Trycera Financial 10-Q 2015 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, 2015

OR

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

For the Transition Period From                      to

Commission File Number: 000-30872

TRYCERA FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Nevada	33-0910363
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
18100 Von Karman Ave, Suite 850, Irvine, California	92612
(Address of principal executive offices)	(Zip Code)

(949) 705-4480

(Registrant’s telephone number, including area code)

None

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

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

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

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

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

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

At June 10, 2015, there were 15,844,673 shares of the registrant’s Common Stock outstanding, par value $0.001 per share.

TRYCERA FINANCIAL, INC.

Table of Contents

PART I FINANCIAL INFORMATION		PAGE
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Discussion About Market Risk	13
Item 4T.	Controls and Procedures	13
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	14
Item 1A.	Risk Factors	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Debt	14
Item 4.	(Removed and Reserved)	15
Item 5.	Other Information	15
Item 6.	Exhibits	15
SIGNATURE PAGE		16

FORWARD-LOOKING STATEMENTS

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

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

PART I

FINANCIAL INFORMATION

Item 1.          Financial Statements

Trycera Financial, Inc.

Balance Sheets

	March 31,			December 31,
	2015			2014
	(unaudited)
Assets
Current Assets
Cash	$	-		$	-
Prepaid expenses and other current assets		4,275			9,025
Total Current Assets		4,275			9,025
Property & Equipment, net		4,228			4,759
Total Fixed Assets		4,228			4,759
Total Assets	$	8,503		$	13,784
Liabilities & Stockholders’ Deficit
Current Liabilities
Bank overdraft	$	130		$	348
Accounts payable		758,666			749,666
Accounts payable - related parties		179,565			179,565
Portfolio reserves		34,774			34,774
Accrued expenses		2,198,852			2,180,765
Debt settlement liability, net		144,428			141,355
Derivative liability		75,000			100,000
Unsecured notes payable, current maturities		94,448			94,448
Convertible notes payable, net of discounts, current maturities		713,042			713,042
Total Current Liabilities		4,198,905			4,193,963
Long-term Liabilities
Unsecured notes payable, less current maturities		148,030			138,030
Total Long-term Liabilities		148,030			138,030
Total Liabilities		4,346,935			4,331,993
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; 669,673 and 667,673 shares    issued and outstanding, respectively		670			668
Additional paid in capital		11,116,694			11,086,696
Prepaid stock - employees		(58,314	)		(181,624	)
Accumulated deficit		(15,397,482	)		(15,223,949	)
Total Stockholders’ Deficit		(4,338,432	)		(4,318,209	)
Total Liabilities & Stockholders’ Deficit	$	8,503		$	13,784

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.

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Trycera Financial, Inc.

Statements of Operations

	For the 3 Months Ended
	March 31, 2015			March 31, 2014
	(unaudited)			(unaudited)
Revenues	$	6,878		$	6,140
		6,878			6,140
Cost of Sales		111			299
Gross Profit (loss)		6,767			5,841
Expenses
Salaries and wages		153,310			143,403
Professional fees		9,008			9,000
Other selling, general and administrative		15,734			79,372
Total Expenses		178,052			231,775
Loss from Operations		(171,285	)		(225,934	)
Other Income (Expense)
Derivative liability gain (loss)		25,000			-
Interest expense		(27,248	)		(24,735	)
Total Other Income (Expense)		(2,248	)		(24,735	)
Loss before tax		(173,533	)		(250,669	)
Income tax		-			-
Net Loss	$	(173,533	)	$	(250,669	)
Basic loss Per Share:
Loss per share	$	(0.26	)	$	(0.39	)
Net Loss Per Share	$	(0.26	)	$	(0.39	)
Weighted Average Shares		667,695			636,615

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.

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Trycera Financial, Inc.

Statements of Cash Flows

	For the 3 Months Ended
	March 31,			March 31,
	2015			2014
	(unaudited)			(unaudited)
Cash Flows from Operating Activities
Net Loss	$	(173,533	)	$	(250,669	)
Adjustments to reconcile net loss to net cash used by operations;
Depreciation and amortization		531			532
Amortization of prepaid stock - consultants		4,750			45,400
Amortization of prepaid stock - employees		123,310			91,680
Amortization of discount on note payable		3,073			3,191
Derivative liability (gain) loss		(25,000	)		-
Stock issued for services		30,000			51,200
Changes in operating assets and liabilities;
Increase (decrease) in accounts payable		9,000			(17,709	)
Increase (decrease) in accrued expenses		18,087			9,879
Net Cash Used by Operating Activities		(9,782	)		(66,496	)
Cash Flows from Financing Activities
Proceeds from issuance of notes payable		10,000			61,730
(Increase) decrease in bank overdraft		(218	)		735
Net Cash Provided by Financing Activities		9,782			62,465
Net Increase (Decrease) in Cash and Cash Equivalents		-			(4,031	)
Cash and Cash Equivalents at Beginning of Period		-			4,031
Cash and Cash Equivalents at End of Period	$	-		$	-
Cash Paid For:
Interest	$	-		$	-
Income Taxes	$	-		$	-
Non-Cash 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.

