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,
2008


or





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





Commission
file number 000-29315











RUBICON
FINANCIAL INCORPORATED








Delaware
            
            13-3349556(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)





4100
      Newport Place, Suite 600Newport
      Beach, California
            92660(Address
      of principal executive offices)
            
            (Zip
      Code)





Registrant’s
telephone number, including area code (949)
798-7220





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




Securities
registered pursuant to Section 12(g) of the Exchange Act: Common Stock, $0.001 par
value





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


 ̈Yes      xNo





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


 ̈Yes      xNo





Indicate
by checkmark 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.


xYes   
   ̈No





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





Large
accelerated filer  ̈                                                                                                                          Accelerated
filer  ̈





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





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes   ̈      No
x





State
the aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter. $7,387,447.60
based on a share value of $1.65.





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date. 12,476,563 shares of common
stock, $0.001 par value, outstanding on April 14, 2009, which includes 499,790
shares authorized but unissued.





DOCUMENTS
INCORPORATED BY REFERENCE





None.













RUBICON
FINANCIAL INCORPORATED


FORM
10-K


TABLE
OF CONTENTS





PagePART
      I
            
            2Item
      1. Business
            
            2Item
      1A. Fisk Factors
            
            15Item
      1B. Unresolved Staff Comments
            
            24Item
      2. Properties
            
            24Item
      3. Legal Proceedings
            
            24Item
      4. Submission of Matters to a Vote of Security Holders
            
            25PART
      II
            
            25Item
      5. Market for Registrant’s Common Equity, Related StockholderMatters
      and Issuer Purchases of Equity Securities
            
            25Item
      6. Selected Financial Data
            
            35Item
      7. Management’s Discussion and Analysis of financial Condition andResults
      of Operations
            
            35Item
      7A. Quantitative and Qualitative Disclosures about Market
    Risk
            
            45Item
      8. Financial Statements and Supplementary Data
            
            45Item
      9. Changes and Disagreements with Accountants on Accounting andFinancial
      Disclosure
            
            47Item
      9A(T). Controls and Procedures
            
            47Item
      9B. Other Information
            
            48Part
      III
            
            48Item
      10. Directors, Executive Officers and Corporate Governance
            
            48Item
      11. Executive Compensation
            
            53Item
      12. Security Ownership of Certain Beneficial Owners andManagement
      and Related Stockholder Matters
            
            58Item
      13. Certain Relationships and Related Transactions, and DirectorIndependence
            
            60Item
      14. Principal Accountant Fees and Services
            
            61Part
      IV
            
            63Item
      15. Exhibits, Financial Statement Schedules
            
            63











FORWARD-LOOKING
STATEMENTS





This
document contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements other than statements
of historical fact are “forward-looking statements” for purposes of federal and
state securities laws, including, but not limited to, any projections of
earnings, revenue or other financial items; any statements of the plans,
strategies and objections of management for future operations; any statements
concerning proposed new services or developments; any statements regarding
future economic conditions or performance; any statements or belief; and any
statements of assumptions underlying any of the foregoing.





Forward-looking
statements may include the words “may,” “could,” “estimate,” “intend,”
“continue,” “believe,” “expect” or “anticipate” or other similar words. These
forward-looking statements present our estimates and assumptions only as of the
date of this report. Accordingly, readers are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the dates on
which they are made. We do not undertake to update forward-looking statements to
reflect the impact of circumstances or events that arise after the dates they
are made. You should, however, consult further disclosures we make in this
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K.





Although
we believe that the expectations reflected in any of our forward-looking
statements are reasonable, actual results could differ materially from those
projected or assumed in any of our forward-looking statements. Our future
financial condition and results of operations, as well as any forward-looking
statements, are subject to change and inherent risks and uncertainties. The
factors impacting these risks and uncertainties include, but are not limited
to:





·
            deterioration
      in general or regional (especially Southern California) economic, market
      and political conditions;


·
            our
      ability to successfully compete in the financial services
      industry;


·
            actions
      and initiatives taken by both current and potential
      competitors;


·
            inability
      to raise additional financing for working
  capital;


·
            inability
      to locate potential mergers and acquisitions within the financial services
      industry and integrate acquired companies into our
      organization;


·
            deterioration
      in the financial services markets, lending markets and the real estate
      markets in general as a result of the delinquencies in the “subprime”
      mortgage markets;


·
            the
      level of volatility of interest rates as well as the shape of the yield
      curve;


·
            the
      fact that our accounting policies and methods are fundamental to how we
      report our financial condition and results of operations, and they may
      require management to make estimates about matters that are inherently
      uncertain;


·
            adverse
      state or federal legislation or regulation that increases the costs of
      compliance, or adverse findings by a regulator with respect to existing
      operations;


·
            changes
      in U.S. GAAP or in the legal, regulatory and legislative environments in
      the markets in which we operate;


·
            inability
      to efficiently manage our
operations;


·
            inability
      to achieve future operating
results;


·
            the
      unavailability of funds for capital
  expenditures;


·
            our
      ability to recruit and hire key
employees;


·
            the
      inability of management to effectively implement our strategies and
      business plans; and


·
            the
      other risks and uncertainties detailed in this
  report.





1


In
this form 10-K references to “Rubicon”, “the Company”, “we,” “us,” and “our”
refer to Rubicon Financial Incorporated and its wholly owned operating
subsidiaries, Grant Bettingen, Inc. Rubicon Financial Insurance Services, Inc.,
Rubicon Real Estate and Mortgages, Inc. and Dial-A-Cup, Inc.





AVAILABLE
INFORMATION





We
file annual, quarterly and special reports and other information with the
SEC.  You can read these SEC filings and reports over the Internet at
the SEC’s website at www.sec.gov or on our website at
www.rubiconfinancial.com.  You can also obtain copies of the documents
at prescribed rates by writing to the Public Reference Section of the SEC at 100
F Street, NE, Washington, DC 20549 on official business days between the hours
of 10:00 am and 3:00 pm.  Please call the SEC at (800) SEC-0330 for
further information on the operations of the public reference facilities. We
will provide a copy of our annual report to security holders, including audited
financial statements, at no charge upon receipt to of a written request to us at
Rubicon Financial Incorporated, 4100 Newport Place, Suite 600, Newport Beach,
California  92660.





PART
I




Item
1.      Business.







Rubicon
Financial Incorporated is a financial services holding company. Our goal is to
become a “Single Source Provider” (SSP) of distinct and diverse financial
services, bundled together for client convenience.  We believe that
the economy of efficiencies that is anticipated to exist between the various
subsidiaries will increase our bottom line by lowering our costs.  We
are based in Newport Beach, California and operate primarily through the
wholly-owned subsidiaries listed below.





Subsidiaries





Grant Bettingen, Inc. (“GBI”), a
broker-dealer registered with the SEC, member of the FINRA, is a full-service
broker-dealer specializing in investment banking.





Through
our subsidiary, Rubicon Financial Insurance Services, Inc., (“RFIS”), we offer
commercial, life, health and personal lines of insurance products made available
by top rated insurance providers.  RFIS also provides long-term care
insurance, workers compensation, as well as disability and group health
insurance.





2


Our subsidiary, Rubicon Real Estate and
Mortgages Inc., (“RREM”), brokers and originates real estate loans and
mortgages.  RREM is licensed as a mortgage broker in California and
derives revenue from loan origination points, fees, processing
fees.





Further, we will continue to identify
additional business opportunities as and when they arise.





We
currently employ 6 people at our executive office located at 4100 Newport Place,
Suite 600, Newport Beach, California 92660.  Our telephone number is
(949) 798-7220 and our website address is www.rubiconfinancial.com.
The
information on our website is for information purposes only and is not
incorporated by reference into this report.





Business
Development




We
were originally incorporated in Delaware on April 28, 1986 under the name Art
World Industries, Inc. On August 6, 2002, we changed our name to ISSG, Inc. In
addition, on March 9, 2004, we completed the acquisition of a wholly owned
subsidiary, Dial-A-Cup Corporation, a New York Corporation, which was
re-domiciled in Nevada on May 18, 2007. Further, on June 2, 2005, we completed a
merger with Rub Investments Ltd., (“Rub”) a company reporting under the
Securities Exchange Act of 1934, as amended (“Exchange Act”). Following the
merger with Rub, in accordance with Rule 12g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, we were the successor
issuer to Rub for reporting purposes under the Exchange Act. Lastly, on
September 6, 2006, we changed our name to Rubicon Financial
Incorporated.




In
the fourth quarter of 2006, we changed our corporate focus to the financial
services industry with our goal to become a single source provider of financial
related services.  In 2007, we completed the acquisition of our first
two financial services entities, (i) RFIS, and (ii) RREM. Further, in June of
2008 we completed the acquisition of GBI.




Recent
Developments





In March of 2009, we executed a
non-binding letter of intent to acquire 100% of 1000 BARS, Inc., a private
Nevada corporation focused on the preservation of the long-term value of assets
through buying and selling strategies of physical precious
metals, specializing in 1000 oz bars of silver. 1000 BARS
has also developed commodity market strategies for the owners
of physical bars of silver.





Economic
Conditions





During
the second half of 2007 and throughout 2008, significant weakness and volatility
in the credit markets stemming from difficulties in the U.S. housing market
spread to the broader financial market and led to a decline in global economic
growth that has resulted in a significant recession. Specifically, declines in
the value of subprime mortgages spread to all mortgage and real estate asset
classes, then to leveraged bank loans and eventually to nearly all asset
classes, including equities. The declines in asset values had collateral
consequences that increased the downward pressure on valuations. For example,
investor margin calls, collateral posting requirements among counterparties, and
redemptions within asset management increased. The decrease in asset values,
coupled with the loss of investor confidence, exacerbated the negative market
conditions, which eventually led to the failure or merger of a number of
prominent financial institutions. As a result, financial institutions have
reduced their willingness to lend, reducing liquidity that has historically
funded large sections of the U.S. economy.





3


In
2009, it is expected that these conditions and the recession will persist,
causing a continuation of the unfavorable economic and market dynamics
experienced in 2008, and possibly leading to a further decline in economic and
market conditions. These conditions have had, and will continue to have, a
direct and material impact on our results of operations and financial condition
because performance in the financial services industry is heavily influenced by
the overall strength of economic conditions and financial market activity. As a
result, we may experience reduced transaction volumes, reduced revenue and
reduced profitability throughout 2009.





OUR
BUSINESS





Overview





We
have established our headquarters in Orange County, California to capitalize on
what our management believes to be a large and affluent demographic base for our
products. The types of financial services we offer are as follows: insurance,
both personal and commercial; mortgage loan and real estate services, both
residential and commercial; investment banking services for small to mid-sized
companies; securities market making; retail brokerage services; and in the
future we intend to offer; on-line trading.. Each subsidiary providing these
services will be an individually licensed corporation doing business under the
parent holding company and is intended to allow us to become a single-source,
financial services provider.





When
future acquisitions of private financial service companies occur, we anticipate
that acting as independent licensed corporations each offering multiple
financial services should allow us to capitalize on a cross-marketing strategy
between our financial service affiliates and internal referrals. The marketing
strategy between our financial service affiliates requires strict adherence to
Regulation S-P and the stated Privacy Policy of each affiliate and with the
protection of client information the first priority in our operations.
Furthermore, we intend to provide a broad variety of product offerings to our
clients.  We believe this will enable us to consolidate a much higher
percentage of the assets and financial service needs of clients, as well as
customize services to their specific needs.





Insurance





Rubicon Financial Insurance
Services, Inc.





Through
RFIS, we offer commercial, life, health and personal lines insurance products
provided by top rated insurance companies.  RFIS has established
relationships with larger preferred insurance carriers as well as general
insurance agents in an effort to offer insurance products from a vast array of
providers, both preferred and non-standard, at beneficial rates to
clients.  RFIS currently is licensed in California and Nevada, and is
in the process of obtaining non-resident licensing for Oregon, New York, and
Arizona. RFIS’ long-term goals include having the capability to write insurance
in other States located in the West, Southwest, and Southeast.




4


RFIS
currently works closely with Hartford, Travelers, Safeco and First American in
an effort to provide personal lines and commercial property and liability
policies. RFIS also has multiple relationships with other Property and Casualty
Insurers in order to diversify its palate of services in the personal and
commercial lines of property casualty insurance.  RFIS has established
a presence in the commercial auto sector specific to trucking and public auto
Insurance.




With
regard to the Life and Annuity products, RFIS works with some of the largest
life insurance and annuity companies in the United States. RFIS currently
provides life insurance and annuities for individual customers, and has the
ability to supply these products on a wholesale level to the institutional
market as well.  RFIS also specializes in long-term care insurance,
worker’s compensation, as well as disability and group health insurance. RFIS
believes it has positioned itself to facilitate the needs of any business or
individual requiring risk management services.




RFIS markets its services to other
financial services companies by implementing what management has titled the
“Innovative Insurance Integration” (i3) marketing plan. This plan targets the
real estate and mortgage sector, individual tax accountants, tax attorneys,
stockbrokers and investment banking firms. The essence of the “i3” marketing
approach is to integrate its insurance products into the services offered by
these companies and to effectively bundle insurance and other financial services
together.




By
implementing the “i3” marketing approach, RFIS hopes to become the preferred
outlet for insurance services for all of its referral partners. With regards to
the mortgage and real estate sector, RFIS is able to provide new homebuyers and
clients refinancing loans with homeowner’s, automobile and life insurance
products. When working with tax attorneys and tax accountants, RFIS can
implement life insurance and annuities that will compliment existing retirement
plans and structure transactions intended to create tax advantages for their
clients. RFIS currently partners with securities brokers to provide insurance
products necessary for the broker to achieve their client’s goals, such as term
and universal life insurance, annuities, and long term care insurance. Finally,
investment-banking firms can work with RFIS to provide directors and officers
insurance, errors and omissions insurance, and key man insurance for their
corporate clientele.




RFIS
has established relationships with partners in each of the sectors described
above and has developed a web-based portal (Rubiconnetworks.com) to acquire and
communicate referral information with its partners. RFIS hopes that as it builds
a well-known reputation in the local community for its products and service, its
business partners will continue to expand and RFIS will add new and diverse
financial service related partners to its resources for all
clients.








5





Real
Estate and Mortgage





Rubicon
Real Estate and Mortgages, Inc.





Rubicon
Real Estate and Mortgages, Inc. provides “full service” real estate sales and
listing services, and also originates real estate loans directly to customers,
at competitive pricing to the market. “Full service” constitutes a similar suite
of services that ‘full price’ realty companies utilize, including listing the
property in the MLS, holding open houses, providing flyers and other print and
Internet marketing, regular networking with other agents to promote the
property, consultation with the seller on how to ‘stage’ the property,
experienced contract negotiation with the other agent, and providing the proper
paperwork in a complete and timely manner as required by the California
Department of Real Estate. Particular emphasis of the retail portion of RREM is
the location and acquisition of investment properties for RREM clients and
clients of other divisions of Rubicon.





RREM also offers assistance in short
sales of properties. A short sale is the sale of the property at below the loan
amount. RREM either arranges the purchase of a short sale home or processes the
short sale for another real estate office or investor.





In
February of 2008, we formed a REO Acquisition & Disposition (“RADD”)
Division RREM. Due to the dramatic spread between the sellers of distressed
pools and the acquisition price level at which risk is minimized, we dissolved
this division shortly after its inception





Our
management anticipates poor market conditions in Southern California for the
years 2009 through 2012 in Real Estate; therefore, short sale programs are
anticipated to provide the bulk of the division’s profits.




Securities





Grant Bettingen,
Inc.





GBI
is a full service broker-dealer providing retail and institutional securities
services as well as investment banking, trading, market-making, brokerage,
investment advisory and financial planning services.  GBI was formed
and has been located in the Newport Beach-Newport Beach, California area since
1985.  Operating as a securities broker-dealer and investment banking
firm for more than twenty years, GBI has dual clearing agreements and is a
correspondent firm with Penson Financial Services and Wedbush Morgan
Securities.





GBI
is registered with the Securities and Exchange Commission and is a member of
FINRA and the Securities Investor Protection Corporation.  GBI is also
a Registered Investment Advisor registered with the Securities and Exchange
Commission and is also licensed as a General Insurance Agency.  GBI is
licensed to conduct its brokerage activities in 49 states and the District of
Columbia and is currently approved to expand to 150 registered representatives
and 95 offices.





6





Investment
Banking





GBI focuses on Small Cap public
companies.  The preferred relationship with corporate clients of the
firm is to provide complete investment banking services, including advisory
services, corporate finance for public and private enterprises, securities
transactions, trading, syndication, mergers and acquisitions, reorganizations,
reverse mergers, PIPE’s, and merchant banking.  The firm also has
experience in private equity placement, for both public and private companies.
Clients can contract for comprehensive service or select any combination of
investment banking services to meet their needs and the growth stage of their
enterprise.





Trading
and Brokerage





GBI has established affiliations with
highly regarded marker makers, which allows GBI’s customers more effective and
efficient execution of orders. In the past, GBI’s trading as dealer has been
conducted primarily with other dealers in the “wholesale market” and in support
of investment banking clients.  Services are directed to the needs of
firms listed and trading as NASDAQ Capital Market, AMEX, Over-the-Counter
Bulletin Board and Pink Sheets needing liquidity sources, stock price support
and order management.  GBI provides brokerage services to individuals,
institutions and its investment banking corporate clients. GBI’s account
executives handle large, complex portfolios. Institutional brokerage services
are provided to corporate clients and fund managers of income, equity and hedge
funds.  Corporate clients are provided with the benefits of trading,
extensive knowledge of market making, and investor relations
services.  Multiple securities clearing platforms available allow GBI
to accommodate the widest range of client account requirements.




Investment
Advisory




GBI
is registered with the SEC as a Registered Investment Advisor. GBI currently
offers investment advisor services providing fee-based account services to
clients.  In addition to customized fee-based account management, GBI
offers a broad professional investment advisory platform allowing account
executives and their clients to select from a premier group of professional
money managers to manage client assets.  Financial Planning services
and products are provided to support the needs of GBI’s high net worth/income
clients, including their need for insurance, annuity, tax planning, and estate
planning.  Full service financial planning and investment advisory
services are offered to serve the growing needs of corporate executives
introduced to the firm through its investment banking activity.





AIS Financial,
Inc.





On
June 15, 2007, we acquired a 24.9% interest in AIS Financial, Inc. (“AIS”)
through the issuance of 100,000 shares of our common stock and a cash payment of
$100,000 to its principal, Mr. Marc Riviello. On June 3, 2008, we entered into a
Stock Repurchase and Settlement Agreement with AIS and Marc Riviello whereby we
returned the 24.9% of AIS in exchange for the cancellation of 100,000 shares of
our common stock initially issued as partial payment of the purchase and an
unsecured promissory note from Mr. Riviello in the amount of $100,000. The note
bears interest at a rate of 6% per annum and matures on June 1, 2009. As of the
date of this report, the entire note balance, including interest, remains
outstanding.





7


Maximum Financial Investment
Group, Inc.





On
April 19, 2007, we executed a stock purchase agreement with Maximum Financial
Investment Group, Inc., pursuant to which we purchased 24.9% of the total issued
and outstanding shares of common stock of Maximum for $50,000. On
October 1, 2008, Maximum withdrew its registration with FINRA and ceased all
business. As a result, we subsequently wrote off our entire investment of
$50,000 in Maximum as of October 31, 2008.





Rubicon Securities,
Inc.





In February of 2007, we incorporated
Rubicon Securities, Inc., a Nevada corporation (“RSI”), as a wholly owned
subsidiary in anticipation of RSI becoming a licensed and
registered  broker/dealer. However, RSI has not conducted any business
and remains as a non-operating dormant subsidiary.





Online
Trading Platform





Rubicon
Online





We have entered into a software
development relationship with Vertikal Technologies, Inc., pursuant to which
Vertikal has initiated development on a proprietary platform to allow Rubicon to
offer an online, discount brokerage division.  With our Online Trading
Platform, we expect to create an international trading platform and website for
automated, online trading of stocks, options, mutual funds, bonds, foreign
exchange currencies, and commodity futures.  Our initial markets of
focus will be the USA OTC:BB, Pink sheet, and small cap NASDAQ, the London AIM,
and the FOREX.  We intend to promote our Online Trading Platform
through arrangements with Investors Hub, Silicon Investor, and ADVFN. Investors
Hub and Silicon Investor are large Internet investment sites with over five
million hits per day.  ADVFN is a large global market data distributor
and the owner of Investors Hub and Silicon Investor. This relationship will give
us unique access to a worldwide pool of over a million active
traders.





Due
to the unique relationship Vertikal has with ADVFN, Investors Hub, and Silicon
Investor, our platform is truly in demand on a global basis.  Their
network is very popular in the United States, Canada, Germany, and throughout
Europe.  For years, these international investors have expressed a
strong interest in a platform created specifically for them to trade small cap
stocks in the United States.  The currency markets are currently
making companies in the U.S. market attractive investments for international
investors.  We expect our market to encompass a significant number of
international clients.





Additionally,
we will be able to execute trades in foreign markets, allowing us to expand the
horizons of our small-cap trading client base to execute trades and seek
opportunities in other countries.  Our unique online trading platform
will be able to handle domestic and foreign transactions appealing to both
domestic and international investors and traders. Vertikal’s revenue streams
will be multifaceted, including trade commissions, order flow, pip spreads
(forex), margin interest, cash interest, market data tools
reselling.





8


Our
product offering will take advantage of the latest in technology in order to
facilitate traders, no matter where they are or what type of system they prefer
to use.  The interfaces offered will be Web-based for the casual
trader, Java Streamer for the active trader who wants to have streaming quotes
on their screen all day, a Windows-based application (“Level 2”) for the very
active trader who requires more sophisticated market data, depth, and trading
tools, and a wireless-accessible interface that will enable clients to view
account information, get quotes, and execute orders from any mobile
device.





Vertikal’s platform is being designed
specifically to target the smallcap active trader market.  We believe
this market is currently underserved and our online trading platform will cater
to the needs and desires of this niche.  This market niche is
essentially overlooked by today’s popular online companies which service the
mainstream, main street investor in mutual funds and big board stocks
investments. Vertikal’s team has extensive experience trading in the small cap
NASDAQ and OTC:BB markets which provides them with a distinct advantage in the
creation of a platform catering to this growing niche of active
traders.





Rubicon’s
Professional Corporate Team





Our
corporate executives and employees are located in our Newport Beach, California
office.  Rubicon internal departments include information technology,
operations, human resources, finance and accounting, legal and compliance. Our
corporate team has been assembled to deliver service excellence from a highly
professional framework providing cost-effective growth and flexibility within
our organization.





The
securities industry in the United States is subject to extensive regulation
under both Federal and State law, as well as self-regulatory
organizations.  Through the issuance of policies and procedures, such
as those related to related party transactions and insider trading, we aim to
assure that our employees are aware of, and abide by, the various rules and
regulations promulgated by these entities.  While we attempt to
maintain up-to-date policies and procedures, regulators are constantly defining
and re-defining their interpretation of such rules and regulations in response
to incidents and events, through various pronouncements and through enforcement
actions aimed at behavior believed to violate such rules and
regulations.  As such, while we believe our current policies and
procedures are reasonably designed to enforce the rules and regulations as
currently interpreted, future interpretations of current rules or regulations,
or further modifications to such rules and regulations could lead us to modify
our policies, procedures and practices accordingly.





Risk
Management





We
utilize a multi-faceted, proactive risk management process in which we create
situational awareness.  We provide and promote an open dialogue to
identify risk associated with all aspects of our business.  Our
management holds our compliance personnel and our professionals accountable for
the detection, investigation, monitoring, and remediation of any inherent risks
that would compromise our reputation, integrity, ethical standards, financial
stability, or client relationships.





9


Upon
completion of each of the proposed acquisitions, we will conduct an internal
risk analysis of each entity to identify their strengths, weaknesses,
opportunities, and threats and implement policies and procedures relevant to
protecting our investment while promoting the company’s growth.  The
policies and procedures are also intended to mitigate any weaknesses identified
and monitor any threats on an on-going basis.  We will ensure checks
and balances are in place to analyze external conditions that could affect
operations such as event risk, interest rate changes, credit and liquidity
concerns, execution risk, new product implementation, and vendor
quality.  The risk management process will be effectively enhanced by
asking questions, soliciting additional advice, observing, analyzing and talking
with the competition and learning from their mistakes and assessing
industry-wide business practices.  We intend to have our risk
management personnel meet on a regularly scheduled basis to assess the findings
of such analysis and make modifications to our processes as
necessary.





In
addition to the ordinary risks inherent in our various businesses, we will
attempt to prepare for those extraordinary risks that can unexpectedly
arise.  We intend to review and evaluate our critical operations and
infrastructure and seek to promptly identify and address
deficiencies.  We will also assess additional areas of extraordinary
risk, such as potential conflicts of interest and exposure to fraud, through
comprehensive polling of our employees.  We will attempt to identify
and remedy any areas of potential conflicts of interest between our clients and
us.





Competition





Our primary competitors will be local
and regional banks that provide similar comprehensive financial services.
However, typically our competitors focus on the commercial banking side of their
business and there does not appear to be many companies of our intended size
that offer the variety of proposed products and services.




The
insurance industry in which RFIS operates is a highly competitive marketplace.
Customers have the freedom to shop their insurance portfolio at every renewal.
RFIS believes however, that by integrating their policies with other financial
services, clientele retention will be at a higher rate than that experienced by
other conventional providers.





We
will be subject to intense competition in all of the markets for our principal
financial products and services in the United States.  Several large
Wall Street and foreign firms dominate the securities industry.  Over
the past several years there have been numerous acquisitions of securities firms
by large financial institutions and insurance companies.  These
financial institutions have greater financial resources than we do, which allow
them to engage in additional lending activities to businesses in connection with
providing financial advisory services as well as to underwrite larger offerings
and hold much larger trading positions than we are able.





10


The
large financial institutions and insurance companies have a broader product base
and geographic reach, which may mitigate the effects on their businesses of a
downturn in certain market conditions or a downturn in the economy in specific
regions of the country or sectors of the economy.  We also compete
with regional broker-dealers and small boutique firms.  In addition,
we compete with alternative trading systems via the internet and other media
through which securities and futures transactions are
affected.  Competition is principally based on price, quality of
service, reputation and financial resources.  There has been increased
competition in recent years from other market participants, including insurance
companies, commercial banks, electronic communications networks, online
brokerage firms, mutual fund sponsors and other companies offering financial
services.





