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

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| 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 June 28, 2008 (unaudited) and December 29, 2007      (audited)  | 2  |
|                                           | Consolidated      Statements of Operations (unaudited) for the three and six months ended      June 28, 2008 and June 30, 2007, and for the period July 10, 2000      (inception) to June 28, 2008  | 3  |
|                                           | Consolidated      Statements of Cash Flows (unaudited) for the six months ended June 28,      2008 and June 30, 2007, and for the period July 10, 2000 (inception) to      June 28, 2008  | 4  |
|                                           | Notes      to Consolidated Financial Statements (unaudited)  | 6  |
|                                           | Item      2.     Management’s Discussion and Analysis of      Financial Condition and Results of Operations.  | 21  |
|                                           | Item      3.     Quantitative and Qualitative Disclosures      About Market Risk.  | 29  |
|                                           | Item      4.     Controls and Procedures.  | 29  |
| PART      II - OTHER INFORMATION          |   |
|                                           | Item      1.     Legal Proceedings.  | 29  |
|                                           | Item      1A.  Risk Factors  | 30  |
|                                           | Item      2.     Unregistered Sales of Equity Securities      and Use of Proceeds.  | 30  |
|                                           | Item      3.     Defaults Upon Senior      Securities.  | 33  |
|                                           | Item      4.     Submission of Matters to a Vote of      Security Holders.  | 33  |
|                                           | Item      5.     Other Information.  | 34  |
|                                           | Item      6.     Exhibits. | 35 |
|                                           |   |   |   |
| SIGNATURES                                     |   |

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| · | 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 expansion; |
| · | 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;                                                                                                                                                                                                                                                                                                                                                                                       |
| · | 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, including under the heading “Risk Factors” 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.” |

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|                                                                                                                                                                                                                                                                                                                                                                                |   | June      28, |        |   | December      29, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                |   | 2008          |        |   | 2007              |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                              |   | (unaudited)   |        |   | (audited)         |   |
|                                                                                                                                                                                                                                                                                                                                                                                |   |          |        |   |              |   |
| CURRENT      ASSETS:                                                                                                                                                                                                                                                                                                                                                                |   |          |        |   |              |   |
| Cash      and cash equivalents                                                                                                                                                                                                                                                                                                                                                      |   | $             | 5,743,738   |   |              | $      | 2,497,365 |   |
| Short      term investment                                                                                                                                                                                                                                                                                                                                                          |   |          | -           |   |              |   | 728,000 |   |
| Receivables:                                                                                                                                                                                                                                                                                                                                                                        |   |          |        |   |              |   |   |   |
| Accounts      (net of allowance for doubtful accounts of $0 and $0,      respectively)                                                                                                                                                                                                                                                                                              |   |          | 5,577       |   |              |   | 10,957 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                               |   |          | 15,215      |   |              |   | 19,027 |   |
| Prepaid      expenses and other current assets (including prepaid marketing costs of      approximately $614,800 and $312,000, respectively)                                                                                                                                                                                                                                        |   |          | 1,495,915   |   |              |   | 705,608 |   |
| Deferred      financing costs                                                                                                                                                                                                                                                                                                                                                       |   |          | 368,083     |   |              |   | - |   |
| Inventories      (net of inventory reserves of $82,400 and $24,500,      respectively)                                                                                                                                                                                                                                                                                              |   |          | 2,639,990   |   |              |   | 1,942,206 |   |
|                Total      current assets                                                                                                                                                                                                                                                                 |   |          | 10,268,518  |   |              |   | 5,903,163 |   |
| PROPERTY      AND EQUIPMENT (net of accumulated depreciation of $567,805 and $446,306,      respectively)                                                                                                                                                                                                                                                                           |   |          | 679,455     |   |              |   | 759,261 |   |
|                                                                                                                                                                                                                                                                                                                                                                                |   |          |        |   |              |   |   |   |
| OTHER      ASSETS                                                                                                                                                                                                                                                                                                                                                                   |   |          | 273,491     |   |              |   | 338,160 |   |
|                                                                                                                                                                                                                                                                                                                                                                                |   |          |        |   |              |   |   |   |
| TOTAL                                                                                                                                                                                                                                                                                                                                                                               |   | $             | 11,221,464  |   |              | $      | 7,000,584 |   |
|                                                                                                                                                                                                                                                                                                                                                                                |   |          |        |   |              |   |   |   |
| LIABILITIES AND      STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                                                     |   |          |        |   |              |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                |   |          |        |   |              |   |   |   |
| CURRENT      LIABILITIES:                                                                                                                                                                                                                                                                                                                                                           |   |          |        |   |              |   |   |   |
| Accounts      payable                                                                                                                                                                                                                                                                                                                                                               |   | $             | 413,383     |   |              | $      | 139,635 |   |
| Accrued      personnel costs                                                                                                                                                                                                                                                                                                                                                        |   |          | 232,214     |   |              |   | 130,804 |   |
| Accrued      inventory liability                                                                                                                                                                                                                                                                                                                                                    |   |          | 370,280     |   |              |   | 593,431 |   |
| Accrued      lease and contractual obligations                                                                                                                                                                                                                                                                                                                                      |   |          | 154,334     |   |              |   | 220,809 |   |
| Deferred      revenues                                                                                                                                                                                                                                                                                                                                                              |   |          | 68,750      |   |              |   | 106,250 |   |
| Other      accrued liabilities                                                                                                                                                                                                                                                                                                                                                      |   |          | 408,618     |   |              |   | 371,298 |   |
|                Total      current liabilities                                                                                                                                                                                                                                                            |   |          | 1,647,579   |   |              |   | 1,562,227 |   |
|                                                                                                                                                                                                                                                                                                                                                                                |   |          |        |   |              |   |   |   |
| COMMITMENTS      AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                  |   |          |        |   |              |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                |   |          |        |   |              |   |   |   |
| STOCKHOLDERS’      EQUITY:                                                                                                                                                                                                                                                                                                                                                    |   |          |        |   |              |   |   |   |
| Preferred      stock - $.001 par value:  25,000,000 shares authorized;      12,637,984 and 8,820,484  shares issued and outstanding on June      28, 2008 and December 29, 2007, respectively, as follows:                                                                                                                                                      |   |          |        |   |              |   |   |   |
|    Series      A Convertible Preferred Stock – 9,327,934 shares authorized; 7,600,484 and      7,820,484 shares  issued and outstanding with liquidation values      of $7,788,934 and $8,213,651 (including undeclared accumulated dividends      in arrears of $188,450 and $393,167) as of June 28, 2008 and December 29,      2007, respectively |   |          | 7,600       |   |              |   | 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      June 28, 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      June 30, 2008                                                                                                                                                                          |   |          | 4,038       |   |              |   | - |   |
| Common      stock - $0.001 par value: 200,000,000 shares authorized; 9,116,454 and      7,371,929 shares issued and outstanding as of June 30, 2008 and December      29, 2007, respectively                                                                                                                                                                                        |   |          | 9,116       |   |              |   | 7,372 |   |
| Additional      paid-in capital                                                                                                                                                                                                                                                                                                                                                     |   |          | 54,170,780  |   |              |   | 42,002,195 |   |
| Deficit      accumulated during the development stage                                                                                                                                                                                                                                                                                                                               |   |          | (44,618,649 | )      |              |   | (36,580,030 | ) |
|                Total      stockholders’ equity                                                                                                                                                                                                                                                     |   |          | 9,573,885   |   |              |   | 5,438,357 |   |
|                                                                                                                                                                                                                                                                                                                                                                                |   |          |        |   |              |   |   |   |
| TOTAL                                                                                                                                                                                                                                                                                                                                                                               |   | $             | 11,221,464  |   |              | $      | 7,000,584 |   |
|                                                                                                                                                                                                                                                                                                                                                                                |   |          |        |   |              |   |   |   |

