UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549 ———————————  FORM 10-QSB  ýQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: September 30, 2007  oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________  Commission file number 000-51522   Vincera, Inc. (Exact name of small business issuer as specified in its charter)  Delaware74-2912383(State or other jurisdiction of
incorporation or organization)(I.R.S. Employer
Identification No.)611 South Congress Avenue, Suite 350
Austin, TX 78704
(Address of principal executive offices)

www.vincera.com  512-443-8749 (Issuers telephone number)
  Check whether the issuer: (1) 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 time period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days.  YES ý NO o  Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act):  YES o NO ý   State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date:  As of November 14, 2007, the registrant had 52,568,811 shares of common stock, par value $0.001, outstanding.    Transitional Small Business Issuer Disclosure Format:  YES o NO ý       Index PART I  FINANCIAL INFORMATION 2 ITEM 1. FINANCIAL STATEMENTS 2 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS 16 ITEM 3. CONTROLS AND PROCEDURES 23 PART II  OTHER INFORMATION 23 ITEM 1. LEGAL PROCEEDINGS 23 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 23 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 23 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 24 ITEM 5. OTHER INFORMATION 24 ITEM 6. EXHIBITS 24                                      INTRODUCTORY NOTE  This Report on Form 10-QSB for Vincera, Inc. (the Company) may contain forward-looking statements.  You can identify these statements by forward-looking words such as may, will, expect, intend, anticipate, believe, estimate, and continue or similar words. Forward-looking statements include information concerning possible or assumed future business success or financial results. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information.  We believe that it is important to communicate future expectations to investors.  However, there may be events in the future that we are not able to accurately predict or control.  Accordingly, we do not undertake any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.  The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties set forth under Risk Factors in this report and in our Form 10-KSB and any other periodic reports filed with the SEC.  Accordingly, to the extent that this Quarterly Report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of the Company, please be advised that the Companys actual financial condition, operating results and business performance may differ materially from that projected or estimated by the Company in forward-looking statements.       PART I  FINANCIAL INFORMATION  Item 1. Financial Statements VINCERA, INC.Balance SheetsAs of September 30, 2007 and December 31, 200620072006Assets(Unaudited)Cash and cash equivalents$5,965582,218Accounts receivable, net4,87135,204Other current assets35,56638,631Property and equipment:Computer equipment and software67,63267,632Furniture and fixtures13,86013,860Less accumulated depreciation and amortization(62,895)(48,699)Net property and equipment18,59732,793Issuance costs, net of amortization-280,281Software acquired, net of amortization-42,431Total assets64,9991,011,558LiabilitiesAccounts payable and accrued liabilities476,788152,118Accounts payable, royalties84,65269,650Notes payable, related parties258,876220,876Deferred revenues12,89620,396Notes payable694,200360,000Accrued interest payable342,274224,207Subordinated notes payable650,000650,000Common stock, 19,402,530 issued and outstanding at December 31, 2006,
subject to registration rights agreement, at fair value-6,984,908Derivative liability, contingent warrants issued with common stock sales-326,507Derivative liability, warrants issued with common stock conversion from
notes payable and accrued interest-48,201Total liabilities2,519,6869,056,863Stockholders deficit:Preferred stock 30,000,000 authorized, 15,000,000 designated Series A
convertible preferred $.001 par value, 985,284 and 1,807,588 shares issued
and outstanding at September 30, 2007 and December 31, 2006, respectively9861,808Additional paid-in-capital  Series A Preferred491,640901,970Common Stock, $.001 par value, 100,000,000 shares authorized and 52,568,811
and 32,280,587 and shares issued and outstanding at September 30, 2007
and December 31, 2006, respectively52,56932,282Additional paid-in-capital13,687,5455,968,453Note receivable from shareholder for purchase of stock-(6,250)Accumulated deficit(16,687,427)(14,943,568)Total stockholders deficit(2,454,687)(8,045,305)Total liabilities and stockholders' deficit$64,9991,011,558  See accompanying notes to financial statements  2     VINCERA, INC.Unaudited Statements of OperationsFor the Three Months and Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,2007200620072006Revenues:Royalties$11,65515,19550,010167,350Licenses4,5004,50013,50013,500Services6,250109,63820,000213,867Total revenues22,405129,33383,510394,717Expenses:Research and development108,772207,332454,591715,748Sales, marketing, general and
administrative427,943327,7931,185,1271,266,192Depreciation and amortization18,46119,35656,62757,675Total operating expenses555,176554,4811,696,3452,039,615Loss from operations(532,771)(425,148)(1,612,835)(1,644,898)Interest and other income (expense), net(54,885)(156,813)(131,024)(297,940)Net loss$(587,656)(581,961)(1,743,859)(1,942,838)Basic and diluted loss per share$(0.01)(0.02)(0.03)(0.06)Weighted average common shares outstanding:Basic and fully diluted52,263,92232,291,00451,845,02732,069,617  See accompanying notes to financial statements.  3      VINCERA, INC.Unaudited Statements of Cash FlowsNine Months Ended September 30,20072006Cash flows from operating activities:Net loss$(1,743,859)(1,942,838)Adjustments to reconcile net loss to net cash used in operating activitiesNon cash adjustments:Share based compensation expense179,0193,933Warrants issued with notes payable14,767-Depreciation and amortization56,62715,248Amortization of issuance costs-198,242Changes in operating assets and liabilities:Accounts receivable30,333(80,250)Other current assets3,065(11,346)Accounts payable and accrued liabilities324,670(207,533)Accounts payable, royalties15,00250,204Deferred rent payable-(2,075)Deferred revenue(7,500)(8,000)Accrued interest payable118,067(27,325)Net cash used in operating activities(1,009,809)(2,011,740)Cash flows from investing activities:Purchases of property and equipment-(761)Net cash used in investing activities-(761)Cash flows from financing activities:Proceeds from notes payable, related parties38,000-Proceeds from notes payable334,200360,000Proceeds from sales of common stock61,3561,651,559Net cash provided by financing activities433,5562,011,559Net decrease in cash and cash equivalents(576,253)(942)Cash and cash equivalents at beginning of period582,218140,071Cash and cash equivalents at end of period$5,965$139,129Cash paid for interest$-$-Cash paid for income taxes$-$-Supplemental disclosure of non-cash financing activities:Common stock issued in conversion of preferred stock$411,152$530,848Common stock subject to registration rights agreement issued for
conversion of subordinated notes payable and interest$-$175,713Reclassification of liabilities to equity. Note 2  See accompanying notes to financial statements.   4


VINCERA, INC. Notes to Financial Statements  (1) Organization Vincera, Inc. (the Company) develops and markets software.  The Company was incorporated in Texas in March 1999 under the name MoveMoney.com, Inc.  In December 2000, MoveMoney.com, Inc. changed its name to MoveMoney, Inc. and reincorporated in Delaware.  In January 2002, MoveMoney, Inc. changed its name to Smarte Solutions, Inc.  On August 23, 2004, Smarte Solutions, Inc. acquired Vincera Software, Inc. and concurrently changed its name to Vincera, Inc. The Companys software offering, Vincera Intelligent ProtectionTM, or VIP, enables document security and distribution monitoring of the documents that allows clients to protect, monitor, measure and manage the distribution of intellectual property and other sensitive data in a process labeled as “business friendly distribution," because businesses are in charge of applying the appropriate security level and deciding how they use the resulting information.  The Company’s other software product, Vincera Process ImprovementTM, or VPI, also allows its clients to monitor businesses' end-user web-based behavior, subsequently delivering predictive analytics that enable businesses to retain, upsell, and ensure the compliance of existing customers. These two fundamental lines of business are the result of the alignment of technologies from Smarte Solutions and Vincera Software, whereby Smarte Solutions original solution line addressed software piracy and Vincera Softwares original solution line addressed web-based user monitoring and analytics.  Based upon the alignment of technologies, a patent-pending document threading capability that operates according to the user-selected guidelines of business friendly distribution, has been developed to the effect that the Vincera software enables the client to deter and detect document tampering and/or a document breach, and can disable access to the document(s) from the point of breach forward if the Company client so chooses. The financial statements and the notes of the Company as of September 30, 2007 and for the nine months and three months ending September 30, 2007 and 2006 have been prepared by management without audit, pursuant to rules and regulations of the Securities and Exchange Commission and should be read in conjunction with the December 31, 2006 audited financial statements contained in the Companys Form 10-KSB, filed April 2, 2007.  In the opinion of management, all normal, recurring adjustments necessary for the fair presentation of such financial information have been included.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. (2) Summary of Significant Accounting Policies (a) Basis of Accounting These financial statements are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles whereby revenues are recognized in the period earned and expenses when incurred.  The balance sheet has been changed to a non-classified presentation.  Certain prior year balances have been reclassified to conform to the 2007 presentation. (b) Loss per Common Share Basic loss per share is based on the weighted effect of common shares issued and outstanding, and is calculated by dividing net loss by the weighted average shares outstanding during the period.  Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares used in the basic loss per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding.


