Edgar Filing: JESUP & LAMONT, INC.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

Commission File No.: 1-31292

JESUP & LAMONT, INC.
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
----------------------------------------------
(Name of small business issuer in its charter)

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

2170 West State Road 434
Suite 100, Longwood, Florida 32779
---------------------------------------------------
(Address of principal executive offices) (Zip Code)

(407) 774-1300
---------------------------
(Issuer's telephone number)

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

Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, $.01 Par Value American Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:

None

Check whether the issuer is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. [_]

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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[_]

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

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

The Issuer's revenues for its fiscal year ended December 31, 2007:
$50,671,898.

The aggregate market value of the voting stock held by non-affiliates
of the Issuer as of March 26, 2008 computed by reference to the closing price of
Issuer's common stock reported on the American Stock Exchange on such date was
$7,715,363.

The number of shares of outstanding Issuer's Common Stock, $.01 par
value per share, as of March 26, 2008 was 11,296,286.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format (check one): Yes___ No_X_

TABLE OF CONTENTS

Page
PART I

Item 1 Description of Business ................................... 4

Item 2 Description of Property ................................... 18

Item 3 Legal Proceedings ......................................... 19

Item 4 Submission of Matters to a Vote of Security Holders ....... 20

PART II

Item 5 Market for Common Equity, Related Stockholder Matters and
Small Business Issuer Purchases of Equity Securities ...... 21

Item 6 Management's Discussion and Analysis or Plan of Operation . 22

Item 7 Financial Statements ...................................... 36

Item 8 Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure........................ 36

Item 8A and 8A(T) Controls and Procedures.......................... 36

Item 8B Other Information.......................................... 38

Part III

Item 9 Directors, Executive Officers, Promoters, Control
Persons and Corporate Governance; Compliance With
Section 16(a) of the Exchange Act. ........................ 38

Item 10 Executive Compensation..................................... 38

Item 11 Security Ownership of Certain Beneficial Owners,
Management and Related Stockholder Matters ................ 38

Item 12 Certain Relationships, Related Transactions and Director
Independence .............................................. 38

Item 13 Exhibits................................................... 39

Item 14 Principal Accountant Fees and Services..................... 42

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

PART I

ITEM 1. DESCRIPTION OF BUSINESS
--------------------------------

OVERVIEW

We provide a broad range of securities brokerage, investment banking,
corporate financing, institutional sales and market making and order execution
services in all 50 states and also in Europe, Asia and other locations. We also
offer investment advisory and asset management services.

GROWTH STRATEGY

Our current growth strategy is a combination of growth by acquisition
and organic growth of our existing and acquired businesses. We plan to build a
mix of financial services and products that provide a varied and continuing
revenue stream, not solely dependent on market conditions, to build stable
profitability. As examples, we intend to continue building our institutional
sales and research businesses. We also intend to focus on expanding the scope of
our international trading ADR and ordinary business.

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

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

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

On November 16, 2006, as of October 31, 2006, we acquired all of the
outstanding shares of JLSC. The acquisition of JLSC increased our consolidated
revenues on an annualized basis by approximately 50%. We are actively pursuing
other acquisition and joint venture opportunities and plan to complete at least
one additional acquisition in 2008. We will continue refining and stream lining
our infrastructure in advance of any acquisition in order to process the added
business. Effective January 2, 2008, we changed the name of the Company to Jesup
& Lamont, Inc.

BROKERAGE SERVICES

FULL SERVICE RETAIL BROKERAGE SERVICES

We provide full service brokerage services directly to our retail
customers, including individuals and small to mid-sized institutions such as
banks, credit unions, hedge funds, money managers, mutual funds and pension
funds. Experienced registered representatives execute buy and sell orders for
customers for stocks, bonds, traded options, commodities, and financial
derivatives and, where requested, provide account management, advisory
information and oversight services. Our customers also receive back office
support, client statements and reports, branch office regulatory compliance
support and advisory services. Approximately 65% of our 2007 revenues and
approximately 57% of our 2006 revenues were derived from commissions and fees
generated in connection with our retail financial brokerage services.

Empire Financial Group, Inc. ("EFG"), our other wholly-owned
broker-dealer subsidiary, has full service offices in Longwood, Florida, San
Francisco, California, and Long Island, New York. JLSC's primary office is in
New York City. JLSC also has branch offices in Stamford, Connecticut, Boston and
Worcester, Massachusetts, Metro-Park, New Jersey, Wilmington, Delaware, and Boca
Raton, Florida. As of December 31, 2007, we had a combined total of 185 employee
registered representatives.

SUPPORT SERVICES FOR INDEPENDENT BROKER NETWORK

We also provide back office and administrative functions for a
nationwide network of independent registered representatives, who process
securities transactions through us. As of December 31, 2007 approximately 105
independent registered representatives in 30 independently owned offices, were
being supported through our capital management division. The services provided
include order execution, client statements and reports, branch office regulatory
compliance support and advisory services, for which we receive a transaction
fee, reimbursement of licensing and insurance costs and a participation in their
revenues. They also utilize our execution, market making and web-based services
to provide access to investments to their client base. These representatives
provide their own offices and typically pay all of their office overhead and
marketing expenses.

As part of our efforts to expand this independent broker network, we
recruit experienced and productive independent financial advisors by offering
them an attractive compensation package and the independence of owning and
operating their own branch office. Generally, each office pays substantially all
costs associated with establishing and operating the office in return for a
relatively high portion of gross commission revenue.

We offer a comprehensive line of investment banking (proprietary and
syndicated), research and brokerage services to our employee and independent
representatives, including:

o United States and foreign equities
o Mutual funds
o Variable annuity and variable life insurance products
o Fixed income
o Portfolio planning and management
o Clearing services through our third party clearing arrangements
o Client and branch management systems and services

MARKET MAKING AND ORDER EXECUTION SERVICES

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

Approximately 13% and 33% of our revenues for the years ended December
31, 2007 and 2006, respectively, were derived from these services.

INVESTMENT BANKING SERVICES

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

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

Our investment banking is also actively involved in underwritings of
blank check companies known as Specified Purpose Acquisition Companies (SPACs).
These companies are formed for the purpose of raising funds in an initial public
offering, a significant portion of which is placed in trust, and then acquiring
a target business, thereby making the target business "public." In recent years,
there has been a surge of activity in this segment of the market, as it provides
an opportunity for smaller, privately held companies to become public by being
acquired by SPACs in lieu of going through the rigorous initial public offering
process.

Approximately 2% and 10% of our revenues for the years ended December
31, 2007 and 2006, respectively, were derived from investment banking services.

INVESTMENT ADVISORY SERVICES

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

o investment portfolio planning with recommendations on asset
allocations based on customers risk tolerances and long term needs;

o recommendations and separate account manager and mutual fund
research and due diligence;

o portfolio performance review and reallocation;

o all inclusive wrap accounts for registered investment advisors.

These services are provided for an all-inclusive fee based on assets
under management. As of December 31, 2007, the average fee being charged was
approximately 140 basis points per annum of the value of our customer's managed
assets.

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

ANCILLARY RETAIL BROKERAGE SERVICES

We offer the following ancillary services to our full service brokerage
customers and the customers of our independent broker network:

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

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

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

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

COMPETITION

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

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

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

TECHNOLOGY

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

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

GOVERNMENT REGULATION

BROKER DEALER REGULATION

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

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

NET CAPITAL REQUIREMENTS AND LIQUIDITY

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

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

In August 2007, the Company received a Notice of Acceptance of Letter
of Acceptance, Waiver and Consent from FINRA ("AWC") dated July 30, 2007, which
in return for the Company's payment of a fine in the amount of $145,000, settled
the following alleged net capital deficiencies:

o On February 6, 2006, EFG received a letter from FINRA threatening
disciplinary action for failure to maintain required net capital during the
period from September 2003 to February 14, 2005 and alleging its violation of
other FINRA rules. FINRA calculated the range of net capital deficiencies during
that period as between approximately $488,000 and $1.833 million.

o On April 25, 2006, the Company notified FINRA and the SEC that as a
result of a routine examination of the Company in April 2005, the Company was
under the minimum net capital requirement for that period. It was determined
that the trading operation was not properly terminating, in the computer trading
platforms, the stocks in which the Company makes a market. The technical error
made it appear the Company was making a market in between 39 and 78 more stocks.
The Company also utilized a restricted stock position for net capital purposes
that was eligible to become unrestricted but the Company had not yet submitted
the documents to the transfer agent to have it cleared.

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

INVESTMENT COMPANY ACT

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

ADDITIONAL REGULATIONS

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

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

EMPLOYEES

As of December 31, 2007, we had 181 full-time employees of which 91
were registered representatives, 7 were in management, 51 provided operation and
client support for our retail and order execution services, 6 provided
accounting services, 4 provided information technology services, and 22 provided
order execution and market making services to our correspondents and retail
client base. We also supported a network of 30 independently owned offices or
OSJ's with a total of 105 independent contractors. The independent contractors
provide retail services to our customers. No employee is covered by a collective
bargaining agreement or is represented by a labor union. We consider our
employee and independent contractor relations to be good.

RISK FACTORS

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

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

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

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

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

At December 31, 2007, EFG reported net capital of $812,456, which was
$320,956 above the required net capital of $491,500. At December 31, 2007, JLSC
reported net capital of $745,509, which was $645,509 above the required net
capital of $100,000.

FAILURE TO MAINTAIN AMERICAN STOCK EXCHANGE LISTING

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

We are currently out of compliance with certain AMEX standards related
to corporate governance requirements relating to the number of independent
directors, as disclosed in our report on Form 8-K filed on February 14, 2008.

FAILURE TO SUCCESSFULLY TRANSITION THE LONG ISLAND OFFICE

In March 2007, we acquired the independent office in Long Island. Due
to the uncertainty of several factors such as the ability to retain the brokers,
market conditions and regulatory factors, there is no assurance that the
intangible assets recorded under purchase accounting will not be written down in
the future as impaired assets.

WE ARE AT COMPETITIVE DISADVANTAGES TO A NUMBER OF COMPANIES.

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

CONTROL OF OUR COMPANY BY A SINGLE SHAREHOLDER LIMITS THE POWER OF
OTHER SHAREHOLDERS TO INFLUENCE DECISIONS.

EFH Partners and its individual members beneficially own approximately
27% of our outstanding common stock. As a result of their stock ownership EFH
Partners can elect all of our directors and approve or disapprove all matters
requiring stockholder approval, such as selling substantially all of our assets,
merging with another entity or changing our Certificate of Incorporation. EFH
Partners' controlling position effectively limits the voting power of other
stockholders. Further, the Chairman of our Board of Directors is also
co-managing director of EFH Partners further increasing EFH Partners' influence
over our business and affairs.

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

Retail customer transactions are cleared through the clearing brokers
on a fully disclosed basis. In the event that customers default in payments of
funds or delivery of securities, the clearing brokers may charge the Company for
any loss incurred in satisfying the customer's obligations. Additional credit
risk occurs if the clearing brokers of affiliates do not fulfill their
obligations. Though we regularly monitor the activity in our customer accounts
for compliance with margin requirements, rapid change in market value or lack of
liquidity for securities held in margin accounts could impose losses on us. In
addition, we have sold securities which we do not currently own and therefore
will be obligated to purchase the securities at a future date. We have recorded
these obligations in our financial statements at December 31, 2007 at the market
values of the securities and will incur a loss if the market value increases
subsequent to December 31, 2007. The occurrence of these off balance sheet
losses could impair our liquidity and force us to reduce or curtail operations.

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

We are engaged in various trading and brokerage activities in which
counterparties primarily include broker-dealers, banks and other financial
institutions. In the event counterparties do 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 counter-party. Our cash in bank accounts,
at times, exceeds the Federal Deposit Insurance Corporation ("FDIC") insurable
limit of $100,000. We have not experienced any previous losses due to this
policy. The concentration of these credit risks increases the magnitude of the
harm we would suffer in the event of default.

