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

|   | Large      accelerated filer   £                                             | Accelerated      filer   £    |
|--------|--------------------------------------------------------------------------------------------------|---------------------------------------------------|
|   | Non-accelerated      filer (Do not check if a smaller reporting company)   £ | Smaller      reporting company   T |

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

----

| nFinanSe      Inc.                        |
|------------------------------------------------|
| A      Development Stage Enterprise       |
| Table      of Contents                         |
|                                           |   | Page      No. |
| NOTE      REGARDING FORWARD LOOKING STATEMENTS | 1 |
|                                           |   |
| PART      I - FINANCIAL INFORMATION       |   |
|                                           | Item      1.     Financial Statements:  |   |
|                                           |   | Consolidated      Balance Sheets as of September 27, 2008 (unaudited) and December 29, 2007      (audited)  | 2 |
|                                           |   | Consolidated      Statements of Operations (unaudited) for the three and nine months ended      September 27, 2008 and September 29, 2007, and for the period July 10,      2000 (inception)      to                 September 27, 2008  | 3 |
|                                           |   | Consolidated      Statements of Cash Flows (unaudited) for the nine months ended September      27, 2008 and September 29, 2007, and for the period July 10, 2000      (inception)      to                                    September 27, 2008  | 4 |
|                                           |   | Notes      to Consolidated Financial Statements (unaudited) | 6 |
|                                           |   |   |   |
|                                           | Item      2.     Management’s Discussion and Analysis of      Financial Condition and Results of Operations.  | 19 |
|                                           | Item      3.     Quantitative and Qualitative Disclosures      About Market Risk.  | 27 |
|                                           | Item      4.     Controls and Procedures.  | 27 |
| PART      II - OTHER INFORMATION          |   |
|                                           | Item      1.     Legal Proceedings.  | 28 |
|                                           | Item      2.     Unregistered Sales of Equity Securities      and Use of Proceeds.  | 28 |
|                                           | Item      3.     Defaults Upon Senior      Securities.  | 28 |
|                                           | Item      4.     Submission of Matters to a Vote of      Security Holders.  | 28 |
|                                           | Item      5.     Other Information.  | 28 |
|                                           | Item      6.     Exhibits. | 29 |
|                                           |   |   |   |
| SIGNATURES                                     |   |

----

| · | our      current expectations regarding our operations to fund normal and recurring      operating commitments over the next twelve months;                                                                                                                                                                                                                          |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | our      ability to raise capital when needed on acceptable  terms;                                                                                                                                                                                                                                                                                                  |
| · | our      ability to execute on our business plan;                                                                                                                                                                                                                                                                                                                    |
| · | the      competitive advantages and customer acceptance of Discover®      Network-branded stored value cards (“SVCs”);                                                                                                                                                                                                                              |
| · | our      ability to expand the number of active retail locations, including the      addition of Interactive Communications International, Inc. (“InComm”)      retailers, that sell our retail gift and reloadable general spend SVCs and      the timing of such expansions, including the timing InComm’s bringing our      products to market; |
| · | our      expectations of when InComm will begin marketing our SVCs;    and                                                                                                                                                                                                                                                                                           |
| · | our      need to expand our customer servicedepartment.                                                                                                                                                                                                                                                                                                              |

| · | 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;                                                                                                                                                                                                                                                                        |
| · | the      performance of third party contractors;                                                                                                                                                                                                                                                                                                                                          |
| · | our      ability to attract the qualified personnel to implement our growth      strategies;                                                                                                                                                                                                                                                                                              |
| · | our      ability to develop sales and distribution capabilities and our      distributors’ efforts and timing in bringing our products to      market;                                                                                                                                                                                                                              |
| · | 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 in our Annual Report on Form 10-KSB for the year ended December      29, 2007, including those factors under the heading “Risk Factors” and      those risks discussed under the heading “Management’s Discussion and      Analysis or Plan of Operation.” |

