UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
 
 Form
        10-KSB
 
 
 x  ANNUAL
        REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
 
 For
        the
        fiscal year ended December 31, 2006
 
 
 o  TRANSITION
        REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
 
 For
        the
        transition period from __________to___________
  Commission
        File No.: 000-28457
  SECURED
        FINANCIAL NETWORK, INC.
 (Name
        of
        small business issuer in its charter)
   Nevada
              86-0955239(State
                  or other jurisdiction of incorporation or organization)
              (I.R.S.
                  Employer Identification No.)
 
 
 
 101
                  NE 3rdAvenueSuite
                  1500Ft.
                  Lauderdale, Florida 33301(Address,
                  including zip code, of principal executive offices)Issuer’s
                  telephone number: (954) 332-3793
  Securities
          registered under Section 12(b) of the Exchange Act: None
  Securities
          registered under Section 12(g) of the Exchange Act:
  Common
          Stock, Par Value $.001 Per Share
 (Title
          of
          class)
  1
 
 
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to such filing requirements for the past 90 days.  x Yes  o No
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B contained in this form, and no disclosure will be contained,
        to
        the best of registrant’s knowledge, in definitive proxy or information
        statements incorporated by reference in Part III of this Form 10-KSB or any
        amendment to this Form 10-KSB. x
 
 State
        issuer’s revenues for its most recent fiscal year. $ 0.
 
 As
        of
        December 31, 2006, we had 31,001,581 shares of our $0.001 par value common
        stock
        issued and outstanding. On December 31, 2006, the aggregate market value
        of our
        common stock held by non-affiliates was approximately $775,000.
 
 DOCUMENTS
        INCORPORATED BY REFERENCE
 None
 
 Transitional
        Small Business Disclosure Form (Check one):   Yes o  No x
 
 To
        simplify the language in this Form 10-KSB, Secured Financial Network, Inc.,
        a
        Nevada corporation, is referred to herein as the "Company" or "We."
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 2




SECURED
        FINANCIAL NETWORK, INC.
 
 TABLE
        OF
        CONTENTS
 
  PagePART
                  1ITEM
                  1.
              ITEM
                  1. DESCRIPTION OF BUSINESS.
              4ITEM
                  2.
              DESCRIPTION
                  OF PROPERTY
              5ITEM
                  3.
              LEGAL
                  PROCEEDINGS
              5ITEM
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              5ITEM
                  5.
              MARKET
                  FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
              6ITEM
                  6.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
              8ITEM
                  7.
              FINANCIAL
                  STATEMENTS.
              10ITEM
                  8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE.
              33ITEM
                  8A.
              CONTROLS
                  AND PROCEDURES
              34PART
                  IIITEM
                  9.
              DIRECTORS,
                  EXECUTIVE OFFICERS. PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                  SECTION
                  16(a)
              35ITEM
                  9B:
              COMPLIANCE
                  WITH SECTION 16(a) OF THE EXCHANGE ACT
              36ITEM
                  10.
              EXECUTIVE
                  COMPENSATION
              36ITEM
                  11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
              37ITEM
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.
              37ITEM
                  13.
              EXHIBITS
                  AND REPORTS ON FORM 8-K.
              38ITEM
                  14.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              38SIGNATURES
              39


3


**PART
      I**





This
      report on Form 10-KSB and documents incorporated herein by reference contain
      certain “forward-looking statements” as defined by the Private Securities
      Litigation Reform Act of 1995, which involve substantial risks and
      uncertainties. When used in this report and in other reports filed by the
      Company, the forward-looking statements are often identified by the use of
      such
      terms and phrases as “anticipates,” “believes,” “intends,” “plans,” “expects,”
“seeks,” “scheduled,” “foreseeable future’ and similar expressions. Although the
      Company believes the understandings and assumptions on which the forward-looking
      statements in this report are based are reasonable, the Company’s actual
      results, performance and achievements could differ materially from the results
      in, or implied by, these forward-looking statements. Certain factors that could
      cause or contribute to such differences include those discussed in “Management’s
      Plan of Operations” and elsewhere herein.





ITEM
      1.
      DESCRIPTION OF BUSINESS.





The
      Company





The
      Company was originally incorporated in the State of Nevada on April 29, 1996
      as
“Loughran/Go Corporation”. On April 12, 2002, the Company entered into an
      Agreement and Plan of Merger with 12 to 20 Plus, Incorporated (12 to 20), a
      Delaware corporation, whereby 12 to 20 was merged into the Company, and the
      Company was the surviving company. The Articles of Merger were filed with the
      Secretary of State of Nevada on May 8, 2002. The Company filed Articles of
      Amendment to Charter amending its Articles of Incorporation with the Secretary
      of State of Nevada to change the Company’s name to “12 to 20 Plus,
      Incorporated.”




Immediately
      prior to the effective date of the merger, the Company had 500,000 shares of
      its
      common stock issued and outstanding. Pursuant to the Plan of Merger, the Company
      issued an additional 950,000 shares to the shareholders of 12 to 20 Plus. Thus,
      upon the consummation of the merger, the Company had 1,450,000 shares of its
      common stock issued and outstanding out of 25,000,000 shares
      authorized.





On
      June
      20, 2002, a majority of the shareholders of the Company authorized a forward
      stock split of three (3) shares of the common stock of the Company for every
      one
      (1) share of the common stock of the Company held by shareholders of the Company
      at the date of the merger. Immediately prior to the stock split there were
      4,450,000 shares of the Company’s common stock issued and outstanding. Upon the
      date, and as a result, of the stock split, the Company had 13,350,000 shares
      of
      issued and outstanding common stock.





On
      October 30, 2002, a majority of the shareholders of the Company authorized
      a
      forward stock split of six (6) shares of common stock of the Company for every
      one (1) share of the common stock of the Company held by shareholders as of
      that
      date. Three (3) shareholders also returned 8,400,000 shares of common stock
      to
      the treasury of the Company. Immediately prior to the stock split there were
      4,950,000 shares of the Company’s common stock issued and outstanding.
      Immediately after the stock split the Company had 29,700,000 shares of its
      common stock issued and outstanding.





On
      October 28, 2004, a majority of the shareholders of the Company authorized
      a
      reverse stock split of one (1) share for every fifty-seven (57) shares of the
      common stock of the Company held by shareholders as of that date. Immediately
      prior to the stock split there were 57,721,460 shares of the Company’s common
      stock issued and outstanding. Immediately after the stock split the Company
      had
      1,012,765 shares of its common stock issued and outstanding.





On
      December 10, 2004, a majority of our stockholders approved a merger between
      the
      Company and Secured Financial Network, Inc., a Nevada corporation, whereby
      the
      Company would be the surviving company.


4


Effective
      January 11, 2005, Secured Financial Network, Inc., a Nevada corporation,
      pursuant to Articles and Plan of Merger filed with the Nevada Secretary of
      State
      on January 11, 2005, merged into the Company. The name of the Surviving
      Corporation was changed to “Secured Financial Network, Inc.”





On
      January 19, 2005, Carol Slavin resigned her position as Director and President
      and was replaced by Jeffrey L. Schultz. Linda Hannon resigned her position
      as
      Director, Secretary and Treasurer and was replaced by Brian N. Schultz.
      Elizabeth Yaeger resigned her position as Director and was replaced by Stephen
      F. Burg. The new officers and Directors shall serve until resignation or
      removal.







The
      Business





Immediately
      after the merger in January 2005, Secured Financial Network, Inc. commenced
      locating and began financing opportunities in trade receivables and container
      type financing. These activities continued through December 2006 when two of
      the
      Company’s major clients were investigated for wrongdoing and their assets,
      including their ability to pay the Company approximately $3.5 million in
      receivables, were frozen. This action caused the company significant financial
      distress. The investigation is still ongoing.





In
      September of 2006 the Company re-focused its business plan on efforts to provide
      e-commerce transaction processing by purchasing and utilizing an “exclusive”
license to deploy the Envoii payment processing solution, which includes a
      proprietary ‘bank grade’ electronic vault.





This
      proprietary payment processing technology provides contracted businesses the
      ability to transact business over the Internet with their client base in a
      very
      secure environment.





The
      company plans on opening a fully operating online mall with ‘virtual’ stores
      selling discounted products and services with all transactions being processed
      through its proprietary platform and bank grade ‘e-vault’.





Employees





During
      the period covered by this report, we had 2 employees.





ITEM
      2.
      DESCRIPTION OF PROPERTY.





Office Facilities:


101
      NE
      3 rd Avenue


Suite
      1500


Ft.
      Lauderdale, Florida 33301





Term:
      Month to month. $250/month.








ITEM
      3.
      LEGAL MATTERS





We
      were
      not a party to any legal proceedings during the reporting period, and we know
      of
      no legal proceedings pending or threatened or judgments entered against any
      director or officer of the Company in his or her capacity as such.








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





None








5





ITEM
      5.
      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.





Our
      common stock trades on the OTC Bulletin Board under the symbol “SFNL.” The
      following table shows the high and low daily closing prices for our common
      stock
      for each quarter since January 1, 2005 as reported by the OTC Bulletin Board.
      All share prices have been adjusted to provide for the 1-for-57 reverse stock
      split which was effected on October 28, 2004. We consider our stock to be
“thinly traded” and any reported sale prices may not be a true market-based
      valuation of the stock. Some of the quotations from the OTC Bulletin Board
      set
      forth below may reflect inter-dealer prices, without retail mark-up, mark-down
      or commission and may not represent actual transactions.




January
                1, 2006 to December 31, 2006 (OTC Bulletin Board)
            
            High
            
            LowFirst
                quarter
            
            $
            0.65
            
            $
            0.20Second
                quarter
            
            
            0.30
            
            
            0.08Third
                quarter
            
            
            0.25
            
            
            0.04Fourth
                quarter
            
            
            0.10
            
            
            0.04





January
                1, 2005 to December 31, 2005 (OTC Bulletin Board)
            
            High
            
            LowFirst
                quarter
            
            $
            0.60
            
            $
            0.21Second
                quarter
            
            
            0.30
            
            
            0.07Third
                quarter
            
            
            0.30
            
            
            0.12Fourth
                quarter
            
            
            0.65
            
            
            0.10





As
      of
      December 31, 2006 we had 31,001,581 shares of common stock outstanding, held
      by
      approximately 230 shareholders.





We
      have
      not paid any cash dividends since our inception and do not contemplate paying
      dividends in the foreseeable future. It is anticipated that earnings, if any,
      will be retained to retire debt and for the operation of the
      business.





Shares
      eligible for future sale could depress the price of our common stock, thus
      lowering the value of a buyer’s investment. Sales of substantial amounts of
      common stock, or the perception that such sales could occur, could adversely
      affect prevailing market prices for shares of our common stock.





Our
      revenues and operating results may fluctuate significantly from quarter to
      quarter, which can lead to significant volatility in the price and volume of
      our
      stock. In addition, stock markets have experienced extreme price and volume
      volatility in recent years. This volatility has had a substantial effect on
      the
      market prices of securities of many smaller public companies for reasons
      unrelated or disproportionate to the operating performance of the specific
      companies. These broad market fluctuations may adversely affect the market
      price
      of our common stock.






















6


**Securities
      Authorized for Issuance Under Equity Compensation Plans.** The
      following provides information concerning compensation plans under which our
      equity securities are authorized for issuance as of December 31,
      2006: ****





**(a)**
            
            **(b)**
            
            **(c)****Plan
                Category**
            
            **Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights**
            
            **Weighted-average
                exercise price of outstanding options, warrants and
                rights**
            
            **Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))**Equity
                compensation plans approved by security holders
            
            
            --
            
            
            --
            
            
            --Equity
                compensation plans not approved by security holders
            
            
            --
            
            
            --
            
            
            5,792,767(1)Total
            
            
            
            
            
            
            
            
            5,792,767(1)


(1) Represents
      shares available for issuance under our 2004 EMPLOYEES/CONSULTANTS COMMON STOCK
      COMPENSATION PLAN filed via Form S-8 on August 9, 2004.







**RECENT
      SALES OF UNREGISTERED SECURITIES**





During
      2006 the Company sold 145,000 shares of common stock for cash totaling of
      $28,000.





We
      relied
      upon Section 4(2) of the Securities Act of 1933, as amended (the "Act") and
      Regulation D promulgated thereunder. Our officers and directors determined
      the
      sophistication of our investors, as the investors were either business
      associates of, or personally known to, our officer and director. Each investor
      completed a subscription agreement whereby the investors certified that they
      were purchasing the shares for their own accounts, with investment intent.
      This
      offering was not accompanied by general advertisement or general solicitation
      and the shares were issued with a Rule 144 restrictive legend.








During
      2006 the Company issued 729,126 shares of it’s common stock to retire debt
      totaling $37,300.





During
      2006 the Company issued 4,524,307 shares of it’s common stock in exchange for
      $674,339 of services.





In
      September and October of 2006 the Company issued Convertible Notes in exchange
      for $597,500 in cash. These notes are convertible into the Company’s common
      stock at an exchange rate based on a number of factors at the time of
      conversion. At present none of these notes have been converted. As part of
      the
      Pledge and Security Agreement within the Convertible Notes, the Company issued
      5,975,000 shares of it’s Restricted Common stock as collateral in the event of
      default. These shares, because they have been pledged as collateral, have not
      been included in the share outstanding amount when calculating earnings per
      share. The Notes also issued warrants convertible at an exchange rate based
      on a
      number of factors at the time of exercise.