POTENTIAL LOSSES OR SANCTION AS A RESULT OF EMPLOYEE MISCONDUCT

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

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

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

TERMINATION OF BUSINESS RELAIONSHIPS BY OUR NETWORK OF
INDEPENDENT REGISTERED REPRESENTATIVES

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

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

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

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

could be delisted from the American Stock Exchange. If our securities were
delisted, trading, if any, in our securities would be conducted in the over the
counter market on FINRA's "OTC Bulletin Board." Consequently, the liquidity of
our securities could be impaired.

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

Sales of a substantial number of shares of our common stock in the
public markets, or the perception that these sales may occur, could cause the
market price of our stock to decline and could materially impair our ability to
raise capital through the sale of additional equity securities. We have
11,106,442 shares of common stock issued and outstanding at December 31, 2007
and an additional 15,153,888 shares of common stock underlying options,
warrants, convertible securities, and common stock and warrants subscribed. The
exercise or conversion of these securities and the sale of the underlying shares
could depress the price of our common stock.

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

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

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

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

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

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

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

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

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

OUR REVENUES MAY DECLINE IN ADVERSE MARKET OR ECONOMIC CONDITIONS.

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

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

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

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

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

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

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

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

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

o trading counterparties;

o customers;

o clearing agents;

o exchanges;

o clearing houses; and

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

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

o holding securities of third parties;

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

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

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

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

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

OUR COMPANY

Jesup & Lamont, Inc. is organized as a corporation under the laws of
the State of Florida and serves as the parent of Empire Financial Group, Inc.,
Empire Investment Advisors, Inc., and Jesup & Lamont Securities Corporation. The
JLI principal executive offices are located at 2170 West State Road 434, Suite
100, Longwood, Florida 32779. The JLI main telephone number is 1-800-569-3337.
The JLSC principal offices are located at 650 Fifth Avenue, New York, NY 10019.
The JLSC main telephone number is 212-307-2660. Our shares are listed on the
American Stock Exchange and quoted under the symbol "JLI" and began trading in
April of 2002. The JLI website is located at www.empirefinancialholding.com. The
JLSC website is located at www.jesuplamont.com. Information contained in or
connected to our web sites are not a part of this report.

Our periodic filings are available on our website or can be requested
directly from us for those persons that make a request in writing (Attn:
Investor Relations) or by e-mail (investorrelations@empirenow.com), and we will
provide free of charge our Annual Reports on Form 10-KSB, Quarterly Reports on
Form 10-QSB and Current Reports on Form 8-K, and amendments to these reports,
our proxy statements and/or reports filed by officers and directors with the
Securities and Exchange Commission under Section 16(a) of the Securities
Exchange Act. These reports are also available on the Securities Exchange
Commission website at www.sec.gov by searching the EDGAR database for our
company's filings under the name "Jesup & Lamont, Inc.".

ITEM 2. DESCRIPTION OF PROPERTY
--------------------------------

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

JLI, EFG and EIA Offices:

Our principal executive offices are located in approximately 8,000
square feet of office space at 2170 West State Road 434, Suite 100, Longwood,
Florida 32779. These offices are leased pursuant to a lease which expires on
February 28, 2010 and provides for an average rent of approximately $13,860 per
month, plus sales and property taxes.

In March 2007, we entered into an agreement to acquire the independent
office in Long Island. As part of that acquisition agreement, we have assumed
the office lease. This office occupies 5,900 square feet with monthly lease
expense of $17,531.

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

Due to the large amounts of travel between the New York area and
significant costs associated with overnight hotel rooms, we maintain an
apartment at 150 West 51st Street in New York City. The apartment is
approximately 700 square feet with monthly rentals of $3,500. We also maintain
two apartments in Orlando with monthly rentals totaling $2,700.

As of December 31, 2007, EFG serviced 30 fully independent offices
throughout the United States. We do not have lease agreements for these offices
or any direct financial commitment. The rent for these facilities is an
obligation of the independent contractors who are located in each of them.

JLSC Offices:

The main office is located at 650 Fifth Ave 3rd Floor New York, NY,
occupying 19,020 square feet with a monthly rent of $65,513. This lease expires
in December 2009. The office employs registered individuals who service our
retail and institutional clients and our Investment Banking and Research
departments with staff to service these areas.

The Florida office is located at 2101 N.W. Corporate Boulevard, Boca
Raton, 1st Floor, and occupies 3,234 square feet with monthly rent of $4,177.
This office houses our Research Department and a portion of our institutional
trading desk.

The Connecticut office is located at 1011 High Ridge Road, Stamford CT
and occupies 1,464 square feet with a monthly rent of $2,684. This office houses
our convertible bond desk.

The Delaware office is located at 3 Mill Road Suite 304, Wilmington DE,
and occupies 2,807 square feet with a monthly rent of $4,795. This office houses
two retail brokers and also services our institutional clients.

The Boston Massachusetts office is located at 99 Summer Street, 11th
Floor, Boston MA, and occupies approximately 6,813 square feet with a monthly
rent of $18,168. This office employs registered individuals and staff who
service our retail and institutional clients.

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

The New Jersey Office is located at 399 Thornall Street, Edison NJ and
occupies 3,602 square feet with a monthly rent of $8,404. This office employs
registered individuals and staff who service our retail and institutional
clients.

We have a rental obligation in New York at 830 Third Ave, New York, NY
that occupies 6,000 square feet with a monthly rent of $18,000. We currently
have no employees on site and sub lease the entire space at our cost.

JLSC also has 7 independent offices located in various locations. We do
not have any lease agreements or any direct financial commitments to these
locations.

ITEM 3. LEGAL PROCEEDINGS
--------------------------

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

On February 6, 2006, EFG received a letter from FINRA threatening
disciplinary action for failure to maintain required net capital during the
period from September 2003 to February 14, 2005 while EFG was under different
management, and alleging its violation of other FINRA rules. FINRA calculated
the range of net capital deficiencies during that period as between
approximately $488,000 and $1.833 million.

On April 25, 2006, EFG notified FINRA and the SEC that as a result of a
routine examination of EFG in April 2005, EFG was under the minimum net capital
requirement for that period. It was determined that the trading operation was
not properly terminating, in the computer trading platforms, for the stocks in
which EFG makes a market. The technical error made it appear that EFG was making
a market in between 39 and 78 more stocks. EFG also utilized a restricted stock
position for net capital purposes that was eligible to become unrestricted but
EFG had not yet submitted the documents to the transfer agent to have it
cleared.

In August 2007, EFG received a Notice of Acceptance of Letter of
Acceptance, Waiver and Consent from FINRA ("AWC") dated July 30, 2007. The AWC
settled all matters in the preceding paragraphs in return for EFG's payment of a
fine in the amount of $145,000. On August 22, 2007 payment was made to FINRA in
this amount.

A competing brokerage firm commenced arbitration by filing a Statement
of Claim on October 14, 2005 before FINRA alleging, among other things, that EFG
improperly solicited Claimant's brokers for employment with EFG. To that end,
Claimant has asserted claims against EFG for tortuous interference with contract
and unfair competition. Claimant seeks $10,000,000 in damages from EFG. EFG
denies the material allegations of the Statement of Claim and is vigorously
defending this action. EFG has also asserted a counterclaim against Claimant for
unfair competition. The parties appeared for several hearings in this
arbitration in 2007. Additional hearing dates have been scheduled in 2008. This
claim is associated with the Long Island office that was acquired in March 2007.
In the opinion of management, based on discussions with legal counsel, the
outcome of this claim will not result in a material adverse affect on the
financial position or results of operations of the Company.

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

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

No matters were submitted to a vote of security holders during the
fourth quarter of 2007.

PART II

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

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

2006 HIGH SALES PRICE LOW SALES PRICE
---- ---------------- ---------------
First Quarter $5.32 $3.00
Second Quarter 4.24 2.80
Third Quarter 3.99 2.25
Fourth Quarter 3.94 2.50

2007 HIGH SALES PRICE LOW SALES PRICE
---- ---------------- ---------------
First Quarter $3.04 $2.38
Second Quarter 2.89 1.40
Third Quarter 1.87 1.10
Fourth Quarter 1.19 0.99

As of March 5, 2008, there were approximately 450 stockholders of
record of our common stock.

DIVIDEND INFORMATION.

We have not paid any dividends to our common stockholders since January
1, 2003. We do not anticipate paying any dividends to our common stockholders in
the foreseeable future. We intend to retain earnings to finance the development
and expansion of our business. Payment of dividends to common stockholders in
the future will be subject to the discretion of our board of directors and will
depend on our ability to generate earnings, our need for capital and our overall
financial condition.

EQUITY COMPENSATION PLANS.

The following table provides information as of December 31, 2007 with
respect to compensation plans (including individual compensation arrangements)
under which our equity securities are authorized for issuance.

Equity Compensation Plan Information

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

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
-------------------------------------------------------------------

INTRODUCTION

We were incorporated in Florida during February 2000. Most of our
business is conducted through our wholly owned subsidiaries, Empire Financial
Group, Inc., Empire Investment Advisors, Inc., and Jesup & Lamont Securities
Corporation. Empire Financial Group, Inc. was founded in 1992 and merged into
Empire Financial Holding Company in 2000. 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.

EFG and JLSC are our financial brokerage services subsidiaries
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, 2007, the annual fee was equal to
approximately 140 basis points times the assets under management.

CRITICAL ACCOUNTING POLICIES

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

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

ACCOUNTING FOR CONTINGENCIES

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

USE OF ESTIMATES

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

GOODWILL AND OTHER INTANGIBLE ASSETS

The Company applies SFAS 142, Goodwill and Other Intangible Assets and
performs a quarterly impairment test. Under SFAS 142, the fair value of an asset
(or liability) is the amount at which that asset (or liability) could be bought
(or incurred) or sold (or settled) in a current transaction between willing
parties, that is, other than in a forced or liquidation sale. Thus, the fair
value of a reporting unit refers to the amount at which the unit as a whole
could be bought or sold in a current transaction between willing parties. Quoted
market prices in active markets are the best evidence of fair value and shall be
used as the basis for the measurement, if available. However, the market price
of an individual equity security (and thus the market capitalization of a
reporting unit with publicly traded equity securities) may not be representative
of the fair value of the reporting unit as a whole. The quoted market price of
an individual equity security, therefore, need not be the sole measurement basis
of the fair value of a reporting unit. Substantial value may arise from the
ability to take advantage of synergies and other benefits that flow from control
over another entity. Consequently, measuring the fair value of a collection of

assets and liabilities that operate together in a controlled entity is different
from measuring the fair value of that entity's individual equity securities. An
acquiring entity often is willing to pay more for equity securities that give it
a controlling interest than an investor who would pay for a number of equity
securities representing less than a controlling interest. That control premium
may cause the fair value of a reporting unit to exceed its market
capitalization.

Our goodwill was recorded for acquisitions which are less than 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
is becoming a primary line of business. Investment banking revenues for the
years ended December 31, 2005 and 2004, totaled $266,410 and $0, respectively.
However, investment banking revenues totaled $11,449,695 and $3,543,625 for the
years ended December 31, 2007 and 2006, respectively.

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. The
Company has elected to perform its goodwill impairment test quarterly.

If the Company subsequently determines its goodwill and other
intangible assets have been impaired, the Company may have to write off a
portion or all of such goodwill and other intangible assets. If all goodwill and
other intangible assets were written off, the Company would record a non cash
loss approximating $17.6 million to operations and stockholders' equity.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET EFFECTIVE

Statements of Financial Accounting Standards (SFAS):

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

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

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

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

o requires the acquirer to recognize contingent consideration at the
acquisition date, measured at its fair value at that date,

This statement is effective for fiscal years beginning after December 15,
2008

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

SFAS 159, The Fair Value Option for Financial Assets and Financial
Liabilities--including an amendment of FASB Statement No. 115 -permits
entities to choose to measure many financial instruments and certain other
items at fair value. The objective is to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This
Statement is expected to expand the use of fair value measurement, which
is consistent with the Board's long-term measurement objectives for
accounting for financial instruments. This Statement is effective as of
the beginning of an entity's first fiscal year that begins after November
15, 2007, and interim periods within those fiscal years. Early adoption is
permitted as of the beginning of a fiscal year that begins on or before
November 15, 2007, provided the entity also elects to apply the provisions
of FASB Statement No. 157, Fair Value Measurements.