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VINCERA, INC. Notes to Financial Statements  (2) Summary of Significant Accounting Policies (continued) (b) Loss per Common Share (continued) Shown below are the incremental common shares attributable to the exercise of outstanding options and warrants that were excluded from the computation of diluted loss per share because the effect would be antidilutive. 20072006Warrants and stock options16,825,33713,364,475 (c) Customer Concentration During the three months and nine months ended September 30, 2007 and 2006, the Company experienced a revenue concentration in customers as follows: 3 Months Ended9 Months EndedSeptember 30,September 30,2007200620072006Customer A34 %71 %27 %49 %Customer B52 %12 %60 %42 %Customer C14 %15 %11 %7 %100 %99 %99 %98 %  The loss of these customers would have a material adverse effect on financial results. (d) Adoption of New Accounting Pronouncements In January 2007, the Company adopted FASB Staff Position (FSP) No. EITF 00-19-2, (FSP EITF 00-19-2), Accounting for Registration Payment Arrangements.  This addresses an issuers accounting for registration payment arrangements and specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies.  The guidance in FSP EITF 00-19-2 amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, and FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, to include scope exceptions for registration payment arrangements.  FSP EITF 00-19-2 further clarifies that a financial instrument subject to a registration payment arrangement should be accounted for in accordance with other applicable generally accepted accounting principles (GAAP) without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement.  This pronouncement shall be effective immediately for registration payment arrangements and the financial instruments subject to those arrangements that are entered into or modified subsequent to the date of issuance of this pronouncement, or for financial statements issued for fiscal years beginning after December 15, 2006, and interim periods within those fiscal years. The Company sold common stock and converted debt into equity with a registration rights agreement and prior to FSB EITF 00-19-2, accounted for the common stock and warrants issued under the registration rights agreement as derivative liabilities due to the uncertainty of the Companys ability to register the shares. Notes 5 and 6.  FSP EITF 00-19-2 specifically addressed the accounting for a registration rights agreement and the requirement to classify instruments subject to registration rights agreements as liabilities, was withdrawn.  The Company re-evaluated its accounting for the conversions of the notes into common stock and determined that the transactions be re-characterized as equity per FSP EITF 00-19-2.  As such, the Company has reclassified the derivative liabilities and common stock subject to registration statement to equity, effective January 1, 2007.  The Company has assessed the liquidated damages under the registration rights agreement using FASB Statement No. 5,


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VINCERA, INC. Notes to Financial Statements  (2) Summary of Significant Accounting Policies (continued) (d) Adoption of New Accounting Pronouncements (continued) Accounting for Contingencies, and determined that its only requirement would be to issue penalty warrants if the stock is not registered and therefore has not accrued any contingent liability for the Companys failure to register the stock per the registration rights agreement. The effect of the reclassification of the derivative liabilities and common stock subject to registration to equity is shown in the table below: As Filed Dec. 31, 2006Effect of re-characterization of derivative liabilitiesNet Account Balances after ReclassificationAssetsIssuance costs, net of amortization$280,281(280,281)-LiabilitiesCommon stock, 19,402,530 issued and outstanding at December 31, 2006,
subject to registration rights agreement, at fair value6,984,908(6,984,908)-Derivative liability, contingent warrants issued with common stock sales326,507(326,507)-Derivative liability, warrants issued with common stock conversion from notes
payable and accrued interest48,201(48,201)-Total liability reclassification7,359,616(7,359,616)-Stockholders deficit:Common stock32,28219,40351,685Additional paid-in-capital5,968,4537,059,93213,028,385Total stockholders' deficit reclassification6,000,7357,079,33513,080,070Total liabilities and stockholders' deficit reclassification$13,360,351(280,281)13,080,070
 (3) Liquidity and Capital Resources The Company is out of cash and has not made payroll since September 15, 2007.  If the Company does not receive additional funding by November 30, 2007, the Company will probably cease operations and possibly file for bankruptcy.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.  The Company has experienced operating losses since inception because of efforts to market and develop its products.  There can be no assurance that the Company will ever achieve or sustain profitability or positive cash flow from its operations. To date, the Company has funded its activities primarily through private equity offerings, which have included sales of common and preferred stock, and the issuance of promissory notes payable. These factors, among others, raise substantial doubt about the Companys ability to continue as a going concern, and the Companys auditors included a going concern paragraph in connection with the Companys financial statements for the year ended December 31, 2006.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company is currently seeking consents and waivers from holders of approximately $650 thousand of Subordinated Notes to convert their principal and accrued interest into shares of Company common stock at $0.36 per share.  The Company is also seeking consent and waiver from a holder of approximately $460 thousand of Promissory Notes to convert the principal and interest into shares of Company common stock at $0.36 per share. If the Company is unable to receive consent from all note holders, the Company would seek to renegotiate the terms and conditions of those notes, and the failure to do so could result in litigation and would have a material adverse affect upon the Company, possibly resulting in bankruptcy.


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VINCERA, INC. Notes to Financial Statements  (4) Commitments and Contingencies Litigation The Company has no outstanding legal actions against it, however, the Company is out of cash and has not made payroll since September 15, 2007.  If the Company does not receive additional funding by the end of November, the Company will probably cease operations and possibly file for bankruptcy.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.  There could be legal actions against the Company as a result of non-payment of outstanding liabilities. Payroll Tax Liabilities The Company has not made its state and federal payroll tax deposits for the six months prior to September 30, 2007 and owes approximately $152 thousand including estimated interest and penalties of approximately $15 thousand through September 30, 2007.  The Company has accrued these amounts in accounts payable and accrued liabilities.  The Company has paid its liabilities relating to its 401(k) plan. (5) Notes Payable Notes PayableNoteIssuedDuePer AnnumWarrant CoverageNo. of WarrantsWarrant Fair ValueAs of September 30, 2007As of December 31, 2006StatusNote payablea8/27/068/27/0710.0%---$100,000100,000DefaultNote payablea9/15/069/15/0710.0%---$260,000260,000DefaultNote payableb5/2/0712/15/0710.0%---$25,000--Note payablec5/2/079/15/0710.0%30%41,667$2,083$50,000-DefaultNote payabled7/20/0712/31/0710.0%30%41,667$2,083$50,000--Note payabled7/23/0712/31/0710.0%30%12,500$625$15,000--Note payabled7/23/0712/31/0710.0%30%4,167$208$5,000--Note payabled7/30/0712/31/0710.0%30%20,833$1,042$25,000--Note payablee7/31/0712/31/0710.0%30%83,333$4,167$100,000--Note payabled8/1/0712/31/0710.0%30%11,833$592$14,200--Note payabled8/3/0712/31/0710.0%30%41,667$2,083$50,000--257,667$12,883$694,200360,000 (a) In August and September 2006, the Company issued two notes to a current investor with principal amounts of $100,000 and $260,000, maturity dates of August 2007 and September 2007, respectively, and an interest rate of 10%, with similar terms as other short-term promissory note holders. The Company will seek to have the holder convert the principal and interest into shares of our common stock at a per share price of $0.36 on or before the final close of its private placement.  These notes are in default. (b) On May 2, 2007, the Company issued one note to a current employee of the Company with a principal amount of $25,000 and a maturity date of December 15, 2007, or when the Company receives investments of at least $3,000,000 from Fifth Street Capital.  The note bears an interest rate of 10% per annum.  This note contains similar terms as other short-term promissory note holders. (c) In May 2007, the Company issued one note to a current investor with a principal amount of $50,000 and a maturity date of September 15, 2007.  The note bears an interest rate of 10% per annum and a warrant for 41,667 shares of its common stock at a strike price of $0.36.  The warrant expires 18 months from the final close of the Companys private placement.  The Company has valued the warrants at approximately $2,083 as using the Black-Scholes method using the following assumptions: risk free interest rate of 4.25%, dividend yield of 0%, weighted-average life of options of 1.5 years, and a 25% volatility factor.  The principal and interest of this note will automatically convert to shares of our common stock at the private placement price of $0.36 per share on the final close of the Companys private placement.  The note is currently in default.


