricted securities and will bear a restrictive legend and be subject to stop
transfer restrictions.  None of the shares of common stock included in
and underlying the units will be issued until the American Stock Exchange has
approved its listing.





As of
March 6, 2007 the Company sold $7,282,434 of units in a private placement to 31
accredited individual and institutional investors.  The units
consisted of an aggregate principal amount of $6,387,158 of convertible
debentures, currently convertible into 2,672,437 shares of common stock, 296,922
shares of common stock, and five-year warrants to purchase 1,484,610 shares of
common stock.  The debentures have a term of five years, pay interest
at 6.5% per annum, and are convertible to common stock at a price of $2.39 per
share.  The debentures contain a provision whereby the Company may
require the holders to convert their debentures in the event that the Company's
common stock trades at a price above $7.50 per share for 20 consecutive days or
more.  The warrants are exercisable after nine months from the date of
issue at a price of $2.62 per share, and contain provisions for cashless
exercise in the event that one year after the date of issuance the shares
underlying the warrants may not be resold pursuant to an effective registration
statement.  Each share of common stock underlying the units is priced
at $2.39, the closing price of the Company's common stock on March 6,
2007.  On March 7, 2007 the Company also entered into binding
registration rights agreements dated as of March 6, 2007, to register all
4,453,969 shares of the common stock included in and underlying the
units.  The Company filed its registration statement as required under
the registration rights agreements under Form S-3 on May 1, 2007.  The
Company received a Notice of Effectiveness declaring the registration had become
effective on May 18, 2007.  No further listing, registration or
contingent requirements exist.  The total separate purchase prices of
the debentures, common stock and warrants were $6,387,158, $709,685, and
$185,591, respectively.  The Company considered SFAS 133 and EITF
00-19 in recording this private placement.  We accounted for the
warrants as equity, recording the warrants at the minimum purchase of $0.125 per
share required by the AMEX rules for an "at the market offering". The
debentures, common stock and warrants were all recorded at their face value
purchase prices which were determined to be their fair values upon sale of the
securities.


F-23


JESUP
& LAMONT, INC.


(FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007





Two
outside investors converted their shares of Series F Preferred Stock for 46,152
shares of common stock.





An
employee received 200,000 shares of restricted stock as part of the acquisition
of JLSC.





An
outside consultant was issued 85,000 shares of common stock at $1.25 per
share.  The stock was issued as compensation for consulting services
rendered.





An
outside legal firm was issued 23,450 shares of common stock at $1.30 per
share.  The stock was issued as compensation for legal services
rendered.





A
preferred stockholder and ex-officer of the Company was issued 15,858 shares of
common stock at $1.67 per share.  The stock was issued as payment for
dividends owed from 2006.





A former
shareholder was issued 65,218 shares of common stock, at $1.15 per share, in
exchange for the balance of an escrow account.





The table
below outlines the conversion price of all outstanding convertible issues,
both debt and equity:





Convertible
      Issue
              
              Outstanding
                  Shares/
                  Balance
              
              
              Preferred/
                  Note
                  Dividend/
                  Interest
                  Rate
              
              
              Convertible
                  to
      Common
                  Shares
      #
              
              
              Conversion
                  PriceSeries
      C participating, cumulative convertible preferred stock, 8000 shares
      authorized, liquidation preference at the $100 per share stated
      value.
              
              
              7,062
              
              
              
              7.5
              %
              
              
              325,100
              
              
              $
              2.00Series
      F participating, cumulative convertible preferred stock, 877,000 shares
      authorized, liquidation preference at the $3.25 per share stated
      value.
              
              
              781,527
              
              
              
              4.0
              %
              
              
              781,527
              
              
              $
              3.25Series
      G participating, cumulative convertible preferred stock, 4000 shares
      authorized, liquidation preference at the $1000 per share stated
      value.
              