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

FASB Staff Positions (FSP):

FSP FAS 157-1, "Application of FASB Statement No. 157 to FASB Statement No.
13 and Other Accounting Pronouncements That Address Fair Value
Measurements for Purposes of Lease Classification or Measurement under
Statement 13" -- amends FASB Statement No. 157, Fair Value Measurements,

to exclude FASB Statement No. 13, Accounting for Leases, and other
accounting pronouncements that address fair value measurements for
purposes of lease classification or measurement under Statement 13.
However, this scope exception does not apply to assets acquired and
liabilities assumed in a business combination that are required to be
measured at fair value under FASB Statement No. 141, Business
Combinations, or No. 141 (revised 2007), Business Combinations, regardless
of whether those assets and liabilities are related to leases.

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

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

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

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

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

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

EITF Consensuses (EITF):

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

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

AICPA Statements of Position (SOP):

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

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

MARKET-MAKING ACTIVITIES

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

SOURCES AND DESCRIPTION OF REVENUES

COMMISSIONS AND FEES.

Approximately 65% of our 2007 revenues and approximately 57% of our
2006 revenues consist of commissions and fees. Commissions and fees include
revenues generated from transactional fees charged to retail and institutional
customers. Commissions and fees also include mutual fund transaction commissions
and trailer fees, which are periodic fees paid by mutual funds as an incentive
to keep assets invested with them over time. Transactional fees charged to
retail and institutional customers are primarily affected by changes in
transaction volumes and changes in the commission or fee rates charged per
transaction.

TRADING REVENUES

Approximately 13% of our 2007 and 33% of our 2006 revenues consist of
equities market-making trading revenues. Equities market-making trading revenues
are generated from the difference between the prices we pay to buy securities
and the price we are paid when we sell securities. Volatility of stock prices,
which can result in significant price fluctuations in short periods of time, may
result in trading gains or losses. Our equities market-making trading revenues
are dependent on our ability to evaluate and act rapidly on market trends and
manage risk successfully. We typically act as principal in these transactions
and do not receive a fee or commission for providing order execution services.

Our 2007 trading revenues were $6,488,356 which consisted of net
realized gains of $7,659,738 and net unrealized losses of $1,171,382.

INVESTMENT BANKING

The remaining 22% of our 2007 revenues came from investment banking as
compared to 10% in 2006. Our 2007 and 2006 investment banking revenues were
$11,449,695 and $3,543,625, respectively.

DESCRIPTION OF OPERATING EXPENSES

EMPLOYEE COMPENSATION AND BENEFITS.

Employee compensation and benefits, which include salaries and wages,
incentive compensation, stock compensation and related employee benefits and
payroll taxes accounted for approximately 34% of our expenses during 2007 and
approximately 31% of our expenses during 2006. Approximately 60% of our
employees are compensated primarily on a performance basis. Therefore, a
significant portion of compensation and benefits expense will fluctuate based on
our operating revenue.

COMMISSIONS AND CLEARING COSTS.

Commissions and clearing costs include commissions paid to independent
brokers, fees paid to floor brokers and exchanges for trade execution costs,
fees paid to third-party vendors for data processing services and fees paid to
clearing entities for certain clearance and settlement services. Commissions and
clearing costs generally fluctuate based on transaction volume. Approximately
49% of our 2007 expenses and approximately 55% of our 2006 expenses consisted of
commissions and clearing costs.

GENERAL AND ADMINISTRATIVE

Our general and administrative expenses consist primarily of executive
compensation, legal, accounting and other professional fees, software consulting
fees, travel and entertainment expenses, insurance coverage, depreciation,
occupancy expenses and other similar operating expenses. These expenses
accounted for approximately 17% and 14% of our expenses for 2007 and 2006,
respectively.

OTHER INCOME AND EXPENSES

Other income and expenses consist of interest income earned on our bank
balances while interest expenses are costs of capital employed in our market
making activities to purchase and hold inventory and to service our debt.
Interest income (expense) net for 2007 and 2006 was ($977,593) and ($479,287),
respectively.

Also included in other income for 2007, we recognized income of
$350,000 resulting from funds returned to us from a settlement with the SEC.

RESULTS OF OPERATIONS - DECEMBER 31, 2007 COMPARED WITH DECEMBER 31, 2006

Total revenues for the year ended December 31, 2007 increased
$15,029,853 or 42%, to $50,671,898 from $35,642,045 reported for the year ended
December 31, 2006. Commissions and fees revenue accounted for $12,359,957 or
approximately 82% of the increase in total revenues. Trading revenues from
equities and market-making activities decreased $5,236,174, or approximately
(35%) decline of the net increase in total revenues. Investment banking income
accounted for $7,906,070, or approximately 53% of the increase in revenues.

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

Commission and fees revenue increased by $12,359,957 to $32,733,847
from $20,373,890 in 2006, due to the acquisition of JLSC which accounted for
100% of the increase. Commissions and fees revenues accounted for approximately
65% and 57% of our total revenues for the years ended December 31, 2007 and
2006, respectively.

Investment banking revenues increased $7,906,070 to $11,449,695 from
$3,543,625 in 2006. The increase was primarily due to the growth and maturing of
our investment banking department.

These revenue increases were offset by a decrease in trading revenues,
which declined by $5,236,174 to $6,488,356 in 2007 from $11,724,530, in 2006,
due to losses in trading.

Operating expenses in 2007 increased $25,269,863, or approximately 72%,
to $60,421,970 from $35,152,107 in 2006, from a combination of reasons as
described below:

Commissions and clearing costs in 2007 increased $10,395,825, or
approximately 54%, to $29,577,137 from $19,181,312 in 2006. This increase was
due to the acquisition of JLSC which accounted for 99% of the increase. As a
percentage, commissions and clearing costs accounted for approximately 49% and
55% of total expenses for the years ended December 31, 2007 and 2006,
respectively.

Employee compensation and benefits in 2007 increased $9,571,312, or
approximately 88%, to $20,498,566 from $10,927,254 in 2006. This increase was
primarily due to the acquisition of JLSC which accounted for $6,672,579, or 70%
of the increase. In addition, 2007 included a charge for employee compensation
of $725,480 for stock option expense related to SFAS No. 123. Employee
compensation and benefits as a percentage of total expenses increased from
approximately 31% in 2006 to 34% in 2007.

General and administrative expenses in 2007 increased $5,302,726 or
approximately 105%, to $10,346,267 from $5,043,541 in 2006. This increase was
primarily due to the acquisition of JLSC which accounted for $3,138,052, or 59%
of the increase, and increases of $1,518,719 for legal and professional fees,
and
$326,006 for depreciation of fixed assets and amortization of software. As a
percentage of total expenses, general and administrative expenses were 17% and
14% for 2007 and 2006, respectively.

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

In 2007, interest income decreased $282,928, or approximately 65%, to
$150,021 as compared to interest income in 2006 of $432,949. Interest expense
increased $565,378, or approximately 62% to $1,477,614 as compared to $912,236
in 2006. This was due mainly to the interest on the March 2007 Private Placement
notes in the amount of $481,321, and bank line interest totaling $133,602,

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

For the year ended December 31, 2007, we reported a net loss applicable
to common stockholders of ($10,901,898), or ($1.00) per basic and diluted share,
as compared to a net loss applicable to common stockholders of $(220,721), or
($.03) per basic and diluted share for the year ended December 31, 2006.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2007, we had $36,552,460 in total assets, of which,
$11,564,689 or approximately 32% consisted of cash or assets readily convertible
into cash, principally securities owned and receivables from clearing brokers,
which include interest bearing cash balances held with our clearing
organization. At December 31, 2007, we had liabilities due within one year
totaling $15,204,365. Historically, we have financed our operating cash deficits
from private placements of stock and debt offerings as discussed below:

During 2007 cash used by operations was $7,825,858 as compared to
$1,671,839 cash used in 2006. The major uses of cash from operations for the
year ended December 31, 2007 resulted from the net loss of $10,727,665, which
was partially offset from non cash expenses and revenues and changes in working
capital totaling $2,901,807.

Net cash used in investing activities for 2007 was $415,562, related to
purchases of furniture and equipment of $266,063 and issuances of notes
receivable, net of payments, totaling $149,499. Cash used in investing
activities for 2006 was $4,938,163, related to cash paid for the acquisition of
JLSC of $1,464,539, purchases of furniture and equipment of $472,614, and
issuances of notes receivable, net of payments, totaling $3,001,010.

Net cash provided by financing activities was $7,786,871 in 2007, as
compared to $7,219,488 provided in 2006.

Financing activities in 2007 included proceeds of $2,895,275 from the
sales and subscriptions of our common stock, net increased borrowings of
$1,197,108 from the issuance and repayments of notes payable, and borrowing
under a bank credit line of $1,999,450.

As of March 3, 2008, the Company entered into binding Subscription
Agreements to sell $2,000,000 of units in a private placement to accredited
investors. Each unit consists of one share of Series G 10% Subordinated
Cumulative Convertible Preferred Stock, par value $0.01 per share, and five-year
warrants to purchase 1,470 shares of the company's Common Stock, par value $0.01
per share. Each share of Series G Preferred Stock is initially convertible into
1,470 shares of Common Stock, subject to limited antidilution protection for
capital changes and similar events. The warrants are exercisable after six
months from the date of issue at a price of $0.816 per share, subject to limited
antidilution protection for capital changes and similar events. The initial
conversion price of the Series G Preferred Stock is $0.68 per share, the closing
price of the company's common stock on March 3, 2008. The Subscription Agreement
also includes JLSC's agreement to register all shares of the common stock
underlying the units. Pursuant to the terms of the transaction, the company must
pay partial liquidated damages in the amount of 1% per month of the purchase
price, subject to a cap of an overall aggregate payment of 6% of the purchase
price, upon any failure to (a) file a registration statement with the Securities
and Exchange Commission within 30 days after the closing date of the
transaction, or 30 days after filing its annual report on Form 10-KSB, whichever
is later, or (b) register all shares of common stock underlying the units within
120 days of the closing date. None of the shares of common stock underlying the
units will be issued until the American Stock Exchange has approved their
listing.

On August 24, 2007, the Company filed a Form 8-K which disclosed that
as of August 20, 2007, the Company had entered into binding agreements to sell
$2,250,000 of units in a private placement to 4 accredited individual and
institutional investors. The units consist of $1,898,580.06 to purchase
1,622,718 shares of Common Stock, and $101,419.94 to purchase five-year
non-redeemable warrants to purchase 811,359 shares of common stock. The warrants
are exercisable after six months from the date of issue at a price of $1.40 per
share. Each share of common stock underlying the units is priced at $1.17, the
closing price of the Company's common stock on August 20, 2007. The subscription
included the Company's agreement to register all 2,434,077 shares of common
stock included in and underlying the units. Pursuant to the terms of the
agreements, the Company must pay partial liquidated damages in the amount of 1%
per month of the purchase price, subject to a cap of an overall aggregate
payment of 10% of the purchase price, upon certain failures to register all
shares of common stock underlying the units within 120 days of the closing date
of the transaction. The Company paid total cash commissions of $80,000 in
connection with these transactions.

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

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

During 2006, we sold 290,000 shares of common stock and 181,500
warrants to purchase common stock at an exercise price of $5.46 per share, for
$725,000 in cash.

During 2006, we sold 866,139 shares of newly created Series F
convertible preferred stock and warrants to acquire 433,069 shares of common
stock at an exercise price of $4.50 per share, for $2,814,993 cash.

