Attached files

file filename
EX-31.1 - SoOum Corp.sfi10qaex311093009.htm
EX-31.2 - SoOum Corp.sfi10qaex312093009.htm
EX-32.1 - SoOum Corp.sfi10qaex321093009.htm
 


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

_______________________
 
FORM 10-Q/A

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

For the quarterly period ended September 30, 2009

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number :  0-7475

_______________________

SWORDFISH FINANCIAL, INC.
(Exact name of registrant as specified in its charter)

Minnesota
41-0831186
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)


142 Wembley Way
 
Rockwall, Texas  75032
(Address of principal executive offices)
 
(972) 310-1830
(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 requirements for the past 90 days.
x  Yes  ¨  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 definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer  ¨
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 Exchange Act).
¨  Yes  x  No

The number of shares of issuer’s common stock, par value $0.16 per share, outstanding as of March 1, 2010, was 13,300,000.  The registrant has no other classes of securities outstanding.
 


 
 

 

 
SWORDFISH FINANCIAL, INC.
INDEX
 
PART I
 
FINANCIAL INFORMATION
Page Number
         
 
Item 1 :
 
Financial Statements
 
         
     
Consolidated Balance Sheets – September 30, 2009 (Unaudited) and December 31, 2008
1
         
     
Consolidated Statements of Operations - Three Months and Nine Months Ended September 30, 2009 and 2008 (Unaudited)
2
         
     
Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2009 and 2008 (Unaudited)
3
         
     
Notes to Consolidated Financial Statements (Unaudited)
4
         
 
Item 2:
 
Management's Discussion and Analysis of Financial Condition and Results of Operations
16
 
Item 3:
 
Quantitative and Qualitative Disclosures About Market Risk
18
         
 
Item 4T:
 
Controls and Procedures
18
         
PART II
 
OTHER INFORMATION
 
       
         Item 1:
 
Legal Proceedings
19
         
 
Item 2:
 
Unregistered Sales of Equity Securities and Use of Proceeds
19
         
 
Item 3:
 
Defaults Upon Senior Securities
19
         
 
Item 4:
 
Submission of Matters to a Vote of Security Holders
19
 
Item 5:
 
Other Information
20
         
 
Item 6 :
 
Exhibits
20
         
     
Signatures
20


 
 

 


SWORDFISH FINANCIAL, INC.
FORM 10-Q/A
EXPLANATORY NOTE

We are filing this Amended Quarterly Report on Form 10-Q/A (the “Amended Filing” or Form 10-Q/A) to our Quarterly Report on Form 10-Q for the three and nine month periods ended September 30, 2009 (the “Original Filing”) to amend and restate our unaudited consolidated financial statements and related disclosures for the three and nine month periods ended September 30, 2009 as discussed in Note 2 to the accompanying restated unaudited consolidated financial statements.   The Original Filing was filed with the Securities and Exchange Commission (SEC”) on March 5, 2010.

Subsequent to issuance, the management of the Company concluded that the transaction in August 2009 between Nature Vision, Inc. (nka Swordfish Financial, Inc.) (the “Company”) and Swordfish Financial, Inc., the Texas corporation should have been recorded as a reverse merger transaction in accordance with FASB ASC 805-10 as described in Note 3 to the accompanying restated unaudited consolidated financial statements and that the  September 30, 2009 quarterly 10-Q should be restated as presented in this Amended Filing.  Accordingly, the accompanying September 30, 2009 balance sheet and statement of operations for the three and six month periods ended September 30, 2009 and 2008, and statement of cash flows for the nine month periods ended September 30, 2009 and 2008 and the December 31, 2008 balance sheet presentations have been retroactively adjusted as presented in this Amended Filing and discussed in Note 2 to the accompanying restated unaudited consolidated financial statements.

For the convenience of the reader, this Amended Filing sets forth the Original Filing as modified and superseded where necessary to reflect the restatement.  The following items have been amended principally as a result of, and to reflect, the restatement;

·  
Part 1 – Item 1.  Restated Financial Statements;
·  
Part 1 – Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations;

In accordance with applicable SEC rules, this Amended Filing includes certifications from our Chief Executive Officer and Chief Financial Officer dated as of the date of this filing.

The sections of the Form 10-Q which were not amended are unchanged and continue in full force and effect as originally filed.  This Amended Filing is as of the date of the Original Filing on the Form 10-Q and has not been updated to reflect events occurring subsequent to the Original Filing date other than those associated with the restatement of the Company’s consolidated financial statements.




 
 

 


Part I – FINANCIAL INFORMATION

Item 1: Financial Statements

Swordfish Financial, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2009 and December 31, 2008

   
Unaudited
       
   
September 30,
   
December 31,
 
   
2009
   
2008
 
   
Restated
   
Restated
 
ASSETS
           
             
CURRENT ASSETS
           
Cash and Cash Equivalents
 
$
151,676
   
$
-
 
Other Receivables
   
45,281
     
-
 
Note Receivable
   
3,500,000
 
   
-
 
Total Current Assets
   
3,696,957
     
-
 
                 
PROPERTY AND EQUIPMENT, NET
   
7,000
     
-
 
                 
TOTAL ASSETS
 
$
3,703,957
   
$
-
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
CURRENT LIABILITIES
               
Current Portion of Long-Term Debt
 
235,952
   
 $
-
 
Note Payable – Related Party
   
450,000
     
-
 
Current Portion of Deferred Retirement Benefits
   
50,550
     
-
 
Accounts Payable
   
948,984
     
-
 
Accrued Payroll and Payroll Taxes
   
2,603
     
-
 
Accrued Expenses
   
1,158,674
     
-
 
Accrued Sales and Warranty Reserve
   
200,000
     
-
 
Total Current Liabilities
   
3,046,763
     
-
 
                 
LONG-TERM LIABILITIES
               
Long-term Debt, Net of Current Portion
   
367,998
     
-
 
Note Payable – Related Party
   
1,154,029
     
-
 
Deferred Retirement Benefits, Net of Current Portion
   
387,476
     
-
 
Total Non-Current Liabilities
   
1,909,503
     
-
 
                 
Total Liabilities
   
4,956,266
     
-
 
                 
COMMITMENTS AND CONTINGENCIES
               
                 
STOCKHOLDERS’ EQUITY
               
Common Stock, $.16 Par Value per Share, 25,000,000 Shares Authorized: 13,300,000  Issued  Outstanding at September 30, 2009 and 2,312,583 at December 31, 2008
   
 
2,128,002
     
 
370,013
 
Additional Paid-In Capital
   
1,742,011
         
Accumulated Deficit
   
(5,122,322
)
   
(370,013
)
Total Stockholders’ Equity
   
(1,252,309
   
-
 
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
3,703,957
   
$
-
 

See accompanying notes to consolidated financial statements.



 
1

 

 
 
Swordfish Financial, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)


   
Three months ended September 30,
   
Nine months ended September 30,
 
   
2009
   
2008
   
2009
   
2008
 
   
Restated
   
Restated
   
Restated
   
Restated
 
SALES, NET
 
$
0
   
$
0
   
$
0
   
$
0
 
                                 
COST OF GOOD SOLD
   
0
     
0
     
0
     
0
 
GROSS PROFIT
   
0
     
0
     
0
     
0
 
                                 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
   
153,819
     
0
     
153,819
     
0
 
     
 153,819
     
 0 
     
153,819
     
 
                                 
LOSS FROM OPERATIONS
   
(153,819
)
   
0
     
(153,819
)
   
0
 
                                 
OTHER INCOME (EXPENSE)
                               
Interest expense
   
(64,209
)
   
0
     
(64,209
)
   
0
 
Interest income
   
21,875
     
0
     
21,875
     
0
 
Other expenses
   
2,480
     
0
     
(6,635
)
   
0
 
                                 
Net Other Income (Expenses)
   
(39,854
)
   
0
     
(39,854
)
   
0
 
                                 
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES
   
(193,673
)
   
0
     
(193,673
)
   
0
 
                                 
PROVISION FOR INCOME TAX EXPENSE
   
-
     
0
     
-
     
0
 
                                 
LOSS FROM CONTINUING OPERATIONS
   
(193,673
)
   
0
     
(193,673
)
   
0
 
                                 
GAIN  (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX
   
(1,782,550)
     
0
     
(1,782,550)
     
0
 
                                 
NET LOSS
 
$
(1,976,223
)
 
$
0
   
$
(1,976,223
)
 
$
0
 
                                 
Loss from continuing operations per common share
                               
Basic
 
$
(0.05
)
 
$
0
   
$
(0.05
)
 
$
0
 
Diluted
 
$
(0.05
)
 
$
0
   
$
(0.05
)
 
$
0
 
                                 
Gain (loss) from discontinued operations per common share
                               
Basic
 
$
(0.43)
   
$
0
   
$
0.43
   
$
0
 
Diluted
 
$
(0.43)
   
$
0
   
$
0.43
   
$
0
 
                                 
Net loss per common share
                               
Basic
 
$
(0.48
)
 
$
0
   
$
(0.48
)
 
$
0
 
Diluted
 
$
(0.48
)
 
$
0
   
$
(0.48
)
 
$
0
 
                                 
Weighted average common shares
                               
Basic
   
4,143,819
     
2,312,583
     
4,143,819
     
2,312,583
 
Diluted
   
4,143,819
     
2,312,583
     
4,143,819
     
2,312,583
 

See accompanying notes to consolidated financial statements.


