UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q




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




For
the Quarterly Period Ended March 31, 2008




OR




 ̈
            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 its charter)







Nevada
            33-0910363(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)2560
      E. Chapman Avenue, Suite 404, Orange, CA
            92689(Address
      of principal executive offices)
            (Zip
      Code)




(949) 273-4300


(Registrant’s
telephone number, including area code)




18023
East Sky Park Circle, Suite G, Irvine, CA  92614


(Former
name, former address and former fiscal year, if changed since last
report)




Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 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.    Yes  x    No  




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.






Large
accelerated
filer                                                                                                  Accelerated
filer  




Non-accelerated
filer    (Do not check if a smaller reporting
company)                Smaller
reporting company  x 




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





As of May
5, 2008, the registrant had outstanding 9,299,302 shares of Common Stock, par
value $0.001 per share.










TRYCERA
FINANCIAL, INC.





Index





PARTI FINANCIAL INFORMATION





Item1.                    Financial
Statements (Unaudited)


ConsolidatedBalance
Sheets


ConsolidatedStatements of Operations


ConsolidatedStatements of Cash Flows


Notesto
Consolidated Financial Statements





Item2.                    Management’s
Discussion and Analysis of Financial Condition and Results
ofOperations





Item3.                    Quantitative
and Qualitative Discussion About Market Risk





Item4.                    Controls
and Procedures








PARTII OTHER INFORMATION





Item1.                    Legal
Proceedings





Item5.                    Other
Information





Item6.                    Exhibits





SIGNATURE






2


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; 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.




Unless
otherwise provided in this report, references to “we”, “us”, “our” and “Company”
refer to Trycera Financial, Inc.




3


PARTI


FINANCIAL
INFORMATION





Item1.                      Financial
Statements


Trycera
      Financial, Inc.BalanceSheetsMarch
              
              
              December31,
      2008
              
              
              
              31,
      2007(Unaudited)AssetsCurrent AssetsCash
              
              $
              36,007
              
              
              $
              72,625Accounts
      Receivable, net
              
              
              16,302
              
              
              
              30,931Prepaid
      Expenses and other current assets
              
              
              23,602
              
              
              
              29,853Client
      ACH Reserves
              
              
              5,000
              
              
              
              5,000Total
      Current Assets
              
              
              80,911
              
              
              
              138,409Property
      & Equipment, net
              
              
              -
              
              
              
              9,751Other AssetsDefinite
      Life Intangible Assets, net
              
              
              814
              
              
              
              2,159Total
      Other Assets
              
              
              814
              
              
              
              2,159Total
      Assets
              
              $
              81,725
              
              
              $
              150,319Liabilities
      & Stockholders’ Equity (Deficit)Current LiabilitiesAccounts
      Payable
              
              $
              184,538
              
              
              $
              126,629Portfolio
      reserves
              
              
              32,545
              
              
              
              34,202Accrued
      Expenses
              
              
              131,243
              
              
              
              114,878Deferred
      Revenue, net
              
              
              -
              
              
              
              -Total
      Current Liabilities
              
              
              348,326
              
              
              
              275,709Total
      Liabilities
              
              
              348,326
              
              
              
              275,709Commitments
              
              
              -
              
              
              
              -Stockholders’ Equity
    (Deficit)Preferred
      Stock, 20,000,000 Shares Authorized,$.001
      Par Value; None Issued and Outstanding
              
              
              -
              
              
              
              -Common
      Stock, 100,000,000 Shares Authorized at$.001
      Par Value; 9,274,302 and 9,250,302 SharesIssued
      and Outstanding, Respectively
              
              
              9,274
              
              
              
              9,250Additional
      Paid In Capital
              
              
              5,230,211
              
              
              
              5,184,500Prepaid
      Stock Compensation
              
              
              (82,064
              )
              
              
              (88,376
              )Accumulated
      Deficit
              
              
              (5,424,022
              )
              
              
              (5,230,764
              )Total
      Stockholders’ Equity (Deficit)
              
              
              (266,601
              )
              
              
              (125,390
              )Total
      Liabilities & Stockholders’ Equity (Deficit)
              
              $
              81,725
              
              
              $
              150,319




The
accompanying notes are an integral part of these financial
statements.
 4




Trycera
      Financial, Inc.ConsolidatedStatements of OperationsFor
      the Three Months EndedMarch
              
