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 June 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
600


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 x       No
 ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
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 x





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





The
number of shares of Common Stock, $0.001 par value, outstanding on August 14,
2009, was 12,596,773, which includes 620,000 shares authorized but
unissued.










PART
I – FINANCIAL INFORMATION


Item
1. Financial Statements


Rubicon
      Financial IncorporatedCondensed
      Consolidated Balance SheetsJune
      30,
            
            
            December
      31,2009
            
            
            2008Assets
            
            (Unaudited)
            
            
            AuditedCurrent
      assets:Cash
            
            $
            278,216
            
            
            $
            212,657Cash
      – restricted
            
            
            311,729
            
            
            
            201,571Marketable
      securities
            
            
            458,302
            
            
            
            530,380Accounts
      receivable
            
            
            557,518
            
            
            
            481,523Prepaid
      expenses
            
            
            48,207
            
            
            
            41,311Notes
      receivable
            
            
            124,202
            
            
            
            124,202Interest
      receivable
            
            
            8,632
            
            
            
            4,906Total
      current assets
            
            
            1,786,806
            
            
            
            1,596,550Fixed
      assets, net of accumulated depreciation of$160,421
      and $134,565, respectively
            
            
            119,701
            
            
            
            136,159Other
      assets:Contract
      advances
            
            
            213,071
            
            
            
            277,197Deposits
            
            
            30,554
            
            
            
            38,554Intangible
      assets – customer list
            
            
            2,439,671
            
            
            
            2,439,671Total
      other assets
            
            
            2,683,296
            
            
            
            2,755,422Total
      assets
            
            $
            4,589,803
            
            
            $
            4,488,131Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Accounts
      payable
            
            $
            304,495
            
            
            $
            242,335Accrued
      expenses
            
            
            615,169
            
            
            
            583,437Investment
      obligation
            
            
            487,000
            
            
            
            487,000Deferred
      revenue
            
            
            103,995
            
            
            
            147,367Capital
      lease obligation
            
            
            7,126
            
            
            
            12,223Line
      of credit
            
            
            99,550
            
            
            
            -Notes
      payable – related party
            
            
            5,859
            
            
            
            4,500Total
      current liabilities
            
            
            1,623,194
            
            
            
            1,476,862Stockholders’
      equityPreferred
      stock, $0.001 par value, 9,000,000 sharesauthorized,
      no shares issued and outstandingas
      of June 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 June 30, 2009 and December 31, 2008, respectively
            
            
            63
            
            
            
            63Common
      stock, $0.001 par value, 50,000,000 sharesauthorized,
      11,976,773 and 11,976,773 shares issuedand
      outstanding as of June 30, 2009 andDecember
      31, 2008, respectively
            
            
            11,977
            
            
            
            11,977Common
      stock owed but not issued, 620,000 and 499,790as
      of June 30, 2009 and December 31, 2008, respectively
            
            
            620
            
            
            
            498Additional
      paid in capital
            
            
            18,098,532
            
            
            
            17,971,575Unamortized
      shares and options issued for services
            
            
            (216,554
            )
            
            
            (433,108
            )Other
      comprehensive losses
            
            
            (1,046,385
            )
            
            
            (611,861
            )Accumulated
      (deficit)
            
            
            (13,881,644
            )
            
            
            (13,927,875
            )Total
      stockholders’ equity
            
            
            2,966,609
            
            
            
            3,011,269Total
      liabilities and stockholders’ equity
            
            $
            4,589,803
            
            
            $
            4,488,131





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




3





Rubicon
      Financial IncorporatedCondensed
      Consolidated Statements of Operations(Unaudited)For
      the Three Months Ended
            
            
            For
      the Six Months EndedJune
      30,
            
            
            June
      30,2009
            
            
            2008
            
            
            2009
            
            
            2008Revenue
            
            $
            3,113,005
            
            
            $
            704,283
            
            
            $
            5,434,770
            
            
            $
            799,503Expenses:Direct
      costs
            
            
            2,028,550
            
            
            
            726,926
            
            
            
            3,820,730
            
            
            
            740,876Consulting
            
            
            375
            
            
            
            65,205
            
            
            
            375
            
            
            