 
2

 

Swordfish Financial, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended September 30, 2009 and 2008

   
2009
   
2008
 
   
Restated
   
Restated
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net loss
 
$
(1,976,223
)
 
$
0
 
Adjustments to reconcile net loss to net cash flows from operating activities
   
     
 
Changes in operating assets and liabilities:
               
Accounts receivable
   
(45,281)
     
0
 
Accounts payable
   
948,984
     
0
 
Accrued payroll and payroll taxes
   
2,603
     
0
 
Accrued expenses
   
1,228,593
     
0
 
             
0
 
Net Cash Flows from Operating Activities
   
158,676
     
0
 
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchases of property and equipment
   
(7,000)
     
0
 
                 
Net Cash Flows from (used in) Investing Activities
   
(7,000)
     
0
 
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Net Cash Flows from (used in) Financing Activities
   
0
     
0
 
Net Change in Cash and Cash Equivalents
   
151,676
     
0
 
                 
CASH AND CASH EQUIVALENTS - January 1, 2009 and 2008
   
0
     
0
 
CASH AND CASH EQUIVALENTS – September 30, 2009 and 2008
 
$
151,676
   
$
0
 

See accompanying notes to consolidated financial statements.


 
3

 

NATURE VISION, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Swordfish Financial, Inc., (f/k/a Nature Vision, Inc. and Photo Control Corporation) (the “Company” or “we”)  as Nature Vision, Inc. designed, manufactured and marketed outdoor recreation products primarily for the sport fishing and hunting markets.  On August 14, 2009, Nature Vision, Inc. entered into a Stock Purchase Agreement with Swordfish Financial, Inc. for 10,987,417 shares (representing approximately 80% of the outstanding shares) of its common stock in exchange for a $3,500,000 promissory note.   On August 17, 2009, the shareholders owning a majority of the outstanding common stock voted to change the Company’s name from Nature Vision, Inc. to Swordfish Financial, Inc.

The Company did not meet the minimum net worth covenants of a line of credit with M&I Business Credit LLC (M&I Bank) as of June 30, 2009, which put the Company in default on the line of credit.  On August 14, 2009, simultaneously with the signing of the Swordfish Financial, Inc. stock purchase agreement, M&I Business Credit LLC, owed approximately $1,800,000 by the Company, foreclosed on the line of credit and forced the Company to enter into a Voluntary Surrender Agreement.  The Voluntary Surrender Agreement tendered to M&I Business Credit LLC total possession of the Company’s Premises, operations and all of the Company’s Collateral, which consisted of all of the Company’s assets.  M&I Business Credit LLC liquidated basically all of the Company’s assets to recover the line of credit debt.

Based on the limited assets, product lines and resources remaining after the M&I Business Credit LLC liquidation, Swordfish Financial, Inc. has decided that there is not enough remaining of the Nature Vision operations to continue as an outdoor recreations products company and will concentrate on the business on being and asset recovery company and using the financial resources recovered to retire the Company’s debts and invest in other businesses domestically and internationally.

Because of seasonal and other factors, the results of operations for the nine months ended September 30, 2009 are not necessarily indicative of the results to be expected for the Company's full 2009 fiscal year.

 
           REVERSE MERGER ACQUISITION ACCOUNTING
 
Swordfish Financial, Inc., a Texas corporation, acquired 80% of the outstanding common stock of Nature Vision, Inc. pursuant to a stock acquisition/merger agreement on August 14, 2009.  Under the purchase method of accounting in a business combination effected through an exchange of equity interests, the entity that issues the equity interests is generally the acquiring entity. In some business combinations (commonly referred to as reverse acquisitions), however, the acquired entity issues the equity interests. FASB ASC 805-10, “Business Combinations” requires consideration of the facts and circumstances surrounding a business combination that generally involve the relative ownership and control of the entity by each of the parties subsequent to the merger. Based on a review of these factors, the August stock acquisition agreement with Swordfish Financial, Inc. , the Texas corporation (“the Merger”) was accounted for as a reverse acquisition (i.e. Nature Vision, Inc. was considered as the acquired company and Swordfish Financial, Inc., the Texas Company was considered as the acquiring company).  As a result, Nature Vision, Inc. assets and liabilities as of August 14, 2009, the date of the Merger closing, have been incorporated into Swordfish’s balance sheet based on the fair values of the net assets acquired, which equaled the consideration paid for the acquisition. FASB ASC 805-10 also requires an allocation of the acquisition consideration to individual assets and liabilities including tangible assets, and financial assets. Further, the Company’s operating results (post Merger) include Swordfish Financial, Inc., the Texas corporation’s operating results prior to the date of closing and the results of the combined entity following the closing of the Merger. Swordfish Financial, Inc., a Texas corporation was considered the acquiring entity for accounting purposes.
 
On August 14, 2009, Nature Vision, Inc. entered into a Stock Acquisition/Reverse Merger Agreement with Swordfish Financial, Inc., a Texas corporation,  for 10,987,417 shares (representing approximately 80% of the outstanding shares) of its common stock in exchange for a $3,500,000 promissory note.  As of the date of this filings, no payments have been made on the note and accrued interest.  The Company expects payment of the note and accrued interest to be paid by the Shareholders of the Texas corporation. Nature Vision’s board of directors resigned in favor of replacements, nominated by Swordfish, a Texas corporation, who also became the officers of the Company.

GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  We incurred net losses of $1,976,223and $-0- respectively, for the nine months ended September 30, 2009 and 2008 and had an accumulated deficit of $5,122,322 as of September 30, 2009.  We have managed our liquidity during the first nine months of 2009


 
4

 

through cost reduction initiatives and the proceeds from collections on accounts receivables.  The Company is currently in default of a $450,000 note with its former CEO and is in negotiations to extend the terms (Note 6).  The Company is currently in default on its line of credit with a bank and in August 2008 it entered into a voluntary surrender agreement allowing the bank (as discussed in Note 4) with its superior lien position to assume control of the Company’s assets and operations until it liquidates sufficient assets to pay off the line of credit.  The Company is in default on $603,950 of others notes payable.

The Company has historically been a seasonal business with the majority of the Company’s revenue being realized in the fourth quarter.  On the August 14, 2009 foreclosure by M&I Business Credit LLC and forcing the Company to enter into a Voluntary Surrender Agreement which tendered to M&I Business Credit LLC total possession of the Company’s Premises, operations and all of the Company’s assets to collect the approximately $1,800,000 owed by the Company.  After the M&I Business Credit LLC’s liquidations of virtually all of the Company’s assets at significant discounts to book value, Swordfish has been left with virtually no product lines to market and continue the Nature Vision outdoor recreations products operations.

Despite cost reduction initiatives, the Company will be unable to pay its obligations in the normal course of business or service its debt in a timely manner throughout 2009 without raising additional debt or equity capital.  See Note 3, for a discussion of capital acquired by the Company.  There can be no assurance that this financing arrangement will alleviate the Company’s 12 month working capital needs unless it is funded or the Company can complete a recovery project.

INTERIM FINANCIAL INFORMATION

The accompanying condensed consolidated balance sheet at September 30, 2009 and the condensed consolidated statements of operations and cash flows for the nine months ended September 30, 2009 and 2008 are unaudited. The unaudited interim condensed consolidated balance sheet and condensed consolidated statements of operations and cash flows have been prepared in accordance with accounting principles generally accepted in the United States of America and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and its cash flows for the nine months ended September 30, 2009 and 2008. The financial data and other information disclosed in these notes to the condensed consolidated financial statements related to these periods are unaudited.  Operating results for the nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. The condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2008 included in the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission.

PRINCIPLES OF CONSOLIDATION

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation.

DISCONTINUED OPERATIONS

As more fully described in Note 8, “Discontinued Operations,” the Company determined to discontinue the Nature Vision operations
as the result of the August 14, 2009 M&I Business Credit LLC foreclosure on the Company’s Line of Credit and forcing it to enter into a Voluntary Surrender Agreement and tender to M&I Business Credit LLC total possession of the Company’s premises, operations and all of the Company’s assets to collect approximately $1,800,000 owed by the Company at that time.  After M&I Business Credit LLC liquidated virtually all of the Company’s assets at significant discounts to book value, the Company was left with no assets or product lines to market and continue the Nature Vision outdoor recreations products operations.

