Trycera Financial, Inc. - FORM 10-K

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EX-31.2 - EX-31.2 - Trycera Financial, Inc.	ex31-2.htm
EX-32.1 - EX-32.1 - Trycera Financial, Inc.	ex32-1.htm
EX-31.1 - EX-31.1 - Trycera Financial, Inc.	ex31-1.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2012

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

For the transition period from ________ to __________

Commission File Number: 000-30872

Trycera Financial, Inc.

(Exact name of Registrant as specified in its charter)

Nevada	33-0910363
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

18100 Von Karman Ave, Suite 850, Irvine, California	92612
(Address of principal executive offices)	(Zip Code)

Issuer’s telephone number, including area code: (949) 705-4480.

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

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes o No x (2) Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

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

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

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

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $1,198,933.66, computed by reference to the average bid and asked price of the Common Stock as of the last business day of the registrant’s fiscal year or December 31, 2012.

At June 20, 2014, there were 611,808,447 shares of the registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

Table of Contents

PART I		4
ITEM 1.	BUSINESS	4
ITEM 1A.	RISK FACTORS	11
ITEM 1B.	UNRESOLVED STAFF COMMENTS	11
ITEM 2.	PROPERTIES	12
ITEM 3.	LEGAL PROCEEDINGS	12
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	13

PART II		13
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	13
ITEM 6.	SELECTED FINANCIAL DATA	14
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	18
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	18
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	19
ITEM 9A.	CONTROLS AND PROCEDURES	19
ITEM 9A(T).	CONTROLS AND PROCEDURES	19
ITEM 9B.	OTHER INFORMATION	20

PART III		21
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	21
ITEM 11.	EXECUTIVE COMPENSATION	22
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	25
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	26
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	27

PART IV		28
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	28

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Forward Looking Statements

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

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

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

Introductory Comment

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

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PART I

ITEM 1. BUSINESS

Overview and Development Since the Beginning of 2009

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

On August 12, 2009, the Company changed its status from shell Company to operating Company. Pursuant to business operations established in the second quarter, the Company has begun operations. The core focus of the restarted operations is marketing prepaid card products, payment reporting products and a suite of financial products and services. As a result, and at this time, the Company does not plan to reinstate its previous program management status, and will instead rely on third party processors, program managers and banks to coordinate, issue and manage prepaid card portfolios on behalf of the Company. The Company will focus on the marketing of network branded third party card programs that can adopt our payment reporting platform within their technical infrastructure. By leveraging existing card platforms and portfolios, we should be able to aggregate more payment reporting customers. The Company has also begun negotiations to engage businesses in the sales process. The targeted focus of the Company is to partner with businesses which deliver non-bank personal and financial services such as insurance agencies, micro-loan centers, rent to own, local/regional credit unions and check cashing businesses. As of the date of this report, the Company has been engaged in a host of negotiations for various credit products, budgeting tools, payment reporting products, strategic arrangements and operating agreements. While various new agreements are in place, it is indeterminable how such agreements may positively or adversely affect the business. As a result, the Company, while attempting to generate newfound revenue streams, will continue seeking opportunities for outside business ventures and raising funds to aid in launching new opportunities, work to begin generating organic revenues and developing strategic alliances and payment reporting partnerships.

All during 2012, primary operational efforts continued to be prioritized and focused on finalizing the technical infrastructure for the planned rollout of the Company’s payment reporting engines. This effort continued as a spillover from the delays associated with funding based on signed investment commitments. Despite the ongoing technical build out, the Company continued working closely with new partners and associations in efforts to position the suite of products and services for a late 2013 calendar year launch. Key management personnel have continued entering into new distribution, strategic partnerships and operating agreements in support of the payment reporting and financial products business that is now the backbone of the payment reporting business. The Company has refocused the operational strategy on products and services while allowing any prepaid card to become a conduit for payment reporting services and other financial products currently being marketed by the Company. During 2012, the Company made very limited progress in marketing the primary products and services in support of continued operations.

In continuing with the direction outlined throughout 2010, 2011 and 2012, the Company continued to focus on developing marketing partnerships to facilitate the distribution of prepaid debit cards, personal financial services and payment reporting services, all of which are designed to assist consumers in managing individual personal finances, including spending, budgeting and financial awareness. As part of the roadmap to further solidify the Company’s payment reporting efforts, the Company has revamped its operational strategy and is not currently seeking a customized network branded card program. The Company has elected to use third party providers for all card-based products and will continue to evaluate any need for a fully customized program and renewed program management status. Based on the economics related to a full custom card solution, the third party provider gives the Company flexibility and access to networks and partnerships that the Company alone could not underwrite nor fund.

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The Company believes that this strategy will be able to offer more predictable low cost model that will provide our customers and strategic distribution partners the flexibility of working with wide reaching portfolio program channels and will better align cardholders with a suite of financial tools that include personal budgeting tools, online card balance viewing, bill payment, convenient reloading options online or at retail and a financial management spending analysis tool. We continue to anticipate launching this program in the late part of the third quarter in conjunction with our payment reporting product and budgeting tools.

In conjunction with continuing efforts to expand operations, the Company spent additional time in 2012 on aligning the payment reporting business with key industry associations, industry experts and governmental agencies in order to foster long term alliances.

In addition, a number of initiatives undertaken during the first, second and third quarters of 2012 by the Company took longer than expected or anticipated. Capital constraints coupled with key management time constraints, increasing regulatory requirements, lengthening approval timeframes and vendor payment shortfalls all contributed to slower than planned marketing as well as delays in generating organic. The Company expects that organic revenues will be generated in the coming quarters to allow the Company to hire third parties to staff and support the program development and primary growth objectives.

Recent Developments

In further support of continued operations, the company made a number of material changes to its operations throughout the 2012 fiscal year, including:

On September 4, 2012, the Company entered into a two year loan with a private individual for twenty five thousand dollars ($25,000). This loan shall accrue simple interest at a rate of ten percent (10%) per annum.

On August 17, 2012, the Company entered into an Addendum to the existing Consulting Agreement with W3 Design Team, LLC in which the Consultant agreed to continue to work for the Company on an accrual basis of $5,000 per month. Such compensation will continue to accrue until the Company secures a minimum investment of $250,000.

On July 1, 2012, the Board of Directors, approved employment contract for Shampa Mitra-Reddy. This fulltime employment agreement became effective July 1, 2012, and is for a term of three years. It is renewable in yearly increments unless terminated prior to expiration of a term. Under the agreement, Ms. Mitra-Reddy is employed as Vice President of Business Development. The base salary is $180,000 per year, payable in the month increments of $15,000. As a signing bonus for entering into the agreement, the party received 18,000,000 shares and will be issued 4,000,000 shares per quarter for eight (8) quarters. The employee is also eligible for performance bonuses and to participate in the Company’s stock option plan. Employee is also entitled to participate in employee benefit plans, including health and retirement plans created hereafter.

On June 30, 2012, Amit Patel resigned as Vice President of Business Development due to inability to fulfill requirements set forth in employment agreement. Mr. Patel forgave all accrued wages and complete stock compensation package. There was no disagreement on any matters relating to the Company’s operations, policies or practices.

On May 23, 2012, the Company entered into a three year, results oriented referral agreement with Residence for Patriots Foundation, a nonprofit organization specializing in assisting military personnel obtain housing.

On May 23, 2012, the Company entered into a one year, results oriented referral agreement with Miles Consulting Firm for the purpose of assisting the Company market its products to various nonprofit organizations specializing in assisting underprivileged, unemployed, and citizens on assisted living support gain financial education to transition to being self-sufficient.

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On May 21, 2012, the Company entered into a one year consulting agreement with Selvin Alvarez for the purpose of marketing the Company’s products and services to various mortgage and auto related companies. Mr. Alvarez is to be paid $1,200 per month and has been granted two (2) million shares of restricted common stock. The consultant is to be paid $1,200 per month and compensation will accrue until the Company secures a minimum of $250,000 in investment dollars. If Company does not secure minimum financing by October 1, 2012, the Consulting Agreement shall immediately terminate and all accrued and unpaid consideration due to Consultant shall be waived and forgiven by Consultant. The Company did not secure the investment and all amounts due were waived.

On May 18, 2012, the Company issued 360,000 shares of restricted common stock for a cash investment of $18,000. The shares were issued in reliance upon the exemptions from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of the Act. The certificates evidencing the above mentioned shares contain a legend (1) stating that the shares have not been registered under the Act and (2) setting forth or referring to the restrictions on transferability and sale of the shares under the Act.

On April 24, 2012, the Company entered into a one year, results oriented referral agreement with Dimensional Builders Corp, for the purpose of assisting the Company market its products to various mortgage related clients.

On April 23, 2012, the Company entered into a one year consulting agreement with Open Door Media, LLC for the purpose of providing public affairs and communication services to Company. The Consultant will be paid at a billable hourly rate and will get written approval from Company prior to work being done.

On April 16, 2012, the Company entered into a one year, results oriented referral agreement with Selvin Alvarez, for the purpose of assisting the Company market its products to various mortgage related clients. Mr. Alvarez is a brother to Hector Alvarez, the Company’s Vice President of Marketing/Education.

On April 12, 2012, the Company entered into a one year, results oriented referral agreement with Capital Impact Group, a firm based in Trenton, NJ, for the purpose of assisting the Company market its products to various nonprofit organizations and unions throughout the state of New Jersey.

On April 6, 2012, the Company entered into a one year, results oriented referral agreement with Ark of Eden, LLC for the purpose of assisting the Company market its products to various Caribbean communities.

On March 26, 2012, the Board of Directors, approved employment contracts for Hector Alvarez and Amit Patel. Each of these fulltime employment agreements became effective March 26, 2012, and is for a term of three years. Each is renewable in yearly increments unless terminated prior to expiration of a term. Under the agreements, Mr. Alvarez is employed as Vice President of Education and Marketing and Mr. Patel is employed as Vice President of Business Development. The base salary for each party is $180,000 per year, payable in the month increments of $15,000. As a signing bonus for entering into the agreements, each party received 18,000,000 shares and will each be issued 4,000,000 shares per quarter for eight (8) quarters. The employees are also eligible for performance bonuses and to participate in the Company’s stock option plan. Each is also entitled to participate in employee benefit plans, including health and retirement plans created hereafter.

