Overview
Inter-Atlantic Financial, Inc. is a blank check company formed on January 12, 2007, for the purpose of acquiring, through a merger, a capital stock exchange, asset acquisition, stock purchase or other similar business combination of an unidentified domestic and/or foreign operating business in the financial services industry or businesses deriving a majority of their revenues from providing services to financial services companies, including for example, payment processing companies and technology providers.

On October 9, 2007, we completed our initial public offering ("IPO") of 7,500,000 Units. Each Unit consists of one share of our common stock, par value $0.0001 per share, (the "Common Stock") and one warrant entitling the holder to purchase one share of our Common Stock at a price of $4.50. The public offering price of each Unit was $8.00, and we generated gross proceeds of $60,000,000 in the IPO. On October 16, 2007, we consummated the closing of 1,110,300 Units pursuant to the underwriters' over-allotment option which generated gross proceeds of $8,882,400. Of the $68,882,400 in gross proceeds from the IPO and the exercise of the over-allotment option: (i) we deposited $66,215,928 into a trust account maintained by American Stock Transfer & Trust Company, as trustee, which proceeds were invested in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940, and included $2,755,296 of contingent underwriting discount; (ii) the underwriters received $2,066,472 as underwriting discount (excluding the contingent underwriting discount); and (iii) we retained approximately $600,000 for offering expenses. In addition, we deposited into the trust account $2,300,000 that we received from the issuance and sale of an aggregate of 2,100,000 warrants to our executive officers and directors and 200,000 warrants to one of our stockholders.
Our trust account is invested in a money market fund that invests in short-term US Treasury securities. The recent decline in short-term interest rates has decreased the interest income generated by the funds held in trust. As a result, our expectation of future interest income is significantly lower than anticipated. As of February 20, 2009, the funds held in trust earned interest at an annual interest rate of .28%, based on a 7-day average yield.
We intend to utilize cash (derived from the proceeds of the IPO, overallotment, and pre-offering private placement of the founders' warrants), our capital stock, debt or a combination of cash, capital stock and debt, in effecting a business combination. The issuance of additional capital stock, including upon conversion of any convertible debt securities we may issue, or the incurrence of debt could have material consequences on our business and financial condition. The issuance of additional shares of our capital stock (including upon conversion of convertible debt securities):
• may significantly reduce the equity interest of our stockholders;

• will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and may also result in the resignation or removal of one or more of our present officers and directors; and

• may significantly and immediately adversely affect prevailing market prices for our common stock.

Similarly, if we issued debt securities, it could result in:
• default and foreclosure on our assets if our operating revenues after a business combination were insufficient to pay our debt obligations;

• acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contained covenants that required the maintenance of certain financial ratios or reserves and any such covenant were breached without a waiver or renegotiation of that covenant; our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and

• our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain additional financing while such security was outstanding.

We may use substantially all of the funds held in the trust account, less the payment due the underwriter for the deferred underwriting discount, to acquire a target business. However, as long as we consummate a business combination with one or more target acquisitions with a fair market value equal to at least 80% of our net assets (excluding the amount held in the trust account representing the underwriters' deferred discount), we may use the assets in the trust account for any purpose we may choose. To the extent that our capital stock or debt is used in whole or in part as consideration to consummate a business combination, the remaining proceeds from the trust account will be used as working capital, including director and officer compensation, change-in-control payments or payments to affiliates, or to finance the operations of the target business, make other acquisitions and pursue our growth strategies.
We will seek stockholder approval before we effect any business combination, even if the nature of the acquisition would not ordinarily require stockholder approval under applicable state law. In connection with the vote required for any business combination, all of our initial stockholders, including all of our officers and directors, have agreed to vote the shares of common stock owned by them immediately before the IPO in accordance with the majority of the shares of common stock voted by the public stockholders. Any shares acquired in the aftermarket by initial stockholders will be voted in favor of the business combination. We will proceed with a business combination only if a majority of the shares of common stock cast at the meeting are voted in favor of the business combination and public stockholders owning 29.99% or less of the shares sold in the IPO exercise their redemption rights described below. This redemption threshold is different from the traditional blank check company structure and makes it more likely that the business combination may be approved, even if a significant number of shareholders do not approve the transaction. Voting against the business combination alone will not result in redemption of a stockholder's shares into a pro rata share of our trust account. Such stockholder must have also exercised its redemption rights described below. Even if 29.99% or less of the stockholders, as described above, exercise their redemption rights, we may be unable to consummate a business combination if such redemption leaves us with funds less than a fair market value equal to at least 80% of the amount in our trust account (excluding any funds held for the benefit of any of the underwriters and taxes payable) at the time of such acquisition which amount is required for our initial business combination. In such event, we may be forced to either find additional financing to consummate such a business combination, consummate a different business combination or dissolve, liquidate and wind up. The Company has agreed not to lower the redemption threshold below 29.99% in connection with the negotiation of a business combination.

