UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





x           QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
quarterly period ended September 30,
2009





 ̈         TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





Commission
file number 000-29315





RUBICON
FINANCIAL INCORPORATED


(Exact
name of registrant as specified in its charter)





Delaware
            13-3349556(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)





4100
Newport Place


Suite
630


Newport
Beach, California 92660


(Address
of principal executive offices)





(949)
798-7220


(Registrant’s
telephone number, including area code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90
days.           Yes þ       No
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).           Yes
 ̈       No
þ





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer 
              Accelerated
      filer Non-accelerated
      filer   (Do not check
      if a smaller reporting company)
              Smaller
      reporting company þ


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





The
number of shares of Common Stock, $0.001 par value, outstanding on November 13,
2009, was 14,098,023, which includes 120,000 shares authorized but
unissued.





PART
I – FINANCIAL INFORMATION


Item
1. Financial Statements


Rubicon
      Financial IncorporatedCondensed
      Consolidated Balance SheetsSeptember
      30,
                                    
                                    
                                    December
      31,2009
                                    
                                    
                                    2008Assets
                                    
                                    (Unaudited)
                                    
                                    
                                    AuditedCurrent
      assets:Cash
                                    
                                    $
                                    456,602
                                    
                                    
                                    $
                                    212,657Cash
      – restricted
                                    
                                    
                                    311,664
                                    
                                    
                                    
                                    201,571Marketable
      securities
                                    
                                    
                                    186,262
                                    
                                    
                                    
                                    530,380Accounts
      receivable
                                    
                                    
                                    782,527
                                    
                                    
                                    
                                    481,523Prepaid
      expenses
                                    
                                    
                                    50,939
                                    
                                    
                                    
                                    41,311Notes
      receivable
                                    
                                    
                                    124,202
                                    
                                    
                                    
                                    124,202Interest
      receivable
                                    
                                    
                                    10,495
                                    
                                    
                                    
                                    4,906Total
      current assets
                                    
                                    
                                    1,922,691
                                    
                                    
                                    
                                    1,596,550Fixed
      assets, net of accumulated depreciation
                                    
                                    
                                    106,446
                                    
                                    
                                    
                                    136,159Other
      assets:Contract
      advances
                                    
                                    
                                    179,758
                                    
                                    
                                    
                                    277,197Deposits
                                    
                                    
                                    30,554
                                    
                                    
                                    
                                    38,554Intangible
      assets – customer list
                                    
                                    
                                    2,439,671
                                    
                                    
                                    
                                    2,439,671Total
      other assets
                                    
                                    
                                    2,649,983
                                    
                                    
                                    
                                    2,755,422Total
      assets
                                    
                                    $
                                    4,679,120
                                    
                                    
                                    $
                                    4,488,131Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Accounts
      payable
                                    
                                    $
                                    249,381
                                    
                                    
                                    $
                                    242,335Accrued
      expenses
                                    
                                    
                                    885,613
                                    
                                    
                                    
                                    583,437Investment
      obligation
                                    
                                    
                                    487,000
                                    
                                    
                                    
                                    487,000Deferred
      revenue
                                    
                                    
                                    90,463
                                    
                                    
                                    
                                    147,367Capital
      lease obligation
                                    
                                    
                                    3,813
                                    
                                    
                                    
                                    12,223Line
      of credit
                                    
                                    
                                    54,243
                                    
                                    
                                    
                                    -Notes
      payable – related party
                                    
                                    
                                    5,213
                                    
                                    
                                    
                                    4,500Total
      current liabilities
                                    
                                    
                                    1,775,726
                                    
                                    
                                    
                                    1,476,862Stockholders’
      equityPreferred
      stock, $0.001 par value, 9,000,000 sharesauthorized,
      no shares issued and outstandingas
      of September 30, 2009 and December 31, 2008, respectively
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Preferred
      series “A”, $0.001 par value, 1,000,000 sharesauthorized,
      62,500 shares issued and outstandingas
      of September 30, 2009 and December 31, 2008, respectively
                                    
                                    
                                    63
                                    
                                    
                                    
                                    63Common
      stock, $0.001 par value, 50,000,000 sharesauthorized,
      13,978,023 and 11,976,773 shares issuedand
      outstanding as of September 30, 2009 andDecember
      31, 2008, respectively
                                    
                                    
                                    13,978
                                    
                                    
                                    
                                    11,977Common
      stock owed but not issued, 120,000 and 499,790as
      of September 30, 2009 and December 31, 2008, respectively
                                    
                                    
                                    120
                                    
                                    
                                    
                                    498Additional
      paid in capital
                                    
                                    
                                    18,190,483
                                    
                                    
                                    
                                    17,971,575Unamortized
      shares and options issued for services
                                    
                                    
                                    (108,277
                                    )
                                    
                                    
                                    (433,108
                                    )Other
      comprehensive losses
                                    
                                    
                                    (1,103,273
                                    )
                                    
                                    
                                    (611,861
                                    )Accumulated
      (deficit)
                                    
                                    
                                    (14,089,700
                                    )
                                    
                                    
                                    (13,927,875
                                    )Total
      stockholders’ equity
                                    
                                    
                                    2,876,774
                                    
                                    
                                    
                                    3,011,269Total
      liabilities and stockholders’ equity
                                    
                                    $
                                    4,679,120
                                    
                                    
                                    $
                                    4,488,131


The
accompanying notes are an integral part of the condensed consolidated financial
statements.


2








Rubicon
      Financial IncorporatedCondensed
      Consolidated Statements of Operations(Unaudited)For
      the Three Months Ended
                    
                    
                    For
      the Nine Months EndedSeptember
      30,
                    
                    
                    September
      30,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Revenue
                    
                    $
                    3,311,638
                    
                    
                    $
                    2,063,896
                    
                    
                    $
                    8,746,408
                    
                    
                    $
                    2,863,399Expenses:Direct
      costs
                    
                    
                    2,570,152
                    
                    
                    
                    1,310,368
                    
                    
                    
                    6,390,882
                    
                    
                    
                    2,051,244Consulting
                    
                    
                    232,424
                    
                    
                    
                    58,986
                    
                    
                    
                    232,799
                    
                    
                    
                    173,901Professional
      fees
                    
                    
                    144,579
                    
                    
                    
                    79,215
                    
                    
                    
                    293,065
                    
                    
                    
                    244,805Executive
      compensation
                    
                    
                    165,137
                    
                    
                    
                    442,717
                    
                    
                    
                    651,387
                    
                    
                    
                    2,126,582General
      and administrative expenses
                    
                    
                    347,927
                    
                    
                    
                    510,575
                    
                    
                    
                    1,272,567
                    
                    
                    
                    1,218,074Depreciation
      and amortization
                    
                    
                    13,255
                    
                    
                    
                    76,852
                    
                    
                    
                    39,111
                    
                    
                    
                    115,872Total
      expenses
                    
                    
                    3,473,474
                    
                    
                    
                    2,478,713
                    
                    
                    
                    8,879,811
                    
                    
                    
                    5,930,478Net
      operating income  (loss)
                    
                    
                    (161,836
                    )
                    
                    
                    (414,817
                    )
                    
                    
                    (133,403
                    )
                    
                    
                    (3,067,079
                    )Other
      income (expense):Interest
      expense
                    
                    
                    (13,394
                    )
                    
                    
                    (3,197
                    )
                    
                    
                    (21,066
                    )
                    
                    
                    (6,457
                    )Interest
      expense - related party
                    
                    
                    -
                    
                    
                    
                    (3,489
                    )
                    
                    
                    -
                    
                    
                    
                    (11,290
                    )Interest
      income
                    
                    
                    3,619
                    
                    
                    
                    9,981
                    
                    
                    
                    12,764
                    
                    
                    
                    38,716Other
      income
                    
                    
                    (36,445
                    )
                    
                    
                    1,714
                    
                    
                    
                    (20,120
                    )
                    
                    
                    44,555Dividend
      income
                    
                    
                    -
                    
                    
                    
                    121,200
                    
                    
                    
                    -
                    
                    
                    
                    121,200Minority
      interest income (loss)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (40,160
                    )Total
      other income (expense)
                    
                    
                    (46,220
                    )
                    
                    
                    126,209
                    
                    
                    
                    (28,422
                    )
                    
                    
                    146,564Net
      income (loss)
                    
                    
                    (208,056
                    )
                    
                    
                    (288,608
                    )
                    
                    
                    (161,825
                    )
                    
                    
                    (2,920,515
                    )Other
      comprehensive (loss)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (315,000
                    )Total
      comprehensive income (loss)
                    
                    $
                    (208,056
                    )
                    
                    $
                    (288,608
                    )
                    
                    $
                    (161,825
                    )
                    
                    $
                    (3,235,515
                    )Weighted
      average number of common sharesoutstanding
      - basic and fully diluted
                    
                    
                    12,849,898
                    
                    
                    
                    12,477,884
                    
                    
                    
                    12,271,013
                    
                    
                    
                    11,840,397Net
      income (loss) per share - basic and fully diluted
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.27
                    )





The
accompanying notes are an integral part of these condensed consolidated
financial statements.