During
      2006 the Company issued 5,000,000 shares of it’s common stock relating to the
      purchase of the Envoii License asset. This asset purchase was subsequently
      renegotiated and the shares were returned to the Company for
      cancellation.


7





During
      2006 the company issued 900,000 shares of it’s common stock to a consultant for
      services in the amount of $ 252,000. The shares were returned to the Company
      as
      the services were not provided as contracted.





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





The
      following discussion is intended to provide an analysis of the Company’s
      financial condition and Plan of Operation and should be read in conjunction
      with
      the Company’s financial statements and the notes thereto set forth herein. The
      matters discussed in this section that are not historical or current facts
      deal
      with potential future circumstances and developments. The Company’s actual
      results could differ materially from the results discussed in the
      forward-looking statements. Factors that could cause or contribute to such
      differences include those discussed below.





Plan
      of
      Operation





Following
      the merger with Secured Financial Network, Inc. in January 2005, the business
      was focused on conducting short-term, financial transactions primarily in the
      shipping container industry. These transactions included “container financing”
that enabled manufacturers and shippers to complete trade transactions, with
      maturities averaging 45 days. In such agreements, working with a network of
      qualified agents, the Company obtains a secured positioned with professionally
      valued collateral assets and personal guarantees.





Similarly,
      “bridge financings” fall into the short-term category of providing business
      capital primarily for Corporate, Production and Real Estate purposes. These
      customers require additional working capital, for a limited period of time.
      The
      need may exist until the closing of new equity financing, or for a variety
      of
      manufacturing and construction project delays. The Company targets the shortest
      term contracts in this category, 30-60 days, and with positions secured by
      free
      trading stock, inventories of production materials, finished products,
      buildings, land or other resalable assets.





The
      Company has a low-operating-cost philosophy to employ a small skilled staff,
      occupy modest office space, and use technology to achieve high performance.
      Working through a network of agents and referral sources, the Company is able
      to
      control its cost-of-transactions, and utilize in-house due diligence
      professionals to minimize risk in these financing transaction.





Since
      December of 2005, the company has been financially unable to carry-out it’s
      business plan in the container financing business due to lack of funds and
      problems related to collections of it’s accounts receivable.





In
      September of 2006 the company completed its acquisition of certain assets of
      Virtual Payment Solutions, LLC which included the “exclusive” License Agreement
      to deploy proprietary Envoii technology for the payment processing industry,
      its
      name and domain sites.





This
      licensed technology will allow the Company to provide payment-processing
      solutions by providing contracted businesses the ability to transact business
      over the internet with their clients through a very secure and proprietary
      payment system. ****





Funding
      for this acquisition in September 2006 was made possible by the issuance of
      convertible notes made with two private investors.





In
      January of 2007 the Company entered into an agreement with All In Movie, LLC
      to
      provide a fully integrated payment processing, stored value and redemption
      platform to coincide with the release of the motion picture “All In”. This
      platform will allow in-theatre and home distribution tie in marketing for
      purchase of related promotions and collateral products through its Internet
      site
“allinmovie.com”.





8


The
      Company plans on opening a fully operating Internet Mall in May of 2007 called
      the “The All In Mall” (theallinmall.com) with fully operating ‘virtual’ stores
      offering a wide selection of products and services. Points earned through
      purchases can be used to play in the mall game arcade and casino. We project
      first year revenues from product sales, advertising, and list monetization
      to be
      approximately $9 million with a $1.8 pre-tax profit.








Results
      of Operation for Year Ended December 31, 2006





The
      Company generated $ 0 in revenue during the period covered by this Report.
      Net
      losses for the year ending December 31, 2006, of $(2,166,311) were primarily
      attributable to the execution of our business plan relating to the Envoii
      License.





The
      Company had total assets of $577,737 at the year ended December 31, 2006,
      compared to $48,341 for the year ended December 31, 2005. The increase was
      primarily attributed to the purchase of the Envoii License through the issuance
      of convertible debt.





The
      Company had total liabilities of $ 3,929,344 at the year ended December 31,
      2006, compared to $2,513,315 for the year ended December 31, 2005. The increase
      was primarily attributable to the issuance of convertible debt to purchase
      the
      Envoii License as well as the derivative and liquidating liabilities associated
      with the notes.





At
      December 31, 2006, the Company had $78,486 cash on hand compared to $0 at
      December 31, 2005.


At
        December 31, 2006, the Company had accounts receivable of $ 0 and container
        note
        receivables of $3,611,101. At December 31, 2006, the Company had an allowance
        for doubtful accounts of $ 3,611,101. The Company’s accounts receivable is
        primarily from two clients that are currently under investigation for certain
        “offshore” transactions made prior to their association with the Company. The
        Company is not under investigation. However, effective December 2005 these
        clients have been instructed to cease business operation pending completion
        of
        the investigation. As a result they are unable to collect their receivables
        and
        subsequently pay the Company amounts owed





The
      timing and/or ultimate payment of these monies due the Company relating to
      its
      container financing business is uncertain at this time. The investigation of
      the
      clients in question is still ongoing. Management believes at this time that
      collection of these finds is unlikely. Accordingly, the Company has established
      an allowance for uncollectible receivables of 100% because of the uncertainties
      associated with collection.





The  curre n t  situation  with  container  notes receivable  and  accounts  recei v able  has  serio u sly
      affected  the  cash  flow  of  the  Co m pany.





Although
      the Company expects to generate revenues in 2007, the Company expects to
      continue to incur losses at least through the first half of 2007, and there
      can
      be no assurance that the Company will achieve or maintain profitability,
      generate revenue or sustain future growth.





Liquidity
      and Capital Resources





At
      December 31, 2006, the Company’s total assets of $577,737 were exceeded by our
      total liabilities of $3,929,344. We had working capital of $124,390. We believe
      that additional working capital will need to be raised in the form of debt,
      equity or some other financing to meet our anticipated cash needs for at least
      the next 12 months. In the event financing is needed in the future, there can
      be
      no assurance that it will be available to the Company in an amount and on terms
      acceptable to us.














9




ITEM
        7.
        FINANCIAL STATEMENTS.
  Our
        financial statements are filed under this Item 7, beginning on page F-1 of
        this
        report.
  **Secured
        Financial Network, Inc.**
 
 **CONTENTS**
  PageREPORT
                OF INDEPENDENT REGISTERED PUBLICACCOUNTING
                FIRM - SHERB & CO, LLP
              F-2REPORT OF INDEPENDENT REGISTERED PUBLIC
                ACCOUNTING
                FIRM - MOORE
              F
                  -3FINANCIAL STATEMENTSBalance Sheets
              F
                  -4Statement of Operations
              F
                  -5Statement of Statements of
                Stockholders’ (Deficit)
              F
                  -6Statement of Cash Flows
              F
                  -7NOTES TO THE FINANCIAL
                STATEMENTS
              F
                  -8 to
                  F-24





F-1


**Report
        of Independent Registered Public Accounting Firm**
 
 Board
        of
        Directors and Stockholders
 Secured
        Financial Network, Inc.
 
 We
        have
        audited the accompanying balance sheet of Secured Financial Network, Inc.
        as of
        December 31, 2006, and the related statements of operations, stockholders’
deficit, and cash flows for the year ended December 31, 2006. These financial
        statements are the responsibility of the Company’s management. Our
        responsibility is to express an opinion on these financial statements based
        on
        our audit.
 
 We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating principles
        used
        and significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audit provides a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of the Company as of December 31,
        2006, and the results of its operations and cash flows for the year ended
        December 31, 2006, in conformity with generally accepted accounting principles
        in the United States.
 
 The
        accompanying financial statements have been prepared assuming that Secured
        Financial Network, Inc. will continue as a going concern. As more fully
        described in Note 1, the Company has incurred recurring operating losses
        and
        will have to obtain additional capital to sustain operations. These conditions
        raise substantial doubt about the Company’s ability to continue as a going
        concern. Management’s plans in regard to these matters are also described in
        Note 1. The financial statements do not include any adjustments to reflect
        the
        possible effects on the recoverability and classification of assets or the
        amounts and classification of liabilities that may result from the outcome
        of
        this uncertainty.
 
 We
        have
        also audited the adjustments described in Note 1 - Restatement and Revision,
        that were applied to restate the 2005 financial statements to correct an
        error.
        In our opinion, such adjustments are appropriate and been properly applied.
        We
        were not engaged to audit, review, or apply any procedures to the 2005 financial
        statements of the Company other than with respect to the adjustments and
        accordingly, we do not express an opinion or any other form of assurance
        on the
        2005 financial statements taken as a whole.
  /s/*Sherb
        & Co., LLP*
 SHERB
        & CO, LLP
 Certified
        Public Accountants
 New
        York,
        New York
 April
        13,
        2007
   F-2
  **MOORE
          & ASSOCIATES, CHARTERED**
 ** *ACCOUNTANTS
          AND ADVISORS*
 *PCAOB
          REGISTERED*
 
 
 REPORT
          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To
          the
          Board of Directors
 Secured
          Financial Network, Inc.
 Las
          Vegas, Nevada
 
 We
          have
          audited the accompanying balance sheet of Secured Financial Network, Inc
          as of
          December 31, 2005, and the related statements of operations, stockholders’
equity and cash flows for the year then ended. These financial statements
          are
          the responsibility of the Company’s management. Our responsibility is to express
          an opinion on these financial statements based on our audits.
 
 We
          conducted our audits in accordance with standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audits to obtain reasonable assurance about whether the
          financial statements are free of material misstatement. An audit includes
          examining, on a test basis, evidence supporting the amounts and disclosures
          in
          the financial statements. An audit also includes assessing the accounting
          principles used and significant estimates made by management, as well as
          evaluating the overall financial statement presentation. We believe that
          our
          audits provide a reasonable basis for our opinion.
 
 In
          our
          opinion, the financial statements referred to above present fairly, in
          all
          material respects, the financial position of Secured Financial Network,
          Inc as
          of December 31, 2005 and the results of its operations and its cash flows
          for
          the year then ended, in conformity with accounting principles generally
          accepted
          in the United States of America.
 
 The
          accompanying financial statements have been prepared assuming that the
          Company
          will continue as a going concern. As discussed in Note 7 to the financial
          statements, the Company’s recurring losses raise substantial doubt about its
          ability to continue as a going concern. The financial statements do not
          include
          any adjustments that might result from the outcome of this
          uncertainty.
 
 
 
 
 ***/s/
          Moore & Associates, Chartered***
 
 
 Moore
          & Associates Chartered
 Las
          Vegas, Nevada
 May
          11,
          2006
 
 
 
 *2675
          S. Jones Blvd. Suite 109, Las Vegas, NV 89146 (702) 253-7511 Fax (702)
          253-7501*






F-3




**SECURED
                  FINANCIAL NETWORK, INC.****BALANCE
                  SHEETS****ASSETS**December
                  31,Restated2006
              
              
              2005CURRENT
                  ASSETSCash
              
              $
              78,486
              
              $
              -Accounts
                  Receivable & Container NotesReceivable,
                  net of allowance
              
              
              -
              
              
              -Employee
                  Loans
              
              
              12,404
              
              
              32,134Prepaid
                  Expenses
              
              
              33,500
              
              
              2,500Total
                  Current Assets
              
              
              124,390
              
              
              34,634FURNITURE
                  AND EQUIPMENT (NET)
              
              
              2,567
              
              
              4,837OTHER
                  ASSETSNote
                  Receivable
              
              
              2,000
              
              
              -Investments
                  Held for Sale
              
              
              4,400
              
              
              6,000Security
                  Deposits
              
              
              -
              
              
              2,870Deferred
                  Financing Fees
              
              
              59,380License
                  Agreement
              
              
              385,000
              
              
              -Total
                  Other Assets
              
              
              450,780
              
              
              8,870TOTAL
                  ASSETS
              
              $
              577,737
              
              $
              48,341**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**CURRENT
                  LIABILITIESAccounts
                  Payable
              
              $
              34,310
              
              $
              128,061Investor
                  Notes Payable
              
              
              2,025,000
              
              
              2,025,000Investor
                  Profit Participation
              
              
              246,000
              
              
              256,733Accrued
                  Expenses
              
              
              638,630
              
              
              103,521Derivative
                  and Liquidating Liabilities
              
              
              862,878
              
              
              -Secured
                  Convertible Notes - net of debtdiscount
                  of $474,974
              
              
              122,526
              
              
              -Total
                  Current Liabilities
              
              
              3,929,344
              
              
              2,513,315STOCKHOLDERS'
                  DEFICITCommon
                  Stock authorized is 100,000,000shares
                  at $0.001 par value. Issued andoutstanding
                  on December 31, 2006 is 31,001,581and
                  December 31, 2005 is 19,628,108 shares.
              