----

|                                                                                                                                                                                                                                                                                                                                                                                    |   | September      27, |        |   | December      29, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                    |   | 2008               |        |   | 2007              |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                  |   | (unaudited)        |        |   | (audited)         |   |
|                                                                                                                                                                                                                                                                                                                                                                                    |   |               |        |   |              |   |
| CURRENT      ASSETS:                                                                                                                                                                                                                                                                                                                                                                    |   |               |        |   |              |   |
| Cash      and cash equivalents                                                                                                                                                                                                                                                                                                                                                          |   | $                  | 2,601,657   |   |              | $      | 2,497,365 |   |
| Short-term      investment                                                                                                                                                                                                                                                                                                                                                              |   |               | -           |   |              |   | 728,000 |   |
| Receivables:                                                                                                                                                                                                                                                                                                                                                                            |   |               |        |   |              |   |   |   |
| Accounts      (net of allowance for doubtful accounts of $0 and $0,      respectively)                                                                                                                                                                                                                                                                                                  |   |               | 7,004       |   |              |   | 10,957 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                   |   |               | 16,399      |   |              |   | 19,027 |   |
| Prepaid      expenses and other current assets (including prepaid marketing costs of      approximately $346,900 and $312,000, respectively)                                                                                                                                                                                                                                            |   |               | 598,232     |   |              |   | 473,493 |   |
| Current      portion deferred financing costs                                                                                                                                                                                                                                                                                                                                           |   |               | 360,550     |   |              |   | - |   |
| Inventories      (net of inventory reserves of $123,300 and $24,500,      respectively)                                                                                                                                                                                                                                                                                                 |   |               | 2,810,685   |   |              |   | 1,942,206 |   |
|                Total      current assets                                                                                                                                                                                                                                                                     |   |               | 6,394,527   |   |              |   | 5,671,048 |   |
| PROPERTY      AND EQUIPMENT (net of accumulated depreciation of $640,000 and $446,300,      respectively)                                                                                                                                                                                                                                                                               |   |               | 682,191     |   |              |   | 759,261 |   |
|                                                                                                                                                                                                                                                                                                                                                                                    |   |               |        |   |              |   |   |   |
| OTHER      ASSETS                                                                                                                                                                                                                                                                                                                                                                       |   |               |        |   |              |   |   |   |
| Deferred      cost of lender warrants                                                                                                                                                                                                                                                                                                                                                   |   |               | 1,454,958   |   |              |   | - |   |
| Deferred      cost of marketing incentive agreement warrants (net of accumulated      amortization of $2,873 and $107, respectively)                                                                                                                                                                                                                                                    |   |               | 532,926     |   |              |   | 535,195 |   |
| Other      Assets                                                                                                                                                                                                                                                                                                                                                                       |   |               | 344,510     |   |              |   | 35,080 |   |
|                                                                                                                                                                                                                                                                                                                                                                                    |   |               |        |   |              |   |   |   |
| TOTAL                                                                                                                                                                                                                                                                                                                                                                                   |   | $                  | 9,409,112   |   |              | $      | 7,000,584 |   |
|                                                                                                                                                                                                                                                                                                                                                                                    |   |               |        |   |              |   |   |   |
| LIABILITIES AND      STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                         |   |               |        |   |              |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                    |   |               |        |   |              |   |   |   |
| CURRENT      LIABILITIES:                                                                                                                                                                                                                                                                                                                                                               |   |               |        |   |              |   |   |   |
| Accounts      payable                                                                                                                                                                                                                                                                                                                                                                   |   | $                  | 537,242     |   |              | $      | 139,635 |   |
| Accrued      personnel costs                                                                                                                                                                                                                                                                                                                                                            |   |               | 306,749     |   |              |   | 130,804 |   |
| Accrued      inventory liability                                                                                                                                                                                                                                                                                                                                                        |   |               | 203,147     |   |              |   | 593,431 |   |
| Accrued      lease and contractual obligations                                                                                                                                                                                                                                                                                                                                          |   |               | 150,241     |   |              |   | 220,809 |   |
| Deferred      revenues                                                                                                                                                                                                                                                                                                                                                                  |   |               | 50,000      |   |              |   | 106,250 |   |
| Other      accrued liabilities                                                                                                                                                                                                                                                                                                                                                          |   |               | 441,740     |   |              |   | 371,298 |   |
|                Total      current liabilities                                                                                                                                                                                                                                                                |   |               | 1,689,119   |   |              |   | 1,562,227 |   |
|                                                                                                                                                                                                                                                                                                                                                                                    |   |               |        |   |              |   |   |   |
| COMMITMENTS      AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                      |   |               |        |   |              |   |   |   |
| STOCKHOLDERS’      EQUITY:                                                                                                                                                                                                                                                                                                                                                        |   |               |        |   |              |   |   |   |
| Preferred      stock - $.001 par value:  25,000,000 shares authorized;      12,537,984 and 8,820,484  shares issued and outstanding on      September 27, 2008 and December 29, 2007, respectively, as      follows:                                                                                                                                                |   |               |        |   |              |   |   |   |
|    Series      A Convertible Preferred Stock – 9,327,934 shares authorized; 7,500,484 and      7,820,484 shares  issued and outstanding with liquidation values      of $7,591,928 and $8,213,651 (including undeclared accumulated dividends      in arrears of $91,444 and $393,167) as of September 27, 2008 and December      29, 2007, respectively |   |               | 7,500       |   |              |   | 7,820 |   |
|    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 27, 2008 and December 29, 2007                                                                                                                                                   |   |               | 1,000       |   |              |   | 1,000 |   |
|    Series      C Convertible Preferred Stock – 4,100,000 shares authorized; 4,037,500      shares issued and outstanding with a liquidation value of $8,075,000 at      September 27, 2008                                                                                                                                                                         |   |               | 4,038       |   |              |   | - |   |
| Common      stock - $0.001 par value: 200,000,000 shares authorized; 9,294,108 and      7,371,929 shares issued and outstanding as of September 27, 2008 and      December 29, 2007, respectively                                                                                                                                                                                       |   |               | 9,294       |   |              |   | 7,372 |   |
| Additional      paid-in capital                                                                                                                                                                                                                                                                                                                                                         |   |               | 56,236,414  |   |              |   | 42,002,195 |   |
| Deficit      accumulated during the development stage                                                                                                                                                                                                                                                                                                                                   |   |               | (48,538,253 | )      |              |   | (36,580,030 | ) |
|                Total      stockholders’ equity                                                                                                                                                                                                                                                         |   |               | 7,719,993   |   |              |   | 5,438,357 |   |
|                                                                                                                                                                                                                                                                                                                                                                                    |   |               |        |   |              |   |   |   |
| TOTAL                                                                                                                                                                                                                                                                                                                                                                                   |   | $                  | 9,409,112   |   |              | $      | 7,000,584 |   |
|                                                                                                                                                                                                                                                                                                                                                                                    |   |               |        |   |              |   |   |   |

