S-1/A 1 fs1a3_swapadept.htm AMENDED REGISTRATION STATEMENT fs1a3_swapadept.htm



As filed with the Securities and Exchange Commission on December 22 , 2008

Registration No.  333-153798
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
AMENDMENT NO.  3 TO FORM S-1

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
 
 SWAP-A-DEBT, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
33-11935
 
59-2754843
(State or Other Jurisdiction of
Incorporation or Organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. Employer
Identification No.)

940 Lincoln Road, Suite 220
Miami, FL 33139
(305) 394-8345
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant’s Principal Executive Offices)

Edward C. DeFeudis
President and Chairman of the Board
940 Lincoln Road, Suite 220
Miami Beach, FL 33139
(305) 394-8345
 (Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
 
Copies to:
  GREGG E. JACLIN, ESQ.
ANSLOW & JACLIN, LLP
195 Route 9 South, Suite204
Manalapan, NJ 07726
TELEPHONE NO.: (732) 409-1212
FACSIMILE NO.: (732) 577-1188
 
Approximate date of commencement of proposed sale to the public: From time to time after the Registration Statement becomes effective.
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  x
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
x
(Do not check if a smaller reporting company)
     
 

 
CALCULATION OF REGISTRATION FEE
 
Title of Class of Securities to
be Registered  
 
Amount to be
Registered (1)  
 
Proposed
Maximum
Offering Price
Per Unit (2)  
 
Proposed
Maximum
Aggregate
Offering Price  
 
Amount of
Registration
Fee
 
Common stock, par value $0.001 per share
   
10,025,000
 
$
1.00
 
$
10,025,000
 
$
 
393.98
 
 
 
(1)
In accordance with Rule 416, promulgated under the Securities Act of 1933, as amended (the “Securities Act”), the Registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions.
     
  
(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based upon the average of the high and low sales prices of our common stock reported on the Pink Sheets on October 1, 2008.
 
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.



 
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.  THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.  THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
SUBJECT TO COMPLETION, DATED DECEMBER __, 2008

PROSPECTUS
__________________________________________

SWAP-A-DEBT, INC.
 
10,025,000 Shares of Common Stock
__________________________________________
 
This Prospectus relates to 10,025,000 shares of our common stock, par value $0.001 per share, which may be offered for sale or otherwise transferred from time to time by the selling shareholders.

The securities subject to this Prospectus are being registered to permit public secondary trading of the securities offered by the selling stockholders named in this Prospectus. We will not receive any of the proceeds from the sale of the securities by the selling stockholders.

The 10,025,000 shares of our common stock will be sold by selling security holders at a fixed price of $1.00 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing marketing prices or privately negotiated prices. See "Plan of Distribution" on Page 32 of this Prospectus.
  
We intend to apply to list our common stock on the Over-the-Counter Bulletin Board (“OTCBB”) if and when we meet the listing requirements. There can be no assurances, however, that we will meet the listing requirements. Therefore, we cannot give you any assurance that an established trading market in our common stock will develop, or if such a market does develop, that it will continue. Our common stock currently is quoted on the Pink Sheets LLC (the “Pink Sheets”) under the symbol “SWPD.PK” The last reported sale price of our common stock on the Pink Sheets on October 1, 2008, was $1.00 per share.
  
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU MAY LOSE YOUR ENTIRE INVESTMENT. SEE “RISK FACTORS” BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT YOU SHOULD CONSIDER.
 
YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION.
 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
The date of this prospectus is December 22 , 2008



 

 
You should only rely on the information contained in this prospectus. We have not, and the selling security holders have not, authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is accurate only as of the date on the front cover, but the information may have changed since that date.



 
 
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus, including “Risk Factors” and the consolidated financial statements and the related notes before making an investment decision.
 
Business Overview

We are a development stage company in the peer-to-peer (P2P) lending space and we have not generated any revenues since 2005 . Our mission is to establish the most efficient Internet non-institutional lending organization with more services than present privately held competitors. Person-to-person lending or peer-to-peer lending or social lending is, in its broadest sense, the name given to a certain breed of financial transactions (primarily lending and borrowing) which occurs directly between individuals (peers) without the intermediation/participation of a traditional financial institution. The biggest enabling technology for person-to- person lending has been the Internet, where person-to-person lending appears in two primary variations: an “online marketplace” model and a “family and friends” model.

We are an on-line site for borrower’s who want to borrow $1,000 to $25,000 and for lenders who can make educated decisions on credit scores, intended use etc., to receive a higher rate of interest than available at traditional financial institutions. This is all facilitated with an Internet website and a highly efficient back office system to completely automate a process that has become ever more cumbersome at brick and mortar banks. Our fully automated Internet website which utilizes16 high level programmers is ninety five percent complete (for further details please refer to page 1 “Our Corporate Information” section). Because of the high automation of its website the personnel requirements for the company are relatively modest. Swap-a-debt will embark on a major marketing campaign to expand its client base. It is in discussions with major marketing companies to execute this program.

Our management is a shareholder in other companies that generated no or minimal revenues. Specifically, Edward C. Defeudis is a shareholder of Kraig Biocraft Laboratories, Inc.:

Kraig Biocraft Laboratories, Inc. (“Kraig Biocraft”) was incorporated under the laws of the State of Wyoming on April 25, 2006. The Company was organized to develop high strength, protein based fiber, using recombinant DNA technology, for commercial applications in the textile and specialty fiber industries. Edward C. Defeudis, our President, Chief Financial Officer, Principal Accounting Officer and sole director , beneficially owns approximately 4,675,000 shares of common stock, or approximately 9.3% of the issued and outstanding shares of Kraig Biocraft. Other than the above stated, Mr. Defeudis was not and is not involved in any business management or decision-making of Kraig Biocraft.
 
Risk Factors

Our ability to successfully operate our business and achieve our goals and strategies is subject to numerous risks as discussed more fully in the section titled “Risk Factors,” including for example:
 
 
·
inability to successfully complete construction of our Internet non-institutional lending services;
 
 
·
inability to effectively manage rapid growth; and
 
 
·
the possibility of losing key members of our senior management.
 
Any of the above risks could materially and adversely affect our business, financial position and results of operations. An investment in our common stock involves risks. You should read and consider the information set forth in “Risk Factors” and all other information set forth in this prospectus before investing in our common stock.
  
Our Corporate Information

On February 26, 2008, we acquired all the right, title and interest in and to www.swapadebt.com, a person-to-person lending website from Spider Investments, LLC, a Florida limited liability company, pursuant to a purchase agreement (the “Purchase Agreement”). As consideration, we issued to Spider Investment of 22,200,000 shares of our common stock, and we also issued an additional 15,000,000 shares of our common stock to Situation X, LLC, a Delaware limited liability company, in connection with services rendered and to be rendered by Marco Garibaldi with respect to the business of our company. The website is in construction and will be launched by the end of November 2008.
 
Our website is approximately 95% completed. Our original intention for our website was to launch by "piggybacking" on Bank of America's ACH system (money transfer system).  However, after several weeks of review, Bank of America declined to set up our API which is the electronic gateway for the ACH.   Bank of America provided us with  two reasons for declining to set up our API: one is that based on the credit crisis, Bank of America now has very strict standard for lending business and therefore it has become much more difficult to get an approval and the other reason is Bank of America required two years financials on any business which processes over the phone or internet which also increased the difficulty to get an approval . Based upon same, we made the decision to build our own proprietary ACH.  The biggest hurdle that was encountered was the fact that our ACH system not only credits accounts (like from buyer to seller), but also needs to be able to debit accounts.  This change in system is highly unusual and has delayed us quite a bit.

To this point, the developers have debited and credited money within our accounts at Bank of America which was a crucial milestone. On December 4, 2008, Mr. DeFeudis sent the developers 8 bank accounts with 4 different banks so they can test in a "real life" environment. They are currently testing the system with these accounts. Once we have tested successfully and the developers say that we are secure, the developers will integrate the ACH system and complete the last 5% of the website.   Upon the current testing status, we anticipate another two weeks to complete the testing of ACH system. Once we have a stable version of the ACH system where there are no major roadblocks and a complete user experience, we will take another week for high-level bug testing and security fixes . This last 5% of integration and the build out of the "community" section should take 2 to 3 weeks from the completion of the ACH gateway.  We anticipate a total of 6 weeks from now on to launch our website.

Contact Information
   
We maintain our corporate offices at 940 Lincoln Road, Suite 220, Miami Beach, FL 33139. Our telephone number is (305) 394-8345 and our facsimile number is (305) 394-8346. We also have a website at www.swapadebt.com which is 95% complete (for further details please refer to page 1 “Our Corporate Information” section).
  
The Offering

This prospectus relates to 10,025,000 shares of common stock.
 
 
 

Common stock outstanding prior to offering
 
49,500,000
     
Common stock offered by Company
 
0
     
Total shares of common stock offered by selling stockholders
 
10,025,000
     
 Common stock to be outstanding after the offering
 
49,500,000
     
Terms of the Offering
 
The selling stockholders will determine when and how they will sell the common stock offered in this prospectus.
     
 Use of proceeds of sale
 
We will not receive any of the proceeds of sale of the shares of common stock by the selling stockholders.
     
Pink Sheet Trading Symbol
 
SWPD.PK
     
 Risk Factors
 
See “Risk Factors” beginning on page 3 and other information included in this prospectus for a discussion of factors you should consider before deciding to invest in shares of our common stock.
 
The shares of common stock offered under this prospectus may be sold by the selling security holders on the public market, in negotiated transactions with a broker-dealer or market maker as principal or agent, or in privately negotiated transactions not involving a broker or dealer. Information regarding the selling shareholders, the common shares they are offering to sell under this prospectus, and the times and manner in which they may offer and sell those shares is provided in the sections of this prospectus captioned "Selling Security Holders," "Registration Rights" and "Plan of Distribution," respectively. The registration of common shares pursuant to this prospectus does not necessarily mean that any of those shares will ultimately be offered or sold by the selling security holders.
 
Summary Consolidated Financial Information
 
The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis,” “Plan of Operation” and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data for the year ended January 31, 2008 and 2007 are derived from our audited financial statements. The interim financial data for the nine-month periods ended October 31, 2008 and 2007 are derived from our unaudited financial statements.
 
     
For the Nine Months Ended
 
For the Year Ended
October 31, 
January 31,
     
(Unaudited)
 
(Audited)
     
2008
 
2007
 
2008
 
2007
           
Revenues
   
$
-
 
$
-
 
$
-
 
$
-
                           
Total operating expenses
     
479,861
   
165,923
   
264,862
   
180,558
                           
Income (loss) from operation
     
(479,861)
   
(165,923)
   
(264,862)
   
(180,558)
                           
Other income (expense)
     
423,094
   
(2,082)
   
(10,803)
   
(1,462)
                           
Income taxes
     
-
   
-
   
   
-
                           
Net income (loss)
   
$
(56,767)
 
$
(168,005)
 
$
(275,665)
 
$
(182,020)
                           
Earnings (loss) per common share-basic and diluted
   
$
(0.001)
 
$
(0.006)
   
(0.004)
 
$
(0.007)
                             
 
BALANCE SHEET DATA:
 
As of October 31,
 
As of January 31,
2008
(Audited)
2008
(Unaudited)
                 
Current assets
 
$
199,287
   
$
384,360
 
                 
Total assets
 
$
305,660
   
$
494,398
 
                 
Total liabilities
 
$
355,178
   
$
1,661,583
 
                 
Stockholders’ equity (deficit)
 
$
(49,518)
   
$
(1,167,185)
 
 
 
 
 
 
 
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Related To Our Business
 
WE ARE A DEVELOPMENT STAGE COMPANY WITH HISTORY OF OPERATING LOSSES AND CUMULATIVE DEFICIT.

We are  a development stage company which has  has incurred net operating losses since 2005. We may continue to incur expenses in excess of our income for a considerable period of time.  The establishment of any new business involves problems, expenses, difficulties, complications and delays.  It is not possible for anyone, including our management team, to predict with certainty what all of these expenses, complications and delays will be .

WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT CAPITAL TO FUND OUR PLANNED CONSTRUCTION OF INTERNET LENDING SERVICES.
 
If adequate additional financing is not available on reasonable terms, we may not be able to undertake the construction of our Internet lending service and we would have to modify our business plans accordingly. There is no assurance that additional financing will be available to us.
 
In connection with our planned expansion and construction of Internet lending services, we may experience increased capital needs and accordingly, we may not have sufficient capital to fund these initiatives without additional capital investments. Our capital needs will depend on numerous factors, including (i) our profitability; (ii) the actual versus planned cost to construct our website and services; (iii) the level of our investment in research and development; and (iv) the amount of our capital expenditures, including acquisitions. We cannot assure you that we will be able to obtain capital in the future to meet our needs.

