ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the Selected Consolidated Financial Data and the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-KSB/A for the year ended December 31, 2007, as previously filed with the Securities and Exchange Commission. Our significant accounting policies are disclosed in the Notes to Consolidated Financial Statements found in our Annual Report on Form 10-KSB/A for the year ended December 31, 2007.

This Form 10-Q contains statements about future events and expectations which are, "forward looking statements". Any statement in this Form 10-Q that is not a statement of historical fact may be deemed to be a forward looking statement. Forward-looking statements represent our judgment about the future and are not based on historical facts. These statements include: forecasts for growth in the number of customers using our service, statements regarding our anticipated revenues, expense levels, liquidity and capital resources and other statements including statements containing such words as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate," "continue" or "plan" and similar expressions or variations. These statements reflect the current risks, uncertainties and assumptions related to various factors including, without limitation, fluctuations in market prices, competition, changes in securities regulations or other applicable governmental regulations, technological changes, management disagreements and other factors described under the heading "Factors affecting our operating results, business prospects, and market price of stock" contained in our Annual Report on Form 10-KSB/A for the year ended December 31, 2007, as previously filed with the SEC. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, believed, estimated or intended. We undertake no obligation to update, and we do not have a policy of updating or revising, these forward-looking statements. Except where the context otherwise requires, the terms "we," "us," or "our" refer to the business of Jesup & Lamont, Inc. and its wholly-owned subsidiaries as previously filed with the Securities and Exchange Commission.

As used in this report, the term "JLI" refers to Jesup & Lamont, Inc. The term "EFG" refers to Empire Financial Group, Inc., the term "EIA" refers to Empire Investment Advisors, Inc. and the term "JLSC" refers to Jesup & Lamont Securities Corporation, each of which is a wholly-owned subsidiary of Jesup & Lamont, Inc. The terms "we" and "us" as used in this report refer to Jesup & Lamont, Inc. and its operating subsidiaries.

CRITICAL ACCOUNTING POLICIES

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

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

ACCOUNTING FOR CONTINGENCIES

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

USE OF ESTIMATES

Note 2 to our consolidated financial statements included in our Annual
Report on Form 10-KSB/A for the year ended December 31, 2007 contains a summary of our significant accounting policies, many of which require the use of estimates and assumptions that affect the amounts reported in the consolidated financial statements for the periods presented. We believe that certain of our significant accounting policies are based on estimates and assumptions that require complex, subjective judgments which can materially impact reported results.

GOODWILL AND OTHER INTANGIBLE ASSETS

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

Our goodwill was recorded for acquisitions which are approximately two years old. We believe we have not nearly begun to realize the fair value of these acquisitions or the synergies which we believe will be realized from combining with our pre acquisition operations. For example, investment banking and the gains from warrants and other securities received from those services is becoming a primary line of business. Investment banking income and gains on securities received for those services for the years ended December 31, 2005 and 2004, totaled $266,410 and $0, respectively. However, investment banking income and gains on securities received for those services totaled $11,449,695 and $3,543,625 for the years ended December 31, 2007 and 2006, respectively, and $2,919,296 for the nine months ended September 30, 2008. Furthermore, during May 2008 we added a fixed income trading business to our product group and recruited a well known individual with a proven history to build this business. We believe that adding fixed income trading to our business model will strengthen the foundation of our business for the future.

We have determined that the fair value of each reporting unit is best estimated using a discounted cash flow methodology.

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

If the Company subsequently determines its goodwill and other intangible assets have been impaired, the Company may have to write off a portion or all of such goodwill and other intangible assets. If all goodwill and other intangible assets were written off, the Company would record a non cash loss approximating $17.5 million to operations and stockholders' equity.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET EFFECTIVE

There are no recently issued accounting pronouncements which are not yet effective which would have a material effect on our financial condition or results of operations.

RESULTS OF OPERATIONS:

The results of our operations for the three months and nine months ended September 30, 2008 as compared to the same periods in 2007 were adversely impacted by general market and economic conditions and the cost of the addition of a new line of business.

During May 2008 we added a fixed income trading business to our product group and recruited a well known individual with a proven history to build this business. Although we believe that adding fixed income trading to our business model will strengthen the foundation of our business for the future, we have incurred substantial start up costs but have not yet had the time to build the revenues related to this new business.

