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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 


FORM 10-K
 


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

For the fiscal year ended December 31, 2014

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

For the transition period from ________ to __________

Commission File Number: 000-30872
 
Trycera Financial, Inc.
(Exact name of Registrant as specified in its charter)

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

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 x  No o

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

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

Large Accelerated Filer  o                                                   Accelerated Filer  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 $13,353,460, 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 on December 31, 2014.

At June 1, 2015, there were 15,842,673 shares of the registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None
 
Table of Contents

PART I
 
5
ITEM 1.
5
ITEM 1A.
10
ITEM 1B.
10
ITEM 2.
10
ITEM 3.
11
ITEM 4.
11
 
 
 
PART II
 
12
ITEM 5.
12
ITEM 6.
13
ITEM 7.
13
ITEM 7A.
17
ITEM 8.
17
ITEM 9.
17
ITEM 9A.
17
ITEM 9A(T).
18
ITEM 9B. OTHER INFORMATION 18
     
PART III
 
19
ITEM 10.
19
ITEM 11.
20
ITEM 12.
23
ITEM 13.
24
ITEM 14.
25
     
PART IV
 
26
ITEM 15.
26
 
 
Forward Looking Statements

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

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

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

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

ITEM 1.  BUSINESS

Overview and Development Since the Beginning of 2009

From 2004 until 2008 the Company was in the business of developing, deploying and marketing semi-custom and customized branded prepaid and prepaid card solutions.  Due to continued losses from operations during 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 February 6, 2009, Mr. Vance appointed Ray Smith as the Company’s President/CEO and was tasked to restructure the Company and implement a new working business model.

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 2012, the Company began operations.  The core focus of the restarted operations was to market a prepaid card product coupled with a payment reporting system and a suite of financial products and services.  As a result, the Company didn’t plan on reinstating its previous program management status, and intended to rely on third party processors, program managers and banks to coordinate, issue and manage prepaid card portfolios on behalf of the Company.  The Company focused on the marketing of network branded third party card programs that could adopt the Company’s payment reporting platform within their technical infrastructure.  By leveraging existing card platforms and portfolios, we intended to aggregate more payment reporting customers. The Company worked on developing and integrating a sophisticated money management and educational portfolio to better assist consumers in navigating the financial system here in the United States.  The targeted focus of the Company has always been to partner with businesses such as mortgage companies and auto dealerships that currently have real-time credit turndowns.  These customers are prime candidates for the Company’s products and services.  Utilizing the relationships established over the years, the Company continues to feel it can generate organic revenues which will in turn help to attract investment dollars so that management can properly run the Company.

All throughout 2014, the Company continued to focus its primary operational efforts on the technical infrastructure and build out of the Live Agent auto dealer kiosk program in addition to rebranding its financial and credit services product line.  These efforts saw limited forward progress due to setbacks which occurred from the failed delivery of committed investments from several groups.  The lack of working capital and limited resources caused delays in progress.

Despite the constant delays, the Company continued to make progress on the completion of the technical build out of the newly branded product line and had limited success in its beta testing.  The Company continued working closely with existing vendors along with new potential partners and associations in efforts to get results from enrolling real consumers into the Company’s program.  Key management personnel have continued their efforts to enter into new distribution, strategic partnerships and operating agreements in support of the money management and credit management business that is now the backbone of the Company’s product line.

In continuing with the direction outlined throughout the previous 4 years, the Company continued to focus on developing marketing partnerships to facilitate the distribution of its Live Agent auto dealer kiosks and also various channels to provide the Company’s consumer financial and credit products, all of which are designed to assist consumers in managing individual personal finances, including spending, budgeting, wealth planning and credit awareness.  During the fourth quarter of 2014, the Company designed a new brand for its product line, which it now calls “Successful Habits of The Rich!™”.  This product line includes three (3) separate products we call RichMoney™, RichCredit™, and RichWealth™.

The purpose of the rebranding was to make the Company’s product line more attractive and more stream lined for consumers to utilize and understand.  The Company worked on converting all previously developed components into one (1) online web portal which consumers will more easily be able to access and utilize.  This was also a requirement for the product line to be efficiently incorporated into the kiosks.  This business model is currently being developed and beta tested and is expected to take significant time and resources to complete and launch.
 

The Company believes its current direction and strategy will be able to offer more a saleable, predictable, efficient customer acquisition model.  We believe it will also provide a more attractive revenue generating solution to strategic distribution partners and give them more of an incentive to team up with the Company.  The flexibility of working with a wide reaching portfolio program should better align interested consumers with our suite of financial tools and education.  This product line has been designed specifically to lay the groundwork for the consumers so that at a future date, the Company can offer them additional financial based products and services.

The Company’s robust system, unlike most systems out there, focuses on three areas:  Money Management (RichMoney™), Credit Management (RichCredit™), and Wealth Management (RichWealth™).  All three of these areas are closely connected and by focusing on all three, it is believed the consumer has a greater chance of reaching their financial goals in life.

The credit scoring system in the USA, commonly known as the FICO Score, focuses heavily on consumer’s on-time payments.  One missed payment seriously affects the consumer’s FICO scores which lowers their ability to obtain loans.  There is a lack of knowledge on how to properly put an effective budget together so to properly manage one’s cash and this gives little hope for a consumer to plan for his or her retirement.

Recent Developments

In further support of continued operations, the company made a number of material changes to its operations throughout the 2014 fiscal year, including:

In 2014 pursuant to employment agreements the Company issued 31,200 shares.

On January 10, 2014, the Company entered into a two (2) year consulting agreement with CrosspointNW, LLC for the purpose of assisting the Company with the deployment its LIVE Agent Auto Dealer Kiosks in up to 150 auto dealerships.  As consideration for such services, the Company will pay Consultant Twenty-Five Dollars ($25) per customer who enrolls into the Company’s financial services program thru a kiosk.

On January 24, 2014, the Company entered into a two-year 10% note with a private party, totaling $7,500.

On February 16, 2014, the Company entered into a two-year 8% promissory note with a private party, totaling $30,000.

On February 18, 2014, the Company filed Form DEF 14C with the Securities and Exchange Commission notifying them of the Company’s intent to complete a Stock-Reverse at a ratio of 1:1,000.  In addition, the Company intends to reduce its Authorized Shares from two billion (2,000,000,000) to five hundred million (500,000,000), and reduce the number of Authorized Shares in its 2004 Stock Option/Stock Issuance Plan from two hundred fifty million (250,000,000) to fifty million (50,000,000).

On February 20, 2014, the Company retained Kline Law Group, PC to represent the Company in all matters relating to the US Securities and Exchange Commission, including but not limited to, reviewing and preparing Company filings, press releases, disclosures, etc.