----

|                                                                                    |   | For      the three months      endedSeptember      27, 2008 |       |   | For      the three months      endedSeptember      29, 2007 |   |       | For      the nine months      endedSeptember      27, 2008 |   |   | For      the nine months      endedSeptember      29, 2007 |   |   | For      the period July      10, 2000(inception)      to September      27, 2008 |       |
|-----------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|------------|--------|-------------------------------------------------------------|--------|------------|------------------------------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------|------------|
| REVENUES                                                                                |   | $                                                           | 13,202     |   |                                                        | $      | 8,129      |                                                       |   | $      | 29,194                                                     |   |   | $                                                                                      | 22,889     |   |   | $ | 1,235,362 |   |
|                                                                                    |   |                                                        |       |   |                                                        |   |       |                                                       |   |   |                                                       |   |   |                                                                                   |       |   |   |   |   |   |
| OPERATING      EXPENSES                                                                 |   |                                                        |       |   |                                                        |   |       |                                                       |   |   |                                                       |   |   |                                                                                   |       |   |   |   |   |   |
| Transaction      and operating expenses                                                 |   |                                                        | 657,182    |   |                                                        |   | 211,180    |                                                       |   |   | 1,594,626                                                  |   |   |                                                                                   | 652,232    |   |   |   | 4,183,260 |   |
| Selling      and marketing expenses                                                     |   |                                                        | 939,470    |   |                                                        |   | 586,681    |                                                       |   |   | 3,016,436                                                  |   |   |                                                                                   | 1,706,346  |   |   |   | 7,373,067 |   |
| General      and administrative expenses                                                |   |                                                        | 2,066,567  |   |                                                        |   | 1,827,680  |                                                       |   |   | 6,265,037                                                  |   |   |                                                                                   | 5,187,965  |   |   |   | 28,611,254 |   |
|    Total      operating expenses                                         |   |                                                        | 3,663,219  |   |                                                        |   | 2,625,541  |                                                       |   |   | 10,876,099                                                 |   |   |                                                                                   | 7,546,543  |   |   |   | 40,167,581 |   |
|                                                                                    |   |                                                        |       |   |                                                        |   |       |                                                       |   |   |                                                       |   |   |                                                                                   |       |   |   |   |   |   |
| Loss      before other income (expense)                                                 |   |                                                        | (3,650,017 | )      |                                                        |   | (2,617,412 | )                                                          |   |   | (10,846,905                                                | )      |   |                                                                                   | (7,523,654 | ) |   |   | (38,932,219 | ) |
|                                                                                    |   |                                                        |       |   |                                                        |   |       |                                                       |   |   |                                                       |   |   |                                                                                   |       |   |   |   |   |   |
| Other      income (expense):                                                            |   |                                                        |       |   |                                                        |   |       |                                                       |   |   |                                                       |   |   |                                                                                   |       |   |   |   |   |   |
| Interest      expense                                                                   |   |                                                        | (38,712    | )      |                                                        |   | (1,216     | )                                                          |   |   | (94,178                                                    | )      |   |                                                                                   | (1,216     | ) |   |   | (1,782,442 | ) |
| Interest      income                                                                    |   |                                                        | 13,645     |   |                                                        |   | 91,314     |                                                       |   |   | 20,487                                                     |   |   |                                                                                   | 133,011    |   |   |   | 1,160,727 |   |
| Gain      (loss) on derivative instruments                                              |   |                                                        | -          |   |                                                        |   | -          |                                                       |   |   | (396,032                                                   | )      |   |                                                                                   | -          |   |   |   | 1,449,230 |   |
| Loss      from litigation                                                               |   |                                                        | (55,000    | )      |                                                        |   | -          |                                                       |   |   | (55,000                                                    | )      |   |                                                                                   | -          |   |   |   | (51,000 | ) |
| Loss      on debt extinguishment                                                        |   |                                                        | -          |   |                                                        |   | -          |                                                       |   |   | -                                                          |   |   |                                                                                   | -          |   |   |   | (4,685,518 | ) |
| Registration      rights penalties                                                      |   |                                                        | -          |   |                                                        |   | -          |                                                       |   |   | -                                                          |   |   |                                                                                   | -          |   |   |   | (98,649 | ) |
| Other      income (expense)                                                             |   |                                                        | -          |   |                                                        |   | -          |                                                       |   |   | (758                                                       | )      |   |                                                                                   | 27,243     |   |   |   | (98,614 | ) |
|    Total      other income (expense)                                     |   |                                                        | (80,067    | )      |                                                        |   | 90,098     |                                                       |   |   | (525,481                                                   | )      |   |                                                                                   | 159,038    |   |   |   | (4,106,266 | ) |
|                                                                                    |   |                                                        |       |   |                                                        |   |       |                                                       |   |   |                                                       |   |   |                                                                                   |       |   |   |   |   |   |
| Loss      from continuing operations                                                    |   |                                                        | (3,730,084 | )      |                                                        |   | (2,527,314 | )                                                          |   |   | (11,372,386                                                | )      |   |                                                                                   | (7,364,616 | ) |   |   | (43,038,485 | ) |
|                                                                                    |   |                                                        |       |   |                                                        |   |       |                                                       |   |   |                                                       |   |   |                                                                                   |       |   |   |   |   |   |
| Loss      from discontinued operations                                                  |   |                                                        | -          |   |                                                        |   | -          |                                                       |   |   | -                                                          |   |   |                                                                                   | (8,689     | ) |   |   | (3,861,579 | ) |
|                                                                                    |   |                                                        |       |   |                                                        |   |       |                                                       |   |   |                                                       |   |   |                                                                                   |       |   |   |   |   |   |
| Net      loss                                                                           |   |                                                        | (3,730,084 | )      |                                                        |   | (2,527,314 | )                                                          |   |   | (11,372,386                                                | )      |   |                                                                                   | (7,373,305 | ) |   |   | (46,900,064 | ) |
| Dividends      paid on Series A Convertible      Preferred    Stock |   |                                                        | (189,519   | )      |                                                        |   | (10,045    | )                                                          |   |   | (585,837                                                   | )      |   |                                                                                   | (42,634    | ) |   |   | (1,638,189 | ) |
| Undeclared      and unpaid dividends on Series A Convertible Preferred    Stock         |   |                                                        | (91,444    | )      |                                                        |   | (101,811   | )                                                          |   |   | (91,444                                                    | )      |   |                                                                                   | (302,422   | ) |   |   | (91,444 | ) |
| Net      loss attributable to common stockholders                                       |   | $                                                           | (4,011,047 | )      |                                                        | $      | (2,639,170 | )                                                          |   | $      | (12,049,667                                                | )      |   | $                                                                                      | (7,718,361 | ) |   | $ | (48,629,697 | ) |
| Net      loss per share - basic and diluted:                                            |   |                                                        |       |   |                                                        |   |       |                                                       |   |   |                                                       |   |   |                                                                                   |       |   |   |   |   |   |
| Continuing      operations                                                              |   | $                                                           | (0.44      | )      |                                                        | $      | (0.42      | )                                                          |   | $      | (1.42                                                      | )      |   | $                                                                                      | (1.64      | ) |   |   |   |   |
| Discontinued      operations                                                            |   | $                                                           | -          |   |                                                        | $      | -          |                                                       |   | $      | -                                                          |   |   | $                                                                                      | -          |   |   |   |   |   |
| Total      net loss per share                                                           |   | $                                                           | (0.44      | )      |                                                        | $      | (0.42      | )                                                          |   | $      | (1.42                                                      | )      |   | $                                                                                      | (1.64      | ) |   |   |   |   |
| Weighted      average number of shares outstanding                                      |   |                                                        | 9,155,743  |   |                                                        |   | 6,353,847  |                                                       |   |   | 8,504,943                                                  |   |   |                                                                                   | 4,715,211  |   |   |   |   |   |
|                                                                                    |   |                                                        |       |   |                                                        |   |       |                                                       |   |   |                                                       |   |   |                                                                                   |       |   |   |   |   |   |