3





Rubicon
      Financial IncorporatedCondensed
      Consolidated Statements of Cash Flows(Unaudited)For
      the Nine Months EndedJune
      30,2009
                          
                          2008Cash
      flows from operating activitiesNet
      income (loss)
                          
                          $
                          (161,825
                          )
                          
                          $
                          (3,235,515
                          )Adjustments
      to reconcile net (loss) tonet
      cash (used) in operating activities:Depreciation
      expense
                          
                          
                          39,111
                          
                          
                          
                          115,876Minority
      interest losses
                          
                          
                          -
                          
                          
                          
                          40,160Amortization
      of prepaid  share-based compensation
                          
                          
                          111,675
                          
                          
                          
                          1,061,695Shares
      and options issued for services
                          
                          
                          433,687
                          
                          
                          
                          737,764Changes
      in operating assets and liabilities:Accounts
      receivable
                          
                          
                          (301,004
                          )
                          
                          
                          (402,228
                          )Prepaid
      expenses
                          
                          
                          (9,628
                          )
                          
                          
                          (15,708
                          )Accrued
      interest receivable
                          
                          
                          (5,589
                          )
                          
                          
                          (3,205
                          )Deposits
      and other assets
                          
                          
                          105,439
                          
                          
                          
                          (199,091
                          )Accounts
      payable and accrued liabilities
                          
                          
                          309,222
                          
                          
                          
                          706,901Investment
      obligation
                          
                          
                          -
                          
                          
                          
                          (104,000
                          )Deferred
      revenue
                          
                          
                          (56,904
                          )
                          
                          
                          177,635Accrued
      interest payable - related party
                          
                          
                          713
                          
                          
                          
                          10,661Net
      cash provided (used) by operating activities
                          
                          
                          464,897
                          
                          
                          
                          (1,109,055
                          )Cash
      flows from investing activitiesPayments
      on notes receivable – related party
                          
                          
                          -
                          
                          
                          
                          (2,000
                          )Purchase
      of fixed assets
                          
                          
                          (9,398
                          )
                          
                          
                          (68,281
                          )Distribution
      of assets – related party
                          
                          
                          -
                          
                          
                          
                          89,716Purchase
      of intangible assets
                          
                          
                          -
                          
                          
                          
                          (762,313
                          )Purchase
      of investments
                          
                          
                          (147,294
                          )
                          
                          
                          -Net
      cash (used) by investing activities
                          
                          
                          (156,692
                          )
                          
                          
                          (742,878
                          )Cash
      flows from financing activitiesCash
      acquired with mergers
                          
                          
                          -
                          
                          
                          
                          388,610Proceeds
      from line of credit
                          
                          
                          54,243
                          
                          
                          
                          -Payments
      on capital lease
                          
                          
                          (8,410
                          )
                          
                          
                          -Preferred
      shares issued for cash
                          
                          
                          -
                          
                          
                          
                          75,000Common
      shares issued for cash
                          
                          
                          -
                          
                          
                          
                          170,000Net
      cash provided by financing activities
                          
                          
                          45,833
                          
                          
                          
                          633,610Net
      increase (decrease) in cash
                          
                          
                          354,038
                          
                          
                          
                          (1,218,323
                          )Cash -
      beginning
                          
                          
                          414,228
                          
                          
                          
                          1,892,541Cash -
      ending
                          
                          $
                          768,266
                          
                          
                          $
                          674,218Supplemental
      disclosures:Interest
      paid
                          
                          $
                          21,066
                          
                          
                          $
                          6,457Income
      taxes paid
                          
                          $
                          -
                          
                          
                          $
                          -Non-cash
      financing activities:Shares
      and options issued for services
                          
                          $
                          81,675
                          
                          
                          $
                          737,764Shares
      issued for acquisition
                          
                          $
                          -
                          
                          
                          $
                          1,680,000Shares
      issued for accounts payable
                          
                          $
                          11,903
                          
                          
                          $
                          -





The
accompanying notes are an integral part of the condensed consolidated financial
statements.


4


RUBICON
FINANCIAL INCORPORATED


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





NOTE 1- Basis of
Presentation


The
unaudited condensed consolidated financial statements have been prepared in
accordance with United States generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and reflect
all adjustments which, in the opinion of management, are necessary for a fair
presentation. All such adjustments are of a normal recurring
nature.  The results of operations for the interim period are not
necessarily indicative of the results to be expected for a full
year.  Certain amounts in the prior year statements have been
reclassified to conform to the current year presentations. The statements should
be read in conjunction with the financial statements and footnotes thereto
included in our audit for the year ended December 31, 2008.





NOTE 2 – Going
concern


The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. These conditions give rise to doubt about the
Company’s ability to continue as a going concern. These financial statements do
not include adjustments relating to the recoverability and classification of
reported asset amounts or the amount and classification of liabilities that
might be necessary should the Company be unable to continue as a going concern.
The Company’s continuation as a going concern is dependent upon its ability to
obtain additional financing or sale of its common stock as may be required and
ultimately to attain profitability.





NOTE 3 – Restricted
Cash


The
Company’s wholly owned subsidiary, Newport Coast Securities, Inc. (formerly
Grant Bettingen, Inc.)(“NCS”), has entered into securities clearing agreements
with Penson Financial Services, Inc. and Wedbush, Morgan Securities, Inc.
Pursuant to these agreements, the Company is required to maintain a deposit
account with each respective clearing firm in amounts determined based on the
Company’s transaction volume. As of September 30, 2009, the Company maintained
deposits of $250,405 and $61,258, respectively.





NOTE 4 - Marketable
securities


Investments
in marketable securities primarily include shares of common stock in various
companies held as available-for-sale and carried at fair market value, with the
unrealized gains and losses, included in the determination of comprehensive
income and reported in shareholders’ equity. NCS holds various securities held
as available-for-sale. On September 30, 2009, other comprehensive loss in
relation to these securities was $1,103,273.





NOTE 5 – Notes
receivable


On April
18, 2008, Rubicon amended its $20,000 note receivable with its RREM subsidiary,
whereby Joel Newman, the former President of RREM accepted full liability for
the principal balance of $20,000. The amended terms require interest to accrue
at a rate of 6% per annum and matured on April 18, 2009. The outstanding
principal balance as of March 31, 2009 was $19,202. In addition, Mr. Newman owes
$5,000 in the form of a demand note, which accrues interest at a rate of 6% per
annum. As of September 30, 2009, Mr. Newman’s principal balances totaled $24,202
with accrued interest receivable of $2,495.


5





On June
3, 2008, Rubicon issued a note receivable in the amount of $100,000 to Marc
Riviello pursuant to the “Stock Repurchase and Settlement Agreement”. The note
accrues interest at a rate of 6% per annum and was due June 1, 2009. As of
September 30, 2009, the principal balance was $100,000 and accrued interest
receivable totaled $8,000. Rubicon has initiated collection efforts on this
note.





NOTE 6 – Related Party
Transactions


On
February 5, 2009, the Company entered into a short-term consulting agreement
with Bootstrap Real Estate Investments, LLC, a company controlled by Mr. Todd
Vande Hei, a former director, former executive officer and current shareholder.
Pursuant to the agreement, the Company authorized the issuance of 120,000 shares
of restricted common stock for services valued at $30,000, or $0.25 per share.
These shares were issued in November of 2009.





