UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549








FORM
10-KSB/A


SECOND AMENDMENT








x ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended: December 31, 2007o TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from: _____________ to
  _____________




Secured
Financial Network, Inc.





(Name of
small business issuer in its charter)







Nevada
            000-28457
            86-0955239(State
      or Other Jurisdiction
            (Commission
            (I.R.S.
      Employerof
      Incorporation)
            File
      Number)
            Identification
      No.)




1180
SW 36th Avenue,
Suite 204, Pompano Beach, FL 33069


(Address
of Principal Executive Office) (Zip Code)




954-376-5611


(Registrant’s
telephone number, including area code)




101
NE 3rd Avenue,
Suite 1500, Ft. Lauderdale, FL 33301


(Former
name or former address, if changed since last report)







Securities
      registered pursuant to Section 12(b) of the Act:Title
      of each class
            
            Name
      of each exchange on which registeredNoneSecurities
      registered pursuant to Section 12(g) of the Act:Common
      Stock, Par Value $.001 Per Share(Title
      of Class)








1




Check
      whether the issuer (1) has filed all reports required to be filed by
      Section 13 or 15(d) of the Securities Exchange Act of 1934 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.
            xYes
            oNoCheck
      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.xIndicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Act).
            oYes
            xNoState
      issuer’s revenue for its most recent fiscal year.  $
      54,059As
      of December 31, 2007, we had 38,675,247 shares of our common stock $.001
      par value issued and outstanding. On February 29, 2008, the aggregate
      market value of our common stock held by non-affiliates was approximately
      $1,050,000.DOCUMENTS
      INCORPORATED BY REFERENCENoneTransitional
      Small Business Disclosure Format (Check one):
            oYes
            xNo





To
simplify the language in this Form 10-KSB , as amended , Secured Financial
Network, Inc., a Nevada Corporation, is referred to herein as the “Company” or
“We.”






EXPLANATORY
NOTE




This
Form 10-KSB/A is being filed to include language inadvertently omitted in
Paragraph 3 of the Section 302 certifications previously filed in the
registrant's Form 10-KSB/A First Amendment and filed herewith as Exhibits 31.1
and 31.2.




2


INDEX




PagePART
      IItem
      1.
            Description
      of Business
            4Item
      2.
            Description
      of Property
            6Item
      3.
            Legal
      Proceedings
            6Item
      4.
            Submission
      of Matters
            6PART
      IIItem
      5.
            Market
      for Common Equity and Related Stockholder Matters and Small Business
      Issuer Purchases of Equity Securities
            7Item
      6.
            Managements’
      Discussion and Analysis or Plan of Operation
            9Item
      7.
            Financial
      Statements
            12Item
      8.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
            13Item
      8A(T).
            Controls
      and Procedures
            13PART
      IIItem
      9.
            Directors,
      Executive Officers, Promoters, Control Persons and Corporate Governance;
      Compliance With Section 16(a) of the Exchange Act
            15Item
      9B.
            Compliance
      with Section 16(a) of the Exchange Act
            16Item
      10.
            Executive
      Compensation
            16Item
      11.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.
            17Item
      12.
            Certain
      Relationships and Related Transactions, and Director
      Independence
            17Item
      13.
            Exhibits
            18Item
      14.
            Principal
      Accounting Fees and Services
            18SIGNATURES
            19











3





PART
I




This
report on Form 10-KSB , as amended,  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 Operation” and elsewhere herein.







Item
      1.
            Description
      of Business.




Secured
Financial Network, Inc., a Nevada corporation (referred to herein as "we,” our,"
"us" or the "Company") was, since the merger in January 2005 between Secured
Financial Network, Inc., a private Florida corporation and 12 to 20 Plus, Inc.,
a Nevada public company which, post-merger changed its name to the Company's
current name, and until approximately December 2005, focused, in part, 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 45-90 days.  Pursuant to the agreements relating
to such transactions, we would generally obtain a secured position through
corporate and personal guarantees of the Company and its principals. During
2005, the Company financed approximately $2 million in promissory notes related
to container product offerings.





Since
December 2005, we have been financially unable to carry-out our business plan
relating to the container financing business due to lack of meaningful funds
from operations and problems associated with collections of accounts receivable.
While we did considerable due-diligence on the 3 trading companies whom we
financed before investments were made, these trading companies and its officers
were indicted on multiple counts of fraud, have just recently plead guilty to
related charges and have been sentenced.  Any and all collection
efforts to collect receivables relative to our container financing business, has
been more recently further exacerbated by the cessation of operations of all of
our principal customers. These customers accounted for over 90% of our accounts
receivable.





Following
such time period, from December 2005 through August 2007 the Company actively
pursued legal avenues relative to the collection of its receivables from the 3
container companies and its principal guarantor as its finances
allowed.





In
addition, the Company reviewed its options to continue in the investment and
financing of short-term notes and made the decision in January 2007 not to
continue in this business activity.





From
January 2006 until September 2006 the Company reviewed several alternative
business opportunities and made the decision in September 2006 to pursue payment
processing because of the background knowledge of certain key employee and
consultants who have had a 5 year history in the debit card and electronic
transfer sector.  We also pursued this business course because of the
statistical information (The McKinsey & Co. Report and Green Sheet) pointing
to the single largest growth sector in payment processing coming from electronic
transactions generated by then available use of debit cards and the growth of
internet e-commerce.





In
September 2006, we completed the acquisition of certain assets of Virtual
Payment Solutions, LLC, which included the Envoii worldwide license to deploy
certain proprietary technology for use in the payment processing industry, use
of the company name, Envoii E-Vault, and domain sites www.virtualpaymentsolutions.com.  This
licensed technology will allow us 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. The terms of such
acquisition generally provided for the payment of $385,000, which we paid at the
time of closing, and an annual pre-paid maintenance fee of $15,000. We expect to
start utilizing the license, and paying the license fee beginning in November
2008.Funding for this acquisition was made possible by funding we
secured from two private investors who were issued convertible promissory notes
aggregating $597,500 principal amount.





4




Item
      1.
              Description
      of Business. - continued
  In
January 2007, we entered into an agreement with All In Movie, LLC and Goldmill
Productions, LLC to build a fully integrated payment processing, stored value
and redemption platform to coincide with the release of their motion picture
“All In”. This platform was designed to allow in-theatre and home distribution
tie in marketing for purchase of related promotions and collateral products
through The All In Mall Internet site www.theallinmall.com
and www.allinmovie.com.





As a
result of opportunities made available to the Company in the payment-processing
marketplace, which require certain certifications and compliance with banking
and processing rules, and because of the limitations placed on the Company as a
result of such compliance, on August 31, 2007 we sold our interest in "The All
In Mall" to Goldmill Productions, LLC for $75,000.  Such entity is the
marketing partner to the All In Mall and has an ownership interest in the movie
“All In”. Payment termsgenerally provide for
the purchaser to make monthly payments to the Company pursuant to a promissory
note of $3,125 through November 1, 2009. Goldmill Productions is currently in
default on their payments to the Company.





In
furtherance of our payment processing business, on June 26, 2007, we entered
into an agreement with Blue Bamboo, a division of Shera International Shanghai,
China, to build-out a PCI (Payment Card Industry) Certified Payment Gateway for
the Company which will allow us to connect merchants, both online and
brick and mortar, with acquiring processors and banks.  The
Payment Gateway provides certified processing of credit/debit card transactions,
bill payment, money transfer, check signature verification, ACH, and a host of
other payment services. We plan to market the Payment Gateway under the RedFin
Network name. ThePayment
Card IndustryData
Security Standard,
with which the Payment Gateway complies,was developed by the
majorcredit
cardcompanies as a guideline to help organizations that process card payments
prevent credit card fraud, cracking and various other security vulnerabilities
and threats. A company processing, storing, or transmitting payment card data
must be PCI compliant or risk losing their ability to process credit card
payments and being audited and/or fined. Merchants and payment card service
providers must validate their compliance periodically.





In
October 2007, we formed a wholly owned subsidiary, Virtual Payment Solutions,
Inc., a Florida corporation  ("VPS").  VPS has entered into
agreements with the National Bank of California, First Data, and iPayments to
market merchant payment services along with value added services such as bill
payment, money transfer, and debit card loading.