If we cannot obtain additional funding, we may be required to: (i) substantially curtail our operations; (ii) limit our marketing efforts; (iii) abandon or delay construction of the Internet lending service; and (iii) decrease or eliminate capital expenditures.  Such reductions could materially adversely affect our business and our ability to compete.
 
Even if we do find a source of additional capital, we may not be able to negotiate acceptable terms and conditions for obtaining the additional capital. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our common stock. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

WE NEED TO MANAGE GROWTH IN OPERATIONS TO MAXIMIZE OUR POTENTIAL GROWTH AND ACHIEVE OUR EXPECTED REVENUES AND OUR FAILURE TO MANAGE GROWTH WILL CAUSE A DISRUPTION OF OUR OPERATIONS RESULTING IN THE FAILURE TO GENERATE REVENUE.

In order to maximize potential growth in our current and potential markets, we believe that we must expand our services and marketing operations. This expansion will place a significant strain on our management and our operational, accounting, and information systems. We expect that we will need to continue to improve our financial controls, operating procedures, and management information systems. We will also need to effectively recruit, train, motivate, and manage our employees. Our failure to manage our growth could disrupt our operations and ultimately prevent us from generating the revenues we expect.
 
WE DEPEND ON OUR KEY MANAGEMENT PERSONNEL AND THE LOSS OF THEIR SERVICES COULD ADVERSELY AFFECT OUR BUSINESS.
 
We place substantial reliance upon the efforts and abilities of our CEO, Mr. Marco Garibaldi.  The loss of the services of Mr. Garibaldi could have a material adverse effect on our business, operations, revenues or prospects.  We do not maintain key man life insurance on the lives of these individuals.

WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS.

We have not declared any cash dividends on our common stock since inception and our board of directors does not intend to declare or distribute dividends in the near future.  The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant.  There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.
 
 
 

MANAGEMENT EXERCISES SIGNIFICANT CONTROL OVER MATTERS REQUIRING SHAREHOLDER APPROVAL WHICH MAY RESULT IN THE DELAY OR PREVENTION OF A CHANGE IN OUR CONTROL.
 
Mr. Marco Garibaldi, our Chairman and Chief Executive Officer, has voting power equal to approximately 30.30% of our voting securities. Mr. Edward C. DeFeudis, our President, has voting power equal to approximately 49.84% of our voting securities.  As a result, management through such stock ownership rights has the ability to exercise significant control over all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions.  This concentration of ownership in management may also have the effect of delaying or preventing a change in control of us that may be otherwise viewed as beneficial by shareholders other than management.

MANAGEMENT OF OUR COMPANY IS A SHAREHOLDER OF ANOTHER DEVELOPMENT STAGE COMPANY WHICH HAS GENERATED NO OR MINIMAL REVENUES.

Our management is a shareholder of another public company that has generated no minimal revenues. Specifically, Edward C. Defeudis was involved with:

Kraig Biocraft Laboratories, Inc. (“Kraig Biocraft”) was incorporated under the laws of the State of Wyoming on April 25, 2006. The Company was organized to develop high strength, protein based fiber, using recombinant DNA technology, for commercial applications in the textile and specialty fiber industries. Edward C. Defeudis, our President, Principal Accounting Officer and sole director , beneficially owns approximately 4,675,000 shares of common stock, which represents approximately 9.3% of the issued and outstanding shares of Kraig Biocraft.
 
Based on the above, our management and some of our shareholders have a history of involvement with companies that have generated no or minimal revenues.
 
WE MAY INCUR SIGNIFICANT COSTS TO ENSURE COMPLIANCE WITH UNITED STATES CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS.

We may incur significant costs associated with our company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

WE MAY NOT BE ABLE TO MEET THE ACCELERATED FILING AND INTERNAL CONTROL REPORTING REQUIREMENTS IMPOSED BY THE SECURITIES AND EXCHANGE COMMISSION RESULTING IN A POSSIBLE DECLINE IN THE PRICE OF OUR COMMON STOCK AND OUR INABILITY TO OBTAIN FUTURE FINANCING.

As directed by Section 404 of the Sarbanes-Oxley Act, as amended by SEC Release No. 33-8934 on June 26, 2008, the Securities and Exchange Commission adopted rules requiring each public company to include a report of management on the company's internal controls over financial reporting in its annual reports.  In addition, the independent registered public accounting firm auditing a company's financial statements must also attest to and report on management's assessment of the effectiveness of the company's internal controls over financial reporting as well as the operating effectiveness of the company's internal controls. Commencing with its annual report for the year ending January 31, 2010, we will be required to include a report of management on its internal control over financial reporting.  The internal control report must include a statement

·
Of management’s responsibility for establishing and maintaining adequate internal control over its financial reporting;

·
Of management’s assessment of the effectiveness of its internal control over financial reporting as of year end; and

·
Of the framework used by management to evaluate the effectiveness of our internal control over financial reporting.

Furthermore, in the following year, our independent registered public accounting firm is required to file its attestation report separately on our internal control over financial reporting on whether it believes that we have maintained, in all material respects, effective internal control over financial reporting.

While we expect to expend significant resources in developing the necessary documentation and testing procedures required by Section 404 of the Sarbanes-Oxley Act, there is a risk that we may not be able to comply timely with all of the requirements imposed by this rule.  In the event that we are unable to receive a positive attestation from our independent registered public accounting firm with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements and our stock price and ability to obtain equity or debt financing as needed could suffer.

In addition, in the event that our independent registered public accounting firm is unable to rely on our internal controls in connection with its audit of our financial statements, and in the further event that it is unable to devise alternative procedures in order to satisfy itself as to the material accuracy of our financial statements and related disclosures, it is possible that we would be unable to file our Annual Report on Form 10-K with the Securities and Exchange Commission, which could also adversely affect the market price of our common stock and our ability to secure additional financing as needed.
 
 
 
WE MAY HAVE DIFFICULTY RAISING NECESSARY CAPITAL TO FUND OPERATIONS AS A RESULT OF MARKET PRICE VOLATILITY FOR OUR SHARES OF COMMON STOCK.

In recent years, the securities markets in the United States have experienced a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values or prospects of such companies.  For these reasons, our shares of common stock can also be expected to be subject to volatility resulting from purely market forces over which we will have no control.  If we are able to complete construction of our planned scrap metal recycling facility and expand the distribution and sales of our metal ore products, we may require additional financing to continue to develop and exploit existing and new products and services related to these aspects of our business and to expand into new markets.  The exploitation of our business may, therefore, be dependent upon our ability to obtain financing through debt and equity or other means.

Risks Related To Our Securities

OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND SOLE DIRECTOR AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR SOLE DIRECTOR.  
  
Our articles of incorporation and applicable Delaware law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person's written promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us which we will be unable to recoup.

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops.    

STOCKS TRADED IN THE PINK SHEETS OR ON THE OTCBB ARE SUBJECT TO LIMITATIONS IN CONNECTION WITH THE AVAILABILITY OF QUOTES AND ORDER INFORMATION.
 
Our shares currently trade in the Pink Sheets. Following this offering we intend to seek quotation on the Over The Counter Bulletin Board. Trades and quotations in the Pink Sheets and on the OTCBB involve a manual process and the market information for those securities cannot be guaranteed. In addition, quote information, or even firm quotes, may not be available. The manual execution process may delay order processing and intervening price fluctuations may result in the failure of a limit order to execute or the execution of a market order at a significantly different price. Execution of trades, execution reporting and the delivery of legal trade confirmation may be delayed significantly. Consequently, one may not able to sell shares of our common stock at the optimum trading prices.

RISK OF MARKET FRAUD.
 
Shares traded in the Pink Sheets and OTCBB securities are frequent targets of fraud or market manipulation. Not only because of their generally low price, but also because the reporting requirements for these securities are less stringent than for listed or NASDAQ traded securities, and no exchange requirements are imposed. Dealers may dominate the market and set prices that are not based on competitive forces. Individuals or groups may create fraudulent markets and control the sudden, sharp increase of price and trading volume and the equally sudden collapse of the market price for shares of our common stock.
 
LIMITED LIQUIDITY IN THE PINK SHEETS OR ON THE OTCBB.
 
When fewer shares of a security are being traded in the Pink Sheets or on the OTCBB, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information. Due to lower trading volumes in shares of our common stock, there may be a lower likelihood of one's orders for shares of our common stock being executed, and current prices may differ significantly from the price one was quoted at the time of one's order entry.


ANY MARKET THAT DEVELOPS IN SHARES OF OUR COMMON STOCK WILL BE SUBJECT TO THE PENNY STOCK REGULATIONS AND RESTRICTIONS WHICH WILL CREATE A LACK OF LIQUIDITY AND MAKE TRADING DIFFICULT OR IMPOSSIBLE.

The trading of our securities, if any, will be in the over-the-counter market which is commonly referred to as the OTCBB as maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our common stock.

Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a "penny stock," for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.

For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased.  In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:

§      the basis on which the broker or dealer made the suitability determination, and
 
§      that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our common stock, if and when our common stock becomes publicly traded. In addition, the liquidity for our common stock may decrease, with a corresponding decrease in the price of our common stock. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their common stock.
 
THE MARKET FOR PENNY STOCKS HAS EXPERIENCED NUMEROUS FRAUDS AND ABUSES WHICH COULD ADVERSELY IMPACT INVESTORS IN OUR STOCK.

We believe that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:
 
§      Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
 
§      Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
 
§      “Boiler room" practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;
 
§      Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
 
§      Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

We believe that many of these abuses have occurred with respect to the promotion of low price stock companies that lacked experienced management, adequate financial resources, an adequate business plan and/or marketable and successful business or product.
 

 
 
OUR CONTROLLING SECURITY HOLDERS MAY TAKE ACTIONS THAT CONFLICT WITH YOUR INTERESTS.

All of our officers and sole director beneficially own approximately 80.15% of our common stock. In this case, all of our officers and sole director will be able to exercise control over all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions, and they will have significant control over our management and policies. The directors elected by these security holders will be able to significantly influence decisions affecting our capital structure. This control may have the effect of delaying or preventing changes in control or changes in management, or limiting the ability of our other security holders to approve transactions that they may deem to be in their best interest. For example, our controlling security holders will be able to control the sale or other disposition of our operating businesses and subsidiaries to another entity.
 
 
This prospectus contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” above.
 
In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements include, among other things, statements relating to:

 
·
Our plans to successfully complete construction of our Internet lending services, or, even if constructed, our ability to operate the online lending services profitably;
 
·
Our intentions to obtain sufficient additional capital to fund our planned expansion and construction of the Internet lending services;
  
·
our expectations regarding the market for our Internet lending services;
 
·
our beliefs regarding the continued growth and competitiveness of the Internet lending services;
 
·
our future business development, results of operations and financial condition; and
 
·
competition from other Internet lending institutions.
 
Also, forward-looking statements represent our estimates and assumptions only as of the date of this prospectus. You should read this prospectus and the documents that we reference in this prospectus, or that we filed as exhibits to the registration statement of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.
 
Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Please note that all information set forth below gives effect to a 1-for-3.85704 reverse stock split on March 7, 2001 and a 1-for-20 reverse stock split of our common stock on February 26, 2008.

 
We will not receive any of the proceeds from any sales of the shares offered for sale under this prospectus by the selling stockholders.
 
DILUTION
 
The common stock to be sold by the selling shareholders is common stock that is currently issued to our shareholders. Accordingly, there will be no dilution to our existing shareholders.


Market Information

Our common stock is quoted on the Pink Sheets, a quotation service for OTC securities, under the symbol “SWPD.PK.” Pink Sheets is a centralized quotation service that collects and publishes market maker quotes for OTC securities in real-time. Our listing status on the Pink Sheets is dependent on market makers’ willingness to provide the service of accepting trades to buyers and sellers of the stock. Quotes for OTC securities reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Unlike securities traded on a stock exchange, such as the New York Stock Exchange, issuers of securities traded on the Pink Sheets do not have to meet any specific quantitative and qualitative listing and maintenance standards.
 
 

 
Our stock has been thinly traded. The following table sets forth the high and low sales price per share of our common stock, as reported by the Pink Sheets LLC, for the periods through January 24, 2008, after giving effect to a 1-for-20 reverse stock split of our common stock on February 26, 2008:
 
                 
   
High
   
Low
 
                 
2008
               
January 24, 2008 to February 25, 2008
 
$
0.10
   
$
0.20
 
February 26, 2008
1:20 Stock Split
February 26, 2008 to March 31, 2008
 
$
2.00
   
$
2.00
 
Second Quarter
 
$
1.55
   
$
0.25
 
Third Quarter
 
$
1.01
   
$
0.25
 

Holders

As of December 22 , 2008, there were approximately 360 security holders of record of our common stock.