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VINCERA, INC. Notes to Financial Statements  (5) Notes Payable (continued) (d) The Company issued several notes maturing 12/31/07, bearing 10% per annum interest. The Company also issued Common Stock Purchase Warrants for shares of common stock at $.36 per share with an expiration date of 18 months from date of final close, and if automatically converted by company upon the filing of a registration statement on Form SB-2 for the shares issued in the Companys private placement the holder will receive another warrant for 30% coverage of both principal and interest.  The Company has valued the warrants at approximately $0.05 per warrant using the Black-Scholes method using the following assumptions: risk free interest rate of 4.25%, dividend yield of 0%, weighted-average life of options of 1.5 years, and a 25% volatility factor.  The warrant expires 18 months from the final close of the Companys private placement.  The principal and interest of this note will automatically convert to shares of our common stock at the private placement price of $0.36 per share on the final close of the Companys private placement. (e) The Company issued one note in July 2007 to a current investor for $100,000 with a maturity date of December 31, 2007.  The note bears an interest rate of 10% per annum. The Company also issued Common Stock Purchase Warrants for 83,333 shares of common stock at $.36 per share with an expiration date of 18 months from date of final close of the Companys private placement.  The Company has valued the warrants at approximately $4,167 as using the Black-Scholes method using the following assumptions: risk free interest rate of 4.25%, dividend yield of 0%, weighted-average life of options of 1.5 years, and a 25% volatility factor.  At the holders option, the principal and interest can either be paid back in cash or cash equivalents or they can be converted into shares of common stock at a price of $0.36 per share.  If the note is converted into shares of common stock, the holder will receive another warrant for 30% coverage for the converted principal and interest. On July 3, 2007, the Company issued a note for $38,000 with terms similar to (d) above.  On August 9, 2007, the note holder converted their promissory note principal and interest totaling $38,164 into 106,567 shares of common stock with the same terms and conditions as the other participants discussed above as part of the eleventh interim close of the Companys private placement. Notes Payable Related Party September 30,December 31,NoteIssueDue20072006Notes payable officera11/2/200511/30/05$40,00040,000Notes payable officers and employeesb8/23/048/24/05180,876180,876Notes payable directorc6/14/0712/31/07$38,000-$258,876220,876 (a) On November 2, 2005, an officer of the Company issued a note with a principal amount of $40,000 and a maturity date of the initial close of the escrow account for the private placement, or in any event not later than November 30, 2005. The note carries an interest rate of 6.375% with similar terms as the other short-term promissory note holders.  The note also provides for a warrant for 30,560 shares of the Companys common stock at an exercise price of $0.50 per share with an expiration date of 18 months from the date of the final closing of the private placement.  The fair value of this warrant has been aggregated with the warrants issued to other related parties as described below.  This note has not been repaid and is currently in default and the Company is accruing interest per the note agreement.  The Company intends to pay this note on or before the final close of the private placement. This note is in default. (b) As a condition of the Vincera Software, Inc. acquisition, the Company assumed notes payable to certain former officers and employees of Vincera Software, Inc. with a balance due of $180,876.  The Company is currently in default on these notes and accruing interest at 1.5% per month as long as the notes remain unpaid.  The Company intends to pay these notes on or before the final close of the private placement. These notes are in default. (c) In June 2007, the Company issued one note to a current director with a principal amount of $38,000 and a maturity date of December 31, 2007.  The note bears an interest rate of 10% per annum and a warrant for 31,667 shares of our common stock at a strike price of $0.36.  The Company has valued the warrants at approximately $1,583 as using


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VINCERA, INC. Notes to Financial Statements  (5) Notes Payable (continued) Notes Payable Related Party (continued) the Black-Scholes method using the following assumptions: risk free interest rate of 4.25%, dividend yield of 0%, weighted-average life of options of 1.5 years, and a 25% volatility factor.  The warrant expires 18 months from the final close of the Companys private placement.  The principal and interest of this note will automatically convert to shares of our common stock at the private placement price of $0.36 per share on the final close of the Companys private placement. Subordinated Notes Payable During June through August of 2004, the Company issued $2,429,710, in Subordinated Promissory Notes (Subordinated Notes).  The Subordinated Notes carry an interest rate of 10%, are subordinate to the other credit agreements and trade payables of the Company, and have maturity dates of one year from their respective issuance dates.  The Subordinated Notes are subject to a Security Agreement whereby the Company has granted a security interest in certain collateral to secure the payment of the Subordinated Notes and other obligations.  Concurrent with the issuance of the Subordinated Notes, the Company had issued Stock Purchase Warrants equal to 7% of the principal amount of the Notes to purchase common stock in the Company.  Each warrant holder shall have the right to purchase common stock of the Company from time to time on and before the earlier of (i) immediately prior to the consummation of a best efforts commitment, underwritten public offering or (ii) until the third anniversary date following the grant date of each Stock Purchase Warrant.  Each Stock Purchase Warrant shall expire and be of no further force or effect upon the earliest of (i) the third anniversary date following the grant date of each Stock Purchase Warrant, (ii) twelve (12) months following the consummation of a best efforts commitment, underwritten public offering (Public Offering), (iii) the sale of all or substantially all of the Companys assets, or (iv) immediately prior to any merger or consolidation of the Company in which the Company is not the surviving entity.  Each warrant granted is fully vested and is exercisable at a price per share equal to (i) the per share price of the Companys common stock issued in a Public Offering or (ii) $0.50 in the event a Public Offering does not occur.  No value was assigned to the stock purchase warrants at the time based on the then estimated value of the common stock of $0.05 per share. From June to August 2005, the Subordinated Notes matured, but were not repaid by the Company and were in default.  From September 2005 through December 2006, the Company received consents from certain holders of the Subordinated Notes to convert the principal and interest to shares of the Companys common stock at $0.36 per share by canceling their indebtedness. Approximately $650 thousand of the notes have not been converted and are in default. Each note holder who converted received the following: (1) Conversion of principal and interest into common shares at $0.36 per share and as compensation to the placement agent, we issued common stock shares equal to approximately 1% of the converted amount.  These common shares are subject to a registration rights agreement whereby the Company must use its best effort to register its common stock within 120 days after the closing of the private placement.  (Note 3) (2) Each investor also received a warrant to purchase common shares representing fifty percent of their investment at an exercise price of $0.50 per share.  These warrants expire 18 months from the date of the Companys final close of the private placement. (3) The placement agent also received warrants to purchase common shares equal to approximately 7% of the conversion amount, at $0.36 per share.  These warrants expire 18 months from the date of the Companys final close of the private placement. (4) The placement agent also received warrants to purchase common shares equal to approximately 4% of the conversion amount, at $0.594 per share.  These warrants expire 18 months from the date of the Companys final close of the private placement. (5) The Company also paid cash to the placement agent of 7% of the converted amount and legal fees. These common shares are subject to a registration rights agreement whereby the Company must use its best effort to register its common stock within 120 days after the closing of the private placement.  These warrants have been valued using the Black-Scholes model with the following assumptions: exercise prices of $ 0.36 to $0.594 per share, dividend yield rate of 0%, volatility factor of 25%, and risk free interest rate of 4.25% and a term of 18 to 60 months.  These warrants were reclassified as discussed in Note 2.


