**SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C. 20549**
  
  **FORM
        10-Q**
  **x**
              **QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934.**
  For
        the
        quarterly period ended June 30, 2008
  ** ̈**
              **TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934.**
  For
        the
        Transition Period from  to  .
  Commission
        file number: 1-15831
  
  **MERRIMAN
        CURHAN FORD GROUP, INC.**
 **(Exact
        Name of Registrant as Specified in its Charter)**
  **Delaware**
              
              **11-2936371****(State
                  or Other Jurisdiction of**
                **Incorporation
                  or Organization)**
              
              **(I.R.S.
                  Employer**
                **Identification
                  No.)**
  **600
                  California Street, 9th Floor**
                **San
                  Francisco, CA**
              
              **94108****(Address
                  of Principal Executive Offices)**
              
              **(Zip
                  Code)**
  **(415)
        248-5600**
 **(Registrant’s
        Telephone Number, Including Area Code)**
  Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
        during the preceding 12 months (or for such shorter period that the
        registrant was required to file such reports), and (2) has been
        subject to such filing requirements for the past
        90 days.    Yes x No  ̈
  Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, a non-accelerated filer, or a smaller reporting company.
        See
        definition of “large accelerated filer,” “accelerated filer” and “smaller
        reporting company” in Rule 12b-2 of the Exchange Act.
  Large
                  accelerated filer ̈
              
              Accelerated
                  filerxNon-accelerated
                  filer ̈
              
              Smaller
                  reporting company ̈
  Indicate
        by check mark whether the registrant is a shell company (as defined in
        Rule 12b-2 of the Act).    Yes  ̈ No x
  The
        number of shares of Registrant’s common stock outstanding as of August 4, 2008
        was 12,859,816.
  
 
 
  **Merriman
        Curhan Ford Group, Inc.**
 **Index**
 
 **Page
                  No.**PART
                  I FINANCIAL INFORMATIONITEM
                  1. Financial Statements (unaudited)Consolidated
                  Statements of Operations For the Three Months and Six Months Ended
                  June
                  30, 2008 and 2007
              
              3Consolidated
                  Statements of Financial Condition as of June 30, 2008 and December
                  31,
                  2007
              
              4Consolidated
                  Statements of Cash Flows For the Six Months Ended June 30, 2008
                  and
                  2007
              
              5Notes
                  to Consolidated Financial Statements
              
              6ITEM
                  2. Management's Discussion and Analysis of Financial Condition
                  and Results
                  of Operations
              
              18ITEM
                  3. Quantitative and Qualitative Disclosures About Market
                  Risk
              
              27ITEM
                  4. Controls and Procedures
              
              28PART
                  II OTHER INFORMATIONITEM
                  1. Legal Proceedings
              
              29ITEM
                  1A. Risk Factors
              
              31ITEM
                  4. Submission of Matters to a Vote of Security Holders
              
              32ITEM
                  6. Exhibits
              
              33Signatures
              
              34Certifications
   2
  **PART
        I.  FINANCIAL INFORMATION**
 
 **Item
        1.   Financial Statements (unaudited)**
  **MERRIMAN
        CURHAN FORD GROUP, INC.**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **(unaudited)**
 **Three
                    Months Ended**
                
                **Six
                    Months Ended****June
                    30,**
                  **2008**
                
                **June
                    30,**
                  **2007**
                
                **June
                    30,**
                  **2008**
                
                **June
                    30,**
                  **2007**Revenue:Commissions
                
                $
                7,892,372
                
                $
                7,717,573
                
                $
                16,361,082
                
                $
                14,883,280Principal
                    transactions
                
                
                1,418,829
                
                
                5,712,652
                
                
                103,753
                
                
                8,325,776Investment
                    banking
                
                
                4,446,995
                
                
                5,631,556
                
                
                7,823,406
                
                
                9,864,027Primary
                    research
                
                
                1,498,144
                
                
                951,062
                
                
                3,039,938
                
                
                951,062Advisory
                    and other fees
                
                
                543,134
                
                
                359,506
                
                
                239,600
                
                
                671,348Total
                    revenue
                
                
                15,799,474
                
                
                20,372,349
                
                
                27,567,779
                
                
                34,695,493Operating
                    expenses:Compensation
                    and benefits
                
                
                12,102,568
                
                
                12,767,087
                
                
                25,273,210
                
                
                23,577,374Brokerage
                    and clearing fees
                
                
                709,183
                
                
                662,056
                
                
                1,484,484
                
                
                1,294,697Cost
                    of primary research services
                
                
                609,129
                
                
                395,218
                
                
                1,194,293
                
                
                395,218Professional
                    services
                
                
                2,475,016
                
                
                703,640
                
                
                3,302,501
                
                
                1,085,118Occupancy
                    and equipment
                
                
                689,428
                
                
                453,061
                
                
                1,226,610
                
                
                895,589Communications
                    and technology
                
                
                1,010,869
                
                
                884,010
                
                
                1,950,847
                
                
                1,696,946Depreciation
                    and amortization
                
                
                162,946
                
                
                182,027
                
                
                306,170
                
                
                363,048Amortization
                    of intangible assets
                
                
                116,536
                
                
                220,643
                
                
                233,071
                
                
                220,643Travel
                    and entertainment
                
                
                1,012,210
                
                
                685,416
                
                
                1,971,804
                
                
                1,154,618Other
                
                
                1,278,377
                
                
                1,124,415
                
                
                2,117,247
                
                
                1,716,359Impairment
                    of goodwill and intangible assets
                
                
                2,601,516
                
                
                ─
                
                
                2,601,516
                
                
                ─Total
                    operating expenses
                
                
                22,767,778
                
                
                18,077,573
                
                
                41,661,753
                
                
                32,399,610Operating
                    (loss) income
                
                
                (6,968,304
                )
                
                2,294,776
                
                
                (14,093,974
                )
                
                2,295,883Interest
                    income
                
                
                34,016
                
                
                107,461
                
                
                130,420
                
                
                229,954Interest
                    expense
                
                
                (18,301
                )
                
                (26,864
                )
                
                (39,008
                )
                
                (81,208
                )(Loss)/income
                    before taxes
                
                
                (6,952,589
                )
                
                2,375,373
                
                
                (14,002,562
                )
                
                2,444,629Income
                    tax (expense) benefit
                
                
                1,838,744
                
                
                (55,000
                )
                
                1,838,744
                
                
                (55,000
                )Net
                    (loss) income
                
                $
                (5,113,845
                )
                $
                2,320,373
                
                $
                (12,163,818
                )
                $
                2,389,629Basic
                    net (loss) income per
                    share:Net
                    (loss) income
                
                $
                (0.41
                )
                $
                0.20
                
                $
                (0.98
                )
                $
                0.22Diluted
                    net (loss) income per share:Net
                    (loss) income
                
                $
                (0.41
                )
                $
                0.18
                
                $
                (0.98
                )
                $
                0.20Weighted
                    average common shares outstanding:Basic
                
                
                12,562,120
                
                
                11,657,775
                
                
                12,425,851
                
                
                11,000,702Diluted
                
                
                12,562,120
                
                
                12,856,306
                
                
                12,425,851
                
                
                12,208,965
 *The
        accompanying notes are an integral part of these consolidated financial
        statements.*
  3
  **MERRIMAN
        CURHAN FORD GROUP, INC.**
 **CONSOLIDATED
        STATEMENTS OF FINANCIAL CONDITION**
 **(unaudited)**
 **June
                    30, 2008**
                
                **December
                    31,**
                  **2007**ASSETSCash
                    and cash equivalents
                
                $
                10,420,371
                
                $
                31,962,201Securities
                    owned:Marketable,
                    at fair value
                
                
                15,791,255
                
                
                14,115,022Not
                    readily marketable, at estimated fair value
                
                
                2,047,169
                
                
                2,250,668Other
                
                
                1,711,270
                
                
                2,254,120Restricted
                    cash
                
                
                1,130,563
                
                
                689,157Due
                    from clearing broker
                
                
                1,234,423
                
                
                1,251,446Accounts
                    receivable, net
                
                
                3,166,425
                
                
                4,008,729Prepaid
                    expenses and other assets
                
                
                2,021,182
                
                
                1,716,814Equipment
                    and fixtures, net
                
                
                1,937,724
                
                
                1,245,692Intangible
                    assets
                
                
                1,323,963
                
                
                1,949,815Goodwill
                
                
                1,129,281
                
                
                3,129,667Total
                    assets
                
                $
                41,913,626
                
                $
                64,573,331LIABILITIES
                    AND STOCKHOLDERS' EQUITYAccounts
                    payable
                
                $
                1,873,241
                
                $
                957,969Commissions
                    and bonus payable
                
                
                6,646,912
                
                
                17,517,032Accrued
                    expenses
                
                
                5,630,368
                
                
                6,351,598Due
                    to clearing and other brokers
                
                
                15,731
                
                
                6,865Securities
                    sold, not yet purchased
                
                
                1,512,896
                
                
                3,804,558Capital
                    lease obligation
                
                
                1,411,989
                
                
                890,272Convertible
                    notes payable, net
                
                
                ─
                
                
                197,416Notes
                    payable
                
                
                ─
                
                
                41,573Total
                    liabilities
                
                
                17,091,137
                
                
                29,767,283Commitments
                    and contingenciesStockholders'
                    equity:Preferred
                    stock, Series A—$0.0001
                    par
                    value; 2,000,000 shares authorized; 0 shares issued and outstanding
                    as of
                    June 30, 2008 and December 31, 2007, respectively; aggregate
                    liquidation
                    preference of $0
                
                
                ─
                
                
                ─Preferred
                    stock, Series B—$0.0001 par value; 12,500,000 shares authorized; 1,250,000
                    shares issued and 0 shares outstanding as of June 30, 2008 and
                    December
                    31, 2007; aggregate liquidation preference of $0
                
                
                ─
                
                
                ─Preferred
                    stock, Series C—$0.0001 par value; 14,200,000 shares authorized; 1,685,714
                    shares issued and 0 shares outstanding as of June 30, 2008 and
                    December
                    31, 2007; aggregate liquidation preference of $0
                
                
                ─
                
                
                ─Common
                    stock, $0.0001 par value; 300,000,000 shares authorized; 12,772,563
                    and
                    12,310,886 shares issued and 12,746,125 and 12,284,448 shares
                    outstanding
                    as of June 30, 2008 and December 31, 2007, respectively
                
                
                1,278
                
                
                1,232Additional
                    paid-in capital
                
                
                126,190,496
                
                
                124,010,283Treasury
                    stock
                
                
                (125,613
                )
                
                (125,613
                )Accumulated
                    deficit
                
                
                (101,243,672
                )
                
                (89,079,854
                )Total
                    stockholders' equity
                
                
                24,822,489
                
                
                34,806,048Total
                    liabilities and stockholders' equity
                
                $
                41,913,626
                
                $
                64,573,331
  *The
        accompanying notes are an integral part of these consolidated financial
        statements.*
  4
  **MERRIMAN
        CURHAN FORD GROUP, INC.**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(unaudited)**
 **Six
                    Months Ended**
                  **June
                    30,****2008**
                
                **2007**Cash
                    flows from operating activities:Net
                    (loss) income
                
                $
                (12,163,818
                )
                $
                2,389,629Adjustments
                    to reconcile net (loss) income to cash provided by (used in)
                    operating
                    activities:Depreciation
                    and amortization
                
                
                306,171
                
                
                363,048Amortization
                    of intangible assets
                
                
                233,070
                
                
                220,643Stock-based
                    compensation
                
                
                1,316,606
                
                
                1,451,862Amortization
                    of discounts on convertible notes payable
                
                
                2,584
                
                
                5,166Impairment
                    of goodwill
                
                
                2,208,735
                
                
                ─Impairment
                    of intangible assets
                
                
                392,781
                
                
                ─Common
                    stock received for services
                
                
                (1,545,788
                )
                
                ─Unrealized
                    loss (gain) on securities owned
                
                
                381,431
                
                
                (5,680,368
                )Provision
                    for bad debt
                
                
                280,543
                
                
                228,167Other
                
                
                ─
                
                
                31,304Changes
                    in operating assets and liabilities:Securities
                    owned
                
                
                (2,057,190
                )
                
                1,896,662Restricted
                    cash
                
                
                (441,406
                )
                
                (2,541
                )Due
                    from clearing broker
                
                
                17,023
                
                
                (574,610
                )Accounts
                    receivable
                
                
                546,762
                
                
                628,898Prepaid
                    expenses and other assets
                
                
                (304,366
                )
                
                667,994Accounts
                    payable
                
                
                915,272
                
                
                570,326Commissions
                    and bonus payable
                
                
                (10,870,120
                )
                
                (1,368,234
                )Accrued
                    expenses
                
                
                (721,230
                )
                
                1,671,655Due
                    to clearing and other brokers
                
                
                8,866
                
                
                10,744Net
                    cash (used in) provided by operating activities
                
                
                (21,494,074
                )
                
                2,510,345Cash
                    flows from investing activities:Purchase
                    of equipment and fixtures
                
                
                (192,428
                )
                
                (118,021
                )Investment
                    in MedPanel
                
                
                ─
                
                
                (24,585
                )Investment
                    in Catalyst
                
                
                ─
                
                
                163,219Net
                    cash (used in) provided by investing activities
                
                
                (192,428
                )
                
                20,613Cash
                    flows from financing activities:Proceeds
                    from the exercise of stock options and warrants
                
                
                470,304
                
                
                102,937Proceeds
                    from the issuance of common stock
                
                
                ─
                
                
                102,555Debt
                    service principal payments
                
                
                (325,632
                )
                
                (352,511
                )Net
                    cash provided by (used in) financing activities
                
                
                144,672
                
                
                (147,019
                )(Decrease)
                    increase in cash and cash equivalents
                
                
                (21,541,830
                )
                
                2,383,939Cash
                    and cash equivalents at beginning of period
                
                
                31,962,201
                
                
                13,746,590Cash
                    and cash equivalents at end of period
                
                $
                10,420,371
                
                $
                16,130,529Supplementary
                    disclosure of cash flow information:Cash
                    paid during the period:Interest
                
                $
                37,924
                
                $
                51,039Income
                    taxes
                
                $
                566,858
                
                $
                ─Supplementary
                    non-cash information:Conversion
                    of note payable into common stock
                
                $
                200,000Property
                    acquired through capitalized leases
                
                $
                805,776
                
                
                182,665
  The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
 5


**MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **(unaudited)**
  **1.
            Significant Accounting Policies**
  *Basis
            of Presentation*
  The
            interim financial statements included herein for Merriman Curhan Ford
            Group,
            Inc. (formerly MCF Corporation), or the Company, have been prepared,
            without
            audit, pursuant to the rules and regulations of the Securities and Exchange
            Commission. In the opinion of management, the financial statements included
            in
            this report reflect all normal recurring adjustments that the Company
            considers
            necessary for the fair presentation of the results of operations for
            the interim
            periods covered and the financial position of the Company at the date
            of the
            interim statement of financial condition. Certain information and footnote
            disclosures normally included in annual financial statements prepared
            in
            accordance with accounting principles generally accepted in the United
            States
            have been condensed or omitted pursuant to such rules and regulations.
            However,
            the Company believes that the disclosures are adequate to understand
            the
            information presented. The operating results for interim periods are
            not
            necessarily indicative of the operating results for the entire year.
            These
            financial statements should be read in conjunction with the Company’s 2007
            audited consolidated financial statements and notes thereto included
            in the
            Company’s Annual Report on Form 10-K for the year ended December 31, 2007.
 