Transfer Agent and Registrant

Our transfer agent is Standard Registrar & Transfer Company, at the address of 12528 South 1840 East Draper, UT 84020. Its telephone number is (801) 571-8844.
 
Penny Stock Considerations 

Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules.

Dividend Policy
 
We have not declared any cash dividends on our common stock since inception. Our board of directors will make any future decisions regarding dividends. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the near future. Our board of directors has complete discretion on whether to pay dividends, subject to the approval of our shareholders. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.
  

The following discussion of the financial condition and results of operation of the Company for the fiscal years ended January 31, 2008 and 2007, and for the nine months ended October 31, 2008 and 2007 should be read in conjunction with the selected financial data, the financial statements and the notes to those statements that are included elsewhere in this registration statement. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this registration statement. We use terms such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
 

 
Overview of Our Performance and Operations

Our business

We are a development stage company in the peer-to-peer (P2P) lending space and we have not generated any revenue since 2005 . Our mission is to create the most efficient non-institutional, Internet-based lending community of individual borrowers and lenders that come together to make personal loans in which both parties benefit.   Our target market is personal loans ranging from $1,000-$25,000.

Peer-to-peer lending is one of the fastest growing sectors of the financial services industry.  While the market for such lending is currently relatively small, and with only approximately $650 million borrowed and lent during all of 2007, the market is already experiencing significant growth and is projected to boom over the coming years reaching nearly $6 billion in loans by 2010.

While the popularity and the ubiquity of the Internet are certainly major factors driving the peer-to-peer lending market forward, there are also very clearly major macro and micro economic factors propelling this business forward.  As a result of an overheated housing sector, and other economic factors, financial institutions have significantly tightened credit standards making it difficult for many consumers to acquire non-collateralized personal loans.  Such loans that are available have become considerably more expensive over the past year.  These financial market conditions have created an opportunity for individual lenders to step in and fill the small loan lending gap, fuelling the current hyper-growth we are currently experiencing in the peer-to-peer lending market.

Peer-to-peer lending offers significant benefits to both borrowers and lenders.  Through peer-to-peer lending borrowers are able to access funds at rates that typically range from 10% to 16%, which compare very favorably to credit card advances, which are often over 25% annually or short-term consumer loans, which are often made at over 100% interest per year.  Peer to peer lenders also realize significant potential benefits.  Compared to the estimated return typically earned on cash deposits, which can range from 2% and below, peer-to-peer lending offers lenders a chance to participate in investment opportunities with much higher returns.  Peer-to-peer lending also offers socially positive benefits to lenders that many find attractive.

Via its website, we are going to provide screening and credit checks on borrowers and allows lenders to select the types of borrowers they wish to consider for loans. The process of credit, background and identity checks, processing of the loan applications, the matching of borrowers and lenders, the tracking of loan payments, and other related functions are handled on a completely automated basis allowing us to incur extremely low overhead costs, likely resulting in meaningful operating margins.

Based on our revenue model, we intend to earn revenue from the fees for the services it provides which are typically 1% to 3% based on the size and the credit rating of the borrower. Additionally, we will charge a 1% annual servicing fee from the borrower on all outstanding balances. While these fees constitute the initial revenue model, we believe it is highly likely the company will develop additional streams in the very near future with website advertising, credit card and auto loan origination and/or referral fees likely showing the most realistic near-term potentials.

We had no operations during the fiscal year ended January 31, 2008 and 2007. Our expenses during that time incurred general and administrative expenses in the amount of $ 236,862 and $ 180,558, respectively. These expenses occurred developing our Web technology and establishing the necessary infrastructure to launch its services. The losses during those two years included accrued officers’ salaries in the amount of $166,582 and $ 85,000, which were forgiven during the quarter ended, April 30, 2008 resulting in a gain in the amount of $431,583.

Our auditors have raised substantial doubt as to our ability to continue as a “Going Concern” as we have generated no revenue since 2005 and have accumulated losses of $5,141,180 at October 31, 2008 and $5,198,358 thru January 31, 2008. Our continued existence is dependent on our ability to generate sufficient cash flow from operations to support its daily operations, as well as, to provide sufficient resources to retire existing liabilities and obligations on a timely basis.

On February 26, 2008, we effectuated a 1:20 reverse split.  Additionally, we purchased the domain names and business plan of “Swap-A-Debt, Inc.” in exchange for 22,200,000 post-split shares.  On April 18, 2008, the three holders of the Convertible Notes Payable amounting to $1,130,000 converted their notes into 9,040,000 shares of Common Stock in full satisfaction of the debt outstanding.

PLAN OF OPERATION

During the next twelve months, we expect to take the following steps in connection with the further development of our business and the implementation of our plan of operations:

1)  
We are a development stage company and plan to work with Hadlock and Associates of Natick MA to remain compliant to facilitate consumer loans in all 50 states and obtain licenses where required;

2)  
We will establish a marketing relationship with a Search Engine Optimization company to give us maximum Web exposure;

3)  
We will also continue to establish and maintain our relationships with realtors, accountants, attorneys, etc they can help to send us business;

4)  
and we will continue to pursue a major funding through a hedge fund or broker dealer to enable us to accelerate our business plan.

 
 
Over the next 12 months, we anticipate our expenses could range from $300,000 to $3,600,000, depending upon financing and the acceleration of our business plan.

If we do not obtain additional funding, we will continue to operate on a reduced budget until such time as more capital is raised. Under this reduced budget, our expenses may be $300,000 for the next 12 months. We believe that we could operate with our current cash on hand while satisfying any shortfall in cash flow with income that will be generated after the launch of our website.

If we obtain a large financing in the future, we would accelerate our business plan and hire up to 9 more staff members, increase our office space and operations, and increase our advertising and marketing budget, all of which would directly affect the performance of the company.

RESULTS OF OPERATIONS

As of the most recent quarter ended October 31, 2008, we had cash on hand of $199,287 and our total assets were $305,660 while our total liabilities consisted of an Outstanding Line of Credit in the amount of $100,000, accrued interest of $5,178 and a short-term convertible notes payable in the amount of $250,000 due on December 29, 2008.  With the continued losses and a resulting accumulated deficit of $5,148,414, we have negative shareholder’s equity in the amount of $49,518.

We are currently operating at a loss and we have a net loss of $56,767 for the nine months ended October 31, 2008. Our auditor has expressed doubt as to whether we will be able to continue to operate as a “going concern” due to the fact that the company has not had revenue since 2005 and will need to raise capital to further its operations. We do not expect to be able to satisfy our cash requirements to continue to operate over the next twelve months unless we obtain additional funding or our revenues significantly improve. If the market does not begin to improve, we will need to raise additional funds to continue to operate as a “going concern.” There is no guarantee that we will be able to raise additional funds and if we are unsuccessful in raising the funds, we may be forced to close our business operations.

As of October 31, 2008, we had cash of $199,287.  

Over the next twelve months, we do not plan to purchase or sell any product or significant equipment. We do not own any products or equipment and we do not rely on any equipment or expensive product to operate in the Person-to-Person Lending Market. Therefore, it is not anticipated that we would have any significant cost associated with a new product or service. 

LIQUIDITY AND CAPITAL RESOURCES

As of October 31 , 2008, we had cash of $199,287.  However, due to the current instability of the credit market and our limited history with no revenue, we may require additional funds to continue to operate. We will continue to operate on a reduced budget until such time as more capital is raised.  We have no written agreement with Mr. DeFeudis to legally insure that he will provide the funding for our operations.  Although we have no commitments for capital, other than verbal assurances from Mr. DeFeudis, we may raise additional funds through:

-  
public offerings of equity, securities convertible into equity or debt,

-  
private offerings of securities or debt, or other sources.

During this offering, the Company has agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $25,000. As to the following serious conditions:

1)  
As of October 31, 2008, we had cash of $199,287;

2)  
We received an aggregate of $850,000 from the sale of three promissory notes in 2008;

3)  
Our auditor had determined that based on our financial condition there is substantial doubt as to whether we can continue to operate as a going concern.

On August 29, 2008, the Company received additional outside funding in the amount of $250,000 in the form of a short-term 12% convertible promissory note, payable December 29, 2008.

 
 
At this time, Mr. DeFeudis has not identified any sources of additional financing. Upon developing a trading market for the common stock he intends to seek additional sources of financing through hedge funds and/or licensed broker-dealers, however, given our precarious financial condition and our lack of business, a trading market may not develop in the foreseeable future.

We have no written agreement with Mr. DeFeudis to legally insure that he will provide the funding for our operations. Although we have no commitments for capital, other than verbal assurances from Mr. DeFeudis, we may attempt to raise additional funds through public offerings of equity, securities convertible into equity or debt, and private offerings of securities or debt, as our previous efforts raised $850,000. Given our history of raising money, there is no guarantee that we will be successful in obtaining funds through public or private offerings in order to fund our operations. Our investors should assume that any additional funding will cause substantial dilution to current stockholders. In addition, we may not be able to raise additional funds on favorable terms, if at all.

To date, we have been able to secure $850,000 that we raised through two convertible promissory notes in January 2008 for $300,000 each and one convertible promissory note for $250,000 in August 2008. Since August, we have not been able to raise any additional capital. We may also rely on sources to borrow funds in the form of loans.

Even if we do not raise additional capital, we believe that we will be able to continue operations for twelve months based on the funding currently provided and revenues that we anticipate generating in the near future. Our investors should assume that any additional funding may cause substantial dilution to current stockholders. In addition, we may not be able to raise additional funds on favorable terms, if at all.

Off Balance Sheet Arrangements

Under SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have:

 
-
Any obligation under certain guarantee contracts;
     
 
-
Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets;

 
-
Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in stockholder’s equity in our statement of financial position; and
     
 
-
Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us.

We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

A summary of significant accounting policies is included in Note 2 to the audited financial statements for the year ended January 31, 2008. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our Company's operating results and financial condition.

 
 
Recently Issued Accounting Pronouncements

On June 5, 2003, the United States Securities and Exchange Commission (“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended by SEC Release No. 33-8934 on June 26, 2008. Commencing with its annual report for the year ending January 31, 2010, we will be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement

·
Of management’s responsibility for establishing and maintaining adequate internal control over its financial reporting;

·
Of management’s assessment of the effectiveness of its internal control over financial reporting as of year end; and

·
Of the framework used by management to evaluate the effectiveness of our internal control over financial reporting.
  
Furthermore, in the following year, it is required to file the auditor’s attestation report separately on our internal control over financial reporting on whether it believes that we have maintained, in all material respects, effective internal control over financial reporting.

On September 15, 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 157 “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective as of the beginning of the first fiscal year beginning after November 15, 2007. We do not anticipate that the adoption of this statement will have a material effect on our financial condition and results of operations.

On February 15, 2007, the FASB issued FASB Statement No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities: Including an amendment of FASB Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits all entities to elect to measure many financial instruments and certain other items at fair value with changes in fair value reported in earnings. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007, with earlier adoption permitted. We do not anticipate that the adoption of this statement will have a material effect on our financial condition and results of operations.

In June 2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3 “Accounting for Nonrefundable Advance Payments for Goods or Services to be Used in Future Research and Development Activities” (“EITF Issue No. 07-3”) which is effective for fiscal years beginning after December 15, 2007. EITF Issue No. 07-3 requires that nonrefundable advance payments for future research and development activities be deferred and capitalized. Such amounts will be recognized as an expense as the goods are delivered or the related services are performed. We do not expect the adoption of EITF Issue No. 07-3 to have a material impact on our financial results.

In December 2007, the FASB issued FASB Statement No. 141 (Revised 2007) “Business Combinations” (“SFAS No. 141(R)”), which requires us to record fair value estimates of contingent consideration and certain other potential liabilities during the original purchase price allocation, expense acquisition costs as incurred and does not permit certain restructuring activities previously allowed under Emerging Issues Task Force Issue No. 95-3 to be recorded as a component of purchase accounting. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. We will adopt this standard at the beginning of our year ending December 31, 2008 for all prospective business acquisitions. We have not determined the effect that the adoption of SFAS No. 141(R) will have on our financial results .

