UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549




FORM 10-K





(Mark One)


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





For the fiscal year ended December 31, 2009





o
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.)





5230 E. Hunter Ave, Anaheim, California

92807(Address of principal executive offices)

(Zip Code)





Issuer’s telephone number, including area code:  (714) 779-5700.





Securities registered pursuant to Section 12(b) of the Act:  None





Securities registered pursuant to Section 12(g) of the Act:  Common Stock, Par Value $0.001





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  o    No  x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  o





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.  (1)  Yes x    No o       (2)  Yes  x    No  o





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x







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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.






Large Accelerated Filer
o
Accelerated Filer
oNon-accelerated Filer
o
Smaller reporting company
x






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





The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $324,005, computed by reference to the average bid and asked price of the Common Stock as of the last business day of the registrant’s most recently completed second fiscal quarter.





At April 14, 2010, there were 445,836,445shares of the registrant’s Common Stock outstanding.




DOCUMENTS INCORPORATED BY REFERENCE




None












































2







Table of Contents
PagePART I
4ITEM 1.  BUSINESS
4ITEM 1A.  RISK FACTORS
10ITEM 1B.  UNRESOLVED STAFF COMMENTS
10ITEM 2.  PROPERTIES
10ITEM 3.  LEGAL PROCEEDINGS
10ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
10PART II
11ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
11ITEM 6.  SELECTED FINANCIAL DATA
12ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
12ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
17ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
17ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
17ITEM 9A.  CONTROLS AND PROCEDURES
17ITEM 9A(T).  CONTROLS AND PROCEDURES
17PART III
18ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
18ITEM 11.  EXECUTIVE COMPENSATION
19ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
22ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
23ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
24PART IV
25ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES
25










3





Forward Looking Statements





The statements contained in this report that are not historical facts are forward-looking statements that represent management’s beliefs and assumptions based on currently available information.  Forward-looking statements include the information concerning our search for an operating company, possible or assumed future operations, business strategies, need for financing, competitive position, potential growth opportunities, ability to retain and recruit personnel, the effects of competition and the effects of future legislation or regulations.  Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believes,” “intends,” “may,” “will,” “should,” “anticipates,” “expects,” “could,” “plans,” or comparable terminology or by discussions of strategy or trends.  Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct.  Such statements by their nature involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements.





Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed in this report.  While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to, changes in regulation of shell or blank check companies; the general economic downturn; a further downturn in the securities markets; our ability to raised needed operating funds and continue as a going concern; and other risks and uncertainties.  Should one or more of these risks materialize (or the consequences of such a development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those expected.  We disclaim any intention or obligation to update publicly or revise such statements whether as a result of new information, future events or otherwise.





There may also be other risks and uncertainties that we are unable to identify and/or predict at this time or that we do not now expect to have a material adverse impact on our business.





Introductory Comment





Throughout this Annual Report on Form 10-K, unless otherwise designated, the terms “we,” “us,” “our,” “the Company,” “our Company,” and “Trycera” refer to Trycera Financial, Inc., a Nevada corporation.




PART I





ITEM 1.  BUSINESS





Overview and Development Since the Beginning of 2009




From 2004 until 2008 the Company was in the business of developing, deploying and marketing semi-custom and customized branded prepaid and prepaid card solutions.  Due to continued losses from operations during 2008, the Company began winding down its principal business operations and commenced a search for a new business venture.  The Company has no material assets and significant liabilities. Former board members and management were unsuccessful in securing a new business venture for the Company and on January 22, 2009, transferred control of the Company to Ronald N. Vance, former company counsel, to seek for and, if possible, locate a suitable operating business venture willing to take control of the Company.





On August 12, 2009, the Company changed its status from shell Company to operating Company.  Pursuant to business operations established in the second quarter, the Company has begun operations.  The core focus of the restarted operations is marketing financial products and services.  As a result, the Company does not plan to reinstate its previous program management status, and will instead rely on third party processors, program managers and banks to coordinate, issue and manage prepaid card portfolios on behalf of the Company.  The Company will focus on the marketing of network branded third party card programs.  In efforts to support the restarted operations and to deliver organic revenue, the Company executed an agreement with a prepaid card program manager, Bank Freedom, in the first quarter of 2009.  By contracting with Bank Freedom, the Company is attempting to provide a network branded prepaid card to customers as a primary vehicle for delivering other financial products and services such as bill payment, payment reporting and online personal financial management tools. The Company has also begun negotiations to engage businesses in the sales process.  The targeted focus of the Company is to partner with businesses which deliver non-bank personal and financial services such as insurance agencies, micro-loan centers, rent to own, local/regional credit unions and check cashing businesses.   As of the date of this report, the Company has begun negotiations for various arrangements and agreements.  While new agreements are in place, it is indeterminable how restarting operations may positively or adversely affect the business.  As a result, the Company, while attempting to create newfound revenue streams, will continue seeking opportunities for outside business ventures and raising funds to aid in retooling and restarting the operations.





4


Recent Developments





On November 6, 2009 the Company notified Wilson Elser Moskowitz Edelman & Dicker LLP in writing that the Company was agreeable to pursuing a settlement in the Transfers4Less arbitration matter.  The Insurance carrier and their legal counsel have indicated that the Company would be liable for $5,000 or more of the proposed settlement.  On December 18, 2009, the Company, under debt conversion and settlement provisions with a third party finalized the payment of $10,000 to Transfers4Less and resolved the outstanding $40,000 arbitration award and any further legal action under a settlement agreement.




On November 2, 2009, the Company filed the amended Articles of Incorporation with the State of Nevada.  The amended Articles of Incorporation authorize up to 2,000,000,000 shares of the Company’s common stock to be issued.





On October 22, 2009, the Company entered into a debt conversion agreement with former Directors Alan Knitowski and Luan Dang.  Messrs Knitowski and Dang also agreed to have certain related party shareholders agree to be included in the debt conversion.  As a result of the debt conversion with these parties, the Company will reduce their liability by $70,000. Shares have not yet been issued under this agreement, and the Company may yet provide the necessary cash payment and alleviate the need to issue a significant quantity of shares.





On October 20, 2009, the Company issued 250,000 shares for services and entered into a leak out agreement with Mr. Dick Croft.  Mr. Croft provides web development and graphics design support for the Company.





On October 16, 2009, the Company issued 1,500,000 shares for business development services to PhilMoss & Co. and Argyle Capital.  PhilMoss received 1,000,000 shares while Argyle Capital received 500,000 shares.





On October 1, 2009, the consulting agreement between the Company and Balius Consulting Group automatically terminated as a result of Mr. Kenyon entering into a formal employment agreement with Trycera and ceasing to provide services for Balius.





On October 1, 2009, the Company entered into formal employment agreements with the two principal executives, Ray Smith and Bryan Kenyon. The employment agreement for Mr. Smith supersedes the prior employment agreement dated February 6, 2009, under which no compensation was paid or accrued.  Each of these full-time employment agreements was effective October 1, 2009, and is for a term of three years.  Each is renewable in two-year increments unless terminated prior to expiration of a term.  The base salary for each party is $240,000 per year, payable in month increments of $20,000.  As a signing bonus for entering into the agreements, each party received 16,000,000 shares.  The employees are also eligible for performance bonuses and to participate in the Company’s stock option plan.  Each is also entitled to participate in employee benefit plans, including health and retirement plans created hereafter.  Each of the employment agreements is terminable upon the death or disability of the employee, or for cause, and may be terminated by the Company without cause which would require the Company to pay a severance benefit in an amount equal to one and one-half of the largest annual base salary under the agreement if terminated prior to October 1, 2010, and one times the largest annual base salary if terminated thereafter.  Each agreement also contains provisions requiring the employee to maintain the confidentiality of any confidential information.  The agreements also include provisions prohibiting the employee from soliciting any employees or clients of the Company for 24 months after the termination of the agreement.  The employees are also prohibited from competing with the Company for a period of 24 months after the termination of the agreement.  Each agreement also includes an indemnification provision which requires the Company to indemnify the employee against proceedings initiated or threatened against him in his capacity as an officer, director, or employee of the Company or for another entity in which he serves at the request of the Company.  The agreements also provide that the Company will advance the employee’s expenses in such instances provided that the employee shall furnish an undertaking to repay such advances if it is ultimately determined that the employee was not entitled to be indemnified.





5





During the fourth quarter, all primary operational efforts have been prioritized and focused on entering into new operating agreements and restarting operations.  At the start of the fourth quarter, the Company focused on developing marketing partnerships to facilitate the distribution of prepaid debit cards, personal financial services and payment reporting services, all of which are designed to assist consumers in managing individual personal finances, including spending, budgeting and financial awareness.  During the fourth quarter, the Company executed agreements to operate using a new banking partnership, a new processor relationship and a leading retail load network.  The new bank relationship allows the Company to market co-branded and customized prepaid card solutions that carry a major card association brand and the platform will be integrated with the payment reporting solutions to facilitate the transfer of recurring payment activities through a third party reporting provider.  The Company has a long standing strategic partnership with a reporting company that utilizes proprietary algorithms to help accurately discern and track on-time nontraditional payments and will provide this data to the national credit reporting agencies in the required format(s).





During the fourth quarter, we continued progress and development on other marketing and sales channels with a new bank partner, card issuer and program manager, Central National Bank.  By working closely with Central National Bank, management believes we will be able to offer a predictable cost model that will provide our customers and strategic distribution partners the flexibility of working with wide reaching portfolio program channels and will align cardholders with a financial tool that includes online card balance viewing, bill payment, convenient reloading options online or at retail and a financial management spending analysis tool.  The two programs in development that will be issued through Central National Bank include a general purpose payment card and a payroll program offered to a leading private retail group in the western United States.  While we did begin to distribute a limited number of payroll cards to customers during the fourth quarter of 2009, we anticipate marketing and launching  two programs to a more broad customer base in the first two quarters of 2010 and each program represents potential organic revenue opportunities to the Company.





In addition to our new operations, we plan to expand in the coming quarters through targeted acquisitions of small card portfolios and complementary personal financial services-related companies.  We have targeted three potential acquisitions in the financial services space, one related to patented technology while the other two are related to the delivery of personal financial services and personal financial awareness.  At this stage the Company has not entered into any negotiations or agreements to make any acquisitions.





The Company currently remains insolvent but is seeking financing from various sources for which there are no commitments from anyone to provide us with such financing.  The Company believes that material changes to the recent trends in revenue are expected within the next ninety days. We do not currently have sufficient cash on hand to satisfy existing operating cash needs or working capital requirements on a sustained basis and the President and CEO has been loaning the Company money in order to fulfill certain obligations related to audit and review functions.





Business of the Company





Selection of a Business





The Company has re-emerged in the prepaid debit card and prepaid payments space.  The Company intends to either seek an outside business venture or to raise funds to grow existing developmental operations.  The Company anticipates that businesses for possible acquisition will be referred by various sources, including its officers and directors, shareholders, professional advisors, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals.  The Company will not engage in any general solicitation or advertising for a business opportunity, and will rely on personal contacts of its sole officer and director and his affiliates, as well as indirect associations between him and other business and professional people.  By relying on “word of mouth,” the Company may be limited in the number of potential acquisitions it can identify.  While it is not presently anticipated that the Company will engage unaffiliated professional firms specializing in business acquisitions or reorganizations, such firms may be retained if management deems it in the best interest of the Company.  The Company has plans to re-sign an operating agreement with CRS Corporation, within the next 90 days in order to maintain reporting status with alternative credit and payment data.  The existing agreement remains in effect, but the Company has provided written notification of intent to terminate in order to enter new negotiations with CRS Corporation.  CRS Corporation is engaged in the business of tracking and reporting nontraditional payment history to national credit reporting agencies.





6


The Company will not restrict its search to any particular business, industry, or geographical location, and management may evaluate and enter into any type of business in any location.  The Company may participate in a newly organized business venture or a more established company entering a new phase of growth or in need of additional capital to overcome existing financial problems.  Participation in a new business venture entails greater risks since in many instances management of such a venture will not have proved its ability, the eventual market of such venture’s product or services will likely not be established, and the profitability of the venture will be unproved and cannot be predicted accurately.  If the Company participates in a more established firm with existing financial problems, it may be subjected to risk because the financial resources of the Company may not be adequate to eliminate or reverse the circumstances leading to such financial problems.