FINANCIAL INSTRUMENTS

The carrying amounts for all financial instruments approximate fair value. The carrying amounts for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these instruments. The fair value of long-term debt, notes payable, line of credit-bank, and deferred liabilities - retirement benefits approximates the carrying amounts based upon the Company’s expected borrowing rate for debt with similar remaining maturities and comparable risk.

            NOTE RECEIVABLE -RELATED PARTY

On August 14, 2009, the Company, (formerly Nature Vision, Inc.), closed a Stock Purchase/Merger Agreement with Swordfish Financial, Inc., a Texas corporation, pursuant to which the Company sold an aggregate of 10,987,417 shares of its common stock in exchange for a $3,500,000 promissory note, payable in two installments of $1,750,000 each with the first installment being forty-five (45) days from the date of the note and the second installment being one-hundred twenty (120) days from the date of the note.  The note bears interest at the rate of 5% per annum.  As the date of this filing, no payments have been made on the promissory note and accrued interest.  The Company expects to be paid in full by shareholders of the Texas corporation.


 
5

 
 
The Company’s Chairman of the Board, President and Chief Executive Officer is now the beneficial owner of 7,700,000 shares of the Company's common stock of the 10,987,417 shares distributed in the stock purchase/merger transaction.


IMPAIRMENT OF LONG-LIVED ASSETS

We assess the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with FASB SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset or asset group is expected to generate.  If an asset or asset group is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds its fair value.  If estimated fair value is less than the book value, the asset is written down to the estimated fair value and an impairment loss is recognized.

If we determine that the carrying amount of long-lived assets, including intangible assets, may not be recoverable, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model or another valuation technique.  Considerable management judgment is necessary in estimating future cash flows and other factors affecting the valuation of long-lived assets, including intangible assets, including the operating and macroeconomic factors that may affect them.  We use historical financial information, internal plans, and projections and industry information in making such estimates. 

Due to the Company’s default on its loan with M&I Business Credit LLC and its repossession of the Company’s assets, the Company’s property and equipment of was reduced to $7,000 at September 30, 2009.

In particular, if we no longer believe we will achieve our long-term projected sales or operating expenses, we may conclude in connection with any future impairment tests that the estimated fair value of our long-lived assets, including intangible assets, are less than the book value and recognize an additional impairment charge.  Such impairment would adversely affect our earnings.

DISCONTINUED OPERATIONS

ASC Topic 360 requires the calculation of estimated fair value less cost to sell of long-lived assets for assets held for sale. The calculation of estimated fair value less cost to sell includes significant estimates and assumptions, including, but not limited to: operating projections; excess working capital levels; real estate values; and the anticipated costs involved in the selling process. The Company recognizes operations as discontinued when the operations have either ceased or are expected to be disposed of in a sale transaction in the near term, the operations and cash flows of all discontinued operations have been eliminated, or will be eliminated upon consummation of the expected sale transaction, and the Company will not have any significant continuing involvement in the discontinued operations subsequent to the expected sale transaction.

Nature Vision Operations

 On August 14, 2009, simultaneously with the signing of the Swordfish Financial, Inc. stock purchase agreement, the Company entered into a Voluntary Surrender Agreement with M&I Business Credit LLC (the ‘Creditor”), who as of August 14, 2009 was owed approximately $1,800,000 by the Company relating the Credit and Security Agreement dated November 8, 2007.   On August 14, 2009, M&I Business Credit LLC foreclosed on the Line of Credit and forced the Company to enter into a Voluntary Surrender Agreement and tender to M&I Business Credit LLC total possession of the Nature Vision Premises, its operations and all of the Nature  Vision assets to collect approximately $1,800,000 owed by the Company at that time.  After the M&I Business Credit LLC’s liquidated virtually all of the Nature Vision assets at significant discounts to book value, the Company has been left with no assets or product lines to market and continue the Nature Vision outdoor recreations products operations.

The results of the Nature Vision operations from the acquisition date through December 31, 2009 are presented on a historical basis as discontinued operations in the consolidated statements of operations.  In accordance with ASC 205-20-45, “Income Statement Presentation, Allocation of Interest to Discontinued Operations,” the Company elected to allocate all consolidated interest expense to the discontinued operations, taking the position that all of the Company’s debt is directly attributed to or related to the discontinued operations.  All of the financial information in the consolidated financial statements and notes to the consolidated financial statements has been revised to reflect only the results of continuing operations -- See Note 10.

SALES AND WARRANTY RESERVE

The Company has established a sales and warranty reserve for sales returns and warranty costs. Reserves are estimated based on historical experience, current product lines being sold, and management's estimates. The Company provides a standard one or two-year warranty program for its products. The sales and warranty reserve for sales returns and warranty costs relating to continuing operations was $200,000 at September 30, 2009. The sales and warranty reserve represents a significant estimate and actual results could differ from the estimate.


 
6

 
 
RESEARCH AND DEVELOPMENT

The Company expenses all costs related to product research and development as incurred.

STOCK-BASED COMPENSATION

In accordance with SFAS No. 123(R), cash flows from income tax benefits resulting from tax deductions in excess of the compensation cost recognized for stock-based awards have been classified as financing cash flows prospectively from January 1, 2006. Prior to adoption of SFAS No. 123(R), such excess income tax benefits were presented as operating cash flows. There were no cash flows from income tax benefits for the nine months ended September 30, 2009 and 2008.

There were no stock options granted during the nine months ended September 30, 2009.

Stock options issued to non-employees (which no options were issued to non-employees), are accounted for in accordance with Emerging Issues Task Force (EITF) 96-18.

LOSS PER COMMON SHARE

Net loss per common share was based on the weighted average number of common shares outstanding during the periods when computing the basic net loss per share. When dilutive, stock options and warrants are included as equivalents using the treasury stock market method when computing the diluted net loss per share.  There were no dilutive common stock equivalents, options and warrants, for the nine months ended September 30, 2009 and 2008. Anti-dilutive options and warrants were -0- at September 30, 2009 and 2008, respectively.

INCOME TAXES

The Company accounts for income taxes using the asset and liability approach, which requires the recognition of deferred tax assets and liabilities for tax consequences of temporary differences between the financial statement and income tax reporting bases of assets and liabilities based on currently enacted rates and laws. These temporary differences principally include depreciation, amortization, net operating losses, deferred retirement benefits, paid time off and performance benefits, contract payable, allowance for doubtful accounts, inventory obsolescence allowance, and warranty reserves. Deferred taxes are reduced by a valuation allowance to the extent that realization of the related deferred tax assets is not assured.  There is a full valuation allowance recorded as of September 30, 2009 and December 31, 2008.

In June 2006, the Financial Accounting Standards Board, or FASB, issued FASB Interpretation No. 48, or FIN 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109," which prescribes comprehensive guidelines for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on tax returns. FIN 48, effective for fiscal years beginning after December 15, 2006, seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. The Company adopted provisions of FASB Interpretation 48, Accounting for Uncertainty in Income Taxes: an interpretation of FASB Statement 109, Accounting for Income Taxes (“FIN 48) on January 1, 2007. To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income taxes, such amounts would be accrued and classified as a component of income tax expenses on the consolidated statement of operations. The Company has no material amount of accrued liabilities for interest or penalties recorded related to unrecognized tax benefits.

The federal and state tax returns are open to examination for the years 2005-2008.

RECLASSIFICATION

Certain prior year amounts have been reclassified to conform to the 2009 presentation.  The reclassification relates to the breakout of operating expenses on the statement of operations into the following categories:  sales and marketing, research and development and engineering, and general and administrative.  The Company’s opinion is that this breakout provided insight into the different categories of operating expenses the Company incurs.

ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. For the Company, significant estimates include the allowance for doubtful accounts receivable, reserves for inventory valuation, impairment of goodwill and long lived assets, reserves for sales returns, reserves for warranty services, and the valuation allowance for deferred tax assets.



 
7

 
 
RECENT ACCOUNTING PRONOUNCEMENTS

During December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations” (“SFAS 141 (Revised 2007)”).  While this statement retains the fundamental requirement of SFAS 141 that the acquisition method of accounting (which SFAS 141 called the  purchase method ) be used for all business combinations, SFAS 141 (Revised 2007) now establishes the principles and requirements for how an acquirer in a business combination:  recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in the acquiree; recognizes and measures the goodwill acquired in the business combination or the gain from a bargain purchase; and determines what information should be disclosed in the financial statements to enable the users of the financial statements to evaluate the nature and financial effects of the business combination.   SFAS 141 (Revised 2007) is effective for fiscal years beginning on or after December 15, 2008.  The adoption of SFAS 141 (Revised 2007) did not have a material impact on the Company’s financial statements.