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VINCERA, INC. Notes to Financial Statements  (5) Notes Payable (continued) Subordinated Notes Payable (continued) The Company accounted for all derivative financial instruments in accordance with SFAS No. 133.  The shares of common stock issued in 2005 and 2006 through the sale of the subordinated notes payable and through the conversion of notes payable are subject to an agreement to register these shares.  As the registration of common stock is not within the control of the Company, and the potential damages for failure to register are material, the shares were recorded as liabilities in accordance with EITF 00-19. In January 2007, the Company adopted FSP EITF 00-19-2 as discussed in Note 2. FSP EITF 00-19-2 specifically addressed the accounting for a registration rights agreement and the requirement to classify instruments subject to registration rights agreements as liabilities was withdrawn.  The Company re-evaluated its accounting for the conversions of the notes into common stock and determined that the transactions be re-characterized as equity per FSP EITF 00-19-2.  As such, the Company has reclassified the derivative liabilities and common stock subject to registration statement to equity, effective January 1, 2007. The net effect of the reclassification of all the conversions of notes into common stock combined with the sales of common stock discussed in Note 6, resulted in the elimination of debt issuance costs of approximately $280 thousand, a decrease in liabilities by eliminating the derivative liabilities of approximately $7.4 million and an increase in common stock plus additional paid in capital of approximately $7.1 million. The Subordinated Notes converted into shares of common stock for the years ended December 31, 2006 and 2005 are presented in the table below with the numbers in the table corresponding to the list above the values for the warrants shown below are the fair values of the warrants.  There were no conversions in the nine months ended September 30, 2007. All ConversionsSharesValueCommon stock issued(1)5,401,188$1,944,428Common stock issued to placement agent(1)54,012$19,444Additional warrants issued(2)2,700,614$27,006Warrants issued to placement agent(3)378,083$18,904Warrants issued to placement agent(4)216,047-Placement fees(5)$137,000 (6) Common Stock The Company is authorized to issue 100,000,000 shares of common stock.  Each common stockholder is entitled to one vote per share of common stock owned.  During the nine months ended September 30, 2007 and the year ended December 31, 2006 the Company issued 196,160 and 7,503,496, respectively, of shares of common stock in eleven interim closes of the Companys private placement. The following list contains additional terms of the private placement and the numbers correspond to the tables below the list: (1) Common shares were purchased at $0.36 per share.  As compensation to the placement agent the Company issued common stock shares equal to approximately 1% of the converted amount.  These common shares are subject to a registration rights agreement whereby the Company must use its best effort to register its common stock within 120 days after the closing of the private placement. (2) Each investor also received a five year warrant to purchase common shares representing twenty-five percent of their investment at an exercise price of $0.36 per share.  These warrants are only exercisable if the Company does not have an effective registration statement on or before 120 days from the date of the final close of the offering.  These warrants are penalty warrants for shares of common stock should the Company be unable to comply with the registration statement timeline defined in the common stock purchase warrant agreement.


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VINCERA, INC. Notes to Financial Statements  (6) Common Stock (continued) (3) The placement agent also received warrants to purchase common shares equal to approximately 7% of the conversion amount, at $0.36 per share.  These warrants expire 18 months from the date of the Companys final close of the private placement. (4) The placement agent also received warrants to purchase common shares equal to approximately 4% of the conversion amount, at $0.594 per share.  These warrants expire 18 months from the date of the Companys final close of the private placement. (5) The Company also paid placement costs of 7% to the placement agent and legal fees. (6) These common shares are subject to a registration rights agreement whereby the Company must use its best effort to register its common stock within 120 days after the closing of the private placement. These warrants were reclassified as discussed in Note 2. (7) The warrants have been valued using the Black-Scholes model with the following assumptions: exercise prices of $ 0.36 to $0.594 per share, dividend yield rate of 0%, volatility factor of 25%, and risk free interest rate of 4.25% and a term of 18 to 60 months. The following table presents the summary of the interim closes of the private placement for the year ended December 31, 2006, for the nine months ended September 30, 2007 and the total of all interim closes.  The values for the warrants shown below are the fair values of the warrants.  Total All Closes of PPM Through 12/31/069th Close Apr. 30, 200710th Close Jul. 2, 200711th Close Aug. 9, 2007All PPMsSharesValueSharesValueSharesValueSharesValueSharesValueCommon stock sales(1)10,531,194$3,791,23030,000$10,80057,650$20,754106,567$38,36410,725,411$3,861,149Common stock issued to
placement agent(1)105,311$37,912300$108577$2081,066$384107,253$38,611Contingent warrants issued(2)2,632,799$289,6087,500$82514,413$1,58526,642$2,9312,681,354$294,949Placement agent warrants-W1(3)737,183$36,8592,100$1054,036$2027,460$373750,779$37,539Placement agent warrants-W2(4)375,302$-1,200$-2,306$-4,263$-383,071$-Placement and legal expenses(5)-$(429,904)-$(1,296)-$(2,490)-$(4,801)-$(438,419)Net cash received-$4,070,551-$9,504-$18,264-$33,563-$4,131,882Common stock subject to
registration rights10,636,505$3,829,142Contingent warrants issued
with common stock sales3,745,284$326,467 In January 2007, the Company adopted FSP EITF 00-19-2 as discussed in Note 2. FSP EITF 00-19-2 specifically addressed the accounting for a registration rights agreement and the requirement to classify instruments subject to registration rights agreements as liabilities was withdrawn.  The Company re-evaluated its accounting for the conversions of the notes into common stock and determined that the transactions be re-characterized as equity per FSP EITF 00-19-2.  As such, the Company has reclassified the derivative liabilities and common stock subject to registration statement to equity, effective January 1, 2007. The net effect of the reclassification of all the conversions of notes into common stock combined with the sales of common stock discussed in this Note, resulted in the elimination of debt issuance costs of approximately $280 thousand, a decrease in liabilities by eliminating the derivative liabilities of approximately $7.4 million and an increase in common stock plus additional paid in capital of approximately $7.1 million.