----

|                                                                                                                                  |   | For      the nine months      ended September      27, 2008 |        |   | For      the nine months      ended September      29, 2007 |   |       | For      the periodJuly      10, 2000(inception)      toSeptember      27, 2008 |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|-------------|--------|-----------------------------------------------------------------------|--------|------------|---------------------------------------------------------------------------------|--------|
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                                                            |   |                                                                  |        |   |                                                                  |   |       |                                                                            |   |
|     Net      loss                                                                                                 |   | $                                                                     | (11,372,386 | )      |                                                                  | $      | (7,373,305 | )                                                                               |   | $ | (46,900,064 | ) |
|     Adjustments      to reconcile net loss to net cash used in operating      activities:                         |   |                                                                  |        |   |                                                                  |   |       |                                                                            |   |   |   |   |
|        Depreciation      and amortization                                                          |   |                                                                  | 224,817     |   |                                                                  |   | 175,894    |                                                                            |   |   | 1,187,050 |   |
|        Provision      for inventory obsolescence                                                   |   |                                                                  | 98,825      |   |                                                                  |   | 14,011     |                                                                            |   |   | 617,682 |   |
|        Provision      for bad debts                                                                |   |                                                                  | 57          |   |                                                                  |   | -          |                                                                            |   |   | 462,029 |   |
|        Amortization      of intangible assets                                                      |   |                                                                  | -           |   |                                                                  |   | -          |                                                                            |   |   | 15,485 |   |
|        Stock-based      compensation and consulting                                                |   |                                                                  | 1,529,389   |   |                                                                  |   | 1,658,495  |                                                                            |   |   | 7,703,755 |   |
|        Purchased      in process research and development                                          |   |                                                                  | -           |   |                                                                  |   | -          |                                                                            |   |   | 153,190 |   |
|        Loss      (gain) on derivative instruments                                                  |   |                                                                  | 396,032     |   |                                                                  |   | -          |                                                                            |   |   | (1,449,230 | ) |
|        Losses      on debt extinguishments                                                         |   |                                                                  | -           |   |                                                                  |   | -          |                                                                            |   |   | 4,685,518 |   |
|        Loss      (gain) on disposal of assets                                                      |   |                                                                  | 394         |   |                                                                  |   | (1,633     | )                                                                               |   |   | 28,762 |   |
|        Loss      from impairment of assets                                                         |   |                                                                  | 224,437     |   |                                                                  |   | 41,139     |                                                                            |   |   | 1,320,339 |   |
|        Forgiveness      of indebtedness as a result of      litigation   settlement |   |                                                                  | -           |   |                                                                  |   | -          |                                                                            |   |   | (50,000 | ) |
|        Non-cash      interest expense                                                              |   |                                                                  | 42,374      |   |                                                                  |   | -          |                                                                            |   |   | 1,621,394 |   |
|        Amortization      of premium on convertible promissory note                                 |   |                                                                  | -           |   |                                                                  |   | -          |                                                                            |   |   | (863,049 | ) |
|        Value/expense      of third party warrants                                                  |   |                                                                  | 2,269       |   |                                                                  |   | 5,600      |                                                                            |   |   | 7,976 |   |
|      Changes in assets and      liabilities, net:                                                            |   |                                                                  |        |   |                                                                  |   |       |                                                                            |   |   |   |   |
|         Receivables                                                                           |   |                                                                  | 9,027       |   |                                                                  |   | 18,484     |                                                                            |   |   | (323,169 | ) |
|         Prepaid      expenses and other current assets                                        |   |                                                                  | (124,737    | )      |                                                                  |   | (360,488   | )                                                                               |   |   | (3,298,152 | ) |
|         Inventories                                                                           |   |                                                                  | (1,191,742  | )      |                                                                  |   | (159,865   | )                                                                               |   |   | (844,001 | ) |
|         Other      assets                                                                     |   |                                                                  | (237,319    | )      |                                                                  |   | 10,571     |                                                                            |   |   | (248,533 | ) |
|         Assets      of discontinued operations                                                |   |                                                                  | -           |   |                                                                  |   | -          |                                                                            |   |   | (229,060 | ) |
|         Accounts      payable and accrued  liabilities                              |   |                                                                  | 182,990     |   |                                                                  |   | (242,801   | )                                                                               |   |   | 1,820,929 |   |
|         Accrued      registration rights penalties                                            |   |                                                                  | -           |   |                                                                  |   | -          |                                                                            |   |   | 98,649 |   |
|         Deferred      revenues                                                                |   |                                                                  | (56,250     | )      |                                                                  |   | 65,000     |                                                                            |   |   | 50,000 |   |
| NET      CASH USED IN OPERATING ACTIVITIES                                                                                            |   |                                                                  | (10,271,823 | )      |                                                                  |   | (6,148,898 | )                                                                               |   |   | (34      ,432,500 | ) |
|                                                                                                                                  |   |                                                                  |        |   |                                                                  |   |       |                                                                            |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                                                            |   |                                                                  |        |   |                                                                  |   |       |                                                                            |   |   |   |   |
|   Purchases      of property and equipment                                                                                  |   |                                                                  | (148,141    | )      |                                                                  |   | (132,488   | )                                                                               |   |   | (2,102,475 | ) |
|   Early      redemption of short-term investment                                                                            |   |                                                                  | 725,496     |   |                                                                  |   | -          |                                                                            |   |   | (2,504 | ) |
|   Investment      in Product Benefits Systems Corporation                                                                   |   |                                                                  | -           |   |                                                                  |   | -          |                                                                            |   |   | (15,737 | ) |
|   Cash      advanced under note receivable                                                                                  |   |                                                                  | -           |   |                                                                  |   | -          |                                                                            |   |   | (202,000 | ) |
|   Other                                                                                                                     |   |                                                                  | -           |   |                                                                  |   | -          |                                                                            |   |   | (15,000 | ) |
| NETCASH PROVIDED BY (USED      IN) INVESTING ACTIVITIES                                                                          |   |                                                                  | 577,355     |   |                                                                  |   | (132,488   | )                                                                               |   |   | (2,337,716 | ) |
|                                                                                                                                  |   |                                                                  |        |   |                                                                  |   |       |                                                                            |   |   |   |   |

----

|                                                                            |   | For      the nine months      ended September      27, 2008 |      |   | For      the nine months      ended September      29, 2007 |   |      | For      the periodJuly      10, 2000(inception)      toSeptember      27, 2008 |   |
|---------------------------------------------------------------------------------|--------|-------------------------------------------------------------|-----------|--------|-------------------------------------------------------------|--------|-----------|---------------------------------------------------------------------------------|--------|
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                      |   |                                                        |      |   |                                                        |   |      |                                                                            |   |
|   Proceeds      from issuance of Series A Convertible Preferred Stock |   |                                                        | -         |   |                                                        |   | -         |                                                                            |   |   | 4,000,000 |   |
|   Proceeds      from issuance of Series B Convertible Preferred Stock |   |                                                        | -         |   |                                                        |   | 3,000,000 |                                                                            |   |   | 3,000,000 |   |
|   Proceeds      from issuance of Series C Convertible Preferred Stock |   |                                                        | 8,075,000 |   |                                                        |   | -         |                                                                            |   |   | 8,075,000 |   |
|   Proceeds      from borrowings                                       |   |                                                        | -         |   |                                                        |   | -         |                                                                            |   |   | 5,365,162 |   |
|   Repayments      of notes payable                                    |   |                                                        | -         |   |                                                        |   | -         |                                                                            |   |   | (147,912 | ) |
|   Collections      on note receivable from stockholder                |   |                                                        | -         |   |                                                        |   | -         |                                                                            |   |   | 3,000,000 |   |
|   Payment      for deferred financing costs                           |   |                                                        | (432,660  | )      |                                                        |   | -         |                                                                            |   |   | (432,660 | ) |
|   Payments      for stock issuance costs                              |   |                                                        | (683,580  | )      |                                                        |   | (640,494  | )                                                                               |   |   | (1,496,741 | ) |
|   Proceeds      from the exercise of vested stock options             |   |                                                        | -         |   |                                                        |   | -         |                                                                            |   |   | 8,249 |   |
|   Proceeds      from the issuance of Common Stock                     |   |                                                        | 2,840,000 |   |                                                        |   | 6,069,610 |                                                                            |   |   | 18,000,775 |   |
| NET      CASH PROVIDED BY FINANCING ACTIVITIES                                  |   |                                                        | 9,798,760 |   |                                                        |   | 8,429,116 |                                                                            |   |   | 39,371,873 |   |