During December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. 51” (“SFAS 160”).  This statement establishes accounting and reporting standards for noncontrolling interests in subsidiaries and for the deconsolidation of subsidiaries and clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  This statement also requires expanded disclosures that clearly identify and distinguish between the interests of the parent owners and the interests of the noncontrolling owners of a subsidiary.  SFAS 160 is effective for fiscal years beginning on or after December 15, 2008.  The
adoption of SFAS 160 did not have a material impact on the Company’s financial statements.

In February 2008, the FASB issued FASB Staff Position (“FSP”) No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”), which delays the effective date of SFAS 157 until January 1, 2009 for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis.  These non-financial items include assets and liabilities such as reporting units measured at fair value in a goodwill impairment test and non-financial assets acquired and liabilities assumed in a business combination.  The adoption of the remainder of SFAS 157 did not have a material impact on the Company’s financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FAS 133” (“SFAS 161”).  This statement changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.  SFAS 161 is effective for fiscal years beginning on or after November 15, 2008.  The adoption of SFAS 161 did not have a material impact on the Company’s financial statements.

In April 2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under FASB Statement No. 142, “Goodwill and Other Intangible Assets”.  This new guidance applies prospectively to intangible assets that are acquired individually or with a group of other assets in business combinations and asset acquisitions.  FAS 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008.  The adoption of FAS 142-3 did not have a material impact on the Company’s financial statements.

In September 2008, the FASB issued FSP No. 133-1 and FASB Interpretation No. 45-4 (“FSP SFAS 133-1 and FIN 45-4”), “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others”, to require additional disclosure about the
current status of the payment/performance risk of a guarantee.  The provisions of the FSP that amend SFAS 133 and FIN 45 and effective for reporting periods ending after November 15, 2008.  FSP SFAS 133-1 and FIN 45-4 also clarifies the effective date in SFAS 161.  Disclosures required by SFAS 161 are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.  The adoption of FSP SFAS 133-1 and FIN 45-4 did not have a material impact on the Company’s financial statements.

In December 2008, the FASB issued FSP No. 140-4 and FIN 46R-8 (“FSP 140-4 and FIN 46R-8”), “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.”  FSP 140-4 and FIN 46R-8 require additional disclosures about transfers of financial assets and involvement with variable interest entities (“VIE’s”).  The requirements apply to transferors, sponsors, servicers, primary beneficiaries and holders of significant variable interests in a variable interest entity or qualifying special purpose entity.  Disclosures required by FSP 140-4 and FIN 46R-8 are effective for the Company in the first quarter of fiscal 2009.  Because the Company has no VIE’s, the adoption did not have a material impact the Company’s financial statements.

In January 2009, the Financial Accounting Standards Board (“FASB”) approved FASB Accounting Standards Codification (the “Codification”), which is effective July 1, 2009.  Other than resolving certain minor inconsistencies in current U.S. GAAP, the Codification is not supposed to change GAAP, but is intend to make it easier to find and research GAAP applicable to a particular


 
8

 
 
transaction or specific accounting issue.  The Codification is a new structure which takes accounting pronouncements and organizes them by approximately 90 accounting topics.  We do not expect the Codification to have a material impact on our financial position or results of operations.

In April 2009, the FASB issued FASB Staff Position SFAS 107-1 (“FSP SFAS 107-1”) and Accounting Principles Board Opinion 28-1, Interim Disclosures about Fair Value of Financial Instruments (“APB 28-1”). FSP SFAS 107-1 and APB 28-1 require disclosures about fair value of financial instruments whenever summarized financial information for interim reporting periods is presented. Entities shall disclose the methods and significant assumptions used to estimate the fair value of financial instruments and shall describe changes in methods and significant assumptions, if any, during the period.  FSP SFAS 107-1 and APB 28-1 are effective for interim reporting periods ending after June 15, 2009.  The Company does not expect the adoption of FSP SFAS 107-1 and APB 28-1 to have a material impact on the Company’s financial statements.

In April 2009, the FASB issued FSP SFAS 157-4, which provides additional guidance for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements (“SFAS 157”), when the volume and level of market activity for the asset or liability have significantly decreased.  FSP SFAS 157-4 emphasizes that even if there has been a significant decrease in the volume and level of market activity for the asset or liability and regardless of the valuation techniques used, the objective of a fair value measurement remains the same.  In addition, the statement provides guidance on identifying circumstances that indicate a transaction is not orderly. FSP SFAS 157-4 is effective for interim and annual periods ending after June 15, 2009.  The Company does not expect the implementation of FSP SFAS 157-4 to have a material impact on our financial statements.

NOTE 2 — RESTATEMENT

Subsequent to issuance, the management of the Company concluded that the transaction in August 2009 between Nature Vision, Inc. (nka Swordfish Financial, Inc.) (the “Company”) and Swordfish Financial, Inc., the Texas corporation should have been recorded as a reverse merger transaction in accordance with FASB ASC 805-10 as described in Note 3 to the accompanying restated unaudited consolidated financial statements and that the  September 30, 2009 quarterly 10-Q should be restated as presented in this Amended Filing.  Accordingly, the accompanying September 30, 2009 balance sheet and statement of operations for the three and six month periods ended September 30, 2009 and 2008, and statement of cash flows for the nine month periods ended September 30, 2009 and 2008 and the December 31, 2008 balance sheet presentations have been retroactively adjusted as presented in this Amended Filing and discussed in Note 2 to the accompanying restated unaudited consolidated financial statements and summarized as follows;
 
   
As Previously
                   
Effect of Corrections
 
Reported
   
As Restated
   
Adjustments
   
Reference
 
                         
At September 30, 2009
                       
STOCKHOLDERS’ DEFICIT
                       
Additional paid-in capital
  $ 8,889,474     $ 1,742,011     $ (7,147,463 )     1  
Accumulated deficit
  $ (12,269,785 )   $ (5,122,322 )   $ 7,147,363       1  
Total Stockholders’ Deficit
                               
                                 
At December 31, 2008
                               
ASSETS
                               
Current assets
  $ 7,739,258     $ 0     $ (7,739,258 )     1  
Property and equipment, net
  $ 1,901,650     $ 0     $ (1,901,650 )     1  
Non-current assets
  $ 997,852     $ 0     $ ( 997,852 )     1  
Total Assets
  $ 10,638,760     $ 0     $ (10,638,760 )        
                                 
LIABILITIES
                               
Current liabilities
  $ 5,922,943     $ 0     $ (5,922,943 )     1  
Long-term liabilities
  $ 1,872,952     $ 0     $ (1,872,952 )     1  
Total Liabilities
  $ 7,795,895     $ 0     $ (7,795,895 )     1  
                                 
STOCKHOLDERS’ DEFICIT
                               
Additional paid-in capital
  $ 7,141,368     $ 0     $ (7,141,368 )     1  
Accumulated deficit
  $ (4,668,516 )   $ 0     $ 4,668,516       1  
Total Stockholders’ Deficit
  $ 2,472,852     $ 0     $ (2,472,852 )     1  
                                 
STATEMENT OF OPERATIONS
                               
Three months ended September 30, 2009
                               
Sales, net
  $ 739,556     $ 0     $ ( 739,556 )     2  
Cost of goods sold
  $ 781,804     $ 0     $ ( 782,804 )     2  
Gross Profit
  $ (42,248 )   $ 0     $ 42,248       2  
Selling, general and administrative
  $ 354,849     $ 153,819     $ ( 201,030 )     2  
Loss from operations
  $ (397,097 )   $ (153,819 )   $ 243,278       2  
Other income (expenses)
  $ (1,579,126 )   $ ( 39,854 )   $ 1,539,272       2  
Loss from continuing operations before taxes
  $ (1,976,223 )   $ (193,673 )   $ 1,782,550       2  
Loss from continuing operations
  $ (1,976,223 )   $ (193,673 )   $ 1,782,550       2  
Loss from discontinued operations
  $ 0     $ (1,782,550 )   $ (1,782,550 )     2  
Net loss
  $ (1,976,223 )   $ (1,976,223 )   $ 0       2  

 
 
9

 
 
Nine months ended September 30, 2009
                       
Sales, net
  $ 4,640,309     $ 0     $ (4,640,309 )     2  
Cost of goods sold
  $ 4,229,949     $ 0     $ (4,229,949 )     2  
Gross Profit
  $ 410,360     $ 0     $ ( 410,360 )     2  
Selling, general and administrative
  $ 2,251,631     $ 153,819     $ (2,097,812 )     2  
Impairment allowance
  $ 598,434     $ 0     $ ( 598,434 )     2  
Loss from operations
  $ (2,439,705 )   $ (153,819 )   $ 2,285,886       2  
Other income (expenses)
  $ (5,220,895 )   $ ( 39,854 )   $ 5,181,041       2  
Loss from continuing operations before taxes
  $ (7,660,600 )   $ (193,673 )   $ 7,466,927       2  
Loss from continuing operations
  $ (7,660,600 )   $ (193,673 )   $ 7,466,927       2  
Gain (loss) from discontinued operations
    59,332     $ (1,782,550 )   $ (1,841,882 )     2  
Net loss
  $ (7,601,268 )   $ (1,976,223 )   $ 5,625,045       2  
                                 