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VINCERA, INC. Notes to Financial Statements  (6) Common Stock (continued) Additionally, during the year ended December 31, 2006, the Company issued the following shares of common stock noted in the table below. 2006Common stock exchanged for preferred stock(1)1,061,697Common stock issued in legal settlement(2)90,000Repurchase of unvested stock option exercises(3)(27,084)Sales of common stock-Total common stock issued not subject to a registration rights agreement1,124,613 1. Shares of common stock through sales, conversion of preferred stock (Note 7), and conversion of debt (Note 5). 2. During May 2006, the Company issued 90,000 shares of fully vested common stock to a former officer of the Company to settle a lawsuit.  The fair market value of the stock was $32,400. 3. Also, during 2006, a former officer and an employee of the Company exchanged 27,084 shares of exercised, but unvested common stock options at the original exercise price of the options totaling approximately $1,355. A former employee defaulted on a loan for $6,250 for the purchase of 125,000 shares of the Companys common stock in 2003.  The loan was collateralized by the common stock purchased and the 125,000 shares were returned to the Company. During September 2007, an employee left the Company that had executed an early exercise of options.  The Company has the option of repurchasing 7,500 the options at the original strike price of $0.05.  The Company has recorded a liability of $375 related to the option. (7) Preferred Stock During 2003, the Company converted notes payable and accrued interest totaling $3,677,266 to 7,354,562 shares of $0.001 par value, Series A Preferred Stock at $0.50 per share.  During the same period an additional 2,568,500 shares of Series A Preferred Stock was sold for $1,284,250.  Each Series A Preferred Stockholder is entitled to one vote per share of Series A Preferred Stock owned. In connection with the sale of the promissory notes payable that were converted to Series A Preferred Stock in 2003, the Company issued warrants to purchase 2,154,028 shares of Series A Preferred Stock.  No value was assigned to the warrants when issued, as the value of these warrants was zero.  These warrants allow for the purchase of Series A Preferred Stock at $0.50 per share and expire in November 2011. Each share of Series A Preferred Stock shall automatically be converted by the Company into shares of common stock at the Series A Conversion Price at the time in effect immediately upon the Companys sale of its common stock in a public offering pursuant to a registration statement filed under the Securities Act of 1933, as amended.  The Series A Conversion Price in effect at the time was $0.50 per share, therefore the Preferred Stock is convertible into 9,923,062 shares of common stock.  The preferred stock can be converted to common stock at the option of the holder at any time into shares of the Company common stock, initially at a conversion price of $0.50 per share, subject to adjustment upon the issuance of shares of our common stock (or securities convertible into shares of our common stock) at a price per share less than the conversion price of the Series A shares then in effect.  Additionally, the liquidation preference of Series A Preferred Stock is in the amount equal to their stated value of $0.50 per share plus declared and unpaid dividends.  The holders of the Series A shares shall be entitled to receive, when and as declared by the Companys board, but only out of funds that are legally available, cash dividends at the rate of 8% per year.  The holders of the Series A preferred shares are entitled to vote equally with the shares of the Companys common stock, and in addition are entitled to elect one member of the Companys board of directors.  The Series A Preferred Stock does not have any contractual registration rights. The Company is authorized to issue up to 30,000,000 shares of preferred stock, of which 15,000,000 shares have been designated as Series A Convertible Preferred Stock. In conjunction with the Companys private placement and the filing of the Companys Form 10-SB, the Company has sought and received the consent from holders of 8,937,778 shares of the Series A Preferred Stock to convert into 8,937,778 shares of the Companys common stock.  There were 822,304 shares of Series A Preferred Stock converted in


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VINCERA, INC. Notes to Financial Statements  (7) Preferred Stock (continued) the nine months ended September 30, 2007.  These shareholders continue to hold warrants to purchase 2,154,028 shares of Series A Preferred Stock.  These warrants do not have any contractual registration rights. The Company is seeking the consents and waivers for conversion of the remaining shares as well as consents converting the warrants to purchase preferred shares into warrants to purchase the Companys common stock.  There is no assurance that the Company can obtain the necessary consents and waivers to convert the remaining shares, which could have a material adverse effect upon the Company. (8) Common Stock Option/Stock Incentive Plan The Companys 2002 Stock Incentive Plan (the Plan) was approved in November 2002.  The Plan provides for a means by which individuals may be given an opportunity to benefit from increases in the value of the common stock through the granting of the following Stock Awards: Incentive Stock Options, Nonstatutory Stock Options, stock bonuses and rights to acquire restricted stock.  In 2004, the Board of Directors increased the maximum shares to 9,000,000.  Incentive Stock Options issued prior to the approval of the Plan are in addition to the total allowed through the Plan. Incentive Stock Options may be granted only to employees.  Other Stock Awards may be granted to employees, non-employee members of the Board of Directors and others.  The provisions of separate options need not be identical, but each option shall include the following provisions: 1. Term  No Incentive Stock Option shall be exercisable after the expiration of ten years from the date it was granted. 2. Exercise Price of an Incentive Stock Option - The exercise price shall not be less than the fair market value of the common stock on the date the option is granted.  Additional restrictions apply to certain shareholders as defined in the Plan. 3. Exercise Price of a Nonstatutory Stock Option  The exercise price shall not be less than 20% of the fair market value of the common stock on the date the option is granted. Under the Plan, stock bonuses and restricted stock awards in the form of shares of common stock may be issued directly to employees, members of the Board of Directors, or other individuals.  Shares of common stock issued as stock bonuses may vest immediately, or in one or more installments, at the discretion of the Board of Directors.  Recipients of stock bonuses and restricted stock awards have full stockholder rights with respect to any shares of common stock issued, regardless of whether such shares are vested.  During the nine months ended September 30, 2007 and the year ended December 31, 2006, no shares of common stock were issued as stock bonuses or restricted stock awards. Stock options issued under the Plan have vesting schedules as determined by the Board of Directors, which are generally four years.  Unless terminated at an earlier date by action of the Board of Directors, the Plan terminates on November 4, 2012. These options were issued pursuant to the Plan and are reflected in the disclosures below. A total of 350,000 options were granted during the nine months ended September 30, 2007. Prior to the approval of the Plan, the Company granted stock options through the direct actions of the Board of Directors.  Options representing a total of 2,707,000 shares as of December 31, 2006 were issued in this manner, outside of the Plan. Under the Companys Plan, of the 9,000,000 shares that are authorized to be issued, the Company has: · Options to purchase 3,471,978 shares of the Companys common stock have been issued and 1,968,958 options have been exercised under the Plan and are outstanding as of September 30, 2007; · The Company may issue up to an additional 3,559,064 options, stock bonus awards or restricted stock awards


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VINCERA, INC. Notes to Financial Statements  (8) Common Stock Option/Stock Incentive Plan (continued) A summary of activity in common stock options for the nine months ended September 30, 2007 is as follows, and includes options granted through the Plan and outside the Plan: SharesRange of Exercise PricesWeighted-Average Exercise PriceOptions outstanding December 31, 20066,223,250$0.001-$0.36$0.07Options granted350,000$0.36$0.36Options exercised---Options forfeited394,272$0.05-$0.36$0.34Options outstanding September 30, 20076,178,978$0.001-$0.36$0.13 The following is a summary of options outstanding and exercisable at September 30, 2007: Number of Shares Subject to Options OutstandingWeighted Average Remaining Contractual Life (in Years)Weighted Average Exercise PriceVested4,718,9034.12$0.08Unvested1,460,0758.18$0.28Total Outstanding6,178,9785.08$0.13  Compensation expense related to the Companys share-based awards during the nine months ended September 30, 2007 and 2006 was approximately $179,019 and $3,933, respectively. The fair value of the options was calculated at the date of grant using the Black-Scholes pricing model with the following weighted-average assumptions for the nine months ended September 30, 2007: risk free interest rate of 4.25%, dividend yield of 0%, weighted-average life of options of 5 to 10 years, and a 25% volatility factor.  For the nine months ended September 30, 2006, the following assumptions were used: risk free interest rate of 4.25%, dividend yield of 0%, weighted-average life of options of 4 years, and a 25% volatility factor.  The weighted-average per share grant date fair value for the nine months ended September 30, 2007 was $0.10. At September 30, 2007, there was approximately $275 thousand of unrecognized compensation expense related to unvested share-based awards granted under the Companys stock option plan.  The expense is expected to be recognized over a weighted-average period of 1.9 years. (9) Subsequent Events On October 31, 2007, the Company issued one note to an executive officer of the Company with a principal amount of $50,000 and a maturity date of March 31, 2008.  The note bears an interest rate of 10% per annum and a warrant for 41,667 shares of its common stock at a strike price of $0.36.  The warrant expires 18 months from the final close of the Companys private placement.  The Company has valued the warrants at approximately $2,083 as using the Black-Scholes method using the following assumptions: risk free interest rate of 4.25%, dividend yield of 0%, weighted-average life of options of 1.5 years, and a 25% volatility factor.  At the holders option, the principal and interest can either be paid back in cash or cash equivalents or they can be converted into shares of common stock at a price of $0.36 per share.  If the note is converted into shares of common stock, the holder will receive another warrant for 30% coverage for the converted principal and interest.