During 2006, we issued a total of $3,924,000 of short term bridge
notes. We also issued common stock warrants as part of the bridge note financing
exercisable into a total of 550,000 shares of common stock at exercise prices
ranging from $2.82 to $4.85 per share.

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

On March 19, 2008, effective as of January 29, 2008, Fifth Third Bank
converted the credit line to a note payable. Under the new note payable, 100% of
EFG's and JLSC's stock is still pledged as collateral. The note carries certain
restrictions and requires pre-approval from Fifth Third Bank for certain events,
including but not limited to, divesture of business assets. The note carries
interest at the Bank's Prime Rate plus 4% (10% at March 19, 2008). The note
calls for monthly interest payments and repayments of principal as follows:

Principal Reduction Due Date Principal Reduction Payment Amount
---------------------------- ----------------------------------

March 31, 2008 ............. $ 100,000
May 1, 2008 ................ $ 250,000
August 1, 2008 ............. $ 250,000
November 3, 2008 ........... $ 250,000
January 29, 2009 ........... $1,150,000

Total interest expense under this credit line for the year ended
December 31, 2007 was $164,237.

Based on our current rate of cash outflows, we believe that our net
cash and liquid assets totaling $11,564,689 at December 31, 2007, combined with
our most recent capital financings completed in 2007 and 2008, will be
sufficient to meet our anticipated cash needs for working capital and capital
expenditures for the foreseeable future. However, we are planning to raise
additional equity capital in 2008.

Our plan for future operations has several different aspects, which we
will continue to implement, as outlined below:

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

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

o expand our investment banking activities by actively seeking small
to mid-size companies that need debt and equity to continue their
expansion plans;

o continue to recruit quality registered representatives;

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

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

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

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

The Company plans to raise additional equity capital in 2008 for
working capital. The Company also has an acquisition plan which contemplates
raising debt and equity capital to finance the acquisitions.

The Company has implemented many operating changes which are expected
to benefit operations in the future. The more notable of these changes have been
to eliminate our proprietary trading and begin consolidating operations of our
broker dealers. The pro forma summary set forth below summarizes the intended
impact on our net loss, cash and net capital as if these changes had been made
as of January 1, 2007.

PRO FORMA SUMMARY
($Millions)

--12 MONTHS ENDED DECEMBER 31, 2007--
BROKERS'
NET NET
LOSS CASH CAPITAL
---- ---- -------

Balances as reported
at December 31, 2007: $(10.7) $0.5 $1.5

Net adjustments related to
proprietary trading 5.6 3.9 1.8

Net adjustments related to
other operations 1.8 1.5 1.3
----- ---- ----

Pro forma balances $(3.3) $5.9 $4.6

Additional adjustments for recurring non cash expenses:

FAS 123 stock 0.7
compensation

Depreciation and
Amortization 0.9
----- ----

Pro forma balances on
cash basis $(1.7) $5.9 $4.6
===== ==== ====

NET CAPITAL REQUIREMENTS

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

The ratio of aggregate indebtedness to net capital was 2.96 to 1 for
EFG and 1.26 to 1 for JLSC. We claim exemption from Rule 15c3-3 under Paragraph
(k) (2) (ii) of the Rule as all customer transactions are cleared through other
broker-dealers on a fully-disclosed basis.

OFF-BALANCE SHEET ARRANGEMENTS

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

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

We have sold securities which we do not currently own and therefore
will be obligated to purchase the securities at a future date. We have recorded
these obligations in our financial statements at December 31, 2007, in the
amount of $522,771, at the market values of the securities and will incur a loss
if the market value increases subsequent to December 31, 2007. The occurrence of
these off-balance sheet losses could impair our liquidity and force us to reduce
or curtail operations.

Tabular Disclosure of Contractual Obligations

Listed below is a tabular representation of our long-term debt
obligations, capital lease obligations, operating lease obligations, purchase
obligations and other long-term liabilities reflected on our Statement of
Financial Condition as of December 31, 2007.

Payment due by period
------------------------------------------------
Less than More than
Contractual Obligations Total 1 year 1-3 years 3-5 years 5 years
--------------------------- ----------- ---------- ---------- ---------- ---------

Long-term debt obligations $10,133,691 $ 246,533 $3,500,000 $6,387,158 $ -
Capital lease obligations $ - $ - $ - $ - $ -
Operating lease obligations $ 4,221,564 $1,922,544 $2,299,020 $ - $ -

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

For the year ending December 31, 2007, we had a net loss attributable
to common stockholders of $(10,901,898).

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

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

ITEM 7. FINANCIAL STATEMENTS
-----------------------------

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

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
------------------------------------------------------------------------

None.

ITEM 8A and 8A(T). CONTROLS AND PROCEDURES
------------------------------------------

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

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

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

o Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the
Company; and

o Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the
Company's assets that could have a material effect on the financial
statements.

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

Management conducted an evaluation of the effectiveness of the
Company's internal control over financial reporting based on the framework in
"Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission". Based on this evaluation, management
concluded that the Company's internal control over financial reporting was
effective as of December 31, 2007.

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

(b) Changes in Internal Control Over Financial Reporting

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

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

As part of Management's evaluation of the effectiveness of the
Company's internal control over financial reporting, Management conducted an
evaluation of the effectiveness of the Company's disclosure controls and
procedures as of the end of the period covered by this report. Based on this
evaluation, management concluded that the Company's disclosure controls and
procedures were effective as of December 31, 2007.

ITEM 8B. OTHER INFORMATION
--------------------------

AMENDMENT TO ARTICLES OF INCORPORATION

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

PART III

ITEMS 9, 10, 11, 12
-------------------

Part III (Items 9 through 12) is omitted since we expect to file with
the U.S. Securities and Exchange Commission within 120 days after the close of
the fiscal year ended December 31, 2007, a definitive proxy statement pursuant
to Regulation 14A under the Securities Exchange Act of 1934 that involves the
election of directors. If for any reason such a statement is not filed within
such a period, this annual report will be appropriately amended.

ITEM 13. EXHIBITS
-----------------

Exhibit No. Description of Exhibit
----------- ----------------------

3(i)(a) Articles of Incorporation (1)

3(i)(b) Amendment to Articles of Incorporation effective January 2, 2008*

3(ii) Bylaws, as amended (2)

4.1 Form of Common Stock Certificate (1)

4.2 Articles of Amendment designating Series B Convertible Preferred
Stock, Series C Convertible Preferred Stock, and Series D
Convertible Preferred Stock dated May 19, 2005 (3)

4.3 Articles of Amendment designating Series F Convertible Preferred
Stock dated March 13, 2007 (4)

4.4 Articles of Amendment designating Series G Convertible Preferred
Stock, effective March 28, 2008 *

10.1 Amended and Restated 2000 Incentive Compensation Plan (5)

10.2 2007 Incentive Compensation Plan (6)

10.3+ Severance Agreement between the Company and Kevin M. Gagne(7)

10.4+ Employment Agreement between the Company and Donald A. Wojnowski
Jr. dated as of September 21, 2007(2)

10.5 Lease between the Company and Emerson Investments International,
Inc., relating to the lease of the Registrant's principal executive
offices (8)

10.6 Form of Indemnification Agreement between the Company and each of
its Directors and executive officers(1)

10.7 Mutual Release between the Company, Richard L. Goble, the Richard
L. Goble First Revocable Trust, Henry N.Dreifus, Kevin M. Gagne,
Bradley L. Gordon, and John J. Tsucalas(17)

10.8 Stock Purchase Agreement between the Gagne First Revocable Trust,
Kevin M. Gagne and Richard L. Goble(17)

10.9 Fully Disclosed Clearing Agreement by and between Penson Financial
Services, Inc. and Empire Financial Group, Inc.(8)

10.12 Stock Exchange Agreement, dated March 8, 2005, between Empire
Financial Holding Company, Kevin M. Gagne and the Gagne First
Revocable Trust.(9)

10.13 Transfer Agreement by and among Empire Financial Holding Company,
Empire Financial Group, Inc., Regal Securities, Inc., and Penson
Financial Services, Inc., as Clearing Broker dated as of November
21, 2005. (10)

10.14 Form of Securities Purchase Agreement dated as of March 10, 2006
(4)

10.15 Form of Warrant to be issued in connection with Securities Purchase
Agreement dated as of March 10, 2006 (4)

10.16+ Employment Agreement with Kevin A. Carreno dated as of November 7,
2007 (2)

10.17+ Employment Agreement with James M. Matthew dated May 15, 2007 (11)

10.18 Stock Purchase Agreement, dated September 14, 2006, among Empire
Financial Holding Company, Jesup & Lamont Securities Corporation,
and Jesup & Lamont Holding Corporation. (12)

10.19 Amendment No. 1 to Stock Purchase Agreement, dated November 10,
2006 (13)

10.20 Amendment No. 2 to Stock Purchase Agreement, dated November 10,
2007 (13)

10.21 Form of Securities Purchase Agreement dated March 6, 2007(14)

10.22 Form of Registration Rights Agreement dated March 6, 2007(14)

10.23 Form of Debenture issuable in connection with Securities Purchase
Agreement dated March 6, 2007 (14)

10.24 Form of Warrant issuable in connection with Securities Purchase
Agreement dated March 6, 2007 (14)

10.25 Form of Subscription Agreement dated August 20, 2007 (15)

10.26 Form of Warrant issuable in connection with Subscription Agreement
dated August 20, 2007 (15)

10.27 Form of Subscription Agreement dated as of March 3, 2008 (16)

14.1 Code of Ethical Conduct(8)

21.1 Subsidiaries of the Company *

23.1 Consent of Miller, Ellin & Company, LLP *

31.1 Certification by Principal Executive Officer pursuant to Rule
13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934,
as amended *

31.2 Certification by Principal Financial Officer pursuant to Rule
13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934,
as amended *

32.1 Principal Executive Officer Certification pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of
1934, as amended, and 18 U.S.C. Section 1350 *

32.2 Principal Executive Officer Certification pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of
1934, as amended, and 18 U.S.C. Section 1350 *
_________________

* Filed herewith
+ Indicates management contract or compensatory plan or arrangement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES
------------------------------------------------

We have retained Miller, Ellin & Company to perform our annual audit,
review our quarterly and annual SEC filings and prepare our tax returns.

AUDIT FEES.

The aggregate fees billed for professional services rendered by Miller,
Ellin & Company for the audit of our annual financial statements and for the
review of our interim financial statements, which are included in our Annual
Report on Form 10-KSB and in our Quarterly Reports on Form 10-QSB, and services
that are normally provided in connection with statutory and regulatory filings
or engagements for fiscal years 2007 and 2006 were $263,694, and $77,294,
respectively.

AUDIT-RELATED FEES.

The aggregate fees for assurance and related services billed by Miller,
Ellin & Company that were reasonably related to the performance of the audit or
review of our financial statements and are not reported under Audit Fees above
for fiscal years 2007 and 2006, were $35,634 and $134,672, respectively, which
were primarily in connection with the filing of our registration statements on
Form S-3.

TAX FEES.

The aggregate fees billed for professional services for tax compliance,
tax advice and tax planning by Miller, Ellin & Company were $78,798 and $29,434
for fiscal years ending 2007 and 2006, respectively.

ALL OTHER FEES.

There were fees billed by Miller Ellin & Company for products and
services other than above in the amount of $0 and $31,021 for fiscal years
ending 2007 and 2006, respectively.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

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

SIGNATURES

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

JESUP & LAMONT, INC.

Dated March 28, 2008 By: /s/ Donald A. Wojnowski Jr.
-------------------------------
Donald A. Wojnowski Jr., President
(Principal Executive Officer)

Dated March 28, 2008 By: /s/ James M. Matthew
-----------------------
James M. Matthew, Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

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

Signatures Title Date

/s/ Donald A. Wojnowski Jr. President and Director, March 28, 2008
--------------------------- (Principal Executive Officer)
Donald A. Wojnowski Jr.