              
              31,002
              
              
              19,628Additional
                  Paid in Capital
              
              
              1,425,639
              
              
              157,335Accumulated
                  Deficit
              
              
              (4,808,248
              )
              
              (2,641,937
              )Total
                  Stockholders' Deficit
              
              
              (3,351,607
              )
              
              (2,464,974
              )TOTAL
                  LIABILITIES ANDSTOCKHOLDERS'
                  DEFICIT
              
              $
              577,737
              
              $
              48,341The
                  accompanying notes are an integral part of these
                  statements


F-4


**SECURED
                  FINANCIAL NETWORK, INC.****STATEMENTS
                  OF OPERATIONS**Year
                  Ended December 31,Restated2006
              
              
              2005REVENUESContainer
                  Profit Participation
              
              $
              -
              
              $
              1,916,450Container
                  Notes - Accrued Interest
              
              
              -
              
              
              157,901Contract
                  Administration
              
              
              -
              
              
              55,149Total
                  Gross Income
              
              
              -
              
              
              2,129,500EXPENSESAdministrative
                  Expenses
              
              
              298,451
              
              
              395,131Container
                  Financing Expense
              
              
              -
              
              
              512,608Bad
                  Debt Expense
              
              
              -
              
              
              3,611,101Professional
                  and Consulting
              
              
              575,746
              
              
              139,895Depreciation
                  and Amortization
              
              
              -
              
              
              616Interest
                  Expense
              
              
              437,070
              
              
              99,336Total
                  Expenses
              
              
              1,311,267
              
              
              4,758,687Net
                  Loss before other income (expense)
              
              
              (1,311,267
              )
              
              (2,629,187
              )Other
                  Income
              
              
              2,500Derivative
                  and Liquidating Expenses
              
              
              (862,878
              )Net
                  Gain (Loss) from Sale of Investments
              
              
              5,334
              
              
              (12,750
              )Net
                  loss before Provisionfor
                  Income Taxes
              
              
              (2,166,311
              )
              
              (2,641,937
              )Provision
                  for Income Taxes
              
              
              -
              
              
              -NET
                  LOSS
              
              $
              (2,166,311
              )
              $
              (2,641,937
              )Basic
                  and DilutedNet
                  Loss per Common Share
              
              $
              (0.10
              )
              $
              (0.16
              )Weighted
                  Average Number of SharesCommon
                  Shares Outstanding -basic
                  and diluted
              
              
              22,327,345
              
              
              16,737,153The
                  accompanying notes are an integral part of these
                  statements






F-5




**SECURED
                  FINANCIAL NETWORK, INC.****STATEMENT
                  OF STOCKHOLDERS' DEFICIT****YEARS
                  ENDED DECEMBER 31, 2005 and 2006**Common
                  Stock
              
              
              
              
              
              
              
              
              TotalPar
                  value  .001
              
              
              Paid
                  in
              
              
              Accumulated
              
              
              Stockholders'Shares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              Deficit**Balance,
                  December 31, 2004 - restated**
              
              
              14,737,343
              
              $
              14,737
              
              $
              (14,737
              )
              $
              -
              
              $
              -Common
                  Stock Issued for Cashin
                  recapitalization
              
              
              956,135
              
              
              956
              
              
              (956
              )
              
              
              
              
              0Common
                  Stock Issued for Cash
              
              
              200,000
              
              
              200
              
              
              29,800
              
              
              
              
              
              30,000Common
                  Stock Issued for Services
              
              
              3,734,630
              
              
              3,735
              
              
              143,228
              
              
              
              
              
              146,963Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              (2,641,937
              )
              
              (2,641,937
              )**Balance,
                  December 31, 2005 - restated**
              
              
              19,628,108
              
              
              19,628
              
              
              157,335
              
              
              (2,641,937
              )
              
              (2,464,974
              )Common
                  Stock Issued for Cash
              
              
              145,000
              
              
              145
              
              
              27,855
              
              
              
              
              
              28,000Common
                  Stock Issued for Services
              
              
              4,524,307
              
              
              4,525
              
              
              669,814
              
              
              
              
              
              674,339Common
                  Stock issued for Pledged Shares
              
              
              5,975,000
              
              
              5,975
              
              
              (5,975
              )
              
              
              
              
              -Common
                  Stock Issued to Retire Debt
              
              
              729,166
              
              
              729
              
              
              36,571
              
              
              
              
              
              37,300Beneificial
                  Conversion Feature and Equity Rights
              
              
              
              
              
              
              
              
              540,039
              
              
              
              
              
              540,039Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              (2,166,311
              )
              
              (2,166,311
              )**Balance,
                  December 31, 2006**
              
              
              31,001,581
              
              $
              31,002
              
              $
              1,425,639
              
              $
              (4,808,248
              )
              $
              (3,351,607
              )The
                  accompanying notes are an integral part of these
                  statements




F-6


**SECURED
                  FINANCIAL NETWORK, INC.****STATEMENTS
                  OF CASH FLOWS**Year
                  Ended December 31,2006
              
              
              2005Cash
                  Flows From Operating Activities:
              
              
              
              
              
              RestatedNet
                  Loss
              
              $
              (2,166,311
              )
              $
              (2,641,937
              )Adjustments
                  to Net Loss:Common
                  Stock for Services
              
              
              674,339
              
              
              146,963Derivative
                  and Liquidating Expense
              
              
              862,878
              
              
              -Amortization
                  of Debt Discount and Finance Fees
              
              
              68,560
              
              
              -Depreciation
              
              
              770
              
              
              616Increase
                  in Allowance for Uncollectibles
              
              
              -
              
              
              3,611,101Adjustments
                  to Reconcile Net Loss toNet
                  Cash (Used) by Operating Activities:Changes
                  in Assets and Liabilities:Accounts
                  Receivable
              
              
              -
              
              
              (1,841,101
              )Container
                  Notes Receivable
              
              
              -
              
              
              (1,770,000
              )Prepaid
                  Expense
              
              
              (31,000
              )
              
              (2,500
              )Employee
                  Loans
              
              
              17,730
              
              
              (32,134
              )Investor
                  Profit Participation
              
              
              (10,733
              )
              
              256,733Accrued
                  Expenses
              
              
              444,037
              
              
              103,521Accounts
                  Payable
              
              
              (35,378
              )
              
              128,030Net
                  Cash (Used) by Operating Activities
              
              
              (175,109
              )
              
              (2,040,708
              )Cash
                  Flows From Investing Activities:Deferred
                  Finance Fees
              
              
              (62,875
              )
              
              -Security
                  Deposits
              
              
              2,870
              
              
              (2,870
              )Investment
                  Held for Sale
              
              
              1,600
              
              
              (6,000
              )License
                  Agreement
              
              
              (385,000
              )
              
              -(Purchase)
                  Sale of Equipment
              
              
              1,500
              
              
              (5,453
              )Net
                  Cash (Used) by Investing Activities
              
              
              (441,905
              )
              
              (14,323
              )Cash
                  Flows From Financing Activities:Principal
                  Received from Investor Notes
              
              
              -
              
              
              2,025,000Principal
                  Received on Long Term Notes
              
              
              667,500
              
              
              -Proceeds
                  from the sale of Common Stock
              
              
              28,000
              
              
              30,000Net
                  Cash Provided by Financing Activities
              
              
              695,500
              
              
              2,055,000Net
                  Change in Cash
              
              
              78,486
              
              
              (31
              )Cash
                  and Cash Equivalents - Beginning
              
              
              -
              
              
              31Cash
                  and Cash Equivalents - Ending
              
              $
              78,486
              
              $
              -Supplemental
                  Cash Flow Disclosures:Taxes
              
              $
              -
              
              $
              -Interest
              
              $
              368,510
              
              $
              99,336Non-Cash
                  Financing Transactions:Shares
                  Issued for Services
              
              $
              674,339
              
              $
              146,963Conversion
                  of Indebtedness for Equity
              
              $
              37,300
              
              $
              -The
                  accompanying notes are an integral part of these
                  statements


F-7
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**






**NOTE
        1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
        POLICIES**
 
 **Nature
        of Business and History of Company**
 
 The
        Company, Secured Financial Network, Inc. (originally Loughran/Go Corporation
        and
        changed its name to 12 To 20 Plus, Inc.), was incorporated in April 26, 1996
        and
        changed its name to Secured Financial Network, Inc. (“ the Company” ) on January
        11, 2005. Secured Financial Network, Inc. is a Ft. Lauderdale, Florida-based
        Company primarily engaged in a full-spectrum of e-commerce transactions through
        a proprietary 'bank-grade' electronic-vault and electronic wallet based payment
        processing system through its exclusive Envoii Deployment License Agreement.
        The
        Company has previously financed domestic and international container shipping.
        The company does not presently have the financial resources to execute it’s
        financing business.
 
 On
        November 22, 2004, 12 To 20 Plus, Inc. entered into a share exchange agreement
        with Secured Financial Network, Inc. through the issuance of an aggregate
        of
        14,737,343 shares of common stock, reflecting 94% of the 15,693,478 shares
        of
        common stock outstanding after the closing. For accounting purposes, the
        transaction is reflected as if the 12 To 20 Plus, Inc. was acquired by Secured
        Financial Network Inc. with the business of Secured Financial Network Inc.
        being
        the successor entity. The acquisition was accounted for as a recapitalization
        of
        the predecessor entity Secured Financial Network, Inc. with the management
        of
        the predecessor entity Secured Financial Network, Inc. controlling and operating
        the Company after the acquisition date. The financial statements presented
        primarily represent the operations of Secured Financial Network, Inc. from
        its
        inception date, November 10, 2004, to the merger date. In addition, the capital
        structure of Secured Financial Network, Inc. has been recapitalized to account
        for the equity structure subsequent to the acquisition as if Secured Financial
        Network, Inc. had been the issuer of the common stock for all periods
        presented.
 
 **Going
        Concern**
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. Going concern contemplates the realization
        of
        assets and the satisfaction of liabilities in the normal course of business
        over
        a reasonable length of time. The Company has incurred losses since inception
        and
        has negative cash flows from operations. For the years ended December 31,
        2006
        and 2005, the Company has incurred net losses of $2,166,311 and $2,641,937
        and
        has a stockholders’ deficit of $3,371,130 as of December 31, 2006. The future of
        the Company is dependent upon its ability to obtain additional equity or
        debt
        financing and upon future successful development and marketing of the Company’s
        products and services. Management is pursuing various sources of equity and
        debt
        financing. Although the Company plans to pursue additional financing, there
        can
        be no assurance that the Company will be able to secure such financing or
        obtain
        financing on terms beneficial to the Company. Failure to secure such financing
        may result in the Company’s inability to continue as a going concern and the
        impairment of the recorded long lived assets.
 
 These
        financial statements do not include any adjustments relating to the
        recoverability and classifications of recorded assets, or the amounts and
        classification of liabilities that might be necessary in the event the Company
        cannot continue in existence.
 
 
 
 
 
 
 
  F-8
 
 Secured
          Financial Network,
          Inc.
 **NOTES
          TO THE FINANCIAL
          STATEMENTS**
 **YEARS
            ENDED DECEMBER 31, 2005 and 2006**
  **Restatement
        and Revision**
 
 After
        review of comments received from the staff of the Securities and Exchange
        Commission (“ Commission”), the Company’s Chief Executive Officer and the Chief
        Financial Officer concluded that the financial statements as for the year
        ended
        December 31, 2005 and the related subsequent quarterly reports, should no
        longer
        be relied upon because of certain errors relating to the merger accounting
        with
        12 to 20 Plus, Inc. Therefore in accordance with FASB Statement No. 154,
        Accounting Changes and Error Corrections, these financial statements as of
        December 31, 2005 and for the year then ended, have been restated for the
        following corrections of errors:
 
 a)
        The
        initial merger accounting was presented as a purchase of the business and
        entity
        of 12 to 20 Plus, Inc, with the business of 12 to 20 Plus, Inc., being
        subsequently presented ( post merger date ) as discontinued operations. The
        initial merger accounting should have been presented as a recapitalization
        of
        the predecessor entity Secured Financial Network, Inc., as neither entity
        had
        any operations, assets or liabilities. We have reversed any discontinued
        operations presented and the predecessor entity 12 to 20 Plus, Inc. capital
        transactions presented in 2005.
 
 b)
        There
        was $50,000 of debts reported as assumed with the merger, relating to the
        shareholders purchase of the outstanding shares of 12 to 20 Plus, Inc. This
        assumed indebtedness has been reversed.
 
 c)
        In
        addition we have eliminated the net loss noted of $392,494 in the Statement
        of
        Operations for the year ended December 31, 2004, the related Statement of
        Cash
        Flows for the year ended December 31, 2004, and the amounts presented in
        the
        Statement of Stockholders’ Equity for the years ended December 31, 2003 and
        2004, as such operations and equity relates to those of the 12 to 20 Plus,
        Inc.
 
 d)
        The
        Statements of Operations, Cash Flows and Stockholders’ Equity have not been
        presented for restatement as the predecessor entity Secured Financial Network,
        Inc. was formed on November 10, 2004. The predecessor entity Secured Financial
        Network, Inc. had no assets or liabilities as of December 31, 2004 and the
        then
        shares outstanding were incidental as the recapitalization on January 11,
        2005
        eliminated such capitalization and any presentation of the predecessor
        entity.
 
 e)
        The
        Statements of Cash Flows for 2005 have been edited for the elimination of
        the
        discontinued operations losses recorded and the $50,000 debt item noted in
        (b)
        above. Certain reclassifications have been made for moving cash flows items
        from
        operating to more appropriate sections.