There
is competition within our industry in obtaining and retaining the services of
qualified employees.  Our ability to compete effectively is dependent
upon attracting, retaining and motivating qualified individuals.  The
ability to attract, retain, and motivate such persons depends, among other
things, on geographical location, work environment, culture and
compensation.  We believe the fact we are publicly traded, which
enables us to offer stock-based compensation and incentives, will allow us to
compete more effectively for qualified employees.





Regulation





Insurance





The
California Department of Insurance regulates RFIS.  California also
regulates such matters as the licensing of sales personnel and the marketing and
contents of insurance policies and annuity contracts.  The primary purpose
of such regulation and supervision is to protect the interests of contract
holders and policyholders.  Financial regulation of RFIS is extensive, and
any financial and intercompany transactions between RFIS and any of our other
companies (such as intercompany dividends, capital contributions and investment
activity) may be subject to pre-notification and continuing evaluation by the
California Department of Insurance.




At
the Federal level, there is periodic interest in enacting new regulations
relating to various aspects of the insurance industry, including taxation of
annuities and life insurance policies, accounting procedures, and the treatment
of persons differently because of gender, with respect to terms, conditions,
rates or benefits of an insurance policy.  Adoption of any new federal
regulation in any of these areas could potentially have an adverse effect upon
RFIS.  Also, recent federal legislative proposals aimed at the promotion of
tax-advantaged savings through Lifetime Savings Accounts and Retirement Savings
Accounts may adversely impact RFIS’s sales of annuity and life insurance
products if enacted.





Mortgage





RREM
is regulated by federal, state, and local government authorities and is subject
to extensive federal, state and local laws, rules and regulations.  It is
also subject to judicial and administrative decisions that impose requirements
and restrictions on its business.  At the federal level, these laws and
regulations include the Equal Credit Opportunity Act, the Federal Truth in
Lending Act and Regulation Z, the Home Ownership and Equity Protection Act, the
Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, the Home Mortgage Disclosure Act, the Fair
Housing Act, the Telephone Consumer Protection Act, the Gramm-Leach-Bliley Act,
the Fair and Accurate Credit Transactions Act, the CAN-SPAM Act, as well as the
Sarbanes-Oxley Act and the USA PATRIOT Act.




11


These
laws, rules and regulations, among other things, impose licensing obligations
and financial requirements on RREM, limit the interest rates, finance charges,
and other fees that it may charge, prohibit discrimination, impose underwriting
requirements, mandate disclosures and notices to consumers, mandate the
collection and reporting of statistical data regarding its customers, regulate
its marketing techniques and practices, require it to safeguard non-public
information about its customers, regulate its collection practices, require it
to prevent money-laundering or doing business with suspected terrorists, and
impose corporate governance, internal control and financial reporting
obligations and standards.




RREM’s
failure to comply with these laws can lead to civil and criminal liability, loss
of approved status, demands for indemnification or loan repurchases from buyers
of its loans, class action lawsuits, and administrative enforcement
actions.





Securities





At
GBI we are subject to complex and extensive regulation of most aspects of our
business by Federal and State regulatory agencies, self-regulatory agencies,
securities exchanges and by foreign governmental agencies, regulatory bodies and
securities exchanges.  The regulatory framework of the securities
industry is designed primarily to safeguard the integrity of the capital markets
and protect customers, not creditors or shareholders.  The laws,
rules, and regulations comprising such regulatory framework are constantly
changing, as are the interpretation and enforcement of existing laws, rules, and
regulations.  The effect of any such changes cannot be predicted and
may direct the manner of operation and profitability of our
company.





GBI
is subject to regulations governing every aspect of the securities business,
including the effecting of securities transactions, capital requirements,
record-keeping, reporting procedures, relationships with customers, the handling
of cash and margin accounts, training requirements for certain employees and
business procedures with firms that are not members of these regulatory
bodies.




GBI
is registered as a securities broker-dealer with the SEC.  The
securities exchanges mentioned above and the FINRA are voluntary,
self-regulatory bodies composed of members, such as GBI, which have agreed to
abide by the respective bodies’ rules and regulations.  These
organizations may expel, fine, and otherwise discipline member firms and their
employees.  GBI is licensed as a broker-dealer in 44
states.  This will require us to comply with the laws, rules, and
regulations of each state.  Each state may revoke the license to
conduct a securities business, fine, and otherwise discipline broker-dealers and
their employees.





GBI
is also subject to the SEC’s uniform net capital rule,
Rule 15c3-1.  The uniform net capital rule sets the minimum level
of net capital a broker-dealer must maintain and also requires that a portion of
its assets be relatively liquid.  In addition, GBI is subject to
certain notification requirements related to withdrawals of excess net
capital.





12


The
research areas of investment banks have been, and remain, the subject of
increased regulatory scrutiny.  In 2002 and 2003, acting in part
pursuant to a mandate contained in the Sarbanes-Oxley Act, the SEC and the FINRA
adopted rules imposing heightened restrictions on the interaction between equity
research analysts and investment banking personnel.  The SEC and the
FINRA may adopt additional and more stringent rules with respect to research
analysis in the future.  GBI does not currently provide research
analysis on securities, but may do so in the future.





GBI
is also subject to the USA Patriot Act anti-money-laundering provisions which,
mandates the implementation of various new regulations applicable to
broker-dealers and other financial services companies, including standards for
verifying client identification at account opening and obligations to monitor
client transactions and report suspicious activities.  Through these
and other provisions, the USA Patriot Act seeks to promote the identification of
parties that may be involved in terrorism or money
laundering.  Anti-money laundering laws outside the United States
contain some similar provisions.  The obligation of financial
institutions to identify their customers, watch for and report suspicious
transactions, respond to requests for information by regulatory authorities and
law enforcement agencies, and share information with other financial
institutions, has required the implementation and maintenance of internal
practices, procedures, and controls which have increased, and may continue to
increase, our costs, and any failure with respect to our programs in this area
could subject us to substantial liability and regulatory sanctions.





DIAL-A-CUP
SPINOUT





On
July 31, 2007, we entered into a Separation and Distribution Agreement with
Dial-A-Cup, Inc., a Nevada corporation and our wholly owned subsidiary (“DAC”),
whereby we agreed to spinout at least 50% of the shares of DAC common stock
owned by us to our shareholders on a ten for one basis (each of our shareholders
will receive one DAC share for every ten shares they hold in us).  The
Separation and Distribution Agreement further provides, among other things, for
the principal corporate transactions required to affect the spinout and certain
other agreements governing our relationship with DAC after the spinout.
Generally, DAC will take all of the business, assets and liabilities transferred
to or assumed by it pursuant to the Separation and Distribution Agreement or
other ancillary agreements on an “as is, where is” basis without representations
or warranties by us.




DAC
is required to file a registration statement on Form S-1 to register shares of
DAC common stock to be distributed to our shareholders. The record date for the
distribution of DAC shares shall be set as the tenth day following effectiveness
of the S-1 registration statement. Fractional shares of DAC will be rounded up
to the nearest whole DAC share. Following the completion of the distribution,
DAC plans to seek a market maker to quote its common stock on the
Over-the-Counter Bulletin Board.





13


All
shareholders that hold shares of our common stock prior to the effective date of
the registration statement will receive shares of DAC in conjunction with the
spin-out.





DAC
Business




Dial-A-Cup
is a rotating cylinder appliance of six individual compartments that allows one
fresh cup of coffee, tea, hot chocolate, soup, etc to be brewed with each
compartment having its own permanent filter. DAC developed the appliance through
Advance Plastics (San Diego, CA) and its manufacturing facilities in China. The
first prototype was completed in late 2004, and the initial pre-production
appliances are currently being manufactured from the recently completed molds
for submission for UL approval.




There
is a wide and varied customer base for beverage systems. Initial marketing will
be to small businesses nationwide through the use of established national
distributors, followed by introduction to the consumer via television through
the consumer home shopping networks followed by sales to national
retailers.




The
on-demand coffee systems currently being marketed have met with poor sales
because they require the use of the manufacturers “coffee pods” which are
expensive and limited in selection. The Dial-A-Cup appliance is designed to
allow the customer to continue to use the brand of coffee, or other beverage,
they currently use in their drip coffee pots. DAC plans to market its own
private label custom blended coffee for its appliance and recently DAC has
engaged in discussions with a major coffee company, which may allow DAC to offer
a greater selection of blends at a consumer friendly price.




Although
we have not commenced any significant operations with our on-demand coffee
systems, we believe we offer a unique product that does not have any direct
competitors. However, we indirectly compete with dispensed coffee manufacturers,
coffee shops, coffee or drinks sales, and more generally the beverage industry
as a whole.





Dial-A-Cup
is a trademarked name, and has been issued two (2) U.S. Patents to date, and has
one (1) patent pending.





In
May 2007, DAC changed its corporate domicile from New York to Nevada through a
merger with a newly formed Nevada corporation and wholly owned
subsidiary.









14







Item
1A.      Risk
Factors.







In
the course of conducting our business operations, we are exposed to a variety of
risks that are inherent to the financial services industry. The following
discusses some of the key inherent risk factors that could affect our business
and operations, as well as other risk factors which are particularly relevant to
us in the current period of significant economic and market disruption. Other
factors besides those discussed below or elsewhere in this report also could
adversely affect our business and operations, and these risk factors should not
be considered a complete list of potential risks that may affect
us.





Risks Relating To Our
Business and Marketplace





Declining
economic conditions could negatively impact our business




Our
businesses and earnings are affected by general business and economic conditions
in the United States and abroad. General business and economic conditions that
could affect us include the level and volatility of short-term and long-term
interest rates, inflation, home prices, employment levels, bankruptcies,
household income, consumer spending, fluctuations in both debt and equity
capital markets, liquidity of the global financial markets, the availability and
cost of credit, investor confidence, and the strength of the U.S. economy
and the local economies in which we operate.




Economic
conditions in the United States and abroad deteriorated significantly during the
second half of 2008, and the United States, Europe and Japan currently are in a
recession. Dramatic declines in the housing market, with falling home prices and
increasing foreclosures, unemployment and under-employment, have negatively
impacted the credit performance of mortgage loans and resulted in significant
write-downs of asset values by financial institutions, including government
sponsored entities as well as major commercial and investment banks. These
write-downs, initially of mortgage-backed securities but spreading to credit
default swaps and other derivatives and cash securities, in turn, have caused
many financial institutions to seek additional capital, to merge with larger and
stronger institutions and, in some cases, to fail. Many lenders and
institutional investors have reduced or ceased providing funding to borrowers,
including to other financial institutions, reflecting concern about the
stability of the financial markets generally and the strength of counterparties.
This market turmoil and tightening of credit have led to an increased level of
commercial and consumer delinquencies, a significant reduction in consumer
confidence, increased market volatility and widespread reduction of business
activity generally. The resulting economic pressure on consumers and lack of
confidence in the financial markets has adversely affected our business,
financial condition, results of operations, liquidity and access to capital and
credit. We do not expect that the difficult conditions in the United States and
international financial markets are likely to improve in the near future. A
worsening of these conditions would likely exacerbate the adverse effects of
these difficult market conditions on us and others in the financial services
industry.








15








Continued
instability of the U.S. financial system may have a negative impact on our
business.





Beginning
in the fourth quarter of 2008, the U.S. government has responded to the
ongoing financial crisis and economic slowdown by enacting new legislation and
expanding or establishing a number of programs and initiatives. Each of the
U.S. Treasury, the FDIC and the Federal Reserve Board have developed
programs and facilities, including, among others, the U.S. Treasury’s
Troubled Asset Relief Program (“TARP”) Capital Purchase Program and other
efforts designed to increase inter-bank lending, improve funding for consumer
receivables and restore consumer and counterparty confidence in the banking
sector. In addition, Congress recently passed the American Recovery and
Reinvestment Act of 2009 (the “ARRA”), legislation intended to expand and
establish government spending programs and provide tax cuts to stimulate the
economy. Congress and the U.S. government continue to evaluate and develop
various programs and initiatives designed to stabilize the financial and housing
markets and stimulate the economy, including the U.S. Treasury’s recently
announced Financial Stability Plan and the U.S. government’s recently
announced foreclosure prevention program. The final form of any such
programs or initiatives or related legislation cannot be known at this time.
There can be no assurance as to the impact that ARRA, the Financial Stability
Plan or any other such initiatives or governmental programs will have on the
financial markets, including the extreme levels of volatility and limited credit
availability currently being experienced. The failure of these efforts to
stabilize the financial markets and a continuation or worsening of current
financial market conditions could materially and adversely affect our business,
financial condition, results of operations, access to credit, or the trading
price of our securities.





During
the year ended December 31, 2008, the U.S. credit markets have been dealing with
the effects of numerous defaults by homeowners on “subprime” mortgage loans,
which may materially impact our real estate and mortgage
subsidiary.





“Subprime” mortgage loan defaults could
adversely impact the operations of our real estate and mortgage
division.  In addition, subprime mortgage loan defaults began to
increase with respect to mortgages considered to be less credit risk than
“subprime” mortgages.  It is expected that mortgage default rates will
continue to increase at least throughout the remainder of 2009 and possibly
through the first half of 2010. These defaults have not only had a materially
adverse impact on the spending power of the borrowers of such defaulted mortgage
loans, but have also reduced the ability of buyers of residential properties to
acquire single family residences, in addition to reductions in the value of
investment portfolios containing securities affected by such
mortgages.  Because the real estate and mortgage division is highly
dependent upon fees and commissions based upon sales and financings related to
residential and investment properties, the downward trend in “subprime”
mortgages may materially impact our results of operations on a consolidated
basis.





Our
auditor’s report reflects the fact that without realization of additional
capital, it would be unlikely for us to continue as a going
concern.





As
a result of our deficiency in working capital at December 31, 2008 and other
factors, our auditors have included a paragraph in their audit report regarding
substantial doubt about our ability to continue as a going concern. Our plans in
this regard are to seek merger or acquisition candidates and to seek additional
capital through future equity private placements or debt
facilities.





16


We
will need additional capital in the future to finance our operations, which we
may not be able to raise or it may only be available on terms unfavorable to us
and or our stockholders. This may result in our inability to fund our working
capital requirements and harm our operational results.





We have and expect to continue to have
substantial capital expenditure and working capital needs. We believe that
current cash on hand and the other sources of liquidity may not be sufficient
enough to fund our operations beyond the second quarter of fiscal 2009.
Therefore, we may need to raise additional funds to continue our operations.
Furthermore, additional funds will be needed to pursue our intentions of
acquiring private companies in the financial services industry.





Additional financing might not be
available on terms favorable to us, or at all. If adequate funds were not
available or were not available on acceptable terms, our ability to fund our
operations, take advantage of unanticipated opportunities, develop or enhance
our business or otherwise respond to competitive pressures would be
significantly limited.





As a financial services holding
company, we are dependent on financing from the sale of our securities and funds
from our operating subsidiaries.





We
are a holding company that is a separate and distinct legal entity from our
broker-dealer, real estate and insurance subsidiaries. We therefore depend on
dividends, distributions and other payments from our subsidiaries and borrowings
and will depend in large part on financing from the sale of our securities to
fund payments on our obligations, including debt obligations. Our broker-dealer
subsidiary and our other subsidiaries are subject to laws that authorize
regulatory bodies to block or reduce the flow of funds from those subsidiaries
to us. Regulatory action of that kind could impede access to funds we need to
make payments on our obligations. In addition, our right to participate in a
distribution of assets upon a subsidiary’s liquidation or reorganization is
subject to the prior claims of the subsidiary’s creditors.





An
inability to access capital readily or on terms favorable to us could impair our
ability to fund operations and could jeopardize our financial
condition.





Access to funds is essential to our
anticipated business of financial services. In the future we may need to incur
debt or issue equity in order to fund our working capital requirements, as well
as to make acquisitions and other investments. Our access to funding sources
could be hindered by many factors. Those factors that are specific to our
anticipated line of business include the possibility that lenders could develop
a negative perception of our long-term or short-term financial prospects if we
incur large trading losses or legal liabilities or if the level of our business
activity decreases due to a market downturn. Similarly, our access may be
impaired if regulatory authorities take significant action against us, or if our
employees engage in material unauthorized or illegal activity.





17


We
have limited operating history in the financial services industry and there can
be no assurance that we will be successful in this industry.





Our operations are subject to all of
the risks inherent in the establishment of a new business, including licensing
risks, insufficient capital, unforeseen problems, and expenses and complications
encountered with the early phases of operations in a business. Moreover, our
lack of an operating history in the financial services industry makes it
impossible to predict whether or not we will operate profitably in the industry.
While we have brought on management that is familiar with this industry, there
can be no assurances that we will be able to locate, hire and retain the
necessary personnel to initiate, manage and operate this new line of business,
develop and implement necessary systems, obtain contracts and obtain financing
as contemplated in our business strategy.





As
a diversified financial service company, our success depends, in part, on our
ability to adapt our products and services to evolving industry
standards.





Our
business model is based on a diversified mix of businesses that provides a wide
range of financial products and services, delivered through multiple
distribution channels. Which means our success depends, in part, on our ability
to adapt our products and services to evolving industry standards. There is
increasing pressure by competition to provide products and services at lower
prices. This can reduce our revenues from our fee-based products and services.
In addition, the widespread adoption of new technologies, including Internet
services, could require us to incur substantial expenditures to modify or adapt
our existing products and services. We might not be successful in developing and
introducing new products and services, responding or adapting to changes in
consumer spending and saving habits, achieving market acceptance of our products
and services, or developing and maintaining loyal customers.





We
may not be able to retain our key personnel or hire the personnel we need to
sustain and grow our business.





We
face intense competition for qualified employees from businesses in the
financial services industry.  Our performance is highly dependent upon
our ability to attract, retain, and motivate highly skilled, talented
employees.  These professionals are regularly recruited by other firms
and may choose to change firms, in which case their clients may choose to move
their assets.  Given our relatively small size compared to some of our
competitors, the performance of our business may be more adversely affected than
our competitors would be if we lose well-performing employees and are unable to
attract new ones.





Regulatory
capital requirements and our holding company structure may adversely affect our
ability to expand or maintain present levels of our business or impair our
ability to meet our financial obligations.





We
have a broker-dealer subsidiary, GBI, which is subject to the SEC’s uniform net
capital rule, Rule 15c3-1, which sets the minimum level of net capital a
broker-dealer must maintain and also requires that a portion of its assets be
relatively liquid.  As we are a holding company, we will depend on
dividends and other payments from our subsidiaries to fund all payments on our
obligations, including any debt obligations, and potential working capital
requirements.  These regulatory restrictions may impede our access to
funds.  In addition, underwriting commitments require a charge against
net capital and, accordingly, GBI’s ability to make underwriting commitments may
be limited by the requirement that it must at all times be in compliance with
the applicable net capital regulations.  GBI is also be subject to
certain notification requirements related to withdrawals of excess net
capital.





18


We
are subject to strict government regulations and the failure to comply could
result in disciplinary actions.





The
securities industry in the United States is subject to extensive regulations
under both Federal and State laws.  Broker-dealers, such as GBI, and
investment advisors are subject to regulations covering all aspects of their
business.  Recently, the securities industry has experienced a great
deal of negative exposure due to alleged underwriting negligence, conflicts of
interest, research improprieties and mutual fund trading
improprieties.  As a result, regulatory agencies and the U.S.
government have intervened in an attempt to resolve these various
issues.  In addition, the SEC, FINRA, other self-regulatory
organizations, and state securities commissions can censure, fine, issue
cease-and-desist orders, or suspend or expel a broker-dealer or any of its
officers or employees.





Our
ability to comply with all applicable laws and rules is largely dependent on our
establishment and maintenance of a system to ensure compliance with these laws
and rules, as well as our ability to attract and retain qualified compliance
personnel.  The demands placed upon our personnel and financial
resources may be too significant for us to quickly adapt to a changing
regulatory environment and may impact our ability to provide or expand our
services.  Any disciplinary or other action imposed upon us due to
claimed noncompliance in the future could have a material adverse effect on our
business, financial condition and operating results.





In
addition, our operations and profitability may be affected by additional
legislation, changes in rules promulgated by the SEC, FINRA, other
self-regulatory organizations, and state securities commissions, or changes in
the interpretation or enforcement of existing laws and rules including, but not
limited to, existing regulations which restrict communications between our
research analysts and our other departments.  We cannot assure you
that such future regulations will not require us to implement additional
compliance policies and that such policies will not materially increase our
compliance expenses or otherwise adversely affect our business, financial
condition and operating results.





We
engage in the securities business that subjects us to the specific risks of that
business.





The
securities business is by its nature subject to various risks, particularly in
volatile or illiquid markets, including the risk of losses resulting from the
underwriting or ownership of securities, customer fraud, employee errors and
misconduct, failures in connection with the execution of securities
transactions, and litigation.  Our business and profitability are
affected by many other factors, including:





19


•
Volume, size and timing of securities transactions;


•
Demand for investment banking services;


•
Level and volatility of interest rates;


•
Availability of credit;


•
Volatility of equity and debt securities held in inventory;


•
Legislation affecting the business and financial communities; and


•
The economy in general.





Conditions in the financial markets and
the economy generally have a direct and material impact on our results of
operations and financial condition.  For example, our investment
banking revenue, in the form of underwriting discounts, placement agent fees,
and financial advisory fees, is directly related to the volume and value of the
transactions in which we are involved.  When uncertain or unfavorable
market or economic conditions exist, the volume and size of capital-raising
transactions and acquisitions and dispositions typically decrease, thereby
reducing the demand for our investment banking services and increasing price
competition.





A
downturn in the financial markets may also result in a decline in the volume and
value of trading transactions.  This could lead to a decline in the
revenue we receive from commissions on the execution of trading transactions and
a reduction in the value of our trading positions, commissions and
spreads.  Sudden sharp declines in market values of securities can
result in illiquid markets, making it more difficult to resell securities we own
and decreasing our trading activities generally, and the failure of
counterparties to perform their obligations, as well as increases in claims and
litigation, including arbitration claims from clients.





We
may not be able to compete successfully with other companies in the securities
industry.





The
securities industry is extremely competitive and our overall business will be
adversely affected if we are unable to compete successfully. In recent years,
significant price competition in many areas of our business, including pressure
on trading spreads and commissions have reduced financial service firms’ profit
margins.  We believe that price competition in these and other areas
will continue as some of our competitors seek to obtain market share by reducing
fees, commissions, or spreads.  Many of these companies are larger
than we are, have greater financial resources and may be more willing to lend
money to businesses in connection with providing them with financial advisory
services.  In our proposed capital markets and investment banking
businesses, we would compete against larger national and international firms
with much larger capital bases that allow them to underwrite larger offerings
and hold much larger trading positions.





Further,
consolidation in the securities industry fostered in part by changes in the
regulatory framework in the U.S. has also increased competition, bolstering the
capital base, product diversification, and geographic reach of some of our
competitors.  Finally, the emergence of alternative securities and
futures trading systems via the internet and other media has offered a
potentially less expensive alternative to our services.  If this trend
toward using alternative trading systems continues to grow, it may adversely
affect our commission and trading revenue, reduce our participation in the
trading markets and our ability to access market information, and result in the
creation of new and stronger competitors.





20


Changes in accounting standards,
especiallythose
thatrelate to
management estimates and assumptions, are unpredictable and may materially
impact how we report and record our financial
condition.





Our
accounting policies and methods are fundamental to how we record and report our
financial condition and results of operations. Some of these policies require
use of estimates and assumptions that may affect the value of our assets or
liabilities and financial results and are critical because they require
management to make difficult, subjective and complex judgments about matters
that are inherently uncertain. From time to time the Financial Accounting
Standards Board (“FASB”) and the SEC change the financial accounting and
reporting standards that govern the preparation of our financial statements. In
addition, accounting standard setters and those who interpret the accounting
standards (such as the FASB, the SEC, banking regulators and our outside
auditors) may change or even reverse their previous interpretations or positions
on how these standards should be applied. These changes can be hard to predict
and can materially impact how we record and report our financial condition and
results of operations. In some cases, we could be required to apply a new or
revised standard retroactively, resulting in our restating prior period
financial statements. For a further discussion of some of our significant
accounting policies and standards and recent accounting changes, see Note 1
to the Consolidated Financial Statements.





Our
internal controls may be inadequate, which could cause our financial reporting
to be unreliable and lead to misinformation being disseminated to the
public.





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. As defined in Exchange Act Rule 13a-15(f),
internal control over financial reporting is a process designed by, or under the
supervision of, the principal executive and principal financial officer and
effected by the board of directors, management and other personnel, 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 and includes those policies and
procedures that: (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the
assets of Rubicon; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of Rubicon are being made only in accordance with authorizations of
management and directors of Rubicon, and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or
disposition of Rubicon's assets that could have a material effect on the
financial statements.





We
have a limited number of personnel that are required to perform various roles
and duties as well as be responsible for monitoring and ensuring compliance with
our internal control procedures. As a result, our internal controls may be
inadequate or ineffective, which could cause our financial reporting to be
unreliable and lead to misinformation being disseminated to the public.
Investors relying upon this misinformation may make an uninformed investment
decision.





21





Risks Relating To Our Common
Stock





Because
our common stock is deemed a low-priced “Penny” stock, an investment in our
common stock should be considered high risk and subject to marketability
restrictions.





Since
our common stock is a penny stock, as defined in Rule 3a51-1 under the
Securities Exchange Act, it will be more difficult for investors to liquidate
their investment even if and when a market develops for the common stock. Until
the trading price of the common stock rises above $5.00 per share, if ever,
trading in the common stock is subject to the penny stock rules of the
Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules
require broker-dealers, before effecting transactions in any penny stock,
to:





·
            Deliver
      to the customer, and obtain a written receipt for, a disclosure
      document;


·
            Disclose
      certain price information about the
stock;


·
            Disclose
      the amount of compensation received by the broker-dealer or any associated
      person of the broker-dealer;


·
            Send
      monthly statements to customers with market and price information about
      the penny stock; and


·
            In
      some circumstances, approve the purchaser’s account under certain
      standards and deliver written statements to the customer with information
      specified in the rules.