On
October 3, 2007, we entered into a non-binding letter of intent to purchase up
to 80% of the outstanding shares of each of two payment processing platforms,
AmeriNet, LLC and PayzNet, LLC.  AmeriNet is an establishedcompany with a
proprietary platform for performing automated clearing house transactions with
gross revenues in excess of $2 million.   PayzNet allows for the
payment by consumers, outside the US, of merchandise and content over the
Internet in their local currency and secures payment to Internet
vendors.  Due-diligence continues to be conducted.





In
December 2007, the Company received PCI and CISP certification of its Payment
Gateway (RedFin Network) and is now creating websites and marketing programs to
promote this business segment.  (PCI) Payment Card Industry Data
Security standard was created to define a series of best practices when
processing, transmitting, and storing of credit card
information.  (CISP) Card Information Security Program was created to
define security standards for all merchants that process, transmit, and store
cardholder information. PCI is a pre-requirement for obtaining CISP
certification.





In
February 2008, the Company partnered with Blue Bamboo USA (www.bluebamboo.com)
to launch secure payment processing of credit, debit, gift card, and check
transactions using Blue Bamboo’s wireless H-50 terminal and P-25M Bluetooth
printer. Adding these low cost hardware components to our PCI compliant RedFin
Payment Gateway, gives us an edge in offering mobile commerce
solutions.  Transactions can be processed through a BlackberryTM
wireless device available through wireless carriers like AT&T, Sprint,
T-Mobile, and Verizon. We also plan to launch a mobile ATM solution based on the
Blue Bamboo H-50 wireless terminal.





We have
historically maintained a low-operating-cost philosophy and continue to plan to
do so. We employ a small staff, occupy modest office space, and seek to use
technology to reduce operating costs generally whenever possible.





Employees




As of
March 18, 2008 the Company had 4 employees.






5




Item
      2.
            Description
      of Property.




Office
Facilities:





1180 SW
36th
Avenue


Suite
204


Pompano
Beach, Florida 33069





Term: 36
Month Lease Expiring October 31, 2010 @ $2,160/month.







Item
      3.
            Legal
      Proceedings.




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.




The
Company is in default on certain of its debt obligations, specifically its
convertible debt in the principal amount of $597,500 together with unpaid
interest due and accruing in the amount of $57,007, a promissory note in the
principal amount of $50,000 together with unpaid interest due and accruing in
the amount of $3,893, and 13 Container Notes debt in the principal amount of
$1,410,000 together with unpaid interest due and accruing in the amount of
$563,264 as of December 31, 2007.




Negotiations
are ongoing with these creditors. While there are currently no legal proceedings
against the Company, some of the Company’s creditors have the legal right to
initiate such proceedings in the event of default and upon unsuccessful
renegotiation of the Company’s debt.






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




None













6





PART
II




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




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, 2006 as reported by the OTC Bulletin Board. 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, markdown or commission and may not represent actual
transactions.




January
      1, 2007 to December 31, 2007 (OTC Bulletin Board)
            
            High
            
            
            LowFirst
      quarter
            
            $
            0.12
            
            
            $
            0.04Second
      quarter
            
            
            0.11
            
            
            
            0.01Third
      quarter
            
            
            0.10
            
            
            
            0.02Fourth
      quarter
            
            
            0.12
            
            
            
            0.03








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





As of
December 31, 2007 we had 38,675,247 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.














7




Item
      5.
              Market
      for Common Equity and Related Stockholder Matters and Small Business
      Issuer Purchases of Equity Securities. -
  continued
  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, 2007:
  (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
                
                
                --
                
                
                --
                
                
                5,626,095(1)Total
                
                
                
                
                
                
                
                
                5,626,095(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.
  The Plan was established
on August 3, 2004, effective August 3, 2004, to amend and restate the Company's
2003 Employees/Consultants Stock Compensation Plan, to offer directors, officers
and selected key employees, advisors and consultants an opportunity to acquire a
proprietary interest in the success of the Company to receive compensation, or
to increase such interest, by purchasing Shares of the Company's common
stock.  The Plan provides both for the direct award or sale of Shares and
for the grant of Options to purchase Shares.  Options granted under the
Plan may include non-statutory options, as well as ISOs intended to qualify
under section 422 of the Code.
  The Plan is intended to
comply in all respects with Rule 16.3 (or its successor) under the Exchange Act
and shall be construed accordingly.
  RECENT
SALES OF UNREGISTERED SECURITIES





During
the past three years, we sold the following securities under the Securities Act
of 1933, as amended, (the “Securities Act”) based upon the limited number of
offerees, their relationship to the Company, the number of shares or other
securities offered, the size of the offering, and the number of such
offerings.





2005


In 2005,
the Company issued 200,000 shares of common stock for cash totaling
$30,000.





In 2005,
the Company issued 3,734,630 shares for services totaling $146,963.





In 2005,
the Company issued seventeen short-term notes (average 90-days) with a specific
rate of return to acquire funds to invest into high yield activities (e.g.
Container financing/investment). As of December 31, 2007 the Company’s
short-term notes payable relating to the previous container financing business
total $1,410,000. The Company has also accrued $563,264 interest on these
notes.  See discussion below under 2007 concerning conversion of
certain of such notes, which were in default including principal and interest
therein to shares of our common stock.





2006


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





In 2006,
the Company issued 729,166 shares of its common stock to retire debt totaling
$37,300.





In 2006,
the Company issued 4,524,307 shares of its common stock in exchange for $674,339
of services.





In
September and October 2006, the Company issued convertible notes in exchange for
$597,500 in cash. We are presently in default of our principal and interest
repayment obligation under such notes.  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 of December 31, 2007, none of these notes have
been converted. As part of the Pledge and Security Agreement relating to the
Convertible Notes, the Company issued 5,975,000 shares of its 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 Convertible Notes also provide for warrants
to purchase shares of our common stock exercisable at an exchange rate based on
a number of factors at the time of exercise.





In 2006,
the Company issued 5,000,000 shares of its 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.




In 2006,
the company issued 900,000 shares of its 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.






8


Item
      5.
                Market
      for Common Equity and Related Stockholder Matters and Small Business
      Issuer Purchases of Equity Securities. -
  continued
  2007


In 2007,
the Company sold 3,000,000 shares of common stock for cash totaling
$150,000.





In 2007,
the Company issued 2,457,000 shares of its common stock to retire debt totaling
$819,644.  The 2,457,000 shares were issued to 13 Container Note
Holders in exchange for their Notes Payable aggregating $819,644 principal,
accrued interest, and profit participation in addition to warrants to purchase
2,400,000 shares of common stock exercisable at $.10 for 5 years and 2,400,000
shares exercisable at $.50 for 5 years.





As of
December 31, 2007, the 17 outstanding Container Notes which were not converted
during 2007 aggregating $1,410,000 principal amount are in default and are
accruing interest at a rate of 18% per annum.





In 2007,
the Company issued 2,216,666 shares of its common stock in exchange for $130,000
of services and interest.





On June
11, 2007 the Company issued a promissory note for $50,000. Terms are 180 days at
14% interest with interest to be paid quarterly. Lender has the option to
convert principal into 2,000,000 shares of Company stock. Interest will still be
payable. The note continues to accrue interest at 14%.





On
October 10, 2007 the Company issued a promissory note for $40,000. Terms are for
24 months at 10% interest with interest to be paid quarterly.





On
December 7, 2007 the Company issued a promissory note for $10,000. Terms are for
24 months at 10% interest with interest to be paid quarterly.





On
December 31, 2007 the Company issued a promissory note for $15,000. Terms are
for 24 months at 10% interest with interest to be paid quarterly.





Item
      6.
            Managements’
      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





Secured
Financial Network through its wholly owned subsidiary Virtual Payment Solutions,
Inc. (the Company) owns and operates a vertically integrated suite of payment
processing and value added platforms marketed and utilized to traditional brick
and mortar and internet e-commerce merchants.





9


Item
      6.
              Managements’
      Discussion and Analysis or Plan of Operation. -
  continued
  Statistics
provided by the McKinsey & Co. Payments Practice Report stated that the
largest growth sector for the payments industry would come from the following
two categories:


PAYMENT
      SECTOR
            2006
            2010Credit
      Card/Electronic Payments
            $49
      billion
            $85
      BillionACH/Electronic
      Checks
            $13
      Billion
            $19
      Billion




In
furtherance of our payment processing business on June 26, 2007, the Company
into an agreement with Blue Bamboo, a division of Shera International Shanghai,
China, to build-out a PCI (Payment Card Industry) Certified Payment Gateway for
the Company which will allow us to connect merchants, both online and brick
& mortar, with acquiring processors and banks.  The Payment
Gateway provides certified processing of credit/debit card transactions, bill
payment, money transfer, check signature verification, ACH, and a host of other
payment services. The Payment Gateway is marketed under the RedFin Network name.
ThePayment
Card IndustryData
Security Standardwas developed by the
majorcredit
cardcompanies as a guideline to help organizations that process card payments
prevent credit card fraud, cracking and various other security vulnerabilities
and threats. A company processing, storing, or transmitting payment card data
must be PCI compliant or risk losing their ability to process credit card
payments and being audited and/or fined. Merchants and payment card service
providers must validate their compliance periodically.





