Trycera Financial, Inc. - FORM 10-Q

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EX-31.1 - EX-31.1 - Trycera Financial, Inc.	ex31-1.htm
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EX-32.2 - EX-32.2 - Trycera Financial, Inc.	ex32-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, 2013

¨	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)

(949) 705-4480

(Registrant’s telephone number, including area code)

None

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 ¨ No x

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

Large accelerated filer o	Accelerated filer o

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

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

At June 15, 2014, there were 611,808,447 shares of the registrant’s Common Stock outstanding, par value $0.001 per share.

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TRYCERA FINANCIAL, INC.

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PART I FINANCIAL INFORMATION		PAGE

Item 1.	Financial Statements (Unaudited)	4
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Operations Results of	11

Item 3.	Quantitative and Qualitative Discussion About Market Risk	18

Item 4T.	Controls and Procedures	18


PART II OTHER INFORMATION

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 3.	Defaults Upon Senior Debt	20

Item 4.	(Removed and Reserved)	20

Item 5.	Other Information	20

Item 6.	Exhibits	20

SIGNATURE PAGE		21

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FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements and information that are based on assumptions made by management and on information currently available. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” and similar expressions, as they relate to our company or its management, are intended to identify forward-looking statements. These statements reflect management’s current view of the company concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others the following: changes in federal, state or municipal laws governing the distribution and performance of financial services; a general economic downturn; our startup phase of operations; reliance on third party processors and product suppliers; the inability to locate suitable acquisition targets; and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, estimated or expected.

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

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

Trycera Financial, Inc.

Balance Sheets

	March 31,			December 31,
	2013			2012
	(Unaudited)
Assets
Current Assets
Cash	$	958		$	473
Prepaid expenses and other current assets		12,500			25,000
Total Current Assets		13,458			25,473

Property & Equipment, net		8,484			9,016
Total Fixed Assets		8,484			9,016


Total Assets	$	21,942		$	34,489

Liabilities & Stockholders’ Deficit
Current Liabilities
Accounts payable	$	716,187		$	692,186
Accounts payable - related parties		179,565			179,565
Portfolio reserves		34,774			34,774
Accrued expenses		1,611,637			1,500,870
Unsecured notes, current maturities		69,448			67,880
Senior secured notes, current maturities		77,500			77,500
Convertible notes payable, net of discounts, current maturities		712,549			662,647

Total Current Liabilities		3,401,660			3,215,422

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

Total Liabilities		3,426,660			3,289,804

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; 567,273,447 and 559,273,447 shares issued and outstanding, respectively		567,273			559,273
Additional paid in capital		9,720,852			9,640,852
Prepaid stock compensation		(646,000	)		(724,001	)
Accumulated deficit		(13,046,843	)		(12,731,439	)
Total Stockholders’ Deficit		(3,404,718	)		(3,255,315	)
Total Liabilities & Stockholders’ Deficit	$	21,942		$	34,489

The accompanying notes are an integral part of these financial statements

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Trycera Financial, Inc.

Statements of Operations

	For the Quarter Ended
	March 31,			March 31,
	2013			2012
Revenues
Stored value	$	1,591		$	400
		1,591			400

Cost of Sales		190			221
Gross Profit (loss)		1,401			179

Expenses
Salaries and wages		90,060			67,500
Stock based compensation		88,000			-
Professional fees		9,000			11,000
General & administrative		106,450			159,461

Total Expenses		293,510			237,961

Loss from Operations		(292,109	)		(237,782	)

Other Income (Expense)
Interest expense		(23,295	)		(70,516	)
Total Other Income (Expense)		(23,295	)		(70,516	)

Loss before tax		(315,404	)		(308,298	)
Income tax		-			-
Net Loss	$	(315,404	)	$	(308,298	)

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

Weighted Average Shares		559,362,336			506,101,447

The accompanying notes are an integral part of these financial statements

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Trycera Financial, Inc.

Statements of Cash Flows

(Unaudited)

	For the Quarter Ended
	March 31,			March 31,
	2013			2012
Cash Flows from Operating Activities
Net Loss	$	(315,404	)	$	(308,298	)
Adjustments to reconcile net loss to net cash used by operations;
Depreciation and amortization		532			531
Amortization of prepaid stock compensation		78,001			22,667
Amortization of discount on note payable		2,088			50,214
Stock issued for services		88,000			-
Changes in operating assets and liabilities;
(Increase) decrease in prepaid and other current assets		12,500			12,500
(Increase) decrease in deposits/reserves		-			6,711
Increase (decrease) in accounts payable		24,001			78,999
Increase (decrease) in accrued expenses		110,767			86,903
Net Cash Used by Operating Activities		485			(49,773	)