NOTE 7 – Notes
payable


A summary
of short-term debt consists of the following:





September
                    30, 2009
                  
                  
                  December 31,
                    2008Demand
      note payable to an officer and shareholder for $4,500, unsecured,
      non-interest bearing and due on demand
                  
                  $
                  5,213
                  
                  
                  $
                  4,500Capital
      lease obligation, maturing October 2009
                  
                  
                  3,813
                  
                  
                  
                  12,223Line
      of credit, secured by cash deposit, interest rate of 2.25%
                  
                  
                  54,243
                  
                  
                  
                  -0-$
                  63,269
                  
                  
                  $
                  16,723




Interest
expense for the three months ended September 30, 2009 and 2008 was $13,394 and
$3,197; interest expense for the nine months ended September 30, 2009 was
$21,066 and $6,457, respectively.





NOTE 8 – Stockholders’
equity


The
Company is authorized toissue 50,000,000 shares
of Common Stock, $0.001 par value per share. Holders of shares of Common Stock
are entitled to one vote for each share on all matters to be voted on by the
stockholders, are without cumulative voting rights, and are entitled to share
ratably in dividends. In the event of a liquidation, dissolution, or winding up
of the Company, the holders of shares of Common Stock are entitled to share pro
rata all assets remaining after payment in full of all liabilities. Holders of
Common Stock have no preemptive rights to purchase the Company’s Common Stock.
There are no conversion rights or redemption or sinking fund provisions with
respect to the common stock.


6





The
Company is authorized to issued 10,000,000 shares of Preferred Stock of which,
1,000,000 shares have been designated as Series “A”. Holders’ of the Series “A”
preferred stock shall not have any voting rights, except in the case of voting
on a change in the preferences of shares. In the event of any liquidation,
dissolution, or winding up of the Company, the holders of shares shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of this Company an amount per share equal to the sum of $2.00 for each
outstanding share and an amount equal to 12% of the original series A issue
price for each 12 months that has passed since the date of issuance of any
shares. In addition, each share shall be convertible into shares of the
Company’s common stock at a price per share of $0.50 at the option of the holder
at any time following the date of issuance.





2009


On February 5, 2009, the Company
entered into a short-term consulting agreement with Bootstrap Real Estate
Investments, LLC, a company controlled by Mr. Todd Vande Hei, a former director
and current shareholder. Pursuant to the agreement, the Company authorized the
issuance of 120,000 shares of restricted common stock for services valued at
$30,000, or $0.25 per share. The Company recorded an expense to executive
compensation of $30,000. These shares were issued in November of
2009.





On July
15, 2009, the Company authorized the issuance of 2,500 shares of its common
stock to each of its three directors; Messrs. Mangiapane, Jr. and Torneo and Ms.
McPherson (7,500 shares total) as consideration for their services valued at
$1,050 for fiscal 2009.





In August
of 2009, the Company issued 150,000 shares of its common stock for legal
services to Stoecklein Law Group valued at $11,903.





On August
21, 2009, the Company issued 500,000 shares of its common stock to Kathleen
McPherson that were previously authorized but remained unissued.





On August
21, 2009, the Company awarded a total of 1,343,750 shares of its restricted
common stock for bonuses valued at $80,625 to twenty-three people associated
with two of its wholly owned subsidiaries. The shares were awarded pursuant to
the Rubicon Financial Incorporated 2007 Acquisition Stock Plan and registered on
the Form S-8 filed on July 30, 2009.





NOTE 9 – Warrants and
options


A summary
of stock options and warrants as of September 30, 2009 is as
follows:





Options
                      
                      
                      Weighted
                        Average
                        Exercise
                        Price
                      
                      
                      Warrants
                      
                      
                      Weighted
                        Average
                        Exercise
                        PriceOutstanding
      as of 01/01/08:
                      
                      
                      1,500,000
                      
                      
                      $
                      1.79
                      
                      
                      
                      100,000
                      
                      
                      $
                      3.00Granted
                      
                      
                      500,000
                      
                      
                      
                      1.00
                      
                      
                      
                      -
                      
                      
                      
                      -Cancelled
                      
                      
                      (200,000
                      )
                      
                      
                      1.00
                      
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Outstanding
      as of 01/01/09:
                      
                      
                      1,800,000
                      
                      
                      $
                      1.66
                      
                      
                      
                      100,000
                      
                      
                      $
                      3.00Granted
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Cancelled
                      
                      
                      (500,000
                      )
                      
                      
                      2.50
                      
                      
                      
                      (100,000
                      )
                      
                      
                      3.00Exercised
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Outstanding
      as of 09/30/09:
                      
                      
                      1,300,000
                      
                      
                      $
                      1.33
                      
                      
                      
                      -
                      
                      
                      $
                      -Vested
      as of 09/30/09:
                      
                      
                      1,000,000
                      
                      
                      $
                      1.00
                      
                      
                      
                      -
                      
                      
                      $
                      -


7





NOTE 10 – Operating
Segments


Rubicon’s
operating segments are evidence of its internal organization. The major segments
are defined by the type of financial services offered. Each segment operates in
a distinct industry: brokerage services (NCS), mortgage and real estate services
(RREM) and personal and commercial insurance services (RFIS). DAC is currently
inactive and not considered an operating segment of Rubicon. Where applicable,
“Corporate” represents items necessary to reconcile to the consolidated
financial statements, which generally include corporate activity and
eliminations.





Net
revenues as shown below represent commissions earned for each segment.
Intercompany revenues have been eliminated and are immaterial for separate
disclosure. Rubicon evaluates performance of individual operating segments based
on pre-tax income (loss). On a consolidated basis, this amount represents total
comprehensive loss as shown in the unaudited condensed consolidated statement of
operations. Reconciling items represent corporate costs that are not allocated
to the operating segments including; stock-based compensation expense and
intercompany eliminations.





Three
      Months Ended
                
                
                Nine
      Months EndedSeptember
      30,
                
                
                September
      30,2009
                
                
                2008
                
                
                2009
                
                
                2008Net
      RevenueInsurance
      services
                
                $
                91,547
                
                
                $
                89,756
                
                
                $
                404,190
                
                
                $
                234,667Mortgage
      services
                
                
                14,400
                
                
                
                49,930
                
                
                
                27,513
                
                
                
                183,458Brokerage
      services(1)
                
                
                3,205,691
                
                
                
                1,924,210
                
                
                
                8,314,705
                
                
                
                2,445,2743,311,638
                
                
                
                2,063,896
                
                
                
                8,746,408
                
                
                
                2,863,399ExpensesInsurance
      services
                
                
                97,426
                
                
                
                143,662
                
                
                
                365,370
                
                
                
                373,599Mortgage
      services
                
                
                9,518
                
                
                
                71,131
                
                
                
                23,708
                
                
                
                327,940Brokerage
      services(1)
                
                
                3,011,132
                
                
                
                1,553,188
                
                
                
                7,511,893
                
                
                
                3,236,624Corporate
                
                
                355,398
                
                
                
                710,732
                
                
                
                978,840
                
                
                
                1,992,3153,473,474
                
                
                
                2,478,713
                
                
                
                8,879,811
                
                
                
                5,930,478Net
      operating income (loss)
                
                $
                (161,836
                )
                
                $
                (414,817
                )
                
                $
                (133,403
                )
                
                $
                (3,067,079
                )





(1)
            The
      NCS acquisition was not consummated until June 2,
  2008.


8





NOTE 11 – Net capital
requirement





The
Company’s wholly owned subsidiary, GBI, is subject to the Securities and
Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1), which requires
the maintenance of minimum net capital, as defined, equal to the greater of
$100,000 or 6 2/3% of aggregate debt balances, as defined in the SEC’s Reserve
Requirement Rule (Rule 15c3-3). At September 30, 2009, GBI had net capital of
$899,987 and was $799,987 in excess of its required net capital of
$100,000.





