**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C.  20549





**Form
      10-QSB**





(Mark
      One)


[X]
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      quarter ended September 30, 2007





[   ]
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      transition period from ________ to __________





Commission
      File Number: 000-30872





**Trycera
      Financial, Inc.**


(Exact
      name of Registrant as specified in charter)






**Nevada**
            
            **33-0910363**State
                or other jurisdiction of incorporation
                or organization
            
            I.R.S.
                Employer I.D. No.











**18023
                East Sky Park Circle, Suite G, Irvine, CA**
            
            **92614**Address
                of principal executive offices
            
            Zip
                Code


****





Issuer’s
                telephone number, including area code:
            **(949)
                273-4300**







Check
      whether the Issuer (1) has filed all reports required to be filed by section
      13
      or 15(d) of the Exchange Act during the past 12 months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90
      days.  (1)  Yes [X]   No
      [    ]       (2)  Yes  [X]    No  [   ]





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange
      Act).Yes  [    ]   No  [X]





State
      the
      number of shares outstanding of each of the Issuer’s classes of common equity as
      of the latest practicable date:  At November 7, 2007, there
      were 8,794,302 shares of the Registrant’s Common Stock
      outstanding.





Transitional
      Small Business Disclosure Format (check one):  Yes
      [   ]    No [X]







**Table
                of Contents**PagePART
              I.
            3ITEM
                1.FINANCIAL STATEMENTS
            3ITEM
                2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION
            9ITEM
                3.CONTROLS AND PROCEDURES
            20PART
              II.
            21ITEM
                1. LEGAL PROCEEDINGS
            21ITEM
                2.UNREGISTERED SALES OF EQUITY
                SECURITIES
            21ITEM
                6. EXHIBITS
            22SIGNATURES
            23


2


**PART
      I**


***ITEM
      1.  FINANCIAL
      STATEMENTS***




**Trycera
                Financial, Inc.**Consolidated
                Balance SheetsSeptember
            
            
            December30,
                2007
            
            
            
            31,
                2006(Unaudited)**Assets**Current
                AssetsCash
            
            
            $
            43,341
            
            
            $
            87,193Accounts
                Receivable, net
            
            
            
            53,150
            
            
            
            86,628Prepaid
                Expenses and other current assets
            
            
            16,803
            
            
            
            12,429Deferred
                Compensation
            
            
            
            94,688
            
            
            
            -Client
                ACH Reserves
            
            
            
            5,000
            
            
            
            5,000Total
                Current Assets
            
            
            
            212,982
            
            
            
            191,250Property
                & Equipment, net
            
            
            
            10,490
            
            
            
            18,395Other
                AssetsDeposits
            
            
            
            3,693
            
            
            
            12,507Definite
                Life Intangible Assets, net
            
            
            4,528
            
            
            
            38,542Total
                Other Assets
            
            
            
            8,221
            
            
            
            51,049Total
                Assets
            
            
            $
            231,693
            
            
            $
            260,694**Liabilities
              & Stockholders’ Equity**Current
                LiabilitiesAccounts
                Payable
            
            
            $
            120,724
            
            
            $
            71,452Portfolio
                reserves
            
            
            
            28,350
            
            
            
            25,425Accrued
                Expenses
            
            
            
            56,818
            
            
            
            78,542Line
                of Credit
            
            
            
            -
            
            
            
            -Total
                Current Liabilities
            
            
            
            205,892
            
            
            
            175,419Total
                Liabilities
            
            
            
            205,892
            
            
            
            175,419Commitments
            
            
            
            -
            
            
            
            -Stockholders’
                EquityPreferred
                Stock, 20,000,000 Shares Authorized,$.001
                Par Value; None Issued and Outstanding
            
            
            -
            
            
            
            -Common
                Stock, 100,000,000 Shares Authorized at$.001
                Par Value; 8,254,302 and 7,582,302 SharesIssued
                and Outstanding, Respectively
            
            
            8,254
            
            
            
            7,582Additional
                Paid In Capital
            
            
            
            4,646,646
            
            
            
            3,886,852Accumulated
                Deficit
            
            
            
            (4,629,099
            )
            
            
            (3,809,159
            )Total
                Stockholders’ Equity
            
            
            
            25,801
            
            
            
            85,275Total
                Liabilities & Stockholders’ Equity
            
            $
            231,693
            
            
            $
            260,694





The
            accompanying notes are an integral part of these financial
            statements.
 3




**Trycera
                  Financial, Inc.**Consolidated
                  Statements of OperationsFor
                  the Three Months Ended
              
              
              For
                  the Nine Months EndedSeptember
              
              
              September
              
              
              September
              
              
              September30,
                  2007
              
              
              
              30,
                  2006
              
              
              
              30,
                  2007
              
              
              
              30,
                  2006(Unaudited)
              
              
              (Unaudited)
              
              
              (Unaudited)
              
              
              (Unaudited)RevenuesStored
                  Value
              
              
              146,570
              
              
              
              285,962
              
              
              
              2,104,022
              
              
              
              669,594146,570
              
              
              
              285,962
              
              
              
              2,104,022
              
              
              
              669,594Cost
                  of Sales
              
              
              116,589
              
              
              
              181,592
              
              
              
              1,762,802
              
              
              
              672,968Gross
                  Profit
              
              
              29,981
              
              
              
              104,370
              
              
              
              341,220
              
              
              
              (3,374
              )ExpensesDepreciation
                  and Amortization
              
              
              1,808
              
              
              
              4,609
              
              
              
              8,485
              
              
              
              14,218Salaries
                  and Wages
              
              
              79,557
              
              
              
              97,675
              
              
              
              293,437
              
              
              
              334,436Stock
                  Based Compensation
              
              
              54,255
              
              
              
              18,317
              
              
              
              99,736
              
              
              
              126,490Professional
                  Fees
              
              
              68,183
              
              
              
              64,150
              
              
              
              298,281
              
              
              
              188,476Bad
                  debt expense
              
              
              27,329
              
              
              
              -
              
              
              
              236,489
              
              
              
              -General
                  & Administrative
              
              
              97,268
              
              
              
              49,568
              
              
              
              203,497
              
              
              
              149,226Total
                  Expenses
              
              
              328,400
              
              
              
              234,319
              
              
              
              1,139,925
              
              
              
              812,846Loss
                  from Operations
              
              
              (298,419
              )
              
              
              (129,949
              )
              
              
              (798,705
              )
              
              
              (816,220
              )Other
                  Income (Expenses)Interest,
                  income
              
              
              152
              
              
              
              40
              
              
              
              452
              
              
              
              1,362Interest,
                  expense
              
              
              (40
              )
              
              
              (30
              )
              
              
              (878
              )
              
              
              (1,023
              )Total
                  other Income (expense)
              
              
              112
              
              
              
              10
              
              
              
              (426
              )
              
              
              339Loss
                  from Continuing Operations before tax
              
              
              (298,307
              )
              
              
              (129,939
              )
              
              
              (799,131
              )
              
              
              (815,881
              )Income
                  tax
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Loss
                  from Continuing Operations
              
              
              (298,307
              )
              
              
              (129,939
              )
              
              
              (799,131
              )
              
              
              (815,881
              )Discontinued
                  OperationsLoss
                  on disposal of Discontinued Operations
              
              
              -
              
              
              
              -
              
              
              
              (27,852
              )
              
              
              -Gain
                  (Loss) from Discontinued Operations
              
              
              -
              
              
              
              1,140
              
              
              
              7,043
              
              
              
              (6,384
              )Total
                  gain (loss) from Discountinued Operations
              
              
              -
              
              
              
              1,140
              
              
              
              (20,809
              )
              
              
              (6,384
              )Net
                  Loss
              
              $
              (298,307
              )
              