On March 9, 2012, the Company entered into a 10% Convertible Note agreement with an accredited investor in the amount of $500,000. The terms of this note are for twenty four (24) months and generate simple interest at the rate of ten percent (10%) per annum. Funds are to be received in five separate installments of $100,000 each and all funds are expected to be received by Company on or before May 12, 2012.

On March 9, 2012, the Company entered into a twelve (12) month lease agreement with ServCorp to rent office space at a rate of $1,461.40 per month. The term of this lease agreement ends on April 1, 2013.

On March 6, 2012, the Company launched a Joint Venture with Education for Homes, LLC to cross-market each other’s products and services. These services include the Company’s credit building and budgeting tools along with Education for Homes’ educational series entitled ‘The Financial Guide to Freedom”.

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On February 29, 2012, the Company was given final notice to vacate current office space located at 18200 Von Karman Ave, Suite 850, Irvine, CA 92612 and pay remaining balance of $26,133.01 by March 20, 2012.

On January 31, 2012, the Company received a Notice of Claim and Conference from the Labor Commissioner, State of California Case Number 18-84792 BB. The case was brought by Michael G. Nathans, the former President of Credit Services. Mr. Nathans stated he resigned from the Company effective November 21, 2011 as a result of the Company’s failure to maintain proper insurance and alleged the Company was in breach of his employment agreement with the Company dated September 17, 2010. Pursuant to the Claim, Mr. Nathans is seeking $152,054 in back wages. The Company intends to vigorously defend this Claim.

On January 10, 2012, the Company received a Notice of Claim and Conference from the Labor Commissioner, State of California Case Number 18-84756 BB. The case was brought by Kevin Goldstein, the former Chief Technology Officer. Mr. Goldstein stated he resigned from the Company effective November 21, 2011 as a result of the Company’s failure to maintain proper insurance and alleged the Company was in breach of his employment agreement dated October 25, 2010. Pursuant to the Claim, Mr. Goldstein is seeking $90,035.71 in back wages. The Company intends to vigorously defend this Claim.

Throughout all four quarters of 2012, the Company continued to negotiate with potential new vendors, key vendors and prior service providers. Key management personnel have accrued wages and continue to accrue wages and accept partial payments for services to date. It is anticipated that key management personnel and key vendors and prior service providers shall be reimbursed accordingly once additional working capital is invested. A continued and substantial backlog of liabilities remains on the records of the Company, but management remain confident that those liabilities will be addressed in the coming quarters. Of the major items outstanding, the single largest are the lapsed settlement agreements with former directors Knitowski, Dang and their related parties, Dang, Ecewa, Curo and Sagoso. The Company has not been in contact with certain principals for quite some. It is expected that cash payments or alternative arrangements will be made in 2013 to mitigate any languishing liabilities to those particular parties.

In conjunction with continuing efforts to expand the operations, the Company’s CEO spent considerable time on creating a process to get recurring alternative payments added as trade lines on a traditional credit report in lieu of consumers having to supply lenders an additional supplemental credit reference statement. The ability for the Company to add alternative payments to traditional credit reports streamlines the process for a consumer and reduces the amount of education required for the Company to provide both consumers and lenders to complete a loan.

During the fourth quarter, all primary operational efforts were prioritized and focused on entering into new operating agreements, restarting operations and leveraging expertise via new hires in the alternative credit and reporting space. At the start of the fourth quarter, the Company focused on developing marketing partnerships to facilitate the distribution of the video communications products, prepaid debit cards, personal financial services and payment reporting services, all of which are designed to assist consumers in managing individual personal finances, including spending, budgeting and financial awareness. We also continued progress and development of relationships on other marketing and sales channels with our banking partner, card issuer and program manager, Central National Bank. The only prohibiting factor of proceeding forward with Central National Bank and rolling out card programs was the bank’s concern about the Company’s lack of funding. The bank would not move forward until substantial funding had been secured and delivered to Company.

The Company currently remains near insolvency but is seeking financing from various sources for which there is one commitment to provide us with such financing. The Company believes that material changes to the recent trends in revenue are expected within the next one hundred eighty days. We do not currently have sufficient cash on hand to satisfy existing operating cash needs or working capital requirements on a sustained basis and the President and CEO has been seeking short term loans for the Company in order to fulfill certain obligations related to audit, employee retention and operational functions.

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Business of the Company

The Company operates in the prepaid debit card and prepaid payments space. The Company intends to either seek an outside business venture or to raise funds to grow existing developmental operations. The Company anticipates that businesses for possible acquisition will be referred by various sources, including its officers and directors, shareholders, professional advisors, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals. The Company will not engage in any general solicitation or advertising for a business opportunity, and will rely on personal contacts of its officers and directors and their affiliates, as well as indirect associations between them and other business and professional people. By relying on “word of mouth,” the Company may be limited in the number of potential acquisitions it can identify. While it is not presently anticipated that the Company will engage unaffiliated professional firms specializing in business acquisitions or reorganizations, such firms may be retained if management deems it in the best interest of the Company.

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

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

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

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

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

Acquisition of an Outside Business

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

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

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

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

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

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

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

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

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

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

Operation of Business After Acquisition

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

Governmental Regulation

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

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Competition

We function in a highly competitive and fragmented marketplace which we expect to become increasingly competitive in the future. In addition to the broad list of competitors described below there always remains the prospect of developing markets and new entrants that are unexpected and unforeseen given the changing competitive prepaid landscape.

We compete against a broad range of well-funded and financially stable providers of general purpose reloadable (GPR) cards. We compete with banks that offer demand deposit accounts and network branded card issuers that offer credit cards, branded private label cards, rewards cards, payroll cards and gift cards. Many of these institutions are substantially larger and have greater resources, larger and more diversified customer bases and greater brand recognition than we do. Many of these companies can also leverage their extensive customer bases and implement pricing policies that dissuade smaller companies from directly competing. In turn these larger companies may garner improved market share and may leverage economies unattainable by us. Primary competitors in the prepaid card and program management space include credit, debit and prepaid card issuers and prepaid card program managers and reload network operators like Green Dot, Netspend, AccountNow, PreCash, First Data, Western Union and MoneyGram.

We believe that the core competitive factors for the prepaid cards and program management space include:

	•	widespread online, retail, mass merchant and niche channel distribution;

	•	name brand recognition;

	•	an ability to access and leverage third party reload networks;

	•	broad compliance and regulatory expertise and capabilities;

	•	cardholder service and support capabilities; and

	•	consumer friendly pricing.

We recognize that we will be involved in intense competition with other business entities, many of which will have a competitive edge over us by virtue of their stronger financial resources and prior experience in business. There is no assurance that the Company will be successful in obtaining suitable investments to compete effectively and based on the core criteria, we believe that our primary products currently do not compete favorably with the competitors.

Employees

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

ITEM 1A. RISK FACTORS

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

ITEM 1B. UNRESOLVED STAFF COMMENTS

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

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ITEM 2. PROPERTIES

The Company entered into a month-to-month lease which commenced on October 1, 2012 for our administrative office and headquarters which are located at 18100 Von Karman Avenue, Suite 850, Irvine, CA 92612. The Company may lease additional commercial office facilities in the future at such time as operations have developed to the point where the facilities are needed, but has no commitments or arrangements for any additional facilities. There is no assurance regarding the future availability of commercial office facilities or terms on which the Company may be able to lease facilities in the future, nor any assurance regarding the length of time the present arrangement may continue.

ITEM 3. LEGAL PROCEEDINGS

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

The Company has received erroneous demands from certain individuals related to compensation and shareholder interests. As a result, the company has retained a law firm to protect our various interests and authorized various cease and desist orders to halt the dissemination of false and misleading information.

On August 22, 2012, the Company was awarded a judgment against GrupoMex Holdings, LLC and Leticia R Castro in the amount of $1,144,957.23 from the Superior Court of California, County of Los Angeles, case number BC463637.

On April 4, 2012, the Company received a subpoena from the California Department of Corporations requesting certain documents and records. The Company intends to comply fully with the subpoena.

On February 19, 2012 the Company was served final notice to vacate its current office location located at 18200 Von Karman Ave, Suite 850, Irvine, CA 92612, by March 20, 2012 and pay final balance of $26,133.01. This remaining balance is a direct result of the demand to stay at current location set forth by the private investor, Seth Weiner, who on September 7, 2011 entered into a Convertible Note to invest $500,000 into Company.

On June 17, 2011, the Company filed a complaint against GrupoMex Holdings LLC, in Los Angeles Superior Court. The complaint is related to a contract breach committed by GrupoMex Holdings LLC in which GrupoMex failed to deliver equity funds in the amount of $2,500,000 within 45 days of August 17, 2010, which would have been October 1, 2010. The Company had detrimentally relied on such funding and as of the date of the complaint, GrupoMex Holdings LLC had invested a total of $157,500 or 6.3% of the committed funding amount.

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

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

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PART II

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

Market Information

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

	Quarter	High		Low
FISCAL YEAR ENDED DECEMBER 31, 2011	First	$	0.05	$	0.02
	Second	$	0.06	$	0.02
	Third	$	0.05	$	0.01
	Fourth	$	0.02	$	0.00

	Quarter	High		Low
FISCAL YEAR ENDED DECEMBER 31, 2012	First	$	0.04	$	0.00
	Second	$	0.05	$	0.02
	Third	$	0.02	$	0.01
	Fourth	$	0.02	$	0.01

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

Holders

At October 6, 2011, the Company had 136 shareholders of record. The number of record holders was determined from the records of the Company’s transfer agent and does not include beneficial owners of Common Stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. The Company has appointed Interwest Transfer Co., Inc., Salt Lake City, Utah, to act as its transfer agent for the Common Stock.

Dividends

The Company has not declared or paid any cash dividends on its Common Stock during the two fiscal years ended December 31, 2012, or in any subsequent period. The Company does not anticipate or contemplate paying dividends on its Common Stock in the foreseeable future. The only restrictions that limit the ability to pay dividends on common equity, or that are likely to do so in the future, are those restrictions imposed by law.