                                 
Three months ended September 30, 2008
                               
Sales, net
  $ 2,199,853     $ 0     $ (2,199,853 )     2  
Cost of goods sold
  $ 1,882,706     $ 0     $ (1,882,706 )     2  
Gross Profit
  $ 317,147     $ 0     $ ( 317,147 )     2  
Selling, general and administrative
  $ 1,040,954     $ 0     $ (1,040,954 )     2  
Loss from operations
  $ (723,807 )   $ 0     $ 723,807       2  
Other income (expenses)
  $ ( 132,195 )   $ 0     $ 132,195       2  
Loss from continuing operations before taxes
  $ ( 856,002 )   $ 0     $ 856,002       2  
Provision for income tax expense
  $ 428,274     $ 0     $ ( 428,274 )     2  
Loss from continuing operations
  $ (1,284,276 )   $ 0     $ 1,284,276       2  
Gain (loss) from discontinued operations
  $ 303,804     $ 0     $ 303,804       2  
Net loss
  $ ( 980,472 )   $ 0     $ 980,472       2  
                                 
Nine months ended September 30, 2008
                               
Sales, net
  $ 6,017,084     $ 0     $ (6,017,084 )     2  
Cost of goods sold
  $ 5,053,292     $ 0     $ (5,053,292 )     2  
Gross Profit
  $ 963,792     $ 0     $ ( 963,792 )     2  
Selling, general and administrative
  $ 3,053,862     $ 0     $ (3,053,862 )     2  
Loss from operations
  $ (2,090,070 )   $ 0     $ 2,090,070       2  
Other income (expenses)
  $ ( 399,019 )   $ 0     $ 399,019       2  
Loss from continuing operations before taxes
  $ (2,489,089 )   $ 0     $ 2,489,089       2  
Provision for income tax expense
    428,274     $ 0     $ ( 428,274 )     2  
Loss from continuing operations
  $ (2,917,363 )   $ 0     $ 2,917,363       2  
Gain from discontinued operations
  $ 1,418,609     $ 0     $ (1,418,609       2  
Net loss
  $ (1,498,754 )   $ 0     $ 1,498,754       2  
                                 
                                 
STATEMENT OF CASH FLOWS
                               
Nine months ended September 30, 2009
                               
Net loss
  $ (7,601,268 )   $ (1,976,223 )   $ 5,625,045       3  
Depreciation and amortization
  $ 495,734     $ 0     $ ( 495,734 )     3  
Loss on bank default
  $ 4,904,565     $ 0     $ (4,904,565 )     3  
Loss on impairment of leasehold
  $ 273,666     $ 0     $ ( 273,666 )     3  
Loss on impairment of prepaid expenses
  $ 324,768     $ 0     $ ( 324,768 )     3  
Stock based compensation
  $ 6,095     $ 0     $ ( 6,095 )     3  
Accounts receivable
  $ 2,391,415     $ ( 45,281 )   $ (2,436,696 )     3  
Inventories
  $ 1,246,455     $ 0     $ (1,246,455 )     3  
Prepaid expenses
  $ ( 70,903 )   $ 0     $ 70,903       3  
Accounts payable
  $ 269,311     $ 948,984     $ 679,673       3  
Accrued payroll and taxes
  $ ( 105,255 )   $ 2,603     $ 107,858       3  
Accrued expenses
  $ 349,297     $ 1,228,593     $ 879,296       3  
Payments on deferred retirement
  $ ( 9,888 )   $ 0     $ 9,888       3  
Cash flows from (used) in operating activities
  $ 2,473,992     $ 158,676     $ (2,315,316 )     3  
                                 
Purchase of property and equipment
  $ 0     $ ( 7,000 )   $ ( 7,000 )     3  
Proceeds from sale of property and equipment
  $ 24,534     $ 0     $ ( 24,534 )     3  
Proceeds from sale of discontinued operations
  $ 236,927     $ 0     $ ( 236,927 )     3  
Cash flows from investing activities
  $ 261,461     $ ( 7,000 )   $ ( 268,461 )     3  
                                 
Bank overdraft
  $ ( 22,236 )   $ 0     $ 22,236       3  
Receipts (payments) on line of credit
  $ (2,325,639 )   $ 0     $ 2,325,639       3  
Proceeds from current note payable
  $ 14,098     $ 0     $ ( 14,098 )     3  
Payments on long-term debit
  $ ( 250,000 )   $ 0     $ 250,000       3  
Cash flows used in financing activities
  $ (2,583,777 )   $ 0     $ 2,583,777       3  
                                 
                                 
Nine months ended September 30, 2008
                               
Net loss
  $ (1,498,754 )   $ 0     $ 1,498,754       3  
Depreciation and amortization
  $ 593,354     $ 0     $ ( 593,354 )     3  
Loss on impairment of leasehold
  $ 28,180     $ 0     $ ( 28,180 )     3  
Gain on sale of building
  $ ( 998,950 )   $ 0     $ 998,950       3  
Stock based compensation
  $ 1,726     $ 0     $ ( 1,726 )     3  
Provision for deferred taxes
  $ 428,274     $ 0     $ ( 428,274 )     3  

 
10

 
 
Amortization of original issue discount
  $ 33,379     $ 0     $ ( 33,379 )     3  
Accounts receivable
  $ 1,248,046     $ 0     $ (1,248,046 )     3  
Inventories
  $ ( 537,393 )   $ 0     $ 537,398       3  
Prepaid expenses
  $ 36,398     $ 0     $ ( 36,398 )     3  
Accounts payable
  $ 625,090     $ 0     $ ( 625,090 )     3  
Accrued payroll and taxes
  $ ( 54,178 )   $ 0     $ 54,178       3  
Accrued expenses
  $ ( 151,127 )   $ 0     $ 151,127       3  
Payments on deferred retirement
  $ ( 58,471 )   $ 0     $ 58,471       3  
Cash flows (used) in operating activities
  $ ( 769,576 )   $ 0     $ 769,576       3  
                                 
Purchases of property and equipment
  $ ( 365,564 )   $ 0     $ 365,564       3  
Purchase of assets from Castaic
  $ ( 340,641 )   $ 0     $ 340,641       3  
Purchase of assets form MarCum
  $ ( 759,521 )   $ 0     $ 759,521       3  
Purchase of assets from Innovative
  $ ( 10,753 )   $ 0     $ 10,753       3  
Proceeds from sale of building
  $ 2,294,941     $ 0     $ (2,294,941 )     3  
Proceeds from sale of discontinued operations
  $ 243,345     $ 0     $ ( 243,345 )     3  
Purchase of intangible assets
  $ ( 11,796 )   $ 0     $ 11,796       3  
Cash flows from investing activities
  $ 1,367,472     $ 0     $ (1,367,472 )     3  
                                 
Bank overdraft
  $ 131,119     $ 0     $ ( 131,119 )     3  
Receipts (payments) on line of credit
  $ 1,200,486     $ 0     $ (1,200,486 )     3  
Payments on long-term debit
  $ (2,060,988 )   $ 0     $ 2,060,988       3  
Cash flows used in financing activities
  $ ( 729,383 )   $ 0     $ 729,383       3  

Reference
1 – The September 30, 2009 and December 31, 2008 balance sheets has been restated to reflect the results of the reverse merger accounting for the combined entities following the merger.  The acquiring entity did not have any operations prior to the closing of the merger transaction.

2 – The operating results for the three months and nine months ended September 30, 2009 and 2008 have been restated to reflect the results of the reverse merger accounting for the combined entities following the merger.  The acquiring entity did not have any operations prior to the closing the merger transaction.

3 – The cash flow results for the nine months ended September 30, 2009 and 2008 have been restated to reflect the results of the reverse merger accounting for the combined entities following the merger.  The acquiring entity did not have any operations prior to the closing the merger transaction.
 
NOTE 3 — REVERSE MERGER ACQUISITION
 
In August of 2009 a stock acquisition/reverse merger agreement was entered into by Nature Vision, Inc. (nka Swordfish Financial, Inc.) (the “Company”) and Swordfish Financial, Inc., the Texas corporation. The reverse merger was closed on August 14, 2009. Pursuant to the terms of the reverse merger, the equity holders of Swordfish Financial, Inc., the Texas corporation, acquired 10,987,417 shares of common stock constituting 80% of voting control of the Company in return for a $3,500,000 note, bearing interest at the rate of 5% per annum.  The financial statements have been prepared to include the results of operations for the Company for the years ended December 31, 2009 and 2008.
 