In December 2007, the FASB issued FASB Statement No. 160 “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51” (“SFAS No. 160”), which causes noncontrolling interests in subsidiaries to be included in the equity section of the balance sheet. SFAS No. 160 applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. We will adopt this standard at the beginning of our year ending December 31, 2008 for all prospective business acquisitions. We have not determined the effect that the adoption of SFAS No. 160 will have on our financial results.

In March 2008, the FASB issued FASB Statement No. 161 “Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133” (“SFAS No. 161”), which changes the disclosure requirements for derivative instruments and hedging activities. Pursuant to SFAS No.161, 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 No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early application encouraged. SFAS No. 161 encourages but does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In years after initial adoption, this Statement requires comparative disclosures only for periods subsequent to initial adoption. We will adopt this standard at the beginning of our year ending December 31, 2008. We do not expect the adoption of SFAS No. 161 to have a material impact on our financial results.
 
We do not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
 
 
 

Our History

We were incorporated in Delaware under the name Windsor Capital Corp. on June 24, 1988 by International Asset Management Group, Inc. (“IAMG”), the promoter and parent of our company.  Our initial business plan was to provide a vehicle to raise capital and seek business opportunities. On January 17, 1989, we issued 64,817 shares of our common stock and 64,817 warrants to IAMG for $125,000. The warrants are exercisable at $192.85 per share for a period of three years.

In February 1989, we completed an initial public offering for 6,482 units at a purchase price of $38.57 per unit, which included 6,482 shares of common stock and 6,482 Class A common stock purchase warrants.

On May 9, 1995, we changed our name to Innovative Health Systems, Inc. On July 13, 1995, we changed our name to Windsor Capital Corp.

We entered into an Agreement and Plan of Merger dated December 18, 1997 with IAMG, and Woodfield Enterprises, Inc., a Florida corporation (“Woodfield”), in which we issued 86,854 shares of our common stock, par value $0.001 per share to the former shareholders of Woodfield, in a private transaction pursuant to Section 4(2) of the Securities Act of 1933, as amended. After the transaction, Woodfield was acquired into our company. Also, pursuant to the terms of the agreement, IAMG cancelled 62,224 shares of common stock and 64,817 warrants.

On January 30, 1998, pursuant to an Agreement and Plan of Merger dated January 29, 1998, we acquired all of the business and assets of Boynton Tobacconists, Inc., a privately-held Florida corporation ("Boynton"), and assumed all of Boynton's liabilities. Pursuant to the merger, 22,950 shares of our common stock, par value $0.001 per share, were issued to the former shareholder of Boynton, Mr. Joel A. Wolk, in a private transaction pursuant to Section 4(2) of the Securities Act of 1933, as amended. Additional shares of our common stock, up to a maximum of 2,288, were issued to Mr. Wolk based on a final valuation of certain assets and liabilities of Boynton as of January 30, 1998.

On March 7, 2001, we completed our 1-for-3.85704 reverse stock split of our common stock.

On March 7, 2001, WCC Acquisition Corp. (“WCC”), our wholly-owned subsidiary, acquired Energy Control Technology, Inc., a privately-held Delaware corporation (“ECT”) pursuant to an Agreement and Plan of merger dated as of December 15, 2000. In connection with the merger, 466,630 shares of our common stock, par value $.001 per share, were issued to the former shareholders of ECT in a private transaction pursuant to Section 4(2) of the Securities Act of 1933, as amended. Upon the merger of ECT into WCC, WCC changed its name to Energy Control Systems, Inc. ("ECS"), and we changed our name to Energy Control Technology, Inc. Our business was changed to development and marketing of proprietary motor control software focused initially on the agricultural irrigation market.

On September 26, 2005, we changed our name to 5fifty5.com, Inc.

On August 8, 2005, we entered into an Agreement for the Purchase of Preferred Stock with Edward C. DeFeudis. Pursuant to the agreement, we would issue to Mr. DeFeudis 3,750,000 shares of preferred stock in exchange for $37,500. Rather than issuing the 3,750,000 shares of our preferred stock, we issued to Mr. DeFeudis 1,875,000 shares of common stock pursuant to a letter of issuance of common stock dated January 25, 2008.

On January 31, 2008, we changed our name to Swap-A-Debt, Inc. On February 26, 2008, we completed our 1-for-20 reverse stock split.

On February 26, 2008, we acquired all the right, title and interest in and to www.swapadebt.com, a person-to-person lending website from Spider Investments, LLC, a Florida limited liability company, pursuant to a purchase agreement (the “Purchase Agreement”). As consideration, we issued to Spider Investment of 22,200,000 shares of our common stock, and we also issued an additional 15,000,000 shares of our common stock to Situation X, LLC, a Delaware limited liability company, in connection with services rendered and to be rendered by Marco Garibaldi with respect to the business of our company. As a result of the transaction, Edward C. DeFeudis held 24,675,000 shares of our common stock, as a beneficial owner of Spider Investment and Lion Equity Corp., which represent 49.84% of all our issued and outstanding common stock. Marco Garibaldi held 15,000,000 shares of our common stock, which represent 30.30% of all our issued and outstanding common stock.  And we therefore entered into an Internet person-to-person lending service. The website is in construction and is 95% complete (for further details please refer to page 1 “Our Corporate Information” section).

All information set forth herein gives effect to a 1-for-3.85704 reverse stock split on March 7, 2001 and a 1-for-20 reverse stock split of our common stock on February 26, 2008.
 
 


Business Overview
 
We are a U.S.  development stage company in the peer-to-peer (P2P) lending space. Our mission is to establish the most efficient Internet non-institutional lending organization with more services than present privately held competitors. We have not generated any revenues since 2005 .

The CEO of our company is Marco Garibaldi. Mr. Garibaldi was a computer programmer by trade with over 30 years of extensive experience in a host of industries including computer programming, Internet, entertainment, and business advisory.

Mr. Garibaldi started his career at Burroughs and Sperry. He later founded InterComm, Inc, which was a think-tank that developed such fundamental Internet services such as, the online shopping cart, online bookstore and the auction server.
 
Our management is a shareholder of another company that has generated no or minimal revenues. Specifically, Edward C. Defeudis is a shareholder of Kraig Biocraft Laboratories, Inc.:

Kraig Biocraft Laboratories, Inc. (“Kraig Biocraft”) was incorporated under the laws of the State of Wyoming on April 25, 2006. The Company was organized to develop high strength, protein based fiber, using recombinant DNA technology, for commercial applications in the textile and specialty fiber industries. Edward C. Defeudis, our President, Chief Financial Officer, Principal Accounting Officer and sole director, beneficially owns approximately 4,675,000 shares of common stock, or approximately 9.3% of the issued and outstanding shares of Kraig Biocraft. Other than the above stated, Mr. Defeudis was not and is not involved in any business management or decision-making of Kraig Biocraft.
 
Market Summary

Person-to-person lending or peer-to-peer lending or social lending is, in its broadest sense, the name given to a certain breed of financial transactions (primarily lending and borrowing) which occurs directly between individuals (peers) without the intermediation/participation of a traditional financial institution. The biggest enabling technology for person-to- person lending has been the Internet, where person-to-person lending appears in two primary variations: an “online marketplace” model and a “family and friends” model.

The marketplace model enables peer lenders to locate peer borrowers and vice-versa. This model connects borrowers with lenders through an auction-like process in which the lender willing to provide the lowest interest rate “wins” the borrower’s loan. We have created a new version of this model by uniquely matching a borrower and a lending not utilizing an auction. Think of it as a Match.com for finance.

The “family and friend” model forgoes the auction-like process entirely and concentrates on borrowers and lenders who already know each other. This model emphasizes online collaboration, loan formalization and servicing.
 
Traditionally, lending institutions have benefited from scale and diversification. By pooling the available money supply and lending it out again, the impact of any one default is made trivial in light of the timely payment of the vast majority of the notes outstanding. The downside of this is that it has generated greater transaction overhead and removed community loyalty.

Person-to-person or peer-to-peer lending models attempt to reintroduce the social components that are lost in traditional centralized banking models, while maintaining a mixed quantitative/qualitative balance of diversification- as opposed to the purely quantitative diversification available through institutional lending.

Peer-to-peer lending eliminates the overhead and inefficiencies of traditional banks and creates a “virtuous cycle” of lenders getting better returns and borrowers getting not only better interest rates but also the loan itself. It is the only time that individuals directly control their own funds, as opposed to the traditional banking/lending models which pool all funds together and completely remove individuals from decision making.

Business Concept

Our business concept is starkly simple. Swapadebt.com is an on-line site for borrowers who want to borrow $1,000 to $25,000 and for lenders who can make educated decisions on credit scores, intended use etc., to receive a higher rate of interest than available at traditional financial institutions. This is all facilitated with an Internet website and a highly efficient back office system to completely automate a process that has become ever more cumbersome at brick and mortar banks.
 
 
There is a charge of $25 for a credit review and assignment of a credit rating. We receive a profit of $13 from this fee.

We profit throughout the entire process. This is the first of a continuous flow of incremental profit on each transaction.  We are different from all other sites in that we offer a credit fixing service to help borrowers increase their credit rating in order to reduce their interest payments not only for the immediate loan but all things going forward.

We have secured an arrangement with a credit agency to supply this service and will receive 30% of the fees charged. The fees will range from $200 to $2000 based on the amount of service provided.

We will receive a 1% annual servicing fee on loan amounts outstanding and we will   receive a transaction fee of between 1% to 3% based on loan size and credit rating. The minimum fee is $80.

At this  time we do not intend to  use any of our own money for any loans and are merely acting as an on-line facilitator. We will also provide collection services using outside accredited companies.

Mechanics of our business

Our plan is to match appropriate borrowers with lenders who are willing to accept the borrower’s credit profile. As the first step in the loan application process, all participants to our online lending community are required to register with and undergo a personal verification process prior to applying for a loan as a borrower or making a loan as a lender. As part of this process, both borrowers and lenders will log onto our web site and fill out an online application with certain personal information, including their driver’s license and social security number. This private information is then encrypted and electronically transmitted to a verification source in order to confirm an applicant’s proper identity, and that they “are who they say they are.” This identify verification process is completely automated via computer systems and encryption technology.

Additionally, as a required component of the application process, the official credit scores of each would-be borrower are sourced automatically from the main consumer credit rating agencies, namely Trans Union LLC, Equifax Inc. and Experian. In order to gain access to an individual credit score, we have contracted with each of these U.S. national consumer credit rating agencies to provide this data to the company. These credit ratings then become an essential part of a borrower’s personal loan application and profile within our network.

By including an individual’s credit rating within their loan profile, and making these ratings highly visible and accessible to the our community of online lenders, we believe borrowers with a responsible financial history, and the corresponding good credit rating to show for it, will be better rewarded by lenders willing accept lower interest rates than for borrowers with a less solid financial background and a poor credit rating. This notion goes back to the company’s core philosophy of building peer-to-peer lending around a community with an “honors and reward system” of sorts when, before the time of paper currency and modern banks, individuals lent essential goods such as livestock and grains to one another within their communities. Within these ancient societies, the timely, effective pay-back of items borrowed was considered essential to maintaining one’s reputation, and with it, access to future borrowing opportunities of goods, support and acceptance within the community. In effect, one’s reputation as a borrower during this time translated into a modern day credit rating which, good or bad, brings rewards or punishments in the form of a market clearing interest rate on an individual’s personal loan.

Once identity is verified and the credit scores obtained, participants are able to proceed with the process. Specifically, lender’s create a personal profile of sorts on the company’s website outlining their borrowing requirements, anywhere from $1,000 to $25,000, intended use of funds, time-to-payback and desired rate of interest on the loan, that is, the desired maximum interest rate level they would like to pay to secure the funds. This information is used by the company’s proprietary matching system to pair a borrower with a corresponding lender who has specified reciprocating criterion. Additionally, a borrower will include their bank account information as the savings or checking account they would ultimately like to use for the deposits and withdrawals of the loan.

Once submitted, a potential buyer’s loan-request and profile goes into Swap-A-Debt’s searchable data base of borrowers where online lenders can access the profiles and select those candidates to whom they wish to make a loan. Finally, each borrower is assigned a Swap-A-Debt account whereby they can log-on to our website and access the status of their loan application, including lender responses to fund their particular personal loan.
 
 

 
For registering lenders, on the other hand, once their personal identification has been established, their next step is to determine the amount of funds they would like to submit and, ultimately invest, in the Swap-A-Debt loan program. For this purpose, we have arranged for Bank of America (“BoA”) to function as the company’s third party bank, as we does not ourselves hold or maintain any funds submitted by would-be-lenders participating in our online community. Rather, we have established a corporate trust account with Bank of America, a renowned and trusted third party financial institution, to function as escrow agent. Thus, all funds submitted by lenders to the Swap-A-Debt program are deposited with Bank of America until the lender is ready to make a loan to a chosen borrower.