F-9
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**




**BALANCE
                  SHEET****ASSETS**December
                  31,Originally
              
              
              
              
              
              
              
              
              RestatedReported
              
              
              Adjustments
              
              
              
              
              
              2005CURRENT
                  ASSETSCash
              
              $
              -
              
              
              
              
              
              
              
              $
              -Accounts
                  Receivable & Container NotesReceivable,
                  net of allowance
              
              
              -
              
              
              
              
              
              
              
              
              -Employee
                  Loans
              
              
              32,134
              
              
              
              
              
              
              
              
              32,134Prepaid
                  Expenses
              
              
              2,500
              
              
              
              
              
              
              
              
              2,500Total
                  Current Assets
              
              
              34,634
              
              
              
              
              
              
              
              
              34,634FURNITURE
                  AND EQUIPMENT (NET)
              
              
              4,837
              
              
              
              
              
              
              
              
              4,837OTHER
                  ASSETSInvestments
                  Held for Sale
              
              
              6,000
              
              
              
              
              
              
              
              
              6,000Security
                  Deposits
              
              
              2,870
              
              
              
              
              
              
              
              
              2,870Total
                  Other Assets
              
              
              8,870
              
              
              
              
              
              
              
              
              8,870TOTAL
                  ASSETS
              
              $
              48,341
              
              
              
              
              
              
              
              $
              48,341**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**CURRENT
                  LIABILITIESAccounts
                  Payable
              
              $
              128,061
              
              
              
              
              
              
              
              $
              128,061Investor
                  Notes Payable
              
              
              2,025,000
              
              
              
              
              
              
              
              
              2,025,000Investor
                  Profit Participation
              
              
              256,733
              
              
              
              
              
              
              
              
              256,733Accrued
                  Expenses
              
              
              103,521
              
              
              
              
              
              
              
              
              103,521Short
                  Term Notes
              
              
              50,000
              
              
              (50,000
              )
              
              (b
              )
              
              -Total
                  Current Liabilities
              
              
              2,563,315
              
              
              
              
              
              
              
              
              2,513,315STOCKHOLDERS'
                  DEFICITCommon
                  Stock
              
              
              19,628
              
              
              
              
              
              
              
              
              19,628Additional
                  Paid in Capital
              
              
              1,000,558
              
              
              (843,223
              )
              
              (a
              )
              
              157,335Accumulated
                  Deficit
              
              
              (3,535,160
              )
              
              893,223
              
              
              (a,b
              )
              
              (2,641,937
              )Total
                  Stockholders' Deficit
              
              
              (2,514,974
              )
              
              
              
              
              
              
              
              (2,464,974
              )TOTAL
                  LIABILITIES ANDSTOCKHOLDERS'
                  DEFICIT
              
              $
              48,341
              
              
              
              
              
              
              
              $
              48,341






F-10
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**




**STATEMENT
                  OF OPERATIONS**Year
                  Ended December 31,Originally
              
              
              
              
              
              
              
              
              RestatedReported
              
              
              Adjustments
              
              
              
              
              
              2005REVENUESContainer
                  Profit Participation
              
              $
              1,916,450
              
              
              
              
              
              
              
              $
              1,916,450Container
                  Notes - Accrued Interest
              
              
              157,901
              
              
              
              
              
              
              
              
              157,901Contract
                  Administration
              
              
              55,149
              
              
              
              
              
              
              
              
              55,149Total
                  Gross Income
              
              
              2,129,500
              
              
              
              
              
              
              
              
              2,129,500EXPENSESAdministrative
                  Expenses
              
              
              395,131
              
              
              
              
              
              
              
              
              395,131Container
                  Financing Expense
              
              
              512,608
              
              
              
              
              
              
              
              
              512,608Bad
                  Debt Expense
              
              
              3,611,101
              
              
              
              
              
              
              
              
              3,611,101Professional
                  and Consulting
              
              
              139,895
              
              
              
              
              
              
              
              
              139,895Depreciation
                  and Amortization
              
              
              616
              
              
              
              
              
              
              
              
              616Interest
                  Expense
              
              
              99,336
              
              
              
              
              
              
              
              
              99,336Total
                  Expenses
              
              
              4,758,687
              
              
              
              
              
              
              
              
              4,758,687Net
                  Loss before discontinuedoperations
              
              
              (2,629,187
              )
              
              
              
              
              
              
              
              (2,629,187
              )Gain
                  on Disposal of Discontinued Ops
              
              
              9,162
              
              
              (9,162
              )
              
              (a
              )
              
              -Net
                  Loss from Discontinued Ops
              
              
              (125,000
              )
              
              125,000
              
              
              (a
              )
              
              -Net
                  Gain (Loss) from Sale of Investments
              
              
              (12,750
              )
              
              
              
              
              
              
              
              (12,750
              )Net
                  loss before Provisionfor
                  Income Taxes
              
              
              (2,757,775
              )
              
              
              
              
              
              
              
              (2,641,937
              )Provision
                  for Income Taxes
              
              
              -
              
              
              
              
              
              
              
              
              -NET
                  LOSS
              
              $
              (2,757,775
              )
              
              
              
              
              
              
              $
              (2,641,937
              )Basic
                  and DilutedNet
                  Loss per Common Share
              
              $
              (0.16
              )
              
              
              
              
              
              
              $
              (0.16
              )Weighted
                  Average Number of SharesCommon
                  Shares Outstanding -basic
                  and diluted
              
              
              16,737,153
              
              
              
              
              
              
              
              
              16,737,153






F-11
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**




**STATEMENTS
                  OF CASH FLOWS**Year
                  Ended December 31,Restated2005
              
              
              
              
              
              
              
              
              2005Cash
                  Flows From Operating Activities:Net
                  Loss
              
              $
              (2,757,775
              )
              $
              115,838
              
              
              (a
              )
              $
              (2,641,937
              )Adjustments
                  to Net Loss:Common
                  Stock for Services
              
              
              146,963
              
              
              
              
              
              
              
              
              146,963Depreciation
              
              
              616
              
              
              
              
              
              
              
              
              616Increase
                  in Allowance for Uncollectibles
              
              
              
              
              
              3,611,101
              
              
              (e
              )
              
              3,611,101Discontinued
                  Operations
              
              
              (157,755
              )
              
              157,755
              
              
              (a
              )
              
              -Adjustments
                  to Reconcile Net Loss toNet
                  Cash (Used) by Operating Activities:Changes
                  in Assets and Liabilities:Container
                  Notes Receivable
              
              
              (1,770,000
              )
              
              
              
              
              
              
              
              (1,770,000
              )Accounts
                  Receivable
              
              
              (1,841,101
              )
              
              
              
              
              
              
              
              (1,841,101
              )Increase
                  in Allowance for Uncollectibles
              
              
              3,611,101
              
              
              (3,611,101
              )
              
              (e
              )
              
              -Security
                  Deposits
              
              
              (2,870
              )
              
              2,870
              
              
              (e
              )
              
              -Prepaid
                  Expense
              
              
              (2,500
              )
              
              
              
              
              
              
              
              (2,500
              )Employee
                  Loans
              
              
              (32,134
              )
              
              
              
              
              
              
              
              (32,134
              )Investor
                  Profit Participation
              
              
              256,733
              
              
              
              
              
              
              
              
              256,733Accrued
                  Expenses
              
              
              103,521
              
              
              
              
              
              
              
              
              103,521Accounts
                  Payable
              
              
              51,623
              
              
              76,438
              
              
              (a
              )
              
              128,030Net
                  Cash (Used) by Operating Activities
              
              
              (2,393,578
              )
              
              
              
              
              
              
              
              (2,040,708
              )Cash
                  Flows From Investing Activities:Security
                  Deposits
              
              
              
              
              
              (2,870
              )
              
              (e
              )
              
              (2,870
              )Investment
                  Held for Sale
              
              
              (6,000
              )
              
              
              
              
              
              
              
              (6,000
              )(Purchase)
                  Sale of Equipment
              
              
              (5,453
              )
              
              
              
              
              
              
              
              (5,453
              )Net
                  Cash (Used) by Investing Activities
              
              
              (11,453
              )
              
              
              
              
              
              
              
              (14,323
              )Cash
                  Flows From Financing Activities:Principal
                  Received on Short Term Notes
              
              
              50,000
              
              
              (50,000
              )
              
              (b
              )
              
              -Principal
                  Received from Investor Notes
              
              
              2,025,000
              
              
              
              
              
              
              
              
              2,025,000Proceeds
                  from the sale of Common Stock
              
              
              330,000
              
              
              (300,000
              )
              
              (a
              )
              
              30,000Net
                  Cash Provided by Financing Activities
              
              
              2,405,000
              
              
              
              
              
              
              
              
              2,055,000Net
                  Change in Cash
              
              
              (31
              )
              
              
              
              
              
              
              
              (31
              )Cash
                  and Cash Equivalents - Beginning
              
              
              31
              
              
              
              
              
              
              
              
              31Cash
                  and Cash Equivalents - Ending
              
              $
              -
              
              
              
              
              
              
              
              $
              -






F-12
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**




**Reclassifications**
 
 Certain
        amounts in the consolidated financial statements of the prior year have been
        reclassified to conform to the presentation of the current year for comparative
        purposes.
 
 **Cash
        and Cash Equivalents**
 
 For
        purposes of the statement of cash flows, the Company considers cash and cash
        equivalents to include all stable, highly liquid investments with maturities
        of
        three months or less.
 
 **Container
        Notes Receivable, Accounts Receivable and Revenue
        Recognition**
 
 Container
        Notes Receivable
 
 The
        Company provided short-term (average 45-day) financing to manufacturers and
        shippers at a specified rate
        of
        return and secured by a non-interest bearing promissory note for the gross
        amount receivable. The Company initially records its container notes receivable
        net of potential interest. This represents the net principle amount invested
        in
        container financing that as of December 31, 2006 is $1,770,000 as is recorded
        as
        Container Notes Receivable. We have ceased accruing interest on the container
        notes as of January 1, 2006 as the collectibility of such interest bearing
        notes
        is questionable.
 
 Accounts
        Receivable
  The
        Company also negotiated a set amount called profit participation associated
        with
        each individual container contract. The amount becomes due when the
        container/product is delivered and the aggregate for the above contracts
        is
        $1,683,200 as of December 31, 2006.
 
 Revenue
        in the form of profit participation and interest on container notes is accrued
        and recognized at the end of each quarter, to the extent such revenues we
        deemed
        collectible.
 
 
 **Accounts
        Receivable Allowance**
 
 Total
        Accounts receivable with their associated allowance consists of the
        following:
   31-Dec-06
              
              
              31-Dec-05Profit
                  Participation
              
              $
              1,683,200
              
              $
              1,683,200Container
                  Notes Receivable
              
              
              1,770,000
              
              
              1,770,000Accrued
                  Interest Receivable
              
              
              157,901
              
              
              157,901Total
                  Receivables
              
              $
              3,611,101
              
              $
              3,611,101Less:
                  Allowance
              
              
              (3,611,101
              )
              
              (3,611,101
              )Net
                  Receivables
              
              $
              0
              
              $
              0
 
 
 The
        Company has no history of collections and the investigation described below
        is
        an extraordinary event that has impacted its ability to receive payment for
        services rendered. The Company will adjust its allowance as history becomes
        available.
 
 The
        container notes the Company holds were executed by clients that are currently
        under investigation for certain “offshore” transactions made prior to their
        association with the Company.  The  Company  is  not  under  investigation.  However, effective December 2005 these  clients  have  been
        instr u cte d  t o  cease  b u si n ess  operati o n  pending  co m p l e tion  o f  the  investigation.  As  a  res u lt  they
        are  unable  to  collect  their  receivables  and  s ubsequently  pay  the  Co m pany  a m ounts  owed.
 
 The
        timing and/or ultimate payment of these monies due the Company relating to
        its
        container financing business is uncertain at this time. The investigation
        of the
        clients in question is still ongoing. Management believes at this time that
        collection of these finds is unlikely. Accordingly, the Company has established
        an allowance for uncollectible receivables of 100% because of the uncertainties
        associated with collection.
 F-13
 
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**
 Container
        Financing
        Expense
 The
        costs
        of providing container financing include sales and marketing fees related
        to
        finding investors. It also
        includes a negotiated interest in the Company’s profit from the sale of the
        contents of the containers that is often referred to as investor profit
        participation. Both components are classified in the financials as Container
        Financing Expense. Direct interest associated with the financing is recorded
        as
        interest expense.
 
 
 **Furniture
        and Equipment**
 
 Furniture
        and equipment are stated at cost. When such assets are retired or otherwise
        disposed of, the asset and related accumulated depreciation accounts are
        relieved of the applicable amounts. Gains or losses from retirements or sales
        are credited or charged to income.
 
 The
        Company depreciates its property and equipment under the straight-line method
        as
        follows:
 
 Furniture     5
        years
 Office
        equipment  5
        years
 
 **Long
        Lived Assets**
 
 In
        August
        2001, SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived
        Assets,” was issued establishing new rules and clarifying implementation issues
        with SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for
        Long-Lived Assets to be Disposed of,” by allowing a probability weighted cash
        flow estimation approach to measure the impairment loss of a long-lived asset.
        The statement also established new standards for accounting for discontinued
        operations. Transactions that qualify for reporting in discontinued operations
        include the disposal of a component of an entity’s operations that comprises
        operations and cash flow that can be clearly distinguished, operationally
        and
        for financial reporting purposes, from the rest of the entity. The Company
        believes that, at December 31, 2006, no such impairments exist.
 
 
 **Stock-Based
        Employee Compensation**  **
 
 The
        Company accounted for stock-based compensation plans utilizing the provisions
        of
        Accounting Principles Board Opinion No. 25 (APB 25), “Accounting for Stock
        Issued to Employees” and the Financial Accounting Statement of Financial
        Accounting Standards No. 123 and No. 148 (SFAS 123 and SFAS 148), “Accounting
        for Stock-Based Compensation”. Under SFAS 123, the Company will continue to
        apply the provisions of APB 25 to its stock-based employee compensation
        arrangements, and is only required to supplement its financial statements
        with
        additional pro-forma disclosures. The Company did not issue any options or
        warrants for compensation in the last two fiscal years. All shares issued
        for
        services have been valued at market value and the related value has been
        expensed accordingly.
 
