----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-QSB**

** September 29, 2007**

**nFinanSe      Inc.**

|   | Nevada                                                               | 65-1071956                                       |   |
|--------|----------------------------------------------------------------------|--------------------------------------------------|--------|
|   | (State                or other jurisdiction of                       | (IRS                Employer Identification No.) |   |
|   | incorporation                or organization)                        |                                             |   |
|   |                                                                 |                                             |   |
|   | 3923                Coconut Palm Drive, Suite 107                    |                                             |   |
|   | Tampa,                Florida                                        | 33619                                            |   |
|   | (Address                of principal executive offices)              | (Zip                Code)                        |   |
|   |                                                                 |                                             |   |
|   | Issuer’s                telephone number, including area code: | (813)                367-4400                    |   |

| **Yes** | X | **No** |   |   |
|---------|---|--------|--------|--------|

| **Yes** |   | **No** | X |   |
|---------|--------|--------|---|--------|

**7,162,219 shares of $0.001 par value      Common Stock outstanding as of November 6, 2007**

| **Yes** |   | **No** | X |   |
|---------|--------|--------|---|--------|

----

| **nFinanSe                Inc.**                            |
|------------------------------------------------------------------|
| **A                Development Stage Enterprise**           |
| **Table                of Contents**                        |
|                                                             |   | **Page                No.** |
| SPECIAL                NOTE REGARDING FORWARD LOOKING STATEMENTS | 3 |
|                                                             |   |
| PART                I - FINANCIAL INFORMATION               |   |
|                                                             | Item                1. Financial Statements:  |   |
|                                                             | Consolidated                Balance Sheet (unaudited) as of September 29, 2007  | 4 |
|                                                             | Consolidated                Statements of Operations (unaudited) for the three and nine months                ended                September 29, 2007 and September 30, 2006, and for the period July                10,                2000 (inception) to September 29, 2007  |  5 |
|                                                             | Consolidated                Statements of Cash Flows (unaudited) for the nine months ended September                29, 2007 and September 30, 2006, and for the period July 10, 2000                (inception) to September 29, 2007  |  7 |
|                                                             | Notes                to Consolidated Financial Statements (unaudited)  | 9 |
|                                                             | Item                2. Management’s Discussion and Analysis or Plan of Operation.  | 21 |
|                                                             | Item                3. Controls and Procedures.  | 29 |
| PART                II - OTHER INFORMATION                  |   |
|                                                             | Item                1. Legal Proceedings.  | 30 |
|                                                             | Item                2. Unregistered Sales of Equity Securities and Use of                Proceeds.  | 30 |
|                                                             | Item                3. Defaults Upon Senior Securities.  | 30 |
|                                                             | Item                4. Submission of Matters to a Vote of Security Holders.  | 30 |
|                                                             | Item                5. Other Information.  | 30 |
|                                                             | Item                6. Exhibits. | 31 |
|                                                             |   |   |   |
| SIGNATURES                                                       |   |

----

**SPECIAL      NOTE REGARDING FORWARD-LOOKING STATEMENTS**

*forward-looking statements*
*seek,*
*anticipate,*
*believe,*
*estimate,*
*expect,*
*intend,*
*plan,*
*budget,*
*project,*
*may      be,*
*may continue,*
*may likely result,*
* *

| · | our                current cash expectations of our operations to fund normal and recurring                operating commitments over the next twelve months;                                                   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | our                ability to recover future lease payments and leasehold improvements                through sublease income;                                                                                  |
| · | the                competitive advantages and customer acceptance of a Discover® Network                branded stored value cards (“SVCs”);                                                   |
| · | our                ability to expand the number of active retail locations through our                distributors selling our retail gift and reloadable general spend                SVCs;                and |
| · | our                ability to successfully recruit operations, information technology                and                customer service employees in the Tampa, Florida                area.                   |

| · | our                ability to design and market our products;                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | our                ability to protect our intellectual property rights and operate our                business without infringing upon the intellectual property rights                of                others;                                                                                                                                                                                                                                       |
| · | whether                or not markets for our products develop and, if they do develop,                the pace                at which they develop;                                                                                                                                                                                                                                                                                                  |
| · | our                ability to attract the qualified personnel to implement our growth                strategies;                                                                                                                                                                                                                                                                                                                                       |
| · | our                ability to develop sales and distribution capabilities;                                                                                                                                                                                                                                                                                                                                                                             |
| · | the                accuracy of our estimates and projections;                                                                                                                                                                                                                                                                                                                                                                                          |
| · | our                ability to fund our short-term and long-term financing                needs;                                                                                                                                                                                                                                                                                                                                                        |
| · | the                effect of certain accounting interpretations on our financial                results;                                                                                                                                                                                                                                                                                                                                               |
| · | changes                in our business plan and corporate strategies; and                                                                                                                                                                                                                                                                                                                                                                              |
| · | other                risks and uncertainties discussed in greater detail in this quarterly                report and our Annual Report on Form 10-K for the year ended September                30,                2006, including those factors under the heading “Risk Factors” and those                risks discussed under the heading “Management’s Discussion and Analysis or                Plan of Operation.” |

*we*
*us*
*our*
*nFinanSe*
*the Company*

----

**PART      I - FINANCIAL INFORMATION**

**Item      1. Financial Statements.**

**nFinanSe      Inc.**

**(A      Development Stage Enterprise)**

**CONSOLIDATED      BALANCE SHEET**

**AS      OF SEPTEMBER 29, 2007**

**(Unaudited)**

|                                                                                                                                                                                                                                                                                                                                                                   |   |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                             |   |        |
|                                                                                                                                                                                                                                                                                                                                                                   |   |        |
| CURRENT                ASSETS:                                                                                                                                                                                                                                                                                                                                         |   |        |
| Cash                and cash equivalents                                                                                                                                                                                                                                                                                                                               | $      | 6,334,353   |   |
| Receivables:                                                                                                                                                                                                                                                                                                                                                           |   |        |   |
| Accounts                (net of allowance for doubtful accounts of $0)                                                                                                                                                                                                                                                                                                 |   | 34,843      |   |
| Other                                                                                                                                                                                                                                                                                                                                                                  |   | 4,822       |   |
| Prepaid                expenses and other current assets                                                                                                                                                                                                                                                                                                               |   | 597,560     |   |
| Inventory                                                                                                                                                                                                                                                                                                                                                              |   | 367,138     |   |
|                Total                current assets                                                                                                                                                                                                                                          |   | 7,338,716   |   |
|                                                                                                                                                                                                                                                                                                                                                                   |   |        |   |
| PROPERTY                AND EQUIPMENT (net of accumulated depreciation of                $533,053)                                                                                                                                                                                                                                                                     |   | 455,619     |   |
|                                                                                                                                                                                                                                                                                                                                                                   |   |        |   |
| OTHER                ASSETS                                                                                                                                                                                                                                                                                                                                            |   | 51,133      |   |
|                                                                                                                                                                                                                                                                                                                                                                   |   |        |   |
| **TOTAL**                                                                                                                                                                                                                                                                                                                                                              | $      | 7,845,468   |   |
|                                                                                                                                                                                                                                                                                                                                                                   |   |        |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                                                                                                                                          |   |        |   |
|                                                                                                                                                                                                                                                                                                                                                                   |   |        |   |
| CURRENT                LIABILITIES:                                                                                                                                                                                                                                                                                                                                    |   |        |   |
| Accounts                payable and accrued liabilities                                                                                                                                                                                                                                                                                                                | $      | 558,944     |   |
| Deferred                revenues                                                                                                                                                                                                                                                                                                                                       |   | 125,000     |   |
|                Total                current liabilities                                                                                                                                                                                                                                     |   | 683,944     |   |
|                                                                                                                                                                                                                                                                                                                                                                   |   |        |   |
| STOCKHOLDERS’                EQUITY:                                                                                                                                                                                                                                                                                                                             |   |        |   |
| Preferred                stock - $.001 par value:  25,000,000 shares authorized;                9,027,934  outstanding as follows:                                                                                                                                                                                                                 |   |        |   |
|        Series                A Convertible Preferred Stock – 9,327,934 shares authorized; 8,027,934                issued and outstanding with a liquidation value of $8,027,934 and                undeclared accumulated dividends in arrears of approximately $302,400                at                September 29, 2007 |   | 8,028       |   |
|        Series                B Convertible Preferred Stock – 1,000,010 shares authorized; 1,000,000                shares issued and outstanding with a liquidation value of $3,000,000                at                September 29, 2007                                                                                   |   | 1,000       |   |
| Common                stock - $0.001 par value: 200,000,000 shares authorized; 7,157,553                shares                issued and outstanding                                                                                                                                                                                                                   |   | 7,157       |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                                                                                              |   | 41,140,861  |   |
| Deficit                accumulated during the development stage                                                                                                                                                                                                                                                                                                        |   | (33,995,522 | ) |
|                Total                stockholders’ equity                                                                                                                                                                                                                              |   | 7,161,524   |   |
|                                                                                                                                                                                                                                                                                                                                                                   |   |        |   |
| **TOTAL**                                                                                                                                                                                                                                                                                                                                                              | $      | 7,845,468   |   |
|                                                                                                                                                                                                                                                                                                                                                                   |   |        |   |