To actually submit funds for participation in the company’s loan program, lenders can elect to have money wired directly from their bank accounts to the trust account maintained by us at Bank of America or, make others arrangements to send a check or have their credit cards charged with amounts deposited into the Swap-A-Debt escrow account. Lenders must also specify a personal checking, savings or other appropriate account to which they would like the funds from the loan payback to be deposited.

Once a lender has submitted his/her funds, these funds are “on-hand” and ready to be dispersed to borrowers in the Swap-A-Debt loan program. At this stage, lenders are able to go to the company’s online community database and, as part of the “peer-to-peer” process, search and select a buyer profile of their liking by choosing a candidate who matches their requirements for loan amount, credit rating and loan interest rate, among others. Alternatively, as part of this process, lenders can also set up Swap-A-Debt profile or of their own, stipulating their criterion as lenders for the type of borrower group on which they want to focus, such as “only AA borrowers,” or “borrowers of all credit ratings willing to pay a certain percentage,” or any combination of distinguishing traits as listed in the borrowers’ Swap-A-Debt profiles. Then, as part of the company’s sophisticated automatic matching process, only those borrowers meeting a lender’s specified characteristics will appear in the lender’s Swap-A-Debt account.

Next, by clicking on a chosen buyer profile, the lender authorizes a stipulated amount to be automatically transferred from his/her funds on hand at BoA into the borrower’s checking/savings actual account. At this point, the loan transaction is complete.

Finally, as part of the payback process, the borrower receives a friendly email reminder from us prior to his/her monthly due date. Upon receiving the reminder, the borrower must log onto his/her Swap-A-Debt account and click on the “make payment” function, upon which the appropriate amount of payment funds will be wire transferred from the borrower’s account to the lender’s specified account.

Alternatively, a borrower can also arrange for automatic withdrawal in order to make the necessary loan payments. Failure to make a loan payment will result in email notifications from us that a payment is late and must be made until finally, a final notice is sent warning of being turned over to a collection agency. If a borrower still fails to act, the loan is turned over to a collection agency to process the remainder of the loan and we are no longer involved.

Revenue Model

We are a development stage company and we have not generated any revenue since 2005 . We anticipate earning revenues in the form of fees for the services it provides. In particular, this revenue stream comes from three main sources in the borrow-and-lend transaction process.

The company’s main revenue stream will come from fees earned on loans made, where we collects a minimum fee of $80.00 assessed to the borrower on all loans including those as low as $1,000. From the point of this minimum fee level, we apply a corresponding graded fee structure between 1.0% to 3.0%, based on loan size and credit rating, to all borrowings as they increase progressively in amount, charging as much as 3.0% on loans in the $25,000 range. For loans above a certain level, the charge is split evenly between the borrower and lender participants. Furthermore, we receive a 1.0% annual servicing fee from borrowers on loan amounts outstanding.

We will also earn revenue from a unique service offering it provides for “fixing” a borrower’s credit profile and thus, their credit rating. This has the benefit to the borrower of reducing total loan-related interest payments both for funding obtained through the Swap-A-Debt program as well as for funding and credit related events going forward. Specifically, we have aligned ourselves and contracted with a U.S. nationwide credit organization dedicated to improving the credit scores of individual borrowers by working with creditors and other parties.

Would-be borrowers to us have the opportunity to “click-on” the company’s website requesting this service, in which case we will automatically fill out all the necessary paperwork with information submitted by the applicant, including their obtained current credit score, and submit it electronically to their partner organization that specializes in restoring an individual’s credit. At this point, the credit-fixing agency will work directly with the borrower to resolve their credit rating issues. Thus, accessing this credit-fixing service via us saves potential borrowers both time and effort in filling out the necessary hard copy paper work, an electronic copy of which we retain on file from our partner organization.

As part of this service, borrowers have access to a credit-fixing organization that has been vetted and endorsed by our company and provides a money-back guarantee should an individual’s particular credit score fail to be fixed. Under this arrangement, we receive a referral fee percentage from the fees charged by the credit-fixing agency to the end user/borrower. We estimate the fees charged by the credit agency will range from $200 to $2,000 and more, based on the level of services required to satisfactorily improve a potential borrower’s credit profile. Finally, once an individual’s credit rating has been improved, the credit-fixing agency will notify the company, and we will update the borrower’s profile on the company’s site to reflect the now more favorable credit rating.

 
 
Finally, our third revenue stream will come from charging would-be borrowers a fee to get their credit ratings from the three U.S. national consumer credit rating agencies. As part of the Swap-A-Debt application process, these credit ratings must be obtained on each respective borrower for inclusion in their personal loan profile kept on file with the company. In order to access individual credit ratings from these third party providers, however, we must pay a fee, which we in turn passes onto borrowers at a higher rate. As part of our service offering to customers, this information is also made available to the borrower applicant who is able to securely access it, print it out or use it anytime by accessing their Swap-A-Debt profile. Comparatively, gaining access to an individual’s official credit scores from these three bureaus can normally cost borrowers even more when done outside of requesting this information in conjunction with Swap-A-Debt. Additionally, in order to procure this information, an individual must be willing to invest the time and effort necessary to sign-up and pay at each of these three companies, respectively.

In addition to these revenue streams, we are currently developing additional financial related services for our online borrowing and lending platform, which it intends to make available going forward.

Customer Base

Our business targets the underserved niche sector of small loan lending in the financial community by specializing in loans that range from $25,000 and below.

Historically, procuring a loan in the $1,000 to $25,000 category has often proven substantially difficult for many borrowers, as most banks and financial institutions simply to not cater to personal loan levels this low. In fact, most traditional lending institutions and professional financial brokers draw the “cut off” point at a minimum level, below which it is simply not economically profitable for these organizations to service given the time and resources required to execute these loan transactions. Additionally, many customers of the small loan market may have poor or non-existent credit scores and/or borrowing profiles that simply are not compelling enough for traditional lenders to take interest. For this reason, many small-loan seekers often face few alternatives such as turning to friends and family or other more costly sources, such as payday advances or credit card cash advances, to meet their financing needs, or else they simply do without.

While the Swap-A-Debt program is open to all would-be borrowers, as there are no minimum criteria, the company’s believes an individual’s credit rating and other important personal borrowing characteristics are likely to play a key role for lenders in selecting a particular borrower’s loan profile.

We currently see our customer base as borrowers seeking access to a loan level between $1,000 and $25,000, with the average loan likely to be between $5,000 and $20,000, although loan amounts above and below these ranges are also possible. Likewise, Swap-A-Debt’s lender profile is likely to encompass individual lenders of all sorts seeking returns on their investment in the approximate average range of 10.0% to 16.0%.

Benefits to the Parties Involved

Benefits to Borrowers

We created our peer-to-peer lending community to specifically address the needs of small loan borrowers with few alternatives in the current financial market place. Several key advantages to borrowers participating in the company’s online lending program include the following:

·  
Access to needed funds in the small loan range of $1,000 to $25,000

·  
The ability to pay a comparatively favorable interest rate, typically ranging from an average of 10% to 16+%, relative to the higher rates often charged by alternative sources such as 25+% for cash advances, credit card changes and payday advances, among others

·  
The ability to independently source funding from a anonymous third party lender, rather than face the potentially awkward experience of having to approach family and friends for money

·  
The convenience of an online “banking-like” experience, whereby the borrower can apply for a loan online and monitor the results of their application and “lender hits” anytime, anywhere online.
 
 
 

 
Benefits to Lenders

Likewise, we believe our lending program offers several advantages and incentives for lenders to participate in our peer-to-peer community as below.

·  
Compared to the estimated return typically earned on cash deposits, which can range from 2.0% and below, we offer lenders the chance to participate in an investment opportunity with average returns as high as 10% to 16+% on loans made

·  
As part of the features of the company’s online lending program, lenders are able to diversify their investments in a portfolio of loans by electing to disperse their funds amongst one or several different borrowers. Additionally, a single lender may choose to provide just a fraction of a borrower’s requested amount, with the remainder coming from other participating lenders in the online community. By choosing to practice lending diversification, lenders should better be able to insulate their returns from the default of any one/few borrowers while still earnings superior returns

·  
The convenience of an online “investing” experience, whereby the lender can create his/her own portfolio of borrower loans

Competition

Competitors are listed as follows:

Prosper was the first on-line peer-to-peer matchmaker which started in February 2006 and has over 600,000 users, over 10,000 deals and loans over $200 million. They were initially funded and founded by Chris Larson who founded E-Loan before Prosper.
 
In April 2007, Ebay moved into peer-to-peer lending space with the purchase of pre-launch, San Francisco based MicroPlace.

Circle lending started in October 2007 and sold a majority stake in the company to Richard Branson’s Virgin USA, re-branding itself as Virgin money. The site manages more than $200 million in loans between friends and family.

The Online Banking Report predicts that within five years, the total market for P2P lending in the U.S. could surpass 1,000,000 loans annually.

Resources Requirements

The resources and necessary know-how to create a successful online community for the purpose of conducting financial transactions, including the borrowing and lending of funds, are extensive. In addition to technical programming skills, the builder must have a thorough understanding of the complex laws and requirements of United States, on a state by state basis, that regulate the online banking industry and dictate its permissible transactions. Effectively, all code must be written to comply with virtually hundreds of laws at every stage and consideration of the transaction process, including the requirements of the Securities and Exchange Commission, the Department of Homeland Security and federal and state laws, among others. Failure to identify and comply with all of these laws as part of peer-to-peer provider’s business plan can delay, halt or even close down an operator’s efforts.

We have invested many thousands of man-hours, and the expertise equivalent of over one hundred years in the programming industry via 16 high level programmers to complete our fully automated Internet website. These efforts were undertaken to ensure all code comprising our platform is logically written to comply with the laws of United States. Furthermore, while we believe our website provides an easy-to-use platform for users, the actual technical framework behind our site is extremely sophisticated. We believe this level of complexity limits the ability of new players to easily enter the market.

Otherwise, we will utilize the proceeds of the investment to bring on senior management to the company. Because of the high automation of our website the personnel requirements for our company are relatively modest. We will also embark on a major marketing campaign to expand our client base. It is in discussions with major marketing companies to execute this program.

Potential Future Business

We are the only online peer-to-peer lending platform for the underserved, small loan market of sub-$25,000 that offers an array of additional credit and financing services to potential borrowers. At present, we do not use any of it own funds for making loans to would-be borrowers, rather the entire amount of funds invested in loans is sourced from other lender participants in the company’s online platform. Going forward, we may choose to pursue a “hybrid model” whereby loans to individual borrowers are sourced in part from the peer-to-peer lending community and in part directly from our own corporate funds.

We believe this hybrid model would be unique to the industry as, at present, the industry of online lending is comprised of players participating either solely as a banking organizations with the deployment of their own funds/customer deposits, or as a peer-to-peer operation where no “house” funds are involved.
 
Additionally, going forward, we envision extending our lending services small businesses seeking up to approximately $10 million in funding.
 
 

 
Employees

As of December 22 , 2008, we have two full-time employees, Marco Garibaldi and Edward DeFeudis. Marco Garibaldi is the CEO and Co-Founder, and Edward DeFeudis is the President and Co-Founder. Mr. Garibaldi and Mr. DeFeudis each spend in excess of 50 hours per working on behalf of the company. As we launch and begin to generate revenue, we will look to raise capital and hire 9 additional staff members over the next 12 months. 

Properties

Our principal executive office is located at 1001 Brickell Bay Drive, Suite 1804, Miami, FL 33137.  We pay rent of $750 per month to occupy this location.

Litigation
 
From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

 
Directors and Executive Officers
 
Our sole director and executive officers, their ages and titles, are as follows.  
  
Directors and Executive Officers
Position/Title
Age
Marco Garibaldi
Chief Executive Officer
53
Edward C. Defeudis
President, Chief Financial Officer,
Principal Accounting Officer,
and sole director
35

Edward C. Defeudis, as our sole director , holds office until the next annual meeting of the shareholders of our company, and until his successor has been qualified after being elected or appointed. Officers serve at the discretion of the board of directors.  The following sets forth biographical information regarding the above Officers and Director

Marco Garibaldi, Chief Executive Officer

Mr. Garibaldi became our CEO since February 26, 2008. He is also serving as Manager of Situation X, LLC. Mr. Garibaldi has extensive experience as an entrepreneur and manager overseeing the development and growth of innovative emerging companies. He is also a computer programmer by trade with over 30 years of extensive experience in a variety of sectors including computer programming, the Internet, entertainment and the business advisory industry.