Consequently,
the penny stock rules may restrict the ability or willingness of broker-dealers
to sell the common stock and may affect the ability of holders to sell their
common stock in the secondary market and the price at which such holders can
sell any such securities.These additional procedures could also limit
our ability to raise additional capital in the future.





If
we fail to remain current on our reporting requirements, we could be removed
from the OTC Bulletin Board, which would limit the ability of broker-dealers to
sell our securities and the ability of stockholders to sell their securities in
the secondary market.





Companies
trading on the OTC Bulletin Board, such as us, must be reporting issuers under
Section 12 of the Securities Exchange Act of 1934, as amended, and must be
current in their reports under Section 13, in order to maintain price quotation
privileges on the OTC Bulletin Board.  More specifically, FINRA has enacted
Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin
Board by requiring an issuer to be current in its filings with the
Commission.  Pursuant to Rule 6530(e), if we file our reports late with the
Commission three times in a two-year period or our securities are removed from
the OTC Bulletin Board for failure to timely file twice in a two-year period
then we will be ineligible for quotation on the OTC Bulletin
Board.  As a result, the market liquidity for our securities could be
severely adversely affected by limiting the ability of broker-dealers to sell
our securities and the ability of stockholders to sell their securities in the
secondary market.  We have not been late in any of our SEC reports
through December 31, 2008.





22


We
have the ability to issue additional shares of our common stock and shares of
preferred stock without asking for stockholder approval, which could cause your
investment to be diluted.





Our
Certificate of Incorporation authorizes the Board of Directors to issue up to
50,000,000 shares of common stock and 10,000,000 shares of preferred
stock.  The power of the Board of Directors to issue shares of common
stock, preferred stock or warrants or options to purchase shares of common stock
or preferred stock is generally not subject to shareholder
approval.  Accordingly, any additional issuance of our common stock,
or preferred stock that may be convertible into common stock, may have the
effect of diluting one’s investment.





By
issuing preferred stock, we may be able to delay, defer or prevent a change of
control.





We
are authorized to issue a total of 9,000,000 shares of “blank
check” preferred stock and up to 1,000,000 shares of Series A Convertible
Preferred Stock.  Our Board of Directors can determine the rights,
preferences, privileges and restrictions granted to, or imposed upon, the shares
of preferred stock and to fix the number of shares constituting any series and
the designation of such series.  It is possible that our Board of
Directors, in determining the rights, preferences and privileges to be granted
when the preferred stock is issued, may include provisions that have the effect
of delaying, deferring or preventing a change in control, discouraging bids for
our common stock at a premium over the market price, or that adversely affect
the market price of and the voting and other rights of the holders of our common
stock.





FINRA
sales practice requirements may also limit a stockholder's ability to buy and
sell our stock.





In addition to the “penny stock” rules
described above, FINRA has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, the FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. The FINRA requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.





Additional Risks and
Uncertainties





We
are a diversified financial services company. Although we believe our diversity
helps lessen the effect when downturns affect any one segment of our industry,
it also means our earnings could be subject to different risks and uncertainties
than the ones discussed herein. If any of the risks that we face actually occur,
irrespective of whether those risks are described in this section or elsewhere
in this report, our business, financial condition and operating results could be
materially adversely affected.







23


Item
1B.      Unresolved
Staff Comments.







Not
applicable.




Item
2.    Properties.







Our
corporate headquarters are located at 4100 Newport Place, Suite 600, Newport
Beach, California  92660.  Our wholly owned subsidiary,
Grant Bettingen, Inc., subleases approximately 7,477 sq. ft. of general office
space, which we occupy, with monthly rent of approximately $11,000. The sublease
expires on August 31, 2009. We believe our current office space is adequate for
our immediate needs; however, as our operations expand, we may need to locate
and secure additional office space.




Item
3.    Legal Proceedings.







We may, from time to time, be named as
defendants in various judicial, regulatory, and arbitration proceedings in the
future in the ordinary course of our business.  The nature of such
proceedings may involve large claims subjecting us to exposure. In addition,
claims may be made against our broker-dealer subsidiary relating to investment
banking underwritings, which may be brought as part of a class action, or may be
routine retail customer complaints regarding losses in individual accounts,
which are ordinarily subject to FINRA arbitration proceedings.  Our
broker-dealer subsidiary may also become subject to investigations or
proceedings by governmental agencies and self-regulatory organizations, which
can result in fines or other disciplinary action being imposed on the
broker-dealer and/or individuals.  Additionally, legal proceedings may
be brought against us from time to time in the future.  In view of the
inherent difficulty of predicting the outcome of legal proceedings, particularly
where the plaintiffs seek substantial or indeterminate damages or where novel
legal theories or a large number of parties are involved, we cannot state with
confidence what the eventual outcome of currently pending matters will be, what
the timing of the ultimate resolution of these matters will be or what the
eventual result in each pending matter will be.





In the Matter of Grant
Bettingen, Inc. and M. Grant Bettingen





On
March 6, 2009, the SEC issued an Order Instituting Administrative Proceedings
Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making
Findings, and Imposing Remedial Sanctions as to Grant Bettingen, Inc. (“GBI
Order:), our broker-dealer subsidiary; and an Order Instituting Administrative
Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934,
Making Findings, and Imposing Remedial Sanctions as to M. Grant Bettingen
(“Bettingen Order”), the former chairman and former Managing Director of
Investment Banking for GBI.





The
GBI Order found that GBI, failed reasonably to supervise a broker in connection
with purported private placement offerings of the securities of two limited
liability companies from January 2004 through December 2005.








24


The
Bettingen Order found that M. Grant Bettingen failed reasonably to supervise the
broker because he did not have a supervisory policy in place at GBI regarding
the sale of securities in private placement offerings until November
2004.





The
GBI Order censured GBI and required GBI to pay disgorgement of $88,675 and
prejudgment interest of $8,460.51. GBI consented to the issuance of the GBI
Order without admitting or denying any of the findings in the GBI Order. The
Bettingen Order required Bettingen to pay a $35,000 civil penalty. The Order
also barred Bettingen from associating in a supervisory capacity with any broker
or dealer with a right to reapply after three years. Bettingen consented to the
issuance of the Bettingen Order without admitting or denying any of the findings
in the Bettingen Order.





Effective
March 13, 2009, Mr. Bettingen was removed as chairman of GBI and terminated as
the Managing Director of Investment Banking for GBI.




Item
4.    Submission of Matters to a Vote of
Security Holders.







We did not submit any matters to a vote
of our security holders during the fourth quarter of 2008.





PART
II




Item
5.    Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.







(a)
Market Information





Our
Common Stock trades sporadically on the over-the-counter bulletin board market
(OTC:BB) under the symbol RBCF. Our common stock has traded infrequently on the
OTC:BB, which limits our ability to locate accurate high and low bid prices for
each quarter within the last two fiscal years. Therefore, the following table
lists the available quotations for the high and low bid prices for the fiscal
years 2008 and 2007.  The quotations from the OTC Bulletin Board
reflect inter-dealer prices without retail mark-up, markdown, or commissions and
may not represent actual transactions.





2008
            
            
            2007High
            
            
            Low
            
            
            High
            
            
            Low1st
      Quarter
            
            $
            3.35
            
            
            $
            1.75
            
            
            $
            2.85
            
            
            $
            1.012nd
      Quarter
            
            $
            2.75
            
            
            $
            1.35
            
            
            $
            2.60
            
            
            $
            1.303rd
      Quarter
            
            $
            2.50
            
            
            $
            0.21
            
            
            $
            2.40
            
            
            $
            1.304th
      Quarter
            
            $
            0.59
            
            
            $
            0.08
            
            
            $
            3.70
            
            
            $
            1.55








25








(b)
Holders of Common Stock





As
of April 14, 2009, there were approximately 426 holders of record of our Common
Stock and 11,979,273 shares outstanding.  As of April 13, 2009, the
closing price of our shares of common stock on the OTC:BB was $0.26 per
share.





(c)
Dividends





In
the future we intend to follow a policy of retaining earnings, if any, to
finance the growth of the business and do not anticipate paying any cash
dividends in the foreseeable future. The declaration and payment of future
dividends on the Common Stock will be the sole discretion of board of directors
and will depend on our profitability and financial condition, capital
requirements, statutory and contractual restrictions, future prospects and other
factors deemed relevant.





(d)
Securities Authorized for Issuance under Equity Compensation Plans





2007
Stock Option Plan





The
Board of Directors approved the 2007 stock option plan on February 1, 2007 and
our stockholders ratified the plan at our 2007 annual stockholder
meeting.  The total number of options that can be granted under the
plan is not to exceed 2,500,000 shares.





The
purpose of the 2007 stock option plan is to enhance the long-term shareholder
value by offering opportunities to our directors, employees, officers,
consultants and independent contractors (collectively the “Participants”) and
our subsidiaries to acquire and maintain stock ownership in Rubicon
Financial.  The plan seeks to accomplish this purpose by enabling
specified persons to purchase shares of our common stock, thereby increasing
their proprietary interest in our success and encouraging them to remain in the
employ or service of us.





Terms
of Stock Option Awards





The
Committee has the authority in its sole discretion to grant stock option awards
as incentive stock options or non-qualified stock options, as
appropriate.  The following are a summary of terms that will apply to
any stock option awards granted under the 2007 Plan, unless otherwise amended or
decided upon by the Committee:




26





(a)
            Exercise
      price per share for each share a Participant is entitled to purchase under
      a nonqualified option will be determined by the Committee.  The
      exercise price per share for each share a Participant is entitled to
      purchase under an incentive stock option shall be determined by the
      Committee but will not be less than Fair Market Value Per Share on the
      grant date.  However, Incentive Stock Options issues to 10% or
      more holders hall be issued at no less than 110% of Fair Market
      Value.


(b)
            The
      consideration to be paid for the shares to be issued upon the exercise of
      an option shall be determined by the Committee and may consist of cash,
      shares of our common stock, such other cashless basis, or such other
      consideration and method permitted under the applicable state and federal
      laws.


(c)
            Each
      option granted shall be exercisable at such times and under conditions
      determined by the Committee.  However, in no event, shall an
      option be exercisable after 10 years from the grant date or 5 years from
      the grant date if the Participant owns more than 10% of the total combined
      voting power of all classes of stock of Rubicon Financial or its
      subsidiaries on the grant date.


(d)
            If
      a Participant ceases to be employed by us for any reason other than
      disability or cause, Participant’s options will expire no later than 6
      months thereafter.  During those six months, Participant may
      exercise any option granted to him but only those that were exercisable on
      the date of termination.


(e)
            If
      a Participant ceases to be employed by Rubicon Financial due to a
      disability, as defined by the Section 22(e)(3) of the Code, the
      Participant’s options will expire no later than 1 year
      thereafter.  During that year, Participant may exercise any
      option granted but only those that were exercisable on the date
      termination due to the disability.


(f)
            If
      a Participant is terminated by us for cause (as defined in the 2007 Plan),
      the Participant’s options shall expire immediately, unless the Committee
      in its sole discretion within 30 days of such termination waive the
      expiration through written notice to the
  Participant.





To
the extent that the right to purchase shares under a stock option award has
vested, in order to exercise the stock option the Participant must execute and
deliver to Rubicon Financial a written stock option exercise agreement or notice
in a form and in accordance with procedures established by the
Committee.  In addition, the full exercise price of the option must be
delivered to Rubicon Financial and must be paid in a form acceptable to the
Committee.





In
the event of a change of control (as defined in the stock option plan), the date
on which all options outstanding under the stock option plan may first be
exercised will be accelerated.  Generally, all options terminate 90
days after a change of control.





As
of December 31, 2008, we granted 1,500,000 options under this plan.





2007
Acquisition Stock Plan





On
April 16, 2007, our Board of Directors established the 2007 Stock Acquisition
Plan, (the “Acquisition Plan”) which expires on April 15, 2017 and
our stockholders ratified the plan at our 2007 annual stockholder
meeting.This plan provides that a maximum of 5,000,000 shares
of common stock will be available for grant or issuance.Our
Board of Directors determined that it would be in our best interest to adopt and
approve a plan that provides incentives in conjunction with the acquisitions of
additional businesses and lines of businesses.





The
purpose of the Acquisition Plan is to provide officers and other employees of an
acquired business with opportunities to purchase Rubicon Financial stock
pursuant to options as well as to provide directors, officers, employees, and
consultants of an acquired business opportunities to make direct purchases of
restricted common stock of Rubicon Financial.  It is intended that
some of options granted under this plan will qualify as Incentive Stock Options
under Section 422 of the Code and other options will be considered Non-Qualified
Options.





27


Individual
Participant Limitation





The
number of shares of common stock for which an option may be granted in any
single fiscal year will not exceed 750,000 shares.  In the event an
option is cancelled, the cancelled option will continue to be counted against
the individual limit.





Incentive
Stock Options





If
an Incentive Stock Option is granted by the Committee, the price per share
relating to such option will not be less than the fair market value of the
common stock on the grant date.  If the Incentive Stock Option is
granted to an employee owning more than 10% of the total combined voting power
of all classes of our stock, the price per share will not be less than 110% of
the fair market value of common stock on the grant date.  Furthermore,
the aggregate fair market value of common stock of an Incentive Stock Option
granted to an employee must not exceed $100,000 during a calendar
year.





Restricted
Stock





Each
grant of restricted stock under the Acquisition Plan will be executed by a
“Restricted Stock Agreement” in such form as the Committee
decides.  The Committee will determine the number of shares to be
issued to an eligible person and whether it will be issued in exchange for cash,
other consideration, or both.  Shares issued pursuant to the
Restricted Stock Agreement must be held by the person granted to for a period of
time determined by the Committee.  Rubicon Financial will have the
option to repurchase the common stock at a price determined in the agreement if
(i) the individual’s employment terminated before the end of the restricted
period, (ii) if the individual has not paid to us the amount required by
federal, state, local or foreign income, or other taxes which we determine is
required, or (iii) any other circumstances determined by the
Committee.





As
of December 31, 2008, we had issued options to purchase 300,000 shares under the
2007 stock acquisition plan.




Recent
Sales of Unregistered Securities


In
October of 2008, we sold 62,500 shares of Series A Convertible Preferred Stock
for $125,000 in cash to three accredited investors. We paid $10,000 in
commissions to Grant Bettingen, Inc., our wholly owned subsidiary, acting as
placement agent for the sale of the preferred shares. We believe the sale of the
shares was exempt from the registration and prospectus delivery requirement of
the Securities Act of 1933, as amended, by virtue of Section 4(2). The shares
were sold directly by us and did not involve a public offering or general
solicitation. The recipients of the shares were afforded an opportunity for
effective access to our files and records that contained the relevant
information needed to make their investment decision, including our financial
statements and 34 Act reports. We reasonably believed that the recipients had
such knowledge and experience in its financial and business matters that they
were capable of evaluating the merits and risks of their
investment.





28


The
rights, preferences, restrictions and other matters relating to the Series A
Convertible Preferred Stock are as follows:




8% Series
A Convertible Preferred Stock:






The
number of shares constituting the 8% Series A Convertible Preferred Stock shall
be 1,000,000. Such number of shares may be increased or decreased by resolution
of the Board; provided,
that no decrease shall reduce the number of shares of 8% Series A Convertible
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Company convertible into 8% Series A Convertible Preferred
Stock.




Section
1.                      DESIGNATION.  The
Shares are designated as the Company’s 8% Series A Convertible Preferred Stock
(the “Shares”).





Section
2.                      DIVIDEND PROVISIONS.
The holders of the Shares will be entitled to a preferred dividend at the rate
of 8% per annum.  Dividends on the Shares will be cumulative and shall
be paid, solely at the option and discretion of the Company, either (i) in cash,
or (ii) in shares of the Company’s Common Stock at a price equal to $0.50 per
share (4 shares of Common Stock for each Preferred Share).  Dividends
shall be paid semi-annually.





Section
3.                      REDEMPTION.





(a)         This
Company may at any time following the first anniversary from the date of
issuance (the “Redemption
Date”), at the option of the Board, redeem in whole or in part the Shares
by paying in cash in exchange for the Shares to be redeemed a sum equal to the
Original Series A Issue Price (as adjusted for any stock dividends, combinations
or splits with respect to such Shares) plus all declared or accumulated but
unpaid dividends on such Shares (the “Redemption Price”). Any
redemption affected pursuant to this provision shall be made on a pro rata basis
among the holders of the Shares in proportion to the number of Shares then held
by them.





(b)         Subject
to the rights of series of preferred stock which may from time to time come into
existence, at least ten (10) but no more than sixty (60) days prior to each
Redemption Date, written notice shall be mailed, first class postage prepaid, to
each holder of record (at the close of business on the business day next
preceding the day on which notice is given) of the Shares to be redeemed, at the
address last shown on the records of this Company for such holder, notifying
such holder of the redemption to be effected, specifying the number of shares to
be redeemed from such holder, the Redemption Date, the Redemption Price, the
place at which payment may be obtained and calling upon such holder to surrender
to this Company, in the manner and at the place designated, his, her or its
certificate or certificates representing the Shares to be redeemed (the “Redemption Notice”). Except
as provided in subsection (4)(c) on or after the Redemption Date, each holder of
Shares to be redeemed shall surrender to this Company the certificate or
certificates representing such shares, in the manner and at the place designated
in the Redemption Notice, and thereupon the Redemption Price of such shares
shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In the event less than all the Shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed Shares.





29


(c)         From
and after the Redemption Date, unless there shall have been a default in payment
of the Redemption Price, all rights of the holders of shares of Shares
designated for redemption in the Redemption Notice as holders of Shares (except
the right to receive the Redemption Price without interest upon surrender of
their certificate or certificates) shall cease with respect to such Shares, and
such Shares shall not thereafter be transferred on the books of this Company or
be deemed to be outstanding for any purpose whatsoever. Subject to the rights of
series of preferred stock which may from time to time come into existence, if
the funds of the Company legally available for redemption of Shares on any
Redemption Date are insufficient to redeem the total number of Shares to be
redeemed on such date, those funds which are legally available will be used to
redeem the maximum possible number of such Shares ratably among the holders of
such Shares to be redeemed based upon their holdings of Shares. The Shares not
redeemed shall remain outstanding and entitled to all the rights and preferences
provided herein. Subject to the rights of series of preferred stock which may
from time to time come into existence, at any time thereafter when additional
funds of the Company are legally available for the redemption of shares of
Shares, such funds will immediately be used to redeem the balance of the Shares
which the Company has become obliged to redeem on any Redemption Date but which
it has not redeemed.





Section
4.                      CONVERSION. The
holders of the Shares shall have conversion rights as follows (the “Conversion
Rights”):





(a)         Right to Convert.
Each Share shall be convertible into shares of the Company’s Common Stock at a
price per share of $0.50 (the “Conversion Price”) (i.e.
every 1 Share converts to 4 shares of Common Stock), at the option of the holder
thereof, at any time following the date of issuance of such Share and on or
prior to the fifth (5th) day
prior to the Redemption Date, if any, as may have been fixed in any Redemption
Notice with respect to the Shares, at the office of this Company or any transfer
agent for such stock.





(b)         Automatic Conversion.
Each Share shall automatically be converted into shares of Common Stock on the
first day of the thirty-sixth (36th) month
following the original issue date of the Shares, at the Conversion Price per
share.





(c)         Mechanics of
Conversion. Before any holder of Shares shall be entitled to convert the
same into shares of Common Stock, he shall surrender the certificate or
certificates therefor, duly endorsed, at the office of this Company or of any
transfer agent for the Shares, and shall give written notice to this Company at
its principal corporate office, of the election to convert the same and shall
state therein the name or names in which the certificate or certificates for
shares of Common Stock are to be issued. This Company shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Shares, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Shares to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date.





30


(d)         No Impairment. This
Company will not, by amendment of its Certificate of incorporation or through
any reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by this Company, but will at all times in good faith
assist in the carrying out of all the provisions of this section and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of the Shares against
impairment.





(e)         Reservation of Stock
Issuable Upon Conversion. This Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting the conversion of the shares of the Shares, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Shares; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the
Shares, in addition to such other remedies as shall be available to the holder
of such Shares, this Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval of any necessary amendment to the Company’s
Certificate of incorporation.





(f)         Notice. Any notice
required by the provisions of this section to be given to the holders of Shares
shall be deemed given if deposited in the United States mail, postage prepaid,
and addressed to each holder of record at his address appearing on the books of
this Company.





Section
5.                      LIQUIDATION
PREFERENCE.





31


(a)         In
the event of any liquidation, dissolution or winding up of the Company, either
voluntary or involuntary, subject to the rights of series of preferred stock
that may from time to time come into existence, the holders of Shares shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of this Company to the holders of Common Stock by reason of their
ownership thereof, an amount per share equal to the sum of (i) $2.00 for each
outstanding Share (the “Original Series A Issue
Price”) and (ii) an amount equal to 12% of the Original Series A Issue
Price for each 12 months that has passed since the date of issuance of any
Shares plus any accrued or declared but unpaid dividends on such Share (such
amount (of declared but unpaid dividends) being referred to herein as the “Premium”). If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Shares shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amounts, then, subject to the rights
of series of preferred stock that may from time to time come into existence, the
entire assets and funds of the Company legally available for distribution shall
be distributed ratably among the holders of the Shares in proportion to the
preferential amount each such holder is otherwise entitled to
receive.





(b)        Upon
the completion of the distribution required by subparagraph (a) above and any
other distribution that may be required with respect to series of preferred
stock that may from time to time come into existence, the remaining assets of
the Company available for distribution to stockholders shall be distributed
among the holders of Shares and Common Stock pro rata based on the number of
shares of Common Stock held by each (assuming conversion of all such
Shares).





(i)
For purposes of this provision, a liquidation, dissolution or winding up of this
Company shall be deemed to be occasioned by, or to include, (A) the acquisition
of the Company by another entity by means of any transaction or series of
related transactions (including, without limitation, any reorganization, merger
or consolidation but, excluding any merger effected exclusively for the purpose
of changing the domicile of the Company); or (B) a sale of all or substantially
all of the assets of the Company; unless the Company’s
shareholders of record as constituted immediately prior to such acquisition or
sale will, immediately after such acquisition or sale (by virtue of securities
issued as consideration for the Company’s acquisition or sale or otherwise) hold
at least 50% of the voting power of the surviving or acquiring
entity.





(ii) In any of such events, if the
consideration received by the Company is other than cash, its value will be
deemed its fair market value. Any securities shall be valued as
follows:







(A)           Securities
not subject to investment letter or other similar restrictions on free
marketability (covered by (B) below):







(1)           If
traded on a securities exchange (NASDAQ, AMEX, NYSE, etc.), the value shall be
deemed to be the average of the closing prices of the securities on such
exchange over the thirty-day period ending three (3) days prior to the
closing;





32


(2)           If
traded on a quotation system, such as the Over-the-Counter Bulletin Board or
Pink Sheets, the value shall be deemed to be the average of the closing bid or
sale prices (whichever is applicable) over the thirty-day period ending three
(3) days prior to the closing; and





(3)           If
there is no active public market, the value shall be the fair market value
thereof, as mutually determined by the Company and the holders of at least a
majority of the voting power of all then outstanding shares of Preferred
Stock.





(B)           The
method of valuation of securities subject to investment letter or other
restrictions on free marketability (other than restrictions arising solely by
virtue of a shareholder’s status as an affiliate or former affiliate) shall be
to make an appropriate discount from the market value determined as above in (A)
(1), (2) or (3) to reflect the approximate fair market value thereof, as
mutually determined by the Company and the holders of at least a majority of the
voting power of all then outstanding shares of such Preferred
Stock.




(iii)
In the event the requirements of this provision are not complied with, this
Company shall forthwith either:





(A)           cause
such closing to be postponed until such time as the requirements of this
provision have been complied with; or





(B)           cancel
such transaction, in which event the rights, preferences and privileges of the
holders of the Shares shall revert to and be the same as such rights,
preferences and privileges existing immediately prior to the date of the first
notice referred to in subsection 3(c)(iv) hereof.




(iv)
The Company shall give each holder of record of Shares written notice of such
impending transaction not later than ten (10) days prior to the shareholders’
meeting called to approve such transaction, or ten (10) days prior to the
closing of such transaction, whichever is earlier, and shall also notify such
holders in writing of the final approval of such transaction. The first of such
notices shall describe the material terms and conditions of the impending
transaction and the provisions of this Section 3, and the Company shall
thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after the
Company has given the first notice provided for herein or sooner than ten (10)
days after the Company has given notice of any material changes provided for
herein; provided, however, that such periods may be shortened upon the written
consent of the holders of Shares that are entitled to such notice rights or
similar notice rights and that represent at least a majority of the voting power
of all then outstanding shares of such Shares.





33


Section
6.                      VOTING RIGHTS. The
holder of each Share shall not have any voting rights, except in the case of
voting on a change in the preferences of Shares.








Section
7.                      PROTECTIVE
PROVISIONS. So long as any Shares are outstanding, this Company shall not
without first obtaining the approval (by vote or written consent, as provided by
law) of the holders of Shares which is entitled, other than solely by law, to
vote with respect to the matter, and which Shares represents at least a majority
of the voting power of the then outstanding Shares:





(a)           sell,
convey, or otherwise dispose of or encumber all or substantially all of its
property or business or merge into or consolidate with any other corporation
(other than a wholly-owned subsidiary corporation) or effect any transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of the Company is disposed of;





(b)           alter
or change the rights, preferences or privileges of the Shares so as to affect
adversely the Shares;





(c)           increase
or decrease (other than by redemption or conversion) the total number of
authorized shares of preferred stock;





(d)           authorize
or issue, or obligate itself to issue, any other equity security, including any
other security convertible into or exercisable for any equity security (i)
having a preference over, or being on a parity with, the Shares with respect to
dividends or upon liquidation, or (ii) having rights similar to any of the
rights of the Preferred Stock; or





(e)           amend
the Company’s Certificate of Incorporation or bylaws.





Subsequent Issuances After
Year-End.