              
              1,688
              
              
              
              10.0
              %
              
              
              2,481,360
              
              
              $
              0.68Convertible
      Notes
              
              
              n/a
              
              
              
              6.5
              %
              
              
              2,597,124
              
              
              $
              2.39




F-24


JESUP
& LAMONT, INC.


(FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007





16.   
STOCK OPTIONS





The
Company has 2 stock option plans in effect, the 2000 Incentive Compensation Plan
and the 2007 Incentive Compensation Plan (collectively the
"Plans").  The Plans are designed to serve as an incentive for
retaining directors, employees, consultants and advisors.  Stock
options, stock appreciation rights and restricted stock options may be granted
to certain persons in proportion to their contributions to the overall success
of the Company as determined by the Board of Directors.





The
following table summarizes stock option activity for the years ended December
31, 2008 and 2007:





2008
              
              
              2007Weighted
              
              
              
              
              
              WeightedAverage
              
              
              
              
              
              AverageExercise
              
              
              
              
              
              ExerciseShares
              
              
              Price
              
              
              Shares
              
              
              PriceOutstanding
      at beginning of year
              
              
              4,360,822
              
              
              $
              2.83
              
              
              
              3,449,143
              
              
              $
              1.43Granted
              
              
              625,000
              
              
              
              1.28
              
              
              
              1,135,300
              
              
              
              1.88Exercised
              
              
              -
              
              
              
              -
              
              
              
              (11,271
              )
              
              
              1.18Cancelled
              
              
              (2,023,300
              )
              
              
              2.94
              
              
              
              (212,350
              )
              
              
              2.21Outstanding
      at end of year
              
              
              2,962,522
              
              
              
              2.20
              
              
              
              4,360,822
              
              
              
              2.83Exercisable
      at end of year
              
              
              2,345,402
              
              
              
              2.23
              
              
              
              2,932,810
              
              
              
              2.55Weighted
      average fair value of options granted during the year
              
              $
              0.84
              
              
              
              
              
              
              $
              0.80





Of the
stock options outstanding at December 31, 2008, 865,000 vested immediately upon
grant, 1,065,000 vest over a two year period from the date of grant, 1,029,000
vest over a three year period from the date of grant and 2,000 vest over a five
year period from the date of grant.  Of the stock options outstanding
at December 31, 2007, 705,000 vested immediately upon grant, 1,217,522 vest over
a two year period from the date of grant, 2,346,300 vest over a three year
period from the date of grant and 92,000 vest over a five year period from the
date of grant.





The
Company granted options to purchase 625,000 and 1,135,300 shares of the
Company's common stock to officers and key employees during the years 2008 and
2007, respectively, at a weighted average exercise price of $1.88.  Of
the 625,000 options granted in 2008, 325,000 options were granted to employees,
100,000 were granted to an officer who was a member of the Board of Directors,
and 200,000 were granted to outside members of the Board of
Directors.  A total of 425,000 options vest immediately, and 200,000
options vest annually over a two year period.  Of the 1,135,300
options granted in 2007, 650,300 options were granted to employees, 260,000 were
granted to officers who are not members of the Board of Directors, and 225,000
were granted to outside members of the Board of Directors. A total of 275,000
options vest immediately, and 860,300 options vest annually over a three year
period.




F-25


JESUP
& LAMONT, INC.


(FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007





The
following table summarizes stock options at December 31, 2008:





Outstanding Stock Options
                
                
                Exercisable Stock OptionsWeighted
                
                
                
                
                
                
                
                
                WeightedAverage
                
                
                Weighted
                
                
                
                
                
                Average
                
                
                WeightedExercise
                
                
                
                
                Remaining
                
                
                Average
                
                
                
                
                
                Remaining
                
                
                AveragePrice
                
                
                
                
                Contractual
                
                
                Exercise
                
                
                
                
                
                Contractual
                
                
                ExerciseRange
                
                Shares
                
                
                Life
                
                
                Price
                
                
                Shares
                
                
                Life
                
                
                Price$1.01
      – 2.00
                
                
                1,987,000
                
                
                