As indicated in the accompanying financial statements, at December 31, 2008, we had $32,248 in cash plus $9,390 of interest income available from our trust property. Further, we have incurred and expect to continue to incur costs in pursuit of our financing and acquisition plans. We cannot assure you that our plan to consummate a business combination will be successful.
For the period from January 12, 2007 (inception) through December 31, 2008, we had net income of approximately $590,000, attributable to interest income of approximately $1,651,000 offset by operating costs and income taxes of approximately $603,000 and $458,000, respectively. For the twelve months ended December 31, 2008, we had net income of approximately $323,000, attributable to interest income of approximately $1,050,000 offset by operating costs and income taxes of approximately $447,000 and $280,000, respectively. We have neither engaged in any operations nor generated any operating revenues to date, other than in connection with our initial public offering. Our entire activity since inception has been to prepare for an consummate our initial public offering and to identify and investigate targets for a business combination. We will not generate any operating revenues until consummation of a business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents.
Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
Contractual Obligations
We do not have any long term debt, capital lease obligations, operating lease obligations, purchase obligations or other long term liabilities. Liquidity and Capital Resources
We will use substantially all of the net proceeds of the IPO, the overallotment, the pre-offering private placement of the founders' warrants, as well as interest, if any, on the funds in our trust account released to us including those funds held in trust, to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating the business combination. The proceeds held in our trust account (exclusive of any funds held for the benefit of the underwriters or used to pay public stockholders who have exercised their redemption rights) may be used as consideration to pay the sellers of a target business with which we ultimately complete a business combination or, if there is insufficient funds not held in trust, to pay other expenses relating to such transaction such as reimbursement to insiders for out-of-pocket expenses, third party due diligence expenses or potential finders fees, in each case only upon the consummation of a business combination. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of the target business or to effect other acquisitions, as determined by our board of directors at that time. To the extent our capital stock is used in whole or in part as consideration to effect a business combination, the proceeds held in our trust account as well as any other net proceeds not expended will be released to us and will be used to finance the operations of the target business.

At December 31, 2008, we had cash outside of the trust account of $32,248, cash held in the trust account of approximately $68,500,000, a $211,000 deferred tax asset, accrued expenses and offering costs of approximately $54,000, no income taxes payable and total liabilities of approximately $22,500,000 (which includes approximately $20,500,000 of common stock which is subject to possible redemption and approximately $2,000,000 of deferred underwriters' fees). Although we cannot be sure, we believe that we have funds sufficient to allow us to operate at least until October 9, 2009, including (i) the unused portion of $1,100,000 of the interest earned on funds in our trust account (net of taxes payable) which will be released to us, and (ii) up to $500,000 from the Company's limited recourse revolving line of credit which will be repayable prior to the consummation of the business combination solely from the $1,100,000 of interest earned on the trust account which is available for working capital, assuming that a business combination is not consummated during that time. Up to $1,100,000 of the interest earned on our trust account (net of taxes payable) is being released to us to fund our working capital requirements and is available to fund the costs associated with such plan of dissolution and liquidation (which we currently estimate to be no more than $15,000) if we do not consummate a business combination. The rate of interest earned on our trust account has decreased recently and will fluctuate through the duration of our trust account, therefore the interest that will accrue on our trust account during the time it will take to identify a target and complete an acquisition may not be sufficient to fund our working capital requirements.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, we may need to raise additional funds through a private offering of debt or equity securities if such funds were required to consummate a business combination. Such debt securities may include a working capital revolving debt facility or a longer term debt facility.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. $68,500,000 of the net offering proceeds (which includes $2,700,000 of the proceeds attributable to the underwriters' discount plus the $2,300,000 of proceeds from the private placement of warrants) has been placed into a trust account maintained by American Stock Transfer, acting as trustee. The proceeds held in trust will only be invested in either short-term securities issued or guaranteed by the United States having a rating in the highest investment category granted thereby by a recognized credit rating agency at the time of acquisition, short-term tax exempt municipal bonds issued by governmental entities located within the United States or in money market funds otherwise meeting the conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940. Thus, we are subject to market risk primarily through the effect of changes in interest rates on government securities, which have declined since our IPO. The effect of other changes, such as foreign exchange rates, commodity prices and/or equity prices, does not pose significant market risk to us.