            114,915Professional
      fees
            
            
            61,155
            
            
            
            49,656
            
            
            
            148,486
            
            
            
            165,590Executive
      compensation
            
            
            233,848
            
            
            
            1,240,936
            
            
            
            486,250
            
            
            
            1,683,865General
      and administrative expenses
            
            
            596,485
            
            
            
            381,514
            
            
            
            924,640
            
            
            
            707,499Depreciation
      and amortization
            
            
            13,035
            
            
            
            32,190
            
            
            
            25,856
            
            
            
            39,020Total
      expenses
            
            
            2,933,448
            
            
            
            2,496,427
            
            
            
            5,406,337
            
            
            
            3,451,765Net
      operating income  (loss)
            
            
            179,557
            
            
            
            (1,792,144
            )
            
            
            28,433
            
            
            
            (2,652,262
            )Other
      income (expense):Interest
      expense
            
            
            (3,550
            )
            
            
            (1,730
            )
            
            
            (7,672
            )
            
            
            (3,260
            )Interest
      expense - related party
            
            
            -
            
            
            
            (3,901
            )
            
            
            -
            
            
            
            (7,801
            )Interest
      income
            
            
            2,052
            
            
            
            15,540
            
            
            
            9,145
            
            
            
            28,735Other
      income
            
            
            1,546
            
            
            
            42,841
            
            
            
            16,325
            
            
            
            42,841Minority
      interest income (loss)
            
            
            -
            
            
            
            19,763
            
            
            
            -
            
            
            
            (40,160
            )Total
      other income (expense)
            
            
            48
            
            
            
            72,513
            
            
            
            17,798
            
            
            
            20,355Net
      income (loss)
            
            
            179,605
            
            
            
            (1,719,631
            )
            
            
            46,231
            
            
            
            (2,631,907
            )Other
      comprehensive (loss)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (315,000
            )Total
      comprehensive income (loss)
            
            $
            179,605
            
            
            $
            (1,719,631
            )
            
            $
            46,231
            
            
            $
            (2,946,907
            )Weighted
      average number of common sharesoutstanding
      - basic and fully diluted
            
            
            11,976,773
            
            
            
            10,093,812
            
            
            
            11,976,773
            
            
            
            11,518,151Net
      income (loss) per share - basic and fully diluted
            
            $
            0.01
            
            
            $
            (0.17
            )
            
            $
            0.00
            
            
            $
            (0.26
            )




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




4




Rubicon
      Financial IncorporatedCondensed
      Consolidated Statements of Cash Flows(Unaudited)For
      the Six Months EndedJune
      30,2009
            
            2008Cash
      flows from operating activitiesNet
      income (loss)
            
            $
            46,231
            
            
            $
            (2,631,907
            )Adjustments
      to reconcile net (loss) tonet
      cash (used) in operating activities:Depreciation
      expense
            
            
            25,856
            
            
            
            39,020Impairment
      of goodwill
            
            
            -
            
            
            
            -Minority
      interest losses
            
            
            -
            
            
            
            40,160Amortization
      of prepaid  share-based compensation
            
            
            216,554
            
            
            
            698,481Shares
      and options issued for services
            
            
            30,000
            
            
            
            737,764Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            (150,121
            )
            
            
            26,110Prepaid
      expenses
            
            
            (6,896
            )
            
            
            45,053Deposits
            
            
            -
            
            
            
            -Employee
      advances
            
            
            -
            
            
            
            (8,452
            )Accrued
      interest receivable
            
            
            (3,726
            )
            
            
            (1,130
            )Accounts
      payable and accrued liabilities
            
            
            93,892
            
            
            
            98,231Investment
      obligation
            
            
            -
            
            
            
            (104,000
            )Deferred
      revenue
            
            
            (43,372
            )
            
            
            56,085Accrued
      interest payable - related party
            
            
            -
            
            
            
            7,801Net
      cash provided (used) by operating activities
            
            
            216,418
            
            
            
            (996,784
            )Cash
      flows from investing activitiesPayments
      on notes receivable – related party
            
            
            -
            
            
            
            (2,000
            )Purchase
      of fixed assets
            
            
            (9,398
            )
            