              
              March31,
      2008
              
              
              
              31,
      2007(Unaudited)
              
              
              (Unaudited)RevenuesStored
      Value
              
              $
              72,199
              
              
              $
              1,246,64372,199
              
              
              
              1,246,643Cost of Sales
              
              
              72,247
              
              
              
              1,104,593Gross
      Profit (Loss)
              
              
              (48
              )
              
              
              142,050ExpensesDepreciation
      and Amortization
              
              
              1,345
              
              
              
              3,338Salaries
      and Wages
              
              
              29,435
              
              
              
              109,664Stock
      Based Compensation
              
              
              42,255
              
              
              
              19,926Professional
      Fees
              
              
              50,857
              
              
              
              75,300Bad
      debt expense
              
              
              6,321
              
              
              
              -General
      & Administrative
              
              
              59,872
              
              
              
              89,034Total
      Expenses
              
              
              190,085
              
              
              
              297,262Loss
      from Operations
              
              
              (190,133
              )
              
              
              (155,212
              )Other Income (Expenses)Interest,
      income
              
              
              156
              
              
              
              150Interest,
      expense
              
              
              (87
              )
              
              
              (534
              )Financing
      costs
              
              
              -
              
              
              
              -Other
      income (expense)
              
              
              (3,194
              )
              
              
              -Total
      other Income (expense)
              
              
              (3,125
              )
              
              
              (384
              )Loss
      from Continuing Operations before tax
              
              
              (193,258
              )
              
              
              (155,596
              )Income
      tax
              
              
              -
              
              
              
              -Loss
      from Continuing Operations
              
              
              (193,258
              )
              
              
              (155,596
              )Discontinued OperationsLoss
      on disposal of Discontinued Operations
              
              
              -
              
              
              
              (27,852
              )Gain
      (Loss) from Discontinued Operations
              
              
              -
              
              
              
              7,043Total
      gain (loss) from Discountinued Operations
              
              
              -
              
              
              
              (20,809
              )Net
      Loss
              
              $
              (193,258
              )
              
              $
              (176,405
              )Basic
      earnings per share:Loss
      per share Continuing operations
              
              
              (0.02
              )
              
              
              (0.02
              )Loss
      per share Discontinued operations
              
              
              -
              
              
              
              (0.00
              )Net
      Loss per share
              
              $
              (0.02
              )
              
              $
              (0.02
              )Weighted
      average shares
              
              
              9,262,302
              
              
              
              7,721,303







The
accompanying notes are an integral part of these financial
statements.
 5




Trycera
      Financial, Inc.ConsolidatedStatements of Cash FlowsFor
      the Three Months EndedMarch
              
              
              March31,
      2008
              
              
              
              31,
      2007(Unaudited)
              
              
              (Unaudited)Cash Flows from Operating
      ActivitiesNet
      Loss
              
              $
              (193,258
              )
              
              $
              (176,405
              )Adjustments
      to Reconcile Net Loss to Net CashUsed
      by Operations;Depreciation
      and amortization
              
              
              7,657
              
              
              
              3,338Depreciation
      and amortization on discontinued operation
              
              
              -
              
              
              
              581Bad
      debt expense
              
              
              6,321
              
              
              
              -Loss
      on sale of assets
              
              
              9,751
              
              
              
              -Loss
      on sale of discontinued operations
              
              
              -
              
              
              
              27,852Stock
      issued for services
              
              
              3,480
              
              
              
              45,250Stock
      options and warrants
              
              
              42,255
              
              
              
              19,926(Increase)
      decrease in accounts receivable
              
              
              8,308
              
              
              
              (23,526
              )(Increase)
      decrease in prepaid and other current assets
              
              
              6,251
              
              
              
              (3,123
              )Increase
      (decrease) in accounts payable
              
              
              57,909
              
              
              
              (18,089
              )Increase
      (decrease) in portfolio reserves
              
              
              (1,657
              )
              
              
              7,274Increase
      (decrease) in accrued expenses
              
              
              16,365
              
              
              
              81,016Increase
      (decrease) in unearned revenue
              
              
              -
              
              
              
              7,500Net
      Cash Used by Operating Activities
              
              
              (36,618
              )
              