              $
              (128,799
              )
              
              $
              (819,940
              )
              
              $
              (822,265
              )Basic
                  earnings per share:Loss
                  per share Continuing operations
              
              
              (0
              )
              
              
              (0
              )
              
              
              (0
              )
              
              
              (0
              )Loss per share Discontinued operations
              
              $
              (0.04
              )
              
              $
              (0.02
              )
              
              $
              (0.10
              )
              
              $
              (0.11
              )Weighted
                  average shares
              
              
              8,178,671
              
              
              
              7,378,053
              
              
              
              7,952,021
              
              
              
              7,225,003
  The
            accompanying notes are an integral part of these financial
            statements.
 4
   **Trycera
                  Financial, Inc.**Consolidated
                  Statements of Cash FlowsFor
                  the Nine Months EndedSeptember
              
              
              September30,
                  2007
              
              
              
              30,
                  2006(Unaudited)
              
              
              (Unaudited)Cash
                  Flows from Operating ActivitiesNet
                  Loss
              
              $
              (819,940
              )
              
              $
              (822,265
              )Adjustments
                  to Reconcile Net Loss to Net CashUsed
                  by Operations;Depreciation
                  and amortization
              
              
              14,798
              
              
              
              16,840Depreciation
                  and amortization on discontinued operation
              
              
              581
              
              
              
              -Loss
                  on sale of assets
              
              
              27,852
              
              
              
              -Stock
                  issued for services
              
              
              104,730
              
              
              
              55,317Stock
                  options and warrants
              
              
              99,736
              
              
              
              126,490(Increase)
                  decrease in accounts receivable
              
              
              33,478
              
              
              
              29,156(Increase)
                  decrease in prepaid and other current assets
              
              
              (4,374
              )
              
              
              7,118(Increase)
                  decrease in deposits
              
              
              8,814
              
              
              
              -Increase
                  (decrease) in accounts payable
              
              
              49,272
              
              
              
              (8,460
              )Increase
                  (decrease) in portfolio reserves
              
              
              2,925
              
              
              
              31,494Increase
                  (decrease) in accrued expenses
              
              
              (21,724
              )
              
              
              9,202Increase
                  (decrease) in unearned revenue
              
              
              -
              
              
              
              (22,191
              )Net
                  Cash Used by Operating Activities
              
              
              (503,852
              )
              
              
              (577,299
              )Cash
                  Flows from Investing ActivitiesAcquisition
                  of intangible assets and other
              
              
              -
              
              
              
              (1,197
              )Proceeds
                  from disposal of discontinued operations
              
              
              5,000
              
              
              
              -Net
                  Cash Provided (Used) by Investing Activities
              
              
              5,000
              
              
              
              (1,197
              )Cash
                  Flows from Financing ActivitiesProceeds
                  from issuance of common stock
              
              
              455,000
              
              
              
              498,000Payments
                  made on line of credit
              
              
              -
              
              
              
              (14,485
              )Net
                  Cash Provided by Financing Activities
              
              
              455,000
              
              
              
              483,515Net
                  Increase (Decrease) in Cash and Cash Equivalents
              
              
              (43,852
              )
              
              
              (94,981
              )Cash
                  and Cash Equivalents at Beginning of Period
              
              
              87,193
              
              
              
              211,523Cash
                  and Cash Equivalents at End of Period
              
              $
              43,341
              
              
              $
              116,542Cash
                  Paid for:Interest
              
              $
              (878
              )
              
              $
              992Income
                  Taxes
              
              $
              -
              
              
              $
              -Non-cash
                  financing activities:Common
                  stock issued for services and deferred compensation
              
              $
              205,730
              
              
              $
              55,317





The
            accompanying notes are an integral part of these financial
            statements.
 5
 Trycera
              Financial, Inc.
 Notes
              to
              the Financial Statements
 September
              30, 2007





NOTE
      1
– SIGNIFICANT ACCOUNTING POLICIES




A.  General




The
                accompanying condensed financial statements of the Company have been
                prepared by the Company, without audit, pursuant to the rules and
                regulations of the Securities and Exchange Commission.  Certain
                information and disclosures normally included in financial statements
                prepared in accordance with accounting principles generally accepted
                in
                the United States have been condensed or omitted pursuant to such
                rules
                and regulations.  These condensed financial statements reflect
                all adjustments (consisting only of normal recurring adjustments)
                that, in
                the opinion of management, are necessary to present fairly the results
                of
                operations of the Company for the periods presented.  These
                condensed financial statements should be read in conjunction with
                the
                financial statements and the notes thereto included in the Company’s Form
                10-KSB for the year ended December 31, 2006.  The results of
                operations for the three and nine months ended September 30, 2007,
                are not
                necessarily indicative of the results that may be expected for the
                fiscal
                year ending December 31, 2007.





B.
            Earnings
                (Loss) Per Share of Common
                Stock





The
                computation of earnings (loss) per share of common stock is based
                on the
                weighted average number of shares outstanding at the date of the
                financial
                statements.  Fully diluted earnings per share, which account for
                outstanding employee stock options and warrants have not been shown
                because the effect would have been anti-dilutive for the periods
                presented.






For
                the three months endedSeptember
                30,
            
            
            September
                30,2007
            
            
            2006(Unaudited)
            
            
            (Unaudited)Basic
              and dilutive Earnings per share:Income
                (Loss) (numerator)
            
            $
            (298,307
            )
            
            $
            (128,799
            )Shares
                (denominator)
            
            
            8,178,671
            
            
            
            7,378,053Per
                Share Amount
            
            $
            (.04
            )
            
            $
            (.02
            )For
                the nine months endedSeptember
                30,
            
            
            September
                30,2007
            
            
            2006(Unaudited)
            
            
            (Unaudited)Basic
              and dilutive Earnings per share:Income
                (Loss) (numerator)
            
            $
            (819,940
            )
            
            $
            (822,265
            )Shares
                (denominator)
            
            
            7,952,021
            
            
            
            7,225,003Per
                Share Amount
            
            $
            (.10
            )
            
            $
            (.11
            )






6


NOTE
      2
–STOCK OPTION PLAN





On
      May 4, 2004, the Company approved
      and adopted the 2004 Stock Option/Stock Issuance Plan, which allows for the
      Company to issue stock or grant options to purchase or receive shares of the
      Company’s common stock.  The maximum number of shares that may be
      optioned and sold under the plan is 10,000,000.  The plan became
      effective with its adoption and remains in effect for ten years, with options
      expiring ten years from grant, unless terminated earlier.  Options
      granted under the plan vest according to terms imposed by the Plan
      Administrator.  The Administrator may not impose a vesting schedule
      upon any option grant which is more restrictive than twenty percent (20%) per
      year vesting with the initial vesting to occur not later than one (1) year
      after
      the option grant date.  The following schedule summarizes the activity
      during the period ending September 30, 2007:




2004
                Stock PlanAmount
                of
              Shares
            
            
            Weighted
                Average
              Exercise
                PriceOutstanding
              at January 1, 2007
            
            
            2,874,750
            
            
            $
            .63Options
                Granted
            
            
            528,250
            
            
            
            .96Options
                Exercised
            
            
            -
            
            
            
            -Options
                Canceled
            
            
            23,500
            
            
            
            1.00Options
                Outstanding at September 30, 2007
            
            
            3,379,500
            
            
            $
            .68Options
                Exercisable at September 30, 2007
            
            
            2,734,706
            
            
            $
            .61





Options
      granted under the plan vest according to terms imposed by the Plan
      Administrator.  The following schedule summarizes the activity during
      the period ending September 30, 2006:




2004
                Stock PlanAmount
                of
              Shares
            
            
            Weighted
                Average
              Exercise
                PriceOutstanding
              at January 1, 2006
            