On February 24, 2014, the Company assigned debt totaling $14,000, to a private individual, in exchange for a two- year promissory note with an 8% simple interest rate.

On March 15, 2014, the Company assigned two (2) debt items, respectively $5,361 and $4,598 to a private individual, in exchange for a two-year 8% promissory note.

On April 1, 2014, the Company entered into a two-year 10% note with a private party, totaling $15,000.
 

On July 11, 2014, the Company entered into a two-year 10% note with a private party, totaling $8,000.

On July 28, 2014, the Company entered into a two-year 10% note with a private party, totaling $3,300.

On November 1, 2014, the Company entered into a two-year 10% note with a private party, totaling $50,000.

On December 26, 2014, the Company and all related parties agreed unanimously to cancel the Amendments to the Employment Agreements and Consulting Agreements previously reported to be amended on January 31, 2014, due to the inability of the Company to complete the Stock Reverse Split.  All parties agreed to revert back to the terms and conditions of the original agreements entered into.

On December 30, 2014, the Company filed a Provisional Patent designed to protect the Company’s proprietary and unique processes and systems used to build a consumer’s credit file and manage their finances.

Throughout all four quarters of 2014, 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 obtained.  A substantial backlog of liabilities remains on the records of the Company, but management remains confident those liabilities will be addressed in the coming quarters.  The largest outstanding liabilities were the lapsed settlement agreements with former directors Knitowski, Dang and their related parties, Dang, Ecewa, Curo and Sagoso.  The Company negotiated with these parties in the third quarter of 2013 and agreed upon a new payment plan, but the Company is currently in default.

In conjunction with continuing efforts to expand the operations, the Company’s CEO continued to spend considerable time beta testing and perfecting the newly branded product line and Live Agent auto dealer kiosk program.  The ability of the Company to deploy these kiosks in high traffic locations which have a large amount of potential consumers for the Company should significantly reduce the cost of customer acquisition and allow the Company to generate organic revenues more quickly.

The Company currently remains insolvent but is seeking financing from various sources for which there is no commitment to provide us with such financing.  The Company believes that material changes to the recent trends in revenue are expected within the next 6 to 12 months.  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.

Business of the Company

The Company operates in the money management, credit management and wealth management industry.  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 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.

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.
 

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, these restricted securities could not be resold until the following conditions were met:  the Company ceased to be a shell company; it remained subject to the Exchange Act reporting obligations; filed all required Exchange Act reports during the preceding 12 months; and at least one year had elapsed from the time the Company filed “Form 10 information” reflecting the fact that it had ceased to be a shell company.  In some circumstances, however, as a negotiated element of the transaction, the Company may agree to register such securities either at the time the transaction is consummated, under certain conditions, or at specified times thereafter.  Although the terms of such registration rights and the number of securities, if any, which may be registered cannot be predicted, it may be expected that registration of securities by the Company in these circumstances would entail substantial expense to the Company.  The issuance of substantial additional securities and their potential sale into any trading market that may develop in the Company’s securities may have a depressive effect on such market.

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

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

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

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

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

Operation of Business After Acquisition

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

Governmental Regulation

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

Competition

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 credit bureaus, credit reporting agencies, banks, financial institutions and credit repair companies.  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.
 
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, name recognition 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 four 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.

ITEM 2.  PROPERTIES

The Company entered into a one year lease on December 12, 2013 and which commenced on February 1, 2014 and was to expire on December 31, 2014.  The Company terminated this lease in August 2014 and reduced to a virtual office in an effort to reduce overhead costs.  Our administrative office and headquarters are still located at 18100 Von Karman Avenue, Suite 850, Irvine, CA 92612 and is on a month-to-month lease agreement at $350 per month.

The Company may need to 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 not 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.

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

None.
 
 
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. On March 16, 2015, the Company filed the required application along with all supplemental documentation with FINRA requesting them to review and complete the Corporate Action Request of the Company to complete a Stock-Reverse at a ratio of 1:1,000.  This Corporate Action was Approved and became Effective as of March 27, 2015. This table shows historical stock prices that do not reflect the effects of the reverse stock split.

FISCAL YEAR ENDED
DECEMBER 31, 2013
Quarter
 
High
   
Low
 
 
First
  $ 0.02     $ 0.00  
 
Second
  $ 0.01     $ 0.00  
 
Third
  $ 0.02     $ 0.00  
 
Fourth
  $ 0.02     $ 0.00  

FISCAL YEAR ENDED
DECEMBER 31, 2014
Quarter
 
High
   
Low
 
 
First
  $ 0.01     $ 0.00  
 
Second
  $ 0.00     $ 0.00  
 
Third
  $ 0.01     $ 0.00  
 
Fourth
  $ 0.05     $ 0.00  
 
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 April 15, 2015, the Company had 153 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, 2014, or in any subsequent period.  The Company does not anticipate or contemplate paying dividends on its Common Stock in the foreseeable future.  The only restrictions that limit the ability to pay dividends on common equity, or that are likely to do so in the future, are those restrictions imposed by law.

Purchases of Equity Securities

At the end of each quarter during the year ended December 31, 2014, the Company issued to its employees Amit Patel, Carl Giese, Steve Rowe, Lisa Bilyeu, and Hector Alvarez a total of 31,200 shares of milestone vested common stock restricted under Rule 144, pursuant to their respective employment agreements.  Mr. Patel was issued eight thousand (8,000) shares; Mr. Giese was issued eight thousand (8,000) shares; Mr. Rowe was issued eight thousand (8,000) shares; Ms. Bilyeu was issued three thousand two hundred (3,200) shares; and Mr. Alvarez was issued four thousand (4,000) shares.  

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 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 February 6, 2009, Mr. Vance appointed Ray Smith as the Company’s President/CEO and was tasked to restructure the Company and implement a new working business model.

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 2012, the Company began operations.  The core focus of the restarted operations was to market a prepaid card product coupled with a payment reporting system and a suite of financial products and services.  As a result, the Company didn’t plan on reinstating its previous program management status, and intended to rely on third party processors, program managers and banks to coordinate, issue and manage prepaid card portfolios on behalf of the Company.  The Company focused on the marketing of network branded third party card programs that could adopt the Company’s payment reporting platform within their technical infrastructure.  By leveraging existing card platforms and portfolios, we intended to aggregate more payment reporting customers. The Company worked on developing and integrating a sophisticated money management and educational portfolio to better assist consumers in navigating the financial system here in the United States.  The targeted focus of the Company has always been to partner with businesses such as mortgage companies and auto dealerships that currently have real-time credit turndowns.  These customers are prime candidates for the Company’s suite of products and services.  Utilizing the relationships established over the years, the Company continues to feel it can generate organic revenues which will in turn help to attract investment dollars so that management can properly run the Company.
 
