Summary of JESUP & LAMONT, INC.

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-K for the year ended December 31, 2008, 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-K for the year ended December 31, 2008.

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-K for the year ended December 31, 2008, 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.

COMPANY OVERVIEW

We were incorporated in Florida in February 2000. Most of our business is conducted through our wholly owned subsidiary Jesup & Lamont Securities Corporation (JLSC). Empire Financial Group, Inc. (EFG) was founded in 1992 and merged into Empire Financial Holding Company in 2000. On November 12, 2008, EFG was out of compliance with the SEC's Net Capital Rule 15c3-1 and, accordingly, ceased conducting a securities business, other than liquidating transactions, while remaining out of compliance with this rule. EFG's out of compliance condition was caused by an arbitration award against it for $772,000 plus costs and fees of approximately $100,000, notice of which was received by EFG on November 12, 2008. See Note 14 to the financial statements for further details. On November 10, 2006, effective as of November 1, 2006, we acquired Jesup & Lamont Securities Corporation. Effective January 2, 2008, we changed the name of Empire Financial Holding Company to Jesup & Lamont, Inc. Accordingly, the following discussion and analysis of our financial condition and results of operations is based on the combined results of these businesses.

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

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

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

RESULTS OF OPERATIONS:

New senior management joined the firm at various times over the last 12 months. The focus of management was to increase the firm's profitability by focusing on more profitable businesses sectors while exiting units that were marginal. A significant strategy was to establish a fixed income division. In addition to having higher margins that those in retail brokerage and institutional equities, fixed income also allowed the company to enhance its retail brokerage business through fixed income transactions and generated potential banking fees through debt issuances.

The plan was hurt by the downturn in the economy and the negative impact that the economy had in the financial markets. Additionally, our Empire Financial Group (EFG) had certain legacy issues that eventually led to the shut down of that unit's brokerage activities. In response to those issues, management refocused its business strategy. The two main objectives were a renewed focus on recruitment with an emphasis in retail brokerage and expense reductions to have the firm's expense structure better coincide with the downturn in the financial markets. Most of those cost changes were implemented at the tail end of the March 31, 2009, quarter and the results of those reductions are first appearing in the quarter that just ended on June 30, 2009. As well, the firm's recruitment has led to the rebuilding of our retail brokerage unit and revenues from that sector have had strong growth during the past quarter. Our recruitment on the fixed income and institutional equities platform has been accelerated in the past month and we expect that those business' will start to see improved growth during the next quarter.

The results of our operations for the six months ended June 30, 2009 as compared to the same period in 2008 were adversely impacted by general market and economic conditions. In addition, EFG was required by FINRA to cease doing business as a broker dealer in November 2008, due to an adverse litigation settlement. This has significantly reduced our Retail business line as we could not move those retail customers to JLSC due to regulatory and operational limitations. To offset the loss of EFG's retail business we are in the process of expanding the retail business in JLSC, and are seeing improvements therein.

In the six months ended June 30, 2009, commissions generated from retail were $12,132,645. During the same period of 2008, commissions from retail were $15,052,896. The reduction was caused by the following reasons: 1) loss of brokers due to the closing of the EFG broker dealer, 2) the economic downturn and related uncertainty in the financial markets and 3) slowdown in activity due to the conversion to a new clearing firm. In March 2009, the Company began a new relationship with a new clearing firm. We anticipated that all accounts would have been moved by the beginning of March 2009. However, due to some operational issues at our old clearing firm, the conversion was not completed until the end of the month. Starting in April 2009 all significant retail accounts were moved.

Equity trading revenues for the six months ended June 30, 2009 were $1,878,508 as compared to the same period in 2008 of $4,551,845. The reduction resulted from EFG ceasing business as noted above and our reduction of this business as market opportunities have declined with the economic downturn.

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. Due to economic uncertainty, the revenue growth has been slower than expected.

In addition, we have also built a quality equity research department that focuses on institutional sales. The building of this department also resulted in increased compensation and other overhead expenses. However, due to the downturn in the economy and the uncertainty of the financial markets, the anticipated revenue from this initiative has been slower than originally anticipated. In March 2009, management decided to do a thorough review of its expense structure and as a result, decided to cut costs through employee dismissals and renegotiations of various contracts. As part of that cost cutting effort, senior management has taken significant reductions in their compensation. Those cost reductions were completed in March 2009 and we started seeing the benefit of these reductions in the second quarter of 2009.

Our investment banking business has improved to prior year levels for the first six month period. During the second quarter of 2009 we benefited from the sale of warrants earned from prior investment banking transactions. We earned $1,604,903 on the sale of these warrants.