| NET      CHANGE IN CASH AND CASH EQUIVALENTS                                                                                       |   |   | 104,292   |   |   |   | 2,147,730 |   |   |   | 2,601,657 |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|
|                                                                                                                               |   |   |      |   |   |   |      |   |   |   |      |   |
| CASH      AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                                                |   |   | 2,497,365 |   |   |   | 4,186,623 |   |   |   | -         |   |
|                                                                                                                               |   |   |      |   |   |   |      |   |   |   |      |   |
| CASH      AND CASH EQUIVALENTS, END OF PERIOD                                                                                      |   | $      | 2,601,657 |   |   | $      | 6,334,353 |   |   | $      | 2,601,657 |   |
|                                                                                                                               |   |   |      |   |   |   |      |   |   |   |      |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:                                                                             |   |   |      |   |   |
| Interest      paid                                                                                                                 |   | $      | 31,859    |   |   | $      | 1,216     |   |   | $      | 48,855    |   |
| Income      taxes paid                                                                                                             |   | $      | -         |   |   | $      | -         |   |   | $      | -         |   |
|                                                                                                                               |   |   |      |   |   |   |      |   |   |   |      |   |
| SUPPLEMENTAL      DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                                                       |   |
| Acquisition      of assets by issuance of Common Stock                                                                             |   | $      | -         |   |   | $      | -         |   |   | $      | 818,200   |   |
| Reclassification      of proceeds from sales of Common Stock to derivative financial instrument      liabilities                   |   | $      | -         |   |   | $      | -         |   |   | $      | 4,007,443 |   |
| Issuance      of Common Stock for net assets of Pan American Energy Corporation in a      recapitalization  - see Note A |   | $      | -         |   |   | $      | -         |   |   | $      | 2,969,000 |   |
| Issuance      of Common Stock in lieu of cash payment of registration      penalties                                               |   | $      | -         |   |   | $      | -         |   |   | $      | 652,625   |   |
| Reclassification      of long-lived assets to assets of discontinued telecom      operations                                       |   | $      | -         |   |   | $      | -         |   |   | $      | 100,000   |   |
| Warrants      Issued to DFS Services, LLC                                                                                          |   | $      | (2,269    | )      |   | $      | -         |   |   | $      | 532,926   |   |
| Warrants      Issued to Lenders                                                                                                    |   | $      | 1,454,958 |   |   | $      | -         |   |   | $      | 1,454,958 |   |
| Conversion      of Series A Convertible Preferred Stock to Common Stock                                                            |   | $      | 320       |   |   | $      | -         |   |   | $      | 1,828     |   |
| Dividends      on Series A Convertible Preferred Stock                                                                             |   | $      | 585,837   |   |   | $      | 42,634    |   |   | $      | 1,638,189 |   |
| Conversion      of Senior Secured Convertible Promissory Notes and accrued interest to      Series A Convertible Preferred Stock   |   | $      | -         |   |   | $      | -         |   |   | $      | 5,327,934 |   |
|                                                                                                                               |   |   |      |   |   |   |      |   |   |   |      |   |

----

|   | •       Wholesale fees, which arise when our SVCs are sold and activated and      when the nFinanSe Network TM      is used to reload a card. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | •       Transaction fees, which arise when our SVCs are used in a purchase      or ATM transaction.                                           |
|   | •       Maintenance fees, which arise when an SVC with a cash balance is      charged for monthly maintenance.                                |
|   | •       Interest revenue, which arises from earnings on overnight investing      of SVC balances by our card issuingbank.                     |

----

----

----

|                                                  |   |                                                     |       |
|-------------------------------------------------------|--------|----------------------------------------------------------|------------|
| Description                                           |   | Shares      of Common Stock and Common Stock equivalents |       |
| Common      Stock outstanding                         |   |                                                     | 9,294,108  |   |
| Series      A Convertible Preferred Stock outstanding |   |                                                     | 7,500,484  |   |
| Series      B Convertible Preferred Stock outstanding |   |                                                     | 1,000,000  |   |
| Series      C Convertible Preferred Stock outstanding |   |                                                     | 4,037,500  |   |
| Stock      options outstanding                        |   |                                                     | 2,654,307  |   |
| Warrants      outstanding                             |   |                                                     | 6,061,054  |   |
|                                                  |   |                                                     |       |   |
| Total                                                 |   |                                                     | 30,547,453 |   |
|                                                  |   |                                                     |       |   |

----

|                                      |   |                                                                   |    |   |                                                              |   |    |                                                             |   |   |                                                             |   |
|-------------------------------------------|--------|------------------------------------------------------------------------|---------|--------|-------------------------------------------------------------------|--------|---------|------------------------------------------------------------------|--------|--------|------------------------------------------------------------------|--------|
| Stock-based      compensation charged to: |   | For      the three months      ended September      27, 2008 |    |   | For      the three months      ended September      29, 2007 |   |    | For      the nine months      ended September      27, 2008 |   |   | For      the nine months      ended September      29, 2007 |   |
| Transaction      and operating expenses   |   | $                                                                      | -       |   |                                                              | $      | 589     |                                                             |   | $      | 243                                                              |   |   | $ | 1,633 |   |
| Selling      and marketing expenses       |   |                                                                   | 46,296  |   |                                                              |   | 49,025  |                                                             |   |   | 175,819                                                          |   |   |   | 127,049 |   |
| General      and administrative expenses  |   |                                                                   | 384,852 |   |                                                              |   | 625,179 |                                                             |   |   | 1,353,327                                                        |   |   |   | 1,529,813 |   |
| Interest      expense                     |   |                                                                   | 17,370  |   |                                                              |   | -       |                                                             |   |   | 42,374                                                           |   |   |   | - |   |
| Total      stock-based compensation       |   | $                                                                      | 448,518 |   |                                                              | $      | 674,793 |                                                             |   | $      | 1,571,763                                                        |   |   | $ | 1,658,495 |   |
|                                      |   |                                                                   |    |   |                                                              |   |    |                                                             |   |   |                                                             |   |   |   |   |   |