All throughout 2014, the Company continued to focus its primary operational efforts on the technical infrastructure and build out of the Live Agent auto dealer kiosk program in addition to rebranding its financial and credit services product line.  These efforts saw limited forward progress due to setbacks which occurred from the failed delivery of committed investments from several groups.  The lack of working capital and limited resources caused delays in progress.

Despite the constant delays, the Company continued to make progress on the completion of the technical build out of the newly branded product line and had limited success in its beta testing.  The Company continued working closely with existing vendors along with new potential partners and associations in efforts to get results from enrolling real consumers into the Company’s program.  Key management personnel have continued their efforts to enter into new distribution, strategic partnerships and operating agreements in support of the money management and credit management business that is now the backbone of the Company’s product line.
 

In continuing with the direction outlined throughout the previous 4 years, the Company continued to focus on developing marketing partnerships to facilitate the distribution of its Live Agent auto dealer kiosks and also various channels to provide the Company’s consumer financial and credit products, all of which are designed to assist consumers in managing individual personal finances, including spending, budgeting, wealth planning and credit awareness.  During the fourth quarter of 2014, the Company designed a new brand for its product line, which it now calls “Successful Habits of The Rich!™”.  This product line includes three (3) separate products we call RichMoney™, RichCredit™, and RichWealth™.

The purpose of the rebranding was to make the Company’s product line more attractive and more stream-lined for consumers to utilize and understand.  The Company worked on converting all previously developed components into one online web portal which consumers will more easily be able to access and utilize.  This was also a requirement for the product line to be efficiently incorporated into the kiosks.  This business model is currently being developed and beta tested and is expected to take significant time and resources to complete and launch.

The Company believes its current direction and strategy will be able to offer a more saleable, predictable, efficient customer acquisition model.  We believe it will also provide a more attractive revenue generating solution to strategic distribution partners and give them more of an incentive to team up with the Company.  The flexibility of working with a wide reaching portfolio program should better align interested consumers with our suite of financial tools and education.  This product line has been designed specifically to lay the groundwork for the consumers so that at a future date, the Company can offer them additional financial based products and services.

The Company’s robust system, unlike most systems out there, focuses on three areas:  Money Management (RichMoney™), Credit Management (RichCredit™), and Wealth Management (RichWealth™).  All three of these areas are closely connected and by focusing on all three, it is believed the consumer has a greater chance of reaching their financial goals in life.

The credit scoring system in the USA, commonly known as the FICO Score, focuses heavily on consumer’s on-time payments.  One missed payment seriously affects the consumer’s FICO scores which lowers their ability to obtain loans.  There is a lack of knowledge on how to properly put an effective budget together so to properly manage one’s cash and this gives little hope for a consumer to plan for their retirement.  It is because of these factors the Company feels its product line is superior to any other program on the market.

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 stock-option compensation and warrants 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, 2014.

Results of Operations -- Year Ended December 31, 2014, versus the Year Ended December 31, 2013

In 2014, we saw revenues remain virtually flat when compared with the prior year.  The lack of revenue was attributed primarily to the lack of working capital.  To date, the Company still remains in developmental, beta-testing, prelaunch stage and re-entry into the financial services, alternative credit payment reporting and personal budgeting business.

Revenue

Revenues were generated from sales of the Company’s products which consist of money management, credit management and wealth management tools.  Revenue was $20,502 and $17,896 for the years ended December 31, 2014 and 2013, respectively, representing an increase of $2,606 or 15%.  Our 2014 and 2013 results show the commencement of our new business plan and beta testing and sales of newly designed products.
 

Cost of Sales and Gross Profit

Cost of sales was $1,274 and $4,460 for the years ended December 31, 2014 and 2013, respectively, representing an decrease of $3,186 or 71%.  The decrease was attributed to minimum program fees and expenses related to the new business operations.

The resulting gross profit was 94% and 75% for the years ended December 31, 2014 and 2013, respectively.  Management expects its strategic relationships which it established and are being developed over time, to have a positive impact on the underlying gross profit margin.  This can only be determined by evaluating the results over time.
 
Operating expenses

Operating expenses were $754,726 and $1,547,757 for the years ended December 31, 2014 and 2013, respectively, representing a decrease of $793,031 or 51%. The major components of operating expense are salaries and wages (75%). Other selling, general and administrative (17%), and Professional fees (8%) for 2014.  A material amount of the operating expenses for the year ended December 31, 2014 have been accrued and continue to be unpaid or paid in small increments.

Salaries and wages expense was $565,558 and $1,300,976 for the years ended December 31, 2014 and 2013, respectively, representing an decrease of $735,418 or 57%. The decrease resulted from the decreased number and value of employment agreements in force for the employees and officers of the Company.

Other selling, general and administrative expense was $125,391 and $149,421 for the years ended December 31, 2014 and 2013, respectively, representing a decrease $24,030 or 16%. 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 2014 fiscal year.

Professional fees and expenses were $63,777 and $97,360 for the years ended December 31, 2014 and 2013, respectively, representing an decrease of $33,583 or 34%.  The decrease is due to reduced audit and legal fees incurred.

Other income (expense)

Other income (expense) was ($133,229) and ($89,462) for the years ended December 31, 2014 and 2013, respectively.  The main component of other expense is the financing costs which resulted from notes payable.  In addition, the Company had derivative liability expenses of $30,000 and $70,000 for 2014 and 2013, respectively, and a gain on extinguishment of debt of $72,440, in 2013, which related to a debt settlement agreement with a former director.

Net loss

We incurred net losses of $868,727 and $1,623,783 for the years ended December 31, 2014 and 2013, respectively.

Liquidity and Capital Resources

As of December 31, 2014, cash totaled $0 as compared with $4,031 of cash at December 31, 2013, resulting in a decrease of $4,031 in cash and cash equivalents.  The decrease in cash and cash equivalents was attributed to the nature of winding up the primary business and seeking a strategic alternative and then subsequently commencing the new business plan coupled with the necessity of accruing most all expenses in lieu of paying for them as incurred.

For the year ended December 31, 2014, we used $142,409 of cash in operations.  For the comparable period in the prior year we used $9,142 of cash in operations.

Cash provided from financing activities was $138,378.  The Company raised $138,030 under debt agreements. For the comparable period in the prior year we obtained $12,700 from financing activities, which consisted solely of the issuance of stock netted with note repayments. 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.

Working capital deficit was ($4,184,938) at December 31, 2014, as compared with working capital of ($4,017,969) at December 31, 2013.  This decrease in working capital was a result of amortization of prepaid stock – consultants and an increase in the derivative liability, as there were no additional material variances in current assets or current liabilities at December 31, 2014 as compared to December 31, 2013.
 