NOTE 12 – Commitments and
Contingencies





In July
of 2009, the Company filed its first amended complaint against Grant Bettingen
and Grant Bettingen, as Trustee of the 1999 Bettingen Trust U/D/T October 8,
1999, seeking damages for (i) Breach of Contract, (ii) Fraud, (iii) Declaratory
Relief, (iv) Breach of Covenant of Good Faith and Fair Dealing, and (v) Unjust
Enrichment. These claims arise from the June 2008 merger between the
Company and NCS (then known as Grant Bettingen, Inc.) On or about August 10,
2009, the Company was served with a suit from M. Grant Bettingen, the Bettingen
1999 Trust and Christi Bettingen stemming from the same transaction. The cases
have been consolidated and is currently pending.





NOTE 13 – Subsequent
Events





In
October of 2009, the Company incorporated two new wholly owned subsidiaries; (i)
Struxurety Corporation, a company intending to focus on delivering core support
services for small businesses, and (ii) Newport Coast Asset Management, Inc., a
company that will conduct registered investment advisory services.





Management
has evaluated all events and transactions that have occurred subsequent to the
balance sheet date and has determined that there are no additional material
events which have occurred as of November 20, 2009, that would be deemed
significant or require recognition or additional disclosure.


9


FORWARD-LOOKING
STATEMENTS





This
document contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements other than statements
of historical fact are “forward-looking statements” for purposes of federal and
state securities laws, including, but not limited to, any projections of
earnings, revenue or other financial items; any statements of the plans,
strategies and objections of management for future operations; any statements
concerning proposed new services or developments; any statements regarding
future economic conditions or performance; any statements or belief; and any
statements of assumptions underlying any of the foregoing.





Forward-looking
statements may include the words “may,” “could,” “estimate,” “intend,”
“continue,” “believe,” “expect” or “anticipate” or other similar words. These
forward-looking statements present our estimates and assumptions only as of the
date of this report. Accordingly, readers are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the dates on
which they are made. We do not undertake to update forward-looking statements to
reflect the impact of circumstances or events that arise after the dates they
are made. You should, however, consult further disclosures we make in this
Quarterly Report on Form 10-Q, Annual Report on Form 10-K and Current Reports on
Form 8-K.





Although
we believe that the expectations reflected in any of our forward-looking
statements are reasonable, actual results could differ materially from those
projected or assumed in any of our forward-looking statements. Our future
financial condition and results of operations, as well as any forward-looking
statements, are subject to change and inherent risks and uncertainties. The
factors impacting these risks and uncertainties include, but are not limited
to:





·
            deterioration
      in general or regional (especially Southern California) economic, market
      and political conditions;


·
            our
      ability to successfully compete in the financial services
      industry;


·
            actions
      and initiatives taken by both current and potential
      competitors;


·
            inability
      to raise additional financing for working
  capital;


·
            inability
      to locate potential mergers and acquisitions within the financial services
      industry and integrate acquired companies into our
      organization;


·
            deterioration
      in the financial services markets, lending markets and the real estate
      markets in general as a result of the delinquencies in the “subprime”
      mortgage markets;


·
            the
      level of volatility of interest rates as well as the shape of the yield
      curve;


·
            the
      fact that our accounting policies and methods are fundamental to how we
      report our financial condition and results of operations, and they may
      require management to make estimates about matters that are inherently
      uncertain;


·
            adverse
      state or federal legislation or regulation that increases the costs of
      compliance, or adverse findings by a regulator with respect to existing
      operations;


·
            changes
      in U.S. GAAP or in the legal, regulatory and legislative environments in
      the markets in which we operate;


·
            inability
      to efficiently manage our
operations;


·
            inability
      to achieve future operating
results;


10





·
            the
      unavailability of funds for capital
  expenditures;


·
            our
      ability to recruit and hire key
employees;


·
            the
      inability of management to effectively implement our strategies and
      business plans; and


·
            the
      other risks and uncertainties detailed in this
  report.





For a
detailed description of these and other factors that could cause actual results
to differ materially from those expressed in any forward-looking statement,
please see “Risk Factors” in this document and in our Annual Report on Form 10-K
for the year ended December 31, 2008.





In this
form 10-Q references to “Rubicon”, “the Company”, “we,” “us,” and “our” refer to
Rubicon Financial Incorporated and its wholly owned operating subsidiaries,
Newport Coast Securities, Inc. (formerly Grant Bettingen, Inc.), Rubicon
Financial Insurance Services, Inc., Rubicon Real Estate and Mortgages, Inc. and
Dial-A-Cup, Inc.





Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.





Overview
of Current Operations





The
Company





Rubicon Financial Incorporated,
together with its wholly owned subsidiaries, provides a wide variety of products
and services to a diversified group of clients and customers, which include both
corporations and individuals. Our business includes security underwriting and
distribution; financial advisory services, including advice on mergers and
acquisitions, restructurings, real estate and project financing; sales, trading,
financing and market making activities in equity securities, related products
and fixed income securities. We provide brokerage and investment advisory
services covering various investment alternatives; financial and wealth
planning; annuity and insurance products; and real estate investments and
services. Rubicon, as the Parent, is continually focusing its efforts towards
the integration of our existing platforms while simultaneously seeking future
acquisitions in an effort to further augment a tailored financial service
experience for our clientele as well as expanding the diversity of financial
products available to meet their individual needs.





Overview of Financial
Services





Economic
Conditions





Our
revenues are derived primarily from managed investment portfolios with the
majority of our assets under management being located within the United States.
Our revenues depend largely on the total value and composition of assets under
our management. Accordingly, fluctuations in financial markets and in the
composition of assets affect our revenues and results of operations. The
significant downturn in the financial and real estate markets during 2008 and
2009 has had a material effect on investor returns and real property values.
Though we have not experienced significant declines in our brokerage or
insurance services, the impact to our real estate services has been
considerable. In response, we have implemented measures to reduce overall
operating costs through the reduction of staff and administrative expenses.
Although we have not made any fundamental changes to our business model like
many other financial service companies, as part of our long term growth
strategy, we continually evaluate our existing portfolio of businesses as well
as new business opportunities to ensure we are investing in those businesses
with the largest, most profitable, growth potential. In response to the current
market conditions, we have redirected a portion of the resources previously
allocated to the development of our real estate and mortgage division until such
time there is sufficient recognition of recovery.


11





Recent
Developments





In March of 2009, we executed a
non-binding letter of intent to acquire 100% of 1000 BARS, Inc., a private
Nevada corporation focused on the preservation of the long-term value of assets
through buying and selling strategies of physical precious
metals, specializing in 1000 oz bars of silver. 1000 BARS
has also developed commodity market strategies for the owners
of physical bars of silver. As of the date of this report we are
continuing to pursue this acquisition.





In October of 2009, we incorporated a
new wholly owned subsidiary, Struxurety Corporation, to pursue the opportunities
to provide core support services to small businesses; such as back office
administration, general ledger accounting and general business strategy and
management.





Results
of Operations





The
following tables summarize selected items from the statement of operations for
the three and nine months ended September 30, 2009 and the comparable periods
ended September 30, 2008.





Revenue:


Three
      Months Ended
                  
                  
                  
                  
                  
                  Nine
      Months EndedSeptember
      30,
                  
                  
                  %
                  
                  
                  September
      30,
                  
                  
                  %2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  2009
                  
                  
                  2008
                  
                  
                  ChangeConsolidatedRevenue
                  
                  $
                  3,311,638
                  
                  
                  $
                  2,063,896
                  
                  
                  
                  61%
                  
                  
                  $
                  8,746,408
                  
                  
                  $
                  2,863,399
                  
                  
                  
                  205%Operating
      expenses
                  
                  $
                  3,473,474
                  
                  
                  $
                  2,478,713
                  
                  
                  
                  40%
                  
                  
                  $
                  8,879,811
                  
                  
                  $
                  5,930,478
                  
                  
                  
                  50%Net
      operating income (loss)
                  
                  $
                  (161,836
                  )
                  
                  $
                  (414,817
                  )
                  
                  
                  (55)%
                  
                  
                  $
                  (133,403
                  )
                  
                  $
                  (3,067,079
                  )
                  
                  
                  (95)%





Overall
revenues increased 61% during the third fiscal quarter of 2009 and 205% during
the nine months ended September 30, 2009. In 2008, we were continuing to invest
significant financial and administrative resources towards the closing of the
acquisition of NCS, which was consummated on June 2, 2008. The significant
revenue increase for the year over year periods is the result of the significant
resources expended prior to the acquisition of NCS and the consolidated results
of operations for NCS. Further, the results of operations for 2008 only include
those of NCS for the period from June 2, 2008 through September 30,
2008.