            
            3,070,250
            
            
            $
            .62Options
                Granted
            
            
            120,000
            
            
            $
            .36Options
                Exercised
            
            
            -
            
            
            
            -Options
                Canceled
            
            
            (252,750
            )
            
            $
            .59Options
                Outstanding at September 30, 2006
            
            
            2,836,250
            
            
            $
            .61Options
                Exercisable at September 30, 2006
            
            
            2,371,562
            
            
            $
            .56


The
      Company, in accordance with Statement of Financial Accounting Standards No.
      123R, *“Accounting for Stock-Based Compensation,”* recognized $54,255 and
      $18,317, for the three months ended September 30, 2007 and 2006, respectively.
      The Company recognized $99,736 and $126,490, respectively for the nine months
      ended September 30, 2007 and 2006, respectively.  The fair value of
      option grants are established at the date of grant using the Black-Scholes
      option pricing model with the following assumptions:






September
                30, 2007Five
              Year Risk Free Interest Rate
            
            
            5.11
            %Dividend
              Yield
            
            
            0
            %Volatility
            
            
            244
            %Average
              Expected Term (Years to Exercise)
            
            
            5





Management
      would like to confirm an intention to use an appropriate volatility in the
      future, which is likely to be higher than the historical basis.





Stock
      options outstanding and exercisable under this plan as of September 30, 2007
      are:






Range
                of
              Exercise
                Price
            
            Number
                of
              Options
                Granted
            
            Weighted
                Average
              Exercise
                Price
            
            Average
                Remaining Contractual Life (Years)
            
            Weighted
                Number of Options Vested
            
            Average
                Exercise
              Price$.001
                - $.99
            
            2,481,250
            
            $.55
            
            2.75
            
            2,398,122
            
            $.55$1.00
                - $2.00
            
            898,250
            
            $1.00
            
            4.25
            
            336,584
            
            $1.06





Employee
      stock options outstanding and exercisable under this plan as of December 31,
      2006 are:




Range
                of
              Exercise
                Price
            
            Number
                of
              Options
                Granted
            
            Weighted
                Average
              Exericse
                Price
            
            Average
                Remaining
              Contractual
                Life (Years)
            
            Weighted
                Number of Options Vested
            
            Average
                Exercise
              Price$.001
                - $.99
            
            2,431,250
            
            $.55
            
            3.5
            
            2,478,642
            
            $.55$1.00 -
                $2.00
            
            443,500
            
            $1.00
            
            4.5
            
            177,333
            
            $1.03







7


NOTE
      3
– DISCONTINUED OPERATIONS





In
      March,
      2007, the Company completed the sale of its IsleCore subsidiary. In accordance
      with Statement of Financial Accounting Standards (“SFAS”) 144, “*Accounting
      for the Impairment or Disposal of Long-Lived Assets”*, the financial results
      of the Company’s IsleCore operations are reported as discontinued operations for
      all periods presented.





The
      financial results included in discontinued operations are:






For
              the three months ended
            
            September
                30, 2007
            
            
            September
                30, 2006(Unaudited)
            
            
            (Unaudited)Gain
              from discontinued Operations, net
            
            $
            -
            
            
            $
            1,140




The
      financial results included in discontinued
      operations are:


For
                the nine months ended
              
              September
                  30, 2007
              
              
              September
                  30, 2006(Unaudited)
              
              
              (Unaudited)Loss
                on disposal of discontinued Operations, net
              
              $
              (27,582
              )
              
              $
              -Gain
                (Loss) from  discontinued Operations, net
              
              $
              7,043
              
              
              $
              (6,384
              )






NOTE
      4
– RESTATEMENT AND RECLASSIFICATION





We
      have
      reclassified our Statement of Operations for the three months ended September
      30, 2006, to reflect the sale of our IsleCore subsidiary. Our management and
      our
      board of directors have concluded this reclassification is necessary to reflect
      the changes described above in Note 3.





NOTE
      5
– COMMON STOCK





The
      Company issued stock in two private offerings. The first offering opened on
      December 11, 2006, and closed on March 12, 2007.  In the offering we
      offered up to 500,000 shares of our common stock at $1.00 per share to investors
      with a 50% additional warrant coverage offer, for maximum gross proceeds of
      $500,000 on the common stock and up to a maximum gross proceeds of $250,000
      related to exercised warrants. The second offering opened on June 15, 2007,
      which was then updated and amended on September 26, 2007.  In this offering
      we offered up to 4,000,000 shares of our common stock at $0.25 per share to
      investors with a 50% additional warrant coverage offer, for maximum gross
      proceeds of $1,000,000 on the common stock and up to a maximum gross proceeds
      of
      $500,000 related to exercised warrants.  Initially the offering was for up
      to 1,000,000 shares of our common stock at $1.00 per share to investors with
      a
      50% additional warrant coverage offer, for maximum gross proceeds of $1,000,000
      on the common stock and up to a maximum gross proceeds of $500,000 related
      to
      exercised warrants. We raised a total of $455,000 from the offerings, of which
      $315,000 was received in the first quarter 2007, and $140,000 was received
      in
      third quarter 2007.  We issued a total of 455,000 common shares and 227,500
      warrants in the offering





During
      the nine months ended September 30, 2007, the Company issued 107,000 shares
      of
      common stock to an individual for accounting and administrative services
      rendered in behalf of the Company.  Accordingly, common stock and
      additional paid in capital have been charged $107 and $99,623,
      respectively.





In
      the
      second quarter the Company issued 100,000 shares in connection with an
      employment agreement to its Principal Executive and Principal Officer.
      Accordingly, common stock and additional paid in capital have been charged
      $100
      and $100,900, respectively. The contract has been included as “Deferred
      Compensation” on the Company’s balance sheet and is being amortized over the
      life of the contract.





In
      the
      second quarter the Company issued 10,000 shares for accounts payable.
      Accordingly, common stock and additional paid in capital have been charged
      $10
      and $4,990, respectively.




NOTE
        6
– GOING CONCERN
 
 The
        Company has had recurring operating losses since inception and is dependent
        upon
        financing to continue its operations.  Unless the Company is successful in
        raising immediate short term financing, or entering into a definitive agreement
        to combine, merge or sell its business to another public or private enterprise,
        it is likely to be unable to continue as a going concern.  These financial
        statements do not include any adjustments relating to the recoverability
        and
        classification of recorded assets, or the amounts and classification of
        liabilities that might be necessary in the event the Company ceases to be
        a
        going concern.  Currently the Company has minimal cash on hand and few
        material assets beyond its employees, banking and processing agreements,
        active
        cardholders, approved programs and product/service offerings (including its
        PinPoint identity verification tools, its My Full Credit alternative credit
        reporting services and its in-house card brands: Trycera Financial Prepaid
        MasterCard, Finium Prepaid MasterCard and Mi Dinero y Mi Suenos Prepaid
        MasterCard).  In addition, the Company has not established, nor maintained,
        a recurring source of revenues to sufficiently cover or offset any current,
        anticipated or planned operating costs to allow it to continue as a going
        concern.  It is the intent of the Company to continue to seek additional
        capital funding while pursuing available strategic alternatives for combining,
        merging or selling its business to another public or private
        enterprise.  There can be no assurances that any of these courses of
        action will be successful.





8





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





The
      following discussion should be read in conjunction with our financial statements
      and related notes thereto as filed with the Securities and Exchange
      Commission.