                6.87
                
                
                $
                1.58
                
                
                
                1,521,350
                
                
                
                7.44
                
                
                $
                1.602.01 – 3.00
                
                
                340,000
                
                
                
                8.53
                
                
                
                2.41
                
                
                
                307,000
                
                
                
                8.91
                
                
                
                2.383.01 – 4.00
                
                
                208,522
                
                
                
                5.20
                
                
                
                3.38
                
                
                
                208,522
                
                
                
                5.20
                
                
                
                3.384.01 – 5.00
                
                
                427,000
                
                
                
                9.41
                
                
                
                4.40
                
                
                
                308,530
                
                
                
                9.19
                
                
                
                4.43





18.   
EMPLOYEE BENEFIT PLANS





The
Company has a savings plan (the "Plan"), provided to the employees of JLI, and
EIA that qualifies as a deferred salary arrangement under Section 401(d) of the
Internal Revenue Code of 1986.  To participate in the Plan, an
employee of the Company must have at least three months of full time service
with the Company and be at least 18 years old.  The amount of salary
deferral during any year for a Plan participant cannot exceed the dollar limit
imposed by applicable federal law.  The Plan also provides that the
Company may match employee contributions to the Plan.  The Company did
not make any contributions to the Plan during the years ended December 31, 2008
and 2007.





The
Company has a second Plan which is provided to the employees of
JLSC.  The JLSC 401(k) retirement plan conforms to and qualifies under
articles 401 and 501 of the Internal Revenue Code of 1986.  Employees
are able to elect to reduce their salary by a specific percentage or dollar
amount and have that amount contributed on a pre-tax basis as a salary
deferral.  Employees are eligible to participate as of date of hire
but must wait for "entry" until the first day of the next Plan year quarter
after eligibility.  The amount of salary deferral during any year for
a Plan Participant cannot exceed the dollar limit imposed by applicable federal
law.  The Plan also provides that JLSC may match employee
contributions to the plan. JLSC did not make any contributions to the Plan since
its acquisition by the Company.





19.   
INCOME TAXES




The
federal and state income tax provision (benefit) for the years ended December
31, 2008 and 2007 is summarized as follows:





2008
              
              
              2007Current:Federal
              
              $
              -
              
              
              $
              -State
              
              
              -
              
              
              
              --
              
              
              
              -Deferred:Federal
              
              
              -
              
              
              
              -State
              
              
              -
              
              
              
              --
              
              
              
              -Total
      provision (benefit) for income taxes
              
              $
              -
              
              
              $
              -




F-26




JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007




Based on
current operations and future projections management believes that the potential
future tax benefits represented by the  deferred tax assets of
$12,482,000 will be realized.  However, in light of the current
economic environment, management believes it is prudent to provide an additional
valuation allowance of $7,301,000 at December 31, 2008. The components of the
Company's deferred tax assets at December 31, 2008 and 2007 were as
follows:





Years
      Ended December 31,2008
              
              
              2007Deferred
      tax assets:Net
      operating loss carryforwards
              
              $
              11,946,000
              
              
              $
              6,078,000Depreciation
      and amortization
              
              
              750,000
              
              
              
              566,000Deferred
      tax assets
              
              
              12,696,000
              
              
              
              6,644,000Deferred
      tax liabilities:Value
      of warrants
              
              
              (214,000
              )
              
              
              (492,000
              )Amortization
      of intangibles
              
              
              -
              
              
              
              (431,000
              )Deferred
      tax liabilities
              
              
              (214,000
              )
              
              
              (923,000
              )Net
      deferred tax assets before valuation allowance
              
              
              12,482,000
              
              
              
              5,721,000Less:  Valuation
      allowance
              
              
              (10,365,000
              )
              
              
              (3,064,000
              )Net
      deferred tax assets
              
              $
              2,117,000
              
              
              $
              2,117,000





The
Company has net operating loss carryforwards for federal tax purposes of
approximately $26,000,000 which expire in years 2022 through
2028.  The amount deductible per year is limited to approximately
$600,000 under current tax regulations.  Customer base intangibles
that have been fully amortized or written off due to impairment are being
amortized over 15 years for tax purposes as required by Internal Revenue Code
Section 197..