The
Payment Gateway will be marketed under Reseller Agreement with ISO’S
(Independent Sales Organizations) and VAR’s (Value Added Resellers) selling
products and merchant services to end customers throughout the US on a
non-exclusive basis.  Revenue is generated from a transaction fee
charged for each transaction passing through the Gateway to end acquiring
processors such as Vital, Global all First Data Networks, PaymentTech,
Heartland, Valutec and others already integrated with the payment
gateway.  The gateway is also integrated with all processing terminals
in the marketplace that require a payment gateway.  All Internet
merchants and certain brick & mortar merchants require a gateway to pass
transactions from their customer’s use of a payment form to the acquiring
bank/processor.





The
Payment Gateway can also be re-branded for other large associations requiring
the own name recognition by the ISO/Merchant customer base.  We
currently have a large processing group, which we have completed re-branding
under the name SureGate that will begin live transaction processing April 1st.





The
Payment Gateway has incorporated a shopping cart emulator, which allows Internet
merchants currently using other competitive Payment Gateway’s to integrate with
the RedFin Network in a quick and efficient manner without disruption of their
business.  The shopping cart emulator has integrated the top 120 carts
currently used by Internet merchants.





The
Company has entered into an agreement to be a Premier distributor for Blue
Bamboo, a Shera International Company (www.bluebamboo.com)
based in China for the marketing and sale of it wireless payment terminal
product line, more specifically the H-50 processing terminal that operates
through the GPRS wireless networks and the P-25 Bluetooth processing terminal
that operates in combination with Blackberry and similar
cell-phones.  The RedFin Network for mobile transaction processing
powers both of these terminals. The Company has entered into Agreement to resell
AT&T and T-Mobile data plans used to transmit transactions wirelessly
creating a monthly recurring revenue stream to the Company.  These
products and services of the Company will be shown and marketed at the ETA
(Electronic Transaction Association) 2008 Show mid-April. The Mobile Wireless
merchant terminals will be marketed and distributed under Reseller Agreement
with ISO’S (Independent Sales Organizations) and VAR’s (Value Added Resellers)
selling products and merchant services to end customers throughout the US on a
non-exclusive basis.





The
company faces significant competition in the marketplace from payment gateways
in operation for the past 10 years such as Authorized.net, a company recently
acquired by Cybersource for nearly $700 million.  Authorized
represents transaction volume from approximately 190,000 Internet
merchants.   Additional gateway competitors include EFS Net and
LinkPoint.  The company has positioned itself in a niche market
providing high volume merchants a very competitive pricing model per
transaction, excellent gateway technology, superior customer service, and
features not available from other gateway’s such as merchant terminal
integration, ACH, and recurring billing to name a few. Currently the are in
excess of 5 million Internet merchants with nearly 5000 new ones opening on a
daily basis requiring a shopping cart and payment gateway. (Statistics gathered
from SIC Code Info and the Green Sheet)





10


Item
      6.
              Managements’
      Discussion and Analysis or Plan of Operation. -
  continued




The
marketplace for wireless merchant terminals includes approximately six major
players including Verifone, Way Systems, and Nurit.  The Company
believes it will be successful in marketing the Blue Bamboo wireless merchant
terminal product line based on its cost to end users being nearly 40% less than
the competitor’s for a product that does not include features such as Pin Debit
and Check Guarantee/Verification.  The terminals come ready to use out
of the box because of its integration with the RedFin Network
Gateway.  There are approximately 2.3 mobile merchants in the US with
less than 10% of them having a wireless payment method installed. (Statistics
gathered from SIC Code info and Green Sheet)





The
RedFin Network Payment Gateway requires an annual renewal and certification
under PCI and CISP protocols.  Third party auditors keeping the
payment gateway in compliance do independent scans randomly.





The
Company will continue its objective to keep a low cost efficient overhead by
outsourcing warehousing and terminal products handling to Paragon Services, Inc.
(www.paragonservices.net)
a trusted name in the payment products distribution marketplace.  In
addition, all customer service related questions have also been outsourced with
24/7 response to customer trouble tickets within 15 minutes.





Results
of Operation for Year Ended December 31, 2007


Compared
to Year Ended December 31, 2006





The
Company generated $ 54,059 in revenue in 2007 compared to $ 0 in 2006. Such
increase in sales was attributable the contract web development of the
All-In-Mall and wireless terminals sold by the Virtual Payment Solutions
Division.





Net loss
for the year ending December 31, 2007 was ($1,676,894) compared to a net loss of
($2,166,311) for the same period ending December 31, 2006. The decrease in loss
was primarily attributable to the reduction in derivative and liquidating
liabilities associated with our convertible debt taken during 2007 compared to
2006. $475,000 of the loss in 2007 was associated with the $400,000 impairment
expense associated with the Envoii License and pre-paid fee as well as a $75,000
bad debt expense relating to the $75,000 Note Receivable with Goldmill
Productions.





The
Company had total assets of $70,811 at the year ended December 31, 2007,
compared to $577,737 for the year ended December 31, 2006. A $475,000 reduction
in assets in 2007 was associated with the $400,000 impairment expense associated
with the Envoii License and pre-paid fee as well as a $75,000 bad debt expense
relating to the $75,000 Note Receivable with Goldmill Productions.





The
Company had total liabilities of $ 3,999,669 at the year ended December 31,
2007, compared to $3,929,344 for the year ended December 31, 2006.





At
December 31, 2007, the Company had $15,041 cash on hand compared to $78,486 at
December 31, 2006.





At
December 31, 2007, the Company had accounts receivable of $ 0.





During
2007, the principals of two clients for whom the Company had previously set up
an allowance for doubtful accounts of $3,611,101 were convicted and sentenced to
10 years in jail. As a result, the Company deemed these receivables
non-collectable. The 13 Notes that were due the Company were offered for sale to
each of the Container Note Holders who had invested monies with the Company. In
November 2007 the Notes were sold for a nominal sum and were removed from the
books of the Company as an accounts receivable.





Although
the Company expects to generate revenues in 2008, due to sales of its wireless
terminals and gateway transaction revenue, the Company expects to continue to
incur losses at least through the first half of 2008, and there can be no
assurance that the Company will achieve or maintain profitability, generate
revenue or sustain future growth.





11




Item
      6.
                Managements’
      Discussion and Analysis or Plan of Operation. -
  continued
  We have
no off-balance sheet arrangements.





Liquidity
and Capital Resources





At
December 31, 2007, the Company’s total assets of $70,811 were exceeded by our
total liabilities of $3,999,669. We had a working capital deficit of $3,896,294.
We believe that additional working capital of up to approximately $2,000,000
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.  We
have no current agreeements, arrangements, or understanding for such needed
capital.  In the event we do not receive approximately $500,000 by June
2008, we may have to reduce or curtail certain operations.





On August
31, 2007 the Company sold its interest in the “All In Mall” to Goldmill
Productions, LLC for the sum of $75,000. Payments were to be made in 24 monthly
payments of $3,125 beginning no later than December 1, 2007. Goldmill is
currently in default on said payments to the Company, hence the Company has
fully reserved against the collection of such receivables.





As of
December 31, 2007, the Company is in default on certain of its debt obligations,
specifically its convertible debt in the principal amount of $597,500 together
with unpaid interest due and accruing in the amount of $57,007, a promissory
note in the principal amount of $50,000 together with unpaid interest due and
accruing in the amount of $3,893, and 13 Container Notes debt in the principal
amount of $1,410,000 together with unpaid interest due and accruing in the
amount of $563,264 as of December 31, 2007.







Item
      7.
            Financial
      Statements.




Our
consolidated financial statements are filed under this Item 7, beginning on page
F-1 of this report.












12












Secured
Financial Network, Inc.