 Effective
        January 1, 2006, the Company adopted SFAS 123R. Under the application, the
        Company is required to record compensation expense for all awards granted
        after
        the date of adoption and for the unvested portion of previously granted awards
        that remain outstanding at the date of adoption. Per the provisions of SFAS
        123R, the Company has adopted the policy to recognize compensation expense
        on a
        straight-line attribution method.
 
 SFAS
        123R
        eliminates the alternative to use the intrinsic value methods of accounting
        that
        was provided in SFAS 123, which generally resulted in no compensation expense
        recorded in the financial statements related to the issuance of stock options.
        SFAS 123R requires that the cost resulting from all share-based payment
        transactions be recognized in the financial statements. SFAS 123R establishes
        fair value as the measurement objective in accounting for share-based payment
        transactions with employees.
 
  F-14
 
 Secured
          Financial Network,
          Inc.
 **NOTES
          TO THE FINANCIAL
          STATEMENTS**
 **YEARS
            ENDED DECEMBER 31, 2005 and 2006**
  
 **Concentration
        of Credit Risk**
  The
        Company is subject to has been subject to significant risks in the normal
        course
        of business with its container financing business being concentrated with
        one
        customer. The Company does at times have cash in excess of the federal insurable
        limits.
 
 **Income
        Taxes**
 
 The
        Company accounts for its income taxes under the provisions of Statement of
        Financial Accounting Standards 109 (“SFAS 109”). The method of accounting for
        income taxes under SFAS 109 is an asset and liability method. The asset and
        liability method requires the recognition of deferred tax liabilities and
        assets
        for the expected future tax consequences of temporary differences between
        tax
        bases and financial reporting bases of other assets and
        liabilities.
 
 **Net
        Loss Per Share**
 
 The
        Company adopted the provisions of Statement of Financial Accounting Standards
        (“SFAS”) No. 128, “Earnings Per Share” (“EPS”) that established standards for
        the computation, presentation and disclosure of earnings per share, replacing
        the presentation of Primary EPS with a presentation of Basic EPS. The Company
        does not have any quantifiable Common stock equivalents outstanding as the
        warrants attributed to the convertible debt are priced and calculated only
        upon
        conversion of the related convertible debt. Once such convertible debt is
        converted and the number of warrants are determined, we will determine if
        the
        inclusion of such warrants would be anti-dilutive, if so, such warrants would
        be
        excluded from the computation of earnings per share. We have excluded the
        5,975,000 pledged shares, issued, from the computation of earnings per share.
        See Convertible Debt note.
 
 **Accounting
        Estimates**
 
 Management
        uses estimates and assumptions in preparing financial statements in accordance
        with generally accepted accounting principles. Those estimates and assumptions
        affect the reported amounts of assets and liabilities, the disclosure of
        contingent assets and liabilities, and the reported revenues and expenses.
        Actual results could vary from the estimates that were used. The reserves
        on the
        Company’s related party receivables could change in the near
        future.
 
 **Fair
        Value of Financial Instruments**
 
 Pursuant
        to SFAS No. 107, “Disclosures About Fair Value of Financial Instruments,” the
        Company is required to estimate the fair value of all financial instruments
        included on its balance sheet as of December 31, 2006. The Company considers
        the
        carrying value of accounts receivable, net of reserves, accounts payable
        and
        accrued expenses in the financial statements to approximate their face value.
        The Company has not made an evaluation of the fair value of the recorded
        related
        party assets and liabilities.
 
 **Recent
        Accounting Pronouncements**
 
 
 FASB
        155
        - Accounting for Certain Hybrid Financial Instruments
 
 In
        February 2006, the FASB issued FASB Statement No. 155, which is an amendment
        of
        FASB Statements No. 133 and 140. This Statement (a) permits fair value
        re-measurement for any hybrid financial instrument that contains an embedded
        derivative that otherwise would require bifurcation, (b) clarifies which
        interest-only strip and principal-only strip are not subject to the requirements
        of Statement 133, (c) establishes a requirement to evaluate interests in
        securitized financial assets to identify interests that are freestanding
        derivatives or that are hybrid financial instruments that contain an embedded
        derivative requiring bifurcation, (d) clarifies that concentrations of credit
        risk in the form of subordination are not embedded derivatives, (e) amends
        Statement 140 to eliminate the prohibition on a qualifying special-purpose
        entity from holding a derivative financial instrument that pertains to a
        beneficial interest other than another derivative financial instrument. This
        Statement is effective for financial statements for fiscal years beginning
        after
        September 15, 2006. Earlier adoption of this Statement is permitted as of
        the
        beginning of an entity’s fiscal year, provided the entity has not yet issued any
        financial statements for that fiscal year. Management believes this Statement
        will have no impact on the financial statements of the Company once
        adopted.
   F-15
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**
   FIN
        48 -
        Accounting for Uncertainty in Income Taxes
 
 In
        July
        2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
        contains a two step approach to recognizing and measuring uncertain tax
        positions accounted for in accordance with SFAS No. 109. The first step is
        to
        evaluate the tax position for recognition by determining if the weight of
        available evidence indicates it is more likely than not that the position
        will
        be sustained on audit, including resolution of related appeals or litigation
        processes, if any. The second step is to measure the tax benefit as the largest
        amount which is more than 50% likely of being realized upon ultimate settlement.
        This provision is effective for fiscal years beginning after December 15,
        2006,
        which will be the Company’s fiscal year 2008. The Company is evaluating the
        impact, if any; the adoption of this statement will have on its results of
        operations, financial position, or cash flows. Given the Company’s substantial
        loss carry-forward, it does not, in the near term, expect to have any impact
        of
        the Company’s tax position with the adoption of FIN 48.
 
 FASB
        157
        - Fair Value Measurements
 
 In
        September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements.” SFAS No.
        157 defines fair value, establishes a framework for measuring fair value
        in
        generally accepted accounting principles, and expands disclosures about fair
        value measurements. SFAS No. 157 does not require any new fair value
        measurements, rather it applies under existing accounting pronouncements
        that
        require or permit fair value measurements. SFAS No. 157 is effective for
        fiscal
        years beginning after November 15, 2007, which will be the Company’s fiscal year
        2009. The Company is currently evaluating the impact of SFAS No. 157 on its
        financial statements.
 
 SAB
        108 -
        Considering the Effects of Prior Year Misstatements in Current Year Financial
        Statements
 
 In
        September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
        Accounting Bulletin No. 108 (SAB 108) “Considering the Effects of Prior Year
        Misstatements in Current Year Financial Statements.” SAB 108 provides guidance
        on quantifying financial statement misstatements, including the effects of
        prior
        year errors on current year financial statements. SAB 108 is effective for
        fiscal years beginning after November 15, 2006, which will be the Company’s
        fiscal year 2008.
 
 FASB
        Staff Position ( FSP ) No. EITF 00-19-2 - Accounting for Registration Payment
        Arrangements
 
 On
        December 21, 2006, the FASB approved FSP No. EITF 00-19-2, “Accounting for
        Registration Payment Arrangements” (“FSP EITF 00-19-2”), which specifies that
        the contingent obligation to make future payments or otherwise transfer
        consideration under a registration payment arrangement, whether issued as
        a
        separate agreement or included as a provision of a financial instrument or
        other
        agreement, should be separately recognized and measured in accordance with
        SFAS
        No. 5, “Accounting for Contingencies”. FSP EITF 00-19-2 also requires additional
        disclosure regarding the nature of any registration payment arrangements,
        alternative settlement methods, the maximum potential amount of consideration
        and the current carrying amount of the liability, if any. The guidance in
        FSP
        EITF 00-19-2 amends FASB Statements No. 133, “Accounting for Derivative
        Instruments and Hedging Activities”, and No. 150, “Accounting for Certain
        Financial Instruments with Characteristics of both Liabilities and Equity”, and
        FASB Interpretation No. 45, “Guarantor's Accounting and Disclosure requirement
        for Guarantees, Including Indirect Guarantees of Indebtedness of Others”, to
        include scope exceptions for registration payment arrangements. FSP EITF
        00-19-2
        is effective immediately for registration payment arrangements and the financial
        instruments subject to those arrangements that are entered into or modified
        subsequent to the issuance date of this FSP, or for financial statements
        issued
        for fiscal years beginning after December 15, 2006, and interim periods within
        those fiscal years, for registration payment arrangements entered into prior
        to
        the issuance date of this FSP. The Company has adopted the terms and conditions
        of this pronouncement as of December 31, 2006, as the culmination of the
        Convertible Notes was completed on December 29, 2006.
  F-16
 
 Secured
          Financial Network,
          Inc.
 **NOTES
          TO THE FINANCIAL
          STATEMENTS**
 **YEARS
            ENDED DECEMBER 31, 2005 and 2006**
  
 **NOTE
        4 - FURNITURE AND EQUIPMENT**
 
 At
        December 31, 2006, furniture and equipment consisted of the
        following:
 
 Description
              
              AmountOffice
                furniture and equipment
              
              $
              5,453Less
                assets sold
              
              
              (1,500
              )Less:
                accumulated depreciation
              
              
              (1,386
              )Property
                and equipment, net
              
              $
              2,567
  Depreciation
        expense charged to operations totaled $770 and $616 in 2006 and 2005,
        respectively.
 
 **NOTE
        5 - LICENSE AGREEMENT**
 
 In
        November 2006 as amended in February 2007, the Company acquired for $385,000
        an
        exclusive license agreement to provide e-commerce transaction processing
        through
        a proprietary ‘bank-grade’ electronic-vault and electronic-wallet based payment
        processing system.
 
 In
        addition $15,000 was prepaid as an annual maintenance fee with regards to
        this
        electronic payment processing system, upon the purchase of the license
        agreement. Once such system is placed in service, the annual maintenance
        fee
        will be amortized over one year.
 
 We
        intend
        to amortize the cost of such license agreement over a two year period. This
        license agreement is for a two year term, with an additional automatic twelve
        month renewal, unless either party terminates such agreement for any reason.
        The
        annual amortization of such agreement will approximate $192,500 per
        annum.
 
 In
        addition to the consideration paid for the purchase of such license agreement,
        royalties shall be due at $0.20 per transaction or 20% of the gross transaction
        excluding micropayment transactions. The Company has guaranteed minimum
        royalties to be paid in the amount of $50,000 in year two starting November
        1,
        2007, $100,000 for year three and $250,000 for each year thereafter in order
        tom
        keep exclusive terms under this license agreement.
 
 **NOTE
        6 - NOTES PAYABLE**
 
 **Investor
        Notes Payable**
 
 The
        Company issued short-term notes (average 90-days) with a specific rate of
        return
        (average 4%) to acquire funds to invest into high yield activities (e.g.
        Container financing/investment). As of December 31, 2006 the Company’s
        short-term notes payable total $2,025,000. The Company has also accrued $444,987
        interest and contractual profit participation of $246,000 associated with
        these
        notes.
 
 
 
   F-17
 
 Secured
          Financial Network,
          Inc.
 **NOTES
          TO THE FINANCIAL
          STATEMENTS**
 **YEARS
            ENDED DECEMBER 31, 2005 and 2006**
  **Secured
        Convertible Notes Payable**
  During
        September and October 2006, “Funding” dates, we issued in a private offering,
        $597,500 aggregate principal amount of secured convertible notes “Convertible
        Notes” with $400,000 due September 26, 2007, $100,000 due October 30, 2007, and
        $ 97,500 due October 31, 2007.
 
 The
        Convertible Notes are convertible as follows: at any time, 90 days after
        funding
        is complete, but prior to repayment of all amounts due as provided under
        the
        Convertible Notes, all or any portion of the principal amount of the note
        shall
        be convertible at the option of the lender into fully paid and non-assessable
        shares of the Company’s common stock. The number of common shares of the Company
        that Convertible Note holder “ Lender” shall be entitled to receive upon
        conversion shall be equal to the number attained by dividing the principal,
        including accrued interest pursuant to the Convertible Note being converted
        by
        the conversion price. The conversion price shall be the lesser of $.10 per
        share, or one of the following times 60%:
 
 a)
              the
                  closing bid price for common stock on the trading day one day prior
                  to a
                  Lender’snotice
                  of conversion, or
 b)
              the
                  average closing bid price for common stock on the five trading
                  days
                  immediately prior to a Lender’s notice of conversion, or if registration
                  statement is not effective on the 180 day anniversary of the Funding
                  (“c”
                  & “d” not otherwise applying),
 c)
              the
                  closing bid price for common stock on the 180 day anniversary of
                  the
                  Funding, or
 d)
              the
                  average closing bid price for common stock on the five trading
                  days
                  immediately prior to the 180 anniversary date of the
                  Funding.
 
 The
        lender shall not be entitled to convert, if such conversion would result
        in
        beneficial ownership by the Lender and its affiliates of more than 9.99%
        of the
        outstanding shares of common stock of the Company on such exercise or conversion
        date, including:
  
 (i)
        the
        number of shares of common stock beneficially owned by the Lender and its
        affiliates, and
  (ii)
        the
        number of shares of common stock issuable upon the exercise of the warrant
        and/or options and/or conversion.
  **The
        convertible debentures and related agreements provide among other things
        for:**
 
 The
        Company may elect to make principal and interest payments in freely tradable
        shares in lieu of cash. The Company’s right to make such payment in shares in
        lieu of cash can only be made if the volume weighted average price of the
        Company’s common stock has been trading at a price of $0.25 or above per share
        for 10 consecutive days prior to the date of the payment date and the average
        daily trading volume is at least 15 times the number of shares to be so issued
        hereby as payment.
 