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Purchases of Equity Securities

On July 1, 2012, the Board of Directors, approved an employment contract for Shampa Reddy Patel, Esq. This fulltime employment agreement became effective July 1, 2012, and is for a term of three years. It is renewable in yearly increments unless terminated prior to expiration of a term. Under the agreement, Ms. Reddy-Patel is employed as Vice President of Business Development. The base salary is $180,000 per year, payable in the month increments of $15,000. As a signing bonus for entering into the agreement, the party received 18,000,000 shares and will each be issued 4,000,000 shares per quarter for eight (8) quarters. The employee is also eligible for performance bonuses and to participate in the Company’s stock option plan, and is also entitled to participate in employee benefit plans, including health and retirement plans created hereafter.

ITEM 6. SELECTED FINANCIAL DATA

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

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

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

Overview

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

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During 2012, the Company made limited progress in marketing the primary products and services in support of continued operations. In continuing with the direction outlined throughout 2010, 2011 and 2012, the Company continued to focus on developing marketing partnerships to facilitate the distribution of prepaid debit cards, personal financial services and payment reporting services, all of which are designed to assist consumers in managing individual personal finances, including spending, budgeting and financial awareness. As part of the roadmap to further solidify the Company’s payment reporting efforts, the Company has revamped its operational strategy and is not currently seeking a customized network branded card program.

The Company has elected to use third party providers for all card-based products and will continue to evaluate any need for a fully customized program and renewed program management status. Based on the economics related to a full custom card solution, the third party provider gives the Company flexibility and access to networks and partnerships that the Company alone could not underwrite nor fund.

Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties that could cause materially different results under different estimates and assumptions. We believe our critical accounting policies relate to accounts receivable, goodwill and intangible assets and related impairment assessments, and stock-option compensation because they are important to the portrayal of our financial condition or results of operations and they require critical management estimates and judgments about matters that are uncertain. There were no changes to our critical accounting policies during the year ended December 31, 2010.

Results of Operations -- Year Ended December 31, 2012, versus the Year Ended December 31, 2011

In 2012, we saw revenues remain flat with the prior year. The lack of revenue was attributed mostly to the fact the Company had signed investment commitments and the investors failed to deliver funds as promised. To the detriment of the Company, these committed funds were relied upon to fulfill agreements both already in place as well as those being negotiated. To date, the Company still remains in developmental stage and re-entry into the financial services, alternative credit payment reporting and personal budgeting business.

Revenue

Revenue was $1,654 and $299 for the years ended December 31, 2012 and 2011, respectively, representing an increase of $1,355 or 453%. Our 2012 and 2011 results reflect the winding up of the operations and the commencement of our new business plan.

Cost of Sales and Gross Profit

Cost of sales was $1,055 and $3,143 for the years ended December 31, 2012 and 2011, respectively, representing a decrease of $2,088 or 66%. The decrease was attributed to minimum program fees and the exiting of the prior business operations.

The resulting gross profit was 36% and (951%) for the years ended December 31, 2012 and 2011, respectively. Management expects a strategic alternatives to favorably impact the underlying gross profit margin but that is only determinable upon execution of an effective alternative.

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Operating expenses

Operating expenses were $1,306,673 and $2,119,997 for the years ended December 31, 2012 and 2011, respectively, representing a decrease of $813,324 or 38%. The major components of operating expense are salaries and wages (36%) general and administrative (38%) and stock based compensation(22%). A material amount of the operating expenses for the year ended December 31, 2012 have been accrued and continue to be unpaid or paid in small increments.

Salaries and wages expense was $472,500 and $576,475 for the years ended December 31, 2012 and 2011, respectively, representing a decrease of $103,975 or 18%. The decrease resulted from the smaller number and value of employment agreements in force due to resignations of some of the employees and officers of the Company.

General and administrative expense was $497,378 and $988,136 for the years ended December 31, 2012 and 2011, respectively, representing a decrease $490,758 or 50%. The decrease resulted from a significant decrease in all categories as the Company had little business, no facility and reduced outside services for most of the 2012 fiscal year.

Professional fees and expenses were $48,795 and $98,097 for the years ended December 31, 2012 and 2011, respectively, representing an decrease of $49,302 or 50%. The decrease resulted from the expenses associated with a third party service providers including strategic consulting services and accounting and legal services.

Other income (expense)

Other income (expense) was ($177,705) and ($306,624) for the years ended December 31, 2012 and 2011, respectively. The main component of other expense is the financing costs which resulted from notes payable.

Net loss

We incurred net losses of $1,483,779 and $2,429,465 for the years ended December 31, 2012 and 2011, respectively.

Liquidity and Capital Resources

As of December 31, 2012, cash totaled $473 as compared with $179 of cash at December 31, 2011, resulting in an increase of $294 in cash and cash equivalents. The increase in cash and cash equivalents was attributed to the nature of winding up the primary business and seeking a strategic alternative and then subsequently commencing the new business plan.

For the year ended December 31, 2012, we used $103,170 of cash in operations. For the comparable period in the prior year we used $399,653 of cash in operations.

Cash provided from financing activities was $103,464. The Company raised $18,600 under an equity investment and a further $85,000 in 10% notes. For the comparable period in the prior year we obtained $527,136 from financing activities.

In order to meet the Company’s cash flow requirements and to satisfy the existing debts, management intends to seek funding through the sale of either debt or equity instruments. Management is currently in the process of delivering a convertible note structure intended to raise short term operating capital while seeking a separate and supplemental capital raise through a nonpublic equity offering. An equity offering amounting to $2,500,000 was completed in August of 2010 but was marginally fulfilled for only $157,500 out of the total of $2,500,000. In March of 2011, the Company secured a replacement investment of $2,500,000 which was also marginally fulfilled in the amount of $320,000. Up until present the Company has detrimentally relied on these secured investments and the Company is reviewing any and all implications of the related under funding. A new equity offering is planned for the last part of the first quarter or early second quarter to coincide with the recapitalization of the Company, which based on time lines outlined by the notification process, is likely to fall at or near the beginning of April 2012.

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The Company has been successful in negotiating tranches of debt down or eliminating debt through a convertible stock offering. Former Directors, Alan Knitowski and Luan Dang and related party shareholders of Messrs Knitowski and Dang, have agreed to convert their $70,000 in debt for shares, although that settlement agreement expired on December 31, 2010 and no olive branch has been extended by either party to confirm or renegotiate the expired agreement. The Company may be able to provide the necessary cash payment and alleviate the need to issue a significant quantity of shares. Separately, if the Company is unable to secure outside funding, management may attempt to continue to renegotiate outstanding debts and satisfy liabilities through organically generated revenue, if any.

Working capital was ($3,189,949) at December 31, 2012, as compared with working capital of $(2,357,407) at December 31, 2011. This decrease in working capital was a result of using existing funds and accounts payable to fund operations and related expenses.

Caution About Forward Looking Statements

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

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

	·	changes in general economic and business conditions in the Company’s market area;
	·	changes in banking and other laws and regulations applicable to the Company; risks inherent in the prepaid space such as fraud loss, illegal card usage and collateral liabilities;

	·	changing trends in customer profiles and behavior;
	·	changes in interest rates and interest rate policies;

	·	maintaining cost controls as the Company opens or acquires new programs/products/operations;
	·	competition with other banks and financial institutions, and companies outside of the prepaid and banking industries, including those companies that have substantially greater access to capital and other resources;

	·	the ability to continue to attract investments and capital to fund operations and growth;
	·	the ability to successfully manage the Company’s growth or implement its growth strategies if it is unable to identify attractive markets, locations or opportunities to expand in the future;

	·	reliance on the Company’s management team, including its ability to attract and retain key personnel;
	·	demand, development and acceptance of new products and services;

	·	problems with technology utilized by the Company;
	·	maintaining capital levels adequate to support the Company’s growth; and

other factors not herein described in Item 1A, “Risk Factors,” above.

Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.

Off-Balance Sheet Arrangements

During the quarter ended December 31, 2012, we did not engage in any off-balance sheet arrangements.

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Stock-Based Compensation

In March 2004, the FASB issued Statement of Financial Accounting Standards (SFAS) No.123 (Revised), Shared-Based Payment. This standard revises SFAS No. 123, APB Opinion No. 25 and related accounting interpretations and eliminates the use of the intrinsic value method for employee stock-based compensation. SFAS No. 123R requires compensation costs related to share based payment transactions to be recognized in the financial statements over the period that an employee provides service in exchange for award. Currently, the Company uses the revised fair value method of SFAS No. 123R to value share-based options granted to employees and board members. This standard requires the expensing of all share-based compensation including options, using the fair value based method.

Subsequent Events

The following material events occurred subsequent to the year ended December 31, 2012:

None.

Off-Balance Sheet Arrangements

During the years ended December 31, 2012 and 2011, we did not engage in any off-balance sheet arrangements.

Recent Accounting Pronouncements

Revenue Recognition – Multiple Deliverable Revenue Arrangements

In October 2010, the FASB issued guidance for Revenue Recognition – Multiple Deliverable Revenue Arrangements (Subtopic 605-25) “Subtopic”. This accounting standards update establishes the accounting and reporting guidance for arrangements under which the vendor will perform multiple revenue – generating activities. Vendors often provide multiple products or services to their customers. Those deliverables often are provided at different points in time or over different time periods. Specifically, this Subtopic addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. The amendments in this guidance will affect the accounting and reporting for all vendors that enter into multiple-deliverable arrangements with their customers when those arrangements are within the scope of this Subtopic.

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

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

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

ITEM 9A. CONTROLS AND PROCEDURES

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

ITEM 9A(T). CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

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

Changes in internal control over financial reporting

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

Management’s report on internal control over financial reporting

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

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

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

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The Company has no material operations or staff at this time, however, management is making every effort to mitigate this material weakness to the fullest extent possible. This is done by having our CEO and our legal counsel review all our financial reporting requirements for reasonableness. All unexpected results are investigated. At any time, if it appears that any control can be implemented to continue to mitigate such weaknesses, it will be immediately implemented. In order to mitigate further weakness, the Company maintains a third party CPA independent of the Company auditors to participate in the accounting and review process. As soon as our finances allow, we plan to hire sufficient accounting staff and implement appropriate procedures for monitoring and review of work performed by our CEO and PFO.