 *Securities
            Owned*
  “Securities
            owned” and “Securities sold, but not yet purchased” are reflected in the
            consolidated statements of financial condition on a trade-date basis.
            Related
            unrealized gains or losses are generally recognized in “Principal transactions
            revenue” in the consolidated statements of operations. The fair value of a
            financial instrument is the amount 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 (the exit price). Instruments that
            the
            Company owns (long positions) are marked to bid prices, and instruments
            that the
            Company has sold, but not yet purchased (short positions), are marked
            to offer
            prices. Fair value measurements are not adjusted for transaction costs.
 
 *Investment
            Banking Revenue*
  Investment
            banking revenue includes underwriting and private placement agency fees
            earned
            through the Company’s participation in public offerings and private placements
            of equity and convertible debt securities and fees earned as financial
            advisor
            in mergers and acquisitions and similar transactions. Underwriting revenue
            is
            earned in securities offerings in which the Company acts as an underwriter
            and
            includes management fees, selling concessions and underwriting fees.
            Fee revenue
            relating to underwriting commitments is recorded when all significant
            items
            relating to the underwriting cycle have been completed and the amount
            of the
            underwriting revenue has been determined. This generally is the point
            at which
            all of the following have occurred: (i) the issuer’s registration statement
            has become effective with the SEC, or other offering documents are finalized,
            (ii) the Company has made a firm commitment for the purchase of the shares
            or debt from the issuer, and (iii) the Company has been informed of the
            exact number of shares or the principal amount of debt that it has been
            allotted.
  Syndicate
            expenses related to securities offerings in which the Company acts as
            underwriter or agent are deferred until the related revenue is recognized
            or we
            determine that it is more likely than not that the securities offerings
            will not
            ultimately be completed. Underwriting revenue is presented net of related
            expenses. As co-manager for registered equity underwriting transactions,
            management must estimate the Company’s share of transaction related expenses
            incurred by the lead manager in order to recognize revenue. Transaction
            related
            expenses are deducted from the underwriting fee and therefore reduces
            the
            revenue that is recognized as co-manager. Such amounts are adjusted to
            reflect
            actual expenses in the period in which the Company receives the final
            settlement, typically 90 days following the closing of the transaction.
  Merger
            and acquisition fees and other advisory service revenue are generally
            earned and
            recognized only upon successful completion of the engagement. Unreimbursed
            expenses associated with private placement and advisory transactions
            are
            recorded as expenses as incurred
  6
  **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED**
 **(unaudited)**
  **1.
            Significant Accounting Policies - Continued**
  *Commissions
            and Principal Transactions Revenue*
  Commissions
            revenue includes revenue resulting from executing stock exchange-listed
            securities, over-the counter securities and other transactions as agent
            for the
            Company’s clients. Principal transactions consist of a portion of dealer spreads
            attributed to the Company’s securities trading activities as principal in
            NASDAQ-listed and other securities, and include transactions derived
            from
            activities as a market-maker. Additionally, principal transactions include
            gains
            and losses resulting from market price fluctuations that occur while
            holding
            positions in trading security inventory. Commissions revenue and related
            clearing expenses are recorded on a trade-date basis as security transactions
            occur. Principal transactions in regular-way trades are recorded on the
            trade
            date, as if they had settled. Profit and loss arising from all securities
            and
            commodities transactions entered into for the account and risk of the
            Company
            are recorded on a trade-date basis.
  *Share-Based
            Compensation Expense*
  The
            Company measures and recognizes compensation expense based on estimated
            fair
            values for all share-based awards made to employees and directors, including
            stock options, non-vested stock, and participation in the Company’s employee
            stock purchase plan. The Company estimates fair value of share-based
            awards on
            the date of grant using an option-pricing model. The value of the portion
            of the
            award that is ultimately expected to vest is recognized as expense in
            the
            Company’s consolidated statements of operations over the requisite service
            periods. Share-based compensation expense recognized in the Company’s
            consolidated statement of operations includes compensation expense for
            share-based awards granted (i) prior to, but not yet vested as of
            December 31, 2005, based on the grant date fair value, and
            (ii) subsequent to December 31, 2005. Compensation expense for all
            share-based awards subsequent to December 31, 2005 is recognized using the
            straight-line single-option method. Because share-based compensation
            expense is
            based on awards that are ultimately expected to vest, share-based compensation
            expense has been reduced to account for estimated forfeitures. Forfeitures
            are
            estimated at the time of grant and revised, if necessary, in subsequent
            periods
            if actual forfeitures differ from those estimates.
  To
            calculate option-based compensation, the Company uses the Black-Scholes
            option
            pricing model, which is affected by the Company’s stock price as well as
            assumptions regarding a number of subjective variables. These variables
            include,
            but are not limited to the Company’s expected stock price volatility over the
            term of the awards, and actual and projected employee stock option exercise
            behaviors. No tax benefits were attributed to the share-based compensation
            expense because a valuation allowance was maintained for all net deferred
            tax
            assets.
  *Income
            Taxes*
  The
            Company uses the asset and liability method of accounting for income
            taxes.
            Deferred tax assets and liabilities are recognized for the estimated
            future tax
            consequences attributable to differences between the financial statement
            carrying amounts of existing assets and liabilities and their respective
            tax
            bases. Deferred tax assets and liabilities are measured using enacted
            tax rates
            expected to apply to taxable income in the years in which those temporary
            differences are expected to be recovered or settled. A valuation allowance
            is
            recorded to reduce deferred tax assets to an amount whose realization
            is more
            likely than not. The effect on deferred tax assets and liabilities of
            a change
            in tax rates is recognized in the consolidated statements of operations
            in the
            period that includes the enactment date. Merriman Curhan Ford Group,
            Inc.
            adopted FIN No. 48 on January 1, 2007.
  *Segment
            Reporting*
  The
            Company organizes its operations into three operating segments for the
            purpose
            of making operating decisions and assessing performance. These operating
            segments are organized along operating subsidiaries, Merriman Curhan
            Ford & Co., MCF Asset Management, LLC and Panel Intelligence, LLC.
            Accordingly, the Company operated in three reportable operating segments
            in the
            United States during 2008.
 
 *Use
            of Estimates*
  The
            preparation of financial statements in conformity with accounting principles
            generally accepted in the United States requires management to make estimates,
            judgments and assumptions that affect the reported amounts of assets,
            liabilities, revenue and expenses. Actual results could differ from those
            estimates.
  7
  **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED**
 **(unaudited)**
  **1.
            Significant Accounting Policies - Continued**
  *New
            Accounting Pronouncements*
  SFAS
            141(R). In December 2007, the FASB issued SFAS No. 141(R), Business
            Combinations. SFAS 141(R) expands the definition of transactions and
            events that
            qualify as business combinations; requires that the acquired assets and
            liabilities, including contingencies, be recorded at the fair value determined
            on the acquisition date and changes thereafter reflected in revenue,
            not
            goodwill; changes the recognition timing for restructuring costs; and
            requires
            acquisition costs to be expensed as incurred. Adoption of SFAS 141(R)
            is
            required for combinations after December 15, 2008. Early adoption and
            retroactive application of SFAS 141(R) to fiscal years preceding the
            effective
            date are not permitted. The Company is evaluating the impact of adoption
            on its
            consolidated financial statements.
  **2.
            Fair Value of Assets and Liabilities**
  Securities
            owned, and securities sold but not yet purchased, are presented at fair
            value.
            Fair value is defined as the price at which an asset would be received
            to sell
            an asset or paid to transfer a liability in an orderly transaction between
            market participants at the measurement date (the exit price). Where available,
            fair value is based on observable market prices or parameters or derived
            from
            such prices or parameters. Where observable prices or inputs are not
            available,
            valuation models are applied. These valuation techniques involve some
            level of
            management estimation and judgment, the degree of which is dependent
            on the
            price transparency for the instruments or market and the instruments’
complexity. Assets and liabilities recorded at fair value in the consolidated
            statement of financial condition are categorized based upon the level
            of
            judgment associated with the inputs used to measure their fair value.
            Hierarchical levels, defined by SFAS 157 and directly related to the
            amount of
            subjectivity associated with the inputs to fair valuation of these assets
            and
            liabilities, are as follows:
  Level
            1 —
Inputs are unadjusted, quoted prices in active markets for identical
            assets or
            liabilities at the measurement date. The types of assets and liabilities
            carried
            at Level 1 fair value generally are G-7 government and agency securities,
            equities listed in active markets, investments in publicly traded mutual
            funds
            with quoted market prices and listed derivatives.
  Level
            2 —
Inputs (other than quoted prices included in Level 1) are either directly
            or
            indirectly observable for the asset or liability through correlation
            with market
            data at the measurement date and for the duration of the instrument’s
            anticipated life. Fair valued assets that are generally included in this
            category are stock warrants for which there are market-based implied
            volatilities, unregistered common stock and thinly-traded common stock.
  Level
            3 —
Inputs reflect management’s best estimate of what market participants would use
            in pricing the asset or liability at the measurement date. Consideration
            is
            given to the risk inherent in the valuation technique and the risk inherent
            in
            the inputs to the model. Generally, assets carried at fair value and
            included in
            this category include stock warrants for which market-based implied volatilities
            are not available.
 
 Assets
            measured at fair value on a recurring basis are categorized in the table
            below
            based upon the lowest level of significant input to the valuations.
  8
  **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED**
 **(unaudited)**
  **2.
            Fair Value of Assets and Liabilities (continued)**
  **Assets
                      at Fair Value at June 30, 2008****Level
                      1**
                  
                  **Level
                      2**
                  
                  **Level
                      3**
                  
                  **Total**Corporate
                      equities
                  
                  $
                  11,372,856
                  
                  $
                  25,000
                  
                  $
                  712,811
                  
                  $
                  12,110,667Stock
                      warrants
                  
                  
                  —
                  
                  
                  —
                  
                  
                  5,441,043
                  
                  
                  5,441,043Underwriters’
                      purchase option
                  
                  
                  —
                  
                  
                  —
                  
                  
                  283,714
                  
                  
                  283,714Preferred
                      stock
                  
                  
                  3,000
                  
                  
                  —
                  
                  
                  —
                  
                  
                  3,000$
                  11,375,856
                  
                  $
                  25,000
                  
                  $
                  6,437,568
                  
                  $
                  17,838,424
  **Assets
                      at Fair Value at December 31, 2007****Level
                      1**
                  
                  **Level 2**
                  
                  **Level
                      3**
                  
                  **Total**Corporate
                      equities
                  
                  $
                  13,696,019
                  
                  $
                  —
                  
                  $
                  489,453
                  
                  $
                  14,185,472Stock
                      warrants
                  
                  
                  —
                  
                  
                  —
                  
                  
                  1,756,580
                  
                  
                  1,756,580Underwriters’
                      purchase option
                  
                  
                  —
                  
                  
                  —
                  
                  
                  194,957
                  
                  
                  194,957Convertible
                      notes
                  
                  
                  228,456
                  
                  
                  —
                  
                  
                  —
                  
                  
                  228,456Preferred
                      stock
                  
                  
                  225
                  
                  
                  —
                  
                  
                  —
                  
                  
                  225$
                  13,924,700
                  
                  $
                  —
                  
                  $
                  2,440,990
                  
                  $
                  16,365,690
  Liabilities
            measured at fair value on a recurring basis consisted of Securities sold,
            not
            yet purchased which are categorized as Level 1. The fair value of Securities
            sold, not yet purchased as of June 30, 2008 and December 31, 2007 was
            approximately $1,513,000 and $3,805,000, respectively.
  The
            following summarizes the change in carrying values associated with Level
            3
            financial instruments for the six months ended June 30, 2008:
  **Corporate**
                    **Equities**
                  
                  **Stock**
                    **Warrants**
                  
                  **Underwriters’**
                    **Purchase Option**
                  
                  **Total**Balance
                      at December 31, 2007
                  
                  $
                  489,453
                  
                  $
                  1,756,580
                  
                  $
                  194,957
                  
                  $
                  2,440,990Purchases,
                      issuances and settlements
                  
                  
                  551,809
                  
                  
                  1,110,586
                  
                  
                  —
                  
                  
                  1,662,395Net
                      transfers in / (out)
                  
                  
                  (339,453
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  (339,453
                  )Gains
                      / (losses)Realized
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —Unrealized
                  
                  
                  11,002
                  
                  
                  2,573,877
                  
                  
                  88,757
                  
                  
                  2,673,636Balance
                      at June 30, 2008
                  
                  $
                  712,811
                  
                  $
                  5,441,043
                  
                  $
                  283,714
                  
                  $
                  6,437,568
  Gains/(losses)
            (both realized and unrealized) for Level 3 financial instruments are a
            component of Principal transactions in the consolidated statements of
            operations.
  9
  **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED**
 **(unaudited)**
  **3.** **Goodwill
            and Intangible Assets**
  Goodwill
            is related to the acquisition of MedPanel, Inc. Goodwill, totaling $3,130,000,
            was allocated to the Primary Research segment pursuant to SFAS No. 142,
            “Goodwill and Other Intangible Assets”. Goodwill represents the excess cost of a
            business acquisition over the fair value of the net assets acquired at
            the
            acquisition date. Identifiable intangible assets capitalized in connection
            with
            the acquisition of MedPanel included customer relationships, customer
            backlog,
            technology platform and the database of registered panelists. The estimated
            fair
            market value of these amortizable intangible assets at the date of acquisition
            amounting to $1,990,000 is being amortized over periods ranging from
            8 months to
            56 months. In addition, an indefinite lived intangible asset was recorded
            for
            the acquired tradename in the amount of $710,000.
 