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

Three months ended June 30, 2009 compared to three months ended June 30, 2008:

Revenues:

Total revenues for the three months ended June 30, 2009 were $9,937,559, an increase of $312,991, or 3% of total revenues for the same period in 2008. This increase is primarily attributable to the reasons described below:

Commissions and fees revenues for the three months ended June 30, 2009 were $7,353,816, a decrease of $52,783 or approximately 1%, from our commissions and fees revenues of $7,406,599 for the comparable period in 2008. The negligible decrease reflects our successful efforts in transitioning our retail business from EFG, which was closed in November 2008, to JLSC as noted above. Commissions and fees revenues accounted for approximately 74% and 77%, of our total revenues for the three month periods ended June 30, 2009 and 2008, respectively.

For the three months ended June 30, 2009 trading income was $732,559, a decrease of $1,115,896, or approximately 60%, from our trading income of $1,848,455 for the comparable period in 2008. This decrease is attributable to EFG ceasing operations in November 2008 and the uncertainty in the financial markets. Trading income accounted for approximately 8% and 19% of our total revenues for the three month periods ended June 30, 2009 and 2008, respectively.

For the three months ended June 30, 2009, our investment banking revenues were $327,480, a decrease of $512,182, or 61%, from our investment banking revenues of $839,662 for the comparable period in 2008. The decrease was primarily due to general market conditions confronting the financial services industries. Investment banking revenues accounted for approximately 3% and 9% of our revenues for the three month periods ended June 30, 2009 and 2008, respectively.

For the three months ended June 30, 2009 gains on securities received from investment banking services were $1,523,704, an increase of $1,993,852, or approximately 424%, from a loss of ($470,148) for the comparable period in 2008. The increase was primarily due to sale of warrants we had earned from previous activities. Gains and losses on securities received for investment banking services accounted for approximately 15% and (5%) of our total revenues for the three month periods ended June 30, 2009 and 2008, respectively.

Expenses:

Employee compensation and benefits were $3,983,168 and $5,207,603 for the three months ending June 30, 2009 and 2008, respectively. Employee compensation decreased $1,224,435, or 24%. The reduction was due to reduced employee commissions, as total commissionable revenues have decreased 17%, and from the benefit of our cost and expense restructuring efforts started earlier this year.

Commissions, clearing and execution costs were $3,771,009 and $5,782,462 for the three months ending June 30, 2009 and 2008, respectively. The decrease of $2,011,453, or 35%, was primarily a result of Commissionable revenue decline of 17%, and our restructuring of the commission payouts of 18%.

General and administrative expenses were $1,240,183 and $2,502,933 for the three months ending June 30, 2009 and 2008, respectively. The decrease of $1,262,750, or 50%, results from expense restructuring taken during the first quarter of 2009. Professional fees, travel and entertainment, and conference expenses were significant components of this reduction.

Interest expense was $369,600 and $781,925 for the three months ending June 30, 2009 and 2008, respectively. The decrease of $412,325, or 53%, was attributable to a payment of a one time financing fee of $500,000 to one of our clearing firms in 2008. See Note 8 to the Consolidated Financial Statements for details.

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

As a result of the prior income tax valuation allowances and tax loss carryforwards, the provision for income taxes was zero for the three months ended June 30, 2009.

As a result of the items discussed in the preceding paragraphs, the Company had net income of $433,093 for the three months ended June 30, 2009 as compared to a net loss of $4,089,042 for the three months ended June 30, 2008.

Six months ended June 30, 2009 compared to six months ended June 30, 2008:

Revenues:

Total revenues for the six months ended June 30, 2009 were $16,444,678, a decrease of $5,170,549, or 24% of total revenues for the same period in 2008. This decrease is primarily due to the reasons described below:

Commissions and fees revenues for the six months ended June 30, 2009 were $12,132,645, a decrease of $2,920,251 or approximately 19%, from our commissions and fees revenues of $15,052,896 for the comparable period in 2008. The decrease was primarily due to EFG ceasing operations in November 2008. We are in the process of rebuilding the retail business line since we could not consolidate the EFG retail business with JLSC. Commissions and fees revenues accounted for approximately 74% and 70%, of our total revenues for the six month periods ended June 30, 2009 and 2008, respectively. As stated previously, the Company exited low margined businesses and entered into higher margin units. However, due to the difficult economic environment, the revenue from new units has been slower to develop than originally estimated.

For the six months ended June 30, 2009 trading income was $1,878,508, a decrease of $2,673,337, or approximately 59%, from our trading income of $4,551,845 for the comparable period in 2008. This decrease is primarily due to EFG ceasing operations in November 2008 and the uncertainty in the financial markets. Trading income accounted for approximately 11% and 21% of our total revenues for the six month periods ended June 30, 2009 and 2008, respectively.

For the six months ended June 30, 2009, our investment banking revenues were $741,391, a decrease of $1,503,058, or 67%, from our investment banking revenues of $2,244,449 for the comparable period in 2008. The decrease was primarily due to general market conditions confronting the financial services industries. Investment banking revenues accounted for approximately 5% and 10% of our revenues for the six month periods ended June 30, 2009 and 2008, respectively.