Based on our evaluation under the frameworks described above, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2012.

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

ITEM 9B. OTHER INFORMATION

The Company did not fail to file any information required to be filed in a report on Form 8-K during the fourth quarter of the fiscal year ended December 31, 2012.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Current Management

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

Name	Age	Position(s)	Director Since	Employment Background
Matt Richards	46	Director	2010	Matthew Richards is a national trainer, public speaker and educator. For 27 years, Mr. Richards has been a business and marketing consultant and a real estate investor.
Ray A. Smith	41	President and Chief Executive Officer / Director	2009	Since April 2006 Mr. Smith has been the President and a director of CRS Corporation, a company offering credit enhancement, credit education, and consumer financial assistance services. From February 2002 until April 2006, he as the President and CEO of Comm 2020 which operated a call center marketing credit services and a credit card application processing center for Visa and MasterCard. Mr. Smith has served as President of and been employed by Trycera since February 2010.
Hector Alvarez		VP of Marketing / Director	2012	Mr. Hector Alvarez is the founder of Education for Homes, LLC, a company dedicated to providing assistance to medium and low income residents of urban communities throughout the United States. Mr. Alvarez has spent the past fifteen (15) years serving in the capacity as a managing member or director of several companies focused on educating and assisting low income families obtain financial education, low-cost energy, green energy, assist children in need of tutoring and better scholastic assistance.
Shampa Mitra-Reddy		VP of Biz Dev/General Counsel	2012	As an attorney, Ms. Reddy has over 12 years of experience representing clients in a broad array of real estate, corporate and construction law matters. In addition to running her private law practice, Ms. Reddy has previously served as in-house counsel to several multi-million dollar construction companies, advising on legal matters as well as coordinating multi-family and mixed use development projects funded by the New Jersey Housing and Mortgage Finance Agency (HMFA), Department of Community Affairs (DCA) and other state agencies.

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

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

Section 16(a) Beneficial Ownership Reporting Compliance

According to our records, no director, officer, or beneficial owner of more than 10% of our Common Stock failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the fiscal year ended December 31, 2012.

Code of Ethics

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

Overview of Director Nominating Process

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

Audit Committee Financial Expert

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

ITEM 11. EXECUTIVE COMPENSATION

Executive Compensation

The following table sets forth the compensation of the named executive officer for each of the two fiscal years ended December 31, 2012 and 2011:

Name & Principal Position	Year	Salary ($)			Bonus ($)		Stock Awards ($)		Option Awards ($)		All Other Compensation ($)		Total ($)
Ray A. Smith	2012	$	240,000	(1)		0		0		0	$	0	$	240,000
President/CEO	2011	$	240,000	(1)		0		0		0		0	$	240,000
Hector Alvarez	2012	$	135,000	(1)		0		0		0	$	0	$	135,000
VP of Sales	2011	$	0	(1)		0		0		0		0	$	0
Shampa Mitra-Reddy	2012	$	90,000	(1)		0		0		0	$	0	$	90,000
VP of Biz Dev	2011		0	(1)		0		0		0	$	0	$	0

(1)

The salaries of all employees were accrued throughout the year as a result of limited working capital.

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Equity Awards

The following table sets forth certain information concerning unexercised options for the named parties that were outstanding as of December 31, 2010:

Name

Number of securities underlying unexercised options

(#)

exercisable

Number of securities underlying unexercised options

(#)

unexercisable

Option exercise price

($)

Option expiration date

Number of shares or units of stock that have not vested

(#)

Market value of shares or units of stock that have not vested

($)

Ray A. Smith

Bryan W. Kenyon

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

There were 10,000,000 shares of common stock initially authorized for nonstatutory and incentive stock options and stock grants under the plan, which are subject to adjustment in the event of stock splits, stock dividends, and other situations. On November 2, 2010, the number of shares authorized under the Plan was increased to 250,000,000.

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

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

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

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

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

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

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

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

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

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

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

Director Compensation

The following table sets forth certain information concerning the compensation of our directors, excluding Messrs Kenyon and Smith, whose total compensation is set forth in the Summary Compensation Table above, for the last fiscal year ended December 31, 2012:

Name

Option awards(1)

($)

All other compensation

($)

Total

($)

Matthew Richards (1)

(1)

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

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Standard Arrangements for Outside Directors. Directors are permitted to receive fixed fees and other compensation for their services as directors, as determined by our board of directors. The board has adopted a policy to compensate non-employee directors. Each such director receives options for each year of service. At the commencement of each year of service as a non-employee director, the person receives options to purchase 250,000 shares. The options are exercisable at market value on the date of grant based upon the average closing bid price for the ten trading days immediately preceding appointment or the anniversary date. The board also grants annual options to purchase 10,000 shares for these directors to serve on a committee of the board, and 5,000 shares to chair the committee. These options vest as to 25% of the options per quarter, starting on the date of grant. They expire five years from the date of grant.

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

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

The following table sets forth certain information from reports filed by the named parties, or furnished by current management, concerning the ownership of our Common Stock as of March 15, 2012, of (i) each person who is known to us to be the beneficial owner of more than 5 percent of our Common Stock; (ii) all directors and executive officers; and (iii) our directors and executive officers as a group:

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership (1)			Percentage of Class (2)

Ray A. Smith 18100 Von Karman Ave Suite 850 Irvine, CA 92612		191,000,000			38.57	%
Bryan Kenyon 18100 Von Karman Ave Suite 850 Irvine, CA 92612		191,715,080	(1)		38.71	%
Matthew Richards 8100 Von Karman Ave Suite 850 Irvine, CA 92612		500,000			.001	%
Executive Officers and Directors as a Group (3 Person)		383,215,080			77.38	%

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

Change of Control

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

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Equity Compensation Plan Information

The following table sets forth as of the most recent fiscal year ended December 31, 2010, certain information with respect to compensation plans (including individual compensation arrangements) under which our common stock is authorized for issuance:

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) and (b)) (c)
Equity compensation plans approved by security holders			$
Equity compensation plans not approved by security holders		-0-		-0-		-0-
Total

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

Certain Relationships and Related Transactions

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

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

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

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Director Independence

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

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees Paid

Pritchett, Siler & Hardy, PC and Morrill & Associates, LLC served as our independent registered public accounting firms for the fiscal years ended December 31, 2012 and 2011, respectively. The following fees were paid to our independent registered public accounting firms for services rendered during our last two fiscal years:

Audit Fees

The aggregate fees billed for professional services rendered by our principal accountants for the audit of our annual financial statements, review of financial statements included in the quarterly reports and other fees that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2012 and 2011 were $ 13,000 and $25,000, respectively.

Audit-Related Fees

There were no fees billed for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of the financial statements, other than those previously reported above, for the fiscal years ended December 31, 2012 and 2011.

Tax Fees

There were no fees billed for professional services rendered by our principal accountant for tax compliance, tax advice and tax planning in the fiscal years ended December 31, 2012 and 2011, respectively.

All Other Fees

There were no other fees billed for products or services provided by the principal accountant, other than those previously reported above, for the fiscal years ended December 31, 2012 and 2011.

Audit Committee

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

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Financial Statements

The following financial statements are filed with this report:

Report of Independent Registered Public Accounting Firm

Balance Sheets at December 31, 2012 and 2011

Statements of Operations for the years ended December 31, 2012 and 2011

Statements of Stockholders’ Equity for the years ended December 31, 2012 and 2011

Statements of Cash Flows for the years ended December 31, 2012 and 2011

Notes to Financial Statements

Exhibits

The following exhibits are filed with this report:

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed Here-with
3.1	Articles of Incorporation	8-K	000-30872	3.1	11/6/09
3.2	Current Bylaws	10-QSB	000-30872	3.2	8/16/04
4.1	Form of Common Stock Certificate	10-SB	000-30872	4.1	7/ 21/00
4.2	2004 Stock Option/Stock Issuance Plan *	8-K	000-30872	4.2	5/ 13/04
4.3	Grant of Stock Option Form used pursuant to the 2004 Stock Option/Stock Issuance Plan	10-KSB	000-30872	4.3	4/ 7/06
4.4	Form of Series A Common Stock Purchase Warrant, as amended	10-KSB	000-30872	4.6	4/ 7/06
4.5	Form of Series B Common Stock Purchase Warrant	10-KSB	000-30872	4.7	4/ 7/06
4.6	Description of Registration Rights for investors in offerings dated September 20, 2005, and January 3, 2006	10-KSB	000-30872	4.8	4/ 7/06
10.1	Employment Agreement with Ray A. Smith	10-QSB	000-30872		11/16/09
10.2	Consulting agreement with Balius Consulting Group, LLC	10-K	000-30872		04/15/09
10.3	Engagement Agreement with Ronald N. Vance	10-K	000-30872		04/15/09
10.5	Employment Agreement with Bryan Kenyon	10-QSB	000-30872		11/16/09
14.1	Code of Ethics	8-K	000-30872	14.1	8/ 26/04
31.1	Rule 13a-14(a) Certification by Principal Financial Officer					X
31.2	Rule 13a-14(a) Certification by Principal Financial Officer					X
32.1	Section 1350 Certification of Principal Executive Officer					X
32.2	Section 1350 Certification of Principal Financial Officer					X
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

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

** In accordance with Rule 406T of Regulation S-T, the XBRL-related information on Exhibit No. 101 to this Annual Report on Form 10-K shall be deemed “furnished” herewith and not “filed.”

Signature Page Follows

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SIGNATURES

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

	Trycera Financial, Inc.