Prior
        to
        May 2004, we had no operating history.  Based in Irvine, California,
        we are currently in the business of developing and marketing a suite of prepaid
        and financial products and services.  Prepaid products are broadly
        defined as financial instruments where the value on the card has been prepaid,
        and where subsequent transactions decrease the value against the balance
        originally loaded onto the instrument.  Our core operating business is
        centered upon developing and marketing a broad array of prepaid products
        and
        services for persons without banking relationships, persons who are underserved
        by existing banking facilities and persons and companies that have a need
        for
        commission, payroll or debt management payments and services. In addition,
        we
        work with our customers to develop financial products for their specific
        target
        markets, some of which include individuals needing a financial tool to shop
        online, the teen financial services market and families who want to share
        money.





***Recent
      Developments***





During
      the quarter ended September 30,
      2007, we continued to focus on card and portfolio aggregation while managing
      through a material program suspension that unfavorably impacted results in
      the
      second quarter and expanded the unfavorable results during this
      quarter.




While working closely with IMG, a program card marketer, we continued to
      materially reduce our overall revenues by suspending services for the
      flagship IMG program, the Plan First Financial Solutions (PFFS)
      product.  Also in the third quarter, and as a direct result of ongoing
      non-payment for services by IMG and related parties, we moved to close programs
      or directly sign agreements with the sub card marketers of  two of the
      four IMG cards under their original card marketer stewardship, of which the
      PFFS
      product was the largest.  At the end of the third quarter we were
      actively engaged in negotiating agreements between Valor Card International
      and
      InControl.





The collective programs under the IMG umbrella represented a focus on the
        debt
        management space and their card offerings were related to actively helping
        individuals manage personal debt and create a financial tool that allowed
        the
        prepaid card to streamline bill payments and proactively manage alternative
        financial solutions.  While the development of the IMG programs
        allowed us to introduce a multi-purse card where there is a general purpose
        spending purse, a managed bill payment (debt management) purse and a savings
        purse, the non-payment for services by IMG and the related card programs
        have
        materially and adversely impacted the operations of our company.  The
        suspension of this single program eliminated more than 30,000 active accounts
        and more than $100M in annualized gross dollar volume , where gross dollar
        volume is the amount of money loaded onto the accounts in this
        portfolio  A significant resource allocation was committed in the
        second and third quarters to resolve the ongoing issues of non-payment with
        IMG
        and we continue to pursue actions to recover the outstanding receivables
        due.  At the end of the third quarter, however, there was limited
        progress on arriving at a solution and further legal actions may be required
        in
        order to receive payment for our services.  In parallel, and to offset
        this unfavorable impact, we reserved the entire outstanding receivable balances
        as bad debt in order to realize and reflect the current non-payment of the
        services provided.





9


Concurrently, we previously recognized that a collateral benefit of working
        with
        IMG was the  development and deployment of the multi-purse card that
        would allow future program card marketers the opportunity to create offerings
        that could segregate funds loaded onto prepaid cards and further enhance
        program
        specific functions to facilitate spending and savings on one
        card.  After further discussions with the issuing bank, MetaBank, we
        have determined that this benefit has been marginalized by problems directly
        related to Plan First Financial Systems and the Plan First prepaid
        program.  As a result, we will only support our existing multi-purse
        programs and are likely to not pursue future similar programs until we receive
        a
        guarantee or approval from MetaBank to issue cards with such features and
        functionality.  To that end and pursuant to ongoing discussions and
        communications with MetaBank, we have elected to notify all Plan First and
        National Foundation for Debt Management cardholders that effective December
        1,
        2007, their cards will no longer be valid, that each account will be closed
        and
        any remaining funds will be refunded to them.  Once this action has
        been completed, the entire Plan First program will be permanently shut
        down.
 
 During
        the third quarter, we continued
        progress and development on two programs with our other issuing bank partner,
        New Millennium Bank.    By working closely with New
        Millennium Bank, we are able to offer a predictable fixed cost pricing solution
        that provides our program partners the flexibility of working with wide reaching
        prepaid programs and align cardholders with a progressive state
        bank.  The two programs in development that will be issued through Mew
        Millennium Bank include a money share program offered by Transfers4Less and
        a
        payroll program offered by Payroll Capital.  While we are working to
        launch these programs in the early part of the fourth quarter, each has resulted
        in challenges to the Company, as both programs are highly dependent upon
        approvals and card feature development outside of our
        control.  Approvals are required from MasterCard on the association
        level, New Millennium Bank on the issuing bank level and Galileo on the
        processor level.  Additionally, feature development is required from
        Galileo on the processor level.  We continue to work with each of
        these companies on behalf of our customers as Program Manager, but are
        ultimately not able to proceed to market without their approvals and completion
        of the required feature development.  In some cases, such as feature
        development tied to overdraft technology, we have been waiting for over 6
        months
        past the original scheduled delivery date provided by our
        processor.  This delay has not only had a material impact to our
        customer, but it has also prevented them from selling or issuing cards to
        their
        customers and targeted channels.  Similarly, and as a result, our
        Company has been materially adversely affected by these delays and has been
        unable to generate any prepaid card income during this period for this
        program.




10




In the third quarter we also refined our basic business paradigm by electing
        to
        discontinue offering our semi-customized OEM platform and instead focus on
        more
        direct to consumer channels.  By refocusing away from OEM offerings,
        we are able to free up resources, mitigate program development timeframe
        delays
        and minimize interaction with third party card marketers who are not revenue
        generating. Developed originally in the middle of 2006, this turnkey prepaid
        solution was designed to showcase our ability to deliver a feature-rich turnkey
        prepaid card program in a timeframe (90 days or less) that was believed to
        create a competitive advantage for us.  However, the changing prepaid
        landscape, coupled with the general failure of the OEM offering as a sustainable
        and profitable platform, required us to get more proactive and refine a strategy
        to engage consumers directly.  Current programs running under this
        platform will continue to be serviced under the terms of original agreements,
        but as OEM marketing and services agreements expire, the Company intends
        to
        offer card marketers  the opportunity to convert to more standardized
        programs or reselling arrangements, deconvert or to discontinue their program(s)
        entirely.


During
      the third quarter we also moved
      to foster momentum with our alternative credit reporting product and service
      branded under the name My Full Credit.  We actively worked with
      sub-prime mortgage lenders to deliver the product as a complement to their
      financial wellness packages being offered in conjunction with loan
      delivery.  While no specific agreements were finalized in the third
      quarter, we did partner with two companies to pilot the program and streamline
      the product delivery process.  The product and service is sold
      primarily as a bundled offer, where a company prepaid card is provided to
      support the payments that are reported by the My Full Credit alternative credit
      reporting product.  This complementary product and service program
      allows participants to report non-traditional payments to over 140 national
      credit reporting agencies.  A majority of the payments and
      transactions provided to the national credit reporting agencies under this
      program would include rent, gas and electric, cable TV, phone/wireless and
      utilities (water, sewer and trash).  By providing such non-traditional
      payment information, My Full Credit allows credit reporting agencies to
      potentially better understand and evaluate an individual’s consumer credit
      behavior and in turn offer an ability to report alternative scores that may
      or
      may not help facilitate credit granting decisions by prospective credit
      lenders.  In the third quarter the My Full Credit continuing
      development incurred expenses in excess of $5,000, much of which is planned
      to
      be recouped when additional revenue streams are realized in the fourth quarter
      of 2007.





Another
      key issue to recap for the
      third quarter has been the accumulation of accounts receivables by our custom
      and semi-custom or OEM program card marketers.  A sizable portion of
      our accounts receivable balances remain outstanding from the first, second
      and
      third quarters of 2007. The growing days sales outstanding contribute to cash
      flow constraints.  As a result, we have worked for the balance of the
      third quarter to collect such outstanding invoices and
      receivables.  Despite our efforts, very few payments have been
      delivered and we are now evaluating any and all options, including and up to
      suspension of services or cancellation of card programs in their
      entirety.  With respect to accounts payable, we continue to actively
      service our key vendors and primary business drivers such as banking, processing
      and card fulfillment.  The accounts payable has grown significantly as
      a result of third party consulting and outsourcing costs.  As of the
      end of the third quarter we began delaying payments to certain vendors
      and continue evaluating the operations for ways to reduce costs
      away.