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Item 2. Managements Discussion and Analysis or Plan of Operations The information presented in this section should be read in conjunction with our audited financial statements and related notes for the periods ended December 31, 2006 and 2005 included in our Form 10-KSB, filed April 2, 2007, as well as the information contained in the financial statements, including the notes thereto, appearing elsewhere in this report.  This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties.  Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled Risk Factors and elsewhere in this report.  Summary Financial Information Statements of Operations Data:Three Months EndedNine Months EndedSeptember 30,September 30,2007200620072006Revenues$22,405129,33383,510394,717Total operating expenses$555,176554,4811,696,3452,039,615Loss from operations$(532,771)(425,148)(1,612,835)(1,644,898)Net loss$(587,656)(581,961)(1,743,859)(1,942,838)Basic and diluted loss per share$$(0.01)$(0.02)$(0.03)$(0.06)  Balance Sheet Data:September 30,December 31,20072006Cash and cash equivalents$5,965582,218Intangibles, net of amortization$-322,712Total assets$64,9991,011,558Liabilities$2,519,6869,056,863Stockholders' deficit$(2,454,687)(8,045,305)   Overview  We license our software to companies concerned with guarding intellectual property and other sensitive data, and all businesses that need to track and manage how their own end-users are using their distributed intellectual property.  These customers must prevent illicit access, theft, or alteration to sensitive data, and they need to track their clients behavior throughout the business cycle to best focus compliance efforts.  The ability to: identify the client who downloaded the document initially; monitor all locations where the document is accessed; determine if the document is being used according to business rules associated with the document; alert the appropriate people if the document is being used outside of compliance to the business rules; and the ability to manage the document to disable it from being used; is collectively called document threading, which we believe is unique to our product offering and is one of the patents pending that we have.  We believe that companies that are concerned with document security typically would through the following methods: · Deter: With document threading, customers can deter their own document recipients from breaching e-distributed material, either by setting stringent security levels, informing document recipients that their activities can be monitored, or both.  When recipients know their activities can be traced directly to themselves, it can prove a powerful disincentive to inappropriate sharing and alteration of sensitive information. · Detect: Document threading capabilities signify an audit trail that enables detection of a potential point of breacheven before the breach occurs.  When the customer applies a given security level for a given document, that customer is notified if the document in question is shared beyond the customers self-defined limits.  Vincera software enables e-discovery and forensic detection detailing breach and/or tampering information, so customers can prevent serious threats to the integrity and secrecy of sensitive documents.


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· Disable: Customers can disable a document, such that the document can not be opened for reading, the document can be limited for a specific document thread, or they can disable the document for everyone.  Disabling the document means not only that the information cannot be forwarded, but that any sensitive information already distributed will be disabled as well. Across diverse industry verticals, most enterprises use Internet-based technology to electronically distribute (or e-distribute) sensitive data such as intellectual property, personally identifiable information, and/or personal health information.  Using the Internet for these purposes presents risks, opportunities, and consequent market needs that Vincera’s Intelligent ProtectionTM (VIP) document security software product fills. Vincera's customers are security, privacy, and risk officers in all enterprises who use Internet-based technology to e-distribute sensitive data such as intellectual property, personally identifiable information, and/or personal health information, and who are charged with safeguarding these sensitive data. Additionally, and to a lesser degree than the document security solution, through our Vincera Process ImprovementTM (VPI) software, we provide our customers a means to improve their customer-facing functions, such as customer retention management, customer upgrade management and license compliance management.  Improvement in these processes are achieved by our customers through the monitoring, capturing, analysis, and reporting of key intelligence about the ways in which their subscribers interact with and use their online information.  By improving these business processes, our customers can reduce costs while simultaneously maximizing the value of each of their subscribers. The Vincera Process Improvement solution is comprised of a number of software products such as: · VPI Retention to help publishers and providers of online information maximize the number of subscribers that renew subscriptions during each subscription period; · VPI Upgrade to help publishers and providers of online information identify subscribers with need for additional products or services and successfully upgrade these subscribers to the appropriate subscription level; and · VPI Compliance to help publishers and providers of online information monitor and capture which subscribers are in violation of their license policies based on excessive or unauthorized use of the online information and services. We currently provide this business solution to publishers and providers of online information.  Hoovers, Inc. (a D&B Company) and Lincoln Financial Group are customers of this solution.  In late 2006, we made the decision to solely focus on our Vincera Intelligent Protection product, and therefore only provided professional services and customer support to our existing customers of our Vincera Process Improvement product.  We have notified our clients that we will be dropping support of the VPI product line. Going forward, we are concentrating our sales efforts in North America and we intend to roll out regional marketing efforts in Asia Pacific, Europe and other parts of the world as we develop sales and marketing alliances in those areas.  As we grow, we must continue to build our support and services capabilities, because customer satisfaction is a primary value of our company and we believe a key element in our overall success.  We are continuously refining our product and solution offerings for both the enterprise customers, such as the Fortune 5000, as well as Small-to-Medium businesses (SMB).  We believe that we will be able to participate in markets that offer significant growth opportunities by continuing to orient our offerings within the Enterprise Information Security, or EIS, market.  Significant to our product/solution strategy is leveraging a trend with the EIS market, that is, the convergence of several business functions that have an interest in the protection of corporate intellectual property and other sensitive data  information technology, data security, and audit.  This convergence is recognized by the leading global affiliate organizations, Information Systems Security Association (ISSA), ASIS International, and the Information Systems Audit and Control Association (ISACA).  Based on this convergence, a new set of product/solution requirements have developed and are incorporated into our Vincera Intelligent Protection product, such as:  · The document security solution must address intra (within) and inter (outside of the) enterprise; · The document security solution must enable the protected distribution of digital content without restriction based on the appropriate security level; · The document security solution must enable our customer to gather behavioral intelligence as the content is distributed, viewed, and, in many cases, re-distributed by the initial recipient, a/k/a document thread;