As a result of the reverse merger being accounted for as a reverse merger acquisition, Nature Vision’s assets and liabilities assets and liabilities as of  the closing date of the reverse merger, have been incorporated into Swordfish Financial, Inc.’s balance sheet based on the fair values of the net assets acquired, which equaled the consideration paid for the acquisition.  FASB ASC 805-10 requires an allocation of the acquisition consideration to the individual assets and liabilities. Further, the Company’s operating results (post-Merger) include Swordfish Financial, Inc., a Texas corporation, operating results prior to the date of the closing and the results of the combined entity following the closing of the Merger. Swordfish Financial, Inc., a Texas corporation, was considered the acquiring entity for accounting purposes.
 
The following represents the unaudited proforma combined results of operations of the Merger as if the Merger had occurred as of January 1, 2008:
                 
   
For Nine Months
   
For the Year
 
   
Ended September 30,
   
Ended December
 
Unaudited proforma information:
 
2009
   
31, 2008
 
Revenue
 
$
4,640,309
   
$
12,054,883
 
Net loss
 
$
(7,601,268
)
 
$
(2,455,345
)
Basic and diluted earnings per share
 
$
(0.57
)
 
$
(0.18
)
Weighted average basic and diluted shares outstanding
   
13,300,000
     
13,300,000
 



 
11

 


NOTE 4 – RELATED PARTY NOTE RECEIVABLE

Current Officer and Director Promissory Note to Company

On August 14, 2009, the Company, (formerly Nature Vision, Inc.), closed a Stock Purchase/Merger Agreement with Swordfish Financial, Inc., a Texas corporation, pursuant to which the Company sold an aggregate of 10,987,417 shares of its common stock in exchange for a $3,500,000 promissory note, payable in two installments of $1,750,000 each with the first installment being forty-five (45) days from the date of the note and the second installment being one-hundred twenty (120) days from the date of the note.  The note bears interest at the rate of 5% per annum.  As the date of this filing, no payments have been made on the promissory note and accrued interest.  The Company expects to be paid in full by shareholders of the Texas corporation.
 
The Company’s Chairman of the Board, President and Chief Executive Officer is now the beneficial owner of 7,700,000 shares of the Company's common stock based on the 10,987,417 share distributed in the stock purchase/merger transaction.

NOTE 5 – RELATED PARTY NOTE PAYABLE

Board of Director Member Notes Payable

On October 19, 2007, the Company borrowed $1,000,000 from a member of its Board of Directors in order to meet its short-term cash flow requirement. This demand promissory note was unsecured and had an interest rate of 15%.   Interest was payable on the first day of each month, commencing on December 1, 2007. The entire principal and accrued interest was payable upon demand anytime after January 19, 2008.

On July 8, 2008, the Company amended the terms and replaced the original demand note issued to the member of its Board of Directors on October 19, 2007.  The amended demand note is held by the same member of the Company’s Board of Directors.  The
demand promissory note is unsecured and bears an interest rate of 15%.    Interest is payable on the first day of each month commencing on August 1, 2008.  The Company incurred approximately $36,833 of interest for the three months ended September 30, 2009.  The entire principal and interest is payable upon demand anytime after June 30, 2010.

On August 17, 2009, the Company borrowed $200,000 from a member of its Board of Directors in order to meet its short-term cash flow requirement. This demand promissory note is secured by a second lien on the Company’s assets and has an interest rate of 15%.  The entire principal and accrued interest is payable upon demand anytime after February 17, 2010.

Chief Executive Officer Note Payable

On October 27, 2008, the Company borrowed $700,000 from its Chief Executive Officer (CEO) in order to meet its short-term cash flow requirements. This promissory note was unsecured and had an interest rate of 15%. The entire principal and accrued interest was payable on January 1, 2009.  The Company incurred approximately $26,200 of interest for the three months ended September 30, 2009.   The Company paid $250,000 of the note in January 2009.  The Company is currently in default on the remaining $450,000 of the note and is in negotiations with its CEO to extend the remaining principal balance of $450,000 in a new note that was outstanding as of September 30, 2009.


NOTE 6 - LINE OF CREDIT, BANK

On November 8, 2007, the Company entered into a line of credit agreement, a demand note, with M&I Bank for up to a maximum amount of $6,000,000.  Interest is payable monthly at the greater of one month LIBOR plus 3.75% or a floor of 5.25% (5.25% at March 31, 2009).  The line of credit is collateralized by accounts receivable, inventories, property and equipment, intangible assets and other assets of the Company.  The facility is based on the following borrowing base restrictions, 75% of eligible accounts receivable and 50% of eligible inventories.   

The Company did not meet the minimum net worth covenants as of June 30, 2009, which put the Company in default on its line of credit with the bank and on August 14, 2009, simultaneously with the signing of the Swordfish Financial, Inc. stock purchase agreement, the Company entered into a Voluntary Surrender Agreement with M&I Business Credit LLC (the ‘Creditor”), who as of August 14, 2009 was owed approximately $1,800,000 by the Company relating the Credit and Security Agreement dated November 8, 2007 (as amended or supplemented, the “Credit Agreement”).  In accordance with the Voluntary Surrender Agreement, the Company agreed to tender to M&I Business Credit LLC total possession of the Company’s Premises, operations and all of the Company’s Collateral, which was basically all of the Company’s assets, which  M&I Business Credit LLC liquidated to pay off the line of credit owed by the Company.



 
12

 


NOTE 7 - LONG-TERM DEBT

Long-term debt consisted of the following at:
   
September 30,
2009
   
Unsecured Promissory Note – Cass Creek – monthly installments of approximately $11,000  from September 2008 through March 2010, then annual installments ranging from $108,000 to $124,000 beginning September 2010 through September 2012, all payments include interest at 8%, guaranteed by the CEO of the Company.
 
$
386,538
   
           
Unsecured Note Payable – Fish Hawk -  annual installments of $33,333 plus interest at 8% from July 2008 through July 2010
   
66,666
   
           
Unsecured Note Payable – Castaic -  annual installments of $17,171, including interest at 8%, from January 2009 through January 2011
   
30,620
   
           
Unsecured Note Payable – Castaic -  monthly installments of $1,175, including interest at 8%, from February 2008 through January 2011
   
20,128
   
           
Unsecured Note Payable – monthly installments of $1,458, including interest at 7%, from August 2008 through July 2010
   
0
   
           
Unsecured Note Payable – Innovative Outdoors – monthly installments of $4,632, including interest at 7% from August 2008 through July 2011
   
99,998
   
           
Totals
   
603,950
   
           
Less: Current portion
   
235,952
   
           
Net Long-Term Debt
 
$
367,998
   


The Company is in default on all the above note payable at September 30, 2009.

Future maturities of long-term debt for years ending after September 30, 2009 are as follows:
   
Total
 
Year ending September 30:
       
2010
 
$
235,952
 
2011
   
209,480
 
2012
   
117,462
 
2013
   
41,056
 
2014 and forward
   
-
 
Total Long-Term Debt
 
$
 
603,950
 

NOTE 8 - INCOME TAXES

The provision for income taxes for continuing operations consists of the following components for the nine months ended September 30:
 
2009
 
2008
 
Current
 
$
-
   
$
-
 
Deferred
   
-
     
-
 
Total Benefit from Income Taxes
 
$
-
   
$
-
 

A comparison of the provision for income tax expense at the federal statutory rate of 34% for the nine months ended September 30 to the Company’s effective rate is as follows:
   
2009
   
2008
 
             
Federal statutory rate
   
(34.0
) %
   
(34.0
) %
State tax, net of federal benefit
   
(3.3
)
   
(3.3
)
Permanent differences and other including surtax exemption
   
0.1
     
0.1
 
Valuation allowance
   
37.2
     
37.2
 
                 
Effective Tax Rate
   
-
%
   
-
%



 
13

 
 
 NOTE 9 - COMMITMENTS AND CONTINGENCIES

Lease Commitment

The Company entered into a lease agreement for its assembly and distribution facility and corporate headquarters in Brainerd, Minnesota. The lease commenced on September 1, 2006 and set to expire on August 31, 2016.  The lease was amended in May 2008 for additional space, a sprinkler system improvement addition, and the term extended through August 31, 2018. The lease was further amended by a second amendment as of July 1, 2009 giving the Company and the Landlord the right to terminate the lease effective as of December 31, 2009 by giving notice of termination 30 days prior to the effective date of termination.  This second amendment also reduced the monthly rent from $21,801 to $15,000 with the $6,801 being deferred and waived by the Landlord if the Company timely pays the Adjusted Monthly Charge through December 31, 2009.  The Company will record monthly rent expense equal to the total of the payments due over the lease term, divided by the number of months of the lease term. The difference between rent expense recorded and the amount paid will be credited or charged to deferred rent. The Company is also required to pay its portion of operating expenses.

Based on the terms of the second amendment the Company will have the right to terminate the lease on December 31, 2009 by giving the Landlord notice 30 days prior to December 31, 2009.   The future minimum lease payments through December 31, 2009 are $45,000 as of September 30, 2009.