/s/ James M. Matthew Chief Financial Officer, March 28, 2008
-------------------- (Principal Financial Officer and
James M. Matthew Principal Accounting Officer)

/s/ John C. Rudy Director March 28, 2008
----------------
John C. Rudy

/s/ Steven M. Rabinovici Director March 28, 2008
------------------------
Steven M. Rabinovici

JESUP & LAMONT, INC.
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

TABLE OF CONTENTS

Page

Report of Independent Registered Public Accounting Firm .................... F-2

Consolidated Statement of Financial Condition December 31, 2007 ............ F-3

Consolidated Statements of Operations Years Ended December 31, 2007
and 2006 .................................................................. F-4

Consolidated Statements of Cash Flows Years Ended December 31, 2007
and 2006 .................................................................. F-5

Consolidated Statements of Changes in Stockholders' Equity Years Ended
December 31, 2007 and 2006 ................................................ F-7

Notes to Consolidated Financial Statements ................................. F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Jesup & Lamont, Inc. and Subsidiaries
(Formerly Empire Financial Holding Company)

We have audited the accompanying consolidated statement of financial condition
of Jesup & Lamont, Inc. and subsidiaries (formerly Empire Financial Holding
Company) as of December 31, 2007, and the related consolidated statements of
operations, changes in stockholders' equity , and cash flows for the years ended
December 31, 2007 and 2006. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Jesup & Lamont, Inc.
and subsidiaries (formerly Empire Financial Holding Company) at December 31,
2007, and the results of its operations and its cash flows for the years ended
December 31, 2007 and 2006, in conformity with accounting principles generally
accepted in the United States of America.

/s/ Miller, Ellin & Company, LLP

New York, New York
March 28, 2008

F-2

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
December 31, 2007

Assets:

Cash and cash equivalents ..................................... $ 535,536
Marketable securities owned, at market value .................. 5,178,988
Securities not readily marketable, at estimated fair value .... 1,229,659
Commissions receivable from clearing organization ............. 1,672,328
Other receivables ............................................. 795,030
Deposits at clearing organizations ............................ 4,177,837
Furniture and equipment, net .................................. 619,153
Prepaid expenses and other assets ............................. 1,671,215
Deferred tax assets ........................................... 2,117,000
Notes receivable .............................................. 979,221
Intangible assets, net ........................................ 17,576,493
------------

Total assets ................................................ $ 36,552,460
============

Liabilities and stockholders' equity

Liabilities:

Line of credit payable ........................................ $ 1,999,450
Accounts payable, accrued expenses and other liabilities ...... 4,992,314
Due to clearing organizations ................................. 7,689,830
Securities sold, but not yet purchased, at market value ....... 522,771
Notes payable ................................................. 9,766,176
------------

Total liabilities ........................................... $ 24,970,541
------------

Commitments and contingencies

Stockholders' equity:

Convertible preferred stock, series C and F $.01 par value,
1,000,000 shares authorized, 7,062 shares of Series C and
819,987 shares of Series F issued and outstanding ........... $ 8,270
Common stock, $.01 par value,
100,000,000 shares authorized,
11,106,442 shares issued and outstanding .................... 111,065
Stock subscribed .............................................. 2,000,000
Additional paid-in capital .................................... 26,324,579
Accumulated deficit ........................................... (16,861,995)

------------

Total stockholders' equity .................................. $ 11,581,919
------------

Total liabilities and stockholders' equity .................. $ 36,552,460
============

See accompanying notes to the consolidated financial statements.

F-3

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

TWELVE MONTHS TWELVE MONTHS
ENDED ENDED
December 31, December 31,
2007 2006
------------- -------------

Revenues:
Commissions and fees ................................................ $ 32,733,847 $ 20,373,890
Trading income ...................................................... 6,488,356 11,724,530
Investment banking income ........................................... 11,449,695 3,543,625
------------ ------------

50,671,898 35,642,045
------------ ------------

Expenses:
Employee compensation and benefits .................................. 20,498,566 10,927,254
Commissions and clearing costs ...................................... 29,577,137 19,181,312
General and administrative .......................................... 9,468,625 4,662,492
Communications and data processing .................................. 877,642 381,049
------------ ------------

60,421,970 35,152,107
------------ ------------

Income (loss) from operations ......................................... (9,750,072) 489,938
------------ ------------

Other income (expenses):
Other income ........................................................ 350,000 -
Interest income ..................................................... 150,021 432,949
Interest expense .................................................... (1,477,614) (912,236)
------------ ------------

(977,593) (479,287)
------------ ------------

Income (loss) before income taxes ..................................... (10,727,665) 10,651
Income taxes .......................................................... - -
------------ ------------

Net income (loss) ..................................................... (10,727,665) 10,651

Preferred stock dividends ............................................. (174,233) (231,372)
------------ ------------

Net income (loss) applicable to common stockholders ................... $(10,901,898) $ (220,721)
============ ============

Basic and diluted earnings (loss) per share applicable to common
stockholders:

Earnings (loss) per share-basic and diluted ......................... $ (1.00) $ (0.03)
============ ============
Earnings (loss) per share diluted ................................... $ (1.00) $ (0.03)
============ ============

Weighted average shares outstanding:
Basic ............................................................... 10,926,021 7,102,379
============ ============
Diluted ............................................................. 10,926,021 7,102,379
============ ============

See accompanying notes to the consolidated financial statements.

F-4

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

TWELVE MONTHS TWELVE MONTHS
ENDED ENDED
December 31, December 31,
2007 2006
------------- -------------

Cash flows from operating activities
Net income (loss) ................................................... $(10,727,665) $ 10,651

Adjustments to reconcile net income (loss) to net cash
used by operating activities:
Depreciation and amortization ..................................... 683,200 363,305
Amortization of customer lists .................................... 113,371 21,644
Amortization of note discount ..................................... 95,868 15,978
Unrealized loss on securities ..................................... 1,430,068 (476,421)
Stock compensation expense ........................................ 725,480 318,688
Amortization of warrants .......................................... 285,065 713,936
Amortization of restricted stock .................................. 16,977 -
Deferred rent amortization ........................................ 54,108 (54,108)
Value of warrants and stock received for services ................. (347,654) (872,285)
Reimbursement of trading losses ................................... - (1,348,357)
(Increase) decrease in operating assets:
Commissions receivable from clearing organizations ................ 409,478 (650,286)
Deposits at clearing organizations ................................ (2,644,063) (360,086)
Other receivables ................................................. 511,438 (420,302)
Marketable trading account securities, net ........................ (1,218,201) (158,555)
Non marketable trading account securities, net .................... - 156,189
Prepaid expenses and other assets ................................. (1,145,300) (486,151)
Increase (decrease) in operating liabilities:
Accounts payable, accrued expenses and other liabilities .......... (719,518) 324,731
Securities sold, but not yet purchased ............................ (876,459) 1,137,547
Due to clearing organizations ..................................... 5,527,949 92,043
------------ ------------
Total adjustments ............................................... 2,901,807 (1,682,490)
------------ ------------

Cash used by operating activities ............................... (7,825,858) (1,671,839)

Cash flows from investing activities
Purchases of furniture and equipment ................................ (266,063) (472,614)
Issuances of notes receivable ....................................... (318,833) (3,993,791)
Cash paid for acquisition of JLSC ................................... - (1,464,539)
Payments on notes receivable ........................................ 169,334 992,781
------------ ------------

Total cash used by investing activities ........................... (415,562) (4,938,163)
------------ ------------
Cash flows from financing activities
Payments on notes payable ........................................... (4,190,050) (779,167)
Repayment of short-term loans related parties ....................... (1,000,000) -
Proceeds from short-term loans related parties....................... 1,000,000 -
Proceeds from stock subscription advance............................. 1,017,000 -
Proceeds from issuance of notes payable ............................. 6,387,158 5,424,000
Proceeds from sale of common stock .................................. 895,275 725,000
Proceeds from common stock subscribed ............................... 2,000,000 -
Proceeds from sale of preferred stock ............................... - 2,814,993
Redemption of preferred stock ....................................... - (374,363)
Proceeds from line of credit ........................................ 1,999,450 -
Dividends paid on preferred stock ................................... (52,300) (151,526)
Payment to former shareholder ....................................... - (75,000)
Fees and commissions paid for capital raise.......................... (269,662) (364,449)
------------ ------------

Total cash provided by financing activities ....................... 7,786,871 7,219,488
------------ ------------

Net increase (decrease) in cash and cash equivalents ................ (454,549) 609,486

Cash and cash equivalents at beginning of period .................... 990,085 380,599
------------ ------------

Cash and cash equivalents at end of period .......................... $ 535,536 $ 990,085
============ ============
(continued)
See accompanying notes to the consolidated financial statements.

F-5

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

TWELVE MONTHS TWELVE MONTHS
ENDED ENDED
December 31, December 31,
2007 2006
------------- -------------

Supplemental cash flow information:

Interest paid ....................................................... $ 703,589 $ 43,001
============ ============

Supplemental disclosures of non-cash investing and financing activities:

Conversion of debt to equity ........................................ $ - $ 200,000
============ ============

Accrued preferred stock dividends ................................... $ 174,233 $ 129,316
============ ============

Conversion of preferred stock ....................................... $ 462 $ 1,525,638
============ ============

Issuance of common stock and stock options for acquisition of JLSC .. $ - $ 10,087,748
Issuance of note payable for acquisition of JLSC .................... $ - $ 2,500,000
Accrued liabilities for acquisition of JLSC ......................... $ - $ 1,459,025
============ ============
Acquisition of JLSC - Total ......................................... $ - $ 14,046,773

Issuance of note payable for acquisition of Long Island Office ...... $ 4,162,856 $ -
Liabilities assumed on acquisition of Long Island Office ............ $ 921,068 $ -
============ ============
Acquisition of Long Island office - Total ........................... $ 5,083,924 $ -

Issuance of stock to pay liability .................................. $ - $ 232,500
============ ============

Receipt of secured demand notes ..................................... $ - $ 1,348,357
============ ============

Issuance of note receivable to employee ............................. $ 200,000 $ -
============ ============

Issuance of stock to pay dividends .................................. $ 26,482 $ -
============ ============

See accompanying notes to the consolidated financial statements.

F-6

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

Series B Series C Series D Series E Series F
Preferred Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------ ------ ------ ------- ------

Balance at December 31, 2005 ............. 7,000 $ 70 7,062 $ 71 2,000 $ 20 13,333 $ 133 - $ -

Sale of common stock ..................... - - - - - - - - - -
Conversion of notes to common stock ...... - - - - - - - - - -
Sale of preferred stock Series F ......... - - - - - - - - 866,139 8,661
Fees for sale of preferred stock ......... - - - - - - - - - -
Fees paid in stock for sale of preferred . - - - - - - - - - -
Redeem preferred stock Series E .......... - - - - - - (4,989) (50) - -
Conversion preferred stock Series E ...... - - - - - - (8,344) (83) - -
Conversion preferred stock Series B ...... (7,000) (70) - - - - - - - -
Conversion preferred stock Series D ...... - - - - (2,000) (20) - - - -
Conversion of notes to stock ............. - - - - - - - - - -
Payment to former shareholder ............ - - - - - - - - - -
Exercise of warrants to common stock ..... - - - - - - - - - -
Amortization of stock options ............ - - - - - - - - - -
Amortization of warrants ................. - - - - - - - - - -
Acquisition of JLSC - stock .............. - - - - - - - - - -
Acquisition of JLSC - options ............ - - - - - - - - - -
Payment of fees in stock ................. - - - - - - - - - -
Preferred stock dividends ................ - - - - - - - - - -
Net income ............................... - - - - - - - - - -
------ ------ ------ ------ ------ ------ ------ ------ ------- ------
Balance at December 31, 2006 ............. - $ - 7,062 $ 71 - $ - - $ - 866,139 $8,661

Sale of common stock ..................... - - - - - - - - - -
Fees for March 2007 private placement .... - - - - - - - - - -
Conversion preferred stock Series F ...... - - - - - - - - (46,152) (462)
Exercise of options for common stock ..... - - - - - - - - - -
Stock compensation ....................... - - - - - - - - - -
Amortization of restricted stock ......... - - - - - - - - - -
Amortization of warrants ................. - - - - - - - - - -
Acquisition of JLSC - consulting fees .... - - - - - - - - - -
Acquisition of JLSC - stock to employee .. - - - - - - - - - -
Escrow refund to former shareholder ...... - - - - - - - - - -
Payment of legal fees in stock ........... - - - - - - - - - -
Payment of dividends in stock ............ - - - - - - - - - -
Preferred stock dividends ................ - - - - - - - - - -
Net income ............................... - - - - - - - - - -
------ ------ ------ ------ ------ ------ ------ ------ ------- ------

Balance at December 31, 2007 ............. - $ - 7,062 $ 71 - $ - - $ - 819,987 $8,199

(continued)
See accompanying notes to the consolidated financial statements.