He began his career at Burroughs and Sperry, which in 1986, became Unisys Corp. and later founded a think-tank corporation called InterComm, Inc. While at InterComm, Inc., Mr. Garibaldi was responsible for introducing a host of essential on-line applications widely used today and familiar to most Internet users. Specifically, his contributions are credited with the development of the online shopping cart, the online bookstore and the auction server, each of which represents a fundamental component of the current Internet commerce environment. Currently, while seeing the underserved need in the microfinance lending industry, Mr. Garibaldi has dedicated his extensive technical skills and creative ingenuity to establishing Swap-A-Debt, an online peer-to-peer lending community designed to bring lenders and borrowers together to pursue new opportunities in this largely untapped market space of micro-lending.

Edward C. DeFeudis, President, Chief Financial Officer, Principal Accounting Officer and Chairman of the Board of Directors

Mr. DeFeudis is  our President, Chief Financial Officer, Principal Accounting Officer and Chairman of the Board of our company since August 2005 and he is mainly responsible for all start-up activities from business plan through execution. He is the Manager of Spider Investments, LLC, as well as the President of Lion Equity Holding Corp., which provides investment banking consulting business services, since 1999.  From March 2004 to February 2006, he served as President and Chief Executive Officer of Ringo, Inc. Mr. DeFeudis also served as Financial Advisor for several financial institutions such as Paragon Capital, Merrill Lynch, Oppenheimer Securities, and Euro-Atlantic Securities from 1996 to 1999.
 
Mr. DeFeudis graduated from University of New Hampshire in 1995 with a BA degree in Political Science.

 
Director Compensation

Mr. DeFeudis, our sole director , was granted $50,000 as consulting fees for his services in connection with stock issuance to Lion Equity Holdings, Inc. 

Audit Committee
 
We have not yet appointed an audit committee. At the present time, we believe that our sole director is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.
 
Audit Committee Financial Expert
 
Our sole director currently acts as our audit committee. We currently do not have a member who qualifies as an “audit committee financial expert” as defined in Regulation S-K and no directors who are “independent” as the term is used in Item 7(d) (3) (iv) of Schedule 14A under the Securities Exchange Act. Our sole director is in the process of searching for additional suitable candidates for this position.

Family Relationships

There are no family relationships among any of our officers or our director.

Involvement in Certain Legal Proceedings
 
To the best of our knowledge, neither our sole   director or executive officers have been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our sole director , executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Code of Business Conduct and Ethics

We currently do not have a code of ethics that applies to our officers, employees and directors, including our Chief Executive Officer, Chief Financial Officer and senior executives.

 
Summary Compensation Table
 
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods.
 
SUMMARY COMPENSATION TABLE
 
Name
and
principal
position
Year
 
Salary
($)
 
Bonus
($)
 
Stock
Awards
($)
 
Option
Awards
($)
 
Non-Equity
Incentive Plan
Compensation
($)
 
Nonqualified
Deferred
Compensation
Earnings ($)
All Other
Compensation
($)
 
Total ($)
 
Marco Garibaldi, CEO (1)
2008
 
$
0
 
0
   
15,000
 
0
   
0
 
0
50,000
 
$
65,000
 
                                           
Edward C. DeFeudis, President,
Chief Financial Officer,
2008
 
$
0
 
0
   
0
 
0
   
0
 
0
60,000
 
$
60,000
 
Principal Accounting Officer
and Chairman
2007
 
$
0
 
0
   
0
 
0
   
0
 
0
0
 
$
0
 
                                           

(1)  
Pursuant to a Purchase Agreement dated February 26, 2008, Situation X, LLC was granted 15,000,000 shares of our common stock in connection with services rendered and to be rendered by Marco Garibaldi with respect to our business. Mr. Garibaldi is the beneficial owner of Situation X, LLC. Mr. Garibaldi was also granted $50,000 as consulting fee for his services to Situation X, LLC.
 
 

 
Option Grants Table. There were no individual grants of stock options to purchase our common stock made to the executive officer named in the Summary Compensation Table through December 22 , 2008.

Aggregated Option Exercises and Fiscal Year-End Option Value Table. There were no stock options exercised until December 22,  2008 by the executive officer named in the Summary Compensation Table.

Long-Term Incentive Plan (“LTIP”) Awards Table. There were no awards made to a named executive officer in the last completed fiscal year under any LTIP
 
Compensation of Directors

Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.

DIRECTOR COMPENSATION
Name
Fees
Earned or
Paid in
Cash
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive
Plan
Compensation
($)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
All
Other
Compensation
($)
Total
($)
Edward C. DeFeudis
President, Chief Financial Officer,
Principal Accounting Officer
and Chairman (1)
0
0
0
0
0
$60,000
$
60,000

(1)  
Mr. DeFeudis was paid $50,000 as consulting fees for his services in connection with stock issuance to Lion Equity Holdings, Inc., and $10,000 as consulting fees in November through Lion Equity.

Employment Agreements

We do not have any employment agreements in place with our officers or directors.
 
 
Transactions with Related Persons
 
Except for the ownership of our securities, and except as set forth below, none of the directors, executive officers, holders of more than five percent of the Company’s outstanding common stock, or any member of the immediate family of any such person have, to our knowledge, had a material interest, direct or indirect, in any transaction or proposed transaction which may materially affect the Company.

Related Party Contracts and Transactions

On August 8, 2005, we entered into an agreement for the purchase of preferred stock with Edward C. DeFeudis. Pursuant to the agreement, Mr. Defeudis invested $37,500 in our company to pay off an outstanding debt with Belmont Partners in exchange for 3,750,000 shares of our preferred stock. As additional consideration, we issued to Lion Equity Holding Corp. 600,000 shares of our common stock. Edward C. DeFeudis, the manager of Lion Equity Holding Corp, was therefore appointed as our President and Chairman.

On February 26, 2008, we entered into a Purchase Agreement with Spider Investments, LLC, a Florida limited liability company.  Mr. Edward C. DeFeudis, our President, Chief Financial Officer, Principal Accounting Officer and Chairman of the Board of Director, is the Manager of Spider Investments, LLC. Pursuant to the terms of this agreement, we acquired all the right, title and interest in www.swapadebt.com, a person-to-person lending website, in exchange for the issuance of 22,200,000 shares of our common stock to Spider Investments, LLC. In connection with the services rendered and to be rendered by Marco Garibaldi, our CEO, with respect to our business, we also issued an additional 15,000,000 shares of our common stock to Situation X, LLC, a Delaware limited liability company.  Marco Garibaldi, our CEO, is the Manager of Situation X, LLC.
 
 
 
 
The following table sets forth certain information as of December 22 , 2008 with respect to the beneficial ownership of our common stock, the sole outstanding class of our voting securities, by (i) any person or group owning more than 5% of each class of voting securities, (ii) each director, (iii) each executive officer named in the Summary Compensation Table in the section entitled “Executive Compensation” below and (iv) all executive officers and our sole director as a group. 

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options, warrants or convertible securities exercisable or convertible within 60 days of December 22 , 2008 are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person, and is based on 49,500,000 common shares issued and outstanding as of December 22, 2008.
 
             
   
Amount and Nature
of Beneficial Ownership
 
Name and Address of Beneficial Owners (1) (2)
 
# of Shares
   
% of Class (7)
 
             
Edward C. DeFeudis
C/O 1001 BRICKELL BAY DR, SUITE 1804
MIAMI, FL 33131 (3)
   
24,675,000
     
49.84
%
Spider Investments, LLC
C/O 1001 BRICKELL BAY DR, SUITE 1804
MIAMI, FL 33131 (4)
   
22,200,000
     
44.84
Marco Garibaldi
9200 SUNSET BLVD #625
LOS ANGELES, CA 90069 (5)
   
15,000,000
     
30.30
%
Situation X, LLC
C/O MARCO GARIBALDI
9200 SUNSET BLVD #625
LOS ANGELES, CA 90069 (5)
   
15,000,000
     
30.30
%
Robert S Pearson
1422 BURTONWOOD DR
GATONIA, NC 28054 (6)
   
4,240,000
     
8.56
%
All named executive officers and our sole director as a group (two (2) persons)
   
39,675,000
     
80.15
%
 
(1)  
Pursuant to Rule 13d-3 under the Exchange Act, a person has beneficial ownership of any securities as to which such person, directly or indirectly, through any contract, arrangement, undertaking, relationship or otherwise has or shares voting power and/or investment power or as to which such person has the right to acquire such voting and/or investment power within 60 days.
   
(2)  
Unless otherwise stated, each beneficial owner has sole power to vote and dispose of the shares.
   
(3)  
The number of shares beneficially owned by Mr. DeFeudis includes 1,875,000 shares of common stock issued on January 2008, 600,000 shares of common stock owned by Lion Equity Holding Corp. and 22,200,000 shares issued to Spider Investment LLC pursuant to a Purchase Agreement. 
   
(4)
On February 26, 2008, we acquired all the right, title and interest in www.swapadebt.com, a person-to-person lending website, in exchange for the issuance of 22,200,000 shares of our common stock to Spider Investments, LLC, pursuant to a Purchase Agreement.
   
(5)
Pursuant to a Purchase Agreement, in connection with the services rendered and to be rendered by Marco Garibaldi with respect to our business, we issued 15,000,000 shares of our common stock to Situation X, LLC, a Delaware limited liability company.  Marco Garibaldi is the beneficial owner of Situation X, LLC.
   
(6)  
On August 2004, we issued to Robert Alick a 9% convertible promissory note at an amount of $537,500 for the services and monies rendered from January 2, 2001 to August 1, 2004, executed by Energy Control Systems, Corp. On September 2, 2004, Mr. Alick assigned the note to Joe Meuse. On August 15, 2005, Mr. Meuse assigned it to Eric Reusch. On November 4, 2005, Mr. Reusch exercised $7,500 of the note for the issuance of 758,713 shares of our common stock and assigned the balance to Robert S. Pearson on January 15, 2008, which was $530,000. On April 18, 2008, Mr. Pearson exercised the note at conversion price of $0.125 per share, and was issued 4,240,000 shares of our common stock.
 
 
 
 
 
On August 29, 2008, we entered into a 12% convertible promissory note with Robert S. Pearson. The maturity date of the contract shall be December 29, 2008. The conversion price shall be equal to the average closing bid price of the common stock (as reported by Bloomberg L.P.) on the Pink Sheets OTC market for the 10 trading days prior to the date of the conversion notice multiplied by .80, provided that the conversion notice is submitted to our company before 6:00 p.m., New York, New York time on such conversion date.  However, the conversion price shall not exceed $1.00. The shares which shall be issued by us if this convertible note is converted into shares of our common stock are not being registered pursuant to this Registration Statement and Prospectus.
   
(7)
Applicable percentage of ownership is based on 49,500,000 shares of common stock outstanding as of December 22 , 2008.
 

We are registering 10,025,000 shares of our common stock.  
 
The table below lists the Selling Security Holders and other information regarding the beneficial ownership of the shares of common stock by each of the Selling Security Holders. The second column lists the number of shares of common stock beneficially owned by each Selling Security Holder as of December 22 , 2008. The third column lists the shares of common stock being offered pursuant to this prospectus by each of the Selling Security Holders. The fourth column lists the number of shares that will be beneficially owned by the Selling Security Holders assuming all of the shares offered pursuant to this prospectus are sold and that shares beneficially owned by them, as of December 22 , 2008 but not offered hereby are not sold. All shareholders listed below are eligible to sell their shares.

Except as indicated in the footnotes to the table, no Selling Security Holder has had any material relationship with us or our predecessors or affiliates during the last three years.