For the six months ended June 30, 2009 gains on securities received from investment banking services were $1,692,134, an increase of $1,926,097, or approximately 823%, from our losses of $233,963 for the comparable period in 2008. The increase was primarily due to sale of warrants we had earned from previous activities. Gains and losses on securities received for investment banking services accounted for approximately 10% and (1%), of our total revenues for the six month period ended June 30, 2009 and 2008, respectively.

Expenses:

Employee compensation and benefits were $8,574,346 and $10,841,405 for the six months ending June 30, 2009 and 2008, respectively. Employee compensation decreased $2,267,059, or 21%. The reduction was due to reduced employee commissions, as total commissionable revenues have decreased 32%, and from the benefit of our cost and expense restructuring efforts started earlier this year.

Commissions, clearing and execution costs were $6,444,242 and $10,811,607 for the six months ending June 30, 2009 and 2008, respectively. The decrease of $4,367,365, or 40%, was due primarily to a decrease in commissionable revenues of 32%, plus our restructuring of commission payouts which occurred in the first quarter.

General and administrative expenses were $3,029,586 and $4,183,380 for the six months ending June 30, 2009 and 2008, respectively. The decrease of $1,153,794, or 28%, was due primarily to decreases in travel and entertainment, professional fees, and occupancy costs resulting from our cost cutting efforts.

Interest expense was $606,389 and $1,097,612 for the six months ending June 30, 2009 and 2008, respectively. The decrease of $491,223, or 45%, was due primarily to a payment of a one time financing fee of $500,000 to one of our clearing firms in 2008. See Note 8 to the Consolidated Financial Statements for details.

As a result of the prior income tax valuation allowances and tax loss carryforwards, the provision for income taxes was zero for the six months ended June 30, 2009.

As a result of the items discussed in the preceding paragraphs, the Company incurred a net loss of $2,494,572 for the six months ended June 30, 2009 as compared to a net loss of $4,997,822 for the six months ended June 30, 2008.

LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2009, we had $32,449,691 in total assets, of which, $4,710,508 or approximately 14% consisted of cash or assets readily convertible into cash, principally securities owned and receivables from clearing brokers, which include interest bearing cash balances held with our clearing organization. At June 30, 2009, we had liabilities due within one year totaling $11,496,183. Historically, we have financed our operating cash deficits from private placements of stock and debt offerings.

Stockholders' equity increased $152,541 to $6,966,146 at June 30, 2009, compared to $6,813,605 at December 31, 2008. This increase is attributable to additional stock subscriptions, offset by net losses incurred for the period.

Net cash used by operations for the six months ended June 30, 2009 was $3,903,422 as opposed to net cash used by operations for the same period in 2008 of $7,045,183. The principal uses of cash in 2009 were an increase in deposits at the clearing brokers of $2,385,164 mainly from the proceeds of a note of $2,000,000 from one of the clearing brokers, the net loss, net of non-cash adjustments, of $2,080,579 and the increase in the amounts due from the clearing brokers of $1,235,766. These amounts were partially offset by the increase in accounts payable, accrued expenses and other liabilities of $1,711,643.

Cash used in investing activities for the six months ended June 30, 2009 was $2,910,216. The Company invested $2,102,543 in a bank certificate of deposit, and invested $662,068 in notes receivable from registered sales representatives primarily to expand its Boca Raton and Ft. Lauderdale offices. The Company also used $145,605 and $288,674 to purchase furniture and equipment during the six months ended June 30, 2009 and 2008, respectively.

Cash provided from financing activities for the six months ending June 30, 2009 was $6,524,999. The Company raised $2,190,000 and $4,600,000 from the sale of common stock subscriptions and new loans, respectively, and made payments of $340,031 against notes payable. An additional $75,000 was raised by increasing the loan from the clearing firm.

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

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

� Expand our institutional trading activities by continuing to add quality trading personnel with existing institutional clients;

� Continue to recruit quality registered representatives;

� Expand our offering of proprietary financial products to our retail and institutional customers;

� Continue to look for and close acquisitions of similar businesses.

If our plans change, or our assumptions change or prove to be inaccurate, or if our available cash otherwise proves to be insufficient to implement our business plans, we may require additional financing through subsequent equity or debt financings. During the six months ended June 30, 2009, we have raised a total of $6,865,000 from equity and debt financings. The Company cannot predict whether additional funds will be available in adequate amounts or on acceptable terms. If funds are needed but not available, the Company's business would be jeopardized.

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

The Company has implemented many operating changes which are expected to benefit operations in the future. The more notable of these changes have been to eliminate our proprietary trading and begin consolidating operations of our broker dealers.

The Company anticipates raising additional capital in 2009 to finance the operations of the Company and provide sufficient liquidity through at least December 31, 2009.

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 June 30, 2009 at the market values of the securities and will incur a loss if the market value increases subsequent to June 30, 2009. 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 June 30, 2009 will not have a material adverse effect on our consolidated financial position or results of operations.

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 . . .