            
            (63,281
            )Distribution
      of assets – related party
            
            
            -
            
            
            
            89,716Purchase
      of intangible assets
            
            
            -
            
            
            
            (762,313
            )Purchase
      of investments
            
            
            (125,756
            )
            
            
            -Net
      cash (used) by investing activities
            
            
            (135,154
            )
            
            
            (737,878
            )Cash
      flows from financing activitiesCash
      acquired with mergers
            
            
            -
            
            
            
            388,610Proceeds
      from line of credit
            
            
            99,550
            
            
            
            -Payments
      on capital lease
            
            
            (5,097
            )
            
            
            -Shares
      issued for cash
            
            
            -
            
            
            
            170,000Net
      cash provided by financing activities
            
            
            94,453
            
            
            
            558,610Net
      increase (decrease) in cash
            
            
            175,717
            
            
            
            (1,176,052
            )Cash
      - beginning
            
            
            414,228
            
            
            
            1,892,541Cash
      - ending
            
            $
            589,945
            
            
            $
            716,489Supplemental
      disclosures:Interest
      paid
            
            $
            7,672
            
            
            $
            3,572Income
      taxes paid
            
            $
            -
            
            
            $
            3,750Non-cash
      financing activities:Shares
      and options issued for services
            
            $
            30,000
            
            
            $
            737,764Shares
      issued for acquisition
            
            $
            -
            
            
            $
            1,680,000





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




5




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, GBI, 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 June 30, 2009, the Company maintained
deposits of $250,405 and $61,324, 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. On November 27, 2007, Rubicon
entered into a Share Purchase Agreement with American International Industries,
Inc. (“AMIN”), whereby Rubicon agreed to issue 1,000,000 shares of its common
stock in exchange for 200,000 shares of AMIN and $1,000,000 in cash. Rubicon
recorded marketable securities of $1,000,000, representing the fair market value
of AMIN’s common stock ($5 per share) on the date of agreement. On August 8,
2008 AMIN issued a stock dividend equal to 40,000 shares of their common stock.
The fair value of the dividend was $121,200. On April 4, 2009, Rubicon
transferred its AMIN holdings to its subsidiary, GBI as an intercompany
transaction. In addition to the AMIN securities, GBI holds various other
securities as available-for-sale. On June 30, 2009, management evaluated the
fair value of all securities held as available-for-sale and recorded
consolidated other comprehensive losses totaling $232,093.




6





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 mature 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 June 30, 2009, Mr. Newman’s principal balances totaled $24,202 with
accrued interest receivable of $2,132.





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 June
30, 2009, the principal balance was $100,000 and accrued interest receivable
totaled $6,500. 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.
As of the date of this filing, the shares are unissued.





NOTE 7 – Notes
payable




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





June
      30, 2009
            
            
            December
      31, 2008Demand
      note payable to an officer and shareholder for $4,500, unsecured,
      non-interest bearing and due on demand
            
            $
            5,859
            
            
            $
            4,500Capital
      lease obligation, maturing October 2009
            
            
            7,126
            
            
            
            12,223Line
      of credit, secured by cash deposit, interest rate of 2.25%
            
            
            99,550
            
            
            
            -0-$
            112,535
            
            
            $
            16,723




Interest
expense for the three and six months ended June 30, 2009 and 2008 was $3,550,
$7,672 and $5,631, $11,061, respectively.





7




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.





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. As of the date of this filing, the shares are
unissued.





NOTE 9 – Warrants and
options




A summary
of stock options and warrants as of June 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
            
            
            
            1.00Cancelled
            
            
            (200,000
            )
            
            
            1.00Exercised
            
            
            -Outstanding
      as of 01/01/09:
            
            
            1,800,000
            
            
            $
            1.66
            
            
            
            100,000
            
            
            $
            3.00Granted
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Cancelled
            
            
            (500,000
            )
            
            
            2.50
            
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Outstanding
      as of 06/30/09:
            
            
            1,300,000
            
            
            $
            1.33
            
            
            
            100,000
            
            
            $
            3.00Vested
      as of 06/30/09:
            
            
            1,000,000
            
            
            $
            1.00
            
            
            