 In
            accordance with SFAS No. 142, indefinite-life intangible assets and goodwill
            are
            not amortized. Rather, they are subject to impairment testing on an annual
            basis, or more often if events or circumstances indicate there may be
            impairment. This test involves assigning tangible assets and liabilities,
            identified intangible assets and goodwill to reporting units and comparing
            the
            fair value of each reporting unit to its carrying amount. If the fair
            value is
            less than the carrying amount, a further test is required to measure
            the amount
            of the impairment.
  When
            available, the Company uses recent, comparable transactions to estimate
            the fair
            value of the respective reporting unit. The Company calculates an estimated
            fair
            value based on multiples of revenue, earnings, and book value of comparable
            transactions. However, when such comparable transactions are not available
            or
            have become outdated, the Company uses discounted cash flow scenarios
            to
            estimate the fair value of the reporting units. As of April 30, 2008,
            the Company performed its annual impairment testing and recorded an impairment
            loss of $2,602,000 in its consolidated statement of operations for the
            three and
            six months ended June 30, 2008 related to goodwill and
            tradename.
  **4.
            Share-Based Compensation Expense**
 
 *Stock
            Options*
  As
            of
            June 30, 2008, there were 6,961,430 shares authorized for issuance under
            the
            Option Plans, and 612,858 shares authorized for issuance outside of the
            Option
            Plans. As of June 30, 2008, 1,302,108 shares were available for future
            option
            grants under the Option Plans. There were no shares available for future
            option
            grants outside of the Options Plans. Compensation expense for stock options
            during the three months and six months ended June 30, 2008 was $402,000
            and
            $784,000, respectively. Compensation expense for stock options during
            the three
            months and six months ended June 30, 2007 was $329,000 and $649,000,
            respectively.
  The
            following table is a summary of the Company’s stock option activity for the six
            months ended June 30, 2008:
  **Options**
                    **Outstanding**
                  
                  
                  **Weighted**
                    **Average**
                    **Exercise Price**Balance
                      as of December 31, 2007
                  
                  
                  4,066,259
                  
                  $
                  6.00Granted
                  
                  
                  608,385
                  
                  
                  3.75Exercised
                  
                  
                  (64,628
                  )
                  
                  (2.36
                  )Canceled
                  
                  
                  (300,119
                  )
                  
                  (6.87
                  )Balance
                      as of June 30, 2008
                  
                  
                  4,309,897
                  
                  $
                  5.68Exercisable
                      as of June 30, 2008
                  
                  
                  3,069,672
                  
                  $
                  6.
                      17
  10
  **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED**
 **(unaudited)**
  **4** **.
            Share Based Compensation Expense (continued)**
 
 The
            following table summarizes information with respect to stock options
            outstanding
            at June 30, 2008:
  **Options
                      Outstanding**
                  
                  **Vested
                      Options****Range
                      of Exercise Price**
                  
                  **Number**
                  
                  **Weighted**
                    **Average**
                    **Remaining**
                    **Contractual**
                    **Life
                      (Years)**
                  
                  **Weighted**
                    **Average**
                    **Exercise**
                    **Price**
                  
                  **Aggregate**
                    **Intrinsic**
                    **Value**
                  
                  **Number**
                  
                  **Weighted**
                    **Average
                      Exercise**
                    **Price**
                  
                  **Aggregate**
                    **Intrinsic**
                    **Value**$
                      0.00 - $ 3.50
                  
                  
                  2,007,309
                  
                  
                  4.86
                  
                  $
                  2.98
                  
                  $
                  ─
                  
                  
                  1,909,777
                  
                  $
                  3.02
                  
                  $
                  ─$
                      3.51 - $ 7.00
                  
                  
                  1,592,700
                  
                  
                  8.11
                  
                  $
                  4.45
                  
                  
                  ─
                  
                  
                  506,212
                  
                  
                  4.43
                  
                  
                  ─$
                      7.01 - $14.00
                  
                  
                  414,220
                  
                  
                  6.06
                  
                  $
                  9.24
                  
                  
                  ─
                  
                  
                  358,015
                  
                  
                  9.37
                  
                  
                  ─$14.01
                      - $28.00
                  
                  
                  256,381
                  
                  
                  2.35
                  
                  $
                  22.04
                  
                  
                  ─
                  
                  
                  256,381
                  
                  
                  22.04
                  
                  
                  ─$28.01
                      - $49.00
                  
                  
                  39,287
                  
                  
                  1.66
                  
                  $
                  49.00
                  
                  
                  ─
                  
                  
                  39,287
                  
                  
                  49.00
                  
                  
                  ─4,309,897
                  
                  
                  6.00
                  
                  $
                  5.68
                  
                  $
                  ─
                  
                  
                  3,069,672
                  
                  $
                  6.17
                  
                  $
                  ─
  As
            of
            June 30, 2008, total unrecognized compensation expense related to unvested
            stock
            options was $3,461,340. This amount is expected to be recognized as expense
            over
            a weighted-average period of 1.48 years.
 
 *Non-Vested
            Stock*
  At
            the
            date of grant, the recipients of non-vested stock have most of the rights
            of a
            stockholder other than voting rights, subject to certain restrictions
            on
            transferability and a risk of forfeiture. Non-vested shares typically
            vest over
            a two to four year period beginning on the date of grant. The fair value
            of
            non-vested stock is equal to the market value of the shares on the date
            of
            grant. The Company recognizes the compensation expense for non-vested
            stock on a
            straight-line basis over the requisite service period. Compensation expense
            for
            non-vested stock during the three months and six months ended June 30,
            2008 was
            $251,000 and $533,000, respectively. Compensation expense for non-vested
            stock
            during the three months and six months ended June 30, 2007 was $327,000
            and
            $688,000, respectively.
 
 The
            following table is a summary of the Company's non-vested stock activity
            for the
            six months ended June 30, 2007:
 **Non-Vested**
                      **Stock**
                      **Outstanding**
                    
                    **Weighted**
                      **Average**
                      **Grant
                        Date**
                      **Fair
                        Value**
                    
                    **Intrinsic**
                      **Value
                        at**
                      **June
                        30, 2007**Balance
                        as of December 31, 2007
                    
                    
                    180,620
                    
                    $
                    7.51Granted
                    
                    
                    30,346
                    
                    
                    1.92Vested
                    
                    
                    (85,307
                    )
                    
                    (6.86
                    )Canceled
                    
                    
                    (670
                    )
                    
                    (10.97
                    )Balance
                        as of June 30, 2008
                    
                    
                    124,989
                    
                    $
                    7.41
                    
                    $
                    158,736
  As
            of
            June 30, 2008, total unrecognized compensation expense related to non-vested
            stock was $539,000. This expense is expected to be recognized over a
            weighted-average period of 0.78 year.
  11
 
 **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED**
 **(unaudited)**
  **4.
            Share-Based Compensation Expense (continued)**
  *2002
            Employee Stock Purchase Plan*
  The
            Company issued all shares previously available under the Employee Stock
            Purchase
            Plan, or ESPP, to its employees through August 15, 2007. As of June 30,
            2008, there are no shares available under the ESPP plan and the Company
            has no
            plan to request additional shares from the stockholders for this program.
            Compensation expense for ESPP during each of the three months and six
            months
            ended June 30, 2008 was $0. Compensation expense for the ESPP during
            the three
            months and six months ended June 30, 2007 were $58,000 and $115,700,
            respectively.
 
 *Fair
            Value and Assumptions Used to Calculate Fair Value*
  The
            weighted average fair value of each stock option granted for the three
            months
            and six months ended June 30, 2008 was $2.31 and $2.49, respectively. The
            weighted average fair value of each stock option granted for the three
            months
            and six months ended June 30, 2007 was $2.53 and $2.56, respectively. The
            fair value of each option award is estimated on the date of grant using
            the
            Black-Scholes stock option pricing model, with the following assumptions
            for the
            six months ended June 30, 2008 and 2007:
  **Six
                      months Ended**
                    **June
                      30,****2008**
                  
                  **2007**Expected
                      volatility
                  
                  
                  70.42
                  %
                  
                  65.83
                  %Expected
                      life (years)
                  
                  
                  6.43
                  
                  
                  4.17Risk-free
                      interest rate
                  
                  
                  3.11
                  %
                  
                  4.75
                  %Expected
                      dividend yield
                  
                  
                  0
                  %
                  
                  0
                  %
 
 The
            weighted average fair value of the non-vested stock granted under the
            Company's
            stock option plans for the three months and six months ended June 30,
            2008 was
            $3.84 and $4.50 per share, respectively. The weighted average fair value
            of the
            non-vested stock granted under the Company's stock option plans for the
            three
            months and six months ended June 30, 2007 was $4.44 and 4.80 per share,
            respectively. The fair value of the non-vested stock award is estimated
            on the
            date of grant using the intrinsic value method.
 
 **5.
            Income Taxes**
  Income
            tax expense is a result of applying the estimated annual effective tax
            rate to
            cumulative income before taxes adjusted for certain discrete items which
            are
            fully recognized in the period they occur.  For the three months and six
            months ended June 30, 2008, the Company recorded an income tax benefit
            of
            ($1,839,000).  The Company’s tax rate is affected by recurring items, which
            it expects to be fairly consistent in the near term, and by discrete
            items that
            are not consistent from year to year.  The effective tax rate for the six
            months ended June 30, 2008 is (12.64)%, which is mainly attributable
            to the
            release of the FIN 48 liability due to the approval of an accounting
            method
            change for federal tax purposes.
  Historically
            and currently, the Company has recorded a valuation allowance on the
            deferred
            tax assets, a significant component of which relates to net operating
            loss
            carryforwards.  Management continually evaluates the realizability of its
            deferred tax assets based upon negative and positive evidence available. 
Based on the evidence available at this time, the Company continues to
            conclude
            that it is not “more likely than not” that we will be able to realize the
            benefit of our deferred tax assets in the future.
  The
            Company adopted Interpretation No. 48 on January 1, 2007.  Upon
            the adoption of FIN 48, the Company recognized no adjustment in the
            liability for unrecognized income tax benefits and no corresponding change
            in
            retained earnings.  At the end of the fiscal year 2007, the Company
            recorded a liability for an uncertain tax position related to certain
            investments in the amount of $1,839,000.  This entire amount has been
            derecognized as of June 30, 2008 due to an Internal Revenue service approved
            accounting method change.
  12
 
 **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED**
 **(unaudited)**
 
 **5.
            Income Taxes (continued)**
 
 The
            Company’s tax years 2005-2007 will remain open for three years for examination
            by the Internal Revenue Service from the date the federal corporation
            tax
            returns were filed.  The Company’s tax years 2003-2007 will remain open for
            three to four years for examination by state tax authorities from the
            date the
            state corporation tax returns were filed.  Net operating losses deducted
            are subject to review and adjustment for three to four years after the
            net
            operating losses are deducted on the U.S. and state returns filed.
 
 **6.
            (Loss)/Earnings per Share**
  The
            following is a reconciliation of the basic and diluted net (loss) income
            available to common stockholders and the number of shares used in the
            basic and
            diluted net (loss) income per common share computations for the periods
            presented:
 
 **Three
                      Months Ended June 30,**
                  
                  **Six
                      Months Ended June 30,****2008**
                  
                  **2007**
                  
                  **2008**
                  
                  **2007**Net
                      (loss) income available to stockholders - basic
                  
                  $
                  (5,113,845
                  )
                  $
                  2,320,373
                  
                  $
                  (12,163,818
                  )
                  $
                  2,389,629Interest
                      on dilutive securities
                  
                  
                  500
                  
                  
                  4,084
                  
                  
                  4,584
                  
                  
                  8,168Net
                      (loss) income available to stockholders - diluted
                  
                  $
                  (5,113,345
                  )
                  $
                  2,324,457
                  
                  $
                  (12,159,234
                  )
                  $
                  2,397,797Weighted-average
                      number of common shares - basic
                  
                  
                  12,562,120
                  
                  
                  11,657,775
                  
                  
                  12,425,851
                  
                  
                  11,000,702Weighted-average
                      number of common shares - diluted
                  
                  
                  12,562,120
                  
                  
                  12,856,306
                  
                  
                  12,425,851
                  
                  
                  12,208,965Basic
                      net income (loss) per common share:
                  
                  $
                  (0.41
                  )
                  $
                  0.20
                  
                  $
                  (0.98
                  )
                  $
                  0.22Diluted
                      net loss per common share:
                  
                  $
                  (0.41
                  )
                  $
                  0.18
                  
                  $
                  (0.98
                  )
                  $
                  0.20
 
 Basic
            (loss) earnings per share is computed by dividing net (loss) income by
            the
            weighted average number of common shares outstanding, excluding shares
            of
            non-vested stock. Diluted earnings per share is calculated by dividing
            net
            income, plus interest and dividends on dilutive securities, by the weighted
            average number of common shares used in the basic earnings per share
            calculation
            plus the number of common shares that would be issued assuming exercise
            or
            conversion of all potentially dilutive common shares outstanding, including
            non-vested stock. Diluted loss per share is unchanged from basic loss
            per share
            for the three months and six months ended June 30, 2008 because the addition
            of
            common shares that would be issued assuming exercise or conversion would
            be
            anti-dilutive.
 