On February 5, 2009, we agreed to issue
Bootstrap Real Estate Investments, LLC, a company controlled by Todd Vande Hei,
a director, executive officer and current shareholder, 120,000 shares of
restricted common stock for services valued at $30,000, or $0.25 per share.As of April 15, 2008, the shares were
unissued.We believe that the issuance of the shares will be exempt from
the registration and prospectus delivery requirements of the Securities Act of
1933 by virtue of Section 4(2).
Bootstrap, through Mr. Vande Hei was afforded an opportunity for effective
access to our files and records that contained the relevant information needed
to make its investment decision, including our financial statements and 34 Act
reports. We reasonably believed that Bootstrap, immediately prior to agreeing to
issue the shares, had such knowledge and experience in financial and business
matters that it was capable of evaluating the merits and risks of its
investment. Mr. Vande Hei had the opportunity to speak with our CEO on several
occasions prior to the investment decision





34





Issuer
Purchases of Equity Securities





We did not repurchase any of our equity
securities during the year ended December 31, 2008.




Item
6.    Selected Financial Data.







Not
applicable.




Item
7.    Management’s Discussion and
Analysis of Financial Condition and Results of Operations.







Overview
of Current Operations





We
are a publicly-traded financial service holding company with three wholly-owned
operating subsidiaries: (i) Rubicon Financial Insurance Services, Inc. (“RFIS”),
a full service insurance agency offering personal lines, life and commercial
insurance products to individuals and companies primarily in California; (ii)
Rubicon Real Estate and Mortgages, Inc. (“RREM”), which provides professional
assistance in the fields of residential and commercial real estate and mortgage
loans in California; and (iii) Grant Bettingen, Inc. (“GBI”) a private brokerage
firm registered with the Financial Industry Regulatory Authority (“FINRA”)
providing retail brokerage services and investment banking





We
also have a non-operating subsidiary, Dial-A-Cup, Inc. (“DAC”), which has
developed a hot-water dispensing system that will brew one fresh cup of coffee,
tea, hot chocolate, soup, etc. on demand.  On July 31, 2007, we
entered into a Separation and Distribution Agreement with DAC, whereby we agreed
to spin-out at least 50% of the shares of DAC common stock owned by us to our
shareholders on a one for ten basis.  The Separation and Distribution
Agreement also provides that DAC will take all of the businesses, assets and
liabilities relating to the DAC business previously held by us.  DAC
intends to file a registration statement on Form S-1 to register the shares of
DAC common stock to be distributed and the record date will be set as the
10th
day following effectiveness of the registration statement.  As of the
date of this report, the Form S-1 has not been filed.





Overview of Financial
Services





We
have established our headquarters in Orange County, California to capitalize on
the perceived large and affluent demographic base for our products in the
financial services industry. The types of financial services we offer are:
insurance, both personal and commercial; mortgage loan and real estate services,
both residential and commercial; and retail brokerage services, securities
market making, as well as investment banking services for small to mid-sized
companies. Each subsidiary providing these services is an individually licensed
corporation doing business under the parent holding company, which is intended
to allow us to become a unique, single-source, financial services
provider.








35


On
June 15, 2007, we acquired a 24.9% interest in AIS Financial, Inc. (“AIS”)
through the issuance of 100,000 shares of our common stock and a cash payment of
$100,000 to its principal, Mr. Marc Riviello. On June 3, 2008, we entered into a
Stock Repurchase and Settlement Agreement with AIS and Marc Riviello whereby we
returned the 24.9% of AIS in exchange for the cancellation of 100,000 shares of
our common stock initially issued as partial payment of the purchase and an
unsecured promissory note from Mr. Riviello in the amount of $100,000. The note
bears interest at a rate of 6% per annum and matures on June 1, 2009. As of the
date of this report, the 100,000 shares have been cancelled and the entire
principal and interest balance on the note remains unpaid.





We
owned a 24.9% interest in Maximum Financial Investment Group, Inc. (“Maximum”),
a former FINRA licensed broker/dealer that focused on wholesale and online
trading. On October 1, 2008, Maximum withdrew its registration with FINRA and
ceased all business. As a result, we subsequently wrote off our entire
investment of $50,000 in Maximum as of October 31, 2008.





As
part of our long term growth strategy, we continually evaluate our existing
portfolio of businesses as well as new business opportunities to ensure we are
investing in those businesses with the largest growth potential. In June of
2008, we completed our acquisition of GBI. As we continue to expand our
operations into that of an independent boutique firm offering multiple financial
services, we intend to continue to acquire other financial service companies to
enhance our ability to be a single-source provider of financial services to our
clientele, with Rubicon being the holding company of these various financial
services entities. We intend to utilize a cross-marketing strategy between all
of our financial service subsidiaries to provide various product offerings to
clients with the ability to gather all the assets and financial services of
clients specific and customized to their needs.





In March of 2009, we executed a
non-binding letter of intent to acquire 100% of 1000 BARS, Inc., a private
Nevada corporation focused on the preservation of the long-term value of assets
through buying and selling strategies of physical precious
metals, specializing in 1000 oz bars of silver. 1000 BARS
has also developed commodity market strategies for the owners
of physical bars of silver.





Results
of Operations





The
following tables summarize selected items from the statement of operations for
the years ended December 31, 2008 and 2007.





Revenue:


Years
      EndedDecember
      31,
            
            
            Increase/(Decrease)2008
            
            2007
            
            
            $
            
            
            
            %ConsolidatedRevenue
            
            $
            4,912,090
            
            
            $
            308,936
            
            
            $
            4,603,154
            
            
            
            1,490
            %Operating
      expenses
            
            
            9,655,974
            
            
            
            8,159,233
            
            
            
            1,496,741
            
            
            
            19
            %Net
      operating (loss)
            
            
            (4,743,884
            )
            
            $
            (7,850,297
            )
            
            $
            (3,106,413
            )
            
            
            (40
            %)





36


Overall
revenues increased 1,490% during fiscal 2008. 2007 was targeted to be a year of
merger and acquisitions. In 2007 we acquired RFIS, RREM and the minority
interest in Maximum.  In 2008, we continued to explore additional
acquisition targets and consummated the acquisition of GBI during the second
fiscal quarter. Our significant revenue increase is the direct result of the
acquisition of GBI for the period from June 2, 2008 through December 31,
2008.





Revenue by
Segment


Years
      EndedDecember
      31,
            
            
            Increase/(Decrease)2008
            
            2007
            
            
            
            
            
            $
            
            %RevenueInsurance
      services
            
            $
            362,091
            
            
            $
            249,064
            
            
            $
            113,027
            
            
            
            46
            %Mortgage
      services
            
            
            183,458
            
            
            
            59,872
            
            
            
            123,586
            
            
            
            207
            %Brokerage
      services
            
            
            4,366,541
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
      revenue
            
            $
            4,912,090
            
            
            $
            308,936
            
            
            $
            4,603,154
            
            
            
            1,490
            %





Insurance Services: RFIS
experienced an increase of 46% in revenues from insurance services for fiscal
2008. RFIS earned $362,091 during 2008 compared to $249,064 in 2007 due to
renewal revenue and increase in commercial policies during the year ended
December 31, 2008. This is the result of an augmented focus towards increasing
the ratio of commercial lines verses personal lines in its overall market base.
RFIS believes the commercial lines will provide greater ability to increase the
insurance services revenue stream as well as provide further stability to our
long term growth platform. RFIS anticipates a financial recognition of these
efforts through increased commission revenue during fiscal 2009.





Mortgage Services: RREM was
acquired in May 2007 and had limited activity during the second quarter of 2007.
In 2008, RREM generated revenue through commissions earned on the sale of
residential real estate and mortgage brokerage services.  During 2008
RREM earned $183,458 in commissions compared to $59,872 for 2007. The current
economic conditions of the real estate market have limited RREM’s ability to
generate revenue on the sales of residential real estate. However, RREM was able
to increase revenues by 207% for the year ended December 31, 2008. RREM is
continuing to seek additional sources of revenue while also increasing its
marketing area.





Brokerage Services: The
acquisition of GBI was completed on June 2, 2008 and accordingly we have only
included revenue from the date of consummation to December 31, 2008. GBI
represents our cornerstone of services and has contributed approximately 89% of
our total revenue for 2008. Revenue for the period of June 2, 2008 to December
31, 2008 totaled $4,366,541.








37





Selling
and Administrative Expenses:





Years
      EndedDecember
      31,
            
            
            Increase/(Decrease)2008
            
            
            2007
            
            
            $
            %Direct
      costs
            
            $
            3,773,120
            
            
            $
            47,455
            
            
            $
            3,725,665
            
            
            
            -Consulting
            
            
            14,317
            
            
            
            1,121,581
            
            
            
            (1,107,264
            )
            
            
            (99
            %)Professional
      fees
            
            
            273,378
            
            
            
            442,631
            
            
            
            (169,253
            )
            
            
            (38
            %)Executive
      compensation
            
            
            3,688,914
            
            
            
            3,264,903
            
            
            
            424,011
            
            
            
            13
            %General
      expenses
            
            
            1,868,667
            
            
            
            744,499
            
            
            
            1,124,168
            
            
            
            151
            %Depreciation
      and amortization
            
            
            37,578
            
            
            
            13,964
            
            
            
            23,614
            
            
            
            169
            %Impairment
      of goodwill
            
            
            -
            
            
            
            2,524,200
            
            
            
            -
            
            
            
            -Operating
      expenses
            
            $
            9,655,974
            
            
            $
            8,159,233
            
            
            $
            1,496,741
            
            
            
            19
            %





Operating overhead, excluding
impairments, increased 19% in 2008 over the previous year ended December 31,
2007. Significant increases were expected as we completed our acquisition
schedule; employed full time executive and administrative staff; and commenced
operations in each business segment of our financial services
platform.





Our
direct costs are comprised of commissions paid to associates and miscellaneous
fees related directly to the generation of revenue. These costs have a direct
relationship to our revenue and will increase or decrease with changes in
revenue.





Expenses by
Segment





RFIS:





Years
      EndedDecember
      31,
            
            
            Increase/(Decrease)2008
            
            
            2007
            
            
            $
            
            
            
            %Insurance
      servicesDirect
      costs
            
            $
            156,578
            
            
            $
            42,825
            
            
            $
            113,753
            
            
            
            266
            %Consulting
            
            
            13,188
            
            
            
            71,926
            
            
            
            (58,738
            )
            
            
            (82
            %)Professional
      fees
            
            
            25,500
            
            
            
            40,016
            
            
            
            (14,516
            )
            
            
            (36
            %)Executive
      compensation
            
            
            60,000
            
            
            
            51,550
            
            
            
            8,450
            
            
            
            16
            %General
      expenses
            
            
            257,996
            
            
            
            171,951
            
            
            
            86,045
            
            
            
            50
            %Depreciation
            
            
            658
            
            
            
            483
            
            
            
            175
            
            
            
            36
            %Operating
      expenses
            
            $
            513,920
            
            
            $
            378,750
            
            
            $
            135,170
            
            
            
            36
            %





RFIS
experienced an overall increase in operating expenses due to full commencement
of operations. RFIS was acquired on February 1, 2007 with one month of historic
operations. To meet the objectives of our business plan, RFIS initially focused
on personal insurance lines including home, auto and life. RFIS now expanded
focus to included full commercial lines in its product mix. Through the addition
of commercial products, RFIS’s gross commission income is anticipated to
increase. With the increased commission revenue, RFIS’s commission expense
included in its direct costs has also increased. On average, RFIS will pay a 65%
commission to its agents on each commercial policy written verses approximately
5% on personal lines. During 2008, RFIS acquired a customer list for the
commercial trucking industry. This was the primary increase in direct costs for
the year ended December 31, 2008. RFIS’s 2008 increase of 266% is attributable
to increases in all policies written.





38


During
the 2007 fiscal year, RFIS employed six full-time agents and two full-time
administrative staff. Base salaries are included in the general expenses and
although RFIS has experienced an approximate 50% increase in 2008, it has been
able to reduce external consulting fees and professional fees by 82% and 36%,
respectively.


RREM:





Year
      Ended
            
            
            May
      2, 2007 toDecember
      31,
            
            
            December
      31,
            
            
            Increase/(Decrease)2008
            
            
            2007
            
            
            $
            %Mortgage
      servicesDirect
      costs
            
            $
            80,265
            
            
            $
            4,630
            
            
            $
            75,635
            
            
            
            1,634
            %Consulting
            
            
            3,710
            
            
            
            2,350
            
            
            
            1,360
            
            
            
            58
            %Professional
      fees
            
            
            9,000
            
            
            
            25,305
            
            
            
            (16,305
            )
            
            
            (64
            %)Executive
      compensation
            
            
            59,318
            
            
            
            96,000
            
            
            
            (36,682
            )
            
            
            38
            %)General
      expenses
            
            
            159,274
            
            
            
            145,563
            
            
            
            13,711
            
            
            
            9
            %Depreciation
            
            
            934
            
            
            
            366
            
            
            
            568
            
            
            
            155
            %Operating
      expenses
            
            $
            312,501
            
            
            $
            274,214
            
            
            $
            38,287
            
            
            
            14
            %





These comparative results are not a
clear representation of actual change. We acquired RREM in May of 2007 and
therefore have only included the activity since May 2, 2007, the date of
acquisition. RREM’s resources were allocated towards the development of mortgage
leads and business structure. This resulted in non-recurring professional
expenses represented by a decrease of 64% during 2008 over 2007. We expect
outside professional fees to remain fairly consistent for fiscal
2009.





RREM
recorded direct costs primarily comprised of commissions paid to agents and
brokers, loan fees and miscellaneous costs directly attributed to the revenue
earned. RREM had a 1,634% increase in the year ended December 31, 2008 due to
the acquisition and operational commencement dates.





RREM’s
general and administrative expenses have increased 9% from 2007 for fiscal 2008.
The increase was anticipated with the commencement of operations. RREM added
both administrative staff as well as mortgage specialists to expand its
operations and capture additional revenue streams in the volatile real estate
market. During the second quarter of fiscal 2008, RREM hired four additional
loan specialists for the primary purpose of developing a revenue stream in loan
modifications and short sales. Due to the declining real estate markets we have
reduced our staff to one until such time that sufficient revenue leads can be
developed. Approximately 55% of RREM’s general and administrative expenses for
the year are attributable to salaries and wages.





39


Executive
compensation is comprised of cash compensation paid to real estate and mortgage
executives. In March of 2008, the President of RREM resigned, eliminating
further obligation for his compensation. Though RREM anticipates continued
executive compensation, it intends to re-structure the compensation package by
lowering the base salary and focusing more of the compensation on net revenue
generated.





GBI:





On June 2, 2008, we consummated our
staged acquisition of GBI, which began with the purchase of a 15% interest in
September 2007 and an additional 6% in March of 2008. We have included the
revenue and expenses of GBI from the date of acquisition through December 31,
2008 in our unaudited condensed consolidated financial statements. We expect the
amounts recognized in the period ended December 31, 2008 to be indicative of
future operating expenses.





The
amounts consolidated from the activities of GBI are as follows:





Acquisition
      toDecember
      31, 2008Brokerage
      servicesDirect
      costs
            
            $
            3,536,277Consulting
            
            
            (101,803
            )Professional
      fees
            
            
            47,185Executive
      compensation
            
            
            203,639General
      expenses
            
            
            866,209Depreciation
            
            
            4,168Operating
      expenses
            
            $
            4,555,676





Other
income and (expense)





Years
      EndedDecember
      31,
            
            
            Increase/(Decrease)2008
            
            
            2007
            
            
            $
            
            
            
            %ConsolidatedInterest
      income
            
            $
            48,198
            
            
            $
            67,182
            
            
            $
            (18,984
            )
            
            
            (28
            %)Interest
      (expense)
            
            
            (15,040
            )
            
            
            (22,897
            )
            
            $
            (7,857
            )
            
            
            (34
            )%Other
      income
            
            
            178,610
            
            
            
            -
            
            
            
            -
            
            
            
            -Other
      comprehensive (loss)
            
            
            (315,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -Realized
      (losses)
            
            
            (70,403
            )
            
            
            -
            
            
            
            -
            
            
            
            -Dividend
      income
            
            
            121,200
            
            
            
            -
            
            
            
            -
            
            
            
            -





Other income and expense consists of
interest earned and expenses, rental income from sub-lease of facilities and our
minority interest investments. We experienced a 28% decline in interest income
as a direct result of our depletion of cash resources held in interest bearing
money market accounts. 75% of our interest expense is attributable to our
related party note payable to the founder of DAC. The remaining interest was
incurred during ordinary course of business through the use of corporate credit
cards. We expect this amount to remain unchanged throughout the remainder of the
fiscal year.





40


We have recorded $178,610 in other
income primarily arising from our consolidation of GBI. Historically, GBI has
sub-leased its excess office space. With the completion of the acquisition, our
intention is to fully utilize all space available and therefore do not expect
future income from this source.





We previously owned a 24.9% interest in
Maximum and record the minority interest gains and losses as prescribed by SFAS
115. Historically, included in our minority interest was a 24.9% interest in AIS
and our previous minority interest in GBI. During the second fiscal quarter we
sold our interest in AIS and completed our acquisition of GBI. In October 2008,
Maximum ceased business operations due to the current economic conditions. In
October we wrote off our entire investment in Maximum.





Satisfaction
of our cash obligations for the next 12 months.





Historically,
our plan of operation has been stalled by a lack of adequate working
capital.  During 2008, we raised $256,500 net of financing costs of
$38,500, through two private placements and as of December 31, 2008 we had
available cash of $212,657. We believe these funds will help support existing
operational costs, but will only be sufficient to satisfy our working capital
requirements through June 30, 2009. Consequently, in addition to cash generated
from operations, we will need to raise additional funds through either equity,
including convertible securities such as preferred stock or debentures, or debt
financing.





Summary
of any product research and development that we will perform for the term of our
plan of operation.





We
do not anticipate performing any additional significant product research and
development under our plan of operation with Dial-A-Cup, RFIS, RREM, GBI or in
the financial services industry.





Expected
purchase or sale of plant and significant equipment.





We
do not anticipate the purchase or sale of any plant or significant equipment; as
such items are not required by us at this time.





Significant
changes in the number of employees.





Currently
we have full-time employment agreements in place with three of our executive
officers; Joseph Mangiapane, Jr. (CEO), Todd Vande Hei (Interim COO) and Thomas
Jandt (EVP of Business Development). The parent company has a total of 4 full
time employees including the officers listed above.





41


In
conjunction with the RFIS merger, RFIS entered into an employment agreement with
Todd Torneo, to serve as its President.  Currently, RFIS has 4 full
time agents and 1 administrative person.





We
intend to use the services of independent consultants and contractors to perform
various professional services when appropriate. We believe the use of
third-party service providers may enhance our ability to contain general and
administrative expenses.





Liquidity
and Capital Resources





A
critical component of our operating plan impacting our continued existence is
the ability to obtain additional capital through additional equity and/or debt
financing. We do not anticipate generating sufficient positive internal
operating cash flow until such time as we can deliver our product to market,
complete additional financial service company acquisitions and generate
substantial revenues, which may take the next few years to fully realize. In the
event we cannot obtain the necessary capital to pursue our strategic plan, we
may have to cease or significantly curtail our operations. This would materially
impact our ability to continue operations.





The
following table summarizes our current assets, liabilities and working capital
at December 31, 2008 compared to December 31, 2007.


December
      31,
            
            
            December
      31,
            
            
            Increase
      / (Decrease)2008
            
            
            2007
            
            
            $
            
            
            %Current
      Assets
            
            $
            1,596,550
            
            
            $
            2,945,532
            
            
            $
            (1,348,982
            )
            
            
            (46
            %)Current
      Liabilities
            
            
            1,379,727
            
            
            
            457,268
            
            
            
            921,570
            
            
            
            202
            %Working
      Capital
            
            $
            216,823
            
            
            $
            2,488,264
            
            
            $
            (2,272,612
            )
            
            
            -





Prior
to the private placements at the end of 2006 and during fiscal 2007, the
inventor of Dial-A-Cup’s product primarily funded our operations. As of December
31, 2008, total amounts owed in principal and interest to this individual was
$221,512. The proceeds loaned have been used to fund operations and for the
development of a prototype of our beverage dispenser. As of December 31, 2008,
the principal balance and accrued interest has been forgiven. As we expand our
activities, we may continue to experience net negative cash flows from
operations, pending receipt of additional revenues.





We believe the $212,657 in
un-restricted cash on hand at December 31, 2008 will only be sufficient to
sustain operations through the second quarter of fiscal 2009.  As a
result, we anticipate the need to seek additional funding for operations through
equity offerings and may need to further do so in the future through additional
financing, acquisitions, joint ventures or other means available to
us.  There can be no assurance that we will be able to complete a
transaction or complete a transaction on terms favorable to our stockholders or
us.





As
we continue to expand in the financial services industry, we anticipate
incurring operating losses over the next twelve months. Our lack of operating
history makes predictions of future operating results difficult to ascertain.
Our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development.





42


Off-Balance
Sheet Arrangements





We do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results or operations, liquidity, capital expenditures or capital
resources that is material to investors.





Going
Concern





The
financial statements included in this filing have been prepared in conformity
with generally accepted accounting principles that contemplate the continuance
of Rubicon as a going concern. Rubicon’s cash position is currently inadequate
to pay all of the costs associated with its operations. Management intends to
use borrowings and security sales to mitigate the effects of its cash position,
however no assurance can be given that debt or equity financing, if and when
required will be available. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded assets
and classification of liabilities that might be necessary should Rubicon be
unable to continue existence.





Critical
Accounting Policies and Estimates





Revenue Recognition: We
recognize revenue from product sales once all of the following criteria for
revenue recognition have been met: pervasive evidence that an agreement exists;
the services have been rendered; the fee is fixed and determinable and not
subject to refund or adjustment; and collection of the amount due is reasonably
assured.  We will primarily derive our revenues from anticipated
financial service related fees, such as commissions.





RFIS
currently earns commissions paid by insurance companies which are based on a
percentage of the premium charged to the policyholder and considered earned over
the term of the policy. Deferred commissions are related to the unexpired terms
of the policies in force. The RFIS recognizes revenue net of expected
cancellations in accordance with Staff Accounting Bulletin (“SAB”)
13A.





Recent
Accounting Developments





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS
No. 159 allows Rubicon to choose to measure many financial assets and
financial liabilities at fair value. Unrealized gains and losses on items for
which the fair value option has been elected are reported in earnings. SFAS 159
is effective for fiscal years beginning after November 15, 2007. The adoption of
SFAS 159 is not expected to have a material impact on Rubicon’s financial
position, results of operation or cash flows.





43


In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements”. This statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling (minority) interest
in a subsidiary and for the de-consolidation of a subsidiary. It clarifies that
a non-controlling interest in a subsidiary is equity in the consolidated
financial statements. SFAS No. 160 is effective for fiscal years and interim
periods beginning after December 15, 2008. The adoption of SFAS 160 is not
expected to have a material impact on Rubicon’s financial position, results of
operation or cash flows.





In
December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combinations”.
SFAS 141 (Revised) establishes principals and requirements for how an acquirer
of a business recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree. This statement also provides guidance for recognizing
and measuring the goodwill acquired in the business combination and determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. The
guidance will become effective for the fiscal year beginning after December 15,
2008.





In
December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding
the use of a “simplified” method, as discussed in SAB No. 107 (SAB 107), in
developing an estimate of expected term of “plain vanilla” share options in
accordance with SFAS No. 123 I, Share-Based Payment.  In particular,
the staff indicated in SAB 107 that it will accept a company’s election to use
the simplified method, regardless of whether Rubicon has sufficient information
to make more refined estimates of expected term. At the time SAB 107 was issued,
the staff believed that more detailed external information about employee
exercise behavior (e.g., employee exercise patterns by industry and/or other
categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. Rubicon currently uses the
simplified method for “plain vanilla” share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on Rubicon’s consolidated financial position, results of
operations or cash flows.





In
March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No.
161, Disclosures about Derivative Instruments and Hedging Activities—an
amendment of FASB Statement No. 133.  This standard requires companies
to provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. Rubicon has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its consolidated financial position, results of operations or
cash flows.





44


In
May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
“The Hierarchy of Generally Accepted Accounting Principles”.  SFAS No.
162 sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB’s amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
Rubicon’s financial position, statements of operations, or cash flows at this
time.





In
May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial Guarantee Insurance Contracts-and interpretation of
FASB Statement No. 60”.  SFAS No. 163 clarifies how Statement 60
applies to financial guarantee insurance contracts, including the recognition
and measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on
Rubicon’s financial position, statements of operations, or cash flows at this
time.




Item
7A.      Quantitative
and Qualitative Disclosures about Market Risk.







Not
applicable.




Item
8.    Financial Statements and
Supplementary Data.







Management
Responsibility for Financial Information





We
are responsible for the preparation, integrity and fair presentation of our
financial statements and the other information that appears in this annual
report on Form 10-K. The financial statements have been prepared in accordance
with accounting principles generally accepted in the United States and include
estimates based on our best judgment.


We
maintain a comprehensive system of internal controls and procedures designed to
provide reasonable assurance, at an appropriate cost-benefit relationship, that
our financial information is accurate and reliable, our assets are safeguarded
and our transactions are executed in accordance with established
procedures.





Weaver
& Martin, LLC, an independent registered public accounting firm, is retained
to audit our consolidated financial statements. Its accompanying report is based
on audits conducted in accordance with the standards of the Public Company
Accounting Oversight Board (United States).





The
Audit Committee, which was comprised of two non-independent directors and one
independent director as of December 31, 2008, meets with our management and the
independent registered public accounting firm to ensure that each is properly
fulfilling its responsibilities. The Committee oversees our systems of internal
control, accounting practices, financial reporting and audits to ensure their
quality, integrity and objectivity are sufficient to protect shareholders’
investments.




45


Index
to Financial Statements




PageReport
      of Independent Registered Public Accounting Firm
            F-1Consolidated
      Balance Sheets at December 31, 2008 and 2007
            F-2Consolidated
      Statements of Operations for the Years Ended December 31, 2008 and
      2007
            F-3Statements
      of Stockholders’ Equity for the Years Ended December 31, 2008 and
      2007
            F-4Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2008 and
      2007
            F-5Notes
      to Consolidated Financial Statements
            F-6


46


Report of Independent
Registered Public Accounting Firm





To
the Board of Directors


Rubicon
Financial Incorporated


Newport
Beach, California





We
have audited the accompanying consolidated balance sheets of Rubicon Financial
Incorporated and subsidiaries as of December 31, 2008 and 2007, and the related
consolidated statements of operations, stockholders’ equity, and cash flows for
the years then ended.  Rubicon Financial Incorporated’s management is
responsible for these financial statements.  Our responsibility is to
express an opinion on these financial statements based on our
audit.