Date: June 24, 2014	/s/ Ray A. Smith
	Ray A. Smith, President (Principal Executive Officer)

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

Date: June 24, 2014	/s/ Matthew Richards
	Matt Richards, Director


Date: June 24, 2014	/s/ Hector Alvarez
	Hector Alvarez, Director


Date: June 24, 2014	/s/ Ray A. Smith
	Ray A. Smith, President (Principal Executive Officer)


Date: June 24, 2014	/s/ Ray A. Smith
	Ray A. Smith, PFO (Principal Financial and Accounting Officer)

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Financial Statements

TRYCERA FINANCIAL, INC

For the years ended December 31, 2012 and 2011

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TRYCERA FINANCIAL, INC.

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For the years ended December 31, 2012 and 2011

	Page

Financial Statements

Report of Independent Registered Public Accounting Firm	F-3

Balance Sheets	F-4

Statements of Operations	F-5

Statements of Cash Flows	F-6

Statements of Stockholders’ Deficit	F-7

Notes to Financial Statements	F-8

F-2

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PRITCHETT, SILER & HARDY, P.C.

CERTIFIED PUBLIC ACCOUNTANTS

A PROFESSIONAL CORPORATION

660 SOUTH 200 EAST, SUITE 300

SALT LAKE CITY, UTAH 84111

(801) 328-2727 FAX (801) 328-1123

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Trycera Financial, Inc.

Irvine, CA

We have audited the accompanying balance sheets of Trycera Financial, Inc. as of December 31, 2012 and the related statement of operations, stockholders' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit 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 has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes 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, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Trycera Financial, Inc. as of December 31, 2012 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 9 to the financial statements, the Company has a working capital deficit, continued operating losses, and negative cash flows from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in those matters are also described in Note 9. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Pritchett, Siler & Hardy, P.C.

Pritchett, Siler & Hardy, P.C.

Salt Lake City, Utah

June 9, 2014

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TRYCERA FINANCIAL, INC.

Balance Sheets

	December 31			December 31
	2012			2011
Assets
Current Assets
Cash	$	473		$	179
Prepaid expenses and other current assets		25,000			75,000
Total Current Assets		25,473			75,179

Property & Equipment, net		9,016			11,143
Total Fixed Assets		9,016			11,143

Other Assets
Deposits		-			6,711
Total Other Assets		-			6,711

Total Assets	$	34,489		$	93,033

Liabilities & Stockholders’ Deficit
Current Liabilities
Bank overdraft	$	-		$	136
Accounts payable		692,186			557,165
Accounts payable - related parties		179,565			165,565
Portfolio reserves		34,774			34,774
Accrued expenses		1,500,870			962,069
Unsecured notes, current maturities		67,880			59,448
Senior secured notes, current maturities		77,500			77,500
Convertible notes payable, net of discounts, current maturities		662,647			575,929

Total Current Liabilities		3,215,422			2,432,586

Long-term Liabilities
Unsecured notes, less current maturities		25,000			-
Convertible notes payable, net of discounts, less current maturities		49,382			-
Total Long-term Liabilities		74,382			-

Total Liabilities		3,289,804			2,432,586

Commitments		-			-

Stockholders’ Deficit

Preferred stock, 20,000,000 shares authorized, $.001 par value; none issued and outstanding		-			-
Common stock, 2,000,000,000 shares authorized at $.001 par value; 559,273,447 and 502,901,447 shares issued and outstanding, respectively		559,273			502,901
Additional paid in capital		9,640,852			8,447,791
Prepaid stock compensation		(724,001	)		(42,585	)
Accumulated deficit		(12,731,439	)		(11,247,660	)
Total Stockholders’ Deficit		(3,255,315	)		(2,339,553	)
Total Liabilities & Stockholders’ Deficit	$	34,489		$	93,033

The accompanying notes are an integral part of these financial statements

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TRYCERA FINANCIAL, INC.

Statements of Operations

	For the Year Ended
	Dec 31,			Dec 31,
	2012			2011
Revenues
Stored value	$	1,654		$	299
		1,654			299

Cost of Sales		1,055			3,143
Gross Profit (loss)		599			(2,844	)

Expenses
Salaries and wages		472,500			576,475
Stock based compensation		288,000			158,505
Professional fees		48,795			98,097
Impairment of assets		-			298,784
General & administrative		497,378			988,136

Total Expenses		1,306,673			2,119,997

Loss from Operations		(1,306,074	)		(2,122,841	)

Other Income (Expense)
Interest expense		(177,705	)		(306,624	)
Total Other Income (Expense)		(177,705	)		(306,624	)

Loss before tax		(1,483,779	)		(2,429,465	)
Income tax		-			-
Net Loss	$	(1,483,779	)	$	(2,429,465	)

Basic loss Per Share:
Loss per share	$	(0.00	)	$	(0.01	)
Net Loss Per Share	$	(0.00	)	$	(0.01	)

Weighted Average Shares		530,612,252			479,445,830

The accompanying notes are an integral part of these financial statements

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TRYCERA FINANCIAL, INC.

Statements of Cash Flows

	For the Years Ended
	Dec 31,			Dec 31,
	2012			2011
Cash Flows from Operating Activities
Net Loss	$	(1,483,779	)	$	(2,429,465	)
Adjustments to reconcile net loss to net cash used by operations;
Depreciation and amortization		2,127			2,128
Impairment of intangible assets		-			298,784
Amortization of prepaid stock compensation		254,584			161,980
Amortization of discount on note payable		91,365			207,035
Stock issued for services		288,000			429,750
Stock options and warrants		-			158,505
Changes in operating assets and liabilities;
(Increase) decrease in prepaid and other current assets		50,000			152,463
(Increase) decrease in deposits/reserves		6,711			-
Increase (decrease) in accounts payable		149,021			148,150
Increase (decrease) in accrued expenses		538,801			471,017
Net Cash Used by Operating Activities		(103,170	)		(399,653	)

Cash Flows from Investing Activities
Payments for definite life intangible assets		-			(143,104	)
Net Cash Provided by Investing Activities		-			(143,104	)

Cash Flows from Financing Activities
Proceeds from the sale of common stock		18,600			380,000
Proceeds from issuance 10% Convertible notes		85,000			150,000
(Increase) decrease in bank overdraft		(136	)		136
Payment of unsecured note		-			(3,000	)
Net Cash Provided by Financing Activities		103,464			527,136

Net Increase (Decrease) in Cash and Cash Equivalents		294			(15,621	)
Cash and Cash Equivalents at Beginning of Period		179			15,800
Cash and Cash Equivalents at End of Period	$	473		$	179

Cash Paid For:
Interest	$	-		$	-
Income Taxes	$	-		$	-
Non-Cash Financing Activities:
Common stock/options issued for services and deferred compensation	$	1,224,000		$	1,185,039
Common stock issued for accounts payable and accrued expenses	$	-		$	43,500
Common stock issued for debt	$	-		$	445,000
Common stock issued for prepaid assets	$	-		$	100,000

The accompanying notes are an integral part of these financial statements

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TRYCERA FINANCIAL, INC.

Statements of Stockholders’ Deficit

For the Years Ended December 31, 2012 and 2011

	Common Stock				Paid-In			Prepaid			Accumulated
	Shares		Amount		Capital			Equity			Deficit
Balance, at December 31, 2010		455,201,446	$	455,201	$	7,287,736		$	(204,565	)	$	(8,818,195	)

Shares issued for cash pursuant to private placement memorandum at $0.05 per share		6,400,000		6,400		313,600			-			-

Shares issued for cash pursuant to private placement memorandum at $0.025 per share		800,000		800		19,200			-			-

Shares issued for cash pursuant to private placement memorandum at $0.02 per share		2,000,000		2,000		38,000			-			-

Shares issues in connection with exercise of options at $.001		14,000,001		14,000		(596,784	)		-			-

Shares issues in connection with accrued compensation at $.03						34,800			-			-

Shares issued for services at $.05						416,200			-			-

Shares issued for services at $.02						4,750			-			-

Shares issued in exchange for retirement of debt at $0.05		7,500,000		7,500		367,500			-			-

Issue of stock for relief of debt - FMV of stock in excess of debt relieved						(367,500	)		-			-

Discount on note payable		-		-		12,000			-			-

Shares issued in exchange for retirement of debt at $0.035		2,000,000		2,000		68,000			-			-

Stock compensation recognized as expense		-		-		755,289			161,980			-

Stock issued for call center assets						95,000			-			-

Net loss for the year ended December 31, 2011		-		-		-			-			(2,429,465	)

Balance, at December 31, 2011		502,901,447	$	502,901	$	8,447,791		$	(42,585	)	$	(11,247,660	)

Shares issued for cash pursuant to private placement memorandum at $0.05 per share		372,000		372		18,228			-			-

Shares issues in connection with employment agreements at $.026						900,000			(936,000	)		-

Shares issues in connection with employment agreements at $.014						268,000			-			-

Discount on note payable		-		-		6,833			-			-

Stock compensation recognized as expense		-		-		-			254,584			-

Net loss for the year ended December 31, 2012		-		-		-			-			(1,483,779	)

Balance, at December 31, 2012		559,273,447	$	559,273	$	9,640,852		$	(724,001	)	$	(12,731,439	)

The accompanying notes are an integral part of these financial statements

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 1 – CORPORATE HISTORY

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

On August 12, 2009, the Company changed its status from shell Company to operating Company. Pursuant to business operations established in the second quarter of fiscal 2010, the Company recommenced operations. The core focus of the restarted operations is marketing prepaid card products, payment reporting products and a suite of financial products and services. As a result, and at this time, the Company does not plan to reinstate its previous program management status, and will instead rely on third party processors, program managers and banks to coordinate, issue and manage prepaid card portfolios on behalf of the Company. The Company will focus on the marketing of network branded third party card programs that can adopt our payment reporting platform within their technical infrastructure. By leveraging existing card platforms and portfolios, we should be able to aggregate more payment reporting customers. The Company has also begun negotiations to engage businesses in the sales process. The targeted focus of the Company is to partner with businesses which deliver non-bank personal and financial services such as insurance agencies, micro-loan centers, rent to own, local/regional credit unions and check cashing businesses. As of the date of this report, the Company has begun negotiations for various arrangements and agreements. While new agreements are in place, it is indeterminable how restarting operations may positively or adversely affect the business. As a result, the Company, while attempting to create newfound revenue streams, will continue seeking opportunities for outside business ventures and raising funds to aid in launching new opportunities, generating organic revenues and restarting the operations.