----

In September 2006, the FASB issued Financial AccountingStandard No. 157, “Fair ValueMeasurements” (“FAS 157”), and weadopted FAS 157 on December 30, 2007, the first day of fiscal year 2008.FAS 157 defines fair value, establishes a methodology for measuring fair value,and expands the required disclosure for fair value measurements. OnFebruary 12, 2008, the FASB issued FASB Staff Position FAS 157-2, “Effective Date of FASB StatementNo. 157,” which amends FAS 157 by delaying its effective date by oneyear for non-financial assets and non-financial liabilities, except for itemsthat are recognized or disclosed at fair value in the financial statements on arecurring basis. Therefore, beginning on December 30, 2007, this standardapplies prospectively to new fair value measurements of financial instrumentsand recurring fair value measurements of non-financial assets and non-financialliabilities. On January 4, 2009, the beginning of our 2009 fiscal year, thestandard will also apply to all other fair value measurements.

----

----

|                                 |   |                    |              |   |
|--------------------------------------|--------|-------------------------|-------------------|--------|
|                                 |   | Nine      monthsended   |              |   | Nine      monthsended |   |   |
|                                 |   | September      27, 2008 |              |   | September      29, 2007 |   |   |
| Expected      term in years          |   |                    | 5                 |   |   |   | 5 |   |   |
| Expected      stock price volatility |   |                    | 73.1%      - 75.1 | %      |   |   | 151.5%      – 169.0 | % |   |
| Risk      free interest rate         |   |                    | 2.7%      - 3.1   | %      |   |   | 4.5%      - 5.0 | % |   |
| Dividend      yield                  |   |                    | 0                 | %      |   |   | 0 | % |   |
|                                 |   |                    |              |   |   |   |   |   |   |

|                                                                                                           |   | Number      ofOptions |      |   | Weighted      averageexerciseprice      per share(priced      at date of grant) |   |
|----------------------------------------------------------------------------------------------------------------|--------|-----------------------|-----------|--------|---------------------------------------------------------------------------------|--------|
| Outstanding      at December  29, 2007                                                               |   |                  | 2,403,696 |   |                                                                            | $      | 3.59 |   |
| Granted                                                                                                        |   |                  | 463,000   |   |                                                                            | $      | 3.50 |   |
| Cancelled                                                                                                      |   |                  | (212,389  | )      |                                                                            | $      | 2.73 |   |
|                                                                                                           |   |                  |      |   |                                                                            |   |   |   |
| Outstanding      at September 27, 2008                                                                         |   |                  | 2,654,307 |   |                                                                            | $      | 3.63 |   |
|                                                                                                           |   |                  |      |   |                                                                            |   |   |   |
| Options      granted at or above market value during the nine months ended        September 27, 2008 |   |                  | 463,000   |   |                                                                            |   |   |   |

----

|                              | Options      outstanding |              | Options      exercisable |                                                  |
|-----------------------------------|--------------------------|-------------------|--------------------------|-------------------------------------------------------|
|                              |                     |              |                     |
| Range      ofexercise      prices |                     | Numberoutstanding |                     | Weightedaverageremainingcontractuallife      in years |   | Weightedaverageexerciseprice |   | NumberExercisable |   | Weightedaverageexerciseprice      pershare |   |
|                              |                     |              |                     |                                                  |   |   |   |   |   |   |   |
|    $1.50-$1.60     |                     | 1,103,791         |                     | 8.3                                                   | $ | 1.50 |   | 936,517 | $ | 1.50 |   |
| $2.20-$4.80                       |                     | 1,277,826         |                     | 6.0                                                   | $ | 3.70 |   | 934,089 | $ | 3.72 |   |
| $5.80-$9.80                       |                     | 123,190           |                     | 3.3                                                   | $ | 7.85 |   | 123,190 | $ | 7.85 |   |
| $10.20-$32.00                     |                     | 149,500           |                     | 1.9                                                   | $ | 15.16 |   | 149,500 | $ | 15.16 |   |
|                         |                     | 2,654,307         |                | 6.6                                                   | $ | 3.63 |    | 2,143,296 | $ | 3.78 |   |

| ·   | Mr.      Welch and Mr. Springer were awarded 95,000 and 45,000 stock options,      respectively, at an exercise price of $4.00 per share. Using the      Black-Scholes option valuation model, at aggregate fair values of      approximately $234,000 and $111,000, respectively, is expected to be      recognized over the vesting periods of the options.  The first      seventeen installments vested on January 28, 2008 and accordingly at that      time 17/28 of the aforementioned stock-based compensation was recognized      as compensation expense.  The remaining compensation expense will be      recognized on a straight line basis as additional installments vest on the      final day of each month through December 31,  2008. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A      total of 155,000 stock options were awarded to eight other officers at an      exercise price of $4.00 per share.  Using the Black-Scholes option      valuation model, an aggregate fair value of approximately $381,300 is      expected to be recognized as stock-based compensation over the vesting      periods of the options.  The options for the eight officers vest      one third at the one-year anniversary of the grants and then ratably for      the following 24 months. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 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 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Pursuant      to Securities Purchase Agreements dated June 29, 2007                                                                                                                  |   |                    | 155,100   |   |                                    | $      | 5.00                 |   | June      29, 2012 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Compensation      for Mr. Bruce E. Terker in connection with the Guarantee and      Indemnification Agreements for bond collateral required for our state      licensing initiative1 |   |                    | 20,626    |   |                                    | $      | 3.35                 |   | 3,716      on April 1, 2013 and 8,455      on June 30, 2013 and 8,455      on September 30, 2013 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Pursuant      to the exchanged securities issued pursuant to the Securities Purchase      Agreements dated June 12, 20082                                                            |   |                    | 700,000   |   |                                    | $      | 2.30                 |   | June      12, 2013 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Pursuant      to Securities Purchase Agreements dated June 29, 2007, as amended for      participation in the June 12, 2008 Securities Purchase Agreements3                          |   |                    | 1,356,500 |   |                                    | $      | 2.30                 |   | June      29, 2012 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Pursuant      to Securities Purchase Agreements dated June 12, 2008                                                                                                                  |   |                    | 2,028,750 |   |                                    | $      | 2.30                 |   | June      12, 2013 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Warrants      held by DFS Services LLC dated November 12, 2007                                                                                                                       |   |                    | 200,000   |   |                                    | $      | 3.00                 |   | November      12, 2010 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Pursuant      to Loan and Security Warrant Agreements dated July 21, 2008 4                                                                                                          |   |                    | 1,007,500 |   |                                    | $      | 2.30                 |   | July      21, 2013 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Partial      compensation for our placement agents in connection with the sale of our      Series C Convertible Preferred Stock and Common Stock on June 12, 2008      5             |   |                    | 109,150   |   |                                    | $      | 2.53                 |   | June      12, 2013 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Consulting      services agreement dated April 1, 2006                                                                                                                               |   |                    | 37,500    |   |                                    | $      | 5.00                 |   | Various      dates through 2011 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Cooperation      Agreement dated November 22, 2006                                                                                                                                   |   |                    | 5,000     |   |                                    | $      | 1.20                 |   | November      22, 2011 |
|                                                                                                                                                                                 |   |                    |      |   |                                    |   |                 |   |   |
| Total      warrants and weighted average exercise price per share outstanding at      September 27, 2008                                                                             |   |                    | 6,061,054 |   |                                    | $      | 2.37                 |   |   |