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 financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit 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.  Our audits of the financial statements include
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.





In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Rubicon Financial Incorporated and
subsidiaries as of December 31, 2008 and 2007, and the results of their
operations, stockholders’ equity, and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses and had negative cash
flows from operations that raise substantial doubt about the Company’s ability
to continue as a going concern. Management’s plans in regard to these matters
are also described in the Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.











/s/ Weaver & Martin,
LLC


Weaver
& Martin, LLC


Kansas
City, Missouri


April
14, 2009


F-1


Rubicon
      Financial IncorporatedConsolidated
      Balance SheetsDecember
      31,2008
            
            
            2007AssetsCurrent
      assets:Cash
            
            $
            212,657
            
            
            $
            1,892,541Cash
      – restricted
            
            
            201,571
            
            
            
            -Marketable
      securities
            
            
            530,380
            
            
            
            956,000Accounts
      receivable
            
            
            481,523
            
            
            
            -Prepaid
      expenses
            
            
            41,311
            
            
            
            90,999Notes
      receivable
            
            
            103,500
            
            
            
            -Notes
      receivable – related party
            
            
            25,608
            
            
            
            5,192Other
      current assets
            
            
            -
            
            
            
            800Total
      current assets
            
            
            1,596,550
            
            
            
            2,945,532Fixed
      assets, net of accumulated depreciation of $134,565 and $14,633,
      respectively
            
            
            136,159
            
            
            
            59,104Other
      assets:Contract
      advances
            
            
            277,197
            
            
            
            -Deposits
            
            
            38,554
            
            
            
            -Intangible
      assets – customer list
            
            
            2,439,671
            
            
            
            -Investments
            
            
            -
            
            
            
            175,000Total
      other assets
            
            
            2,755,422
            
            
            
            175,000Total
      assets
            
            $
            4,488,131
            
            
            $
            3,179,636Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Accounts
      payable
            
            $
            242,335
            
            
            $
            79,775Accrued
      expenses
            
            
            583,437
            
            
            
            23,352Investment
      obligation
            
            
            487,000
            
            
            
            104,000Deferred
      revenue
            
            
            147,367
            
            
            
            35,109Capital
      lease obligation
            
            
            12,223
            
            
            
            -Accrued
      interest payable – related party
            
            
            -
            
            
            
            54,493Note
      payable – related party
            
            
            4,500
            
            
            
            160,539Total
      current liabilities
            
            
            1,476,862
            
            
            
            457,268Stockholders’
      equityPreferred
      stock, $0.001 par value, 9,000,000 sharesauthorized,
      no shares issued and outstandingAs
      of December 31, 2008 and 2007, respectively
            
            
            -
            
            
            
            -Preferred
      series “A”, $0.001 par value, 1,000,000 sharesauthorized,
      62,500 shares and no issued and outstandingas
      of December 31, 2008 and 2007, respectively
            
            
            63
            
            
            
            -Common
      stock, $0.001 par value, 50,000,000 sharesauthorized,
      11,976,773
      and 10,724,273 shares issued and outstandingas
      of December 31, 2008 and December 31, 2007, respectively
            
            
            11,977
            
            
            
            10,724Common
      stock owed but not issued, 499,790 and 559,790as
      of December 31, 2008 and December 31, 2007, respectively
            
            
            498
            
            
            
            559Additional
      paid in capital
            
            
            17,971,575
            
            
            
            15,077,054Unamortized
      shares issued for services
            
            
            (433,108
            )
            
            
            (2,878,413
            )Other
      comprehensive (loss)
            
            
            (611,861
            )
            
            
            (359,000
            )Accumulated
      (deficit)
            
            
            (13,927,875
            )
            
            
            (9,128,556
            )Total
      stockholders’ equity
            
            
            3,011,269
            
            
            
            2,722,368Total
      liabilities and stockholders’ equity
            
            $
            4,488,131
            
            
            $
            3,179,636








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


F-2


Rubicon
      Financial IncorporatedConsolidated
      Statements of OperationsFor
      the Years EndedDecember
      31,2008
            2007Revenue
            
            $
            4,912,090
            
            
            $
            308,936Expenses:Direct
      costs
            
            
            3,773,120
            
            
            
            47,455Consulting
            
            
            14,317
            
            
            
            1,121,581Professional
      fees
            
            
            273,378
            
            
            
            442,631Executive
      compensation
            
            
            3,688,914
            
            
            
            3,264,903General
      and administrative expenses
            
            
            1,868,667
            
            
            
            744,499Asset
      Impairment
            
            
            -
            
            
            
            2,524,200Depreciation
      and amortization
            
            
            37,578
            
            
            
            13,964Total
      expenses
            
            
            9,655,974
            
            
            
            8,159,233Net
      operating (loss)
            
            
            (4,743,884
            )
            
            
            (7,850,297
            )Other
      income (expense):Interest
      expense
            
            
            (3,801
            )
            
            
            (7,295
            )Interest
      expense – related party
            
            
            (11,239
            )
            
            
            (15,602
            )Interest
      income
            
            
            47,123
            
            
            
            67,182Interest
      income – related party
            
            
            1,075
            
            
            
            -Dividend
      income
            
            
            121,200
            
            
            
            -Other
      income
            
            
            178,610
            
            
            
            -Other
      comprehensive (loss)
            
            
            (315,000
            )
            
            
            -Realized
      (losses) on investments
            
            
            (73,403
            )
            
            
            -Total
      other income (expense)
            
            
            (55,435
            )
            
            
            44,285Net
      (loss)
            
            $
            (4,799,319
            )
            
            $
            (7,806,012
            )Weighted
      average number of common sharesoutstanding
      – basic and fully diluted
            
            
            11,487,102
            
            
            
            12,907,111Net
      (loss) per share – basic and fully diluted
            
            $
            (0.42
            )
            
            $
            (0.60
            )














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


F-3




Rubicon
      Financial IncorporatedStatements
      of Changes in Stockholders’ EquityPreferred
      Stock
              
              
              Common
      Stock
              
              
              Common
                Stock
      owed
                but
      not issued
              
              
              Additional
                Paid-in
                Capital
              
              
              Unamortized
      Compensation
              
              
              Other
                Compre-
                hensive
              
              
              Accumulated
                (Deficit)
              
              
              Total
      Stockholders’ EquityShares
              
              
              Amount
              
              
              Shares
              
              
              AmountBalance,
      December 31, 2006
              
              
              -
              
              
              $
              -
              
              
              
              11,337,773
              
              
              $
              11,338
              
              
              $
              575
              
              
              $
              2,908,087
              
              
              $
              -
              
              
              
              -
              
              
              $
              (1,322,544
              
              
              $
              1,597,455Shares
      previously authorized
              
              
              
              
              
              
              
              
              
              
              575,000
              
              
              
              575
              
              
              
              (575
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for services
              
              
              
              
              
              
              
              
              
              
              2,502,500
              
              
              
              2,502
              
              
              
              514
              
              
              
              3,957,109
              
              
              
              (2,012,197
              )
              
              
              -
              
              
              
              -
              
              
              
              1,947,928Shares
      issued for acquisitions
              
              
              
              
              
              
              
              
              
              
              1,309,000
              
              
              
              1,309
              
              
              
              -
              
              
              
              3,379,588
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,380,897Options
      issued for services
              
              
              
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,799,315
              
              
              
              (866,216
              )
              
              
              -
              
              
              
              -
              
              
              
              1,933,099Shares
      issued for cash and
                securities
              
              
              
              
              
              
              
              
              
              
              1,000,000
              
              
              
              1,000
              
              
              
              45
              
              
              
              2,088,955
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,090,000Cancellation
      of previously
                issued
      shares
              
              
              
              
              
              
              
              
              
              
              (6,000,000
              )
              
              
              (6,000
              )
              
              
              -
              
              
              
              6,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Donated
      capital
              
              
              
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              7,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              7,000Merger
      eliminations
              
              
              
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (69,000
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (69,000
              )Other
      comprehensive loss
              
              
              
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (359,000
              )
              
              
              -
              
              
              
              (359,000
              )Net
      (loss)For
      the year ended
                December
      31, 2007
              
              
              
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (7,806,012
              )
              
              
              (7,806,012
              )Balance,
      December 31, 2007
              
              
              -
              
              
              
              -
              
              
              
              10,724,273
              
              
              
              10,724
              
              
              
              559
              
              
              
              15,077,054
              
              
              
              (2,878,413
              )
              
              
              (359,000
              )
              
              
              (9,128,556
              )
              
              
              2,722,367Shares
      previously authorized
                and
      issued
              
              
              
              
              
              
              
              
              
              
              45,000
              
              
              
              45
              
              
              
              (45
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Shares
      issued for cash,
                net
      of financing costs
              
              
              -
              
              
              
              -
              
              
              
              85,000
              
              
              
              85
              
              
              
              -
              
              
              
              143,915
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              144,000Preferred
      shares issued for
                cash,
      net of financing costs
              
              
              62,500
              
              
              
              63
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              112,437
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              112,500Shares
      issued for services
              
              
              -
              
              
              
              -
              
              
              
              22,500
              
              
              
              23
              
              
              
              -
              
              
              
              37,977
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              38,000Options
      issued pursuant to
                employment
      agreement
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              699,764
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              699,764Cancellation
      of shares per
                agreement
              
              
              -
              
              
              
              -
              
              
              
              (100,000
              )
              
              
              (100
              )
              
              
              (16
              )
              
              
              116
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Amortization
      of shares
                issued
      for services
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,445,305
              
              
              
              -
              
              
              
              -
              
              
              
              2,445,305Shares
      issued for acquisition
              
              
              -
              
              
              
              -
              
              
              
              1,200,000
              
              
              
              1,200
              
              
              
              -
              
              
              
              1,678,800
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,680,000Forgiveness
      of related party
                debt
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              221,512
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              221,513Other
      comprehensive loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (252,861
              )
              
              
              -
              
              
              
              (252,861
              )Net
      (loss)For
      the year ended
                December
      31, 2008
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (4,799,319
              )
              
              
              (4,799,319
              )62,500
              
              
              
              63
              
              
              
              11,976,773
              
              
              $
              11,977
              
              
              $
              498
              
              
              $
              17,971,575
              
              
              $
              (433,108
              )
              
              $
              (611,861
              )
              
              $
              (13,927,872
              )
              
              $
              3,011,269
 The accompanying notes
are an integral part of the consolidated financial
statements.




F-4





Rubicon
      Financial IncorporatedConsolidated
      Statements of Cash FlowsFor
      the Years Ended December 31,2008
            
            2007Cash
      flows from operating activitiesNet
      (loss)
            
            $
            (4,799,319
            )
            
            $
            (7,806,012
            )Adjustments
      to reconcile net (loss) tonet
      cash (used) in operating activities:Depreciation
      expense
            
            
            37,578
            
            
            
            13,964Impairment
      of goodwill
            
            
            -
            
            
            
            2,524,200Shares
      and options issued for services
            
            
            737,764
            
            
            
            3,881,027Amortization
      of equity based compensation
            
            
            2,445,305
            
            
            
            -Minority
      interest (losses)
            
            
            73,403
            
            
            
            -Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            (161,491
            )
            
            
            13,208Prepaid
      expenses
            
            
            (5,858
            )
            
            
            (90,600
            )Deposits
            
            
            (21,200
            )
            
            
            4,224Accrued
      interest receivable
            
            
            (4,906
            )
            
            
            (74,748
            )Accounts
      payable and accrued liabilities
            
            
            293,669
            
            
            
            3,536Investment
      obligation
            
            
            383,000
            
            
            
            -Deferred
      revenue
            
            
            112,257
            
            
            
            (5,129
            )Accrued
      interest payable
            
            
            -
            
            
            
            (206
            )Accrued
      interest payable – related party
            
            
            (11,239
            )
            
            
            15,602Net
      cash (used) by operating activities
            
            
            (921,036
            )
            
            
            (1,520,934
            )Cash
      flows from investing activitiesProceeds
      for notes receivable
            
            
            -
            
            
            
            (5,000
            )Proceeds
      for notes receivable – related party
            
            
            -
            
            
            
            (5,000
            )Payments
      on notes receivable – related party
            
            
            798
            
            
            
            -Purchase
      of fixed assets
            
            
            (68,281
            )
            
            
            (29,622
            )Distribution
      of assets – related party
            
            
            89,716
            
            
            
            -Purchase
      of intangible assets
            
            
            (1,103,420
            )
            
            
            -Purchase
      of investments
            
            
            (121,200
            )
            
            
            (431,000
            )Net
      cash (used) by investing activities
            
            
            (1,202,387
            )
            
            
            (470,622
            )Cash
      flows from financing activitiesCash
      acquired with the merger
            
            
            388,610
            
            
            
            936,843Donated
      capital
            
            
            -
            
            
            
            8,455Payments
      on notes payable
            
            
            -
            
            
            
            (52,350
            )Proceeds
      from notes payable – related party
            
            
            -
            
            
            
            25Issuance
      of preferred stock
            
            
            112,500
            
            
            
            -Issuance
      of common stock
            
            
            144,000
            
            
            
            1,090,000Net
      cash provided by financing activities
            
            
            645,110
            
            
            
            1,982,973Net
      (decrease) increase in cash
            
            
            (1,478,313
            )
            
            
            (8,583
            )Cash
      – beginning
            
            
            1,892,541
            
            
            
            1,901,124Cash
      – ending
            
            $
            414,228
            
            
            $
            1,892,541Supplemental
      disclosures:Interest
      paid
            
            $
            6,457
            
            
            $
            7,295Income
      taxes paid
            
            $
            800
            
            
            $
            800Non-cash
      financing activities:Shares
      and options issued for services
            
            $
            737,764
            
            
            $
            3,881,027Shares
      issued for investment
            
            $
            -
            
            
            $
            2,502,500Shares
      issued for acquisition
            
            $
            1,680,000
            
            
            $
            3,135,900

















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


F-5


Rubicon
Financial Incorporated


Notes
to Consolidated Financial Statements





NOTE 1 – Significant
Accounting Policies and Procedures





Organization


The
Company was incorporated in the State of Delaware on April 28, 1986
(“Inception”) and was formerly known as Art World Industries (“AWI”). On August
6, 2002, the Company changed its name to ISSG, Inc. In addition, on March 9,
2004, the Company completed the acquisition of a wholly owned subsidiary,
Dial-A-Cup Corporation (“DAC”), a New York Corporation. Further, on June 2,
2005, the Company completed a merger with Rub Investments Ltd., (“Rub”) on
September 6, 2006; the Company changed its name to Rubicon Financial
Incorporated. Effective February 1, 2007, the Company completed a merger with
Rubicon Financial Insurance Services, Inc. a California corporation (“RFIS”),
pursuant to an agreement and plan of merger. The agreement and plan of merger
provided that ISSG Sub, Inc. our wholly owned subsidiary, merged with and into
RFIS, with RFIS as the surviving corporation and new wholly-owned subsidiary of
the Company. The Company issued 50,000 shares of its common stock in exchange
for 100% of the outstanding shares of RFIS. On February 13, 2007, the Company
formed a wholly owned subsidiary, Rubicon Securities, Inc., a Nevada
corporation. Effective May 11, 2007, the Company acquired Rubicon Real Estate
and Mortgages, Inc., a California corporation (“RREM”), pursuant to an agreement
and plan of merger. The agreement and plan of merger provided that DeeSound,
Inc. our wholly owned subsidiary, merged with and into RREM, with RREM as the
surviving corporation and new wholly owned subsidiary of the Company. The
Company issued 1,159,000 shares of its common stock in exchange for 100% of the
outstanding shares of RREM.  On June 2, 2008, the Company completed
its acquisition of Grant Bettingen, Inc., a California corporation (“GBI”)
registered with the Financial Industry Regulatory Authority. Pursuant to an
agreement and plan of merger, the Company issued 1,200,000 shares of its common
stock and agreed to pay cash totaling $974,000 in exchange for 100% of the
outstanding shares of GBI.







Principles of
Consolidation


The
financial statements include those of: Rubicon Financial Incorporated
(“Rubicon”); and its wholly owned subsidiaries, Rubicon Financial Insurance
Services, Inc. (“RFIS”), Rubicon Real Estate and Mortgages, Inc. (“RREM”), Grant
Bettingen, Inc. (“GBI”) and Dial-A-Cup, Inc. (“DAC”). All significant
inter-company transactions and balances have been eliminated. RBCF and its
subsidiary’s will collectively be referred herein as the “Company”.





Use of
Estimates


The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ from those
estimates. Significant estimates made by management include the recoverability
of intangible assets.




F-6


Cash
Equivalents
 Cash
and cash equivalents consist primarily of cash on deposit, certificates of
deposit, money market accounts, and investment grade commercial paper that are
readily convertible into cash and purchased with original maturities of three
months or less.




Fixed Assets


Property
and equipment are recorded at cost. Expenditures for major additions and
improvements are capitalized and minor replacements, maintenance, and repairs
are charged to expense as incurred. When property and equipment are retired or
otherwise disposed of, the cost and accumulated depreciation are removed from
the accounts and any resulting gain or loss is included in the results of
operations for the respective period. Depreciation is provided over the
estimated useful lives of the related assets using the straight-line method for
financial statement purposes. The Company uses other depreciation methods
(generally accelerated) for tax purposes where appropriate. The estimated useful
lives for significant property and equipment categories are as
follows:










Equipment
            3-5
      yearsFurniture
            7
    years




The
Company reviews the carrying value of property, plant, and equipment for
impairment whenever events and circumstances indicate that the carrying value of
an asset may not be recoverable from the estimated future cash flows expected to
result from its use and eventual disposition. In cases where undiscounted
expected future cash flows are less than the carrying value, an impairment loss
is recognized equal to an amount by which the carrying value exceeds the fair
value of assets. The factors considered by management in performing this
assessment include current operating results, trends and prospects, the manner
in which the property is used, and the effects of obsolescence, demand,
competition, and other economic factors. Based on this assessment there was no
impairment as December 31, 2007.




Impairement of long-lived
assets


The
Company reviews its long-lived assets and intangibles periodically to determine
potential impairment by comparing the carrying value of the long-lived assets
with the estimated future cash flows expected to result from the use of the
assets, including cash flows from disposition. Should the sum of the expected
future cash flows be less than the carrying value, the Company would recognize
an impairment loss. An impairment loss would be measured by comparing the amount
by which the carrying value exceeds the fair value of the long-lived assets and
intangibles. The Company recognized impairment losses in the amount of $0 and
$2,524,200 as of December 31, 2008 and 2007, respectively.





Revenue
Recognition


The
Company recognizes revenue net of expected cancellations in accordance with
Staff Accounting Bulletin (“SAB”) 13A. As of December 31, 2008, the Company
evaluated evidence of cancellation in order to make a reliable estimate and
determined there were no material cancellations during the year and therefore no
allowance has been made.





F-7


The
Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”)
101. Revenue is recorded upon the closing of a sale of real estate and/or
mortgage.





Investment
banking revenues and advisory fees from mergers, acquisitions and restructuring
transactions are recorded when services for the transactions are determined to
be completed, generally as set forth under the terms of the engagement.
Transaction related expenses, primarily consisting of legal, travel and other
costs directly associated with the transaction, are deferred and recognized in
the same period as the related investment banking transaction revenue.
Underwriting revenues are presented net of related expenses.





Commission
revenue generated from executing customer transactions on stocks, options and
futures markets are recognized in the accounts on settlement-date
basis.





Advertising
Costs


The
Company expenses all costs of advertising as incurred. There was $9,272 and
$36,231 of advertising costs included in selling, general, and administrative
expenses for the years ended December 31, 2008 and 2007,
respectively.





Available-for-sale
securities


The
Company classifies its marketable equity securities as available-for-sale and
are carried at fair market value, with the unrealized gains and losses included
in the determination of comprehensive income and reported in stockholders’
equity.





Income
Taxes


The
Company accounts for income taxes in accordance with FASB Statement No. 109
"Accounting for Income Taxes”. SFAS No. 109 requires the Company to provide a
net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book and tax
accounting methods and any available operating loss or tax credit carry
forwards.





The
Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes – an interpretation of FASB Statement No. 109 (“FIN 48”) as of January 1,
2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized
in companies’ financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. As a result, the Company applies a
more-likely-than-not recognition threshold for all tax uncertainties. FIN 48
only allows the recognition of those tax benefits that have a greater than fifty
percent likelihood of being sustained upon examination by the taxing
authorities. As a result of implementing FIN 48, the Company reviewed its tax
positions and determined there were no outstanding, or retroactive tax positions
with less than a 50% likelihood of being sustained upon examination by the
taxing authorities, therefore the implementation of this standard has not had a
material affect on the Company.





The
Company does not anticipate any significant changes to its total unrecognized
tax benefits within the next 12 months. As of December 31, 2008 and 2007, no
income tax expense has been incurred.





F-8


Fair Value of Financial
Instruments


The
Company has financial instruments whereby the fair value of the financial
instruments could be different from that recorded on a historical basis in the
accompanying balance sheets. The Company's financial instruments consist of
cash, receivables, accounts payable, accrued liabilities, and notes payable. The
carrying amounts of the Company's financial instruments approximate their fair
values as of December 31, 2008 and 2007 due to their short-term
nature.





Fair Value of Officer and
Stockholder Transactions


In
accordance with Staff Accounting Bulletin (“SAB”) No. 79, “Accounting for
Expenses or Liabilities Paid by Principal Stockholder,” the Company estimates
and records the fair value of expenses contributed to the Company by its
officers and shareholders. Significant expenses contributed by officers and
shareholders during the periods presented consist of office space and services.
The Company assesses the fair value of these services and records an expense to
operations with a corresponding credit to additional paid-in
capital.





Loss per Common
Share


The
Company presents basic loss per share (“EPS”) and diluted EPS on the face of
consolidated statements of operations. Basic EPS is computed by dividing
reported earnings by the weighted average shares outstanding. Diluted EPS is
computed by adding to the weighted average shares the dilutive effect if stock
options and warrants were exercised into common stock. For the years ended
December 31, 2008 and 2007, the denominator in the diluted EPS computation is
the same as the denominator for basic EPS due to the anti-dilutive effect of the
warrants and stock options on the Company’s net loss.





Risks and
Uncertainties


The
Company’s operations are subject to innovations in product design and function.
Significant technical changes can have an adverse effect on product lives.
Design and development of new products are important elements to achieve
profitability in the industry segment.





Credit
Risks


Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash deposits. Accounts at each institution are
insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At
December 31, 2008 and 2007, the Company had approximately $0 and
$1,591,679 in excess of FDIC insured limits, respectively.





Reclassifications


Certain
reclassifications have been made to the prior years’ financial statements to
conform to the current year presentation. These reclassifications had no effect
on previously reported results of operations or retained earnings.





Recent
Pronouncements


In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS
No. 159 allows the company to choose to measure many financial assets and
financial liabilities at fair value. Unrealized gains and losses on items for
which the fair value option has been elected are reported in earnings. SFAS 159
is effective for fiscal years beginning after November 15, 2007. The adoption of
SFAS 159 is not expected to have a material impact on the Company’s financial
position, results of operation or cash flows.





F-9


In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements”. This statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling (minority) interest
in a subsidiary and for the de-consolidation of a subsidiary. It clarifies that
a non-controlling interest in a subsidiary is equity in the consolidated
financial statements. SFAS No. 160 is effective for fiscal years and interim
periods beginning after December 15, 2008. The adoption of SFAS 160 is not
expected to have a material impact on the Company’s financial position, results
of operation or cash flows.





In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (“FAS 141 (R)”) and SFAS No. 160, Non-controlling Interests in
Consolidated Financial Statements” (“FAS 160”). These standards aim to improve,
simplify, and converge internationally the accounting for business combinations
and the reporting of non-controlling interests in consolidated financial
statements. The provision of FAS 141(R) and FAS 160 are effective for the fiscal
year beginning January 1, 2009. Rubicon is currently evaluating the impact of
the provisions of FAS 141 (R) and FAS 160.





In
December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding
the use of a “simplified” method, as discussed in SAB No. 107 (SAB 107), in
developing an estimate of expected term of “plain vanilla” share options in
accordance with SFAS No. 123 I, Share-Based Payment.  In particular,
the staff indicated in SAB 107 that it will accept a company’s election to use
the simplified method, regardless of whether Rubicon has sufficient information
to make more refined estimates of expected term. At the time SAB 107 was issued,
the staff believed that more detailed external information about employee
exercise behavior (e.g., employee exercise patterns by industry and/or other
categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. Rubicon currently uses the
simplified method for “plain vanilla” share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on Rubicon’s consolidated financial position, results of
operations or cash flows.





In
March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities” (“FAS 161”). FAS 161 is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on the entity’s financial position, financial performance, and cash
flows. The provisions of FAS 161 are effective for the year ending December 31,
2008. Rubicon is currently evaluating the impact of the provisions of FAS
160.





F-10


In
May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“FAS 162”).  FAS 162 sets forth the level of
authority to a given accounting pronouncement or document by category. Where
there might be conflicting guidance between two categories, the more
authoritative category will prevail. FAS 162 will become effective 60 days after
the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA
Professional Standards. FAS 162 has no effect on our financial position,
statements of operations, or cash flows at this time.





Year-end


The
Company has adopted December 31, as its
fiscal year end.





NOTE 2 – Going
concern


The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company has incurred a net loss of
$4,799,319 for the period ended December 31, 2008.





These
conditions give rise to doubt about the Company’s ability to continue as a going
concern. These financial statements do not include adjustments relating to the
recoverability and classification of reported asset amounts or the amount and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company’s continuation as a going
concern is dependent upon its ability to obtain additional financing or sale of
its common stock as may be required and ultimately to attain
profitability.





NOTE 3 – Restricted
Cash


The
Company’s wholly owned subsidiary, GBI, has entered into securities clearing
agreements with Penson Financial Services, Inc. (“Penson) and Wedbush, Morgan
Securities, Inc. (“Wedbush”) Pursuant to these agreements, the Company is
required to maintain a deposit account with each respective clearing firm in
amounts determined based on the Company’s transaction volume. As of December 31,
2008, the Company maintained deposits with Penson of $150,405 and $51,166,
respectively for total restricted cash of $201,571.