Our investment banking business has been adversely impacted by the general downturn in economic activity and the resulting decline in the number of financial transactions. The decline in investment banking revenue in the nine months ended September 30, 2008, is especially dramatic when compared to the same period in 2007 as we recorded the highest investment banking revenue in our history in the second quarter of 2007.

Further discussions of the results of our operations are provided below.

Three months ended September 30, 2008 compared to three months ended September 30, 2007:

Revenues:

Total revenues for the three months ended September 30, 2008 were $9,651,574, a decrease of $2,494,953, or 21%, from total revenues of $12,146,527 for the same period in 2007. This decrease is primarily due to the reasons described below:

Commissions and fees revenues for the three months ended September 30, 2008 were $6,960,884, a decrease of $1,569,148 or approximately 18%, from our commissions and fees revenues of $8,530,032 for the comparable period in 2007. The decrease was primarily due to general market conditions confronting the financial services industries. Commissions and fees revenues accounted for approximately 72% and 70%, of our total revenues for the three month periods ended September 30, 2008 and 2007, respectively.

For the three months ended September 30, 2008 trading income was $1,547,917, a decrease of $62,916, or approximately 4%, from our trading income of $1,610,833 for the comparable period in 2007. Trading income accounted for approximately 16% and 13%, of our total revenues for the three month periods ended September 30, 2008 and 2007, respectively.

For the three months ended September 30, 2008, our investment banking revenues were $1,333,375, a decrease of $291,331, or approximately 18%, from our investment banking revenues of $1,624,706 for the comparable period in 2007. The decrease was primarily due to general market conditions confronting the financial services industries. Investment banking revenues accounted for approximately 14% and 14% of our revenues for the three month periods ended September 30, 2008 and 2007, respectively.

For the three months ended September 30, 2008 losses on securities received from investment banking services were ($190,602), a decrease of ($571,558), or approximately 150%, from our gains of $380,956 for the comparable period in 2007. Losses and gains on securities received for investment banking services accounted for approximately (2%) and 3%, of our total revenues for the three month period ended September 30, 2008 and 2007, respectively.

Expenses:

Employee compensation and benefits were $3,122,509 and $5,521,709 for the three months ending September 30, 2008 and 2007, respectively. The decrease of $2,399,200, or 43%, was due primarily to a change in the mix of our revenues to more commission based revenues and a reduction in number of employees in 2008 due to our plan to cut costs.

Commissions and clearing costs were $8,127,243 and $6,193,056 for the three months ending September 30, 2008 and 2007, respectively. The increase of $1,934,187, or 31%, was due primarily to a change in the mix of our revenues to revenues with predominantly higher commissions.

General and administrative expenses were $2,722,383 and $2,117,605 for the three months ending September 30, 2008 and 2007, respectively. The increase of $604,778, or 29%, was due primarily to increased regulatory related expenses.

Interest expense was $210,362 and $306,342 for the three months ending September 30, 2008 and 2007, respectively. The decrease of $95,980, or 31%, was due primarily to payment of notes outstanding in 2007.

As a result of the items discussed in the preceding paragraphs, the Company incurred a net loss of $4,522,694 for the three months ended September 30, 2008 as compared to a net loss of $1,949,776 for the three months ended September 30,2007.

Nine months ended September 30, 2008 compared to nine months ended September 30, 2007:

Revenues:

Total revenues for the nine months ended September 30, 2008 were $31,266,802, a decrease of $8,955,427, or 22%, over total revenues of $40,222,229 for the same period in 2007. This decrease is primarily due to the reasons described below:

Commissions and fees revenues for the nine months ended September 30, 2008 were $22,013,780, a decrease of $3,453,323 or approximately 14%, from our commissions and fees revenues of $25,467,103 for the comparable period in 2007. The decrease was primarily due to general market conditions. Commissions and fees revenues accounted for approximately 70% and 63%, of our total revenues for the nine month periods ended September 30, 2008 and 2007, respectively.

For the nine months ended September 30, 2008 trading income was $6,333,726, an increase of $442,236, or 8% from our trading income of $5,891,490 for the comparable period in 2007. Trading income accounted for approximately 20% and 15%, of our total revenues for the nine month periods ended September 30, 2008 and 2007, respectively.

For the nine months ended September 30, 2008, our investment banking revenues were $3,343,861, a decrease of $5,679,734, or approximately 63%, from our investment banking revenues of $9,023,595 for the comparable period in 2007. The decrease was primarily due to general market conditions confronting the financial services industries. Investment banking revenues accounted for approximately 11% and 22% of our revenues for the nine month periods ended September 30, 2008 and 2007, respectively.