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|                                                                            |   | For      the three months      endedJune      28, 2008 |       |   | For      the three months      endedJune      30, 2007 |   |       | For      the six months      endedJune      28, 2008 |   |   | For      the six months      endedJune      30, 2007 |   |   | For      the period July      10, 2000(inception)      to June      28, 2008 |       |
|---------------------------------------------------------------------------------|--------|--------------------------------------------------------|------------|--------|--------------------------------------------------------|--------|------------|------------------------------------------------------|--------|--------|------------------------------------------------------|--------|--------|------------------------------------------------------------------------------|------------|
| REVENUES                                                                        |   | $                                                      | 7,345      |   |                                                   | $      | 12,992     |                                                 |   | $      | 15,992                                               |   |   | $                                                                            | 14,760     |   |   | $ | 1,222,160 |   |
|                                                                            |   |                                                   |       |   |                                                   |   |       |                                                 |   |   |                                                 |   |   |                                                                         |       |   |   |   |   |   |
| OPERATING      EXPENSES                                                         |   |                                                   |       |   |                                                   |   |       |                                                 |   |   |                                                 |   |   |                                                                         |       |   |   |   |   |   |
| Transaction      and operating expenses                                         |   |                                                   | 484,138    |   |                                                   |   | 240,612    |                                                 |   |   | 937,444                                              |   |   |                                                                         | 441,052    |   |   |   | 3,526,078 |   |
| Selling      and marketing expenses                                             |   |                                                   | 1,161,930  |   |                                                   |   | 600,954    |                                                 |   |   | 2,076,966                                            |   |   |                                                                         | 1,132,370  |   |   |   | 6,433,597 |   |
| General      and administrative expenses                                        |   |                                                   | 2,175,545  |   |                                                   |   | 1,403,986  |                                                 |   |   | 4,198,469                                            |   |   |                                                                         | 3,347,581  |   |   |   | 26,544,686 |   |
|    Total      operating expenses                                 |   |                                                   | 3,821,613  |   |                                                   |   | 2,245,552  |                                                 |   |   | 7,212,879                                            |   |   |                                                                         | 4,921,003  |   |   |   | 36,504,361 |   |
|                                                                            |   |                                                   |       |   |                                                   |   |       |                                                 |   |   |                                                 |   |   |                                                                         |       |   |   |   |   |   |
| Loss      before other income (expense)                                         |   |                                                   | (3,814,268 | )      |                                                   |   | (2,232,560 | )                                                    |   |   | (7,196,887                                           | )      |   |                                                                         | (4,906,243 | ) |   |   | (35,282,201 | ) |
|                                                                            |   |                                                   |       |   |                                                   |   |       |                                                 |   |   |                                                 |   |   |                                                                         |       |   |   |   |   |   |
| Other      income (expense):                                                    |   |                                                   |       |   |                                                   |   |       |                                                 |   |   |                                                 |   |   |                                                                         |       |   |   |   |   |   |
| Interest      expense                                                           |   |                                                   | (55,050    | )      |                                                   |   | -          |                                                 |   |   | (55,466                                              | )      |   |                                                                         | -          |   |   |   | (1,743,730 | ) |
| Interest      income                                                            |   |                                                   | 5,845      |   |                                                   |   | 18,256     |                                                 |   |   | 6,842                                                |   |   |                                                                         | 41,697     |   |   |   | 1,147,082 |   |
| Gain      (loss) on derivative instruments                                      |   |                                                   | (396,032   | )      |                                                   |   | -          |                                                 |   |   | (396,032                                             | )      |   |                                                                         | -          |   |   |   | 1,449,230 |   |
| Loss      on debt extinguishment                                                |   |                                                   | -          |   |                                                   |   | -          |                                                 |   |   | -                                                    |   |   |                                                                         | -          |   |   |   | (4,685,518 | ) |
| Registration      rights penalties                                              |   |                                                   | -          |   |                                                   |   | -          |                                                 |   |   | -                                                    |   |   |                                                                         | -          |   |   |   | (98,649 | ) |
| Other      income (expense)                                                     |   |                                                   | (758       | )      |                                                   |   | (6,083     | )                                                    |   |   | (758                                                 | )      |   |                                                                         | 27,243     |   |   |   | (94,614 | ) |
|    Total      other income (expense)                             |   |                                                   | (445,995   | )      |                                                   |   | 12,173     |                                                 |   |   | (445,414                                             | )      |   |                                                                         | 68,940     |   |   |   | (4,026,199 | ) |
|                                                                            |   |                                                   |       |   |                                                   |   |       |                                                 |   |   |                                                 |   |   |                                                                         |       |   |   |   |   |   |
| Loss      from continuing operations                                            |   |                                                   | (4,260,263 | )      |                                                   |   | (2,220,387 | )                                                    |   |   | (7,642,301                                           | )      |   |                                                                         | (4,837,303 | ) |   |   | (39,308,400 | ) |
|                                                                            |   |                                                   |       |   |                                                   |   |       |                                                 |   |   |                                                 |   |   |                                                                         |       |   |   |   |   |   |
| Loss      from discontinued operations                                          |   |                                                   | -          |   |                                                   |   | (13,629    | )                                                    |   |   | -                                                    |   |   |                                                                         | (8,689     | ) |   |   | (3,861,579 | ) |
|                                                                            |   |                                                   |       |   |                                                   |   |       |                                                 |   |   |                                                 |   |   |                                                                         |       |   |   |   |   |   |
| Net      loss                                                                   |   |                                                   | (4,260,263 | )      |                                                   |   | (2,234,016 | )                                                    |   |   | (7,642,301                                           | )      |   |                                                                         | (4,845,992 | ) |   |   | (43,169,979 | ) |
| Dividends      paid on Series A Convertible Preferred Stock                |   |                                                   | -          |   |                                                   |   | -          |                                                 |   |   | (396,318                                             | )      |   |                                                                         | -          |   |   |   | (1,448,670 | ) |
| Undeclared      and unpaid dividends on Series A Convertible Preferred    Stock |   |                                                   | (94,746    | )      |                                                   |   | (116,600   | )                                                    |   |   | (188,450                                             | )      |   |                                                                         | (233,200   | ) |   |   | (188,450 | ) |
| Net      loss attributable to common stockholders                               |   | $                                                      | (4,355,009 | )      |                                                   | $      | (2,350,616 | )                                                    |   | $      | (8,227,069                                           | )      |   | $                                                                            | (5,079,192 | ) |   | $ | (44,807,099 | ) |
| Net      loss per share - basic and diluted:                                    |   |                                                   |       |   |                                                   |   |       |                                                 |   |   |                                                 |   |   |                                                                         |       |   |   |   |   |   |
| Continuing      operations                                                      |   | $                                                      | (0.50      | )      |                                                   | $      | (0.61      | )                                                    |   | $      | (1.01                                                | )      |   | $                                                                            | (1.32      | ) |   |   |   |   |
| Discontinued      operations                                                    |   | $                                                      | -          |   |                                                   | $      | -          |                                                 |   | $      | -                                                    |   |   | $                                                                            | -          |   |   |   |   |   |
| Total      net loss per share                                                   |   | $                                                      | (0.50      | )      |                                                   | $      | (0.61      | )                                                    |   | $      | (1.01                                                | )      |   | $                                                                            | (1.32      | ) |   |   |   |   |
| Weighted      average number of shares outstanding                              |   |                                                   | 8,758,652  |   |                                                   |   | 3,863,685  |                                                 |   |   | 8,177,963                                            |   |   |                                                                         | 3,842,586  |   |   |   |   |   |
|                                                                            |   |                                                   |       |   |                                                   |   |       |                                                 |   |   |                                                 |   |   |                                                                         |       |   |   |   |   |   |