            100,000
            
            
            $
            3.00




8




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 (GBI), mortgage and real estate services
(RREM) and personal and commercial insurance services (RREM). 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
            
            
            Six
      Months EndedJune
      30,
            
            
            June
      302009
            
            
            2008
            
            
            2009
            
            
            2008Net
      RevenueInsurance
      services
            
            $
            162,896
            
            
            $
            74,860
            
            
            $
            312,643
            
            
            $
            144,911Mortgage
      services
            
            
            13,113
            
            
            
            108,359
            
            
            
            13,113
            
            
            
            133,528Brokerage
      services(1)
            
            
            2,936,996
            
            
            
            521,064
            
            
            
            5,109,014
            
            
            
            521,0643,113,005
            
            
            
            704,283
            
            
            
            5,434,770
            
            
            
            799,503ExpensesInsurance
      services
            
            
            126,212
            
            
            
            126,884
            
            
            
            267,944
            
            
            
            233,339Mortgage
      services
            
            
            13,171
            
            
            
            146,512
            
            
            
            14,191
            
            
            
            245,244Brokerage
      services(1)
            
            
            2,430,558
            
            
            
            799,235
            
            
            
            4,500,761
            
            
            
            799,235Corporate
            
            
            363,507
            
            
            
            1,423,796
            
            
            
            623,441
            
            
            
            2,173,9472,933,448
            
            
            
            2,496,427
            
            
            
            5,406,337
            
            
            
            3,451,765Net
      operating income (loss)
            
            $
            179,557
            
            
            $
            (1,792,144
            )
            
            $
            28,433
            
            
            $
            (2,652,262
            )





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





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 June 30, 2009, GBI had net capital of
$629,208 and was $529,208 in excess of its required net capital of
$100,000.




9




NOTE 12 – Subsequent
Events





On July
15, 2009, the Company issued 2,500 shares of its restricted common stock to each
of the members of its Board of Director’s (7,500 shares in total) for their
services.




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) Deciaratory
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
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 case is
currently pending.




Pursuant
to FAS 165, 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 August 19, 2009, that
would be deemed significant or require recognition or additional
disclosure.




10




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;


·
            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.




11




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,
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
the first half of 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 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.




12





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.





Results
of Operations





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





Revenue:


Three
      Months Ended
            
            
            
            
            
            Six
      Months EndedJune
      30,
            
            
            %
            
            
            June
      30,
            
            
            %2009
            
            
            2008
            
            
            Change
            
            
            2009
            
            
            2008
            
            
            ChangeConsolidatedRevenue
            
            $
            3,113,005
            
            
            $
            704,283
            
            
            
            342
            %
            
            $
            5,434,770
            
            
            $
            799,503
            
            
            
            580
            %Operating
      expenses
            
            $
            2,933,448
            
            
            $
            2,496,427
            
            
            
            18
            %
            
            $
            5,406,337
            
            
            $
            3,451,765
            
            
            
            57
            %Net
      operating income (loss)
            
            $
            179,557
            
            
            $
            (1,792,144
            )
            
            
            -
            
            
            $
            28,433
            
            
            $
            (2,652,262
            )
            
            
            -





Overall
revenues increased 342% during the second fiscal quarter of 2009 and 580% during
the six months ended June 30, 2009. In 2008, we were continuing to invest
significant financial and administrative resources towards the closing of the
acquisition of GBI, 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 GBI and the consolidated results
of operations for GBI. Further, the results of operations for 2008 only include
those of GBI for the 28 day period from June 2, 2008 through June 30,
2008.





During
the three and six-month periods ended June 30, 2009 we generated a net operating
income of $179,557 and $28,433, respectively. These were our first quarters with
operating income since our transition into the financial services
industry.