CONTENTS




PageREPORT OF INDEPENDENT REGISTERED
      PUBLIC ACCOUNTING FIRM - SHERB & CO, LLP
            F-2CONSOLIDATED
      FINANCIAL
      STATEMENTSConsolidated
      Balance Sheets
            F-3Consolidated
      Statement of Operations
            F-4Consolidated
      Statement of Statements of Stockholders’ (Deficit)
            F-5Consolidated
      Statement of Cash Flows
            F-6NOTES TO THE CONSOLIDATED
      FINANCIAL STATEMENTS
            F-7 to
  F-18











F-1







Report
of Independent Registered Public Accounting Firm





Board of
Directors and Stockholders


Secured
Financial Network, Inc.





We have
audited the accompanying consolidated balance sheet of Secured Financial
Network, Inc. as of December 31, 2007, and the related consolidated statements
of operations, stockholders’ deficit, and cash flows for each of the years ended
December 31, 2007 and 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 consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company as
of December 31, 2007, and the results of its operations and cash flows for each
of the years ended December 31, 2007 and 2006,  in conformity with
generally accepted accounting principles in the United States.





The
accompanying consolidated financial statements have been prepared assuming that
Secured Financial Network, Inc. will continue as a going concern.  As
more fully described in Note 2, 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 2.  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.




/s/ Sherb & Co.,
LLP


SHERB
& CO, LLP


Certified
Public Accountants





New York,
New York


April 11,
2008






F-2




SECURED
      FINANCIAL NETWORK, INC.CONSOLIDATED
      BALANCE SHEETDecember
      31, 2007ASSETSCURRENT
      ASSETSCash
              
              $
              15,041Employee
      Loans
              
              
              9,333Inventory
      - VPS Terminals
              
              
              9,000Prepaid
      Expenses
              
              
              5,000Total
      Current Assets
              
              
              38,375FURNITURE
      AND EQUIPMENT (NET)
              
              
              5,666OTHER
      ASSETSRefundable
      Deposits
              
              
              25,170Investments
      Held for Sale
              
              
              1,600Total
      Other Assets
              
              
              26,770TOTAL
      ASSETS
              
              $
              70,811LIABILITIES AND
      STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESAccounts
      Payable
              
              $
              91,344Investor
      Notes Payable - in default
              
              
              1,410,000Accrued
      Expenses
              
              
              839,634Derivative
      and Liquidating Liabilities
              
              
              946,191Convertible
      Notes Payable - in default
              
              
              50,000Secured
      Convertible Notes - net of debt discount
              
              
              597,500Total
      Current Liabilities
              
              
              3,934,669LONG
      TERM DEBT
              
              
              65,000STOCKHOLDERS'
      DEFICITCommon
      Stock authorized is 100,000,000shares
      at $0.001 par value.  38,675,247 issuedand
      outstanding
              
              
              38,675Additional
      Paid in Capital
              
              
              2,517,610Accumulated
      Deficit
              
              
              (6,485,142
              )Total
      Stockholders' Deficit
              
              
              (3,928,858
              )TOTAL
      LIABILITIES ANDSTOCKHOLDERS'
      DEFICIT
              
              $
              70,811The
      accompanying notes are an integral part of these consolidated
      statements






F-3




SECURED
      FINANCIAL NETWORK, INC.CONSOLIDATED
      STATEMENTS OF OPERATIONSYear
      Ended December 31,2007
              
              
              2006REVENUESWeb
      Site Development
              
              $
              25,000
              
              
              $
              -Terminal
      Sales (VPS)
              
              
              29,059
              
              
              
              -Total
      Revenues
              
              
              54,059
              
              
              
              -Cost
      of Goods Sold
              
              
              21,000
              
              
              
              -Gross
      Profit
              
              
              33,059
              
              
              
              -EXPENSESAdministrative
      Expenses
              
              
              347,133
              
              
              
              298,451Professional
      and Consulting
              
              
              150,904
              
              
              
              575,746Bad
      Debt Expense
              
              
              76,490
              
              
              
              -Depreciation
      and Amortization
              
              
              61,518
              
              
              
              -Asset
      Impairment Expense
              
              
              400,000
              
              
              
              -Total
      Expenses
              
              
              1,036,045
              
              
              
              874,197NET
      LOSS BEFORE OTHER INCOME ( EXPENSES)
              
              
              (1,002,986
              )
              
              
              (874,197
              )OTHER
      INCOME ( EXPENSES ):Interest
      Expense
              
              
              (854,115
              )
              
              
              (437,070
              )Derivative
      and Liquidating Expense
              
              
              (83,313
              )
              
              
              (862,878
              )Other
      Income
              
              
              263,520
              
              
              
              2,500Net
      Gain (Loss) from Sale of Investments
              
              
              -
              
              
              
              5,334Total
      Other Income ( Expenses )
              
              
              (673,908
              )
              
              
              (1,292,114
              )NET
      LOSS BEFORE PROVISION FOR INCOME TAXES
              
              
              (1,676,894
              )
              
              
              (2,166,311
              )Provision
      for Income Taxes
              
              
              -
              
              
              
              -NET
      LOSS
              
              $
              (1,676,894
              )
              
              $
              (2,166,311
              )Basic
      and DilutedNet
      Loss per Common Share
              
              $
              (0.05
              )
              
              $
              (0.10
              )Weighted
      Average Number of SharesCommon
      Shares Outstanding -basic
      and diluted
              
              
              34,838,414
              
              
              
              22,327,345The
      accompanying notes are an integral part of these consolidated
      statements






F-4




SECURED
      FINANCIAL NETWORK, INC.CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' DEFICITYEARS
      ENDED DECEMBER 31, 2006 and 2007Common
      Stock
              
              
              Additional
              
              
              
              
              
              TotalPar
      value $0.001
              
              
              Paid
      in
              
              
              Accumulated
              
              
              Stockholders'Shares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              DeficitBalance,
      December 31, 2005
              
              
              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
              )Common
      Stock Issued for Cash
              
              
              3,000,000
              
              
              
              3,000
              
              
              
              147,000
              
              
              
              -
              
              
              
              150,000Common
      Stock Issued for Services
              
              
              1,866,666
              
              
              
              1,866
              
              
              
              78,134
              
              
              
              -
              
              
              
              80,000Common
      Stock Issued with Debt andRelated
      Beneficial Conversion Rights
              
              
              350,000
              
              
              
              350
              
              
              
              49,650
              
              
              
              -
              
              
              
              50,000Common
      Stock Issued to Retire Debt
              
              
              2,457,000
              
              
              
              2,457
              
              
              
              817,187
              
              
              
              -
              
              
              
              819,644Net
      (Loss)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,676,894
              )
              
              
              (1,676,894
              )Balance,
      December 31, 2007
              
              
              38,675,247
              
              
              $
              38,675
              
              
              $
              2,517,609
              
              
              $
              (6,485,142
              )
              
              $
              (3,928,858
              )The
      accompanying notes are an integral part of these consolidated
      statements






F-5




SECURED
      FINANCIAL NETWORK, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSYear
      Ended December 31,2007
              
              
              2006Cash
      Flows From Operating Activities:Net
      Loss
              
              $
              (1,676,894
              )
              
              $
              (2,166,311
              )Adjustments
      to Net Loss:Common
      Stock for Services
              
              
              80,000
              
              
              
              674,339Derivative
      and Liquidating Income
              
              
              83,313
              
              
              
              862,878Amortization
      of Debt Discount and Finance Fees
              
              
              524,974
              
              
              
              68,560Depreciation
      and Amortization
              
              
              2,138
              
              
              
              770Impairment
      of long lived assets
              
              
              400,000
              
              
              
              -Adjustments
      to Reconcile Net Loss toNet
      Cash (Used) by Operating Activities:Changes
      in Assets and Liabilities:Prepaid
      Expense
              
              
              13,500
              
              
              
              (31,000
              )Employee
      Loans
              
              
              3,071
              
              
              
              17,730Inventory
              
              
              (9,000
              )
              
              
              -Investor
      Accrued Interest
              
              
              118,277
              
              
              
              -Accrued
      Interest Conv. Notes
              
              
              57,007
              
              
              
              -Accrued
      Expenses
              
              
              25,720
              
              
              
              444,037Accounts
      Payable
              
              
              57,033
              
              
              
              (35,378
              )Net
      Cash (Used) by Operating Activities
              
              
              (320,861
              )
              
              
              (164,376
              )Cash
      Flows From Investing Activities:Security
      Deposits
              
              
              (25,170
              )
              