In seeking a business venture, the decision of management will not be controlled by an attempt to take advantage of any anticipated or perceived appeal of a specific industry, management group, product, or industry, but will be based on the business objective of seeking long-term capital appreciation in the real value of the Company.





In analyzing prospective businesses, management will consider, to the extent applicable, the following: the available technical, financial, and managerial resources, working capital and other prospects for the future, the nature of present and expected competition, the quality and experience of management services which may be available and the depth of that management, the potential for further research, development, or exploration, the potential for growth and expansion, the potential for profit, the perceived public recognition or acceptance of products, services, or trade or service marks, name identification and other relevant factors.





The decision to participate in a specific business may be based on management’s analysis of the quality of the other firm’s management and personnel, the anticipated acceptability of new products or marketing concepts, the merit of technological changes, and other factors which are difficult, if not impossible, to analyze through any objective criteria.  It is anticipated that the results of operations of a specific firm may not necessarily be indicative of the potential for the future because of the requirement to substantially shift marketing approaches, expand significantly, change product emphasis, change or substantially augment management, and other factors.





The Company will analyze all available factors and make a determination based on a composite of available facts, without reliance on any single factor.  The period within which the Company may participate in a business cannot be predicted and will depend on circumstances beyond the Company’s control, including the availability of businesses, the time required for the Company to complete its investigation and analysis of prospective businesses, the time required to prepare appropriate documents and agreements providing for the Company’s participation, and other circumstances.





Acquisition of an Outside Business





In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, or other reorganization with another corporation or entity; joint venture; license; purchase and sale of assets; or purchase and sale of stock, the exact nature of which cannot now be predicted.  The structure of the particular business acquisition will be approved by the Board of Directors and may not require the approval of the Company’s shareholders.  Notwithstanding the above, the Company does not intend to participate in a business through the purchase of minority stock positions.  Upon the consummation of a transaction, it is likely or possible that the present management and shareholders of the Company will not be in control of the Company.  In addition, it is anticipated that the current officers and directors would resign in favor of new management designated by the target company without a vote of the Company’s stockholders.





7


In the event the Company enters into an acquisition transaction with another entity, the Company will be required to report the transaction in a Current Report on Form 8-K within four business days following the execution of the agreement, and any amendment thereto, and within four business days following the closing of the transaction.  In addition, since the Company is no longer a shell company, it will be required to file within four business days a Current Report on Form 8-K which includes the information that would be required if the Company were filing a general form for registration of securities on Form 10 reflecting the Company and its securities upon consummation of the transaction, including information on the new business and management of the Company after closing.





In connection with the Company’s acquisition of a business, the present shareholders of the Company, including current management, may, as a negotiated element of the acquisition, sell a portion or all of the Company’s Common Stock held by them at a significant premium over their original investment in the Company.  It is not unusual for affiliates of the entity participating in the reorganization to negotiate to purchase shares held by the present shareholders in order to reduce the number of “restricted securities” held by persons no longer affiliated with the Company and thereby reduce the potential adverse impact on the public market in the Company’s Common Stock that could result from substantial sales of such shares after the restrictions no longer apply.  As a result of such sales, affiliates of the entity participating in the business reorganization with the Company would acquire a higher percentage of equity ownership in the Company.  Public investors will not receive any portion of the premium that may be paid in the foregoing circumstances.  Furthermore, the Company’s shareholders may not be afforded an opportunity to approve or consent to any particular stock buy-out transaction.





In the event sales of shares by present stockholders of the Company, including current management, is a negotiated element of a future acquisition, a conflict of interest may arise because our sole director will be negotiating for the acquisition on behalf of the Company and for sale of his or shareholders’ shares for his own or the shareholders’ respective accounts.  Where a business opportunity is well suited for acquisition by the Company, but affiliates of the business opportunity impose a condition that management sell shares at a price which is unacceptable to our sole director, management may not sacrifice his or the shareholders’ financial interest for the Company to complete the transaction.  Where the business opportunity is not well suited, but the price offered management for the shares is high, management will be tempted to effect the acquisition to realize a substantial gain on the shares in the Company.  Management has not adopted any policy for resolving the foregoing potential conflicts, should they arise, and does not intend to obtain an independent appraisal to determine whether any price that may be offered for their shares is fair.  Stockholders must rely, instead, on the obligation of management to fulfill its fiduciary duty under state law to act in the best interests of the Company and its stockholders.





It is anticipated that any securities issued in any such reorganization would be issued in reliance on exemptions from registration under applicable federal and state securities laws.  Securities, including shares of the Company’s Common Stock, issued by the Company in such a transaction would be “restricted securities” as defined in Rule 144 promulgated by the Securities and Exchange Commission.  Under amendments to Rule 144 recently adopted by the Commission, and which take effect on February 15, 2008, these restricted securities could not be resold under Rule 144 until the following conditions were met:  the Company ceased to be a shell company; it remained subject to the Exchange Act reporting obligations; filed all required Exchange Act reports during the preceding 12 months; and at least one year had elapsed from the time the Company filed “Form 10 information” reflecting the fact that it had ceased to be a shell company.  In some circumstances, however, as a negotiated element of the transaction, the Company may agree to register such securities either at the time the transaction is consummated, under certain conditions, or at specified times thereafter.  Although the terms of such registration rights and the number of securities, if any, which may be registered cannot be predicted, it may be expected that registration of securities by the Company in these circumstances would entail substantial expense to the Company.  The issuance of substantial additional securities and their potential sale into any trading market that may develop in the Company’s securities may have a depressive effect on such market.





While the actual terms of a transaction to which the Company may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to structure the acquisition as a so-called “tax-free” event under sections 351 or 368(a) of the Internal Revenue Code of 1986, (the “Code”).  In order to obtain tax-free treatment under section 351 of the Code, it would be necessary for the owners of the acquired business to own 80% or more of the voting stock of the surviving entity.  In such event, the shareholders of the Company would retain less than 20% of the issued and outstanding shares of the surviving entity.  Section 368(a)(1) of the Code provides for tax-free treatment of certain business reorganizations between corporate entities where one corporation is merged with or acquires the securities or assets of another corporation.  Generally, the Company will be the acquiring corporation in such a business reorganization, and the tax-free status of the transaction will not depend on the issuance of any specific amount of the Company’s voting securities.  It is not uncommon, however, that as a negotiated element of a transaction completed in reliance on section 368, the acquiring corporation issue securities in such an amount that the shareholders of the acquired corporation will hold 50% or more of the voting stock of the surviving entity.  Consequently, there is a substantial possibility that the shareholders of the Company immediately prior to the transaction would retain substantially less than 50% of the issued and outstanding shares of the surviving entity.  It is anticipated that these shareholders would in fact retain less than 5% control of the Company after a reverse acquisition.





8


Therefore, regardless of the form of the business acquisition, it may be anticipated that stockholders immediately prior to the transaction will experience a significant reduction in their percentage of ownership in the Company.





Notwithstanding the fact that the Company is technically the acquiring entity in the foregoing circumstances, generally accepted accounting principles will ordinarily require that such transaction be accounted for as if the Company had been acquired by the other entity owning the business and, therefore, will not permit a write-up in the carrying value of the assets of the other company.





The manner in which the Company participates in a business will depend on the nature of the business, the respective needs and desires of the Company and other parties, the management of the business, and the relative negotiating strength of the Company and such other management.





The Company will participate in a business only after the negotiation and execution of appropriate written agreements.  Although the terms of such agreements cannot be predicted, generally such agreements will require specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to such closing, will outline the manner of bearing costs if the transaction is not closed, will set forth remedies on default, and will include miscellaneous other terms.





Operation of Business After Acquisition





The Company’s operation following internal generation of a business model or its acquisition of a business will be dependent on the nature of the business and the interest acquired.  If an outside business is acquired, it is unlikely that current shareholders would be in control of the Company or that present management would be in control of the Company following the acquisition.  It may be expected that the business will present various risks, which cannot be predicted at the present time.





Governmental Regulation





It is impossible to predict the government regulation, if any, to which the Company may be subject until it has acquired an interest in a business.  The use of assets and/or conduct of businesses that the Company may acquire could subject it to environmental, public health and safety, land use, trade, or other governmental regulations and state or local taxation.  In selecting a business in which to acquire an interest, management will endeavor to ascertain, to the extent of the limited resources of the Company, the effects of such government regulation on the prospective business of the Company.  In certain circumstances, however, such as the acquisition of an interest in a new or start-up business activity, it may not be possible to predict with any degree of accuracy the impact of government regulation.  The inability to ascertain the effect of government regulation on a prospective business activity will make the acquisition of an interest in such business a higher risk.





Competition





The Company will be involved in intense competition with other business entities, many of which will have a competitive edge over the Company by virtue of their stronger financial resources and prior experience in business.  There is no assurance that the Company will be successful in obtaining suitable investments.





9


Employees





The Company currently has two employees, namely its President and CEO, Ray Smith and its CFO and COO, Bryan Kenyon.  Management of the Company expects to use third party providers, consultants, attorneys, and accountants as necessary, and does not anticipate a need to engage other full- time employees at this time.  The future need for employees and their availability will be addressed in connection with the organic growth of the business and /or the strategic acquisition of related or unrelated businesses.





ITEM 1A.  RISK FACTORS





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





ITEM 1B.  UNRESOLVED STAFF COMMENTS





Because we are neither an accelerated filer or a large accelerated filer, nor a well-known seasoned issuer, we have elected not to provide the information required by this item.





ITEM 2.  PROPERTIES





The Company has no office facilities, but does anticipate the need to lease commercial office space or facilities in the coming quarters.  For now the business address being used as the Company address is the mail box suite in Orange, California.  The Company may lease commercial office facilities in the future at such time as operations have developed to the point where the facilities are needed, but has no commitments or arrangements for any facilities.  There is no assurance regarding the future availability of commercial office facilities or terms on which the Company may be able to lease facilities in the future, nor any assurance regarding the length of time the present arrangement may continue.





ITEM 3.  LEGAL PROCEEDINGS





The Company continues to receive demands for payments from creditors.  The Company has insufficient funds to defend these actions or to pay the creditors.  However, management has been proactive to reach out to most creditors in an attempt to negotiate or resolve outstanding debt.  In addition, the Company is proactively working with interested third parties to convert debt on behalf of the Company.  Converted debt notifications will be filed on Form 8-K with the Securities and Exchange Commission.





ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





On September 11, 2009, shareholders owning or holding proxies to vote 5,050,665 shares, or approximately 52% of the total outstanding shares on such date, approved the following items (i) An amendment to our articles of incorporation to increase the authorized number of common shares from 100,000,000 to 2,000,000,000; and (ii) an amendment to our 2004 Stock Option/Stock Issuance Plan to increase the number of shares authorized under the plan from 10,000,000 to 250,000,000.  The articles of amendment to increase the authorized common shares were filed with the State of Nevada on November 2, 2009.






10


PART II





ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES





Market Information





The Company’s Common Stock is quoted on both the OTC Bulletin Board and the Pink Sheets.  The Common Stock is currently traded with the trading symbol of “TRYF.”  The table below sets forth for the periods indicated the quarterly high and low bid prices as reported by the Pink Sheets.  These quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.