13




Revenue by
Segment





Three
      Months Ended
            
            
            
            
            
            Six
      Months EndedJune
      30,
            
            
            %
            
            
            June
      30,
            
            
            %2009
            
            
            2008
            
            
            Change
            
            
            2009
            
            
            2008
            
            
            ChangeRevenueInsurance
      services
            
            $
            162,896
            
            
            $
            74,860
            
            
            
            118
            %
            
            $
            312,643
            
            
            $
            144,911
            
            
            
            116
            %Mortgage
      services
            
            
            13,113
            
            
            
            108,359
            
            
            
            (88
            %)
            
            
            13,113
            
            
            
            133,528
            
            
            
            (90
            %)Brokerage
      services
            
            
            2,936,996
            
            
            
            521,064
            
            
            
            464
            %
            
            
            5,109,014
            
            
            
            521,064
            
            
            
            880
            %Total
      revenue
            
            $
            3,113,005
            
            
            $
            704,283
            
            
            
            342
            %
            
            $
            5,434,770
            
            
            $
            799,503
            
            
            
            580
            %





Insurance Services: RFIS
experienced an expected increase of 118% and 116% in revenues from insurance
services for the three and six months ended June 30, 2009. RFIS earned $162,896
during the second quarter compared to $74,860 over the same three month period
in 2008. 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. RFIS anticipates a financial recognition of these
efforts through increased commission revenue during the second half of
2009.





Mortgage Services: During the
three months ended June 30, 2009 RREM earned $13,113 in commissions compared to
$108,359 for the six month period in 2008, resulting in a 90% 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 GBI in June of 2008, which enabled us to aggressively expand GBI’s
operations following its acquisition. GBI represents the majority of our
revenues and services; representing approximately 94% of our total revenues for
the three and six-month periods ended June 30, 2009. Consolidated revenue for
the three and six months ended June 30, 3009 was $2,936,996 and $5,109,014,
respectively, versus $521,064 for the twenty-eight days ended June 30, 2008. GBI
anticipates additional increases in commission revenue as it enters the third
quarter through the continued addition to its broker base and efforts to seek
and add additional brokerage and investment banking branches.





Selling
and Administrative Expenses:





Three
      Months Ended
            
            
            
            
            
            Six
      Months EndedJune
      30,
            
            
            %
            
            
            June
      30,
            
            
            %2009
            
            
            2008
            
            
            Change
            
            
            2009
            
            
            2008
            
            
            ChangeDirect
      costs
            
            $
            2,028,550
            
            
            $
            726,926
            
            
            
            179
            %
            
            $
            3,820,730
            
            
            $
            740,876
            
            
            
            416
            %Consulting
            
            
            375
            
            
            
            65,205
            
            
            
            (99
            %)
            
            
            375
            
            
            
            114,915
            
            
            
            -Professional
      fees
            
            
            61,155
            
            
            
            49,646
            
            
            
            23
            %
            
            
            148,486
            
            
            
            165,590
            
            
            
            (10
            %)Executive
      compensation
            
            
            233,848
            
            
            
            1,240,936
            
            
            
            (81
            %)
            
            
            486,250
            
            
            
            1,683,865
            
            
            
            (71
            %)General
      expenses
            
            
            596,485
            
            
            
            381,514
            
            
            
            56
            %
            
            
            924,640
            
            
            
            707,499
            
            
            
            31
            %Depreciation
      and amortization
            
            
            13,035
            
            
            
            32,190
            
            
            
            (60
            %)
            
            
            25,856
            
            
            
            39,020
            
            
            
            (34
            %)Operating
      expenses
            
            $
            2,933,448
            
            
            $
            2,496,427
            
            
            
            18
            %
            
            $
            5,406,337
            
            
            $
            3,451,765
            
            
            
            57
            %




14




Operating
expenses only increased 18% over the previous three month comparable period and
57% for the six month comparable period ended June 30, 2009. Significant
increases were expected in direct costs associated with GBI’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
            
            
            
            
            
            Six
      Months EndedJune
      30,
            
            
            %
            
            
            June
      30,
            
            
            %2009
            
            
            2008
            
            
            Change
            
            
            2009
            
            
            2008
            
            
            ChangeInsurance
      servicesDirect
      costs
            
            $
            38,263
            
            
            $
            41,460
            
            
            
            (8
            %)
            
            $
            98,396
            
            
            $
            55,135
            
            
            
            78
            %Consulting
            
            
            375
            
            
            
            9,000
            
            
            
            (96
            %)
            
            
            375
            
            
            
            12,000
            
            
            
            (97
            %)Professional
      fees
            
            
            2,540
            
            
            