              
              2,870Investment
      Held for Sale
              
              
              2,800
              
              
              
              1,600Deferred
      Financing Fees
              
              
              59,380
              
              
              
              (62,875
              )Loan
      Receivable
              
              
              2,000
              
              
              
              -License
      Agreement
              
              
              -
              
              
              
              (385,000
              )(Purchase)  Sale
      of Equipment
              
              
              (5,238
              )
              
              
              1,500Net
      Cash (Used) by Investing Activities
              
              
              33,772
              
              
              
              (441,905
              )Cash
      Flows From Financing Activities:Long
      Term Debt
              
              
              65,000
              
              
              
              -Convertible
      Note
              
              
              50,000
              
              
              
              -Investor
      Profit Participation
              
              
              (41,356
              )
              
              
              (10,733
              )Principal
      Received on Short Term Notes
              
              
              -
              
              
              
              667,500Proceeds
      from the sale of Common Stock
              
              
              150,001
              
              
              
              28,000Net
      Cash Provided by Financing Activities
              
              
              223,645
              
              
              
              684,767Net
      Change in Cash
              
              
              (63,445
              )
              
              
              78,486Cash
      and Cash Equivalents - Beginning
              
              
              78,486
              
              
              
              -Cash
      and Cash Equivalents - Ending
              
              $
              15,041
              
              
              $
              78,486Supplemental
      Cash Flow Disclosures:Taxes
              
              $
              -
              
              
              $
              -Interest
              
              $
              -
              
              
              $
              368,510Non-Cash
      Financing Transactions:Shares
      Issued for Services and Debt
              
              $
              130,000
              
              
              $
              674,339Conversion
      of Indebtedness for Equity
              
              $
              819,644
              
              
              $
              37,300The
      accompanying notes are an integral part of these consolidated
      statements







F-6
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007




NOTE
1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES





Nature
of Business and History of Company





Secured
Financial Network, Inc. (originally Loughran/Go Corporation prior to name change
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. From January 2005 until December 2005 the Company engaged in
investment of capital to fund short-term transactions of close-out or distressed
container sized products.  From mid-2006, the Company restructured its
focus entirely to payment processing and build out of compliant Payment Gateway
connecting merchants to processors and transaction acquiring
banks.




On
November 22, 2004, 12 To 20 Plus, Inc. entered into a share exchange agreement
with Secured Financial Network, Inc. pursuant to which an aggregate of
14,737,343 shares of the Company’s common stock, were issued, representing 94%
of the 15,693,478 shares of common stock outstanding after the closing. For
accounting purposes, the transaction is reflected as if 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
consolidated financial statements presented primarily represent the operations
of Secured Financial Network, Inc. from its inception date, November 10, 2004,
to the share exchange 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 consolidated 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, 2007 and 2006, the Company has incurred net losses of $1,676,894
and $2,166,311 respectively, a substantial portion of the debt is in default and
has a stockholders’ deficit of $3,928,858 as of December 31, 2007. The future of
the Company is dependent upon its ability to obtain additional equity and/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 but cannot assure 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
consolidated 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-7
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007


NOTE 1 - DESCRIPTION OF
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
continued




Consolidation





The
accompanying consolidated financial statements of Secured Financial Network,
Inc., a Nevada corporation (the "Company"), include the accounts of the Company
and its wholly owned subsidiary, Virtual Payment Solutions, Inc, a Florida
Corporation ("VPS"). The Company created VPS in September of
2007.  All significant inter-company accounts and transactions are
eliminated in consolidation.





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.





Accounts
Receivable and Revenue Recognition





Accounts
Receivable





During
2007, the principals of two clients for whom the Company had previously set up
an allowance for doubtful accounts of $3,611,101 were convicted and sentenced to
10 years in jail. As a result, the Company deemed these receivables
non-collectable. The 13 Notes that were due the Company were offered for sale to
each of the Container Note Holders who had invested monies with the Company. In
November 2007 the Notes were sold for a nominal sum and were removed from the
books of the Company as an accounts receivable.





The
Company estimates an allowance for doubtful accounts, sales returns and
allowances based on historical trends and other criteria.  At December
31, 2007 and 2006, there were no allowances on trade receivables from product
sales.  No bad debt expense was incurred in 2007 and 2006 as well on
product sales.





The
Company recognizes revenues associated with the sale of its products at the time
of delivery to customers.





Inventory





Inventories,
which are finished goods, are stated at the lower of cost (first-in, first-out
method) or market. A provision for excess or obsolete inventory is recorded at
the time the determination is made.





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 yearsOffice
      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, 2007, an impairment existed as it related to it’s
$385,000 Envoii License Asset and $15,000 pre-paid License Fee and as such has
taken an impairment charge of $400,000.







F-8
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007


NOTE 1 - DESCRIPTION OF
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
continued




Although
the Company believes that it will ultimately be able to utilize this asset and
the associated fee, valuing this asset has proven to be somewhat difficult. Due
the unique and esoteric nature of the Envoii License technology, the Company’s
has taken a conservative approach in valuing this asset and has taken an
impairment for the entire purchase price.





Stock-Based Employee
Compensation





The
Company adopted SFAS No. 123R, “Share Based Payments.” SFAS No. 123R
requires companies to expense the value of employee stock options and similar
awards and applies to all outstanding and vested stock-based
awards.





In
computing the impact, the fair value of each option is estimated on the date of
grant based on the Black-Scholes options-pricing model utilizing certain
assumptions for a risk free interest rate; volatility; and expected remaining
lives of the awards. The assumptions used in calculating the fair value of
share-based payment awards represent management’s best estimates, but these
estimates involve inherent uncertainties and the application of management
judgment. As a result, if factors change and the Company uses different
assumptions, the Company’s stock-based compensation expense could be materially
different in the future. In addition, the Company is required to estimate the
expected forfeiture rate and only recognize expense for those shares expected to
vest. In estimating the Company’s forfeiture rate, the Company analyzed its
historical forfeiture rate, the remaining lives of unvested options, and the
amount of vested options as a percentage of total options outstanding. If the
Company’s actual forfeiture rate is materially different from its estimate, or
if the Company reevaluates the forfeiture rate in the future, the stock-based
compensation expense could be significantly different from what we have recorded
in the current period. The impact of applying SFAS No. 123R approximated
$130,000 and $674,339 in compensation expense during the year ended December 31,
2007 and 2006, respectively.  Such amount is included general and
administrative expenses on the statement of operations.





Concentration
of Credit Risk




The
Company 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 may be
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.






F-9
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007
 NOTE 1 - DESCRIPTION OF
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
continued
  Accounting
Estimates





Management
uses estimates and assumptions in preparing the Company’s consolidated 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, 2007. The Company considers the
carrying value of accounts receivable, net of reserves, accounts payable and
accrued expenses in the consolidated 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 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
2008. 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 2007.





FASB
141(revised 2007) – Business Combinations




In
December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business
Combinations. This Statement replaces FASB Statement No. 141, Business
Combinations. This Statement retains the fundamental requirements in
Statement 141 that the acquisition method of accounting (which Statement
141 called the purchase method) be used for all business combinations and for an
acquirer to be identified for each business combination. This Statement defines
the acquirer as the entity that obtains control of one or more businesses in the
business combination and establishes the acquisition date as the date that the
acquirer achieves control. This Statement’s scope is broader than that of
Statement 141, which applied only to business combinations in which control was
obtained by transferring consideration. By applying the same method of
accounting—the acquisition method—to all transactions and other events in which
one entity obtains control over one or more other businesses, this Statement
improves the comparability of the information about business combinations
provided in financial reports.




This
Statement requires an acquirer to recognize the assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree at the acquisition
date, measured at their fair values as of that date, with limited exceptions
specified in the Statement. That replaces Statement 141’s cost-allocation
process, which required the cost of an acquisition
to be allocated to the individual assets acquired and liabilities assumed based
on their estimated fair values.




F-10
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007
 NOTE 1 - DESCRIPTION OF
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
continued
  This
Statement applies to all transactions or other events in which an entity (the
acquirer) obtains control of one or more businesses (the acquiree), including
those sometimes referred to as “true mergers” or “mergers of equals” and
combinations achieved without the transfer of consideration, for example, by
contract alone or through the lapse of minority veto rights. This Statement
applies to all business entities, including mutual entities that previously used
the pooling-of-interests method of accounting for some business combinations. It
does not apply to: (a) The formation of a joint venture, (b) The acquisition of
an asset or a group of assets that does not constitute a business, (c) A
combination between entities or businesses under common control, (d) A
combination between not-for-profit organizations or the acquisition of a
for-profit business by a not-for-profit organization.