----

----

| Twelve      monthsending |   | Amounts |    |
|--------------------------|--------|---------|---------|
| September      2009      |   | $       | 256,800 |   |
| September      2010      |   |    | 199,200 |   |
| September      2011      |   |    | 203,500 |   |
| September      2012      |   |    | 208,000 |   |
| September      2013      |   |    | 17,400  |   |
|                     |   |    |    |   |
| Total                    |   | $       | 884,900 |   |
|                     |   |    |    |   |

----

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

----

----

| ·   | Wholesale      fees, which arise when our SVCs are sold and activated and when the      nFinanSe Network TM      is used to reload a card. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Transaction      fees, which arise when our SVCs are used in a purchase or ATM      transaction. |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | Maintenance      fees, which arise when a card with a cash balance is charged for monthly      maintenance. |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | Interest      revenue, which arises from earnings on overnight investing of card      balances by our card-issuing bank. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | Transaction and operating      expenses. Transaction and operating expenses for the three month      periods ended September 27, 2008 and September 29, 2007 were $657,182 and      $211,180, respectively, a 211% increase, and for the nine month periods      ended September 27, 2008 and September 29, 2007, $1,594,626 and $652,232,      respectively, a 144% increase.   The components of expense      are: |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Description                                          |   | For      the three months      ended September      27, 2008 |   | For      the three months      ended September      29, 2007 |   | For      the nine months      ended September      27, 2008 |   | For      the nine months      ended September      29, 2007 |   |
|--------|------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------------------|--------|-------------------------------------------------------------|--------|-------------------------------------------------------------|--------|
|   | SVC      card cost, program and transaction expenses | $      | 366,735                                                      | $      | 77,987                                                       | $      | 832,357                                                     | $      | $312,931                                                    |   |
|   | Inventory      reserves                              |   | 40,901                                                       |   | 4,669                                                        |   | 98,825                                                      |   | 14,010                                                      |   |
|   | Stock-based      compensation                        |   | -                                                            |   | 589                                                          |   | 243                                                         |   | 1,633                                                       |   |
|   | Customer      service expenses                       |   | 249,546                                                      |   | 127,935                                                      |   | 663,201                                                     |   | 323,658                                                     |   |
|   | Total      Transaction and Operating Expenses        | $      | 657,182                                                      | $      | 211,180                                                      | $      | 1,594,626                                                   | $      | 652,232                                                     |   |
|   |                                                 |   |                                                         |   |                                                         |   |                                                        |   |                                                        |   |

|   | SVC      card cost, program and transaction expenses increased $288,748, or 370%,      when comparing the three month period ended September 27, 2008 with the      three month period ended September 29, 2007.  For the nine month      period ended September 27, 2008, the increase was $519,426, or 166%, when      compared with the nine month period ended September 29,      2007.  These three and nine month increases are primarily      attributable to the periodic card costs of $221,000 and $449,000,      respectively, associated with carrying a larger number of cards available      for sale in 2008 versus the periodic card costs of $33,000 and $66,000,      respectively, associated with cards available for sale in      2007.  The number of cards available for sale during the nine      months of 2008 was on average in excess of 4.6 million compared to an      average of 0.5 million in the same period of 2007. Inventory      reserves increased $36,232 and $84,815, respectively, when comparing the      three and nine month periods ended September 27, 2008 with the three month      and nine month periods ended September 29, 2007.  This is due      primarily to the higher inventory levels, which results in a higher      potential for lost, damaged or obsolete SVC card packages. Customer      service expenses increased $121,611 to $249,546 when comparing the three      month period ended September 27, 2008 with the three month period ended      September 29, 2007, a 95% increase.  For the nine month period      ended September 27, 2008, customer service expenses were $339,543, or 105%      higher than the nine month period ended September 29, 2007. The increase      in the three and nine month periods is primarily due to the increase in      staff for our 24 hour/seven days a week customer service department to      support our SVC products. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       ·   | Selling and marketing      expenses. Selling and marketing expenses increased $352,789 to      $939,470 when comparing the three month period ended September 27, 2008      with the same period from a year ago, a 60% increase.  For the      nine month period ended September 27, 2008, selling and marketing expenses      increased $1,310,090, or 77% over the same period from the prior year. The      components of expense are: |
|--------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Description                               |   | For      the three months      ended September 27, 2008 |   | For      the three months      ended September 29, 2007 |   | For      the nine months      ended September 27, 2008 |   | For      the nine months      ended September 29,      2007 |   |
|--------|-------------------------------------------|--------|---------------------------------------------------------|--------|---------------------------------------------------------|--------|--------------------------------------------------------|--------|------------------------------------------------------------------|--------|
|   | Advertising      and marketing expenses   | $      | 446,117                                                 | $      | 112,448                                                 | $      | 1,327,823                                              | $      | 416,455                                                          |   |
|   | Sales      force expenses                 |   | 447,057                                                 |   | 425,208                                                 |   | 1,512,794                                              |   | 1,162,842                                                        |   |
|   | Stock-based      compensation             |   | 46,296                                                  |   | 49,025                                                  |   | 175,819                                                |   | 127,049                                                          |   |
|   | Total      selling and marketing expenses | $      | 939,470                                                 | $      | 586,681                                                 | $      | 3,016,436                                              | $      | 1,706,346                                                        |   |