Quarter

High


LowFISCAL YEAR ENDEDDECEMBER 31, 2008

First

$
0.13


$
0.13Second

$
0.08


$
0.08Third

$
0.07


$
0.07Fourth

$
0.06


$
0.06





Quarter

High


LowFISCAL YEAR ENDEDDECEMBER 31, 2009

First

$
0.055


$
0.015Second

$
0.015


$
0.014Third

$
0.055


$
0.014Fourth

$
0.056


$
0.06




The Company’s Common Stock is considered to be penny stock under rules promulgated by the Securities and Exchange Commission. Under these rules, broker-dealers participating in transactions in these securities must first deliver a risk disclosure document which describes risks associated with these stocks, broker-dealers’ duties, customers’ rights and remedies, market and other  information, and make suitability determinations approving the customers for these stock transactions based on financial situation, investment experience and objectives.  Broker-dealers must also disclose these restrictions in writing, provide monthly account statements to customers, and obtain specific written consent of each customer.  With these restrictions, the likely effect of designation as a penny stock is to decrease the willingness of broker- dealers to make a market for the stock, to decrease the liquidity of the stock and increase the transaction cost of sales and purchases of these stocks compared to other securities.





Holders





At March 18, 2010, the Company had 123 shareholders of record.  The number of record holders was determined from the records of the Company’s transfer agent and does not include beneficial owners of Common Stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.  The Company has appointed Interwest Transfer Co., Inc., Salt Lake City, Utah, to act as its transfer agent for the Common Stock.





Dividends





The Company has not declared or paid any cash dividends on its Common Stock during the two fiscal years ended December 31, 2009, or in any subsequent period.  The Company does not anticipate or contemplate paying dividends on its Common Stock in the foreseeable future.  The only restrictions that limit the ability to pay dividends on common equity, or that are likely to do so in the future, are those restrictions imposed by law.





Purchases of Equity Securities





On October 20, 2009, the Company issued 250,000 shares for services and entered into a leak out agreement with Mr. Dick Croft.  Mr. Croft provides web development and graphics design support for the Company. The shares were issued  in reliance upon the exemptions from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of the Act.  The certificates evidencing the above mentioned shares contain a legend (1) stating that the shares have not been registered under the Act and (2) setting forth or referring to the restrictions on transferability and sale of the shares under the Act.





11





On October 16, 2009, the Company issued 1,500,000 shares for business development services to PhilMoss & Co. and Argyle Capital.  PhilMoss received 1,000,000 shares while Argyle Capital received 500,000 shares. The shares were issued  in reliance upon the exemptions from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of the Act.  The certificates evidencing the above mentioned shares contain a legend (1) stating that the shares have not been registered under the Act and (2) setting forth or referring to the restrictions on transferability and sale of the shares under the Act.





On February 25, 2010, the Company issued an aggregate of 40,000,000 shares of its Common Stock to three unaffiliated entities upon the conversion of an aggregate of $10,000 of outstanding indebtedness.  The lenders acquired and assisted in the settling of a $40,000 arbitration award and this debt had been outstanding since 2007.  The certificates evidencing the above mentioned shares were issued without legend in that Rule 144 permits the lenders to tack back to the date of the debt which was more than two years prior to issuance.





On February 24, 2010, we issued 175,000,000 shares of our common stock each to Ray A. Smith, the Company’s CEO, President and Director and Bryan Kenyon, the Company’s Chief Financial Officer and Chairman in consideration for the shares both Messrs. Smith and Kenyon forgave $100,000 each of accrued salary, loans and other monies advanced on the Company’s behalf by both Mr. Smith and Mr. Kenyon. The shares were issued  in reliance upon the exemptions from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of the Act.  The certificates evidencing the above mentioned shares contain a legend (1) stating that the shares have not been registered under the Act and (2) setting forth or referring to the restrictions on transferability and sale of the shares under the Act.





ITEM 6.  SELECTED FINANCIAL DATA





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





ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





The following discussion should be read in conjunction with our financial statements and related notes thereto as included with this report.





Overview





From 2004 until 2008 the Company was in the business of developing, deploying and marketing semi-custom and customized branded prepaid and prepaid card solutions.  Due to continued losses from operations during 2008, the Company began winding down its principal business operations and commenced a search for a new business venture.  The Company has no material assets and significant liabilities. Former board members and management were unsuccessful in securing a new business venture for the Company and on January 22, 2009, transferred control of the Company to Ronald N. Vance, former company counsel, to seek for and, if possible, locate a suitable operating business venture willing to take control of the Company.





On August 12, 2009, the Company changed its status from shell Company to operating Company.  Pursuant to business operations established in the second quarter, the Company has begun operations.  The core focus of the restarted operations is marketing financial products and services.  As a result, the Company does not plan to reinstate its previous program management status, and will instead rely on third party processors, program managers and banks to coordinate, issue and manage prepaid card portfolios on behalf of the Company.  The Company will focus on the marketing of network branded third party card programs.  In efforts to support the restarted operations and to deliver organic revenue, the Company executed an agreement with a new issuing bank, processing partner and program manager, Central National Bank.  By contracting with Central National Bank, the Company has the ability to deliver a turnkey personalized financial product with a suite of features and functions designed to facilitate e-commerce and provide a network branded prepaid card to customers as a primary vehicle for delivering other financial products and services such as bill payment, payment reporting and online personal financial management tools. The Company has also begun negotiations to engage businesses in the sales process.  The targeted focus of the Company is to partner with businesses which deliver non-bank personal and financial services such as insurance agencies, micro-loan centers, rent to own, local/regional credit unions and check cashing businesses.   As of the date of this report, the Company has begun negotiations for various arrangements and agreements.  While new agreements are in place, it is indeterminable how restarting operations may positively or adversely affect the business.  As a result, the Company, while attempting to create newfound revenue streams, will continue seeking opportunities for outside business ventures and raising funds to aid in retooling and restarting the operations.





12





Critical Accounting Policies





Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties that could cause materially different results under different estimates and assumptions.  We believe our critical accounting policies relate to accounts receivable, goodwill and intangible assets and related impairment assessments, and stock-option compensation because they are important to the portrayal of our financial condition or results of operations and they require critical management estimates and judgments about matters that are uncertain.  There were no changes to our critical accounting policies during the year ended December 31, 2008.





Results of Operations--Year Ended December 31, 2009, versus the Year Ended December 31, 2008





In 2009, we saw revenues drop over the prior year.  The decline of revenue was attributed to the exiting of the underlying business in all channels. The primary operational effort throughout the 2009 fiscal year was to wind up the business and seek a strategic alternative.





Revenue





Revenue was $287 and $151,619 for the years ended December 31, 2009 and 2008, respectively, representing a decrease of $151,332 or 100%. Our 2009 results reflect the winding up of the operations and the commencement of our new business plan.








Cost of Sales and Gross Profit





Cost of sales was $0 and $123,029 for the years ended December 31, 2009 and 2008, respectively, representing a decrease of $123,029 or 100%.  The decrease was attributed to the exiting of the business operations.





The resulting gross profit was 0% and 18.9% for the years ended December 31, 2009 and 2008, respectively. Management expects a strategic alternative to favorably impact the underlying gross profit margin but that is only determinable upon execution of an effective alternative.





Operating expenses





Operating expenses were $466,476 and $755,271 for the years ended December 31, 2009 and 2008, respectively, representing a decrease of $288,795 or 38%. The major components of operating expense are salaries and wages (33%) general and administrative (24%) professional fees (43%).  A material amount of the operating expenses for the year ended December 31, 2009 have been accrued and continue to be unpaid or paid in small increments.





Salaries and wages expense was $152,975 and $32,354 for the years ended December 31, 2009 and 2008, respectively, representing an increase of $120,621 or 373%. The increase resulted from the signing of employment agreements with the officers of the Company.





General and administrative expense was $112,502 and $336,639 for the years ended December 31, 2009 and 2008, respectively, representing a decrease $224,137 or 67%. The decrease resulted from a significant decrease in all categories as the Company had no business, no facility and no employees for most of the 2009 fiscal year.





Professional fees and expenses were $200,999 and $157,868 for the years ended December 31, 2009 and 2008, respectively, representing an increase of $43,131 or 27%.   The increase resulted from the inclusion of additional expenses associated with a third party service providers including strategic consulting services and accounting and legal services.





13


Other income (expense)





Other income (expense) was ($7,001) and ($5,098) for the years ended December 31, 2009 and 2008, respectively.  The main component of other expense is the financing costs which resulted from notes payable.





Net loss





We incurred net losses of $473,990 and $732,579 for the years ended December 31, 2009 and 2008, respectively.





Liquidity and Capital Resources





As of December 31, 2009, cash totaled $0 as compared with $263 of cash at December 31, 2008, resulting in a decrease of $263 in cash and cash equivalents.  The decrease in cash and cash equivalents was attributed to the nature of winding up the primary business and seeking a strategic alternative and then subsequently commencing the new business plan.  For the year ended December 31, 2009, we used $57,407 of cash in operations.  For the comparable period in the prior year we used $149,862 of cash in operations.





Cash provided from financing activities was $57,144.  The Company raised $30,000 in the fourth quarter of 2009 under a private placement memorandum (PPM) and Ray Smith, President and CEO, has loaned the company $26,000 and this amount is payable upon demand.  In event no suitable funding is found, Mr. Smith understands the loans may default and he may not be recompensated. For the comparable period in the prior year we obtained $77,500 from financing activities as we issued 10% secured notes.





In order to meet the Company’s cash flow requirements and to satisfy the existing debts, management intends to seek funding through the sale of either debt or equity instruments.  Management is currently in the process of delivering a convertible note structure intended to raise short term operating capital while seeking a separate and supplemental capital raise through a nonpublic equity offering.  The equity offering is planned for the last part of the first quarter to coincide with the recapitalization of the Company, which based on time lines outlined by the notification process, is likely to fall at or near the beginning of February 2010.  Under an isolated transaction, the Company was successful in raising $100,000 from an accredited investor in March 2010.  No other funds are anticipated under such isolated transaction and the Company shall now consider opening a new private placement memorandum to provide future funding.  The Company has been successful in negotiating tranches of debt down or eliminating debt through a convertible stock offering.  Former Directors, Alan Knitowski and Luan Dang and related party shareholders of Messrs Knitowski and Dang, have agreed to convert their $70,000 in debt for shares, although that settlement agreement expired on December 31, 2009 and no olive branch has been extended by either party to confirm or renegotiate the expired agreement.  The Company may be able to provide the necessary cash payment and alleviate the need to issue a significant quantity of shares.  Separately, if the Company is unable to secure outside funding, management may attempt to continue to renegotiate outstanding debts and satisfy liabilities through organically generated revenue, if any.





Working capital was ($979,968) at December 31, 2009, as compared with working capital of $(589,145) at December 31, 2008.  This decrease in working capital was a result of using existing funds and accounts payable to fund operations and related expenses.





Caution About Forward Looking Statements





Certain information contained in this discussion may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements are generally identified by phrases such as “the Company expects,” “the Company believes” or words of similar import.





14





Such forward-looking statements involve known and unknown risks including, but not limited to, the following factors:


- changes in general economic and business conditions in the Company’s market area;
- changes in banking and other laws and regulations applicable to the Company;risks inherent in the prepaid space such as fraud loss, illegal card usage and collateral liabilities;
- changing trends in customer profiles and behavior;
- changes in interest rates and interest rate policies;
- maintaining cost controls as the Company opens or acquires new programs/products/operations;
- competition with other banks and financial institutions, and companies outside of the prepaid and banking industries, including those companies that have substantially greater access to capital and other resources;
- the ability to continue to attract investments and capital to fund operations and growth;
- the ability to successfully manage the Company’s growth or implement its growth strategies if it is unable to identify attractive markets, locations or opportunities to expand in the future;
- reliance on the Company’s management team, including its ability to attract and retain key personnel;
- demand, development and acceptance of new products and services;
- problems with technology utilized by the Company;
- maintaining capital levels adequate to support the Company’s growth; and
- other factors not herein described in Item 1A, “Risk Factors,” above.




Off-Balance Sheet Arrangements





During the quarter ended December 31, 2009, 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.






15


Subsequent Events





The following material events occurred subsequent to the year ended December 31, 2009:





On March 10, 2010, the Company entered into a new consulting agreement with Newport Coast Securities, Inc.,  which replaced any and all prior agreements by and between the parties.





On February 26, 2010, the Company retained new counsel for corporate legal matters.  The Company is now represented by Sommer & Schneider LLP based in Garden City, New York.