 13
  **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED**
 **(unaudited)**
 
 **6.
            (Loss)/Earnings per Share (continued)**
 
 Shares
            used in the diluted net income per share computation include the dilutive
            impact
            of the Company's stock options and warrants. The impact of the Company's
            stock
            options and warrants on shares used for the diluted earnings per share
            computation is calculated based on the average share price of the Company's
            common stock for each period using the treasury stock method. Under the
            treasury
            stock method, the tax-effected proceeds that would be hypothetically
            received
            from the exercise of all stock options and warrants with exercise prices
            below
            the average share price of the Company's common stock are assumed to
            be used to
            repurchase shares of the Company's common stock. Because the Company
            reported a
            net loss during the three months and six months ended June 30, 2008,
            the Company
            excluded the impact of all stock options and warrants in the computation
            of
            dilutive earnings per share, as their effect would be
            anti-dilutive.
 
 The
            Company excludes all potentially dilutive securities from its diluted
            net (loss)
            income per share computation when their effect would be anti-dilutive.
            The
            following common stock equivalents were excluded from the earnings per
            share
            computation, as their inclusion would have been anti-dilutive:
 
 **Three Months Ended June 30,**
                  
                  **Six
                      Months Ended June 30,****2008**
                  
                  **2007**
                  
                  **2008**
                  
                  **2007**Stock
                      options and warrants excluded due to the exercise price exceeding
                      the
                      average fair value of the Company's common stock during the
                      period
                  
                  
                  4,198,770
                  
                  
                  1,682,257
                  
                  
                  2,226,464
                  
                  
                  1,637,949Weighted
                      average non-vested stock, stock options and stock warrants,
                      calculated
                      using the treasury stock method, that were excluded due to
                      the Company
                      reporting a net loss during the period
                  
                  
                  348,754
                  
                  
                  ─
                  
                  
                  740,477
                  
                  
                  ─Weighted
                      average shares issuable for the period prior to the conversion
                      of the
                      convertible notes payable
                  
                  
                  45,526
                  
                  
                  ─
                  
                  
                  94,192
                  
                  
                  ─Total
                      common stock equivalents excluded from diluted net (loss) income
                      per
                      share
                  
                  
                  4,593,050
                  
                  
                  1,682,257
                  
                  
                  3,061,133
                  
                  
                  1,637,949
 
 **7.
            Regulatory Requirements**
  Merriman
            Curhan Ford & Co. is a broker-dealer subject to Rule 15c3-1 of the
            Securities and Exchange Commission, which specifies uniform minimum net
            capital
            requirements, as defined, for their registrants. As of June 30, 2008,
            Merriman
            Curhan Ford & Co. had regulatory net capital, as defined, of $6,398,982,
            which exceeded the amount required by $5,398,982. Merriman Curhan Ford
& Co.
            is exempt from Rules 15c3-3 and 17a-13 under the Securities Exchange
            Act of 1934
            because it does not carry customer accounts, nor does it hold customer
            securities or cash.
  14
  **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED**
 **(unaudited)**
  **8** **.
            Business Segments**
  The
            Company’s business results are categorized into the following three segments:
            investment bank / broker-dealer, primary research and asset management.
            The
            investment bank / broker-dealer segment includes a broad range of services,
            such
            as capital raising and financial advisory services for corporate clients,
            and
            brokerage and equity research services for our institutional investor
            clients.
            Our primary research segment offers custom, independent primary research
            services to health care and CleanTech companies, as well as financial
            services
            firms that invest in these companies. Our asset management segment manages
            investment products for investors.
  The
            accounting policies of the segments are consistent with those described
            in the
            Significant Accounting Policies in Note 2. Revenue generating activities
            between
            segments are eliminated from the segments results for reporting purposes.
            These
            activities include fees paid by the Asset Management segment to the Primary
            Research segment for the management of its investment portfolio.
 
 The
            Company’s segment information for the three months and six months ended June
            30,
            2008 and 2007 is prepared using the following methodology:
  **·**
                  
                  Revenue
                      and expenses directly associated with each segment are included
                      in
                      determining income.
  **·**
                  
                  Each
                      segment’s operating expenses include compensation and benefits expenses
                      and other operating expenses that are incurred directly in
                      support of the
                      segments. These other operating expenses, include brokerage
                      and clearing
                      fees, cost of primary research services, professional services,
                      occupancy
                      and equipment, communications and technology, depreciation
                      and
                      amortization, amortization of intangible assets, travel and
                      business
                      development and other operating expenses.
  **·**
                  
                  Corporate
                      operating expenses include compensation and benefits for corporate
                      support
                      employees as well as operating expenses that are not incurred
                      directly in
                      support of our three segments.
  15
  **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED**
 **(unaudited)**
  Management
                believes that the following information provides a reasonable representation
                of
                each segment’s contribution to revenue, income and assets:
  ****Three Months Ended**June 30,**
                    
                    ****Six Months Ended**June 30,****2008**
                    
                    **2007**
                    
                    **2008**
                    
                    **2007**Broker-Dealer
                    Revenue
                    
                    $
                    14,175,678
                    
                    $
                    19,156,231
                    
                    $
                    24,913,877
                    
                    $
                    33,304,549Operating
                        expenses
                    
                    
                    13,127,656
                    
                    
                    16,027,623
                    
                    
                    27,074,716
                    
                    
                    29,797,608Operating
                        (loss) income
                    
                    $
                    (1,084,022
                    )
                    $
                    3,128,608
                    
                    $
                    (2,160,838
                    )
                    $
                    3,506,941Segment
                        assets
                    
                    $
                    34,334,205
                    
                    $
                    33,634,010
                    
                    $
                    34,334,205
                    
                    $
                    33,634,011Primary
                        Research
                    Revenue
                    
                    
                    1,498,144
                    
                    
                    973,062
                    
                    $
                    3,039,938
                    
                    $
                    973,062Operating
                        expenses
                    
                    
                    4,587,493
                    
                    
                    1,445,117
                    
                    
                    6,497,873
                    
                    
                    1,445,117Operating
                        (loss) income (1)
                    
                    $
                    (3,089,349
                    )
                    $
                    (472,055
                    )
                    $
                    (3,457,935
                    )
                    $
                    (472,055
                    )Segment
                        assets
                    
                    $
                    3,987,090
                    
                    $
                    7,806,048
                    
                    $
                    3,987,090
                    
                    $
                    7,806,048Asset
                        Management
                    Revenue
                    
                    
                    125,652
                    
                    
                    243,056
                    
                    $
                    (386,036
                    )
                    $
                    417,882Operating
                        expenses
                    
                    
                    590,472
                    
                    
                    218,986
                    
                    
                    1,017,562
                    
                    
                    448,690Operating
                        (loss) income
                    
                    $
                    (464,820
                    )
                    $
                    24,070
                    
                    $
                    (1,403,598
                    )
                    $
                    (30,808
                    )Segment
                        assets
                    
                    $
                    2,436,001
                    
                    $
                    2,345,761
                    
                    $
                    2,436,001
                    
                    $
                    2,325,249Corporate
                        Support
                    Operating
                        loss
                    
                    
                    (4,462,157
                    )
                    
                    (385,845
                    )
                    
                    (7,071,602
                    )
                    
                    (708,195
                    )Assets
                    
                    
                    1,156,330
                    
                    
                    874,154
                    
                    
                    1,156,330
                    
                    
                    874,154Consolidated
                        Entity
                    Revenue
                    
                    
                    15,799,474
                    
                    
                    20,372,349
                    
                    
                    27,567,779
                    
                    
                    34,695,493Operating
                        expenses
                    
                    
                    22,767,
                        778
                    
                    
                    18,077,573
                    
                    
                    41,661,753
                    
                    
                    32,399,610Operating
                        (loss) income
                    
                    $
                    (6,968,304
                    )
                    $
                    2,294,776
                    
                    $
                    (14,093,973
                    )
                    $
                    2,295,883Total
                        assets
                    
                    $
                    41,913,626
                    
                    $
                    44,659,973
                    
                    $
                    41,913,626
                    
                    $
                    44,659,974
  **(1)**
                  **Note:**The operating loss includes $2.6 million of non-cash based
                      impairment of
                      goodwill and an intangible asset associated with the acquisition
                      which is
                      a non-cash expense.
  **9** **.
            Contingencies**
 
 Several
            lawsuits have recently been filed against our subsidiary, Merriman Curhan
            Ford
& Co. (including one which also names the parent company as the defendant)
            in connection with the alleged actions of a former client of the Company
            (the
            "Customer"), and a former retail broker of Merriman Curhan Ford & Co.
 The total amount of damages sought under such lawsuits is over $40
            million. The Company anticipates at least one additional lawsuit will
            be filed
            against Merriman Curhan Ford & Co. by a lender to the Customer on similar
            facts to the lawsuits described below, with a claim believed to be approximately
            $10 million.  The Company denies any involvement and will vigorously
            contest the lawsuits, which are in their early stages.  Due to the early
            stages of these legal matters, we cannot estimate the amount of damages
            if they
            are resolved unfavorably and accordingly, we have not provided an accrual
            for
            these lawsuits.
 
 16
  **MERRIMAN
            CURHAN FORD GROUP, INC.**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED**
 **(unaudited)**
  **10.
            Subsequent Events**
 
 *Restructuring
            and Severance Charges*
 
 In
            order
            to better align its cost structure with its current revenue expectations,
            market
            demand, and areas of focus, the Company implemented a restructuring plan
            in
            August 2008. When the effects are fully reflected in our results by the
            end of
            the third quarter 2008, the plan will reduce operating expenses by $7
            million
            annually.  Among other measures, the plan involved the elimination of
            approximately 20% of the company’s workforce, bringing the headcount to about
            150 employees company-wide. Severance and related costs are estimated
            to be
            about $300,000 which will largely be expensed in the third quarter. The
            Company
            will continue to focus on growing its recurring revenue business lines,
            as well
            as strengthen its core institutional brokerage and investment banking
            business
            units.
 
 17
 
 **ITEM 2
             Management's Discussion and Analysis of Financial Condition and Results
            of
            Operations**
 
 This
            Quarterly Report on Form 10-Q, including this Management's Discussion
            and
            Analysis of Financial Condition and Results of Operations contains
            forward-looking statements regarding future events and our future results
            that
            are based on current expectations, estimates, forecasts, and projections
            about
            the industries in which we operate and the beliefs and assumptions of
            our
            management. Words such as “may,” “will,” “should,” “expects,” “anticipates,”
“targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” “predicts,” “potential” or “continue,” variations of such words,
            and similar expressions are intended to identify such forward-looking
            statements. In addition, any statements that refer to projections of
            our future
            financial performance, our anticipated growth and trends in our businesses,
            and
            other characterizations of future events or circumstances, are forward-looking
            statements. Readers are cautioned that these forward-looking statements
            are only
            predictions and are subject to risks, uncertainties, and assumptions
            that are
            difficult to predict. Therefore, actual results may differ materially
            and
            adversely from those expressed in any forward-looking statements. Readers
            are
            referred to risks and uncertainties identified under **“** Risk
            Factors” beginning on Page 32 and elsewhere herein. We undertake no obligation
            to revise or update publicly any forward-looking statements for any reason.
            Numbers expressed herein may be rounded to thousands of dollars.
  **Overview**
  We
            are a
            financial services holding company that provides investment research,
            capital
            markets services, corporate and executive services, investment banking,
            venture
            services, asset management and primary research through our operating
            subsidiaries, Merriman Curhan Ford & Co., MCF Asset Management, LLC and
            Panel Intelligence, LLC.
  Merriman
            Curhan Ford & Co. is an investment bank and securities broker-dealer
            focused on fast growing companies and institutional investors. Our mission
            is to
            become a leader in the researching, advising, financing, trading and
            investing
            in fast growing companies under $2 billion in market capitalization.
            We provide
            equity research, brokerage and trading services primarily to institutions,
            as
            well as investment banking and advisory services to corporate clients.
            We are
            gaining market share by originating differentiated research for our
            institutional investor clients and providing specialized and integrated
            services
            for our fast-growing corporate clients. Institutional Cash Distributors
            (ICD), a
            division of Merriman Curhan Ford & Co., is a broker of money market funds
            serving the short-term investing needs of corporate finance departments
            at
            companies throughout the United States and Europe.
  Panel
            Intelligence, LLC provides custom and published primary research to industry
            clients and investment professionals through online panel discussions,
            quantitative surveys and an extensive research library. Panel Intelligence
            is
            positioned to provide greater access, compliance, insights and productivity
            to
            clients in the CleanTech, Consumer/Internet/Media, Health Care and Tech/Telecom
            industries.
  MCF
            Asset
            Management, LLC manages absolute return investment products for institutional
            and high-net worth clients. As of June 30, 2008, assets under management
            across
            our two fund products were approximately $49 million.
  **Executive
            Summary**
  Revenue
            declined by 23% in the latest quarter relative to the second quarter
            2007 during
            one of the most tumultuous capital market environments in recent history.
            Our
            commission revenue grew 2% year-over-year, supported by continued growth
            with
            our Institutional Cash Distributors money fund business. Investment banking
            revenue grew 32% sequentially from the first quarter but declined by
            21%
            year-over year as very few companies have come to market during the first
            half
            of 2008. Principal Transactions recovered from posting a loss in the
            first
            quarter 2008 to a gain of $1,419,000 during second quarter 2008. The
            performance
            was driven by solid customer principal transactions and an increase in
            value of
            stock warrants that we own in our investment portfolio.
  **Business
            Environment**
 
 Stocks
            declined sharply during the first and second quarters of 2008, reflecting
            growing evidence that a U.S. recession was either imminent or already
            in
            progress. The active interventions by the Federal Reserve Board, including
            engineering the sale of embattled broker Bear Stearns to JPMorgan Chase,
            multiple reductions of key target short-term interest rates as well as
            the
            government’s willingness to intervene aggressively did not help stabilize stock
            or bond prices toward the end of the second quarter. The overall credit
            market,
            which had staged a slight recovery in April and May, rolled over as prices
            of
            mortgage securities and corporate bonds fell. The second quarter brought
            continued bad macroeconomic news, most of it courtesy of the depressed
            U.S.
            housing market and high oil prices. Market sentiment took a big hit as
            the Dow
            dropped 3% in one trading session two days before the close of the quarter.
            Among the widely followed benchmarks, the broad-based S&P 500® Index, a
            widely followed large-cap benchmark, declined 6% and the technology-sensitive
            NASDAQ Composite® Index (“NASDAQ”) suffered some of the worst damage, falling
            11.27%. The Russell 2000® Index, comprised of small-cap stocks, posted a 3% loss
            for the first quarter. For the first half of 2008 the Russell 2000 was
            down over
            8%. Overall, the environment for small and micro cap stocks in the first
            half
            was perceived by many market participants as the most difficult they
            had seen
            since 2002.
  18
 
 Our
            securities broker-dealer and investment banking activities are linked
            to the
            capital markets. In addition, our business activities are focused in
            the
            CleanTech, healthcare, consumer growth, specialty growth and telecommunications
            sectors. By their nature, our business activities are highly competitive
            and are
            not only subject to general market conditions, volatile trading markets
            and
            fluctuations in the volume of market activity, but also to the conditions
            affecting the companies and markets in our areas of focus.
 