A
reconciliation of the statutory federal income tax rate to the effective income
tax rate for the years ended December 31 consists of the following:





2008
              
              
              2007Computed
      tax at the federal statutory rate of 34%
              
              $
              (5,363,000
              )
              
              $
              (3,647,000
              )State
      taxes, net of federal benefit
              
              
              (1,196,000
              )
              
              
              (1,050,000
              )Operating
      loss carryforwards
              
              
              5,751,000
              )
              
              
              4,401,000Valuation
      allowance
              
              
              635,000
              
              
              
              88,000Amortization
      of intangibles
              
              
              (344,000
              )
              
              
              (356,000
              )Non-deductible
      compensation
              
              
              378,000
              
              
              
              309,000Other
              
              
              139,000
              
              
              
              255,000$
              -
              
              
              $
              -




F-27





JESUP
& LAMONT, INC.


(FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007





20.   
COMMITMENTS AND CONTINGENCIES





Office
Lease Commitments





The
Company and its subsidiaries lease branch offices and office facilities under
operating lease agreements. Lease expense totaled $2,298,045 and $2,302,177 for
the years ended December 31, 2008 and 2007, respectively.





The
following is a schedule by year of future office lease commitments:





Year
      EndingDecember
      312009
                                      
                                      $
                                      2,035,5902010
                                      
                                      
                                      1,536,7142011
                                      
                                      
                                      619,8702012
                                      
                                      
                                      296,9502013
                                      
                                      
                                      154,867Thereafter
                                      
                                      
                                      170,612$
                                      4,814,603





Regulatory
and Legal Matters





A
competing brokerage firm commenced arbitration by filing a Statement of Claim on
October 14, 2005 before FINRA alleging, among other things, that EFG improperly
solicited Claimant's brokers for employment with EFG.  To that end,
Claimant asserted claims against EFG for tortuous interference with contractual
relationships and aiding and abating fiduciary duty.  Claimant sought
$10,000,000 in damages from EFG. EFG has defended the case through a protracted
arbitration proceeding which has ensued over several years.  In the
opinion of management, the outcome of this claim will not have a material
adverse affect on the Company’s financial position.





On
November 12, 2008, EFG received a notice from FINRA that an arbitration award
had been awarded against EFG for $772,000 plus costs and fees of approximately
$80,000.  On December 31, 2008, EKN and Empire entered into a
settlement agreement which addressed the payment and satisfaction of the award.
EFG and EKN agreed that the terms of that settlement would remain
confidential.





A former
employee has filed a claim against the Company in the amount of $5 million
alleging employee discrimination.  Another former employee has filed a
claim against the Company in the amount $500,000 alleging breach of contract and
wrongful termination.  A former broker has filed a claim against the
Company in the amount of $1 million alleging excessive charges.  The
Company intends to defend these claims vigorously and in the opinion of
management, based on its discussions with legal counsel, the outcome of these
claims will not result in a material adverse affect on the financial position or
results of operations of the Company or its subsidiaries.





Customer
Complaints and Arbitration




The
Company's subsidiaries' business involves substantial risks of liability,
including exposure to liability under federal and state securities laws in
connection with the underwriting or distribution of securities and claims by
dissatisfied clients for fraud, unauthorized trading, churning, mismanagement
and breach of fiduciary duty.  In recent years there has been an
increasing incidence of litigation involving the securities industry, including
class actions which generally seek rescission and substantial
damages.  In the ordinary course of business, the Company operating
through its subsidiaries and its principals are, and may become a party to
additional legal or regulatory proceedings or arbitrations.  The
Company is not currently involved in any additional legal or regulatory
proceeding or arbitrations, the outcome of which is expected to have a material
adverse impact on the Company's business.