Cash Flows from Financing Activities
(Increase) decrease in bank overdraft		-			(136	)
Proceeds from issuance of unsecured notes		-			50,000
Net Cash Provided by Financing Activities		-			49,864

Net Increase (Decrease) in Cash and Cash Equivalents		485			91
Cash and Cash Equivalents at Beginning of Period		473			179
Cash and Cash Equivalents at End of Period	$	958		$	270

Cash Paid For:
Interest	$	-		$	-
Income Taxes	$	-		$	-
Non-Cash Financing Activities:
Common stock/options issued for services and deferred compensation	$	88,000		$	1,224,000
Common stock issued for accounts payable and accrued expenses	$	-		$	-
Common stock issued for debt	$	-		$	-
Common stock issued for prepaid assets	$	-		$	-

The accompanying notes are an integral part of these financial statements

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

NOTE 1 – GENERAL

The accompanying condensed financial statements of the Company have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. These condensed financial statements reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the results of operations of the Company for the periods presented. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2012. The results of operations for the three months ended March 31, 2013, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2013.

NOTE 2 – 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 minimal cash on hand and few material assets outside key intellectual property. 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, grow revenues organically through new program launches and marketing campaigns and/or a profitable business venture to acquire or merge.

NOTE 3 – SIGNIFICANT TRANSACTIONS

In connection with employment agreements the Company recorded 8,000,000 shares for $88,000 or $.011 per share.

NOTE 4 – CONTINGENCIES

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.

On December 6, 2013, the Company appeared in person and answered fully and completely the outstanding questions for the California Department of Corporations. No further requests have been made or are expected.

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.

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In 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 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.

NOTE 5 – SUBSEQUENT EVENTS

Pursuant to FASB ASC 855-10-50-1, the Company has evaluated subsequent events through the date these financial statements to be issued. Accordingly the following material events occurred subsequent to the quarter ended March 31, 2013:

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.

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.

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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.

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 are 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.

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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.

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 64,000,000 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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Item 2. Management’s Discussion and Analysis of Financial Condition and Results ofOperations

The following discussion should be read in conjunction with our financial statements and related notes thereto as filed with the Securities and Exchange Commission.

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 2009, the Company began winding down its principal business operations and commenced a search for a new business venture. The Company has no material assets and significant liabilities. Former board members and management were unsuccessful in securing a new business venture for the Company and on January 22, 2009, transferred control of the Company to Ronald N. Vance, former company counsel, to seek for and, if possible, locate a suitable operating business venture willing to take control of the Company.

On August 12, 2009, the Company changed its status from shell Company to operating Company. Pursuant to business operations re-established in 2009, the Company restarted operations. The core focus of the restarted operations is marketing prepaid card products, payment reporting products and a suite of personal 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.

Recent Developments

For the first quarter ending March 31, 2013, all primary operational efforts have been prioritized and focused on finalizing the technical infrastructure for the planned rollout of the Company’s payment reporting engines. This effort continues as a spill over from the delays associated with the restarted operations dating back to 2009. Failures to secure sustained funding for operations have hampered operational efforts and delayed product rollouts. The shortfalls in funding are the direct result of three groups over the course of a two year period failing to deliver on promised funds under signed placement agreements. Despite working capital shortfalls and operational delays, the Company continues its ongoing technical build out, and the Company has 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. Throughout the first quarter and subsequently thereafter, the Company also engaged in signing new agreements, terminating existing agreements and restructuring deals to help ensure the viability of the entity long-term. 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. The Company has refocused away from needing to be a marketer of prepaid cards and instead prefers to align with any prepaid card issuer in efforts to develop a rapport for payment and recurring payment reporting. During the first quarter, the Company made limited progress in marketing the primary products and services in support of continued operations. In continuing with the direction outlined throughout the past two years, 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 no longer 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 piloted a similar program in the past, but without specific target or installed cardholder base, the Company is uncertain when we may anticipate launching this program in conjunction with our payment reporting product and budgeting tools.

In conjunction with continuing efforts to expand operations and generate revenue, the Company spent additional time in the first quarter 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 quarter by the Company have failed or taken longer than expected or anticipated. Capital constraints coupled with key management time constraints, increasing regulatory requirements, lengthening approval timeframes and vendor payment shortfalls and increasing legal procedures all contributed to slower than planned marketing as well as delays in generating organic revenues in the first quarter. The Company expects that organic revenues will be generated in the second half of 2013 to allow the Company to hire third parties to staff and support the program development and primary growth objectives.