For the nine months ended September 30, 2008 losses on securities received from investment banking services were ($424,565), an increase in the loss of ($264,606), or approximately 165% increase, from our losses of ($159,959) for the comparable period in 2007. Losses on securities received for investment banking services accounted for approximately (1%) and (0%), of our total revenues for the nine month periods ended September 30, 2008 and 2007, respectively.

Expenses:

Employee compensation and benefits were $8,557,737 and $14,792,630 for the nine months ending September 30, 2008 and 2007, respectively. The decrease of $6,234,893, or 42%, was due primarily to reduced compensation related to payouts on investment banking income, a change in the mix of our revenues to more commission based revenues, and a reduction in number of employees due to our plan to cut costs.

Commissions and clearing costs were $24,345,027 and $22,748,034 for the nine months ending September 30, 2008 and 2007, respectively. The increase of $1,596,993, or 7%, was due primarily to a change in the mix of our revenues to revenues with predominantly higher commissions.

General and administrative expenses were $7,417,722 and $7,059,338 for the nine months ending September 30, 2008 and 2007, respectively. The increase of $358,384, or 5%, was due to increased regulatory related expenses.

Interest expense and financing fee for the nine months ending September 30,2008 increased to $1,307,974, as compared to $1,245,516 for the nine months ending September 30, 2007. The increase of $62,458, or 5%, was due primarily to a $500,000 fee due to our clearing firm offset by the reduction in interest due to payment of notes outstanding in 2007.

For the nine months ended September 30, 2008 the Company entered into a settlement agreement with a former officer and realized a net non-cash gain of $806,744.

As a result of the items discussed in the preceding paragraphs, the Company incurred a net loss of $9,511,625 for the nine months ended September 30, 2008 as compared to a net loss of $5,173,432 for the nine months ended September 30, 2007.

LIQUIDITY AND CAPITAL RESOURCES

We have financed our business primarily through private placements of stock and debt offerings.

Stockholders' equity decreased $4,592,594 to $12,212,263 at September 30, 2008, compared to $16,804,857 at September 30, 2007. This decrease is primarily due to net losses incurred, partially offset by sales of our common and preferred stock.

Due to the net losses incurred, as adjusted for non-cash charges, offset by changes in operating assets and liabilities, net cash used by operations for the nine months ended September 30, 2008 was $7,950,201 as opposed to net cash used by operations for the same period in 2007 of $7,379,814.

Cash used in investing activities for the nine months ended September 30, 2008 was $746,030. The Company invested $448,000 in notes receivable primarily to expand its Boston office and purchase furniture and equipment.

Cash provided from financing activities for the nine months ending September 30, 2008 was $8,642,074. The Company raised $1,997,495 and $6,038,105 from the sale of preferred stock and common stock respectively, and $2,619,996 from the subscription of common stock, and made payments of $1,725,339 against notes payable.

The Company anticipates raising additional capital in 2008 and 2009 to finance the operations of the Company and provide sufficient liquidity through at least December 31, 2009. However, there can be no assurance that we will be successful in raising this capital.

MARKET RISK

Market risk generally represents the risk of loss that may result from the potential change in the value of a financial instrument as a result of fluctuations in interest and currency exchange rates, equity and commodity prices, changes in the implied volatility of interest rates, foreign exchange rates, equity and commodity prices and also changes in the credit ratings of either the issuer or its related country of origin. Market risk is inherent to both derivative and non-derivative financial instruments, and accordingly, the scope of our market risk management procedures extends beyond derivatives to include all market risk sensitive financial instruments.

We have sold securities which we do not currently own and therefore will be obligated to purchase the securities at a future date. We have recorded these obligations in our financial statements at September 30, 2008 at the market values of the securities and will incur a loss if the market value increases subsequent to September 30, 2008. The occurrence of these off-balance sheet losses could impair our liquidity and force us to reduce or curtail operations.

We are engaged in various trading and brokerage activities in which counterparties primarily include broker-dealers, banks and other financial institutions. In the event counterparties do no fulfill their obligations, we may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is our policy to review, as necessary, the credit standing of each counterparty. We have performed a Company wide analysis of our financial instruments and assessed the related risk. Based on this analysis, we believe the market risk associated with our financial instruments at September 31, 2008 will not have a material adverse effect on our consolidated financial position or results of operations.