----

|   | Advertising      and marketing expenses increased 297%, or $333,669, to $446,117 when      comparing the three month period ended September 27, 2008 with the three      month period ended September 29, 2007.   A comparison of      the nine month period ended September 27, 2008 with the nine month period      ended September 29, 2007 shows a $911,368 increase, or 219%, for the      current nine month period.  These period to period changes were      primarily composed of increases in media and advertising agency expenses      for a national trade print advertising campaign in the current three and      nine month periods with none in the prior three and nine month periods,      and charges for point-of-sale displays for our card product. Sales      force expenses increased $21,849 to $447,057, a 5% increase for the three      month period ended September 27, 2008 when compared with the three month      period ended September 29, 2007.  On a nine month basis, the      period ended September 27, 2008 increased $349,952, or 30%, from the      period ended September 29, 2007.  The principal components of      this increase are employee compensation and benefits expense, travel and      entertainment expense, and rent expense.  The increase in sales      force compensation and travel and entertainment expenses can be attributed      to the 10 new sales force employees hired in the first quarter of      2008.  In addition, the increase in rent expense is composed of      rent for the sales offices located in Atlanta and Dallas that were opened      within the past twelve months and rent for temporary warehouse space to      store point-of-purchase displays for our distributors that were produced      in anticipation of increased sales during this fiscal  year. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General and administrative      expenses. General and administrative expenses increased 13%, or      $238,887, to $2,066,567 during the three month period ended September 27,      2008 when compared with the three month period ended September 29, 2007.      On a nine month basis, expenses for the period ended September 27, 2008      increased $1,077,072, or 21%, from the same period in 2007.  The      components of expense are: |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Description                                    |   | For      the three months      ended September 27, 2008 |   | For      the three months      ended September 29, 2007 |   | For      the nine months      ended September 27, 2008 |   | For      the nine months      ended September 29, 2007 |   |
|--------|------------------------------------------------|--------|---------------------------------------------------------|--------|---------------------------------------------------------|--------|--------------------------------------------------------|--------|--------------------------------------------------------|--------|
|   | Payroll,      benefits and  taxes    | $      | 748,498                                                 | $      | 595,447                                                 | $      | 2,324,492                                              | $      | 1,847,960                                              |   |
|   | Stock-based      compensation                  |   | 384,852                                                 |   | 625,179                                                 |   | 1,353,327                                              |   | 1,529,813                                              |   |
|   | Professional      legal and licensing expense  |   | 325,756                                                 |   | 289,298                                                 |   | 1,239,983                                              |   | 810,010                                                |   |
|   | Office      and occupancy expenses             |   | 256,459                                                 |   | 193,463                                                 |   | 718,529                                                |   | 575,446                                                |   |
|   | Impairment      expense                        |   | 224,437                                                 |   | -                                                       |   | 224,437                                                |   | 41,139                                                 |   |
|   | Other      administrative expense              |   | 126,565                                                 |   | 124,293                                                 |   | 404,269                                                |   | 383,597                                                |   |
|   | Total      General and Administrative Expenses | $      | 2,066,567                                               | $      | 1,827,680                                               | $      | 6,265,037                                              | $      | 5,187,965                                              |   |
|   |                                           |   |                                                    |   |                                                    |   |                                                   |   |                                                   |   |

|   | When      comparing the three month period ended September 27, 2008 with the three      month period ended September 29, 2007, changes in the expense categories      are primarily attributable to: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪   | increased      payroll, benefits and taxes expenses of $153,051, due      to  headcount increases in engineering, legal/compliance and      other administrative areas and annual compensation    increases;                                                                                                                              |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ▪   | decreased      stock-based compensation expense of $240,327, which is primarily      attributable to the July 2007 stock option grant to Mr. Welch and Mr.      Springer under their employment contract;                                                                                                                                           |
| ▪   | increased      professional, legal and licensing expense of $36,458 due to legal and      professional fees incurred in connection with our state licensing      initiative and additional expenses related to complying with state and      federal regulations;                                                                                   |
| ▪   | increased      office and occupancy expenses of $62,996, primarily due to expenses      incurred as the result of a greater number of employees and due to our      recording a charge to operations of approximately $37,400 for the fair      value of the net future lease rentals of our abandoned Bradenton, Florida      office location; and |
| ▪   | impairment      of the cost of certain gift cards to be destroyed due to their impending      expiration date for $224,437.                                                                                                                                                                                                                         |

----

|   | When      comparing the nine month period ended September 27, 2008 with the nine      month period ended September 29, 2007, changes in the expense categories      are primarily attributable to: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪   | increased      payroll, benefits and taxes expenses of $476,532 due to 2007 bonus      compensation awards of $165,000 paid in the second quarter of 2008,      headcount increases in engineering, legal/compliance and other      administrative areas, and annual compensationincreases;                                                                                                              |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ▪   | decreased      stock-based compensation expense of $176,486, which is attributable to 1.3      million less options granted in the nine months ended September 27, 2008      when compared to the nine month period ended September 29, 2007, and lower      per option costs due to the changes in the variable values that are input      into the Black-Scholes option pricing model;                 |
| ▪   | increased      professional, legal and licensing expense of $429,973 due  to      recruiting costs for our new sales hires, programming costs to extend the      life of our existing telephone system, legal and professional fees      incurred in connection with our state licensing initiative and additional      expenses related to complying with state and federal      regulations; |
| ▪   | increased      office and occupancy expenses of $143,083 primarily due to expenses      incurred as the result of a greater number of employees and due to our      recording a charge to operations of approximately $37,400 for the fair      value of the net future lease rentals of our abandoned Bradenton, Florida      office location; and                                                      |
| ▪   | impairment      of the cost of certain gift cards to be destroyed due to their impending      expiration date for $224,437.                                                                                                                                                                                                                                                                              |

----

----

| Twelve      monthsending |   |    | Amounts |   |
|--------------------------|--------|---------|---------|--------|
| September      2009      | $      | 256,800 |    |
| September      2010      |   | 199,200 |    |
| September      2011      |   | 203,500 |    |
| September      2012      |   | 208,000 |    |
| September      2013      |   | 17,400  |    |
|                     |   |    |    |
| Total                    | $      | 884,900 |    |
|                     |   |    |    |

----

----

----

----

|  Exhibit      Number |   |  Description      of Exhibit                                                                                                                                 |
|---------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |   |                                                                                                                                                              |
| *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      11, 2008 | 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      11, 2008 | By:                | /s/ Raymond P.      Springer |
|                                    |               | Raymond      P. Springer, Chief Financial Officer (Principal      Financial Officer) |
|                                    |               |   |
|                                    |               |   |

|                                    | NFINANSE      INC. |
|-----------------------------------------|--------------------|
|                                    |               |   |
| Date:  November      11, 2008 | By:                | /s/      Jerome A. Kollar |
|                                    |               | Jerome      A. Kollar, Vice President Finance and Controller      (Principal Accounting Officer) |
|                                    |               |   |
|                                    |               |   |

----

|  Exhibit      Number |   |  Description      of Exhibit                                                                                                                                 |
|---------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |   |                                                                                                                                                              |
| *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  |

----