 
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, 2014, we did not engage in any off-balance sheet arrangements.

Stock-Based Compensation

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

Subsequent Events

The following material events occurred subsequent to the year ended December 31, 2014:

On May 7, 2015, the Company issued to a private party One Hundred Twenty Five Thousand (125,000) shares of Restricted Common Stock at Three Dollars ($3.00) per share for Three Hundred Seventy Five Thousand Dollars ($375,000).

On April 28, 2015, the Company issued to its legal counsel Fifty Thousand (50,000) shares of Restricted Common Stock for services.

On April 14, 2015, the Company received notice of conversion and agreed to convert $37,500 of the Banner-1 Note from March 2010 into Seven Hundred Fifty Thousand (750,000) post-split shares of Common Stock at a conversion price of Five Cents ($0.05).
 

On April 14, 2015, the Company received notice of conversion and agreed to convert $37,500 of the MJ Rich Note from March 2012 into Seven Hundred Fifty Thousand (750,000) post-split shares of Common Stock at a conversion price of Five Cents ($0.05).

On April 6, 2015, the Company replaced the existing Employment Agreement for its President/CEO, Ray A. Smith with a new Employment Agreement.  The terms of the new agreement are for a period Five (5) years, renewable in two (2) year increments, and includes a Stock Incentive Compensation package consisting of Thirteen Million Five Hundred Thousand (13,500,000) post-split shares of Restricted Common Stock, which were issued upon execution of the agreement, and a salary of Twenty Thousand Dollars ($20,000) per month beginning on January 1, 2016.

On March 16, 2015, the Company filed the required application along with all supplemental documentation with FINRA requesting them to review and complete the Corporate Action Request of the Company to complete a Stock-Reverse at a ratio of 1:1,000.  This Corporate Action was Approved and became Effective as of March 27, 2015.

On January 8, 2015, the Company’s Board of Directors accepted the resignation of its Director Hector Alvarez and his appointed replacement Norman Hardy.

On January 8, 2015, the Company’s Board of Directors accepted the resignation of its Officers Steve Rowe and Hector Alvarez who indicated they wanted to freely pursue other interests.

Off-Balance Sheet Arrangements

During the years ended December 31, 2014 and 2013, we did not engage in any off-balance sheet arrangements.

Recent Accounting 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, 2014 and 2013.  

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

There have been no changes in or disagreements with accountants reportable pursuant to this item.
 
ITEM 9A.  CONTROLS AND PROCEDURES

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

ITEM 9A(T).  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

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

Changes in internal control over financial reporting

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

Management’s report on internal control over financial reporting

Our management consists of Ray A. Smith, our Chief Executive Officer (“CEO”), and 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.

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, 2014.

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, 2014.
 
 
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)
 
Term
 
 
Employment Background
Matt Richards
 
52
 
Director
 
2010 - Current
 
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
 
43
 
President and Chief Executive Officer / Director
 
2009 - Current
 
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 was 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
 
39
 
VP of Marketing / Director
 
2012 - Jan 8, 2015
 
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
 
43
 
VP of Biz Dev/General Counsel
 
2012 - Current
 
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.
Carl Giese
 
64
 
VP of Credit Services
 
2013 - Current
 
Mr. Giese has 24 years of experience with an "insider" perspective on REO acquisition nationwide as well as senior contacts within federal agencies and private institutions. Specializing in working with Community Stabilization groups, land banks and cities, Government Sponsored Enterprise; and banks and asset groups his efforts are focused on sourcing, maintaining and networking relationships nationwide.
Steve Rowe
 
52
 
VP of Operations
 
2013 - Jan 8, 2015
 
Mr. Rowe has over 25 years of experience in sales and marketing. During his tenure in the industry, he led strategic marketing, product development and sales events and creative services. His leadership and knowledge of all aspects of the business particularly in marketing and fulfillment ensured brand credibility and ease of rapid expansion.
Norm Hardy
 
37
 
Director
 
Jan 8, 2015 - Current
 
Mr. Norman Hardy has been an entrepreneur and a leader in his community for over twenty years. At the age of 22 he began his own construction and concrete business which employed up to 20 employees. In just a few short years, his company became the leading concrete company in the Portland, OR and surrounding area. Norman owned and operated this business until 2007when he decided to sell it due to the decline in the home building industry.
 
 
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, 2014.

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, 2014 and 2013:
 
Name &
Principal Position
 
Year
 
Salary ($)
    Bonus
($)
    Stock Awards
($)
    Option Awards
($)
    All Other Compensation
($)
   
Total
($)
 
                                         
Ray A. Smith  
2014
  $ 0 (1)     0       0       0     $ 0     $ 0  
President/CEO  
2013
  $ 240,000 (1)     0       0       0     $ 0     $ 240,000  
                                                     
Hector Alvarez  
2014
  $ 0 (1)     0       0       0     $ 0     $ 0  
VP of Sales  
2013
  $ 180,000 (1)     0       0       0     $ 0     $ 180,000  
                                                     
Shampa Mitra-Reddy
 
2014
  $ 0 (1)     0       0       0     $ 0     $ 0  
VP of Biz Dev
 
2013
  $ 180,000 (1)     0       0       0     $ 0     $ 180,000  
                                                     
Carl Giese  
2014
  $ 0 (1)     0       0       0     $ 0     $ 0  
VP of Sales  
2013
  $ 90,000 (1)     0       0       0     $ 0     $ 90,000  
                                                     
Steve Rowe
 
2014
  $ 0 (1)     0       0       0     $ 0     $ 0  
VP of Biz Dev
 
2013
  $ 90,000 (1)     0       0       0     $ 0     $ 90,000  
 
(1)  
The salaries of all employees were accrued through 2013 and furloughed during 2014 as a result of limited working capital.
 
 
Equity Awards

The following table sets forth certain information concerning unexercised options for the named parties that were outstanding as of December 31, 2014:

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
($)
     
0
     
0
               
     
0
     
0
               
 
On May 11, 2004, our Board of Directors adopted the 2004 Stock Option/Stock Issuance Plan.  Our shareholders approved the plan effective June 14, 2004.  The purpose of the plan is to provide eligible persons an opportunity to acquire a proprietary interest in our company and as an incentive to remain in the service of the company.  The Plan was updated on Jun 7, 2007 to include more shares of common stock.

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

The plan was administered by our Board of Directors.  Participants in the plan were to be selected by the plan administrator which was our Compensation Committee.  The persons eligible to participate in the plan were 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 was in effect until all of the stock available for grant or issuance had been acquired through exercise of options or grants of shares, or until May 1, 2014, whichever was earlier.  This plan has expired and the Company may decide at a future date to implement a new plan.
 