12





During
the three and nine-month periods ended September 30, 2009 we reduced our net
operating loss by 55% and 95%, respectively, over the same periods in 2008.
Included in our net loss for the nine months ended September 30, 2009 was
non-cash expenses totaling $433,687 relating to the issuance of shares of our
common stock for services.





Revenue by
Segment





Three
      Months Ended
                      
                      
                      
                      
                      
                      Nine
      Months EndedSeptember
      30,
                      
                      
                      %
                      
                      
                      September
      30,
                      
                      
                      %2009
                      
                      
                      2008
                      
                      
                      Change
                      
                      
                      2009
                      
                      
                      2008
                      
                      
                      ChangeRevenueInsurance
      services
                      
                      $
                      91,547
                      
                      
                      $
                      89,756
                      
                      
                      
                      2%
                      
                      
                      $
                      404,190
                      
                      
                      $
                      234,667
                      
                      
                      
                      61%Mortgage
      services
                      
                      
                      14,400
                      
                      
                      
                      49,930
                      
                      
                      
                      (71)%
                      
                      
                      
                      27,513
                      
                      
                      
                      183,458
                      
                      
                      
                      (85)%Brokerage
      services
                      
                      
                      3,205,691
                      
                      
                      
                      1,924,210
                      
                      
                      
                      67%
                      
                      
                      
                      8,314,705
                      
                      
                      
                      2,445,274
                      
                      
                      
                      240%Total
      revenue
                      
                      $
                      3,311,638
                      
                      
                      $
                      2,063,896
                      
                      
                      
                      59%
                      
                      
                      $
                      8,746,408
                      
                      
                      $
                      2,863,399
                      
                      
                      
                      205%





Insurance Services: RFIS
generated revenues of $91,547 during the third quarter compared to $89,756
during the same three month period in 2008, which resulted in an increase in
revenues of 2% during the quarter. In addition, RFIS experienced an increase of
61% in revenues from insurance services for the nine months ended September 30,
2009. This is the result of an augmented focus towards increasing the ratio of
commercial lines verses personal lines in its overall market base. RFIS believes
the commercial lines will provide greater ability to increase the insurance
services revenue steam as well as provide further stability to its long term
growth platform.





Mortgage Services: During the
three months ended September 30, 2009 RREM earned $14,400 in commissions
compared to $49,930 for the same period in 2008, resulting in a 71% decrease in
revenues. The current economic conditions of the real estate market have limited
RREM’s ability to generate revenue on the sales of residential real estate. RREM
is continuing to seek additional sources of revenue while also increasing its
marketing area.





Brokerage Services: We
expended a tremendous amount of financial and administrative resources prior to
acquiring NCS in June of 2008, which enabled us to aggressively expand NCS’s
operations following its acquisition. NCS represents the majority of our
revenues and services; representing approximately 98% and 95%, respectively, of
our total revenues for the three and nine-month periods ended September 30,
2009. Consolidated revenue for the three and nine months ended September 30,
3009 was $3,205,691 and $8,314,705, respectively, versus $1,924,210 and
$2,445,274, respectively, for the same periods ended September 30, 2008. NCS
anticipates additional increases in commission revenue as it enters the fourth
quarter through the continued addition to its broker base and efforts to seek
and add additional brokerage and investment banking branches.


13





Selling
and Administrative Expenses:





Three
      Months Ended
                        
                        
                        
                        
                        
                        Nine
      Months EndedSeptember
      30,
                        
                        
                        %
                        
                        
                        September
      30,
                        
                        
                        %2009
                        
                        
                        2008
                        
                        
                        Change
                        
                        
                        2009
                        
                        
                        2008
                        
                        
                        ChangeDirect
      costs
                        
                        $
                        2,570,152
                        
                        
                        $
                        1,310,368
                        
                        
                        
                        96%
                        
                        
                        $
                        6,390,882
                        
                        
                        $
                        2,051,244
                        
                        
                        
                        212%Consulting
                        
                        
                        232,424
                        
                        
                        
                        58,986
                        
                        
                        
                        294%
                        
                        
                        
                        232,799
                        
                        
                        
                        173,901
                        
                        
                        
                        34%Professional
      fees
                        
                        
                        144,579
                        
                        
                        
                        79,215
                        
                        
                        
                        83%
                        
                        
                        
                        293,065
                        
                        
                        
                        244,805
                        
                        
                        
                        20%Executive
      compensation
                        
                        
                        168,137
                        
                        
                        
                        442,717
                        
                        
                        
                        (63)%
                        
                        
                        
                        651,387
                        
                        
                        
                        2,126,582
                        
                        
                        
                        (69)%General
      expenses
                        
                        
                        347,927
                        
                        
                        
                        510,575
                        
                        
                        
                        (32)%
                        
                        
                        
                        1,272,567
                        
                        
                        
                        1,218,074
                        
                        
                        
                        4%Depreciation
      and amortization
                        
                        
                        13,255
                        
                        
                        
                        76,852
                        
                        
                        
                        (83)%
                        
                        
                        
                        39,111
                        
                        
                        
                        115,872
                        
                        
                        
                        (66)%Operating
      expenses
                        
                        $
                        3,473,474
                        
                        
                        $
                        2,478,713
                        
                        
                        
                        40%
                        
                        
                        $
                        8,879,811
                        
                        
                        $
                        5,930,478
                        
                        
                        
                        50%





Operating
expenses only increased 18% over the previous three month comparable period and
57% for the nine month comparable period ended September 30, 2009. Significant
increases were expected in direct costs associated with NCS’s operations;
however, we had significant decreases in consulting and executive compensation
expenses.





Our
direct costs are comprised of commissions paid to associates and miscellaneous
fees related directly to the generation of revenue. These costs have a direct
relationship to our revenue and will increase or decrease with changes in
revenue.





Expenses by
Segment





RFIS:





Three
      Months Ended
                          
                          
                          
                          
                          
                          Nine
      Months EndedSeptember
      30,
                          
                          
                          %
                          
                          
                          September
      30,
                          
                          
                          %2009
                          
                          
                          2008
                          
                          
                          Change
                          
                          
                          2009
                          
                          
                          2008
                          
                          
                          ChangeInsurance
      servicesDirect
      costs
                          
                          $
                          17,999
                          
                          
                          $
                          58,589
                          
                          
                          
                          (69)%
                          
                          
                          $
                          116,395
                          
                          
                          $
                          113,724
                          
                          
                          
                          2%Consulting
                          
                          
                          200
                          
                          
                          
                          838
                          
                          
                          
                          (76)%
                          
                          
                          
                          575
                          
                          
                          
                          12,838
                          
                          
                          
                          (96)%Professional
      fees
                          
                          
                          1,000
                          
                          
                          
                          6,000
                          
                          
                          
                          (83)%
                          
                          
                          
                          5,396
                          
                          
                          
                          21,000
                          
                          
                          
                          (74)%Executive
      compensation
                          
                          
                          12,500
                          
                          
                          
                          15,000
                          
                          
                          
                          (17)%
                          
                          
                          
                          42,500
                          
                          
                          
                          45,000
                          
                          
                          
                          (6)%General
      expenses
                          
                          
                          65,562
                          
                          
                          
                          63,070
                          
                          
                          
                          4%
                          
                          
                          
                          200,010
                          
                          
                          
                          180,543
                          
                          
                          
                          11%Depreciation
                          
                          
                          165
                          
                          
                          
                          165
                          
                          
                          
                          -
                          
                          
                          
                          494
                          
                          
                          
                          494
                          
                          
                          
                          -Operating
      expenses
                          
                          $
                          97,426
                          
                          
                          $
                          143,662
                          
                          
                          
                          (32)%
                          
                          
                          $
                          365,370
                          
                          
                          $
                          373,599
                          
                          
                          
                          (2)%





To meet
the objectives of our business plan, RFIS initially focused on personal
insurance lines including home, auto and life. RFIS now expanded focus to
included full commercial lines in its product mix. Through the addition of
commercial products, RFIS’s gross commission income is anticipated to increase
substantially. With the increased commission revenue, RFIS’s commission expense
included in its direct costs has also increased. On average, RFIS will pay a 50%
commission to its agents on each commercial policy written verses approximately
5% on personal lines.