This
Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. An entity may not apply it
before that date. Management believes this Statement will have no impact on the
financial statements of the Company once adopted, unless any contemplated
acquisitions occur in the near future.




All other
new accounting pronouncements have deemed not relevant, as a result the adoption
of these other new accounting pronouncement is not expected to have any impact
once adopted.




NOTE 2
- FURNITURE AND EQUIPMENT





At
December 31, 2007, furniture and equipment consisted of the
following:





Description
            
            AmountOffice furniture and
      equipment
            
            $
            9,191Less: accumulated
      depreciation
            
            
            (3,524
            )Property and equipment,
      net
            
            $
            5,666




Depreciation
expense charged to operations totaled $2,138 and $770 in 2007 and 2006,
respectively.





NOTE 3
- 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 (the “Envoii System”).





In
addition, $15,000 was prepaid as an annual maintenance fee with regard 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
currently anticipate the Envoii System to be placed in service by November 1,
2008 depending upon our ability to secure needed financing, of which no
assurances are given.





We have
recorded a full reserve of $400,000 against the license and prepaid maintenance
fees, as we are currently unable to predict any reliable cash flow from the
implementation of the Envoii System. 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.





In
addition to the consideration paid for the purchase of such license agreement,
royalties are required to be paid at $0.20 per transaction or 20% of the gross
transaction, whichever is less,excluding micropayment transactions. The
Company has guaranteed minimum royalties to be paid in the amount of $50,000 in
year three starting November 1, 2008, $100,000 for year four and $250,000 for
each year thereafter in order to keep exclusivity terms under this license
agreement.





F-11
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007





NOTE 4
- NOTES PAYABLE and NOTES RECEIVABLE





Investor Notes
Payable





During
2005 the Company issued seventeen (17) short-term notes (average 90-days) with a
specific rate of return to acquire funds to invest in high yield activities
(e.g. Container financing/investment). As of December 31, 2007, the Company’s
short-term notes payable relating to its previous container financing business
total $1,410,000. The Company has also accrued $563,264 interest on these notes.
All seventeen Notes are in default and are accruing interest at the rate of 18%
per annum.





During
February 2007, the Company offered to the holders of its container financing
notes the option to convert into equity. In February the Company exchanged
$819,644 worth of principal, accrued interest, and profit participation debt
into 2,457,000 shares if its restricted common stock, 2,457,000 warrants
exercisable at $.10, and 2,457,000 warrants exercisable at $.50.





Promissory
Notes





On June
11, 2007 the Company entered into a promissory note for $50,000. Terms are 180
days at 14% interest with interest to be paid quarterly. Lender has the option
to convert principal into 2,000,000 shares of Company stock. Interest will still
be payable. The note continues to accrue interest at 14% per annum with interest
to be paid quarterly. The Company is in default on its note payments. The lender
has not exercised their right to convert to common shares of the
Company.





During
the fourth quarter of  2007 the Company entered into three promissory
notes totaling $65,000. Terms are for 24 months at 10% interest per annum with
interest to be paid quarterly.





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, bear interest at 10% per annum, 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 a 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 by the conversion price. The conversion price is 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’s notice of conversion, orb)
            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, ord)
            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.




F-12
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007
 
 NOTE 4
- NOTES PAYABLE and NOTES RECEIVABLE - continued




The
Convertible Notes and related agreements provide, among other things, for the
following as to each Convertible Note:





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
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 Convertible 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. The Lender has the right of first
refusal of any financing for eighteen (18) months after the Funding. The Lender
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.




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 U.S. 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, 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.










F-13
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007
 
 NOTE 4
- NOTES PAYABLE and NOTES RECEIVABLE - continued




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 Company 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 180th
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
Company shall not be liable to the Lender under 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.





Liquidated
Damages will neither accrue nor be payable pursuant to 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 Securities Act of 1933, as
ammended.





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 Company 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 was expensed in 2007.




F-14
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007
 
 NOTE 4
- NOTES PAYABLE and NOTES RECEIVABLE - continued




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 Convertible 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 was expensed in 2007.





Notes
Receivable





On August
31, 2007 the Company sold its interest in the “All In Mall” to Goldmill
Productions, LLC (“Goldmill”) for the sum of $75,000. Payments were to be made
in 24 monthly payments of $3,125 beginning no later than December 1, 2007.
Goldmill is currently in default on said payments to the Company. As a result of
the note being in default the Company has recorded a full reserve of $75,000.
The Company has not received any of the scheduled payments as of March 31,
2008.





NOTE 5
- DERVATIVE AND LIQUIDATING LIABILITES





During
the year ended 2007, the Company recognized derivative liabilities in the amount
of $776,816 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
increase in the derivative liability during the year in the amount of $83,313 as
a cost of maintaining 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.




F-15
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007
  NOTE 5
- DERVATIVE AND LIQUIDATING LIABILITES - continued
  The fair
value of the total derivative liabilities recorded of $946,191 as of December
31, 2007 is comprised of two components, one component of the liability
estimated of $776,816 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 $169,375, 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 as follows;





Convertible
      Note into Shares
            Exercise
      of WarrantsMarket
      Price of Stock
            $0.04
            $0.03Exercise
      Price
            $0.024
            $0.072Term
            Half
      Year
            4.5
      YearsVolatility
            252%
            136%Risk
      Free Rate
            2.78%
            2.78%Number
      of Shares Assumed Issuable
            24,895,833
            2,489,583







NOTE 6
- EQUITY TRANSACTIONS





Common
Stock





On
November 22, 2004, 12 To 20 Plus, Inc. entered into a share exchange agreement
with Secured Financial Network, Inc. pursuant to which an aggregate of
14,737,343 shares of the Company’s common stock were issued, representing 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 share
exchange 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.





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
2006, the following equity transactions occurred:





During
the past two years we sold the following securities under the Securities Act of
1933, as amended (the “Securities Act”) based upon the limited number of
offerees, their relationship to the Company, the number of shares of securities
offered, the size of the offering, and the number of such
offerings.





The
Company had $37,300 in third party debts converted into 729,166 shares of common
stock at share prices ranging from $0.045 to $0.57





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 at share prices ranging
from $0.15 to $0.20.





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
that 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 second quarter of
2006 and closed the purchase effective October 6, 2006. This agreement to
purchase the entity Virtual Payment Solutions, LLC was rescinded.






F-16
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007
  NOTE
6 - EQUITY TRANSACTIONS - continued
  On
February 15th, 2007,
the Company rescinded its acquisition of Virtual Payment Solutions, LLC, as the
company was not auditable. The Company renegotiated the cash paid of $400,000 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. The 5,000,000 shares of the Company’s stock were returned to the
Company and were cancelled.





In 2006
the Company issued 5,975,000 of restricted shares as collateral pursuant to the
terms of the Convertible Notes. See Note 6 - Secured Convertible Notes Payable
for further discussions.





During
2007, the following equity transactions occurred:





In 2007,
the Company sold 3,000,000 shares of common stock for cash totaling of $150,000
at share prices ranging from $0.05 to $0.09.





In 2007,
the Company issued 2,457,000 shares of its common stock to retire debt totaling
$819,644. The 2,457,000 shares were issued to 13 Container Note Holders in
exchange for their notes payable and associated interest due them from the
Company.





In 2007,
the Company issued 1,866,666 shares of its common stock in exchange for $80,000
of services and accrued compensation at share prices ranging from $0.02 to
$0.07.