Stock option awards under the plan consist of nonstatutory stock options (NSOs) and incentive stock options (ISOs).  ISOs may be granted only to employees of our company or one of its subsidiaries.

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

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

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

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

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

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

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 Alvarez and Smith, whose total compensation is set forth in the Summary Compensation Table above, for the last fiscal year ended December 31, 2014:

Name
 
Option awards(1)
($)
   
All other compensation
($)
   
Total
($)
 
Matthew Richards (1)
 
$
0
     
0
     
0
 
Total
 
$
0
     
0
     
0
 

(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.
 
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.  To date, no arrangements have been set.
 

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 May 15, 2015, of (i) each person who is known to us to be the beneficial owner of more than 5 percent of the 15,842,673 shares of our Common Stock currently issued and outstanding; (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
   
13,691,000
 
 
 
     
86.42
 
 
 
%
 
 
 
                 
Shampa Mitra-Reddy
18100 Von Karman Ave
Suite 850
Irvine, CA 92612
   
50,000
 
 
 
     
0.32
 
 
 
%
 
 
 
                 
Carl Giese
18100 Von Karman Ave
Suite 850
Irvine, CA 92612
   
21,000
 
 
 
     
0.13
 
 
%
 
 
 
                 
Matthew Richards
18100 Von Karman Ave
Suite 850
Irvine, CA 92612
   
500
 
 
 
     
0.00
 
 
 
%
 
 
 
                 
Norman Hardy
18100 Von Karman Ave
Suite 850
Irvine, CA 92612
   
5,000
 
 
 
     
0.00
 
 
 
%
 
 
 
                 
Executive Officers and
Directors as a Group
(4 Person)
   
13,767,500
 
 
     
86.9
 
 
%
 
 

Change of Control

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

Equity Compensation Plan Information

The following table sets forth as of the fiscal year ended December 31, 2014, 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

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 related to the Company and had expired Settlement Agreements with the Company for various unpaid accruals and notes payable.  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 were to begin once the Company secured a minimum investment of two hundred fifty thousand dollars within ninety days of the executed settlement agreements.  The Creditor Parties listed above had the right to rescind the newly executed Settlement Agreements if the Company failed to begin the payments within ninety days.  The Company is still seeking the $250,000 investment and the Creditor Parties have not yet rescinded.  In addition to the cash payments, the Parties were granted ten year Warrants for a total of five thousand shares at an excise price of ten dollars.
 
The Company has a $10,000 unsecured promissory note with its Vice President. The note accrues 10% interest and was originally due January 25, 2013.
At December 31, 2014 and 2013, the Company had accounts payable with related parties totaling $179,565, which consisted of accrued consulting fees and expenses.

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, P.C. (“PSH”) served as our independent registered public accounting firm for the fiscal years ended December 31, 2014 and 2013. The following fees were paid to our independent registered public accounting firm for services rendered during our last two fiscal years:
 
Audit Fees
 
The aggregate fees billed for professional services rendered by our principal accountant for the audit of our annual financial statements, review of financial statements included in the quarterly reports and other fees that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2014 and 2013 were $3,000 and $40,000, 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, 2014 and 2013.

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, 2014 and 2013, 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, 2014 and 2013.

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.
 

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, 2014 and 2013
Statements of Operations for the years ended December 31, 2014 and 2013
Statements of Stockholders’ Equity for the years ended December 31, 2014 and 2013
Statements of Cash Flows for the years ended December 31, 2014 and 2013
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
       
X
31.2
       
X
32.1
       
X
32.2
       
X
101.INS
XBRL Instance Document
        X
101.SCH
XBRL Taxonomy Extension Schema Document
        X
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
        X
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
        X
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
        X
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
        X
*Management contract, or compensatory plan or arrangement required to be filed as an exhibit.

Signature Page Follows
 
 
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 1, 2015
By:
/s/ Ray A. Smith
   
Ray A. Smith, President

 
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 1, 2015
 
/s/ Ray A. Smith
   
Ray A. Smith, President (Principal Executive Officer)
     
Date: June 1, 2015
 
/s/ Ray A. Smith
   
Ray A. Smith, PFO (Principal Financial and Accounting Officer)
     
Date: June 1, 2015
 
/s/ Matt Richards
   
Matt Richards, Director
     
Date: June 1, 2015
 
/s/ Norman Hardy
   
Norman Hardy, Director
 

Financial Statements











TRYCERA FINANCIAL, INC










For the years ended December 31, 2014 and 2013
 
 
 
TRYCERA FINANCIAL, INC.
 
Table of Contents

For the years ended December 31, 2014 and 2013
 
 
 
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL CORPORATION
1466 N. HIGHWAY 89 STE. 230
FARMINGTON, UTAH  84025 
(801) 447-9572     FAX (801) 447-9578

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Trycera Financial, Inc.
Irvine, CA

We have audited the accompanying balance sheets of Trycera Financial, Inc. (the Company) as of December 31, 2014 and 2013 and the related statements of operations, stockholders' equity (deficit) and cash flows for the years then ended.  The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2014 and 2013 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming Trycera Financial, Inc. will continue as a going concern. As discussed in Note 10 to the financial statements, Trycera Financial, Inc. has incurred losses since its inception, has a working capital deficit and has not yet established profitable operations.  These factors raise substantial doubt about the ability of the Company to continue as a going concern.  Management’s plans in regards to these matters are also described in Note 10.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

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


PRITCHETT, SILER & HARDY, P.C.

Farmington, Utah
May 29, 2015
 
 
TRYCERA FINANCIAL, INC.
Balance Sheets
 
   
December 31,
   
December 31,
 
   
2014
   
2013
 
Assets
           
Current Assets
           
Cash
 
$
-
   
$
4,031
 
Prepaid expenses and other current assets
   
9,025
     
81,446
 
Total Current Assets
   
9,025
     
85,477
 
                 
Property & Equipment, net
   
4,759
     
6,888
 
Total Fixed Assets
   
4,759
     
6,888
 
                 
                 
Total Assets
 
$
13,784
   
$
92,365
 
                 
Liabilities & Stockholders’ Deficit
               
Current Liabilities
               
Bank overdraft
 
$
348
   
$
-
 
Accounts payable
   
749,666
     
758,983
 
Accounts payable - related parties
   
179,565
     
179,565
 
Portfolio reserves
   
34,774
     
34,774
 
Accrued expenses
   
2,180,765
     
2,123,689
 
Debt settlement liability, net
   
141,355
     
129,063
 
Derivative liability
   
100,000
     
70,000
 
Unsecured notes payable, current maturities
   
94,448
     
94,448
 
Convertible notes payable, net of discounts, current maturities
   
713,042
     
712,924
 
                 
Total Current Liabilities
   
4,193,963
     
4,103,446
 
                 
Long-term Liabilities
               
Unsecured notes, less current maturities
   
138,030
     
-
 
Total Long-term Liabilities
   
138,030
     
-
 
                 
Total Liabilities
   
4,331,993
     
4,103,446
 
                 
Stockholders’ Deficit
               
                 
Preferred stock, 20,000,000 shares authorized,
 $.001 par value; none issued and outstanding
   