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TRYCERA FINANCIAL, INC.

Notes to Financial Statements

NOTE 1 – GENERAL

The accompanying condensed financial statements of the Company have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations.  These condensed financial statements reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the results of operations of the Company for the periods presented.  These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2014.  The results of operations for the three months ended March 31, 2015, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015.

NOTE 2 – GOING CONCERN

The Company has had recurring operating losses since inception and is dependent upon financing to continue operations.  These factors indicate that the Company may be unable to continue in existence should immediate and short term financing options not be available.  These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue its existence.  These financial statements do not include any adjustments that might result from the outcome of this uncertainty.  Currently the Company has minimal cash on hand and few material assets outside key intellectual property.  In addition, the Company has not established or maintained a recurring source of revenues to sufficiently cover or offset any current, anticipated or planned operating costs to allow it to continue as a going concern.  It is the intent of the Company to find additional capital funding, grow revenues organically through new program launches and marketing campaigns, and/or a profitable business venture to acquire or merge.

NOTE 3 – SIGNIFICANT TRANSACTIONS

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.

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 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.  The effects of the reverse stock split have been retroactively applied to all periods presented.

On March 23, 2015, the Company received $10,000 pursuant to a two-year, 10%, unsecured promissory note with an independent party.

NOTE 4 – CONTINGENCIES

The Company has not accrued employee base salaries approximating $800,000 pursuant to employment agreements during the year ended December 31, 2014 or the quarter ended March 31, 2015, as the respective employees have not worked forty hours per week (as required by the employment agreements) because the work has not been available due the Company’s inability to sustain consistent, profitable operations.  Management has assessed the likelihood of the employees pursuing and successfully claiming base salaries as reasonably possible, and has thus elected to disclose but not record these salaries, in accordance with ASC 450-20 Loss Contingencies.

In January 2012, the Company received Notices of Claim from two former employees seeking back-wages of approximately $240,000 pursuant to the Company’s alleged breach of their employment agreements.  In October 2013, the Company filed counter claims against the employees claiming, among other violations, breach of contract and fraud.  The Company is seeking damages in excess of the back-wages, and cannot determine at this time, the amount or likelihood of any gains or losses that may result from these claims.

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NOTE 5 – SUBSEQUENT EVENTS

Pursuant to FASB ASC 855-10-50-1, the Company has evaluated subsequent events through the date these financial statements to be issued. Accordingly the following material events occurred subsequent to the quarter ended March 31, 2015:

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 April 6 and April 22, 2015, the Company received $5,000 and $2,000, respectively, pursuant to two-year, 10%, unsecured promissory notes with one of its Directors.  The notes were repaid in full on May 15, 2015.

On April 14, 2015, the Company received notice of conversion and agreed to convert $37,500 of the Note with Herbert Banner 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 Note with MJ Rich Media Corporation 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 15, 2015, the Company’s President forgave $314,372 in accrued officer compensation and reimbursable expenses owed him.

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

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).

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Item 2.          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 filed with the Securities and Exchange Commission.

Overview

From 2004 until 2008 the Company was in the business of developing, deploying and marketing semi-custom and customized branded prepaid and prepaid card solutions.  Due to continued losses from operations during 2009, the Company began winding down its principal business operations and commenced a search for a new business venture.  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 and into 2015, the Company has 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 have seen 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 has caused delays in progress.

Despite the constant delays, the Company has 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 has 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 has 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.

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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 their retirement.  It is because of these factors the Company feels its product line is superior to any other program on the market.

Recent Developments

For the first quarter ending March 31, 2015, all primary operational efforts were prioritized and focused on beta testing and developing the Company’s newly developed product line and continued efforts to Beta test its Live Agent Auto Dealer Kiosk system along with finalizing the technical infrastructure for the Company’s credit and money management programs.  Despite working capital shortfalls and operational delays, the Company continues its ongoing technical build-out, and the Company has continued working closely with new partners and associations in efforts to position the suite of products and services to be marketed throughout the first quarter of 2015.  Throughout this first quarter and subsequently thereafter, the Company engaged in negotiating contemplated new agreements, terminating existing agreements, and restructuring its debt to help ensure the viability of the entity long-term.