Other Commitments

On May 1, 2008, the Company entered into a research and development consulting agreement with an entity that had common ownership with MarCum.  The agreement requires the Company to pay the entity as follows:  (i) $525,000 in 36 monthly installments of $14,583 for research and development services beginning June 1, 2008, (ii) $200,000 in 24 monthly installments of $8,333 for product support services beginning June 1, 2008.  In addition, the Company will pay this entity a royalty of 5% of net sales (for a period of three years following the first sale) on any new product that meets certain requirements as defined in the agreement.  The Company has recognized approximately $68,748 of expense relating to this agreement for the three months ended September 30, 2009, which is included in research and development and engineering expense.

On May 1, 2008, the Company entered into a research and development consulting agreement with an entity that had common ownership with MarCum.  The agreement requires the Company to pay the entity as follows:  (i) $180,000 in 36 monthly installments of $5,000 for research and development services beginning June 1, 2008, (ii) $100,000 in 24 monthly installments of $4,166 for product support services beginning June 1, 2008.  In addition, the Company will pay this entity a royalty of 5% of net sales (for a period of three years following the first sale) on any new product that meets certain requirements as defined in the agreement.   The Company has recognized approximately $27,498 of expense relating to this agreement for the three months ended September 30, 2009, which is included in research and development and engineering expense.

The Company is under a technology purchase agreement requiring payment of $50,000 by September 30, 2009.

NOTE 10 - DISCONTINUED OPERATIONS

Nature Vision Operations

The Company did not meet the minimum net worth covenants as of June 30, 2009, which put the Company in default on its line of credit with the bank and on August 14, 2009, simultaneously with the signing of the Swordfish Financial, Inc., the Texas corporation, stock purchase agreement, the Company was forced to entered into a Voluntary Surrender Agreement with M&I Business Credit LLC (the ‘Creditor”), who as of August 14, 2009 was owed approximately $1,800,000 by the Company relating to a Credit and Security Agreement dated November 8, 2007.   M&I Business Credit LLC took total possession of Nature Vision’s Premises, its operations and all of the Nature Vision assets to collect approximately $1,800,000 owed by the Company at that time.  After M&I Business Credit LLC liquidated virtually all of the Company’s assets at significant discounts to book value, the Company was left with no assets or product lines to market and continue the Nature Vision outdoor recreations products operations.

The following is a condensed statement of the Nature Vision discontinued hunting and fishing operations for the period from the merger date through September 30, 2009:

Sales, Net
 
$
739,556
 
Cost of goods sold
   
781,804
 
Gross profit
   
(42,248)
 
         
Operating Expenses 
       
Sales and marketing
   
83,985
 
Research and development and engineering
   
117,045
 
Intangible impairment and loss on assets liquidated by bank foreclosure
   
1,539,272
 
   Total Operating Expenses
   
1,740,302
 
 Loss from Discontinued Operations
 
$
  (1,782,550)
 

 
 
14

 
 

 
NOTE 11 - SUPPLEMENTAL CASH FLOWS
   
2009
   
2008
 
Supplemental Cash Flow Disclosures
           
Cash paid for interest
 
$
64,209
   
$
0
 
Cash paid for income taxes
   
0
     
0
 
                 
     Common stock issued for note receivable
 
3,500,000 
         

NOTE 12 – SUBSEQUENT EVENTS

The Company was party to legal action pending in the Ninth Judicial District Court, Crow Wing County, State of Minnesota styled Esox Designs, Inc. vs. Nature Vision, Inc.   The  Plaintiff  filed  complaint  against the defendants to recover amounts  Plaintiff  claims  under  a  consulting agreement entered  into in  2008.  In October 2009, Court issued a default judgment against Nature Vision, Inc. in the amount of $179,166.63, which Swordfish Financial, Inc. will accrue as a liability.





 
15

 

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

Forward Looking Statements

Some of the statements made in this Form 10-Q/A constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to the safe harbor provisions of the reform act. Forward-looking statements may be identified by the use of the terminology such as may, will, expect, anticipate, intend, believe, estimate, should or continue or the negatives of these terms or other variations on these words or comparable terminology. To the extent that this report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of our business, you should be aware that our actual financial condition, operating results and business performance may differ materially from that projected or estimated by us in the forward-looking statements. We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from their current expectations. These differences may be caused by a variety of factors including, but not limited to, adverse economic conditions, intense competition, including entry of new competitors, inability to obtain sufficient financing to support our operations, progress in research and development activities, variations in costs, fluctuations in foreign currencies against the U.S. dollar in countries where we source products, adverse federal, state and local government regulation, unexpected costs, lower sales and net income (or higher net losses, than forecasted), price increases for equipment, inability to raise prices, failure to obtain new customers, the possible fluctuation and volatility of our operating results and financial condition, inability to carry out marketing and sales plans, loss of key executives and other specific risks that may be alluded to in this report.

The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with our audited consolidated financial statements and notes thereto appearing elsewhere in this report, which have been prepared assuming that we will continue as a going concern, and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2008.  As discussed in Note 1 to the condensed consolidated financial statements, our recurring net losses and inability to generate sufficient cash flows to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern.  Management’s plans concerning these matters are also discussed in Note 1 to the condensed consolidated financial statements.  This discussion contains forward-looking statements that involve risks and uncertainties, including information with respect to our plans, intentions and strategies for our businesses. Our actual results may differ materially from those estimated or projected in any of these forward-looking statements.

Overview

Swordfish Financial, Inc., (f/k/a Nature Vision, Inc. and Photo Control Corporation) (the “Company” or “we”) was incorporated as a Minnesota corporation in 1959.  On August 31, 2004, the Company changed its name to Nature Vision, Inc. in connection with a merger transaction with Nature Vision Operating Inc. (f/k/a Nature Vision, Inc.) a Minnesota corporation that was incorporated in 1998. As a part of the merger, Nature Vision Operating Inc. became a wholly-owned subsidiary of the Company. On August 17, 2009, the shareholders of the Company owning a majority of the outstanding common stock voted to change its name to Swordfish Financial, Inc.  The shares of the Company trade on the Over The Counter (OTC) Pinksheets under the symbol, “SWRF.”

Nature Vision designed, manufactured and marketed outdoor recreation products primarily for the sport fishing and hunting markets.

The Company did not meet the minimum net worth covenants of a line of credit with M&I Business Credit LLC (M&I Bank) as of June 30, 2009, which put the Company in default on the line of credit.  On August 14, 2009, simultaneously with the signing of the Swordfish Financial, Inc. stock purchase agreement, M&I Business Credit LLC, owed approximately $1,800,000 by the Company, foreclosed on the line of credit and forced the Company to enter into a Voluntary Surrender.  The Voluntary Surrender Agreement tendered to M&I Business Credit LLC total possession of the Company’s Premises, operations and all of the Company’s Collateral, which consisted of all of the Company’s assets.  M&I Business Credit LLC liquidated basically all of the Company’s assets to recover the line of credit debt.

Based on the limited assets, product lines and resources remaining after the M&I Business Credit LLC liquidation, Swordfish Financial, Inc. has made the decided that there is not enough remaining of the Nature Vision operations to continue as an outdoor recreations products company and will concentrate on the business on being and asset recovery company and using the financial resources recovered to retire the Company’s debts and invest in other businesses domestically and internationally.

Despite cost reduction initiatives, the Company will be unable to pay its obligations in the normal course of business or service its debt in a timely manner throughout 2009 without completing a recovery project, raising additional debt or equity capital.  There can be no assurance that the Company will complete a recovery project, raise additional debt or equity capital.


 
16

 
 
Results of Operations

Plan of Operations

Swordfish Financial will operate as a diversified financial asset recovery company for high net worth individuals and companies with orphaned or dormant assets held in financial institutions around the world.  Swordfish Financial will recognize its share of the recovered assets on its financial statements upon the successful completion of each recovery project.  Swordfish Financial plans to take the financial capital resources recovered and invest in companies that have the mission of being eco-friendly and providing a better standard of living for our world’s people.

Operating Expenses

Total operating expenses were $153,819 for the three and nine months ended September 30, 2009 compared to $-0- for the three and nine months ended September 30, 2008.   Payroll, rent and legal expenses were the primary expenses making up the $153,819.

Other Income and Expenses

Other expense are primarily composed of interest expense accrued on the Company’s outstanding notes payable.

Loss from Operations

The Company recognized a loss from operations of $193,673 for the three and nine months ended September 30, 2009, compared to a gain from operations of $-0- for the three and nine months ended September 30 2008.  The increase in the loss from operations is as a result of the change in business model discussed above.

Loss from Discontinued

The Company recognized a loss of $1,782,550, for the three and nine months ended September 30, 2009 from discontinued operations of the Nature Vision hunting and fishing product manufacturing operation as the result of the Company changing its business model.