----

|                                                                                                                 |   | For      the six months      ended June      28, 2008 |       |   | For      the six months      ended June      30, 2007 |   |       | For      the periodJuly      10, 2000(inception)      toJune      28, 2008 |   |
|----------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|------------|--------|-------------------------------------------------------|--------|------------|----------------------------------------------------------------------------|--------|
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                                           |   |                                                  |       |   |                                                  |   |       |                                                                       |   |
|     Net      loss                                                                                |   | $                                                     | (7,642,301 | )      |                                                  | $      | (4,845,992 | )                                                                          |   | $ | (43,169,979 | ) |
|     Adjustments      to reconcile net loss to net cash used in operating      activities:        |   |                                                  |       |   |                                                  |   |       |                                                                       |   |   |   |   |
|        Depreciation      and amortization                                         |   |                                                  | 152,591    |   |                                                  |   | 116,527    |                                                                       |   |   | 1,114,824 |   |
|        Provision      for inventory obsolescence                                  |   |                                                  | 57,925     |   |                                                  |   | 9,342      |                                                                       |   |   | 576,781 |   |
|        Provision      for bad debts                                               |   |                                                  | -          |   |                                                  |   | -          |                                                                       |   |   | 462,029 |   |
|        Amortization      of intangible assets                                     |   |                                                  | -          |   |                                                  |   | -          |                                                                       |   |   | 15,485 |   |
|        Stock      based compensation and consulting                               |   |                                                  | 1,098,241  |   |                                                  |   | 983,702    |                                                                       |   |   | 7,272,607 |   |
|        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                                        |   |                                                  | -          |   |                                                  |   | 41,139     |                                                                       |   |   | 1,095,903 |   |
|        Forgiveness      of indebtedness as a result of litigation settlement |   |                                                  | -          |   |                                                  |   | -          |                                                                       |   |   | (50,000 | ) |
|        Non-cash      interest expense                                             |   |                                                  | 25,003     |   |                                                  |   | -          |                                                                       |   |   | 1,604,023 |   |
|        Amortization      of premium on convertible promissory note                |   |                                                  | -          |   |                                                  |   | -          |                                                                       |   |   | (863,049 | ) |
|        Value/expense      of third party warrants                                 |   |                                                  | 292        |   |                                                  |   | 5,600      |                                                                       |   |   | 5,999 |   |
|       Changes in assets and      liabilities, net:                                     |   |                                                  |       |   |                                                  |   |       |                                                                       |   |   |   |   |
|         Receivables                                                          |   |                                                  | 11,695     |   |                                                  |   | 46,492     |                                                                       |   |   | (320,558 | ) |
|         Prepaid      expenses and other current assets                       |   |                                                  | (487,519   | )      |                                                  |   | 101,746    |                                                                       |   |   | (1,206,783 | ) |
|         Inventories                                                          |   |                                                  | (755,709   | )      |                                                  |   | (362,270   | )                                                                          |   |   | (2,862,119 | ) |
|         Other      assets                                                    |   |                                                  | (238,410   | )      |                                                  |   | 12,071     |                                                                       |   |   | (249,624 | ) |
|         Assets      of discontinued operations                               |   |                                                  | -          |   |                                                  |   | -          |                                                                       |   |   | (229,060 | ) |
|         Accounts      payable and accrued  liabilities             |   |                                                  | 122,734    |   |                                                  |   | (75,297    | )                                                                          |   |   | 1,760,673 |   |
|         Accrued      registration rights penalties                           |   |                                                  | -          |   |                                                  |   | -          |                                                                       |   |   | 98,649 |   |
|         Deferred      revenues                                               |   |                                                  | (37,500    | )      |                                                  |   | 83,750     |                                                                       |   |   | 68,750 |   |
| NET      CASH USED IN OPERATING ACTIVITIES                                                                           |   |                                                  | (7,296,532 | )      |                                                  |   | (3,884,823 | )                                                                          |   |   | (31,457,209 | ) |
|                                                                                                                 |   |                                                  |       |   |                                                  |   |       |                                                                       |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                                           |   |                                                  |       |   |                                                  |   |       |                                                                       |   |   |   |   |
|   Purchases      of property and equipment                                                                 |   |                                                  | (73,179    | )      |                                                  |   | (47,145    | )                                                                          |   |   | (2,027,513 | ) |
|   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                                                         |   |                                                  | 652,317    |   |                                                  |   | (47,145    | )                                                                          |   |   | (2,262,754 | ) |
|                                                                                                                 |   |                                                  |       |   |                                                  |   |       |                                                                       |   |   |   |   |