F-7

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(continued)

Additional
Common Stock Paid-in Stock Accumulated
Shares Amount capital Subscribed Deficit Totals
---------- -------- ------------ ---------- ------------ ------------

Balance at December 31, 2005 ............. 6,599,005 $ 65,990 $ 10,840,349 $ - $ (5,739,376) $ 5,167,257

Sale of common stock ..................... 290,000 2,900 722,100 - - 725,000
Conversion of notes to common stock ...... 75,000 750 (750) - - -
Sale of preferred stock Series F ......... - - 2,806,332 - - 2,814,993
Fees for sale of preferred stock ......... - - (596,949) - - (596,949)
Fees paid in stock for sale of preferred . - - 232,500 - - 232,500
Redeem preferred stock Series E .......... - - (374,313) - - (374,363)
Conversion preferred stock Series E ...... 178,290 1,783 (1,700) - - -
Conversion preferred stock Series B ...... 1,166,666 11,666 (11,596) - - -
Conversion preferred stock Series D ...... 100,000 1,000 (980) - - -
Conversion of notes to stock ............. 110,000 1,100 198,900 - - 200,000
Payment to former shareholder ............ - - (75,000) - - (75,000)
Exercise of warrants to common stock ..... 98,853 989 (989) - - -
Amortization of stock options ............ - - 318,688 - - 318,688
Amortization of warrants ................. - - 713,936 - - 713,936
Acquisition of JLSC - stock .............. 1,650,154 16,502 5,907,551 - - 5,924,053
Acquisition of JLSC - options ............ - - 3,131,071 - - 3,131,071
Payment of fees in stock ................. 96,912 969 (969) - - -
Preferred stock dividends ................ - - - - (231,372) (231,372)
Net income ............................... - - - - 10,651 10,651
---------- -------- ------------ ---------- ------------ ------------
Balance at December 31, 2006 ............. 10,364,880 $103,649 $ 23,808,181 $ - $ (5,960,097) $ 17,960,465

Sale of common stock ..................... 296,922 2,969 892,306 2,000,000 - 2,895,275
Fees for March 2007 private placement .... - - (269,662) - - (269,662)
Conversion preferred stock Series F ...... 46,152 462 - - - -
Exercise of options for common stock ..... 8,962 90 (90) - - -
Stock compensation ....................... - - 725,480 - - 725,480
Amortization of restricted stock ......... - - 16,977 - - 16,977
Amortization of warrants ................. - - 285,065 - - 285,065
Acquisition of JLSC - consulting fees .... 85,000 850 105,400 - - 106,250
Acquisition of JLSC - stock to employee... 200,000 2,000 630,000 - - 632,000
Escrow refund to former shareholder ...... 65,218 652 74,348 - - 75,000
Payment of legal fees in stock ........... 23,450 235 30,250 - - 30,485
Payment of dividends in stock ............ 15,858 158 26,324 - - 26,482
Preferred stock dividends ................ - - - - (174,233) (174,233)
Net income ............................... - - - - (10,727,665) (10,727,665)
---------- -------- ------------ ---------- ------------ ------------

Balance at December 31, 2007 ............. 11,106,442 $111,065 $ 26,324,579 $2,000,000 $(16,861,995) $ 11,581,919

See accompanying notes to the consolidated financial statements.

F-8

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

1. NATURE OF BUSINESS

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

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

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

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

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

FAIR VALUE. "Marketable securities owned" and "Securities sold, but not
yet purchased" on our consolidated statement of financial condition are carried
at fair value or amounts that approximate fair value, with related unrealized
gains and losses recognized in our results of operations. The determination of
fair value is fundamental to our financial condition and results of operations
and, in certain circumstances, it requires management to make complex judgments.

F-9

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

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

VALUATION OF DEFERRED TAX ASSETS. Deferred income taxes reflect the net
tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes.

GOODWILL AND OTHER INTANGIBLE ASSETS. The Company applies SFAS 142,
Goodwill and Other Intangible Assets and performs an annual impairment test.
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/or
goodwill impairment for each reporting unit. The Company has selected September
30 as the date on which it performs its annual goodwill impairment test.

In connection with its acquisitions, the Company has applied the
provisions of SFAS No. 141 "Business Combinations" using the purchase method of
accounting. The assets and liabilities assumed were recorded at their estimated
fair values. The excess purchase price over the fair value of net tangible
assets and identifiable intangible assets acquired was recorded as goodwill.

The additions to goodwill include the excess purchase price over the
fair value of net tangible assets and identifiable intangible assets acquired
and acquisition costs.

EXPENSE RECOGNITION OF EMPLOYEE STOCK OPTIONS. Effective January 1,2006, the
Company adopted the provisions of Statement of Financial Standards No.123
(revised 2004), Share-Based Payment ("SFAS No. 123 (R)"), which is a revision of
SFAS No. 123. SFAS No. 123 (R) supersedes APB Opinion No. 25, Accounting for
Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash
Flows.

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

FURNITURE AND EQUIPMENT, NET - Property and equipment are recorded at cost.
Depreciation on property and equipment is provided utilizing the straight-line
method over the estimated useful lives of the related assets, which range from
five to seven years.

F-10

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

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

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

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

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.

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

USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS - The Company's financial instruments other
than trading securities, which consist primarily of cash, commissions and other
receivables, deposits, notes payable, and accounts payable, approximate their
fair value due to their short-term nature.

EARNINGS/(LOSS) PER SHARE - Basic earnings/(loss) per share is computed by
dividing net income/(loss) available to common stockholders by the
weighted-average number of common shares outstanding for the period. Diluted
earnings/(loss) per share considers the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or resulted
in issuance of common stock. Options, convertible notes and convertible
preferred stock are included in the computation of net earnings/loss per share.

F-11

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

3. STOCK BASED COMPENSATION

Effective January 1, 2006, the Company adopted the provisions of
Statement of Financial Standards No. 123 (revised 2004), Share-Based Payment
("SFAS No. 123 (R)"), which is a revision of SFAS No. 123. SFAS No. 123 (R)
supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and
amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach
to accounting for share-based payments in SFAS No. 123(R) is similar to the
approach described in SFAS No. 123. However, SFAS No. 123(R) requires all new
share-based payments to employees, including grants of employee stock options,
to be recognized in the financial statements based on their fair values. Pro
forma disclosure of the fair value of new share-based payments is no longer an
alternative to financial statement recognition.

Prior to 2006, the Company accounted for its employee stock option
plans under the intrinsic value method, in accordance with the provisions of
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees", and related interpretations. Compensation expense related to the
granting of employee stock options is recorded over the vesting period only, if,
on the date of grant, the fair value of the underlying stock exceeds the
option's exercise price. The Company had adopted the disclosure-only
requirements of SFAS No. 123, "Accounting for Stock-Based Compensation", which
allowed entities to continue to apply the provisions of APB No. 25 for
transactions with employees and provide pro forma net income and pro forma
income per share disclosures for employee stock grants made as if the fair value
based method of accounting in SFAS No. 123 had been applied to these
transactions.

The Black-Scholes option valuation model is used to estimate the fair
value of the options granted. The model includes subjective input assumptions
that can materially affect the fair value estimates. The model was developed for
use in estimating the fair value of traded options that have no vesting
restrictions and that are fully transferable. Options issued under the Company's
option plan have characteristics that differ from traded options. Principal
assumptions used in applying the Black-Scholes model for the twelve months
ending December 31, 2007 are outlined below. In selecting these assumptions, we
considered the guidance for estimating expected volatility as set forth in SFAS
No. 123(R). Volatility is a measure of the amount by which the Company's common
stock price has fluctuated (historical volatility) or is expected to fluctuate
(expected volatility).

The assumptions used were as follows:

2007 2006
---- ----
Expected dividend yield: None None
Risk free interest rate: 5.16% 4.37%
Expected life: 3 - 5 years 3.0 years
Expected volatility: 58% 100.5%

During the year ended December 31, 2007, the Company granted options to
acquire 1,135,300 shares of the Company's common stock, with exercise prices of
$1.19 - $4.31 per share and aggregate fair value of $911,851. The Company
recorded compensation charges of $725,480 and $318,688, for the years ended
December 31, 2007 and 2006, respectively, relating to the vesting and related
amortization of the fair value of stock options granted.

F-12

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

Had the Company determined compensation expense of employee stock options issued
prior to January 1, 2006, based on the estimated fair value of the stock options
at the grant date and consistent with the guidelines of SFAS 123, its net loss
would have been increased to the pro forma amounts indicated below:

Years ended December 31,
2007 2006
------------ ------------
Net loss applicable to common
stockholders as reported ....................... $(10,901,898) $ (220,721)

Subtract stock-based employee
compensation expense related to stock
options granted prior to January 1, 2006 as
determined under the fair value method ......... (724,688) (553,930)
------------ ------------
Pro forma net loss ............................. $(11,626,586) $ (774,651)
============ ============

Net income (loss) per share applicable to
common stockholders:
As reported:
Basic: ...................................... $ (1.00) $ (0.03)
============ ============
Diluted: .................................... $ (1.00) $ (0.03)
============ ============
Pro forma:
Basic: ...................................... $ (1.06) $ (0.11)
============ ============
Diluted: .................................... $ (1.06) $ (0.11)
============ ============

The pro forma impact of options granted prior to January 1, 2006 on the net loss
for the years ended December 31, 2007 and 2006 is not representative of the pro
forma effects on net income (loss) for future years. In future years the stock
compensation expense recorded will be based on the vesting of stock options
granted on January 1, 2006 and subsequently. However, the future pro forma net
income (loss) will be based on the vesting of stock options granted prior to
January 1, 2006. As of December 31, 2007, there are options to purchase 127,000
shares granted prior to January 1, 2006 that have not yet vested. Some of these
options may expire without being exercised.

F-13

4. ACQUISITION OF JESUP & LAMONT SECURITIES CORPORATION

On November 10, 2006, we acquired all of the outstanding shares of
JLSC, a registered broker dealer, from its parent Jesup & Lamont Holding
Corporation and three private investors. There were no material relationships,
other than in respect of the acquisition transaction, between JLI and JLSC or
between that entity and any director or officer or any associate of any such
director or officer of JLI. We have received the final approved Membership
Agreement from FINRA. The results of operations and differences in the value of
the assets and liabilities transferred in connection with the acquisition of
JLSC during the 10 day period between the effective date of October 31, 2006,
and the acquisition date of November 10, 2006, were not material to our
financial statements. In accordance with SFAS 141, we have adjusted the cost of
JLSC and net income reported.