On June
11, 2007 the Company entered into a promissory note in the amount of $50,000.
The principal of this note is convertible, at the option of the note holder into
2,000,000 shares of the Company’s common stock and was issued 350,000 shares of
common stock with this debt issuance. The combination of the debt discount and
the beneficial conversion rights was valued at $50,000 and expensed





NOTE 7
- INCOME TAXES





The
provisions for income taxes for the year ended December 31, 2007 and 2006
consisted of the following:




Year
      EndedDecember
      31, 2007
            
            
            December
      31, 2006Income
      tax attributable to:Federal
            
            $
            (587,000
            )
            
            $
            (758,000
            )State
      tax benefits
            
            
            (84,000
            )
            
            
            (108,000
            )Permanent
      Timing Differences – Beneficial conversion
              features,
      equity based compensation, derivative expense
            
            
            355,000
            
            
            
            829,000Change
      in valuation allowance
            
            
            316,000
            
            
            
            37,000Net
      amount
            
            $
            —
            
            
            $
            —







F-17
 
 SECURED
FINANCIAL NETWORK, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2006 and 2007




NOTE 7
- INCOME TAXES - continued




The
cumulative tax effect at the expected rate of 40% of significant
item s
comprising our net federal and satate deferred tax amount is as
follows:




December
      31, 2007Deferred
      tax asset attributable to:Net
      operating loss carryover
            
            $
            1,726,000Intangible
      writeoff
            
            
            160,000Accounts
      receivable allowance
            
            
            30,000Net
      deferred tax asset
            
            $
            1,916,000Valuation
      allowance
            
            
            (1,916,000)Net
      deferred asset
            
            $
            -0-




At
December 31, 2007, we had an unused net operating loss carryover approximating
$4,800,000 that is available to offset future taxable income; it expires
beginning in 2023 through 2027. In accordance with Section 382 of the Internal
Revenue Code of 1986, as amended, a change in equity ownership of greater than
50% of the Company within a three year period can result in an annual limitation
on the Company’s ability to utilize its NOL carryforwards that were created
during tax periods prior to the change in ownership. 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.




The
valuation of the deferred tax asset increased by approximately $126,000 for
2007, while the temporary differences increased by $190,000.




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 its federal or state income tax returns for several years
due to its limited financial resources.





NOTE 8
- RELATED PARTY TRANSACTIONS





Michael
Fasci received 500,000 shares of Rule 144 restricted Company stock valued at
$10,000 related to his employment agreement, with a base salary of $72,000,
effective August 1, 2007.





David
Rappa received 500,000 shares of Rule 144 restricted Company stock valued at
$15,000 related to his employment agreement, with a base salary of $72,000,
effective September 1, 2007. Such employment agreement also requires the payment
of commissions on gross profit ranging from 1% to 13%, depending on the
origination of sales generated.





Jeffery
Schultz received 500,000 shares of Rule 144 restricted Company stock valued at
$35,000 related to his employment agreement, with a base salary of $120,000,
effective October 1, 2007.





During
2007 and 2006, the Company advanced funds to the CEO, periodically, during each
year. The balances outstanding as of December 31, 2007 and 2006, were $9,333 and
$12,404 respectively. These loans made to Mr. Schultz may be deemed to be in
violation of Section 402 of the Sarbanes Oxley Act of 2002.





NOTE 9
- LEASE COMMITMENTS





The
Company currently leases its office space with a 36-month term lease expiring at
October 31, 2010 at a rate of $2,160 per month.




The
Company incurred rent expense of $4,212 and $6,858, for the years ended December
31, 2007 and 2006, respectively.





NOTE
10 - SUBSEQUENT EVENTS





On March
25, 2008, a creditor of the Company as of December 31, 2007 gave full credit to
the Company for a $7,500 balance in exchange for not pursuing legal action
against said creditor.





On March
25, 2008, a creditor of the Company exchanged a $200,000 convertible note,
accrued interest of $24,233, and an option to purchase Company stock via a
warrant agreement that was part of the convertible note in exchange for a total
of 3,000,000 shares of the Company’s common stock. Two million shares were
previously held in escrow as collateral for the loan and 1,000,000 additional
shares were issued.





On March
25, 2008, a creditor of the Company exchanged a $100,000 convertible note,
accrued interest of $12,112, and an option to purchase Company
stock pursuant to a warrant agreement that was part of the convertible
note in exchange for a total of 1,500,000 shares of the Company’s common stock.
One million shares were previously held in escrow as collateral for the loan and
another 500,000 additional shares were issued.


F-18







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 and 2004.
Shelley’s reports on the financial statements for those fiscal years did not
contain an adverse opinion or disclaimer of opinion and were not otherwise
qualified or modified as to any uncertainty (except as to raise doubt about our
ability to remain a going concern), 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 audit 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 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 had acted as our principal independent accountant since March
7, 2006.




During
our two fiscal years ended December 31, 2005, and the subsequent interim period
through December 14, 2006  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 fiscal years ended December 31, 2005 and 2004 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 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, 2007 and 2006, and the
subsequent interim period through March 31, 2008, 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, 2007 and
2006 and the subsequent interim period through March 31, 2008, 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, 2007 and 2006 and the subsequent interim period
through March 31, 2008, 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.




Item
      8A(T).
              Controls
      and Procedures
  (a) Management’s Annual Report on
Internal Control Over Financial Reporting. The management of Secured
Financial Networks, Inc., is responsible for establishing and maintaining an
adequate system of internal control over financial reporting (as defined in
Exchange Act Rule 13a-15(f)).  Under the supervision and with the
participation of our senior management, consisting of Jeffrey Schultz,
our Principal Executive Officer and Michael Fasci, our Chief Financial
Officer, we conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), as of the end of the period covered by this report (the
“Evaluation Date”). Based on this evaluation, our Principal Executive
Officer and Chief Financial Officer concluded, as of the Evaluation Date, that
our disclosure controls and procedures are effective such that the information
relating to us required to be disclosed in our Securities and Exchange
Commission (“SEC”) reports (i) is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms, and (ii) is
accumulated and communicated to our management, including our Principal
Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.







13




Item
      8A(T).
              Controls
      and Procedures - continued
  Our
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes of accounting
principles generally accepted in the United States.  Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements.  Therefore, even those systems determined to
be effective can provide only reasonable assurance of achieving their control
objectives.  In evaluating the effectiveness of our internal control
over financial reporting, our management used the criteria set forth by
Generally Accepted Accounting Principles (GAAP).  Based on this
evaluation, our management concluded that, as of December 31, 2007, our internal
control over financial reporting was not effective based on those
criteria.  The following material weaknesses were identified from our
evaluation:




Due to
the small size and limited financial resources, the Company’s CFO and PEO are
the only individuals involved in the accounting and financial reporting.
Furthermore, our CEO performs his duties in FL while our PEO performs his in MA.
As a result, there is no segregation of duties within the accounting function,
leaving all aspects of financial reporting and physical control of cash in the
hands of the same individual, our CFO.  Usually, this lack of
segregation of duties represents a material weakness; however, to remedy the
matter, the Company plans to hire additional in-house accounting personnel in FL
as we expect sales in the short-term to reach levels where it is warranted. This
will allow our CFO to spend more time performing high end accounting duties and
make better use of his time. The PEO and CFO (who also comprise the Board of
Directors) examine and approve all cash transactions. We will continue to
periodically review our disclosure controls and procedures and internal control
over financial reporting and make modifications from time to time considered
necessary or desirable.




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




(b) Changes in Internal Control over
Financial Reporting. There were no changes in our internal control over
financial reporting that occurred during the last fiscal quarter of the period
covered by this report that have materially affected or are reasonably likely to
materially affect our internal control over financial
reporting.







Item
      8B.
            Other
      Information.












14





PART
III




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




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
            57
            Director/CEO/President
            January
      19, 2005Michael
      Fasci
            49
            Director/CFO
      *
            January
      19, 2006




*Appointed
CFO August 1, 2006





Jeffrey
L. SchultzisPresident/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.A copy of Mr. Schultz’s
employment agreement is filed as an exhibit to this filing.





Michael
E. Fasci Sr. EA, 49, is the founder, president, and CEO of Process Engineering
Services, Inc., which has its principal executive offices located in East
Freetown, MA. Process Engineering Services, Inc. designs and manufactures
pollution recovery equipment primarily for the manufacturing industry with
clients worldwide. 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.A copy of Michael Fasci’s
employment agreement was filed with the 3Q07 10-QSB as an exhibit and is hereto
referenced.





15




Item
      9.
              Directors,
      Executive Officers, Promoters, Control Persons and Corporate Governance;
      Compliance With Section 16(a) of the Exchange Act. -
    continued
  No
current director, person nominated to become a director, executive officer,
promoter or control person of the Company has, within the past five
years:





·
            had
      any bankruptcy petition filed by or against any business or which such
      person was a general partner or executive officer either at the time of
      the bankruptcy or within two years prior to that
  time;





·
            been
      convicted in a criminal proceeding or been subject to a pending criminal
      proceeding (excluding traffic violations and other minor
      offenses);





·
            been
      subject to any order, judgment, or decree, not subsequently reversed,
      suspended or vacated, of any court of competent jurisdiction, permanently
      or temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities or banking activities;
      or





·
            been
      found by a court of competent jurisdiction (in a civil action), the SEC,
      or the Commodity Futures Trading Commission to have violated a federal or
      state securities or commodities law, and the judgment has not been
      reversed, suspended or vacated.