            6,000
            
            
            
            (58
            %)
            
            
            4,396
            
            
            
            15,000
            
            
            
            (71
            %)Executive
      compensation
            
            
            15,000
            
            
            
            15,000
            
            
            
            -
            
            
            
            30,000
            
            
            
            30,000
            
            
            
            -General
      expenses
            
            
            69,870
            
            
            
            55,260
            
            
            
            26
            %
            
            
            134,448
            
            
            
            120,875
            
            
            
            11
            %Depreciation
            
            
            164
            
            
            
            164
            
            
            
            -
            
            
            
            329
            
            
            
            329
            
            
            
            -Operating
      expenses
            
            $
            126,212
            
            
            $
            126,884
            
            
            
            (1
            %)
            
            $
            267,944
            
            
            $
            233,339
            
            
            
            15
            %





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. RFIS’s six-month increase in expenses of 15% is
attributable to increases in all policies written.





As of
June 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 31% increase in the three-month
period, it has been able to reduce external consulting fees and professional
fees by 96% and 58%, respectively. In addition, during the six-month period RFIS
had reductions of 97% and 71%, respectively.





RREM:





Three
      Months Ended
            
            
            
            
            
            Six
      Months EndedJune
      30,
            
            
            %
            
            
            June
      30,
            
            
            %2009
            
            
            2008
            
            
            Change
            
            
            2009
            
            
            2008
            
            
            ChangeMortgage
      servicesDirect
      costs
            
            $
            11,146
            
            
            $
            50,149
            
            
            
            (78
            %)
            
            $
            11,146
            
            
            $
            50,424
            
            
            
            (78
            %)Consulting
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,710
            
            
            
            -Professional
      fees
            
            
            -
            
            
            
            3,000
            
            
            
            -
            
            
            
            -
            
            
            
            6,000
            
            
            
            -Executive
      compensation
            
            
            -
            
            
            
            22,893
            
            
            
            -
            
            
            
            -
            
            
            
            58,211
            
            
            
            -General
      expenses
            
            
            1,785
            
            
            
            70,230
            
            
            
            (97
            %)
            
            
            2,593
            
            
            
            128,447
            
            
            
            (98
            %)Depreciation
            
            
            240
            
            
            
            240
            
            
            
            -
            
            
            
            452
            
            
            
            452
            
            
            
            -Operating
      expenses
            
            $
            13,171
            
            
            $
            146,512
            
            
            
            (91
            %)
            
            $
            14,191
            
            
            $
            245,244
            
            
            
            (94
            %)




15




RREM experienced a 78% decrease in
direct costs for the three and six month periods ended June 30, 2009 due to the
substantial reduction in operations. Further, RREM’s general and administrative
expenses have decreased 97% and 98% from 2008 for the three and six month
periods ended June 30, 2009, respectively. The decrease was anticipated with the
dormancy of operations and general economic conditions affecting the real estate
industry, especially in Southern California.





GBI:





On June 2, 2008, we consummated our
staged acquisition of GBI, 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 GBI from the date of acquisition through
June 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 GBI. We expect the amounts recognized in the three and six-months
ended June 30, 2009 to be indicative of future operating expenses.





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





Three
      Months Ended
            
            
            Six
      Months Ended
            
            
            June
      2, 2008
              toJune
      30, 2009
            
            
            June
      30, 2009
            
            
            June
      30, 2008Brokerage
      servicesDirect
      costs
            
            $
            1,979,141
            
            
            $
            3,711,188
            
            
            $
            404,497Consulting
            
            
            -
            
            
            
            -
            
            
            
            18,705Professional
      fees
            
            
            17,840
            
            
            
            27,110
            
            
            
            8,853Executive
      compensation
            
            
            51,071
            
            
            
            110,696
            
            
            
            102,669General
      expenses
            
            
            378,330
            
            
            
            643,602
            
            
            
            261,834Depreciation
            
            
            4,176
            
            
            
            8,165
            
            
            
            2,677Operating
      expenses
            
            $
            2,430,558
            
            
            $
            4,500,761
            
            
            $
            799,235





Other
income and (expense)





Three
      Months Ended
            
            
            