11





In
      addition to our core operations, we
      continued to expand our search for small card marketers, card portfolio
      companies and complementary and financial services-related companies for
      acquisition. Through the end of the third quarter we evaluated two separate
      opportunities and have discontinued our pursuit of
      both.




The current financial state of our company has directly resulted in missed
        opportunities during the third quarter, including renegotiating a new processor
        agreement with our existing processor (Galileo), creating a redundant processor
        agreement with a new processor, establishing new banking relationships with
        both
        federally chartered and state chartered issuing banks, executing
        pay-per-application online sales initiatives and executing opportunistic
        mergers
        and acquisitions.  As an example, we attempted to close the
        acquisition of a small portfolio of cards under a signed LOI from E-Count,
        a
        wholly owned subsidiary of Citibank, but were unable to execute the definitive
        agreements because the issuing bank would not consent to the transaction
        due to
        the small asset base reflected in our current financials.  This theme
        continues to prevent us from being able to execute our business model, as
        the
        underlying approvals for all programs, products and services are not directly
        within our Company’s control.  As a result, and even when we win new
        business, new customers or new contracts, we remain challenged in being able
        to
        go to market and monetize the opportunities because the timing of our launches
        are controlled by numerous third parties.
 At
        a macro level, the landscape for prepaid cards and services is changing rapidly,
        and as a small company we are struggling to adjust our business model to
        address
        the new requirements demanded by both issuing banks and
        processors.  Namely, most issuing banks and processors are
        consolidating and transitioning their prepaid units to having tens of customers
        doing millions of debit cards or transactions from a historic convention
        of
        having hundreds to thousands of customers doing tens of thousands of debit
        cards
        or transactions.  As a result, our programs are experiencing unusually
        long and seemingly punitive delays in getting the requisite approvals in
        order
        for us to take the programs to market and ultimately monetize our investments
        in
        these initiatives.  Thus, these delays are causing a material adverse
        impact to our revenues and our operations as we can no longer predict with
        any
        certainty the timing associated with getting any individual program to
        market.  Furthermore, because we no longer fit into the customer
        profile desired by the issuing banks and processors, we are typically lower
        in
        the priority queue for gaining the approvals needed in order to execute our
        business model.  To this end, our primary issuing bank, MetaBank, has
        communicated its desire to renegotiate its 5 year agreement with us to implement
        terms and pricing that are less favorable to our Company.  The Company
        is in agreement with the bank that the agreement needs to be renegotiated,
        but
        there has been only limited progress on executing a new bank agreement thus
        far.   Unfavorable changes to the agreement, or an unwillingness
        on the part of MetaBank to continue issuing new cards on behalf of the Company,
        or contribute to program delays through lagging approval processes, would
        both
        have a further material adverse affect on our business.  Compounding
        these adverse impacts during the third quarter remains a level of uncertainty
        with our primary issuing bank relationship with MetaBank.  As the
        issuer of the Plan First prepaid program, MetaBank is  not comfortable
        with the ongoing disputes between us and Plan First Financial Solutions
        (PFFS).  PFFS has more than once contacted MetaBank to make certain
        claims and assertions against us.  These ongoing claims made by PFFS
        have resulted in detailed discussions between us and the bank to justify
        our
        position and communicate that our actions fall within the guidelines of the
        bank.  Furthermore, since our active card portfolio is comparatively
        small on the bank scale and requires a high amount of attention for approval
        and
        management purposes, there has been an unintended result of contributing
        to the
        underlying uncertainty.  While management has plans to meet face to
        face with key bank personnel in late fourth quarter, we are cognizant that
        the
        accumulation of events has contributed in potentially material changes to
        our
        primary issuing bank relationship.
  In
          addition, we continued to develop a significant relationship with a new
          card
          marketer in the third quarter.  This relationship is important as the
          card marketer has a large amount of card related deal flow for
          us.  However, due to the challenges facing our business, it is
          possible that we will not be able to deliver on all of the programs as
          specified
          between us and the card marketer.  In the case where we cannot service
          all of the requirements, we may be forced to transfer, assign or otherwise
          refund certain portions of program development and implementation
          fees.
 
 In
          addition, our key processing
          partner, Galileo Processing, continues to adversely impact our primary
          prepaid
          card business.  Program launches are delayed and behind schedule as a
          direct function of delivery delays related to processing platform features
          and
          functionalities, specifically including dual card functionality and overdraft
          protection.  As a constraint of the functionality, a key loading
          partner, IPP, has only recently resurfaced as a loading option on the Galileo
          platform. Whereas previously load capabilities were real-time in nature,
          there
          is now a 48 hour hold on the funds being loaded to a cardholder
          account.  This delay has caused a program specific issue and has yet
          to be remedied.   Moreover, integration timing and scalability
          constraints have also contributed to the IMG program suspension and continue
          to
          affect program launches and projected implementation lead
          times.  While we work closely with our processing partner, we may be
          forced to raise further capital to build an infrastructure and middle ware
          that
          enables more control for the company and provides a more turnkey solution
          that
          will allow the company flexibility to rely on less processing
          resources.


Separately,
      our wholly owned
      subsidiary, isleCORE Systems, located in Honolulu, Hawaii, was disposed during
      the second quarter and provided no new incremental revenues in the third
      quarter.  We continued to carry accounts receivable throughout the
      third quarter and expect the payments to be resolved or written off at the
      end
      of the year.  IsleCORE has been treated as a discontinued operation
      and the Consolidated Statements of Operations reflect such
      treatment.






12





As
      we approached the end of the third
      quarter, we terminated the original six month agreement entered into during
      the
      second quarter, with an investor relations and public relations group named
      TMS
      Capital, LLC.  TMS Capital was hired to help the company distribute
      relevant news and information about the company’s performance.





***Employees***





At
      November 15, 2007, we had two
      full-time equivalents, namely our principal executive officer, COO and CFO,
      Bryan Kenyon, and our  Director of Product
      Development.  We are actively managing the programs currently deployed
      on our platform and other than the existing programs in the
      production/development queue, there are no new plans to further develop any
      additional products and services.  Our headcount will be aligned to
      focus on operational contributions and account/customer
      support.




***Key
      Accounting Policies***





Key
      accounting policies are defined as
      those that are reflective of significant judgments and uncertainties, and
      potentially result in materially different results under different assumptions
      and conditions.  There were no changes to our key accounting policies
      for the quarter ended September 30, 2007.





***Results
      of Operations***





***For
      the three months ended September 30, 2007***





**Revenue**





Revenue
      from continuing operations was $146,570 and $285,962 for the three months ended
      September 30, 2007 and 2006, respectively, representing a decrease of $139,392
      or 49%. As previously discussed, we continued to focus on card and portfolio
      aggregation while managing through a material program suspension that
      unfavorably impacted results in the second quarter. While working closely with
      IMG, a program card marketer, we continued to materially reduce our overall
      revenues by continuing the suspension of services for the flagship IMG program,
      the Plan First Financial Solutions (PFFS) product .We have also contracted
      with
      additional third party distributors and online marketers which have the
      potential to generate additional revenue in the future quarters.





**Cost
      of Sales and Gross Profit**





Cost
      of
      sales was $116,589 and $181,592 for the three months ended September 30, 2007
      and 2006, respectively, representing a decrease of $65,003 or
      36%.  The decrease was attributed to the decline of card production,
      distribution costs, bill payment management and transaction processing costs
      associated with the lower sales and program suspensions.