 At
        any
        time, 90 days after funding is complete, but subject to customary equity
        conditions, the Company may at any time, upon 30 days written notice, prepay
        all
        of the outstanding Convertible Notes on a pro-rata basis at 110% of the
        outstanding principal balance only after the note has amortized one
        year.
 
 As
        security for the repayment of all liabilities arising under the Convertible
        Note, the Company granted to lender a security interest in and a lien on
        5,975,000 shares of common stock, issued with a restricted legend, hereafter
        referred to as the “Collateral”. The Lender has the
        right
        to sell or hypothecate such Collateral, to the extent permitted under applicable
        securities laws .
        However, the Lender shall not sell more than 10% of the average daily volume
        in
        any week.
 
 If
        the
        Company raises money at a lower price than the
        Lender has
        purchased the shares, upon conversion of such Convertible Note, then the
        Company
        will re-price the
        Lender ’s
        shares
        and warrants to that price. T he
        Lender has the
        right of first refusal of any financing for eighteen (18) months after the
        Funding. T he
        Purchaser will be
        notified prior to any other financing and have an option to respond with
        competitive financing terms upon notification. The Company will
        not
        raise any capital below 10 cents per share.
   F-18
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**
  Notwithstanding
        anything herein to the contrary, the Company will
        be
        allowed to raise additional capital to complete its $1.5 million contemplated
        fund-raising.
  The
        Company shall file a Registration Statement with the Securities and Exchange
        Commission “the Commission” in order to register the common shares issuable upon
        conversion of the Convertible Note within sixty- (60) calendar days after
        the
        Funding Date (the
        “Filing Date”), and use its best efforts to cause, such registration statement,
        to be declared effective not
        later
        than one hundred and twenty (120) calendar days after the Funding Date (the
        “Effective Date”). The Company will register not less than a number of shares of
        common stock in the aforedescribed registration statement that is equal to 175%
        of
        the common shares issuable upon conversion of all of the Collateral, and
        100% of
        the warrant shares issuable upon exercise of the warrants (collectively the
        “Registrable Securities”). The Registrable Securities shall be reserved and set
        aside exclusively for the benefit of the Lender, and not issued, employed
        or
        reserved for anyone other than the Lender. The Registration Statement will
        immediately be amended or additional registration statements will be immediately
        filed by the Company as necessary to register additional shares of common
        stock
        to allow the public resale of all common stock included in and issuable by
        virtue of the Registrable Securities. Except with the written consent of
        the
        Lender, or as described on Schedule 11.1 hereto, no securities of the Company
        other than the Registrable Securities will be included in the Registration
        Statement. It shall be deemed a Non-Registration Event if, at any time after
        the
        date the Registration Statement is declared effective by the Commission,
        the
        Company has registered for unrestricted resale on behalf of the Lenders fewer
        than 125%
        of
        the amount of common shares issuable upon full conversion of all sums due
        hereunder and 100% of the warrant shares issuable upon exercise of the
        warrants.
  The
        Company and the Lender agree that the Lender upon conversion of the Convertible
        Notes to common shares will suffer damages if the
        Registration Statement is not filed by the Filing Date and not declared
        effective by the Commission by the Effective Date, and it would not be feasible
        to ascertain the extent of such damages with precision. Accordingly, if (A)
        the
        Registration Statement is not filed on or before the Filing Date, (B) is
        not
        declared effective on or before the Effective Date, (C) due to the action
        or
        inaction of the Company, the Registration Statement is not declared effective
        within 3 business days after receipt by the Company or its attorneys of a
        written or oral communication from the Commission that the Registration
        Statement will not be reviewed or that the Commission has no further comments,
        (D) if the registration statement is not filed within 60 days after written
        request of the Lender, or is not declared effective within 120 days after
        such
        written request, or (E) any registration statement is filed and declared
        effective but shall thereafter cease to be effective without being succeeded
        within 15 business days by an effective replacement or amended registration
        statement or for a period of time which shall exceed 30 days in the aggregate
        per year (defined as a period of 365 days commencing on the Actual Effective
        Date (each such event referred to in clauses (A) through (E) herein as a
        “Non-Registration Event”), then the Maker shall deliver to the Lender of
        Registrable Securities, as liquidated damages (“Liquidated Damages”), an amount
        equal to 5% for each 30 days or part thereof of the face amount hereof.
        Liquidated Damages payable in connection with a Non-Registration Event described
        in clause (B) above shall accrue from the 180 th calendar
        day after the Closing Date. The Company must pay the Liquidated Damages in
        cash,
        except that the Lender may elect that such Liquidated Damages to be paid
        with
        shares of Common Stock with such shares valued at sixty percent (60%) of
        the
        Conversion Price in effect on each thirtieth day or sooner date upon which
        Liquidated Damages have accrued. The Liquidated Damages must be paid within
        10
        days after the end of each thirty (30) day period or shorter part thereof
        for
        which Liquidated Damages are payable. In the event a Registration Statement
        is
        filed by the Filing Date but is withdrawn prior to being declared effective
        by
        the Commission, then such Registration Statement will be deemed to have not
        been
        filed. All
        oral
        or written comments received from the Commission relating to the Registration
        Statement must be adequately responded to within
        30
        days in connection with the initial filing of the Registration Statement
        and
        within 10 business days in connection with amendments to the Registration
        Statement after receipt of such comments from the Commission.
        Failure to
        timely respond to Commission comments is a Non-Registration Event for which
        Liquidated Damages shall accrue and be payable by the Maker to the Lenders
        of
        Registrable Securities at the same rate set forth above. Notwithstanding
        the
        foregoing, the Maker shall not be liable to the Lender under this Section
        11.4
        for any events or delays occurring as a consequence of the acts or omissions
        of
        the Lender contrary to the obligations undertaken by Lender in this Agreement.
  F-19
 
 Secured
          Financial Network,
          Inc.
 **NOTES
          TO THE FINANCIAL
          STATEMENTS**
 **YEARS
            ENDED DECEMBER 31, 2005 and 2006**
   Liquidated
        Damages will neither accrue nor be payable pursuant to this Section 11.4
        nor
        will a Non-Registration Event be deemed to have occurred for times during
        which
        Registrable Securities are transferable by the Lender of Registrable Securities
        pursuant to Rule 144(k) under the 1933 Act.
 
 In
        addition to any other rights available to Lender, if the Company fails to
        deliver to Lender Unlegended Shares as required pursuant to the Agreement,
        within seven (7) business days after the Unlegended Shares Delivery Date
        and the
        Lender purchases (in an open market transaction or otherwise) shares of common
        stock to deliver in satisfaction of a sale by Lender of the shares of Common
        Stock which the Lender was entitled to receive from the Company (a “Buy-In”),
        then the Company shall pay in cash to the Lender (in addition to any remedies
        available to or elected by the Lender) the amount by which (A) the Lender’s
        total purchase price (including brokerage commissions, if any) for the shares
        of
        common stock so purchased exceeds (B) the aggregate purchase price of the
        shares
        of Common Stock delivered to the Maker for reissuance as Unlegended Shares together
        with interest thereon at a rate of 15% per annum, accruing until such amount
        and
        any accrued interest thereon is paid in full (which amount shall be paid
        as
        liquidated damages and not as a penalty). For
        example, if Lender purchases shares of Common Stock having a total purchase
        price of $11,000 to cover a Buy-In with respect to $10,000 of purchase price
        of
        shares of Common Stock delivered to the Company for reissuance as Unlegended
        Shares, the Company shall be required to pay the Lender $ 1,000,
        plus interest. The
        Lender shall provide the Company written notice indicating the amounts payable
        to the Lender in respect of the Buy-In.
 
 The
        Company shall pay to Lender, at Closing, a fixed non-accountable allowance
        to
        cover due diligence expenses of $1,500, plus 1.25% of the total amount invested
        pursuant to each Closing. At the election of the Lender, or its designees,
        any
        or all of the foregoing compensation and expense allowances can be taken
        in
        kind, pursuant to the same terms and conditions as that of an investment
        herein,
        for a like amount. Of the amounts advanced by the Lender to the Company,
        10%
        will be paid directly to Brass Bulls, Corp., on the Company’s behalf, as a
        finder’s fee. This will be the Company’s expense and thus reduce the amount
        otherwise payable to the Company. The Company has recorded $62,875 of fees
        attributed to this financing, as deferred financing fees and will be expensed
        ratably over the term of the Convertible Notes. There was $3,495 of amortization
        recorded for the year ended December 31, 2006, attributed to these deferred
        financing fees. The balance will be expensed in 2007.
 
 The
        Lender or its designee, shall also be entitled to a commission of 5% of any
        and
        all amounts received, directly or indirectly, by the Company. and/or its
        principals as a consequence of a merger, license or any other similar
        arrangement or remuneration as a consequence of the efforts of the Lender
        or its
        designee or agent.
 
 In
        connection with the issuance of the Convertible Notes, the Company issued
        5-year
        warrants to purchase an amount of Company stock up to a limit of 30% of the
        principal amount of the note. The exercise price of the warrants is equal
        to
        300% of the conversion price of the note.
 
 The
        Company recognized a debt discount of $ 540,039 at the date of issuance of
        the
        Convertible Notes. The debt discount of $540,039 is comprised of $69,605
        for the
        detachable warrants and $470,434 for the beneficial conversion features of
        the
        Convertible Notes. The beneficial conversion features were recorded in
        accordance with Emerging Issues Task Force (“EITF”) Issue No. 00-27, Application
        of Issue No. 98-5 to Certain Convertible Instruments and EITF Issue No. 98-5,
        Accounting for Convertible Securities with Beneficial Conversion Features
        or
        Contingently Adjustable Conversion Ratios”. The debt discount is recognized over
        the term of the Convertible Notes of one year. There was $65,065 of amortization
        recorded for the year ended December 31, 2006, attributed to this debt discount.
        The balance will be expensed in 2007.
 
 F-20
 
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**
 **NOTE
          7 - DERVATIVE AND LIQUIDATING LIABILITES**
 
 During
          the year ended 2006, the Company recognized $693,503 of derivative liabilities
          pursuant to EITF 00-19, Accounting for Derivative Financial Instruments
          Indexed
          to and Potentially Settled in a Company’s Own Stock and $169,375 of
          liquidating damages liabilities pursuant to Financial Accounting Standards
          Board
          Staff Position - FSP No. EITF 00-19-2, Accounting for Registration Payment
          Arrangements, all attributed to the terms of the Convertible Notes. A derivative
          liability was required to be recorded fundamentally due to the nature of
          the
          conversion terms, provide that the Company could potentially be in the
          position
          of delivering more shares than the Company has authorized to issue for
          the
          satisfaction of the conversion of the Convertible Notes and the exercise
          of the
          related warrants. Due to the nature of calculating the amount of warrants
          to
          issue and the exercise price, the Company is in the position of issuing
          another
          10% more shares over the shares issued for the conversion of the Convertible
          Notes.
 
 The
        Liquidating Damages liability relates to the recognition of an expense for
        the
        anticipated failure by the Company to comply with certain registration rights
        held by the holders of the Convertible Notes and obtain an effective
        registration of the required shares issuable upon conversion of the Convertible
        Notes and the exercise of related the warrants, described earlier. We have
        recorded the maximum anticipated penalties to be incurred for the failure
        to
        register the required common shares potentially issuable for the conversion
        of
        the Convertible Notes and the exercise of the warrants, through September
        26,
        2007, the maturity date of the first installment of such Convertible Notes.
        The
        penalty calculated was based on 5% of the outstanding Convertible Notes,
        commencing on 180 days from the date of such Convertible Note agreements
        executed, through September 26, 2007. An expense has been recorded for the
        $169,375, as a cost of entering into such debt arrangements, as the terms
        of
        such debt arrangements are overly burdensome. There are no maximum penalty
        terms
        for the failure to obtain an effective Registration.
 
 The
        fair
        value of the derivative liabilities recorded of $693,503, at inception, is
        comprised of two components, one component of the liability estimated of
        $614,676 attributed to the Convertible Notes conversion factor of 60% of
        market,
        but not more than $0.10 and another component of the liability estimated
        to be
        $78,827, attributed the warrants exercise price to be 300% of the conversion
        price, once fixed. A revaluation of the derivative liabilities as of December
        31, 2006 for their fair value, was performed with a lower estimate being
        derived
        of $647,761, as such change is less than 10% no change to the recorded estimate
        was made, primarily due to the high volatility of the stock price and the
        short
        amount of time transpired since the date of issuance of such Convertible
        Notes.
        The estimated derivative liabilities recorded were computed utilizing the
        Black
        Scholes model, with the following assumptions for the three Convertible Note
        agreements executed are as follows;
 
 Convertible
                  Note into Shares
              Exercise
                  of WarrantsMarket
                  Price of Stock
              $0.065
                  - $0.08
              $0.065
                  - $0.08Exercise
                  Price
              $0.039
                  - $0.042
              $0.117
                  - $0.144Term
              One
                  Year
              Five
                  YearsVolatility
              108%
                  - 131%
              108%
                  - 131%Risk
                  Free Rate
              4.74%
              4.74%Number
                  of Shares Assumed Issuable
              14,668,612
              1,466,862
  
 **NOTE
        8 - EQUITY TRANSACTIONS**
 
 **Common
        Stock**
 
 On
        November 22, 2004, 12 To 20 Plus, Inc. entered into a share exchange agreement
        with Secured Financial Network, Inc. through the issuance of an aggregate
        of
        14,737,343 shares of common stock, reflecting 94% of the 15,693,478 shares
        of
        common stock outstanding after the closing. For accounting purposes, the
        transaction is reflected as if the 12 To 20 Plus, Inc. was acquired by Secured
        Financial Network Inc. with the business of Secured Financial Network Inc.
        being
        the successor entity. The acquisition was accounted for as a recapitalization
        of
        the predecessor entity Secured Financial Network, Inc. with the management
        of
        the predecessor entity Secured Financial Network, Inc. controlling and operating
        the Company after the acquisition date. The financial statements presented
        primarily represent the operations of Secured Financial Network, Inc. from
        its
        inception date, November 10, 2004, to the merger date. In addition, the capital
        structure of Secured Financial Network, Inc. has been recapitalized to account
        for the equity structure subsequent to the acquisition as if Secured Financial
        Network, Inc. had been the issuer of the common stock for all periods
        presented.
  F-21
 
 Secured
          Financial Network,
          Inc.
 **NOTES
          TO THE FINANCIAL
          STATEMENTS**
 **YEARS
            ENDED DECEMBER 31, 2005 and 2006**
   
 The
        Company has authorized 100,000,000 shares of common stock with a par value
        of
        $0.001 per share.
 