----

|                                                                |   | For      the six months      ended June      28, 2008 |      |   | For      the six months      ended June      30, 2007 |   |      | For      the periodJuly      10, 2000(inception)      toJune      28, 2008 |   |
|---------------------------------------------------------------------|--------|-------------------------------------------------------|-----------|--------|-------------------------------------------------------|--------|-----------|----------------------------------------------------------------------------|--------|
| CASH      FLOWS FROM FINANCING ACTIVITIES:                          |   |                                                  |      |   |                                                  |   |      |                                                                       |   |
|   Proceeds      from issuance of Series A Preferred Stock |   |                                                  | -         |   |                                                  |   | -         |                                                                       |   |   | 4,000,000 |   |
|   Proceeds      from issuance of Series B Preferred Stock |   |                                                  | -         |   |                                                  |   | 3,000,000 |                                                                       |   |   | 3,000,000 |   |
|   Proceeds      from issuance of Series C 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               |   |                                                  | (368,083  | )      |                                                  |   | -         |                                                                       |   |   | (368,083 | ) |
|   Payments      for stock issuance costs                  |   |                                                  | (656,329  | )      |                                                  |   | -         |                                                                       |   |   | (1,469,490 | ) |
|   Proceeds      from the exercise of vested stock options |   |                                                  | -         |   |                                                  |   | -         |                                                                       |   |   | 8,249 |   |
|        Proceeds from the issuance of Common Stock              |   |                                                  | 2,840,000 |   |                                                  |   | 5,759,997 |                                                                       |   |   | 18,000,775 |   |
| NET      CASH PROVIDED BY FINANCING ACTIVITIES                      |   |                                                  | 9,890,588 |   |                                                  |   | 8,759,997 |                                                                       |   |   | 39,463,701 |   |

|                                                                                                                                      |   |   |      |   |   |   |      |   |   |   |      |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|
| NET      CHANGE IN CASH AND CASH EQUIVALENTS                                                                                              |   |   | 3,246,373 |   |   |   | 4,828,029 |   |   |   | 5,743,738 |   |
|                                                                                                                                      |   |   |      |   |   |   |      |   |   |   |      |   |
| CASH      AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                                                       |   |   | 2,497,365 |   |   |   | 4,186,623 |   |   |   | -         |   |
|                                                                                                                                      |   |   |      |   |   |   |      |   |   |   |      |   |
| CASH      AND CASH EQUIVALENTS, END OF PERIOD                                                                                             |   | $      | 5,743,738 |   |   | $      | 9,014,652 |   |   | $      | 5,743,738 |   |
|                                                                                                                                      |   |   |      |   |   |   |      |   |   |   |      |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:                                                                                    |   |   |      |   |   |
|        Interest paid                                                                                                                 |   | $      | 463       |   |   | $      | -         |   |   | $      | 17,459    |   |
|        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                                                                                          |   | $      | (292      | )      |   | $      | -         |   |   | $      | 535,302   |   |
|        Conversion of Series A Convertible Preferred Stock to Common      Stock                                                       |   | $      | 220       |   |   | $      | -         |   |   | $      | 1,728     |   |
|        Dividends on Series A Convertible Preferred Stock                                                                             |   | $      | 395,309   |   |   | $      | -         |   |   | $      | 1,448,670 |   |
|        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 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 issuingbank.                    |

----

----

----

|                                                  |   |                                                               |   |
|-------------------------------------------------------|--------|--------------------------------------------------------------------|--------|
| Description                                           |   | Shares      of common      stock and common      stock equivalents |   |
|                                                  |   |                                                               |   |
| Common      stock outstanding                         |   | 9,116,454                                                          |   |
| Series      A Convertible Preferred Stock outstanding |   | 7,600,484                                                          |   |
| Series      B Convertible Preferred Stock outstanding |   | 1,000,000                                                          |   |
| Series      C Convertible Preferred Stock outstanding |   | 4,037,500                                                          |   |
| Stock      options outstanding                        |   | 2,826,928                                                          |   |
| Warrants      outstanding                             |   | 5,045,099                                                          |   |
|                                                  |   |                                                               |   |
| Total                                                 |   | 29,626,465                                                         |   |
|                                                  |   |                                                               |   |

----

|                                      |   |                                                              |    |   |                                                    |   |    |                                                  |   |   |                                                  |   |
|-------------------------------------------|--------|-------------------------------------------------------------------|---------|--------|---------------------------------------------------------|--------|---------|-------------------------------------------------------|--------|--------|-------------------------------------------------------|--------|
| Stock-based      compensation charged to: |   | For      the three      months      ended      June      28, 2008 |    |   | For      the three months      ended June      30, 2007 |   |    | For      the six months      ended June      28, 2008 |   |   | For      the six months      ended June      30, 2007 |   |
|                                      |   |                                                              |    |   |                                                    |   |    |                                                  |   |   |                                                  |   |
| Transaction      and operating expenses   |   | $                                                                 | -       |   |                                                    | $      | 583     |                                                  |   | $      | 243                                                   |   |   | $ | 1,044 |   |
| Selling      and marketing expenses       |   |                                                              | 66,611  |   |                                                    |   | 45,855  |                                                  |   |   | 129,523                                               |   |   |   | 90,729 |   |
| General      and administrative expenses  |   |                                                              | 431,615 |   |                                                    |   | 207,182 |                                                  |   |   | 968,475                                               |   |   |   | 891,929 |   |
| Interest      expense                     |   |                                                              | 25,003  |   |                                                    |   | -       |                                                  |   |   | 25,003                                                |   |   |   | - |   |
| Total      stock-based compensation       |   | $                                                                 | 523,229 |   |                                                    | $      | 253,620 |                                                  |   | $      | 1,123,244                                             |   |   | $ | 983,702 |   |
|                                      |   |                                                              |    |   |                                                    |   |    |                                                  |   |   |                                                  |   |   |   |   |   |

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.

----

| ·   | Level      1-Inputs are unadjusted quoted prices in active markets for identical      assets or liabilities that we have the ability to access at the      measurement date. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level      2-Inputs include quoted prices for similar assets and liabilities in      active markets, quoted prices for identical or similar assets or      liabilities in markets that are not active, inputs other than quoted      prices that are observable for the asset or liability (i.e., interest      rates, yield curves, etc.), and inputs that are derived principally from      or corroborated by observable market data by correlation or other means      (market corroborated inputs). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level      3-Unobservable Inputs that reflect our assumptions about the assumptions      that market participants would use in pricing the asset or liability. We      develop these inputs based on the best information available, including      our own data. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

|                                 |   |                  |              |   |
|--------------------------------------|--------|-----------------------|-------------------|--------|
|                                 |   | Six      months ended |              |   | Six      months ended |   |   |
|                                 |   | June      28, 2008    |              |   | June      30, 2007 |   |   |
| Expected      term in years          |   |                  | 5                 |   |   |   | 5 |   |   |
| Expected      stock price volatility |   |                  | 73.1%      - 75.1 | %      |   |   | 106.3%      - 169.0 | % |   |
| Risk      free interest rate         |   |                  | 2.67%      - 3.08 | %      |   |   | 4.5%      - 4.8 | % |   |
| Dividend      yield                  |   |                  | 0                 | %      |   |   | 0 | % |   |
|                                 |   |                  |              |   |   |   |   |   |   |