              
              (28,406
              )Cash Flows from Investing
      ActivitiesProceeds
      from disposal of discontinued operations
              
              
              -
              
              
              
              5,000Net
      Cash Provided (Used) by Investing Activities
              
              
              -
              
              
              
              5,000Cash Flows from Financing
      ActivitiesProceeds
      from issuance of common stock
              
              
              -
              
              
              
              315,000Payments
      made on line of credit
              
              
              -
              
              
              
              27,508Net
      Cash Provided by Financing Activities
              
              
              -
              
              
              
              342,508Net
      Increase (Decrease) in Cash and Cash Equivalents
              
              
              (36,618
              )
              
              
              319,102Cash
      and Cash Equivalents at Beginning of Period
              
              
              72,625
              
              
              
              87,193Cash
      and Cash Equivalents at End of Period
              
              $
              36,007
              
              
              $
              406,295Cash Paid for:Interest
              
              $
              87
              
              
              $
              534Income
      Taxes
              
              $
              -
              
              
              $
              -Non-cash financing
    activities:Common
      stock issued for services and deferred compensation
              
              $
              3,480
              
              
              $
              45,250






The
accompanying notes are an integral part of these financial
statements.
 6
 Trycera
Financial, Inc.
 Notes
to Consolidated Financial Statements
 March
31, 2008




NOTE1 –
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, 2007.  The results of
      operations for the three months ended March 31, 2008, are not
      necessarily indicative of the results that may be expected for the fiscal
      year ending December 31, 2008.





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 endedMarch
      31,
              
              
              March
      31,2008
              
              
              2007(Unaudited)
              
              
              (Unaudited)Basic
      Earnings per share:Income
      (Loss) (numerator)
              
              $
              (193,258
              )
              
              
              (176,405
              )Shares
      (denominator)
              
              
              9,262,302
              
              
              
              7,721,303Per
      Share Amount
              
              $
              (0.02
              )
              
              
              (0.02
              )







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 March 31, 2008:





7
 Trycera
Financial, Inc.
 Notes
to Consolidated Financial Statements
 March
31, 2008




2004
      Stock PlanWeightedAverageAmount
      of
              
              
              ExerciseShares
              
              
              PriceOutstanding
      at January 1, 2008
              
              
              2,379,500
              
              
              $
              0.73Options
      Granted
              
              
              -
              
              
              
              -Options
      Exercised
              
              
              -
              
              
              
              -Options
      Canceled
              
              
              -
              
              
              
              -Options
      Outstanding at March 31, 2008
              
              
              2,379,500
              
              
              $
              0.73Options
      Exercisable at March 31, 2008
              
              
              1,868,874
              
              
              $
              0.66





Options
granted under the plan vest according to terms imposed by the Plan
Administrator.  The following schedule summarizes the activity during
the period ending March 31, 2007:




2004
      Stock PlanWeightedAverageAmount
      of
              
              
              ExerciseShares
              
              
              PriceOutstanding
      at January 1, 2007
              
              
              2,874,750
              
              
              $
              0.63Options
      Granted
              
              
              150,000
              
              
              $
              1.01Options
      Exercised
              
              
              -
              
              
              
              -Options
      Canceled
              
              
              -
              
              
              
              -Options
      Outstanding at March 31, 2007
              
              
              3,024,750
              
              
              $
              0.65Options
      Exercisable at March 31, 2007
              
              
              2,715,683
              
              
              $
              0.60





The
Company, in accordance with Statement of Financial Accounting Standards No.
123R, “Accounting for
Stock-Based Compensation,” $42,255 and $19,926, respectively was
recognized for the three months ended March 31, 2008 and 2007,
respectively.  The fair value of the option grant was established at
the date of grant using the Black-Scholes option pricing model with the
following assumptions:




March
      31, 2008Five
      Year Risk Free Interest Rate
              
              
              4.56%
      - 5.1
              %Dividend
      Yield
              
              
              0
              %Volatility
              
              
              61%
      - 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.