 In
        2004,
        the Company created an employees and consultants stock plan, called “2004
        Employees/Consultants Common Stock Compensation Plan” ( the “Plan”). The plan is
        authorized to issue up to 10,000,000 shares of common stock to employees
        and
        consultants.
 
 **During
        2005, the following equity transactions occurred:**
 
 The
        Company sold 200,000 shares of common stock for $30,000 or $0.15 per
        share.
 
 The
        Company issued 3,734,630 shares of common stock during the year for services
        valued at $146,963 to consultants of the Company, at share prices ranging
        from
        $0.02 to $0.15 per share, which was at the then market price of the trading
        stock of the Company.
 
 **During
        2006, the following equity transactions occurred:**
 
 The
        Company had $37,300 in third party debts converted into 729,166 shares of
        common
        stock.
 
 The
        Company issued 4,524,307 shares of common stock during the year for services
        valued at $674,339, at share prices ranging from $0.03 to $0.13 per share,
        which
        was at the then market price of the trading stock of the Company.
 
 The
        Company sold 145,000 shares of common stock for $28,000.
 
 In
        September 2006, the Company executed a purchase agreement to purchase Virtual
        Payment Solutions, LLC. The purchase price includes $400,000 cash payments,
        issue of 5,000,000 common shares and the issue of 2,000,000 preferred shares
        which will pay a 7% dividend and have a conversion feature that allows
        conversion into $2,000,000 worth of common stock after 12 months or upon
        sale of
        the company. The Company made a deposit of $150,000 during the quarter being
        reported and closed the purchase effective October 6, 2006. This agreement
        to
        purchase the entity Virtual Payment Solutions, LLC has since been rescinded,
        see
        subsequent event footnotes.
 
 The
        Company issued 5,975,000 of restricted shares as collateral pursuant to the
        terms of the Convertible Notes. See Convertible Notes for further
        discussions.
 
 **NOTE
        8 - INCOME TAXES**
 
 The
        provisions for income taxes for the year ended December 31, 2006 consisted
        of
        the following:
  Provision
                benefit for income
                taxesat
                statutory federal rate,
              
              $
              (736,545
              )Permanent
                timing differences
              
              
              465,066Temporary
                timing differences
              
              
              239,525Increase
                in Valuation
                Allowance
              
              
              31,954Net
                Income Tax
                Provision
              
              $
              -
  F-22
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**
  The
        reported provision for income taxes differs from the amount computed by applying
        the statutory U.S. federal income tax rate of 34% to the loss before income
        taxes as follows:
 
 
 December
                  31, 200Federal
                income taxes at statutory
                rate
              
              
              34
              %State
                tax rate, net of federal income
                tax
              
              
              5Permanent
                timing differences
              
              
              (25
              )Temporary
                timing differences
              
              
              (12
              )Valuation
                Allowance
              
              
              (
                2
              )Effective
                income tax
                rate
              
              
              0
              %
  Due
        to
        net operating losses and the uncertainty of realization, no tax benefit has
        been
        recognized for operating losses. The Company’s ability to utilize its net
        operating loss carry forwards is uncertain and thus a valuation reserve has
        been
        provided against the Company’s net deferred tax assets.
 
 The
        Company has not filed their federal or state income tax returns for several
        years.
 
 At
        December 31, 2006, the Company has unused net operating losses of approximately
        $4,000,000 (which will begin expiring in 2011 through 2026) that may be applied,
        against future taxable income.
 
 Due
        to
        the changes in ownership over the years for the various acquisitions, debt
        conversions and equity financings, the Company may have triggered a Section
        382
        limitation on the utilization of such net operating loss carryforwards. The
        Company has not performed such an evaluation to determine whether the net
        operating loss carryforwards have been limited, but we believe the net operating
        loss carryforwards prior to the merger on January 11, 2005 approximating
        $800,000 are limited to the extent they are virtually not usable.
 
 **NOTE
        9 - RELATED PARTY TRANSACTIONS**
 
 Jeffery
        Schultz, CEO, received 500,000 shares of Rule 144 Restricted Company stock
        related to his employment agreement effective October 1, 2006.
 
 Michael
        Fasci, CFO, received 250,000 shares of Rule 144 restricted Company stock
        upon
        his appointment as Director on January 19, 2006. Mr. Fasci also received
        500,000
        shares of Rule 144 Restricted Company stock related to his employment agreement
        effective August 1, 2006.
 
 Process
        Engineering Services, Inc., (PES, Inc.) a company owned my Mr. Fasci, received
        $10,000 and 100,000 shares of company stock for accounting services during
        2006
        prior to Mr. Fasci becoming CFO.
 
 Steve
        Burg received 150,000 shares of Rule 144 Company stock on January 19, 2006
        and
        an additional 150,000 shares of Rule 144 Restricted Company stock on January
        31,
        2006 for consulting services provided to the Company.
 
 During
        2006 and 2005, the Company advanced funds to the CEO, periodically, during
        each
        year. The balances outstanding as of December 31, 2006 and 2005, was $12,404
        and
        $32,134, respectively.
 
 **NOTE
        10 - LEASE COMMITMENTS**
 
 The
        company currently leases its office space on a month-to-month basis at a
        rate of
        $250 per month.
 
 The
        Company incurred rent expense of $6,858 and $19,890, for the years ended
        December 31, 2006 and 2005, respectively.
  F-23
 Secured
            Financial Network,
            Inc.
 **NOTES
            TO THE FINANCIAL
            STATEMENTS**
 **YEARS
              ENDED DECEMBER 31, 2005 and 2006**
  
 **NOTE
        11 - SEGMENT REPORTING**
 
 During
        2006, the Company has two business segments. One was the payment processing
        segment which utilizes the Envoii License and the other is the container
        financing segment.
 
 
 Financial
        Data for 2006:
 Payment
                  Processing
              Container
                  Financing
                Segment
                  which includes parent company expensesRevenues
              $
                  0
              $
                  0Interest
                  expense
              0
              437,070Net
                  loss
              0
              (2,166,311)Long
                  lived assets
              385,000
              0Capital
                  expenditures
              0
              0Total
                  assets
              385,000
              192,737Long
                  term debt
              0
              0
 
 
 
 **NOTE
        12 - SUBSEQUENT EVENTS**
 
 On
        February 15 th ,
        2007,
        the rescinded its acquisition of Virtual Payment Solutions, LLC, as the Company
        was not auditable. The Company renegotiated the cash paid of $400,000 to
        be as
        follows; $385,000 for the purchase of a license agreement and the purchase
        of
        the names “Virtual Payment Solutions” and domain names “Virtual Payment
        Solutions.com and .net” and $15,000 for the first year maintenance fee beginning
        once the software is operable. As of December 31, 2006 the software was not
        operable. The common shares and preferred shares were not recorded as
        outstanding as the acquisition of Virtual Payment Solutions, LLC entity was
        rescinded.






F-24


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





On
      March
      3, 2006 we were notified verbally by Shelley International, CPA (“Shelley”) that
      they were resigning as our independent auditors. Shelley audited our financial
      statements for our two fiscal years ended December 31, 2005. Shelley’s reports
      on the financial statements for those fiscal years did not contain an adverse
      opinion or disclaimer of opinion and was not otherwise qualified or modified
      as
      to any uncertainty, audit scope or accounting principles. During those two
      fiscal years and also during the subsequent period through the date of Shelley’s
      resignation as indicated above: (1) there were no disagreements between us
      and
      Shelley on any matter of accounting principles or practices, financial statement
      disclosure, or auditing scope or procedure; and (2) Shelley provided no advice
      to us that (i) internal controls necessary to develop reliable financial
      statements did not exist, (ii) information had come to the attention of Shelley
      which made it unwilling to rely on management’s representations, or unwilling to
      be associated with the financial statements prepared by management, or (iii)
      the
      scope of the audit should be expanded significantly, or information had come
      to
      the attention of Shelley that it concluded will, or if further investigated
      might, materially impact the fairness or reliability of a previously issued
      audiAt report or the underlying financial statements, or the financial
      statements issued or to be issued covering the fiscal periods subsequent to
      the
      date of the most recent audited financial statements.





On
      March
      7, 2006, we formally appointed Moore & Company (“Moore”) as our independent
      auditors. The decision to engage Moore was recommended by management and
      approved by our board of directors.





During
      our two most recent fiscal years ended December 31, 2005, and also during the
      subsequent interim period through the date of Shelley’s resignation, we did not
      consult with Moore regarding the application of accounting principles to a
      specified completed or contemplated transaction, or the type of opinion that
      might be rendered regarding our financial statements, nor did we consult Moore
      with respect to any accounting disagreement or any reportable event at any
      time
      prior to the appointment of that firm.





On
      December 14, 2006, we engaged Sherb & Co., LLC (“Sherb”) as our new
      principal independent accountants with the approval of our Board of Directors.
      Accordingly, on December 14, 2006, Moore resigned as our independent
      accountants. Moore has acted as our principal independent accountant since
      March
      7, 2006.




During
      our two most recent fiscal years ended December 31, 2005, and the subsequent
      interim period through December 14, the date of Moore’s resignation and the date
      of Sherb’s appointment, there were no disagreements with Moore on any matter of
      accounting principles or practices, financial statement disclosure, or auditing
      scope or procedure.




In
      connection with our two most recent fiscal years ended December 31, 2005 and
      the
      subsequent interim period through December 14, 2006, Sherb was not consulted
      on
      any matter relating to accounting principles to a specific completed or proposed
      transaction or the type of audit opinion that might be rendered on our financial
      statements. In connection with our two most recent fiscal years ended December
      31, 2005 and the subsequent interim period through December 14, 2006, preceding
      the change in accountants, Sherb did not provide any written or oral advice
      that
      was an important factor considered by it in reaching any decision as to the
      accounting, auditing or financial reporting issues.





During
      our two most recent fiscal years ended December 31, 2006, and the subsequent
      interim period through April 17, 2007, there were no disagreements with Sherb
      & Co. on any matter of accounting principles or practices, financial
      statement disclosure, or auditing scope or procedure.




In
      connection with our two most recent fiscal years ended December 31, 2006 and
      the
      subsequent interim period through April 17, 2006, Sherb was not consulted on
      any
      matter relating to accounting principles to a specific completed or proposed
      transaction or the type of audit opinion that might be rendered on our financial
      statements. In connection with our two most recent fiscal years ended December
      31, 2006 and the subsequent interim period through April 17, 2007, Sherb did
      not
      provide any written or oral advice that was an important factor considered
      by it
      in reaching any decision as to the accounting, auditing or financial reporting
      issues.


10







ITEM
      8A.
      CONTROLS AND PROCEDURES





Evaluation
      of Disclosure Controls and Procedures





In
      performing its audit of our Consolidated Financial Statements for Fiscal 2006,
      our
      independent auditors, Sherb & Co.LLP, notified our Board of Directors of several
      reportable conditions in internal controls under standards established by
      the
      American Institute of Certified Public Accountants. Reportable conditions involve
      matters coming to the attention of our auditors relating to significant deficiencies
      in the design or operation of internal controls that, in their judgment,
      could adversely affect our ability to record, process, summarize, and report
      financial data consistent with the assertions of management in the consolidated
      financial statements. It is believed that these reportable conditions were
      a
      contributing factor in the need for the restatement of the financial condition
      of the company for 2005.





Although
      Sherb & Co. noted recent significant improvements in the structure of the accounting
      department, and designed its audit procedures to address the matters described
      below in order to obtain reasonable assurance that the financial statements
      are free of material misstatement and to issue an unqualified audit report,
      certain of the internal control deficiencies noted by Sherb & Co are still
      in need of improvement. The Company has assigned a high priority to the
      remediation of the reportable conditions, has hired a new chief financial
      officer, is seeking additional independent directors, and will implement
      enhanced procedures to accelerate improvement of the internal
      controls.





These
      significant deficiencies in the design and operation of our internal controls
      include the needs to provide better coordination and communication between
      the
      legal and finance/accounting departments and to provide training to existing
      and
      new personnel in technical accounting issues such as accounting for a merger
      as
      well as accounting for convertible debt with derivative liability issues; in
      SEC
      reporting requirements; the need to have corporate SEC legal counsel more
      proactively involved in the review of potential transactions; the needs to
      form
      an independent audit committee, to implement budget and reporting procedures;
      the need to segregate certain duties to ensure a better checks and balances
      system; and the need to provide internal review procedures for schedules, SEC
      reports and filings prior to submission to the auditors and/or filing with
      the
      SEC.