----

**nFinanSe      Inc.**

**(A      Development Stage Enterprise)**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

**(Unaudited)**

|                                                              |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                                |       |
|-------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|------------|--------|------------------------------------------------------------------------------------|--------|------------|-----------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------|------------|
|                                                              |   | **For                the three months ended****September                29, 2007** |       |   | **For                the three months ended****September                30, 2006** |   |       | **For                the nine months ended****September                29, 2007** |   |   | **For                the nine months ended****September                30, 2006** |   |   | **For                the period****July                10, 2000 (inception) to September 29, 2007** |       |
|                                                              |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                                |       |
| REVENUES                                                          |   | $                                                                                  | 8,129      |   |                                                                               | $      | 27,559     |                                                                              |   | $      | 22,889                                                                            |   |   | $                                                                                                   | 37,948     |   |   | $ | 1,196,294 |   |
|                                                              |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                                |       |   |   |   |   |   |
| OPERATING                EXPENSES:                                |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                                |       |   |   |   |   |   |
| Costs                of revenues                                  |   |                                                                               | 29,515     |   |                                                                               |   | 225,168    |                                                                              |   |   | 129,621                                                                           |   |   |                                                                                                | 546,394    |   |   |   | 1,345,912 |   |
| Employee                and director compensation and benefits:   |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                                |       |   |   |   |   |   |
|        Stock-based             |   |                                                                               | 674,793    |   |                                                                               |   | 581,211    |                                                                              |   |   | 1,658,495                                                                         |   |   |                                                                                                | 1,274,795  |   |   |   | 3,055,814 |   |
|        Other                   |   |                                                                               | 1,118,926  |   |                                                                               |   | 614,760    |                                                                              |   |   | 3,267,345                                                                         |   |   |                                                                                                | 1,813,394  |   |   |   | 10,326,120 |   |
| Professional                and consulting fees:                  |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                                |       |   |   |   |   |   |
|        Stock-based             |   |                                                                               | -          |   |                                                                               |   | -          |                                                                              |   |   | -                                                                                 |   |   |                                                                                                | 628,126    |   |   |   | 2,780,452 |   |
|        Other                   |   |                                                                               | 264,505    |   |                                                                               |   | 493,307    |                                                                              |   |   | 868,065                                                                           |   |   |                                                                                                | 1,290,103  |   |   |   | 4,113,276 |   |
| Selling                and marketing                              |   |                                                                               | 103,042    |   |                                                                               |   | 28,503     |                                                                              |   |   | 396,420                                                                           |   |   |                                                                                                | 95,514     |   |   |   | 810,277 |   |
| Occupancy                and equipment                            |   |                                                                               | 174,094    |   |                                                                               |   | 156,734    |                                                                              |   |   | 500,305                                                                           |   |   |                                                                                                | 430,053    |   |   |   | 1,868,018 |   |
| Travel                and entertainment                           |   |                                                                               | 116,803    |   |                                                                               |   | 46,363     |                                                                              |   |   | 352,517                                                                           |   |   |                                                                                                | 123,568    |   |   |   | 726,918 |   |
| Impairment                of assets                               |   |                                                                               | -          |   |                                                                               |   | -          |                                                                              |   |   | 41,139                                                                            |   |   |                                                                                                | -          |   |   |   | 296,293 |   |
| Purchased                in process research and development |   |                                                                               | -          |   |                                                                               |   | -          |                                                                              |   |   | -                                                                                 |   |   |                                                                                                | -          |   |   |   | 153,190 |   |
| Other                                                             |   |                                                                               | 143,863    |   |                                                                               |   | 68,836     |                                                                              |   |   | 332,636                                                                           |   |   |                                                                                                | 396,985    |   |   |   | 1,307,372 |   |
| Total                operating expenses                           |   |                                                                               | 2,625,541  |   |                                                                               |   | 2,214,882  |                                                                              |   |   | 7,546,543                                                                         |   |   |                                                                                                | 6,598,932  |   |   |   | 26,783,642 |   |
|                                                              |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                                |       |   |   |   |   |   |
| Loss                from operations                               |   |                                                                               | (2,617,412 | )      |                                                                               |   | (2,187,323 | )                                                                                 |   |   | (7,523,654                                                                        | )      |   |                                                                                                | (6,560,984 | ) |   |   | (25,587,348 | ) |