The
      resulting gross profit was $29,981 and $104,370 for the three months ended
      September 30, 2007 and 2006, respectively, representing a decrease in gross
      margin from 36% to 20%. The decrease is due to credits being issued on older
      invoices as the Company works with some customers, as it tries to work through
      the growing pains of the OEM programs and avoid program suspensions. Because
      of
      the current state of affairs of the Company and the ongoing contract disputes
      management is unsure as to the direction of gross profit margins going
      forward.






13





**Operating
      expenses**





Operating
      expenses were $328,400 and $234,319 for the three months ended September 30,
      2007 and 2006, respectively, representing an increase of $94,081 or
      40%.  The major components of our operating expense for the three
      months ended September 30, 2007 are general and administrative expenses (30%),
      salaries and wages (20%) and professional fees (20%).





General
      and administrative expense was $97,268 and $49,568 for the three months ended
      September 30, 2007 and 2006, respectively, representing an increase of $47,700
      or 96%.  The increase resulted largely from increased investor
      relations expense and marketing and postage.





Salaries
      and wages expense were $79,557 and $97,675 for the three months ended September
      30, 2007 and 2006, respectively, representing a decrease of $18,118 or
      19%.  The decrease resulted largely from the departure of the former
      CEO and Board Member, Matthew Kerper, at the end of the second
      quarter.





Professional
      fees and expenses were $68,183 and $64,150 for the three months ended September
      30, 2007 and 2006, respectively, representing an increase of $4,033 or 6%.
      The
      increase relates to contract activity related to new customers and the current
      payment disputes.





**Discontinued
      Operations**





*Results
      of discontinued operations*





Having
      disposed of IsleCORE in the first quarter, the results of the subsidiary have
      been shown as a discontinued operation for the purposes of our financial
      statements.  Net income was $0 for the three months ended September
      30, 2007, compared to income of $1,140 for the comparative period.





**Net
      loss**





We
      incurred net losses of $298,307 and $128,799 for the three months ended
      September 30, 2007 and 2006, respectively, representing an increase in net
      loss
      of $169,508 or 132%.  Through the addition of new custom programs and
      the increasing sales of our branded products and services, we expect to increase
      gross profit margins and to reduce net losses in 2007 as compared to
      2006.







14


***For
      the nine months ended September 30, 2007***





**Revenue**





Revenue
      from continuing operations was $2,104,022 and $669,594 for the nine months
      ended
      September 30, 2007 and 2006, respectively, representing an increase of
      $1,434,428 or 214%. Our 2007 product launches coupled with marketing efforts
      resulted in improved revenues through the addition of new customers for our
      customized and semi-customized program solutions and increased sales of our
      branded card products and services. Revenue was unfavorably offset by the
      cessation of reselling bill payment management services as a result of the
      ongoing payment dispute with our customer IMG. Of the increase in revenue for
      the nine months ended September 30, 2007, approximately $1,344,447 resulted
      from
      the sale of bill payment management services.  We have also contracted
      with additional third party distributors and online marketers which have the
      potential to generate additional revenue in the future quarters.





**Cost
      of Sales and Gross Profit**





Cost
      of
      sales was $1,762,802 and $672,968 for the nine months ended September 30, 2007
      and 2006, respectively, representing an increase of $1,089,834 or
      162%.  The increase was attributed to the growth of the card
      production, distribution costs, bill payment management and transaction
      processing costs.





The
      resulting gross profit was $341,220 and gross operating loss was $3,374 for
      the
      nine months ended September 30, 2007 and 2006, respectively. The comparative
      nine month period was unfavorably impacted by a change in bank policy resulting
      in the immediate write-off of negative card balances in the amount of $329,586.
      Because of the current state of affairs of the Company and the ongoing contract
      disputes management is unsure as to the direction of gross profit margins going
      forward.





**Operating
      expenses**





Operating
      expenses were $1,139,925 and $812,846 for the nine months ended September 30,
      2007 and 2006, respectively, representing an increase of $327,079 or
      40%.  The major components of our operating expense for the nine
      months ended September 30, 2007 are bad debt expense (20%), salaries and wages
      (26%) and professional fees (26%).





Bed
      debt
      expense was $236,489 and $0 for the nine months ended September 30, 2007 and
      2006, respectively, representing an increase of $236,489.  The
      increase resulted largely from our ongoing payment dispute with our customer
      IMG.






15





Salaries
      and wages expense were $293,437 and $334,436 for the nine months ended September
      30, 2007 and 2006, respectively, representing a decrease of $40,999 or 12%.
      The
      decrease resulted largely from the departure of the former CEO and Board Member,
      Matthew Kerper, at the end of the second quarter. The decrease was also affected
      by the departure of the in-house financial controller during 2006, whereas
      these
      services are now being outsourced.





Professional
      fees and expenses were $298,281 and $188,476 for the nine months ended September
      30, 2006 and 2005, respectively, representing an increase of $109,805 or 58%.
      The increase results from the non cash expense of higher shares paid in respect
      of accounting resources associated with a third party service provider, (this
      work was handled in-house during the first three months of 2006), in addition
      to
      increased legal fees related to a shareholder meeting and increased contract
      activity related to new customers and the current payment disputes.





**Discontinued
      Operations**





*Loss
      on sale of IsleCORE subsidiary; Discontinued Operations*





As
      previously stated, we disposed of our IsleCORE subsidiary. The sale was
      completed in the first quarter. Proceeds from the sale were $5,000 in cash,
      plus
      the net amount realized from the settlement of the accounts receivable and
      prepaids, less the accounts payable and accrued expenses   On
      this basis we have realized a loss of $27,852 on the transaction.  We
      have the ability to recoup $18,000 of this loss dependent on the results of
      the
      purchaser, but management considers the likelihood of this occurrence to be
      less
      likely and has not accrued the contingent revenue.





*Results
      of discontinued operations*





The
      results of the IsleCORE subsidiary have been shown as a discontinued operation
      for the purposes of our financial statements.  Net income was $7,043
      for the nine months ended September 30, 2007, compared to a loss of $6,384
      for
      the comparative period.  The reason for the net income this period was
      that we had cut most funding and IsleCORE was operating with the least resources
      possible.





**Net
      loss**





We
      incurred net losses of $819,940 and $822,265 for the nine months ended September
      30, 2007 and 2006, respectively, representing a decrease in net loss of $2,325
      or 0%.  Because of the current state of affairs of the Company and the
      ongoing contract disputes, management is unsure as to the direction of gross
      profit margins going forward.







16


***Liquidity
      and Capital Resources***





A
      primary source of operating capital
      for the nine months ended September 30, 2007, was $455,000 from the sale of
      stock.  The sale of stock was related to two private offerings. The
      first offering opened on December 11, 2006, and closed on March 12,
      2007.  In the offering we offered up to 500,000 shares of our common
      stock at $1.00 per share to investors with a 50% additional warrant coverage
      offer, for maximum gross proceeds of $500,000 on the common stock and up to
      a
      maximum gross proceeds of $250,000 related to exercised warrants. The second
      offering opened on June 15, 2007, which was then updated and amended on
      September 26, 2007.  In this offering we offered up to 4,000,000
      shares of our common stock at $0.25 per share to investors with a 50% additional
      warrant coverage offer, for maximum gross proceeds of $1,000,000 on the common
      stock and up to a maximum gross proceeds of $500,000 related to exercised
      warrants.  Initially the offering was for up to 1,000,000 shares of
      our common stock at $1.00 per share to investors with a 50% additional warrant
      coverage offer, for maximum gross proceeds of $1,000,000 on the common stock
      and
      up to a maximum gross proceeds of $500,000 related to exercised warrants. We
      raised a total of $455,000 from the offerings, of which $315,000 was received
      in
      the first quarter 2007, and $140,000 was received in third quarter
      2007.  We issued a total of 455,000 common shares and 227,500 warrants
      in the offering.