14


As of
September 30, 2009, RFIS had seven full-time agents and three full-time
administrative staff. Base salaries are included in the general expenses and
although RFIS has experienced an approximate 11% increase in the nine-month
period, it has been able to reduce external consulting fees and professional
fees by 96% and 74%, respectively.





RREM:





Three
      Months Ended
                            
                            
                            
                            
                            
                            Nine
      Months EndedSeptember
      30,
                            
                            
                            %
                            
                            
                            September
      30,
                            
                            
                            %2009
                            
                            
                            2008
                            
                            
                            Change
                            
                            
                            2009
                            
                            
                            2008
                            
                            
                            ChangeMortgage
      servicesDirect
      costs
                            
                            $
                            10,800
                            
                            
                            $
                            29,823
                            
                            
                            
                            (64)%
                            
                            
                            $
                            21,946
                            
                            
                            $
                            80,247
                            
                            
                            
                            (73)%Consulting
                            
                            
                            -
                            
                            
                            
                            2,000
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            3,710
                            
                            
                            
                            -Professional
      fees
                            
                            
                            -
                            
                            
                            
                            3,000
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            9,000
                            
                            
                            
                            -Executive
      compensation
                            
                            
                            -
                            
                            
                            
                            1,107
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            59,318
                            
                            
                            
                            -General
      expenses
                            
                            
                            (1,524
                            )
                            
                            
                            34,960
                            
                            
                            
                            -
                            
                            
                            
                            1,069
                            
                            
                            
                            174,972
                            
                            
                            
                            (99)%Depreciation
                            
                            
                            242
                            
                            
                            
                            241
                            
                            
                            
                            -
                            
                            
                            
                            693
                            
                            
                            
                            693
                            
                            
                            
                            -Operating
      expenses
                            
                            $
                            9,518
                            
                            
                            $
                            71,131
                            
                            
                            
                            (87)%
                            
                            
                            $
                            23,708
                            
                            
                            $
                            327,940
                            
                            
                            
                            (93)%





RREM experienced a 64% and 73% decrease
in direct costs for the three and nine month periods ended September 30, 2009,
respectively, due to the substantial reduction in operations. Further, RREM’s
general and administrative expenses have decreased 99% from 2008 for the nine
month period ended September 30, 2009. The decrease was anticipated with the
dormancy of operations and general economic conditions affecting the real estate
industry, especially in Southern California.





NCS:





On June 2, 2008, we consummated our
staged acquisition of NCS, which began with the purchase of approximately 15%
interest in September 2007 and an additional 6% in March of 2008. We have
included the revenue and expenses of NCS from the date of acquisition through
September 30, 2008 in our unaudited condensed consolidated financial statements.
As a result we have not presented a year over year comparison of the operating
results of NCS. We expect the amounts recognized in the three and nine-months
ended September 30, 2009 to be indicative of future operating
expenses.





The
amounts consolidated from the activities of NCS are as follows:





Three Months
                      Ended
                    
                    
                    Nine Months
                      Ended
                    
                    
                    June 2, 2008
                      toSeptember 30,
                      2009
                    
                    
                    September 30,
                      2009
                    
                    
                    September 30,
                      2008Brokerage
      servicesDirect
      costs
                    
                    $
                    2,541,353
                    
                    
                    $
                    6,252,541
                    
                    
                    $
                    1,857,273Consulting
                    
                    
                    150,549
                    
                    
                    
                    150,549
                    
                    
                    
                    59,852Professional
      fees
                    
                    
                    113,688
                    
                    
                    
                    140,798
                    
                    
                    
                    55,765Executive
      compensation
                    
                    
                    44,419
                    
                    
                    
                    155,115
                    
                    
                    
                    854,935General
      expenses
                    
                    
                    157,028
                    
                    
                    
                    800,630
                    
                    
                    
                    410,090Depreciation
                    
                    
                    4,095
                    
                    
                    
                    12,260
                    
                    
                    
                    8,709Operating
      expenses
                    
                    $
                    3,011,132
                    
                    
                    $
                    7,511,893
                    
                    
                    $
                    3,236,624


15





Other
income and (expense)





Three
      Months Ended
                
                
                
                
                
                Nine
      Months EndedSeptember
      30,
                
                
                %
                
                
                September
      30,
                
                
                %2009
                
                
                2008
                
                
                Change
                
                
                2009
                
                
                2008
                
                
                ChangeConsolidatedInterest
      income
                
                $
                3,619
                
                
                $
                9,981
                
                
                
                (64)%
                
                
                $
                12,764
                
                
                $
                38,716
                
                
                
                (67)%Interest
      (expense)
                
                
                (13,394
                )
                
                
                (6,686
                )
                
                
                100%
                
                
                
                (21,066
                )
                
                
                (17,747
                )
                
                
                19%Other
      income (expense)
                
                
                (36,445
                )
                
                
                1,714
                
                
                
                -
                
                
                
                (20,120
                )
                
                
                44,555
                
                
                
                (145)%Minority
      interest (loss)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (40,160
                )
                
                
                -Dividend
      income
                
                
                -
                
                
                
                121,200
                
                
                
                -
                
                
                
                -
                
                
                
                121,200
                
                
                
                -





We experienced a 64% and 67% decline in
interest income as a direct result of our depletion of cash resources held in
interest bearing money market accounts. In addition, we experienced increases in
interest expense of 100% and 19% for the respective three and nine-month periods
ended September 30, 2009. We expect these amounts to continue to increase
throughout the remainder of the fiscal year.





During the three and nine months ended
September 30, 2009, we recorded $36,445 and $20,120, respectively, in other
expenses attributable to realized trading losses.





Satisfaction
of our cash obligations for the next 12 months.





Historically,
our plan of operation has been stalled by a lack of adequate working
capital.  As of September 30, 2009 we had available cash of $456,602.
We believe these funds will help support existing operational costs, but will
only be sufficient to satisfy our working capital requirements through March 31,
2010. Consequently, in addition to cash generated from operations, we will need
to raise additional funds through either equity, including convertible
securities such as preferred stock or debentures, or debt
financing.





Summary
of any product research and development that we will perform for the term of our
plan of operation.





We do not
anticipate performing any additional significant product research and
development under our plan of operation with Dial-A-Cup, RFIS, RREM, NCS or in
the financial services industry.





Expected
purchase or sale of plant and significant equipment.





We do not
anticipate the purchase or sale of any plant or significant equipment; as such
items are not required by us at this time.





Significant
changes in the number of employees.





We have
experienced significant changes in our staffing and executive management team as
a result of our business acquisitions. Historically we have relied on outside
consultants to fulfill the needs of the Company while also relying heavily on
our CEO, Joseph Mangiapane, Jr. whom we have a full time employment agreement
with. As we have achieved milestones in our growth projections, it has become
financially prudent to increase our internal staff to satisfy the operational
needs of our business. Likewise, as we have been impacted by the overall
economic recession we have also reduced staffing as appropriate. In addition to
our current executives, we also employee one full-time support person, to assist
in the operational activities.


16





At our
subsidiary levels, we have increased our number of employees to a level which
satisfies our current requirements in an economically sensible manner. As the
economic conditions improve, we anticipate an increase in our staffing levels as
a measure to ensure continued growth. Currently, we employee two executives and
seven administrative staff within NCS. RFIS is staffed with one executive, seven
agents and three administrative support persons. Due to the dramatic downturn in
the real estate markets, RREM is currently staffed with a single executive who
also acts as our broker of record.





Liquidity
and Capital Resources





A
critical component of our operating plan impacting our continued existence is
the ability to obtain additional capital through additional equity and/or debt
financing. We do not anticipate generating sufficient positive internal
operating cash flow until such time as we can generate substantial additional
revenues, which may take the next few years to fully realize. In the event we
cannot obtain the necessary capital to pursue our strategic plan, we may have to
cease or significantly curtail our operations. This would materially impact our
ability to continue operations.





The
following table summarizes our current assets, liabilities and working capital
at September 30, 2009 compared to December 31, 2008.