*(Continued)*

----

**nFinanSe      Inc.**

**(A      Development Stage Enterprise)**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

**(Unaudited)**

|                                                                                                  |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                               |        |
|-------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|------------|--------|------------------------------------------------------------------------------------|--------|------------|-----------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------|-------------|
|                                                                                                  |   | **For                the three months ended****September                29, 2007** |       |   | **For                the three months ended****September                30, 2006** |   |       | **For                the nine months ended****September                29, 2007** |   |   | **For                the nine months ended****September                30, 2006** |   |   | **For                the period****July                10, 2000 (inception)to September 29, 2007** |        |
| Other                income (expense):                                                                |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                               |        |
| Interest                expense                                                                       |   |                                                                               | (1,216     | )      |                                                                               |   | (1,292,487 | )                                                                                 |   |   | (1,216                                                                            | )      |   |                                                                                               | (1,498,128  | ) |   |   | (1,687,442 | ) |
| Interest                income                                                                        |   |                                                                               | 91,314     |   |                                                                               |   | 6,239      |                                                                              |   |   | 133,011                                                                           |   |   |                                                                                               | 11,728      |   |   |   | 1,089,783 |   |
| Gain                on derivative instruments                                                         |   |                                                                               | -          |   |                                                                               |   | 4,260,478  |                                                                              |   |   | -                                                                                 |   |   |                                                                                               | 2,831,037   |   |   |   | 1,845,262 |   |
| Loss                on debt extinguishment                                                            |   |                                                                               | -          |   |                                                                               |   | (5,137,817 | )                                                                                 |   |   | -                                                                                 |   |   |                                                                                               | (5,137,817  | ) |   |   | (4,685,518 | ) |
| Registration                rights reversals (penalties)                                              |   |                                                                               | -          |   |                                                                               |   | 395,600    |                                                                              |   |   | -                                                                                 |   |   |                                                                                               | 111,069     |   |   |   | (98,649 | ) |
| Gain                (loss) on sale of assets                                                          |   |                                                                               | -          |   |                                                                               |   | -          |                                                                              |   |   | 1,633                                                                             |   |   |                                                                                               | -           |   |   |   | (28,368 | ) |
| Gain                from settlement of litigation                                                     |   |                                                                               | -          |   |                                                                               |   | -          |                                                                              |   |   | -                                                                                 |   |   |                                                                                               | -           |   |   |   | 4,000 |   |
| Other                income (expense)                                                                 |   |                                                                               | -          |   |                                                                               |   | 3,462      |                                                                              |   |   | 25,610                                                                            |   |   |                                                                                               | 3,462       |   |   |   | (69,488 | ) |
| Total                other income (expense)                                                           |   |                                                                               | 90,098     |   |                                                                               |   | (1,764,525 | )                                                                                 |   |   | 159,038                                                                           |   |   |                                                                                               | (3,678,649  | ) |   |   | (3,630,420 | ) |
|                                                                                                  |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                               |        |   |   |   |   |   |
| Loss                from continuing operations                                                        |   |                                                                               | (2,527,314 | )      |                                                                               |   | (3,951,848 | )                                                                                 |   |   | (7,364,616                                                                        | )      |   |                                                                                               | (10,239,633 | ) |   |   | (29,217,768 | ) |
|                                                                                                  |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                               |        |   |   |   |   |   |
| Loss                from discontinued operations                                                      |   |                                                                               | -          |   |                                                                               |   | (1,437,949 | )                                                                                 |   |   | (8,689                                                                            | )      |   |                                                                                               | (2,579,144  | ) |   |   | (3,735,120 | ) |
|                                                                                                  |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                               |        |   |   |   |   |   |
| Net                loss                                                                               |   |                                                                               | (2,527,314 | )      |                                                                               |   | (5,389,797 | )                                                                                 |   |   | (7,373,305                                                                        | )      |   |                                                                                               | (12,818,777 | ) |   |   | (32,952,888 | ) |
| Dividends                paid on Series A Convertible Preferred Stock                            |   |                                                                               | (10,045    | )      |                                                                               |   | -          |                                                                              |   |   | (42,634                                                                           | )      |   |                                                                                               | -           |   |   |   | (1,042,634 | ) |
| Undeclared                and unpaid dividends on Series A Convertible Preferred                Stock |   |                                                                               | (101,811   | )      |                                                                               |   | -          |                                                                              |   |   | (302,422                                                                          | )      |   |                                                                                               | -           |   |   |   | (302,422 | ) |
| Net                loss attributable to common stockholders                                           |   | $                                                                                  | (2,639,170 | )      |                                                                               | $      | (5,389,797 | )                                                                                 |   | $      | (7,718,361                                                                        | )      |   | $                                                                                                  | (12,818,777 | ) |   | $ | (34,297,944 | ) |
|                                                                                                  |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                               |        |   |   |   |   |   |
| Net                loss per share - basic and diluted:                                                |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                               |        |   |   |   |   |   |
| Continuing                operations                                                                  |   | $                                                                                  | (0.42      | )      |                                                                               | $      | (1.03      | )                                                                                 |   | $      | (1.64                                                                             | )      |   | $                                                                                                  | (2.77       | ) |   |   |   |   |
| Discontinued                operations                                                                |   | $                                                                                  | -          |   |                                                                               | $      | (0.38      | )                                                                                 |   | $      | -                                                                                 |   |   | $                                                                                                  | (0.70       | ) |   |   |   |   |
| Total                net loss per share                                                               |   | $                                                                                  | (0.42      | )      |                                                                               | $      | (1.41      | )                                                                                 |   | $      | (1.64                                                                             | )      |   | $                                                                                                  | (3.47       | ) |   |   |   |   |
| Weighted                average number of shares outstanding                                          |   |                                                                               | 6,353,847  |   |                                                                               |   | 3,829,028  |                                                                              |   |   | 4,715,211                                                                         |   |   |                                                                                               | 3,688,859   |   |   |   |   |   |
|                                                                                                  |   |                                                                               |       |   |                                                                               |   |       |                                                                              |   |   |                                                                              |   |   |                                                                                               |        |   |   |   |   |   |

----

**nFinanSe      Inc.**

**(A      Development Stage Enterprise)**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(Unaudited)**

|                                                                                                                                    |   |                                                                                                   |       |   |                                                                                                   |   |        |                                                                                                                                    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------|------------|--------|--------------------------------------------------------------------------------------------------------|--------|-------------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                               |   | **For                the****nine                months****ended****September                29, 2007** |       |   | **For                the****nine                months****ended****September                30, 2006** |   |        | **For                the period****July                10, 2000****(inception)                to****September                29, 2007** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                                                                                |   |                                                                                                   |       |   |                                                                                                   |   |        |                                                                                                                                    |   |
| Net                loss                                                                                                                 |   | $                                                                                                      | (7,373,305 | )      |                                                                                                   | $      | (12,818,777 | )                                                                                                                                       |   | $ | (32,952,888 | ) |
| **Adjustments                to reconcile net loss to net cash used in operating                activities:**                           |   |                                                                                                   |       |   |                                                                                                   |   |        |                                                                                                                                    |   |   |   |   |
| Depreciation                and amortization                                                                                            |   |                                                                                                   | 175,894    |   |                                                                                                   |   | 339,033     |                                                                                                                                    |   |   | 876,966 |   |
| Provision                for inventory obsolescence                                                                                     |   |                                                                                                   | 14,011     |   |                                                                                                   |   | 139,616     |                                                                                                                                    |   |   | 508,404 |   |
| Provision                for bad debts                                                                                                  |   |                                                                                                   | -          |   |                                                                                                   |   | 136,274     |                                                                                                                                    |   |   | 461,972 |   |
| Amortization                of intangible assets                                                                                        |   |                                                                                                   | -          |   |                                                                                                   |   | -           |                                                                                                                                    |   |   | 15,485 |   |
| Non-cash                interest expense                                                                                                |   |                                                                                                   | -          |   |                                                                                                   |   | -           |                                                                                                                                    |   |   | 1,579,020 |   |
| Amortization                of premium on senior secured convertible      promissory                notes |   |                                                                                                   | -          |   |                                                                                                   |   | 1,415,923   |                                                                                                                                    |   |   | (863,049 | ) |
| Stock-based                compensation and consulting                                                                                  |   |                                                                                                   | 1,658,495  |   |                                                                                                   |   | 1,954,761   |                                                                                                                                    |   |   | 5,836,266 |   |
| Purchased                in-process research and development                                                                            |   |                                                                                                   | -          |   |                                                                                                   |   | -           |                                                                                                                                    |   |   | 153,190 |   |
| Gain                on derivative financial instruments                                                                                 |   |                                                                                                   | -          |   |                                                                                                   |   | (2,831,037  | )                                                                                                                                       |   |   | (1,845,262 | ) |
| Loss                on debt extinguishment                                                                                              |   |                                                                                                   | -          |   |                                                                                                   |   | 5,137,817   |                                                                                                                                    |   |   | 4,685,518 |   |
| (Gain)                loss on disposal of assets                                                                                        |   |                                                                                                   | (1,633     | )      |                                                                                                   |   | -           |                                                                                                                                    |   |   | 28,368 |   |
| Impairment                of assets                                                                                                     |   |                                                                                                   | 41,139     |   |                                                                                                   |   | 741,731     |                                                                                                                                    |   |   | 1,037,694 |   |
| Forgiveness                of indebtedness as a result of litigation settlement                                                         |   |                                                                                                   | -          |   |                                                                                                   |   | -           |                                                                                                                                    |   |   | (50,000 | ) |
| Value                of Product Benefits Systems Corporation (“PBS”) warrant                                                |   |                                                                                                   | 5,600      |   |                                                                                                   |   | -           |                                                                                                                                    |   |   | 5,600 |   |
| **Changes                in assets and liabilities, net:**                                                                              |   |                                                                                                   |       |   |                                                                                                   |   |        |                                                                                                                                    |   |   |   |   |
| Receivables                                                                                                                             |   |                                                                                                   | 18,484     |   |                                                                                                   |   | 159,061     |                                                                                                                                    |   |   | (341,878 | ) |
| Inventories                                                                                                                             |   |                                                                                                   | (360,488   | )      |                                                                                                   |   | 299,670     |                                                                                                                                    |   |   | (715,265 | ) |
| Prepaid                expenses and other current assets                                                                                |   |                                                                                                   | (159,865   | )      |                                                                                                   |   | 124,563     |                                                                                                                                    |   |   | (638,799 | ) |
| Other                assets                                                                                                             |   |                                                                                                   | 10,571     |   |                                                                                                   |   | 46,806      |                                                                                                                                    |   |   | (18,842 | ) |
| Assets                of discontinued operations                                                                                        |   |                                                                                                   | -          |   |                                                                                                   |   | 286,979     |                                                                                                                                    |   |   | (229,060 | ) |
| Accounts                payable and accrued and other liabilities                                                                       |   |                                                                                                   | (242,801   | )      |                                                                                                   |   | (433,912    | )                                                                                                                                       |   |   | 630,674 |   |
| Accrued                penalties - registration rights                                                                                  |   |                                                                                                   | -          |   |                                                                                                   |   | 98,648      |                                                                                                                                    |   |   | 98,649 |   |
| Deferred                revenues – advertising participation                                                                      |   |                                                                                                   | 65,000     |   |                                                                                                   |   | 10,000      |                                                                                                                                    |   |   | 125,000 |   |
| Liabilities                of discontinued operations                                                                                   |   |                                                                                                   | -          |   |                                                                                                   |   | (197,208    | )                                                                                                                                       |   |   | 87,410 |   |
|                                                                                                                                    |   |                                                                                                   |       |   |                                                                                                   |   |        |                                                                                                                                    |   |   |   |   |
| **NET                CASH USED IN OPERATING ACTIVITIES**                                                                                |   |                                                                                                   | (6,148,898 | )      |                                                                                                   |   | (5,390,052  | )                                                                                                                                       |   |   | (21,524,827 | ) |
|                                                                                                                                    |   |                                                                                                   |       |   |                                                                                                   |   |        |                                                                                                                                    |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                                                                                |   |                                                                                                   |       |   |                                                                                                   |   |        |                                                                                                                                    |   |   |   |   |
| Purchases                of property and equipment                                                                                      |   |                                                                                                   | (132,488   | )      |                                                                                                   |   | (216,156    | )                                                                                                                                       |   |   | (1,503,026 | ) |
| Investment                in PBS                                                                                                        |   |                                                                                                   | -          |   |                                                                                                   |   | (15,737     | )                                                                                                                                       |   |   | (15,737 | ) |
| Note                receivable                                                                                                          |   |                                                                                                   | -          |   |                                                                                                   |   | -           |                                                                                                                                    |   |   | (202,000 | ) |
| Initial                investment in Financial Services International, Inc.                                                             |   |                                                                                                   | -          |   |                                                                                                   |   | -           |                                                                                                                                    |   |   | (10,000 | ) |
| Purchase                of assets from Typhoon Voice Technologies, Inc.                                                                 |   |                                                                                                   | -          |   |                                                                                                   |   | -           |                                                                                                                                    |   |   | (5,000 | ) |
| **NET                CASH USED IN INVESTING ACTIVITIES**                                                                                |   |                                                                                                   | (132,488   | )      |                                                                                                   |   | (231,893    | )                                                                                                                                       |   |   | (1,735,763 | ) |
|                                                                                                                                    |   |                                                                                                   |       |   |                                                                                                   |   |        |                                                                                                                                    |   |   |   |   |