Employee
stock options outstanding and exercisable under this plan as of March 31, 2008
are:







8
 Trycera
Financial, Inc.
 Notes
to Consolidated Financial Statements
 March
31, 2008






Weighted
              
              
              Average
              
              
              WeightedNumber
      of
              
              
              Average
              
              
              Remaining
              
              
              Number
              
              
              AverageRange
      of
              
              
              Options
              
              
              Exercise
              
              
              Contractual
              
              
              of
      Options
              
              
              ExerciseExercise
      Price
              
              
              Granted
              
              
              Price
              
              
              Life
      (Years)
              
              
              Vested
              
              
              Price$
              .001-$0.99
              
              
              
              1,481,250
              
              
              $
              0.55
              
              
              
              2.0
              
              
              
              1,434,372
              
              
              $
              0.55$
              1.00
      - $2.00
              
              
              
              898,250
              
              
              $
              1.03
              
              
              
              3.5
              
              
              
              434,502
              
              
              $
              1.05


Employee
stock options outstanding and exercisable under this plan as of December 31,
2007 are:




Weighted
              
              
              Average
              
              
              WeightedNumber
      of
              
              
              Average
              
              
              Remaining
              
              
              Number
              
              
              AverageRange
      of
              
              
              Options
              
              
              Exercise
              
              
              Contractual
              
              
              of
      Options
              
              
              ExerciseExercise
      Price
              
              
              Granted
              
              
              Price
              
              
              Life
      (Years)
              
              
              Vested
              
              
              Price$
              .001-$0.99
              
              
              
              1,481,250
              
              
              $
              0.55
              
              
              
              2.5
              
              
              
              1,421,247
              
              
              $
              0.55$
              1.00
      - $2.00
              
              
              
              898,250
              
              
              $
              1.03
              
              
              
              3.5
              
              
              
              393,793
              
              
              $
              1.06




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 endedMarch
      31,
              
              
              March
      31,2008
              
              
              2007(Unaudited)
              
              
              (Unaudited)Basic
      Earnings per share:Revenue
              
              $
              -
              
              
              $
              65,293Income
      (loss) from discontinued operations
              
              $
              -
              
              
              $
              7,043


NOTE 4 – RESTATEMENT AND
RECLASSIFICATION





We have
reclassified our Statement of Operations for the three months ended March 31,
2007, 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 – GOING
CONCERN





The
Company has had recurring operating losses since inception and is dependent upon
financing to continue operations.  These factors indicate that the Company
may be unable to continue in existence should immediate and short term financing
options not be available.  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 cannot continue its existence.  These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.  Currently the Company has nearly zero cash on hand and
few material assets.  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 find additional capital
funding and/or a profitable business venture to acquire or merge.






9


Item2.                                Management’s
Discussion and Analysis of Financial Condition and Results
ofOperations








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 Orange County,
California, we are currently in the business of developing and marketing a suite
of stored value and financial products and services.  Stored value
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
stored value products and services for persons without banking relationships and
persons who are underserved by existing banking facilities.





Recent
Developments





For the first quarter ending March 31,
2008, all primary operational efforts have been prioritized and focused on
maintaining existing operations and seeking a strategic alternative for the
Company in order to continue operations beyond May 2008.  The
strategic alternatives have included evaluating companies with which to sell
assets or sell stock, to enter into reverse merges with other profitable
entities or combinations thereof.  The Company has evaluated several
opportunities but timing, due diligence and other factors caused certain
opportunities to be unattainable.





The Company is currently insolvent
unless there is a short-term capital infusion, a material change to the recent
trends in revenue, or consummation of an executed LOI tied to a strategic
alternative. We do not currently have sufficient cash on hand to satisfy
existing operating cash needs or working capital requirements on a sustained
basis beyond the filing deadline of this quarterly report.





The Board of Directors has instructed
the company operators to wind down all operational activities tied to prepaid
debit card programs and products, sell off any specific assets tied to these
activities and pursue a reverse merger with another enterprise as the next step
from our original list of strategic alternatives.  The genesis of the
wind down relates to the non-performance of the letter of intent entered into by
and between the Company and U.S. Social Scene, LLC.  As a result of
the failure to enter into a definitive agreement with this entity, the Board had
no suitable option but to shut down the operations and seek other strategic
alternatives as a means to preserve the entity and perform on payments to key
vendors, partners and investors.








Full
Time Equivalents





At May 5, 2008, we had two full-time
equivalents, namely our COO, CFO and Principal Executive Officer, Bryan Kenyon,
and one other team member, Alex McClure whose role is Director of Product
Development.