|                                                                                         |   | Number      ofOptions |      |   | Weighted      averageexerciseprice      per share(priced      at date of grant) |   |   |
|----------------------------------------------------------------------------------------------|--------|-----------------------|-----------|--------|---------------------------------------------------------------------------------|--------|--------|
|                                                                                         |   |                  |      |   |                                                                            |   |   |
| Outstanding      at December  29, 2007                                             |   |                  | 2,403,966 |   |                                                                            | $      | 3.59   |   |   |
| Granted                                                                                      |   |                  | 458,000   |   |                                                                            | $      | 3.61   |   |   |
| Cancelled                                                                                    |   |                  | (35,038   | )      |                                                                            | $      | 2.41   |   |   |
|                                                                                         |   |                  |      |   |                                                                            |   |   |   |   |
| Outstanding      at June 28, 2008                                                            |   |                  | 2,826,928 |   |                                                                            | $      | 3.60   |   |   |
|                                                                                         |   |                  |      |   |                                                                            |   |   |   |   |
| Options      granted at or above market value during the six months ended June 28,      2008 |   |                  | 458,000   |   |                                                                            |   |   |   |   |

|                              | Options      outstanding |              | Options      exercisable |                                                  |
|-----------------------------------|--------------------------|-------------------|--------------------------|-------------------------------------------------------|
|                              |                     |              |                     |                                                  |
| Range      ofexercise      prices |                     | Numberoutstanding |                     | Weightedaverageremainingcontractuallife      in years |   | Weightedaverageexerciseprice |   | NumberExercisable |   | Weightedaverageexerciseprice      pershare |   |
|                              |                     |              |                     |                                                  |   |   |   |   |   |   |   |
| $1.50                             |                     | 1,155,827    |                     | 8.5                                                   | $ | 1.50  |   | 821,948  | $ | 1.50  |   |
| $2.20-$8.00                       |                     | 1,454,244    |                     | 6.4                                                   | $ | 3.85  |   | 907,440  | $ | 3.72  |   |
| $8.20-$13.80                      |                     | 163,107           |                     | 2.7                                                   | $ | 10.76 |   | 163,107 | $ | 10.76 |   |
| $15.60-$32.00                     |                     | 53,750       |                     | 1.9                                                   | $ | 20.34  |   | 53,750  | $ | 20.34  |   |
|                         |                     | 2,826,928    |                |  6.9                                             | $ |  3.60  |    | 1,946,245  | $ |  3.83  |   |

----

| ·   | 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 an aggregate fair value of      approximately $344,400 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 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                                          |
|                                                                                                                                                                                                  |   |                    |   |                               |   |                                                        |
| 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                                |   | 109,150                 |   | $2.53                              |   | June      12, 2013                                          |
|                                                                                                                                                                                                  |   |                    |   |                               |   |                                                        |
| Pursuant      to Securities Purchase Agreements dated June 29, 2007                                                                                                                                   |   | 155,100                 |   | $5.00                              |   | June      29, 2012                                          |
|                                                                                                                                                                                                  |   |                    |   |                               |   |                                                        |
| Pursuant      to Securities Purchase Agreements dated June 29, 2007 as amended for      participation in the June 12,          2008 Securities Purchase Agreements                |   | 1,356,500               |   | $2.30                              |   | June      29, 2012                                          |
|                                                                                                                                                                                                  |   |                    |   |                               |   |                                                        |
| Pursuant      to the Exchange Securities dated June 12, 2008                                                                                                                                          |   | 700,000                 |   | $2.30                              |   | June      12, 2013                                          |
|                                                                                                                                                                                                  |   |                    |   |                               |   |                                                        |
| 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                                      |
|                                                                                                                                                                                                  |   |                    |   |                               |   |                                                        |
| Compensation      for Mr. Bruce E. Terker in connection with the Guarantee and      Indemnification Agreements for          bond collateral required for our state licensinginitiative |   | 12,171                  |   | $3.35                              |   | 3,716      on April 1, 2013 and 8,455 on June      30, 2013 |
|                                                                                                                                                                                                  |   |                    |   |                               |   |                                                        |
| Consulting      services agreement                                                                                                                                                                    |   | 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 June      28, 2008                                                                                                   |   | 5,045,099               |   | $2.37                              |   |                                                        |

----

| Twelve      monthsending |   |    | Amounts |   |
|--------------------------|--------|---------|---------|--------|
|                     |   |    |    |
| June      2009           | $      | 332,300 |    |
| June      2010           |   | 198,500 |    |
| June      2011           |   | 202,800 |    |
| June      2012           |   | 207,300 |    |
| June      2013           |   | 52,100  |    |
|                     |   |    |    |
| Total                    | $      | 993,000 |    |
|                     |   |    |    |

----

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

----

----

| ·   | 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  issuingbank. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·   | Transaction and operating      expenses. Transaction and operating expenses for the three month      periods ended June 28, 2008 and June 30, 2007 were $484,138 and $240,612,      respectively, a 101% increase, and for the six month periods ended June      28, 2008 and June 30, 2007, $937,444 and $441,052, respectively, a 113%      increase.   The components of expense  are: |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Description                                          |   | For      the three months      ended June      28, 2008 |    |   | For      the three months      ended June      30, 2007 |   |    | For      the six months      ended June      28, 2008 |   |   | For      the six months      ended June      30, 2007 |   |
|--------|------------------------------------------------------|--------|---------------------------------------------------------|---------|--------|---------------------------------------------------------|--------|---------|-------------------------------------------------------|--------|--------|-------------------------------------------------------|--------|
|   | SVC      card cost, program and transaction expenses |   | $                                                       | 229,254 |   |                                                    | $      | 136,048 |                                                  |   | $      | 465,622                                               |   |   | $ | 234,944 |   |
|   | Inventory      reserves                              |   |                                                    | 28,954  |   |                                                    |   | 4,735   |                                                  |   |   | 57,925                                                |   |   |   | 9,342 |   |
|   | Stock      based compensation                        |   |                                                    | -       |   |                                                    |   | 583     |                                                  |   |   | 243                                                   |   |   |   | 1,044 |   |
|   | Customer      service expenses                       |   |                                                    | 225,930 |   |                                                    |   | 99,246  |                                                  |   |   | 413,654                                               |   |   |   | 195,722 |   |
|   | Total      Transaction and Operating Expenses        |   | $                                                       | 484,138 |   |                                                    | $      | 240,612 |                                                  |   | $      | 937,444                                               |   |   | $ | 441,052 |   |