*(Continued)*

----

**nFinanSe      Inc.**

**(A      Development Stage Enterprise)**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(Unaudited)**

|                                                                                                                                                         |   | **For                the nine months ended****September                29,****2007** |      |   | **For                the nine months ended****September                30,****2006** |   |       | **For                the period July 10, 2000 (inception) to September                29,****2007** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|-----------|--------|--------------------------------------------------------------------------------------|--------|------------|-----------------------------------------------------------------------------------------------------|--------|
| **CASH                FLOWS FROM FINANCING ACTIVITIES:**                                                                                                     |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |
| Proceeds                from issuance of Series B Convertible Preferred Stock                                                                                |   |                                                                                 | 3,000,000 |   |                                                                                 |   | -          |                                                                                                |   |   | 3,000,000 |   |
| Proceeds                from issuance of Series A Convertible Preferred Stock                                                                                |   |                                                                                 | -         |   |                                                                                 |   | -          |                                                                                                |   |   | 4,000,000 |   |
| Payment                for stock issuance costs                                                                                                              |   |                                                                                 | (640,494  | )      |                                                                                 |   | -          |                                                                                                |   |   | (783,094 | ) |
| Proceeds                from borrowings                                                                                                                      |   |                                                                                 | -         |   |                                                                                 |   | 4,067,250  |                                                                                                |   |   | 5,365,162 |   |
| Repayments                of notes payable                                                                                                                   |   |                                                                                 | -         |   |                                                                                 |   | (100,000   | )                                                                                                   |   |   | (147,912 | ) |
| Collection                of note receivable from stockholder                                                                                                |   |                                                                                 | -         |   |                                                                                 |   | -          |                                                                                                |   |   | 3,000,000 |   |
| Proceeds                from the issuance of common stock                                                                                                    |   |                                                                                 | 6,069,610 |   |                                                                                 |   | 650,000    |                                                                                                |   |   | 15,160,787 |   |
|                                                                                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| **NET                CASH PROVIDED BY FINANCING ACTIVITIES**                                                                                                 |   |                                                                                 | 8,429,116 |   |                                                                                 |   | 4,617,250  |                                                                                                |   |   | 29,594,943 |   |
|                                                                                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| **NET                CHANGE IN CASH AND CASH EQUIVALENTS**                                                                                                   |   |                                                                                 | 2,147,730 |   |                                                                                 |   | (1,004,695 | )                                                                                                   |   |   | 6,334,353 |   |
|                                                                                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| **CASH                AND CASH EQUIVALENTS, BEGINNING OF PERIOD**                                                                                            |   |                                                                                 | 4,186,623 |   |                                                                                 |   | 1,941,300  |                                                                                                |   |   | - |   |
|                                                                                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| **CASH                AND CASH EQUIVALENTS, END OF PERIOD**                                                                                                  |   | $                                                                                    | 6,334,353 |   |                                                                                 | $      | 936,605    |                                                                                                |   | $ | 6,334,353 |   |
|                                                                                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| **SUPPLEMENTAL                DISCLOSURE OF CASH FLOW INFORMATION:**                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| Interest                paid                                                                                                                                 |   | $                                                                                    | 1,216     |   |                                                                                 | $      | 5,683      |                                                                                                |   | $ | 16,317 |   |
| Income                taxes paid                                                                                                                             |   | $                                                                                    | -         |   |                                                                                 | $      | -          |                                                                                                |   | $ | - |   |
|                                                                                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| **SUPPLEMENTAL                DISCLOSURE OF NON-CASH INVESTING AND FINANCING                ACTIVITIES:**                                                    |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
|                                                                                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| Acquisition                of assets by issuance of stock                                                                                                    |   | $                                                                                    | -         |   |                                                                                 | $      | -          |                                                                                                |   | $ | 818,200 |   |
|                                                                                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| Reclassification                of proceeds from sales of common stock to derivative financial instrument                liabilities                         |   | $                                                                                    | -         |   |                                                                                 | $      | -          |                                                                                                |   | $ | 4,007,443 |   |
| Dividend                on Series A Convertible Preferred Stock                                                                                              |   | $                                                                                    | 42,634    |   |                                                                                 | $      | -          |                                                                                                |   | $ | 1,042,634 |   |
|                                                                                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| Issuance                of common stock for net assets of Pan American Energy Corporation                in a                recapitalizations - see Note A  |   | $                                                                                    | -         |   |                                                                                 | $      | -          |                                                                                                |   | $ | 2,969,000 |   |
|                                                                                                                                                         |   |                                                                                 |      |   |                                                                                 |   |       |                                                                                                |   |   |   |   |
| Issuance                of common stock in lieu of cash payment of registration                penalties                                                     |   | $                                                                                    | -         |   |                                                                                 | $      | -          |                                                                                                |   | $ | 652,625 |   |
| Conversion                of Senior Secured Convertible Promissory Notes and accrued interest                payable to Series A Convertible Preferred Stock |   | $                                                                                    | $-        |   |                                                                                 | $      | $-         |                                                                                                |   | $ | $5,327,934 |   |
|                                                                                                                                                         |   |                                                                                 |      |