During the first quarter, the Company made limited progress in marketing the primary products and services in support of continued operations.  In continuing with the direction outlined throughout the past two years, despite the constant delays, the Company continued to make progress on the completion of the technical build out, customer tracking, and fulfillment process associated with the Company’s product line.  The Company continued working closely with existing vendors along with anticipated new partners and associations in efforts to complete the necessary steps so the Company can actively market its suite of products and services to consumers in a more robust way and gain market share.

The Company continued to focus on developing marketing partnerships to facilitate the distribution of its personal financial services, payment reporting services and a prepaid debit card, all of which are designed to assist consumers in managing individual personal finances, including spending, budgeting, credit and financial awareness.  During the first quarter of 2015and  the fourth quarter of 2014, the Company worked on developing a more efficient way of connecting credit turndown consumers to the Company.  In conjunction with continuing efforts to expand operations and generate revenue, the Company spent additional time in the first quarter on aligning the credit building business with key industry associations, such as mortgage companies, commercial lenders and auto dealerships.

A number of planned initiatives undertaken during the first quarter by the Company have failed or taken longer than expected or anticipated due to capital constraints.  This, coupled with key management time constraints, increasing regulatory requirements, lengthening approval timeframes, vendor payment shortfalls, and increasing legal procedures all contributed to slower than planned marketing as well as delays in generating organic revenues in the first quarter.  The Company expects that organic revenues will be generated throughout the remainder of 2015 and these revenues should make the Company more attractive to investors.

Throughout the first quarter of 2015, the Company was contacted by several vendors demanding payment for prior services.  The Company, as of the date of this report, is underfunded and is nearly insolvent.  The financial commitments entered into during 2013 and 2014 were intended to provide improved funding over the coming quarters and was expected to allow the Company to remain focused on the core business and delivery of the payment reporting personal financial products and services.  However, slow delivery of working capital and delays and misrepresentations in funding overall have resulted in the near collapse of the Company.  The Company continues to negotiate with new vendors, key vendors and prior service providers.  Key management personnel have and continued to accrue or furlough wages, or accept limited or partial payments for services.  In addition, key management personnel are underwriting many operational expenses of the Company and are accruing those expenses as well. It is anticipated that key management personnel and key vendors and prior service providers shall be reimbursed accordingly once additional working capital is invested.

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A continued and substantial backlog of liabilities remains on the records of the Company, but management remain confident that those liabilities will be paid, negotiated, reduced or addressed in the coming quarters.

Key Accounting Policies

Key accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions.  There were no changes to our key accounting policies for the quarter ended March 31, 2015.

Results of Operations

For the three months ended March 31, 2015

In the first quarter of 2015 we were focused on the technical infrastructure and executing distribution, marketing and strategic agreements. Delays in delivering marketing and services coupled with delayed vendor payments caused us to miss the opportunity to generate any material revenues during the quarter.  

Revenue

Revenue from continuing operations was $6,878 and $6,140 for the quarters ended March 31, 2015 and 2014, respectively, representing an increase of $738 or effectively 12%.  As previously discussed, we revised the business strategy to focus on restarting operations and take the company into financial services marketing and move away from direct program management.

Cost of Sales and Gross Profit

Cost of sales was $111 and $299 for the quarters ended March 31, 2015 and 2014.  The decrease was nominal and incudes some nominal operating cost associated with the commencement of programs and operations.

The resulting gross profit was $6,767 and $5,841 for the quarters ended March 31, 2015 and 2014, respectively.  Management expects gross profit margin to remain unpredictable and volatile as the new operations continue.  Fluctuations can be anticipated due to uncertainties in accessing markets coupled with higher product costs mixed with the volatility of entering markets where products have been commoditized.  Management believes that by eliminating previously high fixed processing and banking costs associated with program management, the Company can focus on improving margins by delivering organic revenues through new marketing partnerships and alliances.

Operating Expenses

Operating expenses were $178,052 and $231,775 for the quarters ended March 31, 2015 and 2014, respectively, representing a decrease of $53,723.  The key components of our first quarter 2015 operating expense are salaries and wages ($153,310) professional fees ($9,008) and other selling, general and administrative ($15,734).

Salaries and wages expense were $153,310 and $143,403 for the quarters ended March 31, 2015 and 2014, respectively, representing an increase of $9,907 or 7%. The Company has had four full time employees, two of whom left the Company during the period, all working largely under accrued/furloughed wages and non-cash compensation until such a time certain milestones are achieved or the Company has the funds to pay cash compensation, or until the Company and employees mutually agree to new compensation terms.