----

|   | SVC      card cost, program and transaction expenses increased $93,206, or 69%,      when comparing the three month period ended June 28, 2008 with the three      month period ended June 30, 2007.  For the six month period      ended June 28, 2008, the increase was $230,678, or 98%, when compared with      the six month period ended June 30, 2007.  These increases are      primarily attributable to the periodic transaction costs associated with      carrying a larger number of cards available for sale in 2008 versus the      amount of cards available for sale in 2007.  The number of cards      available for sale during the six months of 2008 was approximately 3.5      million compared to 0.5 million in the same period of 2007. Inventory      reserves increased $24,219 and $48,583, respectively, when comparing the      three and six month periods ended June 28, 2008 with the three month and      six month periods ended June 30, 2007.  This is due primarily to      the higher inventory levels at our distributors and the resulting increase      in potential lost, damaged or obsolete SVC card packages. Customer      service expenses increased $126,684 to $225,930 when comparing the three      month period ended June 28, 2008 with the three month period ended June      30, 2007, a 128% increase.  For the six month period ended June      28, 2008, customer service expenses were $217,932, or 111% higher than the      six month period ended June 30, 2007. The increase in the three and six      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 $560,976 to      $1,161,930 when comparing the three month period ended June 28, 2008 with      the same period from a year ago, a 93% increase.  For the six      month period ended June 28, 2008, selling and marketing expenses increased      $944,596, or 83% over the same period from the prior year. The components      of expense are: |
|--------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Description                               |   | For      the three months      ended June      28, 2008 |      |   | For      the three months      ended June      30, 2007 |   |    | For      the six months      ended June      28, 2008 |   |   | For      the six months      ended June      30, 2007 |   |
|--------|-------------------------------------------|--------|---------------------------------------------------------|-----------|--------|---------------------------------------------------------|--------|---------|-------------------------------------------------------|--------|--------|-------------------------------------------------------|--------|
|   | Advertising      and marketing expenses   |   | $                                                       | 573,628   |   |                                                    | $      | 159,672 |                                                  |   | $      | 881,706                                               |   |   | $ | 304,008 |   |
|   | Sales      force expenses                 |   |                                                    | 521,691   |   |                                                    |   | 396,939 |                                                  |   |   | 1,065,737                                             |   |   |   | 737,633 |   |
|   | Stock      based compensation             |   |                                                    | 66,611    |   |                                                    |   | 44,343  |                                                  |   |   | 129,523                                               |   |   |   | 90,729 |   |
|   | Total      selling and marketing expenses |   | $                                                       | 1,161,930 |   |                                                    | $      | 600,954 |                                                  |   | $      | 2,076,966                                             |   |   | $ | 1,132,370 |   |

|   | Advertising      and marketing expenses increased 259%, or $413,956, to $573,628 when      comparing the three month period ended June 28, 2008 with the three month      period ended June 30, 2007.   A comparison of the six month      period ended June 28, 2008 with the six month period ended June 30, 2007      shows a $577,698 increase, or 190%, for the current six 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 six month periods with      none in the prior three and six month periods, and a small increase for      point-of-sale displays provided to our distributors. Sales      force expenses increased $124,752 to $521,691, a 31% increase for the      three month period ended June 28, 2008 when compared with the three month      period ended June 30, 2007.  On a six month basis, the period      ended June 28, 2008 increased $328,104, or 44%, from the period ended June      30, 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 additional headcount for the sales force that occurred primarily in      the first quarter of 2008.  In addition, the increase in rent      expense is comprised 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 55%, or      $771,559, to $2,175,545 during the three month period ended June 28, 2008      when compared with the three month period ended June 30, 2007. On a six      month basis, expenses for the period ended June 28, 2008 increased      $850,888, or 25%, from the same period in 2007.  The components      of expense are: |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Description                                    |   | For      the three months ended June 28, 2008 |      |   | For      the three months ended June 30, 2007 |   |      | For      the six months ended June 28, 2008 |   |   | For      the six months ended June 30, 2007 |   |
|--------|------------------------------------------------|--------|-----------------------------------------------|-----------|--------|-----------------------------------------------|--------|-----------|---------------------------------------------|--------|--------|---------------------------------------------|--------|
|   | Payroll,      benefits and  taxes    |   | $                                             | 866,205   |   |                                          | $      | 550,058   |                                        |   | $      | 1,575,994                                   |   |   | $ | 1,252,513 |   |
|   | Stock      based compensation                  |   |                                          | 431,615   |   |                                          |   | 208,694   |                                        |   |   | 968,475                                     |   |   |   | 891,929 |   |
|   | Professional      legal and licensing expense  |   |                                          | 511,797   |   |                                          |   | 312,873   |                                        |   |   | 914,227                                     |   |   |   | 520,712 |   |
|   | Office      and occupancy expenses             |   |                                          | 225,428   |   |                                          |   | 194,236   |                                        |   |   | 462,070                                     |   |   |   | 381,983 |   |
|   | Impairment      expense                        |   |                                          | -         |   |                                          |   | 10,157    |                                        |   |   | -                                           |   |   |   | 41,139 |   |
|   | Other      administrative expense              |   |                                          | 140,500   |   |                                          |   | 127,968   |                                        |   |   | 277,703                                     |   |   |   | 259,305 |   |
|   | Total      General and Administrative Expenses |   | $                                             | 2,175,545 |   |                                          | $      | 1,403,986 |                                        |   | $      | 4,198,469                                   |   |   | $ | 3,347,581 |   |

|   | When      comparing the three month period ended June 28, 2008 with the three month      period ended June 30, 2007, changes in the expense categories are      primarily attributable to: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         §  | increased      payroll, benefits and taxes expenses of $316,147, due to $165,000 for the      2007 bonus compensation awards recorded and paid in the current quarter,      headcount increases in engineering, legal/compliance and other      administrative areas, and annual compensation  increases, |
|--------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         §  | increased      stock based compensation expense of $177,995, which is primarily      attributable to the May 2008 grant of the annual stock options granted to      the members of the board of directors, the options granted to Mr. Welch      and Mr. Springer under their employment contract, and the expense of      options granted to new hires, |
|--------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         §  | increased      professional, legal and licensing expense of $128,925 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,    and |
|--------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         §  | increased      office and occupancy expenses of $31,192 primarily due to expenses      incurred as the result of a greater number of employees, and increased      travel related to implementation of new  programs. |
|--------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | When      comparing the six month period ended June 28, 2008 with the six month      period ended June 30, 2007, changes in the expense categories are      primarily attributable to: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         §  | increased      payroll, benefits and taxes expenses of $323,481, due to $165,000 for the      2007 bonus compensation awards recorded and paid in the second quarter of      2008, headcount increases in engineering, legal/compliance and other      administrative areas, and annual compensation  increases, |
|--------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         §  | increased      stock based compensation expense of $76,546, which is attributable to the      expense for options granted to Mr. Welch and Mr. Springer under their      employment contract, and the expense of options grated to other officers      and new hires, |
|--------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         §  | increased      professional, legal and licensing expense of $393,515 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,      and |
|--------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         §  | increased      office and occupancy expenses of $80,087 primarily due to expenses      incurred as the result of a greater number of employees, and increased      travel related to implementation of new  programs. |
|--------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| Twelve      monthsending |   |    | Amounts |   |
|--------------------------|--------|---------|---------|--------|
| June      2009           | $      | 332,300 |    |
| June      2010           |   | 198,500 |    |
| June      2011           |   | 202,800 |    |
| June      2012           |   | 207,300 |    |
| June      2013           |   | 52,100  |    |
|                     |   |    |    |
| Total                    | $      | 993,000 |    |
|                     |   |    |    |