On February 25, 2010, the Company issued an aggregate of 40,000,000 shares of its Common Stock to three unaffiliated entities upon the conversion of an aggregate of $10,000 of outstanding indebtedness.  The lenders acquired and assisted in the settling of a $40,000 arbitration award and this debt had been outstanding since 2007.  The certificates evidencing the above mentioned shares were issued without legend in that Rule 144 permits the lenders to tack back to the date of the debt which was more than two years prior to issuance.





On February 24, 2010, we issued 175,000,000 shares of our common stock each to Ray A. Smith, the Company’s CEO, President and Director and Bryan Kenyon, the Company’s Chief Financial Officer and Chairman in consideration for the shares both Messrs. Smith and Kenyon forgave $100,000 each of accrued salary, loans and other monies advanced on the Company’s behalf by both Mr. Smith and Mr. Kenyon. The shares were issued  in reliance upon the exemptions from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of the Act.  The certificates evidencing the above mentioned shares contain a legend (1) stating that the shares have not been registered under the Act and (2) setting forth or referring to the restrictions on transferability and sale of the shares under the Act.





On February 23, 2010, our board of directors accepted the resignation of Ronald N. Vance as our Chairman of the Board and member of our board of directors. There was no disagreement on any matter relating to the Company’s operations, policies or practices, nor was Mr. Vance removed for cause.





On February 23, 2010 Mr. Matthew Richards was elected to the Company’s board of directors to fill the vacancy resulting from Mr. Vance’s resignation. On that same date, Mr. Bryan Kenyon our Chief Financial Officer and director was elected to replace Mr. Vance as our Chairman and Mr. Ray Smith our CEO, President and a Director was appointed the Company’s Secretary.








Off-Balance Sheet Arrangements





During the years ended December 31, 2009 and 2008, we did not engage in any off-balance sheet arrangements.





Recent Accounting Pronouncements





Revenue Recognition – Multiple Deliverable Revenue Arrangements




In October 2009, the FASB issued guidance for Revenue Recognition – Multiple Deliverable Revenue Arrangements ( Subtopic 605-25 ) “Subtopic”. This accounting standards update establishes the accounting and reporting guidance for arrangements under which the vendor will perform multiple revenue – generating activities. Vendors often provide multiple products or services to their customers. Those deliverables often are provided at different points in time or over different time periods. Specifically, this Subtopic addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting.  The amendments in this guidance will affect the accounting and reporting for all vendors that enter into multiple-deliverable arrangements with their customers when those arrangements are within the scope of this Subtopic.




This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after June 15, 2010. Earlier adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity’s fiscal year, the entity will apply the amendments under this Subtopic retrospectively from the beginning of the entity’s fiscal year.  The presentation and disclosure requirements shall be applied retrospectively for all periods presented. Management believes this Statement will have no impact on the financial statements of the Company once adopted.





16


All other new accounting pronouncements issued but not yet effective, have been deemed not to be relevant to the Company and are not expected to have any impact once adopted





ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





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





ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





The financial statements required pursuant to this item are included immediately following the signature page of this report.





ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





There have been no changes in or disagreements with accountants reportable pursuant to this item.




ITEM 9A.  CONTROLS AND PROCEDURES





As a smaller reporting company, we have elected not to provide the information required by this item.  Rather, we have provided the information set forth in Item 9A(T) below.





ITEM 9A(T).  CONTROLS AND PROCEDURES





Evaluation of disclosure controls and procedures





Our President, who serves as our principal executive officer and our principal financial officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rule 13a-15(e)) as of the end of the period covered by this Annual Report on Form 10-K (the “Evaluation Date”), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and financial officer, as appropriate, to allow timely decisions regarding required disclosure.  A discussion of the material weaknesses in our disclosure controls and procedures is set forth below.





Changes in internal control over financial reporting





There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.





Management’s report on internal control over financial reporting





Our management consists of Ray A. Smith, our Chief Executive Officer (“CEO”), and Bryan Kenyon, our Principal Financial Officer (“PFO”), who are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.  As a result, our internal control system is limited in its scope and capabilities, although, based on our CEO and PFO’s general business experience, is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles.





17


Our management conducted an evaluation of the effectiveness of our internal control over financial reporting.  Based on his evaluation, they concluded that there are material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.





All of our financial reporting is carried out by our CEO and  PFO, and we do not have an audit committee.  This lack of accounting staff results in a lack of segregation of duties and accounting technical expertise necessary for an effective system of internal control.





Since our Company has no material operations and may, at this time, be considered a developmental company, as defined in the Securities Act, we are making an effort to mitigate this material weakness to the fullest extent possible.  This is done by having our CEO and our PFO review all our financial reporting requirements for reasonableness.  All unexpected results are investigated.  At any time, if it appears that any control can be implemented to continue to mitigate such weaknesses, it will be immediately implemented.  As soon as our finances allow, we plan to hire sufficient accounting staff and implement appropriate procedures for monitoring and review of work performed by our CEO and  PFO.





Based on our evaluation under the frameworks described above, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2009.





This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.





ITEM 9B.  OTHER INFORMATION





The Company did not fail to file any information required to be filed in a report on Form 8-K during the fourth quarter of the fiscal year ended December 31, 2009.




PART III





ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





Current Management





The following table sets forth the name and ages of, and position or positions held by, our executive officers and directors:





Name


Age

Position(s)


Director Since

Employment BackgroundMatt Richards


42

Director


2010

Matthew Richards is a national trainer, public speaker and educator.  For 27 years, Mr. Richards has been a business and marketing consultant and a real estate investor.Ray A. Smith


37

President and

Chief Executive Officer


2009

Since April 2006 Mr. Smith has been the President and a director of CRS Corporation, a company offering credit enhancement, credit education, and consumer financial assistance services.  From February 2002 until April 2006, he as the President and CEO of Comm 2020 which operated a call center marketing credit services and a credit card application processing center for Visa and MasterCard.  Mr. Smith has served as President of and been employed by Trycera since February 2009.Bryan Kenyon


38

Chairman,

Chief Financial Officer


2010

Mr. Kenyon was our Chief Financial Officer from May 2004 until October 2008 and our Chief Operating Officer from April 2007 until October 2008.  He was reappointed as our CFO in April 2009.  From May 2002 until February 2004, he was Director of Financial Planning and Analysis for Green Dot Corporation, a leading provider of prepaid MasterCard® cards and prepaid card solutions.





On April 14, 2008, the California Department of Corporations issued a desist and refrain order against Mr. Smith, CRS Corporation and others alleging that the parties had violated Section 25110 of the California Securities Act of 1968 by making general solicitations in connection with the sale of the common stock by CRS Corporation.  The alleged violation took place in or about September 2006.





Directors are elected for a term of one year and until their successors are elected and qualified. Annual meetings of the stockholders, for the selection of directors to succeed those whose terms expire, are to be held at such time each year as designated by the Board of Directors.  The Board of Directors has not selected a date for the next annual meeting of shareholders.  Officers are elected by the Board of Directors, which is required to consider that subject at its first meeting after every annual meeting of stockholders.  Each officer holds his office until his successor is elected and qualified or until his earlier resignation or removal.





Section 16(a) Beneficial Ownership Reporting Compliance




According to our records, no director, officer, or beneficial owner of more than 10% of our Common Stock failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the fiscal year ended December 31, 2009.





Code of Ethics





On August 25, 2004, the Board of Directors adopted a Code of Ethics.  The purpose of the Code of is to set the expectations of the highest standards of ethical conduct and fair dealings.  The Code of Ethics applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.





Overview of Director Nominating Process





The Board of Directors does not have a standing nominating committee or committee performing similar functions. The Board of Directors also does not currently have a policy for the qualification, identification, evaluation or consideration of director candidates. The Board of Directors does not believe that a defined policy with regard to the qualification, identification, evaluation or consideration of candidates recommended by stockholders is necessary at this time due to the lack of operations and the fact that we have not received any stockholder recommendations in the past.  Director nominees are considered solely by our current sole director.





Audit Committee Financial Expert





Our Board of Directors performs the duties that would normally be performed by an audit committee.  Given our lack of operations prior to any merger, our Board of Directors believes that its current member has sufficient knowledge and experience necessary to fulfill the duties and obligations of the audit committee for our Company. The Board of Directors has determined that the Company does not have an audit committee financial expert, due to lack of funds.





18


ITEM 11.  EXECUTIVE COMPENSATION





Executive Compensation





The following table sets forth the compensation of the named executive officer for each of the two fiscal years ended December 31, 2009 and 2008:




Name &

Principal Position
Year

Salary ($)


Bonus

($)


Stock Awards

($)

Option Awards

($)

All Other Compensation

($)


Total

($)Bryan W. Kenyon, CFO/COO
2009

$
60,000



0



160,000
(1)
0

$
0


$
220,0002008

$
0



0



0

0

$
0


$
0Ray A. Smith President/CEO
2009

$
60,000



0



160,000
(1)
0

$
0


$
220,0002008

$
0



0



0

0

$
0


$
0


(1)
On October 1, 2009, our Board of Directors granted 16,000,000 shares each to Messrs Kenyon and Smith as a result of executing employment agreements on October 1, 2009. The value of the shares was determined in accordance with FAS 123R.





Equity Awards





The following table sets forth certain information concerning unexercised options for the named parties that were outstanding as of December 31, 2009:




Name


Number of securities underlying unexercised options (#) exercisable


Number of securities underlying unexercised options (#) unexercisable

Option exercise price

($)

Option expiration date

Number of shares or units of stock that have not vested

(#)

Market value of shares

or units of stock that

have not vested

($)Ray A. Smith



0



0Bryan W. Kenyon



0



0





On May 11, 2004, our Board of Directors adopted the 2004 Stock Option/Stock Issuance Plan.  Our shareholders approved the plan effective June 14, 2004.  The purpose of the plan is to provide eligible persons an opportunity to acquire a proprietary interest in our company and as an incentive to remain in the service of the company.  The Plan was updated on Jun 7, 2007 to include more shares of common stock.





There were 10,000,000 shares of common stock initially authorized for nonstatutory and incentive stock options and stock grants under the plan, which are subject to adjustment in the event of stock splits, stock dividends, and other situations. On November 2, 2009, the number of shares authorized under the Plan was increased to 250,000,000.





19


The plan is administered by our Board of Directors.  Participants in the plan are to be selected by the plan administrator which is currently our Compensation Committee.  The persons eligible to participate in the plan are as follows:  (a) employees of our company and any of its subsidiaries; (b) non-employee members of the board or non-employee members of the Board of Directors of any of its subsidiaries; and (c) consultants and other independent advisors who provide services to our company or any of its subsidiaries.  Options may be granted, or shares issued, only to consultants or advisors who are natural persons and who provide bona fide services to our company or one of its subsidiaries, provided that the services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for our securities.





The plan will continue in effect until all of the stock available for grant or issuance has been acquired through exercise of options or grants of shares, or until May 1, 2014, whichever is earlier.  The plan may also be terminated in the event of certain corporate transactions such as a merger or consolidation or the sale, transfer or other disposition of all or substantially all of our assets.





Stock option awards under the plan consist of nonstatutory stock options (NSOs) and incentive stock options (ISOs).  ISOs may be granted only to employees of our company or one of its subsidiaries.





The purchase price under each option is established by the plan administrator, but in no event will it be less than 100% of the fair market value of our common stock for ISOs and 85% for NSOs.  The price applicable to any option holder who holds more than 10 percent of our outstanding common stock will be 110% percent of fair market value. The aggregate exercise price, plus applicable taxes, are due and payable in cash or check on the date of the exercise of an option.  However, the plan administrator may permit payment of the total amount due by a full-recourse, interest-bearing promissory note; payroll deductions in installments; shares of common stock valued at fair market value on the date of exercise of the option; or through a special sale and remittance procedure through a designated brokerage firm.