Director
Fees





We
currently pay director fees to our directors, and may compensate outside
directors at a reasonable fee to be determined for meetings attended
..





Nominations
to the Board of Directors





There
have been no changes to the procedures by which security holders may recommend
nominees to our board of directors.




Code of
Ethics




We
have not as of yet adopted a code of ethics due to the small size of the
Company.  In the event the Company materially increases in size, management
intends to consider the need for a code of ethics.




Audit
Committee




The
Company does not currently have an independent audit committee.  the two
members of the Board of Directors are currently acting as the audit
committee.  The Company does have an "audit committee financial expert" as
such term is defined in rules and regulations of the SEC, serving on the Board
of Directors.  Mr. Michael Fasci, who also serves as the Company's CFO,
qualifies as an "audit committee financial expert."






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 significant 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, 2007, of all
officers and directors of the Company.





Name
      and PrincipalPositions
      at 12/31/07
            Year
            
            Salary
            
            
            Stock
      Awards
            
            
            TotalJeffrey
      L. Schultz
            2007
            
            $
            120,000
            
            
            $
            35,000
            (a)
            
            $
            155,000Director/President
            2006
            
            $
            78,000
            
            
            $
            32,500
            (b)
            
            $
            110,5002005
            
            $
            169,808
            
            
            $
            150,000
            
            
            $
            319,808Michael
      E. Fasci
            2007
            
            $
            72,000
            
            
            $
            10,000
            (c)
            
            $
            82,000Director/CFO
            2006
            
            $
            30,000
            
            
            $
            122,500
            (d)
            
            $
            152,5002005
            
            
            -0-
            
            
            
            -0-
            
            
            
            -0-Steven
      F. Burg (g)
            2007
            
            
            -0-
            
            
            
            -0-
            
            
            
            -0-Director/Secretary
            2006
            
            
            -0-
            
            
            $
            126,000
            (e)
            
            $
            126,0002005
            
            
            -0-
            
            
            $
            300,000
            (f)
            
            $
            300,000




(a)
            As
      Part of Employment Agreement - Rule 144 Stock - 500K shares @
      $.07/shr.


(b)
            As
      Part of Employment Agreement - Rule 144 Stock - 500K shares @
      $.065/shr.(c)
            As
      Part of Employment Agreement - Rule 144 Stock - 500K shares @
      $.02/shr.(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 - 150,000 shares @ $.52 & 150,000 shares @
      $.32(f)
            Director
      Fee & Consulting Fee - Rule 133 Stock - 750,000 shares @
      $.40/share(g)
            Steven
      F. Burg resigned as a Director on May 4,
2007








16




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




The
following table sets forth, as of December 31, 2007, 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 (1)
            
            
            PercentJeffrey
      L. Schultz
            
            
            5,811,640
            
            
            
            15.0%Director/President/CEOMichael
      Fasci
            
            
            2,000,000
            
            
            
            5.2%Director/CFOKFG
      Financial Services, LLC
            
            
            2,000,000(2)
            
            
            
            5.2%777
      Main Street - Suite 758Sarasota,
      FL 34236The
      Melanie S. Altholtz Irrevocable Trust
            
            
            3,000,000
            
            
            
            7.8%1800
      2nd
      Street – Suite 758
            
            
            3,828,849(2)
            
            
            
            9.9%Sarasota,
      FL 34236The
      Nutmeg Group, LLC
            
            
            3,828,849(2)
            
            
            
            9.9%3346
      CommercialNorthbrook,
      IL 60062Richard
      E. Goulding M.D.
            
            
            3,828,849(2)
            
            
            
            9.9%817
      Hogan WayMelbourne,
      FL 32940Brian
      Corday
            
            
            4,780,597
            
            
            
            12.4%415
      Cullingworth DriveAlpharetta,
      GA 30022HEB,
      LLC
            
            
            4,715,950
            
            
            
            12.2%2225
      E. Randol Mill Road, Suite 305Arlington,
      TX 76011Total
      Director/Officer (2 Persons)
            
            
            7,811,640
            
            
            
            20.2%




(1)
Beneficial ownership has been determined in accordance with Rule 13d-3 under the
Exchange Act and unless otherwise noted, such person has sole voting,
investment, and dispositive power.








There
is no arrangement or understanding currently known to the Company, including any
pledge by any person of securities of the Company, the operation of which may at
a subsequent date result in a change of control in the Company.




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




The
directors named above will serve until the next annual meeting of the Company's
shareholders.  Thereafter, directors will be elected for one-year terms at
the annual stockholders' meeting.  Officers will hold their positions at
the pleasure of the Board of Directors, absent any employment agreement. 
There is no arrangement or understanding between any of the directors or
officers of the Company and any other persons pursuant to which any director or
officer was or is to be selected as a director or officer.




Jeffrey
L. Schultz who is our CEO, President, & director may be deemed to be a
promoter of the Company.




Michael
Fasci received 500,000 shares of Rule 144 Restricted Company stock valued at
$10,000 related to his employment agreement effective August 2, 2007. Employment
Agreement between the Company and Michael Fasci, incorporated by reference as
Exhibit # 10.2 of Form 10-QSB for the quarter ended September 30, 2007 filed
with the Commission on November 14, 2007.





David
Rappa received 500,000 shares of Rule 144 Restricted Company stock valued at
$15,000 related to his employment agreeement effective September 1, 2007.
Employment Agreement between the Company and David Rappa, incorporated by
reference as Exhibit # 10.4 of Form 10-QSB for the quarter ended September 30,
2007 filed with the Commission on November 14, 2007.




Jeffery
Schultz received 500,000 shares of Rule 144 Restricted Company stock valued at
$35,000 related to his employment agreement effective October 1, 2007.
Employment Agreement between the Company and Jeff Schultz, incorporated by
reference as Exhibit # 10.1 to this filing





During
2007 and 2006, the Company advanced funds to the CEO, periodically, during each
year. The balances outstanding as of December 31, 2007 and 2006, were $9,333 and
$12,404 respectively. These loans made to Mr. Schultz may be deemed to be in
violation of Section 402 of the Sarbanes Oxley Act of 2002.







17




Item
      13.
            Exhibits.






Exhibit
      No.
            Description10.1
            Jeffrey Schultz
      Employment Agreement110.2
            12/7/07 promissory
      note110.3
            12/31/07 promissory
      note131.1
            Certificate of
      Principal Executive Officer as Required by Rule
  13a-14(a)/15d-1431.2
            Certificate
      of Chief Financial Officer as Required by Rule
      13a-14(a)/15d-1432.1
            Certificate
      of Principal Executive Officer and Chief Financial 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




1. Incorporated by
reference to the Company's Annual Report on Form 10-KSB as filed with the SEC on
April 15, 2008.






Item
      14.
            Principal
      Accounting 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 Sherb
& Co., LLP 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 Sherb & Co.,
in fiscal year ended December 31, 2007, were approved by our board of
directors.







Audit
Fees




The
aggregate fees billed by Sherb & Co., LLP for professional services for the
2006 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
$34,500 net of expenses.





The
aggregate fees billed by Sherb & Co., LLP for professional services for the
2007 audit of our annual financial statements and review of the financial
statements included in our quarterly reports on Form 10-QSB for fiscal 2007 were
$30,500 net of expenses.







Audit-Related
Fees




During
2007, as a result of a required restatement of earnings for fiscal year 2006,
our auditors were required to perform additional work over and above the scope
of work outlined in the engagement letter to perform the 2006 audit. This
additional work resulted in additional fees amounting to $ 2,700.






Tax
Fees




None






All
Other Fees




None







18





SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant
caused this report, as amended, to be signed on its behalf by the
undersigned, thereunto duly authorized.





SECURED
      FINANCIAL NETWORK, INC.Date:  November
      24, 2008
            By:
            /s/ Jeffrey
      L. SchultzJeffrey
      L. SchultzTitle: Principal
      Executive Officer





Date:  November
      24, 2008
            By:
            /s/ Michael
      FasciMichael
      FasciTitle: Chief
      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,as amended.




Date:  November
      24, 2008
            By:
            /s/ Jeffrey
      L. SchultzJeffrey
      L. SchultzTitle: Director





Date:  November
      24, 2008
            By:
            /s/ Michael
      E. FasciMichael
      E. FasciTitle: Director






19