F-28




JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


A
customer of a retail broker brought an arbitration claim against the Company for
sales practice violations, negligence and breach of fiduciary
duty.  We settled the claim in March 2008 and paid
$700,000.  Of this amount, $350,000 was recovered from our insurance
carrier, and the remainder was charged to operations.





On
January 15, 2009, the Company, announced that EFG had filed a $25 million
arbitration claim against one of its clearing brokers, Penson Financial
Services, Inc., a NASDAQ listed company, its CEO, Phil Pendergraft, its
President, Daniel Son and its Chairman, Roger Engemoen.  Empire’s
causes of action include extortion, civil theft, conspiracy, tortuous
interference with contractual relationships and aiding and abetting breach of
fiduciary duty.  The claims relate to the assistance Penson provided
in connection with a fraud perpetrated upon Empire, Penson’s collusion with a
“raid” of Empire’s global execution services business, Penson’s inappropriate
demands for payments in connection with EFG’s closure by FINRA in April
2008.





Empire
further alleges that Penson sought to profit by making false statements to
FINRA, Empire’s primary regulator, in the interest of closing the
firm.  Thereafter, Penson demanded payments of over $1 million before
Empire could reopen.  Penson has also seized a $1.6 million clearing
deposit of Empire’s as well as commission revenue. As a result of these acts,
the brokerage firm has sustained significant harm.  It is management’s
opinion that the Company will prevail.





American
Stock Exchange Listing





On
February 11, 2008, the Company received notice from the American Stock Exchange
that it is not in compliance with certain standards for continued listing
contained in Section 121(B)(2)(c) of the AMEX Company Guide, which require that
the Company must maintain a Board of Directors comprised of at least 50%
independent directors, and an audit committee of at least two members, comprised
solely of independent directors who also meet the requirements of Rule 10A-3
under the Securities Exchange Act of 1934.  In its notice, the
American Stock Exchange gave the Company until May 12, 2008 to regain compliance
with continued listing standards.  The Company has a meeting scheduled
on May 5, 2009, to comply with this requirement, and if and when held, we
believe we will regain compliance with this requirement.





21.   
OFF BALANCE SHEET RISKS




Clearing
Arrangements.





We do not
carry accounts for customers or perform custodial functions related to
customers' securities.  We introduce all of our customer transactions,
to our clearing brokers, who maintain our customers' accounts and clear such
transactions.  Additionally, the clearing brokers provide the clearing
and depository operations for our proprietary securities
transactions.  These activities may expose us to off-balance-sheet
risk in the event that customers do not fulfill their obligations with the
primary clearing brokers, as we have agreed to indemnify our clearing brokers
for any resulting losses.  We continually assess risk associated with
each customer who is on margin credit and record an estimated loss when we
believe collection from the customer is unlikely.




F-29




JESUP
& LAMONT, INC.
 (FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007


Customer
Claims, Litigation and Regulatory Matters.





In the
normal course of business, we have been and continue to be the subject of civil
actions and arbitrations arising out of customer complaints relating to our
broker dealer activities, as an employer and as a result of other business
activities.





We have
sold securities which we do not currently own and therefore will be obligated to
purchase the securities at a future date.  We have recorded these
obligations in our financial statements at December 31, 2008 at the market
values of the securities and will incur a loss if the market value increases
subsequent to December 31, 2008.  The occurrence of these off-balance
sheet losses could impair our liquidity and force us to reduce or curtail
operations.





22.   
CONCENTRATION OF CREDIT RISKS





We are
engaged in various trading and brokerage activities in which counterparties
primarily include broker-dealers, banks and other financial
institutions.  In the event counterparties do no fulfill their
obligations, we may be exposed to risk.  The risk of default depends
on the creditworthiness of the counterparty or issuer of the
instrument.  It is our policy to review, as necessary, the credit
standing of each counterparty.





Our cash
in bank accounts, at times, exceeds the Federal Deposit Insurance Corporation
("FDIC") insurable limit of $250,000.  We have not experienced any
previous losses due to this condition.