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 March 31, 2008.





Results
of Operations





In the first quarter of 2008 we saw
revenue drop 94% over the prior year comparable period.  The decline
in revenue was attributed to the elimination of the debt management card
programs deployed in the first quarter of 2007 and during the second quarter of
2007.  As a result of the elimination no debt management revenue was
achieved for the comparable first quarter in 2008.





10


Revenue





Revenue
from continuing operations was $72,199 and $1,246,643 for the quarters ended
March 31, 2008 and 2007, respectively, representing a decrease of $1,174,444 or
94%. As previously discussed, we continued to focus on card and portfolio
aggregation while managing through material program suspensions that unfavorably
impacted results beginning in the later half of last year and continuing into
the current quarter. Overall revenues were affected by the suspension of
services for the flagship IMG program, the Plan First Financial Solutions (PFFS)
product .





Cost of Sales and Gross
Profit





Cost of
sales was $72,247 and $1,104,593 for the quarters ended March 31, 2008 and 2007,
respectively, representing a decrease of $1,032,346 or 93%.  The
decrease was attributed to the absence of costs due to the suspension and
termination of some of our major programs.





The
resulting gross profit (loss) was ($48) and $142,050 for the quarters ended
March 31, 2008 and 2007, respectively.  Management expects gross
profit margin to continue to be impacted by the reduction in card programs. The
Company is still incurring fixed processing costs associated with our banking
relationships and now has a lower volume of cards to absorb such
overhead.





Operating
Expenses





Operating
expenses were $190,085 and $297,262 for the quarters ended March 31, 2008 and
2007, respectively, representing a decrease of $107,177 or 36%.  The
major components of our first quarter 2008 operating expense were salaries and
wages (15%), general and administrative (31%), professional fees (27%), and
stock based compensation (22%).





Salaries and wages expense were $29,435
and $109,664 for the quarters ended March 31, 2008 and 2007, respectively,
representing a decrease of $80,229 or 73%.  The decrease resulted from
the departure of the CEO during the middle of 2007, coupled with the fact that
the Company ceased payroll and put all employees on a contract basis in February
2008.





General
and administrative expenses were $59,872 and $89,034 for the quarters ended
March 31, 2008 and 2007, respectively, representing a decrease of $29,163 or
33%.  The decrease resulted largely from decreased technology costs in
the form of $22,000 in stock grants to retain key personnel in the comparative
quarter. Other general and administrative expenses also decreased in the current
quarter due to the decreased sales and marketing activity.





Professional
fees and expenses were $50,857 and $75,300 for the quarters ended March 31,
2008 and 2007, respectively, representing a decrease of $24,443 or
32%.  The decrease results mainly from the fair value of compensation
expense for accounting resources associated with a third party service provider
who is paid partly in the form of stock grants.





Stock
based compensation was $42,255 and $19,926 for the quarters ended March 31, 2008
and 2007, respectively, representing an increase of $22,329 or
112%.  The net increase is a result of a higher volume of options
vesting in 2008 at a higher value (as calculated using Black-Scholes) as
compared to 2007.





Discontinued
Operations





Results
of discontinued operations





Having
disposed of IsleCORE in the first quarter of 2007, the results of the subsidiary
have been shown as a discontinued operation for the purposes of our financial
statements.  Net income was $7,043 for the three months ended March
31, 2007.








11


Net loss





We
incurred net losses of $193,258 and $176,405 for the quarters ended March 31,
2008 and 2007, respectively, representing an increase in net loss of $16,853 or
10%.  As we continue to seek strategic alternatives and a reverse
merger opportunity, we do not expect any material amount of gross profit margins
and the losses are expected to continue.





Liquidity
and Capital Resources





As of March 31, 2008, cash totaled
$36,007 as compared with $72,625 of cash at December 31, 2007, resulting in a
decrease of $36,618 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 existing cash proceeds and accounts
payable.  In the three months ended March 31, 2008 we used $36,618 of
cash in operations.  For the comparable period in the prior year we
used $28,406 of cash in operations.





Working capital was ($267,415) at March
31, 2008, as compared with working capital of ($137,300) at December 31,
2007.  This decrease in working capital was a result of using existing
funds and accounts payable to fund operations and related expenses.