-
     
-
 
Common stock, 500,000,000 shares authorized at
 $.001 par value; 667,673 and 636,473 shares
 issued and outstanding, respectively
   
668
     
637
 
Additional paid-in capital
   
11,086,696
     
10,891,848
 
Prepaid stock - employees
   
(181,624
)
   
(548,344
)
Accumulated deficit
   
(15,223,949
)
   
(14,355,222
)
Total Stockholders’ Deficit
   
(4,318,209
)
   
(4,011,081
)
Total Liabilities & Stockholders’ Deficit
 
$
13,784
   
$
92,365
 
 
The accompanying notes are an integral part of these financial statements.
Effects of the 1 for 1,000 reverse stock split effective March 27, 2015 have been retroactively applied to all periods presented.
 

TRYCERA FINANCIAL, INC.
Statements of Operations

   
For the Year Ended
 
   
December 31,
   
December 31,
 
   
2014
   
2013
 
             
Revenues
  $ 20,502     $ 17,896  
      20,502       17,896  
                 
Cost of Sales
    1,274       4,460  
 Gross Profit
    19,228       13,436  
                 
Expenses
               
Salaries and wages
    565,558       1,300,976  
Professional fees
    63,777       97,360  
Other selling, general and administrative
    125,391       149,421  
                 
Total Expenses
    754,726       1,547,757  
                 
Loss from Operations
    (735,498 )     (1,534,321 )
                 
Other Income (Expense)
               
Derivative liability loss
    (30,000 )     (70,000 )
Gain on extinguishment of debt
    -       72,440  
Interest expense
    (103,229 )     (91,902 )
Total Other Income (Expense)
    (133,229 )     (89,462 )
                 
Loss before tax
    (868,727 )     (1,623,783 )
Income tax
    -       -  
Net Loss
  $ (868,727 )   $ (1,623,783 )
                 
Basic loss Per Share:
               
Loss per share
  $ (1.33 )   $ (2.74 )
Net Loss Per Share
  $ (1.33 )   $ (2.74 )
                 
Weighted Average Shares
   
651,717
      592,529  
 
The accompanying notes are an integral part of these financial statements.
Effects of the 1 for 1,000 reverse stock split effective March 27, 2015 have been retroactively applied to all periods presented.

 
TRYCERA FINANCIAL, INC.
Statements of Cash Flows
 
   
For the Year Ended
 
   
December 31,
   
December 31,
 
   
2014
   
2013
 
Cash Flows from Operating Activities
           
Net Loss
 
$
(868,727
)
 
$
(1,623,783
)
Adjustments to reconcile net loss to net cash
 used by operations;
               
Depreciation and amortization
   
2,129
     
2,128
 
Amortization of prepaid stock – consultants
   
72,421
     
72,354
 
Amortization of prepaid stock – employees
   
366,720
     
339,817
 
Amortization of discount on note payable
   
12,410
     
8,609
 
Gain on extinguishment of debt
   
-
     
(72,440)
 
Derivative liability loss
   
30,000
     
70,000
 
Stock issued for services
   
194,879
     
379,200
 
Changes in operating assets and liabilities;
               
Increase (decrease) in accounts payable
   
(9,317
)
   
192,883
 
Increase in accrued expenses
   
57,076
     
622,090
 
Net Cash Used by Operating Activities
   
(142,409
)
   
(9,142
)
                 
Cash Flows from Investing Activities
   
-
     
-
 
                 
Cash Flows from Financing Activities
               
Proceeds from the sale of common stock
   
-
     
20,200
 
Note repayments
   
-
     
(7,500)
 
Proceeds from convertible notes
   
138,030
     
-
 
Increase in bank overdraft
   
348
     
-
 
Net Cash Provided by Financing Activities
   
138,378
     
12,700
 
                 
Net Increase (Decrease) in Cash and Cash Equivalents
   
(4,031
)
   
3,558
 
Cash and Cash Equivalents at Beginning of Period
   
4,031
     
473
 
Cash and Cash Equivalents at End of Period
 
$
-
   
$
4,031
 
                 
Cash Paid For:
               
Interest
 
$
-
   
$
-
 
Income Taxes
 
$
-
   
$
-
 
Non-Cash Investing and Financing Activities:
 
$
-
   
$
-
 
 
The accompanying notes are an integral part of these financial statements.
Effects of the 1 for 1,000 reverse stock split effective March 27, 2015 have been retroactively applied to all periods presented.
 
 
TRYCERA FINANCIAL, INC. 
Statements of Changes in Stockholders’ Deficit
For the Years Ended December 31, 2014 and 2013

   
Common Stock
   
Paid-In
   
Prepaid
   
Accumulated
       
   
Shares
   
Amount
   
Capital
   
Equity
   
Deficit
    Total  
                                     
Balance, at December 31, 2012
    559,273     $ 559     $ 10,199,566     $ (724,001 )   $ (12,731,439 )     (3,255,315 )
                                                 
Shares issued for cash pursuant to private placement memorandum at $20 per share
    500       1       9,999       -       -       10,000  
                                                 
Shares issued for cash pursuant to private placement memorandum at $10 per share
    1,000       1       9,999       -       -       10,000  
                                                 
Shares issues in connection with employment agreements at $6 per share
    63,200       63       543,297       (164,160 )     -       379,200  
                                                 
Issuance of prepaid stock - consultants
    12,500       13       128,987       -       -       129,000  
                                                 
Amortization of prepaid stock - employees
    -       -       -       339,817       -       339,817  
                                                 
Net loss for the year ended December 31, 2013
    -       -       -       -       (1,623,783 )     (1,623,783 )
                                                 
Balance,  at December 31, 2013
    636,473     $ 637     $ 10,891,848     $ (548,344 )   $ (14,355,222 )     (4,011,081 )
                                                 
Shares issued in connection with employment agreements at $6 per share
    31,200       31       194,848       -       -       194,879  
                                                 
Amortization of prepaid stock - employees
    -       -       -       366,720       -       366,720  
                                                 
Net loss for the year ended December 31, 2014
    -       -       -       -       (868,727 )    
(868,727
)
                                                 
Balance,  at December 31, 2014
    667,673     $ 668     $ 11,086,696     $ (181,624 )   $ (15,223,949 )     (4,318,209 )
 
The accompanying notes are an integral part of these financial statements.
Effects of the 1 for 1,000 reverse stock split effective March 27, 2015 have been retroactively applied to all periods presented.
 