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· The document security solution must enable the ability to manage access to the content, taking that document thread of the digital content out of circulation if need be; and · The document security solution must enable reporting and alerts based on relevant thresholds and business rules. We sell our products through flexible licensing, such as a subscription-based model and a one-time (a/k/a. perpetual) license fee with annual maintenance and support (which provides for enhancements to the product and customer support).  Professional services, such as consulting and education, are a key part of our overall solution to our customers.  By providing these professional services, we are able to work with our customers to help them achieve the success and return on investment they require from their investment in our technologies.  We market our VIP product primarily through channel partners to large enterprise customers, such as the Fortune 5000, and Small-to-Medium businesses (SMB) that have the need or requirement to protect and manage their intellectual property, proprietary information, and sensitive information.  We have very limited resources to sell direct.  Although applicable to many industries, our initial focus is on the major markets of: financial services; healthcare (including pharmaceuticals); government; and manufacturing.  We also market our VIP product to other software vendors where our solution would provide a value-add to their software products.  Applicable in many markets, we have initially focused on Data Loss Prevention (DLP) and Digital Rights Management (DRM) software vendors.  We believe these segments have the greatest need and are most likely to allocate budget dollars towards acquiring our solutions.  Our primary sales strategy is to: · Develop value-added resellers, which are companies that resell our products as stand-alone products and with other complementary products to their client base; · Build strong relationships with software vendors to establish an Original Equipment Manufacturer, or OEM, channel, in which these software vendors would embed our products within their own solutions; · Develop Managed Security Service Providers, or MSSPs, which are companies that would include our products as well as their own products and other companies products to their customers through a for fee service whereby the customers utilize these products which are hosted on the MSSPs site or other locations; and · Sell direct to organizations in our targeted markets, which we will do on a very limited basis. We are currently focused on pursuing opportunities with enterprise and Small-to-Medium business partners for Vincera Intelligent Protection product.  We also believe our product is complementary to a number of software vendors who provide enterprise application solutions in a number of key markets, particularly vendors in the Data Loss Prevention (DLP), Digital Rights Management (DRM), and Managed Security Services Providers (MSSP).  We will seek to pursue OEM relationships with providers in our focused market segments. For the nine months ended September 30, 2007, we signed up three (3) resellers and one (1) Data Loss Prevention vendor. Sources of Revenues  We derived substantially all of our revenues from licensing our products and royalties, which would also include revenue sharing, from the use of our products and providing related services.  Customers can pay us a license fee, subscription fee, or royalty for the right to use our products for a fixed or perpetual term.  Our licensing arrangements may also include the provision of services.  Services revenues are comprised of revenues from professional services, such as consulting services and maintenance and support services.  Consulting services include a range of services such as installation, implementation, and non-complex interface development for the customers specific applications.  Maintenance and support services represent technical support of our software products and include the right to unspecified product upgrades on an if-and-when available basis.


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Critical Accounting Policies and Estimates  Our accounting policies are more fully described in the notes to our financial statements. Adoption of New Accounting Pronouncements In January 2007, the Company adopted FASB Staff Position (FSP) No. EITF 00-19-2, (FSP EITF 00-19-2), Accounting for Registration Payment Arrangements.  This addresses an issuers accounting for registration payment arrangements and specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies.  The guidance in FSP EITF 00-19-2 amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, and FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, to include scope exceptions for registration payment arrangements.  The No. FSP 00-19-2 further clarifies that a financial instrument subject to a registration payment arrangement should be accounted for in accordance with other applicable generally accepted accounting principles (GAAP) without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement.  This pronouncement shall be effective immediately for registration payment arrangements and the financial instruments subject to those arrangements that are entered into or modified subsequent to the date of issuance of this pronouncement, or for financial statements issued for fiscal years beginning after December 15, 2006, and interim periods within those fiscal years.  The Company sold common stock and converted debt into equity with a registration rights agreement and prior to FSB EITF 00-19-2, accounted for the common stock and warrants issued under the registration rights agreement as derivative liabilities due to the uncertainty of the Companys ability to register the shares.  Notes 5 and 6.  FSP EITF 00-19-2 specifically addressed the accounting for a registration rights agreements and the requirement to classify instruments subject to registration rights agreements as liabilities, was withdrawn.  The Company re-evaluated its accounting for the conversions of the notes into common stock and determined that the transactions be re-characterized as equity per FSP EITF 00-19-2.  As such, the Company has reclassified the derivative liabilities and common stock subject to registration statement to equity, effective January 1, 2007.  The Company has assessed the liquidated damages under the registration rights agreement using FASB Statement No. 5, Accounting for Contingencies, and determined that its only requirement would be to issue penalty warrants if the stock is not registered and therefore has not accrued any contingent liability for the Companys failure to register the stock per the registration rights agreement. The effect of the reclassification of the derivative liabilities and common stock subject to registration statement to equity is shown in the table below: As Filed Dec. 31, 2006Effect of re-characterization of derivative liabilitiesNet Account Balances after reclassificationAssetsIssuance costs, net of amortization$280,281(280,281)-LiabilitiesCommon stock, 19,402,530 issued and outstanding at
December 31, 2006, subject to registration rights
agreement, at fair value6,984,908(6,984,908)-Derivative liability, contingent warrants issued with
common stock sales326,507(326,507)-Derivative liability, warrants issued with common
stock conversion from notes payable and accrued interest48,201(48,201)-Total liability reclassification7,359,616(7,359,616)-Stockholders deficit:Common stock32,28219,40351,685Additional paid-in-capital5,968,4537,059,93213,028,385Total stockholders' deficit reclassification6,000,7357,079,33513,080,070Total liabilities and stockholders' deficit reclassification$13,360,351(280,281)13,080,070


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RESULTS OF OPERATIONS  In view of our operating history and changes in the general economic climate, we believe that period-to-period comparisons of revenues and operating results are not necessarily meaningful and should not be relied upon as indications of future performance.  Our prospects must be considered in light of the risks, expenses and difficulties encountered by companies in new and rapidly evolving markets. The following discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities.  We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Estimates and assumptions are reviewed periodically, and actual results may differ from these estimates under different assumptions or conditions. Comparisons of the Three Months Ended September 30, 2007 and 2006 REVENUESThree Months EndedVarianceSeptember 30,2007 vs. 200620072006$%Total revenues$22,405129,333(106,928)(83%)Royalty revenues$11,65515,195(3,540)(23%)License revenues$4,5004,500-0 %Service$6,250109,638(103,388)(94%)  Comparisons of the Nine Months Ended September 30, 2007 and 2006 REVENUESNine Months EndedVarianceSeptember 30,2007 vs. 200620072006$%Total revenues$83,510394,717(311,207)(79%)Royalty revenues$50,010167,350(117,340)(70%)License revenues$13,50013,500-0 %Service$20,000213,867(193,867)(91%)  During the three months and nine months ended September 30, 2007 and 2006, the Company experienced a revenue concentration in customers as follows: 3 Months Ended9 Months EndedSeptember 30,September 30,2007200620072006Customer A34 %71 %27 %49 %Customer B52 %12 %60 %42 %Customer C14 %15 %11 %7 %100 %99 %99 %98 %  Total Revenues.  Revenues decreased 83% and 79%, respectively, for the three months and nine months ended September 30, 2007 from the same periods in 2006.  The decrease in revenues for the three months and the nine months ended September 30, 2007 reflects a decrease in royalties as one customer decreased the usage of our legacy protection software and a decrease in professional