 Fluctuations
            in revenue also occur due to the overall level of market activity, which,
            among
            other things, affects the flow of investment dollars and the size, number
            and
            timing of investment banking transactions. In addition, a downturn in
            the level
            of market activity can lead to a decrease in brokerage commissions. Therefore,
            revenue in any particular period may vary significantly from year to
            year.
  **Results
            of Operations**
 
 The
            following table sets forth the results of operations for the three months
            and
            six months ended June 30, 2008 and 2007:
  **Three
                      Months Ended**
                  
                  **Six
                      Months Ended****June
                      30,**
                    **2008**
                  
                  **June
                      30,**
                    **2007**
                  
                  **June
                      30,**
                    **2008**
                  
                  **June
                      30,**
                    **2007**Revenue:Commissions
                  
                  $
                  7,892,372
                  
                  $
                  7,717,573
                  
                  $
                  16,361,082
                  
                  $
                  14,883,280Principal
                      transactions
                  
                  
                  1,418,829
                  
                  
                  5,712,652
                  
                  
                  103,753
                  
                  
                  8,325,776Investment
                      banking
                  
                  
                  4,446,995
                  
                  
                  5,631,556
                  
                  
                  7,823,406
                  
                  
                  9,864,027Primary
                      research
                  
                  
                  1,498,144
                  
                  
                  951,062
                  
                  
                  3,039,938
                  
                  
                  951,062Advisory
                      and other fees
                  
                  
                  543,134
                  
                  
                  359,506
                  
                  
                  239,600
                  
                  
                  671,348Total
                      revenue
                  
                  
                  15,799,474
                  
                  
                  20,372,349
                  
                  
                  27,567,779
                  
                  
                  34,695,493Operating
                      expenses:Compensation
                      and benefits
                  
                  
                  12,102,568
                  
                  
                  12,767,087
                  
                  
                  25,273,210
                  
                  
                  23,577,374Brokerage
                      and clearing fees
                  
                  
                  709,183
                  
                  
                  662,056
                  
                  
                  1,484,484
                  
                  
                  1,294,697Cost
                      of primary research services
                  
                  
                  609,129
                  
                  
                  395,218
                  
                  
                  1,194,293
                  
                  
                  395,218Professional
                      services
                  
                  
                  2,475,016
                  
                  
                  703,640
                  
                  
                  3,302,501
                  
                  
                  1,085,118Occupancy
                      and equipment
                  
                  
                  689,428
                  
                  
                  453,061
                  
                  
                  1,226,610
                  
                  
                  895,589Communications
                      and technology
                  
                  
                  1,010,869
                  
                  
                  884,010
                  
                  
                  1,950,847
                  
                  
                  1,696,946Depreciation
                      and amortization
                  
                  
                  162,946
                  
                  
                  182,027
                  
                  
                  306,170
                  
                  
                  363,048Amortization
                      of intangible assets
                  
                  
                  116,536
                  
                  
                  220,643
                  
                  
                  233,071
                  
                  
                  220,643Travel
                      and entertainment
                  
                  
                  1,012,210
                  
                  
                  685,416
                  
                  
                  1,971,804
                  
                  
                  1,154,618Other
                  
                  
                  1,278,377
                  
                  
                  1,124,415
                  
                  
                  2,117,247
                  
                  
                  1,716,359Impairment
                      of goodwill
                  
                  
                  2,601,516
                  
                  
                  —
                  
                  
                  2,601,516
                  
                  
                  —Total
                      operating expenses
                  
                  
                  22,767,778
                  
                  
                  18,077,573
                  
                  
                  41,661,753
                  
                  
                  32,399,610Operating
                      (loss) income
                  
                  
                  (6,968,304
                  )
                  
                  2,294,776
                  
                  
                  (14,093,974
                  )
                  
                  2,295,883Interest
                      income
                  
                  
                  34,016
                  
                  
                  107,461
                  
                  
                  130,420
                  
                  
                  229,954Interest
                      expense
                  
                  
                  (18,301
                  )
                  
                  (26,864
                  )
                  
                  (39,008
                  )
                  
                  (81,208
                  )(Loss)
                      income before taxes
                  
                  
                  (6,952,589
                  )
                  
                  2,375,373
                  
                  
                  (14,002,562
                  )
                  
                  2,444,629Income
                      tax expense
                  
                  
                  1,838,744
                  
                  
                  (55,000
                  )
                  
                  1,838,744
                  
                  
                  (55,000
                  )Net
                      (loss) income
                  
                  $
                  (5,113,845
                  )
                  $
                  2,320,373
                  
                  $
                  (12,163,818
                  )
                  $
                  2,389,629
  Our
            net
            (loss) income for the three months and six months ended June 30, 2008
            and 2007
            included the following non-cash expenses:
 
 **Three
                      Months Ended**
                  
                  **Six
                      Months Ended****June
                      30,**
                    **2008**
                  
                  **June
                      30,**
                    **2007**
                  
                  **June
                      30,**
                    **2008**
                  
                  **June
                      30,**
                    **2007**Stock-based
                      compensation
                  
                  $
                  653,281
                  
                  
                  714,159
                  
                  $
                  1,316,606
                  
                  $
                  1,451,862Depreciation
                      and amortization
                  
                  
                  162,946
                  
                  
                  182,028
                  
                  
                  306,171
                  
                  
                  363,048Amortization
                      of intangible assets
                  
                  
                  116,535
                  
                  
                  220,643
                  
                  
                  233,070
                  
                  
                  220,643Provision
                      for uncollectible accounts receivable
                  
                  
                  113,758
                  
                  
                  217,922
                  
                  
                  280,543
                  
                  
                  228,167Impairment
                      of goodwill and intangible assets
                  
                  
                  2,601,516
                  
                  
                  —
                  
                  
                  2,601,516
                  
                  
                  —Amortization
                      of discounts on debt
                  
                  
                  —
                  
                  
                  2,583
                  
                  
                  2,584
                  
                  
                  5,166Total
                  
                  $
                  3,648,036
                  
                  
                  1,337,335
                  
                  $
                  4,740,490
                  
                  $
                  2,268,886
  19
  ***Investment
            Banking Revenue***
  Our
            investment banking activity includes the following:
  ·
                  *Capital
                      Raising*-
                      Capital raising includes private placements of equity and debt
                      instruments
                      and underwritten public offerings.
  ·
                  *Financial
                      Advisory*-
                      Financial advisory includes advisory assignments with respect
                      to mergers
                      and acquisitions, divestures, restructurings and
                      spin-offs.
  The
            following table sets forth our revenue and transaction volumes from our
            investment banking activities for the three months and six months ended
            June 30,
            2008 and 2007:
  **Three
                      Months Ended**
                  
                  **Six
                      Months Ended****June
                      30,**
                    **2008**
                  
                  **June
                      30,**
                    **2007**
                  
                  **June
                      30,**
                    **2008**
                  
                  **June
                      30,**
                    **2007****Revenue:**Capital
                      raising
                  
                  $
                  4,252,495
                  
                  $
                  5,126,556
                  
                  $
                  7,482,685
                  
                  $
                  9,146,527Financial
                      advisory and other
                  
                  
                  194,500
                  
                  
                  505,000
                  
                  
                  340,721
                  
                  
                  717,500Total
                      investment banking revenue
                  
                  $
                  4,446,995
                  
                  $
                  5,631,556
                  
                  $
                  7,823,406
                  
                  $
                  9,864,027**Transaction
                      Volumes:**Public
                      offerings:Capital
                      underwritten participations
                  
                  $
                  8,153,000
                  
                  $
                  72,750,000
                  
                  $
                  8,153,000
                  
                  $
                  105,250,000Number
                      of transactions
                  
                  
                  2
                  
                  
                  4
                  
                  
                  2
                  
                  
                  7Private
                      placements:Capital
                      raised
                  
                  $
                  43,276,000
                  
                  $
                  22,985,000
                  
                  $
                  75,700,000
                  
                  $
                  86,585,000Number
                      of transactions
                  
                  
                  6
                  
                  
                  3
                  
                  
                  10
                  
                  
                  6
  Our
            investment banking revenue was $4,447,000 or 28% of our revenue during
            second
            quarter 2008, representing a 21% decrease from the similar quarter in
            2007.
            Second quarter of 2008 represented a different operating environment
            where the
            ability to execute larger transactions was more difficult than what we
            have
            experienced in the same period in 2007. However, banking revenue for
            the three
            months ended June 30, 2008 has rebounded versus the first quarter 2008
            up 32%
            sequentially driven by an increased number of deals. We participated
            in two
            secondary public offerings during the latest quarter and acted as placement
            agent for five private placements during the quarter.
  During
            the six months ended June 30, 2008, we had one investment banking client
            that
            accounted for 18% of our revenue, while no single investment banking
            client
            accounted for more than 10% of our revenue during the first half of
            2007.
 
 ***Commissions
            and Principal Transactions Revenue***
  Our
            broker-dealer activity includes the following:
  ·
                  *Commissions*-
                      Commissions include revenue resulting from executing stock
                      trades for
                      exchange-listed securities, over-the-counter securities and
                      other
                      transactions as agent.
  ·
                  *Principal
                      Transactions*-**Principal
                      transactions consist of a portion of dealer spreads attributed
                      to our
                      securities trading activities as principal in NASDAQ-listed
                      and other
                      securities, and include transactions derived from our activities
                      as a
                      market-maker. Additionally, principal transactions include
                      gains and
                      losses resulting from market price fluctuations that occur
                      while holding
                      positions in our trading security
                      inventory.
  20
  The
            following table sets forth our revenue and several operating metrics
            which we
            utilize in measuring and evaluating performance and the results of our
            trading
            activity operations:
 
 **Three
                      Months Ended**
                  
                  **Six
                      Months Ended****June
                      30,**
                    **2008**
                  
                  **June
                      30,**
                    **2007**
                  
                  **June
                      30,**
                    **2008**
                  
                  **June
                      30,**
                    **2007****Revenue:**Commissions
                  
                  $
                  7,892,372
                  
                  $
                  7,717,573
                  
                  $
                  16,361,082
                  
                  $
                  14,883,280Principal
                      transactions:Customer
                      principal transactions, proprietary trading and market
                      making
                  
                  $
                  112,637
                  
                  $
                  4,669,144
                  
                  $
                  (3,672,105
                  )
                  $
                  7,354,753Investment
                      portfolio
                  
                  
                  1,306,192
                  
                  
                  1,043,508
                  
                  
                  3,775,858
                  
                  
                  971,023Total
                      principal transactions revenue
                  
                  $
                  1,418,829
                  
                  $
                  5,712,652
                  
                  $
                  103,753
                  
                  $
                  8,325,776**Transaction
                      Volumes:**Number
                      of shares traded
                  
                  
                  329,419,357
                  
                  
                  247,476,532
                  
                  
                  561,535,539
                  
                  
                  477,147,878Number
                      of active clients
                  
                  
                  343
                  
                  
                  408
                  
                  
                  444
                  
                  
                  488
 
 Commissions
            amounted to $7,892,000, or 50%, of our revenue during the second quarter
            2008,
            representing a 2% increase from the similar period in 2007. Lower brokerage
            commissions were offset by higher revenue for brokering institutional
            money
            funds by our Institutional Cash Distributors division.
  Principal
            transactions produced modest gains of $112,637 during the second quarter
            2008
            versus our record gains experienced in 2007. The 2008 gain included increased
            profitability in our market making activities, as well as realized and
            unrealized gains in our investment portfolio. As of June 30, 2008, we
            made
            markets in 1,361 stocks, which has increased from 1,100 stocks as of
            June 30,
            2007. We view “intelligent market making” in small cap stocks as a key element
            to differentiating ourselves from our competition. Principal transactions
            revenue consists of four different activities - customer principal trades,
            market making, trading for our proprietary account, and realized and
            unrealized
            gains and losses in our investment portfolio. As a broker-dealer, we
            account for
            all of our marketable security positions on a trading basis and as a
            result, all
            security positions are marked to fair market value each day. Returns
            from market
            making and proprietary trading activities tend to be more volatile than
            acting
            as agent or principal for customers.
  During
            2008 and 2007, no single brokerage customer accounted for more than 10%
            of our
            revenue from continuing operations.
 