The plan administrator will fix the terms of each option, but no option can be granted for a term in excess of 10 years.  The term of such an option will not be longer than five years in the case of any option holder who holds, on the date of the grant of an ISO, more than 10% of our outstanding common stock. Upon termination of services, the option holder will have a limited time in which to exercise vested options.  The plan administrator will not impose a vesting schedule upon any options granted which provides for exercise of an option for less than 20 percent of the shares subject to the option and with an initial installment for vesting which is fixed for a longer period than one year from the date of grant of the option.





During the lifetime of the person to whom an option has been granted, only that person has the right to exercise the option and that person cannot assign, encumber or transfer any right to the option.  Upon the death of the person to whom an option has been granted, the option may be exercised only by those persons who inherit from the holder of the option by will or under the applicable laws of descent and distribution.





The plan administrator has the authority, with the consent of the option holder affected, to cancel outstanding options and to grant in substitution therefore new options covering the same or a different number of shares of common stock at an exercise price per share based upon the fair market value per share of such stock on the date of the grant of a new option.





At the discretion of the plan administrator, the consideration provided for the issuance of shares of common stock under the stock issuance plan will be satisfied in one or more of the following ways, or combinations thereof:  (a) in cash or check payable to us; (b) issuing of a full-recourse promissory note; (c) payroll deductions in installments; (d) past services rendered to us or one of our subsidiaries; or (e) the agreement of a participant to accept employment and the undertaking and performance of services with or to us or one of our subsidiaries.





Stock issued under the stock issuance plan may vest immediately or upon terms established by the plan administrator, provided that at least 20 percent of the total shares subject to a vesting schedule will fully vest in each calendar year on the anniversary date of the issuance of the shares.





20


Irrespective of whether a participant’s shares are vested or are held in escrow, a participant to whom shares under the stock issuance plan have been issued will have the right to vote those shares and to receive any regular cash dividends paid on those shares.





If employment with or service to us terminates for whatever cause at a time when the participant holds unvested shares issued under the stock issuance plan, those shares will be immediately surrendered to us and cancelled.  In the event the participant paid for the shares surrendered in cash or cash equivalent, the amount of that consideration will be repaid.  In the event that the participant furnished a promissory note in payment of shares surrendered, the remaining balance of that note attributable to the surrendered shares will be cancelled.  In the sole discretion of the plan administrator, the surrender and cancellation of any unvested shares issued under the stock issuance plan may be waived at any time by the plan administrator subject to such terms and conditions or on no terms and conditions as the plan administrator may determine.





Director Compensation





The following table sets forth certain information concerning the compensation of our directors, excluding Messrs Kenyon and Knitowski, whose total compensation is set forth in the Summary Compensation Table above, for the last fiscal year ended December 31, 2009:




Name

Option awards (1)

($)

All other compensation

($)
Total

($)Luan Dang (4)

$Randolph Cherkas (4)

$Robert Lang(4)

$




(1)
The grants and options vest at a rate of 1/4th of the total options granted at the end of each three-month period, which initial period shall commence on the day of the grant, and immediately in the event of a Corporate Transaction, as defined in the Plan. The value of the shares and options was determined in accordance with FAS 123R.





(2)
We paid $5,000 per month to Ecewa Capital Group LLC, a company of which Mr. Knitowski is the managing director, pursuant to an agreement whereby Ecewa provides to us general business and corporate strategy consulting services.





(3)
This amount represents reimbursement to Mr. Dang for medical and dental insurance premiums for him and his family.





(4)
Mr. Dang resigned as a director on January 16, 2009, Mr. Cherkas resigned as a director on October 2, 2008, and Mr. Lang resigned as a director on January 16, 2008.





Standard Arrangements for Outside Directors.  Directors are permitted to receive fixed fees and other compensation for their services as directors, as determined by our board of directors.  The board has adopted a policy to compensate non-employee directors.  Each such director receives options for each year of service.  At the commencement of each year of service as a non-employee director, the person receives options to purchase 25,000 shares.  The options are exercisable at market value on the date of grant based upon the average closing bid price for the ten trading days immediately preceding appointment or the anniversary date.  The board also grants annual options to purchase 10,000 shares for these directors to serve on a committee of the board, and 5,000 shares to chair the committee.  These options vest as to 25% of the options per quarter, starting on the date of grant.  They expire five years from the date of grant.





21





ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS





Beneficial Owners of More than Five Percent, Directors, and Management





The following table sets forth certain information from reports filed by the named parties, or furnished by current management, concerning the ownership of our Common Stock as of March 18, 2010, of (i) each person who is known to us to be the beneficial owner of more than 5 percent of our Common Stock; (ii) all directors and executive officers; and (iii) our directors and executive officers as a group:




Name and Address of Beneficial Owner

Amount and Nature of Beneficial Ownership(1)


Percentage

of Class

(2)Ray A. Smith

1317 S. Westgate Ave, Suite 205

Los Angeles, CA 90025


191,000,000



43.9
%Bryan Kenyon

2560 E. Chapman Ave

Suite 404

Orange, CA. 92689


191,715,080
(1)


44.1
%Executive Officers and

Directors as a Group

(3 Person)


382,715,080



88.1
%


(1)  Includes 190,000 shares owned by a family trust and 80 shares owned with his wife.





Change of Control





We anticipate that a change of control will occur when a new business venture is acquired.  Our business plan is to either reestablish business operations internally or seek and, if possible, acquire an operating entity through a reverse acquisition transaction with the operating entity.  By its nature, a reverse acquisition generally entails a change in management and principal shareholders of the surviving entity.   While management cannot predict the specific nature of the form of the reverse acquisition, it is anticipated that at the closing of the process, the current sole officer and director would resign in favor of persons designated by the operating company and that the shareholders of the operating entity would receive a controlling number of shares in our company, thus effecting a change in control of the company.





Equity Compensation Plan Information





The following table sets forth as of the most recent fiscal year ended December 31, 2008, certain information with respect to compensation plans (including individual compensation arrangements) under which our common stock is authorized for issuance:





Number of securities to be issued upon exercise of outstanding options, warrants and rights

(a)

Weighted-average exercise price of outstanding options, warrants and rights

(b)

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) and (b))

(c)Equity compensation plans approved by security holders


$Equity compensation plans not approved by security holders
-0-


-0-

-0-Total








22


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE





Certain Relationships and Related Transactions





In connection with the change of control at January 22, 2009, all outstanding 10% Senior Secured Promissory Notes, including notes issued to Messrs Knitowski and Dang, former directors of the Company, were cancelled.  These notes were in the principal amount of $77,500.  Also in connection with the change of control, the consulting agreement with Ecewa Capital Group, LLC and the rental agreement with Curo Capital, LLC, entities controlled by Mr. Knitowski, were cancelled.





Mr. Vance’s law firm served as legal counsel for the Company since its inception in 2000 until November 14, 2008, at which time Mr. Vance terminated the representation of the Company.   At the time of the termination, the Company owed Mr. Vance’s firm $23,762 for past services, none of which has been paid.  Mr. Vance also served as Secretary for the Company from May 2004 until November 14, 2008.  Mr. Vance currently owns 85,000 shares of the Company’s common stock which he received for past services.  Mr. Vance’s law firm had represented the Company since its inception in 2000 through November 2009.  Prior to their resignations, Messrs Knitowski and Dang, as the sole directors, approved a new engagement agreement with Mr. Vance’s law firm.  Under the agreement the Company will pay Mr. Vance’s firm an hourly fee for services performed by him or his legal assistants in connection with the settlement of the outstanding debts, review of any potential reverse acquisition transaction, and ongoing reporting obligations with the SEC.  The engagement agreement may be terminated by the Company at any time.





In connection with the change of control at January 22, 2009, Messrs. Knitowski and Dang provided to Mr. Vance irrevocable proxies to vote 3,258,500 shares.  Each of the proxies granted to Mr. Vance is irrevocable and will expire either on December 31, 2009, the date Mr. Vance resigns as a director, or the date upon which Mr. Vance ceases to control the Company, whichever first occurs.  Sale or transfer of the shares is conditioned upon the purchaser or transferee agreeing in writing to be bound by the terms of the proxy.  Mr. Vance, acting as proxy, may vote the shares at any meeting of the shareholders or may execute any written consent evidencing action by the shareholders.  The proxies are not limited in the matters upon which the shares may be voted.





In connection with the appointment of Mr. Smith as President and CEO, the Board approved a one-year, full-time employment agreement with Mr. Smith effective February 6, 2009.  The agreement will be extended for additional one-year periods unless it is terminated by the Company at least 90 days before its expiration.  The base salary to be paid to Mr. Smith is $10,000 per month beginning when the Company raises a minimum of $300,000.  In addition, Mr. Smith shall be entitled to a signing bonus of stock of the Company when all of the existing liabilities of the Company are satisfied and the Company completes a reverse acquisition or merger transaction.  Also, when the payment of salary commences, the Company has agreed to provide Mr. Smith an expense allowance of $2,000 per month.  The employment agreement is terminable upon the death or disability of Mr. Smith, or for cause, and may be terminated by the Company without cause which would require the Company to pay a severance benefit in an amount equal to 90 days’ salary.





On January 29, 2009, the Company entered into a consulting agreement with Balius Consulting Group, LLC, an entity controlled by Bryan Kenyon, a former director and officer of the Company, and Steven Murphy, a former accounting consultant to the Company.  Balius has agreed to assist in the negotiation of outstanding liabilities of the Company and to gather and organize the corporate and financial records of the Company.  The Company has agreed to pay any hourly fee for work performed by Balius and to pay a bonus based upon the settlement amount of the outstanding payables.  The consulting agreement will terminate on December 31, 2009, unless terminated by the Company earlier for cause or if Messrs Kenyon or Murphy shall cease to provide the services for Balius.





23


Director Independence





Our securities are not listed on a national securities exchange or in an inter-dealer quotation system which has requirements that directors be independent.  As a result, we have adopted the independence standards of the American Stock Exchange to determine the independence of our directors and those directors serving on our committees.  These standards provide that a person will be considered an independent director if he or she is not an officer of the Company and is, in the view of the Company’s Board of Directors, free of any relationship that would interfere with the exercise of independent judgment.  Our Board of Directors has determined that our sole director is not independent.  We have no audit committee.





ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES





Fees Paid





Chisholm, Bierwolf, Nilson & Morrill, LLC served as our independent registered public accounting firm for the fiscal years ended December 31, 2009 and 2008.  The following fees were paid to our independent registered public accounting firm for services rendered during our last two fiscal years:





Audit Fees





The aggregate fees billed for professional services rendered by our principal accountant for the audit of our annual financial statements, review of financial statements included in the quarterly reports and other fees that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2009 and 2008 were $ 34,000 and $25,000, respectively.





Audit-Related Fees





There were no fees billed for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of the financial statements, other than those previously reported above, for the fiscal years ended December 31, 2009 and 2008.





Tax Fees





There were no fees billed for professional services rendered by our principal accountant for tax compliance, tax advice and tax planning in the fiscal years ended December 31, 2009 and 2008, respectively.





All Other Fees





There were no other fees billed for products or services provided by the principal accountant, other than those previously reported above, for the fiscal years ended December 31, 2009 and 2008.





Audit Committee





Our Board of Directors, which functions in the capacity of an audit committee, has considered whether the non-audit services provided by our auditors to us are compatible with maintaining the independence of our auditors and concluded that the independence of our auditors is not compromised by the provision of such services.  Our Board of Directors pre-approves all auditing services and permitted non-audit services, including the fees and terms of those services, to be performed for us by our independent auditor prior to engagement.

