Name of Selling Security Holder (3)
Number of Shares Owned
Shares to be offered
Shares to be owned after offering
Percentage to be owned after offering (1) (2)
A.G. Edwards & Sons
1,875
1,875
0
0
Richard Absher and Margo Absher JT TEN
1,297
1,297
0
0
Mary J. Ackley
150
150
0
0
Shabbir Adenwalla
125
125
0
0
Eleanor Adiel
260
260
0
0
David T. Akins
1,000
1,000
0
0
Hymie Akst
2,000
2,000
0
0
Jamie M. Alick
9,623
9,623
0
0
Robert Amyer
2,000
2,000
0
0
Charles Anderson
325
325
0
0
Richard A. Arons
1,800
1,800
0
0
Chandran Arulanandan
4,600
4,600
0
0
Andrew W. Astrove & Ellen M. Astrove
600
600
0
0
Irwin Auslander
39
39
0
0
Balboa Partnership
814
814
0
0
June Barent
75
75
0
0
Paige Barent
75
75
0
0
Anthony Barrett
26
26
0
0
William S. Barrett
130
130
0
0
Bruce Baumgartner
2,500
2,500
0
0
Terri J. Becker
450
450
0
0
Bellingham Industries, Inc.
6,482
6,482
0
0
Ronald J. Benach
1,297
1,297
0
0
John F. Bennett
649
649
0
0
Audrey S. Berger
150
150
0
0
Audrey S. Berger & Laura Crossland
750
750
0
0
 
 
 
 
Eileen Berke
1,000
1,000
0
0
Carmen L. Berra
300
300
0
0
Lawrence A. Berra
450
450
0
0
Mukesh Bhatt
500
500
0
0
Harvey Bibicoff
649
649
0
0
Harold S. Blue
2,593
2,593
0
0
Daniel M. Bogard
1,000
1,000
0
0
Kenneth A. Bossin
150
150
0
0
Boyle Family Trust
500
500
0
0
Gerritt Brouwer & Mac Brouwer Ttees Gerritt Grouwer MD
790
790
0
0
Mark Bruan
3
3
0
0
Edmond A. Bushey
500
500
0
0
Michael E. Bushey
2,000
2,000
0
0
Joe Zack Butler
500
500
0
0
Craig Caffarelli
130
130
0
0
David K. Cameron
750
750
0
0
Sandra Cameron
225
225
0
0
Harry W. Caplan
150
150
0
0
Cede & Co.
117,501
117,501
0
0
Central Fill Pharmacy, Inc.
8,000
8,000
0
0
Centurian Management Corp.
2,000
2,000
0
0
Aileen Ha-Yi Chan
225
225
0
0
Sin Mun Chan
150
150
0
0
C. Chandradas
3,948
3,948
0
0
Irving Chem
13
13
0
0
Clemencia Christensen
6
6
0
0
Earl V. Cochran
950
950
0
0
Phyllis J. Cohen
3,000
3,000
0
0
Michael J. Colagiovanni
500
500
0
0
R.M. Cooke
130
130
0
0
Edwin Cooperrnan
649
649
0
0
Alan Cornell
325
325
0
0
Robert Crawford
400
400
0
0
Anthony C Dalessio
1,000
1,000
0
0
Dalton Living Trust
2,000
2,000
0
0
Dandurnundi Associates in Medicine
8,300
8,300
0
0
Irving W. Davies
2,800
2,800
0
0
Robert Delaney
65
65
0
0
Michael Denius & Marcia Denius JT TEN
649
649
0
0
John A. Depizzo, Jr.
1,000
1,000
0
0
John M. Donaldson
250
250
0
0
James K. Dublin
1,080
1,080
0
0
Carol Durinka
10,000
10,000
0
0
Elliot F. Dworkin
2,000
2,000
0
0
Frank R. Egan
26
26
0
0
Elistics Corp
3,293
3,293
0
0
Andrew Ellis
7
7
0
0
Ira S. Ellis & Florence Ellis
130
130
0
0
Michael Ellis
7
7
0
0
Patricia Ellis
7
7
0
0
Russell S. Ellis
7
7
0
0
Martin H. Elrad
1,297
1,297
0
0
Michael Elrad
649
649
0
0
Estate of Sid Luckman
2,500
2,500
0
0
Fahnestock & Co. Inc.
26
26
0
0
 
 
 
 
Michael Falk
9,723
9,723
0
0
Dr. Edward R. Falkner Trust
4,000
4,000
0
0
John Thomas Fay
8,300
8,300
0
0
Richard J. Felber
600
600
0
0
Allan Feldman
2,300
2,300
0
0
Allan Feldman & Judith Feldman
375
375
0
0
Barry A. Fey
495
495
0
0
Nicholas J. Filipic
300
300
0
0
Nicholas J. Filipic & Susan A. Filipic JTWROS
150
150
0
0
Nicholas J. Filipic Cust. For Jacob Filipic UGMA
150
150
0
0
Nicholas J. Filipic Cust. For Joseph Filipic UGMA
150
150
0
0
Financial Clearing & Services Corp.
26
26
0
0
First National Fund
260
260
0
0
Stephanie Forster
1,000
1,000
0
0
Alan L. Freeman
600
600
0
0
Carly Isabelle Friedman
150
150
0
0
Hannah Lee Friedman
150
150
0
0
Joel Friedman
1,500
1,500
0
0
G & S Metal Products
5,000
5,000
0
0
Edith Gampel Trust
2,593
2,593
0
0
Norman Geller
519
519
0
0
Thomas George
300
300
0
0
Torn George
150
150
0
0
Melvin V. Gershman IRA
2,000
2,000
0
0
Melvin Y. Gershman
2,000
2,000
0
0
Nick Giarelli
188
188
0
0
Glazer Realty, Inc.
12,500
12,500
0
0
Leslie Glazer
2,250
2,250
0
0
Elliott Gold
26
26
0
0
Golden Eagle Technology LLC
150
150
0
0
Joseph Graubart
26
26
0
0
Wayne Gray
400
400
0
0
Joseph T. Greco & Susan B. Greco
600
600
0
0
Elana Green
1,000
1,000
0
0
Linda S. Green
5,000
5,000
0
0
Michael G. Green
250
250
0
0
Brian R. Greene
500
500
0
0
Greenstein Family Partnership
130
130
0
0
Heidi F. Gross
260
260
0
0
Allen J. Gula & Marilyn B. Gula
1,600
1,600
0
0
Bala Gulasekaram M.D.
1,000
1,000
0
0
Theodore A. Gullia A & Patricia A. Gullia A
1,700
1,700
0
0
W. Harichandran
864
864
0
0
Russell W. Harris
150
150
0
0
Samuel Harte & P.K. Harte JT TEN
260
260
0
0
David G. Hast
4,500
4,500
0
0
Michael Havrilak
52
52
0
0
Michael Havrilak Cust. For Eren E. Havrilak
26
26
0
0
Danny Hayes
1,349
1,349
0
0
Scott Hemkin
649
649
0
0
William Herbst
400
400
0
0
High Desert Gastro-Enterology Inc.
2,500
2,500
0
0
Barbara I. Hill
2,500
2,500
0
0
Robert W. Hill
2,500
2,500
0
0
John R. Himes
938
938
0
0
Sarah Catherine Huempfner (5)
2,400,000
2,400,000
0
0
 
 
 
 
Barbara A. Huff
500
500
0
0
Imperial Fund Corp.
389
389
0
0
Intergalactic Growth Fund, Inc.
1,297
1,297
0
0
Internetional Reserve Fund
772
772
0
0
Isakov Family LLC
2,175
2,175
0
0
Terence Isakov M.D.
11,013
11,013
0
0
Joyce Isakov
300
300
0
0
Kadirawel Iswara & Geetha Iswara
3,000
3,000
0
0
Kadirawel Iswara PC Profit Sharing
3,158
3,158
0
0
Kyan Kraus
20,000
20,000
0
0
Shail M. Jain & Than Jain
500
500
0
0
Rashmi Jakhoria
500
500
0
0
Lingaiah Janumpally M.D.
1,650
1,650
0
0
J. Jayakumar & U.P. Jayakumar
186
186
0
0
Jenhan Jayakumar
93
93
0
0
Jitendran Jayakumar
93
93
0
0
Natwarlal Jethva
500
500
0
0
Panch Jeyakumer & Hari Jeyakumer
264
264
0
0
John Shea Family Trust
814
814
0
0
Patty Jones
6
6
0
0
Vinod S. Joshi
1,000
1,000
0
0
John J. Jurcago
600
600
0
0
K.A.M. Group, Inc.
156
156
0
0
John I. Kahi
65
65
0
0
Mayer Kanter
3,000
3,000
0
0
Ira Kent
649
649
0
0
Norma J. King
150
150
0
0
Gilbert Kitt
2,000
2,000
0
0
Stuart Klassman & Jeanmarie Klassman JT TEN
2,000
2,000
0
0
Jlyne H. Kobrin
500
500
0
0
Henry Kohn
130
130
0
0
Korman Co. Profit Sharing Trust
500
500
0
0
Julius Kramer
500
500
0
0
Maurice Krashow
564
564
0
0
Krickstein Partners
2,000
2,000
0
0
Herbert Krickstein
2,000
2,000
0
0
Anil Kumar M.D.
2,500
2,500
0
0
Anil Kumar M.D. Trustee FBO Kumar Medic Corp Money Pur
2,500
2,500
0
0
Barbara Lamborghini
500
500
0
0
Lila Lang Trust
250
250
0
0
Jeffrey Lansman
13
13
0
0
Robin Lynn Lansman
13
13
0
0
Susan Lansman
13
13
0
0
Everett M. Lassman
150
150
0
0
Sherman Z. Leavitt
150
150
0
0
Sande Lehrer & Marilyn Sass-Lehrer
525
525
0
0
Mark P. Levine
80
80
0
0
Steven P. Levine
450
450
0
0
Stephen R. Levy
300
300
0
0
Lion Equity Holding Corp (4)
600,000
100,000
500,000
1.01%
Neil Litten & Loretta Litten JT TEN
649
649
0
0
Lloyds Bank PC
5,250
5,250
0
0
Marc Loveman
3,000
3,000
0
0
Kadirawel Lswara & Geetha Lwara
3,000
3,000
0
0
Michael Luccl
2,000
2,000
0
0
Mel Lyons
150
150
0
0
 
 
 
 
M & G Equities
325
325
0
0
Thomas Mahendra
31
31
0
0
Gary N. Mansfield
2,619
2,619
0
0
Kenneth J. Mansfield
130
130
0
0
Muriel Mansfield
260
260
0
0
Joan Marek
1,000
1,000
0
0
Bennett Marks
130
130
0
0
Brian A. McBride
300
300
0
0
Charles F. McDaniels
30
30
0
0
Mary Ann McMilian
6
6
0
0
Virginia Meade
500
500
0
0
Govind Mehta & Daksha Mehta
250
250
0
0
John Mendoza
75
75
0
0
Frank Merriman
300
300
0
0
Richard P. Messerman
150
150
0
0
Metal Center
8,500
8,500
0
0
Lawrence H. Meuers
250
250
0
0
Manesh Mewar
250
250
0
0
Beno Michel Trust
1,000
1,000
0
0
Suzanne Micolaysen & Denis Micolaysen JTWROS
130
130
0
0
Lawrence F. Mihevic
450
450
0
0
Dean Miller
300
300
0
0
Sanford Miot
260
260
0
0
Barbara L. Misiewicz
150
150
0
0
Gee Gee Morgan
500
500
0
0
Lynn Morgenroth
227
227
0
0
Thomas J. Murphy, Jr.
130
130
0
0
Deborah Muzzin
4,000
4,000
0
0
Matthew J. Neimes & Marcella E. Neimes
30
30
0
0
Charles K. Newcomb & Virginia B.Newcomb JT TEN
150
150
0
0
Joseph Noel
12,342
12,342
0
0
North Park Real Estate Group
1,000
1,000
0
0
Robert J. Olender & Strachan, Willian & Roessler, Kirk W.
450
450
0
0
Vijaykant R. Patel
1,500
1,500
0
0
Canagaratnam Pathmarajah
12,500
12,500
0
0
Herbert Paul
65
65
0
0
Giovanni C. Pavia
150
150
0
0
Jane Elizabeth Pearson (6)
2,400,000
2,400,000
0
0
Robert S. Pearson (7)
4,240,000
4,240,000
0
0
Alice Pehlke
130
130
0
0
George R. Penfield
4,050
4,050
0
0
H.C. Pennells
26
26
0
0
John Richard Pennells
26
26
0
0
Linda Pennells
26
26
0
0
Linda Joy Pennells
26
26
0
0
D. L. Pennels
26
26
0
0
George R. Pennels
26
26
0
0
Randy Perla
500
500
0
0
Joe Perlmutter
150
150
0
0
James M. Persky M.D.
750
750
0
0
D.V. Pillai
658
658
0
0
Pioneer Partners
649
649
0
0
Bertram J. Polan
2,593
2,593
0
0
Harvey Polly
5,000
5,000
0
0
Leonardo Polonsky
500
500
0
0
S. Daniel Ponce
52
52
0
0
 
 
 