NOTE 4 – Identifiable
Intangible Assets


During
the year ended December 31, 2008 Rubicon consummated the acquisition of 100% of
the outstanding common shares of GBI. As a result of the acquisition, Rubicon
identified intangible assets in the GBI customer lists valued at approximately
$2,403,671. In addition, RFIS purchased a customer list for the purpose of
seeking insurance business from the commercial trucking industry.  The
total purchase price was $36,000.





NOTE 5 - Marketable
securities


On
November 27, 2007, Rubicon entered into a Share Purchase Agreement with American
International Industries, Inc. (“AMIN”), whereby
Rubicon agreed to issue 1,000,000 shares of its common stock in exchange for
200,000 shares of AMIN and $1,000,000 in cash. Rubicon recorded marketable
securities of $1,000,000,
representing the fair market value of AMIN’s common stock ($5 per share) on the
date of agreement. On August 8, 2008 AMIN issued a stock dividend equal to
40,000 shares of their common stock. The fair value of the dividend was
$121,200. On December 31, 2008, Rubicon evaluated the fair value of the
securities and recorded other comprehensive loss in the amount of $667,600 to
adjust the carrying value to the market value at the balance sheet date. In
addition, GBI held 700 shares of various securities as available-for-sale and at
December 31, 2008, GBI evaluated the fair value of the securities and recorded
other comprehensive income in the amount of $55,739.





F-11


As
of December 31, 2008, the Company recorded $611,861 as other comprehensive
losses on its consolidated balance sheet.





NOTE 6 – Notes
receivable


On
April 18, 2008, Rubicon amended its $20,000 note receivable with its RREM
subsidiary, whereby Joel Newman, the former President of RREM accepted full
liability for the principal balance of $20,000. The amended terms require
interest to accrue at a rate of 6% per annum and mature on April 18, 2009. On
March 18, 2008, Rubicon received the initial payment of $898 representing
principal in the amount of $798 and interest of $100. The outstanding principal
balance as of December 31, 2008 was $19,202.





In
addition, Mr. Newman owes $5,000 in the form of a demand note, which accrues
interest at a rate of 6% per annum. As of December 31, 2008, the principal
balance owed was $5,000 and accrued interest receivable was $5,475.





On
June 3, 2008, Rubicon was issued a note receivable in the amount of $100,000
from Marc Riviello pursuant to the “Stock Repurchase and Settlement Agreement”
as discussed in note 7. The note accrues interest at a rate of 6% per annum and
is due June 1, 2009. As of December 31, 2008 the principal balance was $100,000
and Rubicon accrued $3,500 in interest receivable.





NOTE 7 -
Investments


Rubicon
purchased a 24.9% interest in Maximum Financial Investment Group, Inc. (“MFIG”).
Rubicon recorded its investment in accordance with the equity method, whereby
the carrying value of the investment is adjusted based on the net income or
losses and any dividends paid. During the year ended December 31, 2008, MFIG
ceased operations and as a result, Rubicon recorded realized losses totaling
$50,000, the full value of its investment.





On
June 3, 2008, Rubicon entered into a Stock Repurchase and Settlement Agreement
with AIS Financial, Inc. (“AIS”) and Marc Riviello whereby Rubicon returned its
previously purchased 24.9% interest in AIS in exchange for the cancellation of
100,000 shares of Rubicon common stock and a note receivable from Mr. Riviello
in the amount of $100,000, representing the original amounts paid by Rubicon for
the acquisition of the minority interest in AIS. As a result of the repurchase
agreement, Rubicon reduced its minority interest losses in the amount of
$20,000.





On
June 2, 2008, Rubicon completed the acquisition of GBI through the purchase of
100% of GBI’s outstanding common shares. Prior to the consummation of the
acquisition, Rubicon gained incremental ownership through its acquisition
agreement with an initial purchase of 15% of the total outstanding shares of
GBI. Rubicon accounted for its investment in GBI pursuant to SFAS 115 which
resulted in realized losses totaling $315,000. In January 2008, Rubicon
purchased and additional 6% interest whereby maintaining a 21% minority interest
which was accounted for under the equity method and resulted in unrealized
losses totaling $43,403.





F-12


As
of December 31, 2008 Rubicon’s realized minority interest losses totaled $73,403
and realized losses on investments total $315,000.





NOTE 8 – Related Party
Transactions


Rubicon’s
operations were previously funded by the sole officer of DAC. As of September
30, 2008, total amounts loaned to Rubicon by this officer were $156,014. The
proceeds loaned have been used to fund operations and for the development of a
prototype of DAC’s beverage dispenser. The note bears interest of 10% per annum
and is due on demand. On December 31, 2008, the principal balance of $156,014
and accrued interest totaling $65,498 has been forgiven. Rubicon recorded the
debt forgiveness as paid in capital in the amount of $221,512.





On
March 27, 2008, Rubicon entered into an employment agreement with its President,
Terence Davis. Pursuant to the agreement, Mr. Davis shall receive annual
compensation in the amount of $96,000 commencing on April 1, 2008 and expiring
on March 31, 2009. On November 15, 2008, Mr. Davis retired and all compensation
earned to date was paid in full.





On
April 3, 2008, Rubicon entered into an agreement with the former President of
RREM, Joel Newman, whereby Rubicon agreed to extend Mr. Newman’s amended note an
additional one year period in exchange for a lock-up agreement on all 284,000
shares of Rubicon common stock currently held by Mr. Newman for a period of two
years expiring on March 15, 2010.





On
June 2, 2008, GBI entered into a five (5) year employment agreement with Grant
Bettingen, the former principal and shareholder of GBI. Pursuant to the
agreement, Mr. Bettingen will receive annual compensation of $120,000 during the
first year of the agreement. For each subsequent year, the annual compensation
will increase at a rate of 10% per annum. In addition, Mr. Bettingen was granted
500,000 options to purchase Rubicon’s common stock at a price of $1 per share
for a period of five (5) years as a signing bonus. The fair value of the options
using the Black-Scholes pricing model was $699,764. The options are fully vested
and Rubicon recorded the full value as executive compensation as of December 31,
2008.





On
June 24, 2008, Rubicon issued a total of 17,500 shares of its restricted common
stock to its Board of Director’s as compensation for their services. The fair
value of the shares issued was $28,000 and has been expensed as of December 31,
2008.





NOTE 9 – Fixed
Assets


Fixed
assets as of consisted of the following:





December
      31,2007
            
            
            2006Furniture
            
            $
            50,821
            
            
            $
            18,318Equipment
            
            
            188,905
            
            
            
            55,419Software
            
            
            30,998
            
            
            
            -Accumulated
      depreciation
            
            
            (134,565
            )
            
            
            (14,633
            )$
            136,159
            
            
            $
            59,104





F-13


During
the years ended December 31, 2008 and 2007, the Company recorded depreciation
expense of $37,578 and $13,964, respectively.





NOTE 10 – Notes
payable


Short-term
debt consists of the following at December 31, 2008 and 2007:





December
      31,2007
            
            
            2006Demand
      note payable to an officer and shareholder for $4,500, unsecured,
      non-interest bearing and due on demand
            
            $
            4,500
            
            
            $
            4,500Capital
      lease obligation, maturing October 2009
            
            
            12,223
            
            
            
            -0-Promissory
      note to a related party for $156,039, unsecured, interest at 10%, due upon
      demand
            
            
            -0-
            
            
            
            156,039$
            16,723
            
            
            $
            160,539




Interest
expense for the year ended December 31, 2008 and 2007 was $3,801 and $7,295
respectively. Interest payable to a related party was $11,239 and $15,602 as of
December 31, 2008 and 2007, respectively.





NOTE 11 – Income
taxes


The
Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes” (“SFAS No. 109”), which
requires use of the liability method.   SFAS No. 109 provides
that deferred tax assets and liabilities are recorded based on the differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes, referred to as temporary
differences.  At December 31, 2008, the Company had approximately
$9,784,010 of federal and state net operating losses. The net operating
loss carry forwards, if not utilized will begin to expire in
2018-2022.





The
provision for income taxes consist of the following:





As
      of December 31,2008
            
            
            2007Current
      tax
            
            $
            -0-
            
            
            $
            -0-Change
      in valuation allowance
            
            
            (486,356
            )
            
            
            (574,867
            )Benefits
      of operating loss carryforwards
            
            
            486,356
            
            
            
            574,867Provision
      for income tax
            
            $
            -0-
            
            
            $
            -0-





F-14


Below
is a summary of deferred tax asset calculations on net operating loss carry
forward amounts as of December 31, 2008. Currently there is no reasonable
assurance that the Company will be able to take advantage of a deferred tax
asset. Thus, an offsetting allowance has been established for the deferred
asset.


Description
            
            NOL
      Balance
            
            
            Tax
            
            
            RateNet
      operating loss
            
            $
            9,784,010
            
            
            $
            3,326,563
            
            
            
            34
            %Valuation
      allowance
            
            
            
            
            
            
            (3,326,563
            )Deferred
      tax asset
            
            
            
            
            
            $
            -0-





For
financial reporting purposes, the Company has incurred a loss since inception to
December 31, 2008.  Based on the available objective evidence,
including the Company’s history of its loss, management believes it is more
likely than not that the net deferred tax assets will not be fully realizable.
Accordingly, the Company provided for a full valuation allowance against its net
deferred tax assets at December 31, 2008. Further,
management does not believe it has taken the position in the deductibility of
its expenses that creates a more likely than not potential for future liability
under the guidance of FIN 48.





A
reconciliation between the amount of income tax benefit determined by applying
the applicable U.S. and State statutory income tax rate to pre-tax loss is as
follows:





Year
      ended December 31,2008
            
            
            2007Federal
      and state statutory rate
            
            
            34
            %
            
            
            34
            %Change
      in valuation allowance on deferred tax assets
            
            
            (34
            %)
            
            
            (34
            %)-
            
            
            
            -





NOTE 12 – Stockholders’
equity


The
Company is authorized toissue 50,000,000 shares
of Common Stock, $0.001 par value per share. Holders of shares of Common Stock
are entitled to one vote for each share on all matters to be voted on by the
stockholders, are without cumulative voting rights, and are entitled to share
ratably in dividends. In the event of a liquidation, dissolution, or winding up
of the Company, the holders of shares of Common Stock are entitled to share pro
rata all assets remaining after payment in full of all liabilities. Holders of
Common Stock have no preemptive rights to purchase the Company’s Common Stock.
There are no conversion rights or redemption or sinking fund provisions with
respect to the common stock.





2007


On
January 29, 2007, the Company issued 575,000 shares of its common stock as
previously authorized.




On
February 6, 2007, the Company issued 25,000 shares of its common stock pursuant
to an employment agreement with its chief financial officer. The company
recorded executive compensation expense totaling $61,250, the fair value of the
underlying shares. Pursuant to the agreement, an additional 25,000 shares will
be earned over the term of the agreement on a pro rata basis. As of December 31,
2007, an additional 13,401 shares had been considered earned and the Company
recorded additional compensation expense in the amount of $26,017. No additional
shares will be issued under this agreement.





F-15


On
February 1, 2007, the Company completed its Agreement and Plan of Merger with
Rubicon Financial Insurance Services, Inc. Pursuant to the agreement, the
Company issued 50,000 shares of its common stock in exchange for 100% of the
outstanding securities of RFIS at the date of closing. The Company recorded an
investment in the amount of $136,500, representing the fair value of the shares
issued and $14,000 in cash paid pursuant to the agreement.





On
February 6, 2007, the Company issued 5,000 shares of its common stock to an
employee for services valued at $12,250.





On
March 1, 2007, the Company issued 2,300,000 shares of its common stock as a
signing bonus pursuant to an employment agreement with its executive vice
president of business development, Mr. Tomas Jandt. The Company recorded
executive compensation totaling $2,760,000, the fair value of the underlying
shares. The value of the common stock will be amortized over the term of the
agreement on a straight-line basis. During the year ended December 31, 2008, Mr.
Jandt redirected his employment endeavors towards other opportunities as a
result, Rubicon expensed the remaining unamortized balance of Mr. Jandt’s
prepaid equity compensation totaling $1,993,333. As of December 31, 2008, $0
remained in unamortized shares issued for services.





On
March 1, 2007, the Company issued 100,000 shares of its common stock for legal
and accounting services previously provided. An expense totaling $120,000 was
recorded as professional fees, the fair value of the underlying
shares.





On
March 3, 2007, the Company issued 45,000 shares of its common stock to Directors
as consideration for their services. The Company recorded executive compensation
expense totaling $36,000 and unamortized share issued for services of $18,250 to
be expenses over the one-year term of services.





On
April 17, 2007, the Company issued 5,000 shares of its common stock to an
individual as consideration for the consulting services rendered. The Company
recorded consulting expense totaling $10,000, the fair value of the underlying
shares.





On
May 11, 2007, the Company completed its Agreement and Plan of Merger with
Rubicon Real Estate and Mortgages, Inc. (RREM). Pursuant to the agreement, the
Company issued 1,159,000 shares of its common stock in exchange for 100% of the
outstanding securities of RREM at the date of closing. The Company recorded an
investment in the amount of $3,013,400, the fair value of the shares issued
pursuant to the agreement.





On
June 15, 2007, the Company completed its stock purchase agreement and purchased
24 shares of common stock of AIS Financial, Inc. (AIS). Pursuant to the
agreement, the Company issued 100,000 shares of its common stock valued at
$245,000 and $125,000 in cash in exchange for 24.9% of the outstanding
securities of AIS at the date of closing. The closing is contingent upon the
approval of the Continuance in Membership Application (CMA) with the Financial
Industry Regulatory Authority (FINRA) for the change in management. On June 3,
2008, Rubicon cancelled the 100,000 shares pursuant to a “Stock Re-Purchase
Agreement” with AIS.





F-16


On
July 12, 2007, the Company issued 5,000 shares of its common stock to an
individual as consideration for the consulting services rendered. The Company
recorded consulting expense totaling $11,800, the fair value of the underlying
shares.





On
July 30, 2007, the Company issued 17,500 shares of its common stock to Directors
as consideration for their services. The Company recorded executive compensation
expense totaling $2,276 and unamortized share issued for services of $24,849 to
be expensed over the one-year term of services.





On
July 31, 2007, the Company entered into a Separation and Distribution Agreement
with Dial-A-Cup, Inc., a Nevada corporation and wholly owned subsidiary of the
Company (“DAC”), whereby the Company has agreed to spin-out at least 50% of the
shares of DAC common stock owned by the Company to the Company’s shareholders on
a ten for one basis (each shareholder of the Company will receive one DAC share
for every ten shares they hold in the Company). Concurrent with the execution of
the Separation and Distribution Agreement, the Company entered into a Stock
Cancellation Agreement by and among the Company, DAC and Timothy McDermott, an
individual and majority shareholder of the Company. A condition to the Company’s
agreement to spinout DAC was that Mr. McDermott transfer 3,100,000 shares to
certain individuals affiliated with the Company and cancel 6,000,000 shares of
the Company’s common stock.





On
August 29, 2007, the
Company entered into a twelve-month consulting agreement with Ms. Kathleen
McPherson for business development services. Pursuant to the agreement, the
Company authorized the issuance of 500,000 shares of common stock, which are
considered fully vested and earned as a signing bonus. The Company recorded
consulting expense in the amount of $875,000. Additionally the Company agreed to
pay a monthly consulting fee of $15,000 in cash and award an additional 500,000
shares of common stock based on performance milestones. As of December 31, 2007,
no additional shares had been earned or expensed.





On
September 4, 2007, the Company entered into a twelve-month employment agreement
with Mr. Tom Collier for service related to the development of information
technologies. Pursuant to the agreement, the Company has agreed to Pay Mr.
Collier a fee of $7,500 per month in cash and 1,389 shares of common stock per
month. As of December 31, 2007 the shares were un-issued and the Company
recorded non-cash consulting fees of $2,431.





During
the fourth quarter of 2007, the Company authorized the issuance of 45,000 shares
of its common stock to three accredited investors pursuant to subscription
agreements for total proceeds of $90,000 or $2 per share. As of December 31,
2007, the shares were un-issued.





On
November 27, 2007, the Company entered into a Share Purchase Agreement with
American International Industries, Inc. (“AMIN”) whereby the Company agreed to
issue 1,000,000 shares of its common stock in exchange for 200,000 shares of
AIMN and $1,000,000 in cash.







F-17


2008


On
April 8, 2008, Rubicon issued 45,000 shares of its common stock pursuant to
previously received subscription agreements.





During
the year ended December 31, 2008, Rubicon issued 85,000 shares of its common
stock pursuant to subscription agreements for cash totaling $170,000 or $2 per
share. Rubicon paid fees in connection with the sale of its common stock
totaling $26,000, which was deducted from the proceeds.




During
the year ended December 31, 2008, Rubicon issued 5,000 shares of its common
stock to an employee as a bonus for past services. The fair value of the shares
on the date of grant was $10,000, which was expensed as additional
compensation.





On
March 31, 2008, Rubicon cancelled 13,401 shares previously authorized and
unissued pursuant to an agreement with its former Chief Financial
Officer.





On
June 2, 2008, Rubicon issued 1,200,000 shares of its common stock as partial
consideration for the acquisition of GBI. In addition, Rubicon granted Mr. Grant
Bettingen, the former stockholder and principal of GBI, an option to purchase
500,000 shares of Rubicon common stock at $1 per share for a period of five
years in connection with Mr. Bettingen’s employment agreement with
GBI.





On
June 3, 2008, Rubicon entered into an agreement for the cancellation of 100,000
shares previously issued as partial consideration for its purchase of 24.9% of
the total outstanding shares of AIS pursuant to the Share Repurchase and
Settlement Agreement. As of December 31, 2008 the shares had not been
cancelled.





On
June 24, 2008, Rubicon issued 17,500 shares of its restricted common stock to
its Board of Director’s for their services. The fair value of the shares was
$28,000 and expensed as of June 30, 2008.





During
the year ended December 31, 2008, we issued 62,500 shares of Series A
Convertible Preferred stock to individuals for cash totaling $125,500. In
addition, we paid financing costs in the amount of $12,500 to our wholly owned
subsidiary GBI, which has been recorded to paid in capital as of December 31,
2008.





NOTE 13 – Warrants and
options


On
August 24, 2006, the Company issued 100,000 Series A Common Stock Purchase
Warrants to an individual in conjunction with equity financing. The 100,000
Series A Common Stock Purchase Warrants gives the holder the right to purchase
100,000 shares of common stock of the Company for an aggregate purchase price of
$300,000 or $3 a share. The aggregate fair value of such warrants totaled
$192,628 based on the Black-Scholes
pricing model using the following estimates:  5% risk free rate, 100%
volatility and expected life of the warrants of 3 years.  Due to the
allocation of the proceeds received from the sale of the common stock and
warrants, the fair value of the warrants were $78,204.





F-18


On
January 1, 2007, the Company granted options to purchase up to 500,000 shares of
its common stock pursuant to its employment agreement with the chief executive
officer. The holder has the right to purchased up to 500,000 shares of common
stock of the Company for an aggregate purchase price of $500,000 or $1 per
share. The aggregate fair value of the option grant totaled $1,299,325. As of
December 31, 2008 and 2007, $433,108 was expensed as executive compensation in
each year and $433,108 remained in unamortized shares issued for services. Fair
value of the option is based on the Black-Scholes pricing model using the
following estimated assumptions: 4.70% risk free rate, 295% volatility, and an
expected life of the option of 5 years.





On
February 1, 2007, the Company granted options to purchase up to 300,000 shares
of its common stock pursuant to its employment agreement between RFIS, its newly
acquired wholly owned subsidiary, and its executive. The options vest at the
rate of one option for every $0.50 of net income generated by RFIS at the end of
each fiscal year, based upon the RFIS’s audited financial statements. As of
December 31, 2008, no options had vested. The holder will have the right to
purchase up to 300,000 shares of the Company’s common stock at an aggregate
purchase price of $735,000 or $2.45 per share.




On
May 11, 2007, the Company granted options to purchase up to 200,000 shares of
its common stock pursuant to its employment agreement between RREM, its newly
acquired wholly owned subsidiary, and its executive. The options vest at the
rate of one option for every $2.00 of net income generated by RREM at the end of
each fiscal year, based upon the RREM’s audited financial statements. As of
December 31, 2008, no options had vested. The holder will have the right to
purchase up to 200,000 shares of the Company’s common stock at an aggregate
purchase price of $200,000 or $1.00 per share.





On
December 26, 2007, the Company granted options to purchase up to 500,000 shares
of its common stock to its principal financial officer as a bonus for services
received during the year ended December 31, 2008. The holder has the right to
purchased up to 500,000 shares of common stock of the Company for an aggregate
purchase price of $1,250,000 or $2.50 per share. The aggregate fair value of the
option grant totaled $1,499,990 and was expensed as executive compensation. Fair
value of the option is based on the Black-Scholes pricing model using the
following estimated assumptions: 3.72% risk free rate, 399% volatility, and an
expected life of the option of 5 years.





During
the three months ended March 31, 2008, Rubicon cancelled 200,000 options
previously granted to the former President of RREM, upon his resignation. The
options had not vested.





On
June 2, 2008, Rubicon granted Mr. Grant Bettingen an option to purchase 500,000
shares of its common stock with an exercise price of $1 pursuant to his
employment agreement with GBI. The fair market value of the options based on the
Black-Scholes model is $699,764 using the following
assumptions:  Strike Price $1; Stock Price $1.40; Volatility 315%;
Term 5 years; Dividend Yield 0%; Interest Rate 3.25%.  We have
recorded executive compensation in the amount of $699,764.





F-19


A
summary of stock options and warrants as of December 31, 2008 is as
follows:





Options
            
            
            Weighted
      Average Exercise Price
            
            
            Warrants
            
            
            Weighted
      Average Exercise PriceOutstanding
      as of 01/01/07:
            
            
            -
            
            
            $
            -
            
            
            
            100,000
            
            
            $
            3.00Granted
            
            
            1,500,000
            
            
            
            1.79Cancelled
            
            
            -Exercised
            
            
            -Outstanding
      as of 01/01/08:
            
            
            1,500,000
            
            
            $
            1.79
            
            
            
            100,000
            
            
            $
            3.00Granted
            
            
            500,000
            
            
            
            1.00
            
            
            
            -
            
            
            
            -Cancelled
            
            
            (200,000
            )
            
            
            1.00
            
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Outstanding
      as of 12/31/08:
            
            
            1,800,000
            
            
            $
            1.66
            
            
            
            100,000
            
            
            $
            3.00Vested
      as of 12/31/08:
            
            
            1,500,000
            
            
            $
            1.79
            
            
            
            100,000
            
            
            $
            3.00





NOTE 14 – Operating
Segments





Rubicon’s
operating segments are evidence of its internal organization. The major segments
are defined by the type of financial services offered. Each segment operates in
a distinct industry: brokerage services (GBI), mortgage and real estate services
(RREM) and personal and commercial insurance services (RREM). DAC is currently
inactive and not considered an operating segment of Rubicon.





Where
applicable, “Corporate” represents items necessary to reconcile to the
consolidated financial statements, which generally include corporate activity
and eliminations.





Net
revenues as shown below represent commissions earned for each segment.
Intercompany revenues have been eliminated and are immaterial for separate
disclosure. Rubicon evaluates performance of individual operating segments based
on pre-tax income (loss). On a consolidated basis, this amount represents total
comprehensive loss as shown in the unaudited condensed consolidated statement of
operations. Reconciling items represent corporate costs that are not allocated
to the operating segments including; stock-based compensation expense and
intercompany eliminations.





The
      Years EndedDecember
      31,2008
            
            
            2007Net
      RevenueInsurance
      services
            
            $
            362,091
            
            
            $
            249,064Mortgage
      services
            
            
            183,458
            
            
            
            59,872Brokerage
      services(1)
            
            
            4,366,541
            
            
            
            -4,912,090
            
            
            
            308,936Operating
      expensesInsurance
      services
            
            
            513,920
            
            
            
            378,750Mortgage
      services
            
            
            312,501
            
            
            
            274,214Brokerage
      services(1)
            
            
            4,555,675
            
            
            
            -Corporate
            
            
            4,273,878
            
            
            
            7,506,2699,655,974
            
            
            
            8,159,233Net
      operating (loss)
            
            $
            (4,743,884
            )
            
            $
            (7,850,297
            )





(1)
            Represents
      the period from June 2, 2008 (the date of the GBI acquisition through
      December 31, 2008.





F-20




NOTE 15 –
Commitments




Employment
agreements





On
March 27, 2008, Rubicon entered into an employment agreement with its President,
Terence Davis. Pursuant to the agreement, Mr. Davis shall receive annual
compensation in the amount of $96,000 commencing on April 1, 2008 and expiring
on March 31, 2009. On November 15, 2008, Mr. Davis retired from his position
with Rubicon and the employment agreement was nullified.





On
June 2, 2008, GBI entered into an employment agreement with Grant Bettingen, the
former principal and founding shareholder of GBI. Pursuant to the agreement, Mr.
Bettingen shall receive annual compensation in the amount of $120,000, subject
to 10% annual increases, for a period of five (5) years. In addition, Mr.
Bettingen will receive quarterly incentive compensation equal to 5% of all net
investment banking income and 10% incentive bonus on net investment income
referred directly by Mr. Bettingen. As an inducement to enter into the
agreement, Rubicon granted Mr. Bettingen and option to purchase up to 500,000
shares of its common stock as a signing bonus. The options are fully vested and
valued at $699,764 (see note 10).  Rubicon further agreed to provide a
monthly auto allowance in the amount of $1,000 and a life insurance policy with
death benefit of $1,000,000. GBI’s future commitment under this agreement is as
follows:





2009
            
            
            144,0002010
            
            
            157,2002011
            
            
            171,7202012
            
            
            187,6922013
            
            
            205,261Total
            
            $
            865,873





F-21


Lease
agreements


The
following is a schedule by years of future minimum rental payments required
under operating leases that have non-cancelable lease terms in excess of one
year as of December 31, 2008:





2009
            
            
            190,9862010
            
            
            15,915Total
            
            $
            267,171





Rent
expense is included in general and administrative expense and totaled $227,484
and $214,824 for the years ended December 31, 2008 and 2007,
respectively.