During 2012, primary operational efforts continued to be prioritized and focused on finalizing the technical infrastructure for the planned rollout of the Company’s payment reporting engines. This effort continued as a spillover from the delays associated with funding based on signed investment commitments. Despite the ongoing technical build out, the Company continued working closely with new partners and associations in efforts to position the suite of products and services for a late 2012 calendar year launch. Key management personnel have continued entering into new distribution, strategic partnerships and operating agreements in support of the payment reporting and financial products business that is now the backbone of the payment reporting business. The Company has refocused the operational strategy on products and services while allowing any prepaid card to become a conduit for payment reporting services and other financial products currently being marketed by the Company. During 2012, the Company made progress in marketing the primary products and services in support of continued operations. In continuing with the direction outlined throughout 2011, the Company continued to focus on developing marketing partnerships to facilitate the distribution of prepaid debit cards, personal financial services and payment reporting services, all of which are designed to assist consumers in managing individual personal finances, including spending, budgeting and financial awareness. As part of the roadmap to further solidify the Company’s payment reporting efforts, the Company has revamped its operational strategy and is not currently seeking a customized network branded card program. The Company has elected to use third party providers for all card-based products and will continue to evaluate any need for a fully customized program and renewed program management status. Based on the economics related to a full custom card solution, the third party provider gives the Company flexibility and access to networks and partnerships that the Company alone could not underwrite nor fund.

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

A. Basis of Accounting

The Company uses the accrual method of accounting and has adopted a calander year-end.

B. Revenue Recognition

The Company applies the provisions of SEC Staff Accounting Bulletin("SAB") No. 104, Revenue Recognition in Financial Statements ("SAB 104"), which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. SAB 104 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to monthly contracted amounts for services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable and (iv) collectibility is reasonably assured.

With regard to events related to purchases of stored value or prepaid card products, the Company has sold no such goods at this time. When the Company begins to sell such stored value products, a customer who purchases a prepaid card product will pay an upfront acceptance fee in addition to paying some incremental value to add to the stored value card. The Company recognizes only the acceptance fee revenues, as the actual pre-funded load value is electronically transferred from our partner processor to an FDIC-insured account at our partner bank. The Company never possesses the actual pre-funded load value, which resides in a secure account at our processor before being sent to a non-Company accessible customer funding account at our bank. As a result, there is no general accounting treatment for the amounts pre-funded on the stored value cards. With respect to the acceptance fee, the Company will collect the acceptance fee from the customer, satisfying criteria (i) under SAB 104 with a persuasive evidence of an arrangement. The company does not realize the revenue from the acceptance income until the customer has activated their card. The activation of their card requires that they have passed the legal requirements of identity verification and an embossed card in their name has been mailed to their physical address and lastly the client with the card in their physical possession has called to activate their card. Moreover, the funds have been prepaid by the customer and thus as outlined in criteria (iv) the collectibility is reasonably assured. In both instances, the Company simply supplies a product or financial tool to a customer. There are no unearned income ramifications since the funds are held in an FDIC-insured account by our partner Bank and not under the control of the Company. The consumer may choose to spend or not spend the money on the stored value card, but the Company after the initial transaction has no obligation to provide future products. The Company does host a customer service center to receive and resolve any issues that may arise out of the use of the prepaid card product.

The consulting revenue the Company receives is billed after satisfying the customers' requirement and which follows the criteria of SAB 104 more specifically relating to the delivery of services rendered as outlined in criteria (ii).

C. Cash Equivalents

The Company considers all short term, highly liquid investments that are readily convertible, within three months, to known amounts as cash equivalents. The Company has $473 and $179 in cash and cash equivalents at December 31, 2012 and 2011 respectively.

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

D. Property and Equipment

Property and equipment as of December 31, 2012 and 2011 consists of the following and are recorded at cost:

	2012			2011

Furniture	$	11,062		$	11,062
Equipment		2,741			2,741

Total fixed assets		13,803			13,803
Accumulated depreciation		(4,787	)		(2,660	)

Net Fixed assets		9,016			11,143

Provision for depreciation of equipment will be computed on the straight-line method for financial reporting purposes. Depreciation is based upon estimated useful lives as follows:

Computer equipment	3 Years
Furniture & fixtures	7 Years

Maintenance, repairs, and renewals which neither materially add to the value of the equipment nor appreciably prolong its life are charged to expense as incurred.

E. Earnings (Loss) Per Share of Common Stock

The computation of earnings (loss) per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements. There are no outstanding employee stock options to be considered in the fully diluted earnings per share calculation in 2012 and 2011.

	For the Year Ended
	Dec 31,			Dec 31,
	2012			2011

Basic loss per share
Net loss (numerator)		(1,483,779	)	$	(2,429,465	)
Weighted average shares (denominator)		530,612,252			479,445,830

Per share amount		(0.00	)	$	(0.01	)

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

F. Stock-Based Compensation

In December 2004, FASB issued FASB ASC 718 (Prior authoritative literature: SFAS No. 123R, “Share-Based Payment”). FASB ASC 718 establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. FASB ASC 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. FASB ASC 718 requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued.

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of FASB ASC 505-50 (Prior authoritative literature: EITF 96-18, “Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” and EITF 00-18, “Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees”). The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. Stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable in accordance with FASB ASC 718.

G. Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles, in the United States of America, require management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

H. Fair Value of Financial Instruments

On January 1, 2008, the Company adopted FASB ASC 820-10-50, “Fair Value Measurements.” This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The carrying value of related party notes payable approximates fair value because negotiated terms and conditions are consistent with current market rates as of December 31, 2012 and 2011.

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

I. Selling, General and Administrative Costs

Selling, general and administrative expenses included the following for the years ended December 31, 2012 and 2011.

	2012		2011

Insurance	$	437	$	38,778
Rent		25,590		61,810
Investor relations		72,712		19,682
Travel and Entertainmnet		300		500
Technology costs		40,000		73,273
Outside services		352,942		757,576
General and administrative		5,397		36,517
	$	497,378	$	988,136

J. Prepaid Expenses and other Current Assets

Prepaid expenses and other current assets included the following for the years ended December 31, 2012 and 2011.

	2012		2011

Prepaid consulting services	$	25,000	$	75,000
	$	25,000	$	75,000

K. Accrued Expenses

Accrued expenses included the following for the years ended December 31, 2012 and 2011.

	2012		2011

Accrued Payroll and Compensated Absences	$	1,042,166	$	589,706
Interest payable		215,957		129,617
Program termination costs		55,000		55,000
Vacation accrual		97,836		97,835
Other		89,911		89,911
	$	1,500,870	$	962,069

L. Trade Receivables and Collections

In the collection of payments, loans or receivables, the Company applies a range of collection techniques to manage delinquent accounts. In instances where balances exceed baseline levels a third party collection agency is selected to perform a collection service. The service fees may cost the Company 25% to 40% of the face value of the debt owed and result in receiving only a small portion of monies owed. With the stored value portfolio, the Company has not implemented a specific policy. Since a majority of the transaction activity is prepaid, the Company does not often provide services and load product until funds have been provided in advance. In cases where the funds are not provided in advance, the Company will carry an open receivable balance and does reserve the right to reduce the client reserve account in lieu of payment. At December 31, 2012 and 2011 the allowance for bad and doubtful accounts was $0.

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

M. Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred income tax assets and liabilities are provided based on the difference between the financial statements and tax basis of assets and liabilities measured by the currently enacted tax rates in effect for the years in which these differences are expected to reverse. Deferred tax expense or benefit is the result of changes in deferred tax assets and liabilities.

N. Concentration

Financial instruments that potentially subject Trycera Financial, Inc. (the Company) to concentrations of credit risk consist of cash and cash equivalents. The Company places its cash and cash equivalents at well-known, quality financial institutions. At times, such cash and cash equivalents may be in excess of the FDIC insurance limit.

O. Capital Structure and Security Rights

Common Stock - The Company is authorized to issue 2,000,000,000 shares of common stock, par value $.001 per share. All common shares are equal to each other with respect to voting, and dividend rights, and are equal to each other with respect to liquidations rights.

Preferred Stock - The Company has authorization to issue 20,000,000 shares of preferred stock, par value $.001 per share. The Board of Directors will be authorized to establish the rights and preferences

of any series of the preferred shares without shareholder approval. At this time, the Board has not established a series of the preferred shares and no preferred shares have been issued.

P. Subsequent Events Evaluation

Pursuant to FASB ASC 855-10-50-1, the Company has evaluated subsequent events through the date these financial statements to be issued.

On April 10, 2014, the Company received notice from FINRA that the Company’s request for them to review and complete the Corporate Action Request of the Company to complete a Stock-Reverse at a ratio of 1:1,000 would be denied until the Company’s SEC filings were current.

On April 1, 2014, the Company entered into a two year 10% convertible note with a private party, totaling $15,000. The note can be converted into post-reverse common stock at a rate of $0.20 per share.

On March 15, 2014, the Company assigned two (2) debt items, respectively $5,361.50 and $4,598.10, to a private individual, in exchange for a convertible promissory note which can be converted into post-reverse common stock at a rate of $0.28 per share.

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

On February 24, 2014, the Company assigned a debt item totaling $14,000, to a private individual, in exchange for a convertible promissory note which can be converted into post-reverse common stock at a rate of $0.28 per share.

On February 18, 2014, the Company entered into a two year 10% convertible note with a private party, totaling $30,000. The note can be converted into post-reverse common stock at a rate of $0.20 per share.

On January 31, 2014, the Company amended the employment agreement with Carl Giese. Pursuant to the Amendment, accrued wages thru January 31, 2014, which totaled $105,000 will be exchanged for 105,000 shares of post-reverse common stock. In addition, the original stock incentive package totaling 25,000,000 shares will be replaced with a new stock incentive package totaling 2,000,000 shares of post-reverse common stock. The common stock in the new stock incentive package will vest in twelve (12) equal installments on a quarterly basis beginning April 1, 2014.