----

**nFinanSe      Inc.**

**(A      Development Stage Enterprise)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

** (Unaudited)**

|   |   |
|--------|--------|

**NOTE      A -**
**FORMATION, BACKGROUND AND OPERATIONS OF THE      COMPANY**

**,**

----

**Discontinued      Operations and Reclassifications**

*Accounting for the      Impairment or Disposal of Long-Lived Assets*

**Revenue      Recognition**

*Revenue Recognition in Financial Statements*

**Accounts      Receivable and Allowance for Doubtful Accounts**

**Cash      and Cash Equivalents**

**Inventories**

----

**Use      of Estimates**

**Property      and Equipment**

**Long-Lived      Assets**

*Accounting for the      Impairment or Disposal of Long-Lived Assets*

**Advertising      Costs**

**Research      and Development**

**Net      Loss Per Share**

*Earnings per Share*

----

**Income      Taxes**

*Accounting for Income Taxes*

**Convertible      Debt and Equity Securities Issued with Registration Rights      Agreements**

*Accounting for Contingencies*
*Accounting for Registration Payment      Arrangements*

**Financial      Instruments and Concentrations**

*Disclosures about Fair Values of Financial Instruments*

----

**Stock-Based      Compensation**

*Share-Based Payments*

**Dividends      on Preferred Stock**

**Reclassifications**

**Recently      Issued Accounting Pronouncements**

*Accounting for      Uncertainty in Income Taxes*
*”*
*Accounting for Income      Taxes*
*”*

*Fair      Value Measurements*

----

*Employers’ Accounting for Defined Benefit Pension and Other Postretirement      Plans*
*”*
*, an amendment of FASB Statement Nos. 87, 88, 106, and      132(R)*
*Employers’Accounting for Pensions*
*”*
*Employers’ Accounting      for Postretirement Benefits Other Than Pensions*
*”*

*T*
*he Fair Value Option for Financial Assets and Financial      Liabilities,*
*including an amendment of FASB Statement      No. 115*
*”*
*,*

**NOTE      B - GOING CONCERN**

----

**NOTE      C – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**

| Balances                                              |   | Amounts |
|-------------------------------------------------------|--------|---------|
| Accounts                payable                       | $      | 179,961 |
| Accrued                personnel costs                |   | 74,657  |
| Other                accrued expenses and liabilities |   | 304,326 |
|                                                  |   |    |
| Total                                                 | $      | 558,944 |
|                                                  |   |    |

**NOTE      D - COMMITMENTS AND CONTINGENCIES**

**Operating      Leases**

| Twelve                monthsending |   |      | Amounts |
|------------------------------------|--------|-----------|---------|
| September                2008      | $      | 355,500   |
| September                2009      |   | 233,500   |
| September                2010      |   | 199,500   |
| September                2011      |   | 203,900   |
| September                2012      |   | 208,400   |
| Thereafter                         |   | 17,367    |
|                               |   |      |
| Total                              | $      | 1,218,167 |
|                               |   |      |

----

**Employment      Agreements**

| ● | The                employment agreement with our Chief Executive Officer, Jerry R. Welch,                has                a term from September 5, 2006 to December 31, 2008 and provides him                with                an annual salary of $235,000. The agreement is to be automatically                renewed                indefinitely for succeeding terms of two years unless otherwise terminated                in accordance with the agreement. Additionally, Mr. Welch received                the                option to purchase approximately 603,400 shares of our common stock                at                $1.50 per share (the “Option Shares”), which when using Black-Scholes                results in an aggregate fair value of approximately $845,000. This                amount                is being recognized as stock-based compensation expense on a straight                line                basis as the options vest. The grant was equal to 4.25% of the total                of                our outstanding shares, options and warrants as of December 28, 2006                (the                date we completed the permanent financing required for the grant                of such                options). The Option Shares are divided into 28 equal installments.                The                first six installments vested on February 28, 2007 and additional                installments vest on the final day of each month through December                31,                2008. In                addition, on July 12, 2007, Mr. Welch was awarded 197,855 stock options                at                $3.40 per share, which when using Black-Scholes results in an aggregate                fair value of approximately $619,000.  The grant was equal to                approximately 4.25% of the shares of our total stock and warrants                issued                under the June 29, 2007 Securities and Purchase Agreements. These                options                vest in 28 equal installments. The first eleven installments vested                on                July 31, 2007 and accordingly at that time 11/28 of the aforementioned                stock-based compensation was recognized as compensation                expense.  The remaining compensation expense is being recognized                on a straight line basis as additional installments vest on the final                day                of each month through December 31,                2008. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | The                employment agreement with our Chief Financial Officer, Raymond Springer,                has a term from September 5, 2006 to December 31, 2008 and provides                him                with an annual salary of $185,000. Additionally, Mr. Springer received                the                option to purchase approximately 284,000 shares of our common stock                at                $1.50 per share (the “Option Shares”), which when using Black-Scholes                results in an aggregate fair value of approximately $400,000. This                amount                is being recognized as stock-based compensation expense on a straight                line                basis as the options vest. This grant was equal to 2.0% of the total                of                our outstanding shares, options and warrants on December 28, 2006                (the                date we completed the permanent financing required for the grant                of such                shares). The Option Shares are divided into 28 equal installments.                The                first six installments vested on February 28, 2007, and additional                installments vest on the final day of each month through December                31,                2008. In                addition, on July 12, 2007, Mr. Springer was awarded 93,108 stock                options                at $3.40 per share, which when using Black-Scholes results in an                aggregate                fair value of approximately $291,000.  The grant was equal to                approximately 2.00% of the shares of our total stock and warrants                issued                under the June 29, 2007 Securities and Purchase Agreements. These                options                vest in 28 equal installments. The first eleven installments vested                on                July 31, 2007 and accordingly at that time 11/28 of the aforementioned                stock-based compensation was recognized as compensation                expense.  The remaining compensation expense is being recognized                on a straight line basis as additional installments vest on the final                day                of each month through December 31, 2008.  |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Service      and Purchase Agreements**

**Purchase      Commitments**

**NOTE      E - STOCK OPTIONS AND WARRANTS**

|                                           |                              |
|------------------------------------------------|-----------------------------------|
|                                           | Three                months ended |   | Nine                months ended |
|                                           | September                29, 2007 |   | September                29, 2007 |
| Expected                Term in years          | 5                                 |   | 5 |
| Expected                stock price volatility | 1.515%                            |   | 1.515%                – 1.690% |
| Risk                free interest rate         | 4.8%                - 5.03%       |   | 4.5%                - 5.03% |
| Dividend                yield                  | 0%                                |   | 0% |
|                                           |                              |   |   |