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services delivered to one other customer.  For the three month and nine month periods ended September 30, 2007, our two largest customers accounted for 86% and 87% of our total revenues, respectively.  Our go-to-market strategy is to acquire value-added resellers (VARs), vendors of Data Loss Prevention/Information Loss Prevention (DLP/ILP) solutions, and managed security services providers (MSSPs).  In the nine months ended September 30, 2007, we have signed agreements with three value-added resellers, LuciData, DataForeSight, and Information Gateways Ltd. Pty. located in Australia and New Zealand, which gives us our first partner outside of the US.  We also signed an agreement with Tablus, which is one of the leading Data Loss Prevention vendors.  As we move forward it is our intent to continue to sign up partnerships with resellers, vendors, systems integrators, and MSSPs in the security sector. Royalty Revenues.  As our customers protect their intellectual property with our products, they may pay us a royalty fee based on the licensing arrangement that we have with each customer.  For the three months ended September 30, 2007 the decrease in royalties was due to the decreased usage of our legacy protection software by one customer.  As we make the transition to the enterprise market with our VIP solutions and to the customer remaining on our legacy technology reducing the need for that legacy technology, we expect that royalty revenues as a percentage of overall revenues to continue to decrease. License Revenues.  The license revenues for the three months ended September 30, 2007 and 2006 remained the same as we continue to have one customer on a quarterly subscription payment.  We have focused on developing our new solutions and in establishing partnerships with resellers, vendors, systems integrators, and MSSPs in the security sector who will become our sales agents. We anticipate that the license revenues will increase as we begin to enter into subscription based and perpetual licenses of our applications to a wider customer base through our reselling partners and our limited direct sales efforts.  The development of channel partners may take at least six (6) months from the time we sign them as partners to the point where they are at a point of being able to produce revenue for us. Services Revenues.  The decrease in services revenues for the three and nine months ended September 30, 2007 compared to the year earlier periods was primarily due to our continued efforts in developing our VIP technologies as we move away from our VPI product.  We expect our services revenues to increase in the future as we move towards the enterprise software model and offer software support and maintenance services, along with some limited professional services. EXPENSESThree Months EndedVarianceSeptember 30,2007 vs. 200620072006$%Research and Development$108,772207,332(98,560)(48%)Sales, General and Administrative$427,943327,793100,15031 %Depreciation and amortization$18,46119,356(895)(5%)Interest and other (income) expense, net$54,885156,813(101,928)(65%)  EXPENSESNine Months EndedVarianceSeptember 30,2007 vs. 200620072006$%Research and Development$454,591715,748(261,157)(36%)Sales, General and Administrative$1,185,1251,266,192(81,067)(6%)Depreciation and amortization$56,62857,675(1,047)(2%)Interest and other (income) expense, net$131,024297,940166,914(56%) Research and Development.  Research and development expenses consist of employee salaries, benefits, consulting costs and the cost of software development tools and expenses associated with the development of new products, enhancements of the existing products, quality assurance and support activities.  Research and development expenses do not include rent or facilities cost because they were immaterial.  For the three months ended September 30, 2007 and 2006, research and development expenses were attributable to enhancements for our full product line, which are ongoing. The decrease in 2007 for both the three months and nine months ended September 30, 2007, is primarily due to a decrease in salaries and contract labor.


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We intend to continue to invest in research and development and expect to incur additional expenses for employees and/or consultants as we develop our VIP products and lessen our dependence on third party royalty bearing technology in our products. Sales, General and Administrative. Sales, general and administrative expenses consist of salaries, benefits, and related costs of our sales, marketing, administrative, finance, business operations and information technology personnel, sales commissions, travel and entertainment expenses, costs of our marketing programs, collateral materials, rent and facilities costs, as well as legal, marketing, and accounting services.  Sales, general and administrative expenses increased approximately 31% for the three months and decreased by 6% for the nine months ended September 30, 2007 over the same periods in 2006. The increase for the 3 month period occurred primarily because of stock compensation expense, while the decrease for the nine month period occurred primarily because of decreased sales salaries and travel expenses.  We expect our sales, general and administrative expenses to increase substantially in future periods if we are successful in raising additional capital in our private placement. We expect in future periods that the percentage of sales and general and administrative to the total operating expenses will increase and research and development expenses will decrease as a percentage of total operating expenses as we increase our revenues. Interest Expense. Interest expense decreased in the three months and nine months ended September 30, 2007 as compared to the same periods in 2006 primarily due to the decrease in amortization of issuance costs discussed under new accounting pronouncements.  We anticipate that the interest expense will increase unless we are successful in converting current debt into equity and raising additional capital, and we are required to increase our borrowings to cover cash requirements. LIQUIDITY AND CAPITAL RESOURCES  Liquidity and Capital Resources. We are out of cash and have not made payroll since September 15, 2007. If we do not receive additional funding by November 30, 2007, we will probably cease operations and possibly file for bankruptcy.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We have experienced operating losses since inception because of efforts to market and develop our products.  There can be no assurance that we will ever achieve or sustain profitability or positive cash flow from its operations. To date, we have funded out activities primarily through private equity offerings, which have included sales of common and preferred stock, and the issuance of promissory notes payable. These factors, among others, raise substantial doubt about our ability to continue as a going concern, and our auditors included a going concern paragraph in connection with the Companys financial statements for the year ended December 31, 2006.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We are currently seeking consents and waivers from holders of approximately $650 thousand of Subordinated Notes to convert their principal and accrued interest into shares of Company common stock at $0.36 per share.  We are also seeking consents and waivers from a holder of approximately $460 thousand of Promissory Notes to convert the principal and interest into shares of Company common stock at $0.36 per share. If we are unable to receive consent from all note holders, the Company would seek to renegotiate the terms and conditions of those notes, and the failure to do so could result in litigation and would have a material adverse affect upon the Company, possibly resulting in bankruptcy.


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Off-Balance Sheet Arrangements We had no off-balance sheet arrangements as of September 30, 2007 and December 31, 2006.  Item 3. Controls and Procedures Our management, including our Chief Executive Officer (our Principal Executive Officer and Principal Financial Officer), has evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the period ended September 30, 2007, the period covered by this Quarterly Report on Form 10-QSB.  Based upon that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2007 to ensure the timely collection, evaluation and disclosure of information relating to our company that would potentially be subject to disclosure under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. There were no changes in our internal controls over financial reporting that have materially affected, or are reasonable likely to materially affect, our internal controls over financial reporting during the three months ended September 30, 2007. The Company is required to be in compliance with the certification requirements relating to internal control for the year ending December 31, 2007.  During 2007, the Company has experienced severe cash flow problems and as a result has not had the resources to address fully the certification requirements.  The Company is working with the board of directors on implementing internal controls and acquiring the required qualified accounting personnel.  Failure to develop adequate internal control and acquire qualified accounting personnel may result in a material weakness in the Companys internal control relating to the above activities only.  While management is working on a plan, no assurance can be made at this point in time.   PART II  OTHER INFORMATION  Item 1. Legal Proceedings None   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In April, July and August of 2007, the Company had three interim closes of the private placement of 196,160 shares of its common stock to 3 accredited investors for a cash price of $0.36 per share.  The investors also received a five year common stock purchase warrant for 25% of their investment at an exercise price of $0.36 per share, which warrants are only exercisable if the Company does not have an effective registration statement on or before 120 days from the date of the final close of the offering.  The aggregate proceeds of the offering were $69,918.  The placement agent received a fee of approximately 7% cash,   warrants to purchase 11,496 shares of common stock at an exercise price of $0.36, a warrant to purchase 6,569 shares of common stock at an exercise price of $0.594 per share and 1,943 shares of common stock.  These warrants are exercisable for a period of 18 months from the date of the final close of the offering.  Item 3. Defaults Upon Senior Securities The Company has approximately $650,000 of Subordinated Promissory Notes that are in default.  The Company is seeking waivers and consents to convert this debt and interest into shares of the Companys common stock. The Company is in default upon a $40,000 note payable to an officer of the Company. The Company is currently in default on notes issued in connection with the Vincera Software, Inc. acquisition, in the amount of $180,873 and is accruing interest at 1.5% per month as long as the notes remain unpaid. The Company is in default upon a $50,000 note payable to an investor.


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The Company is in default on two notes totaling $360,000 to a shareholder. The amounts due on the notes with accrued interest are listed below as of September 30, 2007: Defaults Upon Senior SecuritiesDuePrincipalAccrued InterestTotalSubordinated Promissory Notes6/30/05$650,000209,431859,431Note payable Officer11/30/200540,0004,87944,879Notes payable Officers and employees8/24/05180,87381,808262,681Note payable to investor9/15/0750,0002,06952,069Notes payable to investor8/27/07 & 9/15/07360,00036,864396,864Totals$1,280,873335,0511,615,924   Item 4. Submission of Matters to a Vote of Security Holders None.  Item 5. Other Information None.  Item 6. Exhibits Exhibit No.Description31.1Certification of Chief Executive Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act31.2Certification of Principal Financial Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act32.1Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


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SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VINCERA, INC.

By:/s/ David R. Malmstedt
David R. Malmstedt, President and Chief Executive Officer (Duly Authorized Signatory and Principal Executive, Financial and Accounting Officer)

Date:  November 14, 2007


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