 
TRYCERA FINANCIAL, INC.
Notes to Financial Statements
December 31, 2014 and 2013
 
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, the Company 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 2014, 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.   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 and 2013, the Company made progress in marketing the primary products and services in support of continued operations.  In continuing with the direction outlined throughout 2011 - 2013, 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.


TRYCERA FINANCIAL, INC.
Notes to Financial Statements
December 31, 2014 and 2013
 
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

A.   Basis of Accounting

The Company uses the accrual method of accounting and has adopted a calendar 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.

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 $0 and $4,031 in cash and cash equivalents at December 31, 2014 and 2013 respectively.
 
D.   Property and Equipment
 
Property and equipment as of December 31, 2014 and 2013 consists of the following and are recorded at cost:
 
   
2014
   
2013
 
             
Furniture
  $ 11,062     $ 11,062  
Equipment
    2,741       2,741  
                 
Total fixed assets
    13,803       13,803  
Accumulated depreciation
    (9,044 )     (6,915 )
                 
Net Fixed assets
    4,759       6,888  
 
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.
 
 
TRYCERA FINANCIAL, INC.
Notes to Financial Statements
December 31, 2014 and 2013

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

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, and warrants issued in settlement of debt (NOTE 5) and convertible notes payable (NOTE 7) have not been considered in the fully diluted earnings per share calculation for 2014 and 2013, as their effect would be anti-dilutive. All per-share amounts and common shares outstanding for all periods reflect the Company’s 1-for-1000 reverse stock split, which was effective March 27, 2015.
 
   
For the Year Ended
 
   
December 31,
   
December 31,
 
   
2014
   
2013
 
             
Basic loss per share
           
Net loss (numerator)
 
$
(868,727 )   $ (1,623,783 )
Weighted average shares (denominator)
    651,717       592,529  
                 
Per share amount
 
$
(1.33 )   $ (2.74 )
 
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.
 
 
TRYCERA FINANCIAL, INC.
Notes to Financial Statements
December 31, 2014 and 2013
 
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
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, 2014 and 2013.  The derivative liability resulting from warrants with contingent exercise prices issued in connection with the debt settlement liability (NOTE 5) is revalued on reporting dates using the Black-Scholes Option Pricing Model, which uses quoted stock prices as one of the inputs.

I.   Selling, General and Administrative Costs

Selling, general and administrative expenses included the following for the years ended December 31, 2014 and 2013.

   
2014
   
2013
 
             
Rent
  $ 27,927     $ 2,356  
Investor relations
    1,869       1,870  
Travel and Entertainment
    12,820       1,204  
Technology costs
    2,096       55,000  
Amortization of prepaid stock - consultants
    72,421       72,354  
Other general and administrative
    8,258      
16,637
 
    $ 125,391     $ 149,421  
 
 
F-11

 
TRYCERA FINANCIAL, INC.
Notes to Financial Statements
December 31, 2014 and 2013

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
J.   Prepaid Expenses and other Current Assets

Prepaid expenses and other current assets included the following for the years ended December 31, 2014 and 2013.
 
   
2014
   
2013
 
             
Prepaid stock - consultants
  $ 9,025     $ 81,446  
    $ 9,025     $ 81,446  
 
K.   Accrued Expenses

Accrued expenses included the following for the years ended December 31, 2014 and 2013.
 
   
2014
   
2013
 
             
Accrued Payroll and Compensated Absences
  $ 1,670,772     $ 1,684,567  
Interest payable
    349,085       258,265  
Program termination costs
    55,000       55,000  
Vacation accrual
    97,835       97,835  
Other
    8,073       28,022  
    $ 2,180,765     $ 2,123,689  
 
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. 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, 2014 and 2013 the allowance for bad and doubtful accounts was $0.

M.  Income Taxes

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

N.   Concentration

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

 
TRYCERA FINANCIAL, INC.
Notes to Financial Statements
December 31, 2014 and 2013
 
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

O.   Capital Structure and Security Rights

Common Stock - The Company is authorized to issue 500,000,000 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 May 7, 2015, the Company issued to a private party One Hundred Twenty Five Thousand (125,000) shares of Restricted Common Stock at Three Dollars ($3.00) per share for Three Hundred Seventy Five Thousand Dollars ($375,000).

On April 28, 2015, the Company issued to its legal council, Fifty Thousand (50,000) shares of Restricted Common Stock for services.

On April 14, 2015, the Company received notice of conversion and agreed to convert $37,500 of the Banner-1 Note from March 2010 into Seven Hundred Fifty Thousand (750,000) shares of Common Stock at a conversion price of Five Cents ($0.05).

On April 14, 2015, the Company received notice of conversion and agreed to convert $37,500 of the MJ Rich Note from March 2012 into Seven Hundred Fifty Thousand (750,000) shares of Common Stock at a conversion price of Five Cents ($0.05).

On April 6, 2015, the Company replaced the existing Employment Agreement for its President/CEO, Ray A. Smith with a new Employment Agreement.  The terms of the new agreement are for a period Five (5) years, renewable in two (2) year increments, and includes a Stock Incentive Compensation package consisting of Thirteen Million Five Hundred Thousand (13,500,000) shares of Restricted Common Stock which were issued upon execution of the agreement, and a salary of Twenty Thousand Dollars ($20,000) per month beginning on January 1, 2016.

On March 16, 2015, the Company filed the required application along with all supplemental documentation with FINRA requesting them to review and complete the Corporate Action Request of the Company to complete a Stock-Reverse at a ratio of 1:1,000.  This Corporate Action was Approved and became Effective as of March 27, 2015.

On January 8, 2015, the Company’s Board of Directors accepted the resignation of its Director Hector Alvarez and his appointed replacement Norman Hardy.

On January 8, 2015, the Company’s Board of Directors accepted the resignation of its Officers Steve Rowe and Hector Alvarez who indicated they wanted to freely pursue other interests.
 
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, 2014 and 2013.
 
 
TRYCERA FINANCIAL, INC.
Notes to Financial Statements
December 31, 2014 and 2013
 
NOTE 4 RELATED PARTY TRANSACTIONS

The Company has a $10,000 unsecured promissory note with its Vice President.  See NOTE 7 for terms.

At December 31, 2014 and 2013, the Company had accounts payable with related parties totaling $179,565, which consisted of accrued consulting fees and expenses.