ITEM 8. Financial Statements and Supplementary Data
          Index to Inter-Atlantic Financial, Inc. Financial Statements

      Report of Independent Registered Public Accounting Firm               52

      Balance Sheets as of December 31, 2008 and December 31,
    2007                                                                    53

      Statements of Operations for year ended December 31, 2008,
    the period from January 12, 2007 (inception) to December 31,
    2007 and the period from January 12, 2007 (inception) to
    December 31, 2008                                                       54

      Statement of Stockholders' Equity for the period from
    January 12, 2007 (inception) to December 31, 2008                       55

      Statements of Cash Flows for year ended December 31, 2008,
    the period from January 12, 2007 (inception) to December 31,
    2007 and the period from January 12, 2007 (inception) to
    December 31, 2008                                                       56

      Notes to Financial Statements                                         57

Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Inter-Atlantic Financial, Inc.
We have audited the accompanying balance sheets of Inter-Atlantic Financial, Inc. (a corporation in the development stage) (the "Company") as of December 31, 2008 and 2007, and the related statements of operations and cash flows for the year ended December 31, 2008, and for the periods from January 12, 2007 (inception) to December 31, 2008 and 2007, and statement of stockholders' equity from January 12, 2007 (inception) to December 31, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our 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 audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note A to the financial statements, the Company will face a mandatory liquidation if a business combination is not consummated by October 9, 2009, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Inter-Atlantic Financial, Inc. (a corporation in the development stage) as of December 31, 2008 and 2007, and the results of its operations and its cash flows for the year ended December 31, 2008, and for the periods from January 12, 2007 (inception) to December 31, 2008 and 2007, in conformity with accounting principles generally accepted in the United States of America.
Rothstein, Kass & Company, P.C.
Roseland, New Jersey
March 4, 2009

                         Inter-Atlantic Financial, Inc.
                    (a corporation in the development stage)
                                 BALANCE SHEETS

                                                     December 31, 2008        December 31, 2007

                                              ASSETS
Current Assets
Cash and cash equivalents                           $            32,248      $             6,967
Prepaid insurance                                                29,250                  146,250
Prepaid income taxes                                             51,061

Total current assets                                            112,559                  153,217

Other Assets
Investments held in Trust Account                            68,525,418               68,725,471
Deferred tax asset                                              211,000                   70,000

Total other assets                                           68,736,418               68,795,471

Total assets                                        $        68,848,977      $        68,948,688

                               LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accrued expenses                                    $            20,833      $            35,250
Accrued offering costs                                                                   146,755
Income taxes payable                                                                     248,000
Delaware franchise tax payable                                   32,900                   46,560

Total current liabilities                                        53,733                  476,565

Long-term Liabilities
Deferred underwriters' fee                                    1,928,707                1,928,707
Common stock, subject to possible conversion,
2,582,229 shares at conversion value,
approximately $7.96 per share                                20,547,927               20,547,927

Total liabilities                                            22,530,367               22,953,199


Stockholders' equity
Preferred stock, $.0001 par value; 1,000,000
shares authorized; none issued
Common stock, $.0001 par value, 49,000,000
shares authorized; 10,485,300 issued and
outstanding                                                       1,049                    1,049
Additional paid-in capital                                   45,727,725               45,727,725
Earnings accumulated during the development
stage                                                           589,836                  266,715

Total stockholders' equity                                   46,318,610               45,995,489

Total liabilities and stockholders' equity          $        68,848,977      $        68,948,688

                         Inter-Atlantic Financial, Inc.
                    (a corporation in the development stage)
                            STATEMENTS OF OPERATIONS

                                                                  For the Period from        For the Period from
                                                                   January 12, 2007           January 12, 2007
                                            Year Ended            (inception) through        (inception) through
                                         December 31, 2008         December 31, 2007          December 31, 2008

Revenue                                 $                 -      $                   -      $                   -
Formation and administrative costs                  446,683                    156,678                    603,361

Loss from operations                               (446,683 )                 (156,678 )                 (603,361 )

Interest income                                   1,049,804                    601,393                  1,651,197

Income before provision for income
taxes                                               603,121                    444,715                  1,047,836

Provision for income taxes                          280,000                    178,000                    458,000

Net income                              $           323,121      $             266,715      $             589,836


Maximum number of shares subject to
possible conversion:
Approximate weighted average number
of shares                                         2,582,000                    606,000                  1,609,000

Approximate weighted average number
of common shares outstanding (not
subject to possible conversion):
Basic                                             7,903,000                  3,290,000                  5,632,000

Diluted                                          11,698,000                  4,168,000                  7,994,000


Income per common share not subject
to possible conversion:
Basic                                   $              0.04      $                0.08      $                0.10

Diluted                                 $              0.03      $                0.06      $                0.07

Income per common share subject to
possible conversion:
Basic                                   $                 -      $                   -      $                   -

Diluted                                 $                 -      $                   -      $                   -