General and administrative expenses were $15,734 and $79,372 for the quarters ended March 31, 2015 and 2014, respectively, representing a decrease of $63,638 or 80%. The decrease resulted from the decrease in outside services as the Company had no rent of facility costs during the period.

Net loss

We incurred net losses of $173,533 and $250,669 for the quarters ended March 31, 2015 and 2014, respectively, representing a decrease in the net loss of $77,136.  As we continue our general business operations, organic growth in conjunction with strategic alliances and a potential reverse acquisition or merger opportunity, we expect to improve on net losses when 2015 is compared to 2014.

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Liquidity and Capital Resources

As of March 31, 2015 and December 31, 2014, cash totaled $0.  Working capital deficit was ($4,194,630) at March 31, 2015, as compared with working capital deficit of ($4,184,938) at December 31, 2014.  This decrease in working capital was a result of using new funds and stock to fund operations and related expenses.

The Company is currently being funded through a mix of equity investments and convertible note instruments to supply working capital for operations.  The Company has a substantial backlog of liabilities and will need to negotiate and reduce liabilities in order to remain on a viable business path.  If vendors, agents, suppliers and third parties are unwilling to agree to terms more favorable to the Company, there is likelihood that the liabilities could materially and adversely affect day to day operations.  The funds invested and committed are primarily focused on driving business growth and not specifically earmarked to extinguish large tranches of debt or the backlog of liabilities.

In event that the Company is unable to mitigate the effects of the liabilities, the Company may seek any and all necessary protections afforded under various state and federal laws.  The Company plans to continue to collect equity investments and debt instruments for the remainder of 2015 in order to finance continued operations and to finance potential merger and/or acquisition investments.  In an event where the Company faces immediate insolvency, the Company may pursue the sale of its intellectual property, which may or may not have marketable value.

Off-Balance Sheet Arrangements

During the quarter ended March 31, 2015, we did not engage in any off-balance sheet arrangements.

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.

Subsequent Events

The following material events occurred subsequent to the quarter ended March 31, 2015:

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 April 6 and April 22, 2015, the Company received $5,000 and $2,000, respectively, pursuant to two-year, 10%, unsecured promissory notes with one of its Directors.  The notes were repaid in full on May 15, 2015.

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

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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 15, 2015, the Company’s President forgave $314,372 in accrued officer compensation and reimbursable expenses owed him.

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

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).

Item 3.          Quantitative and Qualitative Disclosures About Market Risk

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

Item 4T.       Controls and Procedures

Controls and Procedures

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

Disclosure Controls and Procedures

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

Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that, as of March 31, 2014, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that (i) the information required to be disclosed by us in this Report was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

With the participation of the Company’s management, including its Chief Executive Officer and Principal Financial Officer, the Company also conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the Company’s fiscal quarter ended March 31, 2015, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.  Based on such evaluation, management concluded that, as of the end of the period covered by this report, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS

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 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 1A.     RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed under the caption “Risk Factors” in Part I, "Item 1. Description of Business" in our Annual Report on Form 10-K for the year ended December 31, 2014 which could materially affect our business prospects, financial condition or future results. There have been no other material changes during the three months ended March 31, 2015 to the risk factors discussed in the periodic report noted above.

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

On April 6, 2015, the Company entered into a five year employment agreement with Ray A. Smith, its President/CEO and issued Thirteen Million Five Hundred Thousand (13,500,000) shares of restricted Common Stock pursuant to the new employment agreement.

On April 14, 2015, the Company converted Thirty Seven Thousand Five Hundred Dollars ($37,500) of debt for Herbert Banner into Seven Hundred Fifty Thousand (750,000) shares of common stock.

On April 14, 2015, the Company converted Thirty Seven Thousand Five Hundred Dollars ($37,500) of debt for MJ Rich Media Corporation into Seven Hundred Fifty Thousand (750,000) shares of common stock.

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

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).

ITEM 3.        DEFAULTS UPON SENIOR DEBT

None

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ITEM 4.        (REMOVED AND RESERVED)

ITEM 5.        OTHER INFORMATION

ITEM 6.        EXHIBITS

Exhibit No.	Description
31.1	Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *
31.2	Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *
32.1	Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. *
32.2	Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. *
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

* Filed herewith

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

SIGNATURE PAGE FOLLOWS

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SIGNATURES

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

	Trycera Financial, Inc.
Date: June 10, 2015	By:	/s/ Ray A. Smith
		Ray A. Smith, President (Principal Executive Officer)
Date: June 10, 2015	By:	/s/ Ray A. Smith
		Ray A. Smith, Principal Financial Officer (Principal Financial Officer)

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