----

|                                                                                                                   |      | Number                ofOptions |      | Weighted                averageexerciseprice                per share(priced                at date of grant) |
|------------------------------------------------------------------------------------------------------------------------|-----------|---------------------------------|-----------|---------------------------------------------------------------------------------------------------------------|
|                                                                                                                   |      |                            |      |                                                                                                          |
| Outstanding                at December  31, 2006                                                             |      | 712,433                         | $         | 7.89                                                                                                          |
|                                                                                                                   | Granted   |                            | 1,790,865 | $                                                                                                             | 2.16 |
|                                                                                                                   | Cancelled |                            | (124,935) | $                                                                                                             | 8.37 |
|                                                                                                                   |      |                            |      |                                                                                                          |   |
| Outstanding                at September 29, 2007                                                                       |      | 2,378,363                       | $         | 3.55                                                                                                          |
|                                                                                                                   |      |                            |      |                                                                                                          |
| Options                granted at or above market value during the nine months ended September                29, 2007 |      | 1,790,865                       |      |                                                                                                          |

|                                                       |         |   | Options                outstanding |   |      | Options                exercisable                              |   |
|-------------------------------------------------------|--------------|--------|------------------------------------|--------|-----------|-----------------------------------------------------------------|--------|
|                                                  |         |   |                               |   |      |                                                            |   |
| Range                ofexercise                prices |         |   | Numberoutstanding                  |   |      | Weightedaverageremainingcontractuallife                in years |   |   | Weightedaverageexerciseprice |   |   | NumberExercisable |   |   | Weightedaverageexerciseprice                pershare |   |
|                                                  |         |   |                               |   |      |                                                            |   |   |   |   |   |   |   |   |   |   |
| $                                                     | 1.50         |   |                               |   | 1,171,569 |                                                            |   |   | 9.3 |   |   | $ | 1.50 |   |   |   | 413,047 |   |   | $ | 1.50 |   |
| $                                                     | 3.20-$10.18  |   |                               |   | 1,057,294 |                                                            |   |   | 5.1 |   |   | $ | 4.18 |   |   |   | 631,098 |   |   | $ | 4.33 |   |
| $                                                     | 10.20-$13.80 |   |                               |   | 95,750    |                                                            |   |   | 3.0 |   |   | $ | 12.26 |   |   |   | 94,500 |   |   | $ | 12.25 |   |
| $                                                     | 15.60-$32.00 |   |                               |   | 53,750    |                                                            |   |   | 2.7 |   |   | $ | 20.34 |   |   |   | 53,750 |   |   | $ | 20.34 |   |
|                                                  |         |   |                               |   | 2,378,363 |                                                            |   |   | 7.0 |   |   | $ | 3.55 |   |   |   | 1,192,395 |   |   | $ | 4.70 |   |

**Other      Officer Options**

----

**Non      Employee Director Options**

**Outstanding      Warrants**

| Warrants                issued in connection with/as:                                                                                                                                                              |   | Number                outstanding |      |   | Exercise                price per share |   | Expiration                date |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|--------|-----------------------------------------|--------|--------------------------------|
|                                                                                                                                                                                                               |   |                              |      |   |                                    |   |                           |
| Partial                compensation for our placement agent in connection with the sale                of our                Series A Convertible Preferred Stock on December 28, 2006                             |   |                              | 320,000   |   |                                    | $      | 1.10                           |   | December                28, 2011 |
|                                                                                                                                                                                                               |   |                              |      |   |                                    |   |                           |   |   |
| Partial                compensation for our placement agent in connection with the sale                of our                Series B Convertible Preferred Stock and Common Stock on June 29,                2007 |   |                              | 120,928   |   |                                    | $      | 3.30                           |   | June                29, 2012 |
|                                                                                                                                                                                                               |   |                              |      |   |                                    |   |                           |   |   |
| Securities                Purchase Agreements dated June 29, 2007                                                                                                                                                  |   |                              | 1,511,600 |   |                                    | $      | 5.00                           |   | June                29, 2012 |
|                                                                                                                                                                                                               |   |                              |      |   |                                    |   |                           |   |   |
| Consulting                services agreement                                                                                                                                                                       |   |                              | 37,500    |   |                                    | $      | 5.00                           |   | Various                dates through 2011 |
|                                                                                                                                                                                                               |   |                              |      |   |                                    |   |                           |   |   |
| Cooperation                Agreement on November 22, 2006                                                                                                                                                          |   |                              | 5,000     |   |                                    | $      | 1.20                           |   | November                22, 2011 |
|                                                                                                                                                                                                               |   |                              |      |   |                                    |   |                           |   |   |
| Total                warrants outstanding at September 29, 2007                                                                                                                                                    |   |                              | 1,995,028 |   |                                    | $      | 4.26                           |   |   |

**NOTE      F - OTHER SIGNIFICANT EVENTS**

----

**NOTE      G - OTHER SIGNIFICANT SUBSEQUENT EVENTS**

|   |   |
|--------|--------|

**End      of Financial Statements.**

----

**Item      2. Management’s Discussion and Analysis or Plan of      Operation.**

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

**Overview.      **

**Discontinued      Operations. **

**Results      of Operations**

**Lack      of Profitability of Business Operations since 2001. **

----

**Revenues**

**Operating      Expenses.  **

| · | **Cost                of Revenues.**Cost of revenues for the three months ended                September 29, 2007 and the three months ended September 30, 2006                were                $29,515 and $225,168, respectively. The 2006 amount includes a write-down                for prepaid inventory of approximately $133,000, and write-downs                of                prepaid fees on discontinued programs of approximately $63,000. Exclusive                of these amounts, cost of revenues increased by $200 during the three                month period ended September 29, 2007 compared to the three month                period                ended September 30, 2006. Cost                of revenues for the nine months ended September 29, 2007 and the                nine                months ended September 30, 2006 were $129,621 and $546,394, respectively.                The 2006 amount includes a provision for inventory obsolescence of                approximately $355,000 that resulted from a dispute with one of our                vendors which effectively made certain inventories unusable, and                write-downs of approximately $132,000 in prepaid expenses for discontinued                programs. Exclusive of these amounts, cost of revenues increased                approximately $70,000 during the nine month period ended September                29,                2007 compared to the nine month ended September 30, 2006 because                of                distribution and maintenance costs we incurred related to our nFinanSe                Discover® Network Cards. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| · | **Stock-based                employee compensation expense.** Stock-based compensation increased                $93,582 to $674,793 when comparing the three month period ending                September                29, 2007 to the same period from a year ago, a 16%                increase.  Stock-based compensation increased 30% or $383,700 to                $1,658,495, when comparing the nine month period ended September                29, 2007                to the nine month period ended September 30,                2006.   Stock-based compensation expense is a function of                the number of options granted, the vesting period for those options,                the                Company’s stock price volatility, and the rate of employee                turnover.  The primary reason for the increase in the current                nine month period was a result of stock-based compensation expense                of                approximately $993,000 for the options issued to Mr. Welch and Mr.                Springer and approximately $298,000 of such expense from options                granted                to our non-employee directors. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | **Other                employee compensation and benefits.**Other employee compensation                and benefits increased 82% or $504,166 to $1,118,926 during the three                month period ended September 29, 2007 when compared to the three                month                period ended September 30, 2006. This increase is due to hiring more                sales                and support personnel related to the nFinanSe Discover® Network Card                program. During                the nine month period ended September 29, 2007, other employee                compensation and benefits increased 80% or $1,453,951 to $3,267,345                when                compared to the nine month period ended September 30, 2006. This                increase                is primarily due to hiring more sales, administrative and support                personnel related to the nFinanSe Discover® Network Card                program.  In addition, a portion of the increase was the result                of $175,701 of expense related to the separation agreement that was                entered into between the Company and Clifford Wildes (our former                Chairman                and CEO and who was replaced by our current Chairman and CEO, Mr.                Welch)                in January 2007.  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | **Stock-based                professional and consulting fees.**** **There                were no stock-based professional and consulting fees in the three                month                periods ended September 29, 2007 or September 30,                2006.  Stock-based professional and consulting fees decreased                from $628,126 for and the nine month period ended September 30, 2006                to $0                for the same periods in 2007.  This is reflective of the                Company’s improved cash position, and its efforts to lessen its reliance                on non-employee professionals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