24





PART IV





ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES





Financial Statements






The following financial statements are filed with this report:





Report of Independent Registered Public Accounting Firm


Balance Sheets at December 31, 2009 and 2008


Statements of Operations for the years ended December 31, 2009 and 2008


Statements of Stockholders’ Equity for the years ended December 31, 2009 and 2008


Statements of Cash Flows for the years ended December 31, 2009 and 2008


Notes to Financial Statements









25





Consolidated Financial Statements
 
 
 
 
 
 
 
 
 
 
 
 TRYCERA FINANCIAL, INC
 
 
 
 
 
 
 
 
 
 
 For the years ended December 31, 2009 and 2008
 
 
 
  Table of ContentsFor the years ended December 31, 2009 and 2008Financial Statements

PageReport of Independent Registered Public Accounting Firm

3Consolidated Balance Sheets

4Consolidated Statements of Operations

5Consolidated Statements of Cash Flows

6Consolidated Statements of Stockholders’ Deficit

7Notes to Consolidated Financial Statements

8
   
  Letterhead
   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the Board of Directors and Shareholders
 Trycera Financial, Inc.
 Santa Monica, California
 
 We have audited the accompanying consolidated balance sheets of Trycera Financial, Inc. as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders' deficit and cash flows for the years ended December 31, 2009 and 2008.  These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
 
 We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall consolidated financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Trycera Financial, Inc. as of December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for the years ended December 31, 2009 and 2008 in conformity with accounting principles generally accepted in the United States of America.
 
 The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 8 to the consolidated financial statements, the Company has a working capital deficit, continued operating losses, and negative cash flows from operations, which raises substantial doubt about its ability to continue as a going concern.  Management’s plans in those matters are also described in Note 8.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 /s/ Chisholm, Bierwolf, Nilson & Morrill LLC
 Chisholm, Bierwolf, Nilson & Morrill LLC
 Bountiful, Utah
 April 14, 2010
    3
  Trycera Financial, Inc.Consolidated Balance SheetsDecember


December31, 2009



31, 2008AssetsCurrent AssetsCash

$
-


$
263Total Current Assets


-



263Total Assets

$
-


$
263Liabilities & Stockholders’ DeficitCurrent LiabilitiesBank overdraft

$
1,144


$
-Accounts payable


288,760



340,089Accounts payable - related parties


209,787



-Portfolio reserves


34,774



34,774Accrued expenses


342,003



137,04510% unsecured note - related party


26,000



-10% senior secured notes


77,500



77,500Total Current Liabilities


979,968



589,408Total Liabilities


979,968



589,408Commitments


-



-Stockholders’ DeficitPreferred stock, 20,000,000 shares authorized, $.001 par value; none issued and outstanding


-



-Common stock, 2,000,000,000 shares authorized at $.001 par value; 44,301,446 and 9,694,302 shares issued and outstanding, respectively


44,301



9,694Additional paid in capital


5,743,147



5,364,504Prepaid stock compensation


(330,083
)


-Accumulated deficit


(6,437,333
)


(5,963,343
)Total Stockholders’ Deficit


(979,968
)


(589,145
)Total Liabilities & Stockholders’ Deficit

$
-


$
263








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





Trycera Financial, Inc.Consolidated Statements of OperationsFor the Years EndedDecember


December31, 2009



31, 2008RevenuesStored value

$
287


$
151,619287



151,619Cost of Sales


-



123,029Gross Profit


287



28,590ExpensesDepreciation and amortization


-



2,159Salaries and wages


152,975



32,354Stock based compensation


-



148,168Professional fees


200,999



157,868Bad debt expense


-



8,083Contract termination costs


-



70,000General & administrative


112,502



336,639Total Expenses


466,476



755,271Loss from Operations


(466,189
)


(726,681
)Other Income (Expense)Interest income


-



174Interest expense


(9,950
)


(2,996
)Other income (expense)


2,949



(2,276
)Total Other Income (Expense)


(7,001
)


(5,098
)Loss before tax


(473,190
)


(731,779
)Income tax


800



800Net Loss

$
(473,990
)

$
(732,579
)Basic loss Per Share:Loss per share

$
(473,990
)

$
(732,579
)Net Loss Per Share

$
(0.03
)

$
(0.08
)Weighted Average Shares


18,204,870



9,375,891







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








Trycera Financial, Inc.Consolidated Statements of Cash FlowsFor the Years EndedDecember


December31, 2009



31, 2008Cash Flows from Operating ActivitiesNet Loss

$
(473,990
)

$
(732,579
)Adjustments to reconcile net loss to net cashused by operations;Depreciation and amortization


-



2,159Amortization of prepaid stock compensation


21,917



88,376Loss on sale of assets


-



9,751Stock issued for services


31,250



32,280Stock options and warrants


-



148,168(Increase) decrease in accounts receivable


-



30,931(Increase) decrease in prepaid and other current assets


-



29,853(Increase) decrease in deposits/reserves


-



5,000Increase (decrease) in accounts payable


158,458



213,460Increase (decrease) in portfolio reserves


-



572Increase (decrease) in accrued expenses


204,958



22,167Net Cash Used by Operating Activities


(57,407
)


(149,862
)Cash Flows from Investing ActivitiesNet Cash Provided by Investing Activities


-



-Cash Flows from Financing ActivitiesIncrease in bank overdraft


1,144



-Proceeds from issuance of 10% Secured Notes


-



77,500Proceeds from issuance of 10% unsecured note


26,000



-Proceeds from Private Placement


30,000



-Net Cash Provided by Financing Activities


57,144



77,500Net Increase (Decrease) in Cash and Cash Equivalents


(263
)


(72,362
)Cash and Cash Equivalents at Beginning of Period


263



72,625Cash and Cash Equivalents at End of Period

$
-


$
263Cash Paid For:Interest

$
-


$
-Income Taxes

$
800


$
-Non-Cash Financing Activities:Common stock issued for services and deferred compensation

$
33,500


$
268,824






The accompanying notes are an integral part of these consolidated financial statements.
 6





Trycera Financial, Inc.Consolidated Statements of Stockholder’s DeficitFrom the Years Ended December 31, 2009 and 2008Preferred Stock


Common Stock


Paid-In


Prepaid


AccumulatedShares


Amount


Shares


Amount


Capital


Equity


DeficitBalance, at January 1, 2008


-


$
-



9,250,302


$
9,250


$
5,184,500


$
-


$
(5,230,764
)Shares issued for services at

at $0.06 - $0.15 per share


-



-



444,000



444



31,836



-



-Valuation of stock options


-



-



-



-



148,168



-



-Net loss for the year ended December 31, 2008


-



-



-



-



-



-



(732,579
)Balance,  at December 31, 2008


-



-



9,694,302



9,694



5,364,504



-



(5,963,343
)Shares issued for services at

at $0.01 per share


-



-



1,500,000



1,500



13,500







-Shares issued for services at

at $0.065 per share


-



-



250,000



250



16,000







-Shares granted in connection with employment agreement at $.011 per share


-



-



32,000,000



32,000



320,000



(352,000
)


-Amount recognized as expense



















21,917Shares issued for cash pursuant to

private placement memorandumat $0.035 per share


-



-



857,144



857



29,143







-Net loss for the year ended

December 31, 2009


-



-



-



-



-



-



(473,990
)Balance, at December 31, 2009


-


$
-



44,301,446


$
44,301


$
5,743,147


$
(330,083
)

$
(6,437,333
)






The accompanying notes are an integral part of these consolidated financial statements.
 7
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008





NOTE 1 - CORPORATE HISTORY
 
 Trycera Financial, Inc., (the "Company") was incorporated in Nevada on May 10, 2000, under the name Whitelight Technologies, Inc., for the purpose of seeking and consummating a merger or acquisition with a business entity organized as a private corporation, partnership, or sole proprietorship.
 
 From 2004 until 2008 the Company was in the business of developing, deploying and marketing semi-custom and customized branded prepaid and prepaid card solutions.  Due to continued losses from operations during 2008, the Company began winding down its principal business operations and commenced a search for a new business venture. On August 12, 2009, the Company changed its status from shell Company to operating Company.  Pursuant to business operations established in the second quarter, the Company has begun operations. The core focus of the restarted operations is marketing financial products and services.  As a result, the Company does not plan to reinstate its previous program management status, and will instead rely on third party processors, program managers and banks to coordinate, issue and manage prepaid card portfolios on behalf of the Company.
 
 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
 
 A.   Basis of Accounting
 
 The Company uses the accrual method of accounting.
 
 B.   Revenue Recognition
 
 The Company applies the provisions of SEC Staff Accounting Bulletin("SAB") No. 104, Revenue Recognition in Financial Statements ("SAB 104"), which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC.  SAB 104 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies.  In general, the Company recognizes revenue related to monthly contracted amounts for services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable and (iv) collectibility is reasonably assured.
 
 With regard to events related to purchases of stored value or prepaid card products, the Company has sold no such goods at this time.  When the Company begins to sell such stored value products, a customer who purchases a prepaid card product will pay an upfront acceptance fee in addition to paying some incremental value to add to the stored value card. The Company recognizes only the acceptance fee revenues, as the actual pre-funded load value is electronically transferred from our partner processor to an FDIC-insured account at our partner bank.  The Company never possesses the actual pre-funded load value, which resides in a secure account at our processor before being sent to a non-Company accessible customer funding account at our bank.  As a result, there is no general accounting treatment for the amounts pre-funded on the stored value cards.  With respect to the acceptance fee, the Company will collect the acceptance fee from the customer, satisfying criteria (i) under SAB 104 with a persuasive evidence of an arrangement.  The company does not realize the revenue from the acceptance income until the customer has activated their card. The activation of their card requires that they have passed the legal requirements of identity verification and an embossed card in their name has been mailed to their
 
  8
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
 
 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 B. Revenue Recognition (Continued)
 
 physical address and lastly the client with the card in their physical possession has called to activate their card.Moreover, the funds have been prepaid by the customer and thus as outlined in criteria (iv) the collectibility is reasonably assured. In both instances, the Company simply supplies a product or financial tool to a customer.  There are no unearned income ramifications since the funds are held in an FDIC-insured account by our partner Bank and not under the control of the Company. The consumer may choose to spend or not spend the money on the stored value card, but the Company after the initial transaction has no obligation to provide future products.  The Company does host a customer service center to receive and resolve any issues that may arise out of the use of the prepaid card product.
 
 The consulting revenue the Company receives is billed after satisfying the customers' requirement and which follows the criteria of SAB 104 more specifically relating to the delivery of services rendered as outlined in criteria (ii).
 
 C.   Cash Equivalents
 
 The Company considers all short term, highly liquid investments that are readily convertible, within three months, to known amounts as cash equivalents. The Company currently has no cash equivalents.
 
 D.   Property and Equipment
 
 As the Company vacated the leased office space in Irvine, California, all remaining fixtures, fittings were either sold or abandoned. The Company, therefore, has no fixed assets at the December 31 2009, but expects that investment in property and equipment will recommence in 2010.
 
 Provision for depreciation of equipment will be computed on the straight-line method for financial reporting purposes. Depreciation is based upon estimated useful lives as follows:
 
 Computer equipment                            2-3 Years
 Furniture & fixtures                              7 Years
 
 Maintenance, repairs, and renewals which neither materially add to the value of the equipment nor appreciably prolong its life are charged to expense as incurred.
 
 E.   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. There were no employee stock options outstanding at December 31, 2009 and 2008:
 
 9
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
 
 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 E.   Earnings (Loss) Per Share of Common Stock (Continued)





For the Years EndedDecember


December31, 2009



31, 2008Basic loss per shareNet loss (numerator)

$
(473,990
)

$
(732,579
)Weighted average shares (denominator)


18,204,870



9,375,891Per share amount

$
(0.03
)

$
(0.08
)




F.   Stock Options
 
 The Company has elected to measure and record compensation cost relative to stock option costs in accordance with SFAS 123R, "ACCOUNTING FOR STOCK-BASED COMPENSATION," which requires the Company to use the Black-Scholes pricing model to estimate the fair value of the options at the option grant date. There are no outstanding stock options at December 31, 2009.
 
 G.   Use of Estimates
  The preparation of the financial statements in conformity with generally accepted accounting principles, in the United States of America, require management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.
 
 H.   Fair Value of Financial Instrument
 
 The fair value of the Company's cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate carrying value based on their effective interest rates compared to current market prices.
 