----

----

----

|   | ● | implementation      of our sales and marketingstrategies; |
|--------|---------|-----------------------------------------------------------|

|   | ● | competitive      developments in our market; |
|--------|---------|----------------------------------------------|

|   | ● | customer      acceptance of and demand for our SVCs and  services; |
|--------|---------|--------------------------------------------------------------------|

|   | ● | our      ability to attract, retain and motivate qualified personnel, particularly      sales associates; and |
|--------|---------|---------------------------------------------------------------------------------------------------------------|

|   | ● | the      continued adoption by consumers ofSVCs. |
|--------|---------|--------------------------------------------------|

----

----

----

The 2008 Annual Meeting of Stockholder of nFinanSe Inc. was held onMay 8, 2008.  The following summarizes the matters voted on and theresults of such votes:

|                                                                                                                                                                                                                                                                                       |   | Votes      Cast |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|-----------|
| Management      Proposals                                                                                                                                                                                                                                                                  |   | For             |      |   | Against |   |   | Abstain |   |
|                                                                                                                                                                                                                                                                                       |   |            |      |   |   |   |   |   |   |
| Ratification      of Kingery and Crouse, P.A. as independent auditors                                                                                                                                                                                                                      |   |            | 7,566,619 |   |   |   | 264 |   |   |   | 230,982 |   |
|                                                                                                                                                                                                                                                                                       |   |            |      |   |   |   |   |   |   |   |   |   |
| Approval      to amend the Company’s 2007 Omnibus Equity Compensation Plan to increase      by             1,000,000 shares the number of shares of common stock authorized for      issuance or transfer           under the plan |   |            | 5,759,338 |   |   |   | 61,734 |   |   |   | 2,494 |   |
|                                                                                                                                                                                                                                                                                       |   |            |      |   |   |   |   |   |   |   |   |   |

----

| Election      of Directors                   |   |                      |      |   |     |   |
|----------------------------------------------|--------|---------------------------|-----------|--------|----------|--------|
| Six      directores were elected as follows: |   | Votes      Received       |      |   | Votes    |   |
| Director      Nominee                        |   | in      Favor of Election |      |   | Withheld |   |
|                                         |   |                      |      |   |     |   |
| Jerry      R Welch                           |   |                      | 7,777,267 |   |     |   | 20,598 |   |
| Benjamin      J. Bond                        |   |                      | 7,792,517 |   |     |   | 5,348 |   |
| Joseph      D. Hudgins                       |   |                      | 7,792,517 |   |     |   | 5,348 |   |
| Mark      Brewer                             |   |                      | 7,792,517 |   |     |   | 5,348 |   |
| Ernest      W. Swift                         |   |                      | 7,792,417 |   |     |   | 5,448 |   |
| Bruce      E. Terker                         |   |                      | 7,777,267 |   |     |   | 20,598 |   |

|                                                                                                                                                                                                                                                                                                                                                                                        |   | Votes      Cast |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|-----------|
| Management      Proposals                                                                                                                                                                                                                                                                                                                                                                   |   | For             |      |   | Against |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   |            |      |   |   |   |
| Consent      of the holders of the Series A Preferred to an accounts receivable line of      credit up to $20,000,000                                                                                                                                                                                                                                                                       |   |            | 5,568,499 |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   |            |      |   |   |   |   |   |
| Consent      of the holders of the Series A Preferred and the Series B Preferred to the      creation of a new series of nFinanSe preferred stock designated as Series      C Convertible Preferred Stock                                                                                                                                                                                   |   |            | 6,568,499 |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   |            |      |   |   |   |   |   |
| Consent      of the holders of the Series A Preferred to an amendment to the      Certificate of Designations, Rights and Preferences of Series A Preferred      such that the “Liquidation Preference” will be paid on a pari passu basis      with the payment of respective liquidation preference payments applicable      to the Series B Preferred and Series C Preferred |   |            | 5,568,599 |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                        |   |            |      |   |   |   |   |   |
| Consent      of the holders of the Series B Preferred to an amendment to the      Certificate of Designations, Rights and Preferences of Series B Preferred      such that the “Liquidation Preference” will be paid on a pari passu basis      with the payment of respective liquidation preference payments applicable      to the Series A Preferred and Series C Preferred |   |            | 1,000,000 |   |   |   | - |   |