| · | **Other                professional and consulting fees.** During the three month period                ended September 29, 2007, other professional and consulting fees                decreased                46% from $493,307 to $264,505 when compared to the three month period                ended September 30, 2006. During the nine month period ended September                29,                2007, other professional and consulting fees decreased 33% from $1,290,103                to $868,065 when compared to the nine month period ended September                30,                2006. These decreases are primarily attributable to a reduction in                fees                associated with our Registration Statement on Form SB-2 filed in                the prior                year (which became effective on June 14, 2006), a reduction in legal                and                consulting fees incurred in connection with licensing and compliance                efforts, and the Company’s efforts to lessen its reliance on non-employee                professionals. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | **Travel                and entertainment.** Travel and entertainment increased from                $46,363 for the three month period ended September 30, 2006 to $116,803                for the three month period ended September 29, 2007, a 152% increase.                When                comparing the nine month period ended September 30, 2006 to the nine                month                period ended September 29, 2007, travel and entertainment increased                $228,949 to $352,517, a 185% increase. This is primarily attributable                to                additional travel due to increased attendance at industry trade shows                and                increased sales calls and the increase in the number of sales personnel                in                the current nine month period versus the same period in the prior                year. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | **Impairment                of Assets.** Impairment of assets expense was $0 for the three                month period ended September 29, 2007, and $41,139 for the nine month                period ended September 29, 2007.  This is attributable to                management's decision to write-off several deposits related to redundant                processing agreements and leases for premises and                equipment. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| · | **Selling                and marketing expenses.** Selling and marketing expenses increased                from $28,503 for the three month period ended September 30, 2006                to                $103,042 for the three month period ended September 29, 2007, a 262%                increase. When comparing the nine month period ended September 29,                2007 to                the nine month period ended September 30, 2006, selling and marketing                expenses increased $300,906 to $396,420, a 315% increase. The increase                is                attributable to additional expenses related to attending industry                trade                shows as well as advertising, promoting and selling our new nFinanSe                Discover® Network Cards. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | **Occupancy                and equipment.** Occupancy and equipment expenses remained                relatively stable for the three month period ended September 29,                2007,                when compared to the same period from a year ago. For the nine month                period ended September 29, 2007, occupancy and equipment expenses                increased $70,252 to $500,305, from the nine month period in the                prior                year.  The increase is primarily attributable to an increase in                equipment depreciation expense and other miscellaneous occupancy                and                equipment expenses arising from the growth of our staff, and an increase                in office rental expense. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | **Other.**                Other expense increased from $68,836 to $143,863, a 109% increase                when                comparing the three month period ended September 30, 2006 to the                three                month period ended September 29, 2007. This increase can be attributed                to                increases in recruiting expense of $15,600, telecommunications expense                of                approximately $4,100, dues and subscriptions expense of $14,100 and                insurance expense of $25,700.  The increased recruiting expense                is related to customer service and sales personnel                recruiting.  The increased telecommunications expense is                primarily related to the increased sales staff, and an upgrade in                service                and equipment.  The increases in dues and subscriptions and in                insurance expense are primarily attributable to upgraded network                security                and increased insurance policy limits. On                a nine month basis, other expense decreased from $396,986 to $332,636,                a                16% decrease when comparing the period ended September 30, 2006 to                the                period ended September 29, 2007. This decrease can be attributed                to                decreases in bad debt expense of approximately $112,500 and legal                settlements of $75,000, being somewhat offset by increases in                telecommunications expense of $29,600, dues and subscriptions expense                of                $37,900 and insurance expense of $53,900.  The increased                telecommunications expense is primarily related to the increased                sales                staff and an upgrade in service and equipment.  The increases in                dues and subscriptions and in insurance expense are attributable                to                upgraded network security and increased insurance policy                limits.  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Other      Non-Operating Income and Expense.**

| · | **Interest                income.**For the three month period ended September 29, 2007,                interest income was $91,314, an $85,075 increase from the same period                in                2006. For the nine month period ended September 29, 2007, interest                income                was $133,011, a $121,283 increase from the same period in 2006 .These                increases are primarily attributable to the interest income received                on                the overnight investment of the higher bank                balances. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | **Interest                expense.** We incurred approximately $1,292,487 and $1,498,128 in                interest expense during the respective the three month and the nine                month                periods ended September 30, 2006.  Substantially all of this                interest expense, in the three and nine month periods of the prior                year,                represented non-cash amortization of debt discounts that arose when                we                allocated proceeds from our financing transactions to other securities                issued in connection with the respective financings, such as warrants,                and                derivative features embedded in the debt instruments. We amortized                debt                discounts and premiums using the effective method where charges and                credits are charged to interest expense and interest income,                respectively.  We have incurred $1,216 of interest expense in                2007 as a result of an insurance premium financing. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| · | **Gain                on Derivative Financial Instruments**. ** **We                recognized a gain on our non-trading derivative financial instruments                of                $4,260,478 for the three month period ended September 30, 2006, and                a net                gain of $2,831,037 for the nine month period ended September 30,                2006. We                no longer have any outstanding derivative financial instrument liabilities                and, accordingly, we have no gains or losses on such instruments                during                the quarter or nine month period ended September 29,                2007.                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----

| · | **Registration                Rights reversals (penalties)**. Registration rights adjustments                occurred in the three month period ended September 30, 2006, resulting                in                gains for both the three month and the nine month periods ended September                30, 2006.  The Company had previously recorded registration                rights penalties as they arose from amounts due to investors because                we                were late in completing the registration of certain common shares                and                warrants sold to investors in two private placements. We record                registration penalties when they are both probable of being incurred                and                reasonably estimable. Because of a change in estimate regarding the                penalties that would be incurred, registration rights gains were                $395,600                and $111,069 for the three month period and nine month period ended                September 30, 2006, respectively.  We have incurred no                registration rights penalties during the first nine months of 2007,                nor do                we currently have any agreements for which we believe would incur                registration rights penalties.  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | **Other                Income (Expense)****.**During the three month period                ended September 29, 2007, we did not incur any other income or                expense.  For the nine month period ended September 29, 2007, we                recognized $25,610 of income which primarily consists $25,000 received                from a former business partner** **as a settlement in a                legal matter and a check recovery of $6,500, slightly offset by $5,600                of                warrant expense related to warrants issued to a business partner                in                consideration of a cooperative agreement.  There was $3,462 of                income or expense recognized for this category for the three month                period                and the nine month period ended September 30,                2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

| · | **Loss                from Discontinued Operations.** During the year ended September 30,                2006, we discontinued our prepaid calling card business and, accordingly,                our statements of operations for all periods presented have been                restated                to reflect the prepaid calling card business as a discontinued operation.                We did not experience a loss from our discontinued operations for                the                three months ended September 29, 2007 versus a loss of $1,437,949                for the                same period of the prior year.  Loss from our discontinued                operations was $8,689 for the nine months ended September 29, 2007                versus                a loss of $2,579,144 for the same period of the prior                year.  Fiscal 2007 losses related to telecommunications expenses                of fiscal 2006 that were unknown to exist at the time operations                were                discontinued. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Liquidity      and Capital Resources. **
** **

----

** **

**Changes      in Number of Employees and Location. **

**Off-Balance      Sheet Arrangements**

**Operating      Leases**

| Twelve                monthsending                September |   |      | Amounts |
|-------------------------------------------------------------|--------|-----------|---------|
|                                                        |   |      |
| 2008                                                        | $      | 355,500   |
| 2009                                                        |   | 233,500   |
| 2010                                                        |   | 199,500   |
| 2011                                                        |   | 203,900   |
| 2012                                                        |   | 208,400   |
| Thereafter                                                  |   | 17,367    |
|                                                        |   |      |
| Total                                                       | $      | 1,218,167 |