We paid a total of (i) $1,464,539 in cash, (ii) 1,650,154 shares of
common stock with a fair value of $5.9 million, (iii) common stock options with
three year vesting, ten year terms, and exercise prices from $4.31 - $4.67 per
share exercisable into 1,342,000 shares of common stock, approximating a fair
value of $3.1 million, (iv) a $2.5 million Note, bearing interest at 4% per
annum, due in five years as to both principal and interest, (v) an account
payable of $600,000, (vi) a stock grant of 200,000 shares of common stock,
approximating a fair value of $632,000, and (vii) commissions and financing
expenses of $678,000. The total purchase price was $14.5 million. The value of
the 1,650,154 shares of common stock issued was determined based on the average
market price of the Company's common shares over the 2-day period before and
after the terms of the acquisition were agreed to and announced. The
Black-Scholes option valuation model was used to estimate the fair value of the
options granted using the following assumptions:

Expected dividend yield .......................... None
Risk-free interest rate .......................... 5.16%
Expected life .................................... 10.0 years
Volatility ....................................... 52.0%

The acquisition of JLSC increased our consolidated revenues on an annualized
basis by approximately 50%. We are actively pursuing other acquisition
opportunities and plan to complete at least one additional acquisition in 2008.
The acquisition of JLSC provides the platform upon which we can implement our
acquisition strategy. The acquisition of JLSC also significantly strengthens our
geographical presence in the Eastern United States.

F-14

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

The following table presents the allocation of the acquisition cost, including
professional fees and other related acquisition costs, to the assets acquired
and liabilities assumed, based on their fair values:

Cash and cash equivalents ...................................... $ 0

Marketable securities owned .................................... 774,540

Commissions and other receivables from clearing organization ... 1,069,252

Furniture and equipment, net ................................... 303,584

Other tangible assets .......................................... 890,509

Intangible assets .............................................. 4,439,343

Goodwill ....................................................... 8,431,830
------------
Total assets acquired ................................. 15,909,058
------------
Accounts payable and accrued expenses .......................... (1,328,438)

Other liabilities .............................................. (130,587)
------------
Total liabilities assumed ............................. (1,459,025)
------------
Net assets acquired ................................... $ 14,450,033
============

Of the $4,439,343 of acquired intangible assets, $3,282,077 was assigned to
registered trademarks that are not subject to amortization and $1,157,266 was
assigned to customer lists which are being amortized on a straight line basis
over 10 years.

5. ACQUISITION OF LONG ISLAND OFFICE

On March 26, 2007, (the "Effective Date"), we acquired all the assets
and operations of an independent broker office of supervisory jurisdiction
("OSJ") located in New York ("the Long Island office"). The purchase price
consisted of (i) cancellation of $4,162,856 of notes owed to the Company by the
OSJ, and (ii) the assumption of liabilities totaling $921,068 for 100% of the
OSJ's assets and operations. The total purchase price was $5,083,924.

F-15

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

Prior to the Effective Date, neither the Registrant nor any of its
affiliates, nor any officer or director of the Registrant or any associate of
any such officer or director, had any material relationship with the OSJ, except
that the OSJ was an Office of Supervisory Jurisdiction (as such term is defined
by the NASD) of the Registrant.

Under the acquisition, the Company recorded (i) furniture and equipment
with a fair value of $163,090, (ii) security deposits of $80,499, (iii) customer
list of $450,000, and (iv) goodwill of $4,390,335.

6. PROPERTY AND EQUIPMENT

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

Estimated
useful lives
------------
Equipment ...................... $ 241,602 5-7 years
Computers ...................... 1,030,936 5 years
Furniture and fixtures ......... 410,089 7 years
Leasehold improvements ......... 259,308 Life of the lease
-----------
1,941,935
Less accumulated depreciation .. (1,322,782)
-----------
$ 619,153
===========

Depreciation expense charged to income was $472,780 in 2007 and $163,871 in
2006.

7. NOTES RECEIVABLE

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

Office Amount
------ ------
New York ...... $ 200,000
San Francisco . 455,000
Boston ........ 273,833
Longwood ...... 50,388
----------
Total notes receivable $ 979,221
==========

F-16

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

8. MARKETABLE SECURITIES OWNED, AT MARKET VALUE

Marketable securities owned include $601,523 of securities remaining, which were
received as a result of the Company calling secured demand notes receivable due
from two
of its employees to recover trading losses of approximately $1,348,000 incurred
by them for the year ended December 31, 2006. The recovered trading losses are
included in trading income for the year ended December 31, 2006. The recovered
trading losses related primarily to short sales of stock.

9. INTANGIBLE ASSETS

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

Trademarks .................................. $ 3,282,077
Customer lists .............................. 1,157,266
Goodwill .................................... 13,272,165
------------
17,711,508
------------
Less: accumulated amortization............... (135,015)
------------
$ 17,576,493
============

Amortization expense for intangible assets totaled $113,371 and $21,644
for the years ended December 31, 2007 and 2006, respectively.

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

Year Ending
December 31,
------------
2008 ............... $160,728
2009 ............... 160,728
2010 ............... 160,728
2011 ............... 160,728
2012 ............... 160,728

We performed an impairment test of our intangible assets as of December 31,
2007, and determined we had no impairment of intangible assets at that date. We
have determined we have one reporting unit for the test of impairment. Summary
information from our impairment tests is set forth in the following.

December 31, 2007
------------------------------------------
Excess Estimated Percent
Reporting Carrying Estimated Fair Value Over Excess
Unit Value Fair Value Carrying Value Value
--------- ----------- ----------- ---------------- -------
JLI $17,576,493 $21,070,000 $3,493,507 19.9%

F-17

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

Principal assumptions used in forecasting future cash flows are outlined below:

Revenue growth rates ......................... 1% in 2008 and 15.0% thereafter
Expense reduction as percentage of revenue ... 22% in 2008, 5% in 2009-2012 and
0% thereafter
Useful lives over which cash flows occur ..... 9.0 years
Residual value at end of useful life ......... Equal to 9th year of useful life
Weighted average cost of capital ............. 10.5%

As part of our impairment tests, we performed sensitivity analyses with our
principal assumptions. The impact on our estimated fair values of a 1% change in
our principal assumptions approximated the following:

Principal Assumption Amount
-------------------- --------
Revenue growth rates ........................ $160,000
Expense reduction as percentage of revenue... $900,000
Useful lives over which cash flows occur .... $ 90,000
Residual value at end of useful life ........ $ 10,000
Weighted average cost of capital ............ $750,000

10. NOTES PAYABLE

Notes payable at December 31, 2007, consisted of the following:

Convertible notes payable to investors, interest payable
at 6.5% percent quarterly. Notes mature March 28, 2012.
Notes convertible into common stock at $2.39 per share . $ 6,387,158

Unsecured note payable to Jesup & Lamont Holding
Corporation. Note accrues interest at four percent
payable annually, and principal payable at maturity of
October 1, 2011. ....................................... 2,500,000

Subordinated note payable to EFH Partners, interest of
twenty percent payable at maturity on February 17, 2007.
The note was extended to April 1, 2009 at four percent
interest. .............................................. 1,000,000

Unsecured note payable to a Company registered
representative which accrues interest at five percent
per annum. Principal and interest payable on demand. ... 246,533
-----------
Total principal payable. ................................ $10,133,691

Less: Unamortized discount on note to Jesup & Lamont
Holding Corporation. ................................... (367,515)
-----------
Notes payable ........................................... $ 9,766,176
===========

F-18

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

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

Year Ending
December 31,
------------
2008 ............... $ 246,533
2009 ............... 1,000,000
2010 ............... -
2011 ............... 2,500,000
2012 ............... 6,387,158
-----------
$10,133,691
===========

Interest on these notes totaled $650,551 and $338,000 for the years
ended December 31, 2007 and 2006, respectively.

11. LINE OF CREDIT PAYABLE

Principal Reduction Due Date Principal Reduction Payment Amount
---------------------------- ----------------------------------
March 31, 2008 ............. $ 100,000
May 1, 2008 ................ $ 250,000
August 1, 2008 ............. $ 250,000
November 3, 2008 ........... $ 250,000
January 29, 2009 ........... $1,149,450

Total interest expense under this credit line for the year ended
December 31, 2007 was $164,237.

F-19

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

12. ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES

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

Accrued payroll and taxes...................... $ 994,948
Accrued legal expenses ........................ 1,288,116
Accrued commissions and management fees ....... 119,548
Accrued preferred stock dividends ............. 226,099
Stock subscription advance .................... 1,017,000
Accounts payable .............................. 778,918
Other accrued expenses ........................ 567,685
----------
$4,992,314
==========

13. TRADING INCOME

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

Years ended December 31,
---------------------------
2007 2006
----------- -----------
Net realized gains and losses ......... $ 7,659,738 $11,276,147
Unrealized gains ...................... 2,049,518 3,741,170
Unrealized losses ..................... (3,220,900) (3,292,787)
----------- -----------
Trading income, net ................... $ 6,488,356 $11,724,530
=========== ===========

14. INVESTMENT BANKING INCOME

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

F-20

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

Years ended December 31,
---------------------------
2007 2006
----------- -----------
Investment banking fees ............... $11,102,041 $ 2,671,341
Gains from warrants ................... 347,654 872,284
----------- -----------
Investment banking income, net ........ $11,449,695 $ 3,543,625
=========== ===========

15. EARNINGS PER SHARE

Basic earnings per share are computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share considers the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
shared in the earnings of the entity.

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

Years Ended December 31,
--------------------------
2007 2006
------------ -----------
Numerator for net income (loss) per share:
Net income (loss) ................................. $(10,727,665) $ 10,651
Preferred stock dividends ......................... (174,233) (231,372)
------------ -----------
Income (loss) attributable to common stockholders . $(10,901,898) $(220,721)
============ ===========
Denominator:
Basic weighted-average shares ..................... 10,926,021 7,102,379
Outstanding options ............................... - -
Outstanding warrants .............................. - -
Convertible securities ............................ - -
------------ -----------
Diluted weighted-average shares ................... 10,926,021 7,102,379
============ ===========
Basic and diluted income (loss) per share:
Basic income (loss) per share ..................... $ (1.00) $ (0.03)
============ ===========
Diluted income (loss) per share ................... $ (1.00) $ (0.03)
============ ===========

F-21

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

Due to their anti-dilutive effect, the following potential common shares have
been excluded from the computation of diluted earnings (loss) per share:

Years Ended December 31,
--------------------------
2007 2006
------------ -----------
Warrants ........................................... 3,426,680 1,952,070
Stock options ...................................... 4,360,822 3,429,143
Restricted common stock granted but not issued ..... 189,844 -
Convertible preferred stock series C ............... 353,100 353,100
Convertible preferred stock series F ............... 819,987 866,139
Convertible notes .................................. 2,672,437 1,239,436
Common stock subscribed ............................ 1,622,718 -
Warrants subscribed ................................ 811,359 -
------------ -----------
14,256,947 7,839,888
============ ===========

16. EQUITY

For the year ended December 31, 2007, the Company recorded the following stock,
option and warrant transactions:

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

F-22

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

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

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

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

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

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

A former shareholder was issued 65,218 share of common stock at $1.15
per share. The stock was issued for the shareholder's balance of an escrow
account.

F-23

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

For the year ended December 31, 2006, the Company recorded the following stock,
option and warrant transactions:

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

o We sold 866,139 shares of newly created Series F convertible preferred
stock and warrants to acquire 433,069 shares of common stock at an
exercise price of $4.50 per share, for $2,814,993 cash. Each share of
Series F preferred stock has a stated value of $3.25 and an initial
conversion price of $3.25 per share. The Series F preferred stock
carries a cumulative 4% annual dividend.

o We redeemed 4,989 shares of Series E convertible preferred stock for
$374,363. The remaining 8,344 shares of Series E stock were converted
to 178,290 shares of common stock.

o The 7,000 outstanding shares of Series B convertible preferred stock
were converted into 1,166,666 shares of common stock.

o The 2,000 shares of outstanding shares of Series D convertible
preferred stock were converted into 100,000 shares of common stock.