NOTE 16 – Net capital
requirement


The
Company’s wholly owned subsidiary, GBI, is subject to the Securities and
Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1), which requires
the maintenance of minimum net capital, as defined, equal to the greater of
$100,000 or 6 2/3% of aggregate debt balances, as defined in the SEC’s Reserve
Requirement Rule (Rule 15c3-3). At December 31, 2008, GBI had net capital of
$193,726 and was $93,726 in excess of its required net capital of
$100,000.





NOTE 17 – Business
Combination Achieved in Stages


On
June 2, 2008 we
completed our June 28, 2007 Agreement and Plan of Merger with Grant Bettingen,
Inc. (“GBI”), a private brokerage firm registered with the Financial Industry
Regulatory Authority (“FINRA”), by completing the acquisition of 100% of the
outstanding common stock of GBI for a total purchase price of
$3,229,364.  On September 7, 2007 we entered into a stock purchase
agreement whereby we agreed to purchase a 15% interest in GBI for cash totaling
$360,000. We had accounted for our investment as “Available for Sale” as
required by FAS 115. On March 7, 2008, we entered into Amendment No. 3 to the
Merger Agreement whereby GBI agreed to sell an additional 6% of its outstanding
shares prior to the closing for a purchase price of $400,000. We paid $312,500
towards to additional interest leaving a balance owed of $87,500 which was
eliminated by GBI upon closing of the merger.





During
the acquisition phases of the Agreement and Plan of Merger, our interest in GBI
initially consisted of 15% of the total outstanding shares, amendment number
three (3) increased our interest in GBI to 21% with the purchase of an
additional 6% interest. Upon completion of the continuation in management
process with FINRA, we acquired the remaining 79% of the total outstanding
shares in exchange for $789,364 in cash and 1,200,000 shares of our common
stock. During the acquisition stages, we have adjusted accounting treatment of
our investment in GBI initially from “Available for Sale” to the equity method
as required by SFAS 115. As a result, we have expensed $315,000 of previously
unrecognized other comprehensive losses and recorded minority interest losses in
the amount of $43,403 resulting in a net investment of $2,870,961.







F-22




NOTE 17 – Business
Combination Achieved in Stages (continued)


Pursuant
to SFAS 141 (R), we have recognized the identifiable assets acquired and the
liabilities assumed as follows:





At
      June 2,2008ConsiderationCash
            
            $
            789,364Equity
      instruments (1,200,000 common shares of RBCF1)
            
            
            1,680,000Fair
      value of total consideration transferred
            
            
            2,469,364Fair
      value of RBCF’s equity interest in GBI prior to
combination
            
            
            401,597$
            2,870,961Recognized
      amounts of identifiable assets acquired and liabilities
      assumedFinancial
      assets
            
            $
            887,422Property,
      plant and equipment
            
            
            62,517Identifiable
      intangible assets – Customer relationships2(SeeNote 4)
            
            
            2,403,671Financial
      liabilities
            
            
            (482,649
            )Total
      identifiable net assets
            
            $
            2,870,9611
      The fair value of the
      1,200,000 common shares issued as part of the consideration paid for 79%
      GBI was determined on the basis of the closing market price of RBCF’s
      common shares on the acquisition date.2We have allocated the
      consideration paid in excess of the fair value of assets acquired and
      liabilities assumed towards the identifiable intangible customer
      relationships acquired. The estimated net future cash flows from these
      relationships are estimated to be approximately $3,250,000 annually based
      on the assets under management at the time of
      acquisition.





The
amounts of GBI’s revenue and expenses included in RBCF’s consolidated income
statement for the year ended December 31, 2008, and the unaudited revenue and
expenses of the combined entity had the acquisition date been January 1, 2008 or
January 1, 2007 are:





Revenue
            
            
            ExpensesActual
      from June 3, 2008 to December 31, 2008
            
            $
            4,366,541
            
            
            $
            4,346,889Supplemental
      pro forma fromJanuary
      1, 2008 to December 31, 2008
            
            $
            6,328,987
            
            
            $
            6,553,190Supplemental
      pro forma fromJanuary
      1, 2007 to December 31, 2007
            
            $
            6,059,650
            
            
            $
            10,154,164





We
believe the acquisition will significantly enhance our financial services
platform by enabling our ability to offer a broad range of
services.  We further deem the synergies that exist between investment
activities, insurance requirements and the current real estate environment, will
create an opportunity for cross revenue generation for all of our financial
service platforms.





F-23




NOTE 18 – Subsequent
Events




On
February 5, 2009, the Company entered into a short-term consulting agreement
with Bootstrap Real Estate Investments, LLC, a company controlled by Mr. Todd
Vande Hei, a director, executive officer and current shareholder. Pursuant to
the agreement, the Company authorized the issuance of 120,000 shares of
restricted common stock for services valued at $30,000, or $0.25 per share.As of the date of this
filing, the shares remain unissued.







On
March 6, 2009, the SEC issued an Order Instituting Administrative Proceedings
Pursuant to Section 15(b) of the Securities Exchange Act of 1934. Making
Findings, and Imposing Remedial Sanctions as to Grant Bettingen, Inc. (“GBI
Order:), our broker-dealer subsidiary; and an Order Instituting Administrative
Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934,
Making Findings, and Imposing Remedial Sanctions as to M. Grant Bettingen
(“Bettingen Order”), the former chairman and former Managing Director of
Investment Banking for GBI. The GBI Order censured GBI and required GBI to pay
disgorgement and prejudgment interest totaling $97,135. GBI consented to the
issuance of the GBI Order without admitting or denying any of the findings in
the GBI Order. The Bettingen Order required Bettingen to pay a $35,000 civil
penalty. The Order also barred Bettingen from associating in a supervisory
capacity with any broker or dealer with a right to reapply after three years.
Bettingen consented to the issuance of the Bettingen Order without admitting or
denying any of the findings in the Bettingen Order.





Effective
March 13, 2009, Mr. Bettingen was removed as chairman of GBI and terminated as
the Managing Director of Investment Banking for GBI.









F-24







Item
9.    Changes in and Disagreements With
Accountants On Accounting and Financial Disclosure.







None.




Item
9A(T).   Controls and Procedures.







Our
Chief Executive Officer and Principal Financial Officer, Joseph Mangiapane, Jr.,
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this Report.  Based on the
evaluation, Mr. Mangiapane concluded that our disclosure controls and procedures
are effective in timely altering him to material information relating to us
(including our consolidated subsidiaries) required to be included in our
periodic SEC filings.





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





Management’s
Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as is defined in the Securities Exchange Act
of 1934. These internal controls are designed to provide reasonable assurance
that the reported financial information is presented fairly, that disclosures
are adequate and that the judgments inherent in the preparation of financial
statements are reasonable. There are inherent limitations in the effectiveness
of any system of internal control, including the possibility of human error and
overriding of controls. Consequently, an effective internal control system can
only provide reasonable, not absolute, assurance, with respect to reporting
financial information.





Management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework and criteria established in Internal
Control — Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, management
concluded that our internal control over financial reporting was effective as of
December 31, 2008.





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





/s/ Joseph Mangiapane,
Jr.


Joseph
Mangiapane, Jr.


Chief
Executive Officer, President and Principal Financial Officer




47


Item
9B.      Other
Information.







On
March 26, 2009, we issued a press release disclosing a corporate update and the
execution of a non-binding letter of intent to acquire a commodity trading and
services company. A copy of the press release is attached hereto as Exhibit
99.2.





PART
III




Item
10.      
Directors, Executive Officers and Corporate Governance.







The
following table sets forth the names and positions of Rubicon’s executive
officers and directors.





Name
            Age
            Title(s)Joseph
      Mangiapane, Jr.
            43
            Chief
      Executive Officer, President, Principal Financial Officer and
      ChairmanTodd
      Vande Hei
            41
            Interim
      Chief Operating Officer and DirectorThomas
      Jandt
            39
            Executive
      Vice President of Business DevelopmentSuzanne
      Herring
            44
            DirectorTerence
      A. Davis(1)
            61
            Former
      President and Former DirectorBrad
      Bunch(2)
            65
            Former
      DirectorJames
      Udel(3)
            49
            Former
      DirectorCraig
      Triance(4)
            47
            Former
      Director


(1)
            Effective
      November 15, 2008, Mr. Davis retired to pursue other business interests,
      thereby resigning as our president and principal financial officer.
      Further, on February 1, 2009, Mr. Davis resigned as a member of our board
      of directors.


(2)
            On
      February 1, 2009, Mr. Bunch resigned as a member of our board of
      directors.


(3)
            On
      February 1, 2009, Mr. Udel resigned as a member of our board of
      directors.


(4)
            On
      June 28, 2008, Craig Triance resigned as a member of our board of
      directors





Joseph
Mangiapane, Jr. is the Chief Executive Officer, President and Principal
Financial Officer and has been the Chairman of the Rubicon’s Board of Directors
since September 2006. In 2009, Mr. Mangiapane began to operate as a FINRA
registered broker/dealer for Grant Bettingen, Inc., a wholly owned subsidiary of
Rubicon. Further, Mr. Mangiapane was a senior registered options principal,
compliance registered options principal, and a registered representative with
Advantage Investment Strategies, Inc., and a FINRA registered broker/dealer from
2005 to 2007. From 1992 to 2000, Mr. Mangiapane was a stockholder, senior
registered options principal, compliance registered options principal, and a
registered representative with Tradeway Securities Group in Irvine, California.
From 1987 to 1989, Mr. Mangiapane was employed with Paine Webber’s Sexton Group,
and from 1986 to 1987 at Drexel Burnham Lambert. Mr. Mangiapane owned and
managed a restaurant in Orange County California from 2000 to
2004.  Mr. Mangiapane’s father was a founder of Dial-A-Cup, a wholly
owned subsidiary of Rubicon.





48


Todd Vande
Hei is Interim Chief Operating Officer and has been a Director of the
Registrant since July 2007 and serves on the Audit Committee and the Governance,
Compensation and Nominating Committee.  He is currently a manager and
member of several Real Estate related LLC’s, including Bootstrap Real Estate
Investments, LLC, and Real Estate holding, new construction, and property
management. From 1998 through 2005 he held the following positions at Fabrica
International (Santa Ana, CA), a Carpet and Rug Manufacturer, Distributor,
Importer/Exporter, and a wholly-owned subsidiary of The Dixie Group
(Chattanooga, TN), including Officer and Vice President of The Dixie Group:
President, Vice President of Sales, and Regional Manager. From 1995 to 1998 he
was the owner-operator of a Manufacturers’ Agency in the Flooring Industry and a
Regional Vice President of Shaw Industries, a division of Berkshire Hathaway.
From 1992 to 1995 he held the position of Group President for College Craft
Enterprises, managing the Chicago Metropolitan Area’s Operations, Sales and
Marketing. From 1990 to 1992 Mr. Vande Hei worked in Sales for Fabrica
International. He is a graduate of the Leadership for Extraordinary Performance
Program at the University of Virginia’s Darden School of Business and was a
trainer at The Dixie Group’s Leadership Legacy Program. In 1990 he graduated
from St. John’s University with a B.A. in Management.





Thomas E. Jandtis Executive Vice President of Business Development of Rubicon Financial
since March 2007. Mr. Jandt has over 15 years experience in the
financial services markets, serving as an officer, director and manager for
corporations in the equity markets and is currently licensed as a
stockbroker and investment banker.  Prior to joining Rubicon, Mr.
Jandt was the founder and head of Investment Banking of The
Private Client Group, established in 1995, offering securities through Tradeway
Securities Group, Inc. Mr. Jandt currently operates The Private Client Group as
CEO, now offering securities through Advantage Investment Strategies, Inc.
The Private Client Group has successfully managed over $400 million dollars in
assets over the past 10 years and has raised over $56 million dollars of
investment capital through its investor network. Additionally, Mr. Jandt is the
Founder and CEO of Accelerate-Financial, Inc., a business development
corporation, which was organized in 2003 for the purpose of assisting businesses
with marketing, management and creating an appropriate capital structure for
companies seeking financing through capital markets.  Mr. Jandt is
also the Chairman & Founder of Champions & Heroes, a non-profit 501 c
3 charitable foundation. Mr. Jandt has also served the boards of IPO
Protocol.com, Grad Products, Inc., Accelerate-Financial, Inc., PCG
Investments, LLC, the Palm Springs Celebrity Golf Classic, Cultural Integration,
LLC, Quick Close Loans and U.S. Member Plan.  Mr. Jandt was
educated at Cal Poly San Luis Obispo.





Suzanne
Herring has been a Director of Rubicon since March 2007 and serves on the
Audit Committee and act as our Audit Committee Financial Expert. Ms. Herring has
over 19 years of financial, private and public accounting experience. Ms.
Herring has worked as an auditor of public and non-public companies and has
served as a chief financial officer for multiple businesses. Further, Ms.
Herring has a broad individual and corporate taxation background. Since February
2008, Ms. Herring has been president of Accuity Financial Inc., a Las Vegas,
Nevada based consulting firm providing contract CFO services and internal
control compliance and implementation to publicly traded small business issuers.
From February 2005 to February 2008, Ms. Herring was president of Accuity
Financial Services, Inc. (f/k/a Opus Pointe), a Las Vegas, Nevada based
consulting firm. In addition, from 1995 to present, Ms. Herring has owned and
operated American West Financial Services, a Las Vegas, Nevada based financial
and taxation consulting firm. From 2003 through 2005, Ms. Herring was an auditor
for a Las Vegas, Nevada based CPA firm, Beckstead and Watts, LLP. Prior to
joining Beckstead and Watts, Ms. Herring served as the Chief Financial Officer
for a Las Vegas, Nevada based commercial development and construction company.
From 1993 to 1995, Ms. Herring served as a staff accountant for Piercy, Bowler,
Taylor & Kern CPAs, a Las Vegas, Nevada based CPA firm.





49


Terence A.
Davisserved
as our President from February 2004 until his retirement on November 15, 2008.
In addition, Mr. Davis was a Director of Rubicon from February 2004 until
February 2009 and served on its Governance, Compensation and Nominating
Committee and was Chairman of its Audit Committee.  Mr. Davis owned
and operated Golden Saw Construction from 1986 to 2004.  From 1991
through 1997 Mr. Davis served as President and a Director of InvestAmerica,
Inc., a Nevada company.  He has degrees in Business Administration and
Accounting from Oklahoma State.





Brad L.
Bunch served as a Director of Rubicon from February 2004 until February
2009 and was Chairman of its Governance, Compensation and Nominating
Committee.  Mr. Bunch received his Juris Doctor from the University of
San Diego School of Law in 1969.  From 1982 to the present, Mr. Bunch
has served as the CEO and Managing Director of Automotive Systems Group, Inc. in
Alhambra, California.  From 1981 to the present, Mr. Bunch has served
as Counsel for the Law Offices of McCollum & Bunch in Fresno,
California.  The law office deals with all phases of business
transactions, mergers and acquisitions, environmental issues, corporate, joint
ventures, with emphasis on business solutions.





James Udel
served as a Director of Rubicon from February 2004 until February
2009.  Mr. Udel received his BA in Photojournalism from Tarrant County
College in Ft. Worth, Texas in 1982.  Mr. Udel is the owner of Udel
Brothers Studios, a photography company since 1985.  From 1980 to the
present Mr. Udel has worked for Mark Brinbaum Productions in Dallas,
Texas.  Mr. Udel has shot stills on over 100 commercials, including
Six Flags, Dr. Pepper, Pizza Hut, Dallas Cowboys and Ford Motor
Company.





Craig
Triance served as a Director of Rubicon from February 2004 through June
2008.  Mr. Triance received his Juris Doctor from the J.D. Loyola Law
School of Los Angeles, California in 1992.  From 1995 to the present
Mr. Triance has served as the Principal Attorney for the Law Offices of Craig
Triance in San Dimas, California.  Mr. Triance’s legal background
includes civil and probate litigation, estate planning and
probate.  Mr. Triance has also formed and served as general counsel
for several dozen California and Nevada corporations.  From 2000
through 2003, Mr. Triance wrote a monthly legal matters column for the San Dimas
Community News.  He co-founded and operates Cambridge Financial
Consultants, LLC, a mortgage company located in El Monte, CA.





50


Limitation of Liability of
Directors





Pursuant
to our Certificate of Incorporation, we have agreed to indemnify our directors
to the fullest extent permitted by Delaware General Corporate
Law.  Under General Delaware Corporate Law, other than in actions
brought by or in the right of the corporation, such indemnification would apply
if it were determined in the specific case that the proposed indemnity acted in
good faith and in a manner such person reasonably believed in or not opposed to
be in the best interests of the corporation and, with respect to any criminal
proceeding, if such person had no reasonable cause to believe that the conduct
was unlawful.  To the extent that any director has been successful on
the merits or otherwise in defense of any action, suit, proceeding, as discussed
herein, whether civil, criminal, administrative, or investigative, such person
must be indemnified against reasonable expenses incurred by such person in
connection therewith.  A Certificate of Incorporation does not
eliminate or limit the liability of a director for acts or omissions that
involve intentional misconduct or a knowing violation of law by a
director.  Additionally, General Delaware Corporate Law does not
affect the availability of equitable remedies such as an injunction or
rescission based upon a director’s breach of his duty of care.





Election of Directors and
Officers





Directors
are elected to serve until the next annual meeting of shareholders and until
their successors have been elected and qualified. Officers are appointed to
serve until the meeting of the board of directors following the next annual
meeting of shareholders and until their successors have been elected and
qualified.





Involvement in Certain Legal
Proceedings





None
of our executive officers or directors has been the subject of any Order,
Judgment, or Decree of any Court of competent jurisdiction, or any regulatory
agency permanently or temporarily enjoining, barring suspending or otherwise
limiting him from acting as an investment advisor, underwriter, broker or dealer
in the securities industry, or as an affiliated person, director or employee of
an investment company, bank, savings and loan association, or insurance company
or from engaging in or continuing any conduct or practice in connection with any
such activity or in connection with the purchase or sale of any
securities.





None
of our executive officers or directors has been convicted in any criminal
proceeding (excluding traffic violations) or is the subject of a criminal
proceeding, which is currently pending.





Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
requires our executive officers and directors, and persons who beneficially own
more than ten percent of our common stock, to file initial reports of ownership
and reports of changes in ownership with the SEC. Executive officers, directors
and greater than ten percent beneficial owners are required by SEC regulations
to furnish us with copies of all Section 16(a) forms they file. All reports
required by Section 16(a) were filed in connection with the securities issuances
to our officers and directors during fiscal 2008; however, Mr. Bettingen, a
beneficial owner, did not file any Section 16(a) reports.





51


Board
of Directors





Our board of directors currently
consists of three members. Our board of directors has affirmatively determined
that none of them are independent directors, as defined by Section 803 of the
American Stock Exchange Company Guide.





Committees
of the Board of Directors





Our board of directors has two standing
committees: an audit committee and a governance, compensation and nominating
committee. Each of those committees has the composition and responsibilities set
forth below.





Audit
Committee





On
February 15, 2007, we established and appointed Mr. Davis and Ms. Herring as the
initial members to the audit committee of our board of directors. Further, in
June of 2008, Mr. Vande Hei was appointed to serve as a member of the audit
committee. Mr. Davis resigned as a director in February 2009, leaving Ms.
Herring and Mr. Vande Hei to serve as the members of the audit
committee.  Currently, none of the members of the audit committee
qualify as an independent director.  The board of directors has
determined that Ms. Herring is an “audit committee financial expert” as
that term is used in Item 401(h) of Regulation S-K promulgated under the
Securities Exchange Act. The audit committee held two meetings during fiscal
2008.





The
audit committee has the sole authority to appoint and, when deemed appropriate,
replace our independent registered public accounting firm, and has established a
policy of pre-approving all audit and permissible non-audit services provided by
our independent registered public accounting firm. The audit committee has,
among other things, the responsibility to evaluate the qualifications and
independence of our independent registered public accounting firm; to review and
approve the scope and results of the annual audit; to review and discuss with
management and the independent registered public accounting firm the content of
our financial statements prior to the filing of our quarterly reports and annual
reports; to review the content and clarity of our proposed communications with
investors regarding our operating results and other financial matters; to review
significant changes in our accounting policies; to establish procedures for
receiving, retaining, and investigating reports of illegal acts involving us or
complaints or concerns regarding questionable accounting or auditing matters,
and supervise the investigation of any such reports, complaints or concerns; to
establish procedures for the confidential, anonymous submission by our employees
of concerns or complaints regarding questionable accounting or auditing matters;
and to provide sufficient opportunity for the independent auditors to meet with
the committee without management present.








52




Governance,
Compensation and Nominating Committee





On
January 15, 2007, we established and appointed Mr. Davis and Mr. Bunch as the
initial members to the governance, compensation and nominating committee and
approved the committee’s charter. Further, in June of 2008, Mr. Vande Hei was
appointed to serve as a member of the committee. Messrs. Davis and Bunch
resigned as directors in February 2009, leaving Mr. Vande Hei to serve as the
sole member of the committee.  The
governance, compensation and nominating
committeeis responsible for, among other things; identifying,
reviewing, and evaluating individuals qualified to become members of the
board, setting the compensation of
the Chief Executive Officer and performing other compensation oversight, reviewing and recommending the nomination of board
members,and administering our equity compensation
plans.The governance, compensation and
nominating committee heldonemeetingduring fiscal
2008.





Code of Ethics





We
have adopted a Code of Business Conduct and Ethics that applies to all of our
directors, officers and employees, as well as to directors, officers and
employees of each subsidiary of Rubicon. Our Code of Ethics is attached hereto
as Exhibit 99.1 to this Annual Report. A copy of our Code of Business Conduct
and Ethics will be provided to any person, without charge, upon request. Contact
Joseph Mangiapane, Jr. at 949-798-7220 to request a copy of the Code or send
your request to Rubicon Financial Incorporated, Attn: Joseph Mangiapane, Jr.,
4100 Newport Place, Suite 600, Newport Beach, California  92660. If
any substantive amendments are made to the Code of Business Conduct and Ethics
or if we grant any waiver, including any implicit waiver, from a provision of
the Code to any of our officers and directors, we will disclose the nature of
such amendment or waiver in a report on Form 8-K.




Item
11. Executive Compensation.







The
following table sets forth summary compensation information for the years ended
December 31, 2008 and 2007 for our chief executive officer and other executive
officers, whom we refer to throughout this report as our named executive
officers, whose total compensation exceeded $100,000.





Summary
Compensation Table


Name and Principal Position
            Fiscal
      Year
            
            Salary ($)
            
            
            Bonus ($)
            
            
            Option Awards ($)
            
            
            Restricted Stock Awards ($)
            
            
            All Other Compen-sation ($)
            
            
            Total ($)Joseph
      Mangiapane, Jr.(1)
            2008
            
            $
            108,000
            
            
            
            --
            
            
            $
            433,108
            
            
            $
            6,760
            
            
            $
            12,000
            
            
            $
            559,868Chief
      Executive Officer/President
            2007
            
            
            108,000
            
            
            
            --
            
            
            
            1,299,325
            (2)
            
            
            
            
            
            
            12,000
            (3)
            
            
            1,419,325Principal
      Financial OfficerTerence
      Davis(4)
            2008
            
            
            60,000
            
            
            
            --
            
            
            
            
            --
            
            
            6,760
            
            
            
            --
            
            
            
            66,760Former
      President and Principal Financial Officer
            2007
            
            
            --
            
            
            
            --
            
            
            
            1,499,990
            (5)
            
            
            
            
            
            
            --
            
            
            $
            1,499,990Thomas
      Jandt
            2008
            
            
            
            
            
            
            2,065,555
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,065,555Senior
      Vice President of Business Development
            2007
            
            
            --
            
            
            
            866,667
            (6)
            
            
            --
            
            
            
            
            
            
            
            1,993,333
            (7)
            
            
            2,860,000







53




(1)
            Mr.
      Mangiapane commenced his employment with Rubicon in September 2006 and
      began receiving compensation on January 1, 2007.  We agreed to
      pay Mr. Mangiapane a monthly salary of $9,000 pursuant to his employment
      agreement.


(2)
            On
      January 1, 2007, Rubicon granted options to purchase up to 500,000 shares
      of its common stock at $1.00 per share for five years to Mr. Mangiapane
      pursuant to his employment agreement. The aggregate fair value of the
      option grant totaled $1,299,325, which represents the estimated total fair
      market value of stock options granted to Mr. Mangiapane under SFAS 123R,
      as discussed in Note13 to the
      audited financial statements included in this report. As of December 31,
      2008, $433,108 was expensed as executive compensation and $433,108
      remained in unamortized shares issued for
  services.


(3)
            Represents
      Mr. Mangiapane’s $1,000 per month automobile allowance paid in accordance
      with his employment agreement.


(4)
            Mr.
      Davis retired on November 15, 2008.


(5)
            On
      December 26, 2007, Rubicon granted options to purchase up to 500,000
      shares of its common stock at $2.50 per share for five years to Mr. Davis
      as a bonus. This amount represents the estimated total fair market value
      of stock options granted to Mr. Davis under SFAS 123I, as discussed in
      Note 7 to the audited financial statements included in this
      report.


(6)
            Mr.
      Jandt commenced his employment with Rubicon on March 1, 2007 and Rubicon
      paid him $100,000 in cash and issued 2,300,000 shares of its common stock
      as a signing bonus pursuant to his employment agreement. Rubicon recorded
      executive compensation totaling $2,760,000, the fair value of the
      underlying shares. The value of the common stock will be amortized over
      the term of the agreement on a straight-line basis. During the year ended
      December 31, 2008, the executive compensation totaled $2,065,555. As of
      December 31, 2008, $0 remained in unamortized shares issued for
      services.





Grants
of Plan-Based Awards in Fiscal 2008





We
did not grant any plan-based awards to our named executive officers during the
fiscal year ended December 31, 2008.





Outstanding
Equity Awards at 2008 Fiscal Year-End





The
following table lists the outstanding equity incentive awards held by our named
executive officers as of December 31, 2008.





Option
      AwardsNumber
      of Securities Underlying Unexercised Options
              Exercisable
            
            
            Number
      of Securities Underlying Unexercised Options
              Unexercisable
            
            
            Option
      Exercise Price
            
            Option
      Expiration DateJoseph
      Mangiapane, Jr.
            