23.   
NET CAPITAL REQUIREMENTS AND VIOLATIONS OF BROKER DEALER
SUBSIDIARIES





Our
broker-dealer subsidiaries, EFG and JLSC, are subject to the requirements of the
Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934, which
requires the maintenance of minimum net capital and requires that the ratio of
aggregate indebtedness to net capital, both as defined, does not exceed 15 to
1.  Net capital and related ratio of aggregate indebtedness to net
capital, as defined, may fluctuate on a daily basis.




In
November, 2008, EFG was out of compliance with the above Net Capital Rule and,
accordingly, EFG immediately ceased conducting a securities business, other than
liquidating transactions.  EFG’s out of compliance condition was
caused by an arbitration award against it for $772,000 plus related costs and
fees of approximately $100,000.  In March of 2009 EFG filed a Broker
Dealer withdrawal with FINRA.





At
December 31, 2008, JLSC had net capital of $314,609, which was $214,609 above
the required net capital of $100,000.  JLSC ratio of aggregate
indebtedness to net capital was 4.65 to 1 as of December 31,
2008.  JLSC is exempt from Rule 15c3-3 because all customer
transactions are cleared through other Broker-dealers on a fully-disclosed
basis.




F-30





JESUP
& LAMONT, INC.


(FORMERLY
EMPIRE FINANCIAL HOLDING COMPANY)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007





24.   
RELATED PARTY TRANSACTIONS





The
following is a discussion of certain relationships and related transactions for
the year ended December 31, 2008.  In the opinion of management, the
terms of these transactions were as fair to the Company as could have been made
with unrelated parties.





We
extended a $1 million short term note that was originally issued on March 1,2006
to EFH Partners, LLC.  During the year, certain payments were made
against the note and the balance remaining at December 31, 2008, was
$222,500.  This note was extended to a new maturity date of April 1,
2009 and then modified to become due on demand.  The note bears
interest at 4%, and is subordinated to all other debt.





In April
2008, the Company entered into a short tem note with Sofisco Nominees
Limited.  The note was for $1 million and the interest rate on the
note was 8%.  The initial term of the loan was six months but was
extended at year end.  The current maturity date for the loan is
December 31, 2009.





On June
14, 2007, one of the Company's broker dealer subsidiaries obtained a short-term
loan from EFH Partners, LLC, a related party in the amount of $1 million in
connection with a proposed underwriting.  The loan bore no interest
but a one-time fee of 7.5% or $75,000, was paid to the Company's clearing
firm.  The loan was payable on demand.  On June 26, 2007, a
$500,000 payment was made.  A second payment of $500,000 was made on
July 6, 2007, paying in full the outstanding balance.





We
extended a $1 million short term note that was originally issued on March 1,
2006 to EFH Partners, LLC.  This note was extended to a new maturity
date of April 1, 2009. The extended note bears interest at 4%, is payable at
maturity and is subordinated to all other debt.  During 2008, the
Company repaid $777,500 leaving a balance due of $222,500 at December 31,
2008.





On
December 5, 2007, we received a stock subscription advance totaling $1,017,000
from an entity controlled by an investor in the Company.





At
December 31, 2007, prepaid expenses and other assets included loans receivable
from officers of our subsidiary, JLSC totaling $629,523. These loans were
acquired as part of the acquisition of JLSC and can be offset against the note
payable issued as part of the purchase price.





25.   
SUBSEQUENT EVENTS





On March
4, 2009, the Company announced that it closed $4.2 million in new financings
which will primarily be used to expand the brokerage operations of its wholly
owned subsidiary Jesup & Lamont Security Corp.  Of these
financings $2 million was provided by Legent Clearing LLC, in connection with a
recently announced clearing agreement. The remaining $2.2 million was provided
pursuant to a series of equity investments, by accredited investors, in units
consisting of 4 shares of Common Stock and one Warrant.




F-31