As
      of September 30, 2007, cash totaled
      $43,341 as compared with $87,193 of cash at December 31, 2006, resulting in
      a
      decrease of $43,852 in cash and cash equivalents.  The decrease in
      cash and cash equivalents was attributed to funding the operational expenses
      and
      cost of goods sold with cash proceeds of the private common stock
      offering.  In the nine months ended September 30, 2007 we used
      $503,852 of cash in operations.  For the comparable period in the
      prior year we used $577,299 of cash in operations.





Working
      capital was $7,090 at September
      30, 2007, as compared with working capital of $15,831 at December 31,
      2006.  This decrease in working capital was a result of using existing
      funds for operations and related expenses through cash proceeds from previous
      capital provided by the private offering proceeds to support the business during
      its startup and growth phase. Moreover, as new developments continue with IMG,
      our working capital can be expected to be adversely impacted should IMG continue
      to neglect servicing their accrued debt and outstanding accounts receivable
      balances.


Proceeds from the private stock offerings have continued to fund operations
      through the third quarter of 2007 to support the growth of the
      business.  Management believes that with funds accumulated from the
      refreshed June 15, 2007 offering, together with revenues generated from
      operations and cash collected from outstanding receivables, we will not have
      sufficient cash to satisfy existing operating cash needs and working capital
      requirements during or through the end of the year in
      2007.  Management further believes that without immediate capital
      contributions, the company will not have sufficient resources to pay its
      bills.  As a result, management has initiated efforts to pursue
      strategic alternatives for the business as it believes that without a merger,
      combination or acquisition with another public or private company, it is likely
      that it will need to cease operations. We remain critically dependent on
      additional funding to satisfy our existing operating cash needs and working
      capital requirements.  Our monthly cash requirements have been
      approximately $65,000 - $85,000 (depending on the timing of payments from our
      marketing partners), in addition to outstanding payables which are currently
      in
      excess of $100,000 or more. As a direct result of the current cash position,
      the
      Company cannot effectively evaluate new business opportunities or expand
      headcount and operations to achieve a sustainable
      operation.  Management estimates that future monthly cash requirements
      are stabilized since headcount and cost of goods are largely a function of
      the
      existing business and card portfolio.  However in order to grow as a
      stand-alone enterprise, the Company would likely need to sustain approximate
      monthly cash requirements in excess of $90,000 per month without addition
      changes to the business model or operational structure.  Due to recent
      market conditions and the Company’s existing operational challenges, all recent
      individual and institutional efforts to raise additional new capital have been
      unsuccessful.  Management will continue to explore all options
      available for financing and will also continue to pursue strategic alternatives
      for the business.  However, there can be no assurances that either of
      these efforts will prove successful.  Should they not prove
      successful, management will explore any and all remaining alternatives for
      the
      Company, whatever they may be.




17





Concurrently,
      and while the timing is
      unknown to management, our key banking partners may in the future require
      security deposits for all cardholder funds or a portion
      thereof.  While the cardholder funds are not our property, revised
      bank policies may necessitate such a collateralization.  Should a bank
      or banks require such a security deposit, we may be forced to raise further
      capital as there is no available cash on hand, which would have a material
      impact on our immediate and short-term capital resources.  We have
      engaged the banks on this specific collateral requirement and at this time
      we
      have determined that until a program is launched with our new bank partner,
      New
      Millennium Bank, we will not require more than $15,000 in aggregate deposit
      amounts.




Additionally,
      we may elect to
      compensate employees with equity incentives where possible and continue to
      utilize equity instruments to compensate all associates in efforts to minimize
      cash outlays.  Management believes this strategy provides the ability
      to increase stockholder value as well as utilize cash resources more
      effectively.





During
      future quarters we may seek
      additional funding to finance future acquisitions and growth.  The
      amount and timing of such capital transactions is not yet known and will depend
      largely on our operating needs and the cost to acquire financial services and
      products companies.  Our ability to secure this additional funding
      given present market conditions is uncertain, as is the financial effect any
      such funding may have on our capital structure or operating
      results.




***Off-Balance
        Sheet Arrangements***
 
 During
        the quarter ended September 30,
        2007, we did not engage in any off-balance sheet arrangements.
 
 ***Stock-Based
        Compensation***
 
 In
        March 2004, the FASB issued
        Statement of Financial Accounting Standards (SFAS) No.123 (Revised),
        Shared-Based Payment.  This standard revises SFAS No. 123, APB Opinion
        No. 25 and related accounting interpretations and eliminates the use of the
        intrinsic value method for employee stock-based compensation.  SFAS
        No. 123R requires compensation costs related to share based payment transactions
        to be recognized in the financial statements over the period that an employee
        provides service in exchange for award.  Currently, the Company uses
        the revised fair value method of SFAS No. 123R to value share-based options
        granted to employees and board members.  This standard requires the
        expensing of all share-based compensation including options, using the fair
        value based method






18





.





***Subsequent
      Events***





The
      following material events occurred
      subsequent to the quarter ended September 30, 2007:




On November 5, 2007, management and the board actively began pursuing a business
        combination, merger or acquisition with or by another party.  While the
        timing of such a combination or transaction is difficult to determine, the
        targeted timeframe from a company standpoint is prior to year end.  In the
        interim, management and the board continue to evaluate ways to potentially
        bridge the financing and cash flow requirements needed between now and year
        end
        in order to consummate such a transaction.  Should a transaction be unable
        to be consummated within a short timeframe, the company will need to explore
        all
        options.


On
      November 1, 2007, we informed E-Count, a wholly owned subsidiary of Citibank
      N.A., that without any support from Bank First, the letter of
      intent to acquire a small general purpose reloadable card portfolio is no
      longer valid.  Instead we proposed to reissue cards directly in
      conjunction with our issuing bank and support the conversion of the
      portfolio.





On
      October 30, 2007 Trycera sent cardholder cancellation notices to all National
      Foundation for Debt Management cardholders.  This notification is a
      required step that will culminate in the cancellation and refund of any card
      balances immediately following the required notification period of 30
      days.





On
      October 15, 2007 Trycera sent cardholder cancellation notices to all Plan First
      Financial Solutions cardholders.  This notification is a required step
      that will culminate in the cancellation and refund of any card balances
      immediately following the required notification period of 30 days.





On
      October 9, 2007, Trycera met with the issuing bank and counsel to discuss Plan
      First Financial Solutions (PFFS) demands directed to the bank.  The
      Company has not been allowed to see the correspondence between the bank
      and PFFS.  However, the bank statedthat PFFS continued to
      assert that they are owed monies from the bank via Trycera.  While
      this request and discussion with the bank addressed specific bank concerns
      there
      are no plans to alter the cancellation of all PFFS services related to the
      PFFS
      program and subsequent card issuance.  As a direct result of the PFFS
      cancellation, all card stock, card collateral materials and marketing materials
      are scheduled to be destroyed.  This cancellation does not affect
      existing cardholders as they will continue to be serviced as valued
      cardholders.  It remains unknown whether an accord can be reached with
      IMG, but this has developed into a material adverse change to the underlying
      revenues and the resulting nonpayment has had an unfavorable impact to the
      third
      quarter and future quarters of working capital and capital resources as well
      as
      significantly reducing revenue over prior levels.






19





On
      October 8, 2007 Trycera entered into
      an agreement to sublease approximately 850 square feet of our Irvine
      headquarters for $2,250 per month.  The lease is a month to month
      agreement with a 30 day convenience termination clause.





On
      October 5, 2007 Trycera sold all of
      the assets of Tru Platinum, the catalog shopping card program, to US Capital
      Financial Services.  An initial payment was received for $12,500 with
      an additional consideration forthcoming that should be similar in size to the
      first payment already received.