            
            500,000
            
            
            
            -
            
            
            $
            1.00
            
            12/31/11Terence
      Davis(1)
            
            
            500,000
            
            
            
            -
            
            
            $
            2.50
            
            02/13/09(1)Thomas
      Jandt(2)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            -





(1)
            Mr.
      Davis retired on November 15, 2008; as a result, his options expired on
      February 13, 2009.


(2)
            Mr.
      Jandt did not have any unexercised options; stock that has not vested; or
      equity incentive plan awards as of December 31,
  2008.





Option
Exercises for 2008





There
were no options exercised by our named executive officers in fiscal
2008.





54


Executive
Employment Agreements





Joseph Mangiapane,
Jr.:





On
January 1, 2007, Rubicon entered into an employment agreement with Joseph
Mangiapane, Jr., its Chief Executive Officer.  The Employment
Agreement provides for a term commencing on January 1, 2007 and expiring on
December 31, 2010, with an automatic two year renewals unless otherwise
terminated as described in the agreement.  Mr. Mangiapane is entitled
to the following compensation pursuant to the Employment Agreement.





·
            Rubicon
      has agreed to pay Mr. Mangiapane a base salary of $9,000 per month with
      yearly adjustments being determined by specified criteria and our board of
      directors.


·
            Mr.
      Mangiapane is entitled to incentive compensation determined after the
      completion of the annual independent audit and based upon our net
      operating profits before taxes, interest, any other executive bonuses
      paid, depreciation and amortization (“EBITBDA”) and a cumulative scaled
      percentage.  The incentive compensation is limited to six times
      Mr. Mangiapane’s base salary.


·
            As
      a signing bonus, Mr. Mangiapane was granted an option to purchase 500,000
      shares of our common stock for $1.00 per share for a period of five (5)
      years, which vested and became exercisable
  immediately.


·
            Mr.
      Mangiapane will be eligible to participate in Rubicon’s Stock Option Plan
      and Stock Purchase Plan during the term of his
  employment.


·
            In
      the event Rubicon terminates Mr. Mangiapane’s employment agreement without
      “cause” (as defined in the Employment Agreement) or Mr. Mangiapane resigns
      with “good reason” (as defined in the Employment Agreement), Mr.
      Mangiapane shall be entitled to receive, through the end of the term his
      base salary and incentive
compensation.


·
            If
      the Employment Agreement is terminated for “cause” (as defined in the
      Employment Agreement), Mr. Mangiapane shall receive his base salary and
      incentive compensation through the date of
      termination.  However, if a dispute arises between Rubicon and
      Mr. Mangiapane that is not resolved within 60 days and neither party
      initiates arbitration, we have the option to pay Mr. Mangiapane a lump sum
      of 6 months base salary as “severance payment” rather than pay Mr.
      Mangiapane’s salary and incentive compensation through the date of
      termination.


·
            In
      the event Mr. Mangiapane becomes incapacitated by reason of accident,
      illness, or other disability whereby he is unable to carry on
      substantially all of his normal duties for a continuous period of 120
      days, the Employment Agreement will terminate and Mr. Mangiapane will
      receive (1) through the end of the fiscal year his incentive compensation
      and (2) his base salary for a 6 month period reduced by the amount of any
      payment received from disability insurance
  proceeds.


·
            In
      the event Mr. Mangiapane dies during the term of the Employment Agreement,
      Rubicon will pay to the estate of Mr. Mangiapane his incentive
      compensation and his base salary for a period of 6
  months.








55





Thomas
Jandt:





On
March 1, 2007, Rubicon entered into an employment agreement with Thomas Jandt to
serve as its executive vice president of business development. The Employment
Agreement is for a three-year term commencing on March 1, 2007 and expiring on
February 28, 2010, with the option to renew by mutual written agreement or
unless otherwise terminated as described in the agreement. Mr. Jandt will
receive the following compensation pursuant to the Employment
Agreement.




·
            Mr.
      Jandt agreed to waive any salary for the services performed under this
      agreement until such time that we have established or acquired a
      subsidiary in the brokerage industry and Mr. Jandt would then become a
      full-time employee of such subsidiary. However, our board of directors may
      pay Mr. Jandt a base salary at any point during the Term of the
      agreement.


·
            As
      a signing bonus, Rubicon agreed to pay Mr. Jandt a one-time cash bonus of
      $100,000 within five days of executing the agreement. If Mr. Jandt does
      not remain employed by us for the entire 36 month Original Term of the
      Employment Agreement, Mr. Jandt shall repay Rubicon a monthly pro-rated
      portion of the cash bonus equal to $2,777.78 for each month of the
      remaining Original Term of the Employment Agreement. (For instance, if Mr.
      Jandt’s employment ceases after 12 months of service, Mr. Jandt would
      repay Rubicon an amount equal to 24 months of the cash bonus, which equals
      $66,666.72.)


·
            Furthermore,
      Rubicon agreed to issue Mr. Jandt’s nominee, PCG Investments, LLC, a
      signing bonus of 2,300,000 shares of its restricted common
      stock.


·
            Mr.
      Jandt will be eligible to participate in Rubicon’s Stock Option Plan and
      Stock Purchase Plan during the term of his
  employment.


·
            In
      the event Rubicon terminates Mr. Jandt’s Employment Agreement without
      “cause” (as defined in the Employment Agreement) Mr. Jandt will be paid
      his base salary, if any, for a two-month
period.


·
            If
      Mr. Jandt resigns with “good reason” (as defined in the Employment
      Agreement), Mr. Jandt shall be paid his base salary, if any, for a
      one-month period.


·
            If
      the Employment Agreement is terminated for “cause” (as defined in the
      Employment Agreement), Mr. Jandt shall receive his base salary, if any,
      and incentive compensation through the date of termination. However, if a
      dispute arises between Rubicon and Mr. Jandt that is not resolved within
      60 days and neither party initiates arbitration, Rubicon has the option to
      pay Mr. Jandt a lump sum of 2 months base salary, if any, as “severance
      payment” rather than pay Mr. Jandt’s salary through the date of
      termination.


·
            In
      the event Mr. Jandt becomes incapacitated by reason of accident, illness,
      or other disability whereby he is unable to carry on substantially all of
      his normal duties for a continuous period of 30 days, the Employment
      Agreement will terminate.


·
            In
      the event Mr. Jandt dies during the term of the Employment Agreement,
      Rubicon will pay to the estate of Mr. Jandt any earned salary through the
      date of his death.








56





Terence
Davis:





On
March 27, 2008, we entered into an employment agreement with Terence Davis, our
former president.  The Employment Agreement was automatically
terminated upon Mr. Davis’ retirement on November 15, 2008.





Todd Vande
Hei:





On
February 5, 2009, in accordance with the engagement of Todd Vande Hei, a current
director of the Registrant, to provide Interim Non-Employee COO services for the
Registrant, the Registrant entered into an interim COO agreement with Bootstrap
Real Estate Investments, LLC, whereby Mr. Vande Hei as the Managing Member of
Bootstrap, agreed to perform the duties and responsibilities of Chief Operating
Officer for the Registrant for a period of 3 months. Upon completion of minimum
financing by the Registrant of $1,000,000, the Registrant has agreed to appoint
Mr. Vande Hei as a fulltime employee as the Registrant’s COO. If the financing
is not achieved then the term of the agreement is to last 3 months from the date
of execution. The Registrant agreed to issue Bootstrap 120,000 shares of
restricted common stock for all services rendered by Mr. Vande Hei under the
Agreement. In addition, Mr. Vande Hei will be eligible for certain to be
determined bonuses during the term of the Agreement.





Change
in Control Arrangements





Rubicon has entered into an employment
agreement with Joseph Mangiapane, Jr., its chief executive officer. This
employment agreement allows for him to resign for good reason upon a change in
control of Rubicon. Upon his resignation for good reason, Mr. Mangiapane would
continue to receive, through the end of the Term of his Agreement, his incentive
compensation in accordance with the terms and conditions of his agreement up to a cap of
6 times his annual salary and his salary at the rate then in effect.
Further, Mr. Mangiapane’s stock options shall remain exercisable for the entire
term of the options.





For
purposes of the employment agreement, a change
in control is defined as:




(i)  a
merger or consolidation in which securities possessing more than fifty percent
(50%) of the total combined voting power of our outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such transaction in a transaction approved by
the shareholders, or the sale, transfer, or other disposition of more than fifty
percent (50%) of the total combined voting power of our outstanding securities
to a person or persons different from the persons holding those securities
immediately prior to such transaction; or





(ii)  the
sale, transfer or other disposition of all or substantially all of the our
assets in complete liquidation or dissolution of our Company other than in
connection with a transaction described in (i) above.








57


Director
Compensation





The following table sets forth
compensation paid to Rubicon’s board members during the year ended December 31,
2008





Name
            
            Fees
      Earned or Paid in Cash
              ($)
            
            
            Stock
      Awards
              ($)
            
            
            Option
      Awards ($)
            
            
            Non-Equity
      Incentive Plan Compensation Earnings
              ($)
            
            
            All
      Other Compensation ($)
            
            
            Total
              ($)Joseph
      Mangiapane, Jr.
            
            
            -
            
            
            $
            4,000
            (1)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            4,000Terence
      Davis(2)
            
            
            -
            
            
            $
            4,000
            (1)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            4,000Suzanne
      Herring
            
            $
            8,000
            (3)
            
            $
            4,000
            (1)
            
            
            -
            
            
            
            -
            
            
            $
            29,180
            (4)
            
            $
            41,180James
      Udel(2)
            
            
            -
            
            
            $
            4,000
            (1)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            4,000Brad
      Bunch(2)
            
            
            -
            
            
            $
            4,000
            (1)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            4,000Craig
      Triance(5)
            
            
            -
            
            
            $
            4,000
            (1)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            4,000Todd
      Vande Hei
            
            
            -
            
            
            $
            4,000
            (1)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            4,000





(1)
            Amount
      represents the estimated total fair market value of 2,500
      shares of common stock issued for services as a Director in June 2008
      under SFAS 123R, as discussed in Note 12 to the audited financial
      statements included in this report.


(2)
            Messrs.
      Davis, Udel and Bunch resigned as members of the board of directors on
      February 1, 2009.


(3)
            Ms.
      Herring was paid $1,000 per month for her services as an audit committee
      chair through August of 2008.


(4)
            Amount
      includes: $29,180 in cash paid to Accuity Financial, Inc. for consulting
      services.


(5)
            Mr.
      Triance resigned as a member of the board of directors on June 28,
      2008.





Directors
receive equity compensation of 2,500 restricted shares of common stock per year
of service. Further, directors who are not employees receive compensation of
$500 for each meeting of the board, as well as travel expenses if required. From
time to time, certain directors who are not employees may also receive grants of
options to purchase shares of Rubicon common stock.




Item
12.       Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.







The
following table presents information, to the best of Rubicon’s knowledge, about
the ownership of Rubicon’s common stock on April 14, 2009 relating to those
persons known to beneficially own more than 5% of Rubicon’s capital stock and by
Rubicon’s directors and executive officers. The percentage of beneficial
ownership for the following table is based on 11,979,273 shares of common stock
outstanding.





Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and does not necessarily indicate beneficial ownership for
any other purpose. Under these rules, beneficial ownership includes those shares
of common stock over which the shareholder has sole or shared voting or
investment power. It also includes shares of common stock that the shareholder
has a right to acquire within 60 days after April 14, 2009 pursuant to options,
warrants, conversion privileges or other right. The percentage ownership of the
outstanding common stock, however, is based on the assumption, expressly
required by the rules of the Securities and Exchange Commission, that only the
person or entity whose ownership is being reported has converted options or
warrants into shares of Rubicon’s common stock.




58





Name
      of Beneficial Owner, Officer or Director(1)
            
            Number
              of
      Shares
            
            
            Percent
      of Outstanding Shares of Common Stock(2)Joseph
      Mangiapane, Jr., Chief Executive Officer and Chairman(3)
            
            
            2,791,722
            (4)
            
            
            22.2
            %Thomas
      Jandt, Vice President of Business Development(3)
            
            
            1,390,000
            (5)
            
            
            11.0
            %Suzanne
      Herring, Director(3)
            
            
            57,500
            
            
            
            0.5
            %Todd
      Vande Hei, Interim Chief Operating Officer and Director(3)
            
            
            782,500
            (6)
            
            
            6.2
            %Directors
      and Officers as a Group
            
            
            5,021,722
            
            
            
            39.9
            %The
      Bettingen 1999 Trust U/D/T October 8, 1999
              4100
      Newport Place, Suite 630
              Newport
      Beach, CA  92660
            
            
            1,200,000
            
            
            
            9.5
            %American
      International Industries, Inc.
              601
      Cien Street, Suite 235
              Kemah,
      TX  77565
            
            
            1,000,000
            
            
            
            7.9
            %Timothy
      McDermott
              4100
      Newport Place, Suite 630
              Newport
      Beach, CA 92660
            
            
            900,100
            
            
            
            7.1
            %Total
      Beneficial Owners as a group
            
            
            3,100,100
            
            
            
            24.6
            %Directors,
      Officers and Beneficial Owners as a Group
            
            
            8,121,822
            
            
            
            64.5
            %


(1)
              As
      used in this table, “beneficial ownership” means the sole or shared power
      to vote, or to direct the voting of, a security, or the sole or shared
      investment power with respect to a security (i.e., thepower to dispose
      of, or to direct the disposition of, a
  security).


(2)
            Figures
      are rounded to the nearest tenth of a
percent.


(3)
            The
      address of each person is care of Rubicon: 4100 Newport Place, Suite
      600,
      Newport Beach, California  92660.


(4)
            Includes
      500,000 options, exercisable at $1.00 per share through December 31,
      2011.


(5)
            Includes
      1,190,000 shares held by PCG Investments LLC, controlled by Mr. Jandt, and
      200,000 shares held by Mr. Jandt’s
children.


(6)
            Includes
      120,000 shares held by Bootstrap Real Estate Investments, LLC, controlled
      by Mr. Vande Hei, and 100,000 warrants, exercisable at $3.00 per share
      through August 23, 2009.











59





Equity
Compensation Plan Information





The following table sets forth
information as of December 31, 2008 regarding outstanding options granted under
the plans, warrants issued to consultants and options reserved for future grant
under the plan.





Plan
      Category
            
            Number
              of
      shares 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 shares remaining available for future issuance under equity
      compensation plans (excluding shares reflected in column (a)
              (c)Equity
      compensation plans approved by stockholders
            
            
            1,500,000
            
            
            $
            1.66
            
            
            
            6,000,000Equity
      compensation plans not approved by stockholders
            
            
            --
            
            
            
            --
            
            
            
            --Total
            
            
            1,500,000
            
            
            $
            1. 66
            
            
            
            6,000,000
            (1)


(1)
            As
      of December 31, 2008, 1,500,000 options were available for issuance under
      our 2007 stock option plan and 4,500,000 options/shares were available for
      issuance under our 2007 acquisition stock plan. In addition, Mr. Davis,
      our former president, was granted 500,000 options that expired 90 days
      after his retirement (02/19/09) and are now available for issuance under
      the 2007 stock option plan.




Item
13.       Certain
Relationships and Related Transactions, and Director Independence.







Other
than as set forth below, we were not a party to any transactions or series of
similar transactions that have occurred during fiscal 2008 in
which:


•
            The
      amounts involved exceeds the lesser of $120,000 or one percent of the
      average of our total assets at year end for the last two completed fiscal
      years ($38,329); and•
            A
      director, executive officer, holder of more than 5% of our common stock or
      any member of their immediate family had or will have a direct or indirect
      material interest.





Consulting Fees Paid to
Companies Controlled by a Director





Suzanne Herring, one of our directors
and a member of the audit committee, is the president of Accuity Financial
Services, Inc. (f/k/a Opus Pointe) and Accuity Financial Inc., both consulting
services companies, which received $29,180 and $45,150, respectively, in cash
compensation for services performed for Rubicon and its subsidiaries during
2008. In addition, Rubicon paid Ms. Herring $7,500 in cash for the preparation
of 2007 federal tax returns. Because of the remuneration paid to Ms. Herring and
the companies she controls, Ms. Herring is not deemed to be an independent
director. Further, Rubicon’s board of directors has reviewed Ms. Herring’s
relationships with Rubicon and has consented to the potential conflicts of
interests involving Ms. Herring.





60


Director
Independence





Our
board of directors has affirmatively determined that none of our current
directors are independent.




Item
14.       Principal
Accountant Fees and Services.







Weaver & Martin, LLC served as our
principal independent public accountants for fiscal 2008 and 2007 years.
Aggregate fees billed to us for the fiscal years ended December 31, 2008 and
2007 by Weaver & Martin, LLC were as follows:





For
      the Fiscal Years Ended
              December
      31,2008
            
            2007(1)
      Audit
      Fees(1)
            
            $
            22,500
            
            
            $
            46,200(2)
      Audit-Related
      Fees(2)
            
            
            13,500
            
            
            
            -0-(3)
      Tax
      Fees(3)
            
            
            -0-
            
            
            
            -0-(4)
      All Other
      Fees
            
            
            -0-
            
            
            
            -0-Total
      fees paid or accrued to our principal accountant
            
            $
            36,000
            
            
            $
            46,200





(1)
            Audit
      Fees include fees billed and expected to be billed for services performed
      to comply with Generally Accepted Auditing Standards (GAAS), including the
      recurring audit of our consolidated financial statements for such period
      included in this Annual Report on Form 10-K and for the reviews of
      the consolidated quarterly financial statements included in the Quarterly
      Reports on Form 10-Q filed with the Securities and Exchange
      Commission. This category also includes fees for audits provided in
      connection with statutory filings or procedures related to audit of income
      tax provisions and related reserves, consents and assistance with and
      review of documents filed with the
SEC.


(2)
            Audit-Related
      Fees include fees for services associated with assurance and reasonably
      related to the performance of the audit or review of our financial
      statements. This category includes fees related to assistance in financial
      due diligence related to mergers and acquisitions, consultations regarding
      Generally Accepted Accounting Principles, reviews and evaluations of the
      impact of new regulatory pronouncements, general assistance with
      implementation of Sarbanes-Oxley Act of 2002 requirements and audit
      services not required by statute or
regulation.


(3)
            Tax
      fees consist of fees related to the preparation and review of our federal
      and state income tax returns.





(5)           Audit Committee Policies and
Procedures





Our
Audit Committee pre-approves all services to be provided to us by our
independent auditor. This process involves obtaining (i) a written
description of the proposed services, (ii) the confirmation of our
Principal Financial Officer that the services are compatible with maintaining
specific principles relating to independence, and (iii) confirmation from
our securities counsel that the services are not among those that our
independent auditors have been prohibited from performing under SEC rules, as
outlined in the Audit Committee charter. The members of the Audit Committee then
make a determination to approve or disapprove the engagement of Weaver &
Martin for the proposed services. In fiscal 2008, all fees paid to Weaver &
Martin were unanimously pre-approved in accordance with this
policy.




61


(6)           Less
than 50 percent of hours expended on the principal accountant’s engagement to
audit the registrant’s financial statements for the most recent fiscal year were
attributed to work performed by persons other than the principal accountant’s
full-time, permanent employees.





Report
of the Audit Committee





March
30, 2009





To
the Board of Directors of Rubicon Financial Incorporated





We
have reviewed and discussed the consolidated financial statements of the
Corporation and its subsidiaries to be set forth in the Corporation’s 2008
Annual Report to Shareholders and at Item 8 of the Corporation’s Annual
Report on Form 10-K for the year ended December 31, 2008 with management of
the Corporation and Weaver & Martin, LLC, independent public accountants for
the Corporation.





We
have discussed with Weaver & Martin, LLC the matters required to be
discussed by Statement on Auditing Standards No. 61, “Communication with
Audit Committees,” Statement on Auditing Standards No. 99, “Consideration
of Fraud in a Financial Statement Audit” and Securities and Exchange Commission
rules regarding auditor independence discussed in Final SEC Releases Nos.
33-8183 and 33-8183a.





We
have received the written disclosures and the letter from Weaver & Martin,
LLC required by Independence Standards Board Standard No. 1, “Independence
Discussions with Audit Committees” and have discussed with Weaver & Martin,
LLC its independence from the Corporation.





Based
on the review and discussions with management of the Corporation and Weaver
& Martin, LLC referred to above, we recommend to the Board of Directors that
the Corporation publish the consolidated financial statements of the Corporation
and subsidiaries for the year ended December 31, 2008 in the Corporation’s
Annual Report on Form 10-K for the year ended December 31, 2008 and in the
Corporation’s 2008 Annual Report to Shareholders.





It
is not the duty of the Audit Committee to plan or conduct audits or to determine
that the Corporation’s financial statements are complete and accurate and in
accordance with generally accepted accounting principles; that is the
responsibility of management and the Corporation’s independent public
accountants. In giving its recommendation to the Board of Directors, the Audit
Committee has relied on (i) management’s representation that such financial
statements have been prepared with integrity and objectivity and in conformity
with generally accepted accounting principles and (ii) the reports of the
Corporation’s independent public accountants with respect to such financial
statements.





Submitted
by the members of the Audit Committee of the Board of Directors.





Suzanne Herring, Chairman


Todd Vande Hei




62


PART
IV




Item
15.      
Exhibits, Financial Statement Schedules.







The
following information required under this item is filed as part of this
report:





(a)           1.
Financial Statements





PageManagement
      Responsibility for Financial Information
            
            44Management’s
      Report on Internal Control Over Financial Reporting
            
            45Report
      of Independent Registered Public Accounting Firm
            
            F-1Consolidated
      Balance Sheets
            
            F-2Consolidated
      Statements of Operations
            
            F-3Consolidated
      Statements of Stockholders Equity
            
            F-4Consolidated
      Statements of Cash Flows
            
            F-5





(b)  2. Financial
Statement Schedules





None.





(c)  3. Exhibit
Index


Incorporated
      by referenceExhibit
              Exhibit
      Description
              Filed
      herewith
              Form
              Period
      ending
              Exhibit
              Filing
      date2.1
              Merger
      Agreement among Rubicon Financial Incorporated, RFI Sub, Inc. and Grant
      Bettingen, Inc.
              
              8-K
              
              2.7
              07/05/072.1(b)
              Amendment
      No. 1 to the Merger Agreement among Rubicon Financial Incorporated, RFI
      Sub, Inc. and Grant Bettingen, Inc.
              
              8-K
              
              2.7(b)
              09/14/072.1(c)
              Amendment
      No.2 to the Merger Agreement among Rubicon Financial Incorporated, RFI
      Sub, Inc. and Grant Bettingen, Inc., dated January 23,
2007
              
              8-K
              
              2.7(c)
              01/24/082.1(d)
              Amendment
      No. 3 to the Merger Agreement among Rubicon Financial Incorporated, RFI
      Sub, Inc. and Grant Bettingen, Inc., dated March 18, 2008
              
              
              
              2.7(d)
              03/21/082.2
              Separation
      and Distribution Agreement by and between Rubicon Financial Incorporated
      and Dial-A-Cup, Inc.
              
              8-K
              
              2.8
              08/06/073.1(i)(a)
              Articles
      of Incorporation
              
              10-KSB
              12/31/05
              3.1(i)(a)
              04/05/063.1(i)(b)
              Certificate
      of Correction of Articles of Incorporation
              
              10-KSB
              12/31/05
              3.1(i)(b)
              04/05/063.1(i)(c)
              Amendment
      to Articles of Incorporation
              
              10-KSB
              12/31/05
              3.1(i)(c)
              04/05/063.1(i)(d)
              Amendment
      to Certificate of Incorporation changing name from ISSG, Inc. to Rubicon
      Financial Incorporated
              
              8-K
              
              3.1(i)(d)
              09/08/063.1(i)(g)
              Amendment
      to Certificate of Incorporation authorizing “blank check” Preferred
      Stock
              
              8-K
              
              3.1(i)(g)
              08/01/073.1(ii)
              Bylaws
              
              10-KSB
              12/31/05
              3.1(ii)
              04/05/064.1
              Amended
      and Restated Certificate of Designation of 8% Series A Convertible
      Preferred Stock
              
              10-Q
              09/30/08
              4.1
              11/19/0810.1
              Employment
      Agreement with Joseph Mangiapane, Jr.
              
              8-K
              
              10.3
              01/17/0710.2
              Employment
      Agreement with Thomas Jandt
              
              8-K
              
              10.610.3
              Share
      Purchase Agreement between Rubicon Financial Incorporated and Grant
      Bettingen, Inc.
              
              8-K
              
              10.9
              09/14/0710.4
              Amendment
      No. 1 to GBI Stock Purchase Agreement dated March 18, 2008
              
              8-K
              
              10.12
              03/21/0810.5
              Employment
      Agreement between GBI and Grant Bettingen
              
              8-K
              
              10.17
              06/06/0810.6
              Stock
      Purchase and Settlement Agreement with AIS Financial Inc. and Marc
      Riviello dated June 2, 2008
              
              8-K
              
              10.18
              06/06/0810.7
              Interim
      COO agreement with Bootstrap Real Estate Investments, LLC dated February
      5, 2009.
              
              8-K
              
              10.1
              03/04/0921
              List
      of Subsidiaries
              X31.1
              Certification
      of Joseph Mangiapane, Jr., Chief Executive Officer and Principal Financial
      Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
              X32.1
              Certification
      of Joseph Mangiapane, Jr., Chief Executive Officer and Principal Financial
      Officer, pursuant to Section 906 of the Sarbanes-Oxley Act
              X99.1
              Code
      of Ethics
              X99.2
              Press
      Release dated March 26, 2009
              X


63




SIGNATURES






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






RUBICON
FINANCIAL INCORPORATED




By:
/s/ Joseph Mangiapane,
Jr.


Joseph
Mangiapane Jr., Chief Executive Officer




Date:
April 14, 2009




Pursuant
to the requirements of the Securities Exchange Act of 1934, the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated have signed this report below.




Name
            Title
            Date/s/ Joseph Mangiapane, Jr.
            Chief
      Executive Officer, President & Director (Principal Executive
      Officer
            April
      14, 2009Joseph
      Mangiapane Jr.
            and
      Principal Financial Officer)/s/ Suzanne Herring
            Director
            April
      14, 2009Suzanne
      Herring/s/ Todd Vande Hei
            Interim
      Chief Operating Officer & Director
            April
      14, 2009Todd Vande
      Hei





64