A
      material weakness is defined as a reportable condition in which the design
      or operation
      of one or more of the internal control components does not reduce to a relatively
      low level the risk that misstatements caused by error or fraud in amounts
      that would be material in relation to the financial statements being audited
      may occur and not be detected within a timely period by employees in the normal
      course of performing their assigned functions. While the Company did implement
      specific changes in our internal controls during the Fiscal 2006, such
      improvements were partially offset by declines in other areas.





The
      Company's senior management is responsible for establishing and maintaining a
      system
      of disclosure controls and procedures (as defined in Rule 13a-15 and 15d-15
      under the Securities Exchange Act of 1934 (the "Exchange Act") designed to
      ensure
      that information required to be disclosed by the Company in the reports
      that it files or submits under the Exchange Act is recorded, processed, summarized
      and reported within the time periods specified in the Securities and Exchange
      Commission's rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed by an issuer in the reports that it files or
      submits under the Act is accumulated and communicated to the issuer's management,
      including its principal executive officer or officers and principalfinancial
      officers to allow timely decisions regarding required
      disclosure.


11





As
      of the
      end of the period covered by this report, the Company carried out an evaluation
      under the supervision and with the participation of the Company's management,
      including its Chief Executive Officer and Chief Accounting Officer, of
      the
      disclosure controls and procedures of the Company as defined in Exchange Act
      Rule
      13(a)-15(e)and has determined that such controls and procedures are not
      effective. In designing and evaluating disclosure controls and procedures,
      the
      Company and its management recognize that any disclosure controls and
      procedures, no matter how well designed and operated, can only provide
      reasonable assurance of achieving the desired control objective. The Chief
      Executive Officer and the Chief Accounting Officer have determined that the
      Company will further enhance its disclosure controls and procedures and that
      except for the matters noted by Sherb & Co., and taking into account the
      steps taken and to be taken to address the matters described above, such
      disclosure controls
      and procedures will provide a reasonable level of assurance to adequately
      and effectively timely alert them to material information required to be
      included in the Company's periodic SEC reports.














PART
      II





ITEM
      9.
      DIRECTORS, EXECUTIVE OFFICERS. PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
      SECTION 16(a)





The
      following table sets forth the names and ages of the directors and executive
      officers of the Company through the date of this Report, as well as the current
      officers and directors; the principal officers and positions with the Company
      held by each person and the date such person became a director or executive
      officer of the Company. Each serves until the next annual meeting of the
      stockholders.





Names
                  of Current Executive Officers and Directors
              Age
              Position
              Date
                  of AppointmentJeffrey
                  L. Schultz
              56
              Director/CEO/President
              January
                  19, 2005Stephen
                  F. Burg
              69
              Director/Secretary
              January
                  19, 2005Michael
                  Fasci
              48
              Director/CFO
                  *
              January
                  19, 2006


Appointed
      CFO August 1, 2006





Jeffrey
      L. Schultz **** is **** President/CEO/Director,
      56, most recently served as Vice President of Sales and Marketing for InteleTech
      Corporation from January through November of 2004. From July of 2002 until
      December of 2003 Mr. Schultz acted as a consultant to various companies involved
      in the plastic printing and card issuance industries. From February of 2001
      until July of 2002 Mr. Schultz was Director of Business Development for
      Continental Plastic Card Co. coordinating the financial and sales restructuring
      of the company and setting in motion a business plan for 2002, which made
      Continental Plastic profitable. Continental Plastic was in the top 10 plastic
      card printers in the USA. Prior to 2001 Mr. Schultz was the President of
      Strategic Funding, Inc. that since its inception in 1996, had been instrumental
      in providing consulting to various private and public companies and raised
      in
      excess of $20 million in capital. From 1990 until 1996 Mr. Schultz was the
      founder, an officer, and director of Aqua Care Systems, Inc., a manufacture
      of
      residential, commercial, industrial, and wastewater treatment plants. Aqua
      Care
      Systems became a public company in October 1993 after a successful NASDAQ
      offering. Mr. Schultz graduated with a B.A. Degree from Wayne State University
      in Detroit, Michigan in 1972.





Stephen
      F. Burg, age 69, **** Director,
      has been chief executive officer of SB Corporate Consulting, Inc., which offers
      corporate growth strategies for public and private companies, nationally and
      internationally, from 1986 to present. From 1978 to 1986, Mr. Burg was Vice
      President-Corporate Acquisitions for Evans Products Company, a New York Stock
      Exchange company with over $2 billion in annual revenues, and from 1973 to
      1978
      was Corporate Director-Acquisitions and Human Services for Jack August
      Enterprises. Mr. Burg has been a director of a pharmaceutical company, Xechem
      International, Inc. and Xechem Nigeria, Inc. for the past 11 years. He also
      serves as a consultant to a number of growth-oriented companies, both public
      and
      private. Mr. Burg is a graduate of Boston University. He is a licensed pilot,
      an
      avid boater, and holds various certifications in Real Estate.


12







Michael
      E. Fasci Sr. EA, 48, is the founder, president, and CEO of Process Engineering
      Services, Inc., which has its principal executive offices located in Middleboro,
      MA. Process Engineering Services, Inc. designs and manufactures pollution
      recovery equipment primarily for the manufacturing industry with clients
      worldwide. Since founding the company in 1987, Mr. Fasci has grown the company
      in each successive year to where it is today. In 1997, Mr. Fasci qualified
      for,
      and currently maintains Enrolled Agent status with the Internal Revenue Service.
      He also has developed a financial consulting and tax practice that serves
      primarily corporate clients. Mr. Fasci also currently owns and manages a number
      of other small businesses. Mr. Fasci has previously served on the Board of
      Directors of other publicly traded companies. He has successfully served in
      capacities including Chairman, President, CFO, and Audit Committee
      Chairman.








ITEM
      9B:
      COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT





Section
      16(a) of the Securities Exchange Act of 1934 requires our officers, directors
      and person who own more than 10% of our Common Stock to file reports of
      ownership and changes in ownership with the Securities and Exchange Commission.
      All of the aforesaid persons are required by SEC regulation to furnish us with
      copies of all Section 16(a) forms they file. No changes in the holdings of
      any
      officer, director or other person took place and therefore, no other reports
      were required to be filed.








ITEM
      10.
      EXECUTIVE COMPENSATION





The
      following table sets forth certain information concerning the compensation
      paid
      by the Company for services rendered in all capacities to the Company from
      January 1, 2005, through the current fiscal year ended December 31, 2006, of
      all
      officers and directors of the Company.






Name
                  and PrincipalPositions
                  at 12/31/06
              Year
              Salary
              Stock
                  Awards
              TotalJeffrey
                  L. Schultz
              2006
              $
                  78,000(a)
              $
                  32,500 (b)
              $152,500Director/President
              2005
              $169,808
              $150,000
                  (c)
              $219,808Michael
                  E. Fasci
              2006
              $
                  30,000(a)
              $122,500
                  (d)
              $194,500Director/CFO
              2005
              -0-
              -0-
              -0-Stephen
                  F. Burg2006
              2006
              -0-
              $126,000 (e)
              $126,000Director/Secretary
              2005
              -0-
              $300,000
                  (f)
              $300,000





(a)
            Accrued
                but not paid.


(b)
            As
                Part of Employment Agreement - Rule 144 Stock - 500K shares @
                $.065/shr.


(c)
            For
                Services - Rule 144 Stock - 375,000 shares @ $
                .40/share


(d)
            As
                Part of Employment Agreement - Rule 144 Stock - 500K shares @
                $.045/shr.


&
      2006 Director Fee - Rule 144 Stock - 250K shares @ $.40/shr.


(e)
            Consulting
                Fees - Rule 144 Stock - 150K shares @ $.52 & 150K @
                $.32


(f)
            Director
                Fee & Consulting Fee - Rule 144 Stock - 750K shares @
                $.40/share





13


ITEM
      11.
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.





The
      following table sets forth, as of December 31, 2006, certain information with
      respect to the beneficial ownership of our common stock by (i) each director
      and
      officer of the Company, (ii) each person known to the Company to be the
      beneficial owner of 5% or more of the outstanding shares of common stock, with
      such person’s address, and (iii) all of the directors and officers as a group.
      Unless otherwise indicated, the person or entity listed in the table is the
      beneficial owner of the shares and has sole voting and investment power with
      respect to the shares indicated.





Name
              of Beneficial Owner
            
            Shares
                Beneficiallyor
              Name of Officer or Director
            
            Owned
            
            PercentJeffrey
              L. Schultz
            
            5,215,950
            
            16.8%Director/President/CEOMichael
              Fasci
            
            1,010,000
            
            3.3%Director/CFOStephen
              F. Burg
            
            50,933
            
            0.2%Director/SecretaryBrian
              Corday
            
            5,314,768
            
            17.1%415
              Cullingworth DriveAlpharetta,
              GA 30022HEB,
              LLC
            
            4,715,950
            
            15.2%2225
              E. Randol Mill Road, Suite
              305Arlington,
              TX 76011Total
              Director/Officer/5% Owners
            
            16,307,601
            
            65.2%











ITEM
      12.
      CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.





Jeffery
      Schultz received 500,000 shares of Rule 144 Restricted Company stock related
      to
      his employment agreement effective October 1, 2006.





Michael
      Fasci Received 250,000 shares of Rule 144 restricted Company stock upon his
      appointment as Director on January 19, 2006. Mr. Fasci also received 500,000
      shares of Rule 144 Restricted Company stock related to his employment agreement
      effective August 1, 2006.





Process
      Engineering Services, Inc., (PES, Inc.) a company owned my Mr. Fasci, received
      $10,000 and 100,000 shares of company stock for accounting services during
      2006
      prior to Mr. Fasci becoming CFO.





Steve
      Burg received 150,000 shares of Rule 144 Company stock on January 19, 2006
      and
      an additional 150,000 shares of Rule 144 Company stock on January 31, 2006
      for
      consulting services to the company.





During
      2006 and 2005, the Company advanced funds to the CEO, periodically, during
      each
      year. The balances outstanding as of December 31, 2006 and 2005, were $12,404
      and $32,134, respectively.


14


These
      loans made to Mr. Schultz may be deemed to be in violation of Section 402 of
      the
      Sarbaines Oxley Act of 2002.








ITEM
      13.
      EXHIBITS AND REPORTS ON FORM 8-K.





(a)
      Exhibits





Exhibit
      No.  Description
      and Method of Filing


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


23.1
          Consent of Independent Auditor




31.1
      Certificate of Principal Executive Officer as Required by Rule
      13a-14(a)/15d-14





31.2
      Certificate of Principal Accounting Officer as Required by Rule
      13a-14(a)/15d-14





32.1
      Certificate of Principal Executive Officer as Required by Rule 13a-14(b) and
      Rule 15d- 14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title
      18 of the United States Code





32.1
      Certificate of Principal Accounting Officer as Required by Rule 13a-14(b) and
      Rule 15d-14(b) (17 CFR 240.15d-14(b) and Section 1350 of Chapter 63 of Title
      18
      of the United States Code





(b)
      Reports on Form 8-K





Filed
      January 9, 2006 and amended on January 11, 2006


Filed
      April 21, 2006 and amended on April 25, 2006, April 26, 2006 and June 28,
      2006


Filed
      August 3, 2006


Filed
      September 15, 2006


Filed
      October 2, 2006


Filed
      October 5, 2006 and amended February 26, 2007 and March 5, 2007


Filed
      December 19, 2006 and amended on December 20, 2006 and January 8,
      2007


Filed
      March 12, 2007











ITEM
      14.
      PRINCIPAL ACCOUNTANT FEES AND SERVICES





Our
      Board
      of Directors reviews and approves audit and permissible non-audit services
      performed by its independent accountants, as well as the fees charged for such
      services. In our review of non-audit service fees and its appointment of Moore
      & Associates, Chartered Accountants. as our independent accountants, our
      Board of Directors considered whether the provision of such services is
      compatible with maintaining independence. All of the services provided and
      fees
      charged by Moore & Associates, Chartered Accountants, in fiscal year ended
      December 31, 2006, were approved by our board of directors.





Audit
      Fees





The
      aggregate fees billed by Moore & Associates, Chartered Accountants, for
      professional services for the 2005 audit of our annual financial statements
      and
      review of the financial statements included in our quarterly reports on Form
      10-QSB for fiscal 2006 were $10,500 net of expenses.





Aggregate
      audit fees billed by Sherb & Co., LLP was $24,000 for professional services
      renderedfor our annual audit for 2006.








Audit-Related
      Fees


15


Additional
      fees related to the financial audits were $ 2,850 paid to an
      accountant.





Tax
      Fees





None


SIGNATURES





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











SECURED
              FINANCIAL NETWORK, INC.Date: April
              17, 2007
            By:
            /s/ Jeffrey
              L. SchultzJeffrey
              L. SchultzTitle 
              Principal Executive Officer


Date: April
              17, 2007
            By:
            /s/ Michael
              FasciMichael
              FasciTitle Principal
              Accounting Officer




Date: April
              17, 2007
            By:
            /s/ Michael
              FasciMichael
              FasciTitle Principal
              Financial Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the following
      persons on behalf of the Registrant and in the capacities and on the dates
      indicated have signed this Report.




Date: April
              17, 2007
            By:
            /s/ Jeffrey
              L. SchultzJeffrey
              L. SchultzTitle 
              Director  Date: April
              17, 2007
            By:
            /s/ Stephen
              F. BurgStephen
              F. BurgTitle Director




16