----

|  Exhibit      Number |   |  Description      of Exhibit                                                                                                                                                                                                                                                                                                                                                                    |
|---------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.1                       |   | Certificate      of Amendment to Certificate of Designation For Nevada Profit Corporation,      Series A Preferred Stock, as filed with the Secretary of State of the      State of Nevada on June 12, 2008 (Incorporated by reference to Exhibit      99.4 of the Company’s Current Report on Form 8-K filed with the SEC on      June 16, 2008).                                             |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.2                       |   | Certificate      of Amendment to Certificate of Designation For Nevada Profit Corporation,      Series B Preferred Stock, as filed with the Secretary of State of the      State of Nevada on June 12, 2008 (Incorporated by reference to Exhibit      99.5 of the Company’s Current Report on Form 8-K filed with the SEC on      June 16, 2008).                                             |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.3                       |   | Certificate      of Designations, Rights and Preferences of Series C Convertible Preferred      Stock, as filed with the Secretary of State of the State of Nevada on June      12, 2008 (Incorporated by reference to Exhibit 99.6 of the Company’s      Current Report on Form 8-K filed with the SEC on June 16,      2008).                                                                |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.1                      |   | Form      of Securities Purchase Agreement, as executed by the Company and the      investors party thereto on March 28, 2008 and March 31, 2008 (Incorporated      by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K      filed with the SEC on March 31, 2008, as amended by the Company’s Current      Report on Form 8-K filed with the SEC on April 1,2008). |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.2                      |   | Form      of Warrant as issued by the Company to certain investors on March 28 and      March 31, 2008 (Incorporated by reference to Exhibit 99.2 of the Company’s      Current Report on Form 8-K filed with the SEC on March 31, 2008, as      amended by the Company’s Current Report on Form 8-K filed with the SEC on      April 1, 2008).                                          |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.3                      |   | Form      of Securities Purchase Agreement, as executed by the Company and Bruce E.      Terker on March 21, 2008 (Incorporated by reference to Exhibit 99.1 of the      Company’s Current Report on Form 8-K filed with the SEC on April 1, 2008,      which exhibit replaces Exhibit 99.1 to the Company’s Current Report on      Form 8-K filed with the SEC on March 28, 2008).      |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.4                      |   | Form      of Securities Purchase Agreement, as executed by the Company and Bruce E.      Terker on May 16, 2008 (Incorporated by reference to Exhibit 99.1 of the      Company’s Current Report on Form 8-K filed with the SEC on May 22,      2008).                                                                                                                                          |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.5                      |   | Form      of Warrant as issued by the Company to Bruce E. Terker on May 16, 2008      (Incorporated by reference to Exhibit 99.2 of the Company’s Current Report      on Form 8-K filed with the SEC on May 22, 2008).                                                                                                                                                                         |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.6                      |   | Form      of Securities Purchase Agreement, as executed by the Company and the      investors party thereto on June 12, 2008 (Incorporated by reference to      Exhibit 99.1 of the Company’s Current Report on Form 8-K filed with the      SEC on June 16, 2008).                                                                                                                            |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.7                      |   | Form      of Warrant to Purchase Common Stock issued by the Company to certain      investors on June 12, 2008 (Incorporated by reference to Exhibit 99.2 of      the Company’s Current Report on Form 8-K filed with the SEC on June 16,      2008).                                                                                                                                          |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.8                      |   | Form      of Securities Exchange Agreement, as executed by the Company and the      investors party thereto on June 12, 2008 (Incorporated by reference to      Exhibit 99.3 of the Company’s Current Report on Form 8-K filed with the      SEC on June 16, 2008).                                                                                                                            |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.9                      |   | Loan      and Security Agreement, dated as of June 10, 2008, among the Company,      nFinanSe Payments Inc., each of the lenders listed on Schedule 1.1(a)      thereto and Ballyshannon Partners, L.P., as agent (Incorporated by      reference to Exhibit 99.7 of the Company’s Current Report on Form 8-K      filed with the SEC on June 16, 2008).                                       |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| *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: August      12, 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:  August      12, 2008 | By:                | /s/ Raymond P.      Springer |
|                                  |               |   |
|                                  |               | Raymond      P. Springer, Chief Financial Officer (Principal      Financial Officer) |
|                                  |               |   |
|                                  |               |   |

|                                  | NFINANSE      INC. |
|---------------------------------------|--------------------|
|                                  |               |   |
| Date:  August      12, 2008 | By:                | /s/ Jerome A.      Kollar |
|                                  |               |   |
|                                  |               | Jerome      A. Kollar, Vice President Finance and Controller      (Principal Accounting Officer) |
|                                  |               |   |
|                                  |               |   |

----

|  Exhibit      Number |   |  Description      of Exhibit                                                                                                                                                                                                                                                                                                                                                                    |
|---------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.1                       |   | Certificate      of Amendment to Certificate of Designation For Nevada Profit Corporation,      Series A Preferred Stock, as filed with the Secretary of State of the      State of Nevada on June 12, 2008 (Incorporated by reference to Exhibit      99.4 of the Company’s Current Report on Form 8-K filed with the SEC on      June 16, 2008).                                             |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.2                       |   | Certificate      of Amendment to Certificate of Designation For Nevada Profit Corporation,      Series B Preferred Stock, as filed with the Secretary of State of the      State of Nevada on June 12, 2008 (Incorporated by reference to Exhibit      99.5 of the Company’s Current Report on Form 8-K filed with the SEC on      June 16, 2008).                                             |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.3                       |   | Certificate      of Designations, Rights and Preferences of Series C Convertible Preferred      Stock, as filed with the Secretary of State of the State of Nevada on June      12, 2008 (Incorporated by reference to Exhibit 99.6 of the Company’s      Current Report on Form 8-K filed with the SEC on June 16,      2008).                                                                |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.1                      |   | Form      of Securities Purchase Agreement, as executed by the Company and the      investors party thereto on March 28, 2008 and March 31, 2008 (Incorporated      by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K      filed with the SEC on March 31, 2008, as amended by the Company’s Current      Report on Form 8-K filed with the SEC on April 1,2008). |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.2                      |   | Form      of Warrant as issued by the Company to certain investors on March 28 and      March 31, 2008 (Incorporated by reference to Exhibit 99.2 of the Company’s      Current Report on Form 8-K filed with the SEC on March 31, 2008, as      amended by the Company’s Current Report on Form 8-K filed with the SEC on      April 1, 2008).                                          |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.3                      |   | Form      of Securities Purchase Agreement, as executed by the Company and Bruce E.      Terker on March 21, 2008 (Incorporated by reference to Exhibit 99.1 of the      Company’s Current Report on Form 8-K filed with the SEC on April 1, 2008,      which exhibit replaces Exhibit 99.1 to the Company’s Current Report on      Form 8-K filed with the SEC on March 28, 2008).      |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.4                      |   | Form      of Securities Purchase Agreement, as executed by the Company and Bruce E.      Terker on May 16, 2008 (Incorporated by reference to Exhibit 99.1 of the      Company’s Current Report on Form 8-K filed with the SEC on May 22,      2008).                                                                                                                                          |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.5                      |   | Form      of Warrant as issued by the Company to Bruce E. Terker on May 16, 2008      (Incorporated by reference to Exhibit 99.2 of the Company’s Current Report      on Form 8-K filed with the SEC on May 22, 2008).                                                                                                                                                                         |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.6                      |   | Form      of Securities Purchase Agreement, as executed by the Company and the      investors party thereto on June 12, 2008 (Incorporated by reference to      Exhibit 99.1 of the Company’s Current Report on Form 8-K filed with the      SEC on June 16, 2008).                                                                                                                            |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.7                      |   | Form      of Warrant to Purchase Common Stock issued by the Company to certain      investors on June 12, 2008 (Incorporated by reference to Exhibit 99.2 of      the Company’s Current Report on Form 8-K filed with the SEC on June 16,      2008).                                                                                                                                          |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.8                      |   | Form      of Securities Exchange Agreement, as executed by the Company and the      investors party thereto on June 12, 2008 (Incorporated by reference to      Exhibit 99.3 of the Company’s Current Report on Form 8-K filed with the      SEC on June 16, 2008).                                                                                                                            |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.9                      |   | Loan      and Security Agreement, dated as of June 10, 2008, among the Company,      nFinanSe Payments Inc., each of the lenders listed on Schedule 1.1(a)      thereto and Ballyshannon Partners, L.P., as agent (Incorporated by      reference to Exhibit 99.7 of the Company’s Current Report on Form 8-K      filed with the SEC on June 16, 2008).                                       |
|                      |   |                                                                                                                                                                                                                                                                                                                                                                                                 |
| *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                                                                                                                                                                                                                                         |

----