            
            
            Six
      Months EndedJune
      30,
            
            
            %
            
            
            June
      30,
            
            
            %2009
            
            
            2008
            
            
            Change
            
            
            2009
            
            
            2008
            
            
            ChangeConsolidatedInterest
      income
            
            $
            2,052
            
            
            $
            15,540
            
            
            
            (87
            %)
            
            $
            9,145
            
            
            $
            28,735
            
            
            
            (68
            %)Interest
      (expense)
            
            
            (3,550
            )
            
            
            (5,631
            )
            
            
            (37
            %)
            
            
            (7,672
            )
            
            
            (11,061
            )
            
            
            (31
            %)Other
      income
            
            
            1,546
            
            
            
            42,841
            
            
            
            (96
            %)
            
            
            16,325
            
            
            
            42,841
            
            
            
            (62
            %)Minority
      interest
            
            
            -
            
            
            
            19,763
            
            
            
            -
            
            
            
            -
            
            
            
            (40,160
            )
            
            
            -





We experienced an 87% and 68% 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 declines in
interest expense of 37% and 31% for the respective three and six-month periods
ended June 30, 2009. We expect these amounts to continue to decline throughout
the remainder of the fiscal year.




16





During the six months ended June 30,
2009, we recorded $16,325 in other income attributable to sub-leased office
space. Our utilization of additional office space has resulted in decreases in
other income of 96% and 62%, respectively, for the three and six-month periods
ended June 30, 2009. We anticipate full utilization of all available office
space during the second half of fiscal 2009, which will result in continued
decreases of other income.





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 June 30, 2009 we had available cash of $278,216. We
believe these funds will help support existing operational costs, but will only
be sufficient to satisfy our working capital requirements through December 31,
2009. 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, GBI 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.





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 GBI. 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.




17





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 June 30, 2009 compared to December 31, 2008.




June 30,
            
            
            December
            
            
            Increase
      / (Decrease)2009
            
            
            31,
      2008
            
            
            $
            
            
            %Current
      Assets
            
            $
            1,786,806
            
            
            $
            1,596,550
            
            
            $
            190,256
            
            
            
            12%Current
      Liabilities
            
            
            1,623,194
            
            
            
            1,476,862
            
            
            
            146,332
            
            
            
            10%Working
      Capital
            
            $
            163,612
            
            
            $
            119,688
            
            
            $
            43,924
            
            
            
            37%





Prior to
our transition into the financial services industry, the inventor of
Dial-A-Cup’s product primarily funded our operations. As of December 31, 2008
total amounts owed in principal and interest to this individual was $221,512,
which was forgiven effective December 31, 2008. The proceeds loaned were used to
fund operations and for the development of a prototype of our beverage
dispenser. As we expand our activities, we may continue to experience net
negative cash flows from operations, pending receipt of additional
revenues.





We believe the $278,216 in unrestricted
cash on hand at June 30, 2009 will only be sufficient to sustain operations
through the balance of fiscal 2009.  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.





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.




18





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.





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.




19





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 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 anticipate adopting
FAS 168, for all interim and annual periods ending after September 15,
2009.





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. 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.




20





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.





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.





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.





21




Rubicon Financial
Incorporated v. Grant Bettingen





In July
of 2009, the Company filed its 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 the Company and 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 Company has filed a motion to consolidate the cases,
under which it is anticipated that the Company will be the plaintiff, which is
currently pending in the Superior Court.




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.





22





Issuer
Purchases of Equity Securities





We did not repurchase any of our equity
securities during the three or six months ended June 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 June 30, 2009; however, from
June 16, 2009 through June 17, 2009, stockholders holding approximately 57.69%
of our outstanding common stock executed written consents in lieu of an annual
meeting to elect Joseph Mangiapane, Jr. as our sole board member; thereby
effectively removing Suzanne Herring and Todd Vande Hei as members of our board
of directors, and ratifying the appointment of Weaver & Martin, LLC as our
independent public accountant for the year ending December 31,
2009.





Item
5. Other Information.





None.





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
            
            08/06/07




23




3.1(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)
            
            04/05/064.1
            
            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 Financial Officer)







Date:
August 19, 2009





25