 ***Primary
            Research Revenue***
  Panel
            Intelligence provides primary market research to corporate and financial
            clients
            in the healthcare and CleanTech industries. The predecessor business
            which was
            called MedPanel was acquired April 17,
            2007. For the quarter ended June 30, 2008, Panel revenues were up 58%
            to
            $1,498,000 versus the same period in 2007. The growth has been primarily
            driven
            by increased business in the healthcare industry. However, we have not
            seen the
            acceleration in the financial services industry that was originally estimated
            when we acquired the business. We believe this is more related to the
            current
            challenging market environment and not a reduction in opportunity. That
            said,
            the current revised outlook for this segment of the business was a contributing
            factor in our impairment analysis of the balance sheet assets for Panel
            Intelligence. See *Other
            Operating Expenses* below
            for further information.
  21
  ***Compensation
            and Benefits Expenses***
  Compensation
            and benefits expense represents the largest component of our operating
            expenses
            and includes incentive compensation paid to sales, trading, research
            and
            investment banking professionals, as well as discretionary bonuses, salaries
            and
            wages, and stock-based compensation. Incentive compensation varies primarily
            based on revenue production. Discretionary bonuses paid to research analysts
            also vary with commissions revenue production, but includes other qualitative
            factors as well. Salaries, payroll taxes and employee benefits vary based
            on
            overall headcount.
 
 The
            following table sets forth the major components of our compensation and
            benefits
            for the three months ended June 30, 2008 and 2007:
 
 **Three
                      Months Ended**
                  
                  **Six
                      Months Ended****June
                      30,**
                    **2008**
                  
                  **June
                      30,**
                    **2007**
                  
                  **June
                      30,**
                    **2008**
                  
                  **June
                      30,**
                    **2007**Incentive
                      compensation and discretionary bonuses
                  
                  $
                  6,139,517
                  
                  $
                  7,708,451
                  
                  $
                  12,355,067
                  
                  $
                  13,383,686Salaries
                      and wages
                  
                  
                  4,242,553
                  
                  
                  3,559,646
                  
                  
                  8,552,376
                  
                  
                  6,599,791Stock-based
                      compensation
                  
                  
                  653,821
                  
                  
                  714,159
                  
                  
                  1,316,606
                  
                  
                  1,451,862Payroll
                      taxes, benefits and other
                  
                  
                  1,066,677
                  
                  
                  784,831
                  
                  
                  3,049,161
                  
                  
                  2,142,035Total
                      compensation and benefits
                  
                  $
                  12,102,568
                  
                  $
                  12,767,087
                  
                  $
                  25,273,210
                  
                  $
                  23,577,374Total
                      compensation and benefits as a percentage of revenue
                  
                  
                  77
                  %
                  
                  63
                  %
                  
                  92
                  %
                  
                  68
                  %Cash
                      compensation and benefits as a percentage of revenue
                  
                  
                  72
                  %
                  
                  59
                  %
                  
                  87
                  %
                  
                  64
                  %
 
 The
            decrease in compensation and benefits expense of $664,519 or 5%, from
            the second
            quarter 2007 to the second quarter 2008 represents lower incentive compensation,
            which is directly correlated to revenue production. Cash compensation
            is equal
            to total compensation and benefits expense excluding stock-based compensation,
            which is a non-cash expense. Cash compensation and benefits expense as
            a
            percentage of revenue increased to 77% during the three months ended
            June 30,
            2008 as compared to 63% during the similar period in 2007. The increase
            was
            largely attributed to lower than anticipated revenues especially in our
            proprietary trading account during the three months ended June 30, 2008
            versus
            same period in 2007. We do not historically pay commissions on gains
            in this
            account, driving higher gross profits. During the second quarter of 2007
            proprietary trading contributed $3,709,000 in trading gains versus a
            loss of
            $436,378 in the same period in 2008. In addition, as revenues decrease,
            the
            fixed portion of the compensation base becomes a larger impact on the
            percentage
            of total revenues.
  No
            single
            sales professional accounted for more than 10% of our revenue during
            the six
            months ended June 30, 2008 and 2007.
  Stock-based
            compensation expense decreased by $60,000 during the second quarter 2008,
            as
            compared to the similar quarter in 2007. The decline in stock-based compensation
            expense was due in part to fewer non-vested restricted shares outstanding
            in
            2008.
 
 ***Other
            Operating Expenses***
  Brokerage
            and clearing fees include trade processing expenses that we pay to our
            clearing
            broker and execution fees that we pay to floor brokers and electronic
            communication networks. Merriman Curhan Ford & Co. is a fully-disclosed
            broker-dealer, which has engaged a third party clearing broker to perform
            all of
            the clearance functions. The clearing broker-dealer processes and settles
            the
            customer transactions for Merriman Curhan Ford & Co. and maintains the
            detailed customer records. Additionally, security trades are executed
            by
            third-party broker-dealers and electronic trading systems. These expenses
            are
            almost entirely variable with commission revenue and the volume of brokerage
            transactions. Our brokerage and clearing fees increased by $47,000, or
            7%,
            during the second quarter of 2008 as compared to the second quarter of
            2007.
            This increase reflected higher costs associated with execution of foreign
            securities for our clients during second quarter 2008 as compared to
            second
            quarter 2007. Execution fees for foreign securities are higher than they
            are for
            domestic securities.
  Cost
            of
            primary research revenue principally consists of panelist honorarium
            and
            recruitment costs. Technical experts (mostly in the medical field but
            including
            those in the CleanTech and technology fields) receive cash honoraria
            for
            participating in qualitative panels and quantitative surveys. We pay
            the
            honoraria to the panelists when the panel or survey has been completed
            and
            record this expense as incurred. We closed the acquisition of MedPanel
            on
            April 17, 2007 and began recognizing primary research revenue and related
            expenses since that date.
  Professional
            services expense includes legal, audit, consulting fees, as well as expenses
            related to investment banking transactions. The increase of $1,771,000
            or 252%,
            from the second quarter of 2007 to the second quarter of 2008 was primarily
            attributed to higher legal fees associated with defending the Company
            in the
            litigations in which it is involved and with various projects, as well
            as higher
            business development costs associated with investment banking transactions.
  22
  Occupancy
            and equipment includes rental costs for our office facilities and equipment,
            as
            well as equipment, software and leasehold improvement expenses. These
            expenses
            are largely fixed in nature. The increase of $236,000 or 52%, from the
            second
            quarter of 2007 to the second quarter of 2008 was in part due to inclusion
            of
            expenses from Panel Intelligence and a subsequent move to a new office
            location
            in August of 2007, as well as higher costs associated with a new lease
            for our
            New York office, which commenced in March 2008.
  Communications
            and technology expense includes market data and quote services, voice,
            data and
            Internet service fees, and data processing costs. Historically, these
            costs have
            increased as we hire additional employees. The increase of $127,000,
            or 14%,
            from the second quarter of 2007 to the second quarter of 2008 was primarily
            due
            to the new lease in New York and Boston as well as increased investment
            in data
            services for the Asset Management business.
  Depreciation
            and amortization expense primarily relate to the depreciation of our
            computer
            equipment and leasehold improvements. The decrease of $19,000, or 10%,
            from the
            second quarter of 2007 to the second quarter of 2008 was due to a decrease
            in
            book value of computer equipment and furniture as they become fully depreciated.
 
 As
            of
            April 30, 2008, the Company determined there was an impairment to the
            goodwill
            and intangible assets related to the acquisition of MedPanel, Inc. (currently
            its subsidiary Panel Intelligence, LLC). The Company calculates an estimated
            fair value based on multiples of revenue, earnings, and book value of
            comparable
            transactions. However, when such comparable transactions are not available
            or
            have become outdated, the Company uses discounted cash flow scenarios
            to
            estimate the fair value of the reporting units. As of April 30, 2008,
            the Company performed its annual impairment testing and recorded an impairment
            loss of $2,600,000 in its consolidated statement of operations for the
            three
            months and six months ended June 30, 2008 related to the goodwill and
            tradename.
            This is a non-cash expense item.
  Travel
            and entertainment expense results from business development activities
            across
            our various businesses. The increase of $327,000 or 48%, from the second
            quarter
            of 2007 to the second quarter of 2008 was due mostly to increased costs
            associated with non-deal related roadshows, client visits, and business
            development.
 
 Other
            operating expense includes company events, recruiting fees, professional
            liability and property insurance, marketing, business licenses and taxes,
            office
            supplies and other miscellaneous office expenses. The increase of approximately
            $153,000 or 14%, from the second quarter of 2007 to the second quarter
            of 2008
            was partly due to increased marketing expenses somewhat offset by lower
            recruiting fees.
  ***Income
            Tax Expense***
  At
            the
            end of each interim reporting period the Company calculates an effective
            tax
            rate based on the Company’s estimate of the tax provision (benefit) that will be
            provided for the full year, stated as a percentage of estimated annual
            pre-tax
            income (loss). The tax provision (benefit) for the interim period is
            determined
            using this estimated annual effective tax rate. For the three months
            and six
            months ended June 30, 2008, the Company recorded $0 and $1,839,000 of
            income tax
            benefit, respectively. The
            effective tax rate for the six months ended June 30, 2008 is (12.64)%,
            which is
            mainly attributable to the release of the FIN 48 liability due to the
            approval
            of an accounting method change for federal tax purposes.
  Historically
            and currently, the Company has recorded a valuation allowance on the
            deferred
            tax assets, the significant component of which relates to net operating
            loss tax
            carryforwards. Management continually evaluates the realizability of
            its
            deferred tax assets based upon negative and positive evidence available.
            Based
            on the evidence available at this time, the Company continues to conclude
            that
            it is not “more likely than not” that we will be able to realize the benefit of
            our deferred tax assets in the future.
 
 The
            Company adopted Interpretation No. 48 on January 1, 2007. Upon the
            adoption of FIN 48, the Company recognized no adjustment in the liability
            for unrecognized income tax benefits and no corresponding change in retained
            earnings. At the end of the fiscal year 2007, the Company recorded a
            liability
            for an uncertain tax position related to certain investments in the amount
            of
            $1,839,000. This
            entire amount has been derecognized as of June 30, 2008 due to an Internal
            Revenue service approved accounting method change.
 
 The
            Company’s tax years 2005-2007 will remain open for three years for examination
            by the Internal Revenue Service from the date the federal corporation
            tax
            returns were filed. The Company’s tax years 2003-2007 will remain open for three
            to four years for examination by state tax authorities from the date
            the state
            corporation tax returns were filed. Net operating losses deducted are
            subject to
            review and adjustment for three to four years after the net operating
            losses are
            deducted on the U.S. and state returns filed.
  23
 
 ***Off-Balance
            Sheet Arrangements***
 
 We
            were
            not a party to any off-balance sheet arrangements during the six months
            ended
            June 30, 2008 and 2007. In particular, we do not have any interest in
            so-called
            limited purpose entities, which include special purpose entities and
            structured
            finance entities.
  ***Commitments***
 
 The
            following table summarizes our significant commitments as of June 30,
            2008,
            consisting of debt payments related to convertible notes payable,
            non-convertible notes payable, capital leases and future minimum lease
            payments
            under all non-cancelable operating leases with initial or remaining terms
            in
            excess of one year.
  **Operating**
                    **Leases**
                  
                  **Capital**
                    **Leases**2008
                  
                  $
                  1,377,663
                  
                  $
                  280,3382009
                  
                  
                  2,624,011
                  
                  
                  407,3692010
                  
                  
                  2,019,930
                  
                  
                  268,8532011
                  
                  
                  1,923,516
                  
                  
                  146,6472012
                  
                  
                  1,174,323
                  
                  
                  —Thereafter
                  
                  
                  572,000
                  
                  
                  —Total
                      commitments
                  
                  $
                  9,691,443
                  
                  $
                  1,103,207
  **Critical
            Accounting Policies and Estimates**
  The
            consolidated financial statements are prepared in accordance with accounting
            principles generally accepted in the United States, which require us
            to make
            estimates and judgments that affect the reported amounts of assets, liabilities,
            revenues and expenses, and related disclosure of contingent assets and
            liabilities. On an on-going basis, we evaluate our estimates, including
            those
            related to the valuation of securities owned and deferred tax assets.
            We base
            our estimates on historical experience and on various other assumptions
            that are
            believed to be reasonable under the circumstances, the results of which
            form the
            basis for making judgments about the carrying values of assets and liabilities
            that are not readily apparent from other sources. Actual results could
            differ
            from those estimates. We believe the following critical accounting policies
            affect our more significant judgments and estimates used in the preparation
            of
            our consolidated financial statements.
  24
 *Valuation
          of Securities Owned*
  “Securities
          owned” and “Securities sold, but not yet purchased” are reflected in the
          consolidated statements of financial condition on a trade-date basis. Related
          unrealized gains or losses are generally recognized in “Principal transactions
          revenue” in the consolidated statements of operations. The use of fair value to
          measure financial instruments is fundamental to our financial statements
          and is
          one of our most critical accounting policies.
  The
          fair
          value of a financial instrument is the amount 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 (the exit price). Instruments that
          the
          Company owns (long positions) are marked to bid prices, and instruments
          that the
          Company has sold, but not yet purchased (short positions), are marked to
          offer
          prices. Fair value measurements are not adjusted for transaction costs.
          Fair
          values of our financial instruments are generally obtained from quoted
          market
          prices in active markets, broker or dealer price quotations, or alternative
          pricing sources with reasonable levels of price transparency. To the extent
          certain financial instruments trade infrequently or are non-marketable
          securities and, therefore, have little or no price transparency, we value
          these
          instruments based on management’s estimates.
  The
          Company has categorized its financial instruments measured at fair value
          into a
          three-level classification in accordance with SFAS 157. Level 1fair value
          measurements of financial instruments uses quoted prices in active markets
          for
          identical assets or liabilities. Fair value measurements of financial instrument
          with inputs (other than quoted prices included in Level 1) are either directly
          or indirectly observable for the asset or liability through correlation
          with
          market data at the measurement date and for the duration of the instrument’s
          anticipated life are categorized as Level 2. Finally, fair value measurements
          of
          financial instruments that have no direct observable levels are generally
          categorized as Level 3. The lowest level input that is significant to the
          fair
          value measurement of a financial instrument is used to categorize the instrument
          and reflects the judgment of management.
  *Revenue
          Recognition*
  Commissions
          revenue and related clearing expenses are recorded on a trade-date basis
          as
          security transactions occur. Principal transactions in regular-way trades
          are
          recorded on the trade date, as if they had settled. Profit and loss arising
          from
          all securities and commodities transactions entered into for the account
          and
          risk of our company are recorded on a trade-date basis.
  Investment
          banking revenue includes underwriting and private placement agency fees
          earned
          through our participation in public offerings and private placements of
          equity
          and convertible debt securities and fees earned as financial advisor in
          mergers
          and acquisitions and similar transactions. Underwriting revenue is earned
          in
          securities offerings in which we act as an underwriter and includes management
          fees, selling concessions and underwriting fees. Management fees are recorded
          on
          the offering date, selling concessions on settlement date, and underwriting
          fees
          at the time the underwriting is completed and the related income is reasonably
          determinable. Syndicate expenses related to securities offerings in which
          we act
          as underwriter or agent are deferred until the related revenue is recognized
          or
          we determine that it is more likely than not that the securities offerings
          will
          not ultimately be completed. Merger and acquisition fees and other advisory
          services revenue are generally earned and recognized only upon successful
          completion of the engagement. Underwriting revenue is presented net of
          related
          expenses. Unreimbursed expenses associated with private placement and advisory
          transactions are recorded as expenses as incurred.
  As
          co-manager for registered equity underwriting transactions, management
          must
          estimate our share of transaction related expenses incurred by the lead
          manager
          in order to recognize revenue. Transaction related expenses are deducted
          from
          the underwriting fee and therefore reduces the revenue that is recognized
          as
          co-manager. Such amounts are adjusted to reflect actual expenses in the
          period
          in which we receive the final settlement, typically 90 days following the
          closing of the transaction.
 