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

o A total of $200,000 of convertible debt was converted into 110,000
shares of common stock.

o For the acquisition of JLSC, we issued 1,650,154 shares of common stock
and options to purchase 1,342,000 shares of common stock with three
year vesting, ten year terms, and exercise prices from $4.31 - $4.67
per share.

o We issued 98,853 shares of common stock for the exercise of warrants.

o We issued 75,000 shares of common stock to a consultant as compensation
for services provided.

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

Convertible Issue Conversion Price
----------------- ----------------
Series C preferred stock (stated value $100.00 per share). $2.00
Series F preferred stock ................................. $3.25
Convertible Notes ........................................ $2.39

F-24

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

17. STOCK OPTIONS

The Company adopted the 2000 Incentive Compensation Plan and the 2007 Incentive
Compensation Plan (collectively the "Plans"). The Plans are designed to serve as
an incentive for retaining directors, employees, consultants and advisors. Stock
options, stock appreciation rights and restricted stock options may be granted
to certain persons in proportion to their contributions to the overall success
of the Company as determined by the Board of Directors. Of the stock options
outstanding at December 31, 2007, 705,000 vested immediately upon grant,
1,217,522 vest over a two year period from the date of grant, 2,346,300 vest
over a three year period from the date of Grant and 92,000 vest over a five year
period from the date of grant.

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

The following table summarizes stock options at December 31, 2007:

Outstanding Stock Options Exercisable Stock Options
------------------------------ ------------------------------
Weighted Weighted
Average Weighted Average Weighted
Exercise Remaining Average Remaining Average
Price Contractual Exercise Contractual Exercise
Range Shares Life Price Shares Life Price
----------- ----------- -------- ----- ----------- -------- -----
$0.90-$1.00 90,000 .33 $0.99 90,000 1.77 $0.99
$1.01-$2.00 2,032,000 7.46 $1.41 1,728,576 5.78 $1.50
$2.01-$3.00 574,800 8.35 $2.12 395,617 4.63 $2.52
$3.01-$4.00 208,522 4.92 $3.38 123,324 4.11 $3.38
$4.01-$5.00 1,455,500 9.79 $4.50 595,293 8.64 $4.51

F-25

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

The following table summarizes stock option activity for the years ended
December 31, 2007 and 2006:

2007 2006
----------------- -----------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
--------- ----- --------- -----
Outstanding at beginning of year ..... 3,449,143 $3.14 2,074,514 $1.88
Granted .............................. 1,135,300 1.88 1,802,022 4.29
Exercised ............................ (11,271) 1.18 (77,393) 1.19
Cancelled ............................ (212,350) 2.21 (350,000) 2.01
--------- ---------
Outstanding at end of year ........... 4,360,822 2.83 3,449,143 3.14
========= =========

Exercisable at end of year ........... 2,932,810 2.31 1,747,121 2.55
========= =========
Weighted average fair value of
options granted during the year 2007 $0.80 $2.22
========= =========

18. EMPLOYEE BENEFIT PLANS

The Company has a savings plan (the "Plan"), provided to the employees of JLI,
EFG, and EIA that qualifies as a deferred salary arrangement under Section
401(d) of the Internal Revenue Code of 1986. To participate in the Plan, an
employee of the Company must have at least three months of full time service
with the Company and be at least 18 years old. The amount of salary deferral
during any year for a Plan participant cannot exceed the dollar limit imposed by
applicable federal law. The Plan also provides that the Company may match
employee contributions to the Plan. The Company did not make any contributions
to the Plan during the years ended December 31, 2007 and 2006.

The Company has a second Plan which is provided to the employees of JLSC.

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

F-26

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

19. INCOME TAXES

The federal and state income tax provision (benefit) for the years ended
December 31, 2007 and 2006 is summarized as follows:

2007 2006
----------- -----------
Current
Federal ................................ $ - $ -
State .................................. - -
----------- -----------
- -
----------- -----------
Deferred
Federal ................................ - -
State .................................. - -
----------- -----------
Total provision (benefit) for income taxes $ - $ -
=========== ===========

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Management believes that,
based on current operations and future projections, the benefit arising from
deferred tax assets totaling $2,117,000 will be realized. However, Management
also believes any additional deferred tax assets which could be recorded may not
be realized, and accordingly, we provided a valuation allowance totaling
$4,283,000 at December 31, 2007. The components of the Company's deferred tax
assets at December 31, 2007 and 2006 were as follows:

2007 2006
----------- -----------
Deferred tax assets:
Net operating loss carryforwards ....... $ 6,078,000 $ 3,605,000
Depreciation and amortization .......... 566,000 1,035,000
----------- -----------
Deferred tax assets .................... 6,644,000 4,640,000

Deferred tax liabilities:
Value of warrants ...................... (492,000) (349,000)
Amortization of intangibles ............ (431,000) -
----------- -----------
Deferred tax liabilities ............... (923,000) (349,000)

Net deferred tax assets ................... 5,721,000 4,291,000
Less: Valuation allowance ............. (3,604,000) (2,174,000)
----------- -----------
Net deferred tax assets ................ $ 2,117,000 $ 2,117,000
=========== ===========

The Company has net operating loss carryforwards for federal tax purposes of
approximately $15,195,000 which expire in years 2022 through 2026. The amount
deductible per year is limited to approximately $576,000 under current tax
regulations. The intangibles being amortized are primarily Internal Revenue Code
Section 197 intangibles that must be amortized over 15 years for tax purposes.
Specifically, the intangibles are customer base intangibles that have been fully
amortized or written off due to impairment as required under SFAS 142.

F-27

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

A reconciliation of the provision (benefit) for income taxes with amounts
determined by applying the statutory U.S. federal income tax rate to income
before income taxes is as follows:

Years Ended December 31,
-------------------------
2007 2006
----------- -----------
Computed tax at the federal statutory rate of 34% . $(3,647,000) $ 3,600
State taxes, net of federal benefit ............... (644,000) (600)
Operating loss carryforwards ...................... 2,706,000 (2,601,000)
Valuation allowance ............................... 1,430,000 2,174,000
Amortization of intangibles ....................... (392,000) (82,000)
Non-deductible compensation ....................... 247,000 108,000
Warrants received as income ....................... 93,000 349,000
Other ............................................. 207,000 49,000
----------- -----------
Provision (benefit) for income taxes .............. $ - $ -
=========== ===========
Effective income tax rate ......................... -% -%
=========== ===========

20. COMMITMENTS AND CONTINGENCIES

Office Lease Commitments

The Company and its subsidiaries lease branch offices and office facilities
under operating lease agreements. Lease expense totaled $2,217,334 and $522,296
for the years ended December 31, 2007 and 2006, respectively.

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

Year Ending December 31,
------------------------
2008 1,922,544
2009 1,291,437
2010 742,126
2111 265,457
Thereafter -
----------
$4,221,564
==========

Employment Agreements

The Company has employment agreements with several of its key officers and a
director. Currently the Company has 6 individuals who have employment
agreements. The following is a schedule by year of future commitments under
these agreements:

Year Ending December 31,
------------------------
2008 1,143,333
2009 910,000
2010 354,000
Thereafter -
----------
$2,407,333
==========

F-28

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

Regulatory and Legal Matters

A competing brokerage firm commenced arbitration by filing a Statement of Claim
on October 14, 2005 before FINRA alleging, among other things, that EFG
improperly solicited Claimant's brokers for employment with EFG. To that end,
Claimant has asserted claims against EFG for tortuous interference with contract
and unfair competition. Claimant seeks $10,000,000 in damages from EFG. EFG
denies the material allegations of the Statement of Claim and is vigorously
defending this action. EFG has also asserted a counterclaim against Claimant for
unfair competition. The parties appeared for several hearings in this
arbitration in 2007. Additional hearing dates have been scheduled in 2008. This
claim is associated with the Long Island office that was acquired in March 2007.
We do not believe an estimate of the possible loss or range of loss can be made
at this time. However, in the opinion of management, based on discussions with
legal counsel, the outcome of this claim will not result in a material adverse
affect on the financial position or results of operations of the Company.

Customer Complaints and Arbitration

From time to time, EFG and JLSC can be defendants or co-defendants in
arbitration matters incidental to their retail brokerage services business. EFG
and JLSC may contest the allegations of the complaints in these cases and carry
an error and omission insurance policy to cover such incidences. The policy
terms require that the Company pay a deductible of $100,000 per incident. In the
opinion of management, based on discussions with legal counsel, the outcome of
any pending matters will not result in a material adverse affect on the
financial position or results of operations of the Company or its subsidiaries.

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

Employment Agreements

The Company has employment agreements with several of its key officers and a
director. Currently the Company has 6 individuals who have employment agreements
totaling $1,350,000 per year.

F-29

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

American Stock Exchange Listing

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

The Company has been seeking to fill vacancies on its Board of Directors and
audit committee caused by the resignations of two independent directors during
January, 2008 and will continue to seek to fill such vacancies in response to
the American Stock Exchange's notice described above.

21. OFF BALANCE SHEET RISKS

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

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

We have sold securities which we do not currently own and therefore will be
obligated to purchase the securities at a future date. We have recorded these
obligations in our financial statements at December 31, 2007 at the market
values of the securities and will incur a loss if the market value increases
subsequent to December 31, 2007. The occurrence of these off-balance sheet
losses could impair our liquidity and force us to reduce or curtail operations.

22. CONCENTRATION OF CREDIT RISKS

F-30

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

Our cash in bank accounts, at times, exceeds the Federal Deposit Insurance
Corporation ("FDIC") insurable limit of $100,000. We have not experienced any
previous losses due to this policy.

23. NET CAPITAL REQUIREMENTS AND VIOLATIONS OF BROKER DEALER SUBSIDIARIES

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

At December 31, 2007, EFG reported net capital of $812,456, which was $320,956
above the required net capital of $491,500. At December 31, 2007, JLSC reported
net capital of $745,509, which was $645,509 above the required net capital of
$100,000.

The ratio of aggregate indebtedness to net capital was 2.96 to 1 for EFG and
1.26 to 1 for JLSC. EFG and JLSC are exempt from Rule 15c3-3 under Paragraph (k)
(2) (ii) of the Rule as all customer transactions are cleared through other
Broker-dealers on a fully-disclosed basis.

As of December 31, 2007, we were in compliance with all net capital
requirements.

24. RELATED PARTY TRANSACTIONS

The following is a discussion of certain relationships and related transactions
for the year ended December 31, 2007. In the opinion of management, the terms of
these transactions were as fair to the Company as could have been made with
unrelated parties.

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

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

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

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

F-31

JESUP & LAMONT, INC. AND SUBSIDIARIES
(FORMERLY EMPIRE FINANCIAL HOLDING COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

25. SUBSEQUENT EVENTS

As of March 3, 2008, the Company entered into binding Subscription Agreements to
sell $2,000,000 of units in a private placement to accredited investors. Each
unit consists of one share of Series G 10% Subordinated Cumulative Convertible
Preferred Stock, par value $0.01 per share, and five-year warrants to purchase
1,470 shares of the company's Common Stock, par value $0.01 per share. Each
share of Series G Preferred Stock is initially convertible into 1,470 shares of
Common Stock, subject to limited antidilution protection for capital changes and
similar events. The warrants are exercisable after six months from the date of
issue at a price of $0.816 per share, subject to limited antidilution protection
for capital changes and similar events. The initial conversion price of the
Series G Preferred Stock is $0.68 per share, the closing price of the company's
common stock on March 3, 2008. The Subscription Agreement also includes JLSC's
agreement to register all shares of the common stock underlying the units.
Pursuant to the terms of the transaction, the company must pay partial
liquidated damages in the amount of 1% per month of the purchase price, subject
to a cap of an overall aggregate payment of 6% of the purchase price, upon any
failure to (a) file a registration statement with the Securities and Exchange
Commission within 30 days after the closing date of the transaction, or 30 days
after filing its annual report on Form 10-KSB, whichever is later, or (b)
register all shares of common stock underlying the units within 120 days of the
closing date. None of the shares of common stock underlying the units will be
issued until the American Stock Exchange has approved their listing.

F-32