Throughout the first quarter of 2013, the Company was contacted by several vendors demanding payment for prior services. The Company, as of the date of this report, is underfunded and is nearly insolvent. The financial commitments entered into in 2010 and 2011 were intended to provide improved funding over the coming quarters and was expected to allow the Company to remain focused on the core business and delivery of the payment reporting personal financial products and services. However, slow delivery of working capital and delays and misrepresentations in funding overall have resulted in the near collapse of the Company. The Company continues to negotiate with new vendors, key vendors and prior service providers. Key management personnel have accrued wages and continue to accrue wages and accept limited or partial payments for services. In addition, key management personnel are underwriting many operational expenses of the Company and are accruing those expenses as well. 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 paid, negotiated, reduced or addressed in the coming quarters. Of the major items outstanding, an area of concern is 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 as listed above for some time. Since the agreements have lapsed the Company has had intermittent contact with certain principals in the three months ending March 31, 2013. It is expected that the Company will re-engage those parties listed above in the coming quarter to arrange cash payments or alternative arrangements in order to mitigate any languishing liabilities to those particular parties.

Key Accounting Policies

Key accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. There were no changes to our key accounting policies for the quarter ended March 31, 2013.

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Results of Operations

For the three months ended March 31, 2013

In the first quarter of 2013 we were focused on the technical infrastructure and executing distribution, marketing and strategic agreements. Delays in delivering marketing and services coupled with delayed vendor payments caused us to miss the opportunity to generate any material revenues during the quarter. As a result the Company had $1,591in revenue for the quarter compared to revenue of $400 for the same quarter last year.

Revenue

Revenue from continuing operations was $1,591 and $400 for the quarters ended March 31, 2013 and 2012, respectively, representing an increase of $1,191 or effectively 297%. As previously discussed, we revised the business strategy to focus on restarting operations and take the company into financial services marketing and move away from direct program management.

Cost of Sales and Gross Profit

Cost of sales was $190 and $221 for the quarters ended March 31, 2013 and 2012. The decrease was nominal and incudes some nominal operating cost associated with the commencement of programs and operations.

The resulting gross profit was $1,401 and $179 for the quarters ended March 31, 2013 and 2012, respectively. Management expects gross profit margin to remain unpredictable and volatile as the new operations begin. Fluctuations can be anticipated due to uncertainties in accessing markets coupled with higher product costs mixed with the volatility of entering markets where products have been commoditized. Management believes that by eliminating previously high fixed processing and banking costs associated with program management, the Company can focus on improving margins by delivering organic revenues through new marketing partnerships and alliances.

Operating Expenses

Operating expenses were $293,510 and $237,961 for the quarters ended March 31, 2013 and 2012, respectively, representing an increase of $55,549. The key components of our first quarter 2013 operating expense are salaries and wages ($90,060) professional fees ($9,000), general and administrative ($106,450) and stock based compensation ($88,000).

Salaries and wages expense were $90,060 and $67,500 for the quarters ended March 31, 2013 and 2012, respectively, representing an increase of $22,560 or 33%. The Company has three full time employees, all of whom are working largely under accrued wages and non-cash compensation until such a time certain milestones are achieved or the Company has the funds to pay cash compensation or until the Company and employees mutually agree to new compensation terms.

General and administrative expenses were $106,450 and $159,461 for the quarters ended March 31, 2013 and 2012, respectively, representing a decrease of $53,011 or 33%. The decrease resulted from the decrease in outside services as the Company refocused and its efforts on the current business plan.

Net loss

We incurred net losses of $315,404 and $308,298 for the quarters ended March 31, 2013 and 2012, respectively, representing an increase in the net loss of $7,106. As we continue our general business operations, organic growth in conjunction with strategic alliances and a potential reverse acquisition or merger opportunity, we expect to improve on net losses when 2014 is compared to 2013.

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Liquidity and Capital Resources

As of March 31, 2013, cash totaled $958 as compared with $473 at December 31, 2012, resulting in a decrease of $485 in cash and cash equivalents. Working capital deficit was ($3,388,202) at March 31, 2013, as compared with working capital deficit of ($3,189,949) at December 31, 2012. This decrease in working capital was a result of using new funds and stock to fund operations and related expenses.

The Company is currently being funded through a mix of equity investments and convertible note instruments to supply working capital for operations. The Company has a substantial backlog of liabilities and will need to negotiate and reduce liabilities in order to remain on a viable business path. If vendors, agents, suppliers and third parties are unwilling to agree to terms more favorable to the Company, there is likelihood that the liabilities could materially and adversely affect day to day operations. The funds invested and committed are primarily focused on driving business growth and not specifically earmarked to extinguish large tranches of debt or the backlog of liabilities. In event that the Company is unable to mitigate the affects of the liabilities, the Company may seek any and all necessary protections afforded under various state and federal laws. The Company plans to continue to collect equity investments and debt instruments for the remainder of 2013 in order to finance continued operations and to finance potential merger and/or acquisition investments. In an event where the Company faces immediate insolvency, the Company may pursue the sale of its intellectual property, which may or may not have marketable value.