----

**Employment      Agreements**

| · | The                employment agreement with our Chief Executive Officer, Jerry R. Welch,                has                a term from September 5, 2006 to December 31, 2008 and provides him                with                an annual salary of $235,000. The agreement is to be automatically                renewed                indefinitely for succeeding terms of two years unless otherwise terminated                in accordance with the agreement. Additionally, Mr. Welch received                the                option to purchase approximately 603,400 shares of our common stock                at                $1.50 per share (the “Option Shares”), which when using Black-Scholes                results in an aggregate fair value of approximately $845,000. This                amount                is being recognized as stock-based compensation on a straight line                basis                as the options vest. The grant was equal to 4.25% of our total outstanding                shares, options and warrants as of December 28, 2006 (the date we                completed the permanent financing required for the grant of such                options).                The Option Shares are divided into 28 equal installments. The first                six                installments vested on February 28, 2007 and additional installments                vest                on the final day of each month through December 31, 2008. Notwithstanding                this vesting schedule, the options will be immediately fully vested                and                exercisable in the event of a change in control (as defined in the                agreement), and/or the death or total disability of Mr. Welch during                the                term of his employment. To the extent it is not previously exercised,                the                option terminates on the earlier of (i) the date ten years following                the                grant date or (ii) at the date 12 months following the cessation                of Mr.                Welch’s employment with us. Mr. Welch also receives a performance-based                bonus and certain medical and other benefits. If we terminate Mr.                Welch                without cause, we will be required to pay severance to him in the                amount                of compensation and benefits he would have otherwise earned in the                remaining term of the agreement or twelve months, whichever period                is                shorter. On                July 12, 2007, Mr. Welch was awarded 197,855 stock options at $3.40                per                share, which when using Black-Scholes results in an aggregate fair                value                of approximately $619,000.   The grant was equal to                approximately 4.25% of the shares of our total stock and warrants                issued                under the June 29, 2007 Securities and Purchase Agreements. These                options                vest in 28 equal installments. The first eleven installments vested                on                July 31, 2007 and accordingly at that time 11/28 of the aforementioned                stock-based compensation was recognized as compensation                expense.  The remaining compensation expense is being recognized                on a straight line basis as additional installments vest on the final                day                of each month through December 31, 2008.   Notwithstanding                this vesting schedule, the options will be immediately fully vested                and                exercisable in the event of a change in control (as defined in the                agreement), and/or the death or total disability of Mr. Welch during                the                term of his employment. To the extent it is not previously exercised,                the                option terminates on the earlier of (i) the date ten years following                the                grant date or (ii) at the date 12 months following the cessation                of Mr.                Welch’s employment with us. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The                employment agreement with our Chief Financial Officer, Raymond Springer,                has a term from September 5, 2006 to December 31, 2008 and provides                him                with an annual salary of $185,000. Additionally, Mr. Springer received                the                option to purchase approximately 284,000 shares of our common stock                at                $1.50 per share (the “Option Shares”), which when using Black-Scholes                results in an aggregate fair value of approximately $400,000. This                amount                is being recognized as stock-based compensation on a straight line                basis                as the options vest. This grant was equal to 2.0% of the outstanding                shares of our total outstanding shares, options and warrants on December                28, 2006 (the date we completed the permanent financing required                for the                grant of such shares). The Option Shares are divided into 28 equal                installments. The first six installments vested on February 28, 2007,                and                additional installments vest on the final day of each month through                December 31, 2008. Notwithstanding this vesting schedule, the options                will                be immediately fully vested and exercisable in the event of a change                in                control (as defined in the agreement), and/or the death or total                disability of Mr. Springer during the term of his employment. To                the                extent it is not previously exercised, the option terminates on the                earlier of (i) the date ten years following the grant date or (ii)                at the                date 12 months following the cessation of Mr. Springer’s employment with                us. Mr. Springer also receives a performance-based bonus and certain                medical and other benefits. If we terminate Mr. Springer without                cause, we                will be required to pay severance to him in the amount of compensation                and                benefits he would have otherwise earned in the remaining term of                the                agreement or twelve months, whichever is shorter. On                July 12, 2007, Mr. Springer was awarded 93,108 stock options at $3.40                per                share, which when using Black-Scholes results in an aggregate fair                value                of approximately $291,000.   The grant was equal to                approximately 2.00% of the shares of our total stock and warrants                issued                under the June 29, 2007 Securities and Purchase Agreements. These                options                vest in 28 equal installments. The first eleven installments vested                on                July 31, 2007 and accordingly at that time 11/28 of the aforementioned                stock-based compensation was recognized as compensation                expense.  The remaining compensation expense is being recognized                on a straight line basis as additional installments vest on the final                day                of each month through December 31, 2008.  Notwithstanding this                vesting schedule, the options will be immediately fully vested and                exercisable in the event of a change in control (as defined in the                agreement), and/or the death or total disability of Mr. Springer                during                the term of his employment. To the extent it is not previously exercised,                the option terminates on the earlier of (i) the date ten years following                the grant date or (ii) at the date 12 months following the cessation                of                Mr. Springer’s employment with us.  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Service      and Purchase Agreements**

**Purchase      Commitments**

**Critical      Accounting Estimates**

----

**Item      3. Controls and Procedures**

**Evaluation      of Disclosure Controls and Procedures**

**Change      in Internal Control over Financial Reporting**

----

**PART      II - OTHER INFORMATION**

**Item      1. Legal Proceedings.**

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

**Item      3. Defaults upon Senior Securities.**

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

**Item      5. Other Information.**

----

**Item      6. Exhibits.**

|                                          |   |                                                                                                                                                                                                          |
|-----------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  **Exhibit                Number**  |   |  **Description                of Exhibit**                                                                                                                                                          |
|                                          |   |                                                                                                                                                                                                          |
| *10.1                                         |   | Commercial                Lease Agreement, dated as of April 16, 2007, by and between FLA Owner                LLC                and the Company                                                        |
|                                          |   |                                                                                                                                                                                                          |
|  *31.1                              |   | Certification                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002                                                                              |
|                                          |   |                                                                                                                                                                                                          |
|  *31.2                              |   | Certification                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002                                                                              |
|                                          |   |                                                                                                                                                                                                          |
|  *32.1                              |   | Certification                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002 |
|                                          |   |                                                                                                                                                                                                          |
|  *32.2                              |   | Certification                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002 |

----

|                                       | **NFINANSE                INC.** |
|--------------------------------------------|----------------------------------|
|                                       |                             |   |
| Date: November                9, 2007 | By:                              | ***/s/                Jerry R. Welch*** |
|                                       |                             |   |
|                                       |                             | Jerry                R. Welch, Chief Executive Officer and Chairman of the Board of Directors                (Principal Executive Officer) |
|                                       |                             |   |
|                                       |                             |   |

|                                             | **NFINANSE                INC.** |
|--------------------------------------------------|----------------------------------|
|                                             |                             |   |
| Date:  November                9, 2007 | By:                              | ***/s/                Raymond P. Springer*** |
|                                             |                             |   |
|                                             |                             | Raymond                P. Springer, Chief Financial Officer (Principal Financial                Officer) |
|                                             |                             |   |
|                                             |                             |   |

|                                             | **NFINANSE                INC.** |
|--------------------------------------------------|----------------------------------|
|                                             |                             |   |
| Date:  November                9, 2007 | By:                              | ***/s/                Jerome A. Kollar*** |
|                                             |                             |   |
|                                             |                             | Jerome                A. Kollar, Vice President Finance and Controller (Principal Accounting                Officer) |
|                                             |                             |   |
|                                             |                             |   |

----

**EXHIBITS      INDEX**

|                                          |   |                                                                                                                                                                                                          |
|-----------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  **Exhibit                Number**  |   |  **Description                of Exhibit**                                                                                                                                                          |
|                                          |   |                                                                                                                                                                                                          |
| *10.1                                         |   | Commercial                Lease Agreement, dated as of April 16, 2007, by and between FLA Owner                LLC                and the Company                                                             |
|                                          |   |                                                                                                                                                                                                          |
|  *31.1                              |   | Certification                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002                                                                              |
|                                          |   |                                                                                                                                                                                                          |
|  *31.2                              |   | Certification                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002                                                                              |
|                                          |   |                                                                                                                                                                                                          |
|  *32.1                              |   | Certification                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002 |
|                                          |   |                                                                                                                                                                                                          |
|  *32.2                              |   | Certification                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002 |

----