September
                      
                      
                      December
                      
                      
                      Increase
      / (Decrease)30,
      2009
                      
                      
                      31,
      2008
                      
                      
                      $
                      
                      
                      
                      %Current
      Assets
                      
                      $
                      1,922,691
                      
                      
                      $
                      1,596,550
                      
                      
                      $
                      326,141
                      
                      
                      
                      20%Current
      Liabilities
                      
                      
                      1,775,726
                      
                      
                      
                      1,476,862
                      
                      
                      
                      298,864
                      
                      
                      
                      22%Working
      Capital
                      
                      $
                      146,965
                      
                      
                      $
                      119,688
                      
                      
                      $
                      27,277
                      
                      
                      
                      23%





We believe the $456,602 in unrestricted
cash on hand at September 30, 2009 will only be sufficient to sustain operations
through the first quarter of 2010.  As a result, we anticipate the
need to seek additional funding for operations through equity offerings and may
need to further do so in the future through additional financing, acquisitions,
joint ventures or other means available to us.  There can be no
assurance that we will be able to complete a transaction or complete a
transaction on terms favorable to our stockholders or us.





Our lack
of operating history makes predictions of future operating results difficult to
ascertain. Our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development.


17





Off-Balance
Sheet Arrangements





We do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results or operations, liquidity, capital expenditures or capital
resources that is material to investors.





Critical
Accounting Policies and Estimates





Revenue Recognition: We
recognize revenue from product sales once all of the following criteria for
revenue recognition have been met: pervasive evidence that an agreement exists;
the services have been rendered; the fee is fixed and determinable and not
subject to refund or adjustment; and collection of the amount due is reasonably
assured.  We will primarily derive our revenues from anticipated
financial service related fees, such as commissions.





RFIS
currently earns commissions paid by insurance companies which are based on a
percentage of the premium charged to the policyholder and considered earned over
the term of the policy. Deferred commissions are related to the unexpired terms
of the policies in force. The Company recognizes revenue net of expected
cancellations in accordance with Staff Accounting Bulletin (“SAB”)
13A.





Going
Concern





The
financial statements included in this filing have been prepared in conformity
with generally accepted accounting principles that contemplate the continuance
of Rubicon as a going concern. Rubicon’s cash position is currently inadequate
to pay all of the costs associated with its operations. Management intends to
use borrowings and security sales to mitigate the effects of its cash position,
however no assurance can be given that debt or equity financing, if and when
required will be available. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded assets
and classification of liabilities that might be necessary should Rubicon be
unable to continue existence.





Recent
Accounting Developments





In March
2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activities—an amendment of
FASB Statement No. 133.  This standard requires companies to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. Rubicon has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its consolidated financial position, results of operations or
cash flows.


18





In May
2008, FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting
Principles”.  SFAS No. 162 sets forth the level of authority to a
given accounting pronouncement or document by category. Where there might be
conflicting guidance between two categories, the more authoritative category
will prevail. SFAS No. 162 will become effective 60 days after the SEC approves
the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards.
SFAS No. 162 has no effect on Rubicon’s financial position, statements of
operations, or cash flows at this time.





In May
2008, FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance
Contracts-and interpretation of FASB Statement No. 60”.  SFAS No. 163
clarifies how Statement 60 applies to financial guarantee insurance contracts,
including the recognition and measurement of premium revenue and claims
liabilities. This statement also requires expanded disclosures about financial
guarantee insurance contracts. SFAS No. 163 is effective for fiscal years
beginning on or after December 15, 2008, and interim periods within those years.
SFAS No. 163 has no effect on Rubicon’s financial position, statements of
operations, or cash flows at this time.





In May
2009, the FASB issued SFAS No. 165 (“FAS 165”) “Subsequent Events”. The
objective of this Statement is to establish general standards of accounting for
and disclosure of, events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. In particular,
this Statement sets forth: 1) The period after the balance sheet date during
which management of a reporting entity should evaluate events or transactions
that may occur for potential recognition or disclosure in the financial
statements, 2) The circumstances under which an entity should recognize events
or transactions occurring after the balance sheet date in its financial
statements, 3) The disclosures that an entity should make about events or
transactions that occurred after the balance sheet date. We have adopted FAS 165
as of June 15, 2009.





In June
2009, the FASB issued SFAS No. 166 (“FAS 166”), “Accounting for Transfers of
Financial Assets - an amendment to FASB Statement No. 140”. FASB’s
objective in issuing this Statement is to improve the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement, if any,
in transferred financial assets. The Board undertook this project to address (1)
practices that have developed since the issuance of FASB Statement No. 140,
Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities,that
are not consistent with the original intent and key requirements of that
Statement and (2) concerns of financial statement users that many of the
financial assets (and related obligations) that have been derecognized should
continue to be reported in the financial statements of transferors. As prescribe
by the FASB we  apply the guidance of FAS 166, where applicable effective
after our first annual reporting period that begins after November 15, 2009, and
to interim periods within that first annual reporting period and for interim and
annual reporting periods thereafter.


19


In June
2009, the FASB issued SFAS No. 167 (“FAS 167”), “Amendments to FASB Interpretation
No. 46(R)”. The Board’s objective in issuing this Statement is to improve
financial reporting by enterprises involved with variable interest entities. The
Board undertook this project to address (1) the effects on certain provisions of
FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest
Entities,as a result of the elimination of the qualifying
special-purpose entity concept in FASB Statement No. 166, Accounting for Transfers of
Financial Assets,and (2) constituent concerns about the application of
certain key provisions of Interpretation 46(R), including those in which the
accounting and disclosures under the Interpretation do not always provide timely
and useful information about an enterprise’s involvement in a variable interest
entity. This Statement shall be effective as of the beginning of each reporting
entity’s first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period, and for interim and
annual reporting periods thereafter. As prescribe by the FASB we anticipate
adopting FAS 167, for all interim and annual reports subsequent to November 15,
2009.





In June
2009, the FASB issued SFAS No. 168 (“FAS 168”), “The FASB Accounting Standards
CodificationTM and the Hierarchy of Generally Accepted Accounting Principles – a
replacement of FASB Statement No. 162”.The FASB Accounting Standards
CodificationTM (Codification) will become the source of authoritative U.S.
generally accepted accounting principles (GAAP) recognized by the FASB to be
applied by nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission (SEC) under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants. On the
effective date of this Statement, the Codification will supersede all
then-existing non-SEC accounting and reporting standards. All other
non-grandfathered non-SEC accounting literature not included in the Codification
will become non-authoritative. As prescribe by the FASB we adopted FAS 168, for
all interim and annual periods ending after September 15, 2009.





Item
3.Quantitative
and Qualitative Disclosures about Market Risk.





Not
applicable.




Item
4T. Controls and Procedures.





Our Chief
Executive Officer and Principal Financial Officer, Joseph Mangiapane, Jr.,
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this Report.  Based on the
evaluation, Mr. Mangiapane concluded that our disclosure controls and procedures
are effective in timely altering him to material information relating to us
(including our consolidated subsidiaries) required to be included in our
periodic SEC filings.





There
were no changes in our internal control over financial reporting that occurred
during our most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.


20





PART
II—OTHER INFORMATION





Item
1.  Legal Proceedings.





We may, from time to time, be named as
defendants in various judicial, regulatory, and arbitration proceedings in the
future in the ordinary course of our business.  The nature of such
proceedings may involve large claims subjecting us to exposure. In addition,
claims may be made against our broker-dealer subsidiary relating to investment
banking underwritings, which may be brought as part of a class action, or may be
routine retail customer complaints regarding losses in individual accounts,
which are ordinarily subject to FINRA arbitration proceedings.  Our
broker-dealer subsidiary may also become subject to investigations or
proceedings by governmental agencies and self-regulatory organizations, which
can result in fines or other disciplinary action being imposed on the
broker-dealer and/or individuals.  Additionally, legal proceedings may
be brought against us from time to time in the future.  In view of the
inherent difficulty of predicting the outcome of legal proceedings, particularly
where the plaintiffs seek substantial or indeterminate damages or where novel
legal theories or a large number of parties are involved, we cannot state with
confidence what the eventual outcome of currently pending matters will be, what
the timing of the ultimate resolution of these matters will be or what the
eventual result in each pending matter will be.