***Forward-Looking
      Statements***





This
      report contains certain
      forward-looking statements and information that are based on assumptions made
      by
      management and on information currently available.  When used in this
      report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“plan,” and similar expressions, as they relate to our company or its
      management, are intended to identify forward-looking
      statements.  These statements reflect management’s current view of the
      Company concerning future events and are subject to certain risks, uncertainties
      and assumptions, including among many others the following:  changes
      in federal, state or municipal laws governing the distribution and performance
      of financial services; a general economic downturn; our startup phase of
      operations; reliance on third party processors and product suppliers; the
      inability to locate suitable acquisition targets; collection of receivables,
      ability to raise capital from the sale of the Company’s shares, and other risks
      and uncertainties.  Should any of these risks or uncertainties
      materialize, or should underlying assumptions prove incorrect, actual results
      may vary materially from those described in this report as anticipated,
      estimated or expected.





***ITEM
      3A(T).  CONTROLS AND
      PROCEDURES***





***Evaluation
      of disclosure and controls and procedure***





With
      the participation of management,
      Bryan W. Kenyon, our principal executive officer and principal financial
      officer, has evaluated the effectiveness of the design and operation of our
      disclosure controls and procedures (as defined in Rules 13a-15(e) under the
      Securities Exchange Act of 1934, as amended) as of the end of the period covered
      by this quarterly report.  Based on that evaluation he has concluded
      that our disclosure controls and procedures are (1) effective to ensure
      that material information required to be disclosed by us in reports filed or
      submitted by us under the Exchange Act is recorded, processed, summarized,
      and
      reported within the time periods specified in the  rules and forms of
      the Securities and Exchange Commission, and (2) effective to ensure that
      information required to be disclosed by us in such reports filed or submitted
      by
      the Company under the Exchange Act is accumulated and communicated to management
      of the Company, including the principal executive officer, to allow timely
      decisions regarding required disclosure.





***Changes
      in internal controls***





There
      were no changes in our internal control over financial reporting (as defined
      in
      Rule 13a-15(f) under the Exchange Act) that occurred during our most recent
      quarter ended September 30, 2007, that has materially affected, or is reasonably
      likely to materially affect, our internal control over financial
      reporting.  It should be noted that any system of controls, however
      well designed and operated, can provide only reasonable and not absolute
      assurance that the objectives of the system will be met.  In addition,
      the design of any control system is based in part upon certain assumptions
      about
      the likelihood of future events.  Because of these and other inherent
      limitations of control systems, there is only reasonable assurance that our
      controls will succeed in achieving their stated goals under all potential future
      conditions.





Under
      current SEC guidelines, the
      requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Act”) , as
      provided in Rule 308T of Regulation S-B, will be effective for the Company’s
      year ending December 31, 2007.  In order to comply with the Act, the
      Company will undertake a comprehensive effort, which includes documentation
      and
      testing of the design and operation of its internal control using the guidelines
      established by *Internal Control - Integrated Framework* issued by the
      Committee of Sponsoring Organizations of the Treadway
      Commission.  During the course of these activities, the Company may
      identify certain internal control matters that management believes should be
      improved.  These improvements, if necessary, will likely include
      further formalization of existing policies and procedures, improved segregation
      of duties, additional information technology systems controls and additional
      monitoring controls.  Because management has not presently determined
      whether these matters will result in material weaknesses being identified in
      the
      Company’s internal control as defined by the Public Company Accounting Oversight
      Board (United States), no assurances can be given regarding the outcome of
      these
      efforts at the present time.






20





**PART
      II**





***ITEM
      1.  LEGAL PROCEDINGS***





In
      our annual report on Form 10-KSB for
      the year ended December 31, 2006, we disclosed the receipt of a letter from
      a
      law firm representing Meridian Enterprises Corporation (“Meridian”), the owner
      of U.S. Patent No. 5,025,372 (the “372” Patent”).  The letter claimed
      that we may be infringing on the 372 Patent which applies to card-based
      incentive programs.  The letter also demanded that we cease and desist
      from infringement of the 372 Patent and account for past damages to
      Meridian.  On June 13, 2007, our intellectual property counsel
      responded to their claims by requesting patent claim charts and on November
      12,
      2007 we provided a facsimile response indicating that we do not offer rewards
      programs with our prepaid debit card offerings.  Management and
      counsel have not reached a conclusion of the merits of this claim and continue
      to evaluate the applicability of the claim to our business.





**ITEM
      2.  UNREGISTERED SALES OF EQUITY
      SECURITIES**





In
      our offering of common stock at
      $1.00 which commenced on December 11, 2006 and was completed on March 8, 2007,
      we reported in our 2006 annual report on Form 10-KSB filed with the Commission
      on April 2, 2007, that we received $25,000 from Lynn Williams Preston from
      the
      sale to her of 50,000 shares.  The correct amount of the proceeds
      received from Ms. Preston for the sale of the 50,000 shares was
      $50,000.





On
      June
      15, 2007, we initiated an offering of up to 1,000,000 shares of common stock
      at
      $1.00 per share for gross proceeds of $1,000,000. The offering was amended
      on
      September 26, 2007, and the offering price was reduced to $0.25 per share and
      the number of shares being offered was increased to 4,000,000 shares. The
      offering also provides for each investor to receive stock purchase warrants
      at a
      rate of 50% of the shares purchased. The warrants are exercisable through
      December 31, 2014, at $0.3125 with certain incentive discounts to the exercise
      price available through December 31, 2011. These shares were sold without
      registration under the Securities Act by reason of the exemption from
      registration afforded by the provisions of Section 4(2) thereof, and Rule 506
      promulgated thereunder, as a transaction by an issuer not involving any public
      offering. Through November 12, 2007, the following securities were
      sold:




Name
              
              Number
                of
                  Shares
              
              
              Number
                  of Warrants
              
              
              AmountKnitowski
                  Family Trust
              
              
              860,000
              
              
              
              430,000
              
              
              $
              215,000Curo
                  Capital
              
              
              140,000
              
              
              
              70,000
              
              
              $
              35,000Matt
                  Portoni
              
              
              100,000
              
              
              
              50,0000
              
              
              $
              25,000TOTALS
              
              
              1,100,0000
              
              
              
              550,000
              
              
              $
              275,000
  21
  All
      of
      the investors represented that they were accredited investors as defined in
      Rule
      501 of Regulation D at the time of the purchase. The investors delivered
      appropriate investment representations with respect to the purchase of the
      shares and consented to the imposition of a restrictive legend upon the
      certificates evidencing such shares and warrants. The investors represented
      that
      they had not purchased the shares as a result of or subsequent to any
      advertisement, article, notice, or other communication published in any
      newspaper, magazine, or similar media or broadcast on television or radio,
      or
      presented at any seminar or meeting. The investors also represented that they
      had received a term sheet describing the offering and had received copies of,
      or
      had access to, all of the reports made by us with the Securities and Exchange
      Commission. The investors further represented that he had been afforded the
      opportunity to ask questions of our management and to receive answers concerning
      the terms and conditions of the transaction. No underwriting discounts or
      commissions were paid in connection with the sale of these shares.




***ITEM
      6.  EXHIBITS***





The
      following exhibits are included as
      part of this report:




31.1
            Rule
                13a-14(a) Certification by Principal Executive
                Officer




32.1
            Section
                1350 Certification of Principal Executive Officer and Principal Financial
                Officer











22


**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      registrant has duly caused this report to be signed on its behalf by the
      undersigned hereunto duly authorized.




**Trycera
              Financial,
              Inc.**Date:
                November
                19, 2007
            By:
            /s/ Bryan
              KenyonBryan
              KenyonChief Financial
                Officer and Chief Operating Officer
              (Principal Executive
                Officer and Principal Financial Officer)