Management believes that the current
lack of possessing a sustainable card portfolio, combined with the prolonged
undercapitalization of the Company, has resulted in the inability to provide
service and performance on any card programs moving forward.





All primary operational efforts are
currently prioritized on winding down the prepaid card operations and seeking a
strategic alternative for the public Company moving forward beyond May
2008.  The Company is currently insolvent unless there is a short-term
capital infusion, a material change to the recent trends in revenue, or an
executed LOI tied to a strategic alternative. We do not currently have
sufficient cash on hand to satisfy existing operating cash needs or working
capital requirements on a sustained basis beyond the filing deadline of this
quarterly report.  As previously disclosed in the Company’s annual
report on Form 10-KSB for the year ending December 31, 2007 (the “2007 Annual
Report”) and quarterly report on Form 10-QSB for the third quarter of the
Company’s 2007 fiscal year (the “Third Quarter 10-QSB 2007”), ongoing program
and approval delays, non-payment for services, operational challenges and an
inability to raise capital have all contributed to the current uncertainty and
viability of the business going forward. Aside from monies received from senior
secured notes in April 2008, all other recent individual and institutional
efforts to raise additional new capital have been unsuccessful and there can be
no assurances that this will change in the short term due to the challenging
market conditions for both private and public financing and the current state of
the Company’s business and operations.





At this time, the Company is in the
process of winding down its existing operations while it pursues strategic
alternatives.  The Company’s Board and management are actively
exploring strategic alternatives that would preserve its status as a public
vehicle and are also considering options associated with the pursuit of a
reverse acquisition should no other strategic alternatives present themselves
that would preserve the Company’s current business operations.  Should
a reverse acquisition ultimately be pursued or executed, it would likely result
in a change to the Company’s underlying business model, a change in control, a
change in management, a sale of assets, a merger with another entity or some
other combination that may result in the disposal of all or substantially all of
the Company’s prior business to one or more third parties.  At this
time, there are two known reverse acquisition opportunities that are being
considered by the Board and management. There can be no assurance that
management will be successful in executing any letters of intent or binding or
definitive agreements, nor can there be any assurance that it will close the
transaction formally.  Should the pursuit of strategic alternatives
fail to deliver a viable migration strategy to the Company or its stakeholders,
the Board and management may seek to initiate an orderly liquidation of the
Company, some combination of these transactions or other legal options that may
be available.  In addition, should alternatives fail to deliver a
viable strategy, the Board and management will attempt to contact vendors to
reduce or eliminate any and all contracted service costs or otherwise negotiate
or settle outstanding debts or obligations using non-cash instruments such as
stock.





12


On April
4, 2008, the Company received $67,500 of financing in the form of senior bridge
notes, including the $37,500 related to the performance on the Letter of Intent
executed by and between U.S. Social Scene (USSS) and Trycera as disclosed under
Form 8-K on April 4, 2008.  Despite the LOI being terminated by the
Board of Directors on or about May 2, 2008, the Board of Directors continues to
work closely with Company investors to deliver a pro rata bridge financing by
prior investors.  The capital proceeds will be used for sustaining the
ongoing operations and to allow the Company to continue efforts to finalize a
strategic alternative now that the USSS deal has been terminated.





As stated
previously, the Company currently does not have any agreement with a potential
acquiror or merger partner in place and there can be no assurance that such an
agreement can be reached on terms acceptable to the Board of Directors, or at
all.  Furthermore, the Company does not have sufficient cash to meet
its working capital needs while it pursues its strategic alternatives beyond
early May 2008, unless additional bridge financing is provided, internally or
externally.  Currently there are discussions ongoing relative to this
bridge financing, but as of this date there are no specific agreements in place
and the monies raised include the $67,500 plus an additional $10,000 from two
additional shareholders.  While the Board is reaching out to investors
for pro-rata commitments no additional funding has resulted thus
far.  Should any efforts by the Board and management not prove
successful, the Board and management will explore any and all remaining
alternatives for the Company, whatever they may be.





Off-Balance
Sheet Arrangements





During the quarter ended March 31,
2008, 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.