 *Stock-Based
          Compensation*
  On
          January 1, 2006, we adopted SFAS 123(R), “Share-Based Payment,” which
          requires the measurement and recognition of compensation expense, based
          on
          estimated fair values, for all share-based awards made to employees and
          directors, including stock options, non-vested stock, and participation
          in our
          employee stock purchase plan. Share-based compensation expense recognized
          in our
          consolidated statement of operations for the three months and six months
          ended
          June 30, 2008 and 2007 includes compensation expense for share-based awards
          granted (i) prior to, but not yet vested as of December 31, 2005,
          based on the grant date fair value estimated in accordance with the provisions
          of SFAS 123, and (ii) subsequent to December 31, 2005, based on the
          grant date fair value estimated in accordance with the provisions of SFAS
          123(R).
  We
          estimate the fair value of stock options granted using the Black-Scholes
          option
          pricing method. This option pricing model requires the input of highly
          subjective assumptions, including the option’s expected life and the price
          volatility of the underlying stock. The expected life of employee stock
          options
          represents the weighted-average period the stock options are expected to
          remain
          outstanding. The Company calculated the expected term using the lattice
          model
          with specific assumptions about the suboptimal exercise behavior, post-vesting
          termination rates and other relevant factors. The expected stock price
          volatility was determined using the historical volatility of our common
          stock.
          The fair value is then amortized on a straight-line basis over the requisite
          service periods of the awards, which is generally the vesting period.
  25
  Because
          share-based compensation expense is based on awards that are ultimately
          expected
          to vest, it has been reduced to account for estimated forfeitures. SFAS
          123(R)
          requires forfeitures to be estimated at the time of grant and revised,
          if
          necessary, in subsequent periods if actual forfeitures differ from those
          estimates. Changes in these inputs and assumptions can materially affect
          the
          measure of estimated fair value of our share-based compensation.
  *Deferred
          Tax Valuation Allowance*
  We
          account for income taxes in accordance with the provision of SFAS
          No. 109, *Accounting for Income Taxes* ,
          which
          requires the recognition of deferred tax assets and liabilities at tax
          rates
          expected to be in effect when these balances reverse. Future tax benefits
          attributable to temporary differences are recognized to the extent that
          the
          realization of such benefits is more likely than not. We have concluded
          that it
          is more likely than not that our deferred tax assets as of June 30, 2008
          and
          2007 will not be realized based on the scheduling of deferred tax liabilities
          and projected taxable income. The amount of the deferred tax assets actually
          realized, however, could vary if there are differences in the timing or
          amount
          of future reversals of existing deferred tax liabilities or changes in
          the
          actual amounts of future taxable income. Should we determine that we will
          be
          able to realize all or part of the deferred tax asset in the future, an
          adjustment to the deferred tax asset will be recorded in the period such
          determination is made.
 
 **Liquidity
          and Capital Resources**
  Historically,
          we have satisfied our liquidity and regulatory capital needs through the
          generation of operating profits and the issuance of equity and debt securities,
          although we have not accessed the capital markets since 2004. As of June
          30,
          2008, liquid assets consisted primarily of cash and cash equivalents of
          $10,420,000 and marketable securities, net of securities sold not yet purchased,
          of $15,791,000, for a total of $26,211,000.
  Cash
          and
          cash equivalents decreased by $21,542,000 during the six months ended June
          30,
          2008 primarily due to the payment of higher employee bonuses in February
          2008
          for the Company’s 2007 performance. The Company’s performance in 2007 was better
          than in 2006 for which bonus was paid in the same period 2007. Cash used
          in
          operating activities for 2008 $21,542,000 which consisted of our net income
          adjusted for non-cash expenses including stock-based compensation, depreciation
          and amortization. In addition realized losses contributed to the loss related
          to
          securities owned and changes in operating asset and liability balances
          partially
          offset by unrealized gains on securities owned. Cash used in investing
          activities amounted to $192,428 during 2008 which consisted primarily of
          purchase of equipment and fixtures. Cash used in financing activities was
          $144,674. Our financing activities included debt service payments, partially
          offset by proceeds from the issuance of common stock in connection with
          our
          employee stock purchase plan and employee stock option exercises.
 
 Merriman
          Curhan Ford & Co., as a broker-dealer, is subject to Rule 15c3-1 of the
          Securities Exchange Act of 1934, which specifies uniform minimum net capital
          requirements, as defined, for their registrants. As of June 30, 2008, Merriman
          Curhan Ford & Co. had regulatory net capital of $6,398,982 which exceeded
          the required amount by $5,398,982.
  We
          believe that our existing cash balances and investments will be sufficient
          to
          meet our liquidity and capital spending requirements, both for the next
          twelve
          months as well as for the long-term. However, we may require additional
          capital
          investment to fund our working capital if we incur future operating losses.
          We
          cannot be certain that additional debt or equity financing will be available
          when required or, if available, that we can secure it on terms satisfactory
          to
          us.
 
 **Restructuring
          and Severance Charges**
 
 In
          order
          to better align its cost structure with its current revenue expectations,
          market
          demand, and areas of focus, the Company implemented a restructuring plan
          in
          August 2008. When the effects are fully reflected in our results by the
          end of
          the third quarter 2008, the plan will reduce operating expenses by $7 million
          annually.  Among other measures, the plan involved the elimination of
          approximately 20% of the company’s workforce, bringing the headcount to about
          150 employees company-wide. Severance and related costs are estimated to
          be
          about $300,000 which will largely be expensed in the third quarter. The
          Company
          will continue to focus on growing its recurring revenue business lines,
          as well
          as strengthen its core institutional brokerage and investment banking business
          units.
 
 The
          Company is also implementing a plan to exit the high net worth retail business,
          which accounted for less than 1% of its revenues in 2007.
  26
 
 **Item  3.  
          Quantitative and Qualitative Disclosures About Market Risk**
  The
          following discussion about market risk disclosures involves forward-looking
          statements. Actual results could differ materially from those projected
          in the
          forward-looking statements. We may be exposed to market risks related to
          changes
          in equity prices, interest rates and foreign currency exchange rates. We
          do not
          use derivative financial instruments for speculative, trading or any other
          purpose.
  *Equity
          Price Risk*
  The
          potential for changes in the market value of our trading positions is referred
          to as “market risk.” Our trading positions result from proprietary trading
          activities. These trading positions in individual equities and equity indices
          may be either long or short at any given time. Equity price risks result
          from
          exposures to changes in prices and volatilities of individual equities
          and
          equity indices. We seek to manage this risk exposure through diversification
          and
          limiting the size of individual positions within the portfolio. The effect
          on
          earnings and cash flows of an immediate 10% increase or decrease in equity
          prices generally is not ascertainable and could be positive or negative,
          depending on the positions we hold at the time. We do not establish hedges
          in
          related securities or derivatives. From time to time, we also hold equity
          securities received as compensation for our services in investment banking
          transactions. These equity positions are always long. However, as the prices
          of
          individual equity securities do not necessarily move in tandem with the
          direction of the general equity market, the effect on earnings and cash
          flows of
          an immediate 10% increase or decrease in equity prices generally is not
          ascertainable.
  *Interest
          Rate Risk*
  Our
          exposure to market risk resulting from changes in interest rates relates
          primarily to our investment portfolio and long-term debt obligations. Our
          interest income and cash flows may be impacted by changes in the general
          level
          of U.S. interest rates. We do not hedge this exposure because we believe
          that we
          are not subject to any material market risk exposure due to the short-term
          nature of our investments. We would not expect an immediate 10% increase
          or
          decrease in current interest rates to have a material effect on the fair
          market
          value of our investment portfolio.
  Our
          long-term debt obligations bear interest at a fixed rate. Accordingly,
          an
          immediate 10% increase or decrease in current interest rates would not
          have an
          impact on our interest expense or cash flows. The fair market value of
          our
          long-term fixed interest rate debt is subject to interest rate risk. Generally,
          the fair market value of fixed interest rate debt will increase as interest
          rates fall and decrease as interest rates rise. We would not expect an
          immediate
          10% increase or decrease in current interest rates to have a material impact
          on
          the fair market value of our long term debt obligations.
  *Foreign
          Currency Risk*
  We
          do not
          have any foreign currency denominated assets or liabilities or purchase
          commitments and have not entered into any foreign currency contracts.
          Accordingly, we are not exposed to fluctuations in foreign currency exchange
          rates.
  27
  **Item  4. 
          Controls and Procedures**
 
 **Evaluation
          of Disclosure Controls and Procedures** -
          We have established disclosure controls and procedures to ensure that material
          information relating to the Company, including its consolidated subsidiaries,
          is
          made known to the officers who certify the Company's financial reports
          and to
          other members of senior management and the Board of Directors.
 
 Based
          on
          their evaluation of the Company's disclosure controls and procedures (as
          defined
          in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
          1934), the Principal Executive Officer and Principal Financial Officer
          of the
          Company have concluded that the disclosure controls and procedures are
          effective
          as of June 30, 2008.
 
 **Changes
          in internal controls** - There
          was
          no change in the Company's internal control over financial reporting (as
          defined
          in Rules 13a-15(d) and 15d-15(d) of the Exchange Act) that occurred during
          the
          quarter ended June 30, 2008, that materially affected, or is reasonably
          likely
          to materially affect, the Company's internal control over financial
          reporting.
  28
 **PART
        II.   OTHER INFORMATION**
 