Rubicon Financial
Incorporated v. Grant Bettingen





In July
of 2009, we filed our first amended complaint in the Superior Court of the State
of California, for the County of Orange – Central Justice Center (Case Number
30-2009-00124138-CU-BC-CJC), against Grant Bettingen and Grant Bettingen, as
Trustee of the 1999 Bettingen Trust U/D/T October 8, 1999, seeking damages
for:





1.
            Breach
      of Contract;


2.
            Fraud;


3.
            Declaratory
      Relief;


4.
            Breach
      of Covenant of Good Faith and Fair Dealing;
and


5.
            Unjust
      Enrichment.





These
claims arise from the June 2008 merger between us and Grant Bettingen, Inc. (now
known as Newport Coast Securities, Inc.) On or about August 10, 2009, we were
served with a suit from M. Grant Bettingen, the Bettingen 1999 Trust and Christi
Bettingen stemming from the same transaction and alleging 31 causes of action.
These two cases have been consolidated. We believe the Bettingen claims have no
merit. As of the date of this filing, we are continuing to aggressively pursue
this action.





Rubicon Financial
Incorporated v. Marc Riviello





In August
of 2009, the Company filed a complaint in the Superior Court of the State of
California, for the County of Orange – Central Justice Center (Case Number
30-2009-00294992-CU-BC-CJC), against Marc Riviello seeking collection of the
$100,000 due and payable pursuant to a promissory note due June 1, 2009. The
case is currently pending.


21




Item
1A. Risk Factors.





Our
significant business risks are described in Item 1A to Form 10-K for the
year ended December 31, 2008 to which reference is made
herein.





Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds.





On July
15, 2009, we issued 2,500 shares of our restricted common stock to each of the
members of our Board of Director’s (7,500 shares in total) for their services.
We believe that the issuance of the shares was exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2) thereof.





In August
of 2009, we issued 150,000 shares of our common stock for legal services to
Stoecklein Law Group valued at $11,903. These shares were registered and issued
under the Form S-8 filed on July 30, 2009.





On August
21, 2009, we issued 500,000 shares of our common stock to Kathleen McPherson
that were previously authorized but remained unissued. We believe that the
issuance of the shares was exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933 by virtue of Section 4(2)
thereof.





On August 21, 2009, we awarded a total
of 1,343,750 shares of our restricted common stock for bonuses valued at $80,625
to twenty-three people associated with two of our wholly owned subsidiaries. The
shares were awarded pursuant to the Rubicon Financial Incorporated 2007
Acquisition Stock Plan and registered on the Form S-8 filed on July 30,
2009.





Issuer
Purchases of Equity Securities





We did not repurchase any of our equity
securities during the three or nine months ended September 30,
2009.





Item
3. Defaults Upon Senior Securities.





None.





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





We did not submit any matters to a vote
of our security holders during the quarter ended September 30,
2009.





Item
5. Other Information.





Effective
September 1, 2009, we relocated our principal executive office to 4100 Newport
Place, Suite 630, Newport Beach, California  92660. Our wholly owned
subsidiary, Newport Coast Securities, Inc. (formerly Grant Bettingen, Inc.),
leases the general office space. The lease expires on during the first quarter
of 2010.


22





On
September 30, 2009, we changed the name of our wholly-owned broker/dealer
subsidiary to Newport Coast Securities, Inc. from Grant Bettingen,
Inc.





In October of 2009, we incorporated two
new wholly owned subsidiaries; (i) Struxurety Corporation, a Nevada corporation,
which intends to focus on delivering core support services for small businesses,
and (ii) Newport Coast Asset Management, Inc., a California corporation, which
will conduct our registered investment advisory services.





Item
6.  Exhibits.





Incorporated
      by referenceExhibit
                                      
                                      Exhibit
      Description
                                      
                                      Filed
      herewith
                                      
                                      Form
                                      
                                      Period
      ending
                                      
                                      Exhibit
                                      
                                      Filing
      date2.1
                                      
                                      Merger
      Agreement among Rubicon Financial Incorporated, RFI Sub, Inc. and Grant
      Bettingen, Inc.
                                      
                                      
                                      
                                      8-K
                                      
                                      
                                      
                                      2.7
                                      
                                      07/05/072.1(b)
                                      
                                      Amendment
      No. 1 to the Merger Agreement among Rubicon Financial Incorporated, RFI
      Sub, Inc. and Grant Bettingen, Inc.
                                      
                                      
                                      
                                      8-K
                                      
                                      
                                      
                                      2.7(b)
                                      
                                      09/14/072.1(c)
                                      
                                      Amendment
      No.2 to the Merger Agreement among Rubicon Financial Incorporated, RFI
      Sub, Inc. and Grant Bettingen, Inc., dated January 23,
2007
                                      
                                      
                                      
                                      8-K
                                      
                                      
                                      
                                      2.7(c)
                                      
                                      01/24/082.1(d)
                                      
                                      Amendment
      No. 3 to the Merger Agreement among Rubicon Financial Incorporated, RFI
      Sub, Inc. and Grant Bettingen, Inc., dated March 18, 2008
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      2.7(d)
                                      
                                      03/21/082.2
                                      
                                      Separation
      and Distribution Agreement by and between Rubicon Financial Incorporated
      and Dial-A-Cup, Inc.
                                      
                                      
                                      
                                      8-K
                                      
                                      
                                      
                                      2.8
                                      
                                      08/06/073.1(i)(a)
                                      
                                      Articles
      of Incorporation
                                      
                                      
                                      
                                      10-KSB
                                      
                                      12/31/05
                                      
                                      3.1(i)(a)
                                      
                                      04/05/063.1(i)(b)
                                      
                                      Certificate
      of Correction of Articles of Incorporation
                                      
                                      
                                      
                                      10-KSB
                                      
                                      12/31/05
                                      
                                      3.1(i)(b)
                                      
                                      04/05/063.1(i)(c)
                                      
                                      Amendment
      to Articles of Incorporation
                                      
                                      
                                      
                                      10-KSB
                                      
                                      12/31/05
                                      
                                      3.1(i)(c)
                                      
                                      04/05/063.1(i)(d)
                                      
                                      Amendment
      to Certificate of Incorporation changing name from ISSG, Inc. to Rubicon
      Financial Incorporated
                                      
                                      
                                      
                                      8-K
                                      
                                      
                                      
                                      3.1(i)(d)
                                      
                                      09/08/063.1(i)(g)
                                      
                                      Amendment
      to Certificate of Incorporation authorizing “blank check” Preferred
      Stock
                                      
                                      
                                      
                                      8-K
                                      
                                      
                                      
                                      3.1(i)(g)
                                      
                                      08/01/073.1(ii)
                                      
                                      Bylaws
                                      
                                      
                                      
                                      10-KSB
                                      
                                      12/31/05
                                      
                                      3.1(ii)
                                      
                                      04/05/06


23





4.1
                        
                        Amended
      and Restated Certificate of Designation of 8% Series A Convertible
      Preferred Stock
                        
                        
                        
                        10-Q
                        
                        09/30/08
                        
                        4.1
                        
                        11/19/0810.1
                        
                        Stock
      Purchase and Settlement Agreement with AIS Financial Inc. and Marc
      Riviello dated June 2, 2008
                        
                        
                        
                        8-K
                        
                        
                        
                        10.18
                        
                        06/06/0810.2
                        
                        Interim
      COO agreement with Bootstrap Real Estate Investments, LLC dated February
      5, 2009.
                        
                        
                        
                        8-K
                        
                        
                        
                        10.1
                        
                        03/04/0931.1
                        
                        Certification
      of Joseph Mangiapane, Jr., Chief Executive Officer and Principal Financial
      Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
                        
                        X32.1
                        
                        Certification
      of Joseph Mangiapane, Jr., Chief Executive Officer and Principal Financial
      Officer, pursuant to Section 906 of the Sarbanes-Oxley Act
                        
                        X


24


SIGNATURES





In accordance with the requirements of
the Exchange Act, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.





RUBICON
      FINANCIAL INCORPORATED(Registrant)By:
                  /s/ Joseph Mangiapane,
  Jr.Joseph
      Mangiapane, Jr., Chief Executive Officer(On
      behalf of the Registrant and as Principal FinancialOfficer)




Date:
November 20, 2009


25