Net Loss

The Company recognized a net loss of $1,976,223 for the three and nine months ended September 30, 2009 compared to a net gain of $-0- for the three and nine months ended September 30, 2008.  The increase in the net loss is as a result of the change in business model discussed above and a loss of $1,581,250 on discontinued operations.

Liquidity and Capital Resources

The Company’s cash flow from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, is summarized in the following table for the nine months ended September 30:

 (thousands)
 
2009
   
2008
 
Cash provided by (used for):
           
Operating activities
 
$
158,676
   
$
0
 
Investing activities
   
(7,000
   
0
 
Financing activities
   
0
     
0
 
Increase (decrease) in cash and cash equivalents
 
$
151,676
   
$
0
 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  We incurred net losses of $1,976,223 and $-0-, respectively, for the nine months ended September 30, 2009 and 2008 and had an accumulated deficit of $5,122,322 as of September 30, 2009.  We have managed our liquidity during the third quarter of 2009 through cost reduction initiatives.

Despite cost reduction initiatives, the Company will be unable to pay its obligations in the normal course of business or service its debt in a timely manner throughout 2009 without realizing one of its recovery projects, raising additional capital or issuing debt instruments.

The Company is currently evaluating strategic alternatives that include the following: (i) raising of new capital, or (ii) issuance of debt instruments.  This process is ongoing and may be lengthy and has inherent costs.  There can be no assurance that the exploration of strategic alternatives will result in any specific action to alleviate the Company’s 12 month working capital needs or result in any other transaction.
 
 
 
17

 

The Company believes that the effect of inflation has not been material during the three months ended September 30, 2009.

Off-Balance Sheet Financing Arrangements

As of September 30, 2009, there were no off-balance sheet arrangements, unconsolidated subsidiaries and commitments or guaranties of other parties.

Critical Accounting Policies

The Company’s critical accounting policies are identified in the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2008 in  Management’s Discussion and Analysis of Financial Condition and Results of Operations  under the heading “Critical Accounting Policies.” There were no significant changes to the Company’s critical accounting policies during the three months ended September 30, 2009.

Item 3: Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable

Item 4T: Controls and Procedures.

          Our  management  is  responsible  for   establishing  and  maintaining adequate  internal  control  over  financial  reporting.  Internal  control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f)  promulgated under the Exchange  Act as a process  designed by, or under the supervision of, the company's  principal executive officer and principal financial officer and effected by our board of directors, management and other personnel, 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 and  includes those policies and procedures that:
 
 
pertain to the  maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
   
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting  principles, and that receipts and expenditures  of the company are being made only in accordance with authorizations of management and directors of the company; and
   
provide reasonable assurance regarding prevention or timely detection of  unauthorized  acquisition,  use or disposition of the company's assets that could have a material effect on the financial statements.
 
          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

          In September 2009, we conducted an evaluation, under the supervision and with the  participation of our principal  executive officer and principal financial officer, of the effectiveness of our internal control over financial  reporting based on the criteria for effective  internal control over financial reporting established in "Internal Control -- Integrated  Framework," issued by the  Committee of  Sponsoring Organizations (COSO) of the Treadway Commission.  Based upon this assessment, we determined that there are material weaknesses affecting our internal control over financial reporting.
 
          The  matters  involving  internal  controls  and  procedures  that our management considers to be material weaknesses under COSO and SEC rules are: (1) lack of a functioning  audit committee and lack of independent  directors on our board of  directors,  resulting in potentially ineffective oversight in the establishment and monitoring of required internal controls and procedures;  (2)inadequate segregation of  duties consistent with control objectives; (3) insufficient written policies and procedures for accounting  and financial reporting with respect to the requirements  and application of US GAAP and SEC disclosure requirements;  and (4) ineffective controls over period end financial disclosure and reporting  processes.  The  aforementioned potential  material weaknesses were identified by our Chief Financial Officer in connection with the preparation  of our financial  statements as of September 30, 2009 who  communicated the matters to our management and board of directors.
 
 
18

 


          Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an affect on our financial results. However, the lack of a functioning  audit committee and lack of a majority of independent directors  on our  board of  directors,  resulting  in  potentially  ineffective oversight in the  establishment and monitoring of required internal controls and procedures, can impact our financial statements.
Management's Remediation Initiatives
 
 
          Although we are unable to meet the standards under COSO because of the limited funds available to a company of our size, we are committed to improving our financial organization. As funds become available, we will undertake to: (1) create a position to segregate duties  consistent with control  objectives,  (2) increase our personnel resources and technical  accounting  expertise within the accounting  function (3) appoint one or more  outside  directors to our board of directors  who shall be appointed to a Company  audit  committee  resulting in a fully  functioning  audit  committee  who will  undertake  the  oversight in the establishment and monitoring of required  internal controls and procedures;  and (4) prepare and implement  sufficient written policies and checklists which will set forth procedures for accounting and financial  reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

          We will  continue to monitor and  evaluate  the  effectiveness  of our internal  controls  and  procedures  and our  internal  control  over  financial reporting on an ongoing  basis and are  committed to taking  further  action and implementing additional enhancements or improvements,  as necessary and as funds allow.  However, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake.  The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Projections of any evaluation of controls effectiveness to future periods are subject to risks.

Part II – OTHER INFORMATION

Item 1.  Legal Proceedings.  

Breach of Contract Action

On August 14, 2009, M&I Business Credit LLC, owed approximately $1,800,000 by the Company, foreclosed on the Company’s assets under a Credit and Security Agreement dated November 8, 2007 (as amended or supplemented, the “Credit Agreement”) and the Company entered into a Voluntary Surrender Agreement which tendered to M&I Business Credit LLC total possession of the Company’s Premises, operations and all of the Company’s Collateral, which was basically all of the Company’s assets, until M&I Business Credit LLC liquidates sufficient assets to pay off the line of credit owed by the Company.  On October 30, 2009, M&I Business Credit LLC notified the Company that it had converted sufficient Company assets to recover the Company’s debt and was turning back to the Company possession of the Company’s Premises, operations and remaining assets.

The Company was party to legal action pending in the Ninth Judicial District Court, Crow Wing County,  State of Minnesota styled Esox Designs, Inc. vs. Nature Vision, Inc.   The  Plaintiff  filed  complaint  against the defendants to recover amounts  Plaintiff  claims  under  a  consulting agreement entered  into in  2008.  In October 2009, Court Issued a default judgment against Nature Vision, Inc. in the Amount of $179,166.63, which Swordfish Financial, Inc. will accrue as an expense.

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

On August 14, 2009, the Company entered into a Stock Purchase Agreement with Swordfish Financial, Inc. pursuant to which the Company sold an aggregate of 10,987,417 shares of its common stock in exchange for a $3,500,000 promissory note, payable in two installments of $1,750,000 each with the first installment being forty-five (45) days from the date of the note and the second installment being one-hundred twenty (120) days from the date of the note.

The issuance of these shares was exempt from the registration requirements of the Securities Act of 1933 under Section 4 (2) thereof.

Item 3.  Defaults Upon Senior Securities.  Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders.  Not applicable.

 
 
19

 
 
Item 5.  Other Information.  

As a result of the Swordfish Financial, Inc. stock purchase described in Note 3 to the financial statements, a change in control occurred with respect to the Company’s capital stock ownership.  Mssrs Richard P. Kiphart, Jeffery P. Zernov, Scott S. Meyers and Curtis A. Sampson served as the members of the Board of Directors. Pursuant to the terms and conditions set forth in the Stock Purchase Agreement, immediately following the closing of the Transaction, (1) On August 13, 2009, Michael D. Alexander and Randy J. Moseley were appointed as a members to the Board of Directors effective August 14, 2009 and (2) Richard P. Kiphart, Jeffery P. Zernov, Scott S. Meyers and Curtis A. Sampson voluntarily tendered their resignations, effective August 14, 2009, as members of the Company’s Board of Directors.

On August 13, 2009, the Company received from each of Jeffrey P. Zernov, President and Chief Executive Officer and Robert P. King, Chief Financial Officer and Secretary a letter voluntarily resigning their respective officer positions with the Company.

On August 17, 2009, the board of directors appointed Michael D. Alexander as the President and Chief Executive Officer of the Company and Randy Moseley as Chief Financial Officer of the Company.   

           On August 17, 2009, the board of directors voted to amend the Company’s Articles of Incorporation to change the name of the Company to Swordfish Financial, Inc.


Item 6.  Exhibits.

Listing of Exhibits:

   
Certification of Chief Executive Officer.
       
   
Certification of Chief Financial Officer.
       
   
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


 

Signatures


In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
SWORDFISH FINANCIAL, INC.
       
       
Date:  November 29, 2010
By:
/s/ Michael Alexander
 
   
Its:  Chief Executive Officer and President
 
       
       
Date:  November 29, 2010
By:
/s/ Randy Moseley
 
   
Its:  Chief Financial Officer
 
 
 

 
20