 **Item 1. Legal
        Proceedings**
  The
        Company is responding to a Grand Jury subpoena from
        the U.S. Attorney’s Office for the Northern District of California for documents
        relating to the activities of a former retail broker of the Company, David
        Scott
        Cacchione, and one of his customers, William Del Biaggio III.  Cacchione’s
        activities under investigation relate primarily to the apparent misuse of
        various client accounts as collateral for loans to Del Biaggio.  Cacchione
        purportedly signed “account control agreements” in which he purported to act on
        behalf of the Company to authorize the use of various client accounts as
        security for loans to the customer from various third party lenders.
 Cacchione
        appears to have improperly provided client
        account statements to third-party lenders or to Del Biaggio for the purpose
        of
        representing to the lenders that the accounts belonged to Del Biaggio.  The
        retail client account statements were altered so that the accounts appear
        to
        belong to Del Biaggio when in fact some of the accounts belonged to other
        Merriman Curhan Ford & Co. retail clients.  Del Biaggio is no longer a
        customer of the Company.
 Cacchione
        has been terminated.  The Company’s
        internal investigation thus far has found no evidence that any of Cacchione’s
        supervisors or any member of management was aware of these activities until
        they
        were uncovered.  The Company is fully cooperating with the Grand Jury
        inquiry and is in the process of producing the documents called for by the
        subpoena.
 The
        Company is also subject to a formal investigation
        commenced by the Securities and Exchange Commission (“SEC”).  The SEC
        investigation appears to relate in part to the subject matter of the Grand
        Jury
        inquiry, i.e., Cacchione’s misuse of client accounts as collateral for
        loans to the customer.  It also appears to relate to other possible
        violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule
        10b-5 thereunder by Cacchione in the handling of his client accounts.  The
        SEC investigation further appears to relate to the Company’s trading activities
        in various stocks in possible violation of Rule 10b-5 as well as to a failure
        to
        adequately supervise its personnel with a view toward preventing violations
        of
        the federal securities laws.  The Company is cooperating fully with the SEC
        in its investigation.
 The
        investigation relating to client accounts appears to
        involve only Cacchione’s retail accounts.  The Company’s high-net-worth
        client retail brokerage business accounted for less than 1% of the Company’s
        revenue in 2007.  The Company is phasing out this business and will
        concentrate on strengthening its core institutional brokerage and investment
        banking businesses.  The Company also is re-examining its compliance
        policies and procedures as well as the alignment of the supervisory and
        compliance related functions of various members of management.
 Cacchione’s
        activities have given rise to a number of lawsuits against
        the Company.  They are as follows:
  DGB
        Investments, Inc. v. Merriman Curhan Ford &
Co.
  In
        May 2008, Merriman Curhan Ford & Co. was served with a complaint filed by
        DGB Investments, Inc. which loaned money to William Del Biaggio III, the
        former
        client of the Company, against Del Biaggio, David Scott Cacchione, a former
        retail broker of Merriman Curhan Ford & Co., and the Company. Plaintiff
        alleges that Del Biaggio defaulted on a multi-million dollar loan obtained
        from
        Plaintiff.  The Company had suspended and, effective June 4, 2008,
        terminated Cacchione’s employment.   The complaint further alleges
        that Cacchione, while still employed with Merriman Curhan Ford & Co., signed
        an account control agreement purporting to pledge a retail client stock account
        as collateral for the Del Biaggio loan. On the basis of these allegations,
        Plaintiff asserts various claims against the Company and others.  Plaintiff
        seeks $3 million in damages.  We believe that we have meritorious defenses
        and intend to contest this claim vigorously.
  Heritage
        Bank of Commerce v. Merriman Curhan Ford &
Co.
  In
        May 2008, Merriman Curhan Ford & Co. was served with a complaint filed by
        Heritage Bank of Commerce, which loaned money to Del Biaggio, against Del
        Biaggio and the Company.  Plaintiff alleges that Del Biaggio defaulted on a
        multi-million dollar loan obtained from Plaintiff.  The complaint further
        alleges that Cacchione, while still employed with Merriman Curhan Ford &
Co., signed an account control agreement purporting to pledge various retail
        client stock accounts as collateral for the Del Biaggio loan. On the basis
        of
        these allegations, Plaintiff asserts various claims against the Company and
        others.  Plaintiff seeks $ 4 million in damages.  We believe that we
        have meritorious defenses and intend to contest this claim
        vigorously.
  Modern
        Bank, N.A. v. Merriman Curhan Ford & Co.
  In
        June 2008, Merriman Curhan Ford & Co. was served with a complaint filed by
        Modern Bank, N.A., which loaned money to Del Biaggio, against Del Biaggio,
        the
        Company, and Cacchione, the same former retail broker of the Company named
        in
        the lawsuits above.  Plaintiff alleges that Del Biaggio defaulted on a
        multi-million dollar loan obtained from Plaintiff.  The complaint further
        alleges that Cacchione, while still employed with Merriman Curhan Ford &
Co., signed an account control agreement purporting to pledge a retail client
        stock account as collateral for the Del Biaggio loan. On the basis of these
        allegations, Plaintiff asserts various claims against the Company and
        others.  Plaintiff seeks $10 million in damages.  We believe that we
        have meritorious defenses and intend to contest this claim
        vigorously.
  29
  Security
        Pacific Bank v. Merriman Curhan Ford &
Co.
  In
        June 2008, Merriman Curhan Ford & Co. was served with a complaint filed by
        Security Pacific Bank, which loaned money to Del Biaggio, against Del Biaggio,
        the Company, and Cacchione named in the lawsuits above.  Plaintiff alleges
        that Del Biaggio defaulted on a multi-million dollar loan obtained from
        Plaintiff.  The complaint further alleges that Cacchione, while still
        employed with Merriman Curhan Ford & Co., signed an account control
        agreement purporting to pledge a retail client stock accounts as collateral
        for
        the Del Biaggio loan. On the basis of these allegations, Plaintiff asserts
        various claims against the Company and others.  Plaintiff seeks $5 million
        in damages.  We believe that we have meritorious defenses and intend to
        contest this claim vigorously.
  AEG
        Facilities, Inc. v. Merriman Curhan Ford &
Co.
  In
        June 2008, Merriman Curhan Ford & Co. was served with a complaint filed by
        AEG Facilities, Inc. which loaned money to Del Biaggio, against Del Biaggio,
        the
        Company, and the same former retail broker of the Company named in the lawsuits
        above.  Plaintiff alleges that Del Biaggio defaulted on a multi-million
        dollar loan obtained from Plaintiff.  The complaint further alleges that
        Cacchione, while still employed with Merriman Curhan Ford & Co., signed an
        account control agreement purporting to pledge various retail client stock
        accounts as collateral for the Del Biaggio loan. On the basis of these
        allegations, Plaintiff asserts various claims against the Company and
        others.  Plaintiff seeks $7 million in damages.  We believe that we
        have meritorious defenses and intend to contest this claim
        vigorously.
  Valley
        Community Bank v. Merriman Curhan Ford &
Co.
  In
        June 2008, Merriman Curhan Ford & Co. was served with a complaint filed by
        Valley Community Bank, which loaned money to Del Biaggio, against Del Biaggio,
        the Company, and the same former retail broker of the Company named in the
        lawsuits above.  Plaintiff alleges that Del Biaggio defaulted on a
        multi-million dollar loan obtained from Plaintiff.  The complaint further
        alleges that Cacchione, while still employed with Merriman Curhan Ford &
Co., signed account control agreements purporting to pledge various retail
        client stock accounts as collateral for the Del Biaggio loan. On the basis
        of
        these allegations, Plaintiff asserts various claims against the Company and
        others.  Plaintiff seeks over $4 million in damages.  We believe that
        we have meritorious defenses and intend to contest this claim
        vigorously.
  The
        Company anticipates at least one additional lawsuit will be filed against
        it by
        a lender to Del Biaggio, on similar facts to the lawsuits described above,
        with
        a claim believed to be approximately $10 million.
  **United
          American Bank v. Merriman Curhan Ford & Co.**
 
 In
          July
          2008, Merriman Curhan Ford & Co. was served with a complaint filed by United
          American Bank, which loaned money to Del Biaggio alleging that the Company
          entered into an account control agreement for an account that Del Biaggio
          had previously pledged to another lender.  The
          account pledged was in the name of Del Biaggio.  Plaintiff has brought
          claims for, among other things, fraud arising out of the failure to disclose
          the
          alleged previous pledge.  Plaintiff alleges damages in the amount of $1.75
          million.  We believe that we have meritorious defenses and intend to
          contest this claim vigorously.
 David
        Hengehold v. Merriman Curhan Ford & Co.
  In
        June 2008, Merriman Curhan Ford & Co. was served with a complaint filed by
        David Hengehold.  Plaintiff alleges, among other things, fraud based on a
        former employee of the Company having induced plaintiff into making loans
        to an
        entity associated with Del Biaggio.  This plaintiff is a former client of
        the Company.  This matter does not involve account control agreements.
        Plaintiff in this lawsuit alleges damages of over $500,000.  We believe
        that we have meritorious defenses and intend to contest this claim
        vigorously.
 **Don Arata, et al. v. Merriman Curhan Ford & Co.** In
        July 2008, Merriman Curhan Ford & Co. and Merriman Curhan Ford Group, Inc.
        were served with a complaint filed by several plaintiffs who made loans to
        Del
        Biaggio and related entities.  Plaintiffs allege, among other things, fraud
        based on Cacchione having induced plaintiff into making loans to Del Biaggio
        and
        certain related entities including Sand Hill Capital Partners III.  This
        matter does not involve account control agreements. Plaintiff in this lawsuit
        alleges damages of $3,025,000.  We believe that we have meritorious
        defenses and intend to contest this claim vigorously.
  30
  The
        Private Bank of the Peninsula v. Merriman Curhan Ford &
Co.
  In
        July 2008, Merriman Curhan Ford & Co. was served with a complaint filed by
        The Private Bank of the Peninsula.  Plaintiff alleges, among other things,
        fraud based on Cacchione having induced plaintiff into making loans to Del
        Biaggio.  This matter does not involve account control agreements.
        Plaintiff in this lawsuit alleges damages of $916,666.65.  We believe that
        we have meritorious defenses and intend to contest this claim
        vigorously.
  Paul
        Davis, et al. v. Merriman Curhan Ford &
Co.
  ****In August 2008, Merriman Curhan Ford & Co. was served with a
        complaint filed by several plaintiffs who made loans to Del Biaggio and related
        entities.  Plaintiffs allege, among other things, fraud based on Cacchione
        having induced plaintiff into making loans to Del Biaggio and entities
        associated with him.  This matter does not involve account control
        agreements. Plaintiffs in this lawsuit allege damages of $1.65 million.  We
        believe that we have meritorious defenses and intend to contest this claim
        vigorously
  Thomas
        O'Shea v. Merriman Curhan Ford & Co.
 In
          June
          2006, our broker-dealer subsidiary Merriman Curhan Ford & Co. was
          served with a claim in NASD Arbitration by Thomas O’Shea. Mr. O’Shea is a
          former at-will employee of Merriman Curhan Ford & Co. and worked in the
          investment banking department. Mr. O’Shea resigned from Merriman Curhan
          Ford & Co. in July 2005. Mr. O’Shea alleges breach of an implied
          employment contract, quantum meruit, and unjust enrichment based on his
          allegations that he was to be paid more for his work. The matter is in
          the
          discovery stage and an arbitration hearing is scheduled for October 2008.
          We
          believe that we have meritorious defenses and intend to contest these claims
          vigorously. However, in the event that we do not prevail, based upon the
          facts
          as we know them to date, we do not believe that the outcome will have a
          material
          effect on our financial position, financial results or cash
          flows.
 S3
        Investment Company, Inc. v. Merriman Curhan Ford & Co. and Qualico
        Capital, Inc.
  In
        September 2007, Merriman Curhan Ford & Co. was served with a complaint
        filed by a former client, S3 Investment Company, Inc. (“S3i”). The plaintiff
        alleged theories of breach of contract, fraud, negligent misrepresentation,
        intentional and negligent interference with prospective economic
        relations.  Subsequent to the end of our fiscal second quarter, this case
        was settled in July 2008.  Terms of the settlement agreement are
        confidential, but the settlement will not have a material effect on our
        financial position, financial results or cash flows.
  Additionally,
        from time to time, we are involved in ordinary routine
        litigation incidental to our business.
 
 Item
        1A. Risk Factors
  In
        addition to the other information set forth in this report, including reports
        we
        incorporate by reference, you should carefully consider the risk factors
        previously disclosed in response to Item 1A to Part 1 of our Annual Report
        on
        Form 10-K for the year ended December 31, 2007 and the additional risk
        factor described below.
  Merriman
        Curhan Ford & Co. is the defendant in numerous large pending
        lawsuits, and expect more lawsuits to be filed.
 
 Several
        lawsuits have recently been filed against Merriman Curhan Ford
& Co. in connection with the alleged actions of a former client of Merriman
        Curhan Ford & Co., William Del Biaggio III, and a former retail broker of
        Merriman Curhan Ford & Co., David Scott Cacchione, as more fully
        described under the heading “Legal Proceedings in Part II, Item 1”.  The
        total amount of damages sought under such lawsuits is over $40 million. 
The Company anticipates at least one additional lawsuit will be filed against
        Merriman Curhan Ford & Co. by a lender to Del Biaggio, on similar facts to
        the lawsuits described above, with a claim believed to be approximately $10
        million.  We can not assure you that we will prevail in any of these
        lawsuits.  We do, however, deny all allegations and will vigorously contest
        the lawsuits, which are in their early stages.  If Merriman Curhan Ford
& Co. is found liable in all of these lawsuits and the plaintiffs were to be
        awarded all of the damages they seek, it is likely that we would not be able
        to
        continue in business.  If we were to lose a significant portion of these
        lawsuits, our business and financial condition are likely to be adversely
        affected.  Even if we ultimately prevail in all of these lawsuits, we may
        incur significant legal fees and diversion of management’s time and attention
        from our core businesses, and our business and financial condition may be
        adversely affected.
  31
 
 **Item
        4.Submission of Matters to a Vote of Security
        Holders**
  The
        annual meeting of our stockholders was held on May 2, 2008. At the
        annual meeting, our stockholders voted on the matters shown in the table
        below.
        Each director was elected, and each proposal adopted, by the votes
        shown.
  **Votes**
                **For**
              
              **Votes**
                **Against**
              
              **Votes**
                **Abstained**
              
              **Broker**
                **Non-Votes**1.
              Election of
                  Directors:John M.
                  Thompson
              
              9,457,143
              
              —
              
              127,935
              
              Not
                  applicableD. Jonathan
                  Merriman
              
              9,456,152
              
              —
              
              128,926
              
              Not
                  applicablePatrick H.
                  Arbor
              
              9,448,128
              
              —
              
              136,950
              
              Not
                  applicableSteven W.
                  Town
              
              9,374,498
              
              —
              
              210,580
              
              Not
                  applicableRaymond J.
                  Minehan
              
              9,362,470
              
              —
              
              222,608
              
              Not
                  applicableDennis G.
                  Schmal
              
              9,358,970
              
              —
              
              226,108
              
              Not
                  applicableScott Potter
              
              9,442,100
              
              —
              
              142,978
              
              Not
                  applicableWilliam J.
                  Febbo
              
              9,441,132
              
              —
              
              143,946
              
              Not
                  applicable2.
              Approval of amendments
                  to
                  the Company's 2003 Stock Option and Incentive Plan to increase
                  by
                  1,370,000 the number of shares of Common Stock available for issuance
                  and
                  to extend the term of the Stock Option and Incentive Plan until
                  March 7,
                  2019.
              
              4,961,508
              
              409,717
              
              9,192
              
              4,204,6613.
              Approval of amendments
                  to
                  the 2006 Directors’ Stock Option and Incentive Plan by 130,000 the number
                  of shares of Common Stock available for issuance and to extend
                  the term of
                  the Stock Option and Incentive Plan until May 5, 2019.
              
              4,954,935
              
              395,557
              
              29,925
              
              4,204,6614.
              Approval of the
                  amendment to
                  the Certificate of Incorporation to change the name of MCF Corporation
                  to
                  Merriman Curhan Ford Group, Inc.
              
              9,421,221
              
              121,227
              
              42,589
              
              41
  32
  **Item
        6. Exhibits**
  31.1
              
              Certification
                  of Principal Executive Officer Pursuant To Section 302 of the
                  Sarbanes-Oxley Act of 2002.31.2
              
              Certification
                  of Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley
                  Act of 2002.32.1
              
              Certification
                  of Chief Executive Officer and Chief Financial Officer Pursuant
                  to 18
                  U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.
  33




**SIGNATURES**




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




MERRIMAN
                CURHAN FORD GROUP, INC.August
                11, 2008
            By:
            /s/ D.
              JONATHAN MERRIMAND.
                Jonathan Merriman,
              Chief
                  Executive Officer
                (Principal
                  Executive Officer)




August
                11, 2008
            By:
            /s/ PETER
              V.
              COLEMANPeter
                V. Coleman
              Chief
                  Financial Officer
                (Principal
                  Financial Officer)




34