 In January 2010 FASB issued Accounting Standards Update (ASU) 2010-06, Improving Disclosures about Fair Value Measurements, to enhance the usefulness of fair value measurements. The amended guidance requires both the disaggregation of information in certain existing disclosures, as well as the inclusion of more robust disclosures about valuation techniques and inputs to recurring and nonrecurring fair value measurements. The Company does not expect these provisions to have a material effect on the results of operations of the Company.
 
 
 10
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 H.   Fair Value of Financial Instrument (Continued)
 
 In September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value Measurementsand Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share(or Its Equivalent). This update provides amendments to Topic 820 for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). It is effective for interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued. The Company does expect the provisions of ASU 2009-12 to have a material effect on the results of operations due to the expense implications of large share issuances in the first quarter of 2010, but specific results will be represented by the calculated value by management of the Company.
 
 I.   Selling, General and Administrative Costs
 
 Selling, general and administrative expenses included the following for the years ended December 31, 2009 and 2008.
 2009


2008Insurance

$
-


$
53,399Rent


-



42,785Signing bonus - officer


75,000



-Travel and entertainment


1,130



4,684Sales and marketing


250



2,528Technology costs


900



1,164Outside services


22,500



207,555General and administrative


12,722



24,524$
112,502


$
336,639




J.   Prepaid Expenses and other Current Assets
 
 Prepaid expenses and other current assets included the following for the years ended December 31, 2009 and 2008.




2009


2008Prepaid expenses

$
-


$
-Prepaid marketing costs


-



-$
-


$
-






11
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008




NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 K.   Accrued Expenses
 
 Accrued expenses included the following for the years ended December 31, 2009 and 2008.
  2009


2008Accrued payroll and Compensated absences

$
215,993


$
39,137Interest payable


15,701



2,908Program termination costs


95,000



95,000Health insurance costs


14,910



-Other


399



-$
342,003


$
137,045
  L.   Trade Receivables and Collections
 
 In the collection of payments, loans or receivables, the Company applies a range of collection techniques to manage delinquent accounts. In instances where balances exceed baseline levels a third party collection agency is selected to perform a collection service.  The service fees may cost the Company 25% to 40% of the face value of the debt owed and result in receiving only a small portion of monies owed.  With the stored value portfolio, the Company has not implemented a specific policy. Since a majority of the transaction activity is prepaid, the Company does not often provide services and load product until funds have been provided in advance. In cases where the funds are not provided in advance, the Company will carry an open receivable balance and does reserve the right to reduce the client reserve account in lieu of payment. At December 31, 2009 the allowance for bad and doubtful accounts was $0.
 
 M. Income Taxes
 
 The Company utilizes the liability method of accounting for income taxes.  Under the liability method, deferred income tax assets and liabilities are provided based on the difference between the financial     statements and tax basis of assets and liabilities measured by the currently enacted tax rates in effect for the years in which these differences are expected to reverse.  Deferred tax expense or benefit is the result of changes in deferred tax assets and liabilities.
 
 N.   Concentration
 
 Financial instruments that potentially subject Trycera Financial, Inc. (the Company) to concentrations of credit risk consist of cash and cash equivalents.  The Company places its cash and cash equivalents at    well-known, quality financial institutions.  At times, such cash and cash equivalents may be in excess of the FDIC insurance limit.
 
 O.   Capital Structure and Security Rights
 
 Common Stock - The Company is authorized to issue 2,000,000,000 shares of common stock, par value $.001 per share. All common shares are equal to each other with respect to voting, and dividend rights, and are equal to each other with respect to liquidations rights.
 
 
 12
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
 
 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 O.   Capital Structure and Security Rights (Continued)
 
 Preferred Stock - The Company has authorization to issue 20,000,000 shares of preferred stock, par value $.001 per share. The Board of Directors will be authorized to establish the rights and preferences
 of any series of the preferred shares without shareholder approval. At this time, the Board has not established a series of the preferred shares and no preferred shares have been issued.
 
 P.  Subsequent Events Evaluation
 
 In May 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 165 (FAS 165), Subsequent Events.  Subsequent events for the Company have been evaluated through April 14, 2010, which is the date the financial statements were available to be issued. This disclosure should be read in conjunction with NOTE 9 contained herein.
 
 NOTE 3 – NEW TECHNICAL PRONOUNCEMENTS
 
 In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160. The Company does not expect the provisions of ASU 2010-02 to have a material effect on the financial position, results of operations or cash flows of the Company.
 
 In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2010-01 to have a material effect on the financial position, results of operations or cash flows of the Company.
 
 In December 2009, the FASB issued Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 167. (See FAS 167 effective date below.)
  In December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 166. (See FAS 166 effective date below)
 
  13
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
  NOTE 3 – NEW TECHNICAL PRONOUNCEMENTS (Continued)
 
 In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This Accounting Standards Update amends the FASB Accounting Standard Codification for EITF 09-1. (See EITF 09-1 effective date below.)
 
 In October 2009, the FASB issued Accounting Standards Update 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements. This update changed the accounting model for revenue arrangements that include both tangible products and software elements. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15,2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2009-14 to have a material effect on the financial position, results of operations or cash flows of the Company.
 
 In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update addressed the accounting for multiple- deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit and will be separated in more circumstances that under existing US GAAP. This amendment has eliminated that residual method of allocation. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2009-13 to have a material effect on the financial position, results of operations or cash flows of the Company.
 
 In September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This update provides amendments to Topic 820 for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). It is effective for interim and annual periods ending after December 15,2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued. The Company does not expect the provisions of ASU 2009-12 to have a material effect on the financial position, results of operations or cash flows of the Company.
 
 In July 2009, the FASB ratified the consensus reached by EITF (Emerging Issues Task Force) issued EITF No. 09-1, (ASC Topic 470) "Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance" ("EITF 09-1"). The provisions of EITF 09-1, clarifies the accounting treatment and disclosure of share-lending arrangements that are classified as equity in the financial statements of the share lender. An example of a share-lending arrangement is an agreement between the Company (share lender) and an investment bank (share borrower) which allows the investment bank to use the loaned shares to enter into equity derivative contracts with investors. EITF 09-1 is effective for fiscal years that beginning on or after December 15,2009 and requires retrospective application for all arrangements outstanding as of the beginning of fiscal years beginning on or after December 15,2009. Share-lending arrangements that have been terminated as a result of counterparty default prior to December 15, 2009, but for which the entity has not reached a final settlement as of December 15, 2009 are within the scope. Effective for share-lending arrangements entered into on or after the beginning of the first reporting period that begins on or after June 15, 2009. The Company does not expect the provisions of EITF 09-1 to have a material effect on the financial position, results of operations or cash flows of the Company.
   14
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
 
 NOTE 3 – NEW TECHNICAL PRONOUNCEMENTS (Continued)
 
 In June 2009, FASB issued ASC 105-10 (Prior authoritative literature:  SFAS No. 168, "The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162").FASB ASC 105-10 establishes the FASB Accounting Standards Codification TM (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. FASB ASC 105-10 is effective for financial statements issued for fiscal years and interim periods ending after September 15, 2009. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ending December 31, 2009.  Adoption of FASB ASC 105-10 did not have a material effect on the Company’s financial statements.
 
 In June 2009, the FASB issued FASB ASC 810-10-65 (Prior authoritative literature:  SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)”) which amends the consolidation guidance applicable to a variable interest entity (“VIE”). This standard also amends the guidance governing the determination of whether an enterprise is the primary beneficiary of a VIE, and is therefore required to consolidate an entity, by requiring a qualitative analysis rather than a quantitative analysis. Previously, the standard required reconsideration of whether an enterprise was the primary beneficiary of a VIE only when specific events had occurred. This standard is effective for fiscal years beginning after November 15, 2009, and for interim periods within those fiscal years. Early adoption is prohibited.  Adoption of FASB ASC 810-10-65 did not have a material impact on the Company’s financial statements.
 
 In June 2009, the FASB ASC 860-10 (Prior authoritative literature: issued SFAS No. 166, “Accounting for Transfers of Financial Assets, an Amendment of FASB Statement No. 140”), which eliminates the concept of a qualifying special-purpose entity (“QSPE”), clarifies and amends the de-recognition criteria for a transfer to be accounted for as a sale, amends and clarifies the unit of account eligible for sale accounting and requires that a transferor initially measure at fair value and recognize all assets obtained and liabilities incurred as a result of a transfer of an entire financial asset or group of financial assets accounted for as a sale. This standard is effective for fiscal years beginning after November 15, 2009. Adoption of FASB ASC 860-10 did not have a material impact on the Company’s financial statements.
 
 In May 2009, FASB issued FASB ASC 855-10 (Prior authoritative literature:  SFAS No. 165, "Subsequent Events"). FASB ASC 855-10 establishes principles and requirements for the reporting of events or transactions that occur after the balance sheet date, but before financial statements are issued or are available to be issued. FASB ASC 855-10 is effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009. As such, the Company adopted these provisions at the beginning of the interim period ended June 30, 2009.
 
 In April 2009, the FASB issued FASB ASC 810-10-65 (Prior authoritative literature: SFAS No. 164, “Not-for-Profit Entities: Mergers and Acquisitions”)which governs the information that a not-for-profit entity should provide in its financial reports about a combination with one or more other not-for-profit entities, businesses or nonprofit activities and sets out the principles and requirements for how a not-for-profit entity should determine whether a combination is in fact a merger or an acquisition. This standard is effective for mergers occurring on or after Dec. 15, 2009 and for acquisitions where the acquisition date is on or after the beginning of the first annual reporting period, beginning on or after Dec. 15, 2009. This standard does not apply to the Company since the Company is considered a for-profit entity.
   15
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
  NOTE 3 – NEW TECHNICAL PRONOUNCEMENTS (Continued)
 
 
 In May 2008, the FASB issued FASB ASC 944 (Prior authoritative literature: SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60"). FASB ASC 944 interprets Statement 60 and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of that Statement.  This standard is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years.   As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009.  The Company does not believe this standard will have any impact on the financial statements.
 
 In March 2008, the FASB issued FASB ASC 815-10 (Prior authoritative literature: SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”), which is effective January 1, 2009. FASB ASC 815-10 requires enhanced disclosures about derivative instruments and hedging activities to allow for a better understanding of their effects on an entity’s financial position, financial performance, and cash flows. Among other things, this standard requires disclosures of the fair values of derivative instruments and associated gains and losses in a tabular formant. This standard is not currently applicable to the Company since we do not have derivative instruments or engage in hedging activity.
 
 NOTE 4–RELATED PARTY TRANSACTIONS
 
 Also, on or about January 3, 2006, the Company entered into an agreement with Ecewa Capital Group, LLC (“Ecewa Capital”), an entity controlled by Mr. Knitowski (the “Ecewa Capital Agreement”) whereby Ecewa Capital provided certain consulting services to the Company.  Pursuant to the terms of the Ecewa Capital Agreement, the Company owed approximately $60,000 to Ecewa Capital at December 31, 2008. The amount incurred in respect of this agreement amounted to $0 and $60,000 for the years ended December 31, 2009 and December 31, 2008.
 
 On or about January 2, 2007, the Company entered into an agreement with Curo Capital, LLC (“Curo Capital”), an entity controlled jointly by Mr. Knitowski and Mr. Dang, (the “Curo Capital Agreement”) whereby the Company agreed to pay $1,000 per month towards the Company’s office lease activities associated with the office of the Chairman.  Pursuant to the terms of the Curo Capital Agreement, the Company owed approximately $12,000 to Curo Capital as of December 31, 2009. Expenses incurred under this agreement amounted to $0 and $12,000 respectively, during the years ended December 31, 2009 and December 31, 2008.
 
 The Company had previously agreed to reimburse Mr. Dang for the cost of health insurance during the period he served as a director of the Company.  At the time of his resignation on December 31, 2008, the Company owed approximately $14,950.83 to Mr. Dang for these health insurance costs.
 
 On or about May 14, 2008, Sagoso Capital (“Sagoso”), a company controlled by Mr. Dang, loaned $5,000 to the Company and the company issued a 10% Senior Promissory Note representing the loan (the “Sagoso Note”) which was due and payable upon a change of control of the Company.  On or about December 29, 2008, Sagoso Capital acquired the 10% Senior Promissory Notes issued by the Company to Ecewa Capital in the principal amount of $77,500 (the “Ecewa Notes”).
 