Off-Balance Sheet Arrangements

During the quarter ended March 31, 2013, we did not engage in any off-balance sheet arrangements.

Stock-Based Compensation

"On June 30, 2009, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 168, The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162. On the effective date of this standard, FASB Accounting Standards Codification™ (ASC) became the source of authoritative U.S. accounting and reporting standards for nongovernmental entities, in addition to guidance issued by the Securities and Exchange Commission (SEC). FASB ASC significantly changes the way financial statement preparers, auditors, and academics perform accounting research."

"This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. If an accounting change results from the application of this guidance, an entity should disclose the nature and reason for the change in accounting principle in their financial statements. This new standard flattens the GAAP hierarchy to two levels: one that is authoritative (in FASB ASC) and one that is non-authoritative (not in FASB ASC). Exceptions include all rules and interpretive releases of the SEC under the authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants, and certain grandfathered guidance having an effective date before March 15, 1992. This standard creates Topic 105, Generally Accepted Accounting Principles, in FASB ASC."

"FASB Statement No. 168 is the final standard that will be issued by FASB in that form. It was added to FASB ASC through Accounting Standards Update No. 2009-02 on June 30, 2009. There will no longer be, for example, accounting standards in the form of statements, staff positions, Emerging Issues Task Force (EITF) abstracts, or AICPA Accounting Statements of Position. Instead, FASB will issue Accounting Standards Updates. FASB will not consider Accounting Standards Updates as authoritative in their own right. Instead, they will serve only to update FASB ASC, provide background information about the guidance, and provide the basis for conclusions on changes made to FASB ASC."

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"FASB ASC is a major restructuring of accounting and reporting standards designed to simplify user access to all authoritative U.S. generally accepted accounting principles (GAAP) by providing the authoritative literature in a topically organized structure. FASB ASC disassembled and reassembled thousands of nongovernmental accounting pronouncements (including those of FASB, the EITF, and the AICPA) to organize them under approximately 90 topics and include all accounting standards issued by a standard setter within levels A-D of the current U.S. GAAP hierarchy. FASB ASC also includes relevant portions of authoritative content issued by the SEC, as well as selected SEC staff interpretations and administrative guidance issued by the SEC; however, FASB ASC is not the official source of SEC guidance and does not contain the entire population of SEC rules, regulations, interpretive releases, and staff guidance. Moreover, FASB ASC does not include governmental accounting standards. FASB ASC is not intended to change U.S. GAAP or any requirements of the SEC."

Subsequent Events

The following material events occurred subsequent to the quarter ended March 31, 2013:

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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 are 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.

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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.

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Item 3. 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 4T. Controls and Procedures

Controls and Procedures

Any control system, no matter how well designed and operated, can provide only reasonable (not absolute) assurance that its objectives will be met. Furthermore, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s “disclosure controls and procedures”, as such term is defined in Rules 13a — 15(e) and 15d — 15(e) of the Securities Exchange Act of 1934 (“Exchange Act”) as of the end of the period covered by the report.

Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that, as of March 31, 2013, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that (i) the information required to be disclosed by us in this Report was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

With the participation of the Company’s management, including its Chief Executive Officer and Principal Financial Officer, the Company also conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the Company’s fiscal quarter ended March 31, 2013, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Based on such evaluation, management concluded that, as of the end of the period covered by this report, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed under the caption “Risk Factors” in Part I, "Item 1. Description of Business" in our Annual Report on Form 10-K for the year ended December 31, 2011 which could materially affect our business prospects, financial condition or future results. There have been no other material changes during the three months ended March 31, 2012 to the risk factors discussed in the periodic report noted above.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

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ITEM 3. DEFAULTS UPON SENIOR DEBT

None

ITEM 4. (REMOVED AND RESERVED)

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS

Exhibit No.		Description

31.1		Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *

31.2		Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *

32.1		Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. *

32.2		Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. *

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**

* Filed herewith

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

SIGNATURE PAGE FOLLOWS

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Trycera Financial, Inc.


Date: July 3, 2014	By:	/s/ Ray A. Smith
		Ray A. Smith, President (Principal Executive Officer)


Date: July 3, 2014	By:	/s/ Ray A. Smith
		Ray A. Smith, Principal Financial Officer (Principal Financial Officer)

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Trycera Financial, Inc. Reports

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