 
S.Daniel Ponce c/o Wallace Bauman Legon Fidiman Ponce
52
52
0
0
Anthony Quinn
1,000
1,000
0
0
R & J Trust
7,000
7,000
0
0
Ranallo Family Limited Partnership
2,500
2,500
0
0
Tony Ranallo
2,500
2,500
0
0
Enzo Ravenna
450
450
0
0
Neel G. Reddy
75
75
0
0
Erik Revohiemi
26
26
0
0
Erik Revohiemi
26
26
0
0
RFD Associates
4,813
4,813
0
0
Bruce Roberson
130
130
0
0
Judy Robins
2,400
2,400
0
0
Francine Rodin
2,250
2,250
0
0
Terence Rodney & Vicky Rodney JT TEN
325
325
0
0
Stanley H. Rosen
25,000
25,000
0
0
Jacob I. Rosenbaum
75
75
0
0
Robert M. Rosin
3,000
3,000
0
0
Jerome M. Rothenberg
685
685
0
0
Steven Rothenberg
350
350
0
0
Rothenberg-Rosenthal Associates
260
260
0
0
Rubenstein Novak Einbuns & Pavlik
180
180
0
0
James Russell & Nancy Russell
2,125
2,125
0
0
S G Holdings
428
428
0
0
Michael A. Sanson
750
750
0
0
Peter Santulli, Jr.
65
65
0
0
Peter Santulli & Irene Santulli JT TEN
130
130
0
0
Brian P. Sass & Randie Ostroff Sass
150
150
0
0
Milton M. Sass
400
400
0
0
Milton M. Sass & Bertha G. Sass
825
825
0
0
Charles P. Saulino
1,000
1,000
0
0
Leonard Schenker
1,000
1,000
0
0
Stanley Schiffman
65
65
0
0
Stanley J. Schiffman
65
65
0
0
Suzanne Schiller
1,200
1,200
0
0
Herbert Schneider
260
260
0
0
James A. Schoke
1,000
1,000
0
0
Harry Schwartz
2,000
2,000
0
0
Mark Schwartz
2,000
2,000
0
0
Paul T. Sciarrino
2,000
2,000
0
0
Beverly Segal
2,000
2,000
0
0
Merton J. Segal
3,450
3,450
0
0
Richard Seltzer
1,000
1,000
0
0
Andrew Selva
1,940
1,940
0
0
Sangor Selva
9,000
9,000
0
0
Saruka Selvaselva
450
450
0
0
N. Senthilkumar M.D.
250
250
0
0
Eileen Shahbazian IRA
1,500
1,500
0
0
Len & Phyllis Shapiro
10,000
10,000
0
0
Shea Diversified Investments Inc.
4,866
4,866
0
0
Kenneth I. Shevin IRA
750
750
0
0
Jay Shulman
250
250
0
0
Shy, Lzhar & Ndoza Rev. Trust
500
500
0
0
Siam Partners II
814
814
0
0
Kanagaratnam Silvalingam
8,763
8,763
0
0
Kanagaratnam Silvalingam IRA
1,425
1,425
0
0
Richard Simonian
40,000
40,000
0
0
 
 
 
 
Situation X, LLC. (8)
15,000,000
100,000
14,900,000
30.10%
David Skok Custodian for Madison Skok
350
350
0
0
M. David Smith
6,900
6,900
0
0
Lynn Snellgrove IRA
3,750
3,750
0
0
Nance Sokoloff
1,000
1,000
0
0
Andrew F. Sroka & Shirley M. Sroka JTROS
600
600
0
0
Standard Register & Transfer Trust For Lost Shareholders
64,325
64,325
0
0
Stanley E. Stein
2,800
2,800
0
0
Steven Wasserstrom, Inc.
26
26
0
0
Gustav J. Suess & Mimma Suess JT TEN
37
37
0
0
Laszlo Szekely
1,025
1,025
0
0
Tahoe Partnership
814
814
0
0
Tamil Refugee Relief Organization
132
132
0
0
Eugene Terry
1,297
1,297
0
0
The Arul Family Trust
2,027
2,027
0
0
The Jerome Mitchell Trust
65
65
0
0
Gajan Thiagarajah
278
278
0
0
Linda K. Topper
500
500
0
0
Alessandra Troncone
300
300
0
0
David R. Tshantz
75
75
0
0
Patricia Tyler
1,650
1,650
0
0
Jeremiah Umakanthan & Padminidevi Umakanthan
300
300
0
0
Anthony Villani
400
400
0
0
Katherine Waity-Fontanetta
130
130
0
0
David Walke
487
487
0
0
Waveland Partners LP
649
649
0
0
Armond Waxman
2,000
2,000
0
0
Greg Waxman & Gayle Waxman JT TEN
500
500
0
0
Larry Waxman
500
500
0
0
Shari Waxman & Gayle Waxman JT TEN
500
500
0
0
Sharon Waxman
500
500
0
0
Melvin Waxnian
1,000
1,000
0
0
Ken Weider
450
450
0
0
Peter Weimer
500
500
0
0
Allison M. Weinberger
6,750
6,750
0
0
Rita M. Weinberger
6,750
6,750
0
0
Edward Weintraub
600
600
0
0
Audrey Weiss & Michael Weiss
1,250
1,250
0
0
Aaron Weizman
6,250
6,250
0
0
Jacob Weizman
5,424
5,424
0
0
Michael Wenger
260
260
0
0
Kevin J. Wiltz
2,000
2,000
0
0
Theodore J. Wins & Edith Wins Trustees The Wins Family
750
750
0
0
Joel A. Wolk
25,238
25,238
0
0
Peter Trevor Wood
111
111
0
0
Wesley T. Wood
2,000
2,000
0
0
Catherine Young
8,323
8,323
0
0
E. Remington Youngman & Joanne Youngman JTWROS
33
33
0
0
Lisa D. Zack
1,250
1,250
0
0
Zena Rommett Dance Association Ltd.
500
500
0
0
Martin Zerobnick IRA
1,500
1,500
0
0
Oscar Zimmerman
1,250
1,250
0
0
TOTAL
 
10,025,000
   
 
 
 

 
(1)  
Under applicable SEC rules, a person is deemed to beneficially own securities which the person has the right to acquire within 60 days through the exercise of any option or warrant or through the conversion of a convertible security. Also under applicable SEC rules, a person is deemed to be the “beneficial owner” of a security with regard to which the person directly or indirectly, has or shares (a) voting power, which includes the power to vote or direct the voting of the security, or (b) investment power, which includes the power to dispose, or direct the disposition, of the security, in each case, irrespective of the person’s economic interest in the security. Each listed selling security holder has the sole investment and voting power with respect to all shares of common stock shown as beneficially owned by such selling security holder, except as otherwise indicated in the footnotes to the table. 

(2)  
As of December 22 , 2008, there were 49,500,000 shares of our common stock issued and outstanding.

(3)  
Except as otherwise stated, the shares were issued to the selling security holders since 2001. We have no knowledge of the beneficial owners of the selling security holders and except as set forth below none of these shareholders has any affiliate relationship with us, or the director and officers of our company.

(4)  
Edward C. DeFeudis is our sole director, President, Chief Financial Officer, and Principal Accounting Officer, as well as the manager of Lion Equity Holding Corp. and therefore has voting and dispositive control over securities held by Lion Equity Holding Corp.

(5)  
On January 18, 2008, we entered into a 9% convertible promissory note with Sarah Catherine Huempfner. The maturity date of the note was April 18, 2008. On April 18, 2008, Ms. Huempfner exercised the note at conversion price of $0.125 per share, and was therefore issued 2,400,000 shares of our common stock.

(6)  
On January 18, 2008, we entered into a 9% convertible promissory note with Jane Elizabeth Pearson. The maturity date of the note was April 18, 2008. On April 18, 2008, Ms. Pearson exercised the note at conversion price of $0.125 per share, and was therefore issued 2,400,000 shares of our common stock.

(7)  
On August 2004, we issued to Robert Alick a 9% convertible promissory note at an amount of $537,500 for the services and monies rendered from January 2, 2001 to August 1, 2004, executed by Energy Control Systems, Corp. On September 2, 2004, Mr. Alick assigned the note to Joe Meuse. On August 15, 2005, Mr. Meuse assigned it to Eric Reusch. On November 4, 2005, Mr. Reusch exercised $7,500 of the note for the issuance of 758,713 shares of our common stock and assigned the balance to Robert S. Pearson on January 15, 2008, which was $530,000. On April 18, 2008, Mr. Pearson exercised the note at conversion price of $0.125 per share, and was issued 4,240,000 shares of our common stock.

On August 29, 2008, we entered into a 12% convertible promissory note with Robert S. Pearson. The maturity date of the contract shall be December 29, 2008. The conversion price shall be equal to the average closing bid price of the common stock (as reported by Bloomberg L.P.) on the Pink Sheets OTC market for the 10 trading days prior to the date of the conversion notice multiplied by .80, provided that the conversion notice is submitted to our company before 6:00 p.m., New York, New York time on such conversion date.  However, the conversion price shall not exceed $1.00. The shares which shall be issued by us if this convertible note is converted into shares of our common stock are not being registered pursuant to this Registration Statement and Prospectus.

(8)  
Marco Garibaldi, our CEO, is also the manager of Situation X, LLC. and therefore has voting and dispositive control over securities held by Situation X, LLC.

All information set forth herein gives effect to a 1-for-3.85704 reverse stock split on March 7, 2001 and a 1-for-20 reverse stock split of our common stock on February 26, 2008.

 
Swap-A-Debt, Inc. was incorporated as a Delaware corporation on June 24, 1988.  As of December 22 , 2008, our authorized capital stock consists of 70,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share.  As of December 22 , 2008, an aggregate of 49,500,000 shares of common stock were issued and outstanding.  There are no shares of preferred stock outstanding.

Common Stock

Our certificate of incorporation authorizes the issuance of 70,000,000 shares of common stock, par value $0.001.  

The holders of our common stock:

 
·
have equal ratable rights to dividends from funds legally available for payment of dividends when, as and if declared by the board of directors;

 
·
are entitled to share ratably in all of the assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;
 
 

 
 
·
do not have preemptive, subscription or conversion rights, or redemption or access to any sinking fund; and

 
·
are entitled to one non-cumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders.

Preferred Stock

Our certificate of incorporation authorizes the issuance of 10,000,000 shares of preferred stock, par value $0.01 per share, with designations, rights and preferences determined from time to time by our board of directors. No shares of preferred stock have been designated, issued or are outstanding. Accordingly, our board of directors is empowered, without stockholder approval, to issue up to 10,000,000 shares of preferred stock with voting, liquidation, conversion, or other rights that could adversely affect the rights of the holders of the common stock. Although we have no present intention to issue any shares of preferred stock, there can be no assurance that we will not do so in the future.

Among other rights, our board of directors may determine, without further vote or action by our stockholders:

 
·
the number of shares and the designation of the series;

 
·
whether to pay dividends on the series and, if so, the dividend rate, whether dividends will be cumulative and, if so, from which date or dates, and the relative rights of priority of payment of dividends on shares of the series;

 
·
whether the series will have voting rights in addition to the voting rights provided by law and, if so, the terms of the voting rights;

 
·
whether the series will be convertible into or exchangeable for shares of any other class or series of stock and, if so, the terms and conditions of conversion or exchange;

 
·
whether or not the shares of the series will be redeemable and, if so, the dates, terms and conditions of redemption and whether there will be a sinking fund for the redemption of that series and, if so, the terms and amount of the sinking fund; and

 
·
the rights of the shares of the series in the event of our voluntary or involuntary liquidation, dissolution or winding up and the relative rights or priority, if any, of payment of shares of the series.

We presently do not have plans to issue any shares of preferred stock. However, preferred stock could be used to dilute a potential hostile acquirer.  Accordingly, any future issuance of preferred stock or any rights to purchase preferred shares may have the effect of making it more difficult for a third party to acquire control of us. This may delay, defer or prevent a change of control in our company or an unsolicited acquisition proposal. The issuance of preferred stock also could decrease the amount of earnings attributable to, and assets available for distribution to, the holders of our common stock and could adversely affect the rights and powers, including voting rights, of the holders of our common stock.

Authorized but Un-issued Capital Stock

Delaware law does not require stockholder approval for any issuance of authorized shares. However, the marketplace rules of the NASDAQ, which would apply only if our common stock were ever listed on the NASDAQ, require stockholder approval of certain issuances of common stock equal to or exceeding 20% of the then outstanding voting power or then outstanding number of shares of common stock, including in connection with a change of control of our company, the acquisition of the stock or assets of another company or the sale or issuance of common stock below the book or market value price of such stock. These additional shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital or to facilitate corporate acquisitions.

One of the effects of the existence of un-issued and unreserved common stock may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of our board by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive the stockholders of opportunities to sell their shares of our common stock at prices higher than prevailing market prices.

 
 
 
Shareholder Matters

As an issuer of "penny stock" the protection provided by the federal securities laws relating to forward looking statements does not apply to us if our shares are co