 16
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
  NOTE 4–RELATED PARTY TRANSACTIONS (Continued)
 
 On or about May 14, 2008, Hang Dang loaned $5,000 to the Company and the company issued a 10% Senior Promissory Note representing the loan which was due and payable upon a change of control of the Company.
 
 On or about April 17, 2009, Ray Smith paid audit fees of $15,000 on behalf of the Company. On or about May 26, 2009 Mr. Smith paid an additional $19,000 on behalf of the company. The Company owes Mr. Smith $26,000 at December 31, 2009 in respect of these payments.
 
 On January 29, 2009, the Company entered into a consulting agreement with Balius Consulting Group, Inc., an entity controlled by Bryan Kenyon, a former director and officer of the Company, and Stephen Murphy, a former accounting consultant to the Company.  Balius has agreed to assist in the negotiation
 of outstanding liabilities of the Company and to gather and organize the corporate and financial records of the Company.  The Company has agreed to pay any hourly fee for work performed by Balius and to pay a bonus based upon the settlement amount of the outstanding payables. On October 1, 2009, the consulting agreement between the Company and Balius Consulting Group automatically terminated as a result of Mr. Kenyon entering into a formal employment agreement with Trycera and ceasing to provide services for Balius. Unpaid expenses of $125,466 are included in the financial statements related to this agreement.
 NOTE 5–INCOME TAXES
  In September 2009, the FASB issued Accounting Standards Update (ASU) 2009-06, Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities, which modifies the guidance on uncertain tax positions in FASB Accounting Standards CodificationTM (ASC or Codification) 740, Income Taxes (formerly FASB Interpretation 48, Accounting for Uncertainty in Income Taxes), as follows:
 Provides implementation guidance that is applicable for all entities

Amends the disclosure requirements for nonpublic entities by eliminating the requirements for certain disclosures


The Company currently has no issues that would mandate application of any deferred tax items or expense. Net operating losses would create possible tax assets in future years. Due to the uncertainty as to the utilization of net operating loss carry forwards an evaluation allowance has been made to the extent of any tax benefit that net operating losses may generate.   No provision for income taxes has been recorded due to net operating losses of $6,437,333 as of December 31, 2009 that may be offset against further taxable income.  No tax benefit has been reported in the financial statements.
 
 
 17
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
 
 NOTE 5–INCOME TAXES (Continued)
 
 Deferred tax assets and the valuation account as of December 31, 2009 and 2008 are as follows:
 2009


2008Deferred tax asset:Net operating loss carryforward

$
2,030,460


$
1,887,463Valuation allowance


(2,030,460
)


(1,887,463
)$
-


$
-The components of income tax expense are as follows:Current Federal Tax

$
-


$
-Current State Tax


800



800Change in NOL benefit


(142,997
)


(225,598
)Change in allowance


142,997



225,598$
-


$
-




The Company has incurred losses that can be carried forward to offset future earnings if conditions of the Internal Revenue Codes are met. These losses may be offset against future taxable income through 2028.
 
 Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss  carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to future use.
 
 NOTE 6–STOCKHOLDERS' EQUITY
 
 During the year ended December 31, 2009, the Company issued an aggregate 1,500,000 shares of common stock for marketing services at $.01 per share. Accordingly, common stock and additional paid in capital have been charged $1500 and $13,500 respectively.
 
 During the year ended December 31, 2009, the Company issued an aggregate 250,000 shares of common stock for marketing services at $.065 per share. Accordingly, common stock and additional paid in capital have been charged $250 and $16,000 respectively.
 
 During the year ended December 31, 2009, the Company issued an aggregate 32,000,000 shares of common stock in connection with employment agreements. Management believes that the value of the shares is $.011. Accordingly, common stock and additional paid in capital have been charged $32,000 and $320,000 respectively. The employment agreements are for a period of 36 months and hence the cost of the agreements will be amortized over this period.
 
 During the year ended December 31, 2009, the Company issued an aggregate of 857,144 shares of common stock pursuant to private offerings at $0.035 per share. Accordingly, common stock and additional paid in capital have been charged $857 and $29,143 respectively.
   18
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
  NOTE 7–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 5,000,000.  The plan became effective with its adoption and remains in effect for ten years, however, options expire five 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.  There were no outstanding options at December 31, 2009.
 
 The following schedule summarizes the activity during the periods ending December 31, 2009 and December 31, 2008 respectively:
  2004 Stock PlanAmount

of

shares


Weighted

average

exercise

priceOutstanding at January 1, 2009


1,979,500


$
0.71Options Granted


-



-Options Exercised


-



-Options Canceled


(1,979,500
)


0.71Options Outstanding at December 31, 2009


-


$
-Options Exercisable at December 31, 2009


-


$
-2004 Stock PlanAmount

of

shares


Weighted

average

exercise

priceOutstanding at January 1, 2008


2,379,500


$
0.73Options Granted


-



-Options Exercised


-



-Options Canceled


(400,000
)


0.84Options Outstanding at December 31, 2008


1,979,500


$
0.73Options Exercisable at December 31, 2008


1,754,496


$
0.67




The Company has elected to measure and record compensation cost relative to performance stock option costs in accordance with Statement of Financial Accounting Standards No. 123R, "Accounting for Stock-Based Compensation", which requires the Company to use the Black-Scholes pricing model to estimate the fair value of options at the option date grant, $0 and $152,741 was recognized for the years ended December 31, 2009 and 2008, 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:
  19
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
 NOTE 7–STOCK OPTION PLAN (Continued)
 
 Employee stock options outstanding and exercisable under this plan as of December 31, 2008 are:
  Range ofExercise Price


Number of Options Granted


Weighted Average Exercise Price


Average Remaining

Contractual Life (Years)


Weighted Number

of Options Vested


Average Exercise Price$
.001 - $0.99



1,321,250


$
0.54



0.8



1,321,247


$
0.54$
1.00 - $2.00



658,250


$
1.04



2.2



433,250


$
1.05




The following represented the key vesting time frames and general terms included in the stock option plans for the Company Executives:
 
 For the initial key personnel, employment agreements outlined provisions for the performance-based vesting terms. The exercise price of the options granted to the employees is $0.25 of the first quarter of the options granted; $0.45 for the next quarter; $0.65 for the next quarter; and $0.85 for the final quarter granted.  The options granted to the employees shall vest as follows: 1/12th per quarter for each quarter of company revenue exceeding the previous quarter of revenue since his date of hire, independent of whether the revenue is generated from acquisition or non-acquisition business activities, 1/12th for each $250K in aggregate gross revenue growth from the day he commences work at the company, and/or at the three year six month anniversary of his employment with the company.
 
 For the subsequent option grants for all other Company associates, refer to the 2004 Stock Option /Stock Issuance Plan, whereby the exercise price of the options granted was determined to be the $0.75 per share price and vests according to 1/4 of the options vesting after the first 12 months and then 1/36 of the options vesting each month, where all options are vested after 48 continuous months of service.
 
 The Company has issued warrants as part of its private placements.  The warrants are exercisable through February 28, 2014, at various prices with certain incentive discounts to the exercise price available through February 28, 2011.  These shares were sold without registration under the Securities Act by reason of the exemption from registration afforded by the provisions of Section 4(2) thereof, and Rule 506 promulgated thereunder, as a transaction by an issuer not involving any public offering. The amount subscribed prior to December 31, 2008 was:
 
 Date

Number of Warrants


Average

ExerciseDecember 31, 2008


1,250,250


$
0.83
 
 The Company uses the Black-Scholes pricing model to estimate the fair value of warrants issued. The resulting cost was expensed as a cost of financing.
 
 20
 TRYCERA FINANCIAL, INC.
 Notes to Consolidated Financial Statements
 December 31, 2009 and 2008
 
 NOTE 8 – 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.
 
 NOTE 9 –  SUBSEQUENT EVENTS
 
 On March 10, 2010, the Company entered into a new consulting agreement with Newport Coast Securities, Inc., which replaced any and all prior agreements by and between the parties.
 
 On February 26, 2010, the Company retained new counsel for corporate legal matters.  The Company is now represented by Sommer & Schneider LLP based in Garden City, New York.
 
 On February 25, 2010, the Company issued an aggregate of 40,000,000 shares of its Common Stock to three unaffiliated entities upon the conversion of an aggregate of $10,000 of outstanding indebtedness.  The lenders acquired and assisted in the settling of a $40,000 arbitration award and this debt had been outstanding since 2007.  The certificates evidencing the above mentioned shares were issued without legend in that Rule 144 permits the lenders to tack back to the date of the debt which was more than two years prior to issuance.
 
 On February 24, 2010, we issued 175,000,000 shares of our common stock each to Ray A. Smith, the Company’s CEO, President and Director and Bryan Kenyon, the Company’s Chief Financial Officer and Chairman in consideration for the shares both Messrs. Smith and Kenyon forgave $100,000 each of accrued salary, loans and other monies advanced on the Company’s behalf by both Mr. Smith and Mr. Kenyon.
 
 On February 23, 2010 Mr. Matthew Richards was elected to the Company’s board of directors to fill the vacancy resulting from Mr. Vance’s resignation. On that same date, Mr. Bryan Kenyon our Chief Financial Officer and director was elected to replace Mr. Vance as our Chairman and Mr. Ray Smith our CEO, President and a Director was appointed the Company’s Secretary.
 
 On February 23, 2010, our board of directors accepted the resignation of Ronald N. Vance as our Chairman of the Board and member of our board of directors. There was no disagreement on any matter relating to the Company’s operations, policies or practices, nor was Mr. Vance removed for cause.
 
 21




Exhibits





The following exhibits are filed with this report:





Incorporated by ReferenceExhibitNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed Here-with3.1

Articles of Incorporation

8-K

000-30872

3.1

11/6/093.2

Current Bylaws

10-QSB

000-30872

3.2

8/16/044.1

Form of Common Stock Certificate

10-SB

000-30872

4.1

7/ 21/004.2

2004 Stock Option/Stock Issuance Plan *

8-K

000-30872

4.2

5/ 13/044.3

Grant of Stock Option Form used pursuant to the 2004 Stock Option/Stock Issuance Plan

10-KSB

000-30872

4.3

4/ 7/064.4

Form of Series A Common Stock Purchase Warrant, as amended

10-KSB

000-30872

4.6

4/ 7/064.5

Form of Series B Common Stock Purchase Warrant

10-KSB

000-30872

4.7

4/ 7/064.6

Description of Registration Rights for investors in offerings dated September 20, 2005, and January 3, 2006

10-KSB

000-30872

4.8

4/ 7/0610.1

Employment Agreement with Ray A. Smith

10-QSB

000-30872



11/16/0910.2

Consulting agreement with Balius Consulting Group, LLC

10-K

000-30872



04/15/0910.3

Engagement Agreement with Ronald N. Vance

10-K

000-30872



04/15/0910.5

Employment Agreement with Bryan Kenyon

10-QSB

000-30872



11/16/0914.1

Code of Ethics

8-K

000-30872

14.1

8/ 26/0431.1

Rule 13a-14(a) Certification by Principal Financial Officer









X31.2

Rule 13a-14(a) Certification by Principal Financial Officer









X32.1

Section 1350 Certification of Principal Executive Officer









X32.2

Section 1350 Certification of Principal Financial Officer









X


*Management contract, or compensatory plan or arrangement required to be filed as an exhibit.








Signature Page Follows




47





SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




Trycera Financial, Inc.Date: April 14, 2010
By:
/s/ Ray A. SmithRay A. SmithPresident







Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.









Date:  April 14, 2010
/s/ Matt RichardsMatt Richards, DirectorDate:  April 14, 2010
/s/ Ray A. SmithRay A. Smith, President (Principal Executive Officer)Date:  April 14, 2010
/s/ Bryan KenyonBryan Kenyon, CFO (Principal Financial and Accounting Officer)