NOTE 5   DEBT SETTLEMENT LIABILITY

On July 2, 2013, the Company entered into new Settlement Agreements (the Agreements) with parties formerly related to the Company (the Creditor Parties) who were owed various accounts payable, accrued expenses, and notes payable pursuant to agreements and settlements previously executed.  Under the Agreements, the Company paid $7,500 as a nonrefundable deposit and agreed to make 24 additional monthly payments of $5,938, which results in total cash requirement of $155,000.  These additional payments were to begin once the Company secured a minimum investment of $250,000 within 90 days of the executed settlement agreements.  The Creditor Parties had the right to rescind the Agreements if the Company failed to procure the $250,000 investment within 90 days.  The Company is still seeking the investment, and the Creditor parties have not yet rescinded.

Interest at 10% has been imputed on the $155,000 cash requirement in the amount of $24,583, which has been recorded as a debt discount to be amortized to interest expense over the 24-month payment period.  During the years ended December 31, 2014 and 2013, the Company recognized $12,292 and $6,146, respectively, in interest expense, which together with the initial $7,500 payment, resulted in a net settlement liability balance of $141,355 and $129,063 at December 31, 2014 and 2013, respectively.
 
In addition to the cash payments, the Creditor Parties were granted 10-year warrants for a total of 5,000 shares at an initial excise price of $10.  However, as long as the warrants are outstanding, if the Company issues, sells, grants, or agrees to issue, sell, or grant any shares of common stock, options, warrants, or debt that is convertible to common stock, at a price per share that is less than the exercise price, the exercise price will be reduced accordingly.  This ratchet or round-down provision creates a derivative liability pursuant to EITF 07-05 Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock.  To value the derivative liability, the Company utilized the Black-Scholes Option Pricing Model, which considered the Company’s quoted stock prices over a 10-year look-back period (volatility), risk-free 10-year US Treasury rates, the stated exercise price, and the Company’s quoted stock price on the issuance date (and on quarterly and annual reporting dates for periodic revaluation).  No dividend yield is anticipated over the term of the warrants.  The resulting change in derivative liability with corresponding expense was $30,000 and $70,000 for the years ended December 31, 2014 and 2013, respectively.  Black-Scholes inputs were as follows:

   
December 31, 2014
   
December 31, 2013
 
             
Volatility
   
607.42
%
   
585.93
%
Exercise price
 
$
10
   
$
10
 
Risk-free rate
   
1.97
%
   
3.04
%
Quoted stock price
 
$
20
   
$
14
 
Total warrant value
 
$
100,000
   
$
70,000
 
                                                                                                                               
The difference between the book value of the original debt and the fair value of the Agreements on the issuance date of June 2, 2013 resulted in a gain on the extinguishment of debt of $72,440 for the year ended December 31, 2013.
 
 
TRYCERA FINANCIAL, INC.
Notes to Financial Statements
December 31, 2014 and 2013
 
NOTE 6 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 a valuation 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 totaling $8,879,760 and other deferred tax assets as of December 31, 2014 that may be offset against further taxable income.  No tax benefit has been reported in the financial statements.
 
Deferred tax assets and the valuation account as of December 31, 2014 and 2013 are as follows:
 
   
2014
   
2013
 
             
Deferred tax asset:
           
Net operating loss carryforward
 
$
3,786,330
   
$
3,615,946
 
Stock compensation
   
770,975 
     
570,933
 
Valuation allowance
   
(4,557,305
)
   
(4,186,879
)
   
$
-
   
$
-
 

The components of income tax expense are as follows:
 
Current Federal Tax
 
$
-
   
$
-
 
Current State Tax
   
-
     
-
 
Change in deferred taxes
   
(370,426
)
   
(665,019
)
Change in allowance
   
370,426
     
665,019
 
   
$
-
   
$
-
 
 
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 2034. Tax years beginning 2011 are open to examination by the IRS.

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.
 
 
TRYCERA FINANCIAL, INC.
Notes to Financial Statements
December 31, 2014 and 2013
 
NOTE 7 NOTES PAYABLE
 
     
December 31,
   
December 31,
 
     
2014
   
2013
 
               
Unsecured Notes Payable
                 
                   
Note payable to former service provider, unsecured,
 interest at 10% originally due February 23, 2011.
Currently past due.
   
$
59,448
   
$
59,448
 
                   
Note payable to Vice President, unsecured,
interest at 10% plus 1,000 shares originally due January 25, 2013.
Net of discount. Currently past due.
     
10,000
     
10,000
 
                   
Note payable to unrelated investor, unsecured,
interest at 10% originally due September 4, 2014.
Currently past due.
     
25,000
     
25,000
 
                   
Note payable to unrelated investor, unsecured,
interest at 8% due Mar 15, 2016.
     
10,230
     
-
 
                   
Note payable to unrelated investor, unsecured,
interest at 8% due Feb 24, 2016.
     
14,000
     
-
 
                   
Note payable to unrelated investor, unsecured,
interest at 8% due Feb 16, 2016.
     
30,000
     
-
 
                   
Note payable to unrelated investor, unsecured,
interest at 10% due Jan 24, 2016.
     
7,500
     
-
 
                   
Note payable to unrelated investor, unsecured,
interest at 10% due April 1, 2016.
     
15,000
     
-
 
                   
Note payable to unrelated investor, unsecured,
interest at 10% due Nov 1, 2016.
     
50,000
     
-
 
                   
Note payable to unrelated investor, unsecured,
interest at 10% due July 11, 2016.
     
8,000
     
-
 
                   
Note payable to unrelated investor, unsecured,
interest at 10% due July 28, 2016.
     
3,300
     
-
 
   -                
Long term portion
     
(138,030
)
   
-
 
Total Unsecured Notes Payable, current maturities
   
$
94,448
   
$
94,448
 
 
 
TRYCERA FINANCIAL, INC.
Notes to Financial Statements
December 31, 2014 and 2013
 
NOTE 7 NOTES PAYABLE (Continued)
 
     
December 31,
   
December 31,
 
     
2014
   
2013
 
 
             
Convertible Notes Payable                  
Convertible Debt Liability - Banner1
    $ 100,000     $ 100,000  
Discount Convertible debt - Banner 1
      -       -  
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 $.50 per share or a 10% discount to the market price
      -       -  
                   
Convertible Debt Liability - Banner2
      100,000       100,000  
Discount Convertible debt - Banner 2
      -       -  
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 $.50 per share or a 10% discount to the market price
      -       -  
                   
Convertible debt liability - Banner3
      100,000       100,000  
Discount Convertible debt - Banner 3
      -       -  
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 $.50 per share or a 10% discount to the market price
      -       -  
                   
Convertible debt liability - Banner4
      50,000       50,000  
Discount Convertible debt - Banner 4
      -       -  
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 $.50 per share or a 10% discount to the market price
      -       -  
                   
Convertible debt liability - JPA