On January 31, 2014, the Company amended the employment agreement with Lisa Bilyeu. Pursuant to the Amendment, accrued wages thru January 31, 2014, which totaled $28,000 will be exchanged for 28,000 shares of post-reverse common stock. In addition, the original stock incentive package totaling 10,000,000 shares will be replaced with a new stock incentive package totaling 1,000,000 shares of post-reverse common stock. The common stock in the new stock incentive package will vest in twelve (12) equal installments on a quarterly basis beginning April 1, 2014.

On January 31, 2014, the Company amended the employment agreement with Shampa Mitra-Reddy. Pursuant to the Amendment, accrued wages thru January 31, 2014, which totaled $270,000 will be exchanged for 270,000 shares of post-reverse common stock. In addition, the original stock incentive package totaling 50,000,000 shares will be replaced with a new stock incentive package totaling 2,500,000 shares of post-reverse common stock. The common stock in the new stock incentive package will vest in twelve (12) equal installments on a quarterly basis beginning April 1, 2014.

On January 31, 2014, the Company amended the employment agreement with Hector Alvarez. Pursuant to the Amendment, accrued wages thru January 31, 2014, which totaled $322,500 will be exchanged for 322,500 shares of post-reverse common stock. In addition, the original stock incentive package totaling 50,000,000 shares will be replaced with a new stock incentive package totaling 2,000,000 shares of post-reverse common stock. The common stock in the new stock incentive package will vest in twelve (12) equal installments on a quarterly basis beginning April 1, 2014.

On January 31, 2014, the Company amended the employment agreement with Steve Rowe. Pursuant to the Amendment, accrued wages thru January 31, 2014, which totaled $105,000 will be exchanged for 105,000 shares of post-reverse common stock. In addition, the original stock incentive package totaling 25,000,000 shares will be replaced with a new stock incentive package totaling 2,000,000 shares of post-reverse common stock. The common stock in the new stock incentive package will vest in twelve (12) equal installments on a quarterly basis beginning April 1, 2014.

On January 31, 2014, the Company amended the consulting agreement with Norman Hardy. Pursuant to the Amendment, the unissued shares of the original stock incentive package totaling 10,000,000 shares will be replaced with a new stock incentive package totaling 2,500,000 shares of post-reverse common stock. The common stock in the new stock incentive package will vest in twelve (12) equal installments on a quarterly basis beginning April 1, 2014.

On January 31, 2014, the Company amended the consulting agreement with Heather Bilyeu. Pursuant to the Amendment, a new stock incentive package totaling 250,000 shares of post-reverse common stock supersedes all previous agreements. The common stock in the new stock incentive package will be issued in five installments of 50,000 shares on a quarterly basis beginning April 1, 2014.

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

On January 31, 2014, the Company amended the consulting agreement with Manishka Investments. Pursuant to the Amendment, the unexercised share option of the original stock incentive package totaling 4,000,000 shares will be replaced with a new stock incentive package totaling 250,000 shares of post-reverse common stock. The common stock in the new stock incentive package will be issued in five installments of 50,000 shares on a quarterly basis beginning April 1, 2014.

On January 24, 2014, the Company entered into a two year 10% convertible note with a private party, totaling $7,500. The note can be converted into post-reverse common stock at a rate of $0.20 per share.

On October 22, 2013, the Company entered into a six month consulting agreement with a private firm to assist the Company in the areas of investor relations, financial relations, and various market awareness programs. The main focus overall is to increase the Company’s presence in the financial communities to more easily raise the required capital to properly run the Company. Under the Consulting Agreement, the Consultant was issued 5,000,000 shares of common stock restricted under Rule 144.

On October 15, 2013, the Company filed a complaint against two former employees, Michael Nathans and Kevin Goldstein, in Orange County Superior Court, case number 30-2013-00681235-CU-BC-CJC. The complaint consists of Breaches of Contract, Civil Conspiracy-Fraud, Breach of the Implied Covenant of Good Faith and Fair Dealing, Interference with Economic Advantage, Unjust Enrichment/Restitution and Breach of Fiduciary Duty committed by both parties. The total general and special financial damages to be determined at the time of trial. Also, the Company is seeking an Injunction to restrain future conduct and reimbursement of all reasonable attorney fees for the cost of the suit.

On October 8, 2013, the Company filed a Form D with the Securities and Exchange Commission notifying the public of an anticipated convertible debt offering in the amount of $5 Million. The notes would be for 2 years and the minimum subscription is anticipated to be $50,000.

On September 23, 2013, the Company issued a private investor 500,000 shares of restricted common stock as interest payment on a $10,000 Loan which was overdue since January 31, 2013. These shares of common stock were issued under Rule 144.

On September 23, 2013, the Company issued a private investor 500,000 shares of restricted common stock for an investment of $10,000. These shares of common stock were issued under Rule 144.

On August 6, 2013, the Company entered into a two year consulting agreement with a private firm for the purpose of marketing the Company’s products and services through television, internet, and various other media outlets. Under the agreement the Consulting Firm was issued 1,000,000 shares of common stock restricted under Rule 144 for $10,000.

On July 23, 2013, the Company issued a private investor, 100,000 shares of restricted common stock as interest payment on a loan which was overdue since January 1, 2013. These shares of common stock were issued under Rule 144.

On July 23, 2013, the Company issued a private investor 500,000 shares of restricted common stock as interest payment on a $10,000 Loan which was overdue since January 31, 2013. These shares of common stock were issued under Rule 144.

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

On July 22, 2013, the Company issued its employees Hector Alvarez and Shampa Mitra-Reddy shares of common stock restricted under Rule 144, pursuant to their respective employment agreements. Mr. Alvarez was issued 38,000,000 shares and Ms. Mitra-Reddy was issued 34,000,000 shares. Of these shares 56,000,000 were earned and issuable through through the balance sheet date and are accounted for on the financial statements.

On July 2, 2013, the Company entered into new Settlement Agreements with Sagosa Capital, Ecewa Capital, Curo Capital, Hang Dang, and Luan Dang which where all former parties to the Company and had expired Settlement Agreements with the Company. Under the new Agreements reached with the above named parties, the Company paid seven thousand five hundred dollars ($7,500) as a nonrefundable deposit and agreed to make twenty four (24) additional payments of five thousand nine hundred thirty-seven dollars and fifty cents ($5,937.50). These additional payments are to begin once the Company secures a minimum investment of two hundred fifty thousand dollars within ninety days of the executed settlement agreements. The Creditor Parties listed above have the right to rescind the newly executed Settlement Agreements if the Company fails to begin the payments within ninety days. In addition to the cash payments, the Parties were granted ten year Warrants for a total of five million (5,000,000) shares at an excise price of one cent ($0.01).

On June 27, 2013, the Board of Directors, approved employment contracts for Lisa Bilyeu, Carl Giese, and Steve Rowe. Each of these full-time employment agreements is effective June 27, 2013, and is for a term of three years. Each is renewable in yearly increments unless terminated prior to expiration of a term. Under the agreements, Mr. Giese is employed as Vice President Credit Services, Mr. Rowe is employed as Vice President of Operations, and Ms. Bilyeu is employed as Administrative Assistant. The base salary for each Messrs. Giese and Rowe is $180,000 per year, payable in the month increments of $15,000. The base salary for Ms. Bilyeu is $48,000 per year, payable in the month increments of $4,000. As a signing bonus for entering into the agreements, Messrs. Giese and Rowe each received 9,000,000 shares and will each be issued 2,000,000 shares per quarter for eight (8) quarters. Ms. Bilyeu received 3,600,000 shares and will be issued 800,000 shares per quarter for eight (8) quarters. The employees are also eligible for performance bonuses and to participate in the Company’s stock option plan. Each is also entitled to participate in employee benefit plans, including health and retirement plans created hereafter.

On June 25, 2013, the Company entered into a one year consulting agreement with Heather Bilyeu for the purpose of assisting the Company market its products to various real estate agents, mortgage brokers and real estate investment organizations. As full compensation and consideration for Consultant’s services under the agreement, the Company issued the Consultant 2,500,000 shares of common stock restricted under Rule 144.

On June 21, 2013, the Company entered into a three year consulting agreement with Norman Hardy for the purpose of assisting the Company market its products to various real estate agents, mortgage brokers and real estate investment organizations. As consideration for Consultant’s services under the agreement, the Company offered a stock incentive grant consisting of 15,000,000 shares. Upon execution of the agreement, the Company issued 5,000,000 shares of common stock restricted under Rule 144. The remaining 10,000,000 shares vest quarterly over a twenty-four month period or over eight quarters during the same two year period for a total of one million two hundred fifty thousand shares per quarter.

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 3 – NEW TECHNICAL PRONOUNCEMENTS

We have reviewed accounting pronouncements issued during the past two years and have adopted any that are applicable to our company. We have determined that none had a material impact on our financial position, results of operations, or cash flows for the years ended December 31, 2012 and 2011.

NOTE 4 – RELATED PARTY TRANSACTIONS

The Company had previously agreed to reimburse Mr. Dang for the cost of health insurance during the period he served as a director of the Company. At the time of his resignation on December 31, 2008, the Company owed approximately $14,950 to Mr. Dang for these health insurance costs. These costs are still outstanding.

On or about May 14, 2008, Sagoso Capital (“Sagoso”), a company controlled by Mr. Dang, loaned $5,000 to the Company and the company issued a 10% Senior Promissory Note representing the loan (the

“Sagoso Note”) which was due and payable upon a change of control of the Company. On or about December 29, 2008, Sagoso Capital acquired the 10% Senior Promissory Notes issued by the Company to Ecewa Capital in the principal amount of $67,500 (the “Ecewa Notes”). These notes are still outstanding.

On or about May 14, 2008, a party related to Mr. Dang loaned $5,000 to the Company and the company issued a 10% Senior Promissory Note representing the loan which was due and payable upon a change of control of the Company. These notes are still outstanding.