Subsequent
Events





The following material events occurred
subsequent to the quarter ended March 31, 2008:





The Board of Directors of Trycera
Financial, Inc. has terminated the previously executed Letter of Intent (LOI) by
and between Trycera Financial, Inc. and U.S. Social Scene, a Nevada
corporation.  As a result of terminating the LOI, the Board of
Directors has instructed the company operators to wind down all operational
activities tied to prepaid debit card programs and products, sell off any
specific assets tied to these activities and pursue a reverse merger with
another enterprise as the next step from our original list of strategic
alternatives.  Both items were filed with the Securities and Exchange
Commission under Form 8-K on May 12, 2008.





Item3.                                Quantitative
and Qualitative Disclosures About Market Risk




As a smaller reporting company we have
elected not to provide the information required by this item.




13


Item4.                                Controls
and Procedures





Disclosure
Controls and Procedures





As of the
end of the period covered by this report, we conducted an evaluation, under the
supervision and with the participation of the principal executive officer
(“COO”) and principal financial officer (“CFO”), of the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”).
Based on this evaluation, the COO and CFO concluded that, as of the end of the
record period covered by this report, our disclosure controls and procedures are
effective to provide reasonable assurance that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.





Change
In Internal Controls Over Financial Reporting





There was no change in our internal
controls over financial reporting during our most recently completed fiscal
quarter that has materially, or is reasonably likely to materially affect, our
internal control over financial reporting.








PARTII


OTHER
INFORMATION





Item1.                                Legal
Proceedings





In April 2008 we received service of
process for a complaint filed by Airport Industrial Complex, our former
landlord. The complaint has been filed in the Orange Superior Court (Case No.
30-2008 00104277).  Management has received and reviewed a copy of the
complaint.  On April 30, 2008 the Company received a two week
extension to file an answer to the complaint.  As such, Management
intends to assess the company’s alternatives in filing an answer, sub-leasing,
settling or defending against the complaint.





On April 24, 2008 we received
correspondence from Hill Ward Henderson, a law firm representing interests on
behalf of a card marketer program, the Plan First Financial Prepaid MasterCard
Card.  The Plan First Prepaid MasterCard Card was the flagship program
under the IMG card marketer umbrella.  The correspondence contains
assertions related to monies owed to both cardholders and Plan First Financial
Solutions, both of which the Company refutes.





On May 1, 2008 we received a service of
process demand for payment letter filed by American Alarm Systems, our former
security system provider.  Management intends to negotiate with
American Alarm Systems to relieve the payment burden on the
Company.




Item5.                                Other
Information





On
February 6, 2008 Execustaff, the Company’s co-employer terminated all human
resource and benefit administration effective February 2008 due to concerns
about our ability to perform on payments for future payrolls, taxes and
services.  As a direct result, the Company changed payment methods and
directly pays the full time equivalents on a contract basis.  Additionally
and since February, 2008 the Company has not directly provided health, dental or
vision benefits but has paid a limited portion of those benefits as additional
cash compensation.





14


On April 3, 2008, the Company began
entering into 10% Senior Secured Promissory Notes for an amount totaling
$77,500.  The proceeds of the secured notes were to assist in bridging
the finances of the Company pursuant to the letter of intent executed on April
1, 2008 by and between the Company and US Social Scene, LLC.





On May 6,
2008, the Company mutually terminated the agreement by and between the Company
and Payroll Capital, LLC.  The Company agreed to waive transition fees due
and agreed to release and assign card plastics/inventor/ and other Payroll
Capital, LLC program materials back to Payroll Capital, LLC.





On May 12, 2008, the Company filed on
Form 8-K the formal termination notice to the USSS LOI and the subsequent
winding down of the business operations.





Item6.    Exhibits




Exhibit No.
            
            Description31.1*
            
            Certification
      pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the
      Securities Exchange Act of 1934 of the Principal Executive
      Officer.31.2*
            
            Certification
      pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the
      Securities Exchange Act of 1934 of the Chief Financial
      Officer.32.1*
            
            Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal
      Executive Officer and Principal Financial
  Officer.







* Filed
herewith








15


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:
      May 15, 2008
              By:
              /s/ Bryan
      KenyonBryan
      Kenyon, President(Principal
      Executive Officer)Date:
      May 15, 2008
              By:
              /s/
      Bryan KenyonBryan
      Kenyon, Chief Financial Officer(Principal
      Financial Officer)










16