NOTE 5 – INCOME TAXES

In September 2009, the FASB issued Accounting Standards Update (ASU) 2009-06, Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities, which modifies the guidance on uncertain tax positions in FASB Accounting Standards Codification™ (ASC or Codification) 740, Income Taxes (formerly FASB Interpretation 48, Accounting for Uncertainty in Income Taxes), as follows:

·	Provides implementation guidance that is applicable for all entities

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

The Company currently has no issues that would mandate application of any deferred tax items or expense. Net operating losses would create possible tax assets in future years. Due to the uncertainty as to the utilization of net operating loss carry forwards an evaluation allowance has been made to the extent of any tax benefit that net operating losses may generate. No provision for income taxes has been recorded due to net operating losses of $7,686,061 as of December 31, 2012 that may be offset against further taxable income. No tax benefit has been reported in the financial statements.

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 5 – INCOME TAXES (Continued)

Deferred tax assets and the valuation account as of December 31, 2012 and 2011 are as follows:

	2012			2011

Deferred tax asset:
Net operating loss carryforward	$	4,141,332		$	3,636,847
Valuation allowance		(4,141,332	)		(3,636,847	)
	$	-		$	-

The components of income tax expense are as follows:

	2012			2011

Current Federal Tax	$	-		$	-
Current State Tax		-			-
Change in NOL benefit		(504,485	)		(826,018	)
Change in allowance		504,485			826,018
	$	-		$	-

The Company has incurred losses that can be carried forward to offset future earnings if conditions of the Internal Revenue Codes are met. These losses may be offset against future taxable income through 2032.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to future use.

NOTE 6 – NOTES PAYABLE

		2012			2011

Senior Secured Notes		$	77,500		$	77,500
Note payable to entity controlled by former officer(s), of the Company, unsecured, interest at 10% originally due December 31, 2010. Currently past due.
Total Senior Secured Notes		$	77,500		$	77,500

Unsecured Notes		$	59,448		$	59,448
Note payable to former service provider, unsecured, interest at 10% originally due February 23, 2011. Currently past due.

Note payable to Vice President, unsecured, interest at 10% plus 1,000,000 shares originally due January 25, 2013. Net of discount. Currently past due.			8,432			-

Note payable to unrelated investor, unsecured, interest at 10% originally due September 4, 2014. Currently past due.			25,000			-

Long term portion	-		(25,000	)		-
Total Unsecured Notes		$	67,880		$	59,448

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011 

NOTE 6 – NOTES PAYABLE (Continued)

		2012			2011
Debt Conversion Liability
Convertible Debt Liability-Banner1		$	100,000		$	100,000
Discount Convertible debt-Banner 1			-			(2,208	)
Note payable to unrelated investor, unsecured, interest at 10% originally due March 12, 2012. Currently past due.
Note is convertible into common stock at the higher of $.05 per share or a 10% discount to the market price

Convertible Debt Liability-Banner2			100,000			100,000
Discount Convertible debt-Banner 2			-			(3,551	)
Note payable to unrelated investor, unsecured, interest at 10% originally due August 4, 2012. Currently past due.
Note is convertible into common stock at the higher of $.05 per share or a 10% discount to the market price

Convertible debt liability-Banner3			100,000			100,000
Discount Convertible debt-Banner 3			(192	)		(5,192	)
Note payable to unrelated investor, unsecured, interest at 10% originally due January 14, 2013. Currently past due.
Note is convertible into common stock at the higher of $.05 per share or a 10% discount to the market price

Convertible debt liability-Banner4			50,000			50,000
Discount Convertible debt-Banner 4			(203	)		(1,203	)
Note payable to unrelated investor, unsecured, interest at 10% originally due March 13, 2013. Currently past due.
Note is convertible into common stock at the higher of $.05 per share or a 10% discount to the market price

Convertible debt liability - JPA			62,542			62,542
Discount convertible debt-JPA			-			(27,288	)
Note payable to unrelated investor, unsecured, interest at 10% originally due November 15, 2012. Currently past due.
Note is convertible into common stock at $.001 per share

Convertible debt liability - Quest			240,000			240,000
Discount convertible debt-Quest			-			(47,671	)
Note payable to unrelated investor, unsecured, interest at 10% originally due November 15, 2012. Currently past due.
Note is convertible into common stock at $.001 per share

Convertible debt liability - Grid			10,500			10,500
Discount convertible debt-Grid			-			-
Note payable to unrelated investor, unsecured, interest at 10% originally due May 22, 2011. Currently past due.
Note is convertible into common stock at $.001 per share

Convertible debt liability - MJ Rich			50,000			-
Discount convertible debt-MJ Rich			(618	)		-
Note payable to unrelated investor, unsecured, interest at 10% due March 08, 2014. Currently past due.
Note is convertible into common stock at $.001 per share

Long term portion			(49,382	)
		$	662,647		$	575,929

Maturities of notes payable	2013	$	808,027		$	712,877
Maturities of notes payable (convertible-$49,382 and unsecured-$25,000)	2014		74,382			-
		$	882,409		$	712,877

Accrued interest on notes payable		$	215,957		$	129,617

F-19

Table of Contents

TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 7 – STOCKHOLDERS' EQUITY

During the year ended December 31, 2011, the Company issued an aggregate 9,200,000 shares of common stock at $0.02 - $0.05 pursuant to private placements. Accordingly, common stock and additional paid in capital have been charged $9,200 and $370,800 respectively.

During the year ended December 31, 2011, the Company issued an aggregate 1,200,000 shares of common stock for accrued compensation at $0.03 per share. Accordingly, common stock and additional paid in capital have been charged $1,200 and $34,800 respectively.

During the year ended December 31, 2011, the Company issued an aggregate 8,800,000 shares of common stock for services at $0.02 - $0.05 per share. Accordingly, common stock and additional paid in capital have been charged $8,800 and $420,950 respectively.

During the year ended December 31, 2011, the Company issued an aggregate 9,500,000 shares of common stock for debt at $0.001 - $0.035 per share. Accordingly, common stock and additional paid in capital have been charged $9,500 and $435,500 respectively.

During the year ended December 31, 2011, the Company issued an aggregate 14,000,001 shares of common stock in connection with options exercised related to employment agreements at $.001. Accordingly common stock has been charged $14,000 and additional paid in capital was debited $596,784 to account for previously charged stock compensation expense.

During the year ended December 31, 2011, the Company issued an aggregate 5,000,000 shares of common stock for assets at $0.02 per share. Accordingly, common stock and additional paid in capital have been charged $5,000 and $95,000 respectively.

During the year ended December 31, 2012, the Company issued an aggregate 36,000,000 shares of common stock in connection with the signing of employment agreements. Accordingly, common stock and additional paid in capital have been charged $36,000 and $900,000 respectively. The fair value of the shares has been treated as offset to equity and will be amortized over the life of the employment agreements.

During the year ended December 31, 2012, the Company issued an aggregate 20,000,000 shares of common stock in connection with the employment agreements. Accordingly, common stock and additional paid in capital have been charged $20,000 and $268,000 respectively.

During the year ended December 31, 2012, the Company issued an aggregate 372,000 shares of common stock at $0.05 pursuant to a private placement. Accordingly, common stock and additional paid in capital have been charged $372 and $18,228 respectively.

F-20

Table of Contents

TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 8 – STOCK OPTION PLAN

On May 4, 2004, the Company approved and adopted the 2004 Stock Option/Stock Issuance Plan, which allows for the Company to issue stock or grant options to purchase or receive shares of the Company's common stock. The maximum number of shares that may be optioned and sold under the plan is 250,000,000. The plan became effective with its adoption and remains in effect for ten years, however, options expire five years from grant, unless terminated earlier. Options granted under the plan vest according to terms imposed by the Plan Administrator. The Administrator may not impose a vesting schedule upon any option grant which is more restrictive than twenty percent (20%) per year vesting with the initial vesting to occur not later than one (1) year after the option grant date

The following schedule summarizes the activity during the periods ending December 31, 2012 and December 31, 2011 respectively:

	2004 Stock Plan
			Weighted
	Amount		average
	of		exercise
	shares		price

Outstanding at January 1, 2012		-	$	-
Options Granted		-		-
Options Exercised		-		-
Options Canceled/expired		-		-
Options Outstanding at December 31, 2012		-	$	-
Options Exercisable at December 31, 2012		-	$	-

	2004 Stock Plan
				Weighted
	Amount			average
	of			exercise
	shares			price

Outstanding at January 1, 2011		45,000,000		$	0.001
Options Granted		-			-
Options Exercised		(14,000,001	)		0.001
Options Canceled/expired		(30,999,999	)		0.001
Options Outstanding at December 31, 2011		-		$	-
Options Exercisable at December 31, 2011		-		$	-

The amount of stock option compensation expense was $0 and $755,290 for the years ended December 31, 2012 and 2011, respectively. The expense was calculated using the Black-Scholes option pricing model.

F-21

Table of Contents

TRYCERA FINANCIAL, INC.

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 8 – STOCK OPTION PLAN (Continued)

Employee stock options outstanding and exercisable under this plan as of December 31, 2012 and December 31, 2011 are:

December 31, 2012

Weighted

Average

Weighted

Number of

Average

Remaining

Number

Average

Range of

Options

Exercise

Contractual

of Options

Exercise

Exercise Price

Granted

Price

Life (Years)

Vested

Price

$.001 - $.001

0.000

0.0

0.000

December 31, 2011

Weighted

Average

Weighted

Number of

Average

Remaining

Number

Average

Range of

Options

Exercise

Contractual

of Options

Exercise

Exercise Price

Granted

Price

Life (Years)

Vested

Price

$.001 - $.001

0.000

0.0

0.000

NOTE 9 – GOING CONCERN

The Company has had recurring operating losses since inception and is dependent upon financing to continue operations. These factors indicate that the Company may be unable to continue in existence should immediate and short term financing options not be available. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue its existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Currently the Company has $473 on hand and few material assets. In addition, the Company has not established nor maintained a recurring source of revenues to sufficiently cover or offset any current, anticipated or planned operating costs to allow it to continue as a going concern. It is the intent of the Company to find additional capital funding and/or a profitable business venture to acquire or merge.

F-22